New EPA Fuel Streamlining Rule Increases Fungibility Of Distillate Fuels For Heating Fuel Dealers, Downstream Distillate Distributors
Heating fuel dealers are about to get much needed regulatory relief from the U.S. Environmental Protection Agency designed to increase downstream fuel distribution efficiency and reduce costs by making distillate fuels more fungible.
The agency’s final Fuels Regulatory Streamlining rule includes several regulatory relief provisions that affect the heating fuel industry as well as downstream distributors of diesel fuel, jet fuel, kerosene and locomotive and marine fuel.
Energy Marketers of America – EMA (formerly PMAA) successfully advocated for all the heating fuel and distillate regulatory relief provisions in written comments and testimony submitted to the EPA during the rulemaking process earlier this year.
Click Here to read the Energy Marketers Association’s comments.
The first and most noteworthy change removes regulatory impediments that prevented downstream redesignation of 15 ppm distillates such as 15 ppm heating oil to 15 ppm diesel fuel.
Before the new rulemaking, heating fuel dealers could not redesignate 15 ppm heating oil to 15 ppm diesel fuel without triggering onerous testing and reporting requirements meant for terminal operators and refiners.
Downstream redesignation was largely limited to designating 15 ppm diesel fuel as 15 ppm heating fuel.
Under the new rule, any batch of distillate fuel that is certified and designated as ULSD by upstream manufacturers may be redesignated by downstream distributors as heating oil, kerosene, ECA marine fuel, jet fuel, or distillate global marine fuel if it is also suitable for such use.
However, in order to redesignate distillates downstream, product transfer documents generated by the refiner or terminal operator must indicate the distillates were manufactured to ULSD standards, including cetane and aromatic specifications.
Moreover, the bar against redesignating distillates intended for a designated use by upstream suppliers as indicated on PTD documents, is also removed.
Before the new rule, even distillates that met the ULSD standard and cetane/aromatic specifications could not be redesignated downstream if the PTD indicated it was for a specific use such as “diesel fuel” or “heating oil.”
Specifically, the new rule allows downstream distributors to redesignate distillate fuel without manufacturer recertification as follows:
— Any batch of diesel fuel or distillate fuel that is certified and designated as ULSD may also be designated as heating oil, kerosene, ECA marine fuel, jet fuel, or distillate global marine fuel if it is also suitable for such use.
— ULSD that is also suitable for use as kerosene or jet fuel (commonly referred to as dual use kerosene) may be designated as ULSD, kerosene, or jet fuel (as applicable).
— ULSD may be redesignated as 500 ppm locomotive/marine (LM) diesel fuel, heating oil, kerosene, emission control area (ECA) marine fuel, jet fuel, or distillate global marine fuel without manufacturer recertification.
— Heating oil, kerosene, ECA marine fuel, or jet fuel may be redesignated as ULSD diesel if the fuel meets required ULSD standard specifications (15 ppm or less sulfur content, minimum cetane index of 40, maximum aromatic content of 35 volume percent) and was designated as ULSD by the manufacturer on the PTD.
— 500 ppm LM diesel fuel may be redesignated as ECA marine fuel, distillate global marine fuel, or heating oil. Any person that redesignates 500 ppm LM diesel fuel to ECA marine fuel or distillate global marine fuel must maintain records from the producer of the 500 ppm LM diesel fuel (i.e., PTDs accompanying the fuel) to demonstrate compliance with the 500 ppm sulfur standard.
The new rule also removes the red dye provision for high sulfur distillates designed to prevent use in on-road diesel engines. The red dye requirement has become obsolete now that all distillates other than locomotive and marine meet the 15ppm sulfur content standard.
However, the IRS red dye requirement for nontaxable fuel remains in place, limiting the redesignation of heating oil to off road and nontaxable uses.
Dyed ULSD heating oil, however, is suitable for on-road use by state and local government entities only.
Finally, the EPA is eliminating the current 500 ppm heating fuel dispenser label for use by retail and/or wholesale purchaser consumers and replacing it with the following:
Federal law prohibits use in highway vehicles or engines, or in nonroad, locomotive, or marine diesel engines. Its use may damage these diesel engines.”
The label content must be in block letters of no less than 24-point bold type, printed in a color contrasting with the background. The new labels are not required until existing dispenser labels require replacement due to fading, cracking, etc.