Understanding Recently Streamlined EPA Fuel Regulations

There’s been some confusion about recent changes in U.S. Environmental Protection Agency (EPA) rules. Many of our customers have reached out to us, asking what these changes may mean for them. While not intended to address any individual fuel marketer’s situation, this post will provide background and reasons behind the change. Of course, if you have questions, your DTN representative is happy to talk with you to determine how we can help you adapt.

What’s happened and why

Fuels Regulatory Streamlining posted in the Federal Register on December 4, 2020, under RIN 2060-AT31, updated EPA regulations governing gasoline, diesel, and other fuel quality standards, effective January 1, 2021. The regulation eliminates redundant and outdated rules and processes, streamlines reporting requirements, narrows fuel standards that reduce the number of “boutique” fuels, and redefines the specification for reformulated gasoline. The regulation makes similar adjustments for diesel fuel, recognizing the existing sulfur requirements in ultra-low sulfur heating oil, kerosene, and jet fuel apply to ultra-low sulfur diesel (ULSD) fuel, and thus redesignates those fuels as ULSD.

While this change recently took effect, it’s been in the works for a while. The EPA undertook the initiative after the successful implementation of other gasoline and diesel programs that reduced hazardous fuel components, streamlining regulation to establish a single, national fuel quality program affecting the same regulated parties. These new regulations stem from the Energy Policy Act of 2005, which directed the agency to consolidate various regional standards regarding reformulated gasoline (RFG) volatile organic compounds into a single national standard. This allowed refined fuels marketers who work nationwide to increase their efficiencies in transferring product to various regions.

What fuels are affected?

Gasoline standards fall into four categories based on the region’s designation for where the fuel is sold, and further, if the region is in attainment or nonattainment with the 1990 Clean Air Act (CAA). The new streamlining rule establishes a single Reid Vapor Pressure (RVP) standard for summer gasoline based on the region’s CAA status. It also ends RFG bifurcated specifications, reducing the parameters the fuel must meet from 11 to three. RFG specifications are now determined by RVP, sulfur, and benzene ratings.

The new refined fuels guidelines look like this:

Winter gasoline: under the new rule, winter gasoline standards are nearly universal, except for California and parts of Arizona.
Summer gasoline: there are four gasoline standards during the high-ozone summer months, determined by their CAA status:
- Federal 9.0psi maximum RVP standard: applies to all regions of the country, unless subject to a lower RVP standard.
- Federal 7.8psi maximum RVP standard: applies to several areas within five states:
  - Colorado
    - Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Jefferson, Larimer, and Weld counties
  - Nevada
    - Washoe county
  - Oregon
    - Clackamas (only the air quality maintenance area), Multnomah (only the air quality maintenance area), Washington (only the air quality maintenance area), Marion (only the Salem-Keizer Area Transportation Study), and Polk (only the Salem-Keizer Area Transportation Study) counties
  - Texas
    - Hardin, Jefferson, and Orange counties
  - Utah
    - Davis and Salt Lake counties
- RFG maximum RVP standard: applies to regions designated in the reformulated gasoline zone.
  - Maximum RVP during summer’s high ozone season is 7.4psi.
  - RFG zones can be found here.
- California gasoline: applies to gasoline sold in California; designated as an RFG zone.
  - State implementation plan requires 5.99psi RVP during the summer period.
- SIP-controlled gasoline: applies to gasoline sold in regions or states administering a federally-approved State Implementation Plan (SIP). These are considered boutique fuels and can be found here.

Diesel fuel: the EPA made no changes to sulfur or cetane/aromatics standards for diesel fuel in the new rule, but they do allow downstream parties to redesignate heating oil, kerosene, or jet fuel as ULSD since those specifications are now universal.
The EPA ruling removes the red dye requirement for non-road, locomotive, and marine (NRLM) diesel fuel, heating oil, and exempt highway diesel fuel.
The EPA rule does not alter Internal Revenue Code (IRC) requirements.

How are DTN customers affected?

In several ways, the new regulation adjusts fuel industry nomenclature and affects product transfer documents. Because DTN understands the complexities of these regulations, we can advise our customers and help them make their best decisions with the most accurate data and insights possible.