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11 July 2008
[Federal Register: July 11, 2008 (Volume 73, Number 134)]
[Rules and Regulations]
[Page 40153-40165]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jy08-10]
[[Page 40153]]
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Part VI
Federal Trade Commission
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16 CFR Part 306
Automotive Fuel Ratings, Certification and Posting; Final Rule
[[Page 40154]]
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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.
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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.
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\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).
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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\
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\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).
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``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\
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\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).
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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\
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\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.
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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.
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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.
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\10\ Comments are available at: (http://www.ftc.gov/os/comments/
biodiesel/index.shtm.)
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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.
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\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.)
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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\
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\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.
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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.
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\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.
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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\
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\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.
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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.
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\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.
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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\
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\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\
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\17\ See note 23, infra, and accompanying text.
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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\
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\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.
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[[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\
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\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).
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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\
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\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).
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\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).
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\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