FF-ROAD DIESEL W NEED K - ctema.com

1 Page 1 of 7 Pages ICPA Advisory on Everything You Need to Know on Off- road DIESEL July 2, 2007 OFF- road DIESEL WHAT YOU NEED TO KNOW Retail fuel dealers need to know about several key issues that will dictate how they will sell off- road DIESEL to their customers. Below you will learn what you need to do and when you need to do it so that you and your customers are in compliance with the new Environmental Protection Agency (EPA) low sulfur off- road DIESEL requirements. Delivery Ticket Language A. Effective June 1, 2007 all heating oil delivery tickets must have the following statement printed on them: Dyed Unmarked Heating Oil: Not for use in highway, locomotive or marine engines.

2 Note that the old IRS language Dyed DIESEL Fuel, Non Taxable Use Penalty for Taxable Use is no longer required. If you are still using this language, it should be removed and replaced with the language stated above. B. Effective June 1, 2007 through October 1, 2007 all off- road DIESEL delivery tickets using heating oil must have the following statement printed on them: HS Dyed NRLM-may exceed 500-ppm sulfur. Not for use in nonroad engines requiring ULSD or highway engines. C. Effective June 1, 2007 all dyed off- road LS DIESEL (containing a maximum of 500ppm sulfur) delivery tickets must have the following statement printed on them: 500-ppm sulfur dyed LSD.

3 Non- road or tax exempt use only. Not for use in 2007 and later vehicles. D. Effective June 1, 2007 all dyed off- road LS DIESEL (containing a maximum of 15ppm sulfur) delivery tickets must have the following statement printed on them: 15-ppm sulfur dyed ULSD. Non- road or tax exempt use only. E. Effective June 1, 2007 in the event that dyed off- road DIESEL is not available you may use clear ULSD 15ppm DIESEL - in that case delivery tickets must have the following statement printed on them: Page 2 of 7 Pages ICPA Advisory on Everything You Need to Know on Off- road DIESEL 15-ppm sulfur ULSD.

4 Note: End users, using clear taxable DIESEL fuel for non-taxable off- road purposes is eligible for federal and state excise tax refunds. See attached tax guidance for refund information. If you have preprinted delivery tickets you should purchase a stamp to mark your tickets with this new language. Off road DIESEL Sulfur Content Until October 1, 2007 you may continue to sell heating oil for off- road purposes. Use the delivery ticket language as stated in B above. After October 1, 2007 you are required to sell off- road DIESEL that has a sulfur content of not more than 500 parts per million (ppm), and will no longer be permitted to sell heating oil for that purpose.

5 Use the delivery ticket language as stated in C or D above. An exemption to the low sulfur off- road DIESEL rule exists for stationary generators manufactured prior to April 1, 2006. Any stationary generator manufactured before April 1. 2006 can continue to use heating oil beyond the October 1, 2007 low sulfur off- road deadline. Note that heating oil sold in Connecticut contains not more than 3000ppm sulfur and does not meet the EPA off- road DIESEL standard of 500ppm sulfur as of October 1, 2007. Dispenser Labeling As of June 1, 2007 off- road DIESEL , heating oil and dyed kerosene dispensers are required to be labeled with specific information prescribed by EPA.

6 Attached you will find an order form for EPA compliant off- road DIESEL , on- road DIESEL and kerosene labels that are being offered by the New England Fuel Institute (NEFI). Record Keeping Off- road DIESEL delivery tickets, invoices, bills of lading, shipping papers, etc. are required to be maintain for five years. Frequently Asked Questions and Answers Off road DIESEL [PMAA] The compliance deadline for EPA s low sulfur non- road DIESEL fuel regulations starts June 1. On this date refiners must begin the phase-out of high sulfur non- road , locomotive and marine (NRLM) engine DIESEL fuel for distillates except heating oil and jet fuel.

7 The length of the phase-out and the compliance requirements differ depending on which part of the country the fuel is marketed. The two compliance areas are: (1) the Northeast/Mid-Atlantic (NEMA) region and (2) the rest of the country (non-NEMA area). The following is a Q & A of the most frequently asked questions on compliance with the new NRLM regulations: Q. How do I know which of the two NRLM compliance areas I am in? A. There are two NRLM compliance areas with different requirements The following states and counties are located in the Northeast/Mid-Atlantic (NEMA) area.

8 Massachusetts Vermont, New Hampshire, Maine, Page 3 of 7 Pages ICPA Advisory on Everything You Need to Know on Off- road DIESEL Connecticut, Rhode Island, new york (except for the counties of Chautauqua, Cattaraugus, and Allegany), New Jersey, Delaware, North Carolina, Virginia, Maryland, Washington , , Pennsylvania (except for the counties of Erie, Warren, Mc Kean, Potter, Cameron, Elk, Jefferson, Clarion, Forest, Venango, Mercer, Crawford, Lawrence, Beaver, Washington, and Greene), and the eight eastern-most counties of West Virginia (Jefferson, Berkeley, Morgan, Hampshire, Mineral, Hardy, Grant, and Pendleton).

9 Every other state and county not listed above is located in the non-NEMA area. Q. Can I still sell heating oil for off- road use in the NEMA area? A. No. Product designated as heating oil may not be sold for non- road locomotive or marine engines after June 1, 2007. However, heating oil may be re-designated on product transfer documents as high sulfur NRLM in the NEMA area and sold as NRLM until October 1, 2007. On this date, any DIESEL fuel over 500-ppm sulfur cannot be used as NRLM fuel (see stationary engine exception below).

10 Q. Can I still sell high sulfur NRLM for off- road use in the non-NEMA area after June 1, 2007? A. Yes, if you can find it. High sulfur NRLM fuel is allowed for off- road use in the non-NEMA area until October 1, 2010 for downstream petroleum marketers. Q. Can I sell marked heating oil in a NEMA area? A. Yes, marked heating oil from the non-NEMA area may be sold within the NEMA area. However, unmarked heating oil from the NEMA area may not be sold in the non-NEMA area. All product designated as "heating oil" in the non-NEMA area must be marked.