(a) Definitions. As used in this section, downgrade means changing the designation or classification of motor vehicle diesel fuel subject to the 15 ppm sulfur standard under §80.520(a)(1) to motor vehicle diesel fuel subject to the 500 ppm sulfur standard under §80.520(c). A downgrade occurs when the change in designation or classification takes place. Changing the designation or classification of motor vehicle diesel fuel subject to the 15 ppm sulfur standard under §80.520(a)(1) to any designation or classification that is not a motor vehicle diesel fuel is not a downgrade for purposes of this section.

(b) Who is subject to the downgrade limitation: Any distributor, retailer, or wholesale purchaser consumer that takes custody of any diesel fuel designated or classified as #2D 15 ppm sulfur motor vehicle diesel fuel and delivers any diesel fuel designated or classified as #2D 500 ppm motor vehicle diesel fuel.

(c) Downgrading limitation. The provisions of this section apply beginning October 15, 2006.

(1) Except as provided in paragraphs (d) and (e) of this section, a person described in paragraph (b) of this section may not downgrade a total of more than 20 percent of the #2D motor vehicle diesel fuel (by volume) that is subject to the 15 ppm sulfur standard of §80.520(a)(1) to #2D motor vehicle diesel fuel subject to the sulfur standard of §80.520(c) while such person has custody of such fuel.

(2) The limitation of paragraph (c)(1) of this section applies separately to each facility as defined under §80.502 where there is custody of the fuel when it is downgraded.

(3) Compliance with the limitation of paragraph (c)(1) of this section applies separately for the compliance periods of October 15, 2006 through May 31, 2007; June 1, 2007 through June 30, 2008; July 1, 2008 through June 30, 2009; July 1, 2009 through May 31, 2010.

(4) Except as provided in paragraph (e) of this section, compliance with the limitation of paragraph (c)(1) of this section shall be as calculated under §80.599(e).

(d) Diesel fuel in violation of the 15 ppm standard. Where motor vehicle diesel fuel subject to the 15 ppm sulfur standard of §80.520(a)(1) is found to be in violation of any standard under §80.520(a) and is consequently downgraded to 500 ppm sulfur motor vehicle diesel fuel, the person having custody of the fuel at the time it is found to be in violation must include the volume of such downgraded fuel toward its 20 percent volume limitation under paragraph (c)(1) of this section, unless the person demonstrates that it did not cause the violation.

(e) Special provisions for retail outlets and wholesale purchaser-consumer facilities. Notwithstanding the provisions of paragraph (c)(1) of this section, retailers and wholesale purchaser-consumers shall comply with the downgrading limitation as follows:

(1) Retailers and wholesale purchaser-consumers who sell, offer for sale, or dispense motor vehicle diesel fuel that is subject to the 15 ppm sulfur standard under §80.520(a)(1) are exempt from the volume limitations of paragraph (c)(1) of this section.

(2) A retailer or wholesale purchaser-consumer who does not sell, offer for sale, or dispense motor vehicle diesel fuel subject to the 15 ppm sulfur standard under §80.520(a)(1) must comply with the downgrading limitations of paragraph (c) of this section, such that it may not downgrade a volume of motor vehicle diesel fuel, designated as subject to the 15 ppm sulfur standard, for more than 20% of the total volume of motor vehicle diesel fuel that it sells, offers for sale, or dispenses in any compliance period.

(f) Termination of downgrading limitations. The provisions of this section shall not apply after May 31, 2010.

[69 FR 39172, June 29, 2004, as amended at 71 FR 25717, May 1, 2006]