The blue fitting is for the return line; it's coming out of the bottom of the regulator.
OH!!! I went back and re-read what I wrote. I see what you thought...
No... when I said "That's not the return line," what I MEANT was that the RUBBER HOSE was not the return line... that it's just acting as a grommet around the aluminun 3/8" metal tube... protecting it from abrasion where it passes through the sheet-metal.
