[Federal Register Volume 65, Number 175 (Friday, September 8, 2000)]
[Rules and Regulations]
[Pages 54423-54433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22808]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-6864-8]


Establishment of Alternative Compliance Periods Under the Anti-
Dumping Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: The Clean Air Act as amended in 1990 (``the Act'') directs the 
Environmental Protection Agency (``EPA'' or ``we'') to issue 
regulations requiring reformulated gasoline for major metropolitan 
areas with the worst ozone air pollution problems. Other areas with 
ozone levels exceeding the public health standards may voluntarily 
choose to participate in the federal reformulated gasoline program. In 
order to ensure that the ``dirtier'' components of reformulated 
gasoline are not dumped into gasoline sold in areas not participating 
in the reformulated gasoline program (``conventional gasoline'' areas), 
the Act requires EPA to ensure that the quality of conventional 
gasoline does not fall below 1990 levels. The Act also mandates that we 
establish an appropriate compliance period or compliance periods 
associated with meeting the anti-dumping standards. Under the existing 
regulations for reformulated gasoline and anti-dumping, the compliance 
period is one year. However, we believe that in certain limited 
circumstances a longer conventional gasoline anti-dumping may be 
appropriate on a temporary basis. Such an alternative compliance period 
is only appropriate for a refiner who produces conventional gasoline 
and who is starting up a refinery and facing significant hardship in 
complying with the anti-dumping statutory baseline NOX 
standard. Moreover, we believe that it is appropriate for any refinery 
subject to an alternative compliance period to meet additional 
substantive and administrative requirements to ensure that there is no 
environmental detriment as a result of the longer averaging period. 
This direct final rule sets forth procedures for

[[Page 54424]]

establishing alternative compliance periods under the anti-dumping 
program and the standards applicable to refineries operating under such 
compliance periods.

DATES: This direct final rule is effective October 23, 2000, unless we 
receive adverse comments or a request for a public hearing by October 
10, 2000. If the Agency receives adverse comment or a request for 
public hearing by October 10, 2000, we will withdraw this direct final 
rule by publishing a timely withdrawal in the Federal Register.

ADDRESSES: If you wish to submit comments or request a public hearing, 
you should send any written materials to the docket address listed and 
to Anne Pastorkovich, Attorney/Advisor, Transportation & Regional 
Programs Division, U.S. Environmental Protection Agency, 1200 
Pennsylvania Avenue, NW (6406J), Washington, DC 20460, (202) 564-8987. 
Materials relevant to this direct final rule have been placed in docket 
A-2000-27 located at U.S. Environmental Protection Agency, Air Docket 
Section, Room M-1500, 401 M Street, SW, Washington, DC 20460. The 
docket is open for public inspection from 8:00 a.m. until 5:30 p.m., 
Monday through Friday, except on Federal holidays. You may be charged a 
reasonable fee for photocopying services.

FOR FURTHER INFORMATION CONTACT: If you would like further information 
about this rule or to request a hearing, contact Anne Pastorkovich, 
Attorney/Advisor, Transportation & Regional Programs Division, (202) 
564-8987.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

    Entities potentially regulated by the action are parties that 
produce conventional gasoline. Regulated categories and entities 
include:

------------------------------------------------------------------------
                 Category                             Examples
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Industry..................................  Gasoline refiners.
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    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists all entities that we are now aware could 
potentially be regulated by this action. Other types of entities not 
listed in this table could also be regulated by this action. To 
determine whether your business is regulated by this action, you should 
carefully examine the applicability criteria in part 80 of Title 40 of 
the Code of Federal Regulations. If you have any questions regarding 
the applicability of this action to a particular entity, consult the 
person listed in the preceding section of this document.

II. Background

    This section summarizes the anti-dumping program. Since refiners 
who request flexibility under today's rule are likely to elect to use 
sulfur-reducing technologies early in order to meet production 
requirements under this rule, a brief overview of the Tier 2 gasoline 
program is included as well.

The Anti-Dumping Program

    The Clean Air Act required EPA to establish rules for reformulated 
gasoline (RFG) designed to result in significant reductions in vehicle 
emissions of ozone-forming and toxic air pollutants. Reformulated 
gasoline is required to be used in specific metropolitan areas with the 
worst ozone problems. Several other areas with ozone levels exceeding 
the public health standard have voluntarily chosen to use RFG. 
Additionally, the Act required us to establish regulations covering all 
gasoline that is not reformulated. Such gasoline is called conventional 
gasoline, and the standards governing it are called the anti-dumping 
standards. We issued final reformulated gasoline and anti-dumping 
regulations on December 15, 1993 \1\ and the standards in those 
regulations became effective in January 1995.
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    \1\ ``Regulaation of Fuels and Fuel Additives: Standard for 
Reformulated and Conventional Gasoline--Final Rule,'' 59 FR 7812 
(February 16, 1994). See 40 CFR part 80 subparts D, E, and F.
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    The purpose of anti-dumping standards is to ensure that the quality 
of a refiner's conventional gasoline does not get worse once the 
reformulated gasoline program begins. To ensure that this does not 
happen, the Act requires that each refiner's conventional gasoline be 
at least as clean as the gasoline produced by that refiner during a 
specific ``baseline'' year. The baseline reference year specified in 
the Act is 1990. The anti-dumping program specifically governs the 
exhaust toxics and NOX emissions of conventional gasoline. 
These emissions are determined using the Complex Model, a tool which 
uses the fuel specifications, or parameters, of a gasoline blend to 
calculate the emissions associated with that gasoline. The fuel 
parameters included in the Complex Model are aromatics, olefins, 
benzene, sulfur, oxygen content and oxygenate type, the percent of fuel 
evaporated at 200  deg.F and 300  deg.F (E200 and E300, respectively) 
and Reid vapor pressure, or RVP.
    Under the anti-dumping program, each refinery and importer has an 
individual baseline consisting of a set of values for the Complex Model 
fuel parameters and the exhaust toxics and NOX emissions 
associated with those values representing the specification of the 
gasoline that the refiner produced in 1990. An individual baseline can 
be one of two types. The first type is the unique individual baseline. 
A refinery or importer has a unique individual baseline if it was in 
operation for at least 6 months in 1990 and had sufficient data and 
supporting analysis to determine the actual quality of its 1990 
gasoline to EPA's satisfaction. Those with unique individual baselines 
also have an associated individual baseline volume, which is the volume 
of gasoline produced or imported by that refiner in 1990. The other 
type of individual baseline is the statutory baseline. The statutory 
baseline consists of a set of fixed values for the Complex Model fuel 
parameters and the emissions associated with those values which 
represent the average quality of all gasoline produced or sold in the 
United States in 1990. The summer portion of the statutory baseline was 
specified in the Clean Air Act; the corresponding winter portion was 
developed by EPA. Together, the summer and winter portions form the 
annual average statutory baseline which is specified in 40 CFR Part 
80.91(c)(5). There is no individual baseline volume for those 
refineries or importers for which the statutory baseline is the 
individual baseline.
    Compliance with the anti-dumping requirements is determined on an 
annual basis. Each batch of gasoline is evaluated under the appropriate 
summer or winter portion of the Complex Model; the resulting emissions 
calculated for batch are volume-weighted to determine the annual 
average exhaust toxics and NOX emissions for the refinery or 
importer. The resulting annual average emissions are compared to the 
baseline emissions values to determine whether the refinery or importer 
is in or out of compliance with its anti-dumping standards.
    Section 211(k)(8)(D) of the Act directs us to establish ``an 
appropriate compliance period or compliance periods'' to be used for 
assessing compliance with the anti-dumping regulations. As mentioned 
above, we have established a one year compliance period for anti-
dumping. A one year compliance period is consistent with other fuels 
programs utilizing averaging and annual reporting, including the RFG 
program. Generally, a one year compliance period is desirable because 
it provides an effective monitoring period for environmental purposes 
while permitting flexibility with respect

[[Page 54425]]

to averaging over the calendar year. A one year period gives more 
assurance that gross violations will not occur before the violation is 
discovered and appropriate action is taken and that those responsible 
for the violation are held accountable. A one year period prevents a 
company from violating for several years, generating a long-term 
environmental detriment, and then going out of business before it can 
be held accountable. A one year period is also simple for compliance 
accounting purposes. Although we chose the one year compliance period 
for the reasons just mentioned, we recognize that the Act permits us to 
establish alternative anti-dumping compliance periods by regulation.

Tier 2 Gasoline

    Since the passage of the 1990 Clean Air Act Amendments, the U.S. 
has made significant progress in reducing emissions from passenger cars 
and light trucks through implementation of programs like RFG and anti-
dumping. Nonetheless, due to increasing vehicle population and vehicle 
miles traveled, passenger cars and light duty trucks will continue to 
be significant contributors to air pollution. In light of this trend 
and to build upon programs aimed at reducing emissions from motor 
vehicles and motor vehicle fuels, EPA recently issued regulations 
establishing lower sulfur content for all gasoline \2\ (i.e., ``Tier 2 
gasoline'') and establishing stricter tailpipe emissions standards for 
all passenger vehicles, including sport utility vehicles (SUVs), 
minivans, and vans and pick-up trucks under 8,500 lbs. The Tier 2 
program will also reduce ozone and particulate matter (PM) pollution. 
Gasoline sulfur levels significantly affect NOX emissions. 
Since NOX emissions are ozone precursors, a reduction in the 
sulfur level of gasoline will reduce ozone pollution. The level of 
gasoline sulfur control required under the Tier 2 program will also 
benefit the environment by directly reducing emissions of sulfur 
compounds.
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    \2\ ``Control of Air Pollution from New Motor Vehicles: Tier 2 
Motor Vehicles Emissions Standards and Gasoline Sulfur Control 
Requirements--Final Rule,'' 65 FR 6698 (February 10, 2000). See also 
40 CFR part 80 subpart H for regulations applicable to gasoline 
sulfur.
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    The Tier 2 gasoline standards will be fully implemented by 2006 by 
all refiners except for those subject to geographic phase-in area (GPA) 
requirements, who have until 2007, and certain other qualifying 
refiners, who have until 2008. (If a hardship extension is granted, an 
individual refiner may have until 2010 to meet the final standards.) 
The Tier 2 program is structured to permit averaging in order to meet 
the sulfur standard, with an average sulfur content standard of 30 ppm 
and a per gallon sulfur limit of 80 ppm by the date of full 
implementation. Benefits from the Tier 2 gasoline program may be seen 
more immediately, as some refiners are expected to start lowering 
sulfur levels as early as this year. Those who lead the way in reducing 
sulfur earlier than required may generate marketable credits or 
allotments. As with the RFG and anti-dumping programs, compliance is 
demonstrated based upon a one year compliance period.

III. Today's Action

Need for and Purpose of Today's Action

    As discussed above, section 211(k)(8)(D) of the Act directs EPA to 
establish an appropriate compliance period or compliance periods for 
the purpose of assessing compliance with anti-dumping requirements. At 
the present time, the only compliance period that has been established 
for anti-dumping is a one year compliance period. The one year 
compliance period is consistent with the one year period established 
under other existing fuels programs and, at the time the anti-dumping 
regulations were developed, there was no compelling reason or 
identified benefit to specifying any alternative compliance period.
    We believe that achieving the Tier 2 gasoline sulfur reductions, at 
the refinery level, as soon as possible is an extremely valuable 
mechanism for reducing vehicle emissions, perhaps more so than any 
other recently promulgated gasoline regulation. We are also aware of at 
least one refinery in a start-up mode which would be able to achieve 
the applicable Tier 2 gasoline sulfur reductions earlier than required, 
but would not be able to comply with its anti-dumping standard, which 
is the statutory baseline, in early production years. In order to 
comply with its anti-dumping standard, the refiner would have to delay 
the start-up process and significantly delay the time frame in which it 
could produce gasoline meeting the Tier 2 gasoline sulfur standards.
    Because we believe that achieving the Tier 2 gasoline sulfur levels 
is critical to reducing ozone levels by reducing emissions of the ozone 
precursor NOX (see the discussion in ``Summary of Today's 
Action'' below), we believe it is appropriate to allow an alternative 
anti-dumping compliance period for a refinery in start-up mode, 
provided that the refiner can show that the refinery will achieve the 
Tier 2 gasoline sulfur levels earlier than otherwise required. At the 
same time, we want to ensure that no environmental detriment occurs as 
a result of the flexibility we are providing, and have included other 
requirements the refinery must meet which will provide the appropriate 
environmental protection. The details of the flexibility are described 
below.

Summary of Today's Action

    We are permitting a refinery in start-up mode which is unable to 
meet its anti-dumping standard during the start-up process, but which 
would otherwise be able to meet the Tier 2 gasoline sulfur standards 
earlier than required, to petition the Agency for an alternative 
compliance period. The Tier 2 standards for most refiners take effect 
in 2006. (See ``Tier 2 Gasoline,'' above, for a more detailed 
discussion of refiner compliance dates.) A refinery eligible for this 
relief must be starting up production of conventional gasoline and must 
never have produced conventional gasoline that was subject to the anti-
dumping regulations. To ensure that the refinery will meet the 
applicable Tier 2 gasoline standards early, the alternative compliance 
period is limited to a two to five year span, as determined by the 
Agency. Because of the other requirements associated with this rule, we 
believe that a refinery would choose to request the shortest 
alternative compliance period possible. Additionally, a refiner must 
show that it would be unable to meet its anti-dumping NOX 
requirement under the current, one year compliance period. While the 
anti-dumping standard for a refinery involves both exhaust toxics and 
NOX emissions, we are requiring that the proposed 
alternative compliance period would only be available to a refinery 
upon a showing that it would otherwise be unable to meet its 
NOX standard. This is because sulfur significantly affects 
NOX emissions,\3\ and decreasing sulfur will result in 
significant NOX emission reductions by moving toward the 
goal of the low sulfur levels required by the Tier 2 standards. Though 
a refiner may have difficulty meeting its exhaust toxics anti-dumping 
standard, for which fuel benzene and aromatics are the primary fuel 
parameters, the refinery units which impact these two fuel parameters 
are different than those used to reduce sulfur. (Most refineries will 
need to install new equipment in order

[[Page 54426]]

to reduce sulfur to the levels required under the Tier 2 standards.) 
Thus, reducing benzene and/or aromatics does not contribute to the goal 
of achieving the Tier 2 gasoline sulfur levels early, and, 
consequently, an alternative compliance period based on the inability 
to meet the anti-dumping exhaust toxics standard would not be 
appropriate given the considerations underlying today's rule.
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    \3\ Under the Complex Model, the tool used to evaluate anti-
dumping performance, olefins is the other fuel parameter which 
significantly impacts NOX emissions.
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    In addition to meeting the Tier 2 gasoline sulfur standards early, 
the gasoline produced by a refinery over the entire alternative 
compliance period must result in a net NOX benefit (compared 
to the statutory baseline) that is at least twice as large as the total 
NOX deficit generated during the period of time during which 
the refinery produced gasoline that did not comply with the statutory 
baseline. Additionally, the refiner must purchase stationary source 
NOX credits sufficient to offset any NOX deficit 
generated (on a quarterly basis) and must meet the specific 
requirements of this direct final rule, including additional reporting 
requirements. By modifying the standards applicable to refineries with 
an alternative compliance period, we are providing appropriate 
assurance that no environmental disbenefit occurs as a result of 
allowing an alternative compliance period.
    When regulated entities cut emissions more than is required, the 
``extra'' environmental benefit may be considered as a pollution 
credit, usually measured in tons, that may be sold or banked for future 
use. Emissions trading associations have been created to facilitate the 
buying and selling of pollution credits. Marketable NOX 
credits are currently generated through NOX reduction 
programs in 13 states. In addition, there is a multi-state 
NOX emission trading program operating in eight Northeastern 
states that are members of the Ozone Transport Commission. Further 
information on NOX trading programs is available on the 
Internet at www.epa.gov/acidrain/programs.html.
    As described below in ``How the Agency Will Act on a Petition'' and 
``The Refiner's Responsibilities if a Petition is Granted,'' 
NOX credits purchased quarterly to offset any NOX 
deficit must be held by a refinery that operates under an adjusted 
compliance period under this rule. These banked credits function as 
collateral against any NOX deficiency that the refiner 
creates, to minimize the possibility of environmental harm in the event 
the refinery does not fulfill its obligation under the other 
requirements of this rule. If, as planned, the refinery eventually 
produces gasoline that meets and then exceeds the NOX 
baseline, the refiner may sell NOX credits equal to the 
benefit produced during that quarter. If the refinery violates the 
conditions under which its petition is granted, the NOX 
credits may be forfeited. The intention of this provision is that 
environment will suffer no net loss, although any NOX 
deficit may occur in a different location than a NOX credit 
was generated. Much of the gasoline in the U.S. is produced on the Gulf 
Coast and other coastal areas and shipped throughout the country, 
primarily by pipeline. Gasoline is fungible, and is normally 
transported in pipelines mixed with other batches that meet the same 
specifications. In general, it is not possible to predict where a 
particular batch of gasoline included in larger shipment will end up; 
as a result, it is not generally possible to predict where a 
NOX deficit may occur. Similarly, it is not possible to 
predict where the air quality benefit from the doubled payback of any 
NOX deficit will occur.

Who May Petition for an Alternative Anti-Dumping Compliance Period

    A refiner may petition EPA for an alternative compliance period for 
any refinery that is starting up gasoline production for the first time 
under the anti-dumping requirements, that is subject to the statutory 
baseline, and that can demonstrate a significant hardship with regard 
to producing gasoline conforming to the statutory baseline for 
NOX in the early years of production. Flexibility with 
regard to alternative anti-dumping compliance periods will be 
particularly helpful for challenged refiners (as described in the Tier 
2 gasoline sulfur rule), including small refiners; however, any refiner 
who meets the threshold conditions above may submit a petition. The 
petition may be for a domestic or foreign refinery. The refiner must 
have specific plans to bring its gasoline into compliance with the 
statutory baseline early enough through the alternative compliance 
period in order to achieve the two-fold NOX payback. 
Furthermore, the refiner must have specific and demonstrable plans to 
produce gasoline to pay back any NOX deficit by the end of 
the requested compliance period. For many refiners, these plans would 
likely include early installation of sulfur-reducing technologies 
necessary to meet the Tier 2 gasoline standards.

When Must Petitions Be Received?

    A refiner who meets the threshold conditions may petition the 
Agency for an alternative anti-dumping compliance period. For reasons 
discussed in the preceding sections, we believe that the window during 
which this flexibility is appropriate is the period before the Tier 2 
gasoline program standards fully apply. Therefore, petitions for 
alternative anti-dumping compliance periods of four or five years in 
length must be received by no later than June 1, 2001. For an 
alternative compliance period of two or three years in length, the 
petition must be received no later than June 1, 2003. No alternative 
anti-dumping compliance period may be designed to start, or requested 
to start, after January 1, 2004 or to end after December 31, 2005.

What A Petition for an Alternative Anti-Dumping Compliance Period Must 
Contain

    A refiner may petition for an alternative anti-dumping compliance 
period of two, three, four, or five years in length. The petition must, 
at a minimum, contain:
     The business name and address and any location(s) where 
the refiner conducts operations.
     The name and contact information for the responsible 
corporate officer and a contact person who can provide further 
clarification with regard to information in the petition.
     A detailed explanation of why the refinery is eligible to 
request an alternative anti-dumping compliance period. This explanation 
would include documentation showing that the refinery is starting up 
production and has never produced conventional gasoline subject to the 
anti-dumping regulations and information demonstrating the hardship the 
refinery will experience meeting the anti-dumping statutory baseline 
NOX standard.
     The length of the averaging period requested (2, 3, 4, or 
5 years) and a justification for why that length of averaging period is 
required.
     An estimate as to when the refinery can produce gasoline 
that will meet the statutory baseline standard for NOX.
     The refinery's estimated gasoline production and average 
NOX level for each of the years in which the alternative 
averaging period is required.
     A detailed description of the current refinery equipment 
and configuration.
     A detailed description of any changes or enhancements to 
the refinery equipment and configuration that will occur during the 
alternative averaging period requested.
     The current nominal crude capacity of the refinery as 
reported to the Energy Information Administration (EIA) of the 
Department of Energy (DOE).

[[Page 54427]]

     A detailed explanation of the refiner's plans to finance 
capital improvements at the refinery in order to meet all current 
applicable EPA gasoline and diesel fuel quality standards.
     A demonstration that the refiner has the funds and 
identified sources from which to purchase stationary source 
NOX credits sufficient to offset the maximum projected 
NOX deficit. An equation for calculating the NOX 
deficit and NOX benefit is included in the regulations.
     A full disclosure and explanation of any matters of non-
compliance or violations of any environmental statutes or requirements 
for which the refiner has received notification by any state, local, or 
Federal agency.
     A signed agreement by any parent company or, in the case 
of a joint venture, individual partners, if applicable, acknowledging 
that they will be liable for any violations.
     Any other information the Administrator may require in 
order to fully evaluate the refiner's petition. Such information would 
include requests for clarification of any item(s) included in the 
petition that is necessary in order to render a final decision as to 
whether to grant or reject the petition.
    The above items represent, at a minimum, the topics that must be 
addressed in the petition. The refiner may wish to elaborate on certain 
topics--e.g., if it faces particular hardship because it is a small 
business or if its refinery faces other, unique challenges that may 
influence the Agency's decision on the petition.
    If we find that any refiner has provided false or inaccurate 
information in connection with its petition, we will notify the refiner 
and the application of any alternative anti-dumping compliance period 
will be void ab initio.

How the Agency Will Act on a Petition and the Refiner's 
Responsibilities if a Petition Is Granted

Notification of Approval or Disapproval of Petition, and Dates by Which 
the Refinery Must Meet the Statutory NOX Baseline Standard 
and Pay Back Double the NOX Deficit
    We will notify a refiner of approval or disapproval of its petition 
by mail after considering a complete petition. If approved, we will 
notify the refiner of the alternative anti-dumping compliance period 
approved (i.e., two, three, four, or five years) and the interim 
standards that must be met. The interim standards shall be as set forth 
in the regulations and include two major standards that the refinery 
must meet. The first standard sets forth the date by which the refinery 
must start to comply with the statutory baseline NOX 
standard, on average, for all its gasoline. For example, for a two year 
averaging period, the refiner must achieve this by the seventh quarter. 
Once the first date is reached, the refiner must continue to meet the 
statutory baseline standard for NOX, on average, for all 
gasoline it produces.
    The second standard sets forth the date by which the refinery must 
pay back double the NOX deficit. This date corresponds to 
the end of the alternative averaging period. For example, for a two 
year averaging period, the refinery must pay back double the 
NOX deficit by the end of the second year. Failure to meet 
one of these standards will result in a violation of the anti-dumping 
regulations. The anti-dumping standards, including NOX 
emissions, are defined in units of milligrams per mile. In order to 
quantify the NOX deficit or benefit in tons under today's 
rule, it is necessary to know the variance from the standard, the 
volume of gasoline involved and the average fuel economy for the 
overall national fleet of gasoline powered vehicles. For the purpose of 
these calculations, we are using the most current data as presented in 
the Calendar Year 1999 National Highway Traffic and Safety 
Administration report to Congress of 24.5 miles per gallon. Thus the 
constant figure in both equations of 2.7 x 10-\8\ is the 
product of the above fuel economy factor and the conversion from 
milligrams to tons. The average NOX level and volume of 
gasoline produced during the quarter are self explanatory. The 
equations for calculating NOX deficit and benefit are as 
follows:

    NOX Deficit:
    [GRAPHIC] [TIFF OMITTED] TR08SE00.004
    
Where:

NOXDef=the NOX deficit for the quarter(s) the 
refiner's annual average NOX performance exceeds the 
applicable NOX standard of 1461 mg/mile, expressed in 
tons.
NOXad=the average volume weighted NOX 
emissions performance for the quarter(s) the refiner exceeds the 
applicable NOX standard, measured in mg/mile.
Gd=the volume of gasoline produced during the quarter(s) 
the refiner exceeds the applicable NOX standard, measured 
in gallons.

    NOX Benefit:
    [GRAPHIC] [TIFF OMITTED] TR08SE00.005
    
Where:

NOXBen=the NOX benefit during the quarter(s) 
the refiner's annual average NOX performance is below the 
applicable NOX standard of 1461 mg/mile.
NOXab=the average volume weighted NOX 
emissions performance for the quarter(s) the refiner is below the 
applicable NOX standard, measured in mg/mile
Gb=the volume of gasoline produced during the quarter(s) 
the refiner is below the applicable NOX standard, 
measured in gallons.
    The calculations are to be performed on a quarterly basis. As an 
example, a 10,000 barrel per day refinery would produce 37.8 million 
gallons during a given quarter. Assuming the gasoline, on average, met 
a NOX standard of 1500 mg/mi, the total NOX 
deficit for the quarter would be

[GRAPHIC] [TIFF OMITTED] TR08SE00.006

    As an example of how the NOX deficit must be paid back 
on a two for one basis, assume that the same refinery has a two year 
alternative averaging period. Assuming that the refinery were to 
produce the same quality and volume of gasoline for the first five 
quarters and then began to produce gasoline meeting the statutory 
baseline (in order to meet the first standard), the total 
NOX deficit, in tons, would be 199 tons. In order to meet 
the second standard, the paying back of double the NOX 
deficit, the refiner would have to produce a total NOX 
benefit of 199 * 2, or 398 tons of NOX benefit. Thus, the 
alternative averaging period is designed to ensure that there is no 
overall environmental detriment by requiring a certain about of 
NOX overcompliance.
Interim Milestones
    A refiner may qualify for an extended averaging period only if, at 
the time of the petition, it activates a refinery that faces 
substantial demonstrated hardship in producing gasoline which meets the 
anti-dumping statutory baseline NOX standards during the 
early years of production. EPA believes that this hardship is most 
likely to be the result

[[Page 54428]]

of a lack of the necessary refinery processing equipment. Moreover, it 
will be necessary for such a refiner to obtain this processing 
equipment in order to begin producing gasoline that will allow the 
refinery to comply with the overall alternative averaging period 
NOX standard. However, if such a refiner fails to obtain 
this processing equipment in a timely manner it is likely the refiner 
will not be able to offset the NOX deficit created during 
the first phase of the extended averaging period by the require 
compliance deadline.
    For this reason EPA believes it is appropriate for a refiner who 
has been granted an extended averaging period to demonstrate that 
reasonable progress is being made toward obtaining necessary processing 
equipment. As a result, under today's rule EPA is requiring refiners to 
include in extended averaging period petitions the expected dates for 
key milestones for obtaining necessary processing equipment. These 
milestones normally would include the dates for signing the contract 
for equipment design, for obtaining necessary permits, for obtaining 
financing commitments, and for breaking ground for construction. During 
the petition review EPA intends to evaluate the milestones proposed by 
the refiner and establish appropriate milestones that will be 
incorporated into any petition approval. The refiner will be required 
to submit reports to EPA demonstrating these milestones are met as a 
contingency for continued operation under the alternative compliance 
period.
    Upon a refiner's failure to meet a milestone, or failure to submit 
a milestone report by the required date, the Administrator would have 
the discretion to accelerate the date by which the refiner would have 
to produce gasoline that complies with the annual average statutory 
baseline NOX standard, so that the gasoline produced by the 
refinery beginning with the quarter immediately following the quarter 
during which the failure occurred (and during each subsequent quarter) 
would have to meet that standard. That is, a failure to meet a 
milestone may result in a requirement for the refinery to begin 
producing gasoline that complies with the statutory baseline beginning 
with the next quarterly averaging period and continuing thereafter. The 
acceleration of the requirement regarding compliance with the annual 
average statutory baseline NOX standard would not affect any 
of the other standards or requirements applicable to the refinery under 
this section (e.g., the refinery would still be required to comply with 
the overall alternative averaging period NOX standard by 
producing gasoline that overcomplies with the annual average statutory 
NOX standard by twice as much as the early NOX 
deficit generated by the refinery). Moreover, upon the refiner's 
failure to meet a milestone, or failure to submit a milestone report by 
the required date, the refiner would forfeit any NOX credits 
that it was required to have banked as of that time. EPA realizes that 
a refiner in this situation may not be able to produce gasoline that 
meets the statutory baseline and may be forced to produce products 
other than gasoline, such as blendstocks, or to close the refinery. 
However, allowing such a refiner to generate additional NOX 
deficits would only result in additional environmental harm.
Additional Requirements
    In addition to the requirements described in the preceding 
paragraph, the following general requirements apply to a refinery for 
which a petition is granted:
     The refinery must meet all applicable statutory baseline 
standards for an annual average compliance period, except the standard 
for NOX. For example, this means that the refinery must 
comply with the toxics standards on an annual basis.
     The refiner must designate all gasoline produced during 
the period of time that the refinery does not meet the annual average 
statutory baseline standards as gasoline with a volatility of 9.0 
pounds per square inch (psi).
     A refiner for which a petition is granted must provide a 
written demonstration that it has purchased and banked NOX 
credits equal to the NOX deficit calculated for the end of 
the preceding quarter and must retain these banked credits throughout 
the current quarter. The NOX credits are necessary in order 
to guarantee that the refinery does not generate a net NOX 
detriment. The amount of NOX credits required to be banked 
will be calculated each quarter. When the refinery begins to produce 
conventional gasoline that, on average, meets the anti-dumping 
NOX standard, it may sell NOX credits off in an 
amount equal to any NOX benefit generated in the preceding 
quarter. We believe that this approach permits more flexibility for the 
start-up refinery than an approach that would require them to make a 
significant up-front purchase of credits equal to the entire projected 
NOX deficit for the alternative averaging period.
     A refinery for which a petition is granted may not 
generate any Tier 2 sulfur credits or allotments during the entire 
alternative anti-dumping compliance period.
     A refinery for which a petition is granted must submit 
anti-dumping compliance reports more frequently than other conventional 
gasoline refineries. This enhanced reporting will ensure that the 
refinery is on target with meeting the interim performance goals. The 
documents that must be submitted include quarterly batch reports and 
anti-dumping averaging reports for gasoline produced during each 
quarter, and documents that demonstrate the refiner has purchased and 
banked the necessary amount of NOX credits to equal the 
NOX deficit calculated for that quarter.
Change in Alternative Averaging Period
    At any point during the pendency of the alternative conventional 
gasoline anti-dumping compliance period the Administrator may, upon 
application by a refiner, approve a different alternative compliance 
period for a refinery already operating subject to an alternative 
compliance period. For example, if a refinery originally received an 
alternative compliance period with a duration of 2 years beginning on 
January 1, 2001, at any time prior to the end of that compliance period 
(January 1, 2003), the Administer may approve an application to assign 
to the refinery the standards and requirements that would have been 
applicable to the refinery had the refinery originally received one of 
the other alternative compliance periods. Any refinery for which a 
change in the applicable alternative compliance period is approved must 
thereafter operate as if the refinery had originally requested and 
received such new alternative compliance period, and shall be subject 
to the standards and other requirements applicable under such new 
alternative compliance period. Consequently, for a refinery with an 
original alternative compliance period of 2 years beginning on January 
1, 2001 (which would end on January 1, 2003), for which the 
Administrator later approves a change to a 3 year compliance period on 
January 1, 2002, the termination date for the new alternative 
compliance period would be January 1, 2004, and the refinery would need 
to begin producing gasoline that complies with the annual average 
statutory baseline during the quarter beginning January 2004.
    The Administrator will approve or disapprove any application for a 
different alternative compliance period, in writing, within six months 
of receipt, and in the case of an approval will include any conditions 
or other requirements to which the approval is subject. No such 
application may result

[[Page 54429]]

in an alternative compliance period that extends beyond January 1, 
2006. A refinery for which the Administrator approves a change in the 
alternative compliance period will be subject to all the standards and 
other requirements of the new alternative compliance period as well as 
any additional conditions or requirements that are included in the 
approval of the application for a changed alternative compliance 
period. Accept as specifically modified by this section, such refinery 
must continue to comply with all other standards and other requirements 
applicable under the conventional gasoline anti-dumping standards.

IV. Administrative Requirements

A. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another Agency;
    (3) Materially alter the budgetary impact of entitlement, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The Agency has determined that this regulation would result in none 
of the economic effects set forth in Section 1 of the Order because it 
generally relaxes the requirements of the anti-dumping program and 
provides regulated parties with more flexibility with respect to 
compliance with the anti-dumping requirements. Pursuant to the terms of 
Executive Order 12866, OMB has notified us that it does not consider 
this a ``significant regulatory action'' within the meaning of the 
Executive Order and has waived review.

B. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This direct final rule does not have federalism implications. This 
direct final rule will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132. 
This rule would permit refiners to petition for alternative anti-
dumping compliance periods and does not impose any substantial direct 
effects on the states. Thus, Executive Order 13132 does not apply to 
this rule.

C. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, we may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, or that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or we consult with those 
governments. If we comply by consulting, Executive Order 13084 requires 
us to provide to the Office of Management and Budget, in a separately 
identified section of the preamble to the rule, a description of the 
extent of our prior consultation with representatives of affected 
tribal governments, a summary of the nature of their concerns, and a 
statement supporting the need to issue the regulation. In addition, 
Executive Order 13084 requires us to develop an effective process 
permitting elected and other representatives of Indian tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory policies on matters that significantly or uniquely affect 
their communities.''
    Today's direct final rule does not significantly or uniquely affect 
the communities of Indian tribal governments. Today's direct final rule 
does not create a mandate for any tribal governments. This direct final 
rule applies to gasoline refiners. Today's action makes some changes 
that would generally provide flexibility within the Federal anti-
dumping requirements, and does not impose any enforceable duties on 
communities of Indian tribal governments. Accordingly, the requirements 
of section 3(b) of Executive Order 13084 do not apply to this direct 
final rule.

D. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et. 
seq.

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business that has not 
more than 1,500 employees (13 CFR 121.201); (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the economic impacts of today's direct final rule 
on small entities, the Administrator has determined that this action 
will not have a significant economic impact on a substantial number of 
small entities. In determining whether a rule has a significant 
economic impact on a substantial number of small entities, the impact 
of concern is any significant adverse economic impact on small 
entities, since the primary purpose of the regulatory flexibility 
analyses is to identify and address regulatory alternatives ``which 
minimize any significant economic impact of the rule on small 
entities.'' 5 U.S.C. 603 and 604. Thus, an agency may certify that a 
rule will not have a significant economic impact on a substantial 
number of small entities if the rule relieves regulatory burden, or 
otherwise has a positive economic effect on all of the small entities 
subject to the rule. Today's direct final rule would provide regulatory 
relief by permitting regulated parties, including small entities, to 
seek an extended anti-dumping compliance period. We have therefore 
concluded

[[Page 54430]]

that today's direct final rule will relieve regulatory burden for all 
small entities. We continue to be interested in the potential impacts 
of the direct final rule on small entities and welcome comments on 
issues related to such impacts.

E. Paperwork Reduction Act

    This action establishes a petition process that involves the 
collection of information. It also requires reports that will utilize 
existing RFG and anti-dumping reporting forms. Refiners that request 
alternative compliance periods for anti-dumping are already subject to 
anti-dumping reporting requirements, which include annual compliance 
reporting, but although refiners of RFG are required to submit 
quarterly batch reports and laboratory reports, refiners of 
conventional gasoline under the anti-dumping program are not generally 
subject to this quarterly reporting requirement. A refiner granted an 
alternative compliance period for anti-dumping under this rule would 
become subject to quarterly batch reporting and laboratory reports. 
Since this constitutes the collection of information as defined by the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq., the existing 
Information Collection Request (ICR) for the RFG and anti-dumping 
program will be submitted to OMB for approval to the collection of any 
information. A separate Federal Register notice will be published 
regarding the ICR. The Office of Management and Budget (OMB) has 
approved the information collection requirements contained in the final 
RFG and anti-dumping rulemaking (See 59 FR 7716, February 16, 1994) and 
has assigned OMB control number 2060-0277 (EPA ICR No. 1591.07).
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information. An Agency may not 
conduct or sponsor, and a person is not required to respond to a 
collection of information unless it displays a currently valid OMB 
control number. The OMB control numbers for our regulations are listed 
in 40 CFR Part 9 and 48 CFR Chapter 15.

F. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, we 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating a rule for which a written statement is 
needed, section 205 of the UMRA generally requires us to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows us to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before establishing any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, an agency must have 
developed under section 203 of the UMRA a small government agency plan. 
The plan must provide for notifying potentially affected small 
governments, enabling officials of affected small governments to have 
meaningful and timely input in the development of regulatory proposals 
with significant Federal intergovernmental mandates, and informing, 
educating, and advising small governments on compliance with the 
regulatory requirements.
    Today's direct final rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local or 
tribal governments or the private sector. The direct final rule would 
impose no enforceable duty on any State, local or tribal governments or 
the private sector. This direct final rule applies to gasoline 
refiners. Today's action would provide regulated parties with more 
flexibility with respect to compliance with the anti-dumping 
requirements.

G. Executive Order 13045: Children's Health Protection

    Executive Order 13045: Protection of Children from Environmental 
Health Risks and Safety Risks (62FR19885, April 23, 1997) applies to 
any rule that: (1) Is determined to be economically significant as 
defined under E.O. 12866, and (2) concerns an environmental health or 
safety risk that we have reason to believe may have a disproportionate 
effect on children. If the regulatory action meets both criteria, the 
Agency must evaluate the environmental health or safety effects of the 
planned rule on children, and explain why the planned regulation is 
preferable to other potentially effective and reasonably feasible 
alternatives considered by the Agency.
    We interpret E.O. 13045 as applying only to those regulatory 
actions that are based on health or safety risks, such that the 
analysis required under section 5-501 of the Order has the potential to 
influence the regulation. This direct final rule is not subject to E.O. 
13045, entitled ``Protection of Children from Environmental Health 
Risks and Safety Risks'' (62FR19885, April 23, 1997), because it does 
not involve decisions on environmental health risks or safety risks 
that may disproportionately affect children. This direct final rule 
permits flexibility in establishing extended anti-dumping compliance 
periods in narrow circumstances where a net environmental benefit is 
expected.

H. National Technology Transfer and Advancement Act of 1995 (NTTAA)

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs us to use voluntary consensus standards in our regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs us to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards. Today's action 
does not establish new technical standards or analytical test methods, 
and does not affect existing technical standards or analytical test 
methods.

[[Page 54431]]

I. Submission to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Act of 1996, generally provides 
that before a rule may take effect, the agency promulgating the rule 
must submit a rule report, which includes a copy of the rule, to each 
House of the Congress and to the Comptroller General of the United 
States. We will submit a report containing this rule and other required 
information to the U.S. Senate, the U.S. House of Representatives, and 
the Comptroller General of the United States prior to publication of 
the rule in the Federal Register. A major rule cannot take effect until 
60 days after it is published in the Federal Register. This action is 
not a ``major rule'' as defined by 5 U.S.C. 804(2), and is not subject 
to the 60 day requirement. This direct final rule will be effective 
October 23, 2000, unless EPA receives adverse comments or a request for 
a public hearing on the rule (see DATES section above).

J. Statutory Authority

    Sections 114, 211, and 301(a) the Clean Air Act as amended (42 
U.S.C. 7414, 7545, and 7601(a)).

List of Subjects in 40 CFR Part 80

    Environmental protection, Air pollution control, Anti-dumping, 
Reformulated gasoline.

    Dated: August 30, 2000.
Carol M. Browner,
Administrator.

    For the reasons described in the preamble, part 80 of title 40 of 
the Code of Federal Regulations is amended as follows:

PART 80--[AMENDED]

    1. The authority citation for part 80 continues to read as follows:

    Authority: Sections 114, 211, and 301(a) of the Clean Air Act as 
amended (42 USC 7414, 7545, and 7601(a).
* * * * *

    2. Section 80.101 is amended by revising paragraph (a) and adding 
paragraph (k) to read as follows:


Sec. 80.101  Standards applicable to refiners and importers.

* * * * *
    (a) Averaging period. The averaging period for the standards 
specified in this section shall be January 1 through December 31, 
except as provided in paragraph (k) of this section.
* * * * *
    * * *
    (k) Petitions for an alternative anti-dumping averaging period.
    (1) Eligibility for petition. (i) The Administrator may grant an 
averaging period of two, three, four or five years upon petition of a 
refiner who:
    (A) Activates or plans to activate conventional gasoline production 
at a refinery that has never produced gasoline subject to the anti-
dumping requirements of subpart E of this part; and
    (B) Faces substantial, demonstrated hardship in meeting the anti-
dumping statutory baseline NOX standard during the early 
years of production.
    (ii) The Administrator will consider the refiner's or refinery's 
compliance with all applicable Federal, state, and local environmental 
statutes or requirements in evaluating the petition, including, but not 
limited to, any applicable stationary source requirement or standards.
    (2) Contents of a petition. A petition for a four or five year 
averaging period must be submitted by June 1, 2001. A petition for a 
two or three year averaging period must be submitted by June 1, 2003. 
Regardless of the averaging period requested, the petition must 
include:
    (i) The business name and address of the affected refinery and any 
location(s) where the refiner conducts operations.
    (ii) The name, address, phone number, fax number, and e-mail 
address of the responsible corporate officer and contact person who can 
provide clarification and explanation with regard to any information in 
the petition.
    (iii) A detailed explanation of why the refinery is eligible for an 
alternative anti-dumping compliance period under paragraph (k)(1) of 
this section, including:
    (A) Documentation the refinery has never produced gasoline that was 
subject to the anti-dumping standards under subpart E of this part and
    (B) Documentation demonstrating the hardship the refinery will 
experience meeting the anti-dumping statutory baseline NOX 
standard.
    (iv) The length of the averaging period requested and a 
justification for why that length of averaging period is required.
    (v) An estimate as to when the refinery can produce gasoline that 
will meet the statutory baseline standard for NOX.
    (vi) The refinery's estimated gasoline production and annual 
average NOX level for each of the years for which the 
alternative averaging period is requested.
    (vii) A detailed description of the current refinery equipment and 
configuration.
    (viii) A detailed description of changes to the refinery equipment 
the refiner intends to complete in order to begin producing gasoline 
that will allow the refinery to comply with the overall alternative 
averaging period NOX standard, and for such changes the 
intended dates for events the refiner believes are appropriate for 
demonstrating reasonable progress towards completion of the changes, 
including the following events:
    (A) Sign the design contract;
    (B) Obtain necessary permits;
    (C) Obtain construction financing commitments;
    (D) Begin construction.
    (E) Complete construction
    (ix) The current nominal crude capacity of the refinery as reported 
to the Energy Information Administration (EIA) of the Department of 
Energy (DOE).
    (x) A detailed explanation of the refiner's plans to finance 
capital improvements at the refinery in order to meet all current 
applicable EPA gasoline and diesel fuel quality standards.
    (xi) A demonstration that the refiner has the funds and identified 
sources from which to purchase stationary source NOX credits 
sufficient to offset the maximum projected NOX deficit as 
calculated in accordance with paragraph (k)(4)(ii) of this section on a 
quarterly basis.
    (xii) A full disclosure and explanation of any matters of non-
compliance or violations of any environmental statutes or requirements 
for which the refiner has received notification by any state, local, or 
Federal agency.
    (xiii) A signed agreement by any parent company or, in the case of 
a joint venture, individual partners, if applicable, acknowledging that 
they will be liable for any violations.
    (xiv) Any other information the Administrator may require in order 
to fully evaluate the refiner's petition.
    (xv) The signature of a responsible corporate officer, certifying 
that the information contained in the petition is true.
    (3) NOX standards and other requirements applicable to 
refineries operating under an alternative anti-dumping averaging 
period. If a petition by a refiner is approved, the standards described 
in this paragraph shall be the standards applicable to the refinery 
identified in the petition for purposes of the anti-dumping program 
during the period of the alternative averaging period. Except as 
specifically modified by this section, the refinery must

[[Page 54432]]

continue to comply with all other standards applicable under the anti-
dumping standards of subpart E of this part.
    (i) A refinery shall meet the following deadlines for compliance 
with the statutory baseline, depending on the length of the alternative 
averaging period applicable to the refinery:

------------------------------------------------------------------------
                                               Refinery must comply with
                            Compliance period    the Statutory Baseline
   Length of compliance       must start no.   NOX standard, on average,
      period in years           later than        for gasoline produced
                              January 1st of       beginning with the
------------------------------------------------------------------------
2.........................               2004  7th quarter and all
                                                subsequent quarters.
3.........................               2003  10th quarter and all
                                                subsequent quarters.
4.........................               2002  13th quarter and all
                                                subsequent quarters.
5.........................               2001  20th quarter and all
                                                subsequent quarters.
------------------------------------------------------------------------

    (ii) By the end of the applicable alternative averaging period, the 
gasoline that the refinery has produced over the entire averaging 
period must result in a net NOX benefit (compared to the 
statutory baseline) that is at least twice as large as the total 
NOX deficit generated during the period of time during which 
the refinery produced gasoline that did not comply with the statutory 
baseline. For the purposes of this paragraph, the NOX 
deficit and the NOX benefit in tons shall be calculated in 
accordance with the following equations:

    NOX Deficit:
    [GRAPHIC] [TIFF OMITTED] TR08SE00.007
    
Where:

NOXDef = the NOX deficit in tons for the 
quarter(s) the refiner's annual average NOX performance 
exceeds the applicable NOx standard of 1461 mg/mile.
NOXad = the average volume weighted NOx emissions 
performance for the quarter(s) the refiner exceeds the applicable 
NOX standard, measured in mg/mile.
Gd = the volume of gasoline produced during the 
quarter(s) the refiner exceeds the applicable NOX 
standard, measured in gallons.

    NOX Benefit:

    [GRAPHIC] [TIFF OMITTED] TR08SE00.008
    

Where:
    NOXBen = the NOX benefit in tons during 
the quarter(s) the refiner's annual average NOX 
performance is below the applicable NOX standard of 1461 
mg/mile.
NOXab = the average volume weighted NOX 
emissions performance for the quarter(s) the refiner is below the 
applicable NOX standard, measured in mg/mile.
Gb = the volume of gasoline produced during the 
quarter(s) the refiner is below the applicable NOX 
standard, measured in gallons.

    (iii) For each quarter for which the refinery produces gasoline for 
which there is a NOX deficit, the refiner shall purchase and 
bank stationary source NOx credits that are equal to or 
greater than the amount of the NOX deficit generated during 
the previous quarter, and provide written demonstration of such 
transaction to the Administrator. These NOX credits are in 
addition to any credits purchased during any previous quarters. 
NOX deficit is to be calculated on a quarterly basis in 
accordance with the equation in paragraph (k)(3)(ii) of this section. 
No NOX credits purchased by the refiner may contribute to 
the refinery's compliance with the requirements of paragraphs (k)(3)(i) 
and (k)(3)(ii). The refinery may sell NOX credits purchased 
under this paragraph once the standard in paragraph (k)(3)(i) is met 
and in an amount equal to the NOX benefit generated, as 
calculated on a quarterly basis.
    (iv) (A) The refinery shall not generate marketable credits or 
allotments under the Tier 2 gasoline program provisions of Subpart H of 
this part during the entire alternative averaging period and shall 
provide a written statement, on a quarterly basis, certifying that the 
refinery has not generated, produced, sold, or transferred any such 
marketable credits or allotments under Subpart H of this part.
    (B) If the final quarter of the alternative averaging period ends 
on a date other than December 31, then the refiner may generate credits 
for that portion of the year that was not subject to the alternative 
averaging period.
    (v) The refinery shall market any conventional gasoline it produces 
that is subject to the requirements of Sec. 80.27 as 9.0 RVP gasoline 
until the standard in paragraph (k)(3)(i) of this section is met.
    (vi) A refinery that has been granted an averaging period under 
this section must submit the following reports to the Administrator 
within 30 days of the end of each calendar quarter:
    (A) Quarterly batch reports and anti-dumping averaging reports for 
gasoline produced during each quarter; and
    (B)(1) Documents that demonstrate compliance with the requirements 
under paragraph (k)(3)(iii) and (k)(3)(iv) of this section. including a 
calculation of the NOX deficit or benefit for that quarter 
and a current total, based upon all quarters, indicating the current 
NOX deficit or NOX benefit balance for the 
refinery; and
    (2) A statement of the number of NOX credits purchased 
or sold during the quarter and a current total, based upon all 
quarters, indicating the current balance of NOX credits; and
    (3) Any contractual documents, or other documents, evidencing the 
purchasing and banking of NOX credits.
    (vii) The Administrator may specify, as part of the approved 
petition, deadlines by which a refiner is obligated to take certain 
actions (including those listed in paragraph (k)(2)(viii) of this 
section) demonstrating reasonable progress toward completion of the 
refinery changes necessary to produce gasoline that will allow the 
refinery to comply with the overall alternative averaging period 
NOX standard.
    (viii) The refiner shall submit reports demonstrating compliance 
with deadline requirements under paragraph (k)(3)(vii) of this section 
no later than 30 days after the applicable deadline occurs. Upon 
failure to meet a deadline requirement under paragraph (k)(3)(vii) of 
this section, the Administrator may accelerate the date by which the 
refiner would have to produce gasoline that complies with the annual 
average statutory baseline NOX standard under paragraph 
(k)(3)(i) of this section such that the gasoline produced by the 
refinery beginning with the quarter immediately following the quarter 
during which the failure occurred (and during each subsequent quarter) 
would have to meet that standard. The acceleration of the requirement 
under paragraph (k)(3)(i) of this section, regarding compliance with 
the annual average statutory baseline NOX standard, does not 
affect the applicability of any other standard or requirement 
applicable to the refinery under this or any other section of the Act 
(e.g., the refinery must still comply with the overall alternative 
averaging period NOX standard by producing gasoline that 
overcomplies with the annual average statutory NOX standard

[[Page 54433]]

by twice as much as the early NOX deficit generated by the 
refinery).
    (ix) The refiner shall comply with any condition or requirement 
prescribed by the Administrator as part of the petition approval.
    (x) The refinery must comply with all standards in this paragraph 
and with all applicable anti-dumping standards in Subpart E of this 
section, except the NOX standard.
    (4) Approval or disapproval of petitions. The Administrator will 
approve or disapprove the petition within six months of receipt, in 
writing, and in the case of an approval will include any conditions or 
requirements to which the approval is subject.
    (5) Effective date for alternative averaging period. (i) For an 
approved petition, the alternative averaging period shall become 
effective with the first day of the next calendar quarter, unless the 
first day of a later calendar quarter is requested.
    (ii) If the final quarter of the alternative averaging period ends 
on a date other than December 31, then the refiner must demonstrate 
compliance with anti-dumping standards for gasoline produced during the 
remainder of that year and must demonstrate such compliance via the 
annual report as specified in Sec. 80.105.
    (6) Refinery request for a change in alternative averaging period. 
At any point during the pendency of an alternative conventional 
gasoline anti-dumping compliance period the Administrator may, upon 
application by a refiner, approve a different alternative compliance 
period for a refinery already operating subject to an alternative 
compliance period. In any such case:
    (i) A refinery for which a change in the applicable alternative 
compliance period is approved shall thereafter operate as if the 
refinery had originally requested and received such alternative 
compliance period, and shall be subject to the standards and other 
requirements applicable under such alternative compliance period.
    (ii) The Administrator will approve or disapprove any application 
for a different alternative compliance period, in writing, within six 
months of receipt, and in the case of an approval will include any 
conditions or other requirements to which the approval is subject;
    (iii) Accept as specifically modified by this section, such 
refinery must continue to comply with all other standards and other 
requirements applicable under the conventional gasoline anti-dumping 
standards; and
    (iv) No application may result in an alternative compliance period 
that extends beyond January 1, 2006.
    (7) Violations under this paragraph (k). Any person who fails to 
meet a standard or other requirement under this paragraph (k) shall be 
liable for penalties under Sec. 80.5. Additionally, in the event that 
the refiner fails to achieve the required NOX benefit 
calculated under paragraph (k)(3)(ii) of this section, any 
NOX credits still banked under paragraph (k)(3)(iii) of this 
section shall be forfeit.

[FR Doc. 00-22808 Filed 9-7-00; 8:45 am]
BILLING CODE 6560-50-U