[Federal Register Volume 71, Number 35 (Wednesday, February 22, 2006)]
[Proposed Rules]
[Pages 9070-9078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1611]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[EPA-HQ-OAR-2005-0170; FRL-8034-9]
Regulation of Fuels and Fuel Additives: Removal of Reformulated
Gasoline Oxygen Content Requirement and Revision of Commingling
Prohibition To Address Non-Oxygenated Reformulated Gasoline
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: In the Energy Policy Act of 2005 (Energy Act), Congress
removed the oxygen content requirement for reformulated gasoline (RFG)
in section 211(k) of the Clean Air Act (CAA). To be consistent with the
current CAA Section 211(k), this rule would amend the fuels regulations
at 40 CFR Part 80 to remove the oxygen content requirement for RFG.
This rule also would remove requirements which were included in the
regulations to implement and ensure compliance with the oxygen content
requirement. In addition, this rule would extend the current
prohibition against combining VOC-controlled RFG blended with ethanol
with VOC-controlled RFG blended with any other type of oxygenate from
January 1 through September 15, to also prohibit combining VOC-
controlled RFG blended with ethanol with non-oxygenated VOC-controlled
RFG during that time period, except in limited circumstances authorized
by the Act.
In the ``Rules and Regulations'' section of the Federal Register,
we are issuing these amendments to the RFG regulations as a direct
final rule without prior proposal because we view them as
noncontroversial amendments and anticipate no adverse comment. We have
explained our reasons for these amendments in the preamble to the
direct final rule. If we receive no adverse comment, we will not take
further action on this proposed rule. If we receive adverse comment, we
will withdraw the direct final fuel and it will not take effect. We
will address all public comments in a subsequent final rule based on
this proposed rule. We will not institute a second comment period on
this action. Any parties interested in commenting must do so at this
time.
DATES: Comments: Comments must be received on or before March 24, 2006.
Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by OMB on or before March 24,
2006.
Hearings: If EPA receives a request from a person wishing to speak
at a public hearing by March 9, 2006, a public hearing will be held on
March 24, 2006. If a public hearing is requested, it will be held at a
time and location to be announced in a subsequent Federal Register
notice. To request to speak at a public hearing, send a request to the
contact in FOR FURTHER INFORMATION CONTACT.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2005-0170 by one of the following methods:
1. http://www.regulations.gov. Follow the on-line instructions for
submitting comments.
2. E-mail: Group [email protected]. Attention Docket ID No.
OAR-2005-0170.
4. Mail: Air and Radiation Docket, Environmental Protection Agency,
Mailcode: 6406J, 1200 Pennsylvania Ave., NW., Washington, DC 20460.
Please include a total of two copies. In addition, please mail a copy
of your comments on the information collection provisions to the Office
of Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725 17th St. NW., Washington, DC
20503.
5. Hand Delivery: EPA Docket Center, Environmental Protection
Agency, 1301 Constitution Avenue, NW., Room B102, Mail Code 6102T,
Washington, DC 20460. Such deliveries are only accepted during the
Docket's normal hours of operation, and special arrangements should be
made for deliveries of boxed information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2005-0170. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or e-mail.
The www.regulations.gov Web site is an ``anonymous access'' systems,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through www.regulations.gov
your e-mail address will be automatically
[[Page 9071]]
captured and included as part of the comment that is placed in the
public docket and made available on the Internet. If you submit an
electronic comment, EPA recommends that you include your name and other
contact information in the body of your comment and with any disk or
CD-ROM you submit. If EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EPA may not be
able to consider your comment. Electronic files should avoid the use of
special characters, any form of encryption, and be free of any defects
or viruses. For additional information about EPA's public docket visit
the EPA Docket Center Home page at http://www.epa.gov/epahome/dockets.htm.
We are only taking comment on issues related to the removal of the
oxygen requirement for RFG and associated compliance requirements, and
the provisions regarding the combining of ethanol blended RFG with non-
oxygenated RFG and provisions for retailers regarding the combining of
ethanol blended RFG with non-ethanol blended RFG. Comments on any other
issues or provisions in the RFG regulations are beyond the scope of
this rulemaking.
Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in www.regulations.gov or in hard copy at the Air and Radiation Docket,
EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington,
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number for the
Air and Radiation Docket is (202) 566-1742.
FOR FURTHER INFORMATION CONTACT: Marilyn Bennett, Transportation and
Regional Programs Division, Office of Transportation and Air Quality
(6406J), Environmental Protection Agency, 1200 Pennsylvania Avenue,
NW., Washington, DC 20460; telephone number: (202) 343-9624; fax
number: (202) 343-2803; e-mail address: [email protected].
SUPPLEMENTARY INFORMATION: For further information, please see the
information provided in the direct final action that is located in the
``Rules and Regulations'' section of this Federal Register publication.
I. General Information
A. Does This Action Apply To Me?
Entities potentially affected by this action include those involved
with the production and importation of conventional gasoline motor
fuel. Regulated categories and entities affected by this action
include:
------------------------------------------------------------------------
NAICS codes Examples of potentially
Category a SIC codes b regulated parties
------------------------------------------------------------------------
Industry............. 324110 2911 Petroleum Refiners,
Importers.
Industry............. 422710 5171 Gasoline Marketers and
Distributors.
422720 5172
Industry............. 484220 4212 Gasoline Carriers.
484230 4213
------------------------------------------------------------------------
a North American Industry Classification System (NAICS).
b Standard Industrial Classification (SIC) system code.
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 the types of entities that EPA is now aware
could be potentially regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your entity is regulated by this action, you should carefully examine
the applicability criteria of part 80, subparts D, E and F of title 40
of the Code of Federal Regulations. If you have any question regarding
applicability of this action to a particular entity, consult the person
in the preceding FOR FURTHER INFORMATION CONTACT section above.
B. What Should I Consider as I Prepare My Comments for EPA?
1. Submitting CBI. Do not submit this information to EPA through
www.regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as
CBI and then identify electronically within the disk or CD ROM the
specific information that is claimed as CBI). In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
2. Tips for Preparing Your Comments. When submitting comments,
remember to:
1. Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).
2. Follow directions--The agency may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.
3. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
4. Describe any assumptions and provide any technical information
and/or data that you used.
5. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
6. Provide specific examples to illustrate your concerns, and
suggest alternatives.
7. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
8. Make sure to submit your comments by the comment period deadline
identified.
3. Docket Copying Costs. You may be charged a reasonable fee for
photocopying docket materials, as provided in 40 CFR part 2.
C. Outline of This Preamble
I. General Information
II. Removal of the RFG Oxygen Content Requirement
III. Combining Ethanol Blended RFG With Non-Ethanol Blended RFG
IV. Environmental Effects of This Action
V. Statutory and Executive Order Reviews
VI. Statutory Provisions and Legal Authority
[[Page 9072]]
II. Removal of the RFG Oxygen Content Requirement
Section 211(k) of the 1990 Amendments to the Clean Air Act (CAA)
required reformulated gasoline (RFG) to contain oxygen in an amount
that equals or exceeds 2.0 weight percent. CAA Section 211(k)(2)(B).
Accordingly, EPA's current regulations require RFG refiners, importers
and oxygenate blenders to meet a 2.0 or greater weight percent oxygen
content standard. 40 CFR 80.41. Recently, Congress passed legislation
which amends Section 211(k) of the CAA to remove the RFG oxygen
requirement.\1\ To be consistent with the current CAA Section 211(k),
today's proposed rule would modify the RFG regulations to remove the
oxygen standard in Sec. 80.41.\2\
---------------------------------------------------------------------------
\1\ Energy Policy Act of 2005, Pub. L. 109-58 (HR6), section
1504(a), 119 STAT 594, 1076-1077 (2005).
\2\ The RFG regulations were promulgated under authority of CAA
Section 211(c) as well as CAA Section 211(k). The regulations were
adopted under Section 211(c) primarily for the purpose of applying
the preemption provisions in section 211(c)(4). See 59 FR 7809
(February 16, 1994.)
---------------------------------------------------------------------------
Today's proposed rule would also modify several other sections of
the RFG regulations which contain provisions designed to implement and
ensure compliance with the oxygen standard. The proposed modifications
to the affected sections are listed in the following table:
---------------------------------------------------------------------------
\3\ The regulations also include oxygen minimum standards for
simple model RFG and Phase I complex Model RFG, and an oxygen
maximum standard for simple model RFG. See Sec. Sec. 80.41(a)
through (d), and (g). These standards are no longer in effect and
today's rule would not modify the regulations to remove these
standards or compliance requirements relating to these standards,
except where such requirements are included in provisions requiring
other changes in today's rule.
Sec. 80.2(ii)........................... Would remove oxygen in the
definition of
``reformulated gasoline
credit.'' With the removal
of the oxygen standard,
there would be no basis for
the generation oxygen
credits.
Sec. Sec. 80.41(e) and (f) \3\......... Would remove the per-gallon
and averaged oxygen
standard for Phase II
Complex Model RFG
Sec. 80.41(o)........................... Would remove the provisions
relating to oxygen survey
failures. With the removal
of the oxygen standard,
oxygen surveys would not
longer be needed.
Sec. 80.41(q)........................... Would remove reference to
Sec. 180.41(o). Also
would remove reference to
oxygenate blenders since
oxygenate blenders were
subject only to adjusted
standards in the case of an
oxygen survey failure and
not any other survey
failure.
Sec. 80.65 heading...................... Would remove oxygenate
blenders from the heading
since oxygenate blenders
were only responsible for
demonstrating compliance
with the oxygen standard
which would be removed.
Sec. 80.65(c)........................... Would remove requirements
relating to compliance with
the oxygen standard which
would be removed.
Sec. 80.65(d)........................... Would remove the designation
requirement relating to
oxygen content, remove the
RBOB designation categories
of ``any oxygenate'' and
``ether only,'and add a
requirement for RBOB to be
designated regarding the
type and amount of
oxygenate required to be
added.
Sec. 80.65(e)........................... Would remove the requirement
for oxygen test results to
be received prior to the
gasoline leaving the
refinery or importer
facility since there would
no longer be an oxygen per-
gallon minimum standard.
Sec. 80.65(h)........................... Would remove the requirement
for oxygenate blenders to
comply with the audit
requirements under subpart
F since they would no
longer be a requirement to
demonstrate compliance with
the oxygen standard.
Sec. 80.67(a)........................... Would remove the option to
comply with the oxygen
standard on average for
oxygenate blenders since
there no longer would be an
oxygen standard. Also would
remove provisions for
refiners and importers to
use gasoline that exceeds
the average standard for
oxygen to offset gasoline
which does not achieve the
average standard for
oxygen.
Sec. 80.67(b)........................... Would remove requirements
relating to oxygenate
blenders who meet the
oxygen standard on average
since there no longer would
be an oxygen standard.
Sec. 80.67(f)........................... Would remove requirements
relating to compliance with
the oxygen standard on
average since there no
longer would be an oxygen
standard.
Sec. 80.67(g)........................... Would remove requirements
relating to compliance
calculations for meeting
the oxygen standard on
average, since there no
longer would be an oxygen
standard. Also would remove
requirements relating to
the generation and use of
oxygen credits.
Sec. 80.67(h)........................... Would remove requirements
relating to the transfer of
oxygen credits.
Sec. 80.68(a) and (b)................... Would remove references to
oxygenate blenders since,
with the removal of the
requirement for oxygen
survey, they would no
longer be subject to survey
requirements. Also would
remove reference to oxygen
regarding consequences of a
failure to conduct a
required survey.
Sec. 80.68(c)........................... Would remove general survey
requirements relating to
oxygen surveys.
Sec. 80.73.............................. Would clarify the
applicability of this
section to oxygenate
blenders.
Sec. 80.74(c)........................... Would remove recordkeeping
requirements for oxygenate
blenders who comply with
the oxygen standard on
average, since they would
no longer be required to
demonstrate compliance with
an oxygen standard. Also
would remove reference to
``types'' of credits, since
there would now only be one
type of credit (i.e.,
benzene.)
Sec. 80.74(d)........................... Would revise this paragraph
to clarify recordkeeping
requirements for oxygenate
blenders.
Sec. 80.75 heading and paragraph (a).... Would remove reporting
requirements for oxygenate
blenders since they would
no longer be required to
demonstrate compliance with
an oxygen standard.
Sec. 80.75(f)........................... Would remove requirement for
submitting oxygen averaging
reports since there would
no longer be a requirement
to comply with the oxygen
standard.
Sec. 80.75(h)........................... Would remove credit transfer
report requirements for
oxygen credits, since
oxygen credits would no
longer be generated.
Sec. 80.75(i)........................... Would remove requirement for
oxygenate blenders to
submit a report identifying
each covered area that was
supplied with averaged RFG,
since they would no longer
be required to demonstrate
compliance with an oxygen
standard.
Sec. 80.75(l)........................... Would remove reporting
requirement for oxygenate
blenders who comply with
the oxygen standard on a
per-gallon basis, since
they would no longer be
required to demonstrate
compliance with an oxygen
standard.
Sec. 80.75(m)........................... Would remove requirement for
oxygenate blenders to
submit a report of the
audit required under Sec.
80.65(h), since oxygenate
blenders would no longer be
required to comply with the
audit requirement.
Sec. 80.75(n)........................... Would remove requirement for
oxygenate blenders to have
reports signed and
certified, since they would
no longer be required to
submit reports under this
section.
Sec. 80.76(a)........................... Would clarify registration
requirements for oxygenate
blenders.
[[Page 9073]]
Sec. 80.77(g)........................... Would remove product
transfer documentation
requirement for oxygen
content.
Sec. 80.77(i)........................... Would remove requirement for
RBOB to be identified on
product transfer documents
as suitable for blending
with ``any-oxygenate,''
``ether-only,'' since these
categories would be
removed.
Sec. 80.78(a)........................... Would remove the prohibition
against producing and
marketing RFG that does not
meet the oxygen minimum
standard since the oxygen
standard would be removed.
Also would remove
requirements to meet the
oxygen minimum standard
during transition from RBOB
to RFG in a storage tank.
(Today's rule would also
remove the provision in
Sec. 80.78(a)(1)
regarding compliance with
the maximum oxygen standard
in Sec. 80.41 for simple
model RFG. See footnote 3.)
Sec. 80.79.............................. Would remove quality
assurance requirement to
test for compliance with
the oxygen standard.
Sec. 80.81(b)........................... Would remove exemptions for
California gasoline survey
and independent analysis
requirements for oxygenate
blenders since they would
no longer be subject to
these requirements.
Sec. 80.125(a), (c) and (d)............. Would remove attest
engagement auditor
requirements for oxygenate
blenders, since they would
no longer be required to
conduct attest engagement
audits.
Sec. 80.126(b).......................... Would revise attest
engagement definition of
credit trading records to
remove reference to oxygen
credits.
Sec. 80.128(e).......................... Would remove reference to
RBOB designations of ``any-
oxygenate'' and ``ether-
only'' with regard to
refiner and importer
contracts with downstream
oxygenate blenders, since
these designations would be
removed from the
regulations.
Sec. 80.129............................. Would remove and reserve
this section which provided
for alternative attest
engagement procedures for
oxygenate blenders, since
they would no longer be
required to conduct attest
audits.
Sec. 80.130(a).......................... Would remove requirement for
a certified public
accountant or an internal
auditor certified by the
Institute of Internal
Auditors, Inc. to issue an
attest engagement report to
blenders, since they would
no longer be required to
conduct attest audits.
Would remove requirement
for blenders to provide a
copy of the auditor's
report to EPA.
Sec. 80.133(h).......................... Would remove references to
``any-oxygenate'' and
``ether-only'' RBOB under
Sec. 80.69(a)(8) since
this section would be
removed.
Sec. 80.134............................. Would remove this section
which provides attest
procedures for oxygenate
blenders since they would
no longer be required to
conduct attest audits.
Today's proposed rule would also modify the provisions for
downstream oxygenate blending in Sec. 80.69. Under the current
regulations, some refiners and importers produce or import a product
called ``reformulated gasoline blendstock for oxygenate blending,'' or
RBOB, which is gasoline that becomes RFG upon the addition of an
oxygenate. The refiner or importer of the RBOB determines the type(s)
and amount (or range of amounts) of oxygenate that must be added to the
RBOB. The RBOB is then transported to an oxygenate blender downstream
from the refiner or importer who adds the type and amount of oxygenate
designated for the RBOB by the refiner or importer. The RBOB refiner or
importer includes the designated amount of oxygenate in its emissions
performance compliance calculations for the RBOB, however, it is the
oxygenate blender who actually adds the oxygenate to the RBOB to comply
with the 2.0 weight percent oxygen standard for the RFG that is
produced by blending oxygenate into the RBOB. The regulations require
oxygenate blenders to conduct testing for oxygen content to ensure that
each batch of RFG complies with the oxygen standard. With the removal
of the oxygen standard, the current requirement for oxygenate blenders
to conduct testing to ensure compliance with the oxygen standard would
no longer be necessary. Accordingly, today's rule would modify Sec.
80.69 to remove the requirement for oxygenate blenders to test RFG for
compliance with the oxygen standard.
Although there would no longer be an oxygen content requirement, we
believe that many refiners and importers would want to continue to
include oxygenate blended downstream in their emissions performance
compliance calculations. As a result, the category of RBOB would be
retained and RBOB refiners and importers would be required to comply
with the contract and quality assurance (QA) oversight requirements in
Sec. 80.69 for any RBOB produced or imported.\4\
---------------------------------------------------------------------------
\4\ EPA is developing a rule which would allow RBOB refiners and
importers to use an alternative method of quality assurance (QA)
oversight of downstream oxygenate blenders in lieu of the contract
and QA requirements in Sec. Sec. 80.78(a)(6) and (a)(7). This
alternative method consists of a QA sampling and testing survey
program carried out by an independent surveyor pursuant to a survey
plan approved by EPA. This alternative QA method is available to
RBOB refiners and importers under enforcement discretion until the
rule is promulgated, or December 31, 2007, whichever is earlier. See
Letter to Edward H. Murphy, American Petroleum Institute, dated
December 22, 2005, from Grant Y. Nakayama, Assistant Administrator,
Office of Enforcement and Compliance Assurance, U.S. Environmental
Protection Agency.
---------------------------------------------------------------------------
Under the current regulations, RBOB refiners and importers are
required to have a contract with the downstream oxygenate blender and
conduct QA oversight testing of the oxygenate blending operation to
ensure that the proper type and amount of oxygenate is added
downstream. Section 80.69(a)(6) and (7). The regulations also provide
that, in lieu of complying with these requirements, a refiner or
importer may designate one of two generic categories of oxygenates to
be added to the RBOB, and assume for purposes of its emissions
compliance calculations that the minimum amount of oxygenate needed to
result in RFG containing 2.0 weight percent oxygen will be added
downstream. Section 80.69(a)(8). RBOB refiner or importer compliance
with the contract and oversight requirements is not required in this
situation because, as discussed above, the oxygenate blender has been
required to meet the 2.0 weight percent oxygen standard and conduct
testing designed to ensure that each batch of RFG complies with the
oxygen standard.\5\ Where an RBOB refiner or importer wishes to include
a larger amount of oxygenate in its compliance calculations (i.e, an
amount that would result in RFG containing more than 2.0 weight percent
oxygen), the refiner or importer must comply with the contract and
oversight requirements in Sec. 80.69(a)(6) and (7) to ensure that the
proper type and amount of oxygenate is added.
---------------------------------------------------------------------------
\5\ For a discussion of the downstream oxygenate blending
requirements, see the preamble to the RFG final rule at 59 FR 7770
(February 16, 1994).
---------------------------------------------------------------------------
Because oxygenate blenders would no longer be conducting testing to
ensure compliance with the oxygen standard, we believe that RBOB
refiner or importer compliance with the contract and QA oversight
requirements would be necessary for RBOB designated to be blended with
any amount of oxygenate, including an amount of oxygenate which would
result in RFG containing 2.0 weight percent (or less) oxygen. As a
result, today's rule would require RBOB refiners and importers to
comply with the contract and QA oversight requirements in Sec. 80.69
for any RBOB produced or imported. This approach is consistent with the
oversight
[[Page 9074]]
requirements in Sec. 80.101(d)(4) for refiners and importers of
conventional gasoline who wish to include oxygen added downstream from
the refinery or importer in anti-dumping emissions compliance
calculations.
Although oxygenate blenders would no longer be subject to the
oxygen standard and associated testing requirements, we believe that
the current requirements for oxygenate blenders to be registered with
EPA, to add the specific type(s) and amount (or range of amounts) of
oxygenate designated for the RBOB, and to maintain records of their
blending operation continue to be necessary in order to ensure
compliance with, and facilitate enforcement of, the emissions
performance standards for RFG produced by blending oxygenate with RBOB
downstream. As a result, these oxygenate blender requirements would be
retained.
We anticipate that the effective date for the removal of the oxygen
requirement would occur during 2006. As a result, refiners, importers
and oxygenate blenders would be subject to the oxygen standard for the
months in 2006 prior to the effective date of this rule. The current
regulations allow parties to demonstrate compliance either on a per-
gallon basis or on an annual average basis. Parties wishing to base
their compliance on the per-gallon requirements, would be able to
formulate and sell RFG without oxygen after the effective date of the
rule. EPA would interpret its regulations regarding annual averaging as
follows. Parties would be able to demonstrate compliance based on the
average oxygen content of RFG during the months prior to the effective
date for the removal of the oxygen content requirement. In addition,
any refiner, importer or oxygenate blender who is unable to meet the
annual average oxygen standard in 2006 based on the months prior to the
effective date for the removal of the oxygen content requirement would
be able to include all of the oxygenated RFG it produces or imports
during 2006 in its annual average compliance calculations.
III. Combining Ethanol Blended RFG With Non-Ethanol Blended RFG
As discussed above, Section 211(k) required RFG to contain a
minimum of 2.0 weight percent oxygen, and the current fuels regulations
reflect this requirement. Refiners, importers and oxygenate blenders
have used different oxygenates to meet this requirement. RFG that
contains ethanol must be specially blended to account for the RVP
``boost'' that ethanol provides, and the consequent possibility of
increased VOC emissions. EPA's existing regulations prohibit the
commingling of ethanol-blended RFG with RFG containing other oxygenates
because the non-ethanol RFG is typically not able to be mixed with
ethanol and still comply with the VOC performance standards. Since all
RFG is currently required to contain oxygen, the regulations do not now
contain a prohibition against combining ethanol-blended RFG with non-
oxygenated RFG. With the removal of the oxygen content requirement for
RFG, EPA expects that refiners and importers will be producing some RFG
without oxygen and some with ethanol or other oxygenates. Mixing
ethanol-blended RFG with non-oxygenated RFG has the same potential to
create an RVP ``boost'' for the non-oxygenated gasoline as mixing
ethanol-blended RFG with RFG blended with other oxygenates. This is of
particular concern regarding RFG because most refiners and importers
comply with the RFG VOC emissions performance standard on an annual
average basis calculated at the point of production or importation. All
downstream parties are prohibited from marketing RFG which does not
comply with a less stringent downstream VOC standard. However, even
though the combined gasoline may meet the downstream VOC standard,
combining ethanol-blended RFG with non-oxygenated RFG may cause some
gasoline to have VOC emissions which are higher on average than the
gasoline as produced or imported. Thus, today's rule would extend the
commingling prohibition currently in the fuels regulations to include a
prohibition against combining VOC-controlled ethanol-blended RFG with
VOC-controlled non-oxygenated RFG during the period January 1 through
September 15, with one exception, described below.
The Energy Act contains a provision which specifically addresses
the combining of ethanol-blended RFG with non-ethanol-blended RFG.\6\
This new provision allows retail outlets to sell non-ethanol-blended
RFG which has been combined with ethanol-blended RFG under certain
conditions. First, each batch of gasoline to be blended must have been
``individually certified as in compliance with subsections (h) and (k)
prior to being blended.'' Second, the retailer must notify EPA prior to
combining the gasolines and identify the exact location of the retail
outlet and specific tank in which the gasoline is to be combined.
Third, the retailer must retain, and, upon request by EPA, make
available for inspection certifications accounting for all gasoline at
the retail outlet. Fourth, retailers are prohibited from combining VOC-
controlled gasoline with non-VOC-controlled gasoline between June 1 and
September 15. Retailers are also limited with regard to the frequency
in which batches of non-ethanol-blended RFG may be combined with
ethanol-blended RFG. Retailers may combine such batches of RFG a
maximum of two periods between May 1 and September 15. Each period may
be no more than 10 consecutive calendar days. Today's rule would
implement this provision of the Energy Act.
---------------------------------------------------------------------------
\6\ Energy Policy Act of 2005, Pub. L. 109-58 (HR6), section
1513, 119 STAT 594, 1088-1090 (2005).
---------------------------------------------------------------------------
This provision will typically be used by retail stations to change
from the use of RFG containing ethanol to RFG not containing ethanol or
vice versa. (Such a change is usually referred to as a ``tank
turnover.'') Such blending can result in additional VOC emissions,
perhaps resulting in gasoline that does not comply with downstream VOC
standards. The Energy Act is unclear as to when the gasoline in the
tank where blending occurs must be in compliance with the downstream
VOC standard.
EPA has already promulgated regulations setting out a methodology
for making tank turnovers. 40 CFR 80.78(a)(10). EPA believes retailers
and wholesale purchaser-consumers should have additional flexibility
during the time that they are converting their tanks from one type of
RFG to another, while minimizing the time period during which non-
compliant gasoline is present in their tanks and being sold. Today's
changes would provide additional flexibility to the regulated parties
by interpreting the Energy Act to provide retailers and wholesale
purchaser-consumers with relief from compliance with the downstream VOC
standard during the ten-day blending period, but requiring that the
gasoline in the tank thereafter be in compliance or be deemed in
compliance with the downstream VOC standard.
To provide assurance that gasoline is in compliance with the
downstream VOC standard after the ten-day period, we propose that there
be two options available for retailers and wholesale purchaser-
consumers. Under the first option, the retailer may add both ethanol-
blended RFG and non-ethanol-blended RFG to the same tank an unlimited
number of times during the ten-day period, but must test the gasoline
in the tank at the end of the ten-day period to make sure that the RFG
is in compliance with the VOC standard. Under the second option, the
[[Page 9075]]
retailer must draw the tank down as much as practicable at the start of
the ten-day period, before RFG of another type is added to the tank,
and add only RFG of one type to the tank during the ten-day period.
That is, the retailer may not add both ethanol-blended RFG and non-
ethanol-blended RFG to the tank during the ten-day period, but may add
only one of these types of RFG. EPA believes that when retailers and
wholesale purchaser-consumers use this second option it is likely that
their gasoline will comply with the downstream VOC standard at the end
of the ten-day period, so that testing will not be necessary. We also
believe that this approach is compatible with current practices of most
retailers and wholesale purchaser-consumers, and expect that most will
find it preferable to testing at the end of the ten-day period.
The commingling provisions apply at a retail level such that each
retailer may take advantage of a maximum of two ten-day blending
periods between May 1 and September 15 of each calendar year. Thus, the
options described above would be available to each retail outlet for
each of two ten-day periods during the VOC control period. During each
ten-day period the options would be available for all tanks at that
retail outlet.
Regarding the requirement that each batch of gasoline to be blended
must have been individually certified as in compliance with subsections
(h) and (k), EPA notes that all gasoline in compliance with RFG
requirements is deemed certified under Section 211(k) pursuant to Sec.
80.40(a). Section 211(h) addresses RVP requirements for gasoline, but
EPA does not have a program to certify gasoline as in compliance with
this provision. For purposes of the commingling exception for retail
outlets which would be incorporated in the regulations at Sec.
80.78(a)(8), EPA would deem gasoline that is in compliance with the
regulatory requirements implementing Section 211(h) to be certified
under that section. Regarding the requirement that retailers retain and
make available to EPA upon request ``certifications'' accounting for
all gasoline at the retail outlet, EPA would deem this requirement
fulfilled where the retailer retains and makes available to EPA, upon
request, the product transfer documentation required under Sec. 80.77
for all gasoline at the retail outlet.
Under today's proposed rule, the provisions blended RFG would also
apply to wholesale purchaser-consumers. Like retailers, wholesale
purchaser-consumers are parties who dispense gasoline into vehicles,
and EPA interprets the Energy Act reference to retailers as applying
equally to them. As a result, wholesale purchaser-consumers would be
treated in the same manner as retailers under this rule. This is
consistent with the manner in which wholesale purchaser-consumers have
been treated in the past under the fuels regulations.
Most of the provisions of this proposed rule are necessary to
implement amendments to the Clean Air Act included in the Energy Act
that eliminate the RFG oxygen content requirement and allow limited
commingling of ethanol-blended and non-ethanol-blended RFG. The
extension of the general commingling prohibition in the fuels
regulations to cover non-oxygenated RFG, and the provisions requiring
refiners and importers to conduct oversight of downstream blenders
adding oxygen to RBOB, are necessary because of the Energy Act
amendments, but would be issued pursuant to authority of CAA Section
211(k). Both provisions would extend current programs to reflect the
presence of non-oxygenated RFG, and are designed to enhance
environmental benefits of the RFG program at reasonable cost to
regulated parties.
IV. Environmental Effects of This Action
We anticipate that little or no environmental impact would occur as
a result of today's action to remove the oxygenate requirement for RFG.
The RFG standards consist of content and emission performance
standards. Refiners and importers would have to continue to meet all
the emission performance standards for RFG whether or not the RFG
contains any oxygenate. This includes both the VOC and NOX
emission performance standards, as well as the air toxics emission
performance standards which were tightened in the mobile source air
toxics (MSAT) rule in 2001.\7\ New MSAT standards currently under
development are anticipated to achieve even greater air toxics emission
reductions.
---------------------------------------------------------------------------
\7\ 66 FR 17230 (March 29, 2001).
---------------------------------------------------------------------------
We have analyzed the potential impacts on emissions that could
result from removal of the oxygenate requirement in the context of
requests for waivers of the Federal oxygen requirement.\8\ We found
that changes in ethanol use could lead to small increases in some
emissions and small decreases in others while still meeting the RFG
performance standards. These potential impacts are associated with the
degree to which ethanol would continue to be blended into RFG after
removal of the oxygen requirement. Past analyses have projected
significant use of ethanol in RFG in California despite removal of the
oxygenate requirement.\9\ Given current gasoline prices and the
tightness in the gasoline market, the favorable economics of ethanol
blending, a continuing concern over MTBE use by refiners, the emission
performance standards still in place for RFG, and the upcoming
renewable fuels mandate,\10\ we believe that ethanol will continue to
be used in RFG after the oxygen requirement is removed, and that as
MTBE is phased out, it is likely to be replaced with ethanol to a large
degree despite the removal of the oxygenate requirement. As a result,
we believe that the removal of the oxygenate mandate would have little
or no environmental impact in the near future. We will be looking at
the long term effect of oxygenate use in the context of the rulemaking
to implement the renewable fuels mandate.
---------------------------------------------------------------------------
\8\ See e.g., California Oxygen Waiver Decision, EPA420-S-05-005
(June 2005); Analysis of and Action on New York Department of
Conservation's Request for a Waiver of the Oxygen Content
Requirement in Federal Reformulated Gasoline, EPA420-D-05-06 (June
2005).
\9\ Technical Support Document: Analysis of California's Request
for Waiver of the Reformulated Gasoline Oxygen Content Requirement
for California Covered Areas, EPA420-R-01-016 (June 2001).
\10\ Energy Policy Act of 2005, Pub. L. 109-58 (HR6), section
1501, 119 STAT 594, 1067-1076, (2005).
---------------------------------------------------------------------------
V. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to 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 entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
[[Page 9076]]
(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.
It has been determined that this proposed rule does not satisfy the
criteria stated above. As a result, this rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and is
therefore not subject to OMB review. Today's proposed rule would remove
certain requirements for all refiners, importers and oxygenate blenders
of RFG. Although small additional costs may be incurred by some
refiners and importers as a result of this rule, on balance, this rule
is expected to greatly reduce overall compliance costs for all
refiners, importers and oxygenate blenders. This rule would also
provide options for retailers to commingle certain compliant gasoline
which otherwise would be prohibited from being commingled. Although
there may be small compliance costs associated with one of these
options, we believe that the additional flexibility provided by this
option would reduce overall compliance costs for these parties.
B. Paperwork Reduction Act
The modifications to the RFG information collection requirements in
this rule have been submitted for approval to the Office of Management
and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et
seq. The modifications to the RFG information collection requirements
are not enforceable until OMB approves them.
This rule would have the effect of reducing the burdens on certain
regulated parties under the reformulated gasoline regulations. All
parties currently subject to the requirement to submit and annual
oxygen averaging report would no longer be required to submit such
report, resulting in an estimated total burden reduction of 100 hours
and $6,500 (100 parties x 1 report/yr x 1 hr/report x $65/hr).
Oxygenate blenders currently subject to the following requirements
would no longer be subject to these requirements and associated
burdens:
RFG batch reports: Total 2500 hours, $162,500(25 blenders x 100
reports/yr x 1 hr/report x $65/hr) plus $600,000 in purchased services;
RFG annual report: Total 25 hours, $1,625(25 blenders x 1 report/yr
x 1 hr/report x $65/hr);
RFG survey reports: Total 500 hours, $32,500(25 blenders x 1
report/yr x 20 hrs/report x $65/hr) plus $1,200,000 for purchased
services:
RFG attest engagement reports: Total 3000 hours, $195,000(25
blenders x 1 report/yr x 120 hrs/report x $65/hr) plus $250,000 for
purchased services.
The estimated total reduction in burdens for this rule is 6,125
hours and $398,125, plus $2,050,000 in purchased services.
Small testing costs may be associated with one of the options for
gasoline retailers to commingle compliance gasolines. However, these
testing costs are expected to be minimal and would be greatly
outweighed by the flexibility provided by the option to commingle
compliant gasolines.
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 EPA's
regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is
approved by OMB, the Agency will publish a technical amendment to 40
CFR part 9 in the Federal Register to display the OMB control number
for the approved information collection requirements contained in this
proposed rule.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (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 proposed rule on
small entities, small entity is defined as: (1) A small business as
defined by the Small Business Administration (SBA) regulations at 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 proposed rule on
small entities, EPA certifies that this action would 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.
This proposed rule would remove certain requirements for all
refiners, importers and oxygenate blenders of RFG, including small
business refiners, importers and oxygenate blenders. Specifically, this
rule would remove the burden on refiners, importers and oxygenate
blenders to comply with the RFG oxygen requirement and associated
compliance requirements. Although in certain situations some refiners
and importers, including some small refiners and importers, may be
required to conduct additional oversight of oxygenate blenders, we
believe that the relief from the burden of complying with the oxygen
requirement would more than outweigh the burden of having to conduct
any additional oversight. This rule also would provide options for
gasoline retailers, including small gasoline retailers, to commingle
certain compliant gasoline which otherwise would be prohibited from
being commingled. Although there may be small compliance costs
associated with one of these options, we believe that the additional
flexibility provided by this option would reduce overall compliance
costs for these parties. We have therefore concluded that today's
proposed rule would relieve regulatory burden for all small entities
subject to the RFG regulations. We continue to be interested in the
potential impacts of the
[[Page 9077]]
proposed rule on small entities and welcome comments on issues related
to such impacts.
D. 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, EPA
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 an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA 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 EPA 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 EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it 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 EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.
Today's proposed 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 that would result in
expenditures of $100 million or more. This proposed rule would affect
gasoline refiners, importers and oxygenate blenders by removing the
oxygen content requirement for RFG and associated compliance
requirements. This rule also would allow gasoline retailers an option
to commingle certain compliant gasoline which otherwise would be
prohibited from being commingled. As a result, this rule would have the
overall effect of reducing the burden of the RFG regulations on these
regulated parties. Therefore, the requirements of the Unfunded Mandates
Act do not apply to this action.
E. 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 proposed rule does not have federalism implications. It would
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 remove the
oxygen standard for RFG and provide gasoline retailers the option to
commingle certain compliance gasolines that otherwise would be
prohibited from being commingled. The requirements of the rule would be
enforced by the federal government at the national level. Thus,
Executive Order 13132 does not apply to this rule.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on one or more Indian tribes, on
the relationship between the Federal government and the Indian tribes,
or on the distribution of power and responsibilities between the
Federal government and Indian tribes.''
This proposed rule does not have tribal implications. It would not
have substantial direct effects on tribal governments, on the
relationship between the Federal government and Indian tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian tribes, as specified in Executive Order 13175.
This rule would apply to gasoline refiners and importers who supply
RFG, and to other parties downstream in the gasoline distribution
system. Today's action contains certain modifications to the federal
requirements for RFG, and would not impose any enforceable duties on
communities of Indian tribal governments. Thus, Executive Order 13175
does not apply to this rule.
G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks
Executive Order 13045: ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that: (1) Is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has 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.
EPA interprets Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under the Order has the potential to influence
the regulation. This proposed rule is not subject to Executive Order
13045 because it is not economically significant and does not establish
an environmental standard intended to mitigate health or safety risks.
H. Executive Order 13211: Acts That Significantly Affect Energy Supply,
Distribution, or Use
This proposed rule would not be an economically ``significant
energy action'' as defined in Executive Order 13211, ``Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use'' (66 FR 28355 (May 22, 2001)) because it would
not have a significant adverse effect on the supply, distribution, or
use of energy. This rule would eliminate the oxygen content requirement
for RFG and associated compliance requirements. This change would have
the effect of reducing burdens on suppliers of RFG, which, in turn, may
have a positive effect on gasoline supplies. RFG refiners and blenders
may continue to use oxygenates at their discretion where and
[[Page 9078]]
when it is most economical to do so. With the implementation of the
renewable fuels standard also contained in the Energy Act, the blending
of ethanol, in particular, into gasoline is expected to increase
considerably, not decrease. Therefore, despite this action to remove
the oxygenate mandate in RFG, when viewed in the context of companion
energy legislation, overall use of oxygenates is expected to increase
in the future. This rule also would allow gasoline retailers to
commingle certain compliant gasolines which otherwise would be
prohibited from being commingled. This also may have a positive effect
on gasoline supplies.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C.
272 note) directs EPA to use voluntary consensus standards in its
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 EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
This proposed rule does not establish new technical standards
within the meaning of the NTTAA. Therefore, EPA did not consider the
use of any voluntary consensus standards.
VI. Statutory Provisions and Legal Authority
The statutory authority for the actions in today's proposed rule
comes from sections 211(c), 211(k) and 301(a) of the CAA.
List of Subjects in 40 CFR Part 80
Environmental protection, Air pollution control, Fuel additives,
Gasoline, Motor vehicle pollution, Reporting and recordkeeping
requirements.
Dated: February 14, 2006.
Stephen L. Johnson,
Administrator.
[FR Doc. 06-1611 Filed 2-21-06; 8:45 am]
BILLING CODE 6560-50-P