# Regulation To Mitigate the Misfueling of Vehicles and Engines With Gasoline Containing Greater Than Ten Volume Percent Ethanol and Modifications to the Reformulated and Conventional Gasoline Programs > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2010-27446 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** November 4, 2010 - **Citation:** 75 FR 68044 ## Text ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 80 [EPA-HQ-OAR-2010-0448; FRL-9215-4] RIN 2060-AQ17 Regulation To Mitigate the Misfueling of Vehicles and Engines With Gasoline Containing Greater Than Ten Volume Percent Ethanol and Modifications to the Reformulated and Conventional Gasoline Programs AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing a regulatory program to help mitigate the potential for misfueling of certain engines, vehicles and equipment with gasoline containing greater than 10 volume percent (“vol%”) ethanol up to 15 vol% ethanol (E15). This proposal is in conjunction with the Agency's partial waiver, pursuant to Clean Air Act section 211(f)(4), which allows for the introduction into commerce of gasoline-ethanol blends containing up to 15 vol% ethanol for use in model year 2007 and newer on-highway light-duty motor vehicles. The E15 waiver is limited in scope to a portion of the light-duty fleet, and the proposed misfueling mitigation program will help avoid the misfueling of all other engines, vehicles, and equipment with unapproved fuels. This proposed rule would require all E15 gasoline fuel dispensers to have a label if a retail station chooses to sell E15 and seeks comment on separate labeling requirements for fuel blender pumps and fuel pumps that dispense E85. Similar to the prohibition in section 211(f)(1), the proposed rule would prohibit the use of gasoline containing greater than 10 vol% ethanol in vehicles and engines not covered by the partial waiver for E15. In addition, the proposed rule would require product transfer documents specifying ethanol content and Reid Vapor Pressure (RVP) to accompany the transfer of gasoline blended with ethanol and a national survey of retail stations to ensure compliance with the these requirements. The proposed rule would also modify the Reformulated Gasoline (“RFG”) program by updating the Complex Model to allow fuel manufacturers to certify batches of gasoline containing up to 15 vol% ethanol. DATES: Comments must be received on or before January 3, 2011. Under the Paperwork Reduction Act, comments on the information collection provisions are best assured of full consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before December 6, 2010, thirty days after date of publication in the Federal Register . Hearing: We will hold a public hearing on November 16, 2010 at the Millennium Knickerbocker Hotel in Chicago, IL. The hearing will start at 10 a.m. local time and continue until everyone has had a chance to speak. If you want to testify at the hearing, notify the contact person listed under FOR FURTHER INFORMATION CONTACT by November 8, 2010. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2010-0448, by one of the following methods: • http://www.regulations.gov: Follow the on-line instructions for submitting comments. • E-mail: E15@epa.gov. • Fax: (202) 566-1741. • Mail: Air and Radiation Docket, Docket ID No. EPA-HQ-OAR-2010-0448, Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Please include a total of two copies. • Hand Delivery: EPA Docket Center, Public Reading Room, EPA West Building, Room 3334, 1301 Constitution Avenue, NW., 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-2010-0448. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at http://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 http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site is an “anonymous access” system, 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 http://www.regulations.gov your e-mail address will be automatically 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 homepage at http://www.epa.gov/epahome/dockets.htm. For additional instructions on submitting comments, go to “What Should I Consider as I Prepare My Comments for EPA?” in the SUPPLEMENTARY INFORMATION section of this document. Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., 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 http://www.regulations.gov or in hard copy at the Air and Radiation Docket, EPA/DC, EPA West, Room 3334, 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 Docket is (202) 566-1742. FOR FURTHER INFORMATION CONTACT: Julia MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; Telephone number: 734-214-4131; Fax number: 734-214-4816; E-mail address: macallister.julia@epa.gov, or Assessment and Standards Division Hotline; telephone number (734) 214-4636; E-mail address asdinfo@epa.gov. SUPPLEMENTARY INFORMATION: Does This Action Apply to Me? Entities potentially affected by this action include those involved with the production, importation, distribution, marketing, or retailing of diesel fuel and production of gasoline. Categories and entities affected by this action include: Category NAICS 1 codes SIC 2 codes Examples of potentially regulated entities Industry 324110 2911 Petroleum refineries. Industry 325193 2869 Ethyl alcohol manufacturing. Industry 424710 5171 Petroleum bulk stations and terminals. Industry 424720 5172 Petroleum and petroleum products merchant wholesalers. Industry 454319 5989 Other fuel dealers. Industry 447190 5541 Gasoline service stations. Marine service stations. Truck stops. This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action; however, other types of entities not listed in the table could also be affected. To determine whether your entity is affected by this action, you should examine the applicability criteria of Parts 79 and 80 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. What should I consider as I prepare my comments for EPA? A. Submitting CBI. Do not submit this information to EPA through http://www.regulations.gov or e-mail. Clearly mark the information that you claim to be CBI. For CBI information on 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 marked as CBI will not be disclosed except in accordance with procedures set forth in 40 CFR Part 2. B. Tips for Preparing Your Comments. When submitting comments, remember to: • Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number). • 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. • Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. • Describe any assumptions and provide any technical information and/or data that you used. • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. • Provide specific examples to illustrate your concerns, and suggest alternatives. • Explain your views as clearly as possible, avoiding the use of profanity or personal threats. • Make sure to submit your comments by the comment period deadline identified. C. Docket Copying Costs. You may be charged a reasonable fee for photocopying docket materials, as provided by 40 CFR Part 2. Outline of This Preamble I. Overview II. Background A. Statutory Authority B. E15 Waiver Request C. Reasons for the Proposed Actions in This Rulemaking D. Federalism Implications III. Misfueling Mitigation Measures A. Labeling Requirements 1. E15 Labels a. Information Component b. Legal Approval Component c. Technical Warning Component d. Legal Warning Component e. E15 Label Proposal 2. Additional Fuel Pump Labeling Requirements 3. Stakeholder Labeling Suggestions 4. FTC Labeling Proposal 5. Labeling Requirements and Liability for Misfueling B. Product Transfer Document Requirements 1. PTD Requirements Downstream of the Point of Ethanol Addition 2. PTD Requirements Up to and Including the Point of Ethanol Addition 3. General PTD Requirements C. Retail Fuel Dispenser Label and Fuel Ethanol Content Survey D. Program Outreach E. What Other Means of Mitigating Misfueling Were Considered? F. Cost of Compliance 1. Labeling Costs 2. PTD Costs 3. Survey Costs 4. Avoided Motor Vehicle and Nonroad Product Repair Costs G. Compliance and Enforcement 1. What are the Prohibited Acts? 2. What are the Proposed Liability and Penalty Provisions for Noncompliance? a. Presumptive Liability b. Affirmative Defenses for Liable Parties c. Penalties for Violations IV. Other Measures to Ensure Compliance A. The 1.0 psi RVP Waiver for E10 Blends 1. National RVP Survey 2. RVP and E15 Underground Storage Tank Transition B. Credit for RFG Downstream Oxygenate Blending V. Modification of the Complex Model A. Background of RFG Requirements B. The Complex Model VI. Why are we proposing misfueling mitigation measures? A. History of Ethanol Use in the U.S. B. Chemical and Physical Differences between Ethanol and Gasoline 1. Impact on the A/F Ratio—Combustion Enleanment 2. Polarity and affinity for water 3. Material Compatibility 4. Corrosion 5. Solvency 6. Volatility C. Model Year 2000 and Older Light-Duty Motor Vehicles 1. Enleanment 2. Material Compatibility 3. Motor Vehicle Population and Anticipated Emissions Impact D. Heavy-duty Gasoline Engines and Vehicles E. Motorcycles F. Nonroad Engines, Vehicles, and Equipment (Nonroad Products) 1. Introduction 2. Enleanment 3. Material Compatibility and Corrosion 4. Phase Separation and Solvency/Detergency G. Model Year 2007 and Newer Light-duty Motor Vehicles H. Model Year 2001-2006 Motor Vehicles I. Emissions Impact Summary and Conclusions VII. What is our legal authority for proposing these misfueling mitigation measures? A. Health and Welfare Concerns of Air Pollution Caused by E15 B. Impact of E15 Emission Products on Emission Control Systems C. Effect of Misfueling Mitigation Measures on the Use of Other Fuels or Fuel Additives VIII. Public Participation A. How Do I Submit Comments? B. How Should I Submit CBI to the Agency? C. Will There Be a Public Hearing? D. Comment Period E. What Should I Consider as I Prepare My Comments for EPA? IX. Administrative Requirements A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132 (Federalism) F. Executive Order 13175 G. Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations I. Overview In today's action, the U.S. Environmental Protection Agency (EPA or the Agency) is proposing regulations to mitigate the potential for misfueling of vehicles and engines with gasoline containing up to 15 vol% ethanol (E15). 1 These regulations are being proposed in conjunction with today's action by EPA granting of a partial waiver for ethanol blends up to 15 vol% ethanol under section 211(f)(4) of the Clean Air Act (CAA or the Act). This partial waiver will allow the introduction into commerce of E15 for use in 2007 model year (MY) and newer light-duty motor vehicles. In partially granting the E15 waiver, EPA imposed a number of conditions on the refiners and renewable fuel producers subject to the waiver. These conditions are designed to help ensure that E15 is introduced into commerce for use in MY2007 and newer light-duty motor vehicles and flexible-fueled vehicles, and not for use in any other vehicles or engines. Some of the regulatory provisions proposed today parallel those conditions and are expected to be a more efficient way to help ensure that the conditions of the E15 partial waiver decision are met and to minimize in-use emissions increases that might result from misfueling vehicles and engines with E15. The proposed safeguards would also promote the successful introduction of E15 into commerce. 1 For purposes of this preamble, E15 refers to gasoline-ethanol blended fuels that contain greater than 10 vol% and no more than 15 vol% ethanol content. We are proposing four requirements as part of our misfueling mitigation regulations. The first requirement, consistent with the partial waiver being granted today, is a prohibition against using E15 in MY2000 and older motor vehicles, heavy-duty gasoline engines and vehicles, on and off-highway motorcycles, 2 and nonroad engines, vehicles, and equipment. 3 This prohibition is similar in nature to the prohibition on producers of fuels and fuel additives under section 211(f)(1); however, the prohibition in section 211(f)(1) only applies to these upstream parties. The prohibitions proposed today would apply at the retail level as well as upstream. The conditions on the partial waiver and the regulations proposed today are similar in nature and have a common goal—ensuring that E15 is used in appropriate motor vehicles covered by the partial waiver, and is not used in other motor vehicles and engines. Since the Agency is deferring a decision for MY2001-2006 light-duty motor vehicles, we are not proposing a prohibition with respect to the fuel used in these motor vehicles at this time. DOE testing of MY2001-2006 light-duty motor vehicles is ongoing and EPA expects to make a waiver determination for these vehicles shortly after the results of the DOE testing are available. If EPA does not grant an E15 waiver for MY2001-2006 light-duty motor vehicles, then we would expect to include the same prohibitions for these MY motor vehicles in the final rulemaking. 2 For purposes of this preamble on and off-highway motorcycles are referred to collectively as “motorcycles.” 3 For purposes of this preamble, nonroad engines, vehicles, and equipment are referred to as “nonroad products.” Second, we are proposing labeling requirements for fuel pumps that dispense E15 to effectively inform consumers regarding the appropriate fuel to be used in vehicles and engines. Third, EPA proposes that product transfer documents (PTDs) from refiners, gasoline terminals, and oxygenate blenders specify the ethanol content or approved level of ethanol addition, of the fuel being sold to retail stations or wholesale purchaser-consumer to ensure that retail stations and wholesale purchaser-consumers know the level of ethanol content they are buying so that, in turn, the retail pumps can be properly labeled. Fourth, EPA proposes a national survey requirement on ethanol producers and the blenders of E15 ( e.g., refiners, gasoline terminals, oxygenate blenders) to ensure that retail station pumps are in fact being labeled properly. EPA is seeking comment on including an RVP component to this national E15 labeling survey to help ensure that summertime RVP requirements are being met throughout the gasoline distribution chain. To avoid confusion for consumers when pumps are not labeled, the Agency is also seeking comment on requiring the labeling of non-E15 pumps. The Agency has used such misfueling mitigation strategies to implement several fuel programs over the past thirty years, including the unleaded gasoline program, the RFG program, and the diesel sulfur program. The Agency believes that the misfueling mitigation measures proposed in this rulemaking, coupled with the E15 waiver and a substantial consumer education and outreach effort by industry, can be an effective strategy to help reduce misfueling and the associated emissions impacts while enabling the use of E15 in appropriate vehicles. The misfueling mitigation program proposed today generally mirrors the misfueling conditions in today's partial waiver decision. While the waiver provides an opportunity for a fuel or fuel additive manufacturer to meet the conditions, the Agency believes that the proposed safeguards would provide the most practical method of addressing the purposes and satisfying the conditions of today's partial waiver decision. These misfueling mitigation regulations are proposed under CAA section 211(c), based on the projected emission increases that would be avoided by deterring the use of E15 in older motor vehicles, heavy-duty gasoline engines and vehicles, motorcycles and nonroad products. Engineering judgment supported by test data, where available, forms the basis for our technical review and conclusions. Our engineering assessment described in Section VI identifies a number of emissions related concerns with the long-term use of E15 in MY2000 and older light-duty motor vehicles, heavy-duty gasoline engines and vehicles, motorcycles, and nonroad products. For motor vehicles these concerns include the potential for catalyst deterioration or catalyst failure as well as material compatibility issues that could lead to extremely elevated exhaust and evaporative emissions. For nonroad products and for motorcycles the misfueling concerns include not only the potential for elevated exhaust and evaporative emissions but also the potential for engine failure from overheating. While it is not possible to quantify precisely the frequency at which motor vehicles and nonroad products might experience these problems with the use of E15, we believe that emissions related problems could potentially occur with enough frequency that the resulting emission benefits from avoiding misfueling would outweigh the relatively low cost imposed by the proposed regulations. This would justify the proposed rule, even if a very low percentage of vehicle and engines experiences problems. As described below in Section VI and in the E15 partial waiver decision document, 4 our assessment indicates that manufacturers have designed at least MY2007 and newer light-duty motor vehicles to be durable for use on gasoline blends up to E15. This conclusion is primarily based on the recently completed catalyst durability test program conducted by the Department of Energy (DOE) wherein they tested 19 vehicle models representative of the Tier 2 motor vehicle fleet out to their full useful life. The study found that Tier 2 motor vehicles continued to meet their emissions standards after operating on E15 for full useful life mileage accumulation. Additionally, according to our analysis of the DOE test data, for Tier 2 motor vehicles we found no statistically significant increases in the emissions of regulated pollutants for motor vehicles operating on E15, and no apparent material compatibility issues, when compared to vehicles that were operated on E0. 5 These results confirm our engineering assessment that MY2007 and newer motor vehicle's emissions should be less sensitive to the increased ethanol content in E15. This engineering assessment is based on the advances in motor vehicle materials and technology in response to in-use experience with E10 and the requirement that motor vehicles comply with a series of important new EPA emission requirements over the years, e.g., enhanced evaporative emission standards and E10 durability testing, supplemental FTP emission standards, CAP2000 in-use durability requirements, and the Tier 2 motor vehicle standards themselves. 4 See Partial Grant and Partial Denial of Clean Air Act Waiver Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the Administrator elsewhere in this issue of the Federal Register. 5 See Partial Grant and Partial Denial of Clean Air Act Waiver Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the Administrator elsewhere in this issue of the Federal Register. For MY2001-2006 light-duty motor vehicles, it is currently less clear whether they could experience significant emission increases when fueled on E15 like MY2000 and older motor vehicles, or continue to function properly like the newer 2007 and newer motor vehicles. On the one hand we believe that many of the same elements for ethanol compatibility of MY2007 and newer light-duty motor vehicles also apply to MY2001-2006 light-duty motor vehicles ( e.g., enhanced evaporative emission standards, SFTP, CAP2000). On the other hand, they were not all required to demonstrate evaporative emission system durability on E10 or to upgrade their catalyst and emission control systems to the extent needed to comply with the Tier 2 standards. Furthermore, currently available test data on these model year vehicles is much more limited. DOE is in the process of developing relevant data for these model year vehicles. Specifically, DOE is conducting catalyst durability testing on six motor vehicle models certified to NLEV standards and two motor vehicles certified to Tier 1 standards scheduled to be completed in November, 2010. Additionally, a study of in-use motor vehicles by Rochester Institute of Technology on E20 6 suggests such motor vehicles may operate acceptably on E20—and by interpolation E15. However, the mileage accumulation of RIT test vehicles is limited and the study is still ongoing until November 2010. This additional information, as well as information gathered through comment on this proposal and any final decision on a section 211(f) waiver for MY2001-2006 light-duty motor vehicles, will be considered in the decisions made for the final rule. 6 The effect of E20 ethanol fuel on vehicle emissions, B Hilton and B Duddy, Center for Integrated Manufacturing Studies, Rochester Institute of Technology, June 26, 2009. See Docket ID No. EPA-HQ-OAR-2010-0448. In addition to misfueling mitigation measures, today's action also proposes slight modifications to the Reformulated Gasoline and Antidumping fuels programs to open the way for refiners and importers to produce and certify gasoline containing up to 15 vol% ethanol. To measure compliance with the RFG and anti-dumping standards, the emissions performance of gasoline is calculated using a model, called the Complex Model, which predicts the emissions of each regulated pollutant based on the measured values of certain gasoline properties. For gasoline to be sold in the U.S., it must comply with the RFG and Antidumping standards and refiners are required to certify that their fuel meets the standards by using the Complex Model. Currently, the equations in the model are limited to an oxygen content of no more than 4.0% by weight in gasoline, which is the maximum possible amount of oxygen in E10. EPA is proposing to modify the Complex Model to allow fuel manufacturers to certify batches of E15 fuel. Finally, EPA proposes to require that Reid Vapor Pressure (RVP) be identified on PTDs from fuel refineries to oxygenate blenders for conventional gasoline to ensure that EPA summertime RVP requirements are met. This is necessary because the waiver announced today is for blends that meet the summertime gasoline volatility standards for conventional gasoline. 7 In order to introduce a fuel that meets both the Federal summertime RVP standards and contains between 10 and 15 vol% ethanol, fuel refiners would have to create a fuel or blendstock that has approximately 1.0 psi lower RVP than a fuel or blendstock intended for E10 due to the interaction between gasoline volatility and ethanol when blended. Oxygenate blenders would need to know the RVP of a blendstock or have the intended ethanol content of a blendstock be specified on the PTD to ensure that they know the correct amount of ethanol that should be blended into a fuel. The Agency is not proposing to change RFG PTD requirements found at 40 CFR 80.77 since RVP is carefully controlled throughout the distribution chain in order to comply with summertime RFG VOC emissions performance standards. 7 See section IV.A. for more information on the 1.0 psi RVP waiver. II. Background A. Statutory Authority CAA section 211(f)(1) makes it unlawful for any manufacturer of any fuel or fuel additive to first introduce into commerce, or to increase the concentration in use of, any fuel or fuel additive for use in motor vehicles manufactured after model year 1974 unless it is substantially similar to any fuel or fuel additive utilized in the certification of any model year 1975, or subsequent model year, vehicle or engine under section 206 of the Act. Section 211(f)(4) of the Act provides that upon application by any fuel or fuel additive manufacturer, the Administrator may waive the prohibition of section 211(f)(1). A waiver may be granted if the Administrator determines that the applicant has established that the fuel or fuel additive, and the emission products of such fuel or fuel additive, will not cause or contribute to a failure of any emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine or nonroad vehicle in which such device or system is used) to achieve compliance with the emission standards to which the vehicle or engine has been certified. In other words, the Administrator may grant a waiver for an otherwise prohibited fuel or fuel additive if the applicant can demonstrate that the fuel or fuel additive will not cause or contribute to engines, vehicles or equipment failing to meet their emissions standards over their useful life. EPA previously issued a “substantially similar” interpretive rule for unleaded gasoline which allows oxygen content up to 2.7% by weight for certain ethers and alcohols. 8 E10 contains approximately 3.5% oxygen by weight, which means E10 is not “substantially similar” to certification fuel under the current interpretation. As explained at 44 FR 20777 (April 6, 1979), E10 received a waiver of the substantially similar prohibition by operation of law since EPA did not grant or deny a waiver request for a fuel containing 90% unleaded gasoline and 10% ethyl alcohol within 180 days of receiving that request. This waiver by operation of law was based on the then current terms of CAA section 211(f)(4), which has subsequently been amended. 8 See 56 FR 5352 (February 11, 1991). Section 211(c)(1) of the Act allows the Administrator, by regulation, to “control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of any fuel or fuel additive for use in a motor vehicle, motor vehicle engine, or nonroad engine or nonroad vehicle (A) if, in the judgment of the Administrator, any fuel or fuel additive or any emission product of such fuel or fuel additive causes, or contributes, to air pollution or water pollution (including any degradation in the quality of groundwater) that may reasonably be anticipated to endanger the public health or welfare, or (B) if emission products of such fuel or fuel additive will impair to a significant degree the performance of any emission control device or system which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it would be in general use were such regulation to be promulgated.” Today's proposed misfueling regulations are based on this authority in section 211(c)(1), as well as our recordkeeping and information collection authority under sections 208 and 114. B. E15 Waiver Request On March 6, 2009, Growth Energy and 54 ethanol manufacturers submitted an application to EPA for a waiver under section 211(f)(4) of the CAA. This application sought a waiver for ethanol-gasoline blends of up to 15 vol% ethanol. 9 On April 21, 2009, EPA published notice of the receipt of the application, and, as required by CAA section 211(f)(4) of the Act, EPA requested public comment on all aspects of the waiver application, to assist the Administrator in determining whether the statutory basis for granting the waiver request for ethanol-gasoline blends containing up to 15 vol% ethanol had been met. ( See 74 FR 18228). 9 Since E15 has greater than 2.7 wt% oxygen content, E15 needs a waiver under CAA section 211(f)(4). In a separate action today, EPA waived the prohibition in CAA section 211(f)(1) to allow introduction into commerce of E15 for use in MY2007 and newer light-duty motor vehicles, including passenger cars, light-duty trucks and medium duty passenger vehicles (hereafter light-duty motor vehicles). EPA is deferring a decision concerning MY2001-2006 light-duty motor vehicles, and has denied the waiver for all other motor vehicles. 10 EPA's partial waiver decision is based on a determination that E15 will not cause or contribute to a failure of MY2007 and newer light-duty motor vehicles to achieve compliance with the emissions standards to which they were certified under section 206 of the CAA over their useful lives. EPA is still evaluating the effect of E15 on MY2001-2006 light-duty motor vehicles to determine whether a waiver of CAA section 211(f)(1) is appropriate for use of E15 in those motor vehicles. EPA also decided that it could not make such a determination and therefore was denying the waiver for all other motor vehicles, including MY2000 and older light-duty motor vehicles. EPA requests comment and additional information regarding the use of E15 in MY 2000 and older motor vehicles. 10 See Partial Grant and Partial Denial of Clean Air Act Waiver Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the Administrator elsewhere in this issue of the Federal Register. EPA issued the partial waiver with several conditions, some of which would be fulfilled by the safeguards being proposed today. The conditions apply to the upstream parties subject to the waiver (refiners, producers of ethanol and oxygenate blenders that introduce E15 into commerce), and are designed to ensure that when E15 is introduced into commerce, it will only be used in the appropriate light-duty motor vehicles. Some of the conditions call for the ethanol blenders, fuel manufacturers, and fuel additive manufacturers (ethanol producers) to take various actions to control the distribution and use of their product so that E15 is only used in approved motor vehicles. The partial waiver imposes different conditions on the different parties. Ethanol blenders, fuel manufacturers, and ethanol producers that introduce E15 into commerce are all responsible for making sure that appropriate labeling occurs on fuel pumps to mitigate potential misfueling. However, this condition, in particular, may be difficult for these parties to satisfy given their limited control over actions taken at retail, which, as discussed below, prompted today's proposal for fuel pump labels. All three parties are also responsible for conducting fuel pump labeling surveys to ensure that pumps are properly labeled and that the correct ethanol blends are loaded into the appropriate tanks at retail stations. Ethanol blenders and fuel manufacturers must also use PTDs to properly document information regarding the ethanol blends to help ensure proper blending and distribution. In June 2010 EPA received a request from ADM to consider, within the context of the E15 waiver application, a waiver for E12 for all motor vehicles. 11 As discussed in the E15 waiver decision document, EPA concluded that there was insufficient basis to support such a waiver for motor vehicles or nonroad products beyond the MY2007 and newer model year light-duty motor vehicles for which the E15 waiver was being granted. 11 Woertz, P.A. Letter to Lisa P. Jackson. 7 June 2010. See Docket ID EPA-HQ-OAR-2009-0211. C. Reasons for the Proposed Actions in This Rulemaking The proposed rules would directly prohibit or control the distribution and use of E15. The rules would apply to parties such as retail stations that are not directly subject to the conditions on the waiver. Collectively, these provisions would mitigate misfueling and maximize the likelihood that E15 is only used in approved motor vehicles. This would also promote the successful introduction of E15 into commerce. The specific provisions are discussed in detail in Sections III-V. In this action, the Agency is proposing to use its authority to help minimize the potential for emissions increases associated with misfueling with E15. Importantly, the proposed safeguards would also assist the ethanol producers and blenders in carrying out the conditions of the waiver. EPA realizes that ethanol blenders, fuel manufacturers, and ethanol producers may have difficulty satisfying the conditions outlined in the E15 partial waiver decision, particularly the fuel pump labeling requirements. Most retail stations are independently owned and operated, which may make it difficult for the ethanol blenders, fuel manufacturers, and ethanol producers to ensure that labels are properly placed on fuel pumps dispensing E15. Under CAA section 211(f)(4), EPA is limited in what kind of conditions it can place on a waiver decision and on whom those conditions may be placed. For example, EPA placed the partial waiver conditions on the ethanol blenders, fuel manufacturers, and ethanol producers, the parties subject to the prohibition in section 211(f)(1), and not on the retail stations. This makes it difficult to ensure effective or complete pump labeling and misfueling mitigation. Without Agency action that requires the provisions proposed in today's rulemaking ( i.e. fuel pump labeling, PTDs, and a national survey), the conditions contained in the E15 partial waiver decision would likely make the distribution of E15 impracticable. However, under CAA section 211(c), EPA has the authority to adopt appropriate controls or prohibitions on the distribution and sale of fuels and fuel additives to avoid emissions increases. EPA's proposed use of this authority would also assist the ethanol blenders, fuel manufacturers, and ethanol producers in carrying out the conditions of the partial waiver so the conditions on the E15 partial waiver are properly implemented. Today's rulemaking also provides EPA with additional tools for regulatory oversight of the ethanol blenders, fuel manufacturers, and ethanol producers introducing E15 into commerce. D. Federalism Implications As mentioned in Section II.A, the proposed prohibition regarding use of E15 in MY2000 and older vehicles, heavy-duty gasoline engines and vehicles, motorcycles, and nonroad engines, vehicles, and equipment is based on the authority in section 211(c)(1) of the Act, as well as our recordkeeping and information collection authority under sections 208 and 114. Section 211(c)(4)(A) of the CAA provides that no State or political subdivision thereof may prescribe or attempt to enforce “for purposes of motor vehicle emission control” any control or prohibition “respecting any characteristic or component of a fuel or fuel additive” in a motor vehicle or motor vehicle engine if EPA has prescribed a control or prohibition applicable to such characteristic or component of the fuel or fuel additive under section 211(c)(1). This prohibition applies to all States except California, as provided in section 211(c)(4)(B). Also, section 211(c)(4)(A) applies only to controls or prohibitions respecting any characteristics or components of fuels or fuel additives for motor vehicles or motor vehicle engines, that is, highway vehicles. Therefore, a State control or prohibition would be preempted under section 211(c)(4)(A), only if it is “for the purposes of motor vehicle emission control.” Further, even if a State rule is established for purposes of motor vehicle emission control, it will not be preempted under section 211(c)(4)(A) unless it is for the same “characteristic or component of a fuel or fuel additive in a motor vehicle or motor vehicle engine” for which EPA has prescribed a control or prohibition under section 211(c)(1)(A). Today's action proposes a rule that would limit the ethanol content in fuel used in certain vehicles and engines as well as proposes misfueling mitigation measures to effectuate that limitation. The Agency is not aware of any State rules or laws that would be preempted by today's proposed rule if adopted. States have not controlled ethanol volumes in gasoline for purposes of motor vehicle emission control. Also, our rule would not require States to change their existing labels. The rule as proposed would impose no substantial direct costs, nor would it have any substantial direct effects on State or local governments. EPA requests comments on the issue of preemption of State fuel programs. Further, EPA consulted with State and local officials early in the process of developing the proposed action to permit them to have meaningful and timely input into its development. EPA met with members of the National Association of Clean Air Agencies (NACAA) to discuss the nature of today's proposed rule. Additionally, we provided State and local governments an opportunity to provide comment on the implementation of misfueling mitigation measures for a partial E15 waiver in both the RFS2 NPRM ( see 74 FR 25016) and the E15 waiver request notice ( see 74 FR 18228). We received comments from only one State on this issue in the RFS2 NPRM, and it supported efforts for properly labeling fuel pumps containing gasoline-ethanol blends. III. Misfueling Mitigation Measures As explained above, CAA section 211(c) grants the Agency authority to control or prohibit the distribution of a fuel or fuel additive when it will significantly impair emission controls or the emission products from that fuel will cause or contribute to air pollution that we reasonably anticipate may endanger public health or welfare. As more fully discussed in Section VI, we are proposing to prohibit use of E15 in MY2000 and older light-duty motor vehicles, and in all heavy-duty gasoline engines and vehicles, motorcycles and nonroad products based on the projected increased emissions that would occur from using E15 in those motor vehicles and nonroad products. We are also proposing to prohibit gasoline retail stations and wholesale purchaser-consumer facilities from selling E15 for use in these products if pumps at those locations are not properly labeled. Since the Agency is deferring a decision for MY2001-2006 light-duty motor vehicles, we are not proposing a prohibition for fuel used in these motor vehicles at this time. DOE testing of MY2001-2006 light-duty motor vehicles is ongoing and EPA expects to make a waiver determination for these vehicles shortly after the results of the DOE testing are available. If EPA does not grant an E15 waiver for MY2001-2006 light-duty motor vehicles, then we would expect to include the same prohibitions for these MY motor vehicles in the final rulemaking . 12 12 Even though we are not proposing an actual prohibition for motor vehicles MY2001-2006, it is still unlawful to use E15 in these motor vehicles until an E15 waiver is granted for these motor vehicles. EPA is proposing a misfueling mitigation strategy to effectuate those proposed prohibitions and to more generally limit the use of E15 to MY2007 and newer light-duty motor vehicles as approved today in the E15 partial waiver decision. We believe that there are four important components to an effective misfueling mitigation strategy for reducing the potential for misfueling with E15. First, effective labeling is a key factor. Labeling is needed to inform consumers of the potential impacts of using E15 in vehicles and engines not approved for its use, to mitigate the potential for intentional and unintentional misfueling of these vehicles and engines. Labeling is also done at the point of sale where the consumer most likely will be choosing which fuel to use. Second, retail stations and wholesale purchaser-consumers need assurance regarding the ethanol content of the fuel that they purchase so they can direct the fuel to the appropriate storage tank and properly label their fuel pumps. The use of proper documentation in the form of PTDs has proven to be an effective means of both ensuring that retail stations know what fuel they are purchasing and as a possible defense for retail stations in cases of liability in the event of a violation of EPA standards. Third, national labeling and fuel sampling surveys are necessary to ensure that retail stations are complying with labeling requirements, ethanol blenders are not blending more than the stated amount of ethanol on PTDs, and assuring downstream compliance for fuel refiners. The Agency has used this general strategy to implement several fuel programs over the past thirty years, including the unleaded gasoline program, the RFG program, and the diesel sulfur program. EPA solicits comments on all of these provisions as more fully described below. The fourth component of an effective misfueling mitigation strategy is effective public outreach and consumer education. Outreach to consumers and stakeholders is critical to mitigate misfueling incidents that can result in increased emissions and vehicle or engine damage. Consumers will need to be engaged through a variety of media to ensure that accurate information is conveyed to the owners and operators of vehicles and engines. The misfueling mitigation program proposed today generally mirrors the misfueling conditions in today's partial waiver decision. While the waiver provides an opportunity for a fuel or fuel additive manufacturer to meet the conditions, the Agency believes that the proposed the measures would provide the most practical method of meeting the purposes of and satisfying the conditions of today's partial waiver decision. A. Labeling Requirements Today's rule proposes to require that retailers and wholesale purchaser-consumers who choose to sell or dispense E15 must label any dispensers of this gasoline-ethanol blend. We are also seeking comment on requiring that dispensers of other gasoline-ethanol blends that contain 10 vol% ethanol or less to be labeled at such time as a retail station chooses to dispense E15 to help alleviate any confusion to consumers. Additionally, we seek comment on requiring labels for E85 pumps and blender pumps. 1. E15 Labels We are proposing requirements that gasoline pumps dispensing E15 be labeled. The label would have to indicate that the fuel contains up to 15 vol% ethanol—that is, the fuel is a gasoline-ethanol blend that contains greater than 10 vol% ethanol but not more than 15 vol% ethanol. Retailers and wholesale purchaser-consumers who choose to sell E15 would be required to label pumps dispensing E15, clearly indicating that the fuel should not be used in MY2000 and older motor vehicles, motorcycles, heavy-duty gasoline engines and vehicles, or any nonroad products. However, EPA also proposes that the label would be modified if the E15 waiver is extended to earlier model year vehicles and/or nonroad products. Based on the Agency's experience with fuel pump labeling for Ultra-Low Sulfur Diesel (ULSD) and Low Sulfur Diesel (LSD) ( see 40 CFR 80.570), there are four important elements to an effective label for misfueling. The Agency proposes that the language of the E15 label would have four components: (1) An information component; (2) a legal approval component; (3) a technical warning component; and (4) a legal warning component. Together, these four components highlight the critical information necessary to inform consumers about the impacts of using E15. a. Information Component The first component informs consumers of the maximum ethanol content the fuel may contain. For E15, the Agency proposes that the information component of the label should contain two aspects, both an acronym for the fuel (in this case E15) and a description of what the acronym means (in this case informing consumers that the fuel may consist of a range of ethanol up to a maximum of 15 vol% ethanol by volume). We propose that this component of the label read: This fuel contains 15% ethanol maximum We propose that this label be applied to any fuel dispenser with greater than 10% ethanol but not more than 15 vol% ethanol. Thus, in the case of any mid-grade fuel that might be blended from E10 and E15, it would also be required to have the E15 label. b. Legal Approval Component The second component of the label language would include information that informs consumers of what vehicles and engines are approved to use E15, mirroring EPA's decisions taken in the waiver context. Since EPA granted a partial waiver of E15 limiting its legal use to MY2007 and later light-duty motor vehicles, its use is only permitted in these motor vehicles. Based on the partial waiver, the Agency proposes that this portion of the label read as follows: Use only in: 2007 and newer gasoline cars 2007 and newer light-duty trucks Flex-fuel vehicles. As discussed elsewhere in today's proposal, if EPA decides to include more model years in a subsequent waiver decision based on the findings of the testing program, then the model year distinction on the label would also need to be adjusted accordingly. We anticipate this will occur before this rulemaking is finalized, and we will make that adjustment in the final rule. Therefore, the proposed language could read as follows: Use only in: 2001 and newer gasoline cars 2001 and newer light-duty trucks Flex-fuel vehicles. c. Technical Warning Component The third component of the label language would alert consumers that use of E15 in other engines, vehicles, and equipment might cause damage to these products. Our experience with past labeling provisions supports the need for both the legal and technical warning so that consumers are informed of the reason for the prohibition. As discussed more fully in Section VI, it appears that use of E15 in these particular products may not only lead to increased emissions but also has the potential, even if limited in nature, to lead to damage of motor vehicle and nonroad product components. Without this component to the label, consumers may more likely be tempted to misfuel—particularly if the price in the marketplace for E15 is lower than E10. Therefore, EPA proposes the following language: “This fuel might damage other vehicles or engines.” d. Legal Warning Component The fourth component of the label would inform consumers that using E15 in a vehicle or engine not approved for E15 use violates Federal law. This is similar to the approach used to mitigate the use of LSD in 2007 and newer on-highway diesel engines. Based on that experience, EPA believes that explicitly notifying consumers that E15 is prohibited by Federal law for use in MY2000 and older motor vehicles, heavy-duty gasoline engines and vehicles, on and off-highway motorcycles, and all nonroad products will result in consumers being less likely to misfuel. Based on the language currently used on the LSD label ( see 40 CFR 80.570), the Agency proposes that the label read as follows: “Federal law prohibits its use in other vehicles and engines.” The Agency has traditionally had “WARNING” language appear before the legal warning component to better draw consumers' attention to the prohibition of using a fuel in certain vehicles and engines ( e.g. LSD in 2007 and newer highway diesel vehicles). After consultation with stakeholders, it was suggested that the Agency should both change “WARNING” to “CAUTION!” and place this language at the top of the label. This would draw consumer attention to the label and help mitigate both intentional and unintentional misfueling. Therefore, we propose to have the word “CAUTION!” appear at the top of the label before the information component. The Agency also considered the use of the word “ATTENTION” instead of “WARNING” or “CAUTION.” We specifically seek comment on using the term “CAUTION!” versus “WARNING” or “ATTENTION”. In addition, the Agency is also interested in whether using “STOP”, with or without including a depiction of a stop sign, would be an appropriate way to draw consumers' attention to the label. We seek comment on whether there are other words that would better convey the message to consumers. e. E15 Label Proposal Taken together, the Agency proposes the following E15 label: EP04NO10.000 EPA seeks comment on all aspects of the label language. For example, we seek comment on whether any additional label language should be required or whether any language should be removed. In particular, we seek comment on ways to portray the information in ways that are the most concise and meaningful to consumers. EPA proposes that the pump labels for E15 be required to be placed on pumps that will dispense E15 prior to any commercial sale of E15. One issue that arose from the labeling provisions of the diesel sulfur program was that the diesel sulfur labeling provisions were written in a way that allowed flexibility in color and design, causing retailers difficulty with coming up with a suitable design that satisfied EPA labeling requirements at the least possible cost. To help address this issue, stakeholders met with EPA to discuss standardized label designs that would both satisfy EPA diesel sulfur requirements and make it easier for retail stations to procure labels. Labeling templates were designed and made available to retail stations to use. Based on this experience, we are proposing more explicit specifications for the E15 label, covering not only the content, but also the appearance of the E15 pump label. In today's rulemaking, we are proposing similar appearance and placement requirements for the E15 labels that were required for the diesel sulfur program labels. We propose that the titles of the labels ( e.g., E15) must be 24-point, white, bold Arial font, the “CAUTION!” text should also be red, uppercase 16-point bold type, the text in the labels which describes the ethanol content of the fuel must be 20-point type and that all other required language in the labels must be 14-point black, Arial font. We propose that the word “prohibits” be in 14 point, black, bold, italic, Arial font. All text should be centered with the arrangement and spacing of the text consistent with the illustration. We further propose that the label be 3.625” width by 3.125” height and that the background for the area which includes “CAUTION!”, the title ( i.e. “E15”), and the ethanol content ( i.e., “15% Ethanol Maximum) shall be 1-inch wide and neon-orange in color, except that a rectangular white background large enough to encompass “CAUTION!” shall be superimposed on this neon-orange background. While we believe it is important to propose these specific label appearance requirements to aid in consumer recognition and avoid unnecessary burden on retailers in developing their own designs, we also recognize that there is a great deal of variation in the design of fuel pumps and dispensers throughout the nation. Consequently, we not only seek comment on all visual aspects of our proposed label, but also suggest that if changes are deemed necessary, regulated and other interested parties work together to provide us with a consensus recommendation in their comments, if possible. In addition to content and appearance, the placement of the label on the pump is also of concern given the limited space available on the fuel pump itself. In the diesel sulfur program we required that labels must be placed on the vertical surface of each pump housing and on each side that has gallon and price meters and that labels be on the upper two-thirds of the pump in a location where they are clearly visible ( see 40 CFR 80.570(d)). We propose the same placement requirements for the E15 labels. However, since most States require labels for gasoline blended with ethanol and the Federal Trade Commission (FTC) requires labels specifying minimum octane levels across grades of gasoline, the addition of the proposed E15 label may impact placement of other labels required by State or Federal law. Furthermore, FTC has proposed a mid-level ethanol gasoline-blend label (described below) in addition to its octane label which may further confuse consumers and make E15 label placement difficult. The Agency seeks comment on the proposed placement of the E15 label in order to most effectively mitigate misfueling, while at the same time avoid interference with other labels on the pumps. 2. Additional Fuel Pump Labeling Requirements In addition to the E15 label proposed above, the Agency is seeking comment on three additional fuel pump labels that would provide consistent labeling across all gasoline fuel pumps. First, the Agency seeks comment on requiring a label on gasoline dispensing fuel pumps that are dispensing fuels which contain ethanol in concentrations up to 10 vol% (“E10 label”). 13 We further seek comment on whether E10 labels should be required at a retail station only if and when E15 is made available for sale at a particular retail station. Such an E10 label would have similar appearance and location requirements to the E15 label and the required label language would follow a similar form to that of the E15 label so as to standardize labels for consumers. 13 If the fuel contains no ethanol, it could be labeled as such. The purpose of such a label would be to enhance the effectiveness of the E15 label to protect against consumer misfueling and the associated emissions impacts. Without such labels, consumers may be confused regarding whether an unlabeled pump was appropriate for their vehicle or engine, undercutting the effectiveness and confidence in the E15 label. This approach is consistent with the labeling requirements we used in the diesel sulfur program where we required the use of labels specifying which type of diesel fuel (low-sulfur diesel, ultra-low sulfur diesel, etc. ) was being dispensed from each pump dispensing diesel fuel. However, since increasing the number of labels will increase the total cost to retail stations by requiring that all gasoline dispensing fuel pumps at a station be labeled, we seek comment on the appropriateness of such a requirement. The Agency seeks comment on the following E10 label language: E10 (Contains up to 10% Ethanol) For use in all gasoline vehicles and engines. The Agency also seeks comment on requiring a label on pumps distributing E85 fuel. E85 is fuel that contains up to 85 vol% ethanol and at least 15 vol% gasoline, used by flex fuel vehicles (FFVs). 14 As we noted in the RFS2 NPRM, fuel retailers expressed concern that if E85 were priced low enough to encourage FFV owners to fuel on it more frequently, then owners of non-FFVs would also be enticed to misfuel on it ( see 74 FR 24977). This could cause the vehicles and equipment to operate very poorly, increasing emissions, as well as cause potential long-term damage and long-term emissions increases. We believe that in most cases fuel pump labels warning that the use of E85 in non-flex fuel vehicles is illegal, can damage the vehicle, and can void vehicle manufacturer warranties may be a sufficient disincentive to mitigate intentional misfueling. Non-FFVs and nonroad products were not designed for operation on E85 and may experience serious emissions increases, operability, and driveability issues, particularly with prolonged use ( e.g. accelerated catalyst deterioration, fuel system component failures, etc. ). 14 FFVs are vehicles or engines that are designed to run on gasoline or gasoline-ethanol blends up to E85. Such an E85 label would have similar appearance and location requirements to the E15 label (discussed above) and the required label language would follow a similar form to that of the E15 label. The Agency seeks comment on the following E85 label language: E85 (Contains up to 85% Ethanol) For use in flex-fuel vehicles only. WARNING Federal law prohibits use in all other vehicles and engines. May damage these vehicles and engines. We request comment on whether the proposed labeling requirements would provide sufficient warning to consumers not to refuel non-flex-fuel vehicles with E85. Additionally the Agency seeks comment on the label language for the E85 label. The Agency also seeks comment on requiring labels for so-called blender pumps. Blender pumps allow station owners to blend E85 and gasoline in their storage tanks to create intermediate gasoline-ethanol blends. This allows either station owners or potentially FFV drivers to choose which gasoline-ethanol blend they prefer, based on operating characteristics and price. During both the RFS2 and E15 waiver request comment periods, the Agency received several comments asking us to require labeling provisions for blender pumps to address misfueling. Similar to E85, consumers may misfuel their non-FFVs and engines on ethanol blends greater than 10% (greater than 15% for 2007 and newer light-duty motor vehicles) due to possible price differences between intermediate ethanol blends and gasoline. Non-FFVs and nonroad products were not designed for operation on such high levels of ethanol and may experience serious emission, operability, and driveability issues, particularly with prolonged use ( e.g. accelerated catalyst deterioration, fuel system component failures, etc. ). Such a blender pump label would have similar appearance and location requirements to the E15 label (discussed above) and the required label language would follow a similar form to that of the E15 label. The Agency seeks comment on the following two blender pump label language options. The first option's language addresses a situation where a vehicle operator can “dial” their own gasoline-ethanol blend level. E15-E85 (Contains between 15% and 85% ethanol) For use in flex-fuel vehicles. WARNING Federal law prohibits use in all other vehicles and engines. May damage these vehicles. The second option's language is to provide for a specific blend of higher than 15 vol% ethanol content within this range, in which case the station owner would replace the option 1's language with the specific value. The language for option 2 would be as follows: EXX (Contains up to XX% Ethanol) For use in flex-fuel vehicles. WARNING Federal law prohibits use in all other vehicles and engines May damage these vehicles and engines. On this label, “XX” is the exact maximum ethanol content a fuel dispensed from a particular blender pump setting is expected to dispense that is greater than 15 vol% ethanol. The blender pump labels would not need to specify blends containing between 10 and 15% ethanol because any such fuel pumps would be required to display the E15 label. However, since a blender pump may dispense several intermediate ethanol blends ( e.g. E20, E30, E40, etc. ), the label should specify a range of ethanol content from E15 through E85. Therefore, under this second option the blender pump would have multiple labels for each of the blends that the pump dispenses. 3. Stakeholder Labeling Suggestions In anticipation of this proposal, EPA met with several stakeholders to discuss the potential label language used for the E15 label language. To date, the Agency has received label language suggestions from Growth Energy. 15 AllSAFE and the American Petroleum Institute provided EPA with their public comments to the FTC labeling proposal. 16 Copies of these labeling recommendations may be viewed in the docket. 17 We have considered the suggestions in these comments for our proposal, but nevertheless seek comment on whether and if so how to modify our label proposals based on these and other suggestions. 15 Buis, T. Letter to Karl Simon. 4 April 2010. See Docket ID No. EPA-HQ-OAR-2010-0448. 16 See Docket ID No. EPA-HQ-OAR-2010-0448. 17 Federal Trade Commission, “# 335; FTC File No. R811005; 16 CFR Part 306: The Federal Trade Commission Rule For Automotive Fuel Ratings, Certification and Posting: Notice of Proposed Rulemaking and Request for Comments.” September 2010. Available at http://www.ftc.gov/os/comments/fuelratingnprm/index.shtm. 4. FTC Labeling Proposal On February 26, 2010, the Federal Trade Commission (FTC) issued a proposed rulemaking that proposes explicit requirements for gasoline-ethanol blends that contain more than 10 vol% ethanol and less than 70 vol% ethanol (“Mid-Level Ethanol blends”) ( see 75 FR 12470). Since the FTC labeling proposal did not contemplate the granting of a waiver for E15, it would have to be modified to be consistent with our recent E15 partial waiver decision. In addition, as discussed above, we believe it is important that the label contain certain components and language necessary to both inform and warn the consumer that are not fully captured in the FTC labels. Therefore, EPA is working with FTC to develop coordinated labeling requirements and seeks comment on how best to achieve this outcome. Preferably, one label would be developed that meets EPA and FTC labeling requirements, since imposing separate labeling requirements may confuse consumers and would ultimately limit the effectiveness of labeling to mitigate misfueling. Requiring two separate labels would also create issues concerning the placement of the E15 label and may impose an unnecessary burden on retail stations. Finally, we also believe that to ensure the effectiveness of all gasoline pump labels, it is important that they be of similar type and format ( i.e. those for E10, E15, E85, and blender pumps). 5. Labeling Requirements and Liability for Misfueling It is important to note that compliance with the labeling requirements specified in this rule does not protect responsible parties from liability for misfueling. Today's regulations not only impose labeling requirements but also a prohibition of the sale or offer for sale of E15 for use in unapproved engines, vehicles, and equipment ( see section III.G below). Compliance with the labeling requirement does not ensure that the responsible parties have not made prohibited sales. In addition, our regulations do not address issues of common law or contract liability between private parties. B. Product Transfer Document Requirements Product transfer documents (PTDs) are customarily generated and used in the course of business and are familiar to parties who transfer or receive blendstocks, base gasoline for oxygenate blending and oxygenated gasoline. In addition, EPA has historically put in place certain requirements for PTDs for reformulated gasoline blends and blendstocks to help ensure downstream compliance with our fuel standards. The introduction of E15 into the marketplace results in the need for additional information on the PTDs that accompany the transfer of gasoline and the base gasoline/gasoline blendstocks used for oxygenate blending, both for reformulated gasoline and conventional gasoline. The type of additional information needed is different upstream versus downstream of the point of ethanol addition. We believe that the additions discussed below to existing PTDs are necessary to minimize misfueling, to help ensure downstream compliance with our fuel standards, and thereby to support the introduction of E15. 1. PTD Requirements Downstream of the Point of Ethanol Addition Downstream of the point where ethanol blending takes place, information on the maximum ethanol concentration in the ethanol blend is needed to help ensure that fuel shipments are delivered into the appropriate storage tanks at retail and fleet fueling facilities. 18 Information on the maximum Reid Vapor Pressure (RVP) of E0, E10 and E15 blends is needed on PTDs to help ensure that the fuel is compliant with the applicable summertime RVP requirements. The RVP reported on the PTD for E10 and E15 blends could be based on the intended RVP that the manufacturer of the blendstock for oxygenate blending designed for as identified on the PTD for the blendstock. 19 Therefore, RVP testing after the addition of ethanol would not be necessary to provide the information on RVP that would be required on the PTD. 18 Currently, ethanol blending typically takes place at the terminal. Evaluations are underway which may facilitate the shipment of ethanol-gasoline blends by pipeline to terminals. Hence, although the proposed PTD requirements regarding maximum ethanol content currently would typically apply to parties downstream of the terminal, parties upstream of the terminal may need to include information on maximum ethanol concentration on product PTDs in the future. 19 This is dependent on the proper amount of ethanol being added to the blendstock, and on the product being segregated from all products with a different RVP. We are proposing that the following statements would be included on the PTDs for the various fuel blends: For E0: “E0: Contains no ethanol. The RVP does not exceed [Fill in appropriate value]” For E10: “E10: Contains between 9 and 10 volume percent ethanol The RVP does not exceed [Fill in appropriate value]” For E15: “E15: Contains up to 15 volume percent ethanol The RVP does not exceed [Fill in appropriate value]” For EXX: “EXX—Contains up to XX% ethanol. “EXX” refers to fuels blends above E15 up to and including E85 and fuel blends below 9 volume percent ethanol. The maximum potential ethanol content of the fuel would be required to be specified on the PTD in the place of “XX”. We request comment on whether additional language on E10 PTDs is needed to inform parties that a blend containing between 9 and 10 volume percent ethanol which benefits from the 1 psi RVP waiver may not be commingled with an E0 or E15 blend. 20 We request comment on whether any other additional information should be provided on the PTDs for ethanol fuel blends. 20 Such as, “Designed for the special RVP provisions for ethanol blends. Do not blend with gasoline containing less than 9 vol% ethanol or E15.” 2. PTD Requirements Up to and Including the Point of Ethanol Addition Upstream of the point where E10 and E15 blends are manufactured, information is needed on the PTDs for base gasoline or gasoline blendstock used for oxygenate blending (BOB) 21 to facilitate ethanol blender compliance with the applicable EPA summertime RVP requirements. 22 This information would need to include the maximum potential RVP of the BOB and the maximum ethanol concentration that may be added to the BOB. 21 For purposes of this discussion, the blendstock or base gasoline (BOB) is typically referring to the fungible base gasoline produced at a refinery for the specific intention of adding ethanol. The fungible gasoline produced for this purpose is subject to all of the 40 CFR parts 79 and 80 regulations applicable to gasoline. However, under 40 CFR 80.101(d)(4), a refiner with direct control of the ethanol addition to the actual gasoline produced by that refiner may consider the final fuel including the ethanol when complying with part 79 and 80 regulations. 22 See section IV of this preamble for a discussion of the RVP requirements for E15 and E10. To satisfy these needs, we are proposing that PTDs for BOBs for use in the manufacture of ethanol blends that are subject to summertime RVP controls include the maximum RVP of the BOB. We are also proposing that such PTDs in non-RFG areas indicate what ethanol concentration is suitable to be blended with the BOB. The RFG requirements found at 40 CFR 80.77 already contain requirements that PTDs indicate what oxygenate and oxygenate amount are suitable to be blended with the reformulated blendstocks for oxygenate blending (RBOBs). We are proposing that the following statements would be included on the PTDs for BOBs in non-RFG areas: “Suitable for blending with ethanol at a concentration up to 15 volume % ethanol” or, in the case of a BOB designed to take advantage of the 1psi allowance for E10 in 40 CFR 80.27(d)(2): “Designed for the special RVP provisions for ethanol blends that contain between 9 and 10 volume % ethanol” “The RVP of this blendstock/base gasoline for oxygenate blending does not exceed [Fill in appropriate value]” As we are proposing and seeking comment on blendstock commingling prohibitions in addition to those already in place for RFG ( see section III.D.) we also request comment on whether additional information is needed on the PTDs for BOBs to help ensure that these blending restrictions are observed. We request comment on whether the following language should be added to the PTD for a BOB designed to take advantage of the 1psi allowance for E10 in order to help prevent downstream violations of the RVP standards: “The use of this gasoline to manufacture a gasoline-ethanol blend with less than 9 vol% ethanol or E15 may cause an RVP violation.” We request comment on whether any additional information should be provided on the PTDs for BOBs. 3. General PTD Requirements We are proposing that on each occasion when any person transfers custody and/or ownership of any gasoline or base gasoline/gasoline blendstock used for oxygenate blending, the transferor would be required to provide the transferee with an appropriate PTD identifying the gasoline/blendstock/base gasoline and its characteristics (as defined below), as well as such general information as the names and addresses of the transferor and transferee, the volume of product being transferred, the location of the product on the date of transfer, and specific information described in this preamble. We are proposing that all parties would be required to retain PTDs for a period of not less than five years and would be required to provide them to EPA upon request. Five years is the normal record retention requirement for 40 CFR part 80 fuels programs, such as the reformulated gasoline (RFG) program. We are proposing that PTDs would be required to be used by all parties in the distribution chain down to the point where the product is sold, dispensed, or otherwise made available to the ultimate consumer. We are proposing that product codes could be used to convey the information required as long as the codes are clearly understood by each transferee. However, we believe that product codes alone would not be sufficient for transfers to truck carriers, retailers, or wholesale-purchaser consumers. Hence, we are proposing that the full proposed text would need to be included on the PTD for transfers to truck carriers, retailers, or wholesale-purchaser consumers. Parties would be afforded significant freedom with regard to the form PTDs take under this proposal, although we are proposing that the PTDs would be required to travel in some manner (paper or electronically) with the volume of blendstock or fuel being transferred. The addition of the proposed information to PTDs would not require any additional testing of fuel composition. Adoption of these proposed changes would add a one-time burden to program and implement new product codes and statements, as well as a continuing small burden associated with using product codes and statements on PTDs. Given this and the fact that PTDs are used in the course of business, we believe that the proposed new PTD requirements could be readily accommodated by industry. The increased burden which would result from the adoption of these proposed PTD requirements is detailed in section IX.B. of this preamble. C. Retail Fuel Dispenser Label and Fuel Ethanol Content Survey To help mitigate the potential for misfueling, oversight of fuel retailer compliance with the proposed E15 labeling requirements and of the actual ethanol content of the dispensed fuel in comparison to the information on the label is needed. To provide adequate oversight, EPA conditioned the E15 partial waiver on a requirement that ethanol blenders, ethanol producers, ethanol importers, petroleum refiners, and petroleum importers participate in a survey of compliance at fuel retail facilities. 23 The E15 partial waiver decision specified that an EPA-approved survey plan is to be in place prior to introduction of E15 to the marketplace and that the results of the survey must be provided to EPA for use in its enforcement and compliance assurance activities. 23 See Partial Grant and Partial Denial of Clean Air Act Waiver Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the Administrator elsewhere in this issue of the Federal Register. Today's notice contains our proposal on requiring a survey as part of a misfueling mitigation program. This proposal covers how the required survey should be formulated and conducted. As discussed in section III.G., we are proposing that the survey could be used to meet the periodic sampling and testing elements of a regulated party's affirmative defenses to presumptive liability in cases where instances of noncompliance with the applicable maximum ethanol content specification are discovered. Should EPA finalize the additional labeling requirements that we requested comment on in section III.A.2. of this proposal, evaluation of retailer compliance with these labeling requirements would also be included in the survey. Regardless of whether we finalize labeling provisions, testing on the ethanol content of the fuel delivered from all non-FFV dispensers would need to be included in the survey to help mitigate misfueling. The survey requirements that we are proposing are based on an existing survey of compliance with the EPA labeling requirements for retail diesel fuel dispensers, and with the maximum allowable sulfur content of the diesel fuel delivered from these dispensers under EPA's ULSD program. EPA recently codified the requirements for this diesel fuel survey in a direct final rule that became effective on July 12, 2010. 24 The reformulated gasoline (RFG) program also utilizes a compliance survey program to ensure seasonal RFG area requirements are met for predicted emissions performance based on average area fuel parameters. Based on the ULSD and RFG programs, we are proposing two options for obligated parties to satisfy the survey requirement. Survey Option 1 allows individual obligated parties to elect to individually survey gasoline and retail stations anywhere their fuel might be sold. Survey Option 2 allows obligated parties to form a consortium that contracts an independent survey association to conduct a national ethanol content and E15 labeling survey. 24 Alternative Affirmative Defense Requirements for Ultra-Low Sulfur Diesel and Gasoline Benzene Technical Amendment, 75 FR 26121, May 11, 2010. For Survey Option 1, we propose that obligated parties choosing the individual survey option must survey labels and ethanol content at retail stations wherever their gasoline may be distributed if it may be blended as E15. Prior to conducting such a survey a survey plan would have to be approved by EPA. We seek comment on all aspects related to Survey Option 1. For Survey Option 2, we propose that the survey would consist of a nationwide program of sampling and testing designed to provide oversight of all retail stations that sell gasoline. Details of the proposed survey requirements are similar to those included in the ULSD and RFG programs. We propose that the survey organization would be required to submit survey plans on an annual basis that would be applicable from January 1 through December 31. We propose that EPA would review the first survey plan within two months of its receipt. We propose that the survey organization would be required to submit subsequent survey plans to EPA for approval by November 1 of the year proceeding the calendar year in which the sampling and testing program would be implemented. The Agency also proposes that proof that the amount of money necessary has been paid to the surveyor is sent to EPA no later than December 15 of the year proceeding the calendar year in which the sampling and testing program would be implemented. For the first annual survey, we propose that proof of payment be submitted to the Agency no later than one month before the sampling and testing program would be implemented. We seek comment on the deadlines for both the survey plan and proof of payment for the survey for the first survey and on subsequent surveys. We propose that the sampling and testing program would ensure comprehensive geographic coverage nationally representative of gasoline sold at retail outlets by providing proportionate coverage of gasoline across three sampling strata. These three strata generally refer to: (1) Densely populated areas, which include Metropolitan Statistical Areas and the reformulated gasoline control areas; (2) transportation corridors, which are based on interstate highways outside the densely populated areas; 25 and (3) rural areas, which include all areas not included in the previous two strata. These areas would be subdivided into clusters, generally based on groupings of counties. The specific criteria used for selecting sampling areas for each survey plan would be subject to EPA approval. We seek comment on all aspects of the proposed elements that a survey plan should include. 25 Transportation corridors would include areas immediately adjacent to the highways themselves and a swath within several miles on each side of the highway. For any given survey, a certain length of any specific highway might be deemed appropriate as a sampling unit or cluster. Comment is specifically requested on the criteria which should be used to determine the minimum sample size for the survey. The sampling and testing program would need to both accurately estimate the proportion of retail stations that are non-compliant with E15 labeling and ethanol content requirements and provide a credible deterrent to deliberate or inadvertent violations of downstream enforcement standards. For the ULSD survey program, we require a minimum of 5,250 samples annually. For a national survey looking at all gasoline retail stations, we believe the minimum number of samples needs to be greater because there are more than three times the number of retail stations that sell gasoline compared with stations that sell diesel. We propose that the survey take a minimum of 7,500 samples spread across four quarterly surveys. We also propose a sample size equation similar to the one used to determine sample sizes for the ULSD survey program ( see equation in the proposed regulations at 80.1502(b)(4)(v)(A)). This equation bases sample size on the proportion of retail stations that are non-compliant. We seek comment on both the minimum number of samples and the method for determining samples sizes. Since initially E15 may be introduced into commerce in a limited geographical area, it may not be necessary to carry out the full survey or to carry it out nationwide. One way to potentially resolve this issue would be to limit the areas required to be surveyed to areas that are known to have E15 being distributed. Unfortunately, there are no reliable real-time data that show when E15 is first introduced into an area and it could take awhile for the proposed annual survey program to incorporate these new geographic areas. Additionally, the borders of such areas are difficult to define and constantly shift in response to market forces. This approach also undermines one of the stated purposes of the survey program, namely that the survey program helps deter either intentional or unintentional violations by increasing the likelihood of violators being randomly caught. If EPA allows only certain areas to be surveyed while excluding others, some parties may manufacturer, blend, or distribute E15 without properly identifying the fuel as E15 or properly labeling the fuel dispenser as dispensing E15. By the time the survey program caught up, motor vehicles and nonroad products not approved for E15 use may have been misfueled for a long time. On the other hand, if there were ways to properly identify areas that are distributing E15 real time, then limiting the survey to only those areas could considerably reduce the cost of compliance with the proposed survey requirements. The Agency seeks comment on ways to possibly limit surveys to only those areas that have E15 being introduced into commerce. Another option to limit survey requirements would be to require a national survey, but have a lower minimum sample size that gradually increases over time. Since the proposed approach for determining sample sizes above 7,500 discussed above is based on the proportion of retail stations that are noncompliant with ethanol content and/or E15 labeling requirements, if there is very little E15 being introduced into the marketplace, the proportion of noncompliant retail stations would be small. In this case, 7,500 samples may be substantially higher than the number of samples required by the proposed method for determining sample sizes. Since this is most likely to occur at the beginning of the survey program, the survey program could gradually increase the annual minimum sample size to reduce the burden to industry. For example, the Agency may only require a minimum of 2,000 samples the first full survey year (2012), 4,000 samples in 2013, 6,000 samples in 2014, and 7,500 samples in 2015. We seek comment on this gradual minimum sample size approach and all other issues related to determining the minimum number of samples for a national ethanol content and E15 labeling survey. We also are proposing that the independent survey association would ship fuel samples on the same day that the sample was collected and that the sample be analyzed for ethanol content within 24 hours from the time the samples were acquired. Although having such a short delivery time for fuel samples to be analyzed may increase costs, this time period is both consistent with other fuel survey programs and would allow ethanol content and E15 labeling violations found by the survey to be corrected quickly to mitigate misfueling. We seek comment on the proposed amount of time allowed for samples to be shipped for the analysis of ethanol content. For both survey options, we require that survey plans would include a methodology for determining when the survey samples will be collected, the locations of the retail outlets where the samples will be collected, the number of samples to be included in the survey, procedures that would prevent the advance notification of retail stations, and how individual retail stations will be determined for sampling. We propose that samples at retail stations be taken from all gasoline dispensers and have the samples tested for ethanol content and that retail stations be selected randomly with the probability of selection proportionate to the volume of gasoline sold at the retail outlet. We also propose that ethanol content be measured in accordance with a test method that meets the requirement of 40 CFR 80.46(g). We seek comment on these requirements for survey plans and whether any additional requirements are necessary. We also seek comment on all matters related to the national ethanol content and E15 labeling survey proposed today. D. Program Outreach Effective outreach to consumers and stakeholders is often essential to the successful implementation of environmental protection programs. To implement the RFS program, for example, EPA provides training seminars for stakeholders and manages dedicated telephone and e-mail support lines. Various industry representatives and organizations provided program information and coordination to their members and customers as well as to facilitate the introduction of new program requirements this past July. In the case of E15, outreach to consumers and stakeholders may be critical to help mitigate misfueling incidents that can result in increased emissions or vehicle or engine damage. The potential for E15 misfueling incidents exists because consumers tend to choose the lowest priced fuel, and E15 may cost less than E10 since ethanol currently tends to be less expensive than gasoline. A recent example of successful outreach to consumers and stakeholders is the coordinated work done in support of the ULSD program. ULSD was a new fuel with the possibility of consumer misfueling that could result in engine damage. With ULSD, the fuel industry trade association API took the lead in working with stakeholders to establish the Clean Diesel Fuel Alliance (CDFA), a collaboration of public and private organizations designed to ensure a smooth program transition by providing comprehensive information and technical coordination. The organizations represented in the CDFA include engine manufacturers, fuel retailers, trucking fleets, DOE and EPA. CDFA efforts to educate ULSD users include developing technical guidance and educational information, including a Web site ( http://www.clean-diesel.org ), as well as serving as a central point of contact to address ULSD-related questions. The CDFA outreach model could prove beneficial in this case. EPA anticipates that all parties that may be involved in bringing higher gasoline-ethanol blends to market would participate in a coordinated industry-led consumer education and outreach effort. In the context of this program, potential key participants include ethanol producers, fuel manufacturers, automobile, engine and equipment manufacturers, States, non-governmental organizations, parties in the fuel distribution system, EPA, DOE, and USDA. Potential education and outreach activities a public/private group could undertake include serving as a central clearinghouse for technical questions about E15 and its use, promoting best practices to educate consumers or mitigate misfueling instances, and developing educational materials and making them available to the public. Some stakeholders have also suggested that a Web site be created to inform consumers of the potential impacts of E15 on older motor vehicles, heavy-duty gasoline engines and vehicles, motorcycles, and nonroad products. Stakeholders have further suggested that, if a unique misfueling Web site is created, then EPA should require the Web site address to be displayed on the E15 label. EPA seeks comment on the appropriateness of a unique misfueling Web site and of including such a Web site address on the E15 label. E. What other means of mitigating misfueling were considered? EPA believes that the proposed misfueling mitigation approach will effectively and sufficiently mitigate misfueling based on our past experience. The Agency employed a similar and relevant misfueling mitigation program when ULSD was introduced in 2006. Retail stations and wholesale purchaser-consumers were required to have fuel dispenser labels indicating whether the diesel being dispensed was 500 ppm (low sulfur diesel or LSD) or 15 ppm (ULSD). MY2007 and newer on-highway diesel vehicles and engines were required to use ULSD and prohibited from using LSD. At the beginning of the ULSD program, we were aware of several instances where consumers, after checking the labels, had difficulty finding ULSD in some areas. Consumers were informed that misfueling would result in significant engine damage. We are not aware of any significant instances when misfueling occurred during this labeling program. This indicates that EPA outreach and information provided by the engine manufacturers, Clean Diesel Fuel Alliance, and other stakeholders, was effective in educating consumers and mitigating misfueling. Additionally, we feel that product transfer document requirements and the ULSD survey program were vital in implementing and enforcing this fuel transition. Based on the success of the ULSD program, we believe that similar requirements for E15 will be sufficient and successful. Some have argued that the ULSD program example is not applicable in this case since the MY2007 and newer on-highway diesel vehicles and engines were at risk from misfueling, whereas for E15, it is primarily older motor vehicles ( i.e. , MY2000 and older motor vehicles) that are at risk. While EPA believes that the potential for engine repair costs applies in both cases, the Agency also believes that similar misfueling mitigation measures can be effective for E15 as well. Coupled with an effective outreach and public education program, the proposed mitigation measures should deter misfueling and encourage consumers to pay close attention to the E15 labels. Some have also argued that the ULSD program is not applicable because the ULSD program focused primarily on commercial truck drivers, who may be more cognizant of fuel choices due to the potential impact on their commercial investments, than the general public. We believe that consumers are also concerned about their private vehicles, and that the potential costs associated with misfueling (discussed below in section III.F) will have just as much of an impact in informing consumer fuel choices. As long as fuel dispensers are properly labeled and consumers are adequately informed of the associated risks of misfueling nonroad products and older motor vehicles on E15, we believe the proposed misfueling mitigation program will be effective. While EPA believes that the misfueling mitigation provisions included in today's proposal will address potential misfueling concerns, we recognize that these provisions are not the only potential means for addressing misfueling concerns. EPA has received many suggestions for mitigating misfueling. For example, API conducted a scoping study, “Evaluation of Measures to Mitigate Misfueling of Mid- to High-Ethanol Blend Fuels at Fuel Dispensing Facilities,” that includes many of these suggestions. That study may be found in the docket. 26 26 American Petroleum Institute, “Evaluation of Measures to Mitigate Misfueling of Mid- to High-Ethanol Blend Fuels at Fuel Dispensing Facilities,” EPA Docket # EPA-HQ-OAR-2010-0448. One suggestion in API's study was to have full service attendants at gas stations that ensure E15 is only used in appropriate motor vehicles. While such a measure may be effective, its overall effectiveness is unknown and it would be a large burden on service stations to employ service attendants for this purpose. This option would come at an extremely large cost, and there would need to be significant training of new employees. API estimates the average annual cost per service station at $67,500 and the annual nationwide cost at $10.6 billion. Another suggestion was to have separate islands at service stations, with one for blends at E10 and below, and one for mid- and high- gasoline-ethanol blends. It was noted that this measure would also likely cause congestion at the pumps, be inconvenient for the consumer, reduce the number of pumps available for higher-demand fuels, and not prevent intentional misfueling. API estimates the cost of separate islands at $700 per station and $40 million nationwide, though they did not cost out the consumer implications. Another option discussed is a measure in which keypads or touchscreens would be made available at each pump to allow consumers to input data about their motor vehicle or simply answer “yes” or “no” to the question of whether their motor vehicle is an FFV or non-FFV. If the motor vehicle is appropriate for the fuel, then the pump would allow fueling. If existing dispensers do not already have display screens, this strategy would require retail stations to install keypads or touchscreens at an approximate cost of $5,000 for dispensers that may be retrofitted, with the cost prohibitive for dispensers that may not be retrofitted. There may also be an additional cost per station of $10,000—$20,000 to install a central controller to accept motor vehicle information. Such a strategy may cause some congestion at the pumps. Intentional misfueling would not be prevented through such measure. Also discussed in the report was a strategy in which retail stations would have a video or audio presentation play when a mid- to high- gasoline-ethanol blend pump is lifted from the dispenser. The presentation would provide information to the consumer about E10+, which motor vehicles may fuel with it, and why other motor vehicles should not. Optionally, the consumer could be required to confirm fueling with E10+ at the end of the presentation. The cost of such an alternative for those stations without display screens, is estimated to be $5,000; if the existing dispenser could not be retrofitted with a display screen, there would be additional and considerable costs incurred for replacing a dispenser. Costs for this option could be as high as $20,000 per station. API also suggested that a different colored hand warmer or a different type of nozzle grip for fuel pumps with E15+ may help alert consumers to the new type of fuel without a large burden on retail stations. Hand nozzles for E15+ would be a different color than for other gasoline types, or would have a different texture from other hand grips. To be effective, one color or one type of grip should be used for E15+ on a national basis. Consumers would know by the color and/or texture that those pumps were for E15+. Some concerns about this option are that it would not be possible to distinguish nozzles that dispense both E10 and E15, some consumers may not notice the warmer or grip, and this would not prevent intentional misfueling. However, API believes that nozzle grips with different textures would be noticeable to most consumers, even those who do not read the pump labels. Also, hand nozzle grips are easy to install and replace as needed. API has estimated the cost at $5 to $11 per nozzle with a national cost of $800,000 to $1.6 million. While many of the strategies discussed in the API study may be effective in communicating with the consumer about E15, EPA believes that the combination of pump labels, regulatory prohibition on misfueling, PTDs, a survey, and consumer outreach will adequately mitigate misfueling by consumers. The labels on the fuel pumps will notify consumers that the pump is for E15 and only certain MY motor vehicles should use that fuel. Consumer outreach will give the consumer more in-depth information, such as why older MY motor vehicles, heavy-duty gasoline engines and vehicles, motorcycles, and nonroad products should not fuel with E15 and what damage may occur from misfueling. The PTDs will help ensure that E15 is identified as such through the distribution chain, which will help prevent inadvertent mislabeling of fuel. Finally, a survey will identify where mislabeling (or no labeling) of E15 has occurred so that appropriate labels are used. Other options that have been suggested may be too expensive, difficult to implement, and/or otherwise not likely acceptable to consumers. As such, EPA does not deem it appropriate to include these options in today's proposal. We seek comment on any other measures not proposed in the rule that the regulated industries and other interested parties feel may be necessary to mitigate misfueling. We seek comment on any other cost-effective mitigation measures that may be appropriate. If EPA considers requiring any other mitigation measures that are suggested by commenters in the final rule, EPA will conduct appropriate analyses of such measures, including the impacts on small businesses, before deciding whether to include such mitigation measures in the final rule. F. Cost of Compliance The cost of compliance with the provisions being proposed today include the periodic capital costs of labeling fuel dispensers, the onetime costs of the PTD requirements, and the annual cost of the survey requirements. The cost of the proposed labeling requirements is estimated at $1.04 million per year on an annualized basis. The cost of the proposed PTD requirements is estimated at $0.56 million per year on an annualized basis. The cost of the proposed survey requirements is estimated at $2.05 million per year. The total cost of all of the proposed requirements is estimated at $3.65 million per year. These estimated costs are detailed in the following sections. As discussed in section III.F.4, we believe that these costs will be more than offset by the avoided costs of repairing engines/vehicles that could otherwise have been damaged by misfueling in the absence of the implementation of the proposed requirements. 1. Labeling Costs Our estimate of the cost of the proposed E15 fuel dispenser labeling requirement includes the cost to the fuel retailer of purchasing the label, the administrative cost to ensure that all gasoline dispensers are labeled appropriately, and the labor cost to replace fuel dispenser labels. Based on our past experience with labeling programs, the RFS2 NPRM and industry input, the cost of an E15 label is estimated to be $5.00 per label. 27 There are approximately 162,000 retail gas stations in the U.S. according to National Petroleum News. 28 The RFS2 Final RIA estimates that there is an average of 7.7 gasoline refueling positions per retail station. 29 Thus, for a retail facility that has 8 refueling positions, the total cost if all of the dispenser labels are replaced would be $40.00. A number of fuel retailers are small businesses. However, we believe that the minor cost of label replacement would not represent a significant additional burden to any fuel retailer. Specifically, making the conservative assumption that there will be the maximum number of pumps (8) even for small stations and assuming an 8 year life before labels need to be replaced, the annualized cost to a service station is $5 per year. The amount of gasoline sold at a small service station is estimated to be approximately 60,000 gallons/month. 30 Assuming an average cost of gasoline at $2.31/gal (per the EIA 2009 national average regular grade gasoline price) the annual revenue for a small service station from its gasoline sales is approximately $1.7 million. 31 Thus, the cost of the labels represents less than 0.001% of the total annual revenue of a small gas station from its gasoline sales. 32 27 RFS2 NPRM RIA page 581 (EPA-420-D-09-001; May, 2009); available at: http://www.epa.gov/otaq/renewablefuels/420d09001.pdf ). 28 National Petroleum News, “2008 marketfacts”, states that there were 161,768 gasoline retail facilities in 2008 http://www.npnweb.com. 29 RFS2 Final RIA, page 232 (EPA-420-R-10-006; February 2010); available at: http://www.epa.gov/otaq/renewablefuels/420r10006.pdf ). 30 The National Association of Convenience Stores (NACS) 2006 State of the Industry Report states that for motor fuel retail stations that sell less than 75,000 gallons of all motor fuels, the average monthly throughput is 57,778 gallons. 31 Energy Information Administration (EIA) annual national average gasoline price data http://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_a.htm. 32 See section IX.D. of this notice for additional discussion of potential impacts from today's proposal on small businesses. Although we are requesting comment on whether all gasoline fuel dispensers should be labeled, 33 today's notice only includes proposed labeling requirements for E15 fuel dispensers. Nevertheless, we are assuming all gasoline refueling positions would be relabeled for the purposes of estimating the costs of this proposal. This approach provides a conservatively high estimate of costs if only the proposed E15 labeling requirements are finalized. By multiplying the average number of gasoline refueling positions per retail facility, by the number of fuel retailers, and the cost per label, we arrived at an estimated cost of $6.23 million to replace all of the labels at gasoline refueling positions at all fuel retailers in the U.S. We assumed an 8 year label life before it needs to be replaced. Amortizing the periodic labeling costs using a 7% cost of capital, we estimate the annualized cost to comply with the proposed labeling provisions to be approximately $1.04 million per year. We request comments on these estimated costs. 33 Including E0, E10, E15, EXX, and E85 fuel dispensers. See section III.A. of this notice. 2. PTD Costs Section IX.B. of today's preamble contains a discussion of the costs of the PTD requirements proposed in today's notice. 34 There would be a one-time cost of $5.1 million to regulated parties to modify the formatting of their existing PTDs to accommodate the new information which would be required as a result of the implementation of today's proposal. After the one-time modification of PTD formatting is complete, we believe that there would be no significant additional costs associated with communicating the additional information that would be required by today's proposal to downstream parties in the distribution system (either in electronic or paper form). By amortizing the one-time reformatting costs over a period of 15 years at a 7% cost of capital, we arrive at an annualized cost of $560,000 for the proposed PTD requirements. We request comment on these estimated costs. 34 Section III.B. contains a discussion of the proposed PTD requirements. 3. Survey Costs The estimated costs of the proposed ethanol content and labeling survey are based on experience with the existing RFG and ULSD surveys and discussions with industry. The RFG survey includes all of the elements required in the proposed nationwide survey except the survey of compliance with the proposed labeling requirements. We estimate that the cost of adding the proposed survey of compliance with the proposed labeling requirements to the existing RFG survey at $50,000 per year. The cost to implement all of the proposed survey provisions for conventional gasoline is estimated at $2 million per year. Thus, the total cost of the proposed survey requirements is estimated to be $2.05 million per year. 35 We request comments on this estimate. 35 See section III.C. for a discussion of the proposed survey provisions. 4. Avoided Motor Vehicle and Nonroad Product Repair Costs We believe that proposed labeling and associated survey and PTD provisions will be an effective tool at mitigating unintentional misfueling based on our experience with other labeling provisions (such as ULSD). The resulting prevention of misfueling will not only minimize the potential emission increases that could result (as discussed in section VI.I.), but also avoid potentially costly highway motor vehicle, heavy-duty gasoline engines and vehicles, motorcycles, and nonroad product repairs that would be anticipated to far exceed the cost of the labels. For example, based on a poll of automobile repair facilities, fuel pump and catalyst replacements average $427 and $1,250, respectively. Similarly, for nonroad equipment, the cost for a fuel line repair of handheld equipment ( e.g. trimmers, chainsaws) or non-handheld equipment ( e.g. lawnmowers, generators) could cost $100-$400 (based on information received from repair facilities in Ann Arbor, Michigan and vicinity) and replacing this same equipment can range from $100 (consumer handheld) to $5,000 (commercial grade garden tractor) should the engine fail. 36 While there are no data to estimate the frequency at which these repairs or other potential complications (discussed in section VI) associated with misfueling on E15 might occur, even if these potential complications were avoided on a tiny fraction of MY2000 and older motor vehicles and nonroad products as a result of the regulations (as opposed to actions taken independently by industry in response to conditions on the partial waiver), the savings would still far exceed the costs of compliance. We request comment on this assessment. 36 While this analysis is focused on small SI engines, note that other nonroad equipment/vehicle categories can incur higher expenses due to the higher complexity of the equipment/vehicle compared to small SI engines. G. Compliance and Enforcement 1. What are the prohibited acts? There is a long-standing prohibition, under CAA section 211(f)(1), that fuel manufacturers may not introduce gasoline-ethanol blends containing greater than 10 vol% ethanol into commerce for use in non-flex-fuel vehicles. The partial waiver modifies this prohibition so that gasoline-ethanol blends containing up to 15 vol% ethanol may legally be introduced into commerce by fuel manufacturers for use in MY2007 and later light-duty motor vehicles. The waiver does not apply to any MY heavy-duty gasoline engine or vehicle, motorcycle, or nonroad product. We are proposing that all parties would be prohibited from selling, introducing into commerce or causing or allowing the sale or introduction into commerce of gasoline that has an ethanol content above 10 vol% ethanol into MY 2000 and older light-duty motor vehicles, any heavy-duty gasoline engine or vehicle, any motorcycle, and any nonroad product. We are also proposing that fuel distributors who transport or store a gasoline-ethanol blend, base gasoline or blendstock for ethanol blending would be prohibited from increasing the ethanol content to exceed the value noted on the PTD. 37 Since the Agency is deferring a decision for MY2001-2006 motor vehicles, we are not proposing a prohibition for fuel used in these motor vehicles at this time. DOE testing of MY2001-2006 light-duty motor vehicles is ongoing and EPA expects to make a waiver determination for these vehicles shortly after the results of the DOE testing are available. If EPA does not grant an E15 waiver for MY2001-2006 light-duty motor vehicles, then we would expect to include the same prohibitions for these MY motor vehicles in the final rulemaking. Even though we are not proposing an actual prohibition for motor vehicles MY2001-2006, it is still unlawful for fuel manufacturers to introduce E15 into commerce for use in these motor vehicles unless we grant an E15 waiver for these motor vehicles. 37 A violation of this prohibition could cause or contribute to vehicle misfueling downstream. In addition to this general misfueling prohibition, there are several other prohibited acts that we are proposing in conjunction with the regulatory provisions being proposed today. We are proposing that retailers and wholesale purchaser consumers would be prohibited from dispensing E15 unless they comply with the proposed dispenser labeling requirements in section III.A. of today's preamble. We are proposing that ethanol blenders would be prohibited from introducing E15 into commerce without complying with the proposed ethanol content survey requirements in section III.C. of today's preamble. In addition, there are several RVP related prohibitions that exist today that may need to be modified in light of E15. There is an existing prohibition with respect to exceeding applicable summertime RVP requirements. 38 We are proposing to prohibit the commingling of an E10 gasoline-ethanol blend with either E0 or E15 due to potential concerns about causing a violation of summertime RVP requirements unless the E10 blend had not taken advantage of the 1 psi RVP waiver. For the same reasons, prohibitions on the commingling of BOBs is necessary. Therefore we are proposing certain prohibitions against commingling conventional gasoline BOBs similar to the prohibitions for reformulated blendstocks for oxygenate blending (RBOBs) in 40 CFR 80.78 under the RFG program. Specifically, we are proposing to prohibit commingling an E10 BOB (produced to take advantage of the 1 psi RVP waiver) with an E15 BOB unless the resulting mixture is designated as an E10 BOB. We request comment on whether other modifications to these existing RVP related regulatory requirements are needed as a result of the introduction of E15. 38 See 40 CFR 80.27. 2. What are the proposed liability and penalty provisions for noncompliance? Today's proposed rule contains prohibition and liability provisions that are similar to those of the other fuels programs in 40 CFR Part 80. 39 Under the proposed regulation, regulated parties would be liable for committing certain prohibited acts, such as selling or distributing gasoline-ethanol blends with an ethanol content that exceeds the maximum for the intended end-use category of vehicles/engines, or causing/contributing to others committing prohibited acts. In addition, parties would be liable for a failure to meet certain affirmative requirements or causing others to fail to meet their affirmative requirements. All parties in the fuel distribution system would be liable for a failure to fulfill the recordkeeping and PTD requirements. 39 See section 80.5 (penalties for fuels violations); section 80.23 (liability for lead violations); section 80.28 (liability for volatility violations); section 80.30 (liability for diesel violations); section 80.79 (liability for violation of RFG prohibited acts); section 80.80 (penalties for RFG/CG violations); section 80.395 (liability for gasoline sulfur violations); section 80.405 (penalties for gasoline sulfur regulations). a. Presumptive Liability All EPA fuels programs include a presumptive liability scheme for violations of prohibited acts. Under this approach, liability is imposed on two types of parties: (1) The party in the fuel distribution system that controls the facility where the violation was found or has occurred; and (2) those parties, typically upstream in the fuel distribution system from the initially listed party (such as any distributor of the fuel), whose prohibited activities could have caused the program nonconformity to exist. 40 This presumptive liability scheme has worked well in enabling us to enforce our fuels programs since it creates comprehensive liability for essentially all the potentially responsible parties. The presumptions of liability may be rebutted by establishing an affirmative defense. 40 An additional type of liability, vicarious liability, is also imposed on branded refiners under these fuels programs. To clarify the inclusive nature of these presumptive liability schemes, today's proposed rule would explicitly include as prohibitions causing another person to commit a prohibited act and causing the presence of a non-conforming gasoline-ethanol blend (such as a blend designated as containing less than 15 vol% ethanol which actually contains a greater concentration of ethanol) to be in the distribution system. This is consistent with the provisions and implementation of other fuels programs. Today's proposed rule, therefore, provides that most parties involved in the chain of distribution would be subject to a presumption of liability for committing prohibited actions and causing violations by other parties. For example, an ethanol blender could be held presumptively liable for causing a gasoline-ethanol blend that exceeds the maximum ethanol content stated on the product's PTD to be present in the distribution system unless the blender provides an affirmative defense to demonstrate that it did not cause the exceedance. An ethanol blender could cause such an exceedance by adding too much ethanol to a blend or making an error on the PTD that they prepare. An ethanol manufacturer could be held presumptively liability for causing an exceedance of the maximum ethanol content requirements unless it could demonstrate that the ethanol it produced could not have caused the downstream violation. 41 Like other fuels regulations, a refiner also would be subject to a presumption of vicarious liability for violations by any downstream facility that displays the refiner's brand name, based on the refiner's ability to exercise control at these facilities. Carriers, however, would be liable only for violations arising from product under their control or custody and not for causing non-conforming gasoline to be in the distribution system, except where specific evidence of causation exists. A carrier might cause an exceedance of the ethanol content stated on the PTD for product in its custody by commingling products with dissimilar ethanol contents. For example, a carrier might cause the ethanol content of a product designated as E15 to exceed 15 vol% ethanol by transporting the product in a tank truck that had previously transported E85 that had not been properly drained. 41 For example, an ethanol manufacturer might cause a downstream exceedance of maximum ethanol content requirements if they did not add the required amount of denaturant. b. Affirmative Defenses for Liable Parties This proposal also includes affirmative defenses for each party that is deemed liable for a violation. Additionally, all presumptions of liability are rebuttable. The proposed defenses are similar to the defenses available to parties for violations of the RFG and diesel sulfur regulations. We believe that these defense elements set forth reasonably attainable criteria to rebut a presumption of liability. We are proposing that the affirmative defense require a party to demonstrate all of the following: (1) The party did not commit or cause the violation; (2) the party has PTDs indicating that the fuel was in compliance at its facility; and (3) except for retailers and wholesale purchaser-consumers, the party conducted a quality assurance program. For parties other than tank truck carriers, we are proposing that the quality assurance program would be required to include periodic sampling and testing of gasoline-ethanol blends for their ethanol content. For tank truck carriers, we are proposing that the quality assurance program would not need to include periodic sampling and testing of the gasoline-ethanol blend, but in lieu of sampling and testing, the carrier would be required to demonstrate evidence of an oversight program for monitoring compliance, such as appropriate guidance to drivers on compliance with applicable requirements and the periodic review of records concerning the quality of gasoline-ethanol blends and their delivery. With respect to the assessment of liability for the introduction of E15 into any engines, vehicles or equipment that are not covered by the partial waiver for use of E15, EPA would typically not hold a self-service fuel retailer liable for customer misfueling if the retailer has labeled their dispensers appropriately and did not condone or facilitate such misfueling. We are proposing that participation in the ethanol content survey could be used to meet some or all of the periodic sampling and testing elements of a regulated party's ( e.g. branded refiners, ethanol blenders, and fuel distributors) affirmative defenses to presumptive liability in cases where instances of noncompliance with the applicable maximum ethanol content specification are discovered. 42 In addition to participation in the survey, we are proposing that ethanol blenders would be required to periodically test the accuracy of their equipment/methods used to add ethanol to gasoline. We are proposing that all other regulated parties could satisfy all of the periodic sampling and testing elements of their affirmative defenses to presumptive liability by participating in the survey. 42 See section III.C. of today's notice for a discussion of the ethanol content survey and section IV for a discussion of the RVP survey. As in other fuel regulations, branded refiners would be subject to more stringent standards for establishing a defense because of the control such refiners have over branded downstream parties. Under today's rule, in addition to other presumptive liability defense elements, we are proposing that branded refiners would also be required to show that the violation was caused by an action by another person in violation of law, an action by another person in violation of a contractual agreement with the refiner, or the action of a distributor not subject to a contract with the refiner for the transportation of the gasoline. Based on experience with other fuels programs, we believe that a presumptive liability approach would increase the likelihood of identifying persons who cause violations of the prohibited acts in today's proposal. We normally do not have the information necessary to establish the cause of a violation found at a downstream facility. We believe that those persons who actually handle the fuel are in the best position to identify the cause of the violation, and that a rebuttable presumption of liability would provide an incentive for parties to be forthcoming with information regarding the cause of the violation. In addition to identifying the party that caused the violation, providing evidence to rebut a presumption of liability would serve to establish a defense for the parties that are not responsible. Presumptive liability is familiar to both the petroleum industry and EPA, and we believe that this approach would make the most efficient use of EPA's enforcement resources. For these reasons we are proposing a liability scheme based on a presumption of liability. We request comment on the proposed liability provisions. c. Penalties for Violations CAA section 211(d)(1) provides for penalties for violations of the fuels regulations. These penalty provisions subject any person that violates any requirement or prohibition of the rule to a civil penalty of up to $27,500 for every day of each such violation and the amount of economic benefit or savings resulting from the violation. Pursuant to 40 CFR 19.4, the amounts of civil penalties for these violations increased to $37,50 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2010-27446. Public record. Not legal advice.