General Procedures to Opt Out of the Reformulated Gasoline Requirements; Removal of Jefferson County, Albany and Buffalo, New York; Twenty-eight Counties in Pennsylvania; and Hancock and Waldo Counties in Maine From the Reformulated Gasoline Program

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-5528-6]

General Procedures to Opt Out of the Reformulated Gasoline

Requirements; Removal of Jefferson County, Albany and Buffalo, New

York; Twenty-eight Counties in Pennsylvania; and Hancock and Waldo

Counties in Maine From the Reformulated Gasoline Program

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: This final rule establishes the criteria and general

procedures for states to opt out of the federal reformulated gasoline

program for ozone non-attainment areas where the state had previously

voluntarily opted into the program. This action describes the petition

process a state must follow to be removed from the program, the

criteria used by EPA to approve a petition, and the transition period

before the opt-out becomes effective. This final rule also removes

Jefferson County and the Albany and Buffalo areas in New York; twenty-

eight counties in Pennsylvania; and Hancock and Waldo counties in Maine

from the list of covered areas identified in Sec. 80.70 of the

reformulated gasoline rule.

Today's action only applies to opt-out requests submitted by states

prior to December 31, 1997, unless this final rule is superseded by

another rule which pertains to new criteria and general procedures for

reformulated gasoline program opt-outs. The Agency intends to propose

and solicit comments on separate opt-out procedures for subsequent

requests to opt out of the reformulated gasoline program.

EFFECTIVE DATE: This final rule is effective August 7, 1996.

FOR FURTHER INFORMATION CONTACT: Mark Coryell, U.S. Environmental

Protection Agency Office of Air and Radiation, 401 M Street, SW

(6406J), Washington, DC 20460, (202) 233-9014. Also, contact Christine

Hawk at (202) 233-9672 or Pat Childers at (202) 233-9415.

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially regulated by this action are those which

produce, supply or distribute motor gasoline. Regulated categories and

entities include:

------------------------------------------------------------------------

Category Examples of regulated entities

------------------------------------------------------------------------

Industry............................... Petroleum refiners, motor

gasoline distributors and

retailers.

State governments...................... State departments of

environmental protection.

------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities likely to be regulated by this

action. This table lists the types of entities that EPA is now aware

could potentially be regulated by this action. Other types of entities

not listed in the table could also be regulated. To determine whether

your business is regulated by this action, you should carefully examine

the list of areas covered by the reformulated gasoline program in

Sec. 80.70 of title 40 of the Code of Federal Regulations. If you have

questions regarding the applicability of this action to a particular

entity, consult the person listed in the preceding FOR FURTHER

INFORMATION CONTACT section.

A copy of this action is available on the OAQPS Technology Transfer

Network Bulletin Board System (TTNBBS). The TTNBBS can be accessed with

a dial-in phone line and a high-speed modem (PH# 919-541-5742). The

parity of your modem should be set to none, the data bits to 8, and the

stop bits to 1. Either a 1200, 2400, 9600, 24.4K, or 48.8K baud modem

should be used. When first signing on, the user will be required to

answer some basic informational questions for registration purposes.

After completing the registration process, proceed through the

following series of menus:

(M) OMS.

(K) Rulemaking and Reporting.

(3) Fuels.

(9) Reformulated gasoline.

[[Page 35674]]

A list of ZIP files will be shown, all of which are related to the

reformulated gasoline rulemaking process. Today's action will be in the

form of a ZIP file and can be identified by the following title:

OPTOUT.ZIP. To download this file, type the instructions below and

transfer according to the appropriate software on your computer:

ownload, rotocol, xamine, ew, ist, or elp

Selection or to exit: D filename.zip

You will be given a list of transfer protocols from which you must

choose one that matches with the terminal software on your own

computer. The software should then be opened and directed to receive

the file using the same protocol. Programs and instructions for de-

archiving compressed files can be found via ystems Utilities from

the top menu, under rchivers/de-archivers. Please note that due to

differences between the software used to develop the document and the

software into which the document may be downloaded, changes in format,

page length, etc. may occur.

Extended Summary

Based upon public comments that were solicited in the Notice of

Proposed Rulemaking (60 FR 31269) published June 14, 1995, EPA has made

the following decisions that are contained in this final rule.

This final rule provides the Agency's general rules concerning

criteria and procedures for states to opt out certain non-attainment

areas from the federal reformulated gasoline (RFG) program. This action

applies to non-attainment areas where the state voluntarily opted into

the program, and subsequently decides to withdraw from the reformulated

gasoline program, an action referred to as ``opt-out.'' This rule

describes the process a state must follow to petition for removal from

the program, the criteria used by EPA to evaluate a request, and the

transition period before the opt-out becomes effective.

This final rule authorizes the EPA's Administrator to approve a

petition to opt out all or a portion of an opt-in area. The final rule

requires that the governor submit the opt-out petition, or the

governor's authorized representative. It must include specific

information on how, if at all, reformulated gasoline has been relied

upon by the state in state or local implementation plans, or revisions

to such plans, both pending or already approved.

This final rule specifies the effective date that an area will be

removed from the list of covered areas defined in Sec. 80.70 of the

reformulated gasoline rule. If reformulated gasoline was included as a

control measure in an approved State Implementation Plan (e.g. to

demonstrate attainment or maintenance), then the opt-out would not

become effective until 90 days from the effective date for Agency

approval of a revision to the state plan removing reformulated gasoline

as a control. If reformulated gasoline was relied upon in a plan

pending Agency approval, then the opt-out would become effective 90

days from the date EPA provides written notification to the state that

the petition has been approved. If the state does not have a plan or

did not rely on reformulated gasoline in a pending plan, then the

effective date is the same as for pending plans described above. The

Agency would also publish a Federal Register notice announcing the

approval of the petition and the effective date for the opt-out.

This final rule also removes Jefferson County and the Albany and

Buffalo areas in New York (a total of nine counties in New York); the

twenty-eight opt-in counties in Pennsylvania; and Hancock and Waldo

counties in Maine from the list of covered areas defined by Sec. 80.70

of the reformulated gasoline rule per the request of the States of New

York, Pennsylvania and Maine. This is based on requests from the

Governors of New York, Pennsylvania and Maine that these areas opt out

of this federal program. In a separate action signed by the EPA

Administrator on December 29, 1994, EPA stayed the application of the

reformulated gasoline regulations in these areas effective January 1,

1995 until July 1, 1995. 60 FR 2696 (January 11, 1995). EPA proposed to

extend this stay until final action was taken on the opt-out requests.

60 FR 31269 (June 14, 1995). In a separate action signed by the EPA

Administrator the Agency extended the stay on June 30, 1995. 60 FR

35488 (July 10, 1995).

The regulations adopted in today's action for processing opt-outs

from the reformulated gasoline requirements would be applicable for

opt-out petitions received or under Agency consideration beginning June

21, 1996, until December 31, 1997, unless superseded by a subsequent

rulemaking.

I. General Procedures for EPA's Processing of Future Opt-Out Requests

A. Background

The federal reformulated gasoline (RFG) program is designed to

reduce ozone levels in the largest metropolitan areas of the U.S. with

the worst ground level ozone problems by reducing vehicle emissions of

the ozone precursors, specifically volatile organic compounds (VOC),

through fuel reformulation. Reformulated gasoline also achieves a

significant reduction in air toxics. In Phase II of the program

nitrogen oxides (NOx), another precursor of ozone, are also

reduced. The 1990 Amendments to the Clean Air Act requires reformulated

gasoline in the nine largest cities with the highest levels of ozone.

In section 211(k)(6), Congress provided the opportunity for states to

opt-in to the RFG program for their other nonattainment areas.

EPA issued final rules establishing requirements for reformulated

gasoline on December 15, 1993. 59 FR 7716 (February 16, 1994). During

the development of the RFG rule a number of states inquired as to

whether they would be permitted to opt out of the RFG program at a

future date, or opt out of certain of the requirements. This was based

on their concern that the air quality benefits of RFG, given their

specific needs, might not warrant the cost of the program, specifically

focusing on the more stringent standards in Phase II of the program

(starting in the year 2000). Such states wished to retain the

flexibility to opt out of the program. Other states indicated they

viewed RFG as an interim strategy to help bring their nonattainment

areas into attainment sooner than would otherwise be the case.

The regulation issued on December 15, 1993 did not include

procedures for opting out of the RFG program because EPA had not

proposed and was not ready to adopt such procedures. However, the

Agency did indicate that it intended to propose such procedures in a

separate rule.

B. Statutory Authority

The statutory authority for this rule is granted to EPA by section

211(c) and (k) and section 301(a) of the Clean Air Act as amended, 42

U.S.C. 7545(c) and (k) and 7601(a). A discussion of EPA's statutory

authority may be found in the preamble to the proposal, at 60 FR 31271

(June 14, 1995).

C. General Rulemaking vs. Notice and Comment Rulemaking for Each Opt-

Out Request

In the NPRM, EPA proposed a general rule that would apply for all

future opt-out requests. Some industry representatives and associations

provided opposing comments. Some commenters argued that under section

307(d) of the Act, EPA must provide public notice and a comment period

for each opt-out request. They argued that EPA must conduct rulemaking

for each opt-out request to consider the

[[Page 35675]]

ramifications of each opt-out request, for example, on long-term costs

to state, local and tribal governments and private industry and

possible adverse regional air quality consequences. Other commenters,

however, preferred the Agency's proposal to develop general opt-out

procedures rather than conduct a rulemaking for each state opt-out

request.

EPA does not agree that a separate rulemaking must be conducted for

each future opt-out request. Through this rulemaking, EPA is

establishing a petition based process that will address, on a case by

case basis, future individual state requests to opt out of the federal

RFG program. The regulations establish clear and objective criteria for

EPA to apply in these future non-rulemaking, adjudication actions.

These criteria address when a state's petition is complete and the

appropriate transition time under the regulations. This application of

regulatory criteria on a case by case basis to future individual

situations does not require notice and comment rulemaking, either under

section 307(d) of the Clean Air Act or the Administrative Procedure

Act.

It is not uncommon for the Agency to establish such a petition

based process within a regulatory structure, in order to apply the

criteria established in a regulation to a wide variety of individual

cases. The reformulated gasoline regulations, for example, include a

petition process for approval of individual baseline, augmentations of

the complex model, exemptions, alternative test procedures, and the

like. EPA believes that approach is most appropriate here as well, as

it will allow for expeditious and consistent Agency action on the

individual opt-out requests presented by states.

EPA believes that the general procedures adopted here will provide

consistent opt-out decisions. This rule will also provide greater

certainty in the market than individual rulemakings could provide.

Lastly, this rule will provide quick approval for opt-out requests

while maintaining a sufficient transition period to minimize costly

market disruptions.

In certain cases, the affected parties will be able to comment on

the state action. In those states where the reformulated gasoline

program is included as a part of an approved state implementation plan

(SIP), affected parties that are concerned with the impacts of an opt-

out would have the opportunity to comment on a state's revised plan

that removes reformulated gasoline as an air control measure.

The Agency is not taking action today on the portion of the

proposed notice concerning the question whether the Agency has the

discretion under section 211(k) of the act to allow attainment areas to

opt into this federal program. EPA has received comments on this

question and is reviewing options that would permit opt-in

opportunities to be expanded. EPA anticipates announcing a policy

shortly.

D. Applicability

The regulations adopted in today's action for processing opt-outs

from the reformulated gasoline requirements would be applicable for

opt-out petitions received or under Agency consideration beginning June

21, 1996, until December 31, 1997, unless superseded by a subsequent

rulemaking.

EPA received comments that complying with the Phase II reformulated

gasoline requirements involves significantly greater capital investment

than for the Phase I requirements. The transition periods set forth in

today's rule for opting out of Phase I reformulated gasoline

requirements would be, according to the comments, grossly inadequate

for industry to recover in a reasonable time frame investment costs

associated with the Phase II. EPA recognizes these different

circumstances may call for different opt-out provisions and intends to

propose separate rules for opting out areas from the Phase II

reformulated gasoline requirements.

E. Petition Process

In the NPRM, EPA proposed that a state may petition the EPA to opt

out of the reformulated gasoline program. Under the proposal, a

petition would have to include specific information about how the

program is used in a State Implementation Plan. If a state did include

the reformulated gasoline program as a control measure in such plan or

revision submitted to EPA for approval, then the state would have to

describe if and how it intended to replace reformulated gasoline as a

control measure. In addition, the state would need to identify whether

it intended to submit a revision and, if so, when.

Several commenters raised concerns about the impacts that approved

petitions would have on air quality, especially in nonattainment areas,

since reformulated gasoline provides significant clean air benefits. A

fuels association commented that petitions should demonstrate that

there will be no unacceptable adverse air quality impacts to other

areas or other states. Industry representatives commented that

nonattainment areas should not be permitted to opt out unless the state

has binding commitments to adopt substitute measures to achieve

attainment. Another commenter cautioned that a petition should not be

approved if there is adequate showing that opting out would cause the

area to return to nonatttainment status. Regarding opportunity for

public consideration, an association remarked that the petition process

should include a formal comment period.

EPA is committed to ensuring that areas around the country attain

the National Ambient Air Quality Standards (NAAQS), including the ozone

standard. EPA recognizes, however, that under the Clean Air Act the

states play a primary role in attaining the NAAQS, including choosing

those control measures they prefer to include in its plans to attain

and maintain the NAAQS. Today's action maintains the flexibility that

states have in air quality planning by honoring their right to opt out

and substitute alternative control measures where the state considers

appropriate. EPA believes that the state should retain flexibility to

revise the SIP by selecting control measures it desires to include in

its plan as long as it makes the necessary demonstrations under the

Act.

To begin the opt-out process, this final rule requires that a

Governor, or his or her authorized representative, submit an opt-out

petition to the Administrator of the Agency. The opt-out petition must

include information describing how, if at all, reformulated gasoline

has been relied upon by the state in its State Implementation Plans,

revisions to such plans, or redesignation requests, both pending or

already approved. This would include, for example, attainment as well

as maintenance plans. The petition must also include a geographic

description of the opt-out area.

In the case where a state has included reformulated gasoline in a

pending plan submission, the petition must identify whether the state

is withdrawing the plan and what alternative air quality control

measures, if any, that the state intends to use to replace RFG. In the

case where a state intends to submit a revision to an approved plan or

to a pending SIP submission, the petition must identify this intention

as well as the alternative air quality control measures that will be

substituted for reformulated gasoline to reach or maintain compliance

with the federal ozone standard. Furthermore, the petition must include

the status of any proposed revision to an approved plan or pending SIP

submission and the projected schedule for the revised plan. In the

event a state does not intend on

[[Page 35676]]

revising an approved plan or pending SIP submission, the petition must

include a description why no revision is considered necessary. A

revision may not be considered necessary, for instance, if the proposed

opt-out area does not need to rely on reformulated gasoline to achieve

or maintain attainment.

The purpose of the information required in the petition is to

provide EPA the assurance that a state has considered the programmatic

effects of the requested opt-out. For instance, EPA expects that states

will fully consider the effects that an RFG opt-out would have on its

SIP or 15% VOC rate of progress plan as well as its overall ability to

attain and maintain the federal ozone standard. Through this petition

exercise, a state may find that alternative control measures may not

offer the cost-effectiveness, immediate benefits, or ancillary benefits

such as toxics reduction that reformulated gasoline provides. Thus

careful planning is needed by the state since reductions from other

sources may be much less practicable, depending on the state's

circumstances. Reformulated gasoline is one of the most cost-effective

measures for ozone control available and also yields significant air

toxics benefits. EPA believes that the information requirement will

address some of the commenters' concerns that states consider the

effects on air quality of their decision to opt out, stated earlier in

this section.

After a state submits a petition, the Agency will review the

document to determine whether it contains all of the required

information. Once the Agency determines that the petition is complete

with the required elements, EPA will send a letter to the state

approving the petition and identifying the effective date of the opt-

out. For those instances where the state does not include federal RFG

in an approved plan, the effective date shall be 90 days from the date

of the notification to the state. When the state has included RFG in an

approved plan, the effective date will be 90 days from the effective

date for Agency approval of a revision to the plan that removes

reformulated gasoline as a control measure.

F. Transition Period

In the NPRM, EPA proposed to make the effective date for an opt-out

dependent upon whether or not a state has an approved plan in place. If

reformulated gasoline was relied upon as a control measure in an

approved plan, EPA proposed to make the opt-out effective 30 days after

the Agency had approved an appropriate revision to the state plan. If

reformulated gasoline was not relied upon in an approved or pending

SIP, SIP revision, or redesignation request, EPA proposed to make the

opt-out become effective 30 days from receipt of a complete opt-out

petition. If reformulated gasoline was relied upon as a control measure

in a plan revision that had been submitted to the Agency but was still

pending Agency approval, and the Agency had found the plan to be

complete and/or made a protectiveness finding under 40 CFR Secs. 51.448

and 93.128, EPA proposed to make the opt-out effective 120 days from

the date a complete petition is received. When the state had a pending

plan revision that the Agency had determined complete and/or for which

the Agency had made a protectiveness finding and the state decided to

withdraw the submission or indicated to the Agency the state's

intention to submit a revision, EPA proposed to make the opt-out

effective 30 days from receipt of a complete petition from the state,

as described above and specified in the proposed regulatory language.

EPA received numerous comments on two aspects of the proposal.

First, the majority of the commenters indicated that the proposed time

period between the approval of an opt-out and the date the opt-out

becomes effective (referred to in this preamble as the transition

period) is insufficient for industry to change the supply of gasoline

from reformulated gasoline to conventional without significant

disruption to the supply infrastructure. Second, commenters recommended

that the opt-out process should be more orderly, with the Agency giving

expeditious and clear notification to the public as to when the opt-out

becomes effective.

In response to the comments received on the timing of opt-outs, EPA

is adopting opt-out provisions that are modified from the proposal.

First, today's action provides for a single 90 day transition period.

In determining an appropriate length of time for the transition period,

EPA weighed the need for industry to plan and implement a change in

gasoline throughout the distribution system to the retail stations

against the request from states to opt out in a timely manner. The

majority of commenters indicated that 60 to 90 days would be adequate

for industry to turn over existing stocks of reformulated gasoline to

conventional gasoline. Also, based upon comments from state

associations, as well as EPA's experience in other opt-outs, states are

concerned that the Agency make a timely decision on the opt-out and

generally consider a 90-day transition period reasonable once the opt-

out approval by the Agency has been made.

This action finalizes a single transition period, not two periods

as proposed. In the NPRM, states with plan revisions containing RFG

pending before the Agency would be opted out of the RFG program in 120

days, but a state could shorten this period to 30 days simply by

withdrawing the pending plan revision or indicating to EPA the state's

intention to submit a revision to the pending plan. These two

conditions provide little impediment to a state to effectively opt out

in 30 days. Therefore, EPA believes that a single transition period

length will simplify an opt-out and maximize affected parties's ability

to plan for a smooth transition from the reformulated gasoline program.

EPA is also modifying the procedure for initiating the 90 day count

for the transition period. Several commenters noted, and EPA concurs,

that in some cases the proposed procedures not only would have created

uncertainty surrounding the transition period start date, but also

would have effectively shortened the proposed transition period. In the

NPRM, EPA proposed to make the transition period begin upon receipt of

a complete petition. As commenters pointed out, this method would

create uncertainty about whether the petition was complete on the day

that the Agency received the petition and did not provide a means for

communicating the petition's approval or effective date to the

regulated industry.

EPA believes that in those cases where reformulated gasoline is

relied upon as a control measure in an approved plan, the procedures

for re-approval of the state plan, with notice, comment, and

publication of the revision, would sufficiently address commenters'

concerns about clear notification of Agency action. Therefore, if RFG

is relied upon as a control measure in an approved plan, the opt-out

would become effective 90 days after the effective date of the Agency's

approval of an appropriate revision to the state plan. Notice of this

action would be published in the Federal Register. Prior to this notice

in the Federal Register, the state must also submit a complete petition

to opt out of the reformulated gasoline program.

Where reformulated gasoline is relied upon as a control measure in

a plan revision pending before the Agency, or is not relied upon in any

plan, the state must petition the Agency to opt out of the reformulated

gasoline program, and the opt-out will be effective 90 days after the

Agency notifies the state that the state's petition is approved. The

[[Page 35677]]

Agency will provide written notification to the state indicating EPA's

approval of the petition. The 90-day transition clock will start from

the date of the approval notification sent to the opt-out state. To

facilitate an orderly opt-out process and minimize any uncertainties

that may result from an opt-out, EPA intends to quickly review opt-out

petitions and expeditiously notify the public of the effective date of

opt-outs. EPA intends to make a decision on the state's petition within

two weeks from receipt of the petition. EPA will promptly notify the

state and publish a notice in the Federal Register notifying the public

of the effective date of the opt-out, thereby giving consistent and

timely information to the affected parties. The Agency will make every

effort to notify the associations of affected industries and states

after EPA has approved a state's opt-out petition. In addition EPA will

announce the opt-out's effective date on the OAQPS Technology Transfer

Network Bulletin Board System (TTNBBS). For information on how to

access this system, see the SUPPLEMENTARY INFORMATION section of this

rule for details.

Finally, at a state's request, the opt-out could be effective later

than 90 days after the start of the transition period. In such a case,

a state must indicate in its petition to the Agency the desired

effective date for the opt-out. In this scenario, EPA recommends that a

state consider an opt-out date which becomes effective on one of the

reformulated gasoline program's natural transition points. EPA received

comments supporting opt-out effective dates that are consistent with

the natural transition points. These natural transition points are

identified as January 1, the start of the averaging season, and May 1

and September 15, the beginning and end, respectively, of the VOC

control season. The Agency understands these concerns and will support

state efforts to accommodate these natural transition points.

G. Cyclic Opt-outs and Opt-ins by a State

The reformulated gasoline program is a cost-effective program

designed to reduce ozone levels in participating metropolitan areas.

But the cost effectiveness of the reformulated gasoline program is

jeopardized by regulatory uncertainty, as it pertains to the regulated

community's ability to plan for providing the manufacturing capacity to

produce oxygenate and reformulated gasoline to specified control areas.

Specifically, the uncertainty is increased by the perceived absence of

long term commitment to the reformulated gasoline program by those

states who opted into the reformulated gasoline program and by the

relatively simple process for states to opt out of the reformulated

gasoline program provided for in this final rule.

EPA understands and expects that before a state submits an opt-out

petition it will have given thoughtful consideration to the air quality

consequences of its action and considered the substitute control

measures that may be needed to achieve air quality standards and

protect the health of its citizens. Therefore, the Agency believes it

is improbable that a state would seek to reverse an opt-out decision by

shortly thereafter requesting to opt back into the program.

However, comments from the oil industry expressed their concern

that states may engage in a cycle of opt-ins and opt-outs. The Agency

agrees that the integrity of the reformulated gasoline program would be

jeopardized if states maintained a cycle of opt-ins and opt-outs, e.g.

to create a customized seasonal program. The reformulated gasoline

program is a year-round program.

Given the limited applicability of this final rule to December 31,

1997, EPA believes that it is unlikely that states would have the

opportunity to complete a cycle of opt-out and opt-in. Although this

final rule effectively allows states to quickly opt out of the

reformulated gasoline program, the Agency may set the effective date of

opt-in up to one year from the date of a governor's opt-in application.

Section 211(k)(6). States would not be able to plan, with any

certainty, the timing of opt-ins and opt-outs which would create a

seasonal reformulated gasoline program. EPA does not believe that

current conditions warrant any further restrictions on opt-ins and opt-

outs. EPA may promulgate restrictions in the future if it is determined

in the future that cyclic opt-outs and opt-ins are occurring.

H. Effect on Averaging

Under the RFG regulations, refiners and importers may elect to meet

certain RFG standards either on a per-gallon basis or on average. This

election, which must be made separately for each parameter and

separately for each calendar year, applies to all RFG produced at a

refinery by a refiner, or imported by an importer, during a calendar

year.

Some commenters indicated that a refiner or importer who elects to

comply with the RFG standards on average may be adversely affected by

an area opting out of the RFG program during an averaging period. This

could occur where a refiner's or importer's average is out of

compliance at the time of an unanticipated opt-out, and reduced future

production or importation of RFG due to the opt-out results in the

refiner or importer having insufficient volume in the remainder of the

averaging period to bring the average into compliance.

EPA believes that the 90 day (minimum) transition period provides

adequate time for refiners and importers to adjust to changes in the

RFG market which may be attributed to opt-outs and that it is unlikely

that a refiner's or importer's ability to comply with the RFG standards

on average would be significantly impaired if an area opts out of the

RFG program. As a result, EPA is not providing regulatory relief in

today's action for such a possibility. Nevertheless, in setting a

potential penalty in an enforcement action for violation of the RFG

averaging standards, EPA will consider the effects of any opt-outs if

the refiner or importer is able to demonstrate (1) that it would have

been in compliance but for the opt-out, and (2) that it took all

reasonable steps to address the averaging problem caused by the opt-

out.

II. New York's, Pennsylvania's and Maine's Requests to Remove Selected

Opt-In Areas From the Requirements of the Reformulated Gasoline Program

A. Introduction

In the NPRM, EPA proposed to grant the petitions from the governors

of the States of New York, Pennsylvania and Maine to remove Jefferson

County and the Albany and Buffalo areas in New York (a total of nine

counties in New York); the twenty-eight opt-in counties in

Pennsylvania; and Hancock and Waldo counties in Maine from the list of

covered areas defined by section 80.70 of the reformulated gasoline

rule.

Jefferson County and the other eight New York counties affected by

this proposal were included as covered areas in EPA's reformulated

gasoline regulations based on Governor Mario Cuomo's request of October

28, 1991, that these areas be included under the Act's opt-in provision

for ozone nonattainment areas (57 FR 7926, March 5, 1992). See 40 CFR

80.70(j)(10)(vi). On November 29, 1994, EPA received a petition from

the Commissioner of New York's Department of Environmental

Conservation, Mr. Langdon Marsh, to remove Jefferson County from the

list of areas covered by the requirements of the reformulated gasoline

program. EPA understands that Commissioner Marsh was acting for

Governor Cuomo in this

[[Page 35678]]

matter. The Administrator responded to the State's request in a letter

to Commissioner Marsh dated December 12, 1994, stating EPA's intention

to grant New York's request, and conduct rulemaking to implement this.

In the letter of December 12, addressing the opt-out request for

Jefferson County, the Administrator also indicated that effective

January 1, 1995, and until the rulemaking to remove Jefferson County

from the list of covered areas is completed, EPA would not enforce the

reformulated gasoline requirements in Jefferson County for reformulated

gasoline violations arising after January 1, 1995. This was based on

the particular circumstances in Jefferson County.

On December 23, 1994, Commissioner Marsh of New York's Department

of Environmental Conservation wrote to further request the opt-out of

the Albany and Buffalo areas which include the counties of Albany,

Greene, Montgomery, Rennsselaer, Saratoga, Schenectady, Erie and

Niagara. EPA Assistant Administrator for Air and Radiation, Mary

Nichols, responded to the state's request in a letter to Commissioner

Marsh dated December 28, 1994, stating EPA's intention to grant New

York's request, and conduct rulemaking to implement this. The December

28 letter also indicated EPA's intent to stay the reformulated gasoline

regulations from January 1, 1995, until July 1, 1995, in the specified

counties while the Agency completes rulemaking to appropriately change

the regulations. The letter stated, however, that the requirements of

the reformulated gasoline program would apply in these areas until the

stay becomes effective January 1, 1995.

Twenty-eight counties in Pennsylvania were included as covered

areas in EPA's reformulated gasoline regulations based on Governor

Robert P. Casey's request dated September 25, 1991. See 40 CFR

80.70(j)(11)(i) through (xxviii). The counties referred to are listed

as follows: Adams, Allegheny, Armstrong, Beaver, Berks, Blair, Butler,

Cambria, Carbon, Columbia, Cumberland, Dauphin, Erie, Fayette,

Lackawanna, Lancaster, Lebanon, Lehigh, Luzerne, Mercer, Monroe,

Somerset, Northhampton, Perry, Washington, Westmoreland, Wyoming and

York. On December 1, 1994, EPA received a petition from Governor Casey

to remove these twenty-eight counties from the list of covered areas

defined by Sec. 80.70 of the reformulated gasoline rule. As with New

York's request, the Administrator responded to the State's request in a

letter to Governor Casey dated December 12, 1994, stating EPA's

intention to grant Pennsylvania's request, and conduct rulemaking to

implement this. Effective January 1, 1995, and until formal rulemaking

to remove the twenty-eight counties from the list of covered areas is

completed, EPA would not enforce the reformulated gasoline requirements

in these twenty-eight counties for reformulated gasoline violations

arising after January 1, 1995. This was based on the particular

circumstances in Pennsylvania. EPA has reserved its authority to

enforce the reformulated gasoline program for violations that may have

occurred prior to January 1, 1995.

Hancock and Waldo Counties in Maine were included as covered areas

in EPA's reformulated gasoline regulation based on Governor John R.

McKernan's request of June 26, 1991, that these counties be included

under the Act's opt-in provision for ozone nonattainment areas. (56 FR

46119, September 10, 1991) See 40 CFR 80.70(j)(5)(viii) and (ix). On

December 27, EPA received a petition from the Acting Commissioner of

Maine's Department of Environmental Protection, Ms. Deborah Garrett, to

remove Hancock and Waldo Counties in Maine from the list of areas

covered by the requirements of the reformulated gasoline program. EPA

understands that Commissioner Garrett is acting for Governor McKernan

in this matter. EPA Assistant Administrator for Air and Radiation, Mary

Nichols, responded to the state's request in a letter to Commissioner

Garrett, dated December 28, 1994, stating EPA's intention to grant

Maine's request, and conduct rulemaking to implement this. The December

28 letter also stated EPA's intent to stay the reformulated gasoline

regulations from January 1, 1995 until July 1, 1995, in the specified

counties while the Agency completes rulemaking to appropriately change

the regulations. However, EPA has reserved its authority to enforce the

reformulated gasoline program for violations that may have occurred

prior to January 1, 1995.

In separate notices signed by the EPA Administrator on December 29,

1994, and June 30, 1995, and for the reasons described therein, EPA has

stayed the program in these thirty-nine counties, or portions thereof,

effective January 1, 1995, until such time as the Agency completed

rulemaking on the proposed opt-out for these areas. (60 FR 2696,

January 11, 1995; 60 FR 35488, July 10, 1995) Based on this chronology,

EPA proposed that these areas be removed from the reformulated gasoline

program effective upon the issuance of final action in this rulemaking.

(60 FR 31269, June 14, 1995)

B. EPA Grants New York's, Pennsylvania's and Maine's Requests To Remove

Selected Opt-In Areas From the Requirements of the Reformulated

Gasoline Program

EPA believes that it is appropriate to interpret section 211(k) as

authorizing states to opt out of the RFG program, provided that a

process is established for a reasonable transition out of the program.

60 FR 31269 (June 14, 1995). The Agency has considered two key aspects

in granting these opt-outs: the first involves coordination of air

quality planning, and the second involves appropriate lead time for

industry to transition out of the program.

With respect to air quality planning, EPA believes there is no

reason to delay the removal of the 39 affected counties, or portions of

counties, in New York, Pennsylvania and Maine. These areas do not

include or rely on reformulated gasoline as a control measure in any

state implementation plan, maintenance plan or 15% rate of progress

plan. Even if reformulated gasoline is included as a contingency

measure in a maintenance plan for the redesignation packages, allowing

an area to opt out now would not interfere with implementing that

contingency. The areas could opt into the reformulated gasoline program

in the future, if necessary, within the restrictions outlined in

section 211 (k)(6) of the Act.

As indicated above, the reformulated gasoline program is currently

stayed in all of the affected areas, and Agency consideration of an

appropriate lead time for industry to change the supply of gasoline is

unnecessary.

Therefore, in today's action, EPA removes Jefferson County and the

Albany and Buffalo areas in New York (a total of nine counties in New

York); the twenty-eight opt-in counties in Pennsylvania; and Hancock

and Waldo counties in Maine from the list of covered areas defined by

Sec. 80.70 of the reformulated gasoline rule as of July 8, 1996.

III. Environmental Impact

If an area opts out of the reformulated gasoline program, it will

not receive the reductions in volatile organic compounds, oxides of

nitrogen (NOX), and air toxics that are expected from this

program. Instead, the areas would be subject to the federal controls on

Reid vapor pressure for gasoline in the summertime, and would receive

control of NOX and air toxics through the requirements of the

conventional gasoline anti-dumping program. These latter requirements

are designed to ensure that gasoline quality does not

[[Page 35679]]

degrade from the levels found in 1990. These areas would be foregoing

the air quality benefits obtained from the use of reformulated

gasoline.

However, as discussed in the proposal, one of the central concepts

behind this rule is a recognition that states have the primary

responsibility to develop the mix of control strategies needed to

attain and maintain the NAAQS, and should have flexibility in

determining the mix of control measures needed to meet their air

pollution goals. EPA expects that states will in fact act prudently in

exercising their rights to opt out under these rules. Any environmental

impacts of opting out are therefore not expected to occur in isolation,

but in a context of states exercising their responsibility and

developing appropriate control strategies for their areas' air

pollution goals.

IV. Regulatory Flexibility Analysis

This rule is not expected to result in any additional compliance

cost to regulated parties and in fact is expected to decrease

compliance costs to those entities who previously supplied reformulated

gasoline to the area opting out. This rule also establishes a

transition period which maximizes affected parties's ability to plan

for smooth transition from the reformulated gasoline program,

minimizing disruption to the motor gasoline marketplace. This

transition period is reasonably expected to allow parties to turn over

existing stocks of reformulated gasoline to conventional gasoline.

Accordingly, EPA has determined that it is not necessary to prepare

regulatory flexibility analysis in connection with this final rule. EPA

has determined that this rule will have no significant adverse effect

on substantial number of small businesses.

V. Public Participation

A. Public Comments

The Agency received submissions during the comment period for the

NPRM from 36 commenters. Copies of all of the written comments

submitted to EPA, as well as records of all oral comments received

during the comment period, can be obtained from the docket for this

rule (see ADDRESSES).

The Agency received comments from the public on three major issues:

the opt-out process, EPA's authority to promulgate a rule on opt-outs,

and transition period. A summary of these comments along with the

Agency's responses are located throughout the preamble above.

Discussion of public comments on the proposed opt-out process and the

Agency response can be located in Section I, Parts C and E of this

preamble. Discussion of public comments on the proposed transition

periods and the Agency response can be found in Section I, Part F. The

Agency response to comments on statutory authority are located in

Section I, Part B and in the preamble to the proposal, at 60 FR 31271.

The docket also contains a document that provides a more detailed

summary of the comments, including some issues not covered in this

preamble because they were minor or less contentious issues, and EPA's

rationale for its response.

B. Public Hearing

The Agency held a public hearing on July 5, 1995 to hear comments

on the Notice of Proposed Rulemaking (60 FR 31269) published June 14,

1995. Comments at the hearing were provided by representatives of the

oil industry and fuel oxygenate producers. These comments have been

presented and addressed in the preamble above.

VI. Executive Order 12866

Under Executive Order 12866 1, the Agency must determine

whether a regulation is ``significant'' and therefore subject to OMB

review and the requirements of the Executive Order. The Order defines

``significant regulatory action'' as one that is likely to result in a

rule that may:

---------------------------------------------------------------------------

\1\ See 58 FR 51735 (October 4, 1993).

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(1) Have an annual effect on the economy of $100 million or more,

or adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local or tribal governments of communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof, or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

this Executive Order.2

---------------------------------------------------------------------------

\2\ Id. at section 3(f)(1)-(4).

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It has been determined that this rule is not a ``significant

regulatory action'' under the terms of Executive Order 12866 and is

therefore not subject to OMB review.

VII. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``UMRA''), Pub.L. 104-4, EPA must prepare a budgetary impact statement

to accompany any general notice of proposed rulemaking or final rule

that includes a Federal mandate which may result in estimated costs to

State, local, or tribal governments in the aggregate, or to the private

sector, of $100 million or more. Under Section 205, for any rule

subject to Section 202 EPA generally must select the least costly, most

cost-effective, or least burdensome alternative that achieves the

objectives of the rule and is consistent with statutory requirements.

Under Section 203, before establishing any regulatory requirements that

may significantly or uniquely affect small governments, EPA must take

steps to inform and advise small governments of the requirements and

enable them to provide input.

EPA has determined that the final rule promulgated today does not

trigger the requirements of UMRA. The rule does not include a Federal

mandate that may result in estimated annual costs to State, local or

tribal governments in the aggregate, or to the private sector, of $100

million or more, and it does not establish regulatory requirements that

may significantly or uniquely affect small governments.

VIII. Judicial Review

Because this final action is nationally applicable, under section

307(b)(1) of the Clean Air Act judicial review of this action is

available only by the filing of a petition for review in the U.S. Court

of Appeals for the D.C. Circuit within sixty days of publication of

this action in the Federal Register.

VIIII. Submission to Congress and the General Accounting Office

Under section 801(a)(1)(A) of the Administrative Procedures Act

(APA) as amended by the Small Business Regulatory Enforcement Fairness

Act of 1996, EPA submitted a report containing this rule and other

required information to the U.S. Senate, the U.S. House of

Representatives and the Comptroller General of the General Accounting

Office prior to publication of the rule in today's Federal Register.

This rule is not a ``major rule'' as defined by section 804(2) of the

APA as amended.

List of Subjects in 40 CFR Part 80

Environmental protection, Air pollution control, Fuel additives,

Gasoline, Motor vehicle pollution.

Dated: June 21, 1996.

Carol M. Browner,

Administrator.

40 CFR part 80 is amended as follows:

[[Page 35680]]

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

Authority: Sections 114, 211 and 301(a) of the Clean Air Act, as

amended (42 U.S.C. 7414, 7545, and 7601(a)).

2. Section 80.2 is amended by adding paragraph (vv) to read as

follows:

Sec. 80.2 Definitions.

* * * * *

Opt-in area. An area which becomes a covered area under Sec. 80.70

pursuant to section 211(k)(6) of the Clean Air Act.

3. Section 80.70 is amended by revising paragraph (j) introductory

text; by removing paragraphs (j)(5)(viii), (5)(ix), (j)(10)(i),

(10)(iii), (10)(v) through (10)(xi); by redesignating paragraphs

(j)(10)(ii) and (iv) as (10)(i) and (10)(ii); by removing paragraph

(j)(11) and redesignating (j)(12) through (14) as (j)(11) through (13)

respectively; and by adding a new paragraph (l) to read as follows:

Sec. 80.70 Covered areas.

* * * * *

(j) The ozone nonattainment areas listed in this paragraph (j) are

covered areas for purposes of subparts D, E, and F of this part. The

geographic extent of each covered area listed in this paragraph (j)

shall be the nonattainment area boundaries as specified in 40 CFR part

81, subpart C:

* * * * *

(l) Upon the effective date for removal under Sec. 80.72(a), the

geographic area covered by such approval shall no longer be considered

a covered area for purposes of subparts D, E and F of this part.

4. Section 80.72 is added to read as follows:

Sec. 80.72 Procedures for opting out of the covered areas.

(a) For petitions received prior to and including December 31, 1997

and in accordance with paragraph (b) of this section, the Administrator

may approve a petition from a state asking for removal of any opt-in

area, or portion of an opt-in area, from inclusion as a covered area

under Sec. 80.70. If the Administrator approves a petition, he or she

shall set an effective date as provided in paragraph (c) of this

section. The Administrator shall notify the state in writing of the

Agency's action on the petition and the effective date of the removal

when the petition is approved.

(b) To be approved under paragraph (a) of this section, a petition

must be signed by the governor of a state, or his or her authorized

representative, and must include the following:

(1) A geographic description of each opt-in area, or portion of

each opt-in area, which is covered by the petition;

(2) A description of all ways in which reformulated gasoline is

relied upon as a control measure in any approved state or local

implementation plan or plan revision, or in any submission to the

Agency containing any proposed plan or plan revision (and any

associated request for redesignation) that is pending before the Agency

when the petition is submitted; and

(3) For any opt-in areas covered by the petition for which

reformulated gasoline is relied upon as a control measure as described

under paragraph (b)(2) of this section, the petition shall include the

following information:

(i) Identify whether the state is withdrawing any such pending plan

submission;

(ii)(A) Identify whether the state intends to submit a revision to

any such approved plan provision or pending plan submission that does

not rely on reformulated gasoline as a control measure, and describe

the alternative air quality measures, if any, that the state plans to

use to replace reformulated gasoline as a control measure;

(B) A description of the current status of any proposed revision to

any such approved plan provision or pending plan submission, as well as

a projected schedule for submission of such proposed revision;

(iii) If the state is not withdrawing any such pending plan

submission and does not intend to submit a revision to any such

approved plan provision or pending plan submission, describe why no

revision is necessary;

(iv) If reformulated gasoline is relied upon in any pending plan

submission, other than as a contingency measure consisting of a future

opt-in, and the Agency has found such pending plan submission complete

or made a protectiveness finding under 40 CFR 51.448 and 93.128,

demonstrate whether the removal of the reformulated gasoline program

will affect the completeness and/or protectiveness determinations;

(4) The Governor of a State, or his or her authorized

representative, shall submit additional information upon request of the

Administrator,

(c) (1) Except as provided in paragraph (c)(2) of this section, the

Administrator shall set an effective date for removal of an area under

paragraph (a) of this section of 90 days from the Agency's written

notification to the state approving the opt-out petition.

(2) If reformulated gasoline is contained as an element of any plan

or plan revision that has been approved by the Agency, other than as a

contingency measure consisting of a future opt-in, then the effective

date under paragraph (a) of this section shall be 90 days from the

effective date for Agency approval of a revision to the plan that

removes reformulated gasoline as a control measure.

(d) The Administrator shall publish a notice in the Federal

Register announcing the approval of any petition under paragraph (a) of

this section, and the effective date for removal.

[FR Doc. 96-16668 Filed 7-5-96; 8:45 am]

BILLING CODE 6560-50-P