Regulations of Fuels and Fuel Additives: Extension of the Reformulated Gasoline Program to the Phoenix, Arizona Moderate Ozone Nonattainment Area

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-5689-2]

Regulations of Fuels and Fuel Additives: Extension of the

Reformulated Gasoline Program to the Phoenix, Arizona Moderate Ozone

Nonattainment Area

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: Under section 211(k)(6) of the Clean Air Act, as amended

(Act), the Administrator of EPA shall require the sale of reformulated

gasoline in an ozone nonattainment area classified as Marginal,

Moderate, Serious, or Severe upon the application of the governor of

the state in which the nonattainment area is located. This action

extends the prohibition set forth in section 211(k)(5) against the sale

of conventional (i.e., non-reformulated) gasoline to the Phoenix,

Arizona moderate ozone nonattainment area. The Agency is revising the

regulations such that the implementation date of the prohibition

described herein shall take effect on the effective date of this rule

or June 1, 1997, whichever is later, for all persons other than

retailers and wholesale purchaser-consumers (i.e., refiners, importers,

and distributors). For retailers and wholesale purchaser-consumers, the

implementation date of the prohibition described herein shall take

effect 30 days after the effective date of this rule or July 1, 1997,

whichever is later. As of the implementation date for retailers and

wholesale purchaser-consumers, the Phoenix ozone nonattainment area

will be a covered area for all purposes in the federal RFG program.

DATES: This action will be effective on April 4, 1997 unless notice is

received by March 20, 1997 from someone who wishes to submit adverse or

critical comments or requests an opportunity for a public hearing. If

such comments or a request for a public hearing are received by the

Agency, EPA will withdraw this direct final rule and a timely notice

will be published in the Federal Register to indicate the withdrawal.

ADDRESSES: Comments should be submitted (in duplicate, if possible) to

Air Docket Section, Mail Code 6102, U.S. Environmental Protection

Agency, 401 M Street, SW, Washington, DC 20460. A copy should also be

sent to Janice Raburn at U.S. Environmental Protection Agency, Office

of Air and Radiation, 401 M Street, SW (6406J), Washington, DC 20460. A

copy should also be sent to EPA Region IX, 75 Hawthorne Street, AIR-2,

17th Floor, San Francisco, CA 94105.

Materials relevant to this document have been placed in Docket A-

97-02. The docket is located at the Air Docket Section, Mail Code 6102,

U.S. Environmental Protection Agency, 401 M Street, SW, Washington, DC

20460, in room M-1500 Waterside Mall. Documents may be inspected from

8:00 a.m. to 5:30 p.m. A reasonable fee may be charged for copying

docket material. An identical docket is also located in EPA's Region IX

office in Docket A-AZ-97. The docket is located at 75 Hawthorne Street,

AIR-2, 17th Floor, San Francisco, California 94105. Documents may be

inspected from 9:00 a.m. to noon and from 1:00--4:00 p.m. A reasonable

fee may be charged for copying docket material.

FOR FURTHER INFORMATION CONTACT: Janice Raburn or Paul Argyropoulos at

U.S. Environmental Protection Agency Office of Air and Radiation, 401 M

Street, SW (6406J), Washington, DC 20460, (202) 233-9000.

SUPPLEMENTARY INFORMATION: A copy of this action is available on

the OAQPS Technology Transfer Network Bulletin Board System

(TTNBBS) and on the Office of Mobile Sources' World Wide Web cite,

http://www.epa.gov/OMSWWW. 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, or 9600 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.

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

[[Page 7165]]

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.

Regulated entities. Entities potentially regulated by this action

are those which produce, supply or distribute motor gasoline. Regulated

categories and entities include:

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Examples of regulated

Category entities

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

gasoline distributors and

retailers.

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

guide for readers regarding entities likely to be regulated by this

action. This table lists 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.

I. Background

As part of the Clean Air Act Amendments of 1990, Congress added a

new subsection (k) to section 211 of the Act. Subsection (k) prohibits

the sale of gasoline that EPA has not certified as reformulated

(``conventional gasoline'') in the nine worst ozone nonattainment areas

beginning January 1, 1995. Section 211(k)(10)(D) defines the areas

covered by the reformulated gasoline (RFG) program as the nine ozone

nonattainment areas having a 1980 population in excess of 250,000 and

having the highest ozone design values during the period 1987 though

1989.1 Under section 211(k)(10)(D), any area reclassified as a

severe ozone nonattainment area under section 181(b) is also to be

included in the RFG program. EPA published final regulations for the

RFG program on February 16, 1994. See 59 FR 7716.

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\1\ Applying these criteria, EPA has determined the nine covered

areas to be the metropolitan areas including Los Angeles, Houston,

New York City, Baltimore, Chicago, San Diego, Philadelphia, Hartford

and Milwaukee.

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Any other ozone nonattainment area classified as Marginal,

Moderate, Serious, or Severe may be included in the program at the

request of the Governor of the state in which the area is located.

Section 211(k)(6)(A) provides that upon the application of a Governor,

EPA shall apply the prohibition against selling conventional gasoline

in any area requested by the Governor which has been classified under

subpart 2 of Part D of Title I of the act as a Marginal, Moderate,

Serious or Severe ozone nonattainment area. Subparagraph 211(k)(6)(A)

further provides that EPA is to apply the prohibition as of the date

the Administrator ``deems appropriate, not later than January 1, 1995,

or 1 year after such application is received, whichever is later.'' In

some cases the effective date may be extended for such an area as

provided in section 211(k)(6)(B) based on a determination by EPA that

there is ``insufficient domestic capacity to produce'' RFG. Finally,

EPA is to publish a governor's application in the Federal Register.

II. The Governor's Request

EPA received an application from the Honorable Fife Symington,

Governor of the State of Arizona, for the Phoenix moderate ozone

nonattainment area to be included in the reformulated gasoline program.

The Governor's letter is set out in full below.

January 17, 1997.

Ms. Carol Browner, Administrator, U.S. Environmental Protection

Agency, 401 M. Street, S.W. (1101), Washington, D.C. 20460.

Dear Ms. Browner: The purpose of this letter is to request,

under Sec. 211(k)(6) of the Clean Air Act and 40 CFR 81.303, that

the U.S. E.P.A. extend the requirement for reformulated gasoline

(RFG) to the Phoenix Ozone Nonattainment Area beginning June 1,

1997. This ``opt-in'' request is made in accordance with the

guidance provided by your agency in letters to me of December 31,

1996 and January 13, 1997.

Furthermore, I am requesting waivers related to summertime Reid

Vapor Pressure (RVP) and wintertime oxygenated fuels:

--From June 1 through September 30 of each year, that the current

State standard of 7.0 pounds per square inch (psi) RVP be enforced

in the Phoenix Ozone Nonattainment Area; and

--That the U.S.E.P.A. preserve existing State standards for

oxygenated gasoline blends.

These unique gasoline standards were submitted by Arizona in the

1993 ozone and carbon monoxide State Implementation Plan revisions

required under the Clean Air Act, but no action was taken on our

waiver request. I urge EPA to expeditiously approve these waivers in

accordance with section 211(c)(4)(C) of the Act.

As you know, Arizona has made a good faith effort to implement

its ozone nonattainment plan in compliance with all of the

requirements of the Clean Air Act. Regardless, a significant

proportion of the emissions reductions included in this plan were

not realized due to the difficulties the State has experienced in

attempting to fully implement the federal enhanced vehicular

inspection and maintenance program. This problem, and continued

violations of the ozone standard in Maricopa County have motivated

the State to voluntarily develop and submit an ozone plan, which

will include a variety of enforceable control programs designed to

reduce pollution and bring about attainment of the ozone standard by

1999. Reformulated gasoline is critical to the success of this plan,

and will probably provide the largest pollution reduction of any

single control program contemplated in this plan.

The State will continue to evaluate gasoline formulations and

other strategies for reducing ozone, carbon monoxide and particulate

pollution, and may determine that another gasoline formulation

provides equivalent or better emissions reductions, and is more

cost-effective or represents a better overall solution to our

pollution problems in the long term. In such case, the State will

submit a complete opt-out request by December 31, 1997, or take

other appropriate action, as described in the December 31, 1996 and

January 13, 1997 letters previously mentioned.

I appreciate the prompt assistance that your Region IX staff

provided on this issue. Thank you for your attention to this matter.

Sincerely,

Fife Symington,

Governor.

FS:sae

cc: Felicia Marcus, EPA, Region IX, Russell F. Rhoades, Arizona

Department of Environmental Quality, John Hays, Arizona Department

of Weights and Measures

III. Action

Pursuant to the governor's letter and the provisions of section

211(k)(6), EPA will apply the prohibitions of subsection (211)(k)(5) to

the Phoenix, Arizona moderate ozone nonattainment area as of the

effective date of this rule, or June 1, 1997 whichever is later, for

all persons other than retailers and wholesale purchaser-consumers.

This date applies to the refinery level and all other points in the

distribution system other than the retail level. For retailers and

wholesale purchaser-consumers, the prohibitions of subsection

(211)(k)(5) will apply 30 days after the effective date of this rule,

or July 1, 1997, whichever is later. As of the implementation date for

retailers and wholesale purchaser-consumers, this area will be treated

as a covered area for all purposes of the federal RFG program.

The application of the prohibition of section 211(k)(5) to the

Phoenix

[[Page 7166]]

moderate ozone nonattainment area could take effect no later than

January 17, 1998 under section 211(k)(6)(A), which stipulates that the

effective program date must be no ``later than January 1, 1995 or 1

year after [the Governor's] application is received, whichever is

later.'' For the Phoenix nonattainment area, EPA could establish an

effective date for the start of the RFG program anytime up to this

date. EPA considers that January 17, 1998, would be the latest possible

effective date, since EPA expects there to be sufficient domestic

capacity to produce RFG and therefore has no current reason to extend

the effective date beyond one year after January 17, 1998. EPA believes

that there is adequate domestic capability to support the current

demand for RFG nationwide as well as the addition of the Phoenix area.

Like the federal volatility program, the RFG program includes

seasonal requirements. Summertime RFG must meet certain VOC control

requirements to reduce emissions of VOCs, an ozone precursor. Under the

RFG program, there are two compliance dates for VOC-controlled RFG. At

the refinery level, and all other points in the distribution system

other than the retail level, compliance with RFG VOC-control

requirements is required from May 1 to September 15. At the retail

level (service stations and wholesale purchaser-consumers), compliance

is required from June 1 to September 15. See 40 CFR 80.78(a)(1)(v).

Pipeline requirements and demands for RFG from the supply industry

drive refineries to establish their own internal compliance date

earlier than May so that they can assure that terminals are capable of

meeting the requirements by the May 1 date. Based on past success with

this implementation strategy, EPA is staggering the implementation

dates for the Phoenix opt-in to the RFG program.

The Governor's request seeks an implementation date of June 1, 1997

for the RFG program in the Phoenix area. However, pursuant to its

discretion to set an effective date under Sec. 211(k)(6), EPA is

establishing two implementation dates. For all persons other than

retailers and wholesale purchaser-consumers (i.e., refiners, importers,

and distributors), implementation shall take effect on the effective

date of this rule, or June 1, 1997, whichever is later. For retailers

and wholesale purchaser-consumers, implementation shall take effect 30

days after the effective date of this rule or July 1, 1997, whichever

is later. EPA believes these implementation dates achieve a reasonable

balance between requiring the earliest possible start date and

providing adequate lead time for industry to prepare for program

implementation. These dates are consistent with the state's request

that EPA require that the RFG program begin in the Phoenix area as

early as possible in the high ozone season, which begins June 1. These

dates provide environmental benefits by allowing Phoenix to achieve VOC

reduction benefits for some of the 1997 VOC-controlled season. EPA

believes these dates provide adequate lead time for the distribution

industry to set up storage and sales agreements to ensure supply.

IV. Public Participation and Effective Date

The Agency is publishing this action both as a proposed rulemaking

and as a direct final rule because it views setting the effective date

for the addition of the Phoenix ozone nonattainment area to the federal

RFG program as non-controversial and anticipates no adverse or critical

comments. This action will be effective April 4, 1997 unless the Agency

receives notice by March 20, 1997 that adverse or critical comments

will be submitted, or that a party requests the opportunity to submit

such oral comments pursuant to section 307(d)(5) of the Act, as

amended. If such notice is received by the Agency, EPA will withdraw

this direct final rule and a timely notice will be published in the

Federal Register to indicate the withdrawal.

The Governor of Arizona established in May 1996 an Air Quality

Strategies Task Force to develop a report describing long- and short-

term strategies that would contribute to attainment of the federal

national ambient air quality standards for ozone, carbon monoxide and

particulates. In July 1996, this task force recommended establishment

of a Fuels Subcommittee to evaluate potential short-term and long-term

fuels options for the Phoenix ozone nonattainment area. The Fuels

Subcommittee was composed of representatives of a diverse mixture of

interests including gasoline-related industries, public health

organizations, and both in-county and out-of-county interests. Several

members of the refining industry supported the opt into the federal RFG

program for Phoenix for the onset of the 1997 VOC control season. The

subcommittee submitted its final report to the Air Quality Strategies

Task Force on November 26, 1996.

Section 211(k)(6) states that, ``[u]pon the application of the

Governor of a State, the Administrator shall apply the prohibition''

against the sale of conventional gasoline in any area of the State

classified as Marginal, Moderate, Serious, or Severe for ozone.

Although section 211(k)(6) provides EPA discretion to establish the

effective date for this prohibition to apply to such areas, and allows

EPA to consider whether there is sufficient domestic capacity to

produce RFG in establishing the effective date, EPA does not have

discretion to deny a Governor's request. Therefore, the scope of this

action is limited to setting an effective date for Phoenix's opt-in to

the RFG program, and not to decide whether Phoenix should in fact opt

in. For this reason, EPA is only soliciting comments addressing the

implementation date and is not soliciting comments that either support

or oppose Phoenix participating in the program.

V. Environmental Impact

The federal RFG program provides reductions in ozone-forming VOC

emissions, oxides of nitrogen (NOX), and air toxics. Reductions in

VOCs are environmentally significant because of the associated

reductions in ozone formation and in secondary formation of particulate

matter, with the associated improvements in human health and welfare.

Exposure to ground-level ozone (or smog) can cause respiratory

problems, chest pain, and coughing and may worsen bronchitis,

emphysema, and asthma. Animal studies suggest that long-term exposure

(months to years) to ozone can damage lung tissue and may lead to

chronic respiratory illness. Reductions in emissions of toxic air

pollutants are environmentally important because they carry significant

benefits for human health and welfare primarily by reducing the number

of cancer cases each year.

The Arizona Governor's Task Force estimates that if federal RFG is

required to be sold in Phoenix, VOC emissions will be be cut by more

than nine tons/day. In addition, all vehicles would have improved

emissions and the area would also get reductions in toxic emissions.

VI. Statutory Authority

The Statutory authority for the action proposed today is granted to

EPA by sections 211(c) and (k) and 301 of the Clean Air Act, as

amended; 42 U.S.C. 7545(c) and (k) and 7601.

VII. Regulatory Flexibility

For the following reasons, EPA has determined that it is not

necessary to prepare a regulatory flexibility analysis in connection

with this final rule. EPA has also determined that this rule will not

have a significant economic impact on a substantial number of small

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entities. In promulgating the RFG and anti-dumping regulations, the

Agency analyzed the impact of the regulations on small businesses. The

Agency concluded that the regulations may possibly have some economic

effect on a substantial number of small refiners, but that the

regulations may not significantly affect other small entities, such as

gasoline blenders, terminal operators, service stations and ethanol

blenders. See 59 FR 7810-7811 (February 16, 1994). As stated in the

preamble to the final RFG/anti-dumping rule, exempting small refiners

from the RFG regulations would result in the failure of meeting CAA

standards. 59 FR 7810. However, since most small refiners are located

in the mountain states or in California, which has its own RFG program,

the vast majority of small refiners are unaffected by the federal RFG

requirements (although all refiners of conventional gasoline are

subject to the anti-dumping requirements). Moreover, all businesses,

large and small, maintain the option to produce conventional gasoline

to be sold in areas not obligated by the Act to receive RFG or those

areas which have not chosen to opt into the RFG program. A complete

analysis of the effect of the RFG/anti-dumping regulations on small

businesses is contained in the Regulatory Flexibility Analysis which

was prepared for the RFG and anti-dumping rulemaking, and can be found

in the docket for that rulemaking. The docket number is: EPA Air Docket

A-92-12.

Today's rule will affect only those refiners, importers or blenders

of gasoline that choose to produce or import RFG for sale in the

Phoenix ozone nonattainment area, and gasoline distributors and retail

stations in those areas. As discussed above, EPA determined that,

because of their location, the vast majority of small refiners would be

unaffected by the RFG requirements. For the same reason, most small

refiners will be unaffected by today's action. Other small entities,

such as gasoline distributors and retail stations located in Phoenix,

which will become a covered area as a result of today's action, will be

subject to the same requirements as those small entities which are

located in current RFG covered areas. The Agency did not find the RFG

regulations to significantly affect these entities.

VIII. Executive Order 12866

Under Executive Order 12866,2 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:

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\2\ 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.3

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\3\ 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.

IX. Unfunded Mandates

Under Section 202 of the Unfunded Mandates Reform Act of 1995

(``UMRA''), Public Law 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 in any one

year. 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 today's rule 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.

X. Submission to Congress

Under 5 U.S.C. 801(a)(1)(A) as added 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 5

U.S.C. 804(2).

List of Subjects in 40 CFR Part 80

Environmental protection, Air pollution control, Fuel additives,

Gasoline, Motor vehicle pollution.

Dated: February 7, 1997.

Carol M. Browner,

Administrator.

40 CFR part 80 is amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

1. The authority citation for part 80 is revised to read as

follows:

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

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

2. Section 80.70 is amended by adding paragraph (m) to read as

follows:

Sec. 80.70 Covered areas.

* * * * *

(m) The prohibitions of section 211(k)(5) will apply to all persons

other than retailers and wholesale purchaser-consumers June 1, 1997.

The prohibitions of section 211(k)(5) will apply to retailers and

wholesale purchaser-consumers July 1, 1997. As of the effective date

for retailers and wholesale purchaser-consumers, the Phoenix, Arizona

ozone nonattainment area is a covered area. The geographical extent of

the covered area listed in this paragraph shall be the nonattainment

boundaries for the Phoenix ozone nonattainment area as specified in 40

CFR 81.303.

[FR Doc. 97-3926 Filed 2-14-97; 8:45 am]

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