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-5689-3]

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: Notice of proposed rulemaking.

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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

proposes to extend 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

proposing the implementation date of the prohibition described herein

to 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, EPA is proposing the

implementation of the prohibition described herein to 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: If a public hearing is held on today's proposal, comments must

be received by April 10, 1997. If a hearing is not held, comments must

be received by March 20, 1997. Please direct all correspondence to the

address shown below. The Agency will hold a public hearing on today's

proposal if one is requested by February 25, 1997. If a public hearing

is held, it will take place on March 11, 1997. To request a hearing, or

to find out if and where a hearing will be held, please call Janice

Raburn at (202) 233-9000.

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 notice 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

[[Page 7198]]

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.

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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Category Examples of regulated 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 section 211(k)(6) of the Clean Air Act and 40 CFR Sec. 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 Sec. 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,

s/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 is proposing to apply the prohibitions of subsection

211(k)(5) to the Phoenix, Arizona 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

[[Page 7199]]

purchaser-consumers, EPA is proposing to apply the prohibitions of

subsection 211(k)(5) to the Phoenix, Arizona ozone nonattainment area

30 days after the effective date for 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 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 then assure that terminals are

capable of meeting the RFG VOC-control requirements by May 1. Based on

past success with this implementation strategy, EPA proposes to stagger

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

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

proposing two implementation dates. For all persons other than

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

and distributors), EPA is proposing the implementation to take effect

on the effective date of this rule, or June 1, 1997, whichever is

later. For retailers and wholesale purchaser-consumers, EPA is

proposing the implementation to take effect 30 days after the effective

date of this rule or July 1, 1997, whichever is later. EPA believes

these proposed 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 would 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. EPA asks for comment

on whether retailers and wholesale purchaser-consumers believe they

could comply with federal RFG in less than 30 days from the effective

date set for persons other than retailers and wholesale purchaser-

consumers.

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. The Agency will hold a public hearing on today's proposal if

one is requested by February 25, 1997.

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 Sec. 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 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

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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 proposed rule. EPA has also determined that this rule will

not have a significant economic impact on a substantial number of small

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 proposed 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.

Therefore, for the reasons dated in this section the Agency

certifies that this action will not have a significant impact on a

substantial number of 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.

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\2\ See 58 FR 51735 (October 4, 1993).

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The Order defines ``significant regulatory action'' as one that is

likely to result in a rule that may:

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

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

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

health or safety, or State, local or tribal governments 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''), P.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 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 proposed 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.

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 proposed to be 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. 97-3927 Filed 2-14-97; 8:45 am]

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