Regulation of Fuels and Fuel Additives: Modification of the Covered Areas Provision for Reformulated Gasoline

SUMMARY: This action proposes to modify 40 CFR 80.70(k) of the

reformulated gasoline (RFG) regulations to allow states to opt into the

RFG program for any area classified as a marginal, moderate, serious or

severe ozone nonattainment area as of November 15, 1990, the date of

the enactment of the Clean Air Act Amendments of 1990 (1990

Amendments), or any time later. This section currently provides that

any area classified as a marginal, moderate, serious or severe ozone

nonattainment area may be included in the RFG program on petition by

the Governor of the State in which the area is located. Today's action

will expand this provision to allow states to opt into the RFG program

for areas which had been previously classified as marginal, moderate,

serious or severe for ozone, but were subsequently redesignated to

attainment. This will provide states an additional effective option

that may be used to avoid the air quality problems that can lead to a

violation of air quality standards. Allowing states to opt into the RFG

program for these previously classified ozone nonattainment areas will

help to ensure that these areas continue to achieve and maintain

compliance with the ozone standard.

DATES: Comments on this proposed rule must be received by April 28,

1997.

ADDRESSES: Interested parties may submit written comments (in

duplicate, if possible) to Public Docket No. A-96-30, at Air Docket

Section, U.S. Environmental Protection Agency, Waterside Mall, Room M-

1500, 401 M Street, S.W., Washington, D.C. 20460 (telephone 202/260-

7540, fax 202/260-4400). The Agency requests that commenters also send

a copy of any comments to Karen Smith at the address listed in the FOR

FURTHER INFORMATION CONTACT section. Documents may be inspected at the

Air Docket Section between the hours of 8:00 a.m. and 5:30 p.m., Monday

through Friday. A reasonable fee may be charged for copying docket

materials.

FOR FURTHER INFORMATION CONTACT: Karen Smith, Policy Analyst, Fuels and

Energy Division, US EPA, 401 M Street, S.W. (6406J), Washington, D.C.

20460. (202) 233-9674.

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially regulated by this action are those which

produce, import or distribute gasoline for sale in areas formerly

classified as marginal, moderate, serious or severe ozone nonattainment

areas which opt into the RFG program, and retail gasoline stations

located in those areas. Regulated categories and entities include:

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Examples of regulated

Category entities

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Industry................................. Refiners, importers,

oxygenate blenders, terminal

operators, distributors,

retail gasoline stations.

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

guide for readers regarding entities potentially 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 company or facility may potentially be regulated by this action,

you should carefully examine the applicability criteria of Part 80,

Subpart D, 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.

Availability on the TTNBBS

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, 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:

OPTINDFR.ZIP. To download this file, type the following instructions

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.

The remainder of this preamble is organized into the following

sections:

I. Background

II. Modification of Sec. 80.70(k)

III. Compliance with the Regulatory Flexibility Act

IV. Administrative Designation

V. Paperwork Reduction Act

VI. Unfunded Mandates Act

VII. Statutory Authority

I. Background

Section 107(d) of the Clean Air Act, as amended in 1990 (the Act),

requires states to identify all areas that do not meet the national

ambient air quality standards (NAAQS) for ozone, and directs EPA to

designate these areas as ozone nonattainment areas. Section 181 of the

Act requires EPA to classify each area designated as an ozone

nonattainment area pursuant to section 107(d) as a marginal, moderate,

serious, severe or extreme area, based on the design value for the

area. Using this section 181 scheme, EPA classified all areas that were

designated as in nonattainment for ozone at the time of the enactment

of the 1990 Amendments, except for certain ``nonclassifiable''

areas.1 56 FR 56694 (November 6, 1991).

[[Page 15075]]

Areas that were designated as in attainment for ozone as of the date of

the 1990 Amendments were categorized as ``unclassifiable/attainment.''

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\1\ ``Nonclassifiable'' areas include: ``transitional'' areas,

defined in section 185A of the Act as areas which were designated as

ozone nonattainment areas as of the date of enactment of the 1990

Amendments, but which had not violated the primary NAAQS for ozone

over the 3-year period from 1987-1989; ``submarginal'' areas,

defined by EPA as those areas which had violated the ozone NAAQS

during the period 1987-1989, but had design values less than the

lower limit for marginal areas due to an adjustment for missing data

when calculating expected exceedances; and ``incomplete/no data''

areas, defined by EPA as areas that were designated nonattainment

areas prior to enactment of the 1990 Amendments, but at the time of

enactment did not have sufficient air quality monitoring data to

determine whether they were or were not violating the NAAQS.

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Section 211(k)(5) of the Act prohibits the sale or dispensing by

any person of conventional gasoline to ultimate consumers in any RFG

covered area. Section 211(k)(6) of the Act, as amended in 1990,

provides that, upon the application of the Governor of a State, the

Administrator shall apply the prohibition contained in section

211(k)(5) in any area in the State classified under Section 181 of the

Act as a marginal, moderate, serious or severe 2 area (the ``opt-

in'' provision). In any such case, the Administrator must establish an

appropriate effective date for such prohibition that is not later than

1 year after such application is received, and publish the application

and effective date in the Federal Register.

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\2\ The Los Angeles area is the only area classified as extreme

for ozone, and it is a mandatory RFG covered area under the Act.

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In accordance with section 211(k)(6) of the Act, EPA promulgated

Sec. 80.70(k) at 40 CFR part 80, which provides that any area

classified under 40 CFR part 81, subpart C, as a marginal, moderate,

serious or severe ozone nonattainment area may be included as a RFG

covered area on petition of the Governor of the State in which the area

is located.

II. Modification of Sec. 80.70(k)

The modification proposed today revises the opt-in provision of

Sec. 80.70(k) to apply it to areas classified as marginal, moderate,

serious or severe ozone nonattainment areas as of November 15, 1990,

the date the 1990 Amendments were enacted, or any time later. This

proposed action will allow states to opt into the RFG program for areas

which previously had been classified as marginal, moderate, serious or

severe ozone nonattainment areas, but which have been redesignated to

attainment. This will provide additional flexibility to the states to

ensure continued compliance with the NAAQS for ozone. States with such

redesignated areas will have the flexibility to include the RFG program

in their maintenance plans or use RFG as a contingency measure for

these areas.

This action is consistent with the text of section 211(k)(6), which

states that areas ``classified under subpart 2 of Part D of title I as

marginal, moderate, serious, or severe'' for ozone can opt into the RFG

program upon the application of the governor of a state. This provision

does not expressly limit the state's opt-in ability to areas currently

classified as marginal, moderate, serious or severe ozone nonattainment

areas. It is reasonable and appropriate to allow areas classified as

marginal, moderate serious, or severe for ozone as of the date of the

enactment of the 1990 Amendments, or any time later, to opt into the

RFG program, in light of the plain language of section 211(k)(6) and

the intent of Congress in enacting it.

The Conference Report to the 1990 Amendments, as passed, states

that the opt-in provision ``clearly allows any nonattainment area which

wants to opt-in to the reformulated gasoline programs to do so. They

should be afforded every opportunity, and at the earliest possible

date, to opt-in to the program subject to approval by EPA.'' (LH at

1024.) Although section 211(k)(6) allows states to opt into the RFG

program only for nonattainment areas classified as marginal, moderate,

serious or severe, Congress clearly intended this provision to provide

states an opportunity to opt into the RFG program for these

nonattainment areas if the state determines it is an appropriate means

of achieving and maintaining the NAAQS for ozone. Today's action

furthers this Congressional goal by ensuring that areas previously

classified as marginal, moderate, serious or severe nonattainment

areas, which have been redesignated to attainment, have the flexibility

to participate in the RFG program. Many of these areas have ozone

levels which are relatively close to the NAAQS, and are concerned about

experiencing violations in the future, although currently in

attainment. This will provide states an additional effective option

that may be used to avoid the air quality problems that can lead to

redesignation as a nonattainment area. Allowing states to opt into the

RFG program for these previously classified ozone nonattainment areas

will help to ensure that these areas continue to achieve and maintain

compliance with the ozone NAAQS. States who have former nonattainment

areas that become eligible for participation in the RFG program under

this proposed rule should be cognizant of the fact that the current RFG

opt-out procedures end December 31, 1997. The Agency is considering

proposing opt-out procedures for the transitional period to Phase II of

RFG, that will require voluntary states to remain in the program for a

period of time substantially longer than the current 90 day opt-out

procedures. The agency reserves its discretion to set an effective date

of up to one year from the receipt of an application to opt-into the

RFG program if supply or other concerns exist, and may, extend the

effective date for two additional one-year periods consistent with

Section 211(k)(6)(b).

EPA requests comment on whether a minimum lead-time of up to one

year should be used in setting the effective date and whether this

should apply to former non-attainment areas that opt-in and/or areas

that are classified as non-attainment when they opt-in.

One idea suggested by an outside party was that EPA should require

that the Governor consider the costs of other programs in making the

determination to adopt RFG. EPA requests comment on the approach,

including whether EPA would have authority to impose such a requirement

and whether it would be appropriate to do so. If EPA determinies the

legal authority exists for such a requirement and that it would be

appropriate, it may be considered for adoption in the final rulemaking.

Today's action is consistent with EPA's interpretation of the opt-

in provision of section 211(k)(6) as expressed in the preamble to the

final rule establishing RFG and anti-dumping standards. See 59 FR 7808-

7809 (April 16, 1994). Comments received on the rule included requests

that certain areas categorized as unclassifiable/attainment areas,

i.e., areas that were designated as in attainment for ozone as of the

date of the 1990 Amendments, be allowed to opt into the RFG program. In

response to these requests, EPA stated: ``Because of statutory

limitations, attainment areas will not be allowed to opt-in to the RFG

program.* * *'' 59 FR 7808. While this language indicates that

unclassifiable/attainment areas are precluded from opting into the RFG

program, it does not address the areas covered by this rule; i.e.,

areas previously designated as in nonattainment for ozone which have

been redesignated to attainment. Today's proposed rule, therefore,

addresses a sub-category of areas that EPA has not previously

considered. EPA's interpretation of section 211(k)(6) as it applies to

such areas is compatible with EPA's interpretation of this provision as

it applies to current nonattainment areas. Since section 211(k)(6)

allows states to opt into the RFG program only for nonattainment areas

classified as marginal, moderate, serious or severe, this action

extends the application of section 211(k)(6) only to redesignated areas

which had been classified as marginal, moderate, serious or severe.

[[Page 15076]]

Any area that opts into the RFG program under Sec. 80.70(k),

whether currently or previously classified as marginal, moderate,

serious or severe for ozone will be subject to all rules promulgated by

the Agency for opting out of the RFG program.

III. Compliance with the Regulatory Flexibility Act

For the following reasons, the Agency has determined that this rule

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

small entities and that a regulatory flexibility analysis is not

necessary. 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

areas which opt into the RFG program as a result of this action, 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 areas which may become covered areas 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. Since this action does not mandate any area to be included in

the federal RFG program, but rather allows states the discretion to opt

into the RFG program for certain areas, an estimate of the number of

small entities which may ultimately be affected by this rule is

unavailable.

IV. Administrative Designation

Pursuant to Executive Order 12866, (58 FR 51735 (October 4, 1993))

the Agency must determine whether the regulatory action is

``significant'' and therefore subject to OMB review and the

requirements of the Executive Order. The Order defines ``significant

regulatory action'' as one that is likely to result in a rule that may:

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

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

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

health or safety, or State, local, or tribal governments or

communities.

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

action taken or planned by another agency;

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

user fees, or lean 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

the Executive Order.

Pursuant to the terms of Executive Order 12866, OMB has notified

EPA that it considers this a significant regulatory action within the

meaning of the Executive Order. EPA has submitted this action to OMB

for review. Changes made in response to OMB suggestions or

recommendations will be documented in the public record.

V. Paperwork Reduction Act

This action does not add any new requirements under the provisions

of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The Office of

Management and Budget (OMB) has approved the information collection

requirements contained in the final FRG/anti-dumping and has assigned

OMB control number 2060-0277 (EPA ICR NO. 1951.03)

Burden means the total time, effort , or financial resources

expended by the persopns to generate, maintain, retain, or disclose or

provide information to or for a Federal Agency. This includes the time

needed to review instructions; develop, acquire, install and utilize

technology and systems for the purposes of collecting, validating, and

verfying information, processing and maintaing information, and

disclosing and providing information; adjust the existing ways to

comply with any previously applicable instructions and requirements;

train personnel to be able to respond to a collection of information;

search data sources; complete and review the collection of information;

and transmit or otherwise disclose information.

An Agency may not conduct or sponsor, and a person is not required

to respond to a collection of information unless it displays a

currently valid OMB control number. The OMB control numbers for EPA's

regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.

VI. Unfunded Mandates Act

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule that includes a Federal mandate that may result in

expenditures by State, local, and tribal governments, in the aggregate;

or by the private sector, of $100 million or more. Under Section 205,

EPA must select the most cost effective and least burdensome

alternative that achieves the objectives of the rule and is consistent

with statutory requirements. Section 203 requires EPA to establish a

plan for informing and advising any small governments that may be

significantly or uniquely impacted by this rule.

EPA has determined that the action taken today does not include a

Federal mandate that may result in estimated costs of $100 million or

more to either State, local, or tribal governments in the aggregate, or

to the private sector. Therefore, the requirements of the Unfunded

Mandates Act do not apply to this action.

VII. 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. 7414, 7545(c) and (k), and 7601.

List of Subjects in 40 CFR Part 80

Environmental protection, Air pollution control, Fuel additives,

Gasoline, Motor vehicle pollution.

[[Page 15077]]

Dated: March 21, 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 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 80.70 is amended by revising paragraph (k) to read as

follows:

Sec. 80.70 Covered areas.

* * * * *

(k) Any other area currently or previously classified under 40 CFR

part 81, subpart C as a marginal, moderate, serious, or severe ozone

nonattainment area as of November 15, 1990, or any time later, may be

included on petition of the governor of the state in which the area is

located.

* * * * *

[FR Doc. 97-7954 Filed 3-27-97; 8:45 am]

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