Regulation of Fuel and Fuel Additives: Modification of Compliance Baseline

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[AMS-FRL-6354-4]

RIN 2060-AI29

Regulation of Fuel and Fuel Additives: Modification of Compliance

Baseline

AGENCY: Environmental Protection Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: With today's action the U.S. Environmental Protection Agency

(``EPA'', ``the Agency'', or ``we'') proposes to evaluate the

conventional gasoline emissions, from gasoline that a refiner sells in

Puerto Rico in excess of its baseline volume of Puerto Rico gasoline,

using only the summer version of the Complex Model. Accordingly, we

propose to modify the reformulated gasoline program's anti-dumping

compliance baseline calculation. This modification will replace the

annual average statutory baseline term with a summer statutory baseline

term for purposes of evaluating a refiner's excess Puerto Rico

gasoline. We also propose to replace the winter Complex Model with the

more climatically appropriate summer Complex Model for all baseline and

compliance calculations for Puerto Rico gasoline. The proposed

provisions would apply to any refiner that has Puerto Rico gasoline in

its individual baseline, has increased production of gasoline for sale

in Puerto Rico above its individual baseline volume of Puerto Rico

gasoline, and petitions the Agency to apply the proposed modified

compliance baseline to its Puerto Rico gasoline. EPA will require any

refiner submitting such a petition to recalculate its individual

baseline using the summer Complex Model for all Puerto Rico gasoline.

We anticipate that today's action will affect only a single

refiner. We have not yet fully evaluated the implications of a general

shift toward a climate-sensitive use of the summer and winter Complex

Models for other Puerto Rico refiners or gasoline suppliers, or for

similarly situated refiners in other regions. However, we request

comment from other refiners that produce gasoline for sale in areas not

subject to EPA's volatility requirements. Based on the comments we

receive, we may or may not proceed with similar future rulemaking

action.

DATES: Written comments on this notice must be submitted by July 9,

1999.

ADDRESSES: Interested parties may submit written comments in paper form

and/or by E-mail. To ensure their consideration by EPA, all comments

must be submitted to EPA by the date indicated under DATES above. Paper

copies of written comments should be submitted (in duplicate if

possible) to Public Docket No. A-99-16 at the following address: U.S.

Environmental Protection Agency (EPA), Air Docket Section, Room M-1500,

401 M Street, S.W., Washington, D.C. 20460. The Agency requests that a

separate paper copy also be sent to the person listed below under FOR

FURTHER INFORMATION CONTACT. EPA also encourages that an electronic

copy of comments (in ASCII format) accompany the submission of a paper

copy (by E-mail to A-and-R-D[email protected] or on a 3.5 inch diskette).

Public comments may also be submitted by E-mail to the docket at the

address listed above without the submission of a paper copy. However,

to ensure the clarity of the submission, EPA encourages that a paper

copy accompany the E-mail submission. If comments are submitted by E-

mail alone, EPA requests that a copy of the E-mail message that

contains the comments be sent to the contact person listed below.

Materials related to this rulemaking are available for review at

EPA's Air Docket at the above address (on the ground floor in Waterside

Mall) from 8:00 a.m. to 5:30 p.m., Monday through Friday, except on

government holidays. The telephone number for EPA's Air

[[Page 30931]]

Docket is (202) 260-7548, and the facsimile number is (202) 260-4400. A

reasonable fee may be charged by EPA for copying docket materials, as

provided in 40 CFR part 2.

FOR FURTHER INFORMATION CONTACT: Christine M. Brunner or Felicia Seals-

Buchanan, U.S. EPA, National Vehicle and Fuels Emission Laboratory,

2000 Traverwood, Ann Arbor, MI 48105; Telephone (734) 214-4287 or

x4589, FAX (734) 214-4051, E-mail [email protected] or seals-

[email protected].

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially affected by this action include those involved

with the production, distribution and sale of gasoline motor fuel.

Regulated categories and entities include:

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Examples of potentially regulated

Category NAICS \1\ codes SIC \2\ codes entities

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Industry............................ 324110 2911 Petroleum Refiners.

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\1\ North American Industry Classification System (NAICS).

\2\ Standard Industrial Classification (SIC) system code.

This table is not intended to be exhaustive, but 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 affected by this action. Other types of entities not

listed in the table could also be affected. To decide whether your

organization might be affected by this action, you should carefully

examine the proposed and existing regulations in 40 CFR part 80. If you

have any questions regarding the applicability of this action to a

particular entity, consult the persons listed in the preceding FOR

FURTHER INFORMATION CONTACT section.

Access to Rulemaking Documents Through the Internet

Today's notice is available electronically on the day of

publication from the EPA Internet Web site listed below. Electronic

copies of the preamble, regulatory language and other documents

associated with today's proposal are available from the EPA Office of

Mobile Sources Web site listed below shortly after the rule is signed

by the Administrator. This service is free of charge, except any cost

that you already incur for Internet connectivity.

EPA Web Site:

http://www.epa.gov/docs/fedrgstr/epa-air/

(Either select a desired date or use the Search feature.)

Office of Mobile Sources (OMS) Web Site:

http://www.epa.gov/omswww/

(Look in ``what's New'' or under the specific rulemaking topic.)

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.

I. Background

A. Anti-Dumping Standards

Section 211(k) of the Clean Air Act requires the U.S. Environmental

Protection Agency (``EPA'' or ``we'') to establish standards for

reformulated gasoline (RFG) to be used in specified ozone nonattainment

areas. In addition, EPA established standards for non-reformulated, or

conventional, gasoline used in the rest of the country. These standards

are called the anti-dumping standards. EPA adopted the anti-dumping

standards to prevent refiners from dumping into conventional gasoline

the dirty gasoline components that are removed when RFG is produced.

The anti-dumping standards require refiners to produce conventional

gasoline each year that is as clean as the gasoline produced by the

refiner in 1990.

In order to be in compliance with the anti-dumping standards, the

exhaust toxics and nitrogen oxides (NOX) emissions

performance of a refinery's conventional gasoline can be no dirtier

than the refinery's 1990 exhaust toxics and NOX emissions

performance, on an annual average basis. EPA requires refiners to

calculate the exhaust toxics and NOX emissions performance

of gasoline using the Complex Model,1 based on measured

properties, such as sulfur and benzene content, and Reid vapor pressure

(RVP). The Complex Model includes both a summer version and a winter

version. The anti-dumping requirements at 40 CFR 80.101(g) require

refiners to use the summer Complex Model to evaluate conventional

gasoline supplied to an area subject to EPA's gasoline volatility

standards when these standards are in effect, and requires them to use

the winter Complex Model to evaluate all other gasoline. The

regulations also require refiners to evaluate the exhaust toxics and

NOX emissions performance of gasoline sold in areas not

subject to those volatility standards, such as Puerto Rico, Hawaii, and

Alaska, using the winter Complex Model.

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\1\ 40 CFR 80.45.

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B. Compliance Baseline Calculation

In general, a refiner's standard for compliance is its individual

1990 refiner baseline. However, when a refiner's annual gasoline

production volume (including RFG, conventional gasoline and

reformulated gasoline blendstock for oxygenate blending) exceeds its

baseline volume (the volume of gasoline that the refiner produced in

1990), the refiner's conventional gasoline compliance standard for

exhaust toxics and NOX is different from its individual

baseline values for these emissions. The standard is different because

EPA requires refiners to compare the excess volume to the statutory

baseline instead of their individual baseline. Because the statutory

baseline was designed to reflect 1990 gasoline generally, the quality

of all the excess gasoline produced approximates the 1990 average

national quality.

In order to determine a refiner's compliance standard for the

averaging period, the anti-dumping provisions at 40 CFR 80.101(f)

require the use of a specified compliance baseline equation. This

equation establishes a single compliance baseline that compares a

refiner's conventional gasoline with that refiner's individual

baseline. However, a portion of the compliance baseline equation

compares the emissions of a refiner's excess volume of conventional

gasoline to the annual average statutory baseline emissions, a

combination of the summer and winter statutory baseline emissions. EPA

requires refiners to evaluate the emissions of gasoline sold in areas

not subject to EPA's volatility requirements using only the winter

Complex Model. Refiners must then compare these emissions to a

compliance baseline equation that is based in part on the summertime

[[Page 30932]]

portion of the statutory baseline. Because different assumptions drive

the summer and winter versions of the Complex Model, this may force

refiners to make quality changes in their gasoline pools, resulting in

unintended negative effects for refiners and the environment.

C. Seasonal Impacts of the Complex Model

A detailed discussion of the development of the summer and winter

versions of the Complex Model was included in the Final Regulatory

Impact Analysis (RIA) for Reformulated Gasoline.2 Both

models are based on MOBILE model outputs. MOBILE model outputs for the

summer model assume ambient temperatures of 69 deg.F-94 deg.F. MOBILE

model outputs for the winter model assume ambient temperatures of 39

deg.F-57 deg.F. Additionally, MOBILE model outputs show significantly

greater ``winter'' emissions due to longer engine and catalyst warm-up

times. As a result, for identical fuel compositions (based on those

fuel parameters evaluated in the Complex Model), the winter Complex

Model results in significantly higher emissions than the summer Complex

Model, on a mg/mile basis.

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\2\ December 13, 1993.

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D. July 11, 1997 Proposal

EPA proposed a variety of changes to the reformulated gasoline and

anti-dumping regulations on July 11, 1997 (62 FR 37337). Classifying

gasoline as summer or winter gasoline was one issue that EPA discussed

in that proposal. In that discussion, EPA stated that it would classify

all gasoline produced for use outside the continental U.S., where the

federal RVP standards do not apply, as winter gasoline year round

because:

(1) EPA required refiners to calculate the emissions of all

gasoline used outside of the continental U.S. using the winter Complex

Model for baseline purposes;

(2) The anti-dumping standards compare the emissions of a

refinery's gasoline during an averaging period with the refinery's

baseline emissions; and

(3) The comparison of baseline emissions to averaging period

emissions is valid only if the refinery uses the same criteria in the

baseline and in the averaging period for classifying gasoline as summer

or winter.

One commenter, Amerada Hess, stated that it was inappropriate for

refiners to use the winter Complex Model to evaluate the gasoline

produced for certain areas outside the continental U.S. and not subject

to the federal volatility requirements. They offered the following

reasons:

(1) In the proposal, ``EPA is acknowledging that the classification

of gasoline as winter or summer actually depends on the season in which

it is sold'' (and not just its RVP);

(2) EPA's MOBILE model, upon which EPA based the Complex Model,

reflects a temperature range of 39 deg. F-57 deg. F when used to

evaluate winter emissions;

(3) It is inappropriate for EPA to assign gasoline for tropical

climates such as Puerto Rico and Hawaii, to the winter category from a

``seasonal weather gasoline characteristic standpoint;''

(4) The RVP of the gasoline sold in these (tropical) areas reflects

summertime RVPs rather than wintertime RVPs;

(5) The July 1, 1994 RFG Question and Answer Document states that

refiners are to evaluate gasoline which remains seasonably the same

throughout the year using the seasonal Complex Model which matches the

year round season.

Additionally, when the volume of gasoline sold in such areas

increases over baseline levels, under 40 CFR 80.101(f)(4)(ii) EPA

requires refiners to calculate the standard for the extra volume using

annual exhaust toxics and NOX emissions values which include

both summer and winter Complex Model calculations. At the same time,

EPA requires calculation of emissions (of gasoline sold in such areas)

for compliance purposes using only the winter Complex Model.

Consequently, according to the commenter, the refiner is unfairly

penalized.

II. Proposal

A. Summary

With today's action, EPA proposes to allow refiners, upon petition,

to replace the winter Complex Model with the summer Complex Model for

all anti-dumping baseline and compliance calculations for conventional

gasoline sold in Puerto Rico, if the refiner has Puerto Rico gasoline

in their individual baseline, and if the refiner currently sells a

volume of gasoline in Puerto Rico greater than that refiner's 1990

Puerto Rico baseline volume. We are taking this action in order to

address specific circumstances where inconsistencies in the RFG

program's anti-dumping provisions have had significant unintended

negative impacts.

The anti-dumping regulations currently require conventional

gasoline sold in Puerto Rico to be evaluated using the winter Complex

Model, for purposes of both compliance calculation and baseline

calculation up to a refiner's 1990 baseline volume. However, the

current regulations require a refiner to use the statutory baseline for

evaluating volumes of Puerto Rico gasoline above that refiner's 1990

baseline volume. The statutory baseline includes both a summer and

winter Complex Model component. As a result, for excess gasoline, there

is an unintended mismatch between the refiner's baseline calculation

(which uses only the winter Complex Model) and the compliance baseline

calculation (which uses a combination of the summer and winter Complex

Models). This results in the appearance of greater emissions in

comparison to an analysis using the same seasonal version of the

Complex Model for both of these calculations. For those refiners with

Puerto Rico gasoline in their individual baseline, that have increased

the volume of gasoline that they sell in Puerto Rico above their 1990

baseline volumes of Puerto Rico gasoline, this incongruence has had a

significant adverse economic effect.

To solve this specific problem, EPA is proposing a provision under

the anti-dumping regulations that would change the compliance

determination of the gasoline a refiner sells in Puerto Rico above that

refiner's 1990 Puerto Rico baseline volume. Refiners would evaluate

such gasoline using only a single statutory seasonal term (the summer

term) in the compliance baseline determination. Additionally, given

Puerto Rico's consistently warm climate, we recognize that the summer

Complex Model is the most appropriate model for evaluating emissions in

Puerto Rico under the anti-dumping program. Thus, we are also proposing

to evaluate all of the conventional gasoline sold in Puerto Rico (by a

refiner that makes a successful petition under this provision) using

the summer Complex Model. The approval of a petition under this

proposed provision would require a refiner to recalculate the Puerto

Rico component of its individual baseline using the summer Complex

Model. As a result, such a refiner will evaluate all of its Puerto Rico

gasoline using a single seasonal version of the Complex Model. Today's

action applies to each batch of gasoline produced by an eligible

refiner and destined for Puerto Rico, even if a small portion of the

batch is subsequently sent to other nearby areas with climates similar

to Puerto Rico and which are also not subject to EPA's volatility

standards.

[[Page 30933]]

B. Modified Compliance Baseline Equation

As discussed in Section I.B., when refiners sell gasoline in excess

of their individual baseline volume in areas such as Puerto Rico, which

are not subject to the federal volatility requirements, use of the

current compliance baseline equation may have negative economic

implications for refiners and unintended negative environmental

effects. EPA requires refiners to evaluate such gasoline using the

winter Complex Model. However, in the compliance baseline equation, all

excess gasoline is compared to the annual average statutory baseline,

which is composed of summertime and wintertime components. Because the

winter Complex Model predicts higher emissions for exhaust toxics and

NOX than does the summer Complex Model, refiners in this

situation are forced to meet a more stringent compliance standard in

these areas than would be required if the seasonal Complex Models used

to evaluate such gasoline were the same. Accordingly, they must divert

cleaner gasoline from other areas.

To remedy this situation, EPA is proposing to modify the compliance

baseline equation at Sec. 80.101(f)(4)(ii). This modification will

ensure that the performance of gasoline sold in Puerto Rico in excess

of a refiner's baseline volume of Puerto Rico gasoline is compared to

the appropriate corresponding seasonal baseline. We believe that the

summer Complex Model is the most appropriate model for evaluating

Puerto Rico gasoline.

EPA proposes to include the following equation at 40 CFR 80.101

(f)(4). This equation includes separate terms for evaluating the

gasoline subject to the refiner's individual baseline and excess

gasoline subject to the summer model-only requirements. EPA requests

comments on the terms and definitions of this proposed equation.

[GRAPHIC] [TIFF OMITTED] TP09JN99.000

where:

CBi = the compliance baseline value for emissions

performance i

Bi = the refiner's or importer's individual annual baseline

for emissions performance i under Sec. 80.91 for gasoline supplied to

areas subject to volatility standards under Sec. 80.27

BSi = the refiner's or importer's individual baseline as

determined under Sec. 80.91 using the summer Complex Model, for

gasoline supplied to Puerto Rico, for emissions performance i

DBAi = annual anti-dumping statutory baseline value for

emissions performance i under Sec. 80.91(c)(5)(iv)

DBSi = the summer statutory baseline value for emissions

performance i under Sec. 80.45(b)(3), table 5

Va = total volume of RFG, conventional gasoline, RBOB,

oxygenates and California gasoline as defined under Sec. 80.81(a)(2)

produced or imported during the averaging period

V1990 = 1990 baseline volume under Sec. 80.91(f)(1)

V1990s=1990 baseline volume of gasoline supplied to Puerto

Rico

Vas=volume of conventional gasoline supplied during the

averaging period to Puerto Rico

i=exhaust toxics or NOX emissions performance

C. Seasonal Re-designation of Puerto Rico Gasoline

EPA is proposing to evaluate the emissions of Puerto Rico gasoline

using only the summer Complex Model for any refiner making a successful

petition under this proposed provision. As a result of comments in

response to the July 11, 1997 NPRM, EPA evaluated the average annual

climatic conditions and gasoline RVP levels for Puerto Rico.\3\ We have

concluded that Puerto Rico's relatively constant year round ambient

temperatures, as well as its gasoline RVPs, are more consistent with

the conditions under which EPA intended the summer Complex Model to

apply than they are with the conditions under which we intended the

winter Complex Model to apply. Additionally, Puerto Rico's ambient

temperature is consistent with conditions typical of a high ozone

season, when summertime gasoline, and thus the summer Complex Model, is

meant to be used. Because this proposed action involves the calculation

of compliance baselines for gasoline sold by refiners in Puerto Rico,

we are taking this opportunity to address the seasonal appropriateness

of the Complex Model that refiners must use to evaluate individual

batches of gasoline. Accordingly, we propose to require refiners to

evaluate all of their Puerto Rico gasoline using the summer Complex

Model for compliance and baseline purposes. We are, however, expressly

limiting the applicability of this change to refiners that petition

for, and are granted, compliance baseline corrections under the

provisions of this proposed rulemaking.

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\3\ 30 year average maximum and minimum temperatures by month,

and RVP specifications.

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D. Environmental Impact

We are presently aware of only one refiner for which the current

regulations have significant unintended negative economic and

environmental impacts. Specifically, the current anti-dumping

regulations applicable to Puerto Rico gasoline negatively affect the

quality of this refiner's mainland reformulated gasoline by requiring

the refiner to shift certain production from RFG to conventional

gasoline in order to comply with the requirements for its Puerto Rico

conventional gasoline. Thus the emissions in areas which most need

clean gasoline--ozone nonattainment areas participating in the RFG

program--are unnecessarily elevated. Conversely, Puerto Rico, which is

in attainment for ozone, is receiving cleaner conventional gasoline due

to the unintended results of the current anti-dumping rules.

The change proposed today helps to provide the cleanest gasoline

where it is needed most. It is possible that the gasoline supplied by

this refiner to Puerto Rico, and other conventional gasoline areas,

could see increases in the emissions regulated under the anti-dumping

requirements. However, this proposal will allow refiners to use the

most seasonally-appropriate Complex Model for gasoline sold in Puerto

Rico, and will not result in an increase in emissions from conventional

gasoline compared to 1990 levels. Thus, the goals of the anti-dumping

program will be preserved. Indeed, this adjustment simply works to

restore the proper balance to the distribution of environmental

benefits under the RFG program.

EPA is proposing that these requirements would apply to gasoline

produced for calendar year 1999 and beyond. EPA will need more

information from other refiners before proposing to broadly apply

similar provisions throughout Puerto Rico and

[[Page 30934]]

in other areas not subject to EPA's volatility requirement.

E. Economic Impact

EPA expects today's proposal to have minimal economic consequences.

Most affected refiners are operating satisfactorily under the current

requirements and are likely to be unaffected by this rule. EPA believes

that refiners satisfying the requirements of this provision, will

petition to re-evaluate the Puerto Rico gasoline in their baseline

using the summer Complex Model only if it is economically beneficial

for them to do so. Therefore, EPA anticipates no adverse economic

impacts as a result of today's proposal rule.

F. Limited Applicability

EPA is proposing today to apply the provisions discussed above

(i.e., the modified compliance baseline equation and the uniform use of

the summer Complex Model) to refiners that have Puerto Rico gasoline in

their individual baseline, that have increased the volume of gasoline

that they sell in Puerto Rico above their 1990 baseline volumes of

Puerto Rico gasoline, and that petition the Agency for such a change.

Once such a petition is made and granted, the new method for

determining compliance would apply from then on, regardless of any

future changes in the refiner's Puerto Rico gasoline production or

distribution. To date, only one refiner has notified EPA of potential

adverse effects due to the application of the current regulations.

While EPA believes that use of the modified compliance baseline

equation and seasonally-appropriate Complex Model may be technically

appropriate in all areas not subject to the federal volatility

requirements, there are a number of factors that EPA is unable to

evaluate at this time. Consequently, we believe it best to limit the

applicability of this proposal to refiners of Puerto Rico gasoline that

can fulfill the other requirements of this proposed rule. The following

section discusses the implications of a broader application of the

principles underlying today's proposed action, and highlights the

difficulties inherent in evaluating the appropriateness of such a

generally applicable provision.

III. Implications for Broader Future Action

Today's action is limited in applicability to Puerto Rico refiners

that meet the criteria enumerated in Section II of this notice.

However, we anticipate that a similar but more generally applicable

provision may be appropriate in the future. Such a provision would

presumably apply to all areas that are not subject to the federal

volatility requirements codified at 40 CFR 80.27.\4\ The substance and

scope of such a generally applicable provision would depend on many

considerations, including environmental and economic impacts, industry

practices, and the likely consequences for the RFG program in general.

Some of the factors that EPA believes warrant additional consideration

prior to the broad application of the provisions in today's proposed

action include:

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\4\ EPA believes that gasoline sent to areas such as Puerto Rico

and Hawaii (and perhaps Guam, the U.S. Virgin Islands (USVI), the

Northern Marianas and American Samoa) might be most appropriately

evaluated using only the summer Complex Model. Similarly, EPA

believes that gasoline sold in Alaska might be most appropriately

evaluated using only the winter Complex Model, as is currently

required.

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(1) Environmental impacts. Many refiners which have Puerto Rico

gasoline in their baseline, aggregate that baseline with baselines of

some or all of their other refineries. Currently, they may not actually

produce gasoline for Puerto Rico, or may produce a reduced amount

relative to their baseline volume of Puerto Rico gasoline. Thus, they

may be taking advantage of Puerto Rico gasoline baseline emissions

under the current regulations for the compliance of conventional

gasoline produced for other locales. If required to re-evaluate the

baseline of the Puerto Rico gasoline and to use the modified compliance

baseline equation, the gasoline quality in either Puerto Rico or in the

conventional or RFG areas of the continental U.S. may deteriorate

relative to the current situation. EPA is also unable to evaluate the

impact on the environment of the activities of refiners that have no

Puerto Rico gasoline in their baseline but would choose to sell

gasoline in Puerto Rico if such gasoline is allowed or required to be

evaluated using the summer Complex Model. Since the summer Complex

Model gives lower emissions for a given composition of gasoline, it

would be advantageous for refiners to produce gasoline for Puerto Rico

under such circumstances. However, because EPA is unable to anticipate

the actions of such refiners (e.g., future gasoline production plans)

it is currently impossible for the Agency to determine the overall

environmental impacts that such a regulatory provision might have.

(2) Economic impacts. EPA expects today's proposal to have minimal

economic consequences. Nonetheless, because of numerous uncertainties,

EPA is unable to determine what economic impacts might result from a

more general provision applicable to all areas not subject to the

federal volatility standards. Specifically, possible reactions by

refiners regarding aggregation and refinery changes would play a

critical role in assessing the economic consequence of any such Agency

action.

EPA understands that refinery aggregation decisions involve precise

and costly evaluations, and that changing such decisions might entail

another round of concerted deliberation. Thus, while the direct

economic impacts of such a broadly applicable provision might actually

be small, a refiner's choice to re-evaluate its aggregation decisions

might result in significant additional expense. Re-aggregation could

not only be time-consuming and costly for the refiner, but could have

anti-competitive effects for those refiners without applicable gasoline

in their baseline. Thus, EPA's current lack of information regarding

the impact that re-consideration of aggregation decisions might have on

the RFG and anti-dumping programs is one reason we are not proposing to

broadly apply the provisions proposed today.

(3) Disturbing the system. With the exception of the problems

addressed by today's proposed action, the current system for

implementing the RFG anti-dumping standards has been successful. Given

the concerns discussed above, EPA is unsure whether it would be

appropriate to disturb the current system for what may be minimal

environmental benefit at potentially high economic costs.

EPA requests comment on the proposed provisions from refiners that

produce gasoline for sale in any area that is not subject to EPA's

volatility requirements. EPA also requests comment from all interested

parties regarding the environmental and economic impacts of extending

the provisions proposed today to other areas not subject to EPA's

volatility requirements. EPA also requests comment on the appropriate

seasonal Complex Model for a refiner or refinery that sells

conventional gasoline in an area not subject to EPA's volatility

requirements but does not have such gasoline in its baseline. Based on

comments received, EPA may or may not proceed with future rulemaking

action proposing changes similar to those proposed today.

IV. Public Participation

EPA desires full public participation in arriving at its final

decisions and solicits comments on all aspects of this proposal.

Wherever applicable, full supporting data and detailed analysis

[[Page 30935]]

should also be submitted to allow EPA to make maximum use of the

comments. All comments should be directed, by July 9, 1999 to the EPA

Air Docket, Docket A-99-16 (See ADDRESSES).

Any proprietary information being submitted for the Agency's

consideration should be markedly distinguished from other submittal

information and clearly labeled ``Confidential Business Information.''

Proprietary information should be sent directly to the contact person

listed above, and not to the public docket, to ensure that it is not

inadvertently placed in the docket. Information thus labeled and

directed shall be covered by a claim of confidentiality and will be

disclosed by EPA only to the extent allowed and by the procedures set

forth in 40 CFR part 2. If no claim of confidentiality accompanies a

submission when it is received by EPA, it may be made available to the

public without further notice to the commenter.

V. Administrative Requirements

A. Administrative Designation and Regulatory Analysis

Under Executive Order 12866 (58 FR 51735 October 4, 1993), EPA must

determine whether the regulatory action is ``significant'' and

therefore subject to Office of Management and Budget (OMB) review and

the requirements of this Executive Order. The Order defines a

``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 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

the Executive Order.

EPA has 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. The Agency has determined that this regulation

would result in none of the economic effects set forth in Section 1 of

the Order because it does not impose any mandatory obligations on the

regulated community beyond those specified in the current regulations.

B. Compliance With the Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires federal

agencies to conduct a regulatory flexibility analysis of any rule

subject to notice and comment rulemaking requirements unless the agency

certifies that the rule will not have a significant economic impact on

a substantial number of small entities. Small entities include

businesses, small not-for-profit enterprises, and small governmental

jurisdictions. This proposed rule would not have a significant impact

on a substantial number of small entities because it involves an

optional provision intended to promote successful implementation of the

RFG anti-dumping requirements and to minimize existing adverse economic

impacts. This proposed action may, in fact, reduce the burden of the

anti-dumping program on regulated entities. Therefore, I certify that

this action will not have a significant economic impact on a

substantial number of small entities.

C. Paperwork Reduction Act

Today's proposal does not involve the collection of information as

defined by the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq.

Therefore, the provisions of that Act do not apply to this action.

D. Intergovernmental Relations

1. Unfunded Mandates Reform Act

Title II of the unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory action on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, EPA

generally must prepare a written statement, including a cost-benefit

analysis, for proposed and final rules with ``Federal mandates'' that

may result in expenditures by State, local, and tribal governments, in

the aggregate, or by the private sector, of $100 million or more in any

one year. Before promulgation an EPA rule for which a written statement

is needed, section 205 of the UMRA generally requires EPA to identify

and consider a reasonable number of regulatory alternatives and adopt

the least costly, most cost-effective or least burdensome alternative

that achieves the objectives of the rule. The provisions of section 205

do not apply when they are inconsistent with applicable law. Moreover,

section 205 allows EPA to adopt an alternative other than the least

costly, most cost-effective or least burdensome alternative if the

Administrator publishes with the final rule an explanation why that

alternative was not adopted. Before EPA establishes any regulatory

requirement that may significantly or uniquely affect small

governments, including tribal governments, it must have developed under

section 203 of the UMRA a small government agency plan. The plan must

provide for notifying potentially affected small governments, enabling

officials of affected small governments to have meaningful and timely

input in the development of EPA regulatory proposals with significant

Federal intergovernmental mandates, and informing, educating, and

advising small governments on compliance with the regulatory

requirements.

Today's rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) for State, local, or tribal

governments or the private sector. The EPA has determined that today's

rule does not include a Federal mandate because it imposes no

enforceable duty on any State, local, and tribal governments, or the

private sector. Today's rule proposes an optional provision for

evaluating the emissions of conventional gasoline sold by certain

refiners in Puerto Rico. This proposed action may, in fact, reduce the

burden of the anti-dumping program on regulated entities. Therefore,

the requirements of the Unfunded Mandates Act do not apply to this

proposed action. For the same reason, EPA has determined that this rule

contains no regulatory requirements that might significantly or

uniquely affect small governments.

2. Executive Order 12875: Enhancing Intergovernmental Partnerships

Under Executive Order 12875, EPA may not issue a regulation that is

not required by statute and that creates a mandate upon a State, local,

or tribal government, unless the Federal government provides the funds

necessary to pay the direct compliance costs incurred by those

governments, or EPA consults with those governments. If EPA complies by

consulting, Executive Order 12875 requires EPA to provide to the Office

of Management and Budget a description of the extent of EPA's prior

consultation with representatives of affected State, local, and tribal

governments, the nature of their concerns, copies of any written

communications from the governments, and a statement supporting the

need to issue the regulation. In addition, Executive Order 12875

requires EPA to

[[Page 30936]]

develop an effective process permitting elected officials and other

representatives of State, local, and tribal governments ``to provide

meaningful and timely input in the development of regulatory proposals

containing significant unfunded mandates.''

Today's rule does not create a mandate on State, local, or tribal

governments. The rule does not impose any mandatory duties on these

entities. Accordingly, the requirements of Section 1(a) of Executive

Order 12875 do not apply to this rule.

3. Executive Order 13084: Consultation and Coordination With Indian

Tribal Governments

Under Executive Order 13084, EPA may not issue a regulation that is

not required by statute, that significantly or uniquely affects the

communities of Indian tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the Federal

government provides the funds necessary to pay the direct compliance

costs incurred by the tribal governments, or EPA consults with those

governments. If EPA complies by consulting, Executive Order 13094

requires EPA to provide to the Office of Management and Budget, in a

separately identified section of the preamble to the rule, a

description of the extent of EPA's prior consultation with

representatives of affected tribal governments, a summary of the nature

of their concerns, and a statement supporting the need to issue the

regulation. In addition, Executive Order 13084 requires EPA to develop

an effective process permitting elected and other representatives of

Indian tribal governments ``to provide meaningful and timely input in

the development of regulatory policies on matters that significantly or

uniquely affect their communities.''

This proposed rule applies exclusively to refiners that sell

gasoline in Puerto Rico. The proposed rule does not create any mandates

or impose any obligations, and thus does not significantly or uniquely

affect the communities of Indian tribal governments. Accordingly, the

requirements of section 3(b) of Executive Order 13084 do not apply to

this rule.

E. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement

Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272),

directs the EPA to use voluntary consensus standards (VCS) in its

regulatory activities unless to do so would be inconsistent with

applicable law or otherwise impractical. Voluntary consensus standards

are technical standards (e.g., materials specifications, test methods,

sampling procedures, business practices, etc.) that are developed or

adopted by voluntary consensus standard bodies. The NTTAA requires EPA

to provide Congress, through OMB, explanations when the Agency decides

not to use available and applicable voluntary consensus standards.

This proposed rulemaking does not involve technical standards.

Therefore, EPA is not considering the use of any voluntary consensus

standards. EPA welcomes comments on this aspect of the proposed

rulemaking and, specifically, invites the public to identify

potentially applicable voluntary consensus standards and to explain why

such standards should be used in this regulation.

F. Executive Order 13045: Children's Health Protection

Executive Order 13045: Protection of Children from Environmental

Health Risks and Safety Risks (62 FR 19885, April 23, 1997) applies to

any rule that: (1) is determined to be economically significant as

defined under E.O. 12866, and (2) concerns an environmental health or

safety risk that EPA has reason to believe may have a disproportionate

effect on children. If the regulatory action meets both criteria, the

Agency must evaluate the environmental health or safety effects of the

planned rule on children, and explain why the planned regulation is

preferable to other potentially effective and reasonably feasible

alternatives considered by the Agency.

EPA interprets E.O. 13045 as applying only to those regulatory

actions that are based on health or safety risks, such that the

analysis required under section 5-501 of the Order has the potential to

influence the regulation. This rule is not subject to E.O. 13045

because it does not establish an environmental standard intended to

mitigate health or safety risks. Additionally, this rule is not subject

to E.O. 13045 because it implements specific standards established by

Congress in statutes.

VI. Statutory Provisions and Legal Authority

The statutory authority for the actions proposed today is granted

to EPA by sections 114, 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, Reporting and recordkeeping

requirements.

Dated: May 28, 1999.

Carol M. Browner,

Administrator.

For the reasons set out in the preamble, part 80 of title 40 of the

Code of Federal Regulations is amended as follows:

PART 80--REGULATION OF FUEL AND FUEL ADDITIVES

1. The authority citation for part 80 continues 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. A new paragraph (d) is added to Section 80.93 to read as

follows:

Sec. 80.93 Individual baseline submission and approval.

* * * * *

(d) Requirements for petition applicable to Puerto Rico gasoline.

(1) Any refiner or importer with Puerto Rico gasoline, or Puerto

Rico and U.S. Virgin Islands gasoline, in its individual baseline may

petition EPA to use the summer Complex Model to evaluate its Puerto

Rico and Virgin Islands gasoline for compliance under Sec. 80.101.

(2) The petition must be sent to: U.S. EPA, Fuels and Energy

Division, 2000 Traverwood, Ann Arbor, MI 48105.

(3) The petition must include the following:

(i) Identification of the refinery;

(ii) Identification of contact person;

(iii) A revised individual baseline determination, wherein the

baseline Puerto Rico and U.S. Virgin Islands gasoline has been

evaluated using the summer Complex Model. The calculations should be

clearly and fully described and displayed.

(iv) Baseline auditor agreement with the revised baseline.

(4) EPA reserves the right to request additional information. If

such information is not forthcoming in a timely manner, the petition

will not be approved.

3. Section 80.101 is amended by revising paragraphs (f)(4) and

(g)(1)(ii) to read as follows:

Sec. 80.101 Standards applicable to refiners and importers.

* * * * *

(f) * * *

(4)(i) Reserved.

[[Page 30937]]

(ii) Reserved.

(iii) Any refiner or importer with Puerto Rico gasoline, or Puerto

Rico and U.S. Virgin Islands gasoline, in its individual baseline and

which has met the requirements specified in paragraph (g)(1)(ii)(B) of

this section, and whose total volume of conventional gasoline, RBOB,

reformulated gasoline, and California gasoline, as defined in

Sec. 80.81(a)(2), produced or imported by the refiner or importer

during the averaging period is greater than that refiner's or

importer's 1990 baseline volume as determined under Sec. 80.91(f)(1),

must calculate the compliance baseline for each parameter or emissions

performance according to the following formula:

[GRAPHIC] [TIFF OMITTED] TP09JN99.001

Where:

CBi = the compliance baseline value for emissions

performance i

Bi = the refiner's or importer's individual annual baseline

for emissions performance i under Sec. 80.91 for gasoline supplied to

areas subject to volatility standards under Sec. 80.27

BSi = the refiner's or importer's individual baseline as

determined under Sec. 80.91 using the summer Complex Model, for

gasoline supplied to Puerto Rico and the U.S. Virgin Islands, for

emissions performance i

DBAi = annual anti-dumping statutory baseline value for

emissions performance i under Sec. 80.91(c)(5)(iv)

DBSi = the summer statutory baseline value for emissions

performance i under Sec. 80.45(b)(3), table 5

Va = total volume of RFG, conventional gasoline, RBOB,

oxygenates and California gasoline as defined under Sec. 80.81(a)(2)

produced or imported during the averaging period

V1990=1990 baseline volume under Sec. 80.91(f)(1)

V1990s=1990 baseline volume of gasoline supplied to Puerto

Rico and the U.S. Virgin Islands

Vas=volume of conventional gasoline supplied during the

averaging period to Puerto Rico and the U.S. Virgin Islands

i=exhaust toxics or NOX emissions performance

* * * * *

(g) * * *

(1) * * *

(ii) Complex Model calculations.

(A) Exhaust benzene, exhaust toxics, and exhaust NOX

emissions performance for each batch shall be calculated in accordance

with the applicable model under Sec. 80.45.

(B) A refiner which has Puerto Rico gasoline, or Puerto Rico and

U.S. Virgin Islands gasoline, in its baseline shall use the summer

Complex Model to evaluate its averaging period Puerto Rico and U.S.

Virgin Islands gasoline provided it has petitioned the Agency, per

Sec. 80.93(d), and has received Agency approval on the petition, and

has revised its individual baseline, such that the Puerto Rico and U.S.

Virgin Islands gasoline in its individual baseline has been evaluated

using the summer Complex Model.

* * * * *

[FR Doc. 99-14496 Filed 6-8-99; 8:45 am]

BILLING CODE 6560-50-P