Modifications to Fuel Regulations To Provide Flexibility for E15; Modifications to RFS RIN Market Regulations

ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 80 [EPA-HQ-OAR-2018-0775; FRL-9991-04-OAR] RIN 2060-AU34 Modifications to Fuel Regulations To Provide Flexibility for E15; Modifications to RFS RIN Market Regulations AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

The Environmental Protection Agency (EPA) is proposing regulatory changes to allow gasoline blended with up to 15 percent ethanol to take advantage of the 1-pound per square inch (psi) Reid Vapor Pressure (RVP) waiver that currently applies to E10 during the summer months. EPA is also proposing an interpretive rulemaking which defines gasoline blended with up to 15 percent ethanol as “substantially similar” to the fuel used to certify Tier 3 motor vehicles. Finally, EPA is proposing regulatory changes to modify certain elements of the Renewable Fuel Standard (RFS) compliance system, in order to improve functioning of the renewable identification number (RIN) market and prevent market manipulation.

DATES:

Comments must be received on or before April 29, 2019. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before April 22, 2019.

Public Hearing. EPA will announce the public hearing date and location for this proposal in a supplemental Federal Register document.

ADDRESSES:

You may send your comments, identified by Docket ID No. EPA-HQ-OAR-2018-0775, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov (our preferred method) Follow the online instructions for submitting comments.

• Mail: U.S. Environmental Protection Agency, EPA Docket Center, Office of Air and Radiation Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

• Hand Delivery/Courier: EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004

p://www.regulations.gov (our preferred method) Follow the online instructions for submitting comments.

• Mail: U.S. Environmental Protection Agency, EPA Docket Center, Office of Air and Radiation Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

• Hand Delivery/Courier: EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004. The Docket Center's hours of operations are 8:30 a.m.-4:30 p.m., Monday-Friday (except Federal Holidays).

Instructions: All submissions received must include the Docket ID No. for this rulemaking. Comments received may be posted without change to https://www.regulations.gov, including any personal information provided. For detailed instructions on sending comments and additional information on the rulemaking process, see the “Public Participation” heading of the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT:

Julia MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-4131; email address: macallister.julia@epa.gov.

SUPPLEMENTARY INFORMATION:

Potentially Affected Entities. Entities potentially affected by this proposed rule include those involved with the production, importation, distribution, marketing, and retailing of transportation fuels, including gasoline and diesel fuel or renewable fuels such as ethanol, biodiesel, renewable diesel, and biogas. Potentially affected categories include:

Category NAICS 1 codes SIC 2 codes Examples of potentially affected entities Industry 324110 2911 Petroleum refineries. Industry 325193 2869 Ethyl alcohol manufacturing. Industry 325199 2869 Other basic organic chemical manufacturing. Industry 424690 5169 Chemical and allied products merchant wholesalers. Industry 424710 5171 Petroleum bulk stations and terminals. Industry 424720 5172 Petroleum and petroleum products merchant wholesalers

es of potentially affected entities Industry 324110 2911 Petroleum refineries. Industry 325193 2869 Ethyl alcohol manufacturing. Industry 325199 2869 Other basic organic chemical manufacturing. Industry 424690 5169 Chemical and allied products merchant wholesalers. Industry 424710 5171 Petroleum bulk stations and terminals. Industry 424720 5172 Petroleum and petroleum products merchant wholesalers. Industry 454319 5989 Gasoline service stations. Industry 447190 5541 Marine service stations. 1 North American Industry Classification System (NAICS). 2 Standard Industrial Classification (SIC). This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this proposed action. This table lists the types of entities that EPA is now aware could potentially be affected by this proposed action. Other types of entities not listed in the table could also be affected. To determine whether your entity would be affected by this proposed action, you should carefully examine the applicability criteria in 40 CFR part 80. If you have any questions regarding the applicability of this proposed action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

Public Participation. Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2018-0775, at https://www.regulations.gov (our preferred method), or the other methods identified in the ADDRESSES section. Once submitted, comments cannot be edited or removed from the docket. EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make

received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

Outline of This Preamble

I. Executive Summary A. Purpose of This Action B. Summary of the Major Provisions of This Action 1. E15 RVP 2. RIN Market Reform II. Extension of the 1-psi Waiver to E15 A. Background 1. Background of E10 and E15 CAA Sec. 211(f)(4) Waivers 2. Background on CAA Sec. 211(h) B. Proposed Interpretation of CAA Sec. 211(h)(4) 1. Proposed Interpretation 2. Regulatory Amendments 3. Effects on Regulated Parties C. Proposed Interpretation of “Substantially Similar” for Gasoline 1. Statutory Framework 2. Certification Fuels 3. History of Sub Sim Interpretations 4. Criteria for Determining Whether a Fuel Is “Substantially Similar” 5. Technical Rationale and Discussion 6. Other Aspects of the Proposed Interpretative Rulemaking D. E15 Misfueling Mitigation E. E15 Emission Impacts F. E15 Economic Impacts 1. Benefits for E15 RVP 2. Costs for E15 RVP III. RIN Market Reforms A. Overview of RFS Compliance B. RIN Market Assessment C. President's Directive D. Objectives E. Proposed Approach to Individual Regulatory Reforms 1. Reform One: Public Disclosure if RIN Holdings Exceed Certain Threshold 2. Reform Two: Increase RFS Compliance Frequency 3. Reform Three: Limiting Who Can Purchase Separated RINs 4

1. Benefits for E15 RVP 2. Costs for E15 RVP III. RIN Market Reforms A. Overview of RFS Compliance B. RIN Market Assessment C. President's Directive D. Objectives E. Proposed Approach to Individual Regulatory Reforms 1. Reform One: Public Disclosure if RIN Holdings Exceed Certain Threshold 2. Reform Two: Increase RFS Compliance Frequency 3. Reform Three: Limiting Who Can Purchase Separated RINs 4. Reform Four: Limiting Duration of RIN Holdings by Non-Obligated Parties 5. Enhancing EPA's Market Monitoring Capabilities F. RIN Market Reform Economic Impacts 1. Benefits of RIN Market Reform 2. Costs of RIN Market Reform G. Conclusion IV. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review B. Executive Order 13771: Reducing Regulations and Controlling Regulatory Costs C. Paperwork Reduction Act (PRA) D. Regulatory Flexibility Act (RFA) E. Unfunded Mandates Reform Act (UMRA) F. Executive Order 13132: Federalism G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use J. National Technology Transfer and Advancement Act (NTTAA) K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations V. Statutory Authority I. Executive Summary

A. Purpose of This Action

The objectives of this action are twofold. First, this rulemaking will take steps intended to create parity in the way the RVP of both E10 and E15 fuels is treated under EPA regulations. Second, this action proposes reforms to RIN regulations intended to increase transparency and deter potential manipulative and other anti-competitive behaviors in the RIN market.

B. Summary of the Major Provisions of This Action

1

s action are twofold. First, this rulemaking will take steps intended to create parity in the way the RVP of both E10 and E15 fuels is treated under EPA regulations. Second, this action proposes reforms to RIN regulations intended to increase transparency and deter potential manipulative and other anti-competitive behaviors in the RIN market.

B. Summary of the Major Provisions of This Action

1. E15 RVP

We are proposing to adjust the volatility requirements for E15 during the summer season or the period of May 1 through September 15. 1 2 The changed volatility requirements for these blends will allow E15 to receive the benefit of the provision at CAA sec. 211(h)(4), commonly referred to as “the 1-psi waiver.” The 1-psi waiver allows gasoline-ethanol blends to have a higher RVP 3 than would be allowed under CAA sec. 211(h)(1) and the corresponding volatility regulations, which prohibit the RVP of gasoline from exceeding 9.0 psi during the summer. 4 Currently, only blends of ethanol and gasoline containing at least 9 percent and no more than 10 percent ethanol by volume (E10) are granted the 1-psi waiver. 5

1 For purposes of this preamble, E15 refers to gasoline-ethanol blended fuels that contain greater than 10 volume percent and no more than 15 volume percent ethanol content.

2 CAA sec. 211(h)(1) requires EPA to establish volatility requirements during the high ozone season. To implement these requirements, EPA defines “high ozone season” at 40 CFR 80.27 as the period from June 1 to September 15. The regulations at 40 CFR 80.27 also specify that all parties except for retailers must make and distribute gasoline meeting the RVP standards at § 80.27 from May 1 through September 15 and calls this period the “regulatory control period.” The E15 partial waivers impose the 9.0 psi RVP limit on E15 from May 1 through September 15

season” at 40 CFR 80.27 as the period from June 1 to September 15. The regulations at 40 CFR 80.27 also specify that all parties except for retailers must make and distribute gasoline meeting the RVP standards at § 80.27 from May 1 through September 15 and calls this period the “regulatory control period.” The E15 partial waivers impose the 9.0 psi RVP limit on E15 from May 1 through September 15. In general practice by industry and for purposes of this preamble, the high ozone season and regulatory control period is referred to as the “summer” or “summer season” and gasoline produced to be used during the regulatory control period and high ozone season is called “summer gasoline.” EPA does not have any volatility requirements on gasoline outside of the summer season.

3 RVP is a measure of the volatility of gasoline. Gasoline must have volatility in the proper range to prevent driveability, performance, and emissions problems. Too low and the gasoline will not ignite properly; too high and the vehicle may experience vapor lock. Importantly for this proposal, excessively high volatility also leads to increased evaporative emissions from the vehicle. Vehicle evaporative emission control systems are designed and certified on gasoline with a volatility of 9.0 psi RVP. Higher volatility gasoline may overwhelm the vehicle's evaporative control system, leading to a condition described as “breakthrough” of the cannister and mostly uncontrolled evaporative emissions.

4 In a few areas, specified at 40 CFR 80.27, the RVP standard is 7.8 psi. In these areas, after application of the 1-psi waiver, gasoline-ethanol blended fuels covered by the 1-psi waiver could have an RVP of up to 8.8 psi.

5 This applies only to conventional gasoline. E10 reformulated gasoline does not receive the 1-psi waiver under CAA sec. 211(h)(4), and neither would E15 reformulated gasoline as a result of this proposed action

80.27, the RVP standard is 7.8 psi. In these areas, after application of the 1-psi waiver, gasoline-ethanol blended fuels covered by the 1-psi waiver could have an RVP of up to 8.8 psi.

5 This applies only to conventional gasoline. E10 reformulated gasoline does not receive the 1-psi waiver under CAA sec. 211(h)(4), and neither would E15 reformulated gasoline as a result of this proposed action. Reformulated blendstock for oxygenate blending would continue to need to meet a lower RVP level to allow for the subsequent addition of ethanol.

EPA is proposing several steps to accomplish this change. First, we are proposing to modify our interpretation of CAA sec. 211(h)(4). Second, we are proposing a regulation that would effect two changes: (1) Remove limitations in our regulations that were put in place in keeping with the prior interpretation of CAA sec. 211(h)(4) on the volatility of E15 promulgated in the E15 Misfueling Mitigation Rule (“MMR”); 6 and (2) modify the associated product transfer document (PTD) requirements also promulgated in the MMR. Third, we are proposing to clarify our interpretation of CAA sec. 211(f), making it clear that the conditions on the CAA sec. 211(f)(4) waivers granted to E15 in 2010 and 2011 do not restrict the application of the 1-psi waiver to downstream oxygenate blenders in most circumstances.

6 See 76 FR 44406 (July 25, 2011).

As a result of this action, parties would be able to make and distribute E15 made with the same conventional blendstock for oxygenate blending (CBOB) 7 that is used to make E10 by oxygenate blenders during the summer. 8 E15 would then be held to the same gasoline volatility standards that currently apply to E10, maintaining substantially the same level of emissions performance as E10 since E15 made from the same CBOB during the summer would have slightly lower RVP than E10 and would be expected to have similar emissions performance as discussed in Sections II.C and II.E

by oxygenate blenders during the summer. 8 E15 would then be held to the same gasoline volatility standards that currently apply to E10, maintaining substantially the same level of emissions performance as E10 since E15 made from the same CBOB during the summer would have slightly lower RVP than E10 and would be expected to have similar emissions performance as discussed in Sections II.C and II.E.

7 CBOB is the base gasoline made specifically for blending with 10 percent ethanol in conventional gasoline areas of the country.

8 EPA does not have volatility limitations on gasoline outside of the summer season. Therefore, E15 can already be made from the same blendstock used for E10 outside of the summer season. The rest of the year is commonly referred to as the “winter season” or “winter.”

As discussed in Section II.C, we are also proposing a “substantially similar” (sub sim) interpretative rulemaking for 9 We are proposing two alternative sub sim interpretations. We are proposing that E15 with an RVP of 10.0 psi is sub sim to fuel used to certify Tier 3 light duty vehicles ( i.e., E10 with an RVP of 9.0 psi). We are also proposing and seeking comment on an alternative interpretation that E15 with an RVP of 9.0 psi is sub sim to fuel used to certify Tier 3 light duty vehicles. Either of these sub sim interpretations would enable E15 to be lawfully blended from the same gasoline blendstock ( i.e., CBOB) that is used to make E10 during the summer by all fuel manufacturers (in addition to oxygenate blenders who would be able to do so without a new sub sim interpretative rulemaking).

9 EPA last issued an interpretative rulemaking for what it considers sub sim for gasoline in 2008. See 73 FR 22281 (April 25, 2008).

2. RIN Market Reform

EPA takes claims of RIN market manipulation seriously and although we have yet to see data-based evidence of such behavior, the potential for manipulation is a concern

would be able to do so without a new sub sim interpretative rulemaking).

9 EPA last issued an interpretative rulemaking for what it considers sub sim for gasoline in 2008. See 73 FR 22281 (April 25, 2008).

2. RIN Market Reform

EPA takes claims of RIN market manipulation seriously and although we have yet to see data-based evidence of such behavior, the potential for manipulation is a concern. Accordingly, we are proposing the four reforms outlined in President Trump's October 11, 2018 statement 10 and are requesting comments on additional steps we can take to identify and prevent RIN market manipulation. Specifically, we are proposing and seeking comment on the following RIN market reforms outlined by the President, as well as some additional items identified by EPA:

10 See: https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-expanding-waivers-e15-increasing-transparency-rin-market.

• Requiring public disclosure when RIN holdings held by an individual actor exceed specified limits.

• Requiring the retirement of RINs for the purpose of compliance be made in real time.

• Prohibiting entities other than obligated parties from purchasing separated RINs.

• Limiting the length of time a non-obligated party can hold RINs.

For the first reform, we are proposing to set two RIN holding thresholds that would work in tandem to prevent potential accumulation of market power. These thresholds would apply to holdings of separated D6 RINs only. 11 The first threshold would be triggered if a party's end-of-day separated D6 RIN holdings exceeded three percent of the total implied conventional biofuel volume requirement. An obligated party that triggered the first threshold would then apply a second threshold by comparing its end-of-day separated D6 RIN holdings with 130 percent of its individual implied conventional renewable volume obligation (RVO)

st threshold would be triggered if a party's end-of-day separated D6 RIN holdings exceeded three percent of the total implied conventional biofuel volume requirement. An obligated party that triggered the first threshold would then apply a second threshold by comparing its end-of-day separated D6 RIN holdings with 130 percent of its individual implied conventional renewable volume obligation (RVO). We are proposing that parties make daily calculations and make a yes/no certification statement to EPA in a quarterly report and that we would publish on our website the names of any parties that reported exceeding the thresholds. We seek comment on whether exceeding the thresholds should be considered a prohibited act. We are also proposing that the RIN holdings of corporate affiliates be included in a party's calculations to determine if they trigger a threshold.

11 RINs specify a “D-code” corresponding to the renewable fuel category applicable to the fuel, as determined by the feedstock used, fuel type produced and GHG emissions of the fuel, among other characteristics. There are five different D-Codes for RINs in the RFS program. D3 RINs are cellulosic biofuel RINs. D4 RINs are biomass-based diesel (including both biodiesel and renewable diesel) RINs. D5 RINs are advanced biofuel RINs. D6 RINs are conventional biofuel RINs (primarily corn ethanol). D7 RINs are cellulosic diesel RINs which meet the requirements for both cellulosic biofuel and biomass-based diesel.

For the second reform, we are proposing to establish RIN retirement requirements for the first three quarters of the compliance year, calculated by an obligated party as its gasoline and diesel production and import volume through the end of the quarter multiplied by the current year renewable fuel standard. We propose to discount the requirement to 80 percent of the calculated volume to provide necessary flexibility

m, we are proposing to establish RIN retirement requirements for the first three quarters of the compliance year, calculated by an obligated party as its gasoline and diesel production and import volume through the end of the quarter multiplied by the current year renewable fuel standard. We propose to discount the requirement to 80 percent of the calculated volume to provide necessary flexibility. Obligated parties would submit reports to EPA 60 days after the end of the quarter to demonstrate compliance with these requirements and could use any D-code RINs to do so. This reform would not impact the current annual RVO calculations or compliance, including the two-year RIN life, the annual deficit carryover, or the 20 percent carryover provisions. We propose that an obligated party that fell short of its quarterly RIN retirement requirement in the current year would not be able to incur a deficit in its next year annual RVO.

For the third reform, we are proposing that only obligated parties, exporters, and certain non-obligated parties be allowed to purchase separated D6 RINs. Non-obligated parties would be exempt from this proposed restriction if they were a corporate or contractual affiliate to an obligated party. This would include blenders who could demonstrate that they had contracts to deliver separated RINs to an obligated party for the purpose of compliance. Non-obligated parties that need to replace invalid RINs would also be exempt from this proposed provision.

For the fourth reform, we are proposing a limit on the duration that a non-obligated party could hold separated D6 RINs. Specifically, we are proposing that a non-obligated party would be required to sell or retire as many RINs as it obtained in a quarter. We are proposing that parties would make a yes/no certification statement to EPA about its compliance with this limit in a quarterly report and that auditors would confirm this statement in the annual attest engagement

obligated party could hold separated D6 RINs. Specifically, we are proposing that a non-obligated party would be required to sell or retire as many RINs as it obtained in a quarter. We are proposing that parties would make a yes/no certification statement to EPA about its compliance with this limit in a quarterly report and that auditors would confirm this statement in the annual attest engagement.

Lastly, we outline our consideration of taking additional steps beyond those listed in the President's directive to enhance our market monitoring capabilities. We propose that auditors would include in their attest engagements to EPA a full list of a party's affiliates, including affiliates not registered with the RFS program. To improve our abilities to analyze and publish RIN price data, we propose that parties would follow certain conventions when reporting RIN prices to EPA and that they would report whether the RIN transaction was on the spot market or as the result of a term contract. We also explain that we plan to update business rules in EMTS to require that both parties in a RIN transaction enter the same RIN price. Finally, we discuss the possibility of employing a third-party market monitor to conduct analysis of the RIN market, including screening for potential anti-competitive behavior.

II. Extension of the 1-psi Waiver to E15

In this action, we are proposing to adjust the volatility requirements for E15 during the summer season based on a revised interpretation of CAA sec. 211(h)(4). The changed volatility requirements for these blends will allow E15 to receive the benefit of the 1-psi waiver. The 1-psi waiver, at CAA sec. 211(h)(4), allows gasoline-ethanol blends to have a higher RVP than would be allowed under CAA sec. 211(h)(1) and the corresponding volatility regulations that prohibit the RVP of gasoline from exceeding 9.0 psi during the summer

ation of CAA sec. 211(h)(4). The changed volatility requirements for these blends will allow E15 to receive the benefit of the 1-psi waiver. The 1-psi waiver, at CAA sec. 211(h)(4), allows gasoline-ethanol blends to have a higher RVP than would be allowed under CAA sec. 211(h)(1) and the corresponding volatility regulations that prohibit the RVP of gasoline from exceeding 9.0 psi during the summer. Currently, EPA regulations only grant the 1-psi waiver to blends of ethanol and gasoline containing at least 9 percent and no more than 10 percent ethanol by volume. The proposed interpretation in this action is in response to the increased presence of E15 in the gasoline marketplace, and the conditions that led us to provide the original 1-psi waiver for E10 in 1990 are equally applicable to E15 today.

The volatility of E15 is also limited by CAA sec. 211(f). CAA sec. 211(f) prohibits the introduction into commerce of fuels and fuel additives unless they are substantially similar to fuels utilized in the certification of motor vehicles, or receive a waiver from the sub sim requirement in accordance

EPA is proposing several steps to accomplish this change. First, we are proposing to modify our interpretation of CAA sec. 211(h)(4). Under this new interpretation, ethanol blends containing at least 10 percent ethanol would receive the 1-psi waiver, including E15. To effectuate this change, we are proposing the following changes to EPA's fuels regulations: (1) Remove limitations in our regulations that were put in place in keeping with the prior interpretation of CAA sec. 211(h)(4) on the volatility of E15 promulgated in 40 CFR 80.27 and the MMR ( i.e., 40 CFR part 80, subpart N); and (2) modify the associated PTD requirements promulgated in the MMR.

After application of the CAA sec. 211(h)(4) waiver, we must then ensure that E15 with an RVP of 10 psi can be introduced into commerce. Therefore, as a second step, in order to allow the introduction into commerce of E15 at 10.0 RVP in the summer under CAA sec

ed in 40 CFR 80.27 and the MMR ( i.e., 40 CFR part 80, subpart N); and (2) modify the associated PTD requirements promulgated in the MMR.

After application of the CAA sec. 211(h)(4) waiver, we must then ensure that E15 with an RVP of 10 psi can be introduced into commerce. Therefore, as a second step, in order to allow the introduction into commerce of E15 at 10.0 RVP in the summer under CAA sec. 211(f), we are co-proposing two potential mechanisms. The first mechanism clarifies our interpretation of CAA sec. 211(f), making it clear that the conditions on the CAA sec. 211(f)(4) waivers granted to E15 in 2010 and 2011 do not restrict the application of the CAA sec. 211(h)(4) 1-psi waiver to downstream oxygenate blenders, as explained in more detail later in this notice. We are co-proposing a second mechanism that would find that E15 is substantially similar to the E10 fuel utilized to certify Tier 3 light-duty vehicles, thus allowing E15 similar treatment to E10 with respect to RVP.

The following subsections provide further details on how we will accomplish this change, as well as impacts on emissions and the economy.

A. Background

1. Background of E10 and E15 CAA Sec. 211(f)(4) Waivers

CAA sec. 211(f)(1) makes it unlawful for any manufacturer of any fuel or fuel additive (“fuel or fuel additive manufacturer”) to first introduce into commerce, or to increase the concentration in use of, any fuel or fuel additive for use by any person in motor vehicles manufactured after model year (MY) 1974, which is not substantially similar (commonly referred to as “sub sim”) to any fuel or fuel additive used in the certification of any MY1975, or subsequent model year, vehicle or engine under CAA sec. 206. Fuels that are not sub sim to a fuel used in certification cannot be introduced into commerce unless EPA has granted a waiver under CAA sec. 211(f)(4). CAA sec. 211(f)(4) provides that upon application of any fuel or fuel additive manufacturer, the Administrator may waive the prohibitions of CAA sec

in the certification of any MY1975, or subsequent model year, vehicle or engine under CAA sec. 206. Fuels that are not sub sim to a fuel used in certification cannot be introduced into commerce unless EPA has granted a waiver under CAA sec. 211(f)(4). CAA sec. 211(f)(4) provides that upon application of any fuel or fuel additive manufacturer, the Administrator may waive the prohibitions of CAA sec. 211(f)(1) if the Administrator determines that the applicant has established that such fuel or fuel additive, or a specified concentration thereof, will not cause or contribute to a failure of any emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine or nonroad vehicle in which such device or system is used) to achieve compliance by the vehicle or engine with the emission standards to which it has been certified pursuant to CAA sec. 206 and 213(a).

In 1978, a waiver application was submitted for gasoline containing ethanol at 10 percent by volume (E10). EPA did not act to grant or deny the petition for a waiver for E10, and consequently, under the statutory scheme as it existed at that time, the waiver was deemed granted by operation of law. 12 Thus, E10 was granted a waiver under CAA sec. 211(f)(4) without any conditions, in contrast to prior CAA sec. 211(f)(4) waivers, which included, for example, conditions on RVP. 13

12 See 44 FR 20777 (April 6, 1979).

13 See e.g., “Fuels and Fuel Additives; Waiver Application,” Octamix Waiver, 53 FR 3636 (February 8, 1988).

For E15, EPA granted partial waivers under CAA sec. 211(f)(4) in 2010 and 2011. 14 Specifically, on October 13, 2010, EPA approved a partial waiver request to allow the introduction of E15 into commerce for use in MY2007 and newer light-duty motor vehicles subject to certain waiver conditions. 15 Subsequently, on January 21, 2011, EPA extended this partial waiver to include MY2001-2006 light-duty motor vehicles after receiving and analyzing additional U.S

4) in 2010 and 2011. 14 Specifically, on October 13, 2010, EPA approved a partial waiver request to allow the introduction of E15 into commerce for use in MY2007 and newer light-duty motor vehicles subject to certain waiver conditions. 15 Subsequently, on January 21, 2011, EPA extended this partial waiver to include MY2001-2006 light-duty motor vehicles after receiving and analyzing additional U.S. Department of Energy (“DOE”) test data and finding that E15 will not cause or contribute to a failure to achieve compliance with the emissions standards to which these vehicles were certified over their useful lives. 16 EPA also denied the waiver request for MY2000 and older light-duty motor vehicles, heavy-duty gasoline engines and vehicles, highway and off-highway motorcycles, and nonroad engines, vehicles, and equipment. This denial was based on EPA's engineering judgement that E15 could adversely affect the emissions and emissions controls of vehicles, engines, and equipment not covered by the partial waivers and that the applicants had not provided sufficient data or other information to demonstrate that E15 would not cause or contribute to a failure to achieve compliance with the emissions standards to which these vehicles, engines, and equipment were certified over their full useful lives, as required by CAA sec. 211(f)(4).

14 See 75 FR 68094 (November 4, 2010) and 76 FR 4662 (January 26, 2011), respectively.

15 See 75 FR 68094 (November 4, 2010).

16 See 76 FR 4662 (January 26, 2011).

In the October 2010 waiver, for MY2007 and newer motor vehicles, EPA also concluded that the data and information show that E15 will not lead to violations of evaporative emissions standards, so long as the fuel does not exceed an RVP of 9.0 psi in the summer. 17 Subsequently, in the January 2011 waiver, EPA imposed identical waiver conditions for MY2001-2006 motor vehicles, including the requirement that the fuel not exceed an RVP of 9.0 psi in the summer, based on the same conclusion

he data and information show that E15 will not lead to violations of evaporative emissions standards, so long as the fuel does not exceed an RVP of 9.0 psi in the summer. 17 Subsequently, in the January 2011 waiver, EPA imposed identical waiver conditions for MY2001-2006 motor vehicles, including the requirement that the fuel not exceed an RVP of 9.0 psi in the summer, based on the same conclusion. 18

17 See 75 FR 68149-68150 (November 4, 2010).

18 See 76 FR 4682-4683 (January 26, 2011).

Taken together, these partial waivers permitted E15 to be used in MY2001 and newer light-duty motor vehicles subject to particular waiver conditions, including fuel quality conditions and conditions on the sale and use of E15. These waiver conditions included the prohibition on the use of E15 in pre-MY2001 motor vehicles, in addition to heavy-duty gasoline engines or vehicles, or motorcycles, as well as any nonroad engines or nonroad vehicles. The waiver conditions also placed limitations on the ethanol that can be added (both the concentration and quality), 19 as well as a condition that the RVP of the final fuel not exceed 9.0 psi. 20 The waiver conditions also require fuel and fuel additive manufacturers to submit a misfueling mitigation plan describing all reasonable precautions for ensuring E15 is only used in MY2001 and newer motor vehicles, as described in the 21 EPA is not proposing to revise the E15 partial waivers under CAA sec. 211(f)(4), and is therefore not soliciting comments on the waiver itself or any of its conditions.

19 For example, the ethanol used to make E15 must meet ASTM D4806-10 specifications for ethanol quality. See ASTM D4806-10, “Standard Specification for Denatured Fuel Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine Fuel,” ASTM International, West Conshohocken, PA, 2010.

20 This RVP limit is identical to the limitation under CAA sec. 211(h)(1) of 9.0 psi RVP during the high ozone season

hanol used to make E15 must meet ASTM D4806-10 specifications for ethanol quality. See ASTM D4806-10, “Standard Specification for Denatured Fuel Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine Fuel,” ASTM International, West Conshohocken, PA, 2010.

20 This RVP limit is identical to the limitation under CAA sec. 211(h)(1) of 9.0 psi RVP during the high ozone season. The high ozone season was defined by the Administrator via regulation to mean the period from June 1 to September 15 of any calendar year.

21 See 76 FR 4662, 4582 (January 26, 2011).

To help facilitate the implementation of the waiver conditions and place requirements on parties other than fuel and fuel additive manufacturers, EPA promulgated the E15 Misfueling Mitigation Rule (MMR) in 2011, under CAA sec. 211(c), subsequent to the E15 partial waiver decisions. 22 The E15 MMR imposed fuel dispenser labeling, PTD, and compliance survey requirements on parties that make and distribute E15. The E15 MMR also promulgated EPA's interpretation of the applicability of the 1-psi waiver in CAA sec. 211(h)(4) to E15 and certain regulations designed to effectuate that interpretation. 23 In this action, EPA is proposing to revise the interpretation of CAA sec. 211(h)(4) articulated in the MMR and the regulations adopted to implement that interpretation.

22 See 76 FR 44406 (July 25, 2011).

23 As discussed further in the following section, in promulgating regulations following the enactment of CAA sec. 211(h)(4), EPA interpreted 211(h)(4) to apply to gasoline ethanol blends containing about 10 percent ethanol. See 56 FR 64708 (December 12, 1991).

2. Background on CAA Sec. 211(h)

To properly understand this proposed action, it is important to review the history of EPA's volatility controls both leading up to and after the enactment of CAA sec. 211(h). Congress enacted CAA sec. 211(h) as part of the CAA Amendments of 1990 to address the volatility of gasoline

lends containing about 10 percent ethanol. See 56 FR 64708 (December 12, 1991).

2. Background on CAA Sec. 211(h)

To properly understand this proposed action, it is important to review the history of EPA's volatility controls both leading up to and after the enactment of CAA sec. 211(h). Congress enacted CAA sec. 211(h) as part of the CAA Amendments of 1990 to address the volatility of gasoline. Congress did so in the context of EPA's prior regulatory actions, under CAA sec. 211(c), which aimed to control the RVP of gasoline. EPA has historically viewed Congress's enactment of 211(h), therefore, as a codification of EPA's regulatory actions with regard to RVP up to that point. 24 Accordingly, CAA sec. 211(h)(1) prohibits the sale of gasoline with an RVP in excess of 9.0 psi during the high ozone season while CAA sec. 211(h)(2) allows EPA to promulgate more stringent RVP requirements for nonattainment areas. CAA sec. 211(h)(4) further provides a 1.0 psi RVP allowance for “fuel blends containing gasoline and 10 percent” ethanol and recognizes the existence of the CAA sec. 211(f)(4) waiver for E10—the only ethanol blend which had received such a waiver at that time—in the “deemed to comply” provisions contained in CAA sec. 211(h)(4)(A-C).

24 See 76 FR 44433 (July 25, 2011).

a. Pre-Enactment Volatility Regulations

In 1987, prior to the 1990 CAA amendments, EPA for the first time proposed limitations on the volatility of gasoline under CAA sec. 211(c), which provides EPA with general authority to regulate fuels and fuel additives. These limitations on gasoline volatility were put into place to address evaporative emissions from gasoline-fueled vehicles due to their contribution to ozone formation. The volatility of gasoline had begun rising significantly in the years preceding EPA's action, due to vehicle design becoming more tolerant of higher RVP through fuel injected engines, as well as strong economic incentive to add butane 25 to fuel due to favorable blending economics

to place to address evaporative emissions from gasoline-fueled vehicles due to their contribution to ozone formation. The volatility of gasoline had begun rising significantly in the years preceding EPA's action, due to vehicle design becoming more tolerant of higher RVP through fuel injected engines, as well as strong economic incentive to add butane 25 to fuel due to favorable blending economics. 26 This lead to very high evaporative volatile organic compound (VOC) emissions from the in-use fleet of gasoline vehicles. EPA believed that matching the volatility of certification fuel to the volatility of in-use fuel would reduce evaporative emissions, and would help ensure vehicle were designed to handle in-use conditions. In particular, limiting the volatility of gasoline to 9.0 psi RVP, which is the level in the E0 gasoline on which vehicles were certified under CAA sec. 206 at that time, would reduce emissions from all gasoline-related sources, and enable additional VOC emission reductions. 27

25 Butane, in this context, refers to a high-volatility, relatively inexpensive gasoline blendstock that gasoline refiners typically add to or remove from gasoline to control RVP.

26 52 FR 31279 (August 19, 1987).

27 See 52 FR 31274 at 31278-31287 (August 19, 1987).

At the time of the 1987 proposal, some parties had begun the practice of adding ethanol to gasoline after the refinery process has been completed to make what was then known as “gasohol.” 28 This practice was known as “splash blending” ethanol into gasoline and generally took place at downstream terminals. At the time, gasohol also had a tax credit because Congress intended to encourage the use of ethanol as a means of reducing dependence on foreign oil and making use of excess agricultural production. 29 Adding 10 percent ethanol to gasoline, however, causes roughly a 1.0 psi RVP increase in the blend's volatility

ash blending” ethanol into gasoline and generally took place at downstream terminals. At the time, gasohol also had a tax credit because Congress intended to encourage the use of ethanol as a means of reducing dependence on foreign oil and making use of excess agricultural production. 29 Adding 10 percent ethanol to gasoline, however, causes roughly a 1.0 psi RVP increase in the blend's volatility. 30 At the time, due to the limited amount of ethanol blended into gasoline, almost no low-RVP gasoline was available into which 10 percent ethanol could be splash-blended without the gasoline-ethanol blended fuel exceeding the proposed RVP limit. Unlike E15, because gasohol was given a CAA sec. 211(f)(4) waiver by operation of law, no volatility controls had previously been placed on it. Thus, even though the CAA sec. 211(f)(4) waiver allowed E10 to be lawfully introduced into commerce, the lowered RVP standards had the potential to shut down the nascent ethanol blending industry.

28 52 FR 31292 (August 19, 1987).

29 Id.

30 Id.

To address this potential hurdle to continued ethanol blending, EPA proposed interim regulations for gasohol that allowed it to be 1.0 psi RVP higher than otherwise required for gasoline. 31 This is referred to as the 1-psi waiver. 32 As a result, 10 percent ethanol could be blended at downstream terminals into the gasoline that refineries had already produced. The agency, therefore, designed the 1-psi waiver as a means of accommodating the CAA sec. 211(f)(4) waiver that was then applicable to E10 and to address public policy concerns, such as reducing dependence on foreign oil and making use of excess agricultural production, as referenced above. The Agency proposed that the 1-psi waiver be conditioned on sampling and testing the final blend of gasoline and ethanol for RVP by all regulated parties, including downstream blenders, that elected to use the waiver. 33

31 See 52 FR 31274, 31316 (August 19, 1987).

32 See 52 FR 31316 (August 19, 1987)

endence on foreign oil and making use of excess agricultural production, as referenced above. The Agency proposed that the 1-psi waiver be conditioned on sampling and testing the final blend of gasoline and ethanol for RVP by all regulated parties, including downstream blenders, that elected to use the waiver. 33

31 See 52 FR 31274, 31316 (August 19, 1987).

32 See 52 FR 31316 (August 19, 1987).

33 See 52 FR 31274, proposed 40 CFR 80.27(d)(1) (August 19, 1987). See also 54 FR 11872-73 (March 22, 1989), where we declined to finalize this approach.

In 1989, EPA finalized regulations that imposed limits on the volatility of gasoline and ethanol blends as “Phase I” of a two-phase regulation under CAA sec. 211(c), which is EPA's general authority to regulate fuels and fuel additives. EPA's regulation established a maximum RVP limit of 10.5 psi for gasoline sold during the high ozone season. 34 In that action, EPA also provided a RVP allowance “for gasoline-ethanol blends commonly known as gasohol” that was 1.0 psi higher than for gasoline. 35 This was finalized as an interim measure with the intent to revisit the issue in “Phase II” of the volatility regulations. 36

34 See 54 FR 11879 (March 22, 1989).

35 Id.

36 Id.

EPA's final regulations in that action provided that in order to receive the 1-psi waiver, “gasoline must contain at least 9% ethanol (by volume),” and that “the ethanol content of gasoline shall be determined by use of one of the testing methodologies specified in Appendix F to this part.” The regulations also provided that “the maximum ethanol content of gasoline shall not exceed any applicable waiver conditions under 37

37 54 FR 11872-73 (March 22, 1989) (codified at 40 CFR 80.27(d)).

In that action, EPA did not place limits on the upper bound of the ethanol content, other than by providing, as quoted above, that the ethanol content shall not exceed any applicable waiver conditions under CAA sec

o provided that “the maximum ethanol content of gasoline shall not exceed any applicable waiver conditions under 37

37 54 FR 11872-73 (March 22, 1989) (codified at 40 CFR 80.27(d)).

In that action, EPA did not place limits on the upper bound of the ethanol content, other than by providing, as quoted above, that the ethanol content shall not exceed any applicable waiver conditions under CAA sec. 211(f)(4) (and thereby implicitly incorporating any upper-bound limit imposed as a condition on any future applicable waiver). At the time, the highest permissible ethanol content under a CAA sec. 211(f)(4) waiver was 10 percent ethanol, and thus, this provision could only apply to blends containing 9-10 percent ethanol. In other words, EPA designed the 1-psi waiver to allow for the continued lawful introduction into commerce of E10 and, the Phase I RVP regulatory language would have automatically accommodated future increases in allowable ethanol concentration in gasoline under a CAA sec. 211(f)(4) waiver.

In June 1990, in “Phase II” of the volatility regulations, EPA established a maximum RVP limit of 9.0 psi. The regulations also established an RVP limit of 7.8 psi for gasoline sold during the high ozone season in both ozone attainment and nonattainment areas in the southern states of the country. EPA further maintained the 1 psi RVP allowance for blends of 10 percent ethanol and gasoline and did not modify the regulations at 40 CFR 80.27(d). 38 Thus, both the language stating that the gasoline must contain at least 9 percent ethanol, and the language stating that the maximum ethanol content of gasoline shall not exceed any applicable waiver conditions under CAA sec. 211(f)(4), remained in the regulations. 39 In doing so the agency reiterated that this was in recognition of the importance of ethanol to the nation's energy security as well as the agricultural economy sector

t the gasoline must contain at least 9 percent ethanol, and the language stating that the maximum ethanol content of gasoline shall not exceed any applicable waiver conditions under CAA sec. 211(f)(4), remained in the regulations. 39 In doing so the agency reiterated that this was in recognition of the importance of ethanol to the nation's energy security as well as the agricultural economy sector. The agency also addressed air quality impacts of allowing the 1-psi waiver given that a higher RVP limit for blends of 10 percent ethanol and gasoline would result in increased evaporative VOC emissions. It “reflects the moderation in EPA's concern about negative air quality impact as well as a reluctance to threaten the motor fuel ethanol production and blending industries with collapse.” 40

38 See 55 FR 23658, 23660 (June 11, 1990).

39 Id.

40 “While some believe the industry should not exist . . . [o]ther agencies and Congress will continue to address related agricultural, trade and energy issues which have led to federal support for the existence of the gasohol industry.” 55 FR 23666 (June 11, 1990).

b. Enactment of CAA Sec. 211(h)

In November 1990, Congress enacted the CAA Amendments of 1990, including CAA sec. 211(h), which provided the first statutory provisions specifically addressing RVP. CAA sec. 211(h)(1) required EPA “to promulgate regulations making it unlawful . . . during the high ozone season to sell . . . or introduce into commerce gasoline with a Reid Vapor Pressure in excess of 9.0 pounds per square inch.” Further in CAA sec. 211(h)(4), Congress, following EPA's lead in the 1989 and 1990 volatility regulations, also allowed fuel blends containing gasoline and 10 percent ethanol to have 1 psi higher RVP than the RVP standard otherwise established in CAA sec. 211(h)(1). CAA sec. 211(h)(4) provides the following:

to commerce gasoline with a Reid Vapor Pressure in excess of 9.0 pounds per square inch.” Further in CAA sec. 211(h)(4), Congress, following EPA's lead in the 1989 and 1990 volatility regulations, also allowed fuel blends containing gasoline and 10 percent ethanol to have 1 psi higher RVP than the RVP standard otherwise established in CAA sec. 211(h)(1). CAA sec. 211(h)(4) provides the following:

(4) Ethanol waiver. For fuel blends containing gasoline and 10 percent denatured anhydrous ethanol, the Reid vapor pressure limitation under this subsection shall be one pound per square inch (psi) greater than the applicable Reid vapor pressure limitations established under paragraph (1).

According to legislative history, “[t]his provision was included in recognition that gasoline and ethanol are mixed after the refining process has been completed. It was recognized that to require ethanol to meet a nine pound RVP would require the creation of a production and distribution network for sub-nine pound RVP gasoline. The cost of producing and distributing type of fuel would be prohibitive to the petroleum industry and would likely result in the termination of the availability of ethanol in the marketplace.” 41 EPA has interpreted CAA sec. 211(h) as largely a codification of our prior RVP regulations. 42 Relevant legislative history also indicates that Congress based the 1.0 psi waiver on technical data showing that blending gasoline with 9-10 percent ethanol would result in an approximate 1 psi RVP increase for the final gasoline-ethanol blend. Hearing testimony provides that “[t]he certainty of physical chemistry provides the assurance the addition of 10 percent ethanol to the base gasoline will not exceed 1.0 psi RVP. . . . [A]nd the Clean Air Act itself which prohibits addition of more than 10 percent ethanol, alleviates any concern that the addition of ethanol to gasoline will result in different volatility levels than already recognized by EPA as adding less than 1.0 psi RVP to gasoline.” 43

41 S. Rep. No

des the assurance the addition of 10 percent ethanol to the base gasoline will not exceed 1.0 psi RVP. . . . [A]nd the Clean Air Act itself which prohibits addition of more than 10 percent ethanol, alleviates any concern that the addition of ethanol to gasoline will result in different volatility levels than already recognized by EPA as adding less than 1.0 psi RVP to gasoline.” 43

41 S. Rep. No. 101-228, at 110 (1989) (Conf. Rep.); reprinted at 5 Leg. Hist. at 8450 (1993).

42 See 76 FR 44433 (July 25, 2011).

43 Clean Air Act Amendments: Hearings on H.R. 2521, H.R. 3054 and H.R. 3196 Before the Subcommittee on Health and the Environment of the Committee On Energy and Commerce, 100th Cong. 1st Sess. (1987) at 366 (statement of Eric Vaughn, President and CEO of renewable Fuels Association).

Further, Congress also enacted a conditional defense against liability for violations of the RVP level allowed under the 1-psi waiver by stating:

[p]rovided; however, that a distributor, blender, marketer, reseller, carrier, retailer, or wholesale purchaser consumer shall be deemed to be in full compliance with the provisions of this subsection and the regulations promulgated thereunder if it can demonstrate that—(A) The gasoline portion of the blend complies with the Reid vapor pressure limitations promulgated pursuant to this subsection; (B) the ethanol portion of the blend does not exceed its waiver condition under subsection (f)(4) of this section; and (C) no additional alcohol or other additive has been added to increase the Reid Vapor Pressure of the ethanol portion of this blend. CAA sec. 211(h)(4). This is referred to as the “deemed to comply” provision, or the alternative compliance mechanism for the 1-psi waiver. It is considered a statutorily mandated defense that allows regulated parties such as downstream oxygenate blenders to demonstrate compliance with the relaxed RVP standard instead of complying with the testing provisions in 40 CFR 80.27(d)(2) (1987)

this blend. CAA sec. 211(h)(4). This is referred to as the “deemed to comply” provision, or the alternative compliance mechanism for the 1-psi waiver. It is considered a statutorily mandated defense that allows regulated parties such as downstream oxygenate blenders to demonstrate compliance with the relaxed RVP standard instead of complying with the testing provisions in 40 CFR 80.27(d)(2) (1987). It also reflects Congressional response to EPA's proposed compliance testing provisions for the 1-psi waiver in the 1987 proposed rulemaking, which they viewed as complicated and burdensome; “the enforcement strategy recently proposed by the Agency . . . would be totally unworkable for those motor vehicle fuels which are a blend of gasoline and ethanol and which are allowed a higher RVP limit under the reported bill.” 44

44 S. Rep. No. 100-231, 100th Cong. 1st Sess. at 149 (1987).

c. Implementation of CAA Sec. 211(h)(4)

Subsequent to Congress's enactment of CAA sec. 211(h)(4), EPA modified these regulations to more explicitly align with the new statutory provisions, but “did not propos[e] any change to the current requirement that the blend contain between 9 and 10 percent ethanol (by volume) to obtain the one psi allowance.” 45 However, EPA did modify its regulations at 40 CFR 80.27 to clarify that “gasoline must contain denatured, anhydrous ethanol,” and that “[t]he concentration of the ethanol, excluding the required denaturing 46 We further stated that “this is consistent with Congressional intent [because] the nature of the blending process . . . further complicates a requirement that the ethanol portion of the blend be exactly 10 percent ethanol.” 47 For these reasons, the 1-psi waiver reflected Congressional recognition of the existing CAA sec. 211(f)(4) waiver for E10; Congress intended that the 1-psi waiver from the 9.0 psi RVP requirement in CAA sec. 211(h)(1) would allow for E10's continued lawful introduction into commerce. 48

45 See 56 FR 64708 (December 12, 1991).

46 Id.

47 Id.

48 Id

the blend be exactly 10 percent ethanol.” 47 For these reasons, the 1-psi waiver reflected Congressional recognition of the existing CAA sec. 211(f)(4) waiver for E10; Congress intended that the 1-psi waiver from the 9.0 psi RVP requirement in CAA sec. 211(h)(1) would allow for E10's continued lawful introduction into commerce. 48

45 See 56 FR 64708 (December 12, 1991).

46 Id.

47 Id.

48 Id.

In issuing implementing regulations at 40 CFR 80.28(g)(8) related to the “deemed to comply” provision in CAA sec. 211(h)(4), EPA allowed parties to demonstrate a defense against liability by making the showings provided in CAA sec. 211(h)(4), stating that “EPA believes this defense is limited to ethanol blends which meet the minimum 9 percent requirement in the regulations and the maximum 10 percent requirement in the waivers under section 211(f)(4).” 49 In doing so, EPA explicitly specified its applicability to E10. (“The ethanol portion of the blend does not exceed 10 percent (by volume)” as compared to CAA sec. 211(h)(4), which merely references the CAA sec. 211(f)(4) waiver. (“[T]he ethanol portion of the blend does not exceed its waiver condition under subsection (f)(4) of this section”)). We also stated that the deemed to comply provision was a “new defense against liability for violation of the ethanol blend RVP requirement [and that] EPA believes that this statutorily mandated defense is in addition to and does not supersede any of the defenses currently contained in the regulations.” 50 We further explained that the provision would allow “a party to demonstrate the elements of the new defense by production of a certification from the facility from which the gasoline is received.” 51 EPA also issued regulations for additional defenses against liability at 40 CFR 80.28(g)(1-7).

49 Id. and 40 CFR 80.28(g).

50 56 FR 64708.

51 Id.

d. Enactment of CAA sec. 211(h)(5)

As part of the Energy Policy Act of 2005 (“EPAct”), Public Law 109-58 (2005), Congress added CAA sec

the new defense by production of a certification from the facility from which the gasoline is received.” 51 EPA also issued regulations for additional defenses against liability at 40 CFR 80.28(g)(1-7).

49 Id. and 40 CFR 80.28(g).

50 56 FR 64708.

51 Id.

d. Enactment of CAA sec. 211(h)(5)

As part of the Energy Policy Act of 2005 (“EPAct”), Public Law 109-58 (2005), Congress added CAA sec. 211(h)(5), which provides:

Upon notification, accompanied by supporting documentation, from the Governor of a State that the RVP limitation established by paragraph (4) will increase emissions that contribute to air pollution in any area in the State, the Administrator shall, by regulation, apply, in lieu of the RVP limitation established by paragraph (4), the RVP limitation established by paragraph (1) to all fuel blends containing gasoline and 10 percent denatured anhydrous ethanol [sold] in the area during the high ozone season.

EPA also read this provision as consistent with the statutory scheme of CAA sec. 211(h) to apply to blends of gasoline and 9-10 percent ethanol produced by downstream oxygenate blenders. At the time CAA sec. 211(h)(4) and 211(h)(5) were enacted, the language “the ethanol portion of the blend does not exceed its waiver condition under subsection (f)(4)” could only refer to an ethanol portion of up to 10 percent, because only blends of gasoline and up to 10 percent ethanol had received a waiver under CAA sec. 211(f)(4).

B. Proposed Interpretation of CAA Sec. 211(h)(4)

In this action, we are proposing to interpret CAA sec. 211(h)(4) recognizing the changed gasoline marketplace since the Agency last issued implementing RVP regulations in 1990, in a manner that is consistent with the text of the provision, its context within CAA sec. 211(h), and Congressional intent. The presence of E15 in the marketplace has increased since EPA interpreted CAA sec. 211(h)(4) in the MMR from zero retail stations to over 1,300 retail stations

4) recognizing the changed gasoline marketplace since the Agency last issued implementing RVP regulations in 1990, in a manner that is consistent with the text of the provision, its context within CAA sec. 211(h), and Congressional intent. The presence of E15 in the marketplace has increased since EPA interpreted CAA sec. 211(h)(4) in the MMR from zero retail stations to over 1,300 retail stations. 52 In addition to granting partial waivers for E15, we have also promulgated the Tier 3 Motor Vehicle Emissions and Fuel Standards Rule, which changed the ethanol content of the vehicle certification test fuel from “indolene” (gasoline without any added ethanol at 9.0 psi RVP), to E10 at 9.0 psi RVP for the certification of all Tier 3 light-duty and chassis-certified heavy-duty gasoline vehicles. 53 This change reflected the near complete transition of the in-use gasoline supply to E10 in the years following the passage of EPAct and the Energy Independence and Security Act (“EISA”) and the implementation of the Renewable Fuel Standard program at CAA sec. 211(o). 54 E15 has now entered the marketplace, but the current limitation of the applicability of the 1-psi waiver to only E10 is one of several hurdles to the continued entry of E15 into the marketplace. 55 The same market limitation that prompted EPA to provide the 1-psi waiver for E10 in 1989 currently exists for E15. Namely, in much of the U.S., there is very little low-RVP CBOB being produced and made available into which 15 percent ethanol could be blended while still meeting the 9.0 psi RVP standard for gasoline during the high ozone season. 56 As a result, parties that might otherwise consider making and distributing E15 may choose not to, given the difficulty in obtaining CBOB that when blended to produce E15 would meet the 9.0 psi RVP during the summer. If we extend the 1-psi waiver, 15 percent ethanol could be blended using the same CBOBs currently being distributed for use with 10 percent ethanol, year-round

he high ozone season. 56 As a result, parties that might otherwise consider making and distributing E15 may choose not to, given the difficulty in obtaining CBOB that when blended to produce E15 would meet the 9.0 psi RVP during the summer. If we extend the 1-psi waiver, 15 percent ethanol could be blended using the same CBOBs currently being distributed for use with 10 percent ethanol, year-round. 57 Today's proposal, therefore, is a response to changed circumstances since the Agency's promulgation of RVP regulations in 1990, which pre-dates EPAct in 2005 and EISA in 2007. Further, because blending 15 volume percent ethanol into gasoline would result in an approximate 1.0 psi RVP increase, similar to E10, the resultant RVP for any gasoline-ethanol blended fuel would be no higher than the RVP standard plus the 1-psi waiver, which is currently 10.0 psi for a gasoline-ethanol blended fuel containing 10 percent ethanol. 58 This proposed interpretation is consistent with the plain language of CAA sec. 211(h) and with Congress' intent to promote ethanol blending into

52 See “Availability of E15 Keeps Growing,” available at: https://growthenergy.org/2018/02/28/availability-e15-keeps-growing.

53 See 79 FR 23414 (April 28, 2014).

54 “Energy Independence and Security Act,” P.L. 110-140 (2007).

55 See, e.g., Prime the Pump: Driving Ethanol Gallons, available at: https://growthenergy.org/wp-content/uploads/2019/01/MDEV-19022-PTP-Overview-2019-01-25.pdf.

56 Some parties have access to low RVP blendstocks created for low-RVP areas, however these blendstocks are not widely distributed in all areas. For a list of state low-RVP areas, see EPA's “State Fuels” website available at: https://www.epa.gov/gasoline-standards/state-fuels.

57 In reformulated gasoline areas (approximately one-third of gasoline nationwide) and certain other areas that do not provide a 1-psi waiver for E10, E15 can already be blended using the same blendstocks used for E10

stocks are not widely distributed in all areas. For a list of state low-RVP areas, see EPA's “State Fuels” website available at: https://www.epa.gov/gasoline-standards/state-fuels.

57 In reformulated gasoline areas (approximately one-third of gasoline nationwide) and certain other areas that do not provide a 1-psi waiver for E10, E15 can already be blended using the same blendstocks used for E10.

58 As discussed further in Section II.B.3.b, this is true for E15 made from blends of certified gasoline or BOB and ethanol. This volatility relationship is not maintained when other products ( e.g., natural gas liquids) are blended to make E15.

1. Proposed Interpretation

In the MMR, we interpreted CAA sec. 211(h)(4) as providing a 1-psi waiver for fuel blends of gasoline and at least 9 volume percent ethanol and not more than 10 volume percent ethanol. As previously explained, this interpretation was premised on a reading of regulations and statutory provisions that reflected the highest available ethanol content in the gasoline marketplace at the time of the 1990 amendments. Due to changes in the gasoline marketplace, including the increased presence of gasoline ethanol blends of up to 15 percent ethanol, we propose to construe CAA sec. 211(h)(4) as specifying the minimum ethanol content that fuel blends containing ethanol and gasoline must contain in order to qualify for the 1-psi waiver. We are proposing a new interpretation of this statutory provision under which the 1-psi waiver would apply to gasoline containing at least 10 percent ethanol. In conjunction with CAA sec. 211(f), this would then allow the 1-psi waiver for any ethanol blend that has received a CAA sec. 211(f)(4) waiver, which at present are blends up to 15 percent ethanol, based on EPA's prior issuance of partial waivers under CAA sec. 211(f)(4) for E15.

It is well settled that EPA has inherent authority to reconsider, revise, or repeal past decisions to the extent permitted by law so long as we provide a reasoned explanation

the 1-psi waiver for any ethanol blend that has received a CAA sec. 211(f)(4) waiver, which at present are blends up to 15 percent ethanol, based on EPA's prior issuance of partial waivers under CAA sec. 211(f)(4) for E15.

It is well settled that EPA has inherent authority to reconsider, revise, or repeal past decisions to the extent permitted by law so long as we provide a reasoned explanation. This authority exists in part because EPA's interpretations of the statutes we administer “are not carved in stone.” 59 An agency “must consider varying interpretations and the wisdom of its policy on a continuing basis.” 60 This is true when, as is the case here, review is undertaken “in response to changed factual circumstances or a change in administration.” 61 EPA must also be cognizant where we are changing a prior position that the revised position is permissible under the statute and must articulate a reasoned basis for the change. 62 This proposal reflects changed circumstances that have arisen since we issued the partial waivers for E15 in 2010 and 2011.

59 Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 863 (1984).

60 Id. at 863-64.

61 Nat'l Cable & Telecomms. Ass'n v. Brand X internet Servs., 545 U.S. 967, 981 (2005). See also Nat'l Ass'n of Home Builders v. EPA, 682 F.3d 1032, 1043 (change in administration is a “perfectly reasonable basis” for an agency's reappraisal of its regulations and programs).

62 FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515.

The term “containing” as used in CAA sec. 211(h)(4) in the phrase “fuel blends containing gasoline and 10 percent denatured anhydrous ethanol” is ambiguous. We interpret this language as establishing a lower limit, or floor, on the minimum ethanol content for a 1-psi waiver from the volatility requirements expressed in CAA sec. 211(h)(1), rather than an upper limit on the ethanol content. We can look to the use of the term “containing” in its ordinary sense

rase “fuel blends containing gasoline and 10 percent denatured anhydrous ethanol” is ambiguous. We interpret this language as establishing a lower limit, or floor, on the minimum ethanol content for a 1-psi waiver from the volatility requirements expressed in CAA sec. 211(h)(1), rather than an upper limit on the ethanol content. We can look to the use of the term “containing” in its ordinary sense. “Containing” is defined as “to have within: hold.” 63 Under this interpretation, the statute sets the minimum ethanol content, such that all fuels which contain at least 10 percent ethanol may receive the 1-psi waiver, including blends that contain more than 10 percent ethanol. 64 Therefore, E15, which has within it 10 percent denatured anhydrous ethanol, meets this definition, and should receive the 1-psi waiver specified in CAA sec. 211(h)(4). 65

63 Webster's Third New International Dictionary 491 (unabridged ed. 1981).

64 We are not changing our definition of the term 10 percent, which includes as little as 9 percent, to continue to provide the necessary blending flexibility for E10 blends. In promulgating regulations implementing CAA sec. 211(h)(4), we stated that requiring exactly 10 percent ethanol “would place a next to impossible burden on ethanol blenders,” and that “[t]he nature of the blending process itself . . . further complicates a requirement that the ethanol portion of the blend be exactly 10 percent ethanol.” See 56 FR 24245 (May 29, 1991).

65 CAA sec. 211(h)(5) also contains the language “fuel blends containing gasoline and ten percent denatured anhydrous ethanol.” Our changed interpretation of CAA sec. 211(h)(4) also has implications for CAA sec. 211(h)(5), which allows states to opt out of the 1-psi wavier provided by CAA sec. 211(h)(4) for particular areas upon a showing that the 1-psi waiver will increase emissions that contribute to air pollution. Because the language in CAA sec. 211(h)(5) pertaining to the 1-psi waiver is identical to the language in CAA sec

anged interpretation of CAA sec. 211(h)(4) also has implications for CAA sec. 211(h)(5), which allows states to opt out of the 1-psi wavier provided by CAA sec. 211(h)(4) for particular areas upon a showing that the 1-psi waiver will increase emissions that contribute to air pollution. Because the language in CAA sec. 211(h)(5) pertaining to the 1-psi waiver is identical to the language in CAA sec. 211(h)(4), and both refer to the 1-psi waiver, we believe that both sections should be read together to apply the 1-psi waiver to E10 and E15. Accordingly, we interpret CAA sec. 211(h)(5) to allow states to opt out of the 1-psi waiver provided by CAA sec. 211(h)(4) for fuel blends containing gasoline and 9-15 percent denatured anhydrous ethanol.

We also acknowledge that Congress can legislate and thus could have used terms that connote a minimum ethanol content, such as the language employed in CAA sec. 211(m)(2) (“not less than 2.7 percent”). 66 But Congress also used terms connoting a maximum ethanol content, such as in CAA sec. 211(k)(3) (“shall not exceed 1.0 percent”). 67 Even more specifically, in CAA sec. 211(h)(1) Congress instructed EPA to promulgate regulations prohibiting the introduction into commerce of “gasoline with a Reid Vapor Pressure in excess of 9.0 pounds per square inch.” Therefore, when Congress intended to impose an upper limit on the content of a particular compound or property of gasoline, it did so. In contrast, in CAA sec. 211(h)(4), Congress provided a higher RVP limit for “fuel blends containing gasoline and ten percent ethanol.” This provision lacks terms modifying the term “containing,” in contrast to the other statutory provisions referenced above, supporting our finding that this term is ambiguous. It is therefore permissible, where Congress has used only the ambiguous term “containing” in CAA sec. 211(h)(4), to interpret “containing” to mean “containing at least.”

66 See, e.g., CAA sec

line and ten percent ethanol.” This provision lacks terms modifying the term “containing,” in contrast to the other statutory provisions referenced above, supporting our finding that this term is ambiguous. It is therefore permissible, where Congress has used only the ambiguous term “containing” in CAA sec. 211(h)(4), to interpret “containing” to mean “containing at least.”

66 See, e.g., CAA sec. 211(m)(2) (“gasoline is to be blended to contain not less than 2.7 percent oxygen by weight” during the wintertime carbon monoxide season).

67 See, e.g., CAA sec. 211(k)(3)(A)(1) and (ii) (“The benzene content of reformulated gasoline shall not exceed 1.0 per cent by volume;” “The aromatics hydrocarbon content of the reformulated gasoline shall not exceed 25 percent by volume.”)

Implementing regulations under both CAA sec. 211(c) prior to the enactment of CAA sec. 211(h) and under CAA sec. 211(h) have reflected the highest permissible ethanol content at the time EPA's RVP regulations were issued, which was 10 percent ethanol under a CAA sec. 211(f)(4) waiver. We stated that the 1-psi waiver is “for blends of gasoline with about 10 percent ethanol, or gasohol” 68 and in regulations, codified the conditions, providing that “[t]he maximum ethanol content . . . in gasoline shall not exceed any applicable waiver conditions under CAA sec. 211(f)(4) waiver.” 69 Additionally, EPA statements on the imprecise nature of ethanol-gasoline blending also support the view that neither Congress nor EPA intended to limit ethanol content for the 1-psi waiver. “The nature of the blending process . . . complicates a requirement that the ethanol portion of the blend be exactly 10 percent ethanol.” 70

68 55 FR 23660 (June 11, 1990).

69 55 FR 23660 (June 11, 1990) and 40 CFR 80.27(d)(2) (1987).

70 56 FR 24245 (May 29, 1991)

nol-gasoline blending also support the view that neither Congress nor EPA intended to limit ethanol content for the 1-psi waiver. “The nature of the blending process . . . complicates a requirement that the ethanol portion of the blend be exactly 10 percent ethanol.” 70

68 55 FR 23660 (June 11, 1990).

69 55 FR 23660 (June 11, 1990) and 40 CFR 80.27(d)(2) (1987).

70 56 FR 24245 (May 29, 1991).

We further note that in the legislative history, Congress employed the term “at least” 10 percent ethanol when discussing the 1-psi waiver, which suggests this provision is a floor for ethanol content in gasoline. For example, section 216 of the House bill provided in part that “[a] manufacturer or processor of gasoline containing at least 10 percent ethanol shall be deemed in full compliance.” 71

71 Clean Air Act Amendments, H.R. 3030 (101st Congress, 1990). See also H.R. Rep. No. 101-490, at 71 (1990) (Conf. Rep.); reprinted at 2 Leg. Hist. at 3095 (1993).

The Senate Report published along with the enactment of the 1990 CAA Amendments and CAA sec. 211(h)(4) also describes both the purpose of including CAA sec. 211(h)(4), and general language about ethanol use in the fuel supply. The report states that the 1-psi waiver was:

included in recognition that gasoline and ethanol are mixed after the refining process has been completed. It was recognized that to require ethanol to meet a 9 pound RVP would require the creation of a production and distribution network for sub-nine pound RVP gasoline. The cost of producing and distributing this type of fuel would be prohibitive to the petroleum industry and would likely result in the termination of the availability of ethanol in the marketplace. Under this provision, the RVP limitations promulgated pursuant to this subsection for such ethanol/gasoline blends shall be one pound per square inch greater than the applicable Reid vapor pressure which apply to gasoline. Senate Report 101-228, at 3495

fuel would be prohibitive to the petroleum industry and would likely result in the termination of the availability of ethanol in the marketplace. Under this provision, the RVP limitations promulgated pursuant to this subsection for such ethanol/gasoline blends shall be one pound per square inch greater than the applicable Reid vapor pressure which apply to gasoline. Senate Report 101-228, at 3495.

Finally, the Senate report states that the 1-psi waiver would “allow ethanol blending to continue to be a viable alternative fuel, with its beneficial environmental, economic, agricultural, energy security and foreign policy implications.” 72 While this legislative history does not speak to the meaning of the word “containing,” it does articulate congressional intent in enacting the provision, recognizing the role for ethanol in the marketplace. This report and other relevant legislative history do not explicitly address whether CAA sec. 211(h)(4) is intended to apply to blends with greater than 10 percent ethanol, but all the reasons it gives for extending the 1-psi waiver to gasoline ethanol blends up to 10 percent ethanol now would similarly weigh in favor of interpreting the 1-psi waiver to apply to E15, given that Congressional action in CAA sec. 211(h) was largely a ratification of agency regulations for RVP that were initiated beginning in 1987, under CAA sec. 211(c).

72 See S. Rep. No. 101-228 at 110 (1989).

Congress designed the 1-psi waiver “deemed to comply” language of CAA sec. 211(h)(4) to adjust to gasoline-ethanol blends with more than 10 volume percent ethanol if allowed under separate provisions of the CAA ( i.e., in the case where EPA grants a CAA sec. 211(f)(4) waiver that allows for greater than 10 volume percent ethanol in gasoline). In other words, the blended fuel is “deemed to comply” not because it is E10, but because it is a gasoline-ethanol blended fuel that has received a CAA sec. 211(f)(4) waiver

nds with more than 10 volume percent ethanol if allowed under separate provisions of the CAA ( i.e., in the case where EPA grants a CAA sec. 211(f)(4) waiver that allows for greater than 10 volume percent ethanol in gasoline). In other words, the blended fuel is “deemed to comply” not because it is E10, but because it is a gasoline-ethanol blended fuel that has received a CAA sec. 211(f)(4) waiver. The Senate Report described the “deemed to comply” provision as an “alternative enforcement arrangement” that had the benefit of simplifying compliance demonstrations due to the inconsistency between the production of gasoline batches, measured in millions of gallons, to ethanol blending at the terminal in batches on the order of thousands of gallons. The “deemed to comply” provision further supports the interpretation that the 1-psi waiver under CAA sec. 211(h)(4) can apply to gasoline with ethanol content greater than 10 percent. The “deemed to comply” provision lays out the compliance mechanisms for regulated parties, but also contemplates ethanol blends beyond E10, the only gasoline-ethanol blended fuel with a CAA sec. 211(f)(4) waiver at the time of enactment, because EPA's waiver authority under that provision is not limited to gasoline containing any particular range of volume percent ethanol. CAA sec. 211(h)(4)(B) provides that the “deemed to comply provision” will apply upon a demonstration that, among other things, “the ethanol portion of the blend does not exceed its waiver condition under subsection (f)(4).” We read this phrase to apply to only the waiver condition specifying the ethanol content of the fuel. Pursuant to the E15 waivers issued in 2010 and 2011, a fuel that includes 15 percent ethanol contains an ethanol portion that does not exceed the 211(f)(4) waiver condition. As previously shown, if Congress had wanted to limit the application of the (h)(4) waiver to E10, it could have done so, but it did not

s phrase to apply to only the waiver condition specifying the ethanol content of the fuel. Pursuant to the E15 waivers issued in 2010 and 2011, a fuel that includes 15 percent ethanol contains an ethanol portion that does not exceed the 211(f)(4) waiver condition. As previously shown, if Congress had wanted to limit the application of the (h)(4) waiver to E10, it could have done so, but it did not. Instead, Congress contemplated that ethanol content may increase in the future, that parties would likely apply for an 211(f)(4) waiver for those higher blends, that the 211(h)(4) waiver would apply to these fuels, and that the 211(h)(4) “deemed to comply” provision would also apply.

Therefore, CAA sec. 211(h)(4) can be read as specifying the minimum ethanol content for ethanol-gasoline blends for purposes of the 1-psi waiver while the deemed to comply provision can be construed as a defense against liability for any ethanol blend that has received a CAA sec. 211(f)(4) waiver, which at present includes E15. As previously explained, the “deemed to comply” provision that was enacted at the inception of the RVP program to address industry practices at the time, reflects the highest permissible ethanol content at that time because of the waiver under CAA sec. 211(f)(4). CAA sec. 211(h)(4)(B) (“the ethanol portion of the blend does not exceed its waiver condition under subsection (f)(4) of this section.”) It is a statutorily mandated defense that is in addition to other defenses codified at 40 CFR 80.28(g)(1) through (7). It is not and has never been the sole enforcement mechanism for the 1-psi waiver. These other equally effective provisions would be applicable to gasoline-ethanol blended fuels containing 15 percent ethanol and our extending the 1-psi waiver to such blends should have no effect on the enforcement of RVP standards. Regulated parties could also continue to avail themselves of this provision, if necessary

not and has never been the sole enforcement mechanism for the 1-psi waiver. These other equally effective provisions would be applicable to gasoline-ethanol blended fuels containing 15 percent ethanol and our extending the 1-psi waiver to such blends should have no effect on the enforcement of RVP standards. Regulated parties could also continue to avail themselves of this provision, if necessary. Moreover, considerations that animated this provision, are now largely attenuated considering changes in the refinery process. Today, ethanol blending is done almost completely through in-line blending ethanol into CBOB specially made for blending with ethanol as compared to the nascent days where it was splash blended after completion of the refining process.

Our primary consideration has been to balance the goals of limiting gasoline volatility and ensure that the addition of ethanol does not cause the exceedance of the maximum RVP standard, while also promoting the use of ethanol consistent with the purpose of CAA sec. 211(h)(4). As previously explained, blending gasoline with at least 10 percent ethanol results in an approximate 1.0 psi RVP increase. It does not result in “different volatility levels than already recognized by EPA as adding less than 1.0 psi RVP to gasoline.” 73 Similarly, we also expect that E15 produced from the same BOB as E10 would have a similar (if not slightly lower) RVP than E10 and thus, would not exceed the current 10.0 psi RVP limit. 74 Therefore, we are fairly confident that relative evaporative emissions effects for E15 would largely be similar or slightly less than those for E10, as discussed in Section II.E.

73 Clean Air Act Amendments: Hearings on H.R. 2521, H.R. 3054 and H.R. 3196 Before the Subcommittee on Health and the House Committee on Environment and Committee On Energy and Commerce, 100th Cong. 1st Sess. (1987) (statement of Eric Vaughn, President and CEO of renewable Fuels Association)

fects for E15 would largely be similar or slightly less than those for E10, as discussed in Section II.E.

73 Clean Air Act Amendments: Hearings on H.R. 2521, H.R. 3054 and H.R. 3196 Before the Subcommittee on Health and the House Committee on Environment and Committee On Energy and Commerce, 100th Cong. 1st Sess. (1987) (statement of Eric Vaughn, President and CEO of renewable Fuels Association).

74 “Determination of the Potential Property Ranges of Mid-Level Ethanol Blends.” American Petroleum Institute, Washington, DC. April 2010.

In sum, the primary consideration underlying the 1-psi waiver is to limit gasoline volatility while promoting the use of ethanol due to its importance to energy security and the agricultural sector. Today's proposed interpretation, if finalized, will continue to further these policy concerns given that agency action will now afford similar treatment to all ethanol-gasoline blends.

2. Regulatory Amendments

This proposal includes technical amendments that would effectuate our

Second, we are proposing to remove or modify provisions in the MMR that were imposed to effectuate the prior 1-psi waiver interpretation under CAA sec. 211(h)(4). Subsequent to the grant of the CAA sec. 211(f)(4) partial waivers for E15, we adopted regulations under CAA sec. 211(c) to ensure that E15 would not be used in certain vehicles and engines for which the waivers did not apply. To do so, in addition to the conditions on the waivers that applied to fuel manufacturers, we promulgated regulations to ensure that those same conditions were enforceable on downstream parties. No changes were made to the RVP regulations at 40 CFR 80.27 as a direct result of our interpretation under CAA sec. 211(h)(4) that the 1-psi waiver did not extend to gasoline-ethanol blends with an ethanol concentration greater than 10 percent

s on the waivers that applied to fuel manufacturers, we promulgated regulations to ensure that those same conditions were enforceable on downstream parties. No changes were made to the RVP regulations at 40 CFR 80.27 as a direct result of our interpretation under CAA sec. 211(h)(4) that the 1-psi waiver did not extend to gasoline-ethanol blends with an ethanol concentration greater than 10 percent. Additional regulations were put in place including regulations currently found in 40 CFR 80.1504(f) and (g) (placing prohibitions on the commingling of E10 and E15), and 40 CFR 80.1503 (placing PTD requirements on E15). These regulations were put in place in order to ensure that the RVP of E15 did not exceed 9.0 psi in accordance with our interpretation of CAA sec. 211(h)(4) at the time. However, since our proposed interpretation of CAA sec. 211(h)(4) increases the RVP allowance to 10.0 psi, these provisions are no longer necessary. Additionally, because the RVP of E15 will be approximately the same as E10 if produced from the same blendstock, we do not anticipate emissions impacts from this equal treatment. Given that we are proposing to interpret CAA sec. 211(h)(4) to extend to gasoline-ethanol blends of up to 15 percent ethanol, the prohibition on the commingling of E15 and E10 is no longer necessary.

Finally, we are proposing to remove the PTD requirements related to the 1-psi waiver at 40 CFR 80.1503. In 40 CFR part 80, subpart N, we included PTD language designed to help ensure that E15 that did not receive the 1-psi waiver would be segregated from E10 that did receive the 1-psi waiver. Since we are proposing to allow the 1-psi waiver for E15, we no longer need these PTD requirements. However, parties that produce and distribute gasoline-ethanol blended fuels would still be required to identify ethanol concentrations on PTDs as specified in 40 CFR 80.27 and 40 CFR 80.1503.

All other E15 misfueling mitigation provisions in 40 CFR part 80, subpart N, would remain unchanged

aiver. Since we are proposing to allow the 1-psi waiver for E15, we no longer need these PTD requirements. However, parties that produce and distribute gasoline-ethanol blended fuels would still be required to identify ethanol concentrations on PTDs as specified in 40 CFR 80.27 and 40 CFR 80.1503.

All other E15 misfueling mitigation provisions in 40 CFR part 80, subpart N, would remain unchanged. In the MMR, we promulgated regulations under CAA sec. 211(c)(1), which prohibit the use of E15 in MY2000 and older motor vehicles, nonroad vehicles, engines, and equipment (including motorcycles, and heavy-duty motor vehicles). CAA sec. 211(c)(1) gives EPA authority to “control or prohibit the manufacture, introduction into commerce, offering for sale, or sale” of any fuel or fuel additive (A) whose emission products, in the judgment of the Administrator, cause or contribute to air pollution “which may be reasonably anticipated to endanger public health or welfare” or (B) whose emission products “will impair to a significant degree the performance of any emission control device or system which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it would be in general use” were the fuel control or prohibition adopted. We promulgated the MMR based on our assessment that E15 would significantly impair the emission control systems used in MY2000 and older light-duty motor vehicles, heavy-duty gasoline engines and vehicles, highway and off-highway motorcycles, and all nonroad products. This led to our conclusion that under CAA sec. 211(c)(1)(A), E15 use in these particular vehicles, engines, and non-road products would likely result in increased VOC, carbon monoxide (CO), and nitrogen oxide (NO X ) emissions. 75 The proposed regulatory changes to 40 CFR part 80, subparts B and N in this proposed rulemaking are solely related to our proposed interpretation to allow the 1-psi waiver for E15 under CAA sec. 211(h)(4)

er CAA sec. 211(c)(1)(A), E15 use in these particular vehicles, engines, and non-road products would likely result in increased VOC, carbon monoxide (CO), and nitrogen oxide (NO X ) emissions. 75 The proposed regulatory changes to 40 CFR part 80, subparts B and N in this proposed rulemaking are solely related to our proposed interpretation to allow the 1-psi waiver for E15 under CAA sec. 211(h)(4). This proposed action would not change the basis of our CAA sec. 211(c)(1)(A) and (B) finding in the MMR that prohibits E15 from use in MY2000 and older light-duty motor vehicles, heavy-duty gasoline engines and vehicles, highway and off-highway motorcycles, and all nonroad products. This action also does not propose to modify the misfueling mitigation measures promulgated in the MMR, but, as discussed in Section II.D.3, we seek comment on the need for additional E15 misfueling measures.

75 76 FR 44422 (July 25, 2011).

3. Effects on Regulated Parties

This section discusses distinctions between the obligations that apply to certain parties in the fuel production, blending, and retail chain, and how this proposed action would affect (or would not affect) those parties. Specifically, we discuss how the proposed CAA sec. 211(h)(4) interpretation under which the 1-psi waiver would extend to E15 would affect fuel manufacturers ( e.g., refiners and importers of gasoline), downstream oxygenate blenders, and retailers that make E15 at a blender pump.

a. E15 Made by Refiners, Importers, and Downstream Oxygenate Blenders

In this action, we are maintaining all of the CAA sec. 211(f)(4) waiver conditions for E15 as they currently apply to fuel and fuel additive manufacturers. 76 CAA sec. 211(f)(1) operates as a prohibition against the introduction into commerce of fuels and fuel additives by manufacturers of fuels and fuel additives, and CAA sec. 211(f)(4) provides a mechanism to waive that prohibition if certain criteria are met

, we are maintaining all of the CAA sec. 211(f)(4) waiver conditions for E15 as they currently apply to fuel and fuel additive manufacturers. 76 CAA sec. 211(f)(1) operates as a prohibition against the introduction into commerce of fuels and fuel additives by manufacturers of fuels and fuel additives, and CAA sec. 211(f)(4) provides a mechanism to waive that prohibition if certain criteria are met. Therefore, fuel and fuel additive manufacturers are subject to any conditions that apply to a CAA sec. 211(f)(4) waiver. Under this approach, fuel and fuel additive manufacturers would still need to produce E15 that meets the 9.0 psi RVP requirement of the waiver condition, while downstream parties are not similarly bound. EPA's fuel and fuel additive registrations (FFARs) regulations at 40 CFR 79.2(d) define which parties are fuel manufacturers and makes clear that parties that only blend oxygenates at allowable levels under CAA sec. 211(f) are excluded from the definition of fuel manufacturers. We are, however, neither reopening 40 CFR 79.2(d), nor soliciting comments on this provision. We will therefore treat any comments we receive on this topic as beyond the scope of this rulemaking.

76 We note, however, that under the new substantially similar interpretive rulemaking proposed in Section II.C, such that it includes E15, such waiver conditions would no longer apply to fuel and fuel additive manufacturers.

We are not changing our interpretation of the way the CAA controls fuels and the way our regulations regulate fuels in any way other than providing the 1-psi waiver to

This is in accordance with how the fuel marketplace currently functions with regard to E10. Refiners and importers currently produce or import gasoline (or conventional blendstock for oxygenate blending (CBOB)), which can then be blended with ethanol downstream. It is not until that ethanol is blended into the gasoline or CBOB that parties are able to receive the benefits of the 1-psi waiver ( i.e., an RVP volatility limit of 10.0 psi)

marketplace currently functions with regard to E10. Refiners and importers currently produce or import gasoline (or conventional blendstock for oxygenate blending (CBOB)), which can then be blended with ethanol downstream. It is not until that ethanol is blended into the gasoline or CBOB that parties are able to receive the benefits of the 1-psi waiver ( i.e., an RVP volatility limit of 10.0 psi). Therefore, a refiner's or importer's gasoline or CBOB must always meet a 9.0 psi RVP limitation prior to the addition of ethanol. 77 However, because the CAA sec. 211(f)(4) waiver for E10 was granted by operation of law, and thus did not contain a waiver condition limiting the RVP to 10.0 psi, in contrast to E15, refiners and importers can take advantage of the 1-psi waiver for E10. It should be noted, however, that if another part of the CAA or EPA regulation precludes the 1-psi waiver, for example, reformulated gasoline (RFG) required under CAA sec. 211(k) or a low-RVP fuel program established in a state implementation plan, parties cannot take advantage of the 1-psi waiver for E10 or E15. 78 In such circumstances, however, the same CBOBs already supplied for E10 blending can already be used for E15 blending, so the 1-psi waiver is not at issue.

77 In fact, as discussed above, downstream parties can only be deemed in compliance under CAA sec. 211(h)(4)(A) if the gasoline or CBOB met the applicable RVP standard prior to the addition of the ethanol.

78 During the pre-proposal development process, we received a document related to whether allowing E15 the 1-psi waiver would result in states being preempted under CAA sec. 211(c)(4). Please see “RVP Preemption Memorandum” in the docket at EPA-HQ-OAR-2018-0775 for this document

er CAA sec. 211(h)(4)(A) if the gasoline or CBOB met the applicable RVP standard prior to the addition of the ethanol.

78 During the pre-proposal development process, we received a document related to whether allowing E15 the 1-psi waiver would result in states being preempted under CAA sec. 211(c)(4). Please see “RVP Preemption Memorandum” in the docket at EPA-HQ-OAR-2018-0775 for this document.

The 1-psi waiver for E15 would function the same way, although if a refiner or importer were to choose to blend E15, including but not limited to blending at a co-located terminal or at a terminal downstream of a refinery operated by the refiner or importer, they would not be able to use the 1-psi waiver because the exclusion from the definition of a “fuel manufacturer” only includes a party “(other than a fuel refiner or importer).” 79 This means that refiners and importers who blend E15 would still need to comply with the waiver conditions under CAA sec. 211(f)(4).

79 If a separate party operated a terminal co-located with a refinery and the party was excluded from the definition of fuel manufacturers under 40 CFR 79.2(d)(2), the party that operated the co-located terminal would be not be subject to the E15 waiver conditions. As previously noted, we are neither reopening this provision for comments nor soliciting comments on it and any comments on it we receive will be treated as beyond the scope of this rulemaking.

This interpretation of CAA sec. 211(f)(4) is consistent with our past treatment of CAA sec. 211(f)(1) and (f)(4)'s applicability to only fuel and fuel additive manufacturers, and is further supported by our actions in the MMR, which imposed regulatory requirements that are similar to the E15 CAA sec. 211(f)(4) waiver conditions on downstream parties, to whom the waiver conditions do not reach. 80 The MMR was enacted “to mitigate misfueling with E15 that lawfully has been introduced into commerce under the terms of the waiver[s]

nly fuel and fuel additive manufacturers, and is further supported by our actions in the MMR, which imposed regulatory requirements that are similar to the E15 CAA sec. 211(f)(4) waiver conditions on downstream parties, to whom the waiver conditions do not reach. 80 The MMR was enacted “to mitigate misfueling with E15 that lawfully has been introduced into commerce under the terms of the waiver[s]. The waiver conditions, and implementation of the waiver conditions, address a closely related but different issue—when, how and by whom E15 can be introduced into commerce under the partial waiver decisions. This rule only addresses the issue of mitigating misfueling in the event E15 is lawfully introduced into commerce under the partial waivers, and is issued under EPA's authority under section 211(c).” 81

80 See 76 FR 44421 (July 25, 2011) (enacting E15 MMR provisions “to ensure that E15 being sold at retail stations was in compliance with the RVP condition of the E15 waiver and that an E10 fuel that used the 1.0 psi RVP waiver under CAA sec. 211(h) was not commingled with E15, which must have a lower RVP in the summertime”).

81 See 76 FR 44440 (July 25, 2011).

As discussed above, CAA sec. 211(f) imposes limitations on fuel and fuel additive manufacturers. All fuel and fuel additive manufacturers must meet the statutory requirements of CAA sec. 211(f)(1) or the waiver conditions imposed under a CAA sec. 211(f)(4) waiver. As previously explained fuel manufacturers are defined in our regulations at 40 CFR 79.2. This definition explicitly excludes parties “(other than a fuel refiner or importer) who add[] an oxygenate compound to fuel in any otherwise allowable amount.” These excluded parties may also be considered “oxygenate blenders” under our regulations in 40 CFR part 80

imposed under a CAA sec. 211(f)(4) waiver. As previously explained fuel manufacturers are defined in our regulations at 40 CFR 79.2. This definition explicitly excludes parties “(other than a fuel refiner or importer) who add[] an oxygenate compound to fuel in any otherwise allowable amount.” These excluded parties may also be considered “oxygenate blenders” under our regulations in 40 CFR part 80. 82 An “oxygenate blender” is defined as “any person who owns, leases, operates, controls, or supervises an oxygenate blending facility, or who owns or controls the blendstock or gasoline used or the gasoline produced at an oxygenate blending facility.” 83 An “oxygenate blending facility” is defined as “any facility (including a truck) at which oxygenate is added to gasoline or blendstock, and at which the quality or quantity of gasoline is not altered in any other manner except for the addition of deposit control additives.” 84

82 40 CFR 80.2.

83 Id.

84 Id.

While our proposed interpretation of CAA sec. 211(h)(4) would allow for gasoline-ethanol blends that contain at least 10 volume percent ethanol to receive the 1-psi waiver, CAA sec. 211(f) and our 40 CFR parts 79 and 80 fuels regulations continue to limit the amount of ethanol allowed to be blended into gasoline, and also the gasoline ethanol blends that can receive the 1-psi waiver. The definition of “fuel manufacturer” also places a limitation on the ethanol content of the fuel. Only parties who “add[] an oxygenate compound to fuel in any otherwise allowable amount” are excluded from the definition of fuel manufacturer. 85 This provision only allows the addition of oxygenate compounds up to the amount of any CAA sec. 211(f)(4) waiver, or any allowable oxygen content under our interpretation of the meaning of “substantially similar.” A party who unlawfully adds an oxygenate compound in a volume that exceeds the oxygen content limit in the interpretative definition of “substantially similar” or the CAA sec

acturer. 85 This provision only allows the addition of oxygenate compounds up to the amount of any CAA sec. 211(f)(4) waiver, or any allowable oxygen content under our interpretation of the meaning of “substantially similar.” A party who unlawfully adds an oxygenate compound in a volume that exceeds the oxygen content limit in the interpretative definition of “substantially similar” or the CAA sec. 211(f)(4) waiver condition, or who adds anything other than an oxygenate compound allowed by the substantially similar interpretative rule, is a fuel manufacturer, and does not receive the 1-psi waiver for fuels containing at least 10 percent ethanol.

85 40 CFR 79.2(d).

The result is that any party who is not a refiner or importer that produces E15 from only certified gasoline (including CBOB) and denatured fuel ethanol would be entitled to the 1-psi waiver just as is the case currently when such parties produce E10. This could occur at 86 as blendstocks onsite so long as that E85 had itself been produced solely from denatured fuel ethanol and certified gasoline (or CBOB).

86 For purposes of this preamble, E85 means a gasoline-ethanol blended fuel that contains at least 50 volume percent ethanol but no more than 83 volume percent ethanol. We use the term E85 as the market has historically and commercially identified such fuels as E85.

b. E15 Made at Blender Pumps

For the reasons described in this section, a retail station that blends E15 using E85 that contains hydrocarbons not certified as gasoline or blendstock for oxygenate blending (BOB) ( e.g., the natural gas liquids that are often used at ethanol plants to denature ethanol and make E85) would not be entitled to the 1-psi waiver

mercially identified such fuels as E85.

b. E15 Made at Blender Pumps

For the reasons described in this section, a retail station that blends E15 using E85 that contains hydrocarbons not certified as gasoline or blendstock for oxygenate blending (BOB) ( e.g., the natural gas liquids that are often used at ethanol plants to denature ethanol and make E85) would not be entitled to the 1-psi waiver.

First, parties that produce E15 via a blender pump using E85 made with ethanol and natural gas liquids ( i.e., an uncertified gasoline blendstock) are fuel manufacturers under our existing 40 CFR part 79 regulations (covering registration of fuels and additives), and as such are subject to the 9.0 psi RVP condition under the existing E15 CAA sec. 211(f)(4) waivers. Any party that blends an uncertified gasoline blendstock into gasoline is a fuel manufacturer under our 40 CFR part 79 regulations because they are altering the chemical composition of a fuel. Regardless of our proposed interpretation of CAA sec. 211(h)(4), then, any such parties that produce E15 are still subject to the 9.0 psi RVP standard. E15 made at blender pumps may only receive the proposed extension of the 1-psi waiver in instances where an oxygenate blender blends certified gasoline (or CBOB) with E85 made from ethanol and certified gasoline (or CBOB).

Second, such parties are also gasoline refiners under our existing 40 CFR part 80 regulations because they blend uncertified gasoline blendstocks into gasoline. 87 Under our regulations in 40 CFR part 80 (covering implementation of our fuels control programs), any party that blends uncertified blendstocks into gasoline is a gasoline refiner and must meet all requirements applicable to gasoline refiners under 40 CFR part 80

lso gasoline refiners under our existing 40 CFR part 80 regulations because they blend uncertified gasoline blendstocks into gasoline. 87 Under our regulations in 40 CFR part 80 (covering implementation of our fuels control programs), any party that blends uncertified blendstocks into gasoline is a gasoline refiner and must meet all requirements applicable to gasoline refiners under 40 CFR part 80. These requirements include, but are not limited to, sampling and testing each batch of gasoline for conformance to EPA's fuel standards, demonstrating compliance with annual average sulfur and benzene standards, registering as a gasoline refiner under 40 CFR part 80, submitting periodic and annual compliance reports, and arranging for an annual audit by an independent auditor. These requirements were put in place to help ensure that parties downstream of gasoline refineries did not adversely affect fuel quality in ways that damaged vehicle and engine emission controls and helped ensure that the air quality benefits of our fuel quality regulations are met.

87 The regulations at 40 CFR part 80 allow for parties to blend uncertified gasoline blendstock into previously certified gasoline as long as the party complies with our sampling and testing requirements at 40 CFR 80.65, 80.101, and 80.1640.

Third, under our FFARS regulations in 40 CFR part 79, parties that blend uncertified blendstocks into gasoline are fuel manufacturers and must register their fuels and fuel additives as required under the CAA. In the case where a blender pump produces E15 by blending a certified gasoline (typically E10) with E85 that contains uncertified blendstocks ( e.g., natural gas liquids), the operator of the blender pump meets the definitions of both a gasoline refiner under 40 CFR part 80 and a fuel manufacturer under 40 CFR part 79 and must comply with associated requirements

dditives as required under the CAA. In the case where a blender pump produces E15 by blending a certified gasoline (typically E10) with E85 that contains uncertified blendstocks ( e.g., natural gas liquids), the operator of the blender pump meets the definitions of both a gasoline refiner under 40 CFR part 80 and a fuel manufacturer under 40 CFR part 79 and must comply with associated requirements.

We proposed to address this situation in the Renewables Enhancement and Growth Support (REGS) rule 88 by proposing provisions that would control the sulfur, benzene, and volatility of E85 used to make E15 via a blender pump, which would allow gasoline made via blender pumps to meet applicable EPA fuel quality standards and lawfully be made. 89 The proposed REGS rule also proposed to remove the FFARS requirements under 40 CFR part 79 for blender pump operators that make gasoline via a blender pump. Since those proposed provisions have not been finalized, the only way for a blender pump operator to lawfully make E15 at a blender pump is to make E15 with certified gasoline and E85 made from ethanol and certified gasoline (or CBOB) or to comply with all requirement applicable to refiners and fuel manufacturers.

88 See 81 FR 80841 (November 16, 2016).

89 In the proposed REGS rule, to specifically address the issue of E10, E15, and other gasoline-ethanol blended gasolines ( i.e., gasoline containing between 16 and 50 volume percent ethanol or “E16-50”) produced at a blender pump, we proposed limitations on the use of fuels that a blender pump operator could use to make compliant gasoline. In general, under the proposed REGS rule, blender pump operators would need to use certified gasoline and certified E85 to assure compliance with EPA's gasoline fuel quality standards under 40 CFR part 80. See 81 FR 80847-80848 (November 16, 2016)

or “E16-50”) produced at a blender pump, we proposed limitations on the use of fuels that a blender pump operator could use to make compliant gasoline. In general, under the proposed REGS rule, blender pump operators would need to use certified gasoline and certified E85 to assure compliance with EPA's gasoline fuel quality standards under 40 CFR part 80. See 81 FR 80847-80848 (November 16, 2016).

Finally, and perhaps most importantly, even if we finalize the proposed REGS rule and allow blender pumps to make gasoline at blender pumps and exempt blender pump operators from complying with the requirements for gasoline refiners and fuel manufacturers, based on information received during the comment period of the proposed REGS rule, it is likely that E15 made at blender pumps with E85 produced from natural gas liquids would often violate the applicable RVP standards even with the 1-psi waiver. Natural gas liquids often have RVP levels well above 10.0 psi. Adding such potentially highly volatile components to E15 (via E85) in significant concentrations would result in a finished E15 with a volatility in excess of 10.0 psi RVP. Therefore, in this proposal, only E15 produced using certified gasoline (or CBOB) and denatured fuel ethanol would be eligible for the 1-psi waiver.

c. Summary and Conclusion

Table II.B.4.c-1 summarizes how we believe the E15 partial waiver conditions imposed via CAA sec. 211(f)(4) and the 1-psi waiver under CAA sec. 211(h)(4) would apply to fuel manufacturers, downstream oxygenate blenders, and retailers that make E15 via a blender pump as a result of our proposed interpretation to allow E15 to receive the 1.0 psi waiver.

Table II.B.4.c-1—Summary of E15 1- psi Waiver Applicability by Party Can take advantage of the 1-psi waiver? Subject to E15 waiver conditions? Could lawfully make/sell E15 at 10 psi in summer? Fuel Manufacturers Yes Yes No. Oxygenate Blenders Yes No Yes. Retailers that make E15 with E85 made with gasoline/BOB Yes No Yes

t of our proposed interpretation to allow E15 to receive the 1.0 psi waiver.

Table II.B.4.c-1—Summary of E15 1- psi Waiver Applicability by Party Can take advantage of the 1-psi waiver? Subject to E15 waiver conditions? Could lawfully make/sell E15 at 10 psi in summer? Fuel Manufacturers Yes Yes No. Oxygenate Blenders Yes No Yes. Retailers that make E15 with E85 made with gasoline/BOB Yes No Yes. Retailers that make E15 with E85 made with something other than gasoline/BOB Yes Yes No. As mentioned above, under our proposed interpretation, all parties can take advantage of the 1-psi waiver unless they are precluded from doing so by some other requirement. We believe that the E15 waiver condition limiting the RVP of E15 to 9.0 psi during the summer would preclude fuel manufacturers ( i.e., refiners and importers) from being able to introduce E15 into commerce under CAA sec. 211(f), but would not preclude downstream oxygenate blenders that were not otherwise fuel manufacturers from blending E15. For retailers that blend E15 using E85 made from denatured fuel ethanol (“DFE”) and certified gasoline (or CBOB) via a blender pump, those parties are acting analogous to downstream oxygenate blenders and could lawfully make E15. For all of the reasons described above, for retailers using E85 made with anything other than DFE and certified gasoline (or CBOB), those parties are acting analogous to fuel manufacturers and could not lawfully make E15.

We seek comment on our proposed interpretation of CAA sec. 211(h)(4) as specifying a minimum ethanol content for fuel blends containing gasoline and ethanol as well as these implementing requirements. Under this construct, only certain regulated parties that produce and distribute E15 would be able to avail themselves of the 1-psi waiver.

C. Proposed Interpretation of “Substantially Similar” for Gasoline

This action proposes a new interpretation of “substantially similar” which defines which fuels are substantially similar to Tier 3 E10 certification fuel under CAA sec

menting requirements. Under this construct, only certain regulated parties that produce and distribute E15 would be able to avail themselves of the 1-psi waiver.

C. Proposed Interpretation of “Substantially Similar” for Gasoline

This action proposes a new interpretation of “substantially similar” which defines which fuels are substantially similar to Tier 3 E10 certification fuel under CAA sec. 211(f)(1), as an alternative to the approach described above which would apply the CAA sec. 211(f)(4) waiver and its associated conditions. 90 Specifically, we are proposing that E15 with an RVP of 10.0 psi is sub sim to fuel used to certify Tier 3 light-duty vehicles ( i.e., E10 with an RVP of 9.0 psi). Alternatively, we propse that E15 with an RVP of 9.0 psi is sub sim to fuel used to certify Tier 3 light-duty vehicles. Either of these new interpretations of sub sim would increase the allowable concentration of ethanol blended into gasoline to up to 15-volume-percent because we believe that E15 is sub sim to Tier 3 E10 certification fuel.

90 Tier 3 vehicles must be certified on fuels described at 40 CFR 1065.710(b). For purposes of this preamble, we refer to certification test fuel used in certification testing for Tier 3 motor vehicles that contains 10-volume-percent ethanol as “Tier 3 E10 certification fuel”.

E15 would have similar effects on emissions (exhaust and evaporative), materials compatibility, and driveability for light-duty motor vehicles certified using Tier 3 E10 certification fuel. 91 This proposed interpretative rule would, if finalized, make it lawful for refiners and importers ( e.g., fuel manufacturers as described in 40 CFR 79.2(d) discussed above) to make and introduce into commerce E15 at 10.0 psi RVP without the use of the E15 partial waivers since we would now interpret E15 as sub sim to Tier 3 E10 certification fuel. We are proposing two alternative interpretations of the sub sim provision for E15

ule would, if finalized, make it lawful for refiners and importers ( e.g., fuel manufacturers as described in 40 CFR 79.2(d) discussed above) to make and introduce into commerce E15 at 10.0 psi RVP without the use of the E15 partial waivers since we would now interpret E15 as sub sim to Tier 3 E10 certification fuel. We are proposing two alternative interpretations of the sub sim provision for E15. First, we are proposing that E15 at 10 psi RVP is substantially similar to Tier 3 E10 certification fuel at 9 psi RVP. Alternatively, we are proposing that E15 at 9 psi is substantially similar to Tier 3 E10 certification fuel at 9 psi RVP. In conjunction with our interpretation of CAA sec. 211(h)(4) described above, this would allow all fuel manufacturers, not only downstream oxygenate blenders, the ability to lawfully introduce into commerce E15 at 10.0 psi RVP from May 1 through September 15. Prohibitions on the use of E15 in 2000 and older MY light-duty vehicles that currently apply as conditions of the CAA sec. 211(f)(4) waiver and as regulations established under CAA sec. 211(c), as well as the use of E15 in other vehicles, engines, and equipment not covered by the E15 partial waivers, would remain in place, and parties that make and distribute E15 and ethanol for use in producing E15 would still need to satisfy the MMR requirements under 40 CFR part 80, subpart N. This section outlines the background and rationale for our proposed interpretative rulemaking.

91 Auto manufacturers certified some light-duty motor vehicles using E10 certification fuel as early as MY2017 and almost all auto manufacturers must certify their light-duty motor vehicles using E10 certification fuel by MY2020.

1. Statutory Framework

The Air Quality Act of 1967 and the CAA of 1970 established the basic framework for EPA fuels regulation. CAA sec. 211(a) allows EPA to designate fuels and fuel additives for registration. CAA sec

vehicles using E10 certification fuel as early as MY2017 and almost all auto manufacturers must certify their light-duty motor vehicles using E10 certification fuel by MY2020.

1. Statutory Framework

The Air Quality Act of 1967 and the CAA of 1970 established the basic framework for EPA fuels regulation. CAA sec. 211(a) allows EPA to designate fuels and fuel additives for registration. CAA sec. 211(b) sets forth registration requirements for fuels and fuel additives and authorizes EPA to require health and environmental effects testing for the registration of fuels and fuel additives. CAA sec. 211(c) authorizes EPA to regulate or prohibit fuels or additives for use in motor (or nonroad) vehicles or engines if: (A) “any fuel or fuel additive or any emission product of such fuel or fuel additive causes, or contributes, to air pollution . . . that may reasonably be anticipated to endanger the public health or welfare, or (B) if emission products of such fuel or fuel additive will impair to a significant degree the performance of any emission control device or system.”

In the CAA Amendments of 1977, Congress established CAA sec. 211(f)(1), which prohibits manufacturers from first introducing into commerce any fuel or fuel additive for general use in light-duty vehicles that is not “substantially similar to any fuel or fuel additive utilized in the certification of any model year 1975, or subsequent model year, vehicle.” If a fuel or fuel additive is not sub sim, a fuel or fuel additive manufacturer may obtain a waiver under CAA sec. 211(f)(4) if the manufacturer can demonstrate that the new fuel or fuel additive “will not cause or contribute to a failure of any emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine, or nonroad vehicle in which such device or system is used) to achieve compliance by the vehicle or engine with the emission standards with respect to which it has been certified.” Together, these CAA sec

the new fuel or fuel additive “will not cause or contribute to a failure of any emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine, or nonroad vehicle in which such device or system is used) to achieve compliance by the vehicle or engine with the emission standards with respect to which it has been certified.” Together, these CAA sec. 211(f) provisions were designed to prevent fuels and fuel additives from being introduced into commerce that would degrade the emission performance of the existing fleet and protect vehicle manufacturers from their

As discussed above, in the CAA Amendments of 1990, Congress added CAA sec. 211(h) to address the volatility of gasoline, which largely codified EPA's then-new RVP regulations. Accordingly, entirely separate from CAA sec. 211(f), CAA sec. 211(h)(1) prohibits the sale of gasoline with an RVP in excess of 9.0 psi during the high ozone season (while allowing EPA to promulgate more stringent RVP requirements for nonattainment areas), and CAA sec. 211(h)(4) provides a 1.0 psi RVP allowance for “fuel blends containing gasoline and 10 percent” ethanol.

2. Certification Fuels

Historically, two fuels are utilized in EPA's emissions standards certification of gasoline-powered vehicles and engines: standardized gasoline with controlled parameters to ensure consistency across vehicle and engine certification used in emissions testing, and commercially available mileage accumulation fuels used to ensure durability in use of exhaust and evaporative emissions controls. 92 Historically the fuel used in emissions testing (“certification test fuel”) contained no oxygenates ( e.g., ethanol) and was often referred to by its brand name, “indolene.”

92 See 46 FR 38582 (July 28, 1981).

In the 2014 Tier 3 rulemaking, we updated the certification test fuel for Tier 3 certified motor vehicles and changed the certification test fuel from E0 to E10 to reflect the widespread use of E10 in the marketplace

emissions testing (“certification test fuel”) contained no oxygenates ( e.g., ethanol) and was often referred to by its brand name, “indolene.”

92 See 46 FR 38582 (July 28, 1981).

In the 2014 Tier 3 rulemaking, we updated the certification test fuel for Tier 3 certified motor vehicles and changed the certification test fuel from E0 to E10 to reflect the widespread use of E10 in the marketplace. 93 The requirement to use Tier 3 E10 certification fuel may have applied as early as MY2015 if a manufacturer elected to comply early with the Tier 3 vehicle emissions standards, but the requirement to use E10 in at least some vehicles began with MY2017. Almost all MY2020 and newer vehicles must be certified for emissions testing with Tier 3 E10 certification fuel with some exceptions for small volume vehicle manufacturers, which must use Tier 3 E10 certification fuel by MY2022.

93 See 79 FR 23414 (April 28, 2014).

Service accumulation fuel for durability must be representative of commercially-available gasoline 94 and evaporative emissions durability must “employ gasoline fuel for the entire mileage accumulation period that contains ethanol in, at least, the highest concentration permissible in gasoline under federal law and that is commercially available in any state in the United States.” 95 Since MY2004, service accumulation fuel used for evaporative system aging must contain the highest concentration of ethanol available in the market. After EPA partially granted the waivers for E15 in 2010 and 2011, we notified manufacturers in early 2012 that new evaporative emission families must be aged on E15 under 40 CFR 86.1824-08(f)(1). We believe that auto manufacturers began evaporative system aging on E15 as early as MY2014.

94 See 40 CFR 86.113-15(a)(5).

95 See 40 CFR 86.1824-08(f)(1).

3. History of Sub Sim Interpretations

EPA has issued four interpretative rules that defined the meaning of “substantially similar” for gasoline

12 that new evaporative emission families must be aged on E15 under 40 CFR 86.1824-08(f)(1). We believe that auto manufacturers began evaporative system aging on E15 as early as MY2014.

94 See 40 CFR 86.113-15(a)(5).

95 See 40 CFR 86.1824-08(f)(1).

3. History of Sub Sim Interpretations

EPA has issued four interpretative rules that defined the meaning of “substantially similar” for gasoline. These interpretive rules describe the types of unleaded gasoline that are considered substantially similar to the unleaded gasoline utilized in our vehicle and engine certification programs by placing limits on a gasoline's chemical composition and physical properties, including the types and amount of alcohols and ethers (oxygenates) that may be added to gasoline. Fuels that are found to be substantially similar to our certification fuels may be introduced into commerce. Each of our past interpretative rules provided an allowance for oxygenates within the gasoline. We last issued an interpretative rule in 2008 on the phrase “substantially similar” for gasoline. 96 The current substantially similar interpretative rule for unleaded gasoline allows oxygen content up to 2.7 percent by weight for certain ethers and alcohols. Despite having changed certification test fuel to include 10 volume percent ethanol, prior to this proposed action, we have not addressed what should be considered substantially similar to Tier 3 E10 certification fuel utilized in Tier 3 light duty vehicle certification.

96 See 73 FR 22281 (April 25, 2008)

asoline allows oxygen content up to 2.7 percent by weight for certain ethers and alcohols. Despite having changed certification test fuel to include 10 volume percent ethanol, prior to this proposed action, we have not addressed what should be considered substantially similar to Tier 3 E10 certification fuel utilized in Tier 3 light duty vehicle certification.

96 See 73 FR 22281 (April 25, 2008).

In defining what qualifies as sub sim to certification fuels, we have listed general physical and chemical characteristics, such as oxygen content, because fuels and fuel additives meeting these general “sub sim” characteristics will “not adversely affect emissions.” If we were to later find that a fuel or fuel additive that satisfies the physical and chemical sub sim characteristics “may reasonably be anticipated to endanger public health or welfare” or “impair to a significant degree the performance of any emission control device or system,” either in general or in particular vehicles or circumstances, we have authority to regulate that fuel or fuel additive under CAA sec. 211(c), which provides that we may by regulation place controls or prohibitions on fuels and fuel additives to protect public health or welfare or protect emission control devices or systems. 97 In our past interpretations defining what physical and chemical characteristics are necessary to make a fuel or fuel additive “sub sim” to certification test fuel, we have taken three primary factors into account: (1) Emissions, (2) materials compatibility, and (3) drivability. 98

97 See 45 FR 67443 (October 10, 1980).

98 See 56 FR 5352 (February 11, 1991).

We initially specified that fuel with oxygen content up to 2.0 weight percent is sub sim to certification test fuel. 99 We later revised the definition to allow oxygen content up to 2.7 weight percent for gasoline containing aliphatic ethers and/or alcohols (excluding methanol), finding, based on data and our experience with CAA sec

43 (October 10, 1980).

98 See 56 FR 5352 (February 11, 1991).

We initially specified that fuel with oxygen content up to 2.0 weight percent is sub sim to certification test fuel. 99 We later revised the definition to allow oxygen content up to 2.7 weight percent for gasoline containing aliphatic ethers and/or alcohols (excluding methanol), finding, based on data and our experience with CAA sec. 211(f)(4) waiver applications, that such levels would not result in emissions, materials compatibility, or drivability problems compared with certification test fuel. 100 Thus, we have a history of establishing maximum oxygen content as a criterion, in addition to other criteria, for determining whether a fuel or fuel additive is substantially similar to a fuel utilized in certification.

99 See 45 FR 6743 (October 10, 1980). 2.0 wt% oxygen equates to approximately 5.7 vol% ethanol.

100 See 56 FR 5352 (February 11, 1991). 2.7 wt% oxygen equates to approximately 7.7 vol% ethanol.

With respect to fuel volatility, our sub sim interpretations have specified that in order to qualify as sub sim to certification test fuel, which has historically had an RVP of 9.0 psi, fuels need only “meet ASTM standards in general, that is, not necessarily for every geographic location and time of year.” 101 To qualify as sub sim, gasoline (whether or not containing ethanol) “must possess, at time of manufacture, all the physical and chemical characteristics of an unleaded gasoline as specified in ASTM D 4814-88 for at least one of the Seasonal and Geographical Volatility Classes specified in the standard.” 102

101 See 46 FR 38585 (July 28, 1981).

102 See 73 FR 22281 (April 25, 2008).

4. Criteria for Determining Whether a Fuel is “Substantially Similar”

In order to be substantially similar, a fuel or fuel additive must be sub sim to a fuel used in the certification of any vehicle or engine under CAA sec. 206

t one of the Seasonal and Geographical Volatility Classes specified in the standard.” 102

101 See 46 FR 38585 (July 28, 1981).

102 See 73 FR 22281 (April 25, 2008).

4. Criteria for Determining Whether a Fuel is “Substantially Similar”

In order to be substantially similar, a fuel or fuel additive must be sub sim to a fuel used in the certification of any vehicle or engine under CAA sec. 206. To make this determination, we have generally considered the effects of a fuel or fuel additive on emissions (exhaust and evaporative), materials compatibility, and driveability for motor 103

103 See, e.g., 56 FR 5354 (February 11, 1991).

In this proposed CAA sec. 211(f)(1) interpretative rulemaking, we consider whether E15 is substantially similar to Tier 3 E10 certification fuel when used in Tier 3 light-duty vehicles. The scope of that comparison is relatively narrow for two reasons. First, CAA sec. 211(f)(1) only requires a consideration of the potential impacts on light-duty motor vehicles and motor vehicle engines. In this regard, CAA sec. 211(f)(1) is different than what an applicant must demonstrate in a waiver under CAA sec. 211(f)(4) from the restrictions of CAA sec. 211(f)(1). CAA sec. 211(f)(1) is focused on motor vehicles and motor vehicle engines under CAA sec. 206 and applies to a broad class of fuels. A CAA sec. 211(f)(4) waiver, on the other hand, requires that a specific fuel not cause or contribute any vehicle or engine certified under CAA sec. 206 and 213 to exceed emission standards over the useful life of the vehicle or engine. Thus, the scope of vehicles and engines considered to determine whether a fuel is substantially similar under CAA sec. 211(f)(1) is significantly narrower than the scope of vehicles and engines that must be considered by EPA for a waiver to be granted under CAA sec. 211(f)(4).

Second, under CAA sec

r CAA sec. 206 and 213 to exceed emission standards over the useful life of the vehicle or engine. Thus, the scope of vehicles and engines considered to determine whether a fuel is substantially similar under CAA sec. 211(f)(1) is significantly narrower than the scope of vehicles and engines that must be considered by EPA for a waiver to be granted under CAA sec. 211(f)(4).

Second, under CAA sec. 211(f)(1), the sub sim determination need only demonstrate that E15 is sub sim to a fuel used in certification of a 1975 or later MY vehicle or engine, not substantially similar to all certification fuels required and used historically ( e.g., E0 for light-duty vehicles and trucks prior to Tier 3) to assess compatibility and emission performance. In this case, the sub sim determination demonstrates that E15 is sub sim to Tier 3 E10 certification fuel.

5. Technical Rationale and Discussion

As discussed above, we have considered whether a fuel has similar effects on emissions, materials compatibility, and driveability when determining whether a fuel is substantially similar to certification fuel. Based on existing data and our engineering judgement, we have concluded that E15, with its additional oxygen content relative to Tier 3 E10 certification fuel, would have effects on emissions, materials compatibility, and drivability substantially similar to E10 in Tier 3 vehicles.

a. Exhaust Emissions

In the 2010 CAA sec. 211(f)(4) partial waiver for E15, we concluded from available data that neither the immediate combustion effects nor the long-term durability impacts of operating on E15 blends would prevent MY2001 and newer light-duty vehicles from complying with their full useful life emission standards. 104 This decision was supported by a large study conducted by DOE that tested 16 high-sales vehicles spanning model years 1999-2007 using ethanol splash blends made from Tier 2 certification gasoline (E0)

ombustion effects nor the long-term durability impacts of operating on E15 blends would prevent MY2001 and newer light-duty vehicles from complying with their full useful life emission standards. 104 This decision was supported by a large study conducted by DOE that tested 16 high-sales vehicles spanning model years 1999-2007 using ethanol splash blends made from Tier 2 certification gasoline (E0). 105 Analysis of the resulting data shows that the E15 blend produced approximately 5% higher NO X , 4% higher NMOG, and 4% lower CO compared to E10, though none of these differences was statistically significant. This work did not measure PM emissions, but the expectation at the time was that PM should react to ethanol in a similar way as NMOG emissions.

104 See 75 FR 68096 (November 4, 2010).

105 Knoll, K., West, B., Huff, S., Thomas, J. et al., “Effects of Mid-Level Ethanol Blends on Conventional Vehicle Emissions,” SAE Technical Paper 2009-01-2723, 2009.

Since the time of the 2010 waiver decision, additional data have been published on the effects of ethanol blends on Tier 2 vehicles. The EPAct/V2/E-89 study (referred to as “EPAct study”), jointly conducted by EPA, DOE/National Renewable Energy Laboratory (NREL), and the Coordinating Research Council (CRC) in 2009-2010, looked at the effects of five fuel properties, including ethanol concentration, on emissions from 15 high-sales light-duty vehicles from MY2008. Measurements included PM, a pollutant for which its relationship to fuel properties had previously not been examined in much detail for gasoline vehicles. The size and scope of this study allowed for statistical models to be developed that could be used to correlate the impacts of the five fuel properties, including ethanol concentration, on emissions, enabling projections to be made of the emission impacts of a wide range of fuels, not limited to those tested

to fuel properties had previously not been examined in much detail for gasoline vehicles. The size and scope of this study allowed for statistical models to be developed that could be used to correlate the impacts of the five fuel properties, including ethanol concentration, on emissions, enabling projections to be made of the emission impacts of a wide range of fuels, not limited to those tested. Results generally confirmed the NO X and CO emission impacts described above, while indicating that ethanol's effects on NMOG and PM are more complex and depend on other fuel parameters, such as the fuel's distillation profile and aromatics content. 106 107 For example, the EPAct study statistical models estimate approximately 2% higher NO X , 4% lower NMOG, 2% lower CO, and 2% higher PM for E15 compared to the E10 fuels used in the DOE study. If we instead assume an E15 splash blend starting from a typical E10 market fuel, the EPAct study models project 2% higher NO X , 2% higher NMOG, 2% lower CO, and 4% higher PM. Since these figures represent the output of models whose coefficients survived a process of statistical testing, they are meaningful despite being small. This type of analysis is different from performing a test for significant differences directly on paired emission measurements, as is presented for the other studies discussed below, where measured differences may be statistically insignificant due to the limited scope of the test program and/or the number of variables left uncontrolled.

106 EPA Office of Transportation and Air Quality. “EPAct/V2/E-89: Assessing the Effect of Five Gasoline Properties on Exhaust Emissions from Light-Duty Vehicles Certified to Tier 2 Standards: Final Report on Program Design and Data Collection”. EPA-420-R-13-004. April 2013.

107 Butler, A., Sobotowski, R., Hoffman, G., and Machiele, P., “Influence of Fuel PM Index and Ethanol Content on Particulate Emissions from Light-Duty Gasoline Vehicles,” SAE Technical Paper 2015-01-1072, 2015, doi:10.4271/2015-01-1072

s on Exhaust Emissions from Light-Duty Vehicles Certified to Tier 2 Standards: Final Report on Program Design and Data Collection”. EPA-420-R-13-004. April 2013.

107 Butler, A., Sobotowski, R., Hoffman, G., and Machiele, P., “Influence of Fuel PM Index and Ethanol Content on Particulate Emissions from Light-Duty Gasoline Vehicles,” SAE Technical Paper 2015-01-1072, 2015, doi:10.4271/2015-01-1072.

Two studies published in 2017 and 2018 by CRC, projects E-94-2 and E-94-3, respectively, examined the effects of ethanol and PM Index on PM and other emissions from MY2012-2015 Tier 2 vehicles, all with gasoline direct injected (GDI) engines and several with turbocharging. 108 109 Results for the overall test fleet of 16 vehicles in E-94-2 showed no statistically significant effect of E10 match blends 110 relative to E0 for total hydrocarbons (THC), NO X , or CO, while PM increased by 19% for the regular-grade (87 AKI) test fuels. The E-94-3 study tested a four-vehicle subset on four E10 splash blends made from the E0 fuels in E-94-2, and found a PM increase of 21% on average, consistent with the effect found in the larger E94-2 study. Assuming this PM effect is linear over small fuel changes, we would expect around 10% higher PM when moving from E10 to E15. Comparing these results to the EPAct study and DOE study above suggests that later-technology vehicles with direct injection have equal or lower

108 Morgan, Peter; Smith, Ian; Premnath, Vinay; Kroll, Svitlana; Crawford, Robert. “Evaluation and Investigation of Fuel Effects on Gaseous and Particulate Emissions on SIDI In-Use Vehicles”. SwRI 03.20955. Southwest Research Institute, San Antonio, TX. CRC E-94-2. Coordinating Research Council, Alpharetta, GA. March 2017.

109 Morgan, Peter; Lobato, Peter; Premnath, Vinay; Kroll, Svitlana; Brunner, Kevin; Crawford, Robert. “Impacts of Splash-Blending on Particulate Emissions for SIDI Engines”. SwRI 03.20955-1. Southwest Research Institute, San Antonio, TX. CRC E-94-3. Coordinating Research Council, Alpharetta, GA

rch Institute, San Antonio, TX. CRC E-94-2. Coordinating Research Council, Alpharetta, GA. March 2017.

109 Morgan, Peter; Lobato, Peter; Premnath, Vinay; Kroll, Svitlana; Brunner, Kevin; Crawford, Robert. “Impacts of Splash-Blending on Particulate Emissions for SIDI Engines”. SwRI 03.20955-1. Southwest Research Institute, San Antonio, TX. CRC E-94-3. Coordinating Research Council, Alpharetta, GA. June 2018.

110 Matched blended fuels are fuels that have been crafted to control fuel parameters ( e.g., distillation parameters and RVP) after the blending of ethanol typically for research and testing purposes. This is contrasted with splash blended fuels, which are not controlled to specifically account for the blending of ethanol.

Another study published in 2018 by the University of California, Riverside Center for Environmental Research and Technology (“CE-CERT”) looked at the effects of ethanol and aromatics on emissions from five vehicles spanning model years 2016 to 2017, all with GDI engines and certified to either Tier 3 or LEV III standards. 111 The test fuels included E0, E10, and E15 blends that were closely matched on aromatic content (at two levels, 21% and 29% volume) but the mid-point distillation temperature (T40-T50) was uncontrolled, and varied significantly. 112 Results of this study showed no statistically significant difference in NO X , non-methane hydrocarbons (NMHC), or PM when comparing E15 to E10 blends at either aromatics level.

111 Karavalakis, G; Durbin, T; Yang, J; Roth, P., “Impacts of Aromatics and Ethanol Content on Exhaust Emissions from Gasoline Direct Injection (GDI) Vehicles”. University of California, CE-CERT, April 2018.

112 The EPAct study found T50 to have a meaningful and statistically significant impact on NMOG, NMHC, NO X , and PM emissions

M when comparing E15 to E10 blends at either aromatics level.

111 Karavalakis, G; Durbin, T; Yang, J; Roth, P., “Impacts of Aromatics and Ethanol Content on Exhaust Emissions from Gasoline Direct Injection (GDI) Vehicles”. University of California, CE-CERT, April 2018.

112 The EPAct study found T50 to have a meaningful and statistically significant impact on NMOG, NMHC, NO X , and PM emissions.

While there are limited data on Tier 3 vehicles, the results of the Tier 2 and Tier 3 vehicle studies cited above are nevertheless largely consistent with each other given that ethanol blending also affects many other fuel properties, and given that ethanol is blended into gasolines in different ways that affect the collateral property changes differently. This makes it difficult to interpret trends across the body of literature without detailed information on multiple fuel properties. However, since the early 1990s, a number of programs have studied the effects of ethanol on emissions from earlier vintage vehicles, and based on these studies, emissions models have been published, including the Complex Model, 113 Predictive Model, 114 and MOVES simulator, 115 and the results from the more recent studies are also largely consistent with them. Namely, ethanol blending causes slight increases in NO X emissions and slight decreases for CO emissions. Earlier studies did not evaluate PM emissions from ethanol blending.

113 See “Complex Model Used to Analyze RFG and Anti-dumping Emissions Performance Standards,” available at https://www.epa.gov/fuels-registration-reporting-and-compliance-help/complex-model-used-analyze-rfg-and-anti-dumping.

114 See “California Gasoline Predictive Models, and CARBOB Model Development,” available at https://www.arb.ca.gov/fuels/gasoline/premodel/pmdevelop.htm.

115 See “Moves and Other Mobile Source Emissions Models,” available at: https://www.epa.gov/moves

e Standards,” available at https://www.epa.gov/fuels-registration-reporting-and-compliance-help/complex-model-used-analyze-rfg-and-anti-dumping.

114 See “California Gasoline Predictive Models, and CARBOB Model Development,” available at https://www.arb.ca.gov/fuels/gasoline/premodel/pmdevelop.htm.

115 See “Moves and Other Mobile Source Emissions Models,” available at: https://www.epa.gov/moves.

While some criteria pollutants would have relative and real increases (NO X and PM) and others have similar decreases (VOC and CO) on E15 compared to E10, these changes are relatively small. In the E15 partial waivers, we determined that effects of this magnitude were too small to cause or contribute 2001 and newer light-duty vehicles to exceed the vehicles' certified exhaust emissions standards and we expect that this would also be the case for Tier 3 certified vehicles. While CAA sec. 211(f)(1) does not define specific criteria for how to determine whether an ethanol blend is substantially similar to certification test gasoline, we believe that the small changes in exhaust emissions from E15 relative to Tier 3 E10 certification fuel used in Tier 3 certified vehicles are within the scope of what we have determined to be sub sim in our prior sub sim interpretive rulemakings. Therefore, we believe that E15 is sub sim to Tier 3 E10 certification fuel from the perspective of exhaust emissions. However, we seek comment and request any additional information related to the potential effects on the exhaust emissions of E15 compared to Tier 3 E10 certification fuel, particularly in Tier 3 certified vehicles given the limited data currently available.

b. Evaporative Emissions

EPA has set evaporative emission standards for motor vehicles since 1971. During the ensuing years, these evaporative standards have continued to evolve, resulting in additional evaporative emissions reductions

on the exhaust emissions of E15 compared to Tier 3 E10 certification fuel, particularly in Tier 3 certified vehicles given the limited data currently available.

b. Evaporative Emissions

EPA has set evaporative emission standards for motor vehicles since 1971. During the ensuing years, these evaporative standards have continued to evolve, resulting in additional evaporative emissions reductions. Consideration of whether E15 is substantially similar to Tier 3 E10 certification fuel for evaporative emissions requires consideration of the applicable evaporative emissions standards to which the particular motor vehicles were certified, in this case Tier 3 motor vehicles. There are now six main components to motor vehicle evaporative emissions that are important for our standards: (1) Diurnal (evaporative emissions that come off the fuel system as a motor vehicle heats up during the course of the day); (2) refueling emissions (evaporative emissions that come off the fuel system as the vehicle is refueled); (3) hot soak (evaporative emissions that come off a hot motor vehicle as it cools down after the engine is shut off); (4) running loss (evaporative emissions that come off the fuel system during motor vehicle operation); (5) permeation (evaporative emissions that come through the walls of elastomers in the fuel system and are measured as part of the diurnal test); and (6) unintended leaks due to deterioration/damage that is now largely monitored through onboard diagnostic standards.

For hot soak, permeation, and unintended leak evaporative emissions, we expect that E15 would have a similar effect as Tier 3 E10 certification fuel. In the E15 partial waivers, we stated that we did not expect that E15 would have an effect on hot soak, permeation, and unintended leak evaporative emissions based on a review of the data and on the fact that auto manufacturers have been required to age vehicles on E10 for evaporative emissions durability testing since MY 2004

that E15 would have a similar effect as Tier 3 E10 certification fuel. In the E15 partial waivers, we stated that we did not expect that E15 would have an effect on hot soak, permeation, and unintended leak evaporative emissions based on a review of the data and on the fact that auto manufacturers have been required to age vehicles on E10 for evaporative emissions durability testing since MY 2004. We are not aware of any information suggesting that Tier 3 vehicles would behave differently since they are aged for evaporative emissions durability on E15 and certified on Tier 3 E10 certification fuel. Furthermore, in our review of the testing of permeation on pre-Tier 3 vehicles ( i.e., prior to changes made to address permeation) in the E15 partial waiver decisions, while ethanol was shown to significantly worsen permeation emissions, there was no discernable worsening of the impacts at higher ethanol concentrations. 116 Consequently, we do not anticipate permeation emissions with E15 to be any higher than with E10.

116 See 75 FR 68115-68120 (November 4, 2010) and 76 FR 4675-4681 (January 26, 2011).

We are proposing two alternative approaches to assessing the evaporative emissions impacts of E15 with regard to the volatility of the fuel. First, we compare E15 at 10.0 psi to Tier 3 E10 certification fuel at 9.0 psi to evaluate differences in evaporative emissions from refueling, diurnal, and running loss emissions sources. Alternatively, we compare E15 at 9.0 psi, the fuel without a 1-psi waiver under CAA sec. 211(h)(4), to Tier 3 E10 certification fuel at 9.0 psi.

Refueling, diurnal, and running loss evaporative emissions increase as fuel volatility increases, with gasoline with an RVP of 10.0 psi producing significantly more vapor for the evaporative emission control system to capture and purge through the engine than gasoline with an RVP of 9.0 psi

si, the fuel without a 1-psi waiver under CAA sec. 211(h)(4), to Tier 3 E10 certification fuel at 9.0 psi.

Refueling, diurnal, and running loss evaporative emissions increase as fuel volatility increases, with gasoline with an RVP of 10.0 psi producing significantly more vapor for the evaporative emission control system to capture and purge through the engine than gasoline with an RVP of 9.0 psi. 117 However, because we specifically addressed gasoline volatility in our prior 1981, 1991, and 2008 sub sim reinterpretations, 118 we are not proposing to modify our long-standing

117 These effects are discussed more in Section II.E.

118 See 46 FR 38582 (July 28, 1981), 56 FR 5352 (February 11, 1991), and 73 FR 22277 (April 25, 2008), respectively. Historically, we have defined sub sim with regards to volatility as being anything within the general ASTM specifications for volatility for any location and time of year.

Historically, the primary purpose of the requirement under the definition of substantially similar that gasoline must meet a volatility class under the ASTM specification for gasoline was to ensure that the fuel was physically and chemically similar to gasoline as to be used in a gasoline-fueled motor vehicle. For example, in the 1980 sub sim interpretative rulemaking, we allowed gasoline-ethanol blends containing up to 2.0 weight percent oxygen (about 5.5 volume percent ethanol); such fuel would experience a similar 1-psi increase to E10 or E15 if produced using the same base gasoline. Even during 1980, certification fuel used for gasoline-fueled motor vehicles was expected to have an RVP of 9.0 psi. 119 Therefore, we have not generally considered the expected increase in RVP resulting from the addition of RVP when determining whether a fuel is sub sim to gasoline certification fuel.

119 See 40 CFR 86.113-78 (1977).

We determined that such a change was unnecessary and declined to impose such a limitation when we reinterpreted sub sim in 1991 and in 2008

expected to have an RVP of 9.0 psi. 119 Therefore, we have not generally considered the expected increase in RVP resulting from the addition of RVP when determining whether a fuel is sub sim to gasoline certification fuel.

119 See 40 CFR 86.113-78 (1977).

We determined that such a change was unnecessary and declined to impose such a limitation when we reinterpreted sub sim in 1991 and in 2008. In 1991, we maintained the view that sub sim fuels need only meet general ASTM specifications ( i.e., any volatility class in ASTM D 4814-88) for volatility. This was after we promulgated the Phase I and Phase II RVP standards for gasoline under CAA sec. 211(c) and Congress enacted CAA sec. 211(h) in 1990, which, as discussed above, we have interpreted as essentially codifying our regulatory approach to fuel volatility as it existed prior to 1990. In 2008, when we provided flexibility for testing gasoline used only in Alaska to meet sub sim volatility requirements, we chose to maintain the existing volatility language for gasoline for the rest of the U.S.

We are also proposing that E15 at 9.0 psi RVP is sub sim to Tier 3 E10 certification fuel at 9.0 psi RVP during the summer. This would allow us, from a technical standpoint, to consider the impacts of RVP on evaporative emissions, and in particular on refueling, diurnal, and running loss evaporative emissions under CAA sec. 211(f)(1). Refueling, diurnal, and running loss evaporative emissions are mostly a function of volatility of the fuel. Therefore, if two fuels have the same RVP, the expected evaporative emissions from the two fuels would be similar. In this situation, since there is no difference in RVP, E15 at 9.0 psi RVP would have nearly identical evaporative emissions to E10 at 9.0 psi RVP from refueling, diurnal, and running loss emissions sources.

We believe that under CAA sec

mostly a function of volatility of the fuel. Therefore, if two fuels have the same RVP, the expected evaporative emissions from the two fuels would be similar. In this situation, since there is no difference in RVP, E15 at 9.0 psi RVP would have nearly identical evaporative emissions to E10 at 9.0 psi RVP from refueling, diurnal, and running loss emissions sources.

We believe that under CAA sec. 211(f)(1) we only need to determine that E15 at 9.0 psi RVP is sub sim to Tier 3 E10 certification fuel at 9.0 psi RVP in order for fuel manufacturers and downstream parties to take advantage of the CAA sec. 211(h)(4) waiver. Congress intended for gasoline-ethanol blends to have a 1-psi waiver in order to promote ethanol blending in gasoline. In other words, given the existence of CAA sec. 211(h)(4), we believe it is appropriate when interpreting sub sim for CAA sec. 211(f)(1) to compare E15 at 9.0 psi RVP to E10 certification test fuel at 9.0 psi RVP. CAA sec. 211(h)(4) then provides the 1-psi waiver to E15. Therefore, under this alternative we would propose to interpret sub sim to apply to gasoline with a maximum of 9.0 psi RVP during the summer.

In summary, we expect that E15 would have similar evaporative emissions effects as Tier 3 E10 certification fuel for Tier 3 light-duty vehicles with regard to evaporative emissions from permeation, hot soak, and other unintended evaporative emissions. For refueling, diurnal and running loss evaporative emissions, we are not proposing to alter the existing interpretation of substantially similar. As explained above in our proposed interpretation of CAA sec. 211(h)(4), we believe it was Congress' intent to allow for gasoline-ethanol blended fuels containing at least 10 percent ethanol to receive the 1-psi waiver and we have interpreted sub sim under 211(f)(1) to be consistent with Congress' intent. Therefore, we are proposing that E15 at 10.0 psi RVP is sub sim to Tier 3 E10 certification test fuel at 9.0 psi RVP when used in Tier 3 vehicles

CAA sec. 211(h)(4), we believe it was Congress' intent to allow for gasoline-ethanol blended fuels containing at least 10 percent ethanol to receive the 1-psi waiver and we have interpreted sub sim under 211(f)(1) to be consistent with Congress' intent. Therefore, we are proposing that E15 at 10.0 psi RVP is sub sim to Tier 3 E10 certification test fuel at 9.0 psi RVP when used in Tier 3 vehicles. Alternatively, we propose that E15 at 9.0 psi RVP is sub sim to Tier 3 E10 certification fuel at 9.0 psi RVP when used in Tier 3 vehicles.

c. Materials Compatibility

Materials compatibility is a key factor in considering what fuels or fuel additives are sub sim to certification fuel, insofar as poor materials compatibility can lead to serious exhaust and evaporative emission compliance problems not only immediately upon use, but especially over the full useful life of vehicles and engines. In the E15 partial waivers, we determined that the use of E15 in MY2001 and newer light-duty motor vehicles “will not [result in] materials compatibility issues that lead to exhaust or evaporative emissions exceedances.” 120 We argued that “[n]ewer motor vehicles, such as Tier 2 and NLEV vehicles (MY2001 and newer), on the other hand, were designed to encounter more regular ethanol exposure compared to earlier model year motor vehicles” since EPA's in-use verification program would require auto manufacturers to place more “emphasis on real world motor vehicle testing” prompting manufacturers to consider commercially available fuels containing ethanol when developing and testing their emissions systems. 121 Based on this assessment plus confirmatory data from DOE's extensive test program that aged MY2001 and newer vehicles up to 120,000 miles on E15, we concluded that MY2001 and newer vehicles would not have materials compatibility issues with E15

hicle testing” prompting manufacturers to consider commercially available fuels containing ethanol when developing and testing their emissions systems. 121 Based on this assessment plus confirmatory data from DOE's extensive test program that aged MY2001 and newer vehicles up to 120,000 miles on E15, we concluded that MY2001 and newer vehicles would not have materials compatibility issues with E15. We expect that Tier 3 certified vehicles would have similar, if not better, materials compatibility with E15 compared to MY2001 and newer vehicles since Tier 3 certified vehicles should be designed to encounter E15 in-use and manufacturers are required to use E15 as an aging fuel for evaporative durability testing.

120 See 75 FR 68122-68123 (November 4, 2010); 76 FR 4681 (January 26, 2011).

121 See 75 FR 68122 (November 4, 2010).

As required under the vehicle and certification regulations, 122 since granting the E15 partial waivers, E15 is now used as an aging fuel for service accumulation for evaporative durability testing. Auto manufacturers have used E15 for service accumulation for evaporative durability testing since at least MY2014. This means that many Tier 2 certified vehicles since MY2014 and all Tier 3 certified vehicles have been aged on E15 and have been designed with materials capable of handling E15 for extended periods of time.

122 See 40 CFR 86.1824-08(f)(1).

Therefore, we would not expect any materials compatibility issues from E15 in Tier 3 vehicles and we expect that

d. Driveability

A change in the driveability of a motor vehicle that results in significant deviation from normal operation ( e.g., stalling, hesitation, etc.) would result in increased emissions. These increases may not be demonstrated in the emission certification test cycles but instead are present during in-use operation

s compatibility issues from E15 in Tier 3 vehicles and we expect that

d. Driveability

A change in the driveability of a motor vehicle that results in significant deviation from normal operation ( e.g., stalling, hesitation, etc.) would result in increased emissions. These increases may not be demonstrated in the emission certification test cycles but instead are present during in-use operation. In addition to consumer dissatisfaction, a motor vehicle stall and subsequent restart can result in a significant increase in emissions because HC and CO emission rates are typically highest during vehicle starts, especially cold starts. Further, concerns exist if the consumer or operator tampers with the motor vehicle in an attempt to correct the driveability issue since consumers may attempt to modify a motor vehicle from its original certified configuration. Thus, we have considered whether fuels or fuel additives have an adverse effect on driveability relative to certification fuel to define what is substantially similar.

We concluded in the E15 partial waivers that we did not believe that E15 would cause driveability concerns for MY2001 and newer light-duty vehicles. We reviewed the data and information from the over 30 different test programs evaluated to grant the E15 partial waivers and we found “no specific reports of driveability, operability or on-board diagnostics (OBD) issues across many different vehicles and duty cycles including lab testing and in-use operation.” 123

123 See 76 FR 4681-82 (January 26, 2011).

After having granted the partial E15 waivers, we believe that Tier 2 and Tier 3 vehicles also have better capability of operating on E15, since as mentioned above, auto manufacturers have been required to use E15 as an aging fuel for evaporative durability aging since at least MY2014

cles and duty cycles including lab testing and in-use operation.” 123

123 See 76 FR 4681-82 (January 26, 2011).

After having granted the partial E15 waivers, we believe that Tier 2 and Tier 3 vehicles also have better capability of operating on E15, since as mentioned above, auto manufacturers have been required to use E15 as an aging fuel for evaporative durability aging since at least MY2014.

We also believe that the producers and distributors of gasoline adhere to ASTM specifications for gasoline ( i.e., ASTM D 4814), 124 which helps address the driveability of gasoline that contains up to 15 volume percent ethanol. As E15 has been in the market since at least 2012, industry, through ASTM International, has worked to develop voluntary consensus-based standards to help ensure the quality of E15 made and used in the marketplace. For example, ASTM D4814-18c has language to ensure that gasoline-ethanol blends have certain physical and chemical characteristics, like the gasoline-ethanol blend having distillation parameters falling within specified ranges, to ensure that when the gasoline-ethanol blended fuel is used, driveability issues will not arise. 125

124 ASTM Standard D4814, 2019, “Standard Specification for Automotive Spark-Ignition Engine Fuel,” ASTM International, West Conshohocken, PA, 2003, DOI: 10.1520/C0033-03, www.astm.org.

125 Id.

For these reasons, we believe that E15 would have similar driveability characteristics to Tier 3 E10 certification fuel.

e. Conclusion

For reasons described above, we are proposing that E15 is substantially similar to Tier 3 E10 certification fuel. As discussed above, when interpreting which fuels and fuel additives are sub sum to certification fuel under CAA sec. 211(f)(1), we consider those potential effects of relevance under CAA sec. 211(f)(1) of fuels and fuel additives on certified motor vehicles' emissions (exhaust and evaporative), materials compatibility, and driveability

15 is substantially similar to Tier 3 E10 certification fuel. As discussed above, when interpreting which fuels and fuel additives are sub sum to certification fuel under CAA sec. 211(f)(1), we consider those potential effects of relevance under CAA sec. 211(f)(1) of fuels and fuel additives on certified motor vehicles' emissions (exhaust and evaporative), materials compatibility, and driveability. Regarding emissions, while E15 compared with Tier 3 E10 certificatio

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