[Federal Register Volume 62, Number 147 (Thursday, July 31, 1997)]
[Notices]
[Pages 41047-41049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20220]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-5867-1]


Change in Minimum Oxygen Content Requirement for Reformulated 
Gasoline

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: EPA's reformulated gasoline (RFG) program contains various 
standards for RFG, including an oxygen content standard. The current 
per-gallon minimum standard for oxygen content in RFG is 1.5% by 
weight. Pursuant to the RFG regulations, EPA is increasing this 
standard to 1.6% by weight for several of the RFG covered areas, 
because those areas failed a series of compliance surveys for oxygen 
content in 1996. This notice announces the increased standard, and 
describes the covered areas and parties that are subject to the 
increased standard. The increased standard will help ensure that all 
covered areas receive the full benefit of the oxygen content 
requirement in the RFG program.

FOR FURTHER INFORMATION CONTACT: Stuart Romanow, Fuels and Energy 
Division, Office of Mobile Sources, Environmental Protection Agency, 
Washington DC (6406J) 202-233-9296.

SUPPLEMENTARY INFORMATION:

I. Regulatory Entities

    Regulatory categories and entities potentially affected by this 
action include:

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                                                Examples of affected    
                 Category                             entities          
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Industry..................................  Refiners, importers,        
                                             oxygenate blenders of      
                                             reformulated gasoline.     
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    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be affected by this 
action. This table lists the types of entities that EPA is now aware 
could be potentially affected by this action. Other types of entities 
not listed in the table could also be affected. To determine whether 
your entity is affected by this action, you should carefully examine 
the existing provisions at 40 CFR 80.41. If you have questions 
regarding the applicability of this action to a particular entity, 
consult the person listed in the preceding FOR FURTHER INFORMATION 
CONTACT section.

II. Background

    Section 211(k) of the Clean Air Act requires that EPA establish 
standards for reformulated gasoline ( RFG) to be used in specified 
ozone nonattainment areas (covered areas). The RFG requirements contain 
performance standards for reductions of emissions from motor vehicles 
of ozone forming volatile organic compounds and toxic pollutants.
    Standards for RFG are contained in 40 CFR 80.41. Refiners and other 
parties subject to the standards can choose to comply on either a per-
gallon basis or to comply on average. The standards for compliance on 
average (``averaged standards'') are numerically more stringent than 
the per-gallon standards. The averaged standards for RFG that apply in 
1996 are contained in Sec. 80.41(b). These averaged standards include a 
per-gallon minimum requirement of 1.5 weight percent oxygen. This per-
gallon minimum requirement is in addition to the requirement for 2.1 
weight percent oxygen, on average. The average standard for oxygen must 
be met by a refiner or oxygenate blender for all of the RFG it produced 
at a refinery or blending facility, or for RFG imported by an importer, 
but these parties are not required to meet this standard for the RFG 
supplied to each covered area separately.
    Any refiner, importer or oxygenate blender has the option of 
meeting the RFG standards on average or per gallon. If a party is 
subject to the averaged standards, then the requirement to conduct 
surveys, as specified in Sec. 80.68, must be satisfied. In these 
surveys, RFG samples are collected at retail gasoline stations within 
covered areas and analyzed to determine if the RFG supplied to each 
covered area meets certain survey pass/fail criteria specified in 
Sec. 80.68. An oxygen survey series failure occurs in a covered area if 
the annual average oxygen content for all of the samples is less than 
2.00 weight percent. The purpose of the surveys and the tightened 
standards which result if a survey is failed is to ensure that 
averaging over a refiner's entire production as compared to separate 
averaging for each covered area does not lead to the reduced quality of 
RFG in any covered area.
    Since the implementation of the RFG program in 1995, these surveys 
have been conducted by the RFG Survey Association, a not-for-profit 
association of refiners, importers and blenders, using an EPA-approved 
survey design plan as required in the regulations. By letter dated 
January 16, 1997, the RFG Survey Association reported to EPA the 
results of its surveys for 1996, indicating that several survey areas 
failed to meet the annual average requirements of 2.00% oxygen by 
weight.\1\ After reviewing the data EPA determined that 8 areas did 
fail the survey series for oxygen content.\2\
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    \1\ Letter dated January 16, 1997 from Frank C. Lenski, 
President, RFG Survey Association, to Charles Freed, Director, Fuels 
and Energy Division, EPA.
    \2\ Letter dated January 31, 1997 from Charles Freed, EPA, to 
Frank Lenski, RFG Survey Association. Also see Memorandum dated 
April 29, 1997 from Stuart Romanow, Mechanical Engineer, Fuels and 
Energy Division to Charles Freed.
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    The following covered areas failed the oxygen survey series:

1. Philadelphia-Wilmington-Trenton area [Sec. 80.70(e)]
2. Baltimore, MD area [Sec. 80.70(g)]

[[Page 41048]]

3. Houston-Galveston-Brazoria, TX area [Sec. 80.70(h)]
4. The Atlantic City, NJ area comprised of [Sec. 80.70(j)(9):]
    Atlantic County
    Cape May County
5. The Dallas-Fort Worth, TX area comprised of [Sec. 80.70(j)(13):]
    Collin County
    Dallas County
    Denton County
    Tarrant County
6. Norfolk-Virginia Beach-Newport News (Hampton Roads), VA area 
comprised of [Sec. 80.70(j)(14):]
    Chesapeake
    Hampton
    James City County
    Newport News
    Norfolk
    Poquoson
    Portsmouth
    Suffolk
    Virginia Beach
    Williamsburg
    York County
7. Richmond, VA area comprised of [Sec. 80.70(j)(14):]
    Charles City County
    Chesterfield County
    Colonial Heights
    Hanover County
    Henrico County
    Hopewell
    Richmond
8. Washington D.C. area comprised of [Sec. 80.70(j)(2),(j)(6),(j)(14):]
    The District of Columbia
    Calvert County, MD
    Charles County, MD
    Frederick County, MD
    Montgomery County, MD
    Prince Georges County, MD
    Alexandria, VA
    Arlington County, VA
    Fairfax, VA
    Fairfax County, VA
    Falls Church, VA
    Loudon County, VA
    Manassas, VA
    Manassas Park, VA
    Prince William County, VA
    Stafford County, VA

    The boundaries of the covered areas are described in detail in 
Sec. 80.70.
    Under Sec. 80.41(o), when a covered area fails an oxygen content 
survey series, the minimum oxygen content requirement for that covered 
area is made more stringent by increasing the per gallon minimum oxygen 
content standard for affected RFG subject to the averaging standard by 
0.1% . This more stringent requirement applies beginning the year 
following the year of the failure. Therefore, in this case, the minimum 
per gallon oxygen content requirement for the above covered areas is 
increased from 1.5% to 1.6% by weight.
    The criteria identifying the refineries, importers and oxygenate 
blenders subject to adjusted standards are stated in Sec. 80.41(q). In 
general, adjusted standards apply to RFG that is subject to an 
averaging standard (``averaged RFG'') that is produced at a refinery or 
oxygenate blending facility if any averaged RFG from that refinery or 
facility supplied a failed covered area during 1996, or supplies the 
covered area during any year that the more stringent standards are in 
effect. The regulation provides for an exception based on certain 
volume limits [see 40 CFR Sec. 80.41(q)(1)(iii).]
    Thus, if a refiner has elected for a refinery to be subject to the 
average oxygen standard, and if even a small portion of the RFG 
produced at the refinery is used in an area subject to an oxygen 
ratchet, the entire volume of RFG produced at the refinery is subject 
to the more stringent oxygen standard regardless of which area receives 
the RFG. This result is true regardless of whether the refinery's 
gasoline was supplied to the city in question during 1996 or during a 
year when the more stringent oxygen standard applies.
    Under Sec. 80.41(q)(2), the applicability of adjusted standards to 
imported averaged RFG is specified by the Petroleum Administration for 
Defense District (PADD) in which the covered area is located and the 
PADD where the gasoline is imported. The covered areas that had oxygen 
survey series failures are located in PADDs I and III. Therefore, all 
RFG imported at facilities located in PADDs I, II, III or IV is subject 
to the adjusted oxygen standard. The states included in each PADD are 
identified in Sec. 80.41(r). In addition, if any RFG imported into any 
other PADD supplies any of the covered areas with oxygen survey 
failures, the adjusted standard applies to that RFG, as well.
    Under Sec. 80.41(q)(3), any gasoline that is transported in a 
fungible manner by a pipeline, barge or vessel is considered to have 
supplied each covered area that is supplied with any gasoline by that 
pipeline, barge or vessel shipment unless the refiner or importer is 
able to establish that the gasoline it produced or imported was 
supplied only to a smaller number of covered areas.
    Consider, for example, gasoline transported on the Colonial 
Pipeline, which supplies RFG to several cities that failed the oxygen 
survey in 1996. If a refinery's RFG was transported by the Colonial 
Pipeline any time during 1996, or any time during any year when the 
more stringent oxygen standard applies, the more stringent oxygen 
standard applies to all RFG produced at the refinery regardless of the 
market. In addition, there is a presumption that, due to fungible 
mixing, each refinery's RFG that is transported by the Colonial 
Pipeline is in part supplied to each city supplied by the Colonial 
Pipeline. This presumption is rebuttable, but the rebuttal normally 
would require a refiner to have transported its RFG in a non-fungible 
manner. Thus, the more stringent standard applies to a refinery whose 
gasoline is transported on the Colonial Pipeline regardless of whether 
the refiner takes delivery of RFG in the specific cities that failed 
the oxygen survey.
    The adjusted oxygen standard applies to all averaged RFG produced 
by a refinery or imported by an importer identified in Sec. 80.41(q). 
In accordance with Sec. 80.41(p), the effective date of this change is 
October 29, 1997.
    Thus, under Sec. 80.41(p) the more stringent oxygen standard 
applies at all points of the distribution system beginning on October 
29, 1997, including terminals supplying the affected covered areas and 
retail outlets in the covered areas. If a downstream facility fails to 
meet the new standard by October 29, 1997, the party who operates the 
facility would be in violation, as well as each upstream party who 
supplied that facility. An upstream party who failed to supply RFG 
meeting the new oxygen standard sufficiently in advance of October 29, 
1997 will have caused the violation.
    As a result, EPA believes that refiners, importers and oxygenate 
blenders must begin producing or importing RFG meeting the new oxygen 
standard sufficiently in advance of October 29, 1997 to ensure all 
downstream parties have time to transition storage tanks to meet the 
new standard.
    However, EPA believes it may be difficult for all regulated parties 
to transition to the new oxygen standard by October 29, 1997. As a 
result, EPA intends to enforce the new oxygen standard in a manner that 
gives parties additional time. Refiners, importers, and oxygenate 
blenders will be required to meet the new oxygen standard beginning 
September 29, 1997. EPA believes this revised date for refinery-level 
compliance reflects a later date than would be necessary if all parties 
had to comply by October 29, 1997. In the case of parties other than 
refiners, importers, oxygenate blenders, retailers and wholesale 
purchaser-consumers, (e.g., pipelines and terminals supplying gasoline 
to affected covered areas) EPA will enforce the new oxygen standard

[[Page 41049]]

beginning November 28, 19973. In the case of retail outlets 
and wholesale purchaser-consumer facilities located in the affected 
covered areas EPA will enforce the new oxygen standard beginning 
December 29, 1997. EPA intends to initiate a rulemaking to revise 
Sec. 80.41(p) to reflect the need for additional downstream transition 
time when a standard is changed.
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    \3\ This supersedes the downstream enforcement timing discussed 
in ``RFG/Anti-Dumping Questions and Answers, November 12, 1996''.
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Mary D. Nichols,
Assistant Administrator for Air and Radiation.
Sylvia K. Lowrance,
Assistant Administrator for Enforcement and Compliance Assurance.
[FR Doc. 97-20220 Filed 7-30-97; 8:45 am]
BILLING CODE 6560-50-P