[Federal Register Volume 63, Number 188 (Tuesday, September 29, 1998)]
[Rules and Regulations]
[Pages 52094-52104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26006]



[[Page 52093]]

_______________________________________________________________________

Part IV





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 80



Regulation of Fuel and Fuel Additives: Modification of the Covered 
Areas Provision for Reformulated Gasoline; Final Rule

  Federal Register / Vol. 63, No. 188 / Tuesday, September 29, 1998 / 
Rules and Regulations  

[[Page 52094]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-6169-5]
RIN 2060-AG77


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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This final action modifies Sec. 80.70(k) of the reformulated 
gasoline (RFG) regulations to allow states to opt into the RFG program 
for any area currently or previously designated as an ozone 
nonattainment area under the national one-hour ozone standard, as of 
November 15, 1990, the date of the enactment of the Clean Air Act 
Amendments of 1990 (1990 Amendments), or any time later. This final 
action encompasses all nonattainment areas including Marginal, 
Moderate, Serious and Severe ozone nonattainment areas, as well as 
those areas classified as transitional, sub-marginal, no data or 
incomplete data areas. Section 80.70(k) currently provides that any 
area classified as a Marginal, Moderate, Serious or Severe ozone 
nonattainment area may be included in the RFG program on petition by 
the Governor of the State in which the area is located. Today's final 
action will expand this provision to allow states to opt into the RFG 
program for areas which had been previously classified as Marginal, 
Moderate, Serious or Severe for ozone, but were subsequently 
redesignated to attainment. This final rule will also allow opt in to 
RFG for those areas designated nonattainment that do not fit into 
Section 181(a)'s classification scheme and therefore were classified as 
transitional, sub-marginal or areas with incomplete data. This will 
provide states an additional option for all areas currently or 
previously designated nonattainment since the 1990 amendments to the 
Clean Air Act that may be used to avoid the air quality problems that 
can lead to a violation of air quality standards. Allowing states to 
opt into the RFG program for these areas will help to ensure that these 
areas have options available to continue to achieve and maintain 
compliance with the ozone standard.

EFFECTIVE DATE: This final rule is effective upon September 29, 2998.

ADDRESSES: Materials relevant to the final rule have been placed in 
Public Docket A-96-30 at the address below. A reasonable fee may be 
charged by EPA for copying docket materials. Documents may be inspected 
at the Air Docket Section between the hours of 8:00 a.m. and 5:30 p.m., 
Monday through Friday. The Air Division Docket is located at the U.S. 
Environmental Protection Agency, Waterside Mall, Room M-1500, 401 M 
Street, S.W., Washington, D.C. 20460 (telephone 202/260-7540, fax 202/
260-4400).

FOR FURTHER INFORMATION CONTACT: Karen Smith, Policy Analyst, Fuels and 
Energy Division, US EPA, 401 M Street, S.W. (6406J), Washington, D.C. 
20460. (202) 564-9674.

SUPPLEMENTARY INFORMATION:

Availability on the TTNBSS

    Copies of this final rule are available electronically from the EPA 
Internet Web site and via dial-up modem on the Technology Transfer 
Network (TTN), which is an electronic bulletin board system (BBS) 
operated by EPA's Office of Air Quality Planning and Standards. Both 
services are free of charge, except for your existing cost of Internet 
connectivity or the cost of the phone call to TTN. Users are able to 
access and download files on their first call using a personal computer 
per the following information. The official Federal Register version is 
made available on the day of publication on the primary Internet sites 
listed below. The EPA Office of Mobile Sources also publishes these 
notices on the secondary Web site listed below and on the TTN BBS.

Internet (Web)
http://www.epa.gov/docs/fedrgstr/EPA-AIR/
(either select desired date or use Search feature)
http://www.epa.gov/OMSWWW/
(look in What's New or under the specific rulemaking topic)
TTNBBS: The TTNBBS can be accessed with a dial-in phone line and a 
high-speed modem (PH# 919-541-5742). The parity of your modem should be 
set to none, the data bits to 8, and the stop bits to 1. Either a 1200, 
2400, 9600, or 14400 baud modem should be used. When first signing on, 
the user will be required to answer some basic informational questions 
for registration purposes. After completing the registration process, 
proceed through the following series of menus:
(T) GATEWAY TO TTN TECHNICAL AREAS (Bulletin Boards)
(M) OMS--Mobile Sources Information
(Alerts display a chronological list of recent documents)
(K) Rulemaking and Reporting

    At this point, choose the topic (e.g., Fuels) and subtopic (e.g., 
Reformulated Gasoline) of the rulemaking, and the system will list all 
available files in the chosen category in date order with brief 
descriptions. To download a file, type the letter ``D'' and hit your 
Enter key. Then select a transfer protocol that is supported by the 
terminal software on your own computer, and pick the appropriate 
command on your own software to receive the file using that same 
protocol. After getting the files you want onto your computer, you can 
quit the TTN BBS with the ``G''oodbye command.
    Please note that due to differences between the software used to 
develop the document and the software into which the document may be 
downloaded, changes in format, page length, etc. may occur.
    Regulated entities. Entities regulated by this action are those 
which produce, import or distribute gasoline for sale in areas formerly 
classified as ozone nonattainment areas which opt into the RFG program, 
and retail gasoline stations located in those areas. Regulated 
categories and entities include:

------------------------------------------------------------------------
             Category                  Examples of regulated entities
------------------------------------------------------------------------
Industry..........................  Refiners, importers, oxygenate
                                     blenders, terminal operators,
                                     distributors, retail gasoline
                                     stations.
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    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities potentially regulated by this 
action. This table lists the types of entities that EPA is now aware 
could be regulated by this action. Other types of entities not listed 
in the table could also be regulated. To determine whether your company 
or facility may be regulated by this action, you should carefully 
examine the applicability criteria of Part 80, Subpart D, of title 40 
of the Code of Federal Regulations. If you have questions regarding the 
applicability of this action to a particular entity, consult the person 
listed in the preceding FOR FURTHER INFORMATION CONTACT section.
    The remainder of this final rulemaking is organized in the 
following sections:

I. Background
II. Description of Final Rule
III. Response to Comments
IIV. Administrative Designation and Regulatory Analysis
    A. Public Participation
    B. Executive Order 12866
    C. Executive Order 12875: Enhancing Intergovernmental 
Partnerships

[[Page 52095]]

    D. Executive Order 13084: Consultation and Coordination With 
Indian Tribal Governments
    E. Regulatory Flexibility
    F. Paperwork Reduction Act
    G. Unfunded Mandates Reform Act
    H. Submission to Congress and the General Accounting Office
    I. Children's Health Protection
    J. National Technology Transfer and Advancement Act of 1995 
(NTTAA)
    K. Statutory Authority

I. Background

    Section 107(d) of the Clean Air Act, as amended in 1990 (the Act), 
requires states to identify all areas that do not meet the national 
ambient air quality standards (NAAQS) for ozone, and directs EPA to 
designate these areas as ozone nonattainment areas. Section 181(a) of 
the Act requires EPA to classify each area designated as an ozone 
nonattainment area pursuant to section 107(d) as a Marginal, Moderate, 
Serious, Severe or Extreme area, based on the design value for the 
area, and using methodology developed by the Agency. EPA used this 
scheme to classify all areas that were designated as in nonattainment 
for ozone at the time of the enactment of the 1990 Amendments, except 
for certain ``nonclassifiable'' areas. Some of these nonclassifiable 
areas were designated nonattainment prior to the 1990 amendments and 
others were designated attainment before November 15, 1990. All of 
these areas were designated nonattainment at the time of the enactment 
of the 1990 amendments. Those in the former category would be required 
to attain by November 15, 1995, while those in the latter group would 
have an attainment date five years from the effective date of the 
nonattainment designation. See 57 FR 13524-13527 (April 16, 1992).
    Section 211(k)(5) of the Act prohibits the sale or dispensing by 
any person of conventional gasoline to ultimate consumers in any RFG 
covered area. Section 211(k)(6) of the Act, as amended in 1990, 
provides that, upon the application of the Governor of a State, the 
Administrator shall apply the prohibition contained in section 
211(k)(5) in any area in the State classified under Section 181 of the 
Act as a Marginal, Moderate, Serious or Severe area (the ``opt-in'' 
provision).1 In any such case, the Administrator must 
establish an appropriate effective date for such prohibition that is 
not later than one year after such application is received, and publish 
the application and effective date in the Federal Register.
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    \1\ Extreme areas are not listed in section 211(k)(6) for 
purposes of opt-in to the federal RFG program. The Los Angeles area 
is the only area classified as extreme for ozone, and it is a 
mandatory RFG covered area under the Act. See section 211(k)(10)(D).
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    EPA's current regulation, 40 CFR 80.70(k), provides that any area 
classified under 40 CFR part 81, subpart C, as a Marginal, Moderate, 
Serious or Severe ozone nonattainment area may be included as a RFG 
covered area on petition of the Governor of the State in which the area 
is located. EPA published proposed changes to this regulation on March 
28, 1997 (62 FR 15074).

II. Description of Final Rule

    The rule finalized today revises the opt-in provision of 
Sec. 80.70(k) to apply it to any area designated as nonattainment for 
the one-hour ozone standard as of November 15, 1990, the date the 1990 
Amendments were enacted, or any time later. This action will allow 
states to opt into the RFG program for areas which previously had been 
classified as Marginal, Moderate, Serious or Severe ozone nonattainment 
areas or those nonattainment areas classified as transitional, sub-
marginal, no data or incomplete data areas, but which have been 
redesignated to attainment since 1990. This will provide additional 
flexibility to the states to ensure continued compliance with the NAAQS 
for ozone. States with such redesignated areas will have the 
flexibility to include the RFG program in their maintenance plans or 
use RFG as a contingency measure for these areas. This final action 
also permits any current nonattainment area classified as transitional, 
sub-marginal, or no data or incomplete data areas to participate in the 
RFG program through the opt-in provision in section 211(k)(6).
    EPA is revising its opt-in rule in two ways. First, an area that is 
currently designated attainment may also opt in if it was previously 
designated as nonattainment for ozone under the one-hour standard, as 
of November 15, 1990 or at any time later. Second, any area designated 
as nonattainment for ozone under the one-hour standard will be allowed 
to opt into the federal RFG program. This includes areas classified as 
transitional, sub-marginal, and no data or incomplete data areas. EPA's 
authority to adopt these revisions is discussed in the response to 
comments section of the notice. The revisions are appropriate because 
any nonattainment area, including the submarginal and other areas, will 
benefit from the ozone reduction and other air quality benefits 
provided by the federal RFG program. RFG has been shown to be an 
important, cost-effective measure to reduce the air pollution from 
motor vehicles that contributes to ozone levels. This rule will provide 
additional ozone nonattainment areas with an effective option in 
solving the air quality problems faced in the area. For similar 
reasons, areas that previously were designated nonattainment will have 
federal RFG as an additional option that may be used to keep air 
quality from degrading and leading to noncompliance. It will provide an 
additional option for states that will help them to ensure that these 
areas continue to achieve and maintain compliance with the ozone NAAQS. 
Many of the areas recently redesignated as attainment for ozone have 
ozone levels which are relatively close to the NAAQS, and are concerned 
about experiencing violations in the future. This rule will provide an 
additional, cost effective measure for states to use in avoiding this 
result.
    The air quality benefits that may be achieved in the additional 
areas that may opt in under this rule can be achieved without placing 
an unreasonable burden on the refining and distribution industry. 
Analysis of the distribution systems shows that RFG is already in the 
major distribution systems, pipelines and terminals, and is being 
handled without any additional problems. In some instances, the areas 
which are interested in using RFG in the near term are contiguous to 
areas currently using RFG so the fuel is already on distribution 
systems which handle RFG. Increasing the use of RFG should not 
adversely affect the system.
    EPA also believes no excessive burden exists for areas that are not 
contiguous to current RFG areas. Section 211(k)(6)(A) of the Act gives 
the Administrator discretion to ``establish an effective date * * * as 
he deems appropriate * * * '' EPA interprets this provision to mean 
that it has broad discretion to consider any factors reasonably 
relevant to the timing of the effective date. This would include 
factors that affect industry and the distribution systems in the 
potential opt-in area. The Phoenix, Arizona opt-in is a recent example 
of a non-contiguous area which successfully completed the opt-in 
process without disruption to supply or excessive burden to industry. 
EPA's analysis in Phoenix showed that the capacity to supply federal 
RFG to the opt-in area exceeded the estimated gasoline demand. See 62 
FR 30260 (June 3, 1997). Refiners were able to adequately supply 
federal RFG for Phoenix within 30 days of the publication of the final 
rule. RFG was available at the retail level 60 days after publication 
of the

[[Page 52096]]

final rule. Each opt-in request will involve potential regulatory 
burdens that are unique to that area. Therefore, EPA will review each 
opt-in request and the particular facts pertaining to the potential 
opt-in area and the suppliers for that area to determine the 
appropriate implementation date.
    EPA requested comment on whether a minimum lead-time of up to one 
year should be used in setting the effective date and whether this 
should apply to former non-attainment areas that opt in and/or areas 
that are designated as non-attainment at the time they opt in. EPA has 
decided not to adopt a mandatory minimum lead-time of one year for the 
effective date of an opt-in at this time. Instead, EPA retains the 
discretion to set an effective date on a case-by-case basis, as the 
Administrator deems appropriate, subject to the limit in Section 
211(k)(6) of one year after the application is received. This issue and 
the responses to comments received are discussed further in Section III 
of this final rule.
    EPA requested comment on whether or not the Agency should require 
that the Governor consider the costs of other ozone control programs in 
making the determination to adopt RFG. EPA requested comment on the 
approach, including whether EPA would have authority to impose such a 
requirement and whether it would be appropriate to do so. After 
consideration of the comments, EPA has decided not to adopt such a 
requirement, for the reasons described in Section III. C of this 
document.
    Any area that opts into the RFG program under section 80.70(k), 
whether currently or previously designated as nonattainment for the 
one-hour ozone NAAQS, will be subject to all rules promulgated by the 
Agency for opting out of the RFG program. On October 20, 1997, EPA 
revised the opt-out procedures for areas that opt into RFG. See 62 FR 
54552. The agency revised its opt-out rules to ensure a smooth 
transition between Phase I and Phase II of the reformulated gasoline 
program. Under these rules, if a state or area chooses to opt out of 
this program, the effective date of the opt-out will be no earlier than 
January 1, 2004. States which previously had opted into the program 
must remain in the RFG program until December 31, 2003 unless an opt-
out petition was submitted to the EPA by December 31, 1997. Under the 
revised rules, opt-out petitions received on or after January 1, 2004 
will be subject to the same procedures that applied prior to December 
31, 1997. These procedures generally provide that opt-out petitions 
become effective 90 days from approval.

III. Response to Comments

    EPA received comments from three associations representing the oil 
industry, gasoline producers, and distributors. Eight domestic gasoline 
producers individually submitted statements supporting the comments 
submitted by their representing associations. Of the domestic gasoline 
producers who commented on the NPRM, only one offered support for 
promulgation of the NPRM. Five state environmental departments 
submitted favorable comments on the NPRM. One private citizen commented 
on the NPRM. One futures and trading organization offered comments on 
the proposed rulemaking.
    The issues discussed in the public comments include: EPA's legal 
authority to expand the reformulated gasoline (RFG) program and EPA's 
interpretation of section 211(k)(6)(A); the intent of Congress 
regarding ``former nonattainment areas''; required lead-in period for 
the opt-in process; the inclusion of sub-marginal areas as former 
nonattainment areas allowed to opt into the RFG program; inclusion of 
all areas, attainment and nonattainment for opt into the RFG program; 
and the consideration of local supply and distribution systems when 
approving a Governor's petition to opt into the RFG program. This is 
not intended to be an exhaustive list of comments. A complete set of 
comments is available from the Air Docket (A-96-30). The issues and 
comments are addressed below.

A. Legal Authority

1. EPA's Proposal
    EPA proposed to modify 40 CFR 80.70(k) of the reformulated gasoline 
(RFG) regulations to allow states to opt into the RFG program for any 
area classified as a Marginal, Moderate, Serious or Severe ozone 
nonattainment area as of November 15, 1990 or any time later. The 
proposed rule would expand the provision to allow states to opt into 
the RFG program for areas which had been previously classified as 
Marginal, Moderate, Serious or Severe for ozone but were subsequently 
redesignated to attainment. Under this approach, states would be 
provided with an additional cost-effective way to ensure achievement 
and maintenance of compliance with the ozone standard.
2. Comments
    EPA received several comments questioning the Agency's legal 
authority for its proposal. Several parties from the oil industry 
commented that EPA's inclusion of former nonattainment areas into the 
RFG program is contrary to the plain language and structure of the Act. 
The commenters argued that under section 211 (k)(6)(A), the 
Administrator can only apply the prohibition set forth in paragraph (5) 
in any area in the state classified under subpart 2 of part D of title 
I as a Marginal, Moderate, Serious or Severe ozone nonattainment area. 
Areas that have been redesignated to attainment status for ozone under 
107(d) of the Act are clearly not classified as Marginal, Moderate, 
Serious or Severe ozone nonattainment areas, and therefore, cannot opt 
into the RFG program under section 211 (k)(6)(A).
    One commenter representing an independent oil petroleum refiner 
supported EPA's proposed rule. The commenter stated that EPA is within 
its legal authority to expand the RFG regulations to include former 
nonattainment areas because Congress did not indicate that states must 
exercise the opt-in option prior to redesignation of the area to 
attainment. The commenter argued that section 211(k)(6) establishes by 
operation of law a category of areas within states for which EPA has a 
nondiscretionary duty to bring into the federal RFG program upon 
submission of a state governor's application.
    The commenter argued that EPA has discretion to clarify that the 
RFG opt-in alternative remains available as a state control strategy 
for redesignated areas. The commenter suggests that this discretionary 
authority is based on EPA's inherent regulatory powers to fill in 
statutory gaps left by Congress so long as it is implementing the 
federal RFG program in a manner consistent with general statutory 
scheme. The commenter argues that the continuation of the RFG control 
alternative for redesignated areas is clearly a permissible and 
reasonable interpretation of its statutory mandate for administering 
the federal RFG program pursuant to section 211(k), just as EPA has 
determined the appropriateness of establishing a mechanism for opting 
out of the RFG program.
    All of the state environmental departments and agencies which 
commented on the rule supported the EPA's proposed approach. These 
state agencies strongly support the proposed rule to allow former 
nonattainment areas (current maintenance areas) to opt into the RFG 
program. Some of these state commenters suggested that the agency 
include transitional and sub-marginal areas in the final rule. Another 
suggested that the agency provide guidance to allow any area whether it 
be designated as attainment or nonattainment to be included in the

[[Page 52097]]

RFG program to maintain air quality. None of the state agencies 
commented on EPA's legal authority to modify the reformulated gasoline 
rule.
    Several of the commenters representing the oil industry argued that 
the fact that Congress did not mention ``former nonattainment areas'' 
in section 211(k)(6)(A) must be presumed to be an intentional policy 
choice made by Congress, particularly since both section 211(h) and (m) 
expressly provide for such areas. The commenters argued that the 
Congress had no intention of offering the opt-in right to areas after 
they achieved attainment status. One commenter stated that the proposal 
would circumvent the clear geographic limitations that Congress 
established for the RFG program. Another stated that the agency cannot 
ascribe to itself new authority simply because the Congress failed to 
anticipate this rulemaking and did not expressly prohibit the EPA from 
expanding opt-in rights. This commenter stated that the nonattainment 
threshold specified by Congress must be crossed for the right to opt 
into the RFG program.
    One commenter in support of the proposed rule stated that the 
proposed rule implements the fundamental approach taken by Congress in 
enacting the Clean Air Act. This commenter stated that the proposed 
approach demonstrates a clear commitment to allowing states the 
flexibility to determine the appropriate mix of measures needed to meet 
their goals for controlling air pollution. The commenter stated that 
EPA's action is consistent with Congress' intention to allow states to 
select from numerous optional control strategies.
    One commenter noted that the proposed rule contradicts the agency's 
Regulatory Impact Analysis (RIA) for the RFG regulations. This 
commenter said that in the 1993 RIA, EPA stated that the opt-in 
language of section 211 clearly limits opt-in to areas in a State 
classified as Marginal, Moderate, Serious, or Severe for ozone 
nonattainment. The commenter added that EPA's interpretation of section 
211(k) in 1993 found no distinction between areas designated attainment 
before and after enactment of the Act, because no distinction exists.
    Commenters representing the oil industry argued that section 
211(k)(6)(A) is a clear exception to the general procedures of section 
211(c). Although the procedures in section 211(k)(6)(A) establish an 
expedited process for states to initiate the imposition of federal fuel 
controls, commenters argued, the procedures in section 211(k)(6)(A) are 
not available everywhere. Commenters stated that Congress chose to 
limit the RFG program and the expedited procedures in section 
211(k)(6)(A) to areas classified as Marginal, Moderate, Serious and 
Severe ozone nonattainment areas. For all other areas, including those 
areas that had the opportunity to use section 211(k)(6)(A) but did not 
exercise that option while it existed, Congress left in place the 
general procedures of section 211(c). The commenter concluded that 
under section 211(c)(1), EPA could attempt to promulgate regulations 
imposing RFG control in ozone attainment areas, provided that EPA meets 
all the substantive and procedural requirements set forth in section 
211(c). The commenter also suggested that EPA utilize section 
211(c)(4)(c) which would allow the agency to approve state fuel 
controls in the state's SIP, provided that the state fuel controls are 
necessary to achieve the NAAQS. Several other independent oil and 
petroleum companies submitted comments in support of these claims.
    Five state environmental agencies and one private citizen commented 
that the proposed rule did not go far enough to allow states the 
flexibility they require to attain their clean air goals. One state 
environmental agency commented that they should have the flexibility to 
consider all possible options should the need arise for additional 
reductions in the levels of ozone-producing pollutants. Another state 
agency stated that the option to opt into the RFG program should also 
explicitly extend to former ``submarginal'' ozone nonattainment areas 
that have been redesignated since the date of the enactment of the 1990 
Clean Air Act Amendments. The state agency argued that former 
``submarginal'' ozone nonattainment areas should not be prohibited from 
implementing control measures that are available to current 
nonattainment areas, particularly when such measures may be needed to 
address violations that occur after redesignation. The state commented 
that all former ozone nonattainment areas subject to the maintenance 
plan provisions of Section 175A of the CAA should be allowed to 
voluntarily participate in the RFG program through the opt-in process. 
This flexibility, the state continued, is particularly important for 
maintenance areas where the ozone standard is threatened or where 
violations have already occurred.
    Another state agency suggested that attainment areas be allowed to 
include RFG in their maintenance plans or as a contingency measure. 
Another agency commented that it is reasonable that any redesignated 
area operating under an approved maintenance plan be eligible to opt 
into RFG. The private citizen commented that the proposal should not be 
limited to former nonattainment areas but should allow states the 
option to opt into the RFG program in any area, including current 
attainment areas, where the Governor of the State applies for such 
coverage and certifies such coverage is necessary to maintain the 
attainment standard in the area. Such a provision, the commenter 
argues, would assist the States in maintaining air quality in 
attainment areas at risk of moving into a nonattainment status and 
would be consistent with the similar provision in the oxygenated fuels 
program which requires the program to remain in effect where necessary 
to maintain attainment with the standard.
3. EPA's Response
    EPA's proposal and the comments received on it raise two basic 
questions of statutory authority. Under section 211(k)(6), may an area 
that was previously designated as nonattainment opt into the RFG 
program after it has been redesignated attainment? Under section 
211(k)(6), may any ozone nonattainment area opt in, including 
transitional, sub-marginal and no data/incomplete data areas?
    Congressional intent on this issue may be discerned from the text 
of section 211(k), its context in the Act, and the relevant legislative 
history. A review of these provisions leads to the conclusion that 
section 211(k)(6) may reasonably be interpreted as authorizing opt-in 
under both situations described above. For the reasons described 
earlier, concerning the benefits from expanding the current rules 
limits on opt-in, EPA is revising its opt-in regulation consistent with 
this interpretation.
    The text of section 211(k)(6) is relatively brief regarding opt-
ins. It states that a state may opt into the federal RFG program for 
``any area in the State classified under subpart 2 of part D of title I 
as a Marginal, Moderate, Serious, or Severe Area.'' EPA shall by rule 
extend the effective date of the opt-in for ``Marginal, Moderate, 
Serious, or Severe Areas,'' if there is insufficient domestic capacity 
to produce RFG, and shall issue such extensions for ``areas with a 
lower ozone classification before issuing any such extension for areas 
with a higher classification.'' The specific issue of whether the opt-
in provision includes former nonattainment areas is not addressed. Did 
Congress intend to only include areas currently designated as ozone 
nonattainment areas, or did it intend to cover all areas currently or 
previously

[[Page 52098]]

designated as nonattainment? Likewise, did Congress use the terms 
``marginal, moderate, serious, or severe areas'' to identify only those 
ozone nonattainment areas with those classifications, or did Congress 
list these terms as a way to indicate that all ozone nonattainment 
areas could opt in?
    On the latter issue, the classification scheme in Section 181 of 
the Act indicates that Congress did intend to allow all ozone 
nonattainment areas the opportunity to opt in to the federal RFG 
program. Section 181 provides for each ozone nonattainment area to be 
classified as Marginal, Moderate, Serious, Severe, or Extreme, 
depending on its design value. The provision indicates that Congress 
believed that ``[e]ach area designated nonattainment for ozone'' would 
be classified in one of these categories. The use of a list of these 
terms in section 211(k)(6) reasonably indicates that Congress' intent 
regarding state opt-in was to identify the universe of all ozone 
nonattainment areas, and not a subset comprising most but not all 
nonattainment areas.
    The fact that EPA later was not able to classify all ozone 
nonattainment areas under this scheme does not change the reasonable 
implication from the text of section 211(k)(6) that Congress expected 
that all ozone nonattainment areas would have the opportunity to opt 
in. Certain ozone nonattainment areas could not be classified as 
Marginal or above because of incomplete monitoring data or because they 
were nonattainment pre-enactment but did not violate the standard 
during the primary data gathering years of 1987-1989.2 
However, all these areas were designated as nonattainment areas for 
ozone at the time of enactment of the 1990 amendments to the Act. The 
legislative history indicates that Congress did expect such areas to be 
designated as ozone nonattainment areas. For example, the Senate 
Environment and Public Works Committee Report accompanying S. 1630 
contains a list of 102 expected nonattainment areas, all of which 
Congress expected would be classified under Section 181's 
classification scheme.3 Some of the listed areas were 
ultimately classified as Submarginal (e.g., Kansas City) or Incomplete/
no data nonattainment areas (e.g., Saginaw-Bay City-Midland, MI, 
Cheshire County, NH, Salem, OR, and several Pennsylvania counties). The 
House Energy and Commerce Committee Report on H.R. 3030 contains a 
similar list of expected ozone nonattainment areas ``indicating on a 
preliminary basis how areas will likely be classified under [Section 
181].'' The House list contains 100 expected ozone nonattainment areas, 
and again lists each area under one of the Section 181 classification 
categories, including areas that were ultimately classified as 
Submarginal (e.g., Kansas City) or incomplete/no data (e.g., Saginaw-
Bay City-Midland, MI, Cheshire County, NH, Salem, OR, and several 
Pennsylvania counties). See Leg. Hist. at 3254-55. This legislative 
history indicates that Congress expected that all areas designated 
nonattainment for ozone would be classified under one of the Section 
181 classifications, and that Congress' failure to mention the 
classifications such as submarginal, and no data/incomplete data areas 
does not represent an intent to exclude these nonattainment areas from 
the scope of section 211(k)(6).
---------------------------------------------------------------------------

    \2\ For example, the submarginal classification, which is not 
identified in the classification scheme of the Act, was created by 
EPA to address areas that were designated nonattainment but had a 
design value lower than the threshold for Marginal areas due to an 
adjustment for missing data when calculating expected exceedances. 
These areas had violations of the ozone NAAQS in 1987-1989. See 57 
FR 13524-13527 (April 16, 1992).
    \3\ Senate Committee on Environment and Public Works, 103d Cong, 
1st Sess., 2 A Legislative History of the Clean Air Act Amendments 
of 1990 at 8375-77 (1993) (``Leg. Hist'').
---------------------------------------------------------------------------

    The legislative history of the opt-in provision clearly indicates 
that Congress did intend to provide this option to all ozone 
nonattainment areas. It also supports the view that former 
nonattainment areas do not lose their opportunity to opt in once they 
are redesignated as an attainment area.
    H.R. 3030, as reported out of the House Committee on Energy and 
Commerce, required that EPA establish a federal RFG program, and 
require the sale of RFG in all ozone nonattainment areas with a 1988 
design value at or above 0.18 ppm. (Leg. Hist. at 3021). This would 
cover areas classified as Severe or Extreme. (Leg. Hist. at 3253) There 
was no provision in the Committee's bill for opt-in by any other 
nonattainment areas. However, an opt-in provision was considered and 
adopted by the House during the floor debate on H.R. 3030. This opt-in 
provision was almost identical to the provision eventually enacted as 
section 211(k)(6). It provided for opt-in by any area ``classified 
under subpart 2 of part D of title I as a Marginal, Moderate, or 
Serious Area. * * *'' 4 (Leg. Hist. at 2063). Rep. 
Richardson, one of the authors of this opt-in amendment, was questioned 
about the geographic scope of the RFG requirements and stated that the 
opt-in provision ``allows any other nonattainment area to adopt these 
standards of its own free will, and subject to any domestic capacity, 
any State or locality may, in order to maintain attainment or just as a 
matter of general public policy,'' adopt the RFG standards. (Leg. Hist. 
at 2690, emphasis added). Rep. McMillan described the RFG provision in 
the Richardson-Madigan opt-in amendment to H.R. 3030 as having a ``much 
needed degree of flexibility in it--specifically, cities in the future 
that fall below their ambient air quality requirements can opt into the 
system, provided that the EPA judges that doing so would not create a 
dramatic gas supply problem.'' (Leg. Hist. at 2762). As noted later, 
these views were repeated in the floor debate on the bill reported out 
of the Conference Committee.
---------------------------------------------------------------------------

    \4\  Severe and Extreme areas were mandatory RFG areas under 
H.R. 3030 as passed by the House. (Leg. Hist. at 2062).
---------------------------------------------------------------------------

    In the Senate, S. 1630 as introduced would have required that EPA 
adopt national fuel standards to reduce motor vehicle pollutants, and 
authorized EPA to require the sale of gasoline in nonattainment areas 
to achieve and maintain the NAAQS. (Leg. Hist. at 9169 (as introduced) 
and 8053 (as reported out of the Committee on the Environment and 
Public Works)) The Committee bill was amended during floor debate, and 
a provision was added establishing a mandatory RFG program in ozone 
nonattainment areas with a design value of 0.18 or higher. States with 
a moderate or serious ozone nonattainment area could propose to revise 
their SIP to include a requirement that RFG be sold in the area. (Leg. 
Hist. at 6817, 4387) 5 As in the House, the Senate moved 
from a program with specified areas where RFG was mandatory to a 
program where RFG was mandatory in certain areas but could be expanded 
at a state's request to more nonattainment areas. In the floor debate 
leading to the passage of S. 1630, Sen. Baucus described the opt-in 
provision as ``if a city wishes to have the RFG standards provided for 
in this amendment, a city could choose to do so. Not only the nine 
cities that are the Severest in nonattainment but the Serious or even 
the Moderate areas could opt in.'' (Leg. Hist. at 6834) Sen. Nickles 
described the RFG program as applying to the nine cities with the worst 
ozone levels, but allowing ``the

[[Page 52099]]

other nonattainment cities'' to opt in (Leg. Hist. at 6826).
---------------------------------------------------------------------------

    \5\ The classification system in S.1630 did not include a 
Marginal classification, so all ozone nonattainment areas were 
expected to be classified as Moderate, Serious, Severe, or Extreme, 
based on the percent amount by which the area exceeded the ozone 
NAAQS in the last calendar year before enactment (See Leg.Hist. at 
4195).
---------------------------------------------------------------------------

    The opt-in provision in the Conference Committee bill closely 
followed the opt-in provision in the House bill. The Report of the 
Conference Committee describes the RFG provision as mandating RFG ``in 
the nine cities with the most Severe ozone pollution beginning in 1995. 
States could elect to have the requirements apply in other cities with 
ozone pollution problems.'' (Leg. Hist. at 336). Rep. Madigan, a co-
author of the opt-in provision in the House bill, described the 
Conference Committee's bill opt-in provision as ``allow[ing] all other 
ozone nonattainment areas to opt in to the program * * * provided EPA 
is satisfied that sufficient supplies of reformulated gasolines could 
be made available. By encouraging other areas to opt into the program, 
the legislation will dramatically improve fuel quality nationwide.'' 
(Leg. Hist. at 1266, emphasis added) Sen. Baucus stated that ``[t]he 
language of the provision clearly allows any nonattainment area which 
wants to opt in to the RFG programs to do so. They should be afforded 
every opportunity, and at the earliest possible date, to opt in to the 
program subject to approval by EPA.'' (Leg. Hist. at 1024, emphasis 
added) Sen. Durenberger described the RFG provision in the conference 
agreement as applying to the nine cities with the worst ozone 
nonattainment problems, and stating that ``[o]ther cities may elect to 
join the program at any time beginning in 1995.'' (Leg. Hist. at 852)
    The drafters of the final opt-in provision intended to provide an 
opportunity for all ozone nonattainment areas to opt into the federal 
program. The statements of various other members of Congress support 
this interpretation. Congress' intent was that all ozone nonattainment 
areas have the opportunity to opt into the federal RFG program. The use 
of the string of terms ``Marginal, Moderate, Serious, and Severe'' in 
Section 211(k)(6) is ambiguous. Under one reading, only the 
specifically mentioned areas would be able to opt in under this 
provision. Alternatively, the string of terms could be read to as a 
phrase intended to mean all areas designated nonattainment for ozone. 
EPA believes the latter reading of the string of terms is more 
reasonable, and is consistent with Congressional intent. Based on this, 
it is reasonable to interpret section 211(k)(6) as applying to all 
ozone nonattainment areas, including the transitional, sub-marginal, 
and no data/incomplete data areas that were not classified marginal or 
worse.
    A literal interpretation of the string of terms would also lead to 
absurd results. A rigid, literal interpretation of the opt-in provision 
that would exclude ozone nonattainment areas not classified as 
Marginal, Moderate, Serious, or Severe should be rejected as it would 
frustrate Congressional intent. See Environmental Defense Fund v. EPA, 
82 F.3d. 451 (D.C. Cir. 1996), where the court upheld EPA's 
interpretation of Section 176(c), permitting a state to change its SIP 
under certain conditions to account for a federal action despite the 
language of Section 176(c)(1) regarding conformity of federal actions 
to the SIP currently in place. The court stated that ``the literal 
terms of the statute would prevent the federal action from proceeding 
until such time as a full-fledged SIP revision could be developed, 
submitted, and approved. * * * This rigid application of the conformity 
rule would block a federal action that the state desires and promises 
to accommodate through the appropriate adjustments to levels of 
emissions from other sources. Because this literal reading of the 
statute would actually frustrate the congressional intent supporting 
it, we look to the EPA for an interpretation of the statute more true 
to the Congress's purposes.'' EDF v. EPA, 82 F.3d. at 468. EPA's 
interpretation of Section 211(k)(6) as applying to any area designated 
nonattainment since the enactment of the 1990 Clean Air Act amendments 
is also consistent with a recent decision from the D.C. Circuit Court 
of Appeals. In Mova Pharmaceutical Corp. v. Shalala, 140F. 3d 1060, 
1069 (D.C. Cir. 1998), the court stated that ``[w]hen the agency 
concludes that a literal reading of a statute would thwart the purposes 
of Congress, it may deviate no further from the statute than is needed 
to protect congressional intent.'' In this action, EPA's interpretation 
of the Act serves to protect Congressional intent in enacting Section 
211(k)(6), as evidenced by the legislative history and by the language 
of Section 181. The Agency's interpretation is narrowly drawn to match 
Congressional intent in adopting the opt-in provision.
    The legislative history does not explicitly address the issue of 
opt-in by former nonattainment areas. However it does show that 
Congress carefully considered the geographic scope of the RFG program, 
considering several different mandatory programs as well as different 
opt-in provisions.6 The opt-in provision that came out of 
this extensive deliberation reflects Congress' intention to allow every 
ozone nonattainment area, whether in existence at the time of enactment 
or designated nonattainment at a later time, the opportunity to opt in 
and gain the air quality benefits of the federal RFG program. Congress 
envisioned a program that could include a very large number of opt-in 
areas, and a federal program of this size was considered fully 
appropriate. Nowhere is there any indication that Congress intended 
this opportunity to expire at some point in the future, or any 
indication that the appropriate size of the program was expected to 
shrink over time as more areas reached attainment.
---------------------------------------------------------------------------

    \6\ For example, in the version of S.1630 that passed the 
Senate, the RFG program was mandated for all ozone nonattainment 
areas with a design value of 0.18 or higher, (Leg. Hist. at 4384), 
which would have resulted in 9 mandatory areas (Leg. Hist. at 8375), 
with an opt-in provision for the remaining 93 anticipated ozone 
nonattainment areas (Leg. Hist. at 4387). H.R. 3030, as introduced, 
contained a mandatory RFG requirement for the 9 worst ozone 
nonattainment areas, with no opt-in provision. (Leg. Hist. at 3084), 
but the House debated and finally adopted an opt-in provision almost 
identical to CAA Section 211(k)(6).
---------------------------------------------------------------------------

    Congress also did not mandate that nonattainment areas opt out of 
the program after they reached attainment. Congress apparently expected 
that former nonattainment areas could and would continue to be part of 
the federal RFG program after redesignation as an attainment area. 
Allowing former nonattainment areas to opt in after redesignation is 
consistent with this intent. As discussed above, it is a reasonable way 
to expand the option available to states that need the air quality 
benefits provided by RFG.
    Comments from the oil industry claim that EPA's reading of Section 
211(k)(6)(A) is particularly inappropriate in light of the Agency's 
authority under Section 211(c). The commenter states that EPA is 
interpreting its authority under Section 211(k)(6)(A) broadly as a way 
to regulate fuel in attainment areas, and that EPA should properly 
attempt to impose RFG requirements in attainment areas under Section 
211(c)(1), provided that the Agency meets the substantive and 
procedural requirements of that section, or that EPA could approve 
state fuel controls in SIPs under Section 211(c)(4)(C), provided that 
such controls are necessary to achieve a NAAQS.
    In this action, EPA is not interpreting Section 211(k)(6)(A) as 
authorizing the Agency to impose RFG requirements broadly in ozone 
attainment areas. Rather, EPA is adopting an interpretation of states' 
opportunity to opt into the RFG program that is consistent with 
Congressional intent, as described above. Former nonattainment areas 
that are now attainment areas will

[[Page 52100]]

be able to opt in to federal RFG. This is based on their status as 
former nonattainment areas, not on their status as attainment areas. It 
is a reasonable interpretation of the Congressional intent behind 
Section 211(k)(6), and is therefore an appropriate interpretation.
    For the same reason, EPA disagrees with the commenter's reference 
to American Petroleum Institute v. EPA, 52 F.3d. 1113 (D.C. Cir. 1984), 
where the court stated that ``EPA does not have an independent source 
of authority to control or prohibit nonrenewable oxygenates springing 
from the considerations enumerated in Section 211(k)(1).'' API v. EPA, 
52 F.3d. at 1120-21. The issue addressed by the court in API v. EPA was 
whether EPA could include a fuel content requirement for federal RFG 
concerning renewable oxygenates that was not expressly specified in 
section 211(k)(1), based on the discretion to take various factors into 
consideration when establishing the requirements of reformulated 
gasoline specified in the section. That case did not address Section 
211(k)(6), and did not address the geographic scope of the RFG program. 
Unlike API v. EPA, questions of the breadth of agency authority to 
establish a variety of new or additional RFG fuel content requirements 
are not involved here. The only question here is the reasonable 
interpretation of Congressional intent concerning a narrow issue 
involving geographic scope of this federal program. The API case is not 
relevant to this action.
    Moreover, opting into RFG is distinct from a state's adoption of 
its own fuel controls under Section 211(c)(4), which generally preempts 
state fuel controls in certain circumstances, and authorizes EPA to 
grant a waiver of federal preemption if certain requirements are met. 
EPA agrees that a state's adoption of state regulations requiring the 
sale of RFG in areas within its jurisdiction would be subject to the 
provisions of Section 211(c)(4). However, Congress provided an 
opportunity for states to opt into the federal RFG program in Section 
211(k)(6), separate and distinct from states' ability to adopt their 
own fuel programs under Section 211(c)(4), and these two provisions are 
not mutually exclusive. One involves the scope of the federal RFG 
program, the other involves when a state program is preempted. For 
example, even prior to today's action, a Marginal ozone nonattainment 
area could choose to opt into the RFG program under Section 211(k)(6), 
or could choose to adopt its own state fuel controls subject to the 
limitations and requirements of Section 211(c)(4). Today's action does 
not change this situation, but simply adopts an interpretation of the 
scope of the opportunity to opt in that is consistent with 
Congressional intent, as described in detail above.
    As described in the NPRM, EPA's interpretation of Section 211(k)(6) 
as applying to all areas designated nonattainment for ozone is not 
inconsistent with EPA's response to comments received regarding 
``unclassifiable/attainment'' areas in the prior RFG program 
rulemaking. Unclassifiable/attainment areas were not designated 
nonattainment at or since the time of enactment of the 1990 amendments 
to the Act. When EPA first adopted regulations for the RFG program, EPA 
stated that these attainment areas will not be able to opt into the RFG 
program, due to statutory limitations. See 59 FR 7809 (February 16, 
1994). EPA did not specifically address former nonattainment areas 
redesignated to attainment. Today's action specifically addresses 
former nonattainment areas, and interprets Section 211(k)(6) consistent 
with Congress' intent to ensure that areas previously designated 
nonattainment have the option to opt into the federal RFG program. This 
will help to ensure that they do not fall back into nonattainment after 
having achieved air quality improvement.
    Commenters point to EPA's statement in a Federal Register notice 
announcing a SIP approval action for the Detroit-Ann Arbor area as 
evidence that EPA's proposed interpretation of Section 211(k)(6) is 
inconsistent with EPA's previous interpretation. The Detroit-Ann Arbor 
SIP action did not articulate specific reasons that, as an area 
redesignated to attainment, the state could not request to opt in for 
this area under Section 211(k)(6). In fact, that SIP action did no more 
than reflect the then current status under EPA's national RFG 
regulations. This rulemaking is now revising those regulations, after 
notice and an opportunity for public comment. EPA's March 1997 proposal 
being finalized today presented the Agency's position on this 
particular question at the national level. To the extent that this is a 
change in approach the agency has provided a reasoned explanation. See 
Motor Vehicle Mfrs. Assn. v. State Farm, 463 U.S. 29 (1983). As 
described above, today's action is consistent with statements made in 
the record for the RFG rulemaking. The Agency has provided a reasoned 
analysis for its current interpretation.
    EPA disagrees with commenters who stated that the inclusion of 
provisions for areas redesignated attainment in Sections 211(h) and 
211(m), and the absence of any such provisions in Section 211(k)(6), 
indicate that Congress did not intend to include such redesignated 
areas in Section 211(k)(6). Section 211(h) directs EPA to adopt 
regulations requiring low RVP gasoline to be sold throughout the 
country. This provision also states that EPA's regulations ``shall not 
make it unlawful for any person to sell, offer for supply, transport, 
or introduce into commerce gasoline with a Reid Vapor Pressure [RVP] of 
9.0 pounds per square inch (psi) or lower in any area designated under 
Section 107 as an attainment area. Notwithstanding the previous 
sentence, the Administrator may impose a Reid vapor pressure 
requirement lower than 9.0 pounds per square inch (psi) in any area, 
formerly an ozone nonattainment area, which has been redesignated as an 
attainment area.'' Commenters claim that since Congress expressly 
authorized EPA to adopt a low RVP requirement in former ozone 
nonattainment areas under Section 211(h), the absence of such language 
in Section 211(k)(6) indicates that Congress intentionally chose not to 
address such areas in the RFG opt-in provision.
    Sections 211(h) and 211(m) both specifically address what federal 
requirements apply in attainment areas, as well as nonattainment areas. 
Section 211(h) contains an express prohibition against federal RVP 
requirements lower than 9.0 psi in attainment areas. Section 211(m)(6) 
specifies that states are not required to adopt an oxygenated gasoline 
program in CO attainment areas. The provisions that commenters 
reference create an exception from these requirements. In Section 
211(h), the exception is that EPA may impose an RVP requirement lower 
than 9.0 psi in former nonattainment areas. In Section 211(m), the 
exception is that the oxygenated gasoline requirements will continue to 
remain in effect in former CO nonattainment areas to the extent such 
requirements are needed to maintain the CO NAAQS in that area.
    In Section 211(h) and (m) Congress addressed requirements for both 
attainment areas and nonattainment areas, and in this context it 
expressly addressed former nonattainment areas, to treat them 
differently from other attainment areas. Sections 211(k)(1) and (k)(6), 
however, only address nonattainment areas. Section 211(k)(1) and 
(k)(6), unlike Sections 211(h) and (m), do not address and prohibit 
attainment areas from opting into RFG. The absence of an exception for 
former nonattainment areas, as in sections 211(h) and (m), is not 
relevant because there is no general prohibition in Section 211(k)(6) 
regarding attainment

[[Page 52101]]

areas. The analysis of the language and legislative history of section 
211(k)(6) indicates that EPA's interpretation is reasonable and 
consistent with Congressional intent.
    As with any other opt-in area, any area that becomes an RFG covered 
area under the authority of today's final rule will be subject to all 
Agency regulations for opting out of the RFG program. EPA's opt-out 
regulations are found at 40 CFR 80.72. See 62 FR 54552 (October 20, 
1997).

B. Opt-in under the Eight-Hour Ozone NAAQS

    While the analysis and interpretation described above applies to 
areas designated nonattainment under the one-hour ozone NAAQS, EPA also 
believes that areas designated nonattainment under the recently adopted 
eight-hour ozone NAAQS may also opt into the federal RFG program based 
on the same analysis and interpretation. EPA is not, however, adopting 
that interpretation into the regulations at this time. EPA did not 
propose or discuss that interpretation in the NPRM. While EPA believes 
that it is the correct interpretation, EPA will take final agency 
action on this issue at a later time after notice and an opportunity 
for comment. This could occur, for example, in a rulemaking to set the 
effective date to opt in for an area that is designated nonattainment 
under the eight-hour NAAQS (and that had not previously been designated 
as a nonattainment area under the one-hour NAAQS.) 7 EPA 
believes that opt-in into RFG for such new nonattainment areas would be 
a cost effective way to obtain the significant ozone and toxic control 
benefits associated with the federal RFG program.
---------------------------------------------------------------------------

    \7\ If the area had previously been designated as a 
nonattainment area under the one-hour NAAQS, then today's rule would 
allow it to opt-in.
---------------------------------------------------------------------------

C. Mandatory One-Year Lead Time to Opt Into the RFG Program

1. EPA's Proposal
    The proposal requested comment on whether a minimum lead-time of 
one year should be used in setting the effective date and whether this 
should apply to former nonattainment areas that opt-in and/or areas 
that are classified as nonattainment when they opt in.
2. Comments
    One commenter stated that when establishing the effective date of 
an opt-in, EPA should take into account the particular circumstances in 
the opt-in area and natural transition points in the program to ensure 
that the petroleum industry is provided with adequate lead-time to meet 
the new demand for RFG.
    One commenter representing a futures and trading organization 
commented that opt-ins should never be allowed without a minimum of 90 
days prior notice to the public, and longer in appropriate 
circumstances, and that EPA should promulgate regulations that permit 
prior notice and public comment before such opt-ins are approved by the 
agency.
    One commenter suggested that all RFG opt-in programs become 
effective at the first of the year. The commenter argued that since the 
RFG rule originally targeted January 1, 1995 as the original start-up 
date for the Federal program, many of the rules were designed for a 
calendar year program. The commenter also stated that the enforcement 
discretion EPA has had to exercise could be avoided by starting opt-ins 
on January 1.
3. EPA's Response
    The Administrator has authority under section 211(k)(6) to 
establish an effective date for a state's entrance into the RFG program 
that is up to one year from the date of receipt of a petition to opt in 
from the Governor. The Administrator also has authority to delay the 
effective date of a state's opt-in to the program for an additional 
year, if after consultation with the Secretary of Energy, she 
determines that there is insufficient domestic capacity to produce 
certified reformulated gasoline, and may renew this delay for two more 
years. The Administrator will consider the result of any sudden and 
unexpected increase in the demand for RFG caused by opt-ins before 
setting an effective date that she deems appropriate. The Administrator 
will also consider whether the local supply and distribution system 
will be able to deliver adequate quantities of RFG to the opt-in area 
before making a final decision on the effective date of the program. As 
to the question of beginning all opt-ins on January 1, EPA believes 
that this would inappropriately limit the flexibility of the opt-in 
provision as it is outlined in section 211(k)(6). In addition, EPA's 
current opt-in process considers relevant enforcement factors and the 
industry's need for lead time when setting the effective opt-in date. 
For these reasons and after consideration of the comments, EPA has 
decided not to adopt regulations establishing a minimum one year lead 
time for the effective date of a state opt-in. EPA will continue to 
establish effective dates on a case-by-case basis, after consideration 
of all relevant factors through a notice and comment rulemaking 
process.

D. Cost Consideration for Other Programs Before Adopting RFG

1. EPA's Proposal
    The proposal requested comment on whether or not EPA should require 
that the Governor consider the costs of other potential ozone control 
programs in making the determination to adopt RFG. EPA requested 
comment on the appropriateness of such an approach, including whether 
the Agency had the authority to impose such a requirement.
2. Comments
    Several commenters representing the oil industry stated that a 
state's decision to opt into RFG should be based on need, good science, 
and a thorough analysis of the incremental cost-effectiveness relative 
to other control measures. The commenters argued that states should 
carefully consider these topics to avoid having to address the opt-out 
question. The commenters stated that EPA has the authority to require 
states to conduct a thorough cost-benefit analysis under section 
211(k)(1) of the Act.
3. EPA's Response
    States generally analyze cost effectiveness, even if informally, in 
deciding to request opt-in to RFG. EPA does not believe it is 
appropriate for the agency to second guess the states' analysis 
regarding the costs and benefits of opting into RFG. Section 211(k)(6) 
does not require the Governor to investigate the cost of the RFG 
program before submitting an application to the Administrator to opt 
into the program, and does not authorize EPA to deny a Governor's 
request because the Agency concludes that opt-in to RFG is not a cost 
effective ozone control option for a particular area. Rather, Section 
211(k)(6) simply directs EPA to set an effective date for a state's opt 
in to RFG once a Governor's request is received. Moreover, EPA does not 
believe that the Agency's authority under Section 211(k)(1) to get the 
content and performance requirements of RFG is relevant to its action 
on state opt-ins under Section 211(k)(6). Section 211(k)(6) sets out 
the specific process for state opt-in, and Section 211(k)(1) provides 
authority for promulgation of the RFG standards. Therefore, the final 
rulemaking does not include any requirement that states demonstrate 
they have analyzed the cost-effectiveness of RFG and other ozone

[[Page 52102]]

control measures in order to opt into the RFG program.
    Clearly, the costs of this final rulemaking will vary depending on 
the area that chooses to opt into the program. However, cost 
effectiveness estimates were prepared as part of the reformulated 
gasoline rule's regulatory impact analysis (RIA) completed in 1993. The 
table below depicts, by RVP region (Class B areas are southern RVP 
areas and Class C areas are northern RVP areas), estimated costs of the 
RFG program. These are averaged values. This does not reflect a new 
analysis of the costs and benefits of the RFG program, but simply an 
adjustment to reflect 1997 cost relative to 1990.

             Cost-Effectiveness of the RFG Program for VOC and NOX Control in 1990 and 1997 Dollars
----------------------------------------------------------------------------------------------------------------
                                       $1990        $1990      $1997 PPI*   $1997 PPI*  $1997 GDP**  $1997 GDP**
            RVP region             -----------------------------------------------------------------------------
                                      Class B      Class C      Class B      Class C      Class B      Class C
----------------------------------------------------------------------------------------------------------------
Phase I RFG-VOC...................          270          260          335          335          320          310
Phase II RFG-VOC..................          390          410          570          560          460          490
Phase II RFG-NOX..................         3240         3250         3620         3640         3860         3870
----------------------------------------------------------------------------------------------------------------
\*\ Adjusted based on the producers price index for capital prices (+11.2%) (to adjust refinery capital costs),
  and gasoline prices (-8.6%) (for operating costs).
** Adjusted based on the gross domestic product implicit price deflator, which is 1.192.
Note that the GDP implicit price deflator is a generic price indicator and does not necessarily reflect specific
  factors relevant to the refining industry.

IV. Administrative Designation and Regulatory Analysis

A. Public Participation

    EPA published the proposed rule on March 28, 1997 (62 FR 15074), 
and no public hearing was requested. Twenty-two comments were received 
from various stakeholders during the 30 day comment period that 
followed publication of the proposed rule. EPA reviewed and considered 
all written comments submitted on this proposal. These comments have 
been presented and addressed in the preamble above. (See Response to 
Comments, Section IV). All comments received by the Agency are located 
in the EPA Air Docket A-96-30.

B. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a Serious inconsistency or otherwise interfere with an 
action taken or planned by another Agency;
    (3) Materially alter the budgetary impact of entitlement, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this rule is a significant regulatory action; as such, 
this action was submitted to OMB for review. Changes made in response 
to OMB suggestions or recommendations will be documented in the public 
record.

C. Executive Order 12875: Enhancing Intergovernmental Partnerships

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a State, local 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments. If the mandate is unfunded, EPA must provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected State, local and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of State, local and tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.''
    Today's rule does not create a mandate on State, local or tribal 
governments. The rule does not impose any enforceable duties on these 
entities. Accordingly, the requirements of section 1(a) of Executive 
Order 12875 do not apply to this rule.

D. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments. If the mandate is unfunded, 
EPA must provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected and other representatives of 
Indian tribal governments ``to provide meaningful and timely input in 
the development of regulatory policies on matters that significantly or 
uniquely affect their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments. Today's final rule does not 
create a mandate for any tribal governments. The rule does not impose 
any enforceable duties on these entities. Today's final rule will 
affect only those refiners, importers or blenders of gasoline that 
choose to produce or import RFG for sale in the former nonattainment 
area that chooses

[[Page 52103]]

to participate in the program, and gasoline distributors and retail 
stations in those areas. Accordingly, the requirements of section 3(b) 
of Executive Order 13084 do not apply to this rule.

E. Regulatory Flexibility

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant economic impact 
on a substantial number of small entities, for the reasons described 
below and in the NPRM. Today's action codifies in regulatory text EPA's 
interpretation of states' ability to opt into the federal RFG program 
under Section 211(k)(6). This action does not mandate the RFG program 
for any areas, but rather clarifies which areas qualify for opt-in 
under Section 211(k)(6). This provision of the Act grants to states 
broad discretion to decide whether to opt into the RFG program. Upon 
receipt of a governor's request to opt in, EPA would conduct a 
rulemaking process to set the effective date for the opt in. In that 
rulemaking, EPA would determine whether that particular opt in would 
have a significant economic impact on a substantial number of small 
entities. See 62 FR 30260 (June 3, 1997). Such determination is more 
appropriately made in the context of a specific opt-in request, because 
impacts on small entities will depend on factors such as the number of 
small entities affected by a particular area's opting into RFG, whether 
small refiners provide gasoline to the area opting in, the local 
gasoline distribution network, the timing of the opt-in, and other 
case-specific facts.

F. Paperwork Reduction Act

    This action does not add any new requirements under the provisions 
of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The Office of 
Management and Budget (OMB) has approved the information collection 
requirements contained in the final RFG/anti-dumping rulemaking (See 59 
FR 7716, February 16, 1994) and has assigned OMB control number 2060-
0277 (EPA ICR No. 1951.08).
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information. An Agency may not 
conduct or sponsor, and a person is not required to respond to a 
collection of information unless it displays a currently valid OMB 
control number. The OMB control numbers for EPA's regulations are 
listed in 40 CFR Part 9 and 48 CFR Chapter 15.

G. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    Today's final rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local or 
tribal governments or the private sector. The rule imposes no 
enforceable duty on any State, local or tribal governments or the 
private sector.

H. Submission to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule. The rule is not a major rule as defined by 
5 U.S.C. 804(2).

I. Children's Health Protection

    This final rule is not subject to E.O. 13045, entitled ``Protection 
of Children from Environmental Health Risks and Safety Risks'' 
(62FR19885, April 23, 1997), because it does not involve decisions on 
environmental health risks or safety risks that may disproportionately 
affect children.

J. National Technology Transfer and Advancement Act of 1995 (NTTAA)

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Pub L. No. 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    This final rulemaking does not involved technical standards. 
Therefore, EPA did not consider the use of any voluntary consensus 
standards.

K. Statutory Authority

    The statutory authority for the rules finalized today is granted to 
EPA by sections 211(c) and (k), and 301 of the Clean Air Act, as 
amended, 42 U.S.C. 7414, 7545(c) and (k), and 7601.

[[Page 52104]]

List of Subjects in 40 CFR Part 80

    Environmental protection, Air pollution control, Fuel additives, 
Gasoline, Motor vehicle pollution, Penalties, Reporting and 
recordkeeping requirements.

    Dated: September 22, 1998.
Carol M. Browner,
Administrator.
    40 CFR part 80 is amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

    1. The authority citation for part 80 continues to read as follows:

    Authority: Secs. 114, 211 and 301(a) of the Clean Air Act as 
amended (42 U.S.C. 7414, 7545, and 7601(a)).

    2. Section 80.70 is amended by revising paragraph (k) to read as 
follows:


Sec. 80.70  Covered areas.

* * * * * *
    (k) Any other area currently or previously designated as a 
nonattainment area for ozone under 40 CFR 50.9 and part D of Title I of 
the Clean Air Act, as of November 15, 1990, or any time later, may be 
included on petition of the governor of the state in which the area is 
located. Effective one year after an area has been reclassified as a 
severe ozone nonattainment area, such severe area shall also be a 
covered area for purposes of this subpart D.
* * * * *
[FR Doc. 98-26006 Filed 9-28-98; 8:45 am]
BILLING CODE 6560-50-P