Federal Register, Volume 63 Issue 188 (Tuesday, September 29, 1998)

[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.
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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).
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\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