[Federal Register Volume 64, Number 110 (Wednesday, June 9, 1999)]
[Proposed Rules]
[Pages 30930-30937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14496]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[AMS-FRL-6354-4]
RIN 2060-AI29


Regulation of Fuel and Fuel Additives: Modification of Compliance 
Baseline

AGENCY: Environmental Protection Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: With today's action the U.S. Environmental Protection Agency 
(``EPA'', ``the Agency'', or ``we'') proposes to evaluate the 
conventional gasoline emissions, from gasoline that a refiner sells in 
Puerto Rico in excess of its baseline volume of Puerto Rico gasoline, 
using only the summer version of the Complex Model. Accordingly, we 
propose to modify the reformulated gasoline program's anti-dumping 
compliance baseline calculation. This modification will replace the 
annual average statutory baseline term with a summer statutory baseline 
term for purposes of evaluating a refiner's excess Puerto Rico 
gasoline. We also propose to replace the winter Complex Model with the 
more climatically appropriate summer Complex Model for all baseline and 
compliance calculations for Puerto Rico gasoline. The proposed 
provisions would apply to any refiner that has Puerto Rico gasoline in 
its individual baseline, has increased production of gasoline for sale 
in Puerto Rico above its individual baseline volume of Puerto Rico 
gasoline, and petitions the Agency to apply the proposed modified 
compliance baseline to its Puerto Rico gasoline. EPA will require any 
refiner submitting such a petition to recalculate its individual 
baseline using the summer Complex Model for all Puerto Rico gasoline.
    We anticipate that today's action will affect only a single 
refiner. We have not yet fully evaluated the implications of a general 
shift toward a climate-sensitive use of the summer and winter Complex 
Models for other Puerto Rico refiners or gasoline suppliers, or for 
similarly situated refiners in other regions. However, we request 
comment from other refiners that produce gasoline for sale in areas not 
subject to EPA's volatility requirements. Based on the comments we 
receive, we may or may not proceed with similar future rulemaking 
action.

DATES: Written comments on this notice must be submitted by July 9, 
1999.

ADDRESSES: Interested parties may submit written comments in paper form 
and/or by E-mail. To ensure their consideration by EPA, all comments 
must be submitted to EPA by the date indicated under DATES above. Paper 
copies of written comments should be submitted (in duplicate if 
possible) to Public Docket No. A-99-16 at the following address: U.S. 
Environmental Protection Agency (EPA), Air Docket Section, Room M-1500, 
401 M Street, S.W., Washington, D.C. 20460. The Agency requests that a 
separate paper copy also be sent to the person listed below under FOR 
FURTHER INFORMATION CONTACT. EPA also encourages that an electronic 
copy of comments (in ASCII format) accompany the submission of a paper 
copy (by E-mail to A-and-R-D[email protected] or on a 3.5 inch diskette). 
Public comments may also be submitted by E-mail to the docket at the 
address listed above without the submission of a paper copy. However, 
to ensure the clarity of the submission, EPA encourages that a paper 
copy accompany the E-mail submission. If comments are submitted by E-
mail alone, EPA requests that a copy of the E-mail message that 
contains the comments be sent to the contact person listed below.
    Materials related to this rulemaking are available for review at 
EPA's Air Docket at the above address (on the ground floor in Waterside 
Mall) from 8:00 a.m. to 5:30 p.m., Monday through Friday, except on 
government holidays. The telephone number for EPA's Air

[[Page 30931]]

Docket is (202) 260-7548, and the facsimile number is (202) 260-4400. A 
reasonable fee may be charged by EPA for copying docket materials, as 
provided in 40 CFR part 2.

FOR FURTHER INFORMATION CONTACT: Christine M. Brunner or Felicia Seals-
Buchanan, U.S. EPA, National Vehicle and Fuels Emission Laboratory, 
2000 Traverwood, Ann Arbor, MI 48105; Telephone (734) 214-4287 or 
x4589, FAX (734) 214-4051, E-mail [email protected] or seals-
[email protected].

SUPPLEMENTARY INFORMATION:

Regulated Entities

    Entities potentially affected by this action include those involved 
with the production, distribution and sale of gasoline motor fuel. 
Regulated categories and entities include:

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                                                                            Examples of potentially regulated
              Category                NAICS \1\ codes   SIC \2\ codes                   entities
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Industry............................          324110             2911   Petroleum Refiners.
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\1\ North American Industry Classification System (NAICS).
\2\ Standard Industrial Classification (SIC) system code.

    This table is not intended to be exhaustive, but provides a guide 
for readers regarding entities likely to be regulated by this action. 
This table lists the types of entities that EPA is now aware could 
potentially be affected by this action. Other types of entities not 
listed in the table could also be affected. To decide whether your 
organization might be affected by this action, you should carefully 
examine the proposed and existing regulations in 40 CFR part 80. If you 
have any questions regarding the applicability of this action to a 
particular entity, consult the persons listed in the preceding FOR 
FURTHER INFORMATION CONTACT section.

Access to Rulemaking Documents Through the Internet

    Today's notice is available electronically on the day of 
publication from the EPA Internet Web site listed below. Electronic 
copies of the preamble, regulatory language and other documents 
associated with today's proposal are available from the EPA Office of 
Mobile Sources Web site listed below shortly after the rule is signed 
by the Administrator. This service is free of charge, except any cost 
that you already incur for Internet connectivity.

EPA Web Site:
    http://www.epa.gov/docs/fedrgstr/epa-air/
    (Either select a desired date or use the Search feature.)
Office of Mobile Sources (OMS) Web Site:
    http://www.epa.gov/omswww/
    (Look in ``what's New'' or under the specific rulemaking topic.)

    Please note that due to differences between the software used to 
develop the document and the software into which the document may be 
downloaded, changes in format, page length, etc., may occur.

I. Background

A. Anti-Dumping Standards

    Section 211(k) of the Clean Air Act requires the U.S. Environmental 
Protection Agency (``EPA'' or ``we'') to establish standards for 
reformulated gasoline (RFG) to be used in specified ozone nonattainment 
areas. In addition, EPA established standards for non-reformulated, or 
conventional, gasoline used in the rest of the country. These standards 
are called the anti-dumping standards. EPA adopted the anti-dumping 
standards to prevent refiners from dumping into conventional gasoline 
the dirty gasoline components that are removed when RFG is produced. 
The anti-dumping standards require refiners to produce conventional 
gasoline each year that is as clean as the gasoline produced by the 
refiner in 1990.
    In order to be in compliance with the anti-dumping standards, the 
exhaust toxics and nitrogen oxides (NOX) emissions 
performance of a refinery's conventional gasoline can be no dirtier 
than the refinery's 1990 exhaust toxics and NOX emissions 
performance, on an annual average basis. EPA requires refiners to 
calculate the exhaust toxics and NOX emissions performance 
of gasoline using the Complex Model,1 based on measured 
properties, such as sulfur and benzene content, and Reid vapor pressure 
(RVP). The Complex Model includes both a summer version and a winter 
version. The anti-dumping requirements at 40 CFR 80.101(g) require 
refiners to use the summer Complex Model to evaluate conventional 
gasoline supplied to an area subject to EPA's gasoline volatility 
standards when these standards are in effect, and requires them to use 
the winter Complex Model to evaluate all other gasoline. The 
regulations also require refiners to evaluate the exhaust toxics and 
NOX emissions performance of gasoline sold in areas not 
subject to those volatility standards, such as Puerto Rico, Hawaii, and 
Alaska, using the winter Complex Model.
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    \1\ 40 CFR 80.45.
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B. Compliance Baseline Calculation

    In general, a refiner's standard for compliance is its individual 
1990 refiner baseline. However, when a refiner's annual gasoline 
production volume (including RFG, conventional gasoline and 
reformulated gasoline blendstock for oxygenate blending) exceeds its 
baseline volume (the volume of gasoline that the refiner produced in 
1990), the refiner's conventional gasoline compliance standard for 
exhaust toxics and NOX is different from its individual 
baseline values for these emissions. The standard is different because 
EPA requires refiners to compare the excess volume to the statutory 
baseline instead of their individual baseline. Because the statutory 
baseline was designed to reflect 1990 gasoline generally, the quality 
of all the excess gasoline produced approximates the 1990 average 
national quality.
    In order to determine a refiner's compliance standard for the 
averaging period, the anti-dumping provisions at 40 CFR 80.101(f) 
require the use of a specified compliance baseline equation. This 
equation establishes a single compliance baseline that compares a 
refiner's conventional gasoline with that refiner's individual 
baseline. However, a portion of the compliance baseline equation 
compares the emissions of a refiner's excess volume of conventional 
gasoline to the annual average statutory baseline emissions, a 
combination of the summer and winter statutory baseline emissions. EPA 
requires refiners to evaluate the emissions of gasoline sold in areas 
not subject to EPA's volatility requirements using only the winter 
Complex Model. Refiners must then compare these emissions to a 
compliance baseline equation that is based in part on the summertime

[[Page 30932]]

portion of the statutory baseline. Because different assumptions drive 
the summer and winter versions of the Complex Model, this may force 
refiners to make quality changes in their gasoline pools, resulting in 
unintended negative effects for refiners and the environment.

C. Seasonal Impacts of the Complex Model

    A detailed discussion of the development of the summer and winter 
versions of the Complex Model was included in the Final Regulatory 
Impact Analysis (RIA) for Reformulated Gasoline.2 Both 
models are based on MOBILE model outputs. MOBILE model outputs for the 
summer model assume ambient temperatures of 69  deg.F-94  deg.F. MOBILE 
model outputs for the winter model assume ambient temperatures of 39 
deg.F-57  deg.F. Additionally, MOBILE model outputs show significantly 
greater ``winter'' emissions due to longer engine and catalyst warm-up 
times. As a result, for identical fuel compositions (based on those 
fuel parameters evaluated in the Complex Model), the winter Complex 
Model results in significantly higher emissions than the summer Complex 
Model, on a mg/mile basis.
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    \2\ December 13, 1993.
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D. July 11, 1997 Proposal

    EPA proposed a variety of changes to the reformulated gasoline and 
anti-dumping regulations on July 11, 1997 (62 FR 37337). Classifying 
gasoline as summer or winter gasoline was one issue that EPA discussed 
in that proposal. In that discussion, EPA stated that it would classify 
all gasoline produced for use outside the continental U.S., where the 
federal RVP standards do not apply, as winter gasoline year round 
because:
    (1) EPA required refiners to calculate the emissions of all 
gasoline used outside of the continental U.S. using the winter Complex 
Model for baseline purposes;
    (2) The anti-dumping standards compare the emissions of a 
refinery's gasoline during an averaging period with the refinery's 
baseline emissions; and
    (3) The comparison of baseline emissions to averaging period 
emissions is valid only if the refinery uses the same criteria in the 
baseline and in the averaging period for classifying gasoline as summer 
or winter.
    One commenter, Amerada Hess, stated that it was inappropriate for 
refiners to use the winter Complex Model to evaluate the gasoline 
produced for certain areas outside the continental U.S. and not subject 
to the federal volatility requirements. They offered the following 
reasons:
    (1) In the proposal, ``EPA is acknowledging that the classification 
of gasoline as winter or summer actually depends on the season in which 
it is sold'' (and not just its RVP);
    (2) EPA's MOBILE model, upon which EPA based the Complex Model, 
reflects a temperature range of 39 deg. F-57 deg. F when used to 
evaluate winter emissions;
    (3) It is inappropriate for EPA to assign gasoline for tropical 
climates such as Puerto Rico and Hawaii, to the winter category from a 
``seasonal weather gasoline characteristic standpoint;''
    (4) The RVP of the gasoline sold in these (tropical) areas reflects 
summertime RVPs rather than wintertime RVPs;
    (5) The July 1, 1994 RFG Question and Answer Document states that 
refiners are to evaluate gasoline which remains seasonably the same 
throughout the year using the seasonal Complex Model which matches the 
year round season.
    Additionally, when the volume of gasoline sold in such areas 
increases over baseline levels, under 40 CFR 80.101(f)(4)(ii) EPA 
requires refiners to calculate the standard for the extra volume using 
annual exhaust toxics and NOX emissions values which include 
both summer and winter Complex Model calculations. At the same time, 
EPA requires calculation of emissions (of gasoline sold in such areas) 
for compliance purposes using only the winter Complex Model. 
Consequently, according to the commenter, the refiner is unfairly 
penalized.

II. Proposal

A. Summary

    With today's action, EPA proposes to allow refiners, upon petition, 
to replace the winter Complex Model with the summer Complex Model for 
all anti-dumping baseline and compliance calculations for conventional 
gasoline sold in Puerto Rico, if the refiner has Puerto Rico gasoline 
in their individual baseline, and if the refiner currently sells a 
volume of gasoline in Puerto Rico greater than that refiner's 1990 
Puerto Rico baseline volume. We are taking this action in order to 
address specific circumstances where inconsistencies in the RFG 
program's anti-dumping provisions have had significant unintended 
negative impacts.
    The anti-dumping regulations currently require conventional 
gasoline sold in Puerto Rico to be evaluated using the winter Complex 
Model, for purposes of both compliance calculation and baseline 
calculation up to a refiner's 1990 baseline volume. However, the 
current regulations require a refiner to use the statutory baseline for 
evaluating volumes of Puerto Rico gasoline above that refiner's 1990 
baseline volume. The statutory baseline includes both a summer and 
winter Complex Model component. As a result, for excess gasoline, there 
is an unintended mismatch between the refiner's baseline calculation 
(which uses only the winter Complex Model) and the compliance baseline 
calculation (which uses a combination of the summer and winter Complex 
Models). This results in the appearance of greater emissions in 
comparison to an analysis using the same seasonal version of the 
Complex Model for both of these calculations. For those refiners with 
Puerto Rico gasoline in their individual baseline, that have increased 
the volume of gasoline that they sell in Puerto Rico above their 1990 
baseline volumes of Puerto Rico gasoline, this incongruence has had a 
significant adverse economic effect.
    To solve this specific problem, EPA is proposing a provision under 
the anti-dumping regulations that would change the compliance 
determination of the gasoline a refiner sells in Puerto Rico above that 
refiner's 1990 Puerto Rico baseline volume. Refiners would evaluate 
such gasoline using only a single statutory seasonal term (the summer 
term) in the compliance baseline determination. Additionally, given 
Puerto Rico's consistently warm climate, we recognize that the summer 
Complex Model is the most appropriate model for evaluating emissions in 
Puerto Rico under the anti-dumping program. Thus, we are also proposing 
to evaluate all of the conventional gasoline sold in Puerto Rico (by a 
refiner that makes a successful petition under this provision) using 
the summer Complex Model. The approval of a petition under this 
proposed provision would require a refiner to recalculate the Puerto 
Rico component of its individual baseline using the summer Complex 
Model. As a result, such a refiner will evaluate all of its Puerto Rico 
gasoline using a single seasonal version of the Complex Model. Today's 
action applies to each batch of gasoline produced by an eligible 
refiner and destined for Puerto Rico, even if a small portion of the 
batch is subsequently sent to other nearby areas with climates similar 
to Puerto Rico and which are also not subject to EPA's volatility 
standards.

[[Page 30933]]

B. Modified Compliance Baseline Equation

    As discussed in Section I.B., when refiners sell gasoline in excess 
of their individual baseline volume in areas such as Puerto Rico, which 
are not subject to the federal volatility requirements, use of the 
current compliance baseline equation may have negative economic 
implications for refiners and unintended negative environmental 
effects. EPA requires refiners to evaluate such gasoline using the 
winter Complex Model. However, in the compliance baseline equation, all 
excess gasoline is compared to the annual average statutory baseline, 
which is composed of summertime and wintertime components. Because the 
winter Complex Model predicts higher emissions for exhaust toxics and 
NOX than does the summer Complex Model, refiners in this 
situation are forced to meet a more stringent compliance standard in 
these areas than would be required if the seasonal Complex Models used 
to evaluate such gasoline were the same. Accordingly, they must divert 
cleaner gasoline from other areas.
    To remedy this situation, EPA is proposing to modify the compliance 
baseline equation at Sec. 80.101(f)(4)(ii). This modification will 
ensure that the performance of gasoline sold in Puerto Rico in excess 
of a refiner's baseline volume of Puerto Rico gasoline is compared to 
the appropriate corresponding seasonal baseline. We believe that the 
summer Complex Model is the most appropriate model for evaluating 
Puerto Rico gasoline.
    EPA proposes to include the following equation at 40 CFR 80.101 
(f)(4). This equation includes separate terms for evaluating the 
gasoline subject to the refiner's individual baseline and excess 
gasoline subject to the summer model-only requirements. EPA requests 
comments on the terms and definitions of this proposed equation.
[GRAPHIC] [TIFF OMITTED] TP09JN99.000

where:

CBi = the compliance baseline value for emissions 
performance i
Bi = the refiner's or importer's individual annual baseline 
for emissions performance i under Sec. 80.91 for gasoline supplied to 
areas subject to volatility standards under Sec. 80.27
BSi = the refiner's or importer's individual baseline as 
determined under Sec. 80.91 using the summer Complex Model, for 
gasoline supplied to Puerto Rico, for emissions performance i
DBAi = annual anti-dumping statutory baseline value for 
emissions performance i under Sec. 80.91(c)(5)(iv)
DBSi = the summer statutory baseline value for emissions 
performance i under Sec. 80.45(b)(3), table 5
Va = total volume of RFG, conventional gasoline, RBOB, 
oxygenates and California gasoline as defined under Sec. 80.81(a)(2) 
produced or imported during the averaging period
V1990 = 1990 baseline volume under Sec. 80.91(f)(1)
V1990s=1990 baseline volume of gasoline supplied to Puerto 
Rico
Vas=volume of conventional gasoline supplied during the 
averaging period to Puerto Rico
i=exhaust toxics or NOX emissions performance

C. Seasonal Re-designation of Puerto Rico Gasoline

    EPA is proposing to evaluate the emissions of Puerto Rico gasoline 
using only the summer Complex Model for any refiner making a successful 
petition under this proposed provision. As a result of comments in 
response to the July 11, 1997 NPRM, EPA evaluated the average annual 
climatic conditions and gasoline RVP levels for Puerto Rico.\3\ We have 
concluded that Puerto Rico's relatively constant year round ambient 
temperatures, as well as its gasoline RVPs, are more consistent with 
the conditions under which EPA intended the summer Complex Model to 
apply than they are with the conditions under which we intended the 
winter Complex Model to apply. Additionally, Puerto Rico's ambient 
temperature is consistent with conditions typical of a high ozone 
season, when summertime gasoline, and thus the summer Complex Model, is 
meant to be used. Because this proposed action involves the calculation 
of compliance baselines for gasoline sold by refiners in Puerto Rico, 
we are taking this opportunity to address the seasonal appropriateness 
of the Complex Model that refiners must use to evaluate individual 
batches of gasoline. Accordingly, we propose to require refiners to 
evaluate all of their Puerto Rico gasoline using the summer Complex 
Model for compliance and baseline purposes. We are, however, expressly 
limiting the applicability of this change to refiners that petition 
for, and are granted, compliance baseline corrections under the 
provisions of this proposed rulemaking.
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    \3\ 30 year average maximum and minimum temperatures by month, 
and RVP specifications.
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D. Environmental Impact

    We are presently aware of only one refiner for which the current 
regulations have significant unintended negative economic and 
environmental impacts. Specifically, the current anti-dumping 
regulations applicable to Puerto Rico gasoline negatively affect the 
quality of this refiner's mainland reformulated gasoline by requiring 
the refiner to shift certain production from RFG to conventional 
gasoline in order to comply with the requirements for its Puerto Rico 
conventional gasoline. Thus the emissions in areas which most need 
clean gasoline--ozone nonattainment areas participating in the RFG 
program--are unnecessarily elevated. Conversely, Puerto Rico, which is 
in attainment for ozone, is receiving cleaner conventional gasoline due 
to the unintended results of the current anti-dumping rules.
    The change proposed today helps to provide the cleanest gasoline 
where it is needed most. It is possible that the gasoline supplied by 
this refiner to Puerto Rico, and other conventional gasoline areas, 
could see increases in the emissions regulated under the anti-dumping 
requirements. However, this proposal will allow refiners to use the 
most seasonally-appropriate Complex Model for gasoline sold in Puerto 
Rico, and will not result in an increase in emissions from conventional 
gasoline compared to 1990 levels. Thus, the goals of the anti-dumping 
program will be preserved. Indeed, this adjustment simply works to 
restore the proper balance to the distribution of environmental 
benefits under the RFG program.
    EPA is proposing that these requirements would apply to gasoline 
produced for calendar year 1999 and beyond. EPA will need more 
information from other refiners before proposing to broadly apply 
similar provisions throughout Puerto Rico and

[[Page 30934]]

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

E. Economic Impact

    EPA expects today's proposal to have minimal economic consequences. 
Most affected refiners are operating satisfactorily under the current 
requirements and are likely to be unaffected by this rule. EPA believes 
that refiners satisfying the requirements of this provision, will 
petition to re-evaluate the Puerto Rico gasoline in their baseline 
using the summer Complex Model only if it is economically beneficial 
for them to do so. Therefore, EPA anticipates no adverse economic 
impacts as a result of today's proposal rule.

F. Limited Applicability

    EPA is proposing today to apply the provisions discussed above 
(i.e., the modified compliance baseline equation and the uniform use of 
the summer Complex Model) to refiners that have Puerto Rico gasoline in 
their individual baseline, that have increased the volume of gasoline 
that they sell in Puerto Rico above their 1990 baseline volumes of 
Puerto Rico gasoline, and that petition the Agency for such a change. 
Once such a petition is made and granted, the new method for 
determining compliance would apply from then on, regardless of any 
future changes in the refiner's Puerto Rico gasoline production or 
distribution. To date, only one refiner has notified EPA of potential 
adverse effects due to the application of the current regulations.
    While EPA believes that use of the modified compliance baseline 
equation and seasonally-appropriate Complex Model may be technically 
appropriate in all areas not subject to the federal volatility 
requirements, there are a number of factors that EPA is unable to 
evaluate at this time. Consequently, we believe it best to limit the 
applicability of this proposal to refiners of Puerto Rico gasoline that 
can fulfill the other requirements of this proposed rule. The following 
section discusses the implications of a broader application of the 
principles underlying today's proposed action, and highlights the 
difficulties inherent in evaluating the appropriateness of such a 
generally applicable provision.

III. Implications for Broader Future Action

    Today's action is limited in applicability to Puerto Rico refiners 
that meet the criteria enumerated in Section II of this notice. 
However, we anticipate that a similar but more generally applicable 
provision may be appropriate in the future. Such a provision would 
presumably apply to all areas that are not subject to the federal 
volatility requirements codified at 40 CFR 80.27.\4\ The substance and 
scope of such a generally applicable provision would depend on many 
considerations, including environmental and economic impacts, industry 
practices, and the likely consequences for the RFG program in general. 
Some of the factors that EPA believes warrant additional consideration 
prior to the broad application of the provisions in today's proposed 
action include:
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    \4\ EPA believes that gasoline sent to areas such as Puerto Rico 
and Hawaii (and perhaps Guam, the U.S. Virgin Islands (USVI), the 
Northern Marianas and American Samoa) might be most appropriately 
evaluated using only the summer Complex Model. Similarly, EPA 
believes that gasoline sold in Alaska might be most appropriately 
evaluated using only the winter Complex Model, as is currently 
required.
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    (1) Environmental impacts. Many refiners which have Puerto Rico 
gasoline in their baseline, aggregate that baseline with baselines of 
some or all of their other refineries. Currently, they may not actually 
produce gasoline for Puerto Rico, or may produce a reduced amount 
relative to their baseline volume of Puerto Rico gasoline. Thus, they 
may be taking advantage of Puerto Rico gasoline baseline emissions 
under the current regulations for the compliance of conventional 
gasoline produced for other locales. If required to re-evaluate the 
baseline of the Puerto Rico gasoline and to use the modified compliance 
baseline equation, the gasoline quality in either Puerto Rico or in the 
conventional or RFG areas of the continental U.S. may deteriorate 
relative to the current situation. EPA is also unable to evaluate the 
impact on the environment of the activities of refiners that have no 
Puerto Rico gasoline in their baseline but would choose to sell 
gasoline in Puerto Rico if such gasoline is allowed or required to be 
evaluated using the summer Complex Model. Since the summer Complex 
Model gives lower emissions for a given composition of gasoline, it 
would be advantageous for refiners to produce gasoline for Puerto Rico 
under such circumstances. However, because EPA is unable to anticipate 
the actions of such refiners (e.g., future gasoline production plans) 
it is currently impossible for the Agency to determine the overall 
environmental impacts that such a regulatory provision might have.
    (2) Economic impacts. EPA expects today's proposal to have minimal 
economic consequences. Nonetheless, because of numerous uncertainties, 
EPA is unable to determine what economic impacts might result from a 
more general provision applicable to all areas not subject to the 
federal volatility standards. Specifically, possible reactions by 
refiners regarding aggregation and refinery changes would play a 
critical role in assessing the economic consequence of any such Agency 
action.
    EPA understands that refinery aggregation decisions involve precise 
and costly evaluations, and that changing such decisions might entail 
another round of concerted deliberation. Thus, while the direct 
economic impacts of such a broadly applicable provision might actually 
be small, a refiner's choice to re-evaluate its aggregation decisions 
might result in significant additional expense. Re-aggregation could 
not only be time-consuming and costly for the refiner, but could have 
anti-competitive effects for those refiners without applicable gasoline 
in their baseline. Thus, EPA's current lack of information regarding 
the impact that re-consideration of aggregation decisions might have on 
the RFG and anti-dumping programs is one reason we are not proposing to 
broadly apply the provisions proposed today.
    (3) Disturbing the system. With the exception of the problems 
addressed by today's proposed action, the current system for 
implementing the RFG anti-dumping standards has been successful. Given 
the concerns discussed above, EPA is unsure whether it would be 
appropriate to disturb the current system for what may be minimal 
environmental benefit at potentially high economic costs.
    EPA requests comment on the proposed provisions from refiners that 
produce gasoline for sale in any area that is not subject to EPA's 
volatility requirements. EPA also requests comment from all interested 
parties regarding the environmental and economic impacts of extending 
the provisions proposed today to other areas not subject to EPA's 
volatility requirements. EPA also requests comment on the appropriate 
seasonal Complex Model for a refiner or refinery that sells 
conventional gasoline in an area not subject to EPA's volatility 
requirements but does not have such gasoline in its baseline. Based on 
comments received, EPA may or may not proceed with future rulemaking 
action proposing changes similar to those proposed today.

IV. Public Participation

    EPA desires full public participation in arriving at its final 
decisions and solicits comments on all aspects of this proposal. 
Wherever applicable, full supporting data and detailed analysis

[[Page 30935]]

should also be submitted to allow EPA to make maximum use of the 
comments. All comments should be directed, by July 9, 1999 to the EPA 
Air Docket, Docket A-99-16 (See ADDRESSES).
    Any proprietary information being submitted for the Agency's 
consideration should be markedly distinguished from other submittal 
information and clearly labeled ``Confidential Business Information.'' 
Proprietary information should be sent directly to the contact person 
listed above, and not to the public docket, to ensure that it is not 
inadvertently placed in the docket. Information thus labeled and 
directed shall be covered by a claim of confidentiality and will be 
disclosed by EPA only to the extent allowed and by the procedures set 
forth in 40 CFR part 2. If no claim of confidentiality accompanies a 
submission when it is received by EPA, it may be made available to the 
public without further notice to the commenter.

V. Administrative Requirements

A. Administrative Designation and Regulatory Analysis

    Under Executive Order 12866 (58 FR 51735 October 4, 1993), EPA must 
determine whether the regulatory action is ``significant'' and 
therefore subject to Office of Management and Budget (OMB) review and 
the requirements of this Executive Order. The Order defines a 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, Local, or Tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    EPA has determined that this rule is not a ``significant regulatory 
action'' under the terms of Executive Order 12866 and is therefore not 
subject to OMB review. The Agency has determined that this regulation 
would result in none of the economic effects set forth in Section 1 of 
the Order because it does not impose any mandatory obligations on the 
regulated community beyond those specified in the current regulations.

B. Compliance With the Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires federal 
agencies to conduct a regulatory flexibility analysis of any rule 
subject to notice and comment rulemaking requirements unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. Small entities include 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. This proposed rule would not have a significant impact 
on a substantial number of small entities because it involves an 
optional provision intended to promote successful implementation of the 
RFG anti-dumping requirements and to minimize existing adverse economic 
impacts. This proposed action may, in fact, reduce the burden of the 
anti-dumping program on regulated entities. Therefore, I certify that 
this action will not have a significant economic impact on a 
substantial number of small entities.

C. Paperwork Reduction Act

    Today's proposal does not involve the collection of information as 
defined by the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq. 
Therefore, the provisions of that Act do not apply to this action.

D. Intergovernmental Relations

1. Unfunded Mandates Reform Act
    Title II of the unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory action on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year. Before promulgation an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirement that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    Today's rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector. The EPA has determined that today's 
rule does not include a Federal mandate because it imposes no 
enforceable duty on any State, local, and tribal governments, or the 
private sector. Today's rule proposes an optional provision for 
evaluating the emissions of conventional gasoline sold by certain 
refiners in Puerto Rico. This proposed action may, in fact, reduce the 
burden of the anti-dumping program on regulated entities. Therefore, 
the requirements of the Unfunded Mandates Act do not apply to this 
proposed action. For the same reason, EPA has determined that this rule 
contains no regulatory requirements that might significantly or 
uniquely affect small governments.
2. Executive Order 12875: Enhancing Intergovernmental Partnerships
    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a State, local, 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments, or EPA consults with those governments. If EPA complies by 
consulting, Executive Order 12875 requires EPA to provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected State, local, and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to

[[Page 30936]]

develop an effective process permitting elected officials and other 
representatives of State, local, and tribal governments ``to provide 
meaningful and timely input in the development of regulatory proposals 
containing significant unfunded mandates.''
    Today's rule does not create a mandate on State, local, or tribal 
governments. The rule does not impose any mandatory duties on these 
entities. Accordingly, the requirements of Section 1(a) of Executive 
Order 12875 do not apply to this rule.
3. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments
    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13094 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected and other representatives of 
Indian tribal governments ``to provide meaningful and timely input in 
the development of regulatory policies on matters that significantly or 
uniquely affect their communities.''
    This proposed rule applies exclusively to refiners that sell 
gasoline in Puerto Rico. The proposed rule does not create any mandates 
or impose any obligations, and thus does not significantly or uniquely 
affect the communities of Indian tribal governments. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply to 
this rule.

E. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272), 
directs the EPA to use voluntary consensus standards (VCS) in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, business practices, etc.) that are developed or 
adopted by voluntary consensus standard bodies. The NTTAA requires EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This proposed rulemaking does not involve technical standards. 
Therefore, EPA is not considering the use of any voluntary consensus 
standards. EPA welcomes comments on this aspect of the proposed 
rulemaking and, specifically, invites the public to identify 
potentially applicable voluntary consensus standards and to explain why 
such standards should be used in this regulation.

F. Executive Order 13045: Children's Health Protection

    Executive Order 13045: Protection of Children from Environmental 
Health Risks and Safety Risks (62 FR 19885, April 23, 1997) applies to 
any rule that: (1) is determined to be economically significant as 
defined under E.O. 12866, and (2) concerns an environmental health or 
safety risk that EPA has reason to believe may have a disproportionate 
effect on children. If the regulatory action meets both criteria, the 
Agency must evaluate the environmental health or safety effects of the 
planned rule on children, and explain why the planned regulation is 
preferable to other potentially effective and reasonably feasible 
alternatives considered by the Agency.
    EPA interprets E.O. 13045 as applying only to those regulatory 
actions that are based on health or safety risks, such that the 
analysis required under section 5-501 of the Order has the potential to 
influence the regulation. This rule is not subject to E.O. 13045 
because it does not establish an environmental standard intended to 
mitigate health or safety risks. Additionally, this rule is not subject 
to E.O. 13045 because it implements specific standards established by 
Congress in statutes.

VI. Statutory Provisions and Legal Authority

    The statutory authority for the actions proposed today is granted 
to EPA by sections 114, 211(c) and (k) and 301 of the Clean Air Act, as 
amended; 42 U.S.C. 7414, 7545(c) and (k), and 7601.

List of Subjects in 40 CFR Part 80

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

    Dated: May 28, 1999.
Carol M. Browner,
Administrator.

    For the reasons set out in the preamble, part 80 of title 40 of the 
Code of Federal Regulations is amended as follows:

PART 80--REGULATION OF FUEL AND FUEL ADDITIVES

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

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

    2. A new paragraph (d) is added to Section 80.93 to read as 
follows:


Sec. 80.93  Individual baseline submission and approval.

* * * * *
    (d) Requirements for petition applicable to Puerto Rico gasoline.
    (1) Any refiner or importer with Puerto Rico gasoline, or Puerto 
Rico and U.S. Virgin Islands gasoline, in its individual baseline may 
petition EPA to use the summer Complex Model to evaluate its Puerto 
Rico and Virgin Islands gasoline for compliance under Sec. 80.101.
    (2) The petition must be sent to: U.S. EPA, Fuels and Energy 
Division, 2000 Traverwood, Ann Arbor, MI 48105.
    (3) The petition must include the following:
    (i) Identification of the refinery;
    (ii) Identification of contact person;
    (iii) A revised individual baseline determination, wherein the 
baseline Puerto Rico and U.S. Virgin Islands gasoline has been 
evaluated using the summer Complex Model. The calculations should be 
clearly and fully described and displayed.
    (iv) Baseline auditor agreement with the revised baseline.
    (4) EPA reserves the right to request additional information. If 
such information is not forthcoming in a timely manner, the petition 
will not be approved.
    3. Section 80.101 is amended by revising paragraphs (f)(4) and 
(g)(1)(ii) to read as follows:


Sec. 80.101  Standards applicable to refiners and importers.

* * * * *
    (f) * * *
    (4)(i) Reserved.

[[Page 30937]]

    (ii) Reserved.
    (iii) Any refiner or importer with Puerto Rico gasoline, or Puerto 
Rico and U.S. Virgin Islands gasoline, in its individual baseline and 
which has met the requirements specified in paragraph (g)(1)(ii)(B) of 
this section, and whose total volume of conventional gasoline, RBOB, 
reformulated gasoline, and California gasoline, as defined in 
Sec. 80.81(a)(2), produced or imported by the refiner or importer 
during the averaging period is greater than that refiner's or 
importer's 1990 baseline volume as determined under Sec. 80.91(f)(1), 
must calculate the compliance baseline for each parameter or emissions 
performance according to the following formula:
[GRAPHIC] [TIFF OMITTED] TP09JN99.001

Where:

CBi = the compliance baseline value for emissions 
performance i
Bi = the refiner's or importer's individual annual baseline 
for emissions performance i under Sec. 80.91 for gasoline supplied to 
areas subject to volatility standards under Sec. 80.27
BSi = the refiner's or importer's individual baseline as 
determined under Sec. 80.91 using the summer Complex Model, for 
gasoline supplied to Puerto Rico and the U.S. Virgin Islands, for 
emissions performance i
DBAi = annual anti-dumping statutory baseline value for 
emissions performance i under Sec. 80.91(c)(5)(iv)
DBSi = the summer statutory baseline value for emissions 
performance i under Sec. 80.45(b)(3), table 5
Va = total volume of RFG, conventional gasoline, RBOB, 
oxygenates and California gasoline as defined under Sec. 80.81(a)(2) 
produced or imported during the averaging period
V1990=1990 baseline volume under Sec. 80.91(f)(1)
V1990s=1990 baseline volume of gasoline supplied to Puerto 
Rico and the U.S. Virgin Islands
Vas=volume of conventional gasoline supplied during the 
averaging period to Puerto Rico and the U.S. Virgin Islands
i=exhaust toxics or NOX emissions performance
* * * * *
    (g) * * *
    (1) * * *
    (ii) Complex Model calculations.
    (A) Exhaust benzene, exhaust toxics, and exhaust NOX 
emissions performance for each batch shall be calculated in accordance 
with the applicable model under Sec. 80.45.
    (B) A refiner which has Puerto Rico gasoline, or Puerto Rico and 
U.S. Virgin Islands gasoline, in its baseline shall use the summer 
Complex Model to evaluate its averaging period Puerto Rico and U.S. 
Virgin Islands gasoline provided it has petitioned the Agency, per 
Sec. 80.93(d), and has received Agency approval on the petition, and 
has revised its individual baseline, such that the Puerto Rico and U.S. 
Virgin Islands gasoline in its individual baseline has been evaluated 
using the summer Complex Model.
* * * * *
[FR Doc. 99-14496 Filed 6-8-99; 8:45 am]
BILLING CODE 6560-50-P