[Federal Register Volume 65, Number 134 (Wednesday, July 12, 2000)]
[Proposed Rules]
[Pages 42920-42936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17351]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-6732-2]
RIN 2060-AI89


Regulation of Fuel and Fuel Additives: Reformulated Gasoline 
Adjustment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This action proposes an adjustment to the VOC performance 
standard under Phase II of the reformulated federal gasoline (RFG) 
program for ethanol RFG blends that contain 3.5 weight percent oxygen. 
For such blends, the proposed adjustment would reduce by 1 percentage 
point (from a 27.4 to a 26.4 percent reduction in the north, and from a 
29 to a 28 percent reduction in the south) the VOC performance 
standard. We believe that air quality benefits will continue to be 
similar to the current RFG standards. EPA also solicits comment on 
adjustment or elimination of the minimum oxygen requirement of 1.5 
weight percent.
    This action implements the National Research Council (NRC) 
recommendation that the contribution of CO to ozone formation be 
recognized in assessments of RFG air quality benefits.
    This action also implements recommendations of the Blue Ribbon 
Panel on Oxygenate Use. One of the panel's recommendations was that EPA 
take steps to reduce the amount of MTBE used in gasoline. The action 
proposed today would increase the flexibility available to refiners to 
formulate RFG without MTBE while still realizing ozone benefits that 
are similar to those of the current Phase II program.

DATES: All public comments must be received on or before September 11, 
2000.

ADDRESSES: Any person wishing to submit comments should send them (in 
duplicate, if possible) to the docket address listed below and to Barry 
Garelick (6406J), Environmental Protection Specialist, U.S. 
Environmental Protection Agency, Office of Transportation and Air 
Quality, Transportation and Regional Programs, 1200 Pennsylvania Ave., 
NW, Washington, DC 20460. Materials relevant to this have been placed 
in docket [A-99-32] located at U.S. Environmental Protection Agency, 
Air Docket Section, Room M-1500, 401 M Street, SW., Washington, DC 
20460. The docket is open for public inspection from 8:00 a.m. until 
5:30 p.m., Monday through Friday, except on Federal holidays. A 
reasonable fee may be charged for photocopying services. To request a 
public hearing, contact Barry Garelick, (202) 564-9028.

FOR FURTHER INFORMATION CONTACT: For further information about this 
proposed rule, contact Barry Garelick, Environmental Protection 
Specialist, Office of Transportation and Air Quality, Transportation 
and Regional Programs Division, at (202) 564-9028. To notify EPA of a 
public hearing request, contact Barry Garelick, (202) 564-9028.

SUPPLEMENTARY INFORMATION: The remainder of this proposed rule is 
organized as follows:

I. Adjusted VOC Standard Under Phase II of the RFG Program

A. Regulated Entities
B. Background
C. Need for Action
    1. Concerns relating to use of MTBE
    2. Summary of today's action
    3. Per gallon oxygen minimum
D. Volatility associated with ethanol RFG blends
E. VOC standard adjustment
F. Evaluation of air quality impacts of the proposed rule
G. Ozone reduction benefit in areas that currently use ethanol
H. Impact of proposed approach on SIPs
I. Oxygen and performance standard averaging
J. Downstream sampling
K. Oxygen Crediting
L. Product Transfer Documentation
M. Future vehicles

II. Elimination of Oxygen Minimum Requirement

A. Background
B. Potential modifications
C. Elimination of RFG oxygen content per-gallon minimum
D. Modification of method for calculation of oxygen survey series 
average
E. Modification to provision for effect of oxygen survey series 
failure
F. Modification to the commingling prohibition
G. Effect on air toxics
H. Effect on VOC

III. Administrative Requirements

A. Executive Order 12866: Federalism
B. Executive Order 13132 (Federalism)
C. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments
D. Regulatory Flexibility
E. Paperwork Reduction Act
F. Unfunded Mandates Reform Act
G. Executive Order 13045: Children's Health Protection
H. National Technology Transfer and Advancement Act of 1995 (NTTAA)

[[Page 42921]]

I. Statutory Authority

I. Adjusted VOC Standard Under Phase II of the RFG Program

A. Regulated Entities

    Regulated categories and entities potentially affected by this 
action include:

------------------------------------------------------------------------
              Category                  Examples of regulated entities
------------------------------------------------------------------------
SIC 2911............................  Refiners, importers, oxygenate
                                       producers, and oxygenate blenders
                                       of reformulated gasoline.
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather 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 be potentially regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
an entity is regulated by this action, one should carefully examine the 
RFG provisions at 40 CFR Part 80, particularly Sec. 80.41 dealing 
specifically with the RFG standards. 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.

B. Background

    The purpose of the RFG program is to improve air quality in certain 
specified areas of the country by requiring reductions in emissions of 
ozone forming volatile organic compounds (VOCs) and emissions of toxic 
air pollutants through the reformulation of gasoline, pursuant to 
211(k) of the Clean Air Act (CAA or the Act), as amended. Section 
211(k)(10)(D) of the Act mandates that RFG be sold in the nine largest 
metropolitan areas with the most severe summertime ozone levels, as 
well as areas that are reclassified to ``Severe''. When the Sacramento 
Metropolitan Air Quality Management District was reclassified to 
``Severe'', the number of mandated areas became 10. There will soon be 
11 areas since the San Joaquin Valley area of California will be 
reclassified to ``Severe''. In addition to the mandatory areas, RFG 
must also be sold in ozone nonattainment areas that opt into the 
program.\1\ The Act also mandates certain requirements for the RFG 
program. Section 211(k)(1) directs EPA to issue regulations that:
---------------------------------------------------------------------------

    \1\ Mandatory areas: Los Angeles, CA, San Diego, CA, Hartford, 
CT, New York City (NY-NJ-CT), Philadelphia (PA-NJ-DE-MD), Baltimore, 
MD, Houston, TX, Chicago (IL-IN-WI), Milwaukee, WI, and Sacramento, 
CA. Opt-in areas: Part or all of CT, DE, DC, KY, MD, MA, MO, NH, NJ, 
NY, RI, TX, and VA. Kansas City, MO and Kansas City, KS are former 
nonattainment areas which tried to opt into the program. On January 
4, 2000, the U.S. Court of Appeals for the District of Columbia 
overturned EPA's final rule to allow former nonattainment areas to 
opt into the RFG program. This decision prohibits EPA from approving 
the opt-in requests submitted to the Agency on July 28, 1999, by 
Governors Carnahan and Graves.

require the greatest reduction in emissions of ozone forming 
volatile organic compounds (during the high ozone season) and 
emissions of toxic air pollutants (during the entire year) 
achievable through the reformulation of conventional gasoline, 
taking into consideration the cost of achieving such emission 
reductions, any nonair-quality and other air-quality related health 
---------------------------------------------------------------------------
and environmental impacts and energy requirements.

    Section 211(k)(2) includes compositional specifications for 
reformulated gasoline including a 2.0 weight percent oxygen minimum, a 
1.0 volume percent benzene maximum, and a prohibition on heavy metal 
content. This section also requires emissions from RFG to contain no 
more oxides of nitrogen (NOX) than baseline gasoline 
emissions. Baseline emissions are the emissions of 1990 model year 
vehicles operated on a specified baseline gasoline.
    Section 211(k)(3) requires RFG to meet the more stringent of either 
a formula or VOC and toxic air pollutant performance standards. During 
the initial RFG rulemaking process EPA found the performance standards 
to be more stringent. The performance standards at 40 CFR 80.41 require 
specific minimum reductions in emissions of VOC and toxics. For 1995 
through 1999, or Phase I of the RFG program, EPA's regulations must 
require VOC emission and toxic air emission reductions from RFG 
measured on a mass basis, at least equal to 15 percent of baseline 
emissions. For the year 2000 and beyond, or Phase II of the RFG 
program, EPA's regulations must include a VOC and toxics performance 
standard each of which must be at least equal to a 25 percent reduction 
from baseline emissions. For the year 2000 and beyond EPA can adjust 
the performance standard upward or downward taking into account such 
factors as technical feasibility and cost, but in no case can the 
reduction be less than 20 percent. EPA also retains the authority in 
section 211(k)(1) to require greater reductions than these Phase I and 
II minimums.
    Shortly after passage of the CAA Amendments in 1990, EPA entered 
into a regulatory negotiation with interested parties to develop 
specific proposals for implementing the RFG program. In August 1991, 
the negotiating committee recommended a program outline that would form 
the basis for a notice of proposed rulemaking, addressing emission 
content standards for Phase I (1995-1999), emission models, 
certification, enforcement, and other important program elements.
    EPA published final regulations on February 16, 1994. The final 
rule closely followed the consensus outline agreed to by various 
parties in the negotiated rulemaking process. The final rule also 
adopted a NOX emission reduction performance standard for 
Phase II RFG, relying on authority under section 211(c)(1)(A).
    The regulations provide a method of certification through the 
complex model, based on fuel characteristics such as oxygen, benzene, 
aromatics, RVP, sulfur, olefins and the percent of fuel evaporated at 
200 and 300 degrees Fahrenheit (E200 and E300, respectively).
    Phase II will lead to significant reductions in the emission of the 
ozone precursors VOC and NOX, and the emission of toxic air 
pollutants. The VOC Phase II performance standard is 29 percent for 
southern (class B) areas and 27.4 percent for northern (class C) areas, 
representing approximately an additional 10 percent reduction in VOC 
emissions beyond the Phase I requirements. The Phase II NOX 
reduction requirement is 6.8 percent, and the toxics reduction 
requirement is 22 percent.

C. Need for Action

1. Concerns Relating to Use of MTBE
    In the Clean Air Act, Congress specified that RFG contain two 
percent by weight oxygen. MTBE and ethanol are the two forms of 
chemical oxygen (or oxygenates) that gasoline producers most commonly 
use to add oxygen to their gasoline. Refiners and importers decide 
which oxygenate to use to meet the CAA requirement. MTBE and ethanol 
have also been used in conventional gasoline, as octane enhancers, 
since the 1970s.
    Many chemicals in gasoline, including MTBE, can end up in 
groundwater, as a result of releases from storage tanks and other 
sources. MTBE is highly soluble and travels faster and farther in water 
than other gasoline components. MTBE has a strong taste and odor, so 
even small amounts of MTBE in water can make a water supply 
undrinkable, and significantly impact an area's ability to fully 
utilize its water resources. At higher levels, MTBE may also pose a 
risk to human health.

[[Page 42922]]

    EPA is concerned about the presence of MTBE in ground and surface 
water. In December 1998, EPA established a panel of independent experts 
to examine MTBE's performance in gasoline, its presence in water, and 
alternatives to its use. Panel recommendations made to EPA in July 1999 
include:
     Ensure no loss of current air quality benefits from RFG.
     Reduce the use of MTBE, and seek Congressional action to 
remove the oxygen requirement in RFG.
     Strengthen the nation's water protection programs, 
including the Underground Storage Tank, Safe Drinking Water, and 
private well protection programs.
    EPA is committed to working with Congress to provide a targeted 
legislative solution that maintains the air quality benefits of RFG 
while allowing reductions in the use of MTBE. EPA will also protect 
water supplies by continuing to enforce the UST requirements and by 
enhancing remediation programs.
    Today's action implements the panel's recommendation that EPA take 
steps within its authority to reduce the amount of MTBE used in 
gasoline. This proposed rule could reduce the amount of MTBE refiners 
use in RFG by increasing the flexibility for refiners to blend ethanol 
into RFG. It will provide continued assurances for ethanol use in the 
Midwest and incentives for other areas looking to use ethanol.
    On March 20, 2000, the Administration announced legislative 
principles for protecting drinking water supplies, preserving clean air 
benefits, and promoting renewable fuels. The following legislative 
principles taken together as a single package are designed to maintain 
air quality and enhance water quality protection while preserving the 
significant role of renewable fuels, most importantly ethanol:
    1. Amend the Clean Air Act or provide the authority to 
significantly reduce or eliminate the use of MTBE;
    2. As MTBE use is reduced or eliminated, ensure that air quality 
gains are not diminished;
    3. Replace the existing oxygen requirement contained in the Clean 
Air Act with a renewable fuel standard for all gasoline.
    In addition to today's action, EPA on March 24, 2000, published an 
Advanced Notice of Intent to Initiate Rulemaking to reduce or eliminate 
MTBE from gasoline, under Section 6 of the Toxic Substances Control Act 
(65 FR 16093).
2. Summary of Today's Action
    EPA proposes to adjust by 1.0 percentage point the Phase II VOC 
performance standard for reformulated gasoline blends with 10 volume 
percent ethanol (approximately 3.5 weight percent oxygen). As discussed 
in Section I.B., section 211(k)(1) of the CAA directs EPA to promulgate 
regulations that require the greatest reduction in emission of ozone 
forming VOCs achievable through the reformulation of conventional 
gasoline. This section also directs EPA, in promulgating such 
regulations, to consider the cost of achieving such emission reductions 
and any nonair-quality and other air-quality related health and 
environmental impacts. With today's action EPA is exercising its 
discretion to consider cost and other environmental concerns in its 
implementation of the VOC performance standards.
    The current Phase II VOC performance standards (as well as the 
proposed adjusted standards) require VOC emission reductions greater 
than those mandated by section 211(k)(3) of the CAA. In promulgating 
the current VOC standards, EPA exercised both its 211(k)(3) authority 
(to impose VOC emission reductions of approximately 25% and additional 
reductions based on technological feasibility and cost), and its 
211(k)(1) authority (to require the greatest VOC emission reductions 
achievable considering cost and various environmental factors).
    In light of certain cost and environmental considerations EPA is 
reevaluating the appropriateness of some of the current VOC emission 
reduction requirements for certain blends of RFG. The considerations 
that compel the proposed VOC adjustment include: (1) The incremental 
cost increase associated with producing Phase II ethanol RFG; (2) the 
potential for an adverse environmental impact (contamination of 
groundwater) from use of MTBE, and the interest in increasing the 
flexibility available to refiners to reformulate without MTBE; and (3) 
the unlikelihood that today's action will undermine the ozone benefits 
of the RFG program. For purposes of evaluating these considerations and 
reaching a decision to undertake today's proposed action, EPA has 
relied upon several sources, including, a cost study on ethanol RFG 
blends conducted by the Department of Energy (DOE) at EPA's request; 
\2\ and the recommendation of the Blue Ribbon Panel on Oxygenate Use. 
The cost factors related to production of ethanol RFG are discussed in 
Section I.E, and the Blue Ribbon Panel recommendations are discussed in 
Section I.C.1.
---------------------------------------------------------------------------

    \2\ ``Transportation Fuels and Efficiency: Estimating Impacts of 
Phase 2 Gasoline Reformulation on the Value of Ethanol; Scenario 
Document'; G.R. Hadder, Oak Ridge National Laboratory; Oak Ridge, 
Tennessee; March 17, 1999. This document is available in the public 
docket for this proposed rulemaking.
---------------------------------------------------------------------------

    In proposing this action EPA also recognizes the fact that the 
oxygen content of gasoline affects the amount of carbon monoxide (CO) 
emissions from automobiles. The National Research Council recommended 
that ``the contribution of CO to ozone formation should be recognized 
in assessments of the effects of RFG'' in its report ``Ozone-forming 
Potential of Reformulated Gasoline,'' p. 6, National Academy Press, 
1999. Accordingly, today's action considers the ozone benefits of CO 
emission reductions resulting from the use of oxygenates in the RFG 
program.
    Oxygenates, like ethanol and MTBE, lead to reductions in emissions 
of CO from 1990 technology cars, the benchmark used for the RFG 
program. The level of CO reduction is a function of the amount of 
oxygen in the fuel. MTBE-blended RFG typically contains 2.0 weight 
percent oxygen. Ethanol, on the other hand, is typically blended in RFG 
at levels of 10 volume percent which equates to approximately 3.5 
weight percent oxygen; thus, the oxygen content in ethanol-blended RFG 
is typically higher than in MTBE-blended RFG. The CO reduction 
attributable to the typical ethanol-blended RFG (with 3.5 weight 
percent oxygen) is therefore greater than that attributable to the 
typical MTBE blend (with 2.0 weight percent oxygen). The impact of the 
proposed VOC adjustment on air quality is discussed further in Section 
I.F.
    Refiners that choose to use ethanol to provide 3.5 weight percent 
oxygen, the maximum allowed under the RFG program, may take advantage 
of the adjusted VOC standard which applies during the summer ozone 
season when VOC emissions are controlled in the RFG program. This 
option may be particularly attractive in the Midwest where state tax 
incentives combine with federal tax incentives to encourage use of 
ethanol at the maximum amount permitted by the RFG program.
3. Per Gallon Oxygen Minimum
    We seek comment on whether we should propose elimination of the per 
gallon oxygen minimum. We believe such action might provide additional 
flexibility to refiners in their choice of oxygenates. Elimination of 
the per

[[Page 42923]]

gallon minimum may allow refiners to use little or no oxygenate during 
the summer ozone season, thus reducing the modest cost associated with 
summer ethanol use. Even if refiners that currently use MTBE choose to 
continue using MTBE during the summer ozone season, and use ethanol 
during the non-ozone season, the use of MTBE may be significantly 
reduced.
    We request comment on the alternative approach of lowering, rather 
than removing the oxygen minimum, which would retain the benefits of 
the requirement while reducing the small potential for any adverse 
impacts.

D. Volatility Associated With Ethanol RFG Blends

    One way to reduce VOC emissions from gasoline is to reduce the 
volatility of the gasoline, measured in Reid Vapor Pressure (RVP). EPA 
expects that the summer RVP levels during Phase II of the RFG program 
will have to average about 6.7 pounds per square inch (psi) in order 
for the fuel to meet the VOC performance standard. In Phase I RFG, 
summer RVP averaged approximately 8.0 psi in the north and 7.0 psi in 
the south.
    When added to gasoline in the amount needed to satisfy the oxygen 
content requirement of the Act, ethanol raises the RVP of the resulting 
RFG blend by about 1.4 psi. For an ethanol RFG blend to meet the VOC 
performance standard, refiners must use a blendstock gasoline with an 
RVP low enough to offset the increase resulting from adding ethanol. 
According to a cost study on ethanol RFG blends--conducted by DOE at 
EPA's request and available in the public docket for this proposed 
rulemaking,\3\ the change in average manufacturing cost of reducing the 
RVP of blendstock intended for ethanol-blended RFG to a level that 
ensures compliance with the current Phase II VOC performance standard 
is approximately $0.01 per gallon of RFG for refiners currently using 
ethanol. Based on DOE's modeled 1.4 psi increase, this cost reflects 
the 1.4 psi RVP reduction necessary to offset the RVP increase 
associated with ethanol. (DOE's cost impact was derived by comparing 
the cost of reducing the RVP in Phase I RFG with 10 volume percent 
ethanol, to the RVP level necessary to comply with the Phase II RFG 
performance standard for VOC.)
---------------------------------------------------------------------------

    \3\ Op. Cit.; Hadder, Oak Ridge National Laboratory; Oak Ridge, 
Tennessee; June 14, 1999.
---------------------------------------------------------------------------

    The ethanol industry has raised concerns that any incremental cost 
associated with using ethanol in Phase II RFG may lead to a switch to 
the use of MTBE, because the more stringent VOC standard of Phase II 
RFG will require a lower RVP blendstock for ethanol blending.
    This summer, ethanol appears to be maintaining its market share in 
the Chicago and Milwaukee RFG programs; however, for the future it is 
difficult to predict the geographic distribution of specific oxygenates 
in Phase II with any certainty. Specifically, in March 1998 EPA wrote 
to several oil companies serving the Midwest to learn their plans for 
ethanol use in Phase II of the RFG program. EPA contacted companies 
that supply a major portion of the Chicago and Milwaukee RFG markets. 
EPA was told that the price of ethanol relative to other oxygenates 
will be the determining factor in ethanol use in Phase II of the 
program. One company told EPA it plans refinery modifications of low to 
moderate cost that will allow continued use of ethanol year-round; 
other companies said they would evaluate the price of each oxygenate 
and, if MTBE was less expensive, they would consider using ethanol 
during the eight month non-ozone season, but MTBE may be their choice 
during the ozone season.
    EPA wishes to ensure the stability of the RFG program in the 
Midwest and to avoid any significant disincentive for the use of 
ethanol. EPA also wants to increase the flexibility for refiners 
currently using MTBE elsewhere in RFG areas to switch to ethanol. 
Still, it remains of primary importance that Phase II RFG continue to 
achieve significant reductions in toxics and in ozone precursors, given 
RFG's key role in states' ozone control strategies.

E. VOC Standard Adjustment

    We are proposing to reduce by 1.0 percent the Phase II VOC standard 
for ethanol RFG blends containing 10 volume percent ethanol. Phase II 
RFG would retain the current average VOC standards of 27.4 percent and 
29 percent for northern (Class C) and southern (Class B) areas, 
respectively, and per-gallon standards of 25.9 percent and 27.5 percent 
for northern and southern areas, respectively. For RFG blends with 10 
volume percent ethanol, however, the average VOC standards would be 
adjusted to 26.4 percent and 28 percent for northern and southern 
areas, respectively, and the per-gallon standards adjusted to 24.9 
percent and 26.5 percent for northern and southern areas, respectively.
    EPA intends this adjustment to provide additional flexibility for 
refiners to produce ethanol-blended RFG. The proposed adjustment to the 
Phase II VOC standard would work to offset the incremental costs 
associated with the production of ethanol-blended RFG that are created 
by the RVP increase caused by ethanol. Thus, the proposed adjustment 
would reduce the cost of ethanol blends and provide refiners with 
additional flexibility.
    EPA believes this adjusted VOC standard maintains the air quality 
benefits of the RFG program while reducing the cost of using ethanol. 
The increased flexibility the rule would provide for refiners would 
help refiners reduce the use of MTBE in RFG.
    As discussed in Section I.D., the addition of ethanol raises the 
RVP of gasoline by approximately 1.4 psi. Under the proposal, the 
adjusted VOC standard would result in an increase of RVP of 
approximately 0.2 psi for ethanol blends of RFG. We cannot adjust the 
standard for ethanol-blended RFG to account for the entire RVP impact 
of ethanol because an increase in RVP of approximately 1.4 psi in the 
volatility of RFG would result in a complete loss of emission 
reductions that would be achieved under Phase II, as well as a partial 
loss of benefits achieved under Phase I.
    Even with the proposed adjustment, Phase II RFG will continue to be 
a strong VOC reduction program and will meet all the requirements of 
the Clean Air Act. By limiting the adjustment to 1.0 percentage point 
for ethanol blends, the change in stringency of the VOC standard for 
ethanol blends is relatively small. This adjustment will still require 
ethanol RFG blends to achieve significant VOC reductions beyond those 
required during Phase I of the program. EPA believes this proposal will 
not undermine the important benefits of Phase II RFG as an ozone 
control strategy. EPA believes that this level of adjustment will 
increase flexibility to switch to ethanol and reduce the incentive for 
refiners to switch to MTBE while maintaining the air quality benefits 
of the RFG program. EPA's reasons for this belief are discussed in more 
detail in Section I.F.
    EPA requests comment on additional areas of flexibility for 
implementation and interaction with other emissions control 
requirements that the public may wish to suggest, and the possible 
benefits to such flexibility.

F. Evaluation of Air Quality Impacts of the Proposed Rule

    Ethanol blends at 10 volume percent, the typical blending level of 
ethanol, contain 3.5 percent by weight oxygen in the fuel and achieve 
significant reductions in CO emissions because the amount of CO 
reduction increases as oxygen increases. Preliminary emission

[[Page 42924]]

estimates using version 5b of the Mobile model indicate that at the 
adjusted VOC level proposed today, the use of RFG with ethanol at 10 
volume percent would reduce emissions of CO by approximately 24 tons 
for every 1 ton increase in VOC emissions associated with the use of 
those blends. (See the technical support document in the docket (A-99-
32) for this rulemaking; document number II.B-2.)
    As recognized in a study conducted by the National Research Council 
(NRC),\4\ CO contributes to ozone formation and is present in ambient 
concentrations due in part to the large volume of CO emissions from 
mobile sources. There is no dispute that CO emissions contribute to 
ozone formation. The Urban Airshed Model (UAM) relied on by states in 
their State Implementation Plan submissions includes inventories of CO 
emissions as well as VOC and NOX. While the role of CO in 
the formation of ozone is limited when compared to the effect of VOC 
and NOX, the volume of CO emissions from motor vehicles is 
comparatively large and therefore is not ignored in photochemical 
modeling demonstrations.
---------------------------------------------------------------------------

    \4\ ``Ozone-Forming Potential of Reformulated Gasoline'; 
National Research Council; Washington DC; May, 1999.
---------------------------------------------------------------------------

    While it is difficult to quantify the overall ozone impact of a 
specific change in emissions of CO and VOC, clearly a reduction in CO 
should directionally reduce ozone, and an increase in VOC should 
directionally increase ozone. The combined impact on ozone of a change 
in emissions may vary depending on a variety of environmental 
conditions, including meteorology. However, given that CO does play a 
role in ozone formation, the relatively large decrease in CO emissions 
will offset some, if not all, of any potential increase in ozone 
formation due to the relatively small increase in VOC emissions. (See 
the technical support document in the docket (A-99-32) for this 
rulemaking; document number II.B-2.) Thus, EPA is generally confident 
that the adjusted standard will achieve ozone reductions that are 
similar to those anticipated from the current standard, and will assure 
that the Phase II RFG program will continue to achieve the significant 
environmental benefits for which it was designed. Furthermore, the 
adjusted standard will achieve the additional environmental benefits 
associated directly with decreased CO emissions and the benefits 
associated with the decreased use of MTBE.
    In establishing a change of 1.0 percent in the VOC performance 
standard, EPA's intent is to take a conservative and cautious approach 
to ensure that RFG will continue to provide the same level of overall 
benefits as the existing RFG requirements. EPA is soliciting comment, 
however, on whether the Agency should also consider adjustments to the 
VOC standard that are less than or greater than 1.0 percentage point.
    With respect to adjustments to the VOC standard greater than 1.0 
percentage point, the Illinois Environmental Protection Agency (IEPA) 
submitted to EPA a proposal and supporting analysis which suggests that 
EPA should allow a VOC adjustment of 3.7 percentage points--
approximately equivalent to an increase in RVP of 0.5 psi. (See Docket 
A-99-32, document file numbers II.D.3, II.D.5 and II.D.6.).
    Briefly, IEPA's analysis compares the VOC and CO emissions 
associated with a ``complying fuel'' (assuming a RVP of 6.8 psi and an 
oxygen content of 2.0 percent by weight) to the emissions associated 
with a fuel having an RVP of 7.3 (representing an increase in RVP of 
0.5 psi) and an oxygen content of 3.5 weight percent. Using a relative 
reactivity analysis, IEPA concluded that the ozone impact of these two 
fuels would be identical, and that EPA should therefore provide an 
adjustment that corresponds to an RVP increase of 0.5 psi. Although EPA 
is not proposing to adopt the approach recommended by IEPA, the Agency 
requests comments on such an approach.
    The IEPA analysis is based primarily on the use of relative 
reactivity factors. Relative reactivity factors are values for various 
types of VOCs and CO that represent a predicted amount of ozone 
formation, expressed as unit mass of ozone per unit mass of VOC or CO.
    EPA is not proposing to use a reactivity analysis as the basis for 
this regulatory action for several reasons. First, the National 
Research Council did not recommend that EPA do so. In its May 1999 
report, NRC stated, ``The committee sees no compelling scientific 
reasons at this time to recommend that fuel certification under the RFG 
program be evaluated on the basis of the reactivity of the emissions 
components.'' Second, in the same report NRC stated, ``So-called 
reactivity factors * * * are often uncertain and of limited utility for 
comparing similar RFG blends.'' EPA agrees with the NRC that the 
reactivity factors that have been developed to date, and were used by 
IEPA, may not accurately reflect actual photochemical reactivity of 
various ozone precursors. In recent regulatory decisions, EPA has 
expressed these concerns and others related to the use of relative 
reactivity factors [63 FR 48792, September 11, 1998]. In particular, 
EPA is concerned that the factors do not represent the wide variation 
in atmospheric conditions that exist across the country and have a 
large influence on ozone formation.
    While today's proposed rule does incorporate a recognition of the 
fact that, in general, CO is relatively less reactive than VOCs, EPA 
agrees with the NRC that it is not possible to precisely identify the 
relative reactivity of such compounds at this time in a manner that is 
meaningfully predictive of ambient conditions and that can reliably 
form the basis of a regulatory program. (see Technical Support Document 
in Docket A-99-32, document number II.B.-2) EPA is, however, currently 
participating in an industry/academic/government workgroup whose goal 
is to identify research needs in the area of VOC reactivity. EPA 
anticipates that significant research results may be available in a 
year or possibly longer, which will assist us in any reexamination of 
our current VOC regulatory policy in selected instances. Until there 
are more data generated from this process, EPA believes that it may be 
premature to base any regulation on a precise quantification of the 
distinctions between reactivities of VOCs. The Agency is interested in 
and solicits comments on IEPA's approach or other reactivity-based 
approaches.
    As explained earlier in this preamble, EPA believes that an 
adjustment to the VOC standard greater than 1.0 percentage point risks 
too great a loss in the mass VOC benefits of Phase II RFG. (See 
Technical Support Document in docket A-99-32,document number II.B.-2). 
When evaluated on a mass basis using EPA's complex model, IEPA's 
approach would result in approximately a 37 percent decrease in the 
incremental amount of VOC emissions reduced between Phase I and Phase 
II RFG.
    Finally, we are also concerned with the effect of fleet turnover 
and the potential for reduced CO benefits associated with advances in 
engine technology which is discussed in further detail in Section I.M 
of the preamble. For this reason, EPA is soliciting comment on whether 
EPA should re-evaluate the adjusted VOC performance standard in several 
years to determine whether the proposed adjustment still makes sense in 
light of technology advances and fleet turnover. This re-evaluation 
will also provide EPA the opportunity to assess the ozone impact of 
this proposal in light of any

[[Page 42925]]

relevant scientific advances in determining ozone impact.

G. Ozone Reduction Benefit in Areas That Currently Use Ethanol

    In developing the VOC adjustment in today's proposal, EPA believes 
that it is important to preserve, as much as possible, the ozone 
benefits of the current Phase II RFG standards. For areas that 
presently do not use RFG with ethanol as an oxygenate, this action may 
lead to an increase in ethanol use. If so, there would probably be an 
increase in the amount of oxygen in the fuel (i.e., oxygen would 
increase to 3.5 weight percent from a baseline level of 2.1 weight 
percent). The increase in oxygen would result in an associated decrease 
in CO emissions and, under this proposal, a slight increase in VOC 
emissions. We believe that this proposed rule would allow areas 
switching to ethanol RFG to realize Phase II RFG ozone benefits that 
are similar to current Phase II benefits.
    In areas that presently use RFG with ethanol as the oxygenate 
(e.g., Chicago and Milwaukee), the oxygen level in the fuel currently 
averages 3.5 weight percent oxygen. EPA believes that without this rule 
change and without changes to the Act's oxygen content requirement for 
RFG, there is some probability that less ethanol (and more MTBE) will 
be used in these areas. If this occurs, there would be a drop in the 
oxygen level in the fuel which would result in increases in CO 
emissions. Thus the CO reduction benefit in the Midwest associated with 
the use of ethanol RFG (at 3.5 weight percent oxygen) would not be 
preserved. Today's action is intended to provide additional flexibility 
to assure that refiners will continue to use ethanol, thus helping to 
preserve the current CO benefits associated with ethanol RFG. Moreover, 
as discussed in Section I.K of the preamble (Oxygen Crediting), 
refiners that take advantage of the adjusted VOC standard would not be 
allowed to generate oxygen credits for RFG in other areas. This will 
avoid double counting the benefits of the additional oxygen. If the 
additional oxygen above 2.0 weight percent in ethanol RFG which results 
in a reduction in CO in a given area is also used as a credit for a 
fuel with less than 2.0 weight percent oxygen in other areas, the CO 
benefit in those areas would be lost. Under this proposal less oxygen 
credits would be available; therefore, fuel in other areas will need to 
use more oxygen, which ultimately lowers CO emissions elsewhere.
    If we did not expect ethanol use to decline with Phase II RFG, 
(i.e., the current 3.5 weight percent oxygen level remains as the 
baseline), then continued use of RFG with ethanol in light of the 
proposed VOC adjustment would represent neither an increase in oxygen 
in the fuel, nor an additional reduction in CO emissions. Such 
situation raises the question of whether the increase in VOC allowed by 
the proposed adjusted VOC standard could then be said to result in a 
lesser ozone benefit. However, when the Phase I RFG program was 
implemented in 1995, ethanol use, and hence oxygen levels, in the 
Midwest increased above previous levels. (According to a 1994 survey 
performed by the American Automobile Manufacturers Association, the 
average oxygen content of gasoline in the Chicago area was less than 
2.0 weight percent.) With the implementation of the Phase I RFG 
program, gasoline oxygen levels in Chicago and Milwaukee increased to 
3.5 weight percent resulting in a decrease in CO emissions. These CO 
emission reductions were not credited under Phase I of the RFG program. 
Those uncredited CO reductions have likely resulted in more ozone 
benefits than would have been realized otherwise.
    The National Research Council has recommended that EPA recognize, 
in the RFG program, the ozone benefits from CO reductions. Accordingly, 
we believe our consideration in this proposed rule of CO reductions 
associated with the use of ethanol RFG is appropriate. Although the 
adjusted VOC increase would, in the worst case, eliminate the 
additional ozone benefit, the air quality would be no worse in the 
Midwest than would otherwise be the case under an ``unadjusted'' VOC 
standard in Phase II of the program. Moreover, given the assumption 
that ethanol use would not decline with Phase II RFG, we believe that 
the nationwide effect of the adjusted VOC standard would not result in 
an ozone disbenefit. This is because of the reason explained above 
relating to limitation on use of oxygen credit trading.
    Finally, although the increase in VOC is expected to slightly 
increase air toxics, we are not proposing to adjust the air toxics 
performance standard. A minimal loss in toxics overcompliance is 
expected in areas that currently use ethanol as a result of this 
proposal. Some toxics overcompliance would be lost in areas that switch 
from MTBE to ethanol; however, we believe the loss, if any, would be 
modest.
    Therefore, EPA believes that the proposed rule would substantially 
preserve the air quality goals of the Phase II RFG program.\5\
---------------------------------------------------------------------------

    \5\ The discussion in this section is limited to the scenario in 
which the current level of ethanol RFG penetration in Chicago and 
Milwaukee is maintained. In Section I.H. below we consider the fact 
that future penetration levels of ethanol RFG in these areas are 
difficult to quantify, and what effect the VOC adjustment has on 
state ROP goals.
---------------------------------------------------------------------------

H. Impact of Proposed Approach on SIPs

    The adjusted VOC standard for ethanol RFG will allow a slight 
increase in VOC where ethanol blends are used. States are required to 
meet specific VOC reduction goals in their respective State 
Implementation Plans (SIPs); specifically the 3.0 percent Rate of 
Progress (ROP) requirement of Section 182(c)(2)(B)(i). Some states rely 
on reductions from the RFG program in meeting these goals. EPA has 
determined that the increased VOC associated with the adjusted VOC 
standard should not affect states' ROP plans in the near term.
    As discussed in Section I.D., current market uncertainty makes it 
difficult to predict the mix of ethanol and MTBE RFG in any one area. 
Given such uncertainty, we believe that the increase in VOC resulting 
from the flexibility proposed today cannot now be adequately 
quantified; moreover, any increase is likely to be a very small portion 
of an area's total emissions. Also as discussed in Section I.F above, 
we believe the reduction in CO associated with ethanol use will 
substantially preserve the benefits of Phase II RFG.
    Therefore, we are proposing at this time that states are not 
required to account for any potential increase in mass VOC emissions 
associated with the proposed adjusted performance standard. In time, 
however, as more data on oxygenate use and distribution becomes 
available, we intend to consider this issue and assess the impact of 
any VOC increases on the states' attainment of the ROP goal. 
Accordingly, we propose to amend the Guidance on the Post-1996 Rate-of-
Progress Plan and the Attainment Demonstration'' to indicate that 
states are not required to evaluate whether there will be an increase 
in mass VOC emissions as a result of adjusted VOC gasoline, for several 
years. Prior to that time, EPA will begin an evaluation of market 
conditions with respect to ethanol and MTBE use and decide whether 
there is sufficient market predictability for state ROP plans to 
account for any subsequent increases in mass VOC emissions resulting 
from adjusted VOC gasoline. We solicit comment on this approach and the 
need

[[Page 42926]]

for any future evaluation. We also solicit comment on the timing and 
appropriateness of the magnitude of the changes in VOC emissions this 
rule would have.

I. Oxygen and Performance Standard Averaging

    The regulations under 40 CFR 80.41 provide both ``per-gallon 
standards'' and ``averaged standards'' for performance standards and 
oxygen content. Therefore, refiners, importers and oxygenate blenders 
would be able to meet the proposed performance standards by producing 
ethanol RFG that meets the proposed 26.4 percent performance standard 
for VOC, on average, as long as on a per gallon basis the ethanol RFG 
meets a minimum VOC performance standard of 23.4 percent.
    The regulations allow refiners to produce fuels that on an average 
basis achieve the minimum 2.1 weight percent oxygen standard, as well 
as the VOC performance standard. While the proposed VOC adjustment does 
not affect oxygen averaging, it does affect how VOC compliance is 
calculated.
    We are therefore proposing a change in the method for determining 
compliance with VOC performance standards. Under the current 
regulations, a refiner or importer supplying averaged RFG or 
reformulated gasoline blendstock for oxygenate blending (RBOB) must 
calculate compliance with RFG standards according to a procedure 
described in 40 CFR 80.67 of the regulations. Refiners are required to 
determine compliance for each portion of gasoline for which standards 
must be separately achieved, and for each relevant standard. Suppliers 
must make separate compliance determinations for each VOC control 
region since different VOC performance standards apply to RFG 
designated for VOC Control Region 1 (southern or Class B) and VOC 
Control Region 2 (northern or Class C).
    Today's proposed regulation creates an additional set of averaged 
VOC performance standards applicable to ``adjusted VOC gasoline'' and 
RBOB used to make ``adjusted VOC gasoline''. (As discussed in Section 
I.K below, we are proposing to define ``adjusted VOC gasoline'' in 
80.40.) Therefore, suppliers could potentially have portions of their 
RFG/RBOB subject to one of four different standards. Under the 
procedure currently specified in 80.67, suppliers would have to 
demonstrate that each of these portions complies separately with the 
relevant standard.
    In order to accommodate the effect of these additional standards on 
compliance determinations, we are proposing to alter the calculation 
procedure in the regulations. With this modification suppliers will not 
have to separately comply with the non-adjusted and ``VOC-adjusted'' 
standards, but will continue to determine compliance by VOC control 
region.
    Section 80.67 requires that a compliance total be calculated as:
    [GRAPHIC] [TIFF OMITTED] TP12JY00.008
    
where Vi is the volume of gasoline batch i, Std is the 
standard for the parameter being evaluated, and n is the number of 
batches included in the averaging period.
    This compliance total is compared with an actual total which is 
calculated as:
[GRAPHIC] [TIFF OMITTED] TP12JY00.009

For VOCs, parmi is the complex model emissions reduction of 
gasoline batch i, and compliance is achieved if the actual total is 
equal to or greater than the compliance total.
    We are proposing for VOC performance compliance calculations that 
Std be replaced by a volume-weighted average of the two standards 
applicable to the RFG and RBOB which a supplier designates for a 
specific VOC control region i.e:
[GRAPHIC] [TIFF OMITTED] TP12JY00.010

Stdu and Stda are the ``unadjusted'' and 
``adjusted'' averaged standards applicable to a VOC control region. 
VUi and VAi are the volumes of the batch i of 
``unadjusted'' and ``VOC-adjusted'' RFG and RBOB which a supplier 
designated for that control region, and nu and na 
are the number of batches in each category. We believe that this 
approach allows the supplier more flexibility in meeting the VOC 
performance standards without adverse environmental consequence.
    We also believe that this approach minimizes the changes to the RFG 
reporting system procedures necessary to report, compute and verify 
compliance calculations. (The RFG reporting system is a data collection 
system through which suppliers report to EPA gasoline properties, 
emissions performance calculations, volumes and other data necessary to 
determine compliance with regulations.) We recognize that reporting 
parties and ``third party'' software developers would have to respond 
to changes in reporting forms and procedures, and thus, that there is a 
benefit in minimizing changes to the current system. Creating an 
additional set of VOC performance standards is expected to have some 
impact on the reporting system regardless of the method of compliance 
calculations. For example, minor changes in reporting procedures may be 
necessary in order to unequivocally identify ``VOC-adjusted'' and 
``unadjusted'' RFG and RBOB batches. However, this proposed change in 
the VOC compliance calculation procedure would avoid modifications to 
the VOC Emissions Performance Averaging Report which would be necessary 
if separate compliance with each VOC standard were still required.
    We are soliciting comment on this proposed approach and any 
alternative compliance calculation approaches. We encourage parties to 
comment on both the environmental and administrative consequences of 
these approaches, including reporting and record keeping issues 
associated with this proposed regulation. Commenters should consider 
reporting and recordkeeping issues not only with respect to VOC 
compliance calculations, but with respect to other aspects of this 
regulation such as oxygen crediting.

J. Downstream Compliance and Survey Sampling

    Theoretically, circumstances might arise where a mixture of two 
ethanol RFG blends (both of which independently meet the applicable VOC 
performance standard) results in a sample that does not meet the VOC 
performance standard, because while one of the fuels qualifies for the 
adjusted downstream standard, the other does not.
    For ethanol-blended RFG, the ethanol is added to reformulated 
blendstock for oxygenate blending, or RBOB, at the terminal. In areas 
of the country that currently use ethanol there is not likely to be the 
same variation in oxygen levels seen with MTBE blends; the RFG will 
typically contain ethanol in amounts close to 10 volume percent. We 
base this finding on survey data for summertime RFG which support the 
expectation that ethanol will be blended at 10 volume percent due to 
marketing considerations. (The statistical analysis of the survey data 
has been submitted to the docket for this rulemaking.) For 1999, of 
3,295 samples of ethanol RFG, over 90 percent of the samples contain 
oxygen levels at or close to 3.5 weight percent, which equates to

[[Page 42927]]

approximately 10 volume percent ethanol. (Depending on the specific 
gravity of the gasoline to which the ethanol is added, the various 
blends near 3.5 weight percent oxygen could theoretically all be 10 
volume percent.) Based on industry practice, therefore, we do not 
believe that there will be a problem related to downstream compliance, 
but we solicit comment on this issue.
    Another ``downstream'' issue associated with this proposed 
regulation is the interaction between the adjusted VOC standard and the 
RFG surveys required by the RFG regulations. Gasoline samples collected 
from retail stations in an RFG covered area in each one-week survey 
conducted during the summer ozone season (June 1-September 15) are 
evaluated for complex model VOC performance. (Covered areas are 
geographic areas using RFG and are defined in 40 CFR 80.70.) If the 
survey average VOC reduction for any survey is less than the applicable 
per-gallon standard for VOC emissions reduction, the covered area fails 
the VOC survey. (RFG surveys are discussed more fully in sections of 
this preamble addressing the oxygen minimum.)
    This proposed regulation creates an additional set of per-gallon 
VOC standards potentially applicable to a portion of the RFG in each 
covered area. Since each individual gasoline sample collected is 
analyzed for type and amount of oxygenate, it can be determined which 
of the VOC standards applies to the gasoline in its current state.
    The existence of dual standards creates some difficulty in the 
implementation and enforcement of the survey regulations. It is 
necessary to collect a sufficiently large number of samples to ensure 
that precision requirements for estimating parameter averages are met. 
These required sample sizes are determined in advance of the surveys, 
and are specified in the survey design plan. Under the current survey 
scheme there is no way to guarantee that the sample size for each RFG 
standard group would be sufficient to meet these precision 
requirements. A survey could be conducted, the samples analyzed and 
categorized according to the applicable standard, and the average 
computed for each of the two groups. However, the number of samples 
falling into each group would not be known in advance of sample 
collection and analysis.
    A more feasible approach to determining survey compliance would be 
to calculate a VOC standard applicable for each survey by weighting 
each of the per-gallon standards by the proportion of samples in that 
group. For example, suppose 100 samples were collected in a survey in a 
covered area in VOC Control Region 2, and 70 contained ethanol at 3.5 
weight percent oxygen while the remaining 30 did not. The applicable 
survey requirement would be calculated as 
(0.70)(24.9)+(0.30)(25.9)=25.2 percent VOC reduction. We are proposing 
to change the RFG regulations to incorporate this approach.

K. Oxygen Crediting

    Refiners and importers are currently able to meet the averaged 
standard for oxygen through the exchange of credits under 40 CFR 
80.67(h). Credits are generated as a result of a refiner producing, or 
an importer importing, gasoline that on average exceeds the averaged 
standard for oxygen over the averaging period. An oxygenate blender 
using the averaged oxygen standard may generate, or use, oxygen 
credits.
    We have considered whether an adverse effect on air quality would 
occur if refiners or importers that qualify for the adjusted VOC 
standard (i.e., make an RFG with 10 volume percent ethanol) also 
exchange oxygen credits under 40 CFR 80.67(h). We believe that there 
would be a disbenefit to air quality because the oxygen credit would be 
sold to a refiner making an RFG with an oxygen level less than 2.0 
weight percent in the fuel. The additional oxygen that results in a 
reduction in CO in the 10 volume percent ethanol RFG would be used as a 
credit for a fuel with less than 2.0 weight percent oxygen. At such 
lower levels of oxygen, there would be an increase in CO which, as 
discussed earlier, plays a role in the formation of ozone in the 
atmosphere.
    The adjusted VOC standard proposed today is based on ethanol RFG 
blends that contain 3.5 weight percent oxygen. We recognize that there 
may be some refiners or importers that may wish to take advantage of 
the oxygen credit trading program as it applies to the averaged oxygen 
standard. (This would be especially true if we were to adopt the 
elimination of the oxygen minimum requirement which is discussed in 
Section II of the preamble and on which we are soliciting comment.) 
Therefore, in order to offer refiners and importers flexibility, we are 
proposing to allow refiners that make RBOB for blending with 10 volume 
percent ethanol a choice of complying with the VOC adjusted standard or 
with the current (non-adjusted) VOC standard by defining ``adjusted VOC 
gasoline'' in 80.40. In the revised 80.40 refiners have the choice of 
designating gasoline with 10 volume percent ethanol as ``adjusted VOC 
gasoline'' or not. If they choose not to, the gasoline must comply with 
the more stringent (i.e., non-adjusted) VOC standard. In this way 
batches of RFG blends that contribute oxygen above the oxygen standard 
and which comply with the non-adjusted VOC performance standard may be 
used by refiners or importers for the purpose of generating oxygen 
credits. Batches of RFG blends containing 10 volume percent ethanol 
which comply with the adjusted VOC standard, however, may not generate 
oxygen credits.
    We are proposing to modify 40 CFR 80.67(h) to reflect which ethanol 
RFG may be used for generating oxygen credits. We solicit comment on 
this proposal as well as whether we should alternatively consider a 
requirement that all ethanol RFG blends containing 10 volume percent 
ethanol be ineligible for generating oxygen credits.
    Allowing refiners the flexibility to comply with either of the VOC 
standards for ethanol RFG would require extensive tracking and 
segregation of the different types of RBOB downstream of the 
refineries. As discussed in Section I.L. below, we are also proposing 
to require that the Product Transfer Document designate the type of 
RBOB and whether it is to be used to make ``adjusted VOC gasoline''.

L. Product Transfer Documentation

    Today's action proposes to require that the Product Transfer 
Document (as specified in 40 CFR 80.77) designate the type of RBOB 
(i.e., which contains no ethanol, which contains ethanol less than 10 
volume percent, or which must contain ethanol at 10 volume percent and 
which is used to make ``adjusted VOC gasoline''). EPA believes that 
such designation is sufficient to allow tracking of the different types 
of ethanol blends as well as providing documentation of the VOC 
standard (i.e., adjusted or non-adjusted) with which a refiner may 
choose to comply. EPA solicits comment on this change.
    We believe that the Product Transfer Document provides a workable 
solution to tracking the RBOB for ethanol RFG products including 
requiring refiners to conduct oversight at retail stations receiving 
that RBOB. If there were sufficient variation in the levels of ethanol 
used in ethanol RFG blends, such level of oversight might be necessary. 
As discussed in Section I.J., the industry practice for ethanol RFG is 
to blend ethanol at 10 volume percent. We are proposing a change in the 
regulations to exempt from the quality assurance and sampling 
requirements of

[[Page 42928]]

40 CFR 80.69(a)(7) ethanol RFG that qualifies for the adjusted VOC 
standard. EPA solicits comment on this change.

M. Future Vehicles

    The adjusted VOC standard is premised in part on the expectation 
that RFG blends containing 10 volume percent ethanol (3.5 weight 
percent oxygen) will achieve larger reductions in CO emissions than RFG 
blends with oxygenates at the level of 2.0 weight percent oxygen. It is 
possible that future vehicles will employ advanced technology that will 
significantly reduce CO emissions, irrespective of the oxygen content 
in the fuel, and consequently negate the importance of the impact of 
gasoline oxygen content on CO emissions.
    We expect that we will learn about the CO emissions performance as 
time passes. We request comment on this issue and on whether (and when) 
EPA should evaluate the relationship between advanced vehicle emission 
control technology and the oxygen content of gasoline on CO emissions.

II. Elimination of Oxygen Minimum Requirement

A. Background

    The Clean Air Act (CAA) section 211(k)(2)(B) requires that 
reformulated gasoline (RFG) contain 2.0 percent oxygen by weight. Our 
RFG regulations, in 40 CFR 80.41, specify standards for various fuel 
parameters, including oxygen content. The regulations provide both 
``per-gallon standards'' and ``averaged standards'' for each parameter. 
Refiners, importers and oxygenate blenders may meet the oxygen content 
requirement by producing RFG which contains at least 2.0 percent oxygen 
in every gallon, or by producing RFG with 2.1 percent by weight oxygen 
on average, over the course of a calendar year, as long as no gallon of 
RFG contains less than 1.5 percent oxygen. This 1.5 percent lower limit 
is called the ``per-gallon minimum''.
    The CAA section 211(k)(7) requires an oxygen credit program. The 
averaged standard for oxygen may be met with the help of oxygen 
credits. Oxygen credits are created when any refiner makes RFG above 
the 2.1 percent average requirement over the course of a calendar year. 
Credits may, with certain restrictions, be transferred from one 
refinery to another, but cannot be used to meet the per-gallon minimum. 
Thus, some parties may produce RFG with average oxygen content in 
excess of the standard while others may produce RFG with average oxygen 
content below the standard as long as the average oxygen content of all 
RFG meets the oxygen content standard.
    These provisions for compliance on average provide more flexibility 
to refiners, importers and oxygenate blenders. We recognized when we 
promulgated the RFG regulations, that allowing for compliance on 
average as an alternative to adherence to a per-gallon standard could 
result in some ``covered areas'' not receiving the same quality of RFG 
that they would have received without averaging. Therefore, we built 
into the regulations several mechanisms, described below, to mitigate 
this potential problem.
    The averaged standards for all parameters are numerically more 
stringent than the per-gallon standards (e.g. for oxygen 2.1 percent vs 
2.0 percent). Furthermore, certain of the parameters (oxygen, benzene 
and volatile organic compound emission performance), have a per-gallon 
minimum or maximum specification which gasoline producers may not 
exceed. These limit the amount of gallon to gallon variability that can 
occur. Since the oxygen per-gallon minimum is set at 1.5 percent, even 
under the worst-case scenario, the annual average oxygen content in a 
covered area could not fall below 1.5 percent.
    In addition to these safeguards in the standards, EPA's regulations 
require refiners, importers and oxygenate blenders who choose to comply 
on average to conduct surveys, as specified in Sec. 80.68. In these 
surveys, RFG samples are collected at retail gasoline stations within 
covered areas and analyzed to determine if the RFG supplied to these 
areas meets certain pass/fail criteria specified in Sec. 80.68. For 
example, an oxygen survey series failure occurs in a covered area if 
the annual average oxygen content of the samples in that area is less 
than 2.0 weight percent. (An oxygen survey series consists of all the 
one week surveys conducted in a single covered area during a single 
calendar year.) These surveys measure all the fuel properties necessary 
to compare the samples with the RFG standards.
    Each type of survey failure results in a specific ``ratcheting'' of 
a fuel-parameter-averaged standard and/or a minimum/maximum standard, 
as specified in Sec. 80.41. For example, an oxygen survey series 
failure results in a tightening of the per gallon minimum by 0.1 
percent. The effect of a survey failure even in a single covered area 
may be wide ranging since, in general, a ratchet will apply to the 
gasoline sold in any area by all refiners, blenders or importers that 
supplied the ratcheted area during the year of the survey failure, and 
by all refiners, blenders or importers that supply the area while the 
ratchet is in effect. Oxygen survey series failures have occurred in 
several covered areas in past years, and consequently, many refiners, 
importers and blenders are subject to a 1.7 percent per gallon minimum 
for oxygen, rather than the initial 1.5 percent minimum.
    These ratchets correct, over time, any geographic disparities in 
the quality of RFG that might result from the use of a refinery based 
average standard. Suppose, for example, that oxygen survey series 
failures occur in successive years and the oxygen minimum for all 
suppliers to the failed covered area is ratcheted by another 0.1 
percent every time a failure occurs, until the per-gallon minimum is 
2.0 percent. Since the minimum oxygen content in each gallon of RFG 
being supplied to the failed covered area must be at least 2.0 percent, 
the annual average oxygen content for that area could not be less than 
2.0 percent. The ratchets also provide an economic incentive to correct 
and avoid geographic deficiencies in the quality of RFG. If any RFG 
standard is incrementally tightened as a result of survey failures for 
some RFG parameter, it is likely that the cost of compliance with this 
standard for suppliers will increase. At some point it is likely that 
it would be economically advantageous to avoid geographic deficiencies 
and survey failures rather than face further tightening of a standard.

B. Potential Modifications

    We are soliciting comment on removal of the per gallon minimum 
oxygen requirement applicable to RFG. We believe that removing the 
minimum would allow refiners, importers and oxygenate blenders more 
flexibility in meeting the RFG oxygen content requirement, without 
compromising the air quality benefits attributable to RFG. Eliminating 
the per-gallon oxygen minimum may cause oxygen levels to fluctuate more 
with time in any covered area. Consequently, in order to reduce the 
effect of such fluctuations on the accuracy of the survey estimates, we 
are also considering a change in the method for calculating the annual 
oxygen average from survey data. Finally, removing the per-gallon 
oxygen minimum requirement eliminates the availability of the oxygen 
minimum as a ratcheting tool in the event of oxygen survey series 
failures. Therefore, in order to ensure continued effectiveness of the 
surveys as a tool to correct and avoid geographic disparities in the

[[Page 42929]]

quality of RFG, we are also considering whether the requirement for 
reduction of averaged toxics emissions (per the complex model) should 
be made more stringent in the event of an oxygen survey series failure.
    Removing the RFG per-gallon oxygen minimum would allow refiners, 
blenders and importers to market some non-oxygenated gasoline in RFG 
areas--so long as the annual average oxygen content of their RFG is at 
least 2.1 weight percent. Currently, under Sec. 80.78, there is a 
prohibition against combining VOC-controlled RFG oxygenated with 
ethanol with VOC-controlled RFG produced using any other oxygenate 
during the period January 1 through September 15. We are soliciting 
comment on whether this prohibition should be extended to the combining 
of VOC-controlled ethanol RFG with any other VOC-controlled RFG 
(including RFG blends without oxygen) during the same time period. We 
are not proposing this change at this time, and will consider all 
comments in deciding whether to propose such a change in a future 
rulemaking. These issues are discussed below.

C. Elimination of RFG Oxygen Content Per-Gallon Minimum

    Removal of the per-gallon minimum would allow producers of RFG more 
flexibility to vary the oxygen content in RFG on a seasonal basis. One 
foreseeable benefit to suppliers would be the option for suppliers, who 
might otherwise oxygenate their VOC-controlled RFG with ethanol, to 
produce a portion of their VOC-controlled RFG without oxygen. Suppliers 
would thus be able to produce a portion of their VOC-controlled RFG 
without utilizing the more costly blendstocks necessary to offset the 
Reid Vapor Pressure (RVP) boost associated with ethanol-blended RFG. 
The RVP boost from ethanol is not an issue in non VOC-controlled 
(winter) RFG, and oxygenate usage at sufficiently high levels in winter 
RFG could ensure that the oxygen content requirement is met on an 
annual average basis.
    Removal of the per-gallon minimum may also facilitate a reduction 
in the use of methyl tertiary butyl ether (MTBE) in RFG. For example, 
some refiners who produce ethanol-oxygenated RFG with high levels of 
oxygen outside of the VOC-control season may elect to use MTBE as an 
oxygenate during the summer VOC-control season. Under the current 
regulation, these refiners would have to use enough MTBE during the 
summer to ensure that both the annual average oxygen requirement and 
the per-gallon minimum are met. The average level of oxygen needed 
during the summer to satisfy the annual average requirement could 
potentially be below the current per-gallon minimum requirement. 
Therefore, removal of the per-gallon minimum could reduce the total 
amount of MTBE that these refiners would need to use.
    As discussed in Section I.C., the ``Blue Ribbon Panel on Oxygenates 
in Gasoline'', a panel of experts appointed by the EPA Administrator, 
has recommended that the use of MTBE should be reduced substantially in 
order to minimize current and future threats to drinking water.
    We do not believe that the elimination of the oxygen per-gallon 
minimum would diminish the quality of RFG or the benefits attributable 
to RFG. However, the modifications to the survey and commingling 
provisions of the existing regulations, described below, will help to 
prevent or mitigate any potential problems. We recognize that, in 
addition to preventing geographic disparities in the quality of RFG, 
the oxygen minimum requirement is a useful tool for detecting the 
illegal presence of conventional gasoline in RFG areas. Elimination of 
the oxygen minimum would also eliminate this enforcement tool. However 
other minimum or maximum standards remain in place and these can be 
employed to help detect conventional gasoline sold as RFG. We request 
comment on whether the value of increased flexibility gained by removal 
of the oxygen minimum sufficiently justifies the loss of this 
enforcement tool. We are soliciting comment on the environmental and 
economic consequences of removal of the oxygen minimum.

D. Modification of Method for Calculation of Oxygen Survey Series 
Average

    The elimination of the oxygen minimum and the proposed adjustment 
to the VOC standard may cause RFG oxygen levels to fluctuate 
substantially throughout the year, with the possibility of seasonal 
trends. Both of these changes may result in different levels of oxygen 
occurring in VOC-controlled and non VOC-controlled RFG produced by the 
same refineries and supplied to the same covered areas. Currently, 
Sec. 80.68 of the RFG regulations specifies that for each covered area, 
the average oxygen content for all samples from the survey series shall 
be averaged, and if the annual average is less than 2.00 percent the 
area fails the survey series. Calculation of an annual oxygen content 
average in this fashion may produce an inaccurate estimate in a covered 
area if there is substantial temporal fluctuation in oxygen levels. The 
bias may be more pronounced if oxygen levels vary seasonally, since 
more surveys are conducted during the ``summer'' (June 1 through 
September 15) and the number of samples per summer survey is also 
greater.
    We are considering whether the method of calculation for the oxygen 
survey series average should be changed. A potential modification in 
procedure would be to:
    1. Determine an average for each survey,
    2. Average the ``summer'' and ``winter'' (January 1 through May 31 
and September 16 through December 31) survey averages separately to 
determine seasonal averages and
    3. Weight the seasonal averages to estimate an annual average.

The summer average could be multiplied by 0.468, the winter average by 
0.532, and the two terms be summed to estimate an annual average to be 
compared to the 2.00 percent survey requirement. These weights are 
already used in the regulations to calculate the annual average toxics 
emission reduction from toxics survey data.
    This change in calculation method should probably be sufficient to 
reduce the potential for seasonal bias in the survey series estimate of 
the annual oxygen average. This change would also reduce the effect of 
scheduling of surveys on survey series outcomes. Although we do not 
conduct these RFG surveys, we determine when and where they occur. 
These surveys are multi-purpose; i.e., the same samples collected for 
determination of compliance with the oxygen requirement are used to 
determine compliance with other RFG requirements. This concurrent 
sampling results in more samples being taken in each summer survey in 
order to satisfy VOC and NOX survey precision requirements, 
and often, in more surveys being done during the summer months in order 
to effectively assess VOC and NOX performance. Thus, our 
scheduling of surveys is not done with the sole objective of accurately 
estimating annual average oxygen content.
    Under the current calculation method, our scheduling decisions 
could limit supplier flexibility in meeting the oxygen average and 
negate the intended benefits of this regulation change. For example, if 
refiners supplying RFG to a covered area elect to use high levels of 
oxygen in winter and low levels in summer, each additional summer 
survey that we schedule for that area is likely to decrease the 
estimate of the

[[Page 42930]]

annual average oxygen content and increase the chance for an oxygen 
survey series failure. Under the suggested method, scheduling an 
additional summer survey should not substantially affect the 
probability of oxygen survey series failure.
    At this time, we are also inviting comment on changes in the method 
for calculating the average for toxics, benzene and non-ozone season 
NOX survey series from an ``average of all samples'' method 
to an ``average of survey averages'' method. These changes are 
consistent with the methodology that we are considering for calculating 
the seasonal oxygen averages. We do not expect that these changes would 
have any substantial interaction with either the adjusted VOC standard 
or removal of the oxygen minimum provisions. The technical rationale 
for these changes is discussed in detail in the original proposal.\6\
---------------------------------------------------------------------------

    \6\ 62 FR 37351 (July 11, 1997).
---------------------------------------------------------------------------

    In summary, we are soliciting comment on whether survey calculation 
procedures should be changed if the oxygen minimum is removed, and if 
so, whether our suggested approach is the most appropriate way to do 
this.

E. Modification to Provision for Effect of Oxygen Survey Series Failure

    Generally, we recognize that removing the oxygen minimum might 
increase the likelihood of area-to-area variability in the oxygen 
content of RFG. Of particular concern is the potential for any 
substantial reduction of the quality of RFG in any covered area. The 
required RFG surveys and resultant ratchets for survey failures are the 
primary mechanism for correcting or avoiding such a situation. These 
surveys assess the quality of RFG with respect to both fuel property 
standards (i.e., oxygen and benzene content) and performance standards 
(i.e., complex model VOC, toxics and NOX emissions 
reductions).
    As stated earlier, a specific ratchet is prescribed in the 
regulations for each type of survey failure, and a failure for a given 
parameter results in a ratchet of that parameter. In the absence of an 
oxygen minimum requirement, we believe that ratcheting of the average 
toxics performance requirement in response to an oxygen survey series 
failure is appropriate.
    The exact role that oxygenates play in RFG toxics emissions 
performance is difficult to quantify. The complex model indicates that 
as oxygen content increases while other fuel properties are held 
constant, the toxics emissions performance of gasoline may increase or 
decrease, depending on the amount and type of oxygenate and values of 
other fuel properties. However, the relationship between toxics 
performance and oxygen in RFG is influenced by other factors. For 
example, oxygenates are a high octane blending component in RFG. 
Producing RFG with less oxygen or no oxygen requires adjusting the 
``recipe'' to provide an alternate source for the volume and octane 
which the oxygenate provided.
    One potential oxygen/octane replacement strategy is the use of 
reformate, a blending component which contains high-octane aromatic 
compounds. Increasing the aromatics content in gasoline increases 
emissions of toxics air pollutants, and this effect is incorporated 
into the complex model. We recognize that reducing or eliminating the 
oxygen content in an RFG recipe would not necessarily result in poorer 
toxics performance. For example, lost volume and octane content could 
be made up by increasing the use of alkylates, another potentially 
available refinery blending stream. Alkylates are a good octane source, 
and an increase in alkylate content in the recipe would not result in 
poorer toxics emissions performance. While the complex model does 
predict that total toxics emissions increase somewhat with oxygen 
removal, independent of what is used as a replacement, this effect can 
be offset by relatively small changes in other fuel properties with 
greater influence on toxics emissions.
    However, U.S. refiners have far greater capacity to produce 
reformate than they do to produce alkylate and, thus, it is likely that 
the removal of oxygen from RFG batches below the current minimum would 
tend to result in an upward pressure on the use of aromatics. 
Therefore, EPA's suggestion to ratchet the toxics performance standard 
in the event of an oxygen survey series failure, is based on a 
reasonable expectation that inadequate use of oxygen will generally 
result in an increase in toxic air emissions. Accordingly, the risk of 
a more stringent ``ratcheted'' toxics standard would provide incentive 
to avoid risking an oxygen survey failure.
    In summary, removing the oxygen per-gallon minimum would not 
necessarily lead to average oxygen content deficiencies, or to poorer 
average toxics emissions performance in any covered area, but the 
potential for such occurrences exists. Therefore, we are requesting 
comment on whether ratchets to the average toxics standard in response 
to oxygen survey failure would be an appropriate mechanism to address 
this concern.
    This toxics ratchet would provide an economic incentive to avoid 
and correct average oxygen content deficiencies in any covered area, as 
well as a means to mitigate the possible environmental consequence of 
such deficiencies. The specific toxics ratchet suggested in the event 
of an oxygen survey series failure is the same as that currently 
prescribed for a toxics emissions performance survey series failure--
i.e., the complex model toxics emissions reduction requirement for that 
covered area beginning in the year following the failure is made more 
stringent by increasing the average toxics emissions reduction standard 
by an additional 1.0 percent.
    The RFG regulations provide enforcement exemptions for Federal RFG 
sold in California. While most survey requirements do not apply in 
California, Section 80.81 of the regulations, which addresses these 
enforcement exemptions, contains a provision for oxygen surveys in 
Federal RFG areas in California.
    We are suggesting that the 1.0% ratchet of the average toxics 
emissions reduction standard apply, as well, in the event of a 
California oxygen survey series failure. We are also soliciting 
comments on possible alternatives to a toxics ratchet.

F. Modification to the Commingling Prohibition

    The regulations, in Sec. 80.78(a)(8), currently prohibit the 
commingling of VOC-controlled RFG oxygenated with ethanol with VOC-
controlled RFG produced using any other oxygenate during the period 
January 1 through September 15. The rationale for this prohibition is 
the RVP boost associated with ethanol. For example, the RVP resulting 
from mixing equal volumes of a 7 psi ethanol-oxygenated RFG blend and a 
7 psi ether-oxygenated RFG blend would be greater than 7 psi. The RVP 
resulting from mixing two 7 psi ether-oxygenated RFG blends or two 
ethanol-oxygenated RFG blends would not be greater than 7 psi.
    When an ethanol-oxygenated blend is mixed with an ether-oxygenated 
blend the commingled blend is likely to have a VOC emissions 
performance worse than the average of the VOC performance of the two 
original RFG formulations. Since commingling can reduce the 
effectiveness of RFG to control VOC emissions, it is prohibited. This 
RVP boost will also occur when RFG oxygenated with ethanol is mixed 
with a non-oxygenated gasoline, and removal of the oxygen minimum would 
produce situations where non-oxygenated RFG is permissible.

[[Page 42931]]

Therefore, in order to prevent reduced VOC control effectiveness, we 
request comment on whether an elimination of the oxygen minimum should 
include an extension of the commingling prohibition to combinations of 
VOC-controlled ethanol-oxygenated RFG with any other VOC-controlled RFG 
during the January 1 to September 15 time period. We also are 
soliciting comment on the adequacy of this approach to addressing 
commingling issues associated with removal of the oxygen minimum.
    Based upon discussions EPA has had with refiners and 
representatives of the ethanol industry, we are considering whether it 
is advisable to change the dates during which the commingling 
prohibition is in effect. Under the current regulation, it is in effect 
from January 1 through September 15. Refiners and ethanol supporters 
are questioning why the period begins in January and suggest that it 
begin in April. The prohibition ends on September 15 because that is 
the end of the ozone season; during the three and a half months after 
that date, refiners and terminals can clear out the VOC controlled RFG. 
The prohibition begins in January because we have evidence that some 
refiners may begin production of VOC controlled RFG as early as 
January.
    We understand that in terms of seasonal switching of RFG (i.e., 
from wintertime non-VOC controlled RFG to summertime VOC controlled 
RFG) there is difficulty in product turnover at some terminals and the 
requirement to segregate VOC controlled RFG from non-VOC controlled RFG 
may present difficulties. This segregation requirement is not, however, 
part of the commingling prohibition. Therefore we would like to know 
what disadvantage the starting date of January 1 represents with 
respect to the commingling prohibition, as well as what advantages a 
starting date of April 1 would provide.

G. Effect on Air Toxics

    Elimination of the oxygen minimum is likely to have some impact on 
toxics emissions. The magnitude of the impact is uncertain for a number 
of reasons. Most fundamentally, there is uncertainty about how, where 
and to what extent the elimination of the oxygen minimum will result in 
seasonal trends in oxygen usage. Consequently, it is impossible to 
predict with any accuracy the overall impact of this potential change 
on RFG toxics performance. However, it is possible to examine, and to 
some degree quantify, changes in RFG toxics performance that could 
occur under certain scenarios.
    Some background information is necessary in order to understand the 
relationship between this rule and toxics emissions. RFG standards 
include a performance standard for toxics. The complex model calculates 
total toxics performance by separately calculating performance for five 
toxic air pollutants; benzene, acetaldehyde, formaldehyde, 1,3 
butadiene and polycyclic organic matter (POM), and summing the results. 
The equations in the model which estimate the various toxics pollutants 
are a function of multiple fuel parameters, including oxygen. Oxygen is 
not the most influential parameter on toxics performance. Variations in 
other parameters, such as benzene, over the range of values that 
normally occur in RFG have a much greater effect on total toxics 
emissions. Some of the toxics equations are not oxygenate-specific, 
while others are. For example, the higher emitter exhaust benzene 
equation contains a term for oxygen weight percent, and as oxygen 
content increases, all else being constant, benzene emissions decrease. 
On the other hand, the formaldehyde equations have a term for oxygen 
from MTBE only, and as MTBE oxygen increases formaldehyde emissions 
increase. The acetaldehyde equations include a term for oxygen from 
ethanol, and as ethanol oxygen increases acetaldehyde emissions 
increase. The complex model treats all of the constituent toxics 
equally on a mass basis even though these toxics may have different 
cancer potencies and pose significantly different cancer risk.
    As a result of these complex model characteristics, the model 
predicts that, as MTBE oxygen increases from zero, all else being 
constant, total toxics emissions will decrease. The model also predicts 
that an ethanol-oxygenated gasoline will have higher total toxics 
emissions than an otherwise identical MTBE-oxygenated gasoline with the 
same weight percent oxygen. Additionally, as ethanol oxygen increases 
from zero, all else being constant, total toxics emissions will 
decrease to a minimum and begin to increase again. However, the total 
toxics emissions at 3.5% oxygen (approximately 10 volume percent 
ethanol) would still be lower than the total toxics emissions at zero 
oxygen.
    Consequently, since this rule may facilitate changes in both the 
type and amount of oxygenate used, there is a potential for some 
adverse impact on total toxics emissions. In order to get a sense of 
the magnitude of this impact, we have provided results from several 
complex model runs where the type and amount of oxygen is varied while 
other parameters are held constant. All model runs were done with the 
Phase II complex model, which is applicable beginning in 2000. However, 
rather than choose a hypothetical ``recipe'' (set of complex model fuel 
parameters) meeting Phase II requirements, we have fixed the non-oxygen 
fuel parameters at summer and winter seasonal average levels for Phase 
I RFG, based on 1998 RFG surveys from areas which used little or no 
ethanol (the summer season is June 1-September 15 and winter is the 
rest of the year). In order to provide a single set of numbers for each 
oxygenate scenario, we have combined summer and winter results from 
each complex model run using the weights 0.468 for summer and 0.532 for 
winter. (These are the weights specified in the RFG regulations for 
calculating annual survey series toxics averages, and suggested for 
calculation of the annual survey series oxygen averages.) Toxics 
results from these complex model runs are summarized in the following 
table:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       MTBE-2% oxygen          Ethanol 3.5% oxygen    Ethanol 0%S/                WMTBE 1%S/Eth. 3.5%W
                                                 ----------------------------------------------------     3.5%                 -------------------------
                                                                                                     -------------   % change
                                                     mg/mi       % change      mg/mi       % change      mg/mi                     mg/mi       % change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exhaust benzene.................................        40.64       -38.82        37.66       -43.31        40.54       -37.93        39.62       -39.65
Nonexhaust benzene..............................         0.76       -32.95         0.83       -31.74         0.83       -31.74         0.80       -32.35
Acetaldehyde....................................         5.35        -9.72        13.74       131.75        10.92        68.33        10.85        66.74
Formaldehyde....................................        14.43        13.22        13.16         3.22        13.16         3.22        13.38         5.47
Butadiene.......................................        11.10       -11.79        10.59       -15.89        11.07       -10.71        10.92       -12.30
POM.............................................         3.46        -9.89         3.44       -10.38         3.46        -9.86         3.46       -10.01
Total exhaust toxics............................        74.99       -26.25        78.59       -22.77        79.15       -22.06        78.22       -23.22
Total toxics....................................        75.75       -27.57        79.42       -24.11        79.98       -23.44        79.02       -24.57
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 42932]]

    The ``MTBE-2% oxygen'' case represents MTBE usage at a 2% by weight 
oxygen level in both summer and winter. This level of oxygen satisfies 
the regulatory requirement, and oxygen usage at this level, with little 
seasonal fluctuation, is typical of Phase I ether-oxygenated RFG. The 
``Ethanol 3.5% oxygen'' case represents ethanol usage at a 3.5% by 
weight oxygen level in both summer and winter. This level of oxygen 
usage, with little seasonal fluctuation, is typical of ethanol-
oxygenated Phase I RFG. The ``Ethanol 0%S/3.5%W'' case represents no 
oxygen usage during the summer and ethanol usage at 3.5% during the 
winter. This oxygenate usage pattern could occur, or be approached, if 
the oxygen minimum requirement were removed. The ``MTBE 1%S/Eth. 
3.5%W'' case represents MTBE usage at 1% by weight oxygen during the 
summer and ethanol usage at 3.5% during the winter. This oxygenate 
usage pattern could occur if the 1.5% minimum were removed and 
suppliers elect to use MTBE during the summer. Suppliers who elect to 
comply with the ``averaged'' oxygen standard must use sufficient oxygen 
to ensure volume-weighted compliance with this standard. Given the 
possibility of a toxics ratchet, suppliers are also likely to use 
sufficient oxygen to avoid survey series failure. If the seasonal 
weighting factors suggested for calculation of the oxygen survey series 
average are applied to this case, the annual oxygen level is about 2.3 
weight percent, sufficient to provide compliance, with some margin, 
with the 2.0 percent survey standard. The columns labeled ``mg/mi'' and 
``% change'' represent complex model emission estimates in milligrams 
per mile and as a % change from ``baseline'' emissions, with a negative 
number indicating a reduction from baseline. All complex model 
emissions estimates are referenced to 1990 technology vehicles and a 
statutory baseline fuel ``recipe''. While the parameters for these 
model runs were derived from Phase I RFG data, all cases complied with 
the 21.5% reduction Phase II ``averaged'' toxics performance standard. 
We acknowledge that this analysis does not attempt to account for 
effects resulting from substituting other blending components to 
replace the volume and octane lost with oxygenate removal. The intent 
of this analysis is to illustrate the direct effect of oxygen on 
complex model toxics emissions and the toxics emission performance 
issue associated with elimination of the oxygen minimum.
    It is apparent from the above table that the ``MTBE-2% oxygen'' 
case has superior total toxics emissions to any of the other cases. 
However, on an individual toxics basis the MTBE case is not always 
superior. Exhaust benzene, formaldehyde and 1,3 butadiene emissions 
from the other cases are, on a milligram per mile basis, at least 
slightly lower than comparable emissions from the ``MTBE-2%'' case. The 
higher total toxics emissions with ethanol blends result primarily from 
higher acetaldehyde emissions. It should also be noted that the 
difference in total toxics emissions between the two ethanol cases is 
substantially smaller than the difference in toxics emissions between 
the MTBE case and the ``Ethanol 3.5% oxygen'' case. Consequently, the 
adverse impact, if any, of oxygen minimum elimination on total toxics 
emissions in a market already using ethanol is likely to be small. A 
larger adverse toxics impact could occur in a market switching from 
MTBE to ethanol. However most of this impact would be attributable to 
the switch in oxygenate type rather than to any change in seasonal 
oxygen usage. Thus, the incremental ``total toxics'' penalty resulting 
from the removal of the oxygen minimum is likely to be much less than 
the ``total toxics'' penalty resulting from a switch from MTBE to 
ethanol, assuming such a switch were to occur.
    In summary, there are air toxics trade-offs associated with changes 
in oxygenate usage. At this time, the impact of an elimination of the 
oxygen minimum on oxygenate use and distribution and, hence, toxics 
emissions performance is uncertain. However, were EPA to implement such 
a change, the RFG surveys will provide a substantial amount of data to 
evaluate these impacts. Therefore, we are soliciting comment on the 
effects that this approach may have on toxic air emissions and, 
consequently on the benefits or dis-benefits of this approach with 
respect to air toxics. We also request comment on alternative 
regulatory approaches, such as lowering, rather than removing the 
oxygen minimum, which may provide some of the benefits of this 
regulation while mitigating some adverse impacts.

H. Effect on CO Emissions

    Section I of the preamble which addresses the adjusted VOC 
standard, points out that the ozone impacts of the slight increase in 
VOC associated with the adjusted standard are likely to be generally 
offset by the reduction in CO emissions resulting from the higher level 
of oxygen in the fuel, since CO plays a role in the formation of ozone 
in the atmosphere. The CO decrease associated with higher oxygen levels 
raises the question of what the effect might be on air quality if 
gasoline with zero oxygen is used in the summertime. Specifically, 
elimination of the oxygen minimum could result in some amount of 
gasoline with zero oxygen in the summer months, and a relative increase 
in CO emissions associated with such fuel.
    We believe that the unpredictability of ethanol RFG distribution 
identified in Section I.D and I.H also applies with respect to the 
distribution of gasoline with zero oxygen during the summer months in 
any given geographic region. As discussed in I.F, we believe that the 
increase in VOC emissions resulting from utilization of the adjusted 
VOC standard cannot be adequately quantified at this time and any 
increase is likely to be a very small portion of an area's total VOC 
emissions.
    We believe the same to be true with respect to predicting the 
likelihood of increased CO emissions resulting from the presence of 
zero-oxygen RFG during the summer months. That is, the increase in CO 
emissions resulting from zero oxygen RFG during the summer months in 
any given region cannot be adequately predicted or quantified at this 
time. We believe that such increases are likely to be a very small 
portion of an area's total CO emissions and thus would likely have a 
negligible effect on ambient ozone.
    Therefore we request comment on whether EPA should evaluate the 
need to re-evaluate the distribution of zero oxygen RFG in the summer 
months at some time after a rulemaking to eliminate the oxygen minimum 
requirement.

III. Administrative Requirements

A. 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;

[[Page 42933]]

    (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.
    The Agency has determined that this regulation would result in none 
of the adverse economic effects set forth in Section 1 of the Order 
because it generally relaxes the requirements of the RFG program by 
providing regulated parties with more flexibility with respect to 
compliance with the RFG requirements. Pursuant to the terms of 
Executive Order 12866, OMB has notified EPA that it considers this a 
``significant regulatory action'' within the meaning of the Executive 
Order. EPA has submitted this action to OMB for review. Changes made in 
response to OMB suggestions or recommendations will be documented in 
the public record.

B. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.'' Under 
Executive Order 13132, EPA may not issue a regulation that has 
federalism implications, that imposes substantial direct compliance 
costs, and that is not required by statute, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by State and local governments, or EPA consults with 
State and local officials early in the process of developing the 
proposed regulation. EPA also may not issue a regulation that has 
federalism implications and that preempts State law unless the Agency 
consults with State and local officials early in the process of 
developing the proposed regulation.
    If EPA complies by consulting, Executive Order 13132 requires EPA 
to provide to the Office of Management and Budget (OMB), in a 
separately identified section of the preamble to the rule, a federalism 
summary impact statement (FSIS). The FSIS must include a description of 
the extent of EPA's prior consultation with State and local officials, 
a summary of the nature of their concerns and the agency's position 
supporting the need to issue the regulation, and a statement of the 
extent to which the concerns of State and local officials have been 
met. Also, when EPA transmits a draft final rule with federalism 
implications to OMB for review pursuant to Executive Order 12866, EPA 
must include a certification from the agency's Federalism Official 
stating that EPA has met the requirements of Executive Order 13132 in a 
meaningful and timely manner.
    This proposed rule will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132. 
The proposed rule would provide regulatory relief for refiners who 
choose to make RFG with 10 volume percent ethanol by adjusting the VOC 
performance standard. As discussed in Section I.H. of the preamble, we 
believe that the increased VOC associated with the adjusted VOC 
standard should not affect states' ROP plans in the near term, and does 
not impose any substantial direct effects on the states. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
rule.

C. 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 13084 
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.''
    Today's proposed rule does not significantly or uniquely affect the 
communities of Indian tribal governments. Today's proposed rule does 
not create a mandate for any tribal governments. This proposed rule 
applies to gasoline refiners, blenders and importers that supply 
gasoline to RFG areas. Today's action proposes some changes that would 
generally relax the Federal RFG requirements, and does not impose any 
enforceable duties on communities of Indian tribal governments. 
Accordingly, the requirements of section 3(b) of Executive Order 13084 
do not apply to this proposed rule.

D. Regulatory Flexibility Act (RFA), as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business that has not 
more than 1,500 employees (13 CFR 121.201); (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' 5 U.S.C. 603 
and 604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if

[[Page 42934]]

the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule. 
Today's proposed rule would provide regulatory relief by making the VOC 
standard for RFG that contains 10 volume percent ethanol slightly less 
stringent, and by eliminating the oxygen minimum requirement in RFG. 
These actions will provide more flexibility for refiners to reduce MTBE 
use by decreasing the cost of ethanol-blended RFG. We have therefore 
concluded that today's proposed rule will relieve regulatory burden for 
all small entities. We continue to be interested in the potential 
impacts of the proposed rule on small entities and welcome comments on 
issues related to such impacts.

E. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted by approval to the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No. 1591.11) and a copy may be obtained from Sandy Farmer by mail 
at OP Regulatory Information Division; U.S. Environmental Protection 
Agency (2137); 401 M St., SW.; Washington, DC 20460, by email at 
[email protected], or by calling (202) 260-2740. A copy may also be 
downloaded off the internet at http://www.epa.gov/icr.
    The action will result in revision of the Reformulated Gasoline and 
Anti-Dumping Batch Report form (EPA Form 3520-20C) that refiners must 
complete. The form would be revised to include under Item 4.0 a new 
product type called ``Adjusted VOC gasoline''. This revision does not 
represent significant new reporting requirements, nor a substantial 
increase in the amount of time spent filling out the form. 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. 1591.08). ICR No. 1591.08 will be renewed in July of 
this year. Upon final promulgation of today's proposal, ICR 1591.11 
associated with this rule will be encompassed in the renewed ICR 
1591.08.
    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.

F. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
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.
    This proposed 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 proposed rule would 
impose no enforceable duty on any State, local or tribal governments or 
the private sector. This proposed rule applies to gasoline refiners, 
blenders and importers that supply gasoline to RFG areas. Today's 
action proposes changes that would provide regulated parties with more 
flexibility with respect to compliance with the RFG requirements.

G. 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 Executive Order 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 Executive Order 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 final rule is not subject 
to Executive Order 13045, entitled ``Protection of Children from 
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 
1997), because it does not involve decisions on environmental health 
risks or safety risks that may disproportionately affect children. For 
reasons stated in Section I.F. of the preamble, we believe that the 
adjusted VOC standard for RFG with 10 volume percent ethanol will 
continue to provide a similar level of benefits to those anticipated 
from the current standard, and will assure that the Phase II RFG 
program will continue to achieve the significant environmental benefits 
for which it was designed.

H. 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

[[Page 42935]]

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 
Reforumlated Gasoline Adjustment Proposal Page 82 of Page 92 Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.
    This proposed rule does not involve technical standards, and does 
not specify the use of technical methods. Therefore, EPA did not 
consider the use of any voluntary consensus standards.

I. Statutory Authority

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

List of Subjects in 40 CFR Part 80

    Environmental protection, Air pollution control, Reformulated 
gasoline.

    Dated: June 30, 2000.
Carol M. Browner,
Administrator.
    For the reasons set forth in the preamble, we propose to amend part 
80 of title 40, of the Code of Federal Regulations to read 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 80.40 is amended by adding paragraph (c) to read as 
follows:


Sec. 80.40  Fuel certification procedures.

* * * * *
    (c)(1) ``Adjusted VOC gasoline'' for purposes of the Product 
Transfer Document requirements in Sec. 80.77 is gasoline that contains 
10 volume percent ethanol for which the less stringent VOC standards in 
Sec. 80.41 apply.
    (2) Refiners may choose not to designate gasoline which contains 10 
volume percent ethanol as ``adjusted VOC gasoline'', in which case the 
more stringent VOC standards in Sec. 80.41 apply.
    3. Section 80.41 is amended by revising paragraphs (e) and (f) to 
read as follows:


Sec. 80.41  Standards and requirements for compliance.

* * * * *
    (e) Phase II complex model per-gallon standards. The Phase II 
``complex model'' standards for compliance when achieved on a per-
gallon basis are as follows:

              Phase II--Complex Model Per-Gallon Standards
------------------------------------------------------------------------
 
------------------------------------------------------------------------
VOC emissions performance reduction (percent):
    Gasoline containing 10 volume % ethanol designated for          26.5
     VOC-Control Region 1..................................
    All other gasoline designated for VOC-Control Region 1.         27.5
    Gasoline containing 10 volume % ethanol designated for          24.9
     VOC-Control Region 2..................................
    All other gasoline designated for VOC-Control Region 2.         25.9
    Toxic air pollutants emissions performance reduction            20.0
     (percent).............................................
NOx emissions performance reduction (percent):
    Gasoline designated as VOC-controlled..................          5.5
    Gasoline not designated as VOC-controlled..............          0.0
    Oxygen content (percent, by weight)....................          2.0
    Benzene (percent, by volume)...........................         1.00
------------------------------------------------------------------------

    (f) Phase II complex model averaged standards. The Phase II 
``complex model'' standards for compliance when achieved on average are 
as follows:

                Phase II Complex Model Averaged Standards
------------------------------------------------------------------------
 
------------------------------------------------------------------------
VOC emissions performance reduction (percent):
    Gasoline containing 10 volume % ethanol designated for
     VOC-Control Region 1:
        Standard.............................................       28.0
        Per-Gallon Minimum...................................       25.0
    All other gasoline designated for VOC-Control Region 1:
        Standard.............................................       29.0
        Per-Gallon Minimum...................................       25.0
    Gasoline containing 10 volume % ethanol designated for
     VOC-Control Region 2:
        Standard.............................................       26.4
        Per-Gallon Minimum...................................       23.4
    All other gasoline designated for VOC-Control Region 2:
        Standard.............................................       27.4
        Per-Gallon Minimum...................................       23.4
    Toxic air pollutants emissions performance reduction            21.5
     (percent)...............................................
NOX emissions performance reduction (percent):
    Gasoline designated as VOC-controlled....................        6.8
    Gasoline not designated as VOC-controlled................        1.5
Oxygen content (percent, by weight):
    Standard.................................................        2.1
    Per-Gallon Minimum.......................................        1.5
Benzene (percent, by volume):
    Standard.................................................  i=the volume of gasoline batch i
    std=the standard for the parameter being evaluated
    n=the number of batches of gasoline produced or imported during the 
averaging period and

    (B) For computation of the VOC performance standard compliance 
total, Std for each VOC control region is determined by the following 
formula:
[GRAPHIC] [TIFF OMITTED] TP12JY00.012

    Where, for gasoline and RBOB designated for that VOC control 
region:

    Std=the value to be used in the compliance total formula:
    Stdu=the averaged VOC emissions performance reduction 
standard applicable to reformulated gasoline and RBOB not designated 
for compliance with the adjusted VOC gasoline standard
    Stda=the averaged VOC emissions performance reduction 
standard applicable to reformulated gasoline and RBOB designated for 
compliance with the adjusted VOC gasoline standard
    VUi=the volume of batch i not designated for compliance 
with the adjusted VOC gasoline standard
    VAi=the volume of batch i designated

[[Page 42936]]

for compliance with the adjusted VOC gasoline standard
    nu=the number of batches produced or imported and not 
designated for compliance with the adjusted VOC gasoline standard
    na=the number of batches produced or imported and 
designated for compliance with the adjusted VOC gasoline standard and

    (C) The actual total using the following formula:
    [GRAPHIC] [TIFF OMITTED] TP12JY00.013
    
    Where:

    Vi=the volume of gasoline batch i
    parmi=the parameter value of gasoline batch i
    n=the number of batches of gasoline produced or imported during the 
averaging period
    (ii) [Reserved]
* * * * *
    (h) * * *
    (4) In the case of gasoline containing 10 volume percent ethanol 
oxygen credits may be generated, transferred and used for such gasoline 
only if it is not identified in the Product Transfer Document per 
Sec. 80.77(g)(4)(B)(3) as ``adjusted VOC gasoline'' as defined in 
Sec. 80.40(c).
* * * * *
    5. Section 80.68 is amended by revising paragraph (c)(8)(ii)(B) to 
read as follows:


Sec. 80.68  Compliance surveys.

* * * * *
    (c) * * *
    (8) * * *
    (ii) * * *
    (B) The covered area shall have failed the complex model VOC survey 
if the VOC emissions reduction percentage average of all survey samples 
is less than the weighted average of the applicable per-gallon 
standards for VOC emissions reduction calculated according to the 
following formula:
[GRAPHIC] [TIFF OMITTED] TP12JY00.014

Where:
    WSTD=Weighted average of the applicable per-gallon VOC standards
    VOCU=Per gallon VOC standard applicable in the covered area to RFG 
containing less than 10% ethanol by volume
    VOCA=Per gallon VOC standard applicable in the covered area to RFG 
containing 10% ethanol by volume
    nu=Number of samples in the VOC survey with oxygen 
content less than 3.5% by weight
    na=Number of samples in the VOC survey with oxygen 
content equal to or greater than 3.5% by weight
    n=Total number of samples in the VOC survey
* * * * *
    6. Section 80.69 is amended by revising the introductory paragraph 
to read as follows:


Sec. 80.69  Requirements for downstream oxygenate blending.

    The requirements of this section apply to all reformulated gasoline 
blendstock for oxygenate blending, or RBOB, to which oxygenate is added 
at any oxygenate blending facility, except that paragraph (a)(7) of 
this section does not apply to ``adjusted VOC gasoline'' as defined in 
Sec. 80.40(c).
* * * * *
    7. Section 80.77 is amended by revising paragraph (g)(3) to read as 
follows:


Sec. 80.77  Product transfer documentation.

* * * * *
    (g) * * *
    (3) Identification of VOC-controlled reformulated gasoline 
including ``adjusted VOC gasoline'' as defined in Sec. 80.40(c), or 
RBOB as gasoline, or RBOB which does not contain any ethanol, or RBOB 
which contains less than 10 volume % ethanol, or RBOB which must 
contain 10 volume % ethanol and is used to make ``adjusted VOC 
gasoline''.
* * * * *

[FR Doc. 00-17351 Filed 7-11-00; 8:45 am]
BILLING CODE 6560-50-P