[Federal Register Volume 65, Number 175 (Friday, September 8, 2000)]
[Proposed Rules]
[Pages 54447-54454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22809]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-6864-9]


Establishment of Alternative Compliance Periods Under the Anti-
Dumping Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Clean Air Act as amended in 1990 (``the Act'') directs the 
Environmental Protection Agency (``EPA'' or ``we'') to issue 
regulations requiring reformulated gasoline for major metropolitan 
areas with the worst ozone air pollution problems. Other areas with 
ozone levels exceeding the public health standards may voluntarily 
choose to participate in the federal reformulated gasoline program. In 
order to ensure that the ``dirtier'' components of reformulated 
gasoline are not dumped into gasoline sold in areas not participating 
in the reformulated gasoline program (``conventional gasoline'' areas), 
the Act requires EPA to ensure that the quality of conventional 
gasoline does not fall below 1990 levels. The Act also mandates that we 
establish an appropriate compliance period or compliance periods 
associated with meeting the anti-dumping standards. Under the existing 
regulations for reformulated gasoline and anti-dumping, the compliance 
period is one year. However, we believe that in certain limited 
circumstances a longer conventional gasoline anti-dumping may be 
appropriate on a temporary basis. Such an alternative compliance period 
would be only appropriate for a refiner who produces conventional 
gasoline and who is starting up a refinery and facing significant 
hardship in complying with the anti-dumping statutory baseline 
NOX standard. Moreover, we believe that it would be 
appropiate for any refinery subject to an alternative compliance period 
to meet additional substantive and administrative requirements to 
ensure that there is no environmental detriment as a result of the 
longer averaging period. This notice of proposed rulemaking sets forth 
proposed procedures for establishing alternative compliance periods 
under the anti-dumping program and the proposed standards applicable to 
refineries operating under such compliance periods.

DATES: Comments or a request for a public hearing must be received by 
October 10, 2000.

ADDRESSES: If you wish to submit comments or request a public hearing, 
you should send any written materials to the docket address listed and 
to Anne Pastorkovich, Attorney/Advisor, Transportation & Regional 
Programs Division, U.S. Environmental Protection Agency, 1200 
Pennsylvania Avenue, NW. (6406J), Washington, DC 20460, (202) 564-8987. 
Materials relevant to this proposed rule have been placed in docket A-
2000-27 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. You may be charged a 
reasonable fee for photocopying services.

FOR FURTHER INFORMATION CONTACT: If you would like further information 
about this rule or to request a hearing, contact Anne Pastorkovich, 
Attorney/Advisor, Transportation & Regional Programs Division, (202) 
564-8987.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

    Entities potentially regulated by the proposed action are parties 
that produce conventional gasoline. Regulated categories and entities 
include:

------------------------------------------------------------------------
                 Category                             Examples
------------------------------------------------------------------------
Industry..................................  Gasoline refiners
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
proposed action. This table lists all entities that we are now aware 
could potentially be regulated by this proposed action. Other types of 
entities not listed in this table could also be regulated by this 
proposed action. To determine whether your business would be regulated 
by this proposed action, you should carefully examine the applicability 
criteria in part 80 of Title 40 of the Code of Federal Regulations. If 
you have any questions regarding the applicability of this proposed 
action to a particular entity, consult the person listed in the 
preceding section of this document.

II. Background

    This section summarizes the anti-dumping program. Since refiners 
who request flexibility under today's proposed rule are likely to elect 
to use sulfur-reducing technologies early in order to meet production 
requirements under this proposed rule, a brief overview of the Tier 2 
gasoline program is included as well.

The Anti-Dumping Program

    The Clean Air Act required EPA to establish rules for reformulated 
gasoline (RG) designed to result in significant reductions in vehicle 
emissions of ozone-forming and toxic air pollutants. Reformulated 
gasoline is required to be used in specific metropolitan areas with the 
worst ozone problems. Several other areas with ozone levels exceeding 
the public health standard have voluntarily chosen to use RFG. 
Additionally, the Act required us to establish regulations covering all 
gasoline that is not reformulated. Such gasoline is called conventional 
gasoline, and the standards governing it are called the anti-dumping 
standards. We issued final reformulated gasoline and anti-dumping 
regulations on December 15, 1993\1\ and the standards in those 
regulations became effective in January 1995.
---------------------------------------------------------------------------

    \1\ ``Regulation of Fuels and Fuel Additives: Standards for 
Reformulated and Conventional Gasoline--Final Rule,'' 59 FR 7812 
(February 16, 1994). See 40 CFR part 80, subparts D, E, and F.
---------------------------------------------------------------------------

    The purpose of anti-dumping standards is to ensure that the quality 
of a refiner's conventional gasoline does not get worse once the 
reformulated gasoline program begins. To ensure that this does not 
happen, the Act requires that each refiner's conventional gasoline be 
at least as clean as the gasoline produced by that refiner during a 
specific ``baseline'' year. The baseline reference year specified in 
the Act is 1990. The anti-dumping program specifically governs the 
exhaust toxics and NOX emissions of conventional gasoline. 
These emissions are determined using the Complex Model, a tool which 
uses the fuel specifications, or parameters, of a gasoline blend to 
calculate which emissions associated with that gasoline. The fuel 
parameters included in the Complex Model are aromatics, olefins, 
benzene, sulfur, oxygen content and oxygenate type, the percent of fuel 
evaporated at 200 deg.F and 300 deg.F (E200 and E300, respectively) and 
Reid vapor pressure, or RVP.

[[Page 54448]]

    Under the anti-dumping program, each refinery and importer has an 
individual baseline consisting of a set of values for the Complex Model 
fuel parameters and the exhaust toxics and NOX emissions 
associated with those values representing the specification of the 
gasoline that the refiner produced in 1990. An individual baseline can 
be one of two types. The first type is the unique individual baseline. 
A refinery or importer has a unique individual baseline if it was in 
operation for at least 6 months in 1990 and had sufficient data and 
supporting analysis to determine the actual quality of its 1990 
gasoline to EPA's satisfaction. Those with unique individual baselines 
also have an associated individual baseline volume, which is the volume 
of gasoline produced or imported by that refiner in 1990. The other 
type of individual baseline is the statutory baseline. The statutory 
baseline consists of a set of fixed values for the Complex Model fuel 
parameters and the emissions associated with those values which 
represent the average quality of all gasoline produced or sold in the 
United States in 1990. The summer portion of the statutory baseline was 
specified in the Clean Air Act; the corresponding winter portion was 
developed by EPA. Together, the summer and winter portions form the 
annual average statutory baseline which is specified in 40 CFR Part 
80.91(c)(5). There is no individual baseline volume for those 
refineries or importers for which the statutory baseline is the 
individual baseline.
    Compliance with the anti-dumping requirements is determined on an 
annual basis. Each batch of gasoline is evaluated under the appropriate 
summer or winter portion of the Complex Model; the resulting emissions 
calculated for batch are volume-weighted to determine the annual 
average exhaust toxics and NOX emissions for the refinery or 
importer. The resulting annual average emissions are compared to the 
baseline emissions values to determine whether the refinery or importer 
is in or out of compliance with its anti-dumping standards.
    Section 211(k)(8)(D) of the Act directs us to establish ``an 
appropriate compliance period or compliance periods'' to be used for 
assessing compliance with the anti-dumping regulations. As mentioned 
above, we have established a one year compliance period for anti-
dumping. A one year compliance period is consistent with other fuels 
programs utilizing averaging and annual reporting, including the RFG 
program. Generally, a one year compliance period is desirable because 
it provides an effective monitoring period for environmental purposes 
while permitting flexibility with respect to averaging over the 
calendar year. A one year period gives more assurance that gross 
violations will not occur before the violation is discovered and 
appropriate action is taken and that those responsible for the 
violation are held accountable. A one year period prevents a company 
from violating for several years, generating a long-term environmental 
detriment, and then going out of business before it can be held 
accountable. A one year period is also simple for compliance accounting 
purposes. Although we chose the one year compliance period for the 
reasons just mentioned, we recognize that the Act permits us to 
establish alternative anti-dumping compliance periods by regulation.

Tier 2 Gasoline

    Since the passage of the 1990 Clean Air Act Amendments, the U.S. 
has made significant progress in reducing emissions from passenger cars 
and light trucks through implementation of programs like RFG and anti-
dumping. Nonetheless, due to increasing vehicle population and vehicle 
miles traveled, passenger cars and light duty trucks will continue to 
be significant contributors to air pollution. In light of this trend 
and to build upon programs aimed at reducing emissions from motor 
vehicles and motor vehicle fuels, EPA recently issued regulations 
establishing lower sulfur content for all gasoline \2\ (i.e., ``Tier 2 
gasoline'') and establishing stricter tailpipe emissions standards for 
all passenger vehicles, including sport utility vehicles (SUVs), 
minivans, and vans and pick-up trucks under 8,500 lbs. The Tier 2 
program will also reduce ozone and particulate matter (PM) pollution. 
Gasoline sulfur levels significantly affect NOX emissions. 
Since NOX emissions are ozone precursors, a reduction in the 
sulfur level of gasoline will reduce ozone pollution. The level of 
gasoline sulfur control required under the Tier 2 program will also 
benefit the environment by directly reducing emissions of sulfur 
compounds.
---------------------------------------------------------------------------

    \2\ ``Control of Air Pollution from New Motor Vehicles: Tier 2 
Motor Vehicles Emissions Standards and Gasoline Sulfur Control 
Requirements--Final Rule,'' 65 FR 6698 (February 10, 2000). See also 
40 CFR part 80, subpart H for regulations applicable to gasoline 
sulfur.
---------------------------------------------------------------------------

    The Tier 2 gasoline standards will be fully implemented by 2006 by 
all refiners except for those subject to geographic phase-in area (GPA) 
requirements, who have until 2007, and certain other qualifying 
refiners, who have until 2008. (If a hardship extension is granted, an 
individual refiner may have until 2010 to meet the final standards.) 
The Tier 2 program is structured to permit averaging in order to meet 
the sulfur standard, with an average sulfur content standard of 30 ppm 
and a per gallon sulfur limit of 80 ppm by the date of full 
implementation. Benefits from the Tier 2 gasoline program may be seen 
more immediately, as some refiners are expected to start lowering 
sulfur levels as early as this year. Those who lead the way in reducing 
sulfur earlier than required may generate marketable credits or 
allotments. As with the RFG and anti-dumping programs, compliance is 
demonstrated based upon a one year compliance period.

III. Today's Proposed Action

Need for and Purpose of Today's Proposed Action

    As discussed above, section 211(k)(8)(D) of the Act directs EPA to 
establish an appropriate compliance period or compliance periods for 
the purpose of assessing compliance with anti-dumping requirements. At 
the present time, the only compliance period that has been established 
for anti-dumping is a one year compliance period. The one year 
compliance period is consistent with the one year period established 
under other existing fuels programs and, at the time the anti-dumping 
regulations were developed, there was no compelling reason or 
identified benefit to specifying any alternative compliance period.
    We believe that achieving the Tier 2 gasoline sulfur reductions, at 
the refinery level, as soon as possible is an extremely valuable 
mechanism for reducing vehicle emissions, perhaps more so than any 
other recently promulgated gasoline regulation. We are also aware of at 
least one refinery in a start-up mode which would be able to achieve 
the applicable Tier 2 gasoline sulfur reductions earlier than required, 
but would not be able to comply with its anti-dumping standard, which 
is the statutory baseline, in early production years. In order to 
comply with its anti-dumping standard, the refiner would have to delay 
the start-up process and significantly delay the time frame in which it 
could produce gasoline meeting the Tier 2 gasoline sulfur standards.
    Because we believe that achieving the Tier 2 gasoline sulfur levels 
is critical to reducing ozone levels by reducing emissions of the ozone 
precursor NOX (see the discussion in ``Summary of Today's 
Proposed Action'' below), we

[[Page 54449]]

believe it would be appropriate to allow an alternative anti-dumping 
compliance period for a refinery in start-up mode, provided that the 
refiner can show that the refinery will achieve the Tier 2 gasoline 
sulfur levels earlier than otherwise required. At the same time, we 
want to ensure that no environmental detriment occurs as a result of 
the flexibility we are providing, and have included other requirements 
the refinery would have to meet which will provide the appropriate 
environmental protection. The details of the proposed flexibility are 
described below.

Summary of Today's Proposed Action

    We are proposing to permit a refinery in start-up mode which is 
unable to meet its anti-dumping standard during the start-up process, 
but which would otherwise be able to meet the Tier 2 gasoline sulfur 
standards earlier than required, to petition the Agency for an 
alternative compliance period. The Tier 2 standards for most refiners 
take effect in 2006. (See ``Tier 2 Gasoline,'' above, for a more 
detailed discussion of refiner compliance dates.) A refinery eligible 
for this proposed relief must be starting up production of conventional 
gasoline and must never have produced conventional gasoline that was 
subject to the anti-dumping regulations. To ensure that the refinery 
will meet the applicable Tier 2 gasoline standards early, the 
alternative compliance period would be limited to a two to five year 
span, as determined by the Agency. Because of the other requirements 
associated with this proposed rule, we believe that a refinery would 
choose to request the shortest alternative compliance period possible. 
Additionally, a refiner would have to show that it would be unable to 
meet its anti-dumping NOX requirement under the current, one 
year compliance period. While the anti-dumping standard for a refinery 
involves both exhaust toxics and NOX emissions, we believe 
that the proposed alternative compliance period should only be 
available to a refinery upon a showing that it would otherwise be 
unable to meet its NOX standard. This is because sulfur 
significantly affects NOX emissions,\3\ and decreasing 
sulfur will result in significant NOX emission reductions by 
moving toward the goal of the low sulfur levels required by the Tier 2 
standards. Though a refiner may have difficulty meeting its exhaust 
toxics anti-dumping standard, for which fuel benzene and aromatics are 
the primary fuel parameters, the refinery units which impact these two 
fuel parameters are different than those used to reduce sulfur. (Most 
refineries will need to install new equipment in order to reduce sulfur 
to the levels required under the Tier 2 standards.) Thus, reducing 
benzene and/or aromatics does not contribute to the goal of achieving 
the Tier 2 gasoline sulfur levels early, and, consequently, an 
alternative compliance period based on the inability to meet the anti-
dumping exhaust toxics standard would not be appropriate given the 
considerations underlying today's proposed rule.
---------------------------------------------------------------------------

    \3\ Under the Complex Model, the tool used to evaluate anti-
dumping performance, olefins is the other fuel parameter which 
significantly impacts NOX emissions.
---------------------------------------------------------------------------

    In addition to meeting the Tier 2 gasoline sulfur standards early, 
the gasoline produced by a refinery over the entire alternative 
compliance period would have to result in a net NOX benefit 
(compared to the statutory baseline) that is at least twice as large as 
the total NOX deficit generated during the period of time 
during which the refinery produced gasoline that did not comply with 
the statutory baseline. Additionally, the refiner would have to 
purchase stationary source NOX credits sufficient to offset 
any NOX deficit generated (on a quarterly basis) and would 
have to meet the specific requirements of this proposed rule, including 
additional reporting requirements. By proposing to modify the standards 
applicable to refineries with an alternative compliance period, we are 
providing appropriate assurance that no environmental disbenefit occurs 
as a result of allowing an alternative compliance period.
    When regulated entities cut emissions more than is required, the 
``extra'' environmental benefit may be considered as a pollution 
credit, usually measured in tons, that may be sold or banked for future 
use. Emissions trading associations have been created to facilitate the 
buying and selling of pollution credits. Marketable NOX 
credits are currently generated through NOX reduction 
programs in 13 states. In addition, there is a multi-state 
NOX emission trading program operating in eight Northeastern 
states that are members of the Ozone Transport Commission. Further 
information on NOX trading programs is available on the 
Internet at www.epa.gov/acidrain/programs.html.
    As described below in ``How the Agency Proposes to Act on a 
Petition'' and ``The Refiner's Proposed Responsibilities if a Petition 
is Granted,'' NOX credits purchased quarterly to offset any 
NOX deficit must be held by a refinery that operates under 
an adjusted compliance period under this proposed rule. These banked 
credits function as collateral against any NOX deficiencies 
that the refiner creates, to minimize the possibility of environmental 
harm in the event that the refiner does not fulfill its obligation 
under the other requirements of this proposed rule. If, as planned, the 
refinery eventually produces gasoline that meets and then exceeds the 
NOX baseline, the refiner may sell NOX credits 
equal to the benefit produced during that quarter. If the refinery 
violates the conditions under which its petition is granted, the 
NOX credits may be forfeited. The intention of this proposed 
provision is that environment will suffer no net loss, although any 
NOX deficit may occur in a different location than a 
NOX credit was generated. Much of the gasoline in the U.S. 
is produced on the Gulf Coast and other coastal areas and shipped 
throughout the country, primarily by pipeline. Gasoline is fungible, 
and is normally transported in pipelines mixed with other batches that 
meet the same specifications. In general, it is not possible to predict 
where a particular batch of gasoline included in larger shipment will 
end up; as a result, it is not generally possible to predict where a 
NOX deficit may occur. Similarly, it is not possible to 
predict where the air quality benefit from the doubled payback of any 
NOX deficit will occur.

Who May Petition for an Alternative Anti-Dumping Compliance Period

    Under this proposed rule, a refiner may petition EPA for an 
alternative compliance period for any refinery that is starting up 
gasoline production for the first time under the anti-dumping 
requirements, that is subject to the statutory baseline, and that can 
demonstrate a significant hardship with regard to producing gasoline 
conforming to the statutory baseline for NOX in the early 
years of production. Flexibility with regard to alternative anti-
dumping compliance periods will be particularly helpful for challenged 
refiners (as described in the Tier 2 gasoline sulfur rule), including 
small refiners; however, any refiner who meets the threshold conditions 
above would be able to submit a petition. The petition may be for a 
domestic or foreign refinery. The refiner would have to have specific 
plans to bring its gasoline into compliance with the statutory baseline 
early enough through the alternative compliance period in order to 
achieve the two-fold NOX payback. Furthermore, the refiner 
would have to have specific and demonstrable plans to produce gasoline 
to pay back any NOX deficit by the end of the requested 
compliance

[[Page 54450]]

period. For many refiners, these plans would likely include early 
installation of sulfur-reducing technologies necessary to meet the Tier 
2 gasoline standards.

When Would Petitions Have To Be Received By?

    A refiner who meets the threshold conditions would be able to 
petition the Agency for an alternative anti-dumping compliance period. 
For reasons discussed in the preceding sections, we believe that the 
window during which this flexibility is appropriate is the period 
before the Tier 2 gasoline program standards fully apply. Therefore, 
petitions for alternative anti-dumping compliance periods of four or 
five years in length would have to be received by no later than June 1, 
2001. For an alternative compliance period of two or three years in 
length, the petition would have to be received no later than June 1, 
2003. No alternative anti-dumping compliance period may be designed to 
start, or requested to start, after January 1, 2004 or to end after 
December 31, 2005.

What a Petition for an Alternative Anti-Dumping Compliance Period Would 
Have To Contain

    A refiner would be able to petition for an alternative anti-dumping 
compliance period of two, three, four, or five years in length. The 
petition would have to contain, at a minimum:
     The business name and address and any location(s) where 
the refiner conducts operations.
     The name and contact information for the responsible 
corporate officer and a contact person who can provide further 
clarification with regard to information in the petition.
     A detailed explanation of why the refinery is eligible to 
request an alternative anti-dumping compliance period. This explanation 
would include documentation showing that the refinery is starting up 
production and has never produced conventional gasoline subject to the 
anti-dumping regulations and information demonstrating the hardship the 
refinery will experience meeting the anti-dumping statutory baseline 
NOX standard.
     The length of the averaging period requested (2, 3, 4, or 
5 years) and a justification for why that length of averaging period is 
required.
     An estimate as to when the refinery can produce gasoline 
that will meet the statutory baseline standard for NOX.
     The refinery's estimated gasoline production and average 
NOX level for each of the years in which the alternative 
averaging period is required.
     A detailed description of the current refinery equipment 
and configuration.
     A detailed description of any changes or enhancements to 
the refinery equipment and configuration that will occur during the 
alternative averaging period requested.
     The current nominal crude capacity of the refinery as 
reported to the Energy Information Administration (EIA) of the 
Department of Energy (DOE).
     A detailed explanation of the refiner's plans to finance 
capital improvements at the refinery in order to meet all current 
applicable EPA gasoline and diesel fuel quality standards.
     A demonstration that the refiner has the funds and 
identified sources from which to purchase stationary source 
NOX credits sufficient to offset the maximum projected 
NOX deficit. An equation for calculating the NOX 
deficit and NOX benefit is included in the regulations.
     A full disclosure and explanation of any matters of non-
compliance or violations of any environmental statutes or requirements 
for which the refiner has received notification by any state, local, or 
Federal agency.
     A signed agreement by any parent company or, in the case 
of a joint venture, individual partners, if applicable, acknowledging 
that they will be liable for any violations.
     Any other information the Administrator may require in 
order to fully evaluate the refiner's petition. Such information would 
include requests for clarification of any item(s) included in the 
petition that is necessary in order to render a final decision as to 
whether to grant or reject the petition.
    The above items represent, at a minimum, the topics that we believe 
must be addressed in the petition. The refiner may wish to elaborate on 
certain topics--e.g., if it faces particular hardship because it is a 
small business or if its refinery faces other, unique challenges that 
may influence the Agency's decision on the petition.
    If we were to find that any refiner has provided false or 
inaccurate information in connection with its petition, we propose that 
the remedy be to notify the refiner and the application of any 
alternative anti-dumping compliance period would be void ab initio.

How the Agency Proposes To Act on a Petition and the Refiner's Proposed 
Responsibilities if a Petition Is Granted

Notification of Approval and Disapproval of Petition and Proposed Dates 
By Which the Refinery Would Have To Meet the Statutory NOX 
Baseline Standard and Pay Back Double the NOX Deficit
    We propose to notify a refiner of approval or disapproval of its 
petition by mail after considering a complete petition. If approved, we 
propose to notify the refiner of the alternative anti-dumping 
compliance period approved (i.e., two, three, four, or five years) and 
the interim standards that would have to be met. The interim standards 
would be as set forth in the regulations and would include two major 
standards that the refinery would have to meet. The first standard sets 
forth the date by which the refinery would have to start to comply with 
the statutory baseline NOX standard, on average, for all its 
gasoline. For example, for a two year averaging period, the refiner 
would have to hit the first interim standard by the seventh quarter. 
Once the first date is reached, the refiner would have to continue to 
meet the statutory baseline standard for NOX, on average, 
for all gasoline it produces.
    The second standard would set forth the date by which the refinery 
would have to pay back double the NOX deficit. This date 
would correspond to the end of the alternative averaging period. For 
example, for a two year averaging period, the refiner would have to pay 
back double the NOX deficit by the end of the second year. 
Failure to meet one of these standards would result in a violation of 
the anti-dumping regulations. The anti-dumping standards, including 
NOX emissions, are defined in units of milligrams per mile. 
In order to quantify the NOX deficit or benefit in tons 
under today's proposed rule, it is necessary to know the variance from 
the standard, the volume of gasoline involved and the average fuel 
economy for the overall national fleet of gasoline powered vehicles. 
For the purpose of these calculations, we are proposing to use the most 
current data as presented in the Calendar Year 1999 National Highway 
Traffic and Safety Administration report to Congress of 24.5 miles per 
gallon. Thus the constant figure in both equations of 
2.7 x 10-8 is the product of the above fuel economy factor 
and the conversion from milligrams to tons. The average NOX 
level and volume of gasoline produced during the quarter are self 
explanatory. The equations for calculating NOX

[[Page 54451]]

deficit and benefit are proposed to be as follows:
    NOX Deficit:

    [GRAPHIC] [TIFF OMITTED] TR08SE00.007
    
Where:

NOXDef = the NOX deficit for the quarter(s) 
the refiner's annual average NOX performance exceeds the 
applicable NOX standard of 1461 mg/mile, expressed in 
tons.
NOXad = the average volume weighted NOX 
emissions performance for the quarter(s) the refiner exceeds the 
applicable NOX standard, measured in mg/mile.
Gd = the volume of gasoline produced during the 
quarter(s) the refiner exceeds the applicable NOX 
standard, measured in gallons.


    NOX Benefit:

    [GRAPHIC] [TIFF OMITTED] TP08SE00.001
    

Where:

NOXBen = the NOX benefit during the quarter(s) 
the refiner's annual average NOX performance is below the 
applicable NOX standard of 1461 mg/mile.
NOXab = the average volume weighted NOX 
emissions performance for the quarter(s) the refiner is below the 
applicable NOX standard, measured in mg/mile.
Gb = the volume of gasoline produced during the 
quarter(s) the refiner is below the applicable NOX 
standard, measured in gallons.

    The calculations would be performed on a quarterly basis. As an 
example, a 10,000 barrel per day refinery would produce 37.8 million 
gallons during a given quarter. Assuming the gasoline, on average, met 
a NOX standard of 1500 mg/mi, the total NOX 
deficit for the quarter would be

[GRAPHIC] [TIFF OMITTED] TP08SE00.002


    As an example of how the NOX deficit would have to be 
paid back on a two for one basis, assume that the same refinery has a 
two year alternative averaging period. Assuming that the refinery were 
to produce the same quality and volume of gasoline for the first five 
quarters and then began to produce gasoline meeting the statutory 
baseline (in order to meet the first standard), the total 
NOX deficit, in tons, would be 199 tons. In order to meet 
the second standard, the paying back of double the NOX 
deficit, the refiner would have to produce a total NOX 
benefit of 199 * 2, or 398 tons of NOX benefit. Thus, the 
alternative averaging period is designed to ensure that there is no 
overall environmental detriment by requiring a certain amount of 
NOX overcompliance.
Interim Milestones
    A refiner would be able to qualify for an extended averaging period 
only if, at the time of the petition, it activates a refinery that 
faces substantial demonstrated hardship in producing gasoline which 
meets the anti-dumping statutory baseline NOX standards 
during the early years of production. EPA believes that this hardship 
is most likely to be the result of a lack of the necessary refinery 
processing equipment. Moreover, it would be necessary for such a 
refiner to obtain this processing equipment in order to begin producing 
gasoline that would allow the refinery to comply with the proposed 
overall alternative averaging period NOX standard. However, 
if such a refiner were to fail to obtain this processing equipment in a 
timely manner it is likely the refiner will not be able to offset the 
NOX deficit created during the first phase of the extended 
averaging period by the required compliance deadline.
    For this reason EPA believes it is appropriate for a refiner who 
has been granted an extended averaging period to demonstrate that 
reasonable progress is being made toward obtaining necessary processing 
equipment. As a result, under today's proposed rule EPA is requiring 
refiners to include in extended averaging period petitions the expected 
dates for key milestones for obtaining necessary processing equipment. 
These milestones normally would include the dates for signing the 
contract for equipment design, for obtaining necessary permits, for 
obtaining financing commitments, and for breaking ground for 
construction. During the petition review EPA intends to evaluate the 
milestones proposed by the refiner and establish appropriate milestones 
that will be incorporated into any petition approval. The refiner would 
be required to submit reports to EPA demonstrating these milestones are 
met as a contingency for continued operation under the alternative 
compliance period.
    Upon a refiner's failure to meet a milestone, or failure to submit 
a milestone report by the required date, the Administrator would have 
the discretion to accelerate the date by which the refiner would have 
to produce gasoline that complies with the annual average statutory 
baseline NONOX standard, so that the gasoline produced by 
the refinery beginning with the quarter immediately following the 
quarter during which the failure occurred (and during each subsequent 
quarter) would have to meet that standard. That is, a failure to meet a 
milestone may result in a requirement for the refinery to begin 
producing gasoline that complies with the statutory baseline beginning 
with the next quarterly averaging period and continuing thereafter. The 
acceleration of the requirement regarding compliance with the annual 
average statutory baseline NOX standard would not affect any 
of the other standards or requirements applicable to the refinery under 
this section (e.g., the refinery would still be required to comply with 
the overall alternative averaging period NOX standard by 
producing gasoline that overcomplies with the annual average statutory 
NOX standard by twice as much as the early NOX 
deficit generated by the refinery). Moreover, upon the refiner's 
failure to meet a milestone, or failure to submit a milestone report by 
the required date, we are proposing that the refiner would forfeit any 
NOX credits that it was required to have banked as of that 
time. EPA realizes that a refiner in this situation may not be able to 
produce gasoline that meets the statutory baseline and may be forced to 
produce products other than gasoline, such as blendstocks, or to close 
the refinery. However, allowing such a refiner to generate additional 
NOX deficits would only result in additional environmental 
harm.
Additional Requirements
    In addition to the proposed requirements described in the preceding 
paragraph, the following general requirements are proposed to apply to 
a refinery for which a petition is granted:
     The refinery must meet all applicable statutory baseline 
standards for an annual average compliance period, except the standard 
for NOX. For example, this means that the refinery would 
have to comply with the toxics standards on an annual basis.
     The refiner must designate all gasoline produced during 
the period of time that the refinery does not meet the annual average 
statutory baseline

[[Page 54452]]

standards as gasoline with a volatility of 9.0 pounds per square inch 
(psi).
     A refiner for which a petition is granted must provide a 
written demonstration that it has purchased and banked NOX 
credits equal to the NOX deficit calculated for the end of 
the preceding quarter and must retain these banked credits throughout 
the current quarter. The NOX credits are necessary in order 
to guarantee that the refinery does not generate a net NOX 
detriment. The amount of NOX credits required to be banked 
will be calculated each quarter. When the refinery begins to produce 
conventional gasoline that, on average, meets the anti-dumping 
NOX standard, it may sell NOX credits off in an 
amount equal to any NOX benefit generated in the preceding 
quarter. We believe that this approach permits more flexibility for the 
start-up refinery than an approach that would require them to make a 
significant up-front purchase of credits equal to the entire projected 
NOX deficit for the alternative averaging period.
     A refinery for which a petition is granted may not 
generate any Tier 2 sulfur credits or allotments during the entire 
alternative anti-dumping compliance period.
     A refinery for which a petition is granted must submit 
anti-dumping compliance reports more frequently than other conventional 
gasoline refineries. This enhanced reporting will ensure that the 
refinery is on target with meeting the interim performance goals. The 
documents that must be submitted include quarterly batch reports and 
anti-dumping averaging reports for gasoline produced during each 
quarter, and documents that demonstrate the refiner has purchased and 
banked the necessary amount of NOX credits to equal the 
NOX deficit calculated for that quarter.
Change in Alternative Averaging Period
    At any point during the pendency of the alternative conventional 
gasoline anti-dumping compliance period, we are proposing that the 
Administrator may, upon application by a refiner, approve a different 
alternative compliance period for a refinery already operating subject 
to an alternative compliance period. For example, if a refinery 
originally received an alternative compliance period with a duration of 
2 years beginning on January 1, 2001, at any time prior to the end of 
that compliance period (January 1, 2003), the Administrator may approve 
an application to assign to the refinery the standards and requirements 
that would have been applicable to the refinery had the refinery 
originally received one of the other alternative compliance periods. 
Any refinery for which a change in the applicable alternative 
compliance period is approved would thereafter operate as if the 
refinery had originally requested and received such new alternative 
compliance period, and would be subject to the standards and other 
requirements applicable under such new alternative compliance period. 
Consequently, for a refinery with an original alternative compliance 
period of 2 years beginning on January 1, 2001 (which would end on 
January 1, 2003), for which the Administrator later approves a change 
to a 3 year compliance period on January 1, 2002, the termination date 
for the new alternative compliance period would be January 1, 2004, and 
the refinery would need to begin producing gasoline that complies with 
the annual average statutory baseline during the quarter beginning 
January 2004.
    We are proposing that the Administrator will approve or disapprove 
any application for a different alternative compliance period, in 
writing, within six months of receipt, and in the case of an approval 
will include any conditions or other requirements to which the approval 
is subject. No such application may result in an alternative compliance 
period that extends beyond January 1, 2006. A refinery for which the 
Administrator approves a change in the alternative compliance period 
would be subject to all the standards and other requirements of the new 
alternative compliance period as well as any additional conditions or 
requirements that are included in the approval of the application for a 
changed alternative compliance period. Accept as specifically modified 
by this section, such refinery would have to continue to comply with 
all other standards and other requirements applicable under the 
conventional gasoline anti-dumping standards.

IV. 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;
    (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 proposed regulation would 
result in none of the economic effects set forth in Section 1 of the 
Order because it would generally relax the requirements of the anti-
dumping program and provides regulated parties with more flexibility 
with respect to compliance with the anti-dumping requirements. Pursuant 
to the terms of Executive Order 12866, OMB has notified us that it does 
not consider this a ``significant regulatory action'' within the 
meaning of the Executive Order and has waived review.

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.''
    This proposed rule does not have federalism implications. This 
proposed rule would 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. This 
proposed rule would permit refiners to petition for alternative anti-
dumping compliance periods and would not impose any substantial direct 
effects on the states. Thus, Executive Order 13132 does not apply to 
this proposed rule.

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

    Under Executive Order 13084, we may not issue a regulation that is 
not

[[Page 54453]]

required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, or 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 we consult with those 
governments. If we comply by consulting, Executive Order 13084 requires 
us 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 our 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 us 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 would not significantly or uniquely affect 
the communities of Indian tribal governments. Today's proposed rule 
would not create a mandate for any tribal governments. This proposed 
rule would apply to gasoline refiners. Today's proposed action would 
make some changes that would generally provide flexibility within the 
Federal anti-dumping 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 would 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 proposed 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, the Administrator has determined that this proposed 
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 rule on small 
entities.'' 5 U.S.C. Sections 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 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 permitting regulated parties, including small 
entities, to seek an extended anti-dumping compliance period. We have 
therefore concluded that today's proposed rule would 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

    This proposed action establishes a petition process that involves 
the collection of information. It also requires reports that will 
utilize existing RFG and anti-dumping reporting forms. Refiners that 
request alternative compliance periods for anti-dumping are already 
subject to anti-dumping reporting requirements, which include annual 
compliance reporting, but although refiners of RFG are required to 
submit quarterly batch reports and laboratory reports, refiners of 
conventional gasoline under the anti-dumping program are not generally 
subject to this quarterly reporting requirement. A refiner granted an 
alternative compliance period for anti-dumping under this rule would 
become subject to quarterly batch reporting and laboratory reports. 
Since this constitutes the collection of information as defined by the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq., the existing 
Information Collection Request (ICR) for the RFG and anti-dumping 
program will be submitted to OMB for approval to the collection of any 
information. A separate Federal Register notice will be published 
regarding the ICR. The Office of Management and Budget (OMB) has 
approved the information collection requirements contained in the final 
RFG and anti-dumping rulemaking (See 59 FR 7716, February 16, 1994) and 
has assigned OMB control number 2060-0277 (EPA ICR No. 1591.07).
    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 our 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, we 
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 a rule for which a written statement is 
needed, section 205 of the UMRA generally requires us 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 us to adopt an alternative other than the least 
costly, most cost-effective

[[Page 54454]]

or least burdensome alternative if the Administrator publishes with the 
final rule an explanation why that alternative was not adopted. Before 
establishing any regulatory requirements that may significantly or 
uniquely affect small governments, including tribal governments, an 
agency 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 
regulatory proposals with significant Federal intergovernmental 
mandates, and informing, educating, and advising small governments on 
compliance with the regulatory requirements.
    Today's 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. 
Today's proposed action would provide regulated parties with more 
flexibility with respect to compliance with the anti-dumping 
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 E.O. 12866, and (2) concerns an environmental health or 
safety risk that we have 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.
    We interpret 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 proposed 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. This proposed rule permits flexibility in establishing 
extended anti-dumping compliance periods in narrow circumstances where 
a net environmental benefit is expected.

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

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) 
directs us to use voluntary consensus standards in our 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 us to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards. Today's 
proposed action would not establish new technical standards or 
analytical test methods, and would not affect existing technical 
standards or analytical test methods.

J. 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, Anti-dumping, 
Reformulated gasoline.

    Dated: August 30, 2000.
Carol M. Browner,
Administrator.
[FR Doc. 00-22809 Filed 9-7-00; 8:45 am]
BILLING CODE 6560-50-P