[Federal Register Volume 68, Number 87 (Tuesday, May 6, 2003)]
[Proposed Rules]
[Pages 24311-24321]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10890]



  Federal Register / Vol. 68, No. 87 / Tuesday, May 6, 2003 / Proposed 
Rules  

[[Page 24311]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-7491-9]


Extension of Alternative Compliance Periods Under the Anti-
Dumping Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: Today's proposal would amend the provisions that EPA 
promulgated on September 8, 2000, when we published a direct final rule 
allowing start-up refineries to apply for a conventional gasoline anti-
dumping compliance period of longer than one year. Alternative 
compliance periods are available only to start-up refineries that are 
facing significant hardship in complying with the anti-dumping 
statutory baseline oxides of nitrogen (NOX) standard. 
Today's proposal would amend the alternative anti-dumping compliance 
period provisions to permit an alternative compliance period of up to 
seven years for start-up refineries owned by small refiners (but in no 
case extending beyond calendar year 2007), while requiring refineries 
to provide additional environmental benefits for any cumulative 
NOX deficits remaining at the end of the fifth or sixth 
calendar years of any alternative compliance period.
    A refinery with an alternative compliance period is allowed to 
produce gasoline that does not comply with the statutory anti-dumping 
NOX standard on an annual average basis, thereby generating 
a NOX emissions deficit in the early part of the alternative 
compliance period. However, the refinery must produce NOX 
emissions benefits before the end of the alternative compliance period 
that make up for these early deficits and that provide an additional 
environmental NOX benefit at least equivalent to the overall 
cumulative NOX deficit generated during the course of the 
alternative compliance period. To track its NOX compliance, 
the refinery must calculate its NOX emissions benefit or 
deficit on a quarterly basis using specified equations. This proposed 
rule would modify the method for determining a refiner's quarterly 
NOX emissions deficit or benefit for a refinery with an 
approved alternative compliance period, to account for ordinary 
seasonal variation in gasoline quality and use of different seasonal 
versions of the Complex Model. The net determination of NOX 
deficit or benefit would be unaffected. This proposal would also allow 
a refinery to meet all or some of the over-compliance requirement by 
purchasing and retiring NOX emissions credits instead of 
requiring the refinery to over-comply based on the actual performance 
of the gasoline it produces over the course of the alternative 
compliance period.
    Additionally, this proposed rule would allow a start-up refinery to 
petition to receive the less stringent anti-dumping statutory baseline 
exhaust toxics value as its conventional gasoline mobile source air 
toxics (MSAT) standard for all or part of its alternative anti-dumping 
compliance period. Thereafter, the refinery's conventional gasoline 
MSAT standard would be the MSAT conventional gasoline default baseline 
value.
    Finally, this proposed rule would make a correction to the 
quarterly reporting requirements for start-up refineries that have been 
granted an alternative anti-dumping compliance period. The existing 
regulation was accidentally promulgated without language requiring that 
quarterly reports be signed and certified by a responsible corporate 
officer. Today's proposal would correct that omission.

DATES: Comments or a request for a public hearing must be received by 
June 5, 2003.

ADDRESSES: To request a public hearing, please contact Anne 
Pastorkovich, Attorney/Advisor, Transportation & Regional Programs 
Division, U.S. Environmental Protection Agency, 1200 Pennsylvania 
Avenue, NW., (6406J), Washington, DC 20460 or by e-mail to 
[email protected]. No confidential business information 
(CBI) should be submitted by e-mail.
    EPA has established a public docket for this proposed rule under 
Docket ID No. OAR-2003-0007, which is available for public viewing at 
the Air and Radiation Docket and Information Center (EPA/DC) in the EPA 
Docket Center, EPA West, Room B102, 1301 Constitution Avenue, NW., 
Washington DC. The EPA Docket Center Public Reading Room is open from 
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Reading Room is (202) 566-1744, 
and the telephone number for the Air and Radiation Docket and 
Information Center is (202) 566-1742. An electronic version of the 
public docket is available through EPA Dockets (EDOCKET) at http://www.epa.gov/edocket. Use EDOCKET to submit or view public comments, 
access the index listings of the contents of the public docket, and to 
access those documents in the public docket that are available 
electronically. Once in the system, select ``search,'' then key in the 
docket ID number identified above.
    Any comments related to the proposed rule should be submitted to 
EPA within 30 days of this notice, and according to the following 
detailed instructions: Submit your comments to EPA online using EDOCKET 
(our preferred method) or by mail to EPA Docket Center, Environmental 
Protection Agency (6102T), 1200 Pennsylvania Avenue, NW., Washington, 
DC 20460.
    EPA's policy is the public comments, whether submitted 
electronically or in paper format, will be made available for public 
viewing in EDOCKET as EPA receives them and without change, unless the 
comment contains copyrighted material, CBI, or other information whose 
public disclosure is otherwise restricted by statute, is not included 
in the official public docket, and will not be available for public 
viewing in EDOCKET. For further information about the electronic 
docket, see EPA's Federal Register notice describing the electronic 
docket at 67 FR 38102 (May 31, 2002), or go to http://www.epa.gov/edocket.

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, or by e-mail to [email protected].

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

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

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                  Category                   NAICS Code *   SIC Code **                  Example
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Industry...................................       324120          2911   Petroleum refiners.
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* North American Industry Classification System.

[[Page 24312]]

 
** Standard Industry Classification System Code.

    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 all entities that we are now aware could 
potentially be regulated by this action. Other types of entities not 
listed in this table could also be regulated by this action. To 
determine whether your business is regulated by this 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 action to a particular entity, consult the 
person listed in the preceding section of this document.

II. Background

    The Clean Air Act requires EPA to establish rules for reformulated 
gasoline (RFG) designed to reduce vehicle emissions of ozone-forming 
volatile organic compounds (VOCs) and toxic air pollutants. The Act 
requires refiners, importers, and blenders to sell only reformulated 
gasoline in specific ``covered areas'' with the worst ozone problems. 
Other areas with ozone levels exceeding the public health standard have 
voluntarily chosen to become RFG covered areas. 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.
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    \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.
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    The purpose of the 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 the 
``baseline'' year 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 content specifications, or parameters, of a 
gasoline blend to calculate the 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 (``RVP'').
    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 emissions performance 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 
80.91(c)(5). There is no individual baseline volume for those 
refineries or importers for whom the statutory baseline is the 
individual baseline.
    Compliance with the anti-dumping requirements is generally 
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 each batch are volume-weighted 
to determine the annual average exhaust toxics and NOX 
emissions for the refinery or importer. Then, the annual average 
emissions are compared to the applicable 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, a one year compliance period is the norm. However, on September 
8, 2000 we published a rule that allows a refiner to apply for an 
alternative compliance period under 40 CFR 80.101(k) for a start-up 
refinery.\2\ To receive an alternative anti-dumping compliance period 
the refiner must show that it is starting up a refinery that will 
produce conventional gasoline and that it faces significant hardship in 
meeting the anti-dumping statutory baseline NOX standard. 
EPA may approve an alternative compliance period for any domestic or 
foreign refiner that meets these conditions. If EPA approves the 
application, we may establish a compliance period of two, three, four, 
or five years. Under Sec.  80.101(k)(6)(iv), no compliance period may 
exceed five years or extend beyond January 1, 2006. This date was 
picked because it represented the deadline for Tier 2 gasoline sulfur 
standards for most refiners. When EPA approves an alternative 
compliance period it also establishes milestones that require the 
refinery to begin meeting the annual statutory baseline by a specified 
date. Moreover, the refinery must produce gasoline by the end of the 
alternative compliance period that generates NOX emissions 
benefits that are equal to double the cumulative NOX deficit 
that the refinery generates during the alternative compliance period. 
Under the existing regulations, NOX emission benefits may 
only be generated by gasoline that is produced by the refiner and that 
over-complies with the annual NOX baseline standard. The 
refinery must also bank stationary source NOX credits or 
allowances equivalent to the NOX deficit it generates on a 
quarterly basis until it begins to produce gasoline that meets or 
exceeds the NOX statutory baseline standard.
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    \2\ For more information, see ``Establishment of Alternative 
Compliance Periods under the Anti-Dumping Program''--Direct Final 
Rule, 65 FR 54423 (September 8, 2000).
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III. Today's Proposed Action

A. Maximum Duration of Alternative Compliance Periods for Small 
Refiners

    This proposed rule would allow small start-up refiners to request 
an alternative compliance period under Sec.  80.101(k) of up to seven 
years, so long as that period does not extend beyond December 31, 2007. 
As with all applications for alternative anti-dumping compliance

[[Page 24313]]

periods, the Administrator would act upon the petition within six 
months. EPA believes that this change is appropriate for the reasons 
outlined below.
    The alternative anti-dumping compliance period provisions at 40 CFR 
80.101(k) are designed for refiners that are starting up production of 
conventional gasoline and could achieve the Tier 2 gasoline sulfur 
reductions earlier than required, but are facing significant hardship 
in complying with the anti-dumping statutory NOX standard. 
Under this provision, such a refiner may request an alternative anti-
dumping compliance period of greater than the ordinary one year 
(currently alternative compliance periods of two, three, four or five 
years are available). Any refinery subject to an alternative compliance 
period must meet various substantive and administrative requirements to 
ensure that there is no environmental detriment as a result of the 
longer compliance period. Such a refinery must produce a benefit that 
is equal to twice any NOX deficit it produces during the 
alternative compliance period. Sulfur significantly affects 
NOX emissions, and decreasing sulfur will result in 
significant NOX emissions reductions. Therefore, a refinery 
granted an alternative anti-dumping compliance period would almost 
certainly need to install sulfur-reducing technologies (such as those 
necessary to meet the Tier 2 gasoline standards) before the end of its 
alternative compliance period in order to generate the NOX 
benefits needed to meet its overall NOX obligations.\3\ In 
fact, one purpose for permitting a refinery to have an alternative 
anti-dumping compliance period was to promote refinery plans to meet 
the Tier 2 sulfur levels earlier than otherwise required.\4\
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    \3\ See 65 FR 54423, 54426 (September 8, 2000).
    \4\ Id. at 54425.
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    The existing regulations regarding alternative anti-dumping 
compliance periods make no distinctions based on refinery size. 
However, small refiners starting up a new refinery may face greater 
hardships than larger refineries in raising funds for construction of 
refinery units and installation of equipment to reduce gasoline sulfur. 
Under existing Sec.  80.101(k), a refiner may request a compliance 
period of up to five years and no compliance period may extend beyond 
January 1, 2006. We selected the January 1, 2006 date as the latest 
date for any alternative compliance period because it is the date by 
which most refiners must meet the 30 ppm average Tier 2 gasoline sulfur 
standards under 40 CFR 80.195 and must already have installed sulfur 
reduction technology. Because a refiner that complies with the 30 ppm 
sulfur requirement will also most likely comply with the annual average 
statutory anti-dumping NOX baseline,\5\ an alternative 
compliance period extending beyond this date would be unhelpful. 
Moreover, one of the intended benefits of the alternative compliance 
baseline provisions is to encourage early reductions in gasoline 
sulfur.
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    \5\ The NOX emissions performance of a refinery's 
gasoline improves dramatically when the refinery reduces the sulfur 
content of its gasoline, due to the effect of sulfur content on 
NOX emissions as calculated by the Complex Model.
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    However, if a refiner is a small refiner under the Tier 2 gasoline 
sulfur regulation, then full compliance with the regulations is not 
required until January 1, 2008.\6\ Thus, an alternative anti-dumping 
compliance period extending beyond calendar year 2005 may prove 
beneficial for a small refiner, and also is consistent with EPA intent 
to encourage early reductions in sulfur content. For example, small 
refiners may face particular hardship in raising capital and bringing 
new refinery units on line, including de-sulfurization equipment. In 
fact, one small refiner with an approved alternative compliance period 
believes that it will have difficulty complying within the five year 
maximum period under Sec.  80.101(k), and believes that a longer 
compliance period would be appropriate. The existing regulations for 
alternative anti-dumping compliance periods at Sec.  80.101(k) contain 
no provision for a compliance period that exceeds five years or that 
extends beyond January 1, 2006. However, we believe that it may be 
appropriate to allow small refiners to petition for an alternative 
anti-dumping compliance period of up to seven years, as long as the 
compliance period does not extend beyond calendar year 2007 (when small 
refiners generally will have to meet the Tier 2 sulfur requirements). 
This proposed approach would provide additional flexibility to small 
start-up refineries. Additionally, it would be extremely difficult for 
a refinery to generate the NOX benefits necessary to 
compensate for the cumulative NOX deficits generated during 
its alternative compliance period without implementing sulfur-reducing 
technologies as soon as possible and producing low sulfur gasoline 
earlier than otherwise required. Therefore, even with an alternative 
period extending through 2007, we believe that we would realize the 
intended benefits of early sulfur reductions.
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    \6\ See 40 CFR 80.260 and 80.553. Under certain circumstances, a 
refiner may have until 2010 to meet the final gasoline sulfur 
standards. However, we expect that most small refiners will fully 
comply with the 30 pm average Tier 2 gasoline sulfur standard by 
January 1, 2008.
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    For any new alternative compliance period petitions, in order for a 
refinery to receive an alternative compliance period that exceeds five 
years or that extends beyond calendar year 2005, we propose that the 
refiner demonstrate that it is a ``small refiner'' for purposes of 
EPA's Tier 2 low sulfur gasoline regulations \7\ and explain the 
conditions that justify the alternative compliance period requested. 
For a refinery that already has an alternative anti-dumping compliance 
period, and that wants to extend its compliance period beyond five 
years or calendar year 2005, we propose that the refiner submit a 
petition describing the hardships that make a longer alternative anti-
dumping compliance period appropriate and demonstrating that it is a 
small refiner. Specifically, any refiner requesting an alternative 
compliance period of more than five years, or extending beyond calendar 
year 2005, must include all information required under Sec.  
80.101(k)(2), appropriately updated to reflect current conditions. Such 
a refiner would have to include a clear explanation as to the hardship 
that makes it infeasible for it, as a small refiner, to meet the 
applicable milestones and standards within five years or by January 1, 
2006, whichever comes first. The refiner must show that it is has 
received approval as a small refiner under the Tier 2 gasoline sulfur 
regulations and that the conditions of that approval are still 
applicable. The application must be submitted by no later than January 
1, 2004. We chose this date since it permits reasonable time after 
promulgation of this regulation for a refiner to apply for the 
flexibility, while ensuring that timely decisions are made to produce 
sufficient clean gasoline for compliance purposes. The Administrator 
will act on the application within six months of receipt and will issue 
an approval or disapproval, in writing, including any conditions or 
other requirements to which the approval is subject.
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    \7\ See 40 CFR 80.225--80.235
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    Under this proposal, if EPA were to determine that the 
circumstances described in a petition warrant an extended compliance 
period, we would be able to grant a refinery an alternative compliance 
period of up to seven years total, so long as the alternative period 
would not extend beyond calendar year 2007. If EPA were to grant an 
alternative

[[Page 24314]]

anti-dumping compliance period of more than five years, or extending 
beyond calendar year 2005, EPA's approval would provide for appropriate 
milestones and other requirements. If EPA were to approve an extension 
to an existing alternative compliance period, we would adjust the 
compliance dates and other requirements as appropriate to reflect the 
new alternative compliance period.
    We propose that, if EPA finds that a refiner has provided false or 
misleading information in connection with any application relating to 
an alternative anti-dumping compliance period, we would notify the 
refiner that its application and any alternative compliance period that 
relies on such application would be void ab initio.
    We propose that, if a refiner's status changes at any time during 
an alternative anti-dumping compliance period and the refiner is no 
longer eligible for the small refiner hardship provisions of the Tier 2 
gasoline rule, then any refineries owned or operated by such refiner 
would no longer be eligible for an alternative anti-dumping compliance 
period that extends longer than five years or beyond calendar year 
2005.\8\ Any change in a refinery's alternative compliance period 
eligibility would become effective with the first full annual averaging 
period following the refiners loss of small refiner status. The 
refinery would be required to notify EPA immediately of any change in 
small refiner status under the Tier 2 gasoline regulation.\9\
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    \8\ See 40 CFR 80.230.
    \9\ See 40 CFR 80.230(b).
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    For any refinery with an alternative compliance period that exceeds 
five years, EPA proposed to require the refinery to provide additional 
NOX benefits (above and beyond those benefits required to 
provide a double payback of cumulative NOX deficits) if the 
refinery has any cumulative NOX deficits remaining at the 
termination of the fifth or sixth years of its alternative compliance 
period. As discussed in the September 8, 2000 action, we believe that a 
one year compliance period should be the norm, even though alternative 
anti-dumping compliance periods of up to five years may be appropriate 
in limited circumstances. We continue to believe that the shortest, 
appropriate compliance period is the correct one and we want to 
minimize any potential for short-term or long-term environmental 
detriment. We want to encourage refiners to meet the anti-dumping 
statutory baseline NOX standard, on average, for all of 
their gasoline as soon as possible. Any refinery that is granted an 
alternative anti-dumping compliance period of up to five years must 
produce a net NOX benefit by the end of the applicable 
period. In the case of a small refinery with an alternative compliance 
period of more than five years, we believe it is reasonable to require 
the refinery to provide additional NOX benefits if the 
refinery has not made substantial gains by the end of the fifth year of 
the compliance period, because such requirement will provide a 
deterrent against delays in the production of cleaner gasoline. 
Moreover, this requirement functions to minimize the potential for any 
environmental harm that might occur in the event that a refinery fails 
to meet its obligations under its alternative anti-dumping compliance 
period. The longer a refinery's alternative compliance period, the 
greater the potential for a refinery to generate a large NOX 
deficit, and the greater the potential risk to the environment if the 
refiner cannot meet its obligations. Thus, for an extended alternative 
compliance period, when a refinery carries NOX deficits too 
late into its compliance period, we believe it is appropriate for EPA 
to impose prophylactic requirements in the form of additional 
NOX benefit obligations.
    For every ton of NOX deficit remaining upon the 
expiration of the fifth year of any alternative anti-dumping compliance 
period, the small refiner would be required to provide an additional 
\1/2\-ton of NOX benefit by the end of the alternative 
compliance period. These additional NOX benefits are in 
addition to all other requirements of Sec.  80.101(k). Similarly, for 
every ton of NOX deficit remaining upon the expiration of 
the sixth year of any alternative compliance period, the refiner would 
be required to provide an additional 1-ton of NOX benefit by 
the end of alternative compliance period. We propose that these 
additional tons of NOX benefit may come from actual 
emissions benefits from gasoline that the refinery produces, or from 
the purchase and retirement of marketable NOX allowances or 
credits as discussed earlier in this notice.

B. Using NOX Credits or Allowances To Satisfy Double Payback 
Provisions

    Today's proposed rule would allow refiners to purchase and retire 
marketable stationary source NOX allowances or credits in 
order to satisfy the requirements for up to one-half of the total 
NOX payback under Sec.  80.101(k)(2). However, a refinery 
would have to compensate for the entire cumulative NOX 
deficit that it generates over the alternative compliance period by 
producing NOX benefits from gasoline that the refinery 
actually produces before the end of the alternative compliance period 
(measured in tons of NOX).
    Existing Sec.  80.101(k) requires refiners both to compensate for 
all NOX deficits generated during the alternative compliance 
period, and to generate additional NOX benefits before the 
end of the alternative compliance period. Accordingly, half of the 
total NOX payback represents repayment for ``dirtier'' 
gasoline produced earlier in the compliance period. The second half of 
the NOX payback (beyond the break-even point) represents a 
precautionary surplus environmental benefit. Currently, all 
NOX benefits must come from cleaner gasoline that the 
refinery actually produces. However, we believe it is appropriate to 
permit this surplus benefit to be paid in terms of either actual 
emission reductions from gasoline that the refinery produces, or from 
the purchase and retirement of marketable NOX allowances or 
credits. This would allow additional flexibility for the refiner to 
invest in and develop infrastructure at the refinery, including 
infrastructure needed to comply with the Tier 2 gasoline sulfur 
requirements early. In order to pay back the actual NOX 
deficit created in the earlier part of an alternative anti-dumping 
compliance period, a refinery would have to begin producing adequate 
quantities of low sulfur/low NOX gasoline to meet its multi-
year average compliance obligations by the end of the applicable 
alternative compliance period. Discussions with an affected refiner 
have confirmed this understanding.
    To provide for NOX benefits by way of NOX 
credits or allowances, a refiner would have to appropriately retire 
NOX credits or allowances on a timely basis. A refiner may 
acquire stationary source NOX credits or allowances for 
purposes of satisfying up to half of its total NOX repayment 
obligations under Sec.  80.101(k)(2) from any of several state 
stationary source programs covered by an approved state implementation 
plan (SIP), such as the Ozone Transport Commission (OTC) NOX 
Budget Program.\10\ In order to be applied toward the refiners 
NOX payback obligations, the allowances or credits must be 
current, marketable allowances or credits and must actually be retired 
by EPA or the administering state agency, and the retired credits or 
allowances must reflect actual NOX emissions reductions. It 
is the refiner's

[[Page 24315]]

responsibility to ensure that the credits or allowances are legitimate 
and are actually retired.
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    \10\ See http://www.epa.gov/airmarkets/progsregs/noxview.html 
for more detailed information about NOX allowances and 
credits.
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C. Correction of Quarterly Compliance Equations and Quarterly Reporting 
Requirements

    Today's proposed rule would change the equations for calculating 
quarterly NOX deficits and benefits to reflect ordinary 
seasonal variation in gasoline quality and differences in the 
applicable seasonal versions of the Complex Model. The current 
regulations require a refiner to purchase NOX credits when, 
on a quarterly basis, its average NOX emissions exceed the 
annual statutory NOX value. As stated in the September 8, 
2000, rule, ``* * * credits function as collateral against any 
NOX deficiency that the refiner creates to minimize the 
possibility of environmental harm in the event the refinery does not 
fulfill its obligation under the other requirements of the rule.''
    EPA believes that the current method of calculating NOX 
emissions deficits and benefits at Sec.  80.101(k)(3)(ii) may have the 
unintended effect of creating an unnecessary pattern of buying and 
selling because of the combined effects of seasonal gasoline quality 
and the application of seasonal versions of the Complex Model. EPA 
believes that we can achieve the same environmental outcome with the 
changes contained in today's action while avoiding the unnecessary 
outlay of capital by the refiner at a time when the refiner is 
operating under an alternative compliance period specifically to reduce 
the impact of financial constraints.
    On a quarterly basis, gasoline production during the first and 
fourth quarters of the calendar year is almost all, if not entirely, 
winter gasoline for most refiners. Winter gasoline is not only gasoline 
with different properties (like higher RVP) than summer gasoline, but 
it must also be evaluated using the winter Complex Model (which is 
substantively different from the summer Complex Model used for gasoline 
produced during the summer months). For a given fuel composition (based 
on fuel properties used in the Complex Model), the winter Complex Model 
yields higher emissions than the summer Complex Model. Winter emissions 
determined using the Complex Model will always be higher than annual 
emissions determined by combining winter and summer results from the 
Complex Model.\11\ Thus, under the current equation for calculating 
NOX deficit and benefit under Sec.  80.101(k)(3), a refiner 
will almost always have to purchase credits for the first and fourth 
quarters simply because the equation requires the comparison of the 
quarterly production against the annual average. A refiner could 
produce extremely clean winter gasoline in these quarters in order to 
not have to purchase credits under Sec.  80.101, but it is unlikely 
that a refiner in start-up mode would be able to produce such clean 
gasoline.
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    \11\ The annual statutory baseline value for NOX 
emissions is 1461 milligrams per mile (mg/mile). (See Sec.  
80.91(c)(5)(iv).) The summer and winter statutory baseline values 
for NOX are 1340 and 1540 mg/mile, respectively. These 
were determined by inputting the summer and winter statutory 
baseline fuel parameters into the summer or winter Complex Model, 
respectively. (See Sec.  80.45(b).) The annual statutory 
NOX baseline emissions value was determined from the 
weighting of the summer and winter baseline emissions using a 0.396 
fraction of summer and a 0.604 fraction of winter gasoline.
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    In the second and third quarters, winter gasoline constitutes 
roughly 20-30 percent of total gasoline production. Because of the 
inclusion of summer gasoline, second and third quarter NOX 
emissions determined via the Complex Model are generally less than the 
annual statutory NOX value. In fact, under Sec.  
80.101(k)(3)(ii), this overcompliance in the second and third quarters 
(resulting in a quarterly NOX benefit) would likely more 
than exceed the deficit created in the first and fourth quarters, 
allowing those credits to be sold.
    Thus, as a result of the combined effects of seasonal gasoline 
quality and the provisions of the Complex Model, the current manner in 
which NOX benefit and deficit are determined can cause a 
refiner with an alternative compliance period to expend capital, on a 
regular basis, to purchase credits to cover NOX deficits 
caused by the production of winter gasoline in the first and fourth 
quarters and to then be able to, regularly, sell those credits back 
following production of a mix of summer and winter gasoline in the 
second and third quarters.
    EPA believes that today's proposed rule, which would modify the 
equations at Sec.  80.101(k)(3) used to calculate the quarterly 
NOX deficit or benefit, would not change the environmental 
protection aspects intended under Sec.  80.101(k) and would facilitate 
start-up refineries' ability to install sulfur reducing technology and 
introduce cleaner gasoline to the market sooner. For the limited 
application of determining an approved refiner's quarterly 
NOX deficit or benefit for purposes of determining the 
refinery's obligations regarding the purchase of collateral 
NOX credits, today's proposed rule would provide that the 
refiner's quarterly NOX emissions will be compared to a 
quarterly NOX emissions value rather than to the annual 
statutory baseline NOX emissions value. The quarterly and 
annual NOX values (to which the refinery's NOX 
emissions are compared) are based on the statutory NOX 
seasonal values. A memo detailing the calculation of quarterly 
NOX values has been placed in the docket.
    Additionally, the September 8, 2000 rule omitted the requirement 
that quarterly reports be signed and certified by the owner or a 
responsible corporate officer of the refinery. This requirement is 
included in other fuels programs that have periodic compliance 
reporting. This proposed rule would correct the previous omission and 
require that quarterly reports be appropriately signed and certified.

D. Use of Conventional Gasoline Baseline Toxics Requirement as MSAT 
Baseline

    This proposed rule would allow a refinery with an approved 
alternative anti-dumping compliance period to petition EPA to 
substitute the anti-dumping statutory baseline toxic value for the 
mobile source air toxics (MSAT) default toxics baseline for some or all 
of a refinery's alternative anti-dumping compliance period. On March 
29, 2001, EPA published a rule for the control of emissions of 
hazardous air pollutants from mobile sources.\12\ This rule is 
generally known as the Mobile Source Air Toxics, or ``MSAT,'' rule. 
This rule requires that the average toxics emissions of gasoline 
produced or imported during each annual averaging period not exceed the 
average toxics emissions of gasoline produced or imported during the 
baseline period 1998-2000. Toxics emissions must be determined on a 
refinery or importer basis, and must be determined separately for 
reformulated gasoline and conventional gasoline.
---------------------------------------------------------------------------

    \12\ 66 FR 17230.
---------------------------------------------------------------------------

    The MSAT regulations specify that a refinery or importer must 
determine a unique individual baseline if it has data on gasoline 
produced or imported over at least a 12 month period between January 1, 
1998 and December 31, 2000. The regulations further specify that a 
refinery or importer which does not have the appropriate gasoline data 
shall have the default baseline values specified at 40 CFR 
80.855(b)(1). The default baseline values represent the national 
average toxics performance values of gasoline produced and imported 
during the baseline period.
    The regulations governing the alternative anti-dumping averaging 
provisions at Sec.  80.101(k) provide for

[[Page 24316]]

approved refiners to have the anti-dumping statutory baseline exhaust 
toxics emissions values specified at Sec.  80.91(c)(5) as their anti-
dumping standard. As discussed above, the alternative anti-dumping 
averaging regulations were finalized on September 8, 2000, and apply to 
refiners which had never produced gasoline subject to the anti-dumping 
requirements. Thus, a refiner approved for an alternative anti-dumping 
averaging period would not meet the 12 month requirement for 
establishing an individual MSAT baseline, and would be subject to the 
MSAT default baseline values at Sec.  80.855(b)(1). The conventional 
gasoline MSAT default baseline toxics performance value of 
approximately 94 mg/mile is a more stringent standard than the anti-
dumping statutory baseline value of approximately 104 mg/mile.
    The intent of the alternative averaging period provisions is to 
provide additional flexibility to approved refiners during the start-up 
of a refinery. The September 8, 2000, rule specifically excluded a 
start-up refinery's inability to meet its anti-dumping toxics standard 
as cause to petition for an alternative averaging period because the 
refinery units which impact benzene and aromatics (the primary fuel 
components affecting toxics performance) are different than those used 
to reduce sulfur (which leads to reduced NOX emissions). 
However, in that rule, EPA also required petitioning refiners to 
include a detailed description of the current and future state of the 
refinery equipment (processing units). During the course of adding 
refinery processing units and bringing them up to normal operational 
levels, gasoline quality can fluctuate significantly. The operational 
levels and throughput of the processing units is dependent on the 
target standard(s). Refinery process units produce a variety of 
blendstocks which have a wide range of properties. Some blendstocks are 
higher in sulfur or olefins, fuel parameters which significantly affect 
NOX emissions. Other blendstocks are higher in benzene and 
aromatics, two fuel parameters which contribute significantly to toxics 
performance as determined by the Complex Model. If a processing unit 
which produces a blendstock stream high in benzene or aromatics is put 
into operation first, toxics levels would be expected to be higher than 
when the gasoline is composed of many blendstocks, including those 
blendstocks with low benzene and aromatics levels which will dilute the 
high benzene and aromatics blendstocks' effect on toxics performance.
    Because of the variations in gasoline fuel quality that can occur 
during startup (as streams are added and then brought to normal 
operational levels), EPA believes that some start-up refineries may not 
be able to achieve the MSAT default baseline toxics performance, and 
that it may be appropriate for EPA to allow a refiner with an approved 
alternative anti-dumping averaging period to comply with the less 
stringent anti-dumping statutory baseline value as its conventional 
gasoline MSAT standard for some or all of its alternative averaging 
period. We propose to require that the refiner petition EPA for 
approval to use the anti-dumping statutory baseline value as its MSAT 
compliance baseline for a limited period of time not to exceed its 
alternative anti-dumping period. The refiner would have to specify the 
cost and/or technological constraints that make it infeasible for the 
refinery to achieve compliance with the MSAT compliance baseline value 
specified in Sec.  80.855(b), and the expected time-line for achieving 
compliance with that requirement (including achievable incremental 
improvements in toxics performance). We propose that, when EPA approves 
a refiner's petition, it will establish a date by which the refinery 
must comply with the MSAT default baseline. Upon expiration of the 
period during which the refinery may use the anti-dumping statutory 
baseline toxics value as its MSAT compliance baseline, the refinery 
would be subject to the MSAT compliance baseline value specified at 
Sec.  80.855(b). We believe that requiring the refiner to specify its 
technological and cost constraints, and basing the approval of such a 
petition on that information, is consistent with the Clean Air Act 
requirement at 202(l)(2).

E. Effects of Today's Proposed Rule

    The environmental effects of today's proposed rule would be 
minimal, as only one refinery has received an approved alternative 
anti-dumping averaging period so far. No new refineries have been 
constructed since 1997, and only five refineries have been reactivated 
since 1997.
    The economic effects of today's action are likely to be positive, 
on a small, local scale. Refinery start-up, with a less stringent 
toxics standard, would be able to proceed more quickly. Additionally, 
the cost of complying with a more stringent standard would not be 
imposed, and thus would not be passed on to consumers.

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866, (58 FR 51,735 (October 4, 1993)) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to 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 entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    This proposed rule is not a significant regulatory action within 
the meaning of the Executive Order. It would not have an annual effect 
on the economy of $100 million or more and it is not expected to have 
any adverse economic effects as described in the Order. This proposed 
rule does not raise issues of consistency with the actions taken or 
planned by other agencies, will not materially alter the cited 
budgetary impacts, and does not raise any novel legal or policy issues 
as defined in the Order.

B. Paperwork Reduction Act

    This proposed rule would not add any new requirements involving the 
collection of information as defined by the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. Today's proposed rule would only permit more 
flexibility to parties under an existing petitioning process for anti-
dumping. OMB has approved the information collection requirements 
contained in the final reformulated gasoline (RFG) and anti-dumping 
rulemaking and has assigned OMB control number 2060-0277. To the extent 
that this rule affects the MSAT provisions, the OMB control number for 
the information requirements will be listed in an amendment to 40 CFR 
part 9 in a subsequent Federal Register document after OMB approves the 
ICR. The information requirements are not enforceable until OMB 
approves them.

[[Page 24317]]

    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.

C. Regulatory Flexibility Act

    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 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.
    This proposed rule would grant small entities that are start-up 
refineries additional flexibility for purposes of meeting the existing 
NOX performance requirements under the conventional gasoline 
anti-dumping program and the toxics baseline under the mobile source 
air toxics (MSAT) program. In general, this proposed rule would allow 
small start-up refineries to apply for an alternative anti-dumping 
averaging period of up to seven years. It would allow refineries with 
an alternative averaging period to purchase NOX credits to 
provide the required annual average over-compliance by the end of the 
extended compliance period, instead of requiring actual NOX 
performance over-compliance. Today's proposed rule would allow refiners 
with an alternative averaging period to petition to have the annual 
average anti-dumping statutory toxics baseline as their MSAT baseline 
for some or all of an extended averaging period. Therefore, today's 
proposed rule would relieve existing regulatory burdens for small 
entities.

D. Unfunded Mandates Reform Act

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

E. 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. It 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. The proposed rule would permit 
start-up refineries reasonable flexibility in meeting anti-dumping and 
MSAT requirements. Thus, Executive Order 13132 does not apply to this 
proposed rule.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian tribes, on 
the relationship between the Federal government and the Indian tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian tribes.''
    This proposed rule does not have tribal implications. It would not 
have substantial direct effects on tribal governments, on the 
relationship between the Federal government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes, as specified in Executive Order 13175. 
This proposed rule applies to start-up refineries, including small 
businesses and grants reasonable flexibility in meeting anti-dumping 
and MSAT

[[Page 24318]]

requirements. This proposed rule, if adopted, would modify the Federal 
anti-dumping and MSAT requirements, but does not impose any enforceable 
duties on communities of Indian tribal governments. Thus, Executive 
Order 13175 does not apply to this proposed rule.

G. Executive Order 13045: Protection of Children From Environmental 
Health & Safety Risks

    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 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.

H. Executive Order 13211: Actions that Significantly Affect Energy 
Supply, Distribution or Use

    This proposed rule is not an economically ``significant energy 
action'' as defined in Executive Order 13211, ``Actions Concerning 
Regulations That Significantly Affect Energy Supply, Distribution, or 
Use'' (66 FR 28355 (May 22, 2001)) because it does not have a 
significant adverse effect on the supply, distribution, or use of 
energy. If adopted, this proposed rule would allow additional 
flexibility in meeting alternative anti-dumping compliance periods.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This proposed rule does not involve technical standards. Therefore, 
EPA did not consider the use of any voluntary consensus standards.

J. Statutory Authority

    Sections 114, 211, and 301(a) of the Clean Air Act as amended (42 
U.S.C. 7414, 7545, and 7601(a)). Today's proposed rule, and each 
element of today's action, including the promulgation or revision of 
regulations pertaining to fuels and fuel additives under section 211 of 
the Clean Air Act constitutes rulemaking under Clean Air Act section 
307(d). See 42 U.S.C. 7606(d)(1).

List of Subjects in 40 CFR Part 80

    Environmental Protection, Fuel additives, Gasoline, Imports, 
Labeling, Motor vehicle pollution, Penalties, Reporting and 
recordkeeping requirements.

    Dated: April 25, 2003.
Christine Todd Whitman,
Administrator.

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

    1. The authority citation for part 80 is proposed to continue to 
read as follows:

    Authority: Section 114, 211, and 301(a) of the Clean Air Act as 
amended (42 U.S.C. 7414, 7545, and 7601(a)).
    2. Section 80.101 is proposed to be amended by revising paragraphs 
(a), (k)(3)(i) through (k)(3)(iii), (k)(3)(vi)(B)(2) and (3), 
(k)(3)(viii), and (k)(6)(iv), and adding paragraph (l) to read as 
follows:


Sec.  80.101  Standards applicable to refiners and importers.

* * * * *
    (a) Averaging period. The averaging period for the standards 
specified in this section shall be January 1 through December 31, 
except as provided in paragraphs (k) and (l) of this section.
* * * * *
    (k) * * *
    (3) * * *
    (i) A refinery shall meet the following deadlines for compliance 
with the stautory baseline, depending on the length of the alternative 
averaging period applicable to the refinery:

----------------------------------------------------------------------------------------------------------------
                                      Compliance
                                      period must       Refinery must comply with the statutory baseline NOX
  Length of compliance period in    start no later   standard, on average, for gasoline produced beginning with
               years                 than  January                            the . . .
                                        1st of
----------------------------------------------------------------------------------------------------------------
2.................................            2004  7th quarter and all subsequent quarters.
3.................................            2003  10th quarter and all subsequent quarters.
4.................................            2002  13th quarter and all subsequent quarters.
5.................................            2001  16th quarter and all subsequent quarters.
----------------------------------------------------------------------------------------------------------------

    (ii)(A) By the end of the applicable alternative averaging period, 
the refinery must generate 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 refiner produced gasoline that did not comply with the statutory 
baseline.
    (B) At least one-half of the total NOX benefit required 
under paragraph (k)(3)(ii)(A) of this section must be generated by 
production of conventional gasoline at the refinery that is cleaner 
than the statutory baseline NOX standard, as calculated on a 
quarterly basis in accordance with the provision of this paragraph 
(k)(3)(ii) of this section.
    (C) Any portion of the total NOX benefit beyond that 
portion described under paragraph (k)(3)(ii)(B) of this section may 
come from either the

[[Page 24319]]

production of conventional gasoline at the refinery that is cleaner 
than the statutory baseline NOX standard, as calculated on a 
quarterly basis, or from the purchase and retirement of stationary 
source NOX credits or allowances, as provided in paragraph 
(k)(3)(iii) of this section.
    (D) For the purposes of this Sec. Sec.  80.101(k) and 80.101(l), 
the NOX deficit in tons shall be calculated in accordance 
with the following equation:

NOXDef = (NOXad - NOXsea)* Gd*2.7 x 
10-8

Where:

NOXDef = the NOX deficit, in tons, for a calendar 
quarter in which the refiner's NOX performance for that 
quarter exceeds NOXsea.
NOXad = the average volume weighted NOX emissions 
performance, in mg/mile, for a calendar quarter in which the refiner 
exceeds NOXsea.
NOXsea = quarterly statutory NOX performance 
values. First calendar quarter = 1540 mg/mile; Second calendar quarter 
= 1383 mg/mile; Third calendar quarter = 1381 mg/mile; Fourth calendar 
quarter = 1540 mg/mile.
Gd = the volume of gasoline produced during a quarter in which the 
refiner exceeds the applicable NOX standard, measured in 
gallons.

    (E) For the purposes of this Sec. Sec.  80.101(k) and 80.101(l), 
the NOX benefit in tons shall be calculated in accordance 
with the following equation:

NOXBen = (NOXsea - NOXab)* Gd*2.7 x 
10-8

Where:

NOXBen = the NOX benefit, in tons, for a calendar 
quarter in which the refiner's NOX performance for that 
quarter is below NOXsea.
NOXab = the average volume weighted NOX emissions 
performance, in mg/mile, for a calendar quarter in which the refiner is 
below NOXsea.
NOXsea = quarterly statutory NOX performance 
values. First calendar quarter = 1540 mg/mile; Second calendar quarter 
= 1383 mg/mile; Third calendar quarter = 1381 mg/mile; Fourth calendar 
quarter = 1540 mg/mile.
Gb = the volume of gasoline produced during a quarter in 
which the refiner is below the applicable NOX standard, 
measured in gallons.

    (iii) NOX Credits and Allowances. (A) Within 60 days of 
the end of each quarter for which the refinery produces gasoline for 
which there is a NOX deficit, the refiner shall purchase 
stationary source NOX credits or allowances that are equal 
to or greater than the amount of the NOX deficit generated 
during the quarter, and provide written demonstration of such 
transaction to the Administrator. These NOX credits or 
allowances are in addition to any NOX credits or allowances 
purchased during any previous quarters. NOX deficit is to be 
calculated on a quarterly basis in accordance with the equation in 
paragraph (k)(3)(ii)(D) of this section.
    (B) No NOX credits or allowances purchased by the 
refiner may contribute to the refinery's compliance with the 
requirements of paragraphs (k)(3)(ii)(B) of this section.
    (C) The refinery may sell NOX credits or allowances 
purchased under this paragraph (k)(3)(iii) only in an amount equal to 
or less than any NOX benefit that the refinery generates 
subsequently through the production of conventional gasoline at the 
refinery that is cleaner than the statutory baseline NOX 
standard, as calculated on a quarterly basis. A refiner may retire 
credits or allowances purchased under this paragraph (k)(3)(iii) at any 
time.
    (D) For purposes of satisfying a refinery's obligations under 
paragraphs (k)(3)(ii)(C), (k)(3)(iii)(A) or (l)(6)(ii) of this section, 
any NOX credits or allowances that a refiner purchases must 
have been validly generated as part of a state stationary source 
program covered by an approved state implementation plan (SIP) and must 
be current and marketable NOX credits or allowances. It 
shall be the refiner's responsibility to ensure that NOX 
credits or allowances are valid, current and marketable.
    (E) In order to be retired, NOX allowances or credits 
must be retired by EPA or the administering state agency, as provided 
for in the applicable state implementation plan (SIP). It shall be the 
refiner's responsibility to ensure that NOX credits or 
allowances are actually retired and that retirement is reflected in the 
records of EPA or the administering state agency.
* * * * *
    (vi) * * *
    (B)(1) * * *
    (2) A statement of the number of NOX credits or 
allowances purchased, sold or retired during the quarter and a current 
total, based upon all quarters, indicating the current balance of 
NOX credits or allowances; and
    (3) Any contractual documents, or other documents, evidencing the 
purchasing, banking or retiring of NOX credits or 
allowances.
    (viii)(A) The refiner shall submit reports demonstrating compliance 
with deadline requirements under paragraph (k)(3)(vii) of this section 
no later than 30 days after the applicable deadline occurs. Upon 
failure to meet a deadline requirement under paragraph (k)(3)(vii) of 
this section, the Administrator may accelerate the date by which the 
refiner would have to produce gasoline that complies with the annual 
average statutory baseline NOX standard under paragraph 
(k)(3)(i) or (l)(6)(i) of this section such 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. The acceleration of the 
requirement under paragraph (k)(3)(i) or (l)(6)(i) of this section, 
regarding compliance with the annual average statutory baseline 
NOX standard, does not affect the applicability of any other 
standard or requirement applicable to the refinery under this or any 
other section of the Act (e.g., the refinery must still comply with the 
overall alternative averaging period NOX requirements in 
paragraph (k)(3)(ii) of this section).
    (B) The reports required by this paragraph shall be on forms and 
following procedures specified by the Administrator of the EPA and 
signed and certified as correct by the owner or a responsible corporate 
officer of the refiner.
* * * * *
    (6) * * *
    (iv) No application may result in an alternative compliance period 
that extends beyond January 1, 2006, except as provided in paragraph 
(l) of this section.
* * * * *
    (l) Special alternative anti-dumping averaging period provisions 
for small refineries.
    (1) Eligibility for petition. A refiner who has been granted small 
refiner status under Sec.  80.235 and who meets the eligibility 
requirements in paragraph (k)(1) of this section may petition for an 
alternative compliance period that is greater than five years and/or 
that extends beyond January 1, 2006, provided that such application is 
submitted by January 1, 2004. No application under this paragraph (l) 
may result in an alternative compliance period that extends beyond 
January 1, 2008.
    (2) Application process. Applications must be submitted to the 
Administrator by January 1, 2004 to the following address: U.S. EPA--
Attn: Anti-Dumping Compliance Period (6406J), 1200 Pennsylvania Avenue, 
NW., Washington, DC 20460 (certified mail/return receipt) or U.S. EPA--
Attn: Anti-

[[Page 24320]]

Dumping Compliance Period (6406J), Transportation & Regional Programs 
Division, 501 3rd Street, NW., Washington, DC 20001 (express mail/
return receipt).
    (3) Contents of the application petition. Each petition must 
include:
    (i) The information and signed statements specified for all 
petitioners under Sec.  80.101(k)(2);
    (ii) A description of the hardships that make it infeasible, on a 
cost and/or technological basis, for the refinery to comply with an 
alternative anti-dumping compliance baseline of five years or less, or 
that ends on or before January 1, 2006.
    (iii) A quarterly timeline, from the date of the application, 
indicating the expected NOX emissions performance of the 
refinery's conventional gasoline, and the reasons for any expected non-
compliance with the statutory baseline standard for NOX on a 
quarterly basis (for example, a particular gasoline blendstock-
producing unit not yet installed). The timeline shall include the date 
by which the refinery will produce conventional gasoline that complies 
with the annual average statutory NOX baseline on a 
quarterly basis as determined according to Sec.  80.101(k)(3)(ii).
    (iv) A demonstration that the conditions for which the refinery was 
granted small refiner status under Sec.  80.235 are still applicable.
    (v) Information already submitted to the Administrator as part of a 
prior petition under paragraph (k) of this section, shall be updated if 
applicable.
    (4) Approval or disapproval of petitions. The Administrator may 
approve a petition under this paragraph (l) if it includes information 
sufficient to demonstrate to the Administrator's satisfaction that cost 
and/or technological constraints make it infeasible for the refinery to 
comply with an alternative anti-dumping compliance baseline of five 
years or less, or that ends on or before January 1, 2006. The 
Administrator will approve or deny the petition in writing within six 
months of receipt. An approval will include any conditions or 
requirements to which the approval is subject.
    (5) Cessation of Extended Alternative Compliance Period.
    (i) Refineries that qualify as small under Sec.  80.223, and that 
later are disqualified under Sec.  80.230(b), will be subject to the 
statutory anti-dumping baseline on an annual average basis beginning 
the calendar year immediately following the refinery's change in 
status.
    (ii) If the Administrator finds that a refiner provided false or 
inaccurate information on its application for small refiner status, 
upon notice from the Administrator, the refiner's extended alternative 
compliance period will be void ab initio.
    (6) Compliance requirements for qualifying small refiners.
    (i) If the refiner's application for an extended compliance period 
under this paragraph (l) is approved, then the refinery must comply 
with the statutory baseline NOX standard, on average, for 
gasoline produced beginning by not later than the 19th quarter (for a 
six year compliance period) or by no later than the 22nd quarter (for a 
seven year compliance period).
    (ii) The refinery must meet all other applicable requirements in 
paragraph (k) of this section, including the production of a net 
NOX benefit under paragraph (k)(3)(ii) of this section, 
except that the following provisions shall apply:
    (A) For any cumulative NOX deficit remaining at the 
expiration of the fifth year, based on the NOX emission 
performance of gasoline actually produced at the refinery, and as 
calculated under paragraph (k)(3)(ii) of this section, the refiner 
shall provide an additional NOX benefit equal to one half 
ton of NOX emissions per ton of deficit remaining by the end 
of the refinery's alternative anti-dumping averaging period.
    (B) For any cumulative NOX deficit remaining at the 
expiration of the sixth year, based on the NOX emission 
performance of gasoline actually produced at the refinery, and as 
calculated under paragraph (k)(3)(ii) of this section, the refiner 
shall provide an additional NOX benefit equal to one ton of 
NOX emissions per ton of deficit remaining by the end of the 
refinery's alternative anti-dumping averaging period.
    (C) The additional NOX benefits required under this 
paragraph (l)(6)(ii) may come from the production of gasoline at the 
refinery that is cleaner than the statutory baseline or from the 
purchase and retirement of stationary source NOX credits or 
allowances as provided in paragraph (k)(3)(iii) of this section.
    3. Paragraph (c) is added to Sec.  80.855 to read as follows:


Sec.  80.855  How is the compliance baseline determined?

* * * * *
    (c)(1) Eligibility to petition. A refiner who has been granted an 
alternative anti-dumping averaging period under Sec.  80.101(k) may 
petition the Administrator to have the statutory baseline exhaust 
toxics emissions, Phase II value specified in Sec.  80.91(c)(5)(iv) as 
its compliance baseline for the purposes of this subpart J for one or 
more of the years of the refiner's approved alternative anti-dumping 
averaging period.
    (2) Application process. Applications must be submitted to the 
Administrator by January 1, 2004 to the following address: U.S. EPA--
Attn: Anti-Dumping Compliance Period (6406J), 1200 Pennsylvania Avenue, 
NW., Washington, DC 20460 (certified mail/return receipt) or U.S. EPA--
Attn: Anti-Dumping Compliance Period (6406J), Transportation & Regional 
Programs Division, 501 3rd Street, NW., Washington, DC 20001 (express 
mail/return receipt).
    (3) Contents of the application petition. Each petition must 
include:
    (i) A copy of the refinery's approval for an alternative averaging 
period under Sec.  80.101(k).
    (ii) A description of the hardships that make it infeasible, on a 
cost and/or technological basis, for the refinery to comply with the 
compliance baseline specified in paragraph (b) of this section.
    (iii) A quarterly timeline, from the date of the application, 
indicating the expected exhaust toxics emissions performance of the 
refinery's conventional gasoline, and the reasons for any expected non-
compliance with the compliance baseline specified in paragraph (b) of 
this section (for example, a particular gasoline blendstock-producing 
unit not yet installed). The timeline shall include the date by which 
the refinery will produce conventional gasoline that complies with the 
baseline specified in paragraph (b) of this section on an annual 
average basis.
    (4) Approval or disapproval of petitions. (i) The Administrator may 
approve a petition if it includes information sufficient to demonstrate 
to the Administrator's satisfaction that cost and/or technological 
constraints make it infeasible for the refinery to comply with the 
baseline specified in paragraph (b) of this section. The Administrator 
will approve or deny a petition in writing within six months of 
receipt.
    (ii)(A) Each approval will specify the date by which the refinery 
must comply with the baseline specified in paragraph (b) of this 
section. No petition approval shall allow for use of the statutory 
baseline exhaust toxics emissions, Phase II value as a refinery's 
compliance baseline under this subpart J beyond the last day of a 
refinery's alternative anti-dumping averaging period under Sec.  
80.101(k) or Sec.  80.101(l).

[[Page 24321]]

    (B) An approval may include any conditions or other requirements to 
which the approval is subject.
    (5) Effective date for petition. (i) Beginning with the averaging 
period immediately following the end of the approved period under 
paragraph (c)(4) of this section, the compliance baseline for the 
purposes of this subpart J shall be as specified in paragraph (b) of 
this section.
    (ii) Notwithstanding the requirement specified in paragraph 
(c)(5)(i) of this section, if at any time the alternative compliance 
period approved under Sec.  80.101(k) or Sec.  80.101(l) ceases to 
apply, the approval granted under this paragraph (c) shall also cease 
to apply.

[FR Doc. 03-10890 Filed 5-5-03; 8:45 am]
BILLING CODE 6560-50-P