[Federal Register Volume 70, Number 244 (Wednesday, December 21, 2005)]
[Rules and Regulations]
[Pages 75914-75921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24298]



[[Page 75913]]

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Part IV





Environmental Protection Agency





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40 CFR Part 80



Regulation of Fuel and Fuel Additives: Extension of California 
Enforcement Exemptions for Reformulated Gasoline to California Phase 3 
Gasoline; Final Rule

  Federal Register / Vol. 70, No. 244 / Wednesday, December 21, 2005 / 
Rules and Regulations  

[[Page 75914]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[OAR-2003-0217; FRL-8011-4]
RIN 2060-AK04


Regulation of Fuel and Fuel Additives: Extension of California 
Enforcement Exemptions for Reformulated Gasoline to California Phase 3 
Gasoline

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This final rule exempts refiners, importers, and blenders of 
gasoline subject to the State of California's Phase 3 reformulated 
gasoline (CaRFG3) regulations from certain enforcement provisions in 
the Federal reformulated gasoline (RFG) regulations. We are taking this 
action because we believe that gasoline complying with the CaRFG3 
regulations will provide emissions benefits equivalent to Federal Phase 
II RFG and because California's compliance and enforcement program will 
in practice be sufficiently rigorous to assure that the standards are 
met. Since the Federal RFG program began in 1995, California refiners, 
importers and blenders have been continuously exempted from certain 
enforcement-related requirements such as recordkeeping and reporting, 
and certain sampling and testing requirements. This final rule extends 
those exemptions, which are applicable to California Phase 2 gasoline, 
to CaRFG3. It also restores the definition of ``California gasoline'' 
which was erroneously and accidentally deleted during a prior 
rulemaking.

DATES: This final rule is effective February 21, 2006.

ADDRESSES: EPA has established a docket for this action under OAR-2003-
0217. All documents in the docket are listed in the EDOCKET index at 
http://www.epa.gov/edocket. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
the disclosure of which is restricted by statute. Certain other 
material, such as copyrighted material, is not placed on the Internet 
and will be publicly available only in hard copy form. Publicly 
available docket materials are available either electronically in 
EDOCKET or in hard copy at the Air Docket in the EPA Docket Center, 
EPA/DC, EPA West, Room B102, 1301 Constitution Avenue, NW., Washington, 
DC. The 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 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Anne Pastorkovich, Attorney/Advisor, 
Transportation and Regional Programs Division, Office of Transportation 
and Air Quality (6406J), Environmental Protection Agency, 1200 
Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (202) 
343-9623; fax number: (202) 343-2801; e-mail address: 
[email protected].

SUPPLEMENTARY INFORMATION:

I. General Information

    Regulated categories and entities potentially affected by this 
final rule include:

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                                                 NAICSs codes                        Examples of potentially
                   Category                           \a\        SIC codes \b\          regulated parties
----------------------------------------------------------------------------------------------------------------
Industry......................................          324110            2911  Petroleum refiners.
Industry......................................          422710            5171  Gasoline Marketers and
                                                        422720            5172   Distributors.
----------------------------------------------------------------------------------------------------------------
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) 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 the types of entities that EPA is now aware 
could be potentially regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
an entity is regulated by this action, one should carefully examine the 
RFG provisions at 40 CFR part 80, particularly Sec.  80.81 dealing 
specifically with California gasoline. If you have questions regarding 
the applicability of this action to a particular entity, consult the 
person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

II. History of the California Enforcement Exemptions

    Section 211(k) of the Federal Clean Air Act (the Act) directs the 
EPA to establish requirements for reformulated gasoline (RFG) to be 
used in specified ozone nonattainment areas, as well as ``anti-
dumping'' requirements for conventional gasoline used in the rest of 
the country. The areas covered by the Federal RFG program in California 
are San Joaquin Valley, Los Angeles, San Diego, and Sacramento.\1\ The 
RFG provisions of the Act require EPA to promulgate regulations to 
reduce the emissions in RFG covered areas of ozone forming volatile 
organic compounds (VOCs) and toxic air pollutants through the use of 
RFG in gasoline-fueled motor vehicles. The Act also specifies that RFG 
use result in no increase in the emission of oxides of nitrogen 
(NOX) over baseline levels (under Phase I of the program). 
Finally, gasoline subject to the RFG requirements must meet certain 
content standards for oxygen, benzene and heavy metals.
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    \1\ See http://www.epa.gov/otaq/rfgmap.jpg for a map and list of 
RFG covered areas by state. A copy of the map and list has been 
placed in the docket for this rulemaking. The map and list are 
revised frequently--please contact the person identified in the FOR 
FURTHER INFORMATION CONTACT section for updated information. Please 
be aware that the statutory requirement for RFG use in Atlanta and 
Baton Rouge that arose from their classification as severe non-
attainment areas for the 1-hour ozone standard is currently stayed 
pursuant to court orders in pending litigation and, therefore, these 
areas do not currently appear on the map.
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    The RFG program was designed to be implemented in two phases. The 
Phase I program was in effect from January 1, 1995 through December 31, 
1999. The Phase II program, which began on January 1, 2000 and is 
currently in effect, is similar to the Phase I program, but requires 
even greater reductions in emissions of VOC, toxics and NOX. 
The regulations for RFG and conventional gasoline may be found at 40 
CFR part 80, subparts D, E, and F.
    On September 18, 1992, the California Air Resources Board (CARB) 
adopted regulations establishing California's Phase 2 reformulated 
gasoline program (``California Phase 2 RFG''), which became effective 
March 1, 1996. These regulations established a comprehensive set of 
gasoline specifications designed to achieve reductions in emissions of 
VOCs, NOX, carbon monoxide (CO), sulfur dioxide, and toxic 
air pollutants

[[Page 75915]]

from gasoline-fueled motor vehicles.\2\ The California Phase 2 RFG 
regulations set standards for eight gasoline parameters--sulfur, 
benzene, olefins, aromatic hydrocarbons, oxygen, Reid vapor pressure 
(RVP), and distillation temperatures for the 50 percent and 90 percent 
evaporation points (T-50 and T-90, respectively). These regulations 
also provide for the production and sale of alternative gasoline 
formulations, with certification under the CARB program based on a 
predictive model or on vehicle emission testing.
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    \2\ California's reformulated gasoline regulations, includng 
Phase 2 and Phase 3, are at Title 13, California Code of Regulations 
(CCR), section 2250 et seq. (May 1, 2003). A copy of the regulations 
have been placed in the docket.
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    EPA previously adopted enforcement exemptions for California Phase 
2 gasoline under the Federal Phase I RFG program.\3\ In doing so, we 
concluded that:
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    \3\ See 59 FR 7758 (February 16, 1994) and 63 FR 34818 (June 26, 
1998).
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    (1) The emission reductions resulting from the California Phase 2 
standards would be equal to or greater than the Federal Phase I RFG 
standards (i.e., the standards that were applicable from January 1, 
1995 through December 31, 1999),
    (2) The content standard for benzene under California Phase 2 would 
be equivalent in practice to the Federal Phase I content standard and 
that the oxygen content standard of 2.0 weight percent would be 
achieved in Federal RFG areas, and
    (3) CARB's compliance and enforcement program was designed to be 
sufficiently rigorous to ensure that Federal Phase I requirements would 
be met in practice.
    Consequently, while the Federal Phase I RFG standards continued to 
apply in California, EPA exempted refiners, importers, and blenders of 
gasoline sold in California from many of the enforcement-related 
provisions of the Federal Phase I RFG regulations. The exemptions 
applied to the gasoline they sold for use in California and included, 
with some limitations, the following provisions in 40 CFR part 80:

------------------------------------------------------------------------
        Requirement  exempted               Citation at 40 CFR 80.xx
------------------------------------------------------------------------
Compliance Surveys.\4\                 80.68
Independent Sampling & Testing.......  80.65(f)
Designation of Gasoline..............  80.65(d)
Marking of Conventional Gasoline.....  80.65(g) and 80.82
Downstream Oxygenate Blending........  80.69
Recordkeeping........................  80.74 and 80.104
Reporting............................  80.75 and 80.105
Product Transfer Documents...........  80.77
Parameter Value Reconciliation         80.65(e)(2)
 Requirements.
Reformulated Gasoline and              80.65(c)
 Reformulated Gasoline Blendstock for
 Oxygenate Blending (RBOB) Compliance
 Requirements.
Annual Compliance Audit Requirements.  80.65(h)
Compliance Attest Engagement           subpart F
 Requirements.
------------------------------------------------------------------------

    California refiners, importers, and blenders were not granted 
exemptions from these Federal enforcement requirements with regard to 
gasoline delivered for use outside California, because the California 
Phase 2 standards and the CARB enforcement program do not apply to 
gasoline delivered for use outside of California.
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    \4\ Partial exemption from oxygen survey requirement. See 63 FR 
34818, 34820-34822 (June 26, 1998). Also see fn. 9.
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    The original California enforcement exemptions expired on December 
31, 1999 when the Federal Phase II RFG started. The exemptions expired 
because they were based on a comparison of California Phase 2 gasoline 
and Federal Phase I RFG. An appropriate equivalency determination 
comparing California Phase 2 and Federal Phase II gasolines would have 
been premature in 1994, when the final RFG regulations were issued. 
However, on September 15, 1999, we published a direct final rule 
continuing the California enforcement exemptions beyond December 31, 
1999.\5\ We took this action after comparing California Phase 2 
gasoline and Federal Phase II RFG. In brief, we concluded that:
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    \5\ See ``Regulation of Fuels and Fuel Additives, Extension of 
California Enforcement Exemptions for Reformulated Gasoline Beyond 
December 31, 1999'' Direct Final rule, 64 FR 49992 (September 15, 
1999).
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    (1) The emissions reductions resulting from the California Phase 2 
RFG standards would be equal to or greater than the reductions from the 
Federal Phase II RFG standards;
    (2) The content standards for benzene under California Phase 2 
would be equivalent in practice to the Federal Phase II content 
standard and that the oxygen content standard of 2.0 weight percent 
would be achieved in Federal RFG areas, and
    (3) CARB's compliance and enforcement program was designed to be 
sufficiently rigorous to ensure that Federal Phase II requirements 
would be met in practice.\6\
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    \6\ See the Notice of Proposed Rulemaking (which accompanied the 
Direct Rule cited in footnote 5) at 64 FR 50036, 50038-50040 
(September 15, 1999).
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III. Today's Action and Response to Comments on the Notice of Proposed 
Rulemaking

    On August 11, 2004, EPA published a notice of proposed rulemaking 
for this rule in the Federal Register.\7\ This section summarizes the 
analyses and conclusions that we used in developing the proposed and 
final rule. It also discusses comments we received in response to the 
notice of proposed rulemaking.
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    \7\ See 69 FR 48827.
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A. California's Phase 3 Gasoline Rulemaking Activities

    On August 3, 2000, California first promulgated the CaRFG3 
regulations, which included a prohibition on the use of methyl 
tertiary-butyl ether (MTBE) by December 31, 2002. On March 21, 2001, we 
received a written request from the California Air Resources Board 
(CARB) requesting extension of the California enforcement exemptions of 
40 CFR 80.81 to CaRFG3. In that letter, CARB explains that its CaRFG3 
regulations were adopted in response to Governor Gray Davis's issuance 
of Executive Order D-5-99, directing the phase-out of methyl tertiary-
butyl ether (MTBE) as an additive in California gasoline by December 
31, 2002.
    Since March 21, 2001, CARB has completed a series of rulemakings 
that amended its CaRFG3 regulations. Many of these amendments were made 
necessary by a postponement of the MTBE phase-out and to accommodate 
the use of ethanol. The MTBE phase-out was delayed until December 31, 
2003 by Governor Gray Davis's issuance of a second Executive Order D-
52-02.\8\ The CaRFG3 regulations and all standards discussed in this 
notice represent the May 1, 2003 version of the California Reformulated 
Gasoline Regulations, Title 13, California Code of Regulations, Sec.  
2250 et seq.
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    \8\ A copy of the Executive Order has been placed in the docket.
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B. EPA's Analysis and Conclusions Regarding California's Phase 3 
Gasoline Regulations

    In developing the proposed rule and determining whether to apply 
the Federal enforcement exemptions of 40 CFR 80.81 to CaRFG3, we 
considered:

[[Page 75916]]

    (1) Whether the emissions reductions resulting from CaRFG3 would be 
equal to or greater than the reductions from Federal Phase II RFG 
standards;
    (2) Whether the content standard for benzene under CaRFG3 would be 
equivalent in practice to the Federal Phase II content standard and 
whether the oxygen content standard of 2.0 weight percent would be met 
in Federal RFG areas; \9\ and
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    \9\ Both oxygenated and nonoxygenated blends were considered in 
developing the notice of proposed rulemaking. At the time we issued 
the notice of proposed rulemaking, we did not know if California's 
request for a waiver of the oxygen content requirements for 
reformulated gasoline would be granted. We also did not know what 
the outcome would be with regard to the Energy Bill, H.R. 6, which 
addressed the elimination of the oxygen content requirement for 
reformulated gasoline. Since then, H.R. 6 was passed by both the 
House and Senate and was signed into law by President Bush. The 
Energy Policy Act of 2005, Pub.L. 109-58, Sec. 1504, amends section 
211(k) of the Clean Air Act to eliminate the oxygen content 
requirement under that section. We plan to initiate rulemaking 
activity soon to amend 40 CFR part 80 to reflect changes to the 
Clean Air Act that were enacted in the Energy Policy Act.
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    (3) Whether CARB's compliance and enforcement program is designed 
to be sufficiently rigorous to ensure that the Federal Phase II 
requirements would be met in practice.
    Considering these factors is appropriate and consistent with the 
analyses we used when we previously granted enforcement exemptions to 
refiners, importers, and blenders of California Phase 2 gasoline under 
both the Federal Phase I and Phase II RFG programs.\10\
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    \10\ See 59 FR 7813 (February 16, 1994) as amended at 59 FR 
36965 (July 20, 1994), 59 FR 39289 (August 2, 1994), 59 FR 60715 
(November 28, 1994), 63 FR 34825 (June 26, 1998), 64 FR 49997 
(September 15, 1999), and 66 FR 17263 (March 29, 2001).
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    To determine whether CaRFG3 emissions reductions are equivalent to 
or greater than Federal Phase II RFG, we have evaluated the CaRFG3 
standards and the Federal Phase II complex model standards. We have 
also considered whether possible ``real world'' CaRFG3 formulations 
would comply with Federal Phase II RFG emissions reduction standards. 
Compliance with performance standards under the Federal RFG program is 
determined by using the Phase II Complex Model. The Complex Model 
predicts VOC, toxics and NOX emissions relative to the 
emissions of 1990 baseline gasoline.\11\ These reduction percentages 
are compared to RFG performance standards. The Federal performance 
standards applicable to VOC-controlled RFG designated for VOC control 
region 1 apply to California areas covered by the Federal RFG 
program.\12\
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    \11\ ``Baseline gasoline'' refers to a general set of properties 
representative of a refiner's fuel in 1990. The purpose of 
establishing a baseline is to prevent the quality of gasoline to 
degrade in areas in which reformulated gasoline is not required. For 
a discussion of baselines, please refer to the RFG and anti-dumping 
final rule, 59 FR 7798 (February 16, 1994).
    \12\ See 40 CFR 80.41 and 90.71.
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    California's Phase 2 RFG regulations established specifications for 
eight gasoline parameters: sulfur, benzene, olefins, aromatic 
hydrocarbons, oxygen, RVP, T50 and T90. Some parameters are expressed 
as flat limits and some parameters are expressed as averaging limits 
with caps. California's flat limit option requires refiners to meet 
parameter standards on an every-gallon, rather than an averaged basis. 
The California flat limits are somewhat analogous to the Federal RFG 
per-gallon standards. The CaRFG3 regulations revised certain of these 
specifications and incorporated an updated version of the California 
predictive model.\13\ Refiners may produce complying California 
gasoline using a ``recipe'' that meets these parameter specifications. 
Alternative specifications for complying gasoline can be established by 
using the California predictive model to demonstrate that emissions are 
equivalent to those of a gasoline meeting the established 
specifications. Six of the parameters are also input parameters for the 
EPA Complex Model. The remaining two, T50 and T90, are closely related 
to E200 and E300, the remaining two Complex Model inputs.\14\
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    \13\ The California predictive model, like the Complex Model, is 
used to predict emissions performance of gasoline.
    \14\ There is a strong correlation between T50 (the 50% 
distillation temperature) and E200 (the percent distilled at 200F). 
Likewise, there is a strong correlation between T90 (the 90% 
distillation temperature) and E300 (the percent distilled at 300F). 
For the analysis in table 1, E200 and E300 were estimated from the 
flat limit T50 and T90 specifications using conversions found in 
EPA's complex model spreadsheet.
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    If CaRFG3 provides emission benefits equivalent to Federal Phase II 
RFG, then a gasoline formulation meeting the CaRFG3 flat limit 
specifications should provide emission reductions, as calculated by the 
complex model, which meet Federal Phase II performance standards. The 
following table, which was prepared for the proposed rule, compares the 
emissions performance of the CaRFG3 ``recipe,'' evaluated using the 
Federal Complex Model, to the Federal Phase II RFG performance 
standards: \15\
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    \15\ Oxygen was assumed to be 2.0 wt%, the midpoint of the 1.8-
2.2 wt% specification and RVP was 6.90, the RVP used with the 
evaporative compliance option in the predictive model.

 Table 1.-- Comparison of CaRFG3 Flat Limit Recipe Complex Model Performance With Federal Phase II RFG Standards
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                                                                    VOC (%         Toxics (%          NOX (%
                                                                  reduction)       reduction)       reduction)
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CaRFG3 Flat Limits with ethanol..............................             27.7             30.0             14.5
CaRFG3 Flat Limits with MTBE.................................             27.7             32.2             14.5
Federal per gallon standards.................................             27.5             20.0              5.5
Federal averaged standards...................................             29.0             21.5              6.8
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    Table 1 shows two sets of results; one where the oxygenate was 
assumed to be MTBE and the other where the oxygenate was assumed to be 
ethanol. The specific oxygenate affects the toxics performance 
estimate. Two sets of Federal standards are shown, the per-gallon 
standards and the averaged standards. (These numerically more stringent 
averaged standards are applicable if a refiner chooses to comply on 
average, rather than on a per gallon basis.) The emissions performance 
of the flat limit recipe gasoline is better than the Federal RFG per 
gallon standards for VOC, toxics and NOX reductions, and 
better than the Federal RFG averaged standards for toxics and 
NOX reduction. Thus, gasoline produced in compliance with 
the CaRFG3 flat limits (which are somewhat analogous to Federal per-
gallon standards) would achieve performance limits at least as 
stringent as the Federal Phase II RFG per-gallon standards for VOCs and 
at least as stringent as the averaged standards for toxics and 
NOX. Thus, CaRFG3 would meet Federal standards if every 
gallon were produced according to this recipe.

[[Page 75917]]

    However, as explained in the proposed rule, we anticipate that most 
refiners will use the CaRFG3 predictive model to certify alternative 
specifications with emissions equivalent to or better than the flat 
limit recipe. While there are similarities between the California Phase 
3 predictive model and the Federal Phase II Complex Model, there are 
also substantial differences. Consequently, two recipes found to have 
equal emissions with the California predictive model may not have equal 
emissions when evaluated by the Federal Complex Model. In other words, 
a finding that the Complex Model emissions performance of the flat 
limit recipe is equal to or better than the Federal standards does not 
guarantee that the Complex Model emissions performance of all gasoline 
blends that may be produced in compliance with CaRFG3 will meet or 
surpass the Federal standards.
    For purposes of determining whether or not CaRFG3 produced and 
certified under the predictive model would be equivalent to Federal 
Phase II RFG, we considered several reasonably likely ``real world'' 
CaRFG3 formulations. These formulations were developed in connection 
with California's 1999 request for a waiver from the Federal oxygen 
content requirement for reformulated gasoline.\16\ The CaRFG3 
formulations depicted in Tables 2 and 3 do not represent each and every 
possible gasoline formulation under the California's regulations, but 
we believe that they provide a representative sample of that universe 
of gasoline formulations that are likely to be produced under the 
CaRFG3 program. This analysis is discussed in more detail in the 
following paragraphs.
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    \16\ The California waiver analysis considered the effect of 
changes in gasoline composition on the entire on-road and off-road 
gasoline-power fleet. The analysis for this rule considers only 
Complex Model performance, which considers a portion of the on-road 
gasoline-powered fleet, since the Model considers 1990s technology 
vehicles.
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    In April 1999, California applied for a waiver of the Federal 
oxygen content requirement for reformulated gasoline. In order to 
complete an evaluation of the technical basis for this waiver request, 
we determined that additional refinery modeling was needed to forecast 
the likely composition of CaRFG3, after California's phase-out of 
methyl-tertiary-butyl-ether (MTBE), with and without an oxygen 
waiver.\17\ Consequently, EPA commissioned MathPro to conduct this 
modeling, which estimated the composition of ethanol-oxygenated and 
non-oxygenated CaRFG3 under various scenarios.\18\ These scenarios 
varied in terms of the continued or reduced use of MTBE outside of 
California, whether or not refiners avoid the patent held by Unocal on 
certain reformulated blends, and whether ethanol is used at 2.0 or 2.7 
weight percent oxygen. Although these modeling results were intended 
for use in the waiver evaluation, they are also helpful when 
considering the appropriateness of extending the existing enforcement 
exemptions to CaRFG3. EPA believes that these modeling results are 
likely to be the most accurate and comprehensive forecasts of the 
likely properties of the CaRFG3 that will be sold in Federal RFG areas 
in California. For the purpose of this rule, we have considered both 
oxygenated and non-oxygenated CaRFG3 blends. (See footnote 9 for a 
discussion of the oxygen content requirement in light of the Energy 
Policy Act of 2005.)
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    \17\ One of the reasons for this determination was that earlier 
modeling was done before the CaRFG3 predictive model was finalized. 
This may have affected the estimates of CaRFG3 properties developed 
from these earlier studies. EPA's Technical Support Document for the 
waiver decision ``Analysis of California's Reformulated Gasoline 
Oxygen Content Requirement for California Covered Areas'' discusses 
this in greater depth. A copy of this document has been placed in 
the docket.
    \18\ See ``Analysis of the Production of California Phase 3 
Reformulated Gasoline With and Without an Oxygen Waiver'', MathPro, 
Inc. (January 19, 2001). A copy of this document has been placed in 
the docket.
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    Table 2, below and as prepared for the proposed rule, shows that 
oxygenated CaRFG3 produced under each of the scenarios that EPA 
evaluated meets Federal RFG performance standards. All of these fuels 
had better performance than the Federal RFG per gallon standards. With 
one exception (underlined in Table 2), these fuels also met or 
surpassed the Federal RFG averaged standards. The one exception is a 
fuel that was estimated to provide a VOC reduction of 28.9%. Since the 
Federal per gallon standard is 27.5% and the averaged standard is 
29.0%, this fuel would meet the Federal per gallon but not the averaged 
standard. However, we believe for purposes of today's analysis, that 
the Federal per gallon standard is a more appropriate reference point.
    MathPro's modeling assumed that essentially all CaRFG3 is certified 
with the flat limit variant of the Predictive Model. Therefore, the 
formulations which they forecast have California predictive model 
emissions performance equivalent to, or better than, the flat limit 
recipe, but do not necessarily meet California predictive model 
averaged limit requirements. As previously noted, California's flat 
limit option requires refiners to meet parameter standards on an every-
gallon, rather than averaged basis. The California flat limits are 
analogous to the Federal RFG per-gallon standards. In both cases, 
refiners elect to meet less stringent standards on an every-gallon 
basis, rather than more stringent standards, on average. Consequently, 
it is appropriate to expect the complex model performance of these 
CaRFG3 formulations to meet the Federal Phase II per-gallon performance 
standards, but not necessarily to meet the Federal Phase II averaged 
standards.

                           Table 2.--Complex Model Performance of Oxygenated CaRFG3 Using MathPro Gasoline Property Estimates
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                                              Sulfur      RVP                           Aromatics   Olefins    Benzene                Toxics
           Ethanol  (wt% oxygen)              (ppm)      (psi)    E200  (%)  E300  (%)    (vol%)     (vol%)     (vol%)    VOC  (%)     (%)      NOX  (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2.0.......................................         15       6.66      47.20      87.60      24.10       4.40       0.64       30.2       32.9       14.8
2.0.......................................         10       6.74      46.40      88.70      23.30       3.90       0.57       29.6       34.1       15.4
2.7.......................................         10       6.85      46.90      88.10      23.20       3.80       0.70       29.0       32.8       15.4
2.7.......................................          9       6.84      46.60      88.00      23.30       3.80       0.68       29.0       32.9       15.4
2.0.......................................         17       6.60      46.80      88.30      26.50       3.40       0.62       30.1       32.0       14.3
2.0.......................................         17       6.60      45.20      90.60      19.10       4.60       0.77       30.8       33.8       16.4
2.0.......................................         13       6.62      46.20      87.70      24.30       3.70       0.60       30.1       33.2       15.0
2.0.......................................         12       6.60      46.10      88.20      28.60       2.90       0.51       29.6       32.1       14.2
2.7.......................................         10       6.76      46.20      88.60      25.70       2.80       0.66       29.1       32.1       14.9
2.7.......................................         12       6.60      44.90      87.70      22.40       2.80       0.71       30.2       32.9       15.7

[[Page 75918]]

 
2.7.......................................          8       6.73      45.40      89.00      26.30       1.90       0.63       28.9       32.1       15.0
2.7.......................................         10       6.69      45.40      88.30      25.30       2.80       0.65       29.4       32.3       15.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 3, below, shows that non-oxygenated CaRFG3 produced under 
each of the scenarios that EPA evaluated meets Federal RFG performance 
standards. All of the fuels shown in Table 3, which EPA believes to be 
reasonably representative of the fuel formulations that refiners would 
produce in California without an oxygen content requirement are 
predicted to perform better than the Federal RFG per gallon and 
averaged standards. (See footnote 9 for a discussion of the oxygen 
content requirement in light of the Energy Policy Act of 2005.)

                         Table 3.--Complex Model Performance of Non-Oxygenated CaRFG3 Using MathPro Gasoline Property Estimates
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                                              Sulfur      RVP                           Aromatics   Olefins    Benzene                Toxics
           Ethanol  (wt% oxygen)              (ppm)      (psi)    E200  (%)  E300  (%)    (vol%)     (vol%)     (vol%)   VOC  (% )     (%)      NOX  (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.0.......................................          8       6.60       47.7       87.4       23.0        5.9       0.57       30.7       32.5       15.1
0.0.......................................          7       6.60       48.7       87.6       28.6        4.7       0.51       30.0       30.4       14.0
0.0.......................................          8       6.60       48.1       87.2       26.9        2.4       0.46       29.7       32.0       14.3
0.0.......................................         10       6.60       47.7       88.0       24.3        3.9       0.49       30.3       32.9       14.8
0.0.......................................         12       6.60       49.0       85.8       24.8        6.0       0.52       30.5       32.2       14.3
0.0.......................................         10       6.60       49.2       87.4       28.6        4.1       0.53       30.0       30.2       13.8
0.0.......................................         12       6.60       47.6       86.8       21.2        6.3       0.52       31.0       33.8       15.3
0.0.......................................          9       6.60       47.9       87.6       25.7        3.9       0.49       30.1       32.2       14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Based upon a comparison of the CaRFG3 flat limit ``recipe'' and 
Federal Phase II Complex model standards, as well as a consideration of 
possible California fuel formulations certified using the California 
Phase 3 predictive model, we have concluded that the NOX, 
VOC and toxics emissions reductions resulting from the CaRFG3 standards 
would be equal to or greater than the Federal Phase II RFG standards.
    The content standard for benzene for CaRFG3 is equivalent to or 
better than the Federal Phase II standards. The California flat limit 
benzene standard is 0.80 volume percent and the averaged standard is 
0.70 volume percent with a 1.10 volume percent cap. By comparison, the 
Federal per gallon benzene standard is 1.00 volume percent and the 
averaged standard is 0.95 volume percent with a 1.30 volume percent 
cap. EPA retains the authority to sample and test California gasoline 
to make sure it meets all applicable Federal standards.
    In developing the proposed rule, we considered the design and 
implementation of CARB's enforcement program, which includes 
enforcement at refineries, import facilities, terminals, and service 
stations. CARB's enforcement program is generally outlined in its 
regulations and includes requirements that refiners submit annual 
compliance plans,\19\ which outline how they will meet CaRFG3 
requirements, and that refiners and importers conduct testing and 
maintain records of testing performed on batches of gasoline.\20\ CARB 
staff summarized information on its actual enforcement activities in 
fiscal years 1999-2000 and 2000-2001, indicating that 6.6% and 6.5% of 
gasoline sold in California was inspected, during each respective 
period. In 1999-2000, the violation rate was 1.9% (based on volumes 
sampled) and 0.5% (based on the number of samples). In 2000-2001, the 
violation rate was 0.16% (based on volumes sampled) and 1.06% (based on 
the number of samples). We believe that, considering the presence of 
adequate enforcement provisions in its regulations and CARB's actual 
enforcement activities, that the CARB enforcement program is 
sufficiently stringent to ensure that the California standards will be 
met. For all these reasons, we have determined that it is appropriate 
to apply the enforcement exemptions at 40 CFR 80.81 to refiners, 
importers, and blenders of CaRFG3.
---------------------------------------------------------------------------

    \19\ Title 13, CCR section 2269.
    \20\ Title 13, CCR section 2270.
---------------------------------------------------------------------------

C. Definition of California Gasoline

    This rule restores the definition of ``California gasoline,'' which 
was previously included in Sec.  80.81, but which was accidentally and 
erroneously removed from the Code of Federal Regulations. The 
definition is necessary because it describes the gasoline to which the 
enforcement exemptions may apply.

D. Response to Comments

    We received no adverse comments on the notice of proposed 
rulemaking. The only written comment received was from the Western 
States Petroleum Association and it was a positive one that urged us to 
finalize this rule as soon as possible.

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866, 58 Federal Register 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;

[[Page 75919]]

    (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 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 is not expected to have any adverse 
economic effects as described in the Order. This rule does not raise 
issues of consistency with the actions taken or planned by other 
agencies, does 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 rule does not impose any new information collection burden. 
Today's rule extends enforcement exemptions to refiners of CaRFG3 and 
would reduce burdens associated with overlapping Federal and state 
requirements, including recordkeeping and reporting requirements. 
However, the Office of Management and Budget (OMB), under the 
provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., has 
previously approved the information collection requirements contained 
in the final reformulated gasoline (RFG) and anti-dumping rulemaking 
and gasoline sulfur control rulemaking, and has assigned OMB control 
numbers 2060-0277 and 202-0308. A copy of the OMB approved Information 
Collection Request (ICR) may be obtained from the Collection Strategies 
Division; U.S. Environmental Protection Agency (2822T); 1200 
Pennsylvania Ave., NW., Washington, DC 20460.
    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 (RFA)

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business that has not 
more than 1,500 employees (13 CFR 121.201); (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the economic impacts of today's rule on small 
entities, I certify that this action would 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.'' See 5 U.S.C. 603 and 
604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule.
    Today's rule extends enforcement exemptions to refiners of CaRFG3 
and would reduce burdens associated with overlapping Federal and state 
requirements, including recordkeeping and reporting requirements. We 
have therefore concluded that today's rule will relieve regulatory 
burden for all small entities.

D. Unfunded Mandates Reform Act

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

[[Page 75920]]

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 rule does not have federalism implications. It does 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. Today's rule extends enforcement 
exemptions to refiners of CaRFG3 and would reduce burdens associated 
with overlapping Federal and state requirements, including 
recordkeeping and reporting requirements. Thus, Executive Order 13132 
does not apply to this 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'' are 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 rule does not have tribal implications. It will 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 rule applies to refiners, importers and blenders of CaRFG3 and 
does not impose any enforceable duties on communities of Indian tribal 
governments. Thus, Executive Order 13175 does not apply to this rule.

G. Executive Order 13045: Protection of Children From Environmental 
Health and 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 rule is not subject to E.O. 
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 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.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Pub L. 104-113, 12(d) (15 U.S.C. 272 note) directs 
EPA to use voluntary consensus standards in its regulatory activities 
unless to do so would be inconsistent with applicable law or otherwise 
impractical. Voluntary consensus standards are technical standards 
(e.g., materials specifications, test methods, sampling procedures, and 
business practices) that are developed or adopted by voluntary 
consensus standards bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards. Today's rule does not 
affect technical standards and raises no issues under the NTTAA.

J. Statutory Provisions and Legal Authority

    Statutory authority for today's rule comes from sections 211(c), 
211(i) and 211(k) of the CAA (42 U.S.C. 7545(c) and (k)). Section 
211(c) and 211(i) allows EPA to regulate fuels that contribute to air 
pollution which endangers public health or welfare, or which impairs 
emission control equipment. Section 211(k) prescribes requirements for 
RFG and conventional gasoline and requires EPA to promulgate 
regulations establishing these requirements. Additional support for the 
fuels controls in today's rule comes from sections 114(a) and 301(a) of 
the CAA.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule to the 
U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States before the rule is published in the 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 80

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

    Dated: December 15, 2005.
Stephen L. Johnson,
Administrator.

0
For the reasons set forth in the preamble, part 80 of title 40 of the 
Code of Federal Regulations is amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

0
1. The authority citation for part 80 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7545 and 7601(a).

Subpart D--[Amended]

0
2. Section 80.81 is amended by:
0
a. Revising paragraph (a).
0
b. Revising paragraph (c) introductory text.
0
c. Revising paragraph (e)(2) introductory text and (e)(3)(i).
0
d. Revising paragraph (g)(1) introductory text.
0
e. Revising paragraphs (h)(1) introductory text, (h)(1)(ii)(A), 
(h)(1)(ii)(C) and (h)(2)(i).
    The revisions read as follows:

[[Page 75921]]

Sec.  80.81  Enforcement exemptions for California gasoline.

    (a)(1) The requirements of subparts D, E, F, and J of this part are 
modified in accordance with the provisions contained in this section in 
the case of California gasoline.
    (2) For purposes of this section, ``California gasoline'' means any 
gasoline that is sold, intended for sale, or made available for sale as 
a motor vehicle fuel in the State of California and that:
    (i) Is manufactured within the State of California;
    (ii) Is imported into the State of California from outside the 
United States; or
    (iii) Is imported into the State of California from inside the 
United States and that is manufactured at a refinery that does not 
produce reformulated gasoline for sale in any covered area outside the 
State of California.
* * * * *
    (c) Any refiner, importer, or oxygenate blender of California 
gasoline that is manufactured or imported subsequent to March 1, 1996 
and that meets the requirements of the California Phase 2 or Phase 3 
reformulated gasoline regulations, as set forth in Title 13, California 
Code of Regulations, section 2250 et seq. (May 1, 2003), is with regard 
to such gasoline, exempt from the following requirements (in addition 
to the requirements specified in paragraph (b) of this section:
* * * * *
    (e) * * *
    (2) Such exemption provisions shall not apply to any refiner, 
importer, or oxygenate blender of California gasoline with regard to 
any gasoline formulation that it produces or imports and that is 
certified under Title 13, California Code of Regulations, section 2265 
or 2266 (May 1, 2003), unless:
* * * * *
    (3)(i) Such exemption provisions shall not apply to any refiner, 
importer, or oxygenate blender of California gasoline who has been 
assessed a civil, criminal, or administrative penalty for violations of 
subpart D, E, or F of this part or for a violation of the California 
reformulated gasoline regulations set forth in Title 13, California 
Code of Regulations, section 2250 et seq. (May 1, 2003).
* * * * *
    (g)(1) Any refiner that operates a refinery located outside the 
State of California at which California gasoline is produced (as 
defined in paragraph (a)(2)(ii) or (iii) of this section) is produced 
shall, with regard to such gasoline, provide to any person to whom 
custody or title of such gasoline has transferred, and each transferee 
shall provide to any subsequent transferee, documents which include the 
following information:
* * * * *
    (h)(1) For the purposes of the batch sampling and analysis 
requirements contained in Sec.  80.65(e)(1) and Sec.  
80.101(i)(1)(i)(A), any refiner, importer, or oxygenate blender of 
California gasoline may use a sampling and/or analysis methodology 
prescribed in Title 13, California Code of Regulations, section 2250 et 
seq. (May 1, 2003), in lieu of any applicable methodology specified in 
Sec.  80.46, with regard to:
* * * * *
    (ii) * * *
    (A) The gasoline must be produced by a refinery that is located in 
the state of California that produces California gasoline, or imported 
into California from outside the United States as California gasoline;
* * * * *
    (C) The refiner or importer must correlate the results from the 
applicable sampling and/or analysis methodology prescribed in Title 13, 
California Code of Regulations, section 2250 et seq. (May 1, 2003) with 
the method specified in Sec.  80.46, and such correlation must be 
adequately demonstrated to EPA upon request.
    (2) * * *
    (i) The samples are properly collected under the terms of a current 
and valid protocol agreement between the refiner and the California Air 
Resources Board with regard to sampling at the off site tankage and 
consistent with the requirements prescribed in Title 13, California 
Code of Regulations, section 2250 et seq. (May 1, 2003); and
* * * * *
[FR Doc. 05-24298 Filed 12-20-05; 8:45 am]
BILLING CODE 6560-50-P