[Federal Register Volume 79, Number 65 (Friday, April 4, 2014)]
[Proposed Rules]
[Pages 18850-18866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07423]


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FEDERAL TRADE COMMISSION

16 CFR Part 306


Automotive Fuel Ratings, Certification and Posting

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission proposes amendments to its Rule for Automotive 
Fuel Ratings, Certification and Posting (``Fuel Rating Rule'' or 
``Rule'') that would adopt and revise rating, certification, and 
labeling requirements for ethanol-gasoline blends and would allow an 
alternative octane rating method. The proposed amendments further the 
Rule's goal of helping purchasers identify the correct fuel for their 
vehicles.

DATES: Comments on the proposed information requests must be received 
on or before June 2, 2014.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Fuel Rating Rule 
Review, 16 CFR Part 306, Project No. R811005'' on your comment, and 
file your comment online at https://ftcpublic.commentworks.com/ftc/autofuelratingscertnprm by following the instructions on the web-based 
form. If you prefer to file your comment on paper, mail or deliver your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, Room H-113 (Annex N), 600 Pennsylvania Avenue NW., 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Miriam Lederer, (202) 326-2975, 
Division of Enforcement, Bureau of Consumer Protection, Federal Trade 
Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    The Federal Trade Commission proposes amending its Fuel Rating 
Rule, 16 CFR part 306, to provide: (1) Revised rating, certification, 
and labeling requirements for blends of gasoline and more than 10 
percent ethanol (``ethanol blends''); and 2) an additional octane 
rating method for gasoline. The Commission previously proposed 
amendments governing ethanol blends in a 2010 Notice of Proposed 
Rulemaking (``2010 NPRM'').\1\ After reviewing the comments, the 
Commission responded in April 2011 by publishing final amendments 
addressing other issues. Specifically, the Commission approved a new 
octane rating method and declined to amend the biodiesel and biomass-
based diesel provisions.\2\ The Commission deferred consideration of 
ethanol blend labeling to consider an Environmental Protection Agency 
(``EPA'') decision permitting the use of ethanol blends between 10 to 
15 percent concentration (``E15'') in 2001 and newer conventional 
vehicles.\3\ The Commission now proposes ethanol-labeling amendments in 
response to comments received on the 2010 NPRM proposals, EPA's action, 
and changes in an ASTM International specification regarding ethanol.
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    \1\ Federal Trade Commission: Automotive Fuel Ratings, 
Certification and Posting: Notice of Proposed Rulemaking (``2010 
NPRM''), 75 FR 12470 (Mar. 16, 2010).
    \2\ Federal Trade Commission: Automotive Fuel Ratings, 
Certification and Posting: Final Rule Amendments (``2011 Final 
Amendments''), 76 FR 19684 (Apr. 8, 2011).
    \3\ EPA made this decision through a two-step process. First, 
the agency approved E15 for 2007 and newer vehicles. Environmental 
Protection Agency: Partial Grant and Partial Denial of Clean Air Act 
Waiver Application Submitted by Growth Energy to Increase the 
Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the 
Administrator (``EPA Waiver Decision I''), 75 FR 68094 (Nov. 4, 
2010). Then, it expanded its approval to 2001 and newer vehicles, 
based on additional test data. Environmental Protection Agency, 
Partial Grant of Clean Air Act Waiver Application Submitted by 
Growth Energy to Increase the Allowable Ethanol Content of Gasoline 
to 15 Percent; Decision of the Administrator (``EPA Waiver Decision 
II''), 76 FR 4662 (Jan. 26, 2011). For ease of discussion, this 
document refers to them together as the EPA ``waiver decision.''
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    The amendments proposed today retain the 2010 NPRM's proposal that 
entities rate and certify all ethanol blends, but alter the proposed 
ethanol label's disclosures, to provide consumers with more precise 
concentration and suitability information. The new proposed amendments 
also exempt EPA-approved E15 from the Commission's labeling 
requirements.
    The Commission also proposes an additional octane rating method 
that

[[Page 18851]]

uses infrared sensor technology (the ``infrared method'') to measure 
gasoline octane levels. Although the Commission did not propose this 
rating method in the 2010 NPRM, several commenters, including state 
regulatory agencies, supported its use.
    To accomplish these goals, this document first provides background 
on the Fuel Rating Rule, ethanol blends, and this rulemaking's 
procedural history. Then, it discusses the additions to the record 
since the 2010 NPRM.\4\ Finally, it responds to the new record evidence 
and describes the new proposed amendments in detail.
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    \4\ For a discussion of comments regarding other issues, see 
2011 Final Amendments, 76 FR at 19686-87.
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II. Background

A. The Fuel Rating Rule

    The Commission first promulgated the Fuel Rating Rule, 16 CFR Part 
306 (then titled the ``Octane Certification and Posting Rule''), in 
1979, in accordance with the Petroleum Marketing Practices Act 
(``PMPA''), 15 U.S.C. 2801 et seq.\5\ The Rule originally applied only 
to gasoline. In 1993, pursuant to PMPA amendments, the Commission 
expanded the Rule to cover all alternative liquid fuels.\6\ Currently, 
the Rule identifies a non-exhaustive list of ``alternative liquid 
automotive fuels.'' That list does not include ethanol blends below 70 
percent concentration.\7\
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    \5\ Federal Trade Commission: Automotive Fuel Ratings, 
Certification and Posting: Final Rule, 44 FR 19160 (Mar. 30, 1979).
    \6\ Federal Trade Commission: Automotive Fuel Ratings, 
Certification and Posting: Final Rule (``1993 Final Rule''), 58 FR 
41356 (Aug. 3, 1993).
    \7\ 16 CFR 306.0(i)(2).
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    PMPA authorizes the Commission to require octane ratings, cetane 
ratings (for diesel fuel), or ``another form of rating'' that it 
determines is more appropriate to carry out the Act's purposes. For 
alternative fuels, the 1993 amendments require a rating that is ``the 
commonly used name of the fuel with a disclosure of the amount, 
expressed as a minimum percentage by volume, of the principal component 
of the fuel.'' \8\ In promulgating those amendments, the Commission 
determined that this rating was appropriate because octane ratings 
might mislead consumers to believe that gasoline and alternative fuels 
are interchangeable and that alternative fuels' high octane ratings 
``signif[y] higher quality and better performance.'' \9\
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    \8\ 16 CFR 306.0(j)(2). For blends with more than 5 percent 
biodiesel or biomass-based diesel, the rating is a ``disclosure of 
the biomass-based diesel or biodiesel component, expressed as a 
percentage by volume.'' 16 CFR 306.0(j)(3).
    \9\ 58 FR at 41361.
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    The Fuel Rating Rule designates methods for rating and certifying 
fuels, as well as posting the ratings at the point of sale. The Rule 
also requires refiners, importers, and producers of any liquid 
automotive fuel to determine a fuel's ``automotive fuel rating'' before 
transferring it to a distributor or retailer. Any covered entity, 
including a distributor, that transfers a fuel must certify the fuel's 
rating to the transferee either by including it in papers accompanying 
the transfer or by letter.\10\ The Rule also requires retailers to post 
the fuel rating by adhering a label to the retail fuel pump; the Rule 
provides precise specifications regarding the content, size, color, and 
font of the labels.\11\
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    \10\ 16 CFR 306.6.
    \11\ 16 CFR 306.10; 306.12.
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B. Ethanol

    Ethanol is a renewable fuel made from corn or other plant 
materials.\12\ Fuel producers and retailers can blend ethanol with 
gasoline in various concentrations. Almost all gasoline in the United 
States contains ethanol in a low-level blend composed of up to 10 
percent ethanol and 90 percent gasoline.\13\ EPA recently approved the 
use of E15 in conventional vehicles model year (``MY'') 2001 and newer, 
subject to certain conditions.\14\
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    \12\ See www.afdc.energy.gov/fuels/ethanol.html.
    \13\ See www.afdc.energy.gov/fuels/ethanol_blends.html.
    \14\ EPA Waiver Decision II, 76 FR 4662.
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C. Procedural History

    This rulemaking began in 2009 when the Commission solicited general 
comments on the Fuel Rating Rule.\15\ After reviewing those comments, 
the Commission published the 2010 NPRM proposing, among other things, 
three changes to the Fuel Rating Rule's ethanol fuel provisions. First, 
the proposed amendments required rating ethanol-gasoline blends by the 
percentage of ethanol, rather than the currently required ``principal 
component,'' in order to accurately label ethanol blends below 50 
percent concentration. Second, the proposed amendments defined a new 
class of ethanol blends containing more than 10 but less than 70 
percent ethanol as ``mid-level ethanol blends.'' Third, the proposed 
amendments added new labeling requirements for ethanol blends. For mid-
level ethanol blends, the labels would disclose the ethanol content as 
a broad range of ``10 to 70 percent ethanol,'' a narrower range, or a 
specific percentage. For all ethanol blends, the proposed labels 
contained the additional disclosures ``may harm some vehicles'' and 
``check owner's manual.'' The Commission explained that the labels' 
``additional information should assist consumers in identifying the 
proper fuel for their vehicles.'' \16\
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    \15\ Federal Trade Commission: Automotive Fuel Ratings, 
Certification and Posting: Request for Public Comments, 74 FR 9054 
(Mar. 2, 2009).
    \16\ 2010 NPRM, 75 FR at 12474.
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    As described in detail below, commenters responding to the 2010 
NPRM objected to several aspects of the proposed ethanol labeling 
requirements and suggested various revisions. Generally, they favored a 
more precise disclosure of the fuel's ethanol concentration and a more 
specific disclosure concerning the fuel's proper use. They also 
encouraged the FTC to coordinate its labeling requirements with EPA's 
developing labeling requirements for E15. In addition, many commenters 
urged the Commission to allow the infrared method as an additional 
octane rating method.\17\
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    \17\ Commenters had not previously mentioned the infrared 
method, and the Commission did not propose it in the 2010 NPM. 
Therefore, the Commission declined to issue final amendments 
including the infrared method without providing notice and 
opportunity for comment on it. 2011 Final Amendments, 76 FR at 
19689.
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    On April 8, 2011, in light of the commenters' feedback and EPA's 
pending E15 rulemaking, the Commission published final amendments 
addressing the 2010 NPRM's non-ethanol provisions but announced that it 
would consider issuing ethanol-labeling amendments and the infrared 
method at a later date.\18\
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    \18\ Id.
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III. The Record

    The Commission received 54 comments in response to the 2010 NPRM 
that addressed ethanol labeling.\19\ In addition, EPA issued final 
rules governing use of E15 in conventional cars, including a pump label 
for E15 dispensers. Furthermore, ASTM International (``ASTM'') 
substantially revised its ethanol fuel specification for ethanol 
percentages in higher concentration ethanol blends. Finally, the 
Commission received many comments, including from industry, state 
regulatory agencies, and a consumer advocacy group supporting the use 
of the infrared method in testing octane.
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    \19\ These comments are located at: www.ftc.gov/os/comments/fuelratingnprm.
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A. Comments Received in Response to the 2010 NPRM's Proposed Ethanol 
Labeling

    Commenters generally objected to the 2010 ethanol-labeling 
proposal, but

[[Page 18852]]

their reasons differed. The Renewable Fuels Association (``RFA'') and 
Growth Energy, an association of ethanol producers, argued that the FTC 
lacks legal authority to promulgate the proposed labeling requirements. 
In addition, these commenters, along with other individuals and 
businesses, asserted that the proposed labels' suitability disclosures, 
``May harm some vehicles'' and ``Check owner's manual,'' unfairly 
conveyed a negative message about the fuel.\20\ In contrast, other 
commenters, including consumer groups, petroleum industry members and 
organizations, engine manufacturer organizations, and state regulators, 
argued that the risks from ethanol misfueling necessitated stronger 
suitability language and a more precise disclosure regarding the 
percentage of ethanol in the fuel.\21\
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    \20\ The following commenters specifically supported Growth 
Energy's comment: Bob Haskins Racing; ``Eichstadt''; Kurt Felker; 
Donna Funk; ``Gill''; David Gloer; ``Kelleher''; Kelley Manning; and 
Jonathan Overly. In addition to commenters supporting Growth Energy, 
the following individuals and entities submitted brief comments 
voicing support for ethanol fuels and/or criticisms of the proposed 
labels as unfair to those fuels: Dale Calendine; James Foley; 
Michael Green; Kelly Hansen; ``Jarman''; Steve Murphy; William 
Nankervis; Philbro; POET Biorefining; Patrick Reid; and Dan Sanders. 
Growth Energy, RFA, ICM, Inc., and the American Coalition for 
Ethanol (``ACE''), along with the other commenters identified in 
this footnote are hereinafter referred to collectively as ``ethanol-
industry commenters.'' The Commission recognizes that some of these 
commenters may not be ethanol industry members or employees, and is 
using the term only as shorthand for the purposes of this document.
    \21\ Specifically, these commenters were: The Center for Auto 
Safety; the American Petroleum Institute; Marathon Petroleum 
Company, LLC; the Alliance of Automobile Manufacturers; the 
Association of International Automobile Manufacturers; the Clean 
Vehicle Education Foundation; the Alliance for a Sane Alternative 
Fuels Environment; the National Marine Manufacturers Association; 
the Tennessee, New York, and Missouri Departments of Agriculture; 
and the New York Department of Environmental Conservation.
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1. Objections to the Proposed Labeling Requirements as Beyond the FTC's 
Authority
    RFA and Growth Energy argued that PMPA did not authorize the FTC to 
require the ethanol labels proposed in the 2010 NPRM. They asserted 
that PMPA permitted the FTC to require that retailers display only 
``automotive fuel rating[s].'' \22\ RFA asserted that, under PMPA, the 
term ``automotive fuel rating'' does not include ``representations as 
to the quality of the fuel or potential impacts on vehicle 
performance.'' \23\ They therefore argued that the proposed disclosure 
``May harm some vehicles/Check owner's manual'' did not fall within the 
definition of ``automotive fuel rating.'' \24\ Moreover, RFA viewed the 
proposed disclosures as denigrating to the ethanol blends' performance 
and quality and, therefore, beyond PMPA's authority.\25\
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    \22\ PMPA's definition of ``automotive fuel ratings'' includes: 
Octane ratings; cetane ratings; or ``another form of rating 
determined by the Federal Trade Commission, after consultation with 
[ASTM], to be more appropriate to carry out the purposes of this 
subchapter with respect to the automotive fuel concerned. 15 U.S.C. 
2821(17)(C).
    \23\ RFA comment at 3.
    \24\ Id.
    \25\ RFA comment at 3.
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    Growth Energy likewise focused on the definition of ``automotive 
fuel rating,'' arguing that the statute's intent was only to require 
octane, cetane, or similar ratings. The Act states: ``The term 
`automotive fuel rating' means (A) the octane rating of an automotive 
spark-ignition engine fuel; and (B) if provided for by the Federal 
Trade Commission by rule, the cetane rating of diesel fuel oils; or (C) 
another form of rating. . . .'' \26\ Growth Energy argued that the use 
of ``and'' and ``or'' evidences an intent that the FTC require either 
octane and cetane ratings or another, similar rating in their 
place.\27\
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    \26\ 15 U.S.C. 2821(17) (emphasis added).
    \27\ Growth Energy comment at 11.
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    Growth Energy further asserted that principles of statutory 
construction require the Commission to read ``another form of rating'' 
in light of the other listed ratings. Thus, according to Growth Energy, 
the statutory language ``makes it unambiguous that Congress wanted to 
require any other rating forms that the FTC might attempt to promulgate 
to be similar in purpose to octane or cetane ratings.'' \28\
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    \28\ Id. at 11-12.
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    In further support of their reading of PMPA, Growth Energy and RFA 
cited statements in the Congressional Record regarding the 1992 
amendments to the statute.\29\ In particular, Growth Energy cited 
statements describing the amendments as extending the statute's octane 
rating requirements to other fuels, thereby allowing consumers to 
compare different fuels' octane ratings.\30\ RFA noted that in its 1993 
rulemaking, the Commission relied upon legislative history describing 
an intent to ensure that consumers ``have a right to know what they pay 
for, and . . . dealers have a right to know that their competitors are 
not cheating.'' \31\ Growth Energy and RFA maintained that these 
statements foreclosed interpreting ``automotive fuel rating'' to 
include the proposed disclosures.\32\
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    \29\ Growth Energy also cited the original PMPA's legislative 
history as indicating intent to require retailers to post only 
octane ratings. Growth Energy comment at 7.
    \30\ Growth Energy comment at 8.
    \31\ RFA comment at 2-3 (internal quotation marks omitted).
    \32\ Id. at 3; Growth Energy Comment at 8. Growth Energy made 
two additional arguments related to process. First, it argued that 
the Commission has not fulfilled its obligation under PMPA to 
consult with ASTM. Growth Energy comment at 13. Second, it argued 
that the Commission must assess how the proposed disclosures further 
the ``objectives of an octane rating'' before requiring an 
alternative rating. Id. at 14.
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2. Objections to the Proposed Labels
    Commenters disagreed about the form and content of the proposed 
ethanol disclosures. Ethanol-industry commenters viewed the disclosures 
as excessive and urged what they characterized as more neutral content. 
In contrast, consumer groups, petroleum industry groups, auto and other 
engine manufacturing groups, as well as individual commenters, 
criticized the disclosures as inadequate given the risks of using 
ethanol blends in conventional vehicles.
a. Criticism of Proposed Labels as Unnecessary and Unfair
    Ethanol-industry commenters presented several arguments that the 
proposed ethanol labels were unnecessary and unfair. As discussed 
below, three of these commenters disputed evidence that ethanol blends 
harm conventional engines, and all asserted that the proposed labels 
denigrated ethanol blends. In addition, several argued that the amended 
Rule would unfairly require the proposed disclosures only for ethanol 
blends rather than all alternative fuels. To address these issues, 
almost all of these commenters \33\ suggested, among other things, 
replacing the proposed language with ``flex-fuel vehicles only,'' or 
substantially similar language.\34\
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    \33\ RFA opposed any narrative disclosure, arguing that ``[t]he 
ethanol content of the fuel is sufficient to inform consumers'' of 
misfueling risk. RFA comment at 8.
    \34\ See, e.g., ACE comment at 2; ICM, Inc. comment at 2. Growth 
Energy favored voluntary labeling guidelines that would include 
``Flex Fuel Vehicles Only'' on the labels. Growth Energy comment at 
18-19.
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    As a threshold issue, three commenters disagreed that the evidence 
established that there is a significant risk to consumers' vehicles 
from ethanol fuel use. RFA stated that earlier comments noting 
potential risks from ethanol ``provide no evidence that mid-level 
ethanol blends or E85 will damage conventional vehicles,'' explaining:

    There are many ongoing projects researching the effects of E15 
and E20 on vehicle engine, catalysts, Powertrain systems, fuel 
system damper, level sensors, and general material compatibility. 
This research

[[Page 18853]]

is not complete, and it is incorrect to state confirmatively that 
blends above 10 percent ethanol by volume are not appropriate for 
certain vehicles . . . . [E]vidence to date . . . indicates that 
mid-level ethanol blends do not harm motor vehicles.\35\
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    \35\ RFA comment at 6-7.

Growth Energy concurred, asserting ``[t]he statement that midlevel 
blends `MAY HARM SOME VEHICLES' has no apparent basis in the record, 
other than two comment letters unaccompanied by any technical or 
market-research analysis.'' \36\ ACE likewise argued that the need for 
``may harm some vehicles'' is ``unsupported by any of the data'' in the 
March 2009 record.\37\
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    \36\ Growth Energy comment at 15.
    \37\ ACE comment at 2.
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    ACE and RFA asserted that the Rule's current requirements already 
prevent misfueling, relying on a 2009 comment asserting that ethanol 
misfueling is virtually nonexistent.\38\ Thus, RFA concluded, ``using 
the commonly used name of alternative fuels with a disclosure of the 
amount . . . of the principal component of the fuel provides sufficient 
information for consumers.'' \39\
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    \38\ Id. at 1; RFA comment at 3. The Alliance of Automobile 
Manufacturers (``AAM'') submitted the referenced comment, which 
observed that ``pump labeling of E85 dispensers appears to have been 
successful'' because reports of misfueling have been ``virtually 
nonexistent.'' See 2010 NPRM, 75 FR at 12471 for further discussion. 
As discussed below, evidence submitted in response to the NPRM 
contradicts AAM's comment.
    \39\ RFA comment at 3.
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    Growth Energy, ACE, RFA, and the other ethanol-industry commenters 
also argued that the proposed labels' ``negative statements'' would 
mislead consumers by suggesting that they should not use ethanol blends 
in any type of vehicle.\40\ In particular, Growth Energy expressed 
concern that the term ``some'' would confuse consumers, leaving them 
``wondering if [their] vehicle fits within the `some' category'' and, 
thereby, deterring flex-fuel vehicle owners from purchasing ethanol 
blends.\41\ ICM, Inc., an agricultural and renewable energy company, 
concurred, stating that consumers could perceive the labels as a 
warning, thereby improperly influencing their purchasing decisions.\42\ 
ACE asserted that ``any fuel `MAY HARM SOME VEHICLES,' '' so the 
proposed labels would unfairly discourage use of ethanol blends by 
suggesting to a consumer that ``his/her vehicle may be [one] that would 
be harmed.'' \43\ According to ACE, the proposed labels would likely 
``lead a flex fuel vehicle owner to question whether a mid-level blend 
or E85 is suitable for the very type of vehicle that was designed to 
use that fuel.'' \44\ In addition, many other individual and business 
commenters described the labels as a ``gross misrepresentation of the 
fuel,'' \45\ and argued that requiring suitability language only for 
ethanol blends treats like fuels inconsistently.\46\
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    \40\ See, e.g., id. at 5. Other commenters voiced similar 
concerns. The Petroleum Marketers Association of America (``PMAA'') 
asserted that the proposed language would ``confuse consumers and 
raise an unwarranted suspicion'' that ethanol blends could damage 
cars regardless of concentration. PMAA comment at 2. In addition, 
the Tennessee Department of Agriculture, while not characterizing 
the suitability language as distorting or disparaging, expressed 
concern that the labels would lead flex-fuel vehicle owners to avoid 
ethanol fuel. Tennessee Department of Agriculture comment at 2.
    \41\ Growth Energy comment at 15.
    \42\ ICM, Inc. comment at 1.
    \43\ ACE comment at 2.
    \44\ Id.
    \45\ See, e.g., David Gloer comment; Kurt Felker comment; 
Patrick Reid comment.
    \46\ RFA comment at 6. AAM also acknowledged the inconsistency 
of requiring suitability language for some but not all fuels, but 
proposed addressing it by requiring the same advisory language for 
blends of gasoline and methanol, an alcohol-based fuel, as well as 
for biodiesel fuels. AAM comment at 2.
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    Finally, Growth Energy, ACE, and all other ethanol-industry 
commenters that addressed the issue criticized the proposed labels' 
orange background. Specifically, they argued that orange was an 
inappropriate color because the transportation sector traditionally has 
used that color to signal caution.\47\
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    \47\ See, e.g., ACE comment at 2; Growth Energy comment at 18; 
ICM, Inc. comment at 2.
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    To remedy the perceived content and format flaws, Growth Energy, 
ACE, and other ethanol-industry commenters, as well as some state 
regulators, suggested a ``For Flex-Fuel Vehicles Only'' disclosure (or 
substantially similar language), and an octane disclosure.\48\ 
Commenter ICM, Inc. explained:
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    \48\ See, e.g., Growth Energy comment at 18-19; ACE comment at 2 
(``The simple addition of the phrase `For Flex-Fuel Vehicles Only' 
would be a change that we would support.''); ICM, Inc. comment at 2; 
Patrick Reid comment; David Gloer comment. Growth Energy, consistent 
with its interpretation of PMPA, supported this type of disclosure 
only on a voluntary basis.

    This clear warning statement will protect consumers against 
improper fueling of their vehicles while not discouraging the market 
access and use of alternative fuels containing ethanol. . . . In 
addition, we strongly recommend including an octane rating 
requirement for alternative fuels containing ethanol. The FTC's 
proposed label for alternative fuels does not have the critical 
octane rating which ensures that consumers can choose the 
appropriate octane level for their engine.\49\
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    \49\ ICM, Inc. comment at 2.

The Tennessee Department of Agriculture supported replacing ``May harm 
some vehicles'' with ``For flexible fuel vehicles only,'' but favored 
retaining ``Check owner's manual.'' \50\ The New York Department of 
Environmental Conservation supported an octane disclosure on ethanol 
labels, but only in conjunction with a disclosure of ethanol content 
and ``any appropriate limitation on use of the fuel in order to prevent 
misfueling.'' \51\ In addition, Growth Energy and other ethanol-
industry commenters proposed changing the required background to blue, 
asserting that a dark blue background for ethanol blends would 
``distinguish[ ] these fuels from the other alternative fuels.'' \52\
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    \50\ Tennessee Department of Agriculture comment at 2.
    \51\ New York Department of Environmental Conservation comment 
at 2.
    \52\ Growth Energy comment at 18; see also, e.g., Patrick Reid 
comment; David Gloer comment.
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b. Criticism of Proposed Labels as Insufficient To Warn Against Risks
    In contrast, some commenters supported revising the proposed labels 
to include stronger misfueling disclosures. In addition, some of these 
commenters criticized the proposed labels' failure to address non-
automotive devices, such as lawn equipment. Notably, all of these 
commenters proposed adding a ``For Flex-Fuel Vehicles Only'' 
disclosure, and most supported additional disclosure language.
    Many commenters voiced concerns that the proposed labels would not 
prevent misfueling. For example, Marathon Petroleum Company, LLC 
(``Marathon'') stated that it ``does not believe that [the] FTC's 
current proposal to label mid-level ethanol blends . . . is enough of a 
consumer warning to prevent mis-fueling and advise the consumer of the 
potential dangers.'' \53\ The American Petroleum Institute (``API'') 
agreed, explaining:
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    \53\ Marathon comment at 1.

    [The proposed] language is inadequate because it fails to warn 
consumers that mid-level ethanol blends may cause damage to, and may 
not be used in, any equipment other than Flexible-Fuel Vehicles 
(``FFVs''). . . . [O]nly FFVs are currently permitted by EPA to use 
blends containing greater than 10 vol% ethanol. Use in non-FFVs is a 
violation of federal law. . . . Therefore, strong language is 
necessary to clarify that only specialty vehicles can use these 
fuels.\54\
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    \54\ API comment at 3.

Similarly, the Association of International Automobile Manufacturers 
(``AIAM'') supported stronger language because EPA does not allow 
distribution of ethanol fuel for use in conventional vehicles.\55\
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    \55\ AIAM comment at 2.

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[[Page 18854]]

    In addition, several commenters noted that misfueling can cause 
significant engine damage. For example, the Center for Auto Safety 
(``CAS''), a nonprofit consumer group, noted EPA's prohibition and 
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explained:

    Depending upon the percentage of ethanol in the fuel blend and 
the number of misfueling events, misfueling a non-FFV with mid-level 
or higher ethanol and gasoline blends can cause: An increase in HC 
and NOX emissions, malfunction of the engine, degradation 
of the catalyst or engine, and invalidation of the manufacturer 
warranty on the vehicle emissions control systems[.] \56\
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    \56\ CAS comment at 2 (citations omitted).

The Clean Vehicle Education Foundation (``CVEF'') similarly noted that 
misfueling potentially causes ``failure of the fuel system on the 
vehicle due to degradation of the elastomers and galvanic corrosion.'' 
\57\ PMAA likewise argued that the proposed labels are ``not 
sufficient'' because ethanol misfueling ``could void automobile 
warranties, damage catalytic converters, increase tailpipe emissions 
and expose petroleum retailers to increased risk of liability.'' \58\
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    \57\ CVEF comment at 1.
    \58\ PMAA comment at 1-2. See also The Alliance for a Safe 
Alternative Fuels Environment (``AllSAFE'') comment at 4 
(``[Conventional vehicles] may experience emissions control device 
failures, operability issues, and equipment failures when operated 
on fuels greater than E-10.'').
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    Moreover, Petroleum Marketers and Convenience Stores of Iowa 
(``PMCI''), an Iowa fuel retailer group, reported that ethanol 
misfueling occurs in the absence of labeling.\59\ Notably, this 
contradicts AAM's comment in the March 2009 record that ethanol 
misfueling is virtually nonexistent.
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    \59\ Specifically, PMCI related that ``[i]n Iowa where Mid-Level 
Ethanol blends and E85 are widely available and heavily promoted by 
interested groups, instances of misfueling occur frequently enough 
to be a cause for concern among retailers.'' PMCI comment at 1. See 
also PMAA comment at 1 (stating that ``misfueling would increase'' 
in the absence of labeling).
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    In addition, commenters AllSAFE, the National Marine Manufacturers 
Association (``NMMA''), and several individual commenters \60\ 
criticized the proposed labels for inadequately warning non-automotive 
engine owners of ethanol misfueling risks.\61\ AllSAFE explained that 
use of ethanol blends in non-automotive engines can cause ``emissions 
control device failures, operability issues, and equipment failures,'' 
which can present safety risks for those devices' users.\62\ NMMA noted 
that ethanol blends can adversely impact boat engines.\63\
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    \60\ See, e.g., Louis Ehlers comment (supporting an ethanol 
disclosure so consumers can select proper fuel for use in 
airplanes).
    \61\ Several petroleum companies and associations agreed that 
ethanol fuels pose risks to non-road engines. See, e.g., Marathon 
comment at 1.
    \62\ AllSAFE comment at 4.
    \63\ NMMA comment at 4. See also EPA Waiver Decision I, 75 FR at 
68129-37 (discussing non-suitability of E15 for non-road engines, 
vehicles, and equipment).
---------------------------------------------------------------------------

    Despite disagreeing with ethanol-industry commenters about the need 
to alert consumers of misfueling risks, commenters favoring stronger 
labels recommended a ``For Flex-Fuel Vehicles Only'' disclosure, albeit 
generally as part of a longer advisory. For example, commenters 
AllSAFE, NMMA, and API supported adding a ``Flex-Fuel Vehicles Only'' 
disclosure. AllSAFE and NMMA supported this additional disclosure in 
conjunction with an advisement that the law prohibits use of ethanol 
blends in an exhaustive list of non-automotive engines and 
equipment.\64\ API supported the disclosure along with legal 
prohibition language, an advisement that the fuel ``may damage'' non 
flex-fuel vehicles, and the word ``WARNING.'' \65\ Commenters CVEF, 
Marathon, AIAM, and PMCI also favored ``For Flex-Fuel Vehicles Only'' 
(or something very similar).\66\ Similarly, CAS supported a ``Flexible-
Fuel Vehicles Only'' labeling scheme, along with requiring 
``conspicuous signs indicating that [ethanol] fuels are for FFVs only'' 
and pump nozzle labels stating ``For FFV use only.'' \67\
---------------------------------------------------------------------------

    \64\ AllSAFE comment at 12; NMMA comment at 5. In addition, 
AllSAFE proposed going beyond labeling and requiring a ``visible 
gap'' between gasoline and ethanol fuel pumps. AllSAFE comment at 5.
    \65\ API comment at 4.
    \66\ CVEF comment at 1; Marathon comment at 2; AIAM comment at 
2; PMCI comment at 2. In addition, the Missouri Department of 
Agriculture (``MDA'') noted that the National Conference on Weights 
and Measures (``NCWM'') has adopted model regulations requiring 
ethanol fuel labels reading: ``For Use in Flexible Fuels Vehicles 
(FFV) Only.'' MDA comment at 2.
    \67\ CAS comment at 2.
---------------------------------------------------------------------------

3. Objections to Proposed Ethanol Concentration Disclosures
    In the 2010 NPRM, the Commission proposed continuing to allow 
labels for ethanol blends above 70 percent concentration to disclose 
the minimum amount in the blend, while requiring ``mid-level ethanol 
blend'' labels to disclose a range of 10 to 70 percent, a narrower 
range, or the exact percentage of ethanol in the blend. Of the fourteen 
commenters that addressed this issue, all but one favored a more 
specific fuel-concentration disclosure. Several argued that consumers 
needed more specificity because fuel economy decreases as ethanol 
concentration increases, affecting consumers' overall fuel costs. CVEF 
explained:

    Ethanol has a lower volumetric energy density than gasoline. A 
blend of ethanol in gasoline will have a lower energy density than 
the base gasoline by an amount proportional to the volume -% ethanol 
in the blended fuel. Ethanol . . . has an energy density of 
approximately 76,000 BTU/gallon. . . . Gasoline . . . [has] an 
energy density generally measured in the range of 109,000 to 119,000 
BTU/gallon. . . . [Thus,] for every 1% addition of ethanol in 
gasoline, the energy density of the fuel blend will drop by about 
0.33%. . . . As the volumetric energy density of the fuel goes down, 
so does the vehicle's fuel economy.\68\
---------------------------------------------------------------------------

    \68\ CVEF comment at 2 (citations omitted). CVEF's comment cited 
two studies of ethanol fuel economy supporting its observations. No 
commenter presented data contradicting those studies.

Individual commenter James Hyde submitted a similar analysis, and 
observed that the disparity in energy densities between gasoline and 
---------------------------------------------------------------------------
ethanol can affect consumers' overall fuel costs:

    [S]ince ethanol contains considerably less energy [than] does 
petroleum-derived gasoline, the consumer must purchase more gallons 
of mixtures to drive the same distance[,] . . . and so reducing the 
value to a consumer while also reducing the supplier's cost . . . . 
The consumer who is unaware of these differences may be [led] to 
believe that a fuel with a lower cost per gallon and a higher posted 
octane is a better value.\69\
---------------------------------------------------------------------------

    \69\ James Hyde comment at 1.

In addition, AAM noted that vehicle ethanol tolerances will likely vary 
in the future, and consumers will need a more specific disclosure ``to 
protect their vehicles and related warranties when selecting fuel.'' 
\70\
---------------------------------------------------------------------------

    \70\ AAM comment at 1. AAM also suggested changing the 
disclosure thresholds from 10 and 70 percent to 11 and 69 to further 
mitigate the risk of consumer confusion about selecting the proper 
fuel. Id. at 2.
---------------------------------------------------------------------------

    Thus, CVEF and AAM, as well as the Tennessee, New York, and 
Missouri Departments of Agriculture, and the New York Department of 
Environmental Conservation, supported more precise concentration 
disclosures.\71\ MDA supported a disclosure of the exact ethanol 
percentage.\72\ Others suggested allowing some flexibility. For 
example,

[[Page 18855]]

the Tennessee Department of Agriculture supported rounding to the 
nearest interval of 10 (e.g., disclose 62 percent ethanol as 60 
percent) because such rounding would ``provide[ ] reasonable 
flexibility, and also provide[ ] sufficient information for the 
consumer to make an informed choice.'' \73\
---------------------------------------------------------------------------

    \71\ CVEF comment at 1; AAM comment at 1; Tennessee Department 
of Agriculture comment at 2; New York Department of Agriculture and 
Markets comment at 1; MDA comment at 1; New York Department of 
Environmental Conservation comment at 2; AllSAFE comment at 8-9. As 
an alternative means of addressing the problem, Hyde suggested 
adopting unit pricing based on gasoline-gallon equivalents rather 
than an ethanol content disclosure. James Hyde comment at 2. AllSAFE 
similarly requested that the Commission use its authority under the 
FTC Act to require fuel labeling according to energy content (e.g., 
a label disclosing the BTU per gallon of fuel sold). AllSAFE comment 
at 10-11.
    \72\ MDA comment at 1. MDA favored an exact disclosure for only 
blends below 70 percent concentration. Id.
    \73\ Tennessee Department of Agriculture comment at 2.
---------------------------------------------------------------------------

    Significantly, ethanol-industry commenters also recommended a more 
precise content disclosure. Growth Energy, for example, favored an 
exact percentage disclosure because ``ethanol concentration has an 
impact on the economics of the purchase, and the consumer needs to know 
more precisely the concentration of the ethanol in the fuel to make an 
informed decision regarding the purchase.'' \74\ Comments submitted by 
individual ethanol supporters suggested a disclosure grouped in 
intervals of 10, allowing the actual fuel concentration to vary from as 
much as 10 percent more than the disclosed amount to 10 percent less 
than that amount (e.g., a blend disclosed as 20 percent could vary 
between 18 and 22 percent, while a blend disclosed as 30 percent could 
vary between 27 and 33 percent).\75\
---------------------------------------------------------------------------

    \74\ Growth Energy comment at 17-18.
    \75\ See, e.g., ICM, Inc. comment at 2; David Gloer comment.
---------------------------------------------------------------------------

    One commenter, PMCI, did not support a more precise disclosure. 
Instead, it praised the Commission's proposal as giving ``retailers the 
flexibility to account for relative changes in the prices of gasoline 
and ethanol.'' \76\
---------------------------------------------------------------------------

    \76\ PMCI comment at 1. In addition to comments regarding 
precise disclosure, API urged that the Commission ensure consistency 
with EPA regulations by defining mid-level ethanol blends and E85 
according to their percentages of pure, rather than denatured, 
ethanol. API comment at 1-2. As part of the ethanol production 
process, manufacturers add a small amount of denaturant, usually 
gasoline, to the ethanol before distributing it. The proposed 
amendments define ethanol fuels according to their ethanol volume, 
exclusive of denaturant, to remain consistent with EPA regulations.
---------------------------------------------------------------------------

B. EPA E15 Waiver

    When the Commission issued the 2010 NPRM, EPA was considering an 
application to allow E15 in conventional vehicles, pursuant to its 
authority under the Clean Air Act, Section 211(f)(4), to grant 
``waivers'' to non-gasoline fuels for use in conventional cars.\77\ 
Several commenters urged the FTC to coordinate with EPA to avoid 
conflicts in the labeling requirements.\78\
---------------------------------------------------------------------------

    \77\ See EPA Waiver Decision I, 75 FR at 68099. Section 211(f) 
of the Clean Air Act bans alternative fuels, including ethanol 
blends, from being introduced into commerce unless EPA affirmatively 
permits them for certain vehicles. See 42 U.S.C. 7545(f).
    \78\ For example, Growth Energy argued that if EPA approved the 
waiver request, the FTC's proposed Fuel Rating Rule amendments would 
require a label for E15 advising consumers of potential vehicle 
harm, even though EPA had approved the fuel for all vehicles. Growth 
Energy comment at 17. API and other commenters urged the Commission 
to ``communicate and coordinate with [EPA] to develop a common 
dispenser labeling scheme.'' API comment at 1. See also AAM comment 
at 2; AIAM comment at 2; AllSAFE comment at 6-7; NMMA comment at 2; 
National Petrochemical & Refiners Association (``NPRA'') comment at 
2; New York Department of Environmental Conservation comment at 1; 
New York State Department of Agriculture and Markets comment at 2-3. 
Marathon, PMAA, and Valero recommended delaying any rulemaking until 
EPA issued a decision on the waiver petition. Marathon comment at 1-
2; PMAA comment at 2; Valero comment at 1.
---------------------------------------------------------------------------

    After the 2010 NPRM comment period closed, EPA granted a waiver 
that permitted light-duty \79\ conventional vehicles, MY2001 and later, 
to use EPA-approved E15 blends. The waiver requires that this fuel meet 
certain fuel quality standards.\80\ Moreover, EPA soon thereafter 
promulgated complementary regulations to help prevent misfueling.\81\ 
The regulations include: (1) A prohibition on misfueling by ``gasoline 
and ethanol producers, distributors, retailers, and consumers'' and (2) 
``labeling requirements for fuel pumps that dispense E15 to alert 
consumers to the appropriate and lawful use of the fuel.'' \82\
---------------------------------------------------------------------------

    \79\ ``Light-duty'' vehicles include passenger cars, light-duty 
trucks, and medium-duty passenger vehicles. See EPA Waiver Decision 
I, 75 FR at 68095.
    \80\ EPA Waiver Decision I, 75 FR at 68149-50.
    \81\ Regulation to Mitigate the Misfueling of Vehicles and 
Engines With Gasoline Containing Greater Than Ten Volume Percent 
Ethanol and Modifications to the Reformulated and Conventional 
Gasoline Programs; Final Rule (``Final Rule to Mitigate 
Misfueling''), 40 CFR Part 80, 76 FR 44406, 44407 (July 25, 2011).
    \82\ Id. EPA promulgated these anti-misfueling measures under 
Section 211(c) of the Clean Air Act, which authorizes that agency to 
``control or prohibit the manufacture, introduction into commerce, 
offering for sale, or sale'' of a fuel if it determines that use of 
the fuel will impair emission control systems or have other 
environmental impacts. 42 U.S.C. 7545(c).
---------------------------------------------------------------------------

1. EPA's Prohibition Against Misfueling
    Relying on its technical and engineering expertise, EPA prohibited 
the use of E15 and higher blends in certain vehicles and engines 
because it found that ethanol has properties that can damage older 
conventional cars, heavy-duty gasoline engines and vehicles, 
motorcycles, and nonroad products.\83\ Specifically, ethanol increases 
the air-fuel ratio, causing the fuel to burn hotter.\84\ Hotter burning 
fuel can damage catalytic converters over time and lead to other 
component failure.\85\ In motorcycles and nonroad products, EPA raised 
engine-failure concerns from overheating. Therefore, EPA declined to 
approve ethanol blends above 10 percent for use in older conventional 
vehicles, heavy-duty gasoline engines and vehicles, motorcycles, or 
nonroad products, unless it had reliable \86\ test data showing a lack 
of harm.\87\
---------------------------------------------------------------------------

    \83\ EPA prohibited the use of E15 in MY2000 and older vehicles, 
heavy-duty gasoline engines and vehicles, motorcycles, and all 
nonroad products (which includes marine applications), ``based on 
potential effects of E15 in four areas: (1) Exhaust emissions--
immediate and long-term (known as durability); (2) evaporative 
emissions--immediate and long-term; (3) the impact of materials 
compatibility on emissions; and (4) the impact of driveability and 
operability on emissions.'' EPA Waiver Decision II, 76 FR at 4663. 
Later, in EPA's Final Rule to Mitigate Misfueling, EPA explained 
that its ``engineering assessment for these vehicles, engines, and 
products identifies a number of emission-related concerns with the 
use of E15.'' 76 FR at 44439.
    \84\ EPA Waiver Decision I, 75 FR at 68103.
    \85\ Id.
    \86\ EPA found that tests cited by Growth Energy in its waiver 
application were not sufficient to show a lack of potential harm to 
older vehicles. Id. at 68104.
    \87\ Id. at 68095. Currently, it is illegal to distribute 
ethanol blends above 15 percent concentration for use in 
conventional vehicles. 42 U.S.C. 7545(f).
---------------------------------------------------------------------------

    As part of EPA's waiver, the agency promulgated complementary 
regulations that, among other things, prohibit misfueling in older 
conventional cars, heavy-duty gasoline engines, motorcycles, and non-
road engines.\88\ This prohibition ``establishes a legal barrier 
against production, distribution, sale or use of gasoline containing 
more than 10 vol% ethanol in vehicles, engines and equipment not 
covered by the partial waiver decisions . . . . The prohibition is 
broadly applicable, including to consumers.'' \89\ In response to a 
question regarding to whom the prohibition applied, EPA responded:
---------------------------------------------------------------------------

    \88\ EPA did not address the emissions impacts of blends above 
E15 for newer, light-duty conventional vehicles. See Final Rule to 
Mitigate Misfueling, 76 FR at 44417. However, it is currently 
illegal to distribute those blends for use in conventional vehicles 
because EPA has not granted a waiver allowing ethanol blends in 
those vehicles. See 42 U.S.C. 7545(f).
    \89\ Final Rule to Mitigate Misfueling, 76 FR at 44411; see also 
40 CFR 80.1504(a) (amendment as codified).

[T]he proposed regulations would prohibit consumer misfueling, 
whether intentional or not, and we are retaining that provision in 
today's final rule. Thus, today's final rule prohibits any person 
from introducing or causing the introduction of gasoline containing 
greater than 10 vol% ethanol into vehicles, engines, and products 
not covered by the E15 partial waivers, and prohibits causing or 
allowing the introduction of gasoline containing greater than 10 
vol%

[[Page 18856]]

ethanol into such vehicles, engines, and products.\90\
---------------------------------------------------------------------------

    \90\ Final Rule to Mitigate Misfueling, 76 FR at 44437 (emphasis 
in original). This misfueling prohibition does not extend to 
ethanol-blend use in newer conventional vehicles.

    Section 80.1506 of the final rule provides that any person who 
misfuels ``is subject to an administrative or civil penalty, as 
specified in sections 205 and 211(d) of the Clean Air Act, for every 
day of each violation and the amount of economic benefit or savings 
resulting from the violation.'' \91\
---------------------------------------------------------------------------

    \91\ 40 CFR 80.1506 (amendment as codified); see also 76 FR at 
44449 .
---------------------------------------------------------------------------

2. EPA's Labeling Requirements
    EPA also promulgated labeling requirements to prevent misfueling of 
E15 in non-approved engines. In formulating its E15 label, EPA 
``consulted with FTC consumer labeling experts and other staff about 
effective label design and potential coordination with FTC labels.'' 
\92\ As a result, EPA's final E15 label, shown below, ``adopts FTC's 
color scheme for alternative fuel labels and other aspects of the 
design of FTC's proposed gasoline-ethanol blend labels, such as size, 
shape, and font . . . .'' \93\ In addition, EPA's label included the 
warning: ``Don't use in other vehicles, boats, or gasoline-powered 
equipment. It may cause damage and is prohibited by federal law.'' \94\
---------------------------------------------------------------------------

    \92\ Final Rule to Mitigate Misfueling, 76 FR at 44408.
    \93\ Id.
    \94\ Id. at 44418.
    [GRAPHIC] [TIFF OMITTED] TP04AP14.031
    
    EPA explained that this ``damage statement'' was ``necessary and 
appropriate for the E15 label . . . because (1) [a]vailable data is 
insufficient to show that E15 would not cause or contribute to a 
failure by these products to meet emission standards, and (2) [EPA's] 
engineering judgment is that E15 may adversely affect the emissions 
control performance of these products, particularly over time.'' \95\ 
EPA continued:
---------------------------------------------------------------------------

    \95\ Id. at 44414.

A statement that E15 use in those products `may cause damage' is 
consistent with and supported by EPA's technical analysis for its 
decision to deny the waiver request for introduction of E15 into 
commerce for use in these products. Including the damage statement 
is also critical to the effectiveness of the E15 label, since 
consumers are more likely to comply with the label's direction if 
---------------------------------------------------------------------------
they understand that harm might otherwise occur.\96\

    \96\ Id. at 44415.
---------------------------------------------------------------------------

C. ASTM Ethanol Specification

    In proposing labeling requirements, the 2010 NPRM relied in part on 
ASTM's specification for high concentration ethanol blends, ASTM D5798. 
At that time, ASTM D5798 characterized ethanol blends of at least 70 
percent concentration as ``E85.'' Therefore, the Commission proposed 
amendments differentiating E85 and lower concentration ethanol blends.
    Two commenters objected. Growth Energy and API both noted that, 
subsequent to publication of the NPRM, ASTM had lowered the E85 blend 
threshold, making the ``85'' number less useful to consumers.\97\ API 
noted that ASTM was considering lowering the blend threshold even 
further, and urged the Commission to ``draft the rule to allow for such 
changes.'' \98\ In addition, Growth Energy noted that ``E85 is 
problematic'' because it ``does not represent[ ] the true ethanol 
concentration of all fuels'' labeled as such and, therefore, 
recommended a ``new name'' for the fuel.\99\
---------------------------------------------------------------------------

    \97\ Growth Energy comment at 4-5; API comment at 2.
    \98\ API comment at 2. RFA argued that the FTC lacked authority 
to define new fuels such as ``Mid-Level Ethanol blends'' as 
``alternative fuels,'' pointing to a definition of that term in the 
Energy Policy Act of 1992 authorizing DOE to determine which fuels 
qualify as alternative fuels. RFA comment at 4.
    \99\ Growth Energy comment 4, 5.
---------------------------------------------------------------------------

    After the comment period closed, ASTM further lowered D5798's 
concentration threshold and ceased using the term ``E85.'' The standard 
now applies to fuels of at least 51 percent concentration and replaces 
the term ``E85'' with ``Ethanol Flex-Fuel.''

D. Comments Supporting the Infrared Method

    Several commenters supported amending the Fuel Rating Rule to allow 
use of the Infrared Method as an additional octane rating method. 
Tesoro, a manufacturer and marketer of petroleum products, explained 
that the Infrared Method provides more precise and accurate results, an 
ability to sample gasoline more efficiently, and reduced costs to 
industry.\100\ Specifically, Tesoro reported:

    \100\ Tesoro comment at 1-2. Tesoro also submitted additional 
material to Commission staff during the comment period, which is 
included in the record and available on the same Web page as the 
comments.

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

[[Page 18857]]

A recent interlaboratory study was conducted to demonstrate the 
accuracy and precision of infrared analyzers for octane. Based on 
the results of that study involving six laboratories, near infrared 
analyzers showed significantly better precision over ASTM D2699 and 
D2700 octane [methods].\101\
---------------------------------------------------------------------------

    \101\ Id. at 2.

Tesoro further reported that, due in part to greater reliability, 
``[o]ver 25 states use infrared analyzers for screening fuel samples 
[to test octane levels] in the field as well as in the laboratory.'' 
\102\
---------------------------------------------------------------------------

    \102\ Id. at 4.
---------------------------------------------------------------------------

    Tesoro further suggested that the Commission could ensure the 
accuracy of infrared method ratings by providing that, in the case of a 
discrepancy between infrared results and results derived through the 
traditional ASTM D2699 and D2700 methods, the D2699/2700 methods would 
be the ``referee test.'' \103\
---------------------------------------------------------------------------

    \103\ Id. at 6.
---------------------------------------------------------------------------

    Tesoro recommended amending the Rule to allow the method only 
insofar as the method conforms to ASTM D6122, ``Standard Practice for 
Validation of the Performance of Multivariate Infrared 
Spectrophotometers,'' and as set out in that protocol to correlate with 
the ASTM D2699 and D2700 methods.\104\ In addition, Tesoro submitted 
specific language to effect its proposed change.\105\
---------------------------------------------------------------------------

    \104\ Id. at 7.
    \105\ Id. at 8. Petroleum industry members and representatives 
ConocoPhillips, Flint Hills Resources LP, Marathon, Suncor Energy 
USA, NPRA, and Valero Energy Corporation (``Valero'') also supported 
the Infrared Method. ConocoPhillips comment at 2; Flint Hills 
Resources comment; Marathon comment at 2; Suncor Energy USA comment; 
NPRA comment at 3; Valero comment at 1.
---------------------------------------------------------------------------

    Several state regulators also supported approving the infrared 
method. For example, the Washington State Department of Agriculture 
reported that it ``has used portable infrared octane analyzers 
successfully in the field to test octane levels on gasoline motor fuels 
for over 10 years'' and that it has ``found portable infrared analyzers 
to be an accurate and low cost tool in determining octane level 
compliance.'' \106\ Additionally, the National Conference on Weights 
and Measures (``NCWM'') provided a survey showing that 17 of 24 
regulatory agencies surveyed use the Infrared Method to determine if 
fuel dispensed at a pump has the same octane rating as posted on the 
label.\107\
---------------------------------------------------------------------------

    \106\ Washington State Department of Agriculture comment; see 
also Massachusetts Division of Standards comment (supporting the 
Infrared Method); Nevada Department of Agriculture comment (same); 
North Carolina Department of Agriculture and Consumer Services 
comment (same).
    \107\ NCWM comment at 3-4.
---------------------------------------------------------------------------

    Significantly, the CAS supported the method. CAS explained that 
allowing the method would ease enforcement and, therefore, benefit 
consumers:

    Many states now use infrared analyzers to determine octane 
because they are cheaper, more accurate and permit greater number[s] 
of dispensing pump inspections per day than using octane engines. . 
. . Approving infrared analyzers calibrated to measure octane would 
allow greater levels of enforcement and increased quality control by 
refiners at lower cost.\108\
---------------------------------------------------------------------------

    \108\ CAS comment at 2.
---------------------------------------------------------------------------

IV. Proposed Rule Amendments

    In light of the comments, EPA's waiver decision, and the revision 
to ASTM D5798, the Commission now proposes: (1) New requirements for 
rating, certification, and labeling of ethanol blends; and (2) 
amendments allowing use of the Infrared Method.

A. Ethanol Fuel Amendments

    The following proposed amendments require labels for ethanol 
blends, excluding EPA-approved E15, to state ``USE ONLY IN FLEX-FUEL 
VEHICLES/MAY HARM OTHER ENGINES'' and to disclose the percentage 
ethanol content rounded to the nearest interval of 10. These amendments 
differ from those proposed in the 2010 NPRM in four ways. First, the 
new amendments do not distinguish between ``mid-level ethanol blends'' 
and ``E85.'' As noted by API and Growth Energy, the term ``E85'' no 
longer accurately describes higher concentration ethanol blends and, 
therefore, could confuse consumers about such fuel's ethanol 
concentration. Second, the new proposed amendments revise the 
disclosures in light of views from both ethanol-industry commenters and 
those arguing for a stronger label using ``flex-fuel vehicle only'' and 
a more precise concentration disclosure. Third, the amendments address 
the request for additional language to prevent misfueling harm to non 
flex-fuel vehicles and engines. Finally, the amendments exempt fuel 
that meets EPA's E15 waiver.
    The discussion below first describes the amendments and then 
explains the Commission's legal authority to promulgate them.
1. Definitions
    In order to establish requirements for rating, certifying, and 
labeling ethanol blends, the 2010 NPRM proposed using the term ``mid-
level ethanol blend'' to describe blends of over 10, but not more than 
70, percent ethanol and adding that term to the Rule's list of 
alternative fuels. Although the 2010 NPRM did not propose defining 
ethanol blends at greater concentrations, it did propose a separate 
label for such fuels that would describe the fuel as ``E85.''
    Based on ASTM amendments, providing different labels for ``mid-
level'' blends and ``E85'' is no longer appropriate. The revised D5798 
does not use the term ``E85,'' and there is no other basis in the 
record to distinguish between blends above and below that 
concentration. Moreover, as Growth Energy noted, allowing labels to use 
``E85'' to described fuels meeting the revised D5798's concentration 
level of 51 percent could mislead consumers.
    Thus, the Commission now proposes adding to the Fuel Rating Rule's 
non-exhaustive alternative fuel list a single, new defined term, 
``ethanol blend,'' that covers all concentrations of ethanol blends 
above 10 percent.\109\ This will facilitate uniform labeling 
requirements for ethanol blends, which should assist consumers in 
quickly identifying ethanol blends at pumps.\110\
---------------------------------------------------------------------------

    \109\ As explained below, the new proposed amendments would 
exempt EPA-approved E15 from the Rule's labeling requirements, 
provided that retailers use EPA's required label.
    \110\ The new term would be codified at Sec.  306.0(i)(2)(iii). 
RFA argued that this section should not include ethanol blends as 
alternative fuels because the Energy Policy Act of 1992 specifies 
DOE as the agency that determines whether fuels are ``alternative'' 
for certain purposes. RFA's argument is inapposite because the 
Commission's rulemaking is under PMPA, which authorizes the FTC to 
provide labeling for all liquid automotive fuels, regardless of 
whether they are also designated as alternative by DOE. See 15 
U.S.C. 2821(6).
---------------------------------------------------------------------------

2. Rating and Certification
    The Commission reaffirms its 1993 determination that ``another form 
of rating'' is more appropriate for ethanol blends than an octane 
rating.\111\ Requiring octane ratings for ethanol blends might 
incorrectly suggest that those blends are interchangeable with 
gasoline. As discussed in the 1993 rulemaking, not only would an octane 
rating not provide useful information to consumers, it might deceive 
them about the suitability of the fuel for their vehicles. Ethanol 
blends have naturally occurring high octane levels. Conventional 
vehicle owners might misinterpret those blends' higher octane content 
as signifying that they are better for conventional gasoline 
engines.\112\
---------------------------------------------------------------------------

    \111\ See 15 U.S.C. 2821(17); 1993 Final Rule, 58 FR 41361.
    \112\ 1993 Final Rule, 58 FR at 41361.
---------------------------------------------------------------------------

    Consistent with this finding, the 2010 NPRM proposed new rating and 
certification provisions to clarify that

[[Page 18858]]

covered entities must rate ethanol blends by ``the percentage of 
ethanol contained in the fuel,'' and not by the percentage of the 
principal component of the fuel. This change is necessary to require 
ethanol-content labeling for blends below 50 percent concentration. Two 
commenters supported this change,\113\ and no commenters took issue 
with the proposal. Accordingly, the amendments proposed today require 
rating ethanol blends by ethanol content.
---------------------------------------------------------------------------

    \113\ PMAA comment at 1; Tennessee Department of Agriculture 
comment at 1.
---------------------------------------------------------------------------

    The 2010 NPRM also proposed an amendment providing that a 
certification of ethanol content letter remains valid only as long as 
the fuel transferred contains the same percentage of ethanol as 
previous fuel transfers covered by the letter.\114\ For most 
alternative fuels, a certification letter remains valid if a 
transferred fuel has the same or a higher concentration than certified 
because an increase in concentration will not trigger different 
labeling requirements. An increase or decrease in concentration for 
ethanol blends, however, may trigger different concentration 
disclosures. For example, if a fuel's ethanol concentration increases 
from 26 percent to 38 percent, the label, as discussed below, must 
disclose a higher concentration level. No commenter objected to the 
2010 proposal; therefore, the Commission proposes it again here.
---------------------------------------------------------------------------

    \114\ Section 306.6(b) allows fuel transferors to provide 
certifications through a letter to the transferee rather than 
through a document accompanying each fuel shipment.
---------------------------------------------------------------------------

3. Labeling
    The 2010 NPRM proposed adding new labeling requirements for ethanol 
blends. The proposed amendments required labels disclosing the fuel's 
suitability for different vehicles by stating:

MAY HARM SOME VEHICLES

CHECK OWNER'S MANUAL

The proposed amendments also would have required ethanol blends below 
70 percent concentration to disclose that the fuels contained between 
10 to 70 percent ethanol, a narrower range, or the precise amount of 
ethanol in the blend.
    Commenters generally objected to both the disclosures and the 10-70 
content range. They also urged the Commission to coordinate with EPA to 
prevent duplicative or inconsistent labeling requirements. The new 
proposed amendments address both issues.
a. Text
    Some commenters objected that the 2010 NPRM advisory disclosure was 
excessive, and others objected that it was insufficient. Ethanol-
industry commenters asserted that: (1) The record did not establish 
that ethanol blends would harm conventional vehicles; (2) the 
disclosure was unnecessary; (3) the disclosure would discourage proper 
use of ethanol blends; and (4) requiring the additional disclosure 
would be unfair. Conversely, some commenters argued for stronger and 
more precise language, noting the EPA prohibition on use in 
conventional vehicles, risk of engine damage, damage to the vehicle's 
emissions system, and other problems.
    Nevertheless, all but one of the comments \115\ supported a ``use 
only in flex-fuel vehicles'' disclosure. In addition, NCWM has adopted 
model state regulations requiring ethanol fuel labels that state ``For 
Use in Flexible Fuel Vehicles (FFV) Only.'' \116\ Many commenters also 
stressed the need for additional disclosures to prevent misfueling.
---------------------------------------------------------------------------

    \115\ RFA comment at 8 (arguing that ethanol-content disclosure 
is sufficient).
    \116\ MDA comment at 2. NCWM's comment did not address this 
issue.
---------------------------------------------------------------------------

    In light of these comments, the new proposed amendments replace the 
2010 NPRM's proposed disclosure with ``USE ONLY IN FLEX-FUEL VEHICLES/
MAY HARM OTHER ENGINES.'' These two disclosures should explain the 
significance of the ethanol-concentration rating without misleading 
flex-fuel vehicle owners about the fuel's suitability for their cars. 
Specifically, ``USE ONLY IN FLEX-FUEL VEHICLES'' provides a simple, 
unambiguous direction to consumers that they can use ethanol blends in 
their flex-fuel vehicles. This direction eliminates the need for 
consumers to consult their owner's manuals. And, ``MAY HARM OTHER 
ENGINES'' alerts consumers that use in other engines may have serious 
consequences.
    Given consumers' unfamiliarity with ethanol blends, a bare ethanol-
concentration disclosure will not provide sufficient information for 
many consumers to understand whether the fuel is appropriate for their 
engines. Accordingly, the proposed text conveys the significance of the 
ethanol concentration and the potential risk of damage to consumers' 
cars, which are often among their most expensive purchases. 
Additionally, this disclosure should alert consumers not to use the 
fuel in their non-vehicular engines (e.g., lawn mowers, motor 
boats).\117\
---------------------------------------------------------------------------

    \117\ The Commission declines to require additional language 
suggested by commenters. The specificity of the proposed disclosure 
should sufficiently apprise owners of conventional vehicles and non-
automotive devices that ethanol fuels are not appropriate for their 
engines. Furthermore, additional language may dilute the 
disclosures' message and lessen their effectiveness.
---------------------------------------------------------------------------

    Ethanol-industry commenters' criticism of the 2010 NPRM's labels is 
either inapplicable to the revised disclosures or unpersuasive. The 
Energy Independence and Security Act's renewable fuel mandate will 
likely ensure that ethanol blends are an increasing part of the fuel 
market, thereby exposing many more consumers to pumps dispensing those 
blends.\118\ The record, however, shows a risk that misfueling may harm 
conventional vehicles and non-road engines.\119\ As EPA explained, 
``[e]thanol impacts motor vehicles in two primary ways. First, . . . 
ethanol enleans the [air/fuel] ratio (increases the proportion of 
oxygen relative to hydrocarbons) which can lead to increased exhaust 
gas temperatures and potentially increase incremental deterioration of 
emission control hardware and performance over time, possibly causing 
catalyst failure. Second, ethanol can cause materials compatibility 
issues, which may lead to other component failures.'' \120\
---------------------------------------------------------------------------

    \118\ See 2010 NPRM, 75 FR at 12471. On November 15th, EPA 
proposed reducing the 2014 renewable mandate due to a limited market 
and production capacity for renewables. See Proposed 2014 Standards 
for the Renewable Fuel Standard Program, 40 CFR Part 80, 78 FR 71732 
(Nov. 29, 2013). However, EPA indicated that it remained committed 
to increasing the amount of renewable fuel in the market. See id. at 
71738 (``[O]ur intent is to develop an approach that puts the 
[Renewable Fuel Standard] program on a manageable trajectory while 
supporting continued growth in renewable fuels over time.'').
    \119\ See section III.A.2.b, supra.
    \120\ EPA Waiver Decision I, 75 FR at 68103.
---------------------------------------------------------------------------

    EPA ultimately held that these general concerns were allayed only 
with regard to the use of E15 in light-duty conventional vehicles 
MY2001 and newer. However, that agency also found, based on its 
technical and engineering experience, that ethanol potentially damages 
older conventional cars, heavy-duty engines, motorcycles, and non-road 
engines, explaining:

    Older motor vehicles, heavy-duty gasoline engines and vehicles, 
motorcycles, and especially nonroad products cannot fully compensate 
for the change in the stoichiometric air-to-fuel ratio as ethanol 
concentration increases. Over time, this enleanment caused by 
ethanol may lead to thermal degradation of the emissions control 
hardware and ultimately catalyst failure. Higher ethanol 
concentration will exacerbate the enleanment effect in these 
vehicles, engines, and equipment and therefore

[[Page 18859]]

increase the potential of thermal degradation and risk of catalyst 
failure. In addition to enleanment, ethanol can cause materials 
compatibility issues which may lead to other component failure and 
ultimately exhaust and/or evaporative emission increases. . . . For 
older motor vehicles, heavy-duty gasoline engines and vehicles, 
motorcycles, and nonroad products, the potential for materials 
compatibility issues increases with higher ethanol 
concentration.\121\

    \121\ Final Rule to Mitigate Misfueling, 40 CFR Part 80, 76 FR 
at 44439.
---------------------------------------------------------------------------

The Commission seeks evidence regarding the harm or benefits of ethanol 
blends to non flex-fuel engines, including newer conventional 
vehicles.\122\
---------------------------------------------------------------------------

    \122\ The Commission is aware of all studies cited in EPA's 
waiver decision.
---------------------------------------------------------------------------

    The lack of EPA approval for ethanol blends, other than E15, in non 
flex-fuel engines further supports a label with the two-prong notice. 
Specifically, distribution of such blends to non flex-fuel vehicles is 
prohibited by the Clean Air Act.\123\ In addition, EPA regulations 
expose consumers and retailers to liability for misfueling MY 2000 and 
older light-duty vehicles, as well as all motorcycles, heavy-duty 
vehicles, and non-road engines.\124\ Therefore, consumers need clear 
guidance regarding the engines for which those blends are appropriate, 
so that they can make an informed choice.
---------------------------------------------------------------------------

    \123\ 42 U.S.C. 7545(f).
    \124\ Final Rule to Mitigate Misfueling, 76 FR at 44437. See 
also 40 CFR 80.1504(a)(1) (codification of misfueling prohibition).
---------------------------------------------------------------------------

    The commenters' other concerns are also not persuasive. The concern 
that the 2010 NPRM's ``MAY HARM SOME VEHICLES'' disclosure would lead 
flex-fuel vehicle owners to wrongly conclude that their vehicles fit 
into the ``some'' category does not apply to the revised disclosure. 
Although ``MAY HARM OTHER ENGINES'' is similar, it does not raise the 
same concern because it emphasizes that the fuel potentially harms only 
``other'' (i.e., non flex-fuel) engines. In addition, the new 
disclosures advise, more prominently and in larger text, that the fuel 
is indeed suitable for flex-fuel vehicles. This disclosure would also 
appear appropriate even if, at this rulemaking's conclusion, the record 
is unsettled about whether ethanol blends are suitable for some newer 
model conventional vehicles. The proposed disclosure states only that 
the fuel ``may'' harm other engines, not that it would necessarily harm 
all such engines.
    The Commission also disagrees with the claim that any disclosures 
are unfair because they apply only to ethanol blends. EPA has 
promulgated extensive rules to mitigate potential misfueling of EPA-
approved E15. The Commission has no evidence indicating that other 
alternative fuels carry a similar risk. If the Commission obtains 
evidence demonstrating that another fuel poses similar misfueling and 
consumer confusion risks, the Commission will consider similar 
suitability ratings for those fuels.\125\ In promulgating regulations, 
agencies need not take an all-or-nothing approach but may proceed 
incrementally.\126\
---------------------------------------------------------------------------

    \125\ The proposed amendments do not adopt CAS' proposal to 
require separate signs and pump nozzle disclosures or AllSAFE's 
proposal to require a visible gap between ethanol pumps and other 
fuel pumps. There is no evidence that such additional steps are 
necessary to prevent misfueling.
    \126\ Investment Co. Inst. v. CFTC, 891 F. Supp. 2d 162, 187 
(D.D.C. 2012) (``[A]gencies, like legislatures, do not generally 
resolve massive problems in one fell regulatory swoop.'') (quotation 
omitted); City of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989) 
(``[A]gencies have great discretion to treat a problem 
partially.'').
---------------------------------------------------------------------------

b. Percentage Disclosure
    The 2010 NPRM proposed requiring that ethanol blends below 70 
percent concentration have a label disclosing that the fuel contained 
between 10 and 70 percent ethanol. Retailers would have had the option 
of disclosing a narrower range or an exact percentage. Commenters 
generally favored requiring a more precise content disclosure because 
fuels with higher concentrations of ethanol have worse fuel economy. In 
addition, commenters noted that future vehicle fleets might have 
varying ethanol tolerances, which will require more precise content 
disclosures. Significantly, both ethanol-industry and other commenters 
supported such disclosures.
    In light of these comments, the Commission proposes requiring 
ethanol percentage disclosures rounded to the nearest factor of 10 
(e.g., retailers can label fuels at 26 and 34 percent concentrations as 
30% Ethanol).\127\ Requiring this more precise disclosure would help 
flex-fuel vehicle owners make informed choices about ethanol blends, 
while presenting consumers with numbers that are easy to use.\128\ 
Rounding also benefits retailers by allowing them to alter their blends 
by small percentages without the expense of changing labels. However, 
the Commission notes that consumers purchasing ethanol blends with 
rounded-down disclosures may receive less than expected fuel 
efficiency. Thus, the Commission invites comment on the costs and 
benefits of this approach for retailers and consumers.
---------------------------------------------------------------------------

    \127\ This approach will address concerns of commenters 
supporting energy-content labeling.
    \128\ The Commission proposes adopting the Tennessee Department 
of Agriculture's rounding approach rather than the ethanol-industry 
commenters' 10 percent tolerance approach because it is simpler.
---------------------------------------------------------------------------

c. Label Specifications
    The proposed amendments retain the size, font, and format 
requirements proposed in the 2010 NPRM.\129\ These requirements are 
consistent with those in place for most of the alternative liquid fuels 
covered by the Rule. The new proposed amendments require Helvetica 
Black type, or equivalent type style, as the Rule requires for all 
other labels. They also propose a sample ethanol fuel label.\130\
---------------------------------------------------------------------------

    \129\ The new amendments also propose deleting the Rule's sample 
label for ``E-100'' (i.e., ethanol not mixed with gasoline) because 
the record does not show any retail sales of such fuels.
    \130\ The Rule's recordkeeping provisions (16 CFR 306.7, 306.9, 
and 306.11) without amendment will require covered entities to 
maintain records supporting the rating of any ethanol fuel they 
produce, transfer, or sell.
---------------------------------------------------------------------------

    The proposed ethanol fuel label requires an orange background (PMS 
1495 or its equivalent). Orange is the color for all alternative fuels 
except biodiesel and will enable retail consumers to distinguish 
ethanol blends from gasoline. Several ethanol-industry commenters 
objected to orange, asserting that it is associated with caution and, 
thus, places the fuel at a competitive disadvantage. The Commission 
disagrees.
    First, because the Rule currently requires an orange label for 
almost all alternative fuels (including ethanol blends), excepting 
ethanol blends would result in inconsistent treatment. Second, orange, 
a bright color, will help ensure that consumers notice the label and, 
therefore, prevent misfueling. Finally, EPA's E15 label uses the same 
orange background to coordinate with the FTC. Therefore, using orange 
will promote a consistent labeling scheme for all ethanol blends.
    A proposed sample label is at the end of this document. The 
Commission invites comment on how consumers will perceive and 
understand the label's information about the rating, and whether the 
label will prevent misfueling.
d. E15 Exemption
    To prevent consumer confusion and avoid unnecessary burden on 
industry, the new proposed amendments exempt fuel meeting EPA's E15 
waiver from labeling requirements. The Commission provides this 
exemption for two reasons. First, EPA is better situated to tailor its 
labeling requirements to reflect

[[Page 18860]]

the waiver's evolving scope.\131\ Second, exempting EPA-approved E15 
from the FTC rule will avoid unduly burdening industry with redundant 
labels. Moreover, the proposed exemption is narrowly tailored to ensure 
that only E15 blends that obtain an EPA waiver, and therefore are 
labeled according to EPA rules, are exempt from the FTC's labeling 
requirements.
---------------------------------------------------------------------------

    \131\ As noted above, the EPA waiver allows fuel with 15 percent 
ethanol in conventional vehicles. If EPA later determines that 
conventional vehicles can tolerate ethanol concentrations above 15 
percent, the Commission can revise the Fuel Rating Rule to 
accommodate that determination.
---------------------------------------------------------------------------

4. PMPA Authorizes the Ethanol Amendments
    Growth Energy and RFA argued that PMPA does not authorize the 
Commission to propose labels with disclosures about ethanol blends' 
suitability for consumers' vehicles. The Commission disagrees.
    PMPA authorizes the Commission to require automotive fuel labels 
``displaying the automotive fuel rating of automotive fuel at the point 
of sale.'' \132\ PMPA further defines ``automotive fuel rating'' to 
include octane ratings; cetane ratings; or ``another form of rating 
determined by the Federal Trade Commission, after consultation with 
[ASTM],\133\ to be more appropriate to carry out the purposes of this 
subchapter with respect to the automotive fuel concerned.'' \134\
---------------------------------------------------------------------------

    \132\ 15 U.S.C. 2823(c)(1)(B).
    \133\ Growth Energy relied on this language to argue that the 
Commission cannot promulgate alternative fuel ratings without ASTM 
consultation that is ``subject to public review and comment.'' 
Growth Energy comment at 13. Growth Energy did not cite any 
authority for this interpretation. Nonetheless, Commission staff has 
consulted with ASTM throughout this rulemaking, and, as discussed 
below, is relying in part on an ASTM standard to justify abandoning 
a special label for ``E85.''
    \134\ 15 U.S.C. 2821(17). PMPA also empowers the Commission to 
define relevant terms used in the statute. 15 U.S.C. 2823(a).
---------------------------------------------------------------------------

    As the Commission explained in 1993, one of PMPA's purposes is to 
give ``purchasers the information they need to choose the correct type 
or grade of fuel for their vehicles.'' \135\ For example, the 
legislative history reveals that Congress designed PMPA to ``increase 
consumer confidence in and information about motor fuels'' and ensure 
that ``motorists have a right to know what they are getting and what 
they are paying for.'' \136\ And it expresses specific concern about 
engine damage and stresses the need ``to assist [motorists] in the 
purchase of suitable gasoline for their motor vehicles.'' \137\
---------------------------------------------------------------------------

    \135\ 1993 Final Rule, 58 FR at 41356.
    \136\ H. Rep. No. 102-474(I) (1992).
    \137\ S. Rep. No. 95-731 (1978).
---------------------------------------------------------------------------

    Accordingly, the Commission determined that PMPA authorizes it to 
require fuel ratings that inform consumers about the content of 
alternative fuels to prevent misfueling. In evaluating options for 
rating alternative fuels, the Commission concluded, ``automotive fuel 
rating'' encompasses text necessary to ``assure consumers that they are 
purchasing a product that satisfies automobile engine minimum content 
requirements, which may be specified in their owner's manuals.'' \138\ 
Thus, since 1993 the Commission has interpreted automotive fuel ratings 
to include information necessary to prevent misfueling, such as fuel 
descriptors.\139\
---------------------------------------------------------------------------

    \138\ 1993 Final Rule, 58 FR at 41364-65.
    \139\ The Rule's current alternative fuel labels require a 
descriptor at the top of the label that identifies the fuel. For 
example, retailers must label liquefied petroleum gas as ``LPG.'' 16 
CFR 306.10(f)(5).
---------------------------------------------------------------------------

    Consistent with its 1993 determination, the Commission finds that 
the proposed ethanol-content disclosure accompanied by explanatory 
language regarding the suitability of the fuel is more appropriate than 
an octane rating for ethanol blends. The proposed disclosures further 
PMPA's purpose of helping consumers choose the correct fuel and 
preventing engine damage. Thus, the proposed label appears to fall 
squarely within the Commission's statutory authority to prescribe 
labels disclosing fuel ratings.
    This interpretation comports with the plain meaning of ``rating,'' 
which includes ``[t]he value of a property or condition that is claimed 
to be standard, optimal, or limiting for a device, engine, etc.; a 
rated value.'' \140\ Significantly, a ``rating'' does not encompass 
only numeric rankings of superiority or quality, but includes a 
``condition'' that is standard or ``limiting'' for engines. Therefore, 
a rating can consist of a content description and suitability language 
communicating whether the rated item is proper, or improper, for 
certain devices, including engines.
---------------------------------------------------------------------------

    \140\ Oxford English Dictionary Online (2013), http://www.oed.com/view/Entry/158481?rskey=MGAeBQ&result=1&isAdvanced=false#eid (last visited 
March 18, 2014) (emphasis added).
---------------------------------------------------------------------------

    One example is film ratings (G, PG, PG13, R, and NC17). Those 
ratings do not identify any quantity or embody any qualitative score. 
Instead, they provide guidance on the suitability of particular films 
for particular audiences, and include explanatory text, e.g., ``PG-13; 
PARENTS STRONGLY CAUTIONED; SOME MATERIAL MAY BE INAPPROPRIATE FOR 
CHILDREN UNDER 13.'' \141\ Similarly, the FTC's statutory authorization 
to adopt, for labeling purposes, ``another form of rating'' in lieu of 
octane measurements encompasses the authority to require labels 
alerting consumers to the suitability of particular fuel blends for 
particular engines.
---------------------------------------------------------------------------

    \141\ See Motion Picture Association of America, How to Read a 
Rating, www.mpaa.org/ratings/how-to-read-a-rating.
---------------------------------------------------------------------------

    Growth Energy and RFA made four arguments to support their position 
that the disclosures the Commission proposed in 2010 are inconsistent 
with the statute. The Commission is inclined to reject these arguments. 
First, RFA argued that language about a fuel's suitability for certain 
engines cannot be a rating because it is a ``representation[] as to the 
quality of the fuel or potential impacts on vehicle performance.'' 
\142\ This is incorrect and inapposite. Neither the statute nor the 
plain meaning of the term ``rating'' excludes ratings based on fuel 
quality or performance; even an octane rating constitutes a 
representation about the fuel's ``quality'' and ``performance'' impact. 
In any event, the proposed disclosures do not include a generalized 
``quality'' description of the fuel, but merely clarify the implication 
of the fuel's ethanol percentage and its suitability for certain 
engines in order to prevent misfueling and potential engine damage.
---------------------------------------------------------------------------

    \142\ RFA comment at 3.
---------------------------------------------------------------------------

    Second, Growth Energy noted PMPA's list of permissible ratings uses 
the conjunctive ``and'' between octane and cetane ratings, and the 
disjunctive ``or'' between those two ratings and ``another form of 
rating.'' Growth Energy argued that this language demonstrates 
Congress' intent to authorize only octane and cetane ratings or, in 
their place, a rating that ``would carry out the same purpose'' as 
these ratings. This language, however, appears to have the opposite 
import. Specifically, the use of the disjunctive ``or'' after the 
conjunctive ``and'' signals that the phrase ``another form of rating'' 
could include types of rating distinct from those linked in the 
previous conjunctive list. Moreover, the statutory text authorizes the 
Commission to determine that another form of rating is ``more 
appropriate to carry out the purposes of this subchapter.'' (Emphasis 
supplied). The reference to ``the purposes of this subchapter'' is a 
reference to PMPA as a whole, which broadly seeks to allow consumers to 
make informed decisions for all types of fuel, including alternative 
fuel blends. The Commission, therefore, provisionally concludes that 
the proposed label is no

[[Page 18861]]

less appropriate or consistent with the PMPA's purposes than the 
ratings the Commission has required for the past 20 years.
    Third, Growth Energy argued that the Commission must interpret 
``another form of rating'' to be similar in purpose to octane or cetane 
ratings under the principle of ejusdem generis, a canon of statutory 
construction under which a general term following a specific one is 
often understood as a reference to subjects akin to the one with the 
specific enumeration. However, the Supreme Court has held that ``[t]his 
canon does not control . . . when the whole context dictates a 
different conclusion.'' \143\ That is the case here. Again, when 
Congress initially enacted PMPA, it pursued a general purpose of 
ensuring informed consumer choice at the pump, and it specifically 
directed the FTC to ensure accurate octane metrics because those are 
the main consumer concerns that arise in connection with the sale of 
ordinary gasoline. But because Congress understood that consumer-
protection concerns will evolve with changes in fuel technology, it 
deliberately built flexibility into this statutory scheme by allowing 
the FTC to prescribe ``another form of rating'' that is ``more 
appropriate'' to carry out the consumer-protection purposes of PMPA. It 
would appear to defeat, not serve, that congressional policy choice to 
hamstring the FTC's consumer-protection authority as Growth Energy 
proposes here.
---------------------------------------------------------------------------

    \143\ Norfolk & W. Ry. v. American Train Dispatchers Ass'n, 499 
U.S. 117, 129 (1991).
---------------------------------------------------------------------------

    Finally, both Growth Energy and RFA argued that, notwithstanding 
the PMPA's plain language authorizing alternative forms of rating, 
legislative history precludes the Commission's interpretation of the 
term ``rating'' under PMPA. Specifically, Growth Energy cited 
statements describing the 1992 PMPA amendments as expanding the 
statute's octane rating requirements to other fuels. RFA noted that in 
its 1993 rulemaking, the Commission relied upon statements in the 
legislative history that consumers ``have a right to know what they pay 
for.'' \144\ However, the history cited by Growth Energy does not 
preclude the Commission's interpretation, and the history cited by RFA 
supports the Commission's interpretation. First, the statements cited 
by Growth Energy simply note the expansion of the statute's coverage to 
alternative fuels and do not refer specifically to the meaning of 
``automotive fuel rating.'' \145\ Moreover, to the extent this history 
could be read as requiring octane ratings for alternative fuels, it is 
directly contradicted by the statutory language, which explicitly 
allows ratings other than octane ratings. Finally, the statement cited 
by RFA declares an intent to ensure that fuel retailers provide 
consumers with the information they need to choose the correct fuel for 
their vehicles.\146\
---------------------------------------------------------------------------

    \144\ RFA comment at 2.
    \145\ Significantly, the cited statements include the 
observation that one of the PMPA amendments' goals ``is to improve 
the information available to consumers.'' Growth Energy comment at 
8. See also H. Rep. No. 102-474(I) (1992) (explaining that ``this 
legislation attempts to increase confidence in and information about 
motor fuels); S. Rep. No. 95-731 (1978) (expressing concern about 
engine damage and noting the need ``to assist [motorists] in the 
purchase of suitable gasoline for their motor vehicles).
    \146\ Growth Energy and RFA made two ancillary arguments for a 
narrow reading of ``automotive fuel rating.'' First, RFA argued that 
the proposed language is misleading and, therefore, not a proper 
rating. For reasons explained above, the Commission does not agree 
that the proposed labels are misleading. Second, Growth Energy 
argued that before requiring a rating other than an octane or cetane 
rating, the Commission must consider how the alternative rating 
furthers the objectives of an octane rating. Growth Energy appears 
to base this argument on an assumption that PMPA's objective is to 
require octane ratings for all fuels. As explained above, that view 
of PMPA's purpose is contrary to its text.
---------------------------------------------------------------------------

B. Infrared Method

    All commenters that addressed allowing automotive fuel rating 
through infrared spectrophotometers supported doing so. Significantly, 
these commenters included business, consumer groups, and state 
regulators. Their comments indicate that the infrared method is a more 
accurate and cost-effective means of measuring octane. Moreover, the 
record indicates widespread use of the method by state regulatory 
agencies.
    In light of this strong support, the Commission proposes adding the 
infrared method to the Fuel Rating Rule's list of approved octane 
rating methods. Specifically, the amendment would allow use of octane 
measurement by infrared spectrophotometers that are correlated with 
ASTM D2699 and D2700, the octane rating methods specified in PMPA, and 
conform to ASTM D6122 (``Standard Practice for the Validation of the 
Performance of Multivariate Infrared Spectrophotometers''). For 
businesses, such an amendment should lower costs. For consumers, it 
should reduce the risk of inaccurate measurements.
    The Commission does not propose adopting Tesoro's suggestion to 
designate D2699 and D2700 as ``referee tests.'' Tesoro appears to be 
recommending that the Rule provide that a fuel's rating derived through 
the infrared method is invalid if it differs from the rating derived 
through D2699 and D2700. However, the record does not show that D2699 
and D2700 are superior to the infrared method. Thus, there is no reason 
to favor one approved rating method over another.

V. Request for Comment

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 2, 2014. 
Write ``Fuel Rating Rule Review, 16 CFR Part 306, Project No. 811005'' 
on your comment. Your comment--including your name and your state--will 
be placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment doesn't include any 
sensitive personal information, such as anyone's Social Security 
number, date of birth, driver's license number or other state 
identification number or foreign country equivalent, passport number, 
financial account number, or credit or debit card number. You are also 
solely responsible for making sure that your comment does not include 
any sensitive health information, such as medical records or other 
individually identifiable health information. In addition, don't 
include any ``[t]rade secret or any commercial or financial information 
which is . . . privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names. If you 
want the Commission to give your comment confidential treatment, you 
must file it in paper form, with a request for confidential treatment, 
and you have to follow the procedure explained in FTC Rule 4.9(c), 16 
CFR 4.9(c).\147\ Your comment will be kept confidential only if the FTC 
General Counsel grants your request in

[[Page 18862]]

accordance with the law and the public interest.
---------------------------------------------------------------------------

    \147\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/autofuelratingscertnprm, by following the instruction on the web-
based form. If this Notice appears at http://www.regulations.gov, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Fuel Rating Rule Review, 
16 CFR Part 306, Project No. R811005'' on your comment and on the 
envelope, and mail or deliver it to the following address: Federal 
Trade Commission, Office of the Secretary, Room H-113 (Annex N), 600 
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
NPRM and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before June 2, 2014. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
    The Commission invites members of the public to comment on any 
issues or concerns they believe are relevant or appropriate to the 
Commission's consideration of proposed amendments. The Commission 
requests that comments provide factual data upon which they are based. 
In addition to the issues raised above, the Commission solicits public 
comment on the following questions and the costs and benefits to 
industry members and consumers of each of the proposals. These 
questions are designed to assist the public and should not be construed 
as a limitation on the issues on which public comment may be submitted.
    1. What evidence exists regarding whether ethanol blends can harm 
engines, including newer conventional vehicle engines? Is there 
evidence showing that harm is more likely at higher ethanol-
concentration levels, and, if so, what levels?
    2. What evidence exists regarding consumers misfueling with ethanol 
blends? If misfueling is occurring, is it happening with greater 
frequency in any particular geographical region or with fuel containing 
any particular ethanol concentration? Do ethanol blend pumps currently 
contain any disclosures? If so, what do those disclosures say? Are they 
voluntary or required by state law? Do they effectively prevent 
misfueling?
    3. How would consumers understand the disclosures on the proposed 
label? Would the ``MAY HARM OTHER ENGINES'' deter any lawful use of 
ethanol blends? Would ``USE ONLY IN FLEX-FUEL VEHICLES'' alone be 
sufficient to advise consumers not to use ethanol blends in other 
engines? Provide all evidence, including consumer surveys or copy 
tests, supporting your response.
    4. What costs on businesses and consumers would the proposed 
requirement to disclose ethanol content rounded to the nearest tenth 
impose? What benefits to businesses and consumers would the proposed 
requirement provide? Provide all evidence supporting your response.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. 3501-3521 
(``PRA''), the Commission also invites comments on (1) whether the 
proposed modifications to the current rating, certification, and 
labeling requirements are necessary and/or will be practically useful; 
(2) the accuracy of the associated burden estimates; (3) how to improve 
the quality, utility, and clarity of the labels; and (4) how to 
minimize further the burden of the collections of information.
    Your responses to the points immediately above additionally should 
be sent to the Office of Management and Budget. If sent by U.S. mail, 
they should be addressed to Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: Desk Officer for 
the Federal Trade Commission, New Executive Office Building, Docket 
Library, Room 10102, 725 17th Street NW., Washington, DC 20503. 
Comments sent to OMB by U.S. postal mail, however, are subject to 
delays due to heightened security precautions. Thus, comments should 
instead be sent by facsimile to (202) 395-5167.

VI. Paperwork Reduction Act

    The proposed amendments allowing the infrared method do not impose 
any burdens because they merely provide an alternative means of 
compliance. However, the proposed certification and labeling 
requirements for ethanol blends constitute a ``collection of 
information'' under the PRA.
    Consistent with the Fuel Rating Rule's requirements for other 
alternative fuels, under the proposed amendments, refiners, producers, 
importers, distributors, and retailers of ethanol blends must retain, 
for one year, records of any delivery tickets, letters of 
certification, or tests upon which they based the automotive fuel 
ratings that they certify or post.\148\ The covered parties also must 
make these records available for inspection by staff of the Commission 
and EPA or by persons authorized by those agencies. Finally, retailers 
must produce, distribute, and post fuel-rating labels on pumps.
---------------------------------------------------------------------------

    \148\ See the Fuel Rating Rule's recordkeeping requirements, 16 
CFR 306.7; 306.9; and 306.11.
---------------------------------------------------------------------------

    In the 2010 NPRM, the Commission provided estimated recordkeeping 
and disclosure burdens for entities covered under the Rule and sought 
comment on the accuracy of those estimates. The Commission believes 
that the changes made since the 2010 NPRM do not affect the previous 
burden estimates. Below, the Commission discusses those estimates.
    The Commission estimated the burden associated with the Rule's 
recordkeeping requirements for the sale of automotive fuels to be no 
more than 5 minutes per year (or 1/12th of an hour) per industry 
member, and no more than 1/8th of an hour per year per industry member 
for the Rule's disclosure requirements.\149\ Consistent with OMB 
regulations that implement the PRA, these estimates reflect solely the 
burden incremental to the usual and customary recordkeeping and 
disclosure activities performed by affected entities in the ordinary 
course of business. See 5 CFR 1320.3(b)(2).
---------------------------------------------------------------------------

    \149\ See, e.g., Federal Trade Commission: Automotive Fuel 
Ratings, Certification and Posting: Final Rule on Biodiesel 
Labeling, 73 FR at 40161. Staff has previously estimated that 
retailers of automotive fuels incur an average burden of 
approximately one hour to produce, distribute, and post fuel-rating 
labels. Because the labels are durable, staff has concluded that 
only about one of every eight retailers incur this burden each year. 
Hence, the Rule's disclosure requirement will impose an annual 
burden of 1/8th of an hour, on average, per retailer.
---------------------------------------------------------------------------

    Because the procedures for distributing and selling ethanol blends 
are not substantially different from those for other fuels, the 
Commission expects that, consistent with practices in the fuel industry 
generally, the covered parties will record the fuel rating 
certification on documents (e.g., shipping receipts) already in use, or 
will use a letter of certification. Furthermore, the Commission expects 
that labeling of ethanol-fuel pumps will be consistent, generally, with 
practices in the fuel industry. Accordingly, the PRA burden will be the 
same as that for other automotive fuels: 1/12th of an hour per

[[Page 18863]]

year for recordkeeping and 1/8th of an hour per year for disclosure.
    The U.S. Department of Energy (``DOE'') indicates 2,667 ethanol 
retailers nationwide, and the U.S Energy Information Administration 
indicates 193 ethanol fuel production plants.\150\ Thus, assuming that 
each ethanol retailer and producer will spend 1/12th of an hour per 
year complying with the proposed recordkeeping requirements, and each 
ethanol retailer will spend 1/8th of an hour per year complying with 
the proposed disclosure requirements, the Commission estimates the 
incremental annual burden to be 238 hours, rounded, for recordkeeping 
(1/12th of an hour x 2,860 entities) and 333 hours, rounded, for 
disclosure (1/8th of an hour x 2,667), combined, 571 hours.
---------------------------------------------------------------------------

    \150\ See http://www.afdc.energy.gov/fuels/ethanol_locations.html (last visited Feb. 26, 2014); http://www.eia.gov/petroleum/ethanolcapacity/ (last visited Feb. 26, 2014).
---------------------------------------------------------------------------

    Labor costs are derived by applying appropriate hourly cost figures 
to the burden hours described above. Applying an average hourly wage 
for producers of $30.56, and an average hourly wage for retailers of 
$10.54 to the estimated affected population, labor costs total 
$6,338.66 (($30.56 x 16 hours) + ($10.54 x 555 hours)) for 
recordkeeping and disclosure burden.\151\
---------------------------------------------------------------------------

    \151\ See http://www.bls.gov/iag/tgs/iag211.htm#earnings (Bureau 
of Labor Statistics, December 2013 Current Employment Statistics, 
Average Hourly Earnings for Oil and Gas Extraction Production and 
Nonsupervisory Employees); http://www.bls.gov/iag/tgs/iag447.htm 
(Bureau of Labor Statistics, December 2013 Current Employment 
Statistics, Average Hourly Earnings for Gasoline Station Production 
and Nonsupervisory Employees).
---------------------------------------------------------------------------

    The Rule does not impose any capital costs for producers, 
importers, or distributors of ethanol blends. Retailers, however, do 
incur the cost of procuring and replacing fuel dispenser labels to 
comply with the Rule. Staff has previously estimated that the price per 
automotive fuel label is fifty cents and that the average automotive 
fuel retailer has six dispensers. PMAA, however, stated that the cost 
of labels ranges from one to two dollars. Conservatively applying the 
upper end from PMAA's estimate results in an initial cost to retailers 
of $12 (6 pumps x $2). Regarding label replacement, staff has 
previously estimated a dispenser useful life range of 6 to 10 years. 
Assuming a useful life of 8 years, the mean of that range, replacement 
labeling will not be necessary for well beyond the relevant time frame, 
i.e., the immediate 3-year PRA clearance sought. Accordingly, averaging 
solely the $12 labeling cost at inception per retailer over that 
period, annualized labeling cost per retailer will be $4. Cumulative 
labeling cost would thus be $10,668 (2,667 retailers x $4 each, 
annualized).\152\
---------------------------------------------------------------------------

    \152\ This reflects strictly the incremental (and annualized) 
PRA costs of the ethanol amendments. Cumulative capital/non-labor 
costs for the current Rule under existing OMB clearance (Control No. 
3084-0068) is $88,600.
---------------------------------------------------------------------------

VII. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires an 
agency to provide an Initial Regulatory Flexibility Analysis with a 
proposed rule unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
See 5 U.S.C. 603-605.
    The FTC finds that the proposed amendments will not have a 
significant economic impact on a substantial number of small entities. 
The amendment allowing alternative octane measurements does not impose 
any new costs on covered entities because it merely gives those 
entities the option of using a different octane rating method than what 
the Rule currently requires. As explained in Section VI above, the 
Commission expects each ethanol retailer and producer to spend, at 
most, 5 minutes per year complying with the recordkeeping requirements, 
and each ethanol retailer to spend 1/8th of an hour per year complying 
with the new ethanol disclosure requirements.\153\ As also explained in 
Section VI, staff estimates an average hourly wage for producers of 
$30.56, and for retailers of $10.54. Even assuming that all ethanol 
producers and retailers are small entities, compliance with the 
recordkeeping requirements will cost producers an estimated $2.55 
($30.56 x 1/12th of an hour) and cost retailers an estimated $0.88 
($10.54 x 1/12th of an hour). In addition, under the same conservative 
assumptions, compliance with the disclosure requirements will cost 
retailers an estimated $1.32 ($10.54. x 1/8th of an hour). Finally, as 
discussed in Section VI, the Commission estimates annualized capital 
costs as $4.
---------------------------------------------------------------------------

    \153\ The Commission assumes that ethanol-blend producers and 
distributors would determine the ethanol percentage in their blends 
and include it with the blends' transfer documents.
---------------------------------------------------------------------------

    This document serves as notice to the Small Business Administration 
of the agency's certification of no effect. Nonetheless, the Commission 
has prepared the following analysis.

A. Reasons why the Commission is Proposing the Amendments

    The Commission proposes these amendments in response to the 
emergence of ethanol blends as a retail fuel and the likely increased 
availability of such blends. As discussed above, the proposed 
amendments will further PMPA's objective of giving consumers 
information necessary to choose the correct fuel for their vehicles.

B. Statement of the Objectives and Legal Basis of the Amendments

    These amendments provide requirements for rating and certifying 
ethanol blends and requirements for labeling blends of more than 10 
percent ethanol, with an exemption for EPA-approved E15. Thus, they 
provide a mechanism for fuel pumps dispensing ethanol blends to post a 
rating that will alert consumers to the fuel's ethanol content and the 
suitability of that fuel for their vehicles, pursuant to PMPA, 15 
U.S.C. 2801 et seq.

C. Estimate of the Number of Small Entities to Which the Proposed 
Amendments Will Apply

    Retailers of ethanol blends will be classified as small businesses 
if they satisfy the Small Business Administration's relevant size 
standards, as determined by the Small Business Size Standards component 
of the North American Industry Classification System (``NAICS''). The 
closest NAICS size standard relevant to this rulemaking is for 
``Gasoline Stations with Convenience Stores.'' That standard classifies 
retailers with a maximum $27 million in annual receipts as small 
businesses.\154\ As discussed above, DOE reports 2,667 ethanol fueling 
stations.\155\ DOE does not provide information on those retailers' 
revenue. Therefore, the Commission seeks comment on how many of those 
retailers qualify as small businesses.
---------------------------------------------------------------------------

    \154\ See http://www.sba.gov/content/small-business-size-standards. (last visited Dec. 31, 2013).
    \155\ See www.afdc.energy.gov/afdc/fuels/stations_counts.html 
(last visited Dec. 31, 2013).
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    The proposed amendments make clear that the Fuel Rating Rule's 
recordkeeping, certification, and labeling requirements apply to 
ethanol blends. Small entities potentially affected are producers, 
importers, distributors, and retailers of those blends. The Commission 
expects that the recordkeeping, certification, and labeling tasks are 
done by industry members in the normal course of their business. 
Accordingly, we do not expect the proposed amendments to require any 
professional skills beyond those

[[Page 18864]]

already employed by industry members, namely, administrative.

E. Identification of Overlapping Federal Rules

    The Commission is not aware of any relevant Federal Rules that 
would duplicate, overlap, or conflict with the proposed amendments. The 
amendments specifically exempt EPA-approved E15 blends, which must be 
labeled under EPA rules.

F. Alternatives Considered

    As explained above, PMPA requires retailers of liquid automotive 
fuels to post labels at the point of sale displaying those fuels' 
ratings. The posting requirements in the proposed amendments are 
minimal and, as noted above, do not require creating any separate 
documents because covered parties may use documents already in use, 
such as invoices, to certify a fuel's rating. Moreover, the Commission 
cannot exempt small businesses from the Rule and still communicate fuel 
rating information to consumers. Furthermore, the amendments minimize 
what, if any, economic impact there is from the labeling requirements. 
Finally, because PMPA requires point-of-sale labels, the Rule must 
require retailers to incur the costs of posting those labels. 
Therefore, the Commission concludes that there are no significant 
alternative measures that would accomplish the objectives of PMPA and 
further minimize the burden on small entities.

VIII. Public Hearings

    Persons desiring a public hearing should notify the Commission no 
later than May 5, 2014. If there is interest in a public hearing, it 
will take place at a time and date to be announced in a subsequent 
notice. If a hearing is held, persons desiring an appointment to 
testify must submit to the Commission a complete statement in advance, 
which will be entered into the record in full. As a general rule, oral 
statements should not exceed 10 minutes. If there is a hearing, the 
Commission will provide further instructions in a notice announcing the 
hearing.

IX. Communications by Outside Parties to the Commissioners or Their 
Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding from any 
outside party to any Commissioner or Commissioner's advisor will be 
placed on the public record. See 16 CFR 1.26(b)(5).

X. Proposed Rule

List of Subjects in 16 CFR Part 306

    Fuel ratings, Trade practices, Incorporation by reference.

    For the reasons discussed in the preamble, the Federal Trade 
Commission proposes to amend title 16, chapter I, subchapter C, of the 
Code of Federal Regulations, part 306, as follows:

PART 306--AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING

0
1. The authority citation for part 306 continues to read as follows:

    Authority: 15 U.S.C. 2801 et seq.; 42 U.S.C. 17021.

0
2. Amend Sec.  306.0 by revising paragraphs (b), (i), and (j), and 
adding paragraph (o), to read as follows:


Sec.  306.0  Definitions.

* * * * *
    (b) Research octane number and motor octane number. (1) These terms 
have the meanings given such terms in the specifications of ASTM 
International (``ASTM'') entitled ``Standard Specification for 
Automotive Spark-Ignition Engine Fuel (published November 2010)'' 
designated D4814-10b and, with respect to any grade or type of 
gasoline, are determined in accordance with one of the following test 
methods or protocols:
    (i) ASTM D2699-09, ''Standard Test Method for Research Octane 
Number of Spark-Ignition Engine Fuel (published November 2009)'' and 
ASTM D2700-09, ``Standard Test Method for Motor Octane Number of Spark-
Ignition Engine Fuel (published November 2009)'';
    (ii) ASTM D2885-10, ``Standard Test Method for Determination of 
Octane Number of Spark-Ignition Engine Fuels by On-Line Direct 
Comparison Technique (published March 2010);'' or
    (iii) ASTM D6122-10, ``Standard Practice for Validation of the 
Performance of Multivariate Infrared Spectrophotometers,'' which is 
correlated with ASTM D2699-09 and ASTM D2700-09.
    (2) The incorporations by reference of ASTM D4814-10b, ASTM D6122-
10, ASTM D2699-09, ASTM D2700-09, and ASTM D2885-10 in paragraph (b)(1) 
of this Section, and in Sec.  306.5(a), were approved by the Director 
of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. Copies of ASTM D4814-10b, ASTM D6122-10, ASTM D2699-09, ASTM 
D2700-09, and ASTM D2885-10, may be obtained from ASTM International, 
100 Barr Harbor Drive, West Conshohocken, PA 19428, or may be inspected 
at the Federal Trade Commission, Public Reference Room, Room 130, 600 
Pennsylvania Avenue NW, Washington, DC, or at the National Archives and 
Records Administration (``NARA''). For information on the availability 
of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.
* * * * *
    (i) Automotive fuel. This term means liquid fuel of a type 
distributed for use as a fuel in any motor vehicle, and the term 
includes, but is not limited to:
    (1) Gasoline, an automotive spark-ignition engine fuel, which 
includes, but is not limited to, gasohol (generally a mixture of 
approximately 90 percent unleaded gasoline and 10 percent ethanol) and 
fuels developed to comply with the Clean Air Act, 42 U.S.C. 7401 et 
seq., such as reformulated gasoline and oxygenated gasoline; and
    (2) Alternative liquid automotive fuels, including, but not limited 
to:
    (i) Methanol, denatured ethanol, and other alcohols;
    (ii) Mixtures containing 85 percent or more by volume of methanol 
and/or other alcohols, excluding ethanol (or such other percentage, as 
provided by either the Secretary of the United States Department of 
Energy, by rule), with gasoline or other fuels;
    (iii) Ethanol blends;
    (iv) Liquefied natural gas;
    (v) Liquefied petroleum gas;
    (vi) Coal-derived liquid fuels;
    (vii) Biodiesel;
    (viii) Biomass-based diesel;
    (ix) Biodiesel blends containing more than 5 percent biodiesel by 
volume; and
    (x) Biomass-based diesel blends containing more than 5 percent 
biomass-based diesel by volume.
* * * * *
    (j) Automotive fuel rating means. (1) For gasoline, the octane 
rating.
    (2) For an alternative liquid automotive fuel other than biodiesel, 
biomass-based diesel, biodiesel blends, biomass-based diesel blends, 
and ethanol blends, the commonly used name of the fuel with a 
disclosure of the amount, expressed as the minimum percentage by 
volume, of the principal component of the fuel. A disclosure of other 
components, expressed as the minimum percentage by volume, may be 
included, if desired.
    (3) For biomass-based diesel, biodiesel, biomass-based diesel 
blends with more than 5 percent biomass-based diesel, and biodiesel 
blends with more than 5 percent biodiesel, a disclosure of the biomass-
based diesel or biodiesel

[[Page 18865]]

component, expressed as the percentage by volume.
    (4) For ethanol blends, a disclosure of the ethanol component, 
expressed as the percentage by volume and the text ``USE ONLY IN FLEX-
FUEL VEHICLES/MAY HARM OTHER ENGINES.''
* * * * *
    (o) Ethanol blend means a mixture of gasoline and ethanol 
containing more than 10 percent ethanol;
0
3. Revise Sec.  306.5 to read as follows:


Sec.  306.5  Automotive fuel rating.

    If you are a refiner, importer, or producer, you must determine the 
automotive fuel rating of all automotive fuel before you transfer it. 
You can do that yourself or through a testing lab.
    (a) To determine the automotive fuel rating of gasoline, add the 
research octane number and the motor octane number and divide by two, 
as explained by ASTM D4814-10b, ``Standard Specifications for 
Automotive Spark-Ignition Engine Fuel,'' (incorporated by reference, 
see Sec.  306.0(b)(2)). To determine the research octane and motor 
octane numbers you may do one of the following:
    (1) Use ASTM standard test method ASTM D2699-09, ``Standard Test 
Method for Research Octane Number of Spark-Ignition Engine Fuel'' 
(incorporated by reference, see Sec.  306.0(b)(2)), to determine the 
research octane number, and ASTM standard test method ASTM D2700-09, 
``Standard Test Method for Motor Octane Number of Spark-Ignition Engine 
Fuel'' (incorporated by reference, see Sec.  306.0(b)(2)), to determine 
the motor octane number;
    (2) Use the test method set forth in ASTM D2885-10, ``Standard Test 
Method for Determination of Octane Number of Spark-Ignition Engine 
Fuels by On-Line Direct Comparison Technique'' (incorporated by 
reference, see Sec.  306.0(b)(2)); or
    (3) Use a multivariate infrared spectrophotometer, as described in 
Section 6.1.1 of ASTM D6122-10, ``Standard Practice for Validation of 
the Performance of Multivariate Infrared Spectrophotometers,'' to 
determine the research octane number and the motor octane number 
following the procedures set forth in ASTM D6122-10 to correlate the 
measured research and motor octane numbers with the results of test 
methods ASTM D2699-09 and ASTM D2700-09 (incorporated by reference, see 
Sec.  306.0(b)(2)).
    (b) To determine automotive fuel ratings for alternative liquid 
automotive fuels other than ethanol blends, biodiesel blends, and 
biomass-based diesel blends, you must possess a reasonable basis, 
consisting of competent and reliable evidence, for the percentage by 
volume of the principal component of the alternative liquid automotive 
fuel that you must disclose. In the case of biodiesel blends, you must 
possess a reasonable basis, consisting of competent and reliable 
evidence, for the percentage of biodiesel contained in the fuel. In the 
case of biomass-based diesel blends, you must possess a reasonable 
basis, consisting of competent and reliable evidence, for the 
percentage of biomass-based diesel contained in the fuel. In the case 
of ethanol blends, you must possess a reasonable basis, consisting of 
competent and reliable evidence, for the percentage of ethanol 
contained in the fuel. You also must have a reasonable basis, 
consisting of competent and reliable evidence, for the minimum 
percentages by volume of other components that you choose to disclose.
0
4. Revise Sec.  306.6(b) to read as follows:


Sec.  306.6  Certification.

* * * * *
    (b) Give the person a letter or other written statement. This 
letter must include the date, your name, the other person's name, and 
the automotive fuel rating of any automotive fuel you will transfer to 
that person from the date of the letter onwards. Octane rating numbers 
may be rounded to a whole or half number equal to or less than the 
number determined by you. This letter of certification will be good 
until you transfer automotive fuel with a lower automotive fuel rating, 
except that a letter certifying the fuel rating of biomass-based 
diesel, biodiesel, a biomass-based diesel blend, a biodiesel blend, or 
an ethanol blend will be good only until you transfer those fuels with 
a different automotive fuel rating, whether the rating is higher or 
lower. When this happens, you must certify the automotive fuel rating 
of the new automotive fuel either with a delivery ticket or by sending 
a new letter of certification.
* * * * *
0
5. Revise Sec.  306.10(a) and (f) to read as follows:


Sec.  306.10  Automotive fuel rating posting.

    (a) If you are a retailer, you must post the automotive fuel rating 
of all automotive fuel you sell to consumers. You must do this by 
putting at least one label on each face of each dispenser through which 
you sell automotive fuel. If you are selling two or more kinds of 
automotive fuel with different automotive fuel ratings from a single 
dispenser, you must put separate labels for each kind of automotive 
fuel on each face of the dispenser. Provided, however, that you do not 
need to post the automotive fuel rating of a mixture of gasoline and 
ethanol containing more than 10 but not more than 15 percent ethanol if 
the face of the dispenser is labelled in accordance with 40 CFR 
80.1501.
* * * * *
    (f) The following examples of automotive fuel rating disclosures 
for some presently available alternative liquid automotive fuels are 
meant to serve as illustrations of compliance with this part, but do 
not limit the Rule's coverage to only the mentioned fuels:

(1) ``Methanol/Minimum ---- % Methanol''
(2) ``---- % Ethanol/Use only in Flex-Fuel Vehicles/May harm other 
engines''
(3) ``M85/Minimum ---- % Methanol''
(4) ``LPG/Minimum ---- % Propane'' or ``LPG/Minimum ---- % Propane and 
---- % Butane''
(5) ``LNG/Minimum ---- % Methane''
(6) ``B20 Biodiesel Blend/contains biomass-based diesel or biodiesel in 
quantities between 5 percent and 20 percent''
(7) ``20% Biomass-Based Diesel Blend/contains biomass-based diesel or 
biodiesel in quantities between 5 percent and 20 percent''
(8) ``B100 Biodiesel/contains 100 percent biodiesel''
(9) ``100% Biomass-Based Diesel/contains 100 percent biomass-based 
diesel''
* * * * *
0
6. Amend Sec.  306.12 by re-designating existing paragraphs (a)(4) 
through (9) as paragraphs (a)(5) through (10), respectively; by adding 
new paragraph (a)(4); by removing the illustration of the ``E-100'' 
label in paragraph (f); and by adding a new illustration after the 
existing illustrations in paragraph (f), to read as follows:


Sec.  306.12  Labels.

* * * * *
    (a) * * *
    (4) For ethanol blends. (i) The label is 3 inches (7.62 cm) wide h 
2 1/2 inches (6.35 cm) long. ``Helvetica Black'' or equivalent type is 
used throughout. The type in the band is centered both horizontally and 
vertically. The band at the top of the label contains one of the 
following:
    (A) The numerical value representing the volume percentage of 
ethanol in the fuel followed by the percentage sign and then by the 
term ``ETHANOL''; or
    (B) The numerical value representing the volume percentage of 
ethanol in the fuel, rounded to the nearest factor of 10, followed by 
the percentage sign and then the term ``ETHANOL.''

[[Page 18866]]

    (ii) The band should measure 1 inch (2.54 cm) deep. The percentage 
disclosure and the word ``ETHANOL'' are in 24 point font. The type 
below the black band is centered vertically and horizontally. The first 
line is the text: ``USE ONLY IN.'' It is in 16 point font, except for 
the word ``ONLY,'' which is in 26 point font. The word ``ONLY'' is 
underlined with a 2 point (or thick) underline. The second line is in 
16 point font, at least 1/8 inch (.32 cm) below the first line, and is 
the text: ``FLEX-FUEL VEHICLES.'' The third line is in 10 point font, 
at least 1/8 inch (.32 cm) below the first line, and is the text ``MAY 
HARM OTHER ENGINES.''
* * * * *
    (f) * * *
    [GRAPHIC] [TIFF OMITTED] TP04AP14.032
    

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2014-07423 Filed 4-3-14; 8:45 am]
BILLING CODE 6750-01-P