Control of Hazardous Air Pollutants From Mobile Sources
[Federal Register: March 29, 2006 (Volume 71, Number 60)]
[Proposed Rules]
[Page 15903-15952]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29mr06-35]
[[pp. 15903-15952]]
Control of Hazardous Air Pollutants From Mobile Sources
[[Continued from page 15902]]
[[Page 15903]]
and 11 would use benzene saturation. The analysis projects that 43
refineries would reduce their benzene levels to the proposed benzene
standard or lower, while 49 refineries would reduce their benzene
levels but still would need to purchase credits to comply with the
average benzene standard. Including the refineries with benzene levels
currently below 0.62, we project that there would be a total of 62
refineries producing gasoline with benzene levels at 0.62 or lower. The
model assumes that those with benzene levels lower than 0.62 volume
percent would generate credits for sale to other refineries. Finally,
the model projects that there would be 6 refineries that would take no
benzene reduction action and comply with the proposed program solely
through the use of benzene credits.
The refinery model estimates that the proposed benzene standard
would cost 0.13 cents per gallon, averaged over the entire U.S.
gasoline pool. (When averaged only over those refineries which are
assumed to take steps to reduce their benzene levels, the average cost
would be 0.19 cents per gallon.) This per-gallon cost would result from
an industry-wide investment in capital equipment of $500 million to
reduce gasoline benzene levels. This would amount to an average of $5
million in capital investment in each refinery that adds such
equipment.\284\
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\284\ The modeling does not separate out capital costs for the
recovery of lost octane and supplying additional hydrogen, but
rather includes these in the operating cost estimates. Therefore,
actual capital costs maybe somewhat greater.
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We also estimated annual aggregate costs associated with the
proposed new fuel standard. As shown in Table IX.A-1, these costs are
projected to begin at $186 million in 2011 and increase over time as
fuel demand increases.
Table IX.A-1.--Annual Aggregate Fuel Costs
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2011 2013 2015 2017 2019 2020
----------------------------------------------------------------------------------------------------------------
$185,533,000.................... $191,873,000 $198,283,000 $204,212,000 $209,875,000 $212,606,000
----------------------------------------------------------------------------------------------------------------
Several observations can be made from these results from our
nationwide analysis. First, significantly reducing gasoline benzene
levels to low levels, coupled with the flexibility of an ABT program,
will incur fairly modest costs. This is primarily because we expect
that refiners would optimize their benzene control strategies,
resulting in large benzene reductions at a low overall program cost.
With high benzene prices relative to those of gasoline projected to
continue (even if they drop from the recent very high levels),
extraction would be a very low cost technology--the primary reason why
the cost of the overall program is very low. Also, precursor rerouting,
either with or without isomerization in an existing unit, is a low-cost
technology requiring little or no capital to realize. The model
concludes that even the higher-cost benzene saturation technology would
be fairly cost-effective overall because larger refineries that install
this technology would take advantage of their economies of scale.
b. Regional Distribution of Costs
The benzene reductions estimated by the cost model and associated
costs vary significantly by region. Table IX.A-2 summarizes the initial
benzene levels and the projected benzene levels after refiners take
anticipated steps to reduce the benzene in their gasoline and the estimated
per-gallon costs for complying with the proposed benzene standard.
Table IX.A-2 shows that under the proposed program the largest
benzene reductions occur in the areas with the highest benzene levels.
This is expected as many of these refineries are not doing anything to
reduce their gasoline benzene levels today and simple, low-cost
technologies can be employed to realize large reductions in their
benzene levels. In PADDs 1 and 3, which have significant benzene
control today to meet the RFG requirements, a more modest benzene
reduction would occur. Many of the refineries producing fuel for sale
in PADDs 1 and 3 cannot reduce their benzene levels further because
they are already extracting all the benzene that they can. Extraction
is the technology most used in PADDs 1 and 3, resulting in a much lower
average cost for reducing benzene in these regions.
For comparison, we also modeled a program where the 0.62 vol%
average standard was supplemented by a maximum average benzene cap
standard, as described in section VII above. We did not propose such a
maximum average standard because the main effect would simply be to
shift emission reductions from one region of the country to another
with no change in overall emission reductions. Table IX.A-2 shows that
a maximum average standard would increase costs slightly nationwide,
but that PADD 2 benzene levels, already above the standard, would rise
while other areas improved.
Table IX.A-2.--Current and Projected Benzene Levels and Costs by PADD
[$2002, 7% ROI before taxes]
----------------------------------------------------------------------------------------------------------------
PADD
-------------------------------------------------------
5 (w/o U.S.
1 2 3 4 CA)
----------------------------------------------------------------------------------------------------------------
Current Benzene Level (vol%).................. 0.66 1.32 0.86 1.54 1.87 0.97
Projected Benzene Level (vol%)................ 0.51 0.73 0.55 0.95 1.04 0.62
Cost (c/gal).................................. 0.05 0.25 0.05 0.40 0.72 0.125
Projected Benzene Level (vol%) (With 1.3 vol% 0.50 0.75 0.56 0.90 0.88 0.62
Max-Avg Std).................................
Cost (c/gal).................................. 0.06 0.22 0.03 0.43 1.18 0.130
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c. Cost Effects of Different Standards
We also estimated the benzene reduction costs for other benzene
reduction levels, as summarized in Table IX.A-3. The cost model
estimates that a 0.52 volume percent benzene
[[Page 15904]]
standard with an ABT program \285\ is the maximum benzene reduction
possible when each refinery employs the maximum appropriate reformate
benzene control (that is, benzene extraction whenever possible, and
benzene saturation otherwise).
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\285\ The cost model projects that this standard would require
an ABT program because many of the refineries modeled would not be
able to achieve this standard. These refineries would have to rely
on the purchase of credits from other refineries which are already
below this benzene level, or other refineries which could install
benzene control technology to get their benzene levels below this
standard. This scenario assumes a fully utilized credit program.
Table IX.A-3.--Costs of Various Potential Benzene Control Standards
[$2002, 7% ROI before taxes]
------------------------------------------------------------------------
Cost (cents/
Average standard (vol%) gallon)
------------------------------------------------------------------------
0.62 (Proposed Standard)................................ 0.13
0.65.................................................... 0.09
0.60.................................................... 0.15
0.52.................................................... 0.36
------------------------------------------------------------------------
The results in Table IX.A-3 indicate that the cost for reducing
benzene levels is not very sensitive to the benzene standard in the
range from 0.60 to 0.65 volume percent benzene. This is because we
project that standards in this range would not require many of the
smaller or otherwise higher-cost refineries to employ benzene
saturation, which is the highest cost technology. Also, in this range
of potential standards, the ABT program would allow the refining
industry to optimize the benzene control technologies they apply. The
need for all refineries to use either benzene saturation or benzene
extraction to comply with a 0.52 vol% standard explains the much higher
cost for a program with a standard that range.
We also examined the effect of the ABT program on cost. Without
ABT, we assume that the standard would be met by all refineries. To
achieve a national average level of 0.62 vol% benzene without an ABT
program would require an absolute standard of 0.73 vol%. We estimate
that such a program would result in a nationwide average cost of 0.25
cents per gallon, about double the cost of the program with ABT.
d. Effect on Cost Estimates of Higher Benzene Prices
As described above, we also performed a sensitivity analysis to
estimate the costs of the proposed program if the recent very high
prices for chemical grade benzene continue into the future. We estimate
that at an average benzene price of $38 dollars above that for
gasoline, the program would cost 0.08 cents per gallon less on average
nationwide.
3. Economic Impacts of MSAT Control Through Gasoline Sulfur and RVP
Control and a Total Toxics Standard
As discussed above in section VII, we have considered two
approaches to fuel-related MSAT control that would involve increasing
the stringency of two existing emission control programs, the gasoline
sulfur program and the gasoline volatility program. We estimated the
cost of programs that would further reduce the sulfur content and Reid
vapor pressure (RVP) of gasoline. For these costs estimates, the LP
refinery model was used to estimate the costs for the year 2010,
including the fuel economy impacts. We summarize these costs here and
provide detailed analyses in Chapter 9 of the RIA.
For sulfur control, we estimated the costs of reducing U.S.
gasoline sulfur levels down to 10 ppm from the 30 ppm sulfur level
required for Tier 2 sulfur control. The costs are based on revamping
current hydrotreaters installed to meet the 30 ppm sulfur standard. We
estimate that reducing gasoline sulfur down to 10 ppm would cost 0.51
cents per gallon, taking into account the fuel economy effects. The
analysis also estimates that U.S. refiners would invest $1.3 billion in
new capital to achieve this sulfur reduction.
We also estimated costs for lowering summertime gasoline RVP down
to a maximum of 7.8 or 7.0 RVP from the current average for non-RVP
controlled gasoline of 9.0 RVP. The estimated volume of gasoline
required to meet an additional low RVP requirement was assumed to be
equivalent to half of the volume of the reformulated gasoline sold
within the PADD, applied to the conventional gasoline sold within the
PADD. This simple means of estimating the volume of gasoline affected
by future additional RVP control programs was used because the analysis
of possible new low RVP programs established for complying with the 8
hour ozone National Ambient Air Quality Standards (NAAQS) was not
completed when the cost analysis was initiated. The per-gallon cost is
not expected to vary much by the size of the program. The cost analysis
estimates that reducing RVP down to 7.8 RVP would cost 0.23 cents per
gallon. The analysis also estimates that U.S. refiners would invest
$121 million in new capital to achieve this level of RVP control. The
cost analysis estimates that reducing RVP down to 7.0 RVP would cost
0.40 cents per gallon. Meeting a 7.0 RVP standard is projected to cause
U.S. refiners to invest $184 million in new capital to achieve this
level of RVP control.
We have also evaluated the costs of programs that would control
total air toxics. These programs, the analyses of which are also found
in Chapter 9 of the RIA, would all be more costly than the proposed
program.
B. What Are the Vehicle Cost Impacts?
In assessing the economic impact of setting cold temperature
emission standards, we have made a best estimate of the necessary
vehicle modifications and their associated costs. In making our
estimates we have relied on our own technology assessment, which
includes information supplied by individual manufacturers and our own
in-house testing. Estimated costs typically include variable costs (for
hardware and assembly time) and fixed costs (for research and
development, retooling, and certification). All costs are presented in
2003 dollars. Full details of our cost analysis can be found in Chapter
8 of the draft RIA.
As described in section VI, we are not expecting hardware changes
to Tier 2 vehicles in response to new cold temperature standards. Tier
2 vehicles are already being equipped with very sophisticated emissions
control systems. We expect manufacturers to use these systems to
minimize emissions at cold temperatures. We were able to demonstrate
significant emissions reductions from a Tier 2 vehicle through
recalibration alone. In addition, a standard based on averaging allows
some vehicles to be above the numeric standard as long as those excess
emissions are offset by vehicles below the standard. Averaging would
help manufacturers in cases where they are not able to achieve the
numeric standard for a particular vehicle group, thus helping
manufacturers avoid costly hardware changes. The phase-in of standards
and emissions credits provisions also help manufacturers avoid
situations where expensive vehicle modifications would be needed to
meet a new cold temperature NMHC standard. Therefore, we are not
projecting hardware costs or additional assembly costs associated with
meeting new cold temperature NMHC emissions standards.
Manufacturers would incur research and development (R&D) costs
associated with a new cold temperature standard, and some likely would
need to upgrade testing facilities to handle an increased number of
cold tests during vehicle development. We have estimated the
[[Page 15905]]
fixed costs associated with R&D and test facilities. We project that
manufacturers would recover R&D costs over a five-year period and their
facilities costs over a ten-year period. Long-term impacts on engine
costs are expected to decrease as manufacturers fully amortize their
fixed costs. Because manufacturers recoup fixed costs over a large
volume of vehicles, average per vehicle costs due to the new cold
temperature NMHC standards are expected to be low. We project that the
average incremental costs associated with the new cold temperature
standards would be less than $1 per vehicle.
We are not anticipating additional costs for the proposed new
evaporative emissions standard. As discussed in section VI, we expect
that manufacturers will continue to produce 50-state evaporative
systems that meet LEV II standards. Therefore, harmonizing with
California's LEV-II evaporative emission standards would streamline
certification and be an ``anti-backsliding'' measure. It also would
codify the approach manufacturers have already indicated they are
taking for 50-state evaporative systems.
We also estimated annual aggregate costs associated with the new
cold temperature emissions standards. These costs are projected to
increase with the phase-in of standards and peak in 2014 at about $13.4
million per year, then decrease as the fixed costs are fully amortized.
The projected aggregate costs are summarized below, with annual
estimates provided in Chapter 8 of the RIA.
Table IX.B-1.--Annual Aggregate Costs
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2010 2012 2014 2016 2018 2020
----------------------------------------------------------------------------------------------------------------
$11,119,000..................... $12,535,000 $13,406,000 $12,207,000 $10,682,000 $0
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C. What Are the Gas Can Cost Impacts?
For gas cans, we have made a best estimate of the necessary
technologies and their associated costs. Estimated costs include
variable costs (for hardware and assembly time) and fixed costs (for
research and development, retooling, and certification). The analysis
also considers fuels savings associated with low emissions gas cans.
Cost estimates based on the projected technologies represent an
expected change in the cost of gas cans as they begin to comply with
new emission standards. All costs are presented in 2003 dollars. Full
details of our cost analysis, including fuel savings, can be found in
Chapter 10 of the Draft RIA.
Table IX.C-1 summarizes the projected near-term and long-term per
unit average costs to meet the new emission standards. Long-term
impacts on gas cans are expected to decrease as manufacturers fully
amortize their fixed costs. We project that manufacturers will
generally recover their fixed costs over a five-year period, so these
costs disappear from the analysis after the fifth year of production.
These estimates are based on the manufacturing cost rather than
predicted price increases.\286\ The table also shows our projections of
average fuel savings over the life of the gas can. Fuel savings can be
estimated based on the VOC emissions reductions due to gas can controls.
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\286\ These cost numbers may not necessarily reflect actual
price increases as manufacturer production costs, perceived product
enhancements, and other market impacts will affect actual prices to
consumers.
Table IX.C-1.--Estimated Average Gas Can Costs and Lifetime Fuel Savings
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Cost
------------------------------------------------------------------------
Near-Term Costs................................................ $2.69
Long-Term Costs................................................ 1.52
Fuel Savings (NPV)............................................. 4.24
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With current and projected estimates of gas can sales, we translate
these costs into projected direct costs to the nation for the new
emission standards in any year. A summary of the annual aggregate costs
to manufacturers is presented in Table IX.C-2. The annual cost savings
due to fuel savings start slowly, then increase as greater numbers of
compliant gas cans enter the market. Table IX.C-2 also presents a
summary of the estimated annual fuel savings. Aggregate costs are
projected to peak in 2013 at about $51 million and then drop to about
$29 million once fixed costs are recovered. The change in numbers
beyond 2015 occurs due to projected growth in gas can sales and population.
Table IX.C-2.--Total Annualized Costs and Fuel Savings
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2009 2013 2015 2020
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Costs........................................... $49,112,000 $51,228,000 $28,772,000 $31,767,000
Fuel Saving..................................... 14,381,000 76,037,000 92,686,000 98,861,000
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D. Cost Per Ton of Emissions Reduced
We have calculated the cost per ton of HC, benzene, total MSATs,
and PM emissions reductions associated with the proposed fuel, vehicle,
and gas can programs using the costs described above and the emissions
reductions described in section V. More detail on the costs, emissions
reductions, and cost per ton estimates can be found in the draft RIA.
We have calculated the costs per ton using the net present value of the
annualized costs of the program, including gas can fuel savings, from
2009 through 2030 and the net present value of the annual emission
reductions through 2030. We have also calculated the cost per ton of
emissions reduced in the year 2030 using the annual costs and emissions
reductions in that year alone. This number represents the long-term
cost per ton of emissions reduced. For fuels, the cost per ton
estimates include costs and emission reductions that will occur from
all motor vehicles and nonroad engines fueled with gasoline.\287\
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\287\ The proposed standards do not apply to nonroad engines,
since section 202 (l) authorizes controls only for ``motor
vehicles,'' which does not include nonroad vehicles. CAA section 216
(2). However, we are reducing benzene in all gasoline, including
that used in nonroad equipment. Therefore, we are including both the
costs and the benzene emissions reductions associated with the fuel
used in nonroad equipment.
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[[Page 15906]]
For vehicles and gas cans, we are proposing to establish NMHC and
HC standards, respectively, which would also reduce benzene and other
VOC-based toxics. For vehicles, we are also expecting direct PM
reductions due to the proposed NMHC standard.\288\ Section V provides
an overview of how we are estimating benzene and PM reductions
resulting from the NMHC standards for vehicles and benzene reductions
resulting from the HC standard for gas cans. We have not attempted to
apportion costs across these various pollutants for purposes of the
cost per ton calculations since there is no distinction in the
technologies, or associated costs, used to control the pollutants.
Instead, we have calculated costs per ton by assigning all costs to
each individual pollutant. If we apportioned costs among the
pollutants, the costs per ton presented here would be proportionally
lowered depending on what portion of costs were assigned to the various
pollutants.
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\288\ Again, although gasoline PM is not a mobile source air
toxic, the rule will result in emission reductions of gasoline PM
which reductions are accounted for in our analysis.
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The results for HC for vehicles and gas cans are provided in Table
IX.D-1 using both a three percent and a seven percent social discount
rate. Again, this analysis assumes that all costs are assigned to HC
control. The discounted cost per ton of HC reduced for the proposal as
a whole would be $0 because the fuel savings from gas cans offsets the
costs of gas can and vehicle controls. The table presents these as $0
per ton, rather than calculating a negative value that has no clear
meaning. For vehicles in 2030, the cost per ton is $0 because by 2030
all fixed costs have been recovered and there are no variable costs
estimated for the proposed vehicle program.\289\
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\289\ We note that in determining whether the proposed vehicle
controls represent the greatest emissions reductions achievable
considering costs, we have considered the proposed cold-start
standards separately from any other proposed control program.
Similarly, in considering whether the proposed controls for gas cans
represent the best available control considering economic
feasibility, we considered the proposed gas can standards separately
from any other proposed control program.
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The cost per ton estimates for each individual program are
presented separately in the tables below, and are part of the
justification for each of the programs. For informational purposes, we
also present the cost per ton for the three programs combined.
Table IX.D-1.--HC Aggregate Cost Per Ton and Long-Term Annual Cost Per Ton
[$2003]
----------------------------------------------------------------------------------------------------------------
Discounted Discounted Long-term cost
lifetime cost lifetime cost per ton in
per ton at 3% per ton at 7% 2030
----------------------------------------------------------------------------------------------------------------
Vehicles........................................................ $14 $18 $0
Gas Cans (without fuel savings)................................. 230 250 180
Gas Cans (with fuel savings).................................... 0 0 0
Combined (with fuel savings).................................... 0 0 0
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The cost per ton of benzene reductions for fuels, vehicles, and gas
cans are shown in Table IX.D-2 using the same methodology as noted
above for HC. The results are calculated by assigning all costs to
benzene control.
Table IX.D-2.--Benzene Aggregate Cost Per Ton and Long-Term Annual Cost Per Ton
[$2003]
----------------------------------------------------------------------------------------------------------------
Discounted Discounted Long-term cost
lifetime cost lifetime cost per ton in
per ton at 3% per ton at 7% 2030
----------------------------------------------------------------------------------------------------------------
Fuels........................................................... $10,900 11,100 11,400
Vehicles........................................................ 260 340 0
Gas Cans (without fuels savings)................................ 27,800 30,900 21,600
Gas Cans (with fuel savings).................................... 0 0 0
Combined (with fuel savings).................................... 3,400 3,600 2,400
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The cost per ton of overall MSAT reductions for fuels, vehicles,
and gas cans are shown in Table IX.D-3 using the same methodology as
noted above for HC and benzene. The results are calculated by assigning
all costs to MSAT control.
Table IX.D-3.--MSAT Aggregate Cost Per Ton and Long-Term Annual Cost Per Ton
[$2003]
----------------------------------------------------------------------------------------------------------------
Discounted Discounted Long-term cost
lifetime cost lifetime cost per ton in
per ton at 3% per ton at 7% 2030
----------------------------------------------------------------------------------------------------------------
Fuels........................................................... $10,900 $11,100 $11,400
Vehicles........................................................ 40 53 0
Gas Cans (without fuel savings)................................. 1,800 2,000 1,400
Gas Cans (with fuel savings).................................... 0 0 0
Combined (with fuel savings).................................... 710 780 450
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[[Page 15907]]
We have also calculated a cost per ton for direct PM reductions for
vehicles. Again, this analysis assigns all related costs to direct PM
reductions.
Table IX.D-4.--Direct PM Aggregate Cost Per Ton and Long-Term Annual Cost Per Ton
($2003)
----------------------------------------------------------------------------------------------------------------
Discounted Discounted Long-term cost
lifetime cost lifetime cost per ton in
per ton at 3% per ton at 7% 2030
----------------------------------------------------------------------------------------------------------------
Vehicles........................................................ $620 $820 $0
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E. Benefits
This section presents our analysis of the health and environmental
benefits that can be expected to occur as a result of the proposed
standards throughout the period from initial implementation through
2030. In terms of emission benefits, we expect to see significant
reductions in mobile source air toxics (MSATs) from the proposed
vehicle, fuel and gas can standards, reductions in VOCs (an ozone
precursor) from the proposed cold temperature vehicle and gas can
standards, and reductions in direct PM2.5 from the proposed
cold temperature vehicle standards. When translating emission benefits
to health effects and monetized values, however, we only quantify the
PM-related benefits associated with the proposed cold temperature
vehicle standards.
The reductions in PM from the proposed cold temperature vehicle
standards would result in significant reductions in premature deaths
and other serious human health effects, as well as other important
public health and welfare effects. We estimate that in 2030, the
benefits we are able to monetize are expected to be approximately $6.5
billion using a 3 percent discount rate and $5.9 billion using a 7
percent discount rate. Total social costs of the entire proposal for
the same year (2030) are $205 million. Details on the costs of each of
the proposed controls are in section IX.F. These estimates, and all
monetized benefits presented in this section, are in year 2003 dollars.
We demonstrate that the proposed standards would reduce cancer and
noncancer risk from reduced exposure to MSATs (as described in Section
IV of this preamble). However, we do not translate this risk reduction
into benefits. We also do not quantify the benefits related to ambient
reductions in ozone due to the VOC emission reductions expected to
occur as a result of the proposed standards. The following section
describes in more detail why these benefits are not quantified.
1. Unquantified Health and Environmental Benefits
This benefit analysis estimates improvements in health and human
welfare that can be expected as a result of the proposed standards, and
monetizes those benefits. The benefits would come from reductions in
emissions of air toxics (including benzene, 1,3-butadiene,
formaldehyde, acetaldehyde, acrolein, naphthalene, and other air toxic
pollutants discussed in Section III), ambient ozone (as a result of VOC
controls), and direct PM2.5 emissions.
While there will be benefits associated with air toxic pollutant
reductions, notably with regard to reductions in exposure and risk (see
Section IV, above), we do not attempt to monetize those benefits. This
is primarily because available tools and methods to assess air toxics
risk from mobile sources at the national scale are not adequate for
extrapolation to incidence estimations or benefits assessment. The best
suite of tools and methods currently available for assessment at the
national scale are those used in the National Scale Air Toxics
Assessment (NATA; these tools are discussed in Section IV.A). The EPA
Science Advisory Board specifically commented in their review of the
1996 National Air Toxics Assessment (NATA) that these tools were not
yet ready for use in a national-scale benefits analysis, because they
did not consider the full distribution of exposure and risk, or address
sub-chronic health effects.\290\ While EPA has since improved the
tools, there remain critical limitations for estimating incidence and
assessing benefits of reducing mobile source air toxics. We continue to
work to address these limitations, and we are exploring the feasibility
of a quantitative benefits assessment for air toxics as part of a case
study being done for benzene as part of the ongoing update to the
Section 812 retrospective and prospective studies.\291\
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\290\ Science Advisory Board. 2001. NATA-Evaluating the
National-Scale Air Toxics Assessment for 1996--an SAB Advisory.
http://www.epa.gov/ttn/atw/sab/sabrev.html.
\291\ The analytic blueprint for the Section 812 benzene case
study can be found at
http://www.epa.gov/air/sect812/appendixi51203.pdf.
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We also do not estimate the monetized benefits of VOC controls in
this benefits analysis. Though VOCs would be demonstrably reduced as a
result of the cold temperature vehicle standards, we assume that these
emissions would not have a measurable impact on ozone formation since
the standards seek to reduce VOC emissions at cold ambient temperatures
and ozone formation is primarily a warm ambient temperature issue. The
gas can controls would likely result in ozone benefits, though we do
not attempt to monetize those benefits. This is primarily due to the
magnitude of, and uncertainty associated with, the estimated changes in
ambient ozone associated with the proposed standards. In Section IV.C.,
we discuss that the ozone modeling conducted for the proposed gas can
standards results in a net reduction in the population weighted ozone
design value metric measured within the modeled domain (37 Eastern
states and the District of Columbia). The net improvement is very
small, however, and would likely lead to negligible monetized benefits.
Instead, we acknowledge that this analysis may underestimate the
benefits associated with reductions in ozone precursor emissions
achieved by the various proposed standards. We discuss these benefits
qualitatively within the Regulatory Impact Analysis.
Table IX.E-1 lists each of the MSAT and ozone health and welfare
effects that remain unquantified because of current limitations in the
methods or available data. This table also includes the PM-related
health and welfare effects that also remain unquantified due to current
method and data limitations. Chapter 12 of the Regulatory Impact
Analysis for the proposed standards provides a qualitative description
of the health and welfare effects not quantified in this analysis.
[[Page 15908]]
Table IX.E-1.--Unquantified and Non-Monetized Effects
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Pollutant/effects Effects not included in primary estimates--changes in:
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Ozone Health \a\......................... Premature mortality: short term exposures \b\.
Hospital admissions: respiratory.
Emergency room visits for asthma.
Minor restricted-activity days.
School loss days.
Asthma attacks.
Cardiovascular emergency room visits.
Acute respiratory symptoms.
Chronic respiratory damage.
Premature aging of the lungs.
Non-asthma respiratory emergency room visits.
Exposure to UVb (+/-) \e\.
Ozone Welfare............................ Decreased outdoor worker productivity.
Agricultural yields for
--commercial forests.
--some fruits and vegetables.
--non-commercial crops.
Damage to urban ornamental plants.
Impacts on recreational demand from damaged forest aesthetics.
Ecosystem functions.
Exposure to UVb (+/-) \e\.
PM Health \c\............................ Premature mortality--short term exposures \d\.
Low birth weight.
Pulmonary function.
Chronic respiratory diseases other than chronic bronchitis.
Non-asthma respiratory emergency room visits.
Exposure to UVb (+/-) \e\.
PM Welfare............................... Visibility in many Class I areas.
Residential and recreational visibility in non-Class I areas.
Soiling and materials damage.
Damage to ecosystem functions.
Exposure to UVb (+/-) \e\.
MSAT Health.............................. Cancer (benzene, 1,3-butadiene, formaldehyde, acetaldehyde, naphthalene).
Anemia (benzene).
Disruption of production of blood components (benzene).
Reduction in the number of blood platelets (benzene).
Excessive bone marrow formation (benzene).
Depression of lymphocyte counts (benzene).
Reproductive and developmental effects (1,3-butadiene).
Irritation of eyes and mucus membranes (formaldehyde).
Respiratory irritation (formaldehyde).
Asthma attacks in asthmatics (formaldehyde).
Asthma-like symptoms in non-asthmatics (formaldehyde).
Irritation of the eyes, skin, and respiratory tract (acetaldehyde).
Upper respiratory tract irritation and congestion (acrolein).
MSAT Welfare............................. Direct toxic effects to animals.
Bioaccumulation in the food chain.
Damage to ecosystem function.
Odor.
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\a\ In addition to primary economic endpoints, there are a number of biological responses that have been associated with ozone health effects including
increased airway responsiveness to stimuli, inflammation in the lung, acute inflammation and respiratory cell damage, and increased susceptibility to
respiratory infection.
\b\ EPA sponsored a series of meta-analyses of the ozone mortality epidemiology literature, published in the July 2005 volume of the journal
Epidemiology, which found that short-term exposures to ozone may have a significant effect on daily mortality rates, independent of exposure to PM.
EPA is currently considering how to include an estimate of ozone mortality in its primary benefits analyses.
\c\ In addition to primary economic endpoints, there are a number of biological responses that have been associated with PM health effects including
morphological changes and altered host defense mechanisms. The public health impact of these biological responses may be partly represented by our
quantified endpoints.
\d\ While some of the effects of short term exposures are likely to be captured in the estimates, there may be premature mortality due to short term
exposure to PM not captured in the cohort study upon which the primary analysis is based.
\e\ May result in benefits or disbenefits.
2. Quantified Human Health and Environmental Effects of the Proposed
Cold Temperature Vehicle Standard
In this section we discuss the PM2.5 benefits of the
proposed cold temperature vehicle standard. To estimate
PM2.5 benefits, we rely on a benefits transfer technique.
The benefits transfer approach uses as its foundation the relationship
between emission reductions and ambient PM2.5 concentrations
modeled across the contiguous 48 states (and DC) for the Clean Air
Nonroad Diesel (CAND) proposal.\292\ For a given future year, we first
calculate the ratio between CAND direct PM2.5 emission
reductions and direct PM2.5 emission reductions associated
with the proposed cold temperature vehicle control standard
[[Page 15909]]
(proposed emission reductions/CAND emission reductions). We multiply
this ratio by the percent that direct PM2.5 contributes
towards population-weighted reductions in total PM2.5 due to
the CAND standards. This calculation results in a ``benefits
apportionment factor'' for the relationship between direct PM emissions
and primary PM2.5, which is then applied to the BenMAP-based
incidence and monetized benefits from the CAND proposal. In this way,
we apportion the results of the proposed CAND analysis to its
underlying direct PM emission reductions and scale the apportioned
benefits to reflect differences in emission reductions between the
modeled CAND control option and the proposed standards.\293\ This
benefits transfer method is consistent with the approach used in other
recent mobile and stationary source rules.\294\
---------------------------------------------------------------------------
\292\ See 68 FR 28327, May 23, 2003.
\293\ Note that while the proposed regulations also control
VOCs, which contribute to PM formation, the benefits transfer
scaling approach only scales benefits based on NOX,
SO2, and direct PM emission reductions. PM benefits will
likely be underestimated as a result, though we are unable to
estimate the magnitude of the underestimation.
\294\ See: Clean Air Nonroad Diesel final rule (69 FR 38958,
June 29, 2004); Nonroad Large Spark-Ignition Engines and
Recreational Engines standards (67 FR 68241, November 8, 2002);
Final Industrial Boilers and Process Heaters NESHAP (69 FR 55217,
September 13, 2004); Final Reciprocating Internal Combustion Engines
NESHAP (69 FR 33473, June 15, 2004); Final Clean Air Visibility Rule
(EPA-452/R-05-004, June 15, 2005); Ozone Implementation Rule
(documentation forthcoming).
---------------------------------------------------------------------------
Table IX.E-2 presents the primary estimates of reduced incidence of
PM-related health effects for the years 2020 and 2030 for the proposed
cold temperature vehicle control strategies.\295\ In 2030, we estimate
that PM-related annual benefits would result in approximately 910 fewer
premature fatalities, 590 fewer cases of chronic bronchitis, 1,600
fewer non-fatal heart attacks, and 940 fewer hospitalizations (for
respiratory and cardiovascular disease combined). In addition, we
estimate that the emission controls would reduce days of restricted
activity due to respiratory illness by about 620,000 days and reduce
work-loss days by about 110,000 days. We also estimate substantial
health improvements for children from reduced upper and lower
respiratory illness, acute bronchitis, and asthma attacks.
---------------------------------------------------------------------------
\295\ The ``primary estimate'' refers to the estimate of
benefits that reflects the suite of endpoints and assumptions that
EPA believes yields the expected value of air quality improvements
related to the proposed standards. The impact that alternative
endpoints and assumptions have on the benefit estimates are explored
in appendixes to the RIA.
TABLE IX.E-2.--Estimated Annual Reductions in Incidence of Health
Effects Related to the Proposed Cold Temperature Vehicle Standard a
------------------------------------------------------------------------
2020 Annual 2030 Annual
Health effect incidence incidence
reduction reduction
------------------------------------------------------------------------
PM-Related Endpoints:
Premature Mortality b
Adult, age 30+ and Infant, age < 1 480 910
year...............................
Chronic bronchitis (adult, age 26 330 590
and over)..........................
Non-fatal myocardial infarction 820 1,600
(adult, age 18 and over)...........
Hospital admissions--respiratory 260 540
(all ages) c.......................
Hospital admissions--cardiovascular 220 400
(adults, age >18) d................
Emergency room visits for asthma 360 630
(age 18 years and younger).........
Acute bronchitis, (children, age 8- 790 1,400
12)................................
Lower respiratory symptoms 9,400 17,000
(children, age 7-14)...............
Upper respiratory symptoms 7,100 13,000
(asthmatic children, age 9-18).....
Asthma exacerbation (asthmatic 12,000 21,000
children, age 6-18)................
Work Loss Days...................... 63,000 110,000
Minor restricted activity days 370,000 620,000
(adults age 18-65).................
------------------------------------------------------------------------
a Incidence is rounded to two significant digits. Estimates represent
benefits from the proposed rule nationwide, excluding Alaska and
Hawaii.
b PM-related adult mortality based upon studies by Pope, et al 2002.296
PM-related infant mortality based upon studies by Woodruff, Grillo,
and Schoendorf,1997.297
c Respiratory hospital admissions for PM include admissions for chronic
obstructive pulmonary disease (COPD), pneumonia and asthma.
d Cardiovascular hospital admissions for PM include total cardiovascular
and subcategories for ischemic heart disease, dysrhythmias, and heart
failure.
PM also has numerous documented effects on environmental quality
that affect human welfare. These welfare effects include direct damages
to property, either through impacts on material structures or by
soiling of surfaces, and indirect economic damages through the loss in
value of recreational visibility or the existence value of important
resources. Additional information about these welfare effects can be
found in Chapter 12 of the Regulatory Impact Analysis prepared for this
proposal.
---------------------------------------------------------------------------
\296\ Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D.
Krewski, K. Ito, and G.D. Thurston. 2002. ``Lung Cancer,
Cardiopulmonary Mortality, and Long-term Exposure to Fine
Particulate Air Pollution.'' Journal of American Medical Association
287:1132-1141.
\297\ Woodruff, T.J., J. Grillo, and K.C. Schoendorf. 1997.
``The Relationship Between Selected Causes of Postneonatal Infant
Mortality and Particulate Infant Mortality and Particulate Air
Pollution in the United States.'' Environmental Health Perspectives
105(6):608-612.
---------------------------------------------------------------------------
3. Monetized Benefits
Table IX.E-3 presents the estimated monetary value of reductions in
the incidence of those health effects we are able to monetize for the
proposed cold temperature vehicle standard. Total annual PM-related
health benefits are estimated to be approximately $6.5 or $5.9 billion
in 2030 (3 percent and 7 percent discount rate, respectively). These
estimates account for growth in real gross domestic product (GDP) per
capita between the present and 2030.
Table IX.E-3 indicates with a ``B'' those additional health and
environmental benefits of the rule that we are unable to quantify or
monetize. These effects are additive to the estimate of total benefits,
and are related to the following sources:
? There are many human health and welfare effects associated
with PM, ozone, and toxic air pollutant reductions that remain
unquantified because of current limitations in the methods or available
data. A listing of the benefit categories that could not be quantified
or monetized in our benefit estimates are provided in Table IX.E-1.
[[Page 15910]]
? The PM benefits scaled transfer approach, derived from the
Clean Air Nonroad Diesel rule, does not account for VOCs as precursors
to ambient PM2.5 formation. To the extent that VOC emission
reductions associated with the proposed regulations contribute to
reductions in ambient PM2.5, this analysis does not capture
the related health and environmental benefits of those changes.
? The PM air quality model only captures the benefits of air
quality improvements in the 48 states and DC; PM benefits for Alaska
and Hawaii are not reflected in the estimate of benefits.
TABLE IX.E-3.--Estimated Annual Monetary Value of Reductions in Incidence of Health and Welfare Effects Related
to the Proposed Cold Temperature Vehicle Standard
[Millions of 2003$]
a b
----------------------------------------------------------------------------------------------------------------
2030 Estimated Estimated Estimated
Health effect Pollutant 2020 Estimated value of value of value of
value of reductions reductions reductions reductions
-------------------------------------------------------------------------------------------- ------------------------
PM-Related Premature mortality
c, d:
Adult, 30+ years and
Infant, < 1 year.
3 percent discount rate PM2.5............. $3,100 $6,000
7 percent discount rate .................. 2,800 5,400
Chronic bronchitis (adults, 26 PM2.5............. 150 270
and over).
Non-fatal acute myocardial
infarctions:
3 percent discount rate .................. 80 150
7 percent discount rate PM2.5............. 77 150
Hospital admissions for PM2.5............. 4.8 10
respiratory causes.
Hospital admissions for PM2.5............. 5.1 9.4
cardiovascular causes.
Emergency room visits for PM2.5............. 0.12 0.21
asthma.
Acute bronchitis (children, age PM2.5............. 0.32 0.58
8-12).
Lower respiratory symptoms PM2.5............. 0.17 0.30
(children, age 7-14).
Upper respiratory symptoms PM2.5............. 0.20 0.37
(asthma, age 9-11).
Asthma exacerbations........... PM2.5............. 0.57 1.0
Work loss days................. PM2.5............. 9.2 14
Minor restricted activity days PM2.5............. 21 36
(MRADs).
Monetized Total e:
Base estimate..............
3 percent discount rate PM2.5............. 3,400+ B 6,500+ B
7 percent discount rate .................. 3,100+ B 5,900+ B
----------------------------------------------------------------------------------------------------------------
\a\ Dollars are rounded to two significant digits. The PM estimates represent benefits from the proposed rule
across the contiguous United States.
\b\ Monetary benefits adjusted to account for growth in real GDP per capita between 1990 and the analysis year
(2020 or 2030).
\c\ Valuation of premature mortality based on long-term PM exposure assumes discounting over the SAB recommended
20 year segmented lag structure described in the Regulatory Impact Analysis for the Final Clean Air Interstate
Rule (March 2005). Results show 3 percent and 7 percent discount rates consistent with EPA and OMB guidelines
for preparing economic analyses (US EPA, 2000 and OMB, 2003).\298\
\d\ Adult mortality based upon studies by Pope et al. 2002. Infant mortality based upon studies by Woodruff,
Grillo, and Schoendorf, 1997.
\e\ B represents the monetary value of health and welfare benefits not monetized. A detailed listing is provided
in Table IX.E-1.
4. What Are the Significant Limitations of the Benefit Analysis?
---------------------------------------------------------------------------
\298\ U.S. Environmental Protection Agency, 2000. Guidelines for
Preparing Economic Analyses.
http://www.yosemite1.epa.gov/ee/epa/eed/hsf/pages/Guideline.html.
Office of Management and Budget, The Executive Office of the
President, 2003. Circular A-4. http://www.whitehouse.gov/omb/circulars. 
---------------------------------------------------------------------------
Perhaps the most significant limitation of this analysis is our
inability to quantify a number of potentially significant benefit
categories associated with improvements in air quality that would
result from the proposed standards. Most notably, we are unable to
estimate the benefits from reduced air toxics exposures because the
available tools and methods to assess mobile source air toxics risk at
the national scale are not adequate for extrapolation to incidence
estimations or benefits assessment. We also do not quantify ozone
benefits due to the magnitude of, and uncertainty associated with, the
modeled changes in ambient ozone associated with the proposed gas can
standards, despite net benefits, when population weighted, in the ozone
design value metric observed across the modeled domain (see Section IV.C).
More generally, every benefit-cost analysis examining the potential
effects of a change in environmental protection requirements is limited
to some extent by data gaps, limitations in model capabilities (such as
geographic coverage), and uncertainties in the underlying scientific
and economic studies used to configure the benefit and cost models.
Deficiencies in the scientific literature often result in the inability
to estimate quantitative changes in health and environmental effects,
such as potential increases in premature mortality associated with
increased exposure to carbon monoxide. Deficiencies in the economics
literature often result in the inability to assign economic values even
to those health and environmental outcomes which can be quantified.
These general uncertainties in the underlying scientific and economics
literature, which can cause the valuations to be higher or lower, are
discussed in detail in the RIA and its supporting references. Key
uncertainties that have a bearing on the results of the benefit-cost
analysis of the proposed standards include the following:
? The exclusion of potentially significant and unquantified
benefit categories (such as health, odor, and ecological benefits of
reduction in air toxics, ozone, and PM);
? Errors in measurement and projection for variables such as
population growth;
? Uncertainties in the estimation of future year emissions
inventories and air quality;
? Uncertainties associated with the scaling of the PM
results of the modeled
[[Page 15911]]
benefits analysis to the proposed standards, especially regarding the
assumption of similarity in geographic distribution between emissions
and human populations and years of analysis;
? Uncertainty in the estimated relationships of health and
welfare effects to changes in pollutant concentrations including the
shape of the C-R function, the size of the effect estimates, and the
relative toxicity of the many components of the PM mixture;
? Uncertainties in exposure estimation; and
? Uncertainties associated with the effect of potential
future actions to limit emissions.
Despite these uncertainties, we believe this benefit-cost analysis
provides a conservative estimate of the expected economic benefits of
the proposed standards for cold temperature vehicle control in future
years because of the exclusion of potentially significant benefit
categories. Acknowledging benefits omissions and uncertainties, we
present a best estimate of the total benefits based on our
interpretation of the best available scientific literature and methods
supported by EPA's technical peer review panel, the Science Advisory
Board's Health Effects Subcommittee (SAB-HES). EPA has also worked to
address many of the comments made by the National Academy of Sciences
(NAS) in a September 26, 2002 report on its review of the Agency's
methodology for analyzing the health benefits of measures taken to
reduce air pollution. EPA addressed many of these comments in the
analysis of the final CAIR rule.\299\ The analysis of the proposed rule
incorporates this most recent work.
---------------------------------------------------------------------------
\299\ See Chapter 4 of the Final Clean Air Interstate Rule RIA
(http://www.epa.gov/cair) for a discussion of EPA's ongoing efforts to
address the NAS recommendations in its regulatory analyses.
---------------------------------------------------------------------------
There is one category where new studies suggest the possibility of
significant additional economic benefits. Over the past several years,
EPA's SAB has expressed the view that there were not sufficient data to
show a separate ozone mortality effect, in essence saying that any
ozone benefits are captured in the PM-related mortality benefit
estimates. However, in their most recent advice, the SAB recommended
that EPA reconsider the evidence on ozone-related mortality based on
the publication of several recent analyses that found statistically
significant associations between ozone and mortality. Based on these
studies and the recommendations from the SAB, EPA sponsored three
independent meta-analyses of the ozone-mortality epidemiology
literature to inform a determination on including this important health
endpoint. The studies were peer-reviewed and printed in the journal
Epidemiology in July 2005.300 301 302
---------------------------------------------------------------------------
\300\ Levy, J.I, Chemerynski, S.M., Sarnat, J.A. 2005. Ozone
Exposure and Mortality: An Empirical Bayes Meta-Regression Analysis.
Epidemiology. 16:458-468.
\301\ Bell, M.L., Dominici, F., Samet, J.M. 2005. A Meta-
Analysis of Time-Series Studies of Ozone and Mortality with
Comparison to the National Morbidity, Mortality, and Air Pollution
Study. Epidemiology. 16:436-445.
\302\ Ito, K., DeLeon, S.F., Lippmann, M. 2005. Associations
Between Ozone and Daily Mortality: Analysis and Meta-Analysis.
Epidemiology. 16:446-457.
---------------------------------------------------------------------------
EPA is reviewing the body of literature available on the
association of ozone exposure and premature mortality. EPA's second
external review draft of the Criteria Document for ozone has concluded
that there is strong evidence that exposure to ozone has been
associated with premature mortality.\303\ We are exploring ways of
appropriately characterizing the premature mortality benefits of
reducing ozone and included an estimate in recent analyses of the Clear
Skies legislation.\304\ We plan to include a quantification of ozone
mortality benefits in future air pollution rulemakings.
---------------------------------------------------------------------------
\303\ EPA, 2005. Air Quality Criteria for Ozone and Related
Photochemical Oxidants (Second External Review Draft). August.
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=137307
\304\ For technical details about Clear Skies multi-pollutant
analysis, see http://www.epa.gov/airmarkets/mp/bmresults/health_benefits_method.pdf
In contrast to the additional benefits of the proposed standards
discussed above, it is also possible that this rule will result in
disbenefits in some areas of the United States. The effects of ozone
and PM on radiative transfer in the atmosphere can lead to effects of
uncertain magnitude and direction on the penetration of ultraviolet
light and climate. Ground level ozone makes up a small percentage of
total atmospheric ozone (including the stratospheric layer) that
attenuates penetration of ultraviolet-b (UVb) radiation to the ground.
EPA's past evaluation of the information indicates that potential
disbenefits would be small, variable, and with too many uncertainties
to attempt quantification of relatively small changes in average ozone
levels over the course of a year.\305\ EPA's most recent provisional
assessment of the currently available information indicates that
potential but unquantifiable benefits may also arise from ozone-related
attenuation of UVb radiation.\306\ EPA believes that we are unable to
quantify any net climate-related disbenefit or benefit associated with
the combined ozone and PM reductions in this rule.
---------------------------------------------------------------------------
\305\ EPA, 2005. Air Quality Criteria for Ozone and Related
Photochemical Oxidants (First External Review Draft). January.
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=114523
\306\ EPA, 2005. Air Quality Criteria for Ozone and Related
Photochemical Oxidants (Second External Review Draft). August.
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=137307
5. How Do the Benefits Compare to the Costs of the Proposed Standards?
This proposed rule provides three separate provisions that reduce
air toxics emissions from mobile sources: cold temperature vehicle
controls, an emissions control program for gas cans, and a control
program limiting benzene in gasoline. A full appreciation of the
overall economic consequences of these provisions requires
consideration of the benefits and costs expected to result from each
standard, not just those that could be expressed here in dollar terms.
As noted above, due to limitations in data availability and analytical
methods, our benefits analysis only monetizes the PM2.5-
related benefits from direct PM emission reductions associated with the
cold temperature standards. There are a number of health and
environmental effects associated with the proposed standards that we
were unable to quantify or monetize (see Table IX.E-1).
Table IX.E-4 contains the estimates of monetized benefits of the
proposed cold temperature vehicle standards and estimated social
welfare costs for each of the proposed control programs.\307\ The
annual social welfare costs of all provisions of this proposed rule are
described more fully in Section IX.F. It should be noted that the
estimated social welfare costs for the vehicle program contained in
this table are for 2019. The 2019 vehicle program costs are included
for comparison purposes only and are therefore not included in the
total 2020 social costs. There are no compliance costs associated with
the vehicle program after 2019; as explained elsewhere in this
preamble, the vehicle compliance costs are primarily R&D and facilities
costs that are expected to be recovered by manufacturers over the first
ten years of the program.
---------------------------------------------------------------------------
\307\ Social costs represent the welfare costs of the rule to
society. These social costs do not consider transfer payments (such
as taxes) that are simply redistributions of wealth.
---------------------------------------------------------------------------
The results in Table IX.E-4 suggest that the 2020 monetized
benefits of the cold temperature vehicle standards are greater than the
expected social welfare costs of that program in 2019. Specifically,
the annual benefits of the
[[Page 15912]]
program would be approximately $3,400 + B million or $3,100 + B million
annually in 2020 (using a 3 percent and 7 percent discount rate in the
benefits analysis, respectively), compared to estimated social welfare
costs of approximately $11 million in the last year of the program
(2019). These benefits are expected to increase to $6,500 + B million
or $5,900 + B million annually in 2030 (using a 3 percent and 7 percent
discount rate in the benefits analysis, respectively), even as the
social welfare costs of that program fall to zero. Table IX.E-4 also
presents the costs of the other proposed rule provisions: an emissions
control program for gas cans and a control program limiting benzene in
gasoline. Though we are unable to present the benefits associated with
these two programs, we note for informational purposes that the
benefits associated with the proposed cold temperature vehicle
standards alone exceed the costs of all three proposed rule provisions
combined.
Table IX.E-4.--Summary of Annual Benefits of the Proposed Cold
Temperature Vehicle Standards and Costs of All Provisions of the
Proposed Standards a
[Millions of 2003 dollars]
------------------------------------------------------------------------
Description 2020 2030
------------------------------------------------------------------------
Estimated Social Welfare Costs
\b\:
Proposed Cold Temperature $11 \c\............ $0
Vehicle Standards.
Proposed Gasoline Container 32................. 39
Standards.
Proposed Fuel Standards \d\ 210................ 250
----------------------------------------
Total.................. 240................ 290
Fuel Savings............... -73................ -82
----------------------------------------
Total Social Welfare 170................ 205
Costs.
Total PM2.5-Related Health
Benefits of the Proposed Cold
Temperature Vehicle Standards
\e\:
3 percent discount rate.... 3,400 + B \f\...... 6,500 + B \f\
7 percent discount rate.... 3,100 + B \f\...... 5,900 + B \f\
------------------------------------------------------------------------
\a\ All estimates are rounded to two significant digits and represent
annualized benefits and costs anticipated for the years 2020 and 2030,
except where noted. Totals may not sum due to rounding.
\b\ Note that costs are the annual total costs of reducing all
pollutants associated with each provision of the proposed MSAT control
package. Also note that while the cost analysis only utilizes a 7
percent discount rate to calculate annual costs, the benefits analysis
uses both a 3 percent and 7 percent discount rate to calculate annual
benefits. Benefits reflect only direct PM reductions associated with
the cold temperature vehicle standards.
\c\ These costs are for 2019; the vehicle program compliance costs
terminate after 2019 and are included for illustrative purposes. They
are not included in the total social welfare cost sum for 2020.
\d\ Our modeling for the total costs of the proposed gasoline benzene
program included California gasoline, since it was completed before we
decided to propose that California gasoline not be covered by the
program. California refineries comprise approximately 1 percent of
these 2projected costs. For the final rule, we expect to exclude
California refineries from the analysis.
\e\ Valuation of premature mortality based on long-term PM exposure
assumes discounting over the SAB recommended 20 year segmented lag
structure described in the Regulatory Impact Analysis for the Final
Clean Air Interstate Rule (March 2005). Annual benefits analysis
results reflect the use of a 3 percent and 7 percent discount rate in
the valuation of premature mortality and nonfatal myocardial
infarctions, consistent with EPA and OMB guidelines for preparing
economic analyses (US EPA, 2000 and OMB, 2003).\308\
\f\ Not all possible benefits or disbenefits are quantified and
monetized in this analysis. B is the sum of all unquantified benefits
and disbenefits. Potential benefit categories that have not been
quantified and monetized are listed in Table IX.E-1.
F. Economic Impact Analysis
We prepared a draft Economic Impact Analysis (EIA) to estimate the
economic impacts of the proposed emission control program on the gas
can, gasoline fuel, and light-duty vehicle markets. In this section we
briefly describe the Economic Impact Model (EIM) we developed to
estimate both the market-level changes in price and outputs for
affected markets and the social costs of the program and their
distribution across affected economic sectors. We also present the
results of our analysis.
---------------------------------------------------------------------------
\308\ U.S. Environmental Protection Agency, 2000. Guidelines for
Preparing Economic Analyses.
http://www.yosemite1.epa.gov/ee/epa/eed/hsf/pages/Guideline.html.
Office of Management and Budget, The Executive Office of the
President, 2003. Circular A-4. http://www.whitehouse.gov/omb/circulars.
---------------------------------------------------------------------------
We estimate the net social costs of the proposed program to be
about $171.5 million in 2020. This estimate reflects the estimated
costs associated with the gasoline, gas can, and vehicle controls and
the expected fuel savings from better evaporative controls on gas cans.
The results of the economic impact modeling performed for the gasoline
fuel and gas can control programs suggest that the social costs of
those two programs are expected to be about $244.3 million in 2020 with
consumers of these products expected to bear about 60 percent of these
costs. We estimate fuel savings of about $72.8 million in 2020 that
will accrue to consumers. There are no social costs associated with the
vehicle program in 2020. These estimates, and all costs presented in
this section, are in year 2003 dollars.
With regard to market level impacts in 2020, the maximum price
increase for gasoline fuel is expected to be about 0.1 percent (0.2
cents per gallon) for PADD 5. The price of gas cans is expected to
increase by about 1.8 percent ($0.20 per can) in areas that already
have gas can requirements and about 32.5 percent ($1.52 per can) in
areas that do not.
Detailed descriptions of the EIM, the model inputs, modeling
results, and several sensitivity analyses can be found in Chapter 13 of
the Regulatory Impact Analysis prepared for this proposal.
1. What Is an Economic Impact Analysis?
An Economic Impact Analysis (EIA) is prepared to inform decision
makers about the potential economic consequences of a regulatory
action. The analysis consists of estimating the social costs of a
regulatory program and the distribution of these costs across
stakeholders. These estimated social costs can then be compared with
estimated social benefits (as presented in Section IX.E). As defined in
EPA's Guidelines for Preparing Economic Analyses, social costs are the
value of the goods and services lost by society resulting from (a) the
use of resources to comply with and implement a regulation and (b)
reductions in
[[Page 15913]]
output.\309\ In this analysis, social costs are explored in two steps.
In the market analysis, we estimate how prices and quantities of goods
affected by the proposed emission control program can be expected to
change once the program goes into effect. In the economic welfare
analysis, we look at the total social costs associated with the program
and their distribution across stakeholders.
---------------------------------------------------------------------------
\309\ EPA Guidelines for Preparing Economic Analyses, EPA 240-R-
00-003, September 2000, p 113. A copy of this document can be found
at http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html#download
---------------------------------------------------------------------------
2. What Is the Economic Impact Model?
The Economic Impact Model (EIM) is a behavioral model developed for
this proposal to estimate price and quantity changes and total social
costs associated with the emission controls under consideration. The
EIM simulates how producers and consumers of affected products can be
expected to respond to an increase in production costs as a result of
the proposed emission control program. In this EIM, compliance costs
are directly borne by producers of affected goods. Depending on the
producers' and consumers' sensitivity to price changes, producers may
be able to pass some or all of these compliance costs on to the
consumers of these goods in the form of higher prices. Consumers adjust
their consumption of affected goods in response to these price changes.
This information is passed back to the producers in the form of
purchasing decisions. The EIM takes these behavioral responses into
account to estimate new market equilibrium quantities and prices for
all modeled sectors and the resulting distribution of social costs
across these stakeholders (producers and consumers).
3. What Economic Sectors Are Included in This Economic Impact Analysis?
There are three economic sectors affected by the control programs
described in this proposal: gas cans, gasoline fuel, and light-duty
vehicles. In this Economic Impact Analysis we model only the impacts on
the gas can and gasoline fuel markets. We did not model the impacts on
the light-duty vehicle market. This is because the compliance costs for
the proposed vehicle program are expected to be very small, less than
$1 per vehicle and, even if passed on entirely, are unlikely to affect
producer or consumer behavior. Therefore, we do not expect these
proposed controls to affect the quantity of vehicles produced or their
prices. At the same time, however, the light-duty vehicle compliance
costs are a cost to society and should be included in the economic
welfare analysis. We do this by adding the vehicle program engineering
compliance cost estimates to the estimated social costs of the gasoline
and gas can programs.
With regard to the gasoline fuel and gas can markets, we consider
only the impacts on residential users of these products. This means
that we focus the analysis on the use of these products for personal
transportation (gasoline fuel) or residential lawns and garden care or
recreational uses (gas cans) and do not consider how the costs of
complying with the proposed programs may affect the production of goods
and services that use gasoline fuel or gas cans as production inputs.
We believe this approach is reasonable because the commercial share of
the end-user markets for both gasoline fuel and gas cans is relatively
small.310 311 In addition, for most commercial users the
share of the cost of these products to total production costs is also
small (e.g., the cost of a gas can is only a very small part of the
total production costs for an agricultural or construction firm).
Therefore, a price increase of the magnitude anticipated for this
control program is not expected to have a noticeable impact on prices
or quantities of goods produced using these inputs (e.g., agricultural
product or buildings).
---------------------------------------------------------------------------
\310\ The U.S Department of Energy estimates that about 92
percent of gasoline used in the United States for transportation is
used in light-duty vehicles. About 6 percent is used for commercial
or industrial transportation, and the remaining 2 percent is used in
recreational marine vessels. See U.S Department of Energy, Energy
Information Administration, 2004. ``Annual Energy Outlook 2004 with
projections to 2025.'' Last updated June 2, 2004. Table A-2 and
Supplemental Table 34. http://www.eia.doe.gov/oiaf/aeoref_tab.html.
\311\ A recent study by CARB (1999) found that 94 percent of
portable fuel containers in California were used by residential
households California Environmental Protection Agency, Air Resources
Board (CARB) 1999. See ``Hearing Notice and Staff Report, Initial
Statement of Reasons for Proposed Rule Making Public Hearing to
Consider the Adoption of Portable Fuel Container Spillage Control
Regulation.'' Sacrament, CA: California Environmental Protection
Agency, Air Resources Board (CARB). A copy of this document is
available at http://www.arb.ca.gov/regact/spillcon/isor.pdf
With regard to the gasoline fuel analysis, it should be noted that
this Economic Impact Analysis does not include California fuels in the
market analysis. California fuels are only included, as a separate line
item, in the economic welfare analysis. California currently has state-
level controls that address air toxics from gasoline. Any actions that
refiners may take to comply with the federal program are expected to be
small and not affect market prices or quantities in that state.
However, because the estimated fuel program compliance costs include a
small compliance cost for California, and this cost would be a cost to
society, it is necessary to include those costs in the total economic
welfare costs of the proposal. This is done by including the estimated
engineering compliance costs as a separate line item. Also, consistent
with the cost analysis, the economic impact analysis does not
distinguish between reformulated and conventional gasoline fuels.
The EIM models the economic impacts on two gas can markets (states
that currently have requirements for gas cans and those that do not),
and four gasoline fuel markets (PADDs 1+3, PADD 2, PADD 4, PADD 5). The
markets included in this EIA are described in more detail in Chapter 13
of the RIA for this proposal.
In the EIM, the gasoline fuel and gas can markets are not linked
(there is no feedback mechanism between the gas can and gasoline fuel
model segments). This is because these two sectors represent different
aspects of fuel consumption (fuel storage and fuel production) and
production and consumption of one product is not affected by the other.
In other words, an increase in the price of gas cans is not expected to
have an impact on the production and supply of gasoline, and vice
versa. Production and consumption of each of these products are the
result of other factors that have little cross-over impacts (the need
for fuel storage; the need for personal transportation).
4. What Are the Key Features of the Economic Impact Model?
A detailed description of the features of the EIM and the data used
in the analysis is provided in Chapter 13 of the RIA prepared for this
rule. The model methodology is firmly rooted in applied microeconomic
theory and was developed following the methodology set out in the
OAQPS's Economic Analysis Resource Document.\312\
---------------------------------------------------------------------------
\312\ U.S. Environmental Protection Agency, Office of Air
Quality Planning and Standards, Innovative Strategies and Economics
Group, OAQPS Economic Analysis Resource Document, April 1999. A copy
of this document can be found at
http://www.epa.gov/ttn/ecas/econdata/Rmanual2/
---------------------------------------------------------------------------
The EIM is a computer model comprised of a series of spreadsheet
modules that simulate the supply and demand characteristics of the
markets under consideration. The initial market equilibrium conditions
are shocked by applying the compliance costs for the control program to
the supply side of the markets (this is done by shifting the relevant
supply curves by the amount of the compliance costs). The model
equations can be analytically solved for
[[Page 15914]]
equilibrium prices and quantities for the markets with the regulatory
program and these new prices and quantities are used to estimate the
social costs of the model and how those costs are shared among affected
markets.
The EIM is a partial equilibrium, intermediate-run model that
assumes perfect competition in the relevant markets. As explained in
EPA's Guidelines for Preparing Economic Analyses, ``partial
equilibrium'' means that the model considers markets in isolation and
that conditions in other markets are assumed either to be unaffected by
a policy or unimportant for social cost estimation.\313\ The use of the
intermediate run means that some factors of production are fixed and
some are variable. In very short analyses, all factors of production
would be assumed to be fixed, leaving the producers with no means to
respond to the increased production costs associated with the
regulation (e.g., they cannot adjust labor or capital inputs). Under
this time horizon, the costs of the regulation fall entirely on the
producer. In the long run, all factors of production are variable and
producers can adjust production in response to cost changes imposed by
the regulation (e.g., using a different labor/capital mix). In the
intermediate run there is some resource immobility which may cause
producers to suffer producer surplus losses, but they can also pass
some of the compliance costs to consumers.
---------------------------------------------------------------------------
\313\ EPA Guidelines for Preparing Economic Analyses, EPA 240-R-
00-003, September 2000, p. 125-6.
---------------------------------------------------------------------------
The perfect competition assumption is widely accepted economic
practice for this type of analysis, and only in rare cases are other
approaches used.\314\ It should be noted that the perfect competition
assumption is not primarily about the number of firms in a market. It
is about how the market operates: the nature of the competition among
firms. Indicators that allow us to assume perfect competition include
absence of barriers to entry, absence of strategic behavior among firms
in the market, and product differentiation.
---------------------------------------------------------------------------
\314\ See, for example, EPA Guidelines for Preparing Economic
Analyses, EPA 240-R-00-003, September 2000, p 126.
---------------------------------------------------------------------------
With regard to the gasoline fuel market, the Federal Trade
Commission (FTC) has developed an approach to ensure competitiveness in
gasoline fuel markets. It reviews oil company mergers and frequently
requires divestiture of refineries, terminals, and gas stations to
maintain a minimum level of competition. This is discussed in more
detail in the industry profile prepared for this proposal.\315\
---------------------------------------------------------------------------
\315\ Section 3 Industry Organization, ``Characterizing Gasoline
Markets: a Profile,'' Final Report, prepared for EPA by RTI, August 2005.
---------------------------------------------------------------------------
With regard to the gas can market, the small number of firms in the
market is offset by several features of this market. Because gas cans
are compact and lightweight, they are easy to transport far from their
place of manufacture. This means that production is not limited to
local producers. Although they vary by size and material, consumers are
likely to view all gas cans as good substitutes for one another.
Because the products are similar enough to be considered homogeneous
(e.g., perfectly substitutable), consumers can shift their purchases
from one manufacturer to another. There are only minimal technical
barriers to entry that would prevent new firms from freely entering the
market, since manufacturing is based on well-known plastic processing
methods. In addition, there is significant excess capacity, enabling
competitors to respond quickly to changes in price. Excess production
capacity in the general container manufacturing market also means that
manufacturers could potentially switch their product lines to compete
in this segment of the market, often without a significant investment.
In addition, there is no evidence of high levels of strategic behavior
in the price and quantity decisions of the firms. Finally, it should be
noted that contestable market theory asserts that oligopolies and even
monopolies will behave very much like firms in a competitive market if
manufacturers have extra production capacity and this capacity could
allow them to enter the market costlessly (i.e., there are no sunk
costs associated with this kind of market entry or exit).\316\ As a
result of these conditions, producers and consumers in the gas can
market take the market price as given when making their production and
consumption choices. For all these reasons, the market can be modeled
as a competitive market even though the number of producers is small.
---------------------------------------------------------------------------
\316\ A monopoly or firms in oligopoly may not behave as
neoclassical economic theories of the firm predict because they may
be concerned about new entrants to the market. If super-normal
profits are earned, potential competitors may enter the market. To
respond to this treat, existing firm(s) in the market will keep
prices and output at a level where only normal profits are made,
setting price and output levels at or close to the competitive price
and output. See Chapter 13 of the RIA for more information, Section 13.2.3.
---------------------------------------------------------------------------
5. What Are the Key Model Inputs?
Key model inputs for the EIM are the behavioral parameters,
compliance costs estimates, and market equilibrium quantities and prices.
The EIM is a behavioral model. The estimated social costs of this
emission control program are a function of the ways in which producers
and consumers of the gas cans and gasoline fuel affected by the
standards change their behavior in response to the costs incurred in
complying with the standards. These behavioral responses are
incorporated in the EIM through the price elasticity of supply and
demand (reflected in the slope of the supply and demand curves), which
measure the price sensitivity of consumers and producers. The price
elasticites used in this analysis are described in Chapter 13 of the
RIA. The gasoline elasticites were obtained from the literature and are
-0.2 for demand and 0.2 for supply. This means that both the quantity
supplied and demanded are expected to be fairly insensitive to price
changes and that increases in prices are not expected to cause sales to
fall or production to increase by very much. Because we were unable to
find published supply and demand elasticities for the gas can market,
we estimated these parameters using the procedures described in Chapter
13 of the RIA. This approach yielded a demand elasticity of -0.01 and a
supply elasticity of 1.5. The estimated demand elasticity is nearly
perfectly inelastic (equal to zero), which means that changes in price
are expected to have very little effect on the quantity of gas cans
demanded. However, supply is fairly elastic, meaning producers are
expected to respond to a change in price. Therefore, consumers are
expected to bear more of the burden of gas can regulatory control costs
than producers.
Initial market equilibrium conditions are simulated using the same
current year sales quantities and growth rates used in the engineering
cost analysis. The initial equilibrium prices for gas can and gasoline
fuel were obtained from industry sources and published government data.
The initial equilibrium market conditions are shocked by applying the
engineering compliance cost estimates described in earlier in this
section. Although both the gas can and gasoline fuel markets are
competitive markets, the model is shocked by applying the sum of
variable and fixed costs. Two sets of compliance costs are used in the
gas can market analysis, reflecting states with existing controls and
states without existing controls. The compliance costs used to shock
the gasoline fuel market are based on an average total cost (variable +
fixed) analysis. An explanation for this
[[Page 15915]]
approach can be found in Section 13.2.4.1 of the RIA prepared for this
proposal. These gasoline fuel compliance costs differ across PADDs but
are the same across years. Because California already has existing
gasoline fuel controls, fuel volumes for that state are not included in
the market analysis. However, because it may be necessary for refiners
to adjust their production to comply with the new federal standards,
California fuel controls are included in the economic welfare analysis.
Additional costs that need to be considered in the EIM are the
savings associated with the gas can controls and the costs of the
light-duty vehicle controls. The proposed gas can controls are expected
to reduce evaporative emissions from fuel storage, leading to fuel
savings for users of these containers. These fuel savings are not
included in the market analysis for this economic impact analysis
because these savings are not expected to affect consumer decisions
with respect to the purchase of new containers. Fuel savings are
included in the social cost analysis, however, because they are a
savings that accrues to society. The estimated fuel savings are added
to the estimated social costs as a separate line item. As noted above,
the economic impacts of the light-duty vehicle controls are not modeled
in the EIM. Instead, the estimated engineering compliance costs are
used as a proxy, and are also added into the estimated social costs as
a separate line item.
The EIM relies on the estimated compliance costs for the gas can
and gasoline fuel programs described elsewhere in this preamble. Thus,
the EIM reflects cost savings associated with ABT or other flexibility
programs to the extent they are included in the estimated compliance costs.
6. What Are the Results of the Economic Impact Modeling?
Using the model and data described above, we estimated the economic
impacts of the proposed emission control program. The results of our
analysis are summarized in this section. Detailed results for all years
are included in the appendices to Chapter 13 of the RIA. Also included
as an appendix to that chapter are sensitivity analyses for several key
inputs.
Market Impact Analysis. Market impacts are the estimated changes in
the quantity of affected goods produced and their prices. As explained
above, we estimated market impacts for only gasoline fuel and gas cans,
and California fuel is not included in the market analysis for PADD 5.
The estimated market impacts are presented in Table IX.F-1. In this
table the market results for gasoline are presented for only 2015
because the compliance costs for the gasoline fuel program are constant
for all years and therefore the results of the market analysis are the
same for all years.\317\ The market results for gas cans are presented
for 2009 and 2015, reflecting the changes in estimated compliance costs
due to amortization of fixed costs over the first five years of the
program. After 2013 the compliance costs remain constant for all future
years.\318\
---------------------------------------------------------------------------
\317\ The number of gallons of gasoline fuel produced is
expected to decrease in future years, but the percent decrease is
expected to remain the same; this is due to the growth in fuel
consumption generally.
\318\ The number of gas cans produced is expected to decrease in
future years, but the percent decrease is expected to remain the
same; this is due to the growth in gas can production generally.
---------------------------------------------------------------------------
With regard to the gasoline fuel program, the market impacts are
expected to be small, on average. The price of gasoline fuel is
expected to increase by about 0.15 percent or less, depending on PADD.
The expected reduction in quantity of fuel produced is expected to be
less than 0.03 percent. The market impacts for the gas can program are
expected to be more significant. In 2009, the first year of the gas can
program, the model predicts a price increase of about 7 percent for gas
cans in states that are currently have regulations for gas cans and
about 57 percent for those that do not. Even with these larger price
increases, however, the quantity produced is not expected to decrease
by very much, less than 0.6 percent. These percent price increases and
quantity decreases much smaller after the first five years. In 2015,
the estimated gas can price increase is expected to be less than 2
percent for states that currently regulate gas cans and about 32.5
percent for states without such regulations. The quantity produced is
expected to decrease by less than 0.4 percent. These changes are
expected to remain constant for future years, even though the absolute
quantities produced are expected to increase somewhat.
Table IX.F-1.--Summary of Market Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in price Change in quantity
Market Engineering cost per ---------------------------------------------------------------------------------------------
unit Absolute Percent Absolute Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gasoline Fuel:
PADD 1 & 3....................
PADD 2........................ N/A (gasoline fuel control program begins in 2011)
PADD 4........................
PADD 5 (w/out CA).............
--------------------------------------------------------------------------------------------------------------------------------------------------------
$/can
Thousand Cans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gas Cans:
States with existing programs. $0.77................. $0.76................. 6.9%.................. -6.8................. -0.07%
States without existing $2.70................. $2.68................. 57.4%................. -88.5................ -0.57%
programs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
[cent]/gallon
Million Gallons
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gasoline Fuel:
PADD 1 & 3.................... 0.049[cent]........... 0.03[cent]............ 0.02%................. -3.1................. -0.004%
PADD 2........................ 0.202[cent]........... 0.11[cent]............ 0.07%................. -6.9................. -0.015%
[[Page 15916]]
PADD 4........................ 0.358[cent]........... 0.19[cent]............ 0.12%................. -1.4................. -0.025%
PADD 5 (w/out CA)............. 0.391[cent]........... 0.21[cent]............ 0.13%................. -2.5................. -0.026%
--------------------------------------------------------------------------------------------------------------------------------------------------------
$/can
Thousand Cans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gas Cans:
States with existing programs. $0.21................. $0.20................. 1.9%.................. -2.1................. -0.02%
States without existing $1.53................. $1.52................. 32.5%................. -56.4................ -0.32%
programs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Economic Welfare Analysis. In the economic welfare analysis we look
at the costs to society of the proposed program in terms of losses to
consumer and producer surplus. These surplus losses are combined with
the estimated vehicle compliance costs, fuel savings, and government
revenue losses to estimate the net economic welfare impacts of the
proposed program. Estimated annual net social costs for selected years
are presented in Table IX-F-2. Initially, the estimated social costs of
the program are relatively small and are attributable to the gas can
program, which begins in 2009, and the vehicle program, which begins in
2010. For 2009 and 2010 the estimated social costs are less than $40
million. In 2011 the estimated social costs increase to $215 million,
reflecting the beginning of the gasoline fuel program. In subsequent
years, estimated social costs increase due to growth. However, they
decrease in 2014, to $169 million, when the gas can fixed costs are
fully recovered and in 2020, to $171.5 million, when the vehicle
program compliance costs are terminated.
Table IX.F-2.--Net Social Costs Estimates for the Proposed Program
[2009 to 2035--2003$, $million]
------------------------------------------------------------------------
Total social
costs
Year (includes fuel
savings)
------------------------------------------------------------------------
2009.................................................... $38.4
2010.................................................... 39.2
2011.................................................... 215.0
2012.................................................... 208.6
2013.................................................... 202.2
2014.................................................... 169.3
2015.................................................... 171.6
2016.................................................... 173.6
2017.................................................... 175.5
2018.................................................... 177.3
2019.................................................... 179.7
2020.................................................... 171.5
2021.................................................... 174.2
2022.................................................... 176.9
2023.................................................... 179.9
2024.................................................... 183.3
2025.................................................... 186.8
2026.................................................... 190.3
2027.................................................... 193.9
2028.................................................... 197.6
2029.................................................... 201.3
2030.................................................... 205.2
2031.................................................... 209.1
2032.................................................... 213.1
2033.................................................... 217.2
2034.................................................... 221.4
2035.................................................... 225.7
NPV at 3%............................................... 2,937.3
NPV at 7%............................................... 1,633.0
------------------------------------------------------------------------
Table IX.F-3 contains more detailed estimated social costs for
2009, when the gas can program begins, 2011, when the gasoline fuel
program begins, and 2015, when the gas can fixed costs are fully
recovered. The vehicle program applies from 2010 through 2019.
According to these results, consumers are expected to bear
approximately 99 percent of the cost of the gas can program. This
reflects the inelastic price elasticity on the demand side of the
market and the elastic price elasticity on the supply side. The burden
of the gasoline fuel program is expected to be shared more evenly, with
54.5 percent expected to be borne by consumers and 45.5 percent
expected to be borne by producers. In all years, the estimated loss to
consumer welfare will be offset somewhat by the fuel savings associated
with gas cans. Beginning at about $11 million per year, these savings
increase to about $70 million by 2015 as compliant gas cans are phased
in. These savings accrue for the life of the gas cans.
Table IX.F-3.--Summary of Net Social Costs Estimates Associated With Primary Program
[2009, 2011, and 2015--2003$, $million]
----------------------------------------------------------------------------------------------------------------
Change in consumer Change in producer
Market surplus surplus Total
----------------------------------------------------------------------------------------------------------------
2009
----------------------------------------------------------------------------------------------------------------
Gasoline U.S.:
PADD 1 & 3
PADD 2 N/A (gasoline fuel control program begins in 2011)
PADD 4..........................
PADD 5 (w/out CA)...............
Gas Cans U.S........................ -$48.7.................. -$0.3.................. -$49.0
(99.3%)................. (0.7%)
States with existing programs....... -$7.5................... -$0.1..................
[[Page 15917]]
States without existing programs.... -$41.2.................. -$0.3..................
---------------------------------------------------------------------------
Subtotal.................... -48.7................... -0.3................... -$49.0
(99.3%)................. (1%)...................
----------------------------------------------------------------------------------------------------------------
Fuel Savings........................ ........................ ....................... $10.6
Vehicle Program..................... ........................ ....................... $0
California fuel \a\................. ........................ ....................... $0
---------------------------------------------------------------------------
Total................... ........................ ....................... -$38.4
----------------------------------------------------------------------------------------------------------------
2011
----------------------------------------------------------------------------------------------------------------
Gasoline U.S........................ -$100.3................. -$83.6................. -$183.9
PADD 1 & 3.......................... -$21.6.................. -$18.0 .......................
PADD 2.............................. -$49.1.................. -$40.9 .......................
PADD 4.............................. -$10.2.................. -$8.5 .......................
PADD 5 9w/out CA)................... -$19.4.................. -$16.2 .......................
Gas Cans U.S........................ -$50.7.................. -$0.3.................. -$51.0
(99.4%)................. (0.7%)
States with existing programs....... -$7.8................... -$0.1 .......................
States without existing programs.... -$42.9.................. -$0.3..................
---------------------------------------------------------------------------
Subtotal.................... -$150.9................. -$83.9................. -$234.8
(64.3%)................. (35.7%)................
----------------------------------------------------------------------------------------------------------------
Fuel Savings........................ ........................ ....................... $33.3
Vehicle Program..................... ........................ ....................... -$11.8
California fuel \a\................. ........................ ....................... -$1.7
Total................... ........................ ....................... $215.0
----------------------------------------------------------------------------------------------------------------
2015
----------------------------------------------------------------------------------------------------------------
Gasoline U.S........................ -$107.1................. -$89.4................. -$196.5
(54.5%)................. (45.5%)
PADD 1 & 3.......................... -$23.1.................. -$19.3 .......................
PADD 2.............................. -$52.4.................. -$43.7 .......................
PADD 4.............................. -$10.9.................. -$9.1 .......................
PADD 5 (w/out CA)................... -$20.7.................. -$17.3 .......................
Gas Cans U.S........................ -$28.5.................. -$0.2.................. -$28.7
(99.3%)................. (0.7%)
States with existing programs....... -$2.3................... $0.0 .......................
States without existing programs.... -$26.3.................. -$0.2 .......................
Subtotal.................... -$135.7................. -$89.5................. -$225.2
(60.3%)................. (39.7%)
Fuel Savings........................ ........................ ....................... $68.3
Vehicle Program..................... ........................ ....................... $12.9
California fuel \a\................. ........................ ....................... -$1.8
Total................... ........................ ....................... $171.6
----------------------------------------------------------------------------------------------------------------
\a\ California fuel costs are considered separately. See Section 13.1.3 of the RIA.
The present value of net social costs (discounted back to 2005) of
the proposed standards through 2035, contained in Table IX-F-2, is
estimated to be $2.9 billion (2003$). This present value is calculated
using a social discount rate of 3 percent and the stream of economic
welfare costs from 2009 through 2035. We also performed an analysis
using a 7 percent social discount rate.\319\ Using that discount rate,
the present value of the net social costs through 2035 is estimated to
be $1.6 billion (2003$).
---------------------------------------------------------------------------
\319\ EPA has historically presented the present value of cost
and benefits estimates using both a 3 percent and a 7 percent social
discount. The 3 percent rate represents a demand-side approach and
reflects the time preference of consumption (the rate at which
society is willing to trade current consumption for future
consumption). The 7 percent rate is a cost-side approach and
reflects the shadow price of capital.
---------------------------------------------------------------------------
X. Alternative Program Options
We considered several options for fuels, vehicles, and gas cans in
developing this proposal.
A. Fuels
We considered a wide range of control strategies for gasoline to
reduce toxic emissions. Among the options considered are a toxics
performance standard, varying levels of benzene control, approaches for
controlling other MSATs in addition to benzene, and lower sulfur and
RVP for VOC control. The discussion of these options is provided in
section VII.
In addition, we request comment on the following specific concepts
relating
[[Page 15918]]
to the proposed ABT and compliance assurance provisions.
1. Alternative Compliance Assurance Provisions
The design of the proposed ABT program is based on other recent
fuel programs (primarily gasoline and diesel sulfur), but with fewer
restrictions. The proposed program includes nationwide trading, does
not include an upper limit on benzene, and combines all fuel into a
single pool for credit accounting purposes. The compliance assurance
mechanisms for the proposed ABT program are also based on previous
recent fuel programs (including reformulated gasoline and gasoline and
diesel sulfur) which in turn were developed based on the experiences in
enforcing past fuel programs. At the same time there are other programs
with different ABT and corresponding compliance assurance provisions
that could serve as models for this benzene proposal, such as the Acid
Rain Program.
An overarching concern that today's proposal attempts to address,
and that any alternative program also would have to address, is that
EPA does not have the resources to audit a substantial number of
refineries each year, and certainly not every refinery. Thus, we must
devise a credit program whose enforcement integrity does not depend on
EPA conducting annual audits of many or most refiners to determine the
validity of credits generated, transferred, banked and used.
The program as proposed would provide a great deal of flexibility
to refiners in complying with the standards, but balances this
flexibility with provisions to ensure the standard's enforceability.
This program would also provide incentives for refiners and importers
to ensure the validity of any credits they obtain, through the
provisions that hold the buyer of invalid credits liable for any
resulting violation of the standard. We summarize the most important of
these provisions here:
? Credit life would be limited to 5 years. This is intended
to provide reasonable assurance that EPA will have the opportunity to
review the appropriate records to verify compliance, regardless of
personnel changes, whether existing refiners and importers are bought,
sold, merged, or go out of business, and whether new refiners and
importers are created;
? Records would be required to be retained for the life of
the credits to allow for EPA to enforce the benzene content standard
through random audits;
? We propose that credits be limited in the number of trades
that would be allowed and are requesting comment on the range from 2 to
4 trades. (We will establish an appropriate number of permissible
trades in the final rule.) Such a limitation would be intended to allow
EPA to have a reasonable chance of verifying the validity of credits
that are traded;
? Both the buyer and seller of the credits would be
potentially liable should credits be found to be invalid, in order to
allow EPA to maintain the environmental benefits of the program should
the credit seller no longer be in business; and
? Purchasers of credits would need to be potential credit
users, and so would be refiners or importers. Our experiences during
the gasoline lead phase-down program in the 1980s, where brokers and
others were allowed to take title to lead credits, raised enforcement
problems severe enough to call the program's validity into question.
These problems have not arisen for more recent programs, where credit
purchasers must be credit users.
We request comment on these provisions as a whole and individually.
In addition, we note that the proposed benzene program is different
from the other recent fuel programs in several key respects that may
provide opportunities to design the ABT program and corresponding
compliance assurance mechanisms differently. For example, the proposed
program would not have an upper limit on the per-gallon benzene
concentration that would otherwise force all refiners to ultimately
comply with the standard through actual physical refinery changes.
Since this proposed program would allow some degree of variation in
benzene levels to continue indefinitely, additional flexibility in how
credits are handled may be desirable. Thus, we specifically request
comment on the following alternate ABT program elements.
As mentioned above, EPA could not, with its limited resources,
conduct annual audits of all refiners (and possibly other parties, as
discussed below). With regard to any potential alternative ABT program
elements, including those discussed below, we request detailed ideas
about a potential auditing process that would be sufficiently robust to
assure the validity of credits generated, used, banked or traded,
including how such audits might be self-funded.
Credit Life
EPA notes that a system that limits credit life may, under certain
circumstances, depress the market price of credits and create less
incentive for benzene reductions early in the program. EPA therefore
requests comment on whether the credit life should be limited or
whether unlimited banking should be encouraged through having credits
with unlimited life or longer life. We also seek comment on how a
program with unlimited credit life could be successfully enforced. For
example, EPA audits for refinery compliance with fuel standard and
credit requirements normally include review of refinery production,
testing and business records. EPA seeks comment on whether these audits
could be effectively conducted to review the validity of credits that
were generated more than five years previously and whether audits could
be effectively concluded during the first five years of a credit's life.
EPA also seeks comment on the appropriate consequences if EPA was
unable to verify credit validity, the criteria for identifying credits
as being invalid, and whether EPA should have the burden of proving
credits were invalid or whether the credit generator (or the credit
user) should have the burden of proving that credits were valid. See
Hazardous Waste Treatment Council v. EPA, 886 F. 2d 355, 367-68 (D.C.
Cir. 1990) ( relating to circumstances when the burden of proof may
permissibly shift to a regulated entity). EPA also seeks comment on
mechanisms that would allow companies to verify the validity of credits
they generate without the need for EPA audits. Thus, EPA seeks comment
on whether audits conducted by independent auditors could be a reliable
indicator of credit validity, and if so, the necessary qualifications
of the auditor, the criteria for auditor independence, how these
qualifications and independence should be established, whether the
audit should review records of all company fuels activities related to
credit creation or only a random portion of these records, the
appropriate timing requirements for these audits, and the nature and
timing of reports. EPA seeks comment on the enforcement implications of
the Clean Air Act's five-year statute of limitations if credits with a
life longer than five years were allowed.
Record Retention
We also seek comment on whether a program with unlimited credit
life would need to require that the associated records be retained
indefinitely until a credit was used. (The use of credits for which no
records exist could result in their being declared
[[Page 15919]]
null and void since credit validity could not be established.) We seek
comment as to whether record-keeping and EPA audits involving
activities occurring more than five years in the past could create any
issues regarding statutes of limitations. Also, in general, we request
comment on provisions that could address the fact that the farther back
in time an event occurred, the more difficult it becomes for EPA to
conduct an effective audit (due to factors such as mergers,
acquisitions, and turnover of personnel). EPA seeks comment on whether
the Clean Air Act's five-year statute of limitations would adversely
impact EPA's ability to enforce a requirement to keep records longer
than five years.
Number of Times Credits May Be Traded
As described earlier in this preamble, EPA is requesting comment on
allowing credits to be traded between 2 and 4 times. In particular, EPA
seeks comment on any specific benefits to regulated parties or to the
credit market generally if a number of trades in this range were
allowed; on requirements that should be included to ensure the validity
of credits that have been transferred multiple times; on procedures for
identifying which credits have been transferred if the credit
transferor is found to have had in its possession both valid and
invalid credits; and on appropriate consequences to the generator and/
or transferor of invalid credits. In addition, EPA seeks comment on
mechanisms that would allow companies to establish the validity of
credits they have purchased without the need for EPA audits. Thus, EPA
requests comment on whether companies that obtain credits that have
previously been purchased should be required to establish their
validity through reports of independent audits of the credit-creation
activities of the company that created the credits and of the credit
activities of any intermediary entities to which the credits had been
transferred.
Case-By-Case Relaxation of Compliance Restrictions
In addition to seeking comment on general modifications discussed
above to the proposed provisions, we also request comment on allowing
regulated entities to petition for case-by-case relaxation of specific
provisions in special cases. For example, such a provision might allow
a refiner to petition EPA to allow a specific group of credits to be
traded one or more additional times than the final rule ultimately
allows. Petitioners might also be allowed to request an extension of
the five year limit on credit life. EPA seeks comment on whether and
how such an extension might affect the ability to enforce the benzene
content standard, including impacts from the statute of limitations.
Such an exception might have important implications for enforcement,
record-keeping, and emissions, which would have to be adequately
addressed. EPA seeks comment on the nature of documentation that would
be required in such a petition and criteria that might be used to make
a determination regarding approval of such a petition. EPA also seeks
comment on the extent to which any such ABT flexibility provisions
would be used, and what the benzene content, enforcement, liquidity,
and other implications might be.
Ownership of Benzene Credits
The potential modifications of the proposed program on which we
request comment may be able to be accomplished relatively easily within
the bounds of the proposed program. Another concept, allowing traders
and other entities to take title to credits, might best be accomplished
by moving to an entirely different type of credit program, since it
might require a set of other related changes in order to function
effectively. For example, it may be possible to design the benzene
trading program and related compliance assurance provisions in a manner
that would allow benzene credits to be traded on the open market like
many other commodities and not unlike the way SO2 credits
are traded under the Acid Rain Program, or how carbon credits are
traded through the voluntary trading program established by the Chicago
Climate Exchange. We next discuss such an alternate credit program.
The proposed restriction of benzene credit use to refiners and
importers does not provide an opportunity for other entities to
participate in this credit market by taking title to credits.\320\ The
inability of traders to take actual title to credits may reduce the
ability of the market to function in certain ways including, for
example, to hedge against risk effectively or to aggregate small
holdings into larger blocks for sale. This might be avoided if the
program provided for benzene credits to be owned, and for entities
other than refiners and importers to obtain, hold, and transfer them.
---------------------------------------------------------------------------
\320\ In the proposed program non-refiners would be allowed to
facilitate, or broker, credit transactions between refiners or
importers. Thus, a refiner (or importer) that needed to purchase
credits could contract with a broker to identify refiners or
importers that have credits to sell.
---------------------------------------------------------------------------
EPA requests comment on any specific benefits to regulated parties
or to the credit market generally if non-refiners were allowed to take
title to credits. EPA also requests comments on any situations that
occurred under other motor vehicle fuels credit programs where the
absence of non-refiner credit owners created difficulties or problems
in regulated parties being able to transfer or obtain credits. EPA
seeks comment on how the benzene credit program could be reliably
enforced if non-refiners were allowed to own credits. Thus, EPA seeks
comment on the qualifications that should be required for a company to
be a non-refiner credit owner, and how these qualifications should be
established; on any registration, record keeping, reporting,
independent audit and independent attestation requirements that should
be imposed on non-refiner owners of credits; and on the nature of
liability that should attach to non-refiner owners of credits that were
found to have transferred invalid credits.
We expect that such a program would require that all refiners and
importers have their credits (and therefore compliance) verified each
year. Given the resource needs for EPA to undertake such verifications,
we would expect to require refiners to utilize independent auditors,
sufficient for the auditor to make a verified audit finding that the
company's assertions regarding credit creation are correct. We believe
that verification of credits in this manner would require a complete
audit of the gasoline production and testing records related to the
benzene content and volume of gasoline produced or imported, including
reviews and reconciliation of all batch information. The audit also
would also have to include sufficient review of records of product
sales to verify the completeness of the gasoline production records.
The independent auditor performing such an audit would have to be
qualified to understand and review the records of gasoline production
and testing generated at a refinery, or the importation and testing
records associated with imported gasoline. To the extent that gasoline
testing was conducted by independent laboratories, the credit audit
would have to include the activities of the independent laboratory to
make an audit finding of the validity of the laboratory test results.
EPA would then continue to have the ability to perform spot audits.
EPA seeks comment on whether the regulations should require that these
[[Page 15920]]
independent audits must be conducted by an independent audit
organization that is funded by an industry consortium, rather than by
audit firms individually retained by refiners/importers. The industry
consortium would submit to EPA for approval: the consortium
organization; the qualifications of the individual auditors; the
general audit plans, and any audit plans that are specific to an
individual company. The audit organization would submit audit reports
to EPA and to the companies that were the subject of their audits.
The refiners and importers would then assign a unique serial number
to each credit containing key information including the entity's
registration number, the year, and the credit number. These entities
would then report this information to EPA as a part of their annual
compliance report. Credits properly generated under such a program
could then be traded freely until they were used. If an audit
determined that some credits were improperly generated, a mechanism
would be required to decide which credits were considered to be valid
and which invalid.
Given EPA's resource constraints, EPA seeks comment on a mechanism
that would allow refiners and importers, and non-refiner owners of
credits (if allowed) to conduct this detailed tracking of individual
credits, with reconciliation of the reports of all parties
transferring, obtaining, or holding credits. Thus, EPA seeks comment on
whether the regulations should include an option whereby companies that
wish to sell, purchase or hold verified credits would fund an
independent organization that would function as the clearinghouse of
benzene credits. EPA also seeks comment on how such an independent
organization option should be structured: What would be the
qualifications of the organization and how would they be established;
how would the method of operations of the organization be established
and approved by EPA; what reporting by companies to the organization
would be required, and what reporting to EPA by the organization would
be required; and how would the organization establish the validity of
credits that are the subject of reports from companies.
In addition, as in past programs, if credits were later found to be
improperly created, the party that generated the invalid credits and
the party that used the invalid credits would be subject to EPA
enforcement. The party using the invalid credits would be required to
remove the invalid credits from its compliance calculations. If this
recalculation resulted in a violation of the benzene standard, the
party would be subject to an enforcement action for this violation,
regardless of whether the invalid credits were purchased in good faith
(although the party may be permitted to remedy such violations through
the subsequent purchase of valid credits). This is intended to maintain
the environmental benefits of the program and to encourage self-
policing by the industry of the validity of the credits they use for
compliance. However, in this situation EPA would look first to the
generator of the invalid credits to remedy the shortfall. If this
generator could make up any credit deficit, EPA normally would defer
enforcement against the user or intermediary transferor of invalid credits.
2. Alternative ABT Options
EPA seeks comment on whether the regulations should create two
options for benzene credits: one that is based on the credit
enforcement provisions contained in the proposed fuels program,
resulting in credits with more limited credit life that must be
transferred from the credit generator to the credit user; and
``verified'' benzene credits that have a longer credit life and that
can be owned by companies other than refiners/importers. Under this
approach, benzene credits could be ``verified'' if certain conditions
are met. First, the credit generator would need to participate in an
audit consortium (as described above) and the credits would need to be
verified through an audit conducted by this organization. Second, the
credit generator and any other company that took title to or used these
credits would need to participate in a benzene credit clearing house
(as described above). In this way, companies that wished to generate
benzene credits with longer life and broader ownership options could do
so, but also would bear at least part of the expense associated with
establishing the validity and tracking the movements of this class of
credits. At the same time, companies that wished to generate and transfer
credits in the traditional manner, would not bear these extra expenses.
EPA also seeks comment on an approach that would allow refiners and
importers, and non-refiner owners of credits (if allowed), to establish
a private clearing house to conduct the detailed tracking of individual
credits, with reconciliation of the reports of all parties
transferring, obtaining, or holding credits. The Chicago Climate
Exchange provides an example of a privately established trading
program. The Chicago Climate Exchange provides a trading platform with
a registry for credits and clearing facility. The NASD provides market
surveillance and verification of emission credits. EPA seeks comment on
how such an independent organization could be established; what
requirements should EPA establish for the organization; what reporting
would be required by companies to the organization; and what reporting
would be required by the organization to EPA.
We request comment on the appropriateness of such an alternative
ABT program for the proposed benzene control program and how it might
work and be enforced.
B. Vehicles
For vehicles, we considered normal temperature standards more
stringent than Tier 2 standards, which would likely entail hardware
changes to Tier 2 vehicles. This option is discussed in section VI. We
did not consider a less stringent standard for cold temperature NMHC
control because CAA sections 202(a) and 202(l) require us to establish
the most stringent standards achievable considering cost and other
factors. We believe that the proposed cold NMHC standards and phase-in
for Tier 2 vehicles satisfy these CAA requirements, and a less
stringent standard would not.
C. Gas Cans
For gas cans, as discussed in section VIII, we are proposing an
emissions performance standard we believe reflects the performance of
the best available control technologies. We considered but are not
proposing options for design-based requirements, including requirements
for automatic shut-off spouts. We also considered but are not proposing
retrofit requirements for gas cans. These options are discussed in
sections VIII.B.3-VIII.B.5.
XI. Public Participation
We request comment on all aspects of this proposal. This section
describes how you can participate in this process.
A. How Do I Submit Comments?
We are opening a formal comment period by publishing this document.
We will accept comments during the period indicated under DATES above.
If you have an interest in the proposed emission control program
described in this document, we encourage you to comment on any aspect
of this rulemaking. We also request comment on specific topics
identified throughout this proposal.
[[Page 15921]]
Your comments will be most useful if you include appropriate and
detailed supporting rationale, data, and analysis. Commenters are
especially encouraged to provide specific suggestions for any changes
to any aspect of the regulations that they believe need to be modified
or improved. You should send all comments, except those containing
proprietary information, to our Air Docket (see ADDRESSES) before the
end of the comment period.
You may submit comments electronically, by mail, or through hand
delivery/courier. To ensure proper receipt by EPA, identify the
appropriate docket identification number in the subject line on the
first page of your comment. Please ensure that your comments are
submitted within the specified comment period. Comments received after
the close of the comment period will be marked ``late.'' EPA is not
required to consider these late comments. If you wish to submit CBI or
information that is otherwise protected by statute, please follow the
instructions in section XI.B.
B. How Should I Submit CBI to the Agency?
Do not submit information that you consider to be CBI
electronically through the electronic public docket,
http://www.regulations.gov, or by e-mail. Send or deliver information
identified as CBI only to the following address: U.S. Environmental
Protection Agency, Assessment and Standards Division, 2000 Traverwood
Drive, Ann Arbor, MI 48105, Attention Docket ID EPA-HQ-OAR-2005-0036.
You may claim information that you submit to EPA as CBI by marking any
part or all of that information as CBI (if you submit CBI on disk or CD
ROM, mark the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is CBI). Information so marked will not be disclosed except in
accordance with procedures set forth in 40 CFR part 2.
In addition to one complete version of the comment that includes
any information claimed as CBI, a copy of the comment that does not
contain the information claimed as CBI must be submitted for inclusion
in the public docket. If you submit the copy that does not contain CBI
on disk or CD ROM, mark the outside of the disk or CD ROM clearly that
it does not contain CBI. Information not marked as CBI will be included
in the public docket without prior notice. If you have any questions
about CBI or the procedures for claiming CBI, please consult the person
identified in the FOR FURTHER INFORMATION CONTACT section.
C. Will There Be a Public Hearing?
We will hold a public hearing on April 12, 2006 at the Sheraton
Crystal City Hotel, 1800 Jefferson Davis Highway, Arlington, Virginia
22202, Telephone: (703) 486-1111. The hearing will start at 10 a.m.
local time and continue until everyone has had a chance to speak.
If you would like to present testimony at the public hearing, we
ask that you notify the contact person listed under FOR FURTHER
INFORMATION CONTACT at least ten days before the hearing. You should
estimate the time you will need for your presentation and identify any
needed audio/visual equipment. We suggest that you bring copies of your
statement or other material for the EPA panel and the audience. It
would also be helpful if you send us a copy of your statement or other
materials before the hearing.
We will make a tentative schedule for the order of testimony based
on the notifications we receive. This schedule will be available on the
morning of the hearing. In addition, we will reserve a block of time
for anyone else in the audience who wants to give testimony.
We will conduct the hearing informally, and technical rules of
evidence won't apply. We will arrange for a written transcript of the
hearing and keep the official record of the hearing open for 30 days to
allow you to submit supplementary information. You may make
arrangements for copies of the transcript directly with the court reporter.
D. Comment Period
The comment period for this rule will end on May 30, 2006.
E. What Should I Consider as I Prepare My Comments for EPA?
You may find the following suggestions helpful for preparing your
comments:
? Explain your views as clearly as possible.
? Describe any assumptions that you used.
? Provide any technical information and/or data you used
that support your views.
? If you estimate potential burden or costs, explain how you
arrived at your estimate.
? Provide specific examples to illustrate your concerns.
? Offer alternatives.
? Make sure to submit your comments by the comment period
deadline identified.
? To ensure proper receipt by EPA, identify the appropriate
docket identification number in the subject line on the first page of
your response. It would also be helpful if you provided the name, date,
and Federal Register citation related to your comments.
XII. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to Office of Management and Budget (OMB) review
and the requirements of the Executive Order. The Executive Order
defines a ``significant regulatory action'' as one that is likely to
result in a rule that may:
? Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, Local, or Tribal governments or
communities;
? Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
? Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs, or the rights and obligations of
recipients thereof; or
? Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, it has been
determined that this rule is a ``significant regulatory action''
because estimated annual costs of this rulemaking are estimated to be
over $100 million per year and it raises novel legal or policy issues.
A draft Regulatory Impact Analysis has been prepared and is available
in the docket for this rulemaking and at the docket internet address
listed under ADDRESSES above. This action was submitted to the Office
of Management and Budget for review under Executive Order 12866.
Written comments from OMB and responses from EPA to OMB comments are in
the public docket for this rulemaking.
B. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
Agency proposes to collect information to ensure compliance with the
provisions in this rule. This includes a variety of
[[Page 15922]]
requirements, both for vehicle manufacturers, fuel producers, and
portable gasoline container manufacturers. Information-collection
requirements related to vehicle manufacturers are in EPA ICR
#0783.50 (OMB Control Number 2060-0104); requirements related
to fuel producers are in EPA ICR #1591.20 (OMB Control Number
2060-0277); requirements related to portable gasoline container
manufacturers are in EPA ICR #2213.01. For vehicle and fuel
standards, section 208(a) of the Clean Air Act requires that
manufacturers provide information the Administrator may reasonably
require to determine compliance with the regulations; submission of the
information is therefore mandatory. We will consider confidential all
information meeting the requirements of section 208(c) of the Clean Air
Act. For portable gasoline container standards, recordkeeping and
reporting requirements for manufacturers would be pursuant to the
authority of sections 183(e) and 111 of the Clean Air Act.
As shown in Table XII.B-1, the total annual burden associated with
this proposal is about 24,696 hours and $2,771,309, based on a
projection of 225 respondents. The estimated burden for vehicle
manufacturers and fuel producers is a total estimate for both new and
existing reporting requirements. The portable gasoline container
requirements represent our first regulation of gas cans, so those
burden estimates reflect only new reporting requirements. Burden means
the total time, effort, or financial resources expended by persons to
generate, maintain, retain, or disclose or provide information to or
for a Federal agency. This includes the time needed to review
instructions; develop, acquire, install, and utilize technology and
systems for the purposes of collecting, validating, and verifying
information, processing and maintaining information, and disclosing and
providing information; adjust the existing ways to comply with any
previously applicable instructions and requirements; train personnel to
be able to respond to a collection of information; search data sources;
complete and review the collection of information; and transmit or
otherwise disclose the information.
Table XII.B-1.--Estimated Burden for Reporting and Recordkeeping Requirements
----------------------------------------------------------------------------------------------------------------
Number of Annual burden
Industry sector respondents hours Annual costs
----------------------------------------------------------------------------------------------------------------
Vehicles........................................................ 35 770 $80,900
Fuels........................................................... 185 23,710 2,677,410
Gas Cans........................................................ 5 216 12,999
-----------------------------------------------
Total....................................................... 225 24,696 2,771,309
----------------------------------------------------------------------------------------------------------------
An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.
To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, including the use of automated collection
techniques, EPA has established a public docket for this rule, which
includes this ICR, under Docket ID number EPA-HQ-OAR-2005-0036. Submit
any comments related to the ICR for this proposed rule to EPA and OMB.
See ADDRESSES section at the beginning of this notice for where to
submit comments to EPA. Send comments to OMB at the Office of
Information and Regulatory Affairs, Office of Management and Budget,
725 17th Street, NW., Washington, DC 20503, ``Attention: Desk Office
for EPA.'' Include the ICR number in any correspondence. Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after March 29, 2006, a comment to OMB is best assured of having its
full effect if OMB receives it by April 28, 2006. The final rule will
respond to any OMB or public comments on the information collection
requirements contained in this proposal.
C. Regulatory Flexibility Act (RFA), as Amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et seq.
1. Overview
The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201 (see table below); (2) a small governmental jurisdiction that
is a government of a city, county, town, school district or special
district with a population of less than 50,000; and (3) a small
organization that is any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field. The
following table provides an overview of the primary SBA small business
categories potentially affected by this regulation:
------------------------------------------------------------------------
Defined as small entity
Industry by SBA if less than or NAICS codes
equal to \a\
------------------------------------------------------------------------
Light-duty vehicles:
--Vehicle manufacturers 1,000 employees........ 336111
(including small volume
manufacturers).
--Independent commercial $6 million annual sales 811111,
importers. 811112, 811198
--Alternative fuel vehicle 100 employees.......... 424720
converters.
1,000 employees........ 335312
$6 million annual sales 811198
Gasoline fuel refiners......... 1500 employees \b\..... 324110
[[Page 15923]]
Portable fuel container
manufacturers:
--Plastic container 500 employees.......... 326199
manufacturers.
--Metal gas can 1,000 employees........ 332431
manufacturers.
------------------------------------------------------------------------
Notes:
\a\ North American Industrial Classification System.
\b\ EPA has included in past fuels rulemakings a provision that, in
order to qualify for EPA's small refiner flexibilities, a refiner must
also produce no greater than 155,000 bpcd crude capacity.
2. Background
Mobile sources emit air toxics that can cause cancer and other
serious health effects (Section III of this preamble and Chapter 1 of
the Regulatory Impact Analysis (RIA) for this rule describe these
compounds and their health effects). Mobile sources contribute
significantly to the nationwide risk from breathing outdoor sources of
air toxics. In today's action we are proposing: standards to limit the
exhaust hydrocarbons from passenger vehicles during cold temperature
operation; evaporative hydrocarbon emissions standards for passenger
vehicles; limiting the average annual benzene content of gasoline; and
hydrocarbon emissions standards for gas cans that would reduce
evaporation, permeation, and spillage from these containers. (Detailed
discussion of each of these programs is in sections VI, VII, and VIII
of the preamble and Chapters 5, 6, and 7 of the RIA). We are proposing
the standards for vehicles and gasoline under section 202(l)(2) of the
Clean Air Act (CAA), which directs EPA to establish requirements to
control emissions of mobile source air toxics (MSATs) from new motor
vehicles and fuels. Controls for gas cans are being pursued under CAA
section 183(e), the provisions applying to consumer and commercial
products.
Pursuant to section 603 of the RFA, EPA prepared an initial
regulatory flexibility analysis (IRFA) that examines the impact of the
proposed rule on small entities along with regulatory alternatives that
could reduce that impact. The IRFA, as summarized below, is available
for review in the docket and Chapter 14 of the RIA.
As required by section 609(b) of the RFA, as amended by SBREFA, EPA
also conducted outreach to small entities and convened a Small Business
Advocacy Review Panel to obtain advice and recommendations of
representatives of the small entities that potentially would be subject
to the rule's requirements.
Consistent with the RFA/SBREFA requirements, the Panel evaluated
the assembled materials and small-entity comments on issues related to
elements of the IRFA. A copy of the Panel report is included in the
docket for this proposed rule, and a summary of the Panel process, and
subsequent Panel recommendations, is summarized below.
3. Summary of Regulated Small Entities
The following section discusses the small entities directly
regulated by this proposed rule.
a. Highway Light-Duty Vehicles
In addition to the major vehicle manufacturers, three distinct
categories of businesses relating to highway light-duty vehicles would
be covered by the new vehicle standards: small volume manufacturers
(SVMs), independent commercial importers (ICIs), and alternative fuel
vehicle converters. SVMs are companies that sell less than 15,000
vehicles per year, as defined in past EPA regulations, and this status
allows vehicle models to be certified under a slightly simpler
certification process. Independent commercial importers are companies
that hold a Certificate (or certificates) of Conformity permitting them
to alter imported vehicles to meet U.S emission standards. Alternative
fuel vehicle converters are businesses that convert gasoline or diesel
vehicles to operate on alternative fuel, and converters must seek a
certificate for all of their vehicle models. Based on a preliminary
assessment, EPA identified about 14 SVMs, 10 alternative fuel vehicle
converters, and 10 ICIs. Of these, EPA believes 5 SVMs, 6 converters,
and all 10 ICIs would meet the small-entity criteria as defined by SBA
(no major vehicle manufacturers meet the small-entity criteria). EPA
estimates that these small entities comprise about 0.02 percent of the
total light-duty vehicle sales in the U.S. for the year 2004.
b. Gasoline Refiners
EPA's current assessment is that 15 refiners meet SBA's criterion
of having 1,500 employees or less. It should be noted that because of
the dynamics in the refining industry (i.e., mergers and acquisitions)
and decisions by some refiners to enter or leave the gasoline market,
the actual number of refiners that ultimately qualify for small refiner
status under an MSAT program could be much different than these initial
estimates. Current data further indicates that these refiners produce
about 2.5 percent of the total gasoline pool.
c. Portable Gasoline Container Manufacturers
EPA conducted a preliminary industry profile to identify the
manufacturers of portable gasoline containers (gas cans)--98 percent
are plastic containers and 2 percent are metal gas cans. Using this
industry profile, EPA identified 4 domestic manufacturers and 1 foreign
manufacturer. Of these 4 U.S. manufacturers, 3 meet the SBA definition
of a small entity. One small business accounted for over 50 percent of
the U.S. sales in 2002, and the other small entities comprised about 10
percent of U.S. sales.
4. Potential Reporting, Record Keeping, and Compliance
For highway light-duty vehicles, EPA is proposing to continue the
reporting, recordkeeping, and compliance requirements prescribed for
this category in 40 CFR 86. Key among these requirements are
certification requirements and provisions related to reporting of
production, emissions information, flexibility use, etc.
For any fuel control program, EPA must have assurance that fuel
produced by refiners meets the applicable standard, and that the fuel
continues to meet the standard as it passes downstream through the
distribution system to the ultimate end user. EPA expects that
recordkeeping, reporting and compliance provisions of the proposed rule
will be fairly consistent with those in place today for other fuel
programs. For example, reporting would likely involve requiring that
refiners submit pre-compliance reports updating EPA on their plans to
meet the MSAT standards.
For gas cans, there currently are not federal emission control
requirements, and thus, EPA is proposing new reporting and record
keeping requirements for gas can manufacturers that would be subject to
the proposed standards. EPA is proposing
[[Page 15924]]
requirements that would be similar to those in the California program,
such as submitting emissions testing information, reporting of
certification families, and use of transition provisions.
5. Relevant Federal Rules
We are aware of a few other current or proposed Federal rules that
are related to the upcoming proposed rule. The primary federal rules
that are related to the proposed MSAT rule under consideration are the
first MSAT rule (Federal Register Vol. 66, p. 17230, March 29, 2001),
the Tier 2 Vehicle/Gasoline Sulfur rulemaking (Federal Register Vol.
65, p. 6698, February 10, 2000), the fuel sulfur rules for highway
diesel (Federal Register Vol. 66, p. 5002, January 18, 2001) and
nonroad diesel (Federal Register Vol. 69, p. 38958, June 29, 2004), and
the Cold Temperature Carbon Monoxide Rulemaking (Federal Register Vol.
57, p. 31888, July 17, 1992).
In addition, the Evaporative Emissions Streamlining Direct Final
Rulemaking was issued on December 8, 2005 (Federal Register Vol. 70, p.
72917). For gas cans, OSHA has safety regulations for gasoline
containers used in workplace settings. Cans meeting OSHA requirements,
commonly called safety cans, are exempt from the California program,
and we are planning to exempt them from the EPA program.
Section 1501 of the Energy Policy Act of 2005 requires the Agency
to implement a Renewable Fuels Standard (RFS) program. Beginning in
2006, this program will require increasing volumes of renewable fuel to
be used in gasoline, until a total of 7.5 billion gallons is required
in 2012. The most prevalent renewable fuel is expected to be ethanol.
There are a wide variety of potential impacts of ethanol blending on
MSAT emissions that will be evaluated as part of the RFS rulemaking
process. In general, as ethanol use increases, other sources of octane
in gasoline can decrease. Depending on these changes, the impact on
benzene emissions will vary. The specific effects of ethanol on benzene
will be addressed in the Regulatory Impact Analysis (RIA) to this rule
and in future rulemakings, such as the RFS rule.
6. Summary of SBREFA Panel Process and Panel Outreach
a. Significant Panel Findings
The Small Business Advocacy Review Panel (SBAR Panel, or the Panel)
considered many regulatory options and flexibilities that would help
mitigate potential adverse effects on small businesses as a result of
this rule. During the SBREFA Panel process, the Panel sought out and
received comments on the regulatory options and flexibilities that were
presented to SERs and Panel members. The major flexibilities and
hardship relief provisions that were recommended by the Panel are
described below and are also located in Section 9 of the SBREFA Final
Panel Report which is available in the public docket.
b. Panel Process
As required by section 609(b) of the RFA, as amended by SBREFA, we
also conducted outreach to small entities and convened an SBAR Panel to
obtain advice and recommendations of representatives of the small
entities that potentially would be subject to the rule's requirements.
On September 7, 2005, EPA's Small Business Advocacy Chairperson
convened a Panel under Section 609(b) of the RFA. In addition to the
Chair, the Panel consisted of the Division Director of the Assessment
and Standards Division of EPA's Office of Transportation and Air
Quality, the Chief Counsel for Advocacy of the Small Business
Administration, and the Administrator of the Office of Information and
Regulatory Affairs within the Office of Management and Budget. As part
of the SBAR Panel process, we conducted outreach with representatives
from the various small entities that would be affected by the proposed
rulemaking. We met with these Small Entity Representatives (SERs) to
discuss the potential rulemaking approaches and potential options to
decrease the impact of the rulemaking on their industries. We
distributed outreach materials to the SERs; these materials included
background on the rulemaking, possible regulatory approaches, and
possible rulemaking alternatives. The Panel met with SERs from the
industries that will be directly affected by the MSAT rule on September
27, 2005 (gasoline refiners) and September 29, 2005 (light-duty
vehicles and portable gasoline containers) to discuss the outreach
materials and receive feedback on the approaches and alternatives
detailed in the outreach packet (the Panel also met with SERs on July
19, 2005 for an initial outreach meeting). The Panel received written
comments from the SERs following the meeting in response to discussions
had at the meeting and the questions posed to the SERs by the Agency.
The SERs were specifically asked to provide comment on regulatory
alternatives that could help to minimize the rule's impact on small
businesses.
In general, SERs representing the gas can manufacturers industry
raised concerns on how the MSAT rule's requirements would be
coordinated with the California program and other requirements, and
that there should be adequate opportunity for sell through at the start
of the program. The small volume manufacturer, ICI, and vehicle
converter SERs that participated had questions about the form of the
new standards for light-duty vehicles, specifically testing and
certification requirements. The gasoline refiner SERs generally stated
that they believed that small refiners would face challenges in meeting
a new standard. More specifically, they raised the concern that the
rule could be very costly and dependence on credits may not be a
comfortable situation; they were also concerned about the timing of the
standards for this rule, given other upcoming fuel standards.
The Panel's findings and discussions were based on the information
that was available during the term of the Panel and issues that were
raised by the SERs during the outreach meetings and in their comments.
It was agreed that EPA should consider the issues raised by the SERs
(and discussions had by the Panel itself) and that EPA should consider
comments on flexibility alternatives that would help to mitigate any
negative impacts on small businesses. Alternatives discussed throughout
the Panel process included those offered in previous or current EPA
rulemakings, as well as alternatives suggested by SERs and Panel
members, and the Panel recommended that all be considered in the
development of the rule. Though some of the flexibilities suggested may
be appropriate to apply to all entities affected by the rulemaking, the
Panel's discussions and recommendations were focused mainly on the
impacts, and ways to mitigate adverse impacts, on small businesses. A
summary of these recommendations is detailed below, and a full
discussion of the regulatory alternatives and hardship provisions
discussed and recommended by the Panel can be found in the SBREFA Final
Panel Report. A complete discussion of the transition and hardship
provisions that we are proposing in today's action can be found in
Sections VI.E, VII.E, and VIII (vehicle, fuels, and gas can sections)
of this preamble. Also, the Panel Report includes all comments received
from SERs (Appendices D and E of the Report) and summaries of the two
outreach meetings that were held with the SERs (Appendices B and C). In
accordance with the RFA/SBREFA requirements, the Panel evaluated the
[[Page 15925]]
aforementioned materials and SER comments on issues related to the
Initial Regulatory Flexibility Analysis (IRFA). The following sections
describe the Panel recommendations from the SBAR Panel Report.
c. Small Business Flexibilities
The Panel recommended that EPA consider and seek comment on a wide
range of regulatory alternatives to mitigate the impacts of the
rulemaking on small businesses, including those flexibility options
described below. As previously stated, the following discussion is a
summary of the SBAR Panel recommendations; our proposals regarding
these recommendations are located in earlier sections of this rule preamble.
i. Highway Light-Duty Vehicles
(a) Highway Light-Duty Vehicle Flexibilities
For certification purposes (and for the sake of simplicity for
Panel discussions regarding flexibility options), SVMs include ICIs and
alternative fuel vehicle converters since they sell less than 15,000
vehicles per year. Similar to the flexibility provisions implemented in
the Tier 2 rule, the Panel recommended that we allow SVMs (includes all
vehicle small entities that would be affected by this rule, which are
the majority of SVMs) the following flexibility options for meeting
cold temperature VOC standards and evaporative emission standards:
For cold VOC standards, the Panel recommended that SVMs simply
comply with the standards with 100 percent of their vehicles during the
last year of the 4 year phase-in period. For example, if the standard
for light-duty vehicles and light light-duty trucks (0 to 6,000 pounds
GVWR) were to begin in 2010 and end in 2013 (25%, 50%, 75%, 100% phase-
in over 4 years), the SVM provision would be 100 percent in 2013. If
the standard for heavy light-duty trucks and medium-duty passenger
vehicles (greater than 6,000 pounds GVWR) were to start in 2012 (25%,
50%, 75%, 100% phase-in over 4 years), the SVM provision would be 100
percent in 2015.
In regard to evaporative emission standards, the Panel recommended
that since the evaporative emissions standards will not have phase-in
years, we allow SVMs to simply comply with standards during the third
year of the program (we have implemented similar provisions in past
rulemakings). For a 2009 start date for light-duty vehicles and light
light-duty trucks, SVMs would need to meet the evaporative emission
standards in 2011. For a 2010 implementation date for heavy light-duty
trucks and medium-duty passenger vehicles, SVMs would need to comply in
2012.
(b) Highway Light-Duty Vehicle Hardships
In addition, the Panel recommended that hardship flexibility
provisions be extended to SVMs for the cold temperature VOC and
evaporative emission standards. The provisions that the Panel
recommended are:
SVMs would be allowed to apply (EPA would need to review and
approve application) for up to an additional 2 years to meet the 100
percent phase-in requirements for cold VOC and the delayed requirement
for evaporative emissions. Appeals for such hardship relief must be
made in writing, must be submitted before the earliest date of
noncompliance, must include evidence that the noncompliance will occur
despite the manufacturer's best efforts to comply, and must include
evidence that severe economic hardship will be faced by the company if
the relief is not granted.
ii. Gasoline Refiners
(a) Gasoline Refiner Flexibilities
The Panel recommended that EPA propose certain provisions to
encourage early compliance with lower benzene standards. The Panel
recommended that EPA propose that small refiners be afforded the following
flexibility options to help mitigate the impacts on small refiners:
Delay in Standards--The Panel recommended that a four-year delay
period be proposed for small refiners. A four-year delay would be
needed in order to allow for a review of the ABT program, as discussed
below, to occur one year after implementation but still three years
prior to the small refiner compliance deadline. It was noted by the
small refiners that three years are generally needed for small refiners
to obtain financing and perform engineering and construction. The Panel
was also in support of allowing for refinery expansion within the delay
option, and recommended that refinery expansion be provided for in the rule.
Early ABT Credits--The Panel recommended that early credit
generation be afforded to small refiners that take some steps to meet
the benzene requirement prior to the effective date of the standard.
Depending on the start date of the program, and coupled with the four-
year delay option, a small refiner could have a total credit generation
period of five to seven years. The Panel was also in support of
allowing refiners (small, as well as non-small, refiners) to generate
credits for reductions to their benzene emissions levels, rather than
credits only for meeting the benzene standard that is set by the rule.
The Panel recommended a review of the credit trading program and
small refiner flexibility options one year after the general program
starts. Such a review could take into account the number of early
credits generated, as well as the number of credits generated and sold
during the first year of the program. Further, a review after the first
year of the program would still provide small refiners with the three
years that it was suggested would be needed for these refiners to
obtain financing and perform engineering and construction for benzene
reduction equipment. Should the review conclude that changes to either
the program or the small refiner provisions are necessary, the Panel
recommended that EPA also consider some of the suggestions provided by
the small refiners (their comments are located in Appendix E of the
Final Panel Report), such as:
? The general MSAT program should require pre-compliance
reporting (similar to EPA's highway and nonroad diesel rules);
? Following the review, EPA should revisit the small refiner
provisions if it is found that the credit trading market does not
exist, or if credits are only available at a cost that would not allow
small refiners to purchase credits for compliance;
? The review should offer ways either to help the credit
market, or help small refiners gain access to credits (e.g., EPA could
``create'' credits to introduce to the market, EPA could impose
additional requirements to encourage trading with small refiners, etc.).
In addition, the Panel recommended that EPA consider in this
rulemaking establishing an additional hardship provision to assist
those small refiners that cannot comply with the MSAT with a viable
credit market. (This suggested hardship provision was also suggested by
the small refiners in their comments, located in Appendix E of the
Final Panel Report). This hardship provision could address concerns
that, for some small refineries, compliance may be technically feasible
only through the purchase of credits and it may not be economically
feasible to purchase those credits. This flexibility could be provided
to a small refiner on a case-by-case basis following the review and
based on a summary, by the refiner, of technical or financial
infeasibility (or some other type of similar situation that
[[Page 15926]]
would render its compliance with the standard difficult). This hardship
provision might include further delays and/or a slightly relaxed
standard on an individual refinery basis for a duration of two years;
in addition, provision might allow the refinery to request, and EPA
grant, multiple extensions of the flexibility until the refinery's
material situation changes. The Panel also stated that it understood
that EPA may need to modify or rescind this provision, should it be
implemented, based on the results of the program review.
(b) Gasoline Refiner Hardships
During the Panel process, we stated that we intended to propose the
extreme unforeseen circumstances hardship and extreme hardship
provisions (for all gasoline refiners and importers), similar to those
in prior fuels programs. A hardship based on extreme unforeseen
circumstances is intended to provide short term relief due to
unanticipated circumstances beyond the control of the refiner, such as
a natural disaster or a refinery fire; an extreme hardship is intended
to provide short-term relief based on extreme circumstances (e.g.,
extreme financial problems, extreme operational or technical problems,
etc.) that impose extreme hardship and thus significantly affect a
refiner's ability to comply with the program requirements by the
applicable dates. The Panel agreed with the proposal of such provisions
and recommended that we include them in the MSAT rulemaking.
iii. Portable Gasoline Containers
(a) Portable Gasoline Container Flexibilities
Since nearly all gas can manufacturers are small entities and they
account for about 60 percent of sales, the Panel planned to extend the
flexibility options to all gas can manufacturers. Moreover,
implementation of the program would be much simpler by doing so. The
recommended flexibilities are the following:
Design Certification--The Panel recommended that we propose to
permit gas can manufacturers to use design certification in lieu of
running any or all of the durability aging cycles. Manufacturers could
demonstrate the durability of their gas cans based in part on emissions
test data from designs using the same permeation barriers and
materials. Under a design-based certification program a manufacturer
would provide evidence in the application for certification that their
container would meet the applicable standards based on its design
(e.g., use of a particular permeation barrier). The manufacturer would
submit adequate engineering and other information about its individual
design such that EPA could determine that the emissions performance of
their individual design would not be negatively impacted by slosh, UV
exposure, and/or pressure cycling (whichever tests the manufacturer is
proposing to not run prior to emissions testing).
Broaden Certification Families--This approach would relax the
criteria used to determine what constitutes a certification family. It
would allow small businesses to limit their certification families (and
therefore their certification testing burden), rather than testing all
of the various size containers in a manufacturer's product line. Some
small entities may be able to put all of their various size containers
into a single certification family. Manufacturers would then certify
their containers using the ``worst case'' configuration within the
family. To be grouped together, containers would need to be
manufactured using the same materials and processes even though they
are of different sizes.
Additional Lead-time--Since it may take additional time for the gas
can SERs to gather information to fully evaluate whether or not
additional lead-time is needed beyond the 2009 start date, the Panel
recommended that we discuss lead-time in the proposal and request
comments on the need for additional lead-time to allow manufacturers to
ramp up to a nationwide program.
Product Sell-through--As with past rulemakings for other source
sectors, the Panel recommended that EPA propose to allow normal sell
through of gas cans as long as manufacturers do not create stockpiles
of noncomplying gas cans prior to the start of the program.
(b) Portable Gasoline Container Hardships
The Panel recommended that EPA propose two types of hardship
programs for small gas can manufacturers. These provisions are:
Allow small manufacturers to petition EPA for limited additional
lead-time to comply with the standards. A manufacturer would have to
make the case that it has taken all possible business, technical, and
economic steps to comply but the burden of compliance costs would have
a significant adverse effect on the company's solvency. Hardship relief
could include requirements for interim emission reductions. The length
of the hardship relief would be established during the initial review
and would likely need to be reviewed annually thereafter.
Permit small manufacturers to apply for hardship relief if
circumstances outside their control cause the failure to comply (i.e.
supply contract broken by parts supplier) and if failure to sell the
subject containers would have a major impact on the company's solvency.
The terms and timeframe of the relief would depend on the specific
circumstances of the company and the situation involved. As part of its
application, a company would be required to provide a compliance plan
detailing when and how it would achieve compliance with the standards
under both types of hardship relief.
We invite comments on all aspects of the proposal and its impacts
on small entities.
D. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective, or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the final rule an explanation of why that
alternative was not adopted.
Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of the UMRA a
small government agency plan. The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant federal
intergovernmental mandates, and informing, educating, and advising
[[Page 15927]]
small governments on compliance with the regulatory requirements.
This rule contains no federal mandates for state, local, or tribal
governments as defined by the provisions of Title II of the UMRA. The
rule imposes no enforceable duties on any of these governmental
entities. Nothing in the rule would significantly or uniquely affect
small governments. EPA has determined that this rule contains federal
mandates that may result in expenditures of more than $100 million to
the private sector in any single year. EPA believes that the proposal
represents the least costly, most cost-effective approach to achieve
the statutory requirements of the rule. The costs and benefits
associated with the proposal are discussed above and in the Draft
Regulatory Impact Analysis, as required by the UMRA.
E. Executive Order 13132: Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This proposed rule does not have federalism implications. It will
not have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132.
Although section 6 of Executive Order 13132 does not apply to this
rule, EPA did consult with representatives of various State and local
governments in developing this rule. EPA has also consulted
representatives from STAPPA/ALAPCO, which represents state and local
air pollution officials.
In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this proposed rule
from State and local officials.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (59 FR 22951, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.''
This proposed rule does not have tribal implications as specified
in Executive Order 13175. This rule will be implemented at the Federal
level and impose compliance costs only on vehicle manufacturers
(includes alternative fuel vehicle converters and ICIs), fuel
producers, and portable gasoline container manufacturers. Tribal
governments will be affected only to the extent they purchase and use
regulated vehicles, fuels, and portable gasoline containers. Thus,
Executive Order 13175 does not apply to this rule. EPA specifically
solicits additional comment on this proposed rule from tribal officials.
G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks
Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
This proposed rule is subject to the Executive Order because it is
an economically significant regulatory action as defined by Executive
Order 12866, and we believe that by addressing the environmental health
or safety risk, this action may have a disproportionate beneficial
effect on children. Accordingly, we have evaluated the potential
environmental health or safety effects of VOC and toxics emissions from
gasoline-fueled mobile sources and gas cans on children. The results of
this evaluation are described below and contained in section IV.
Exposure to a number of the compounds addressed in this rule may
have a disproportionate effect on children. First, exposure to
carcinogens that cause cancer through a mutagenic mode of action during
childhood development may have an incrementally disproportionate
impact. Because of their small size, increased activity, and increased
ventilation rates compared to adults, children may have greater
exposure to these compounds in the ambient air, on a unit body weight
basis. Moreover, for PM, because children's breathing rates are higher,
their exposures may be higher and because their respiratory systems are
still developing, children may be more susceptible to problems from
exposure to respiratory irritants. The public is invited to submit or
identify peer-reviewed studies and data, of which EPA may not be aware,
that assessed results of early life exposure to the pollutants
addressed by this rule.
H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use
This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy. If promulgated,
the gasoline benzene provisions of the proposed rule would shift about
22,000 barrels per day of benzene from the gasoline market to the
petrochemical market. This volume represents about 0.2 percent of
nationwide gasoline production. The actual impact of the rule on the
gasoline market, however, is likely to be less due to offsetting
changes in the production of petrochemicals, as well as expected growth
in the petrochemical market absent this rule. The major sources of
benzene for the petrochemical market other than reformate from gasoline
production are also derived from gasoline components or gasoline
feedstocks. Consequently, the expected shift toward more benzene
production from reformate due to this proposed rule would be offset by
less benzene produced from other gasoline feedstocks.
The rule would require refiners to use a small additional amount of
energy in processing gasoline to reduce benzene levels, primarily due
to the increased energy used for benzene extraction. Our modeling of
increased energy use indicates that the process energy used by refiners
to produce gasoline would increase by about one percent. Overall,
[[Page 15928]]
we believe that the proposed rule would result in no significant
adverse energy impacts.
The proposed gasoline benzene provisions would not affect the
current gasoline distribution practices.
We discuss our analysis of the energy and supply effects of the
proposed gasoline benzene standard further in section IX of this
preamble and in Chapter 9 of the Regulatory Impact Analysis.
The fuel supply and energy effects described above would be offset
substantially by the positive effects on gasoline supply and energy use
of the proposed gas can standards also proposed in today's action.
These proposed provisions would greatly reduce the gasoline lost to
evaporation from gas cans. This would in turn reduce the demand for
gasoline, increasing the gasoline supply and reducing the energy used
in producing gasoline.
I. National Technology Transfer Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law No. 104-113, 12(d) (15 U.S.C. 272
note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. The NTTAA directs EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
The proposed rulemaking involves technical standards. Therefore,
the Agency conducted a search to identify potentially applicable
voluntary consensus standards. However, we identified no such
standards. Therefore, for the cold temperature NMHC standards, EPA
proposes to use the existing EPA cold temperature CO test procedures
(manufacturers currently measure hydrocarbon emissions with current
cold CO test procedures), which were adopted in a previous EPA
rulemaking (1992). The fuel standards referenced in today's proposed
rule involve the measurement of gasoline fuel parameters. The
measurement standards for gasoline fuel parameters referenced in
today's proposal are government-unique standards that were developed by
the Agency through previous rulemakings. Both the cold temperature CO
test procedures and the measurement standards for gasoline fuel
parameters have served the Agency's emissions control goals well since
their implementation and have been well accepted by industry. For gas
cans, EPA is proposing new procedures for measuring hydrocarbon emissions.
EPA welcomes comments on this aspect of the proposed rulemaking
and, specifically, invites the public to identify potentially-
applicable voluntary consensus standards and to explain why such
standards should be used in this regulation.
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 directs Federal agencies to ``determine
whether their programs, policies, and activities have
disproportionately high adverse human health or environmental effects
on minority populations' (sections 3-301 and 3-302). In developing this
proposed rule, EPA assessed environmental justice issues that may be
relevant to this proposal (see section IV of this proposed rule and
chapter 3 of the Draft Regulatory Impact Analysis).
The proposed rule would reduce VOC and toxics emissions from
gasoline-fueled mobile sources (particularly highway light-duty
vehicles) and gas cans, and thus, it would decrease the amount of air
pollution to which the entire population is exposed. EPA evaluated the
population residing close to high traffic density (near roadways), and
we found that this population has demographic differences from the
general population, including a greater fraction of lower income and
minority residents. Since the proposed rule would reduce emissions from
roadways, those living nearby (more likely to be lower income and
minority residents) are likely to have a disproportionate benefit from
the proposed rule. Thus, this proposed rule does not have a
disproportionately high adverse human health or environmental effect on
minority populations.
XIII. Statutory Provisions and Legal Authority
Statutory authority for the fuels controls proposed in today's
document can be found in sections 202 and 211(c) of the Clean Air Act
(CAA), as amended, 42 U.S.C. sections 7521 and 7545(c). Additional
support for the procedural and enforcement-related aspects of the fuel
controls in today's proposal, including the proposed recordkeeping
requirements, come from sections 114(a) and 301(a) of the CAA, 42
U.S.C. sections 7414(a) and 7601(a).
Statutory authority for the vehicle controls proposed in this
document can be found in sections 202, 206, 207, 208, and 301 of the
CAA, 42 U.S.C. sections 7521, 7525, 7541, 7542 and 7601.
Statutory authority for the portable gasoline container controls
proposed in today's document can be found in sections 183(e) and 111,
42 U.S.C. sections 7511b(e) and 7411.
List of Subjects
40 CFR Part 59
Environmental protection, Administrative practice and procedure,
Confidential business information, Incorporation by reference,
Labeling, Consumer or Commercial Products pollution, Penalties,
Reporting and recordkeeping requirements.
40 CFR Part 80
Environmental protection, Air pollution control, Fuel additives,
Gasoline, Imports, Incorporation by reference, Labeling, Motor vehicle
pollution, Penalties, Reporting and recordkeeping requirements.
40 CFR Part 85
Environmental protection, Administrative practice and procedure,
Confidential business information, Imports, Labeling, Motor vehicle
pollution, Penalties, Reporting and recordkeeping requirements,
Research, Warranties.
40 CFR Part 86
Environmental protection, Administrative practice and procedure,
Confidential business information, Incorporation by reference,
Labeling, Motor vehicle pollution, Penalties, Reporting and
recordkeeping requirements.
Dated: February 28, 2006.
Stephen L. Johnson,
Administrator.
For the reasons set forth in the preamble, parts 59, 80, 85 and 86
of title 40 of the Code of Federal Regulations are proposed to be
amended as follows:
PART 59--NATIONAL VOLATILE ORGANIC COMPOUND EMISSION STANDARDS FOR
CONSUMER AND COMMERCIAL PRODUCTS
1. The authority citation for part 59 continues to read as follows:
Authority: 42 U.S.C. 7414 and 7511b(e).
2. Subpart F is added to part 59 to read as follows:
[[Page 15929]]
Subpart F--Control of Evaporative Emissions From New and In-Use
Portable Gasoline Containers
Sec.
Overview and Applicability
59.600 Does this subpart apply for my products?
59.601 Do the requirements of this subpart apply to me?
59.602 What are the general prohibitions and requirements of this subpart?
59.603 How must manufacturers apply good engineering judgment?
59.605 What portable gasoline containers are excluded from this
subpart's requirements?
59.607 Submission of information.
Emission Standards and Related Requirements
59.611 What evaporative emission requirements apply under this subpart?
59.612 What emission-related warranty requirements apply to me?
59.613 What operation and maintenance instructions must I give to buyers?
59.615 How must I label and identify the portable gasoline
containers I produce?
Certifying Emission Families
59.621 Who may apply for a certificate of conformity?
59.622 What are the general requirements for obtaining a certificate
of conformity and producing portable gasoline containers under it?
59.623 What must I include in my application?
59.624 How do I amend my application for certification?
59.625 How do I select emission families?
59.626 What emission testing must I perform for my application for a
certificate of conformity?
59.627 How do I demonstrate that my emission family complies with
evaporative emission standards?
59.628 What records must I keep and what reports must I send to EPA?
59.629 What decisions may EPA make regarding my certificate of conformity?
59.630 EPA testing.
59.650 General testing provisions.
59.652 Other procedures.
59.653 How do I test portable gasoline containers?
Special Compliance Provisions
59.660 Exemption from the standards.
59.662 What temporary provisions address hardship due to unusual
circumstances?
59.663 What are the provisions for extending compliance deadlines
for manufacturers under hardship?
59.664 What are the requirements for importing portable gasoline
containers into the United States?
Definitions and Other Reference Information
59.680 What definitions apply to this subpart?
59.685 What symbols, acronyms, and abbreviations does this subpart use?
59.695 What provisions apply to confidential information?
59.697 State actions.
59.698 May EPA enter my facilities for inspections?
59.699 How do I request a hearing?
Subpart F--Control of Evaporative Emissions From New and In-Use
Portable Gasoline Containers
Overview and Applicability
Sec. 59.600 Does this subpart apply for my products?
(a) Except as provided in Sec. 59.605 and paragraph (b) and (c) of
this section, the regulations in this subpart F apply for all portable
gasoline containers (defined in Sec. 59.680) beginning January 1, 2009.
(b) See Sec. 59.602(a) and (b) to determine how to apply the
provisions of this subpart for containers that were manufactured before
January 1, 2009.
Sec. 59.601 Do the requirements of this subpart apply to me?
(a) Unless specified otherwise in this subpart, the requirements
and prohibitions of this subpart apply to all manufacturers and
importers of portable gasoline containers. Certain prohibitions in
Sec. 59.602 apply to all other persons.
(b) New portable gasoline containers that are subject to the
emissions standards of this part must be covered by a certificate of
conformity that is issued to the manufacturer of the container. If more
than one person meets the definition of manufacturer for a portable
gasoline container, see Sec. 59.621 to determine if you are the
manufacturer who may apply for and receive a certificate of conformity.
(c) Unless specifically noted otherwise, the term ``you'' means
manufacturers, as defined in Sec. 59.680.
Sec. 59.602 What are the general prohibitions and requirements of
this subpart?
(a) General prohibition for manufacturers and importers. No
manufacturer or importer may sell, offer for sale, introduce or deliver
for introduction into commerce in the United States, or import any new
portable gasoline container that is subject to the emissions standards
of this subpart and is manufactured after December 31, 2008 unless it
is covered by a valid certificate of conformity, it is labeled as
required, and it complies with all of the applicable requirements of
this subpart, including complies with the emissions standards for its
useful life. After June 30, 2009, no manufacturer or importer may sell,
offer for sale, introduce into commerce in the United States, or import
any new portable gasoline container that was manufactured prior to
January 1, 2009.
(b) General prohibition for wholesale distributors. No wholesale
distributor may sell, offer for sale, or distribute any portable
gasoline container that is subject to the emissions standards of this
subpart and is manufactured after December 31, 2008 unless it is
covered by a valid certificate of conformity and is labeled as
required. After December 31, 2009, no wholesale distributor may sell,
offer for sale, or distribute any portable gasoline container that was
manufactured prior to January 1, 2009. After December 31, 2009, all new
portable gasoline containers shall be deemed to be manufactured after
December 31, 2008 unless they are in retail inventory.
(c) Reporting and recordkeeping. (1) You must keep the records and
submit the reports specified in Sec. 59.628. Records must be retained
for at least 5 years from the date of manufacture or importation and
must be supplied to EPA upon request.
(2) No person may alter, destroy, or falsify any record or report
required by this subpart.
(d) Testing and access to facilities. You may not keep us from
entering your facility to test inspect if we are authorized to do so.
Also, you must perform the tests we require (or have the tests done for
you). Failure to perform this testing is prohibited.
(e) Warranty. You may not fail to offer, provide notice of, or
honor the emissions warranty required under this subpart.
(f) Replacement components. No person may sell, offer for sale,
introduce or deliver for introduction into commerce in the United
States, import, or install any replacement component for portable
gasoline containers subject to the standards of this subpart where the
component has the effect of disabling, bypassing, or rendering
inoperative the emissions controls of the containers.
(g) Violations. If a person violates any prohibition or requirement
of this subpart or the Act concerning portable gasoline containers, it
shall be considered a separate violation for each portable gasoline
container.
(h) Assessment of penalties and injunctions. We may assess
administrative penalties, bring a civil action to assess and recover
civil penalties, bring a civil action to enjoin and restrain
violations, or bring criminal action as provided by the Clean Air Act.
Sec. 59.603 How must manufacturers apply good engineering judgment?
(a) In addition to other requirements and prohibitions set forth in
this subpart, you must use good engineering judgment for decisions
related to any requirements under this subpart. This
[[Page 15930]]
includes your applications for certification, any testing you do to
show that your portable gasoline containers comply with requirements
that apply to them, and how you select, categorize, determine, and
apply these requirements.
(b) Upon request, you must provide EPA a written description of the
engineering judgment in question. Such information must be provided
within 15 working days unless EPA specifies a different period of time
to respond.
(c) We may reject your decision if it is not based on good
engineering judgment or is otherwise inconsistent with the requirements
that apply, and we may:
(1) Suspend, revoke, or void a certificate of conformity if we
determine you used incorrect or incomplete information or failed to
consider relevant information, or that your decision was not based on
good engineering judgment; or
(2) Notify you that we believe any aspect of your application or
other information submission may be incorrect or invalid due to lack of
good engineering judgment or other cause. Unless a different period of
time is specified, you will have 30 days to respond to our notice and
specifically address our concerns. After considering your information,
we will notify regarding our finding, which may include the actions
provided in paragraph (c)(1) of this section.
(d) If you disagree with our conclusions under paragraph (c) of
this section, you may file a request for a hearing with the Designated
Compliance Officer as described in Sec. 59.699. In your request, you
must specifically state your objections, and include relevant data or
supporting analysis. The request must be signed by your authorized
representative. If we agree that your request raises a substantial
factual issue, we will hold the hearing according to Sec. 59.699.
Sec. 59.605 What portable gasoline containers are excluded from this
subpart's requirements?
This section describes exclusions that apply to certain portable
gasoline containers. The prohibitions and requirements of this subpart
do not apply for containers excluded under this section. Exclusions
under this section are based on inherent characteristics of the
containers. See Sec. 59.660 for exemptions that apply based on special
circumstances.
(a) Containers approved as safety cans consistent with the
requirements of Title 29, part 1926, subpart F, of the Code of Federal
Regulations (29 CFR 1926.150 through 1926.152) are excluded. Such cans
generally have a flash-arresting screens, spring-closing lids and spout
covers and have been approved by a nationally recognized testing
laboratory such as Factory Mutual Engineering Corp., Underwriters'
Laboratories, Inc., or Federal agencies such as Bureau of Mines, or
U.S. Coast Guard.
(b) Containers with a nominal capacity of less than 0.25 gallons or
more than 10.0 gallons are excluded.
(c) Containers designed and marketed solely to deliver fuel
directly to nonroad engines during engine operation, such as containers
with a connection for a fuel line and a reserve fuel area, are
considered to be nonroad fuel tanks, and are thus excluded.
Sec. 59.607 Submission of information.
(a) You are responsible for all statements you make to us related
to this subpart F, including information not required during
certification. You are required to provide truthful and complete
information. This subpart describes the consequences of failing to meet
this obligation. The consequences also may include prosecution under 18
U.S.C. 1001 and 42 U.S.C. 7431(c)(2).
(b) We may require an officer or authorized representative of your
company with knowledge of the other information contained in the
submittal to approve and sign any submission of information to us, and
to certify that all of the information submitted is accurate and complete.
Emission Standards and Related Requirements
Sec. 59.611 What evaporative emission requirements apply under this
subpart?
(a) Emissions from portable gasoline containers may not exceed 0.30
grams per gallon per day when measured with the test procedures in
Sec. Sec. 59.650 through 59.653. This procedure measures diurnal
venting emissions and permeation emissions.
(b) For the purpose of this section, portable gasoline containers
include spouts, caps, gaskets, and other parts provided with the
container.
(c) The following general requirements also apply for all portable
gasoline containers subject to the standards of this subpart:
(1) Prohibited controls. You may not design your emission-control
systems so that they cause or contribute to an unreasonable risk to
public health, welfare, or safety while operating. You may not design
your portable gasoline containers to have adjustable parameters unless
the containers will meet all the requirements of this subpart when
adjusted anywhere within the physically adjustable range. You may not
equip your portable gasoline containers with a defeat device, or
intentionally produce your containers to enable the use of a defeat
device. A defeat device is an element of design (either original or
replacement) that is not approved in advance by EPA and that reduces
the effectiveness of emission controls under conditions that the
portable gasoline containers may reasonably be expected to encounter
during normal use.
(2) Leaks. You must design and manufacture your containers to be
free of leaks. This requirement applies when your container is upright,
partially inverted, or completely inverted.
(3) Refueling. You are required to design your portable gasoline
containers to minimize spillage during refueling to the extent
practical. This requires that you use good engineering judgment to
avoid designs that will make it difficult to refuel typical vehicle and
equipment designs without spillage.
(d) Portable gasoline containers must meet the standards and
requirements specified in this subpart throughout the useful life of
the container. The useful life of the container is five years beginning
on the date of sale to the ultimate purchaser.
Sec. 59.612 What emission-related warranty requirements apply to me?
(a) General requirements. You must warrant to the ultimate
purchaser that the new portable gasoline container, including all parts
of its evaporative emission-control system, is:
(1) Designed, built, and equipped so it conforms at the time of
sale to the ultimate purchaser with the requirements of this subpart.
(2) Is free from defects in materials and workmanship that may keep
it from meeting these requirements.
(b) Warranty notice and period. Your emission-related warranty must
be valid for a minimum of one year from the date of sale to the
ultimate purchaser.
(c) Notice. You must provide a warranty notice with each container.
Sec. 59.613 What operation and maintenance instructions must I give
to buyers?
You must provide the ultimate purchaser of the new portable
gasoline container written instructions for properly maintaining and
using the emission-control system.
Sec. 59.615 How must I label and identify the portable gasoline
containers I produce?
This section describes how you must label your portable gasoline
containers.
[[Page 15931]]
(a) At the time of manufacture, indelibly mark the month and year
of manufacture on each container.
(b) Mold into or affix a legible label identifying each portable
gasoline container. The label must be:
(1) Attached so it is not easily removable.
(2) Secured to a part of the container that can be easily viewed
when the can is in use, not on the bottom of the container.
(3) Written in English.
(c) The label must include:
(1) The heading ``EMISSION CONTROL INFORMATION''.
(2) Your full corporate name and trademark.
(3) A standardized identifier such as EPA's standardized designation
for the emission families, the model number, or the part number.
(4) This statement: ``THIS CONTAINER COMPLIES WITH U.S. EPA
EMISSION REGULATIONS FOR PORTABLE GASOLINE CONTAINERS.''.
(d) You may add information to the emission control information
label to identify other emission standards that the container meets or
does not meet (such as California standards). You may also add other
information to ensure that the portable gasoline container will be
properly maintained and used.
(e) You may request EPA to approve modified labeling requirements
in this subpart F if you show that it is necessary or appropriate. We
will approve your request if your alternate label is consistent with
the requirements of this subpart.
(f) You may identify the name and trademark of another company
instead of their own on your emission control information label,
subject to the following provisions:
(1) You must have a contractual agreement with the other company
that obligates that company to take the following steps:
(i) Meet the emission warranty requirements that apply under Sec.
59.612. This may involve a separate agreement involving reimbursement
of warranty-related expenses.
(ii) Report all warranty-related information to the certificate
holder.
(2) In your application for certification, identify the company
whose trademark you will use and describe the arrangements you have
made to meet your requirements under this section.
(3) You remain responsible for meeting all the requirements of this
subpart.
Certifying Emission Families
Sec. 59.621 Who may apply for a certificate of conformity?
A certificate of conformity may only be issued to the manufacturer
that completes the construction of the portable gasoline container. In
unusual circumstances, upon a petition by a manufacturer, we may allow
another manufacturer of the container to hold the certificate of
conformity. However, in order to hold the certificate, the manufacturer
must demonstrate day-to-day ability to ensure that containers produced
under the certificate will comply with the requirements of this subpart.
Sec. 59.622 What are the general requirements for obtaining a certificate
of conformity and producing portable gasoline containers under it?
(a) You must send us a separate application for a certificate of
conformity for each emission family. A certificate of conformity for
containers is valid from the indicated effective date until the end of
the production period for which it is issued. EPA may require new
certification prior to the end of the production period if EPA finds
that containers are not meeting the standards in use during their
useful life.
(b) The application must be written in English and contain all the
information required by this subpart and must not include false or
incomplete statements or information (see Sec. 59.629).
(c) We may ask you to include less information than we specify in
this subpart, as long as you maintain all the information required by
Sec. 59.628.
(d) You must use good engineering judgment for all decisions
related to your application (see Sec. 59.603).
(e) An authorized representative of your company must approve and
sign the application.
(f) See Sec. 59.629 for provisions describing how we will process
your application.
(g) You may ask us to modify specific provisions for demonstrating
compliance with the requirements of this subpart if they cannot be met
for your portable gasoline container. We may approve your request if we
determine that such a change is consistent with the intent of this
subpart. We will not approve your request if it might lead to less
effective emission control or prevent us from ensuring compliance with
the requirements of this subpart. To make a request, describe in
writing which provision you are unable to meet, why you are unable to
meet it, and how the provision should be modified to address your concern.
(h) If we approve your application, we will issue a certificate
that will allow you to produce the containers that you described in
your application for a specified production period. Certificates do not
allow you to produce containers that were not described in your
application, unless we approve the additional containers under Sec. 59.624.
Sec. 59.623 What must I include in my application?
This section specifies the information that must be in your
application, unless we ask you to include less information under Sec.
59.622(c). We may require you to provide additional information to
evaluate your application.
(a) Describe the emission family's specifications and other basic
parameters of the emission controls. List each distinguishable
configuration in the emission family. Include descriptions and part
numbers for all detachable components such as spouts and caps.
(b) Describe and explain the method of emission control.
(c) Describe the products you selected for testing and the reasons
for selecting them.
(d) Describe the test equipment and procedures that you used,
including any special or alternate test procedures you used (see Sec.
59.650).
(e) List the specifications of the test fuel to show that it falls
within the required ranges specified in Sec. 59.650 of this subpart.
(f) Include the maintenance and use instructions and warranty
information you will give to the ultimate purchaser of each new
portable gasoline container (see Sec. 59.613).
(g) Describe your emission control information label (see Sec. 59.615).
(h) State that your product was tested as described in the
application (including the test procedures, test parameters, and test
fuels) to show you meet the requirements of this subpart.
(i) Present emission data to show your products meet the applicable
emission standards. Where applicable, Sec. Sec. 59.626 and 59.627 may
allow you to submit an application in certain cases without new
emission data.
(j) Report all test results, including those from invalid tests or
from any other tests, whether or not they were conducted according to
the test procedures of Sec. Sec. 59.650 through 59.653. We may ask you
to send other information to confirm that your tests were valid under
the requirements of this subpart.
(k) Unconditionally certify that all the products in the emission
family comply with the requirements of this subpart,
[[Page 15932]]
other referenced parts of the CFR, and the Clean Air Act.
(l) Include estimates of U.S.-directed production volumes.
(m) Include the information required by other sections of this subpart.
(n) Include other relevant information, including any additional
information requested by EPA.
(o) Name an agent for service of process located in the United
States. Service on this agent constitutes service on you or any of your
officers or employees for any action by EPA or otherwise by the United
States related to the requirements of this subpart.
Sec. 59.624 How do I amend my application for certification?
Before we issue you a certificate of conformity, you may amend your
application to include new or modified configurations, subject to the
provisions of this section. After we have issued your certificate of
conformity, you may send us an amended application requesting that we
include new or modified configurations within the scope of the
certificate, subject to the provisions of this section. You must amend
your application if any changes occur with respect to any information
included in your application.
(a) You must amend your application before you take either of the
following actions:
(1) Add a configuration to an emission family. In this case, the
configuration added must be consistent with other configurations in the
emission family with respect to the criteria listed in Sec. 59.625.
(2) Change a configuration already included in an emission family
in a way that may affect emissions, or change any of the components you
described in your application for certification. This includes
production and design changes that may affect emissions any time during
the portable gasoline containers' lifetime.
(b) To amend your application for certification, send the
Designated Compliance Officer the following information:
(1) Describe in detail the addition or change in the configuration
you intend to make.
(2) Include engineering evaluations or data showing that the
amended emission family complies with all applicable requirements. You
may do this by showing that the original emission data are still
appropriate with respect to showing compliance of the amended family
with all applicable requirements.
(3) If the original emission data for the emission family are not
appropriate to show compliance for the new or modified configuration,
include new test data showing that the new or modified configuration
meets the requirements of this subpart.
(c) We may ask for more test data or engineering evaluations. You
must give us these within 30 days after we request them.
(d) For emission families already covered by a certificate of
conformity, we will determine whether the existing certificate of
conformity covers your new or modified configuration. You may ask for a
hearing if we deny your request (see Sec. 59.699).
(e) For emission families already covered by a certificate of
conformity and you send us a request to amend your application, you may
sell and distribute the new or modified configuration before we make a
decision under paragraph (d) of this section, subject to the provisions
of this paragraph. If we determine that the affected configurations do
not meet applicable requirements, we will notify you to cease
production of the configurations and any containers from the new or
modified configuration will not be considered covered by the
certificate. In addition, we may require you to recall any affected
containers that you have already distributed, including those sold to
the ultimate purchasers. Choosing to produce containers under this
paragraph (e) is deemed to be consent to recall all containers that we
determine do not meet applicable emission standards or other
requirements and to remedy the nonconformity at no expense to the
owner. If you do not provide information required under paragraph (c)
of this section within 30 days, you must stop producing the new or
modified containers.
Sec. 59.625 How do I select emission families?
(a) Divide your product line into families of portable gasoline
containers that are expected to have similar emission characteristics
throughout the useful life.
(b) Group containers in the same emission family if they are the
same in all the following aspects:
(1) Type of material (including pigments, plasticizers, UV
inhibitors, or other additives).
(2) Production method.
(3) Spout design.
(4) Gasket material/design.
(5) Emission control strategy.
(c) You may subdivide a group of containers that is identical under
paragraph (b) of this section into different emission families if you
show the expected emission characteristics are different.
(d) You may group containers that are not identical with respect to
the things listed in paragraph (b) of this section in the same emission
family if you show that their emission characteristics will be similar
throughout their useful life.
Sec. 59.626 What emission testing must I perform for my application
for a certificate of conformity?
This section describes the emission testing you must perform to
show compliance with the emission standards in Sec. 59.611.
(a) Test your products using the procedures and equipment specified
in Sec. Sec. 59.650 through 59.653.
(b) Select an emission-data unit from each emission family for
testing. You must test a production sample or a preproduction product
that will represent actual production. Select the configuration that is
most likely to exceed (or have emissions nearest to) the applicable
emission standard. For example, for a family of multilayer portable
gasoline containers, test the container with the thinnest barrier
layer. Test 3 identical containers.
(c) We may measure emissions from any of your products from the
emission family. You must supply your products to us if we choose to
perform confirmatory testing.
(d) You may ask to use emission data from a previous production
period (carryover) instead of doing new tests, but only if the
emission-data from the previous production period remains the
appropriate emission-data unit under paragraph (b) of this section. For
example, you may not carryover emission data for your family of
containers if you have added a thinner-walled container than was tested
previously.
(e) We may require you to test a second unit of the same or
different configuration in addition to the unit tested under paragraph
(b) of this section.
(f) If you use an alternate test procedure under Sec. 59.652 and
later testing shows that such testing does not produce results that are
equivalent to the procedures specified in this subpart, we may reject
data you generated using the alternate procedure and base our
compliance determination on the later testing.
Sec. 59.627 How do I demonstrate that my emission family complies
with evaporative emission standards?
(a) For purposes of certification, your emission family is
considered in compliance with an evaporative
[[Page 15933]]
emission standard in Sec. 59.611(a) if the test results from all
portable gasoline containers in the family that have been tested show
measured emissions levels that are at or below the applicable standard.
(b) Your emissions family is deemed not to comply if any container
representing that family has test results showing an official emission
level above the standard.
(c) Round the measured emission level to the same number of decimal
places as the emission standard. Compare the rounded emission levels to
the emission standard.
Sec. 59.628 What records must I keep and what reports must I send to EPA?
(a) Organize and maintain the following records:
(1) A copy of all applications and any summary information you send us.
(2) Any of the information we specify in Sec. 59.623 that you were
not required to include in your application.
(3) A detailed history of each emission-data unit. For each
emission data unit, include all of the following:
(i) The emission-data unit's construction, including its origin and
buildup, steps you took to ensure that it represents production
containers, any components you built specially for it, and all the
components you include in your application for certification.
(ii) All your emission tests, including documentation on routine
and standard tests, as specified in Sec. Sec. 59.650 through 59.653,
and the date and purpose of each test.
(iii) All tests to diagnose emission-control performance, giving
the date and time of each and the reasons for the test.
(iv) Any other relevant events or information.
(4) Production figures for each emission family divided by assembly
plant.
(5) If you identify your portable gasoline containers by lot number
or other identification numbers, keep a record of these numbers for all
the containers you produce under each certificate of conformity.
(b) Keep data from routine emission tests (such as test cell
temperatures and relative humidity readings) for one year after we
issue the associated certificate of conformity. Keep all other
information specified in paragraph (a) of this section for five years
after we issue your certificate.
(c) Store these records in any format and on any media, as long as
you can promptly send us organized, written records in English if we
ask for them. You must keep these records readily available. We may
review them at any time.
(d) Send us copies of any maintenance instructions or explanations
if we ask for them.
(e) Send us an annual warranty report summarizing by emissions
family successful warranty claims under Sec. 59.612, including the
reason for the claim. You must submit the report by July 1 for the
preceding calendar year.
Sec. 59.629 What decisions may EPA make regarding my certificate of
conformity?
(a) If we determine your application is complete and shows that the
emission family meets all the requirements of this subpart and the Act,
we will issue a certificate of conformity for your emission family for
the specified production period. We may make the approval subject to
additional conditions.
(b) We may deny your application for certification if we determine
that your emission family fails to comply with emission standards or
other requirements of this subpart or the Act. Our decision may be
based on a review of all information available to us. If we deny your
application, we will explain why in writing.
(c) In addition, we may deny your application or suspend, revoke,
or void your certificate if you do any of the following:
(1) Refuse to comply with any testing or reporting requirements.
(2) Submit false or incomplete information.
(3) Render inaccurate any test data.
(4) Deny us from completing authorized activities despite our
presenting a warrant or court order (see Sec. 59.698). This includes a
failure to provide reasonable assistance.
(5) Produce portable gasoline containers for importation into the
United States at a location where local law prohibits us from carrying
out authorized activities.
(6) Fail to supply requested information or amend your application
to include all portable gasoline containers being produced.
(7) Take any action that otherwise circumvents the intent of the
Act or this subpart.
(d) If we deny your application or suspend, revoke, or void your
certificate, you may ask for a hearing (see Sec. 59.699).
Sec. 59.630 EPA testing.
We may test any portable gasoline container subject to the
standards of this subpart.
(a) Certification and production sample testing. Upon our request,
a manufacturer must supply a prototype container or a reasonable number
of production samples to us for verification testing. These samples
will generally be tested using the full test procedure of Sec. 59.653.
(b) In-use testing. We may test in-use containers using the test
procedure of Sec. 59.653 without preconditioning.
Sec. 59.650 General testing provisions.
(a) The test procedures of this subpart are addressed to you as a
manufacturer, but they apply equally to anyone who does testing for you.
(b) Unless we specify otherwise, the terms ``procedures'' and
``test procedures'' in this subpart include all aspects of testing,
including the equipment specifications, calibrations, calculations, and
other protocols and procedural specifications needed to measure emissions.
(c) The specification for gasoline to be used for testing is given
in 40 CFR 1065.210. Use the grade of gasoline specified for general
testing. Blend this grade of gasoline with reagent grade ethanol in a
volumetric ratio of 90.0 percent gasoline to 10.0 percent ethanol. You
may use ethanol that is less pure if you can demonstrate that it will
not affect your ability to demonstrate compliance with the applicable
emission standards.
(d) Accuracy and precision of all temperature measurements must be
±2.2 [deg]C or better.
(e) Accuracy and precision of mass balances must be sufficient to
ensure accuracy and precision of two percent or better for emission
measurements for products at the maximum level allowed by the standard.
The readability of the display may not be coarser than half of the
required accuracy and precision.
Sec. 59.652 Other procedures.
(a) Your testing. The procedures in this subpart apply for all
testing you do to show compliance with emission standards, with certain
exceptions listed in this section.
(b) Our testing. These procedures generally apply for testing that
we do to determine if your portable gasoline containers complies with
applicable emission standards. We may perform other testing as allowed
by the Act.
(c) Exceptions. We may allow or require you to use procedures other
than those specified in this subpart in the following cases.
(1) You may request to use special procedures if your portable
gasoline containers cannot be tested using the specified procedures. We
will approve your request if we determine that it would produce
emission measurements that represent in-use operation and we determine
that it can be used to show
[[Page 15934]]
compliance with the requirements of the standard-setting section.
(2) You may ask to use emission data collected using other
procedures, such as those of the California Air Resources Board. We
will approve this only if you show us that using these other procedures
do not affect your ability to show compliance with the applicable
emission standards. This generally requires emission levels to be far
enough below the applicable emission standards so that any test
differences do not affect your ability to state unconditionally that
your containers will meet all applicable emission standards when tested
using the specified test procedures.
(3) You may request to use alternate procedures that are equivalent
to allowed procedures, or more accurate or more precise than allowed
procedures.
(d) You may not use other procedures under paragraph (c) of this
section until we approve your request.
Sec. 59.653 How do I test portable gasoline containers?
You must test the portable gasoline container as described in your
application, with the applicable spout and cap attached. Tighten
fittings in a manner representative of how they would be tightened by a
typical user.
(a) Preconditioning for durability. Complete the following steps at
the start of testing, unless we determine that omission of one or more
of these durability steps will not affect the emissions from your container.
(1) Pressure cycling. Perform a pressure test by sealing the
container and cycling it between +13.8 and -1.7 kPa (+2.0 and -0.5
psig) and back to +13.8 kPa for 10,000 cycles at a rate of 60 seconds
per cycle.
(2) UV exposure. Perform a sunlight-exposure test by exposing the
container to an ultraviolet light of at least 24 W/m2 (0.40
W-hr/m2/min) on the container surface for at least 450
hours. Alternatively, the container may be exposed to direct natural
sunlight for an equivalent period of time, as long as you ensure that
the container is exposed to at least 450 daylight hours.
(3) Slosh testing. Perform a slosh test by filling the portable
gasoline container to 40 percent of its capacity with the fuel
specified in paragraph (e) of this section and rocking it at a rate of
15 cycles per minute until you reach one million total cycles. Use an
angle deviation of +15[deg] to -15[deg] from level. This test must be
performed at a temperature of 28 [deg]C ± 5[deg]C.
(4) Spout actuation. Perform the following spout actuation and
inversion steps at the end on the slosh testing, and at the end of the
preconditioning soak.
(i) Perform one complete actuation/inversion cycle per day for ten days.
(ii) One actuation/inversion cycle consists of the following steps:
(A) Remove and replace the spout to simulate filling the container.
(B) Slowly invert the container and keep it inverted for at least 5
seconds to ensure that the spout and mechanisms become saturated with
fuel. Any fuel leaking from any part of the container will denote a
leak and will be reported as part of certification. Once completed,
place the container on a flat surface in the upright position.
(C) Actuate the spout by fully opening and closing without
dispensing fuel. The spout must return to the closed position without
the aid of the operator (e.g., pushing or pulling the spout closed).
Repeat for a total of 10 actuations. If at any point the spout fails to
return to the closed position, the container fails the test.
(D) Repeat the step contained in paragraph (a)(4)(ii)(B) of this
section (i.e., the inversion step).
(E) Repeat the steps contained in paragraph (a)(4)(ii)(C) of this
section (i.e., ten actuations).
(b) Preconditioning fuel soak. Complete the following steps before
a diurnal emission test: (1) Fill the portable gasoline container with
the specified fuel to its nominal capacity, seal it using the spout,
and allow it to soak at 28 ±5 [deg]C for at least 20 weeks.
You are not required to soak the container for more than 20 weeks
unless it has been determined that a longer soak period is needed to
achieve a stabilized emissions rate. Alternatively, the container may
be soaked for a shorter period of time at a higher temperature if you
can show that the hydrocarbon permeation rate has stabilized. You may
count the time of the slosh testing as part of the 20 weeks.
(2) Pour the fuel out of the container and immediately refill to 50
percent of nominal capacity. Be careful to not spill any fuel on the
container. Wipe the outside of the container as needed to remove any
liquid fuel that may have spilled on it.
(3) Seal the container using the spout and cap assemblies that will
used to seal the openings in a production container. Leave other
openings on the container (such as vents) open unless they are
automatically closing and unlikely for the user to leave open during
typical storage.
(c) Reference container. A reference tank is required to correct
for buoyancy effects that may occur during testing. Prepare the
reference tank as follows:
(1) Obtain a second tank that is identical to the test tank. You
may not use a tank that has previously contained fuel or any other
contents that might affect the stability of its mass.
(2) Fill the reference tank with enough dry sand (or other inert
material) so that the mass of the reference tank is approximately the
same as the test tank when filled with fuel. Use good engineering
judgment to determine how similar the mass of the reference tank needs
to be to the mass of the test tank considering the performance
characteristics of your balance.
(3) Ensure that the sand (or other inert material) is dry. This may
require heating the tank or applying a vacuum to it.
(4) Seal the tank.
(d) Diurnal test run. To run the test, take the steps specified in
this paragraph (d) for a portable gasoline container that was
preconditioned as specified in paragraph (a) of this section.
(1) Stabilize the fuel temperature within the portable gasoline
container at 22.2 [deg]C. Vent the container at this point to relieve
any positive or negative pressure that may have developed during
stabilization.
(2) Weigh the sealed reference container and record the weight.
Place the reference on the balance and tare it so that it reads zero.
Place the sealed test portable gasoline container on the balance and
record the difference between the test container and the reference
container. This value is Minitial Take this measurement
within 8 hours of filling the test container with fuel as specified in
paragraph (b)(2) of this section.
(2) Immediately place the portable gasoline container within a well
ventilated, temperature-controlled room or enclosure. Do not spill or
add any fuel.
(3) Close the room or enclosure.
(4) Follow the temperature profile in the following table for all
portable gasoline containers. Use good engineering judgment to follow
this profile as closely as possible. You may use linearly interpolated
temperatures or a spline fit for temperatures between the hourly setpoints.
[[Page 15935]]
Table 1 of Sec. 59.653.--Diurnal Temperature Profile for Portable
Gasoline Containers
------------------------------------------------------------------------
Ambient
Temperature
(C) Profile
Time (hours) for Portable
Gasoline
Containers
------------------------------------------------------------------------
0....................................................... 22.2
1....................................................... 22.5
2....................................................... 24.2
3....................................................... 26.8
4....................................................... 29.6
5....................................................... 31.9
6....................................................... 33.9
7....................................................... 35.1
8....................................................... 35.4
9....................................................... 35.6
10...................................................... 35.3
11...................................................... 34.5
12...................................................... 33.2
13...................................................... 31.4
14...................................................... 29.7
15...................................................... 28.2
16...................................................... 27.2
17...................................................... 26.1
18...................................................... 25.1
19...................................................... 24.3
20...................................................... 23.7
21...................................................... 23.3
22...................................................... 22.9
23...................................................... 22.6
24...................................................... 22.2
------------------------------------------------------------------------
(5) At the end of the diurnal period, retare the balance using the
reference container and weigh the portable gasoline container. Record
the difference in mass between the reference container and the test.
This value is Mfinal
(6) Subtract Mfinal from Minitial; and divide
the difference by the nominal capacity of the container (using at least
three significant figures) to calculate the g/gallon/day emission rate:
Emission rate = (Minitial-Mfinal)/(nominal
capacity)/(one day)
(7) Round your result to the same number of decimal places as the
emission standard.
(8) Instead of determining emissions by weighing the container
before and after the diurnal temperature cycle, you may place the
container in a SHED meeting the specifications of 40 CFR 86.107-
96(a)(1) and measure emissions directly. Immediately following the
stabilization in paragraph (d)(1) of this section, purge the SHED and
follow the temperature profile from paragraph (d)(4) of this section.
Start measuring emissions when you start the temperature profile.
(e) For metal containers, you may demonstrate for certification
that your portable gasoline containers comply with the evaporative
emission standards without performing the pre-soak or container
durability cycles (i.e., the pressure cycling, UV exposure, and slosh
testing) specified in this section. For other containers, you may
demonstrate compliance without performing the durability cycles
specified in this section only if we approve it after you have presented
data clearly demonstrating that the cycle or cycles do not negatively
impact the permeation rate of the materials used in the containers.
Special Compliance Provisions
Sec. 59.660 Exemption from the standards.
In certain circumstances, we may exempt portable gasoline
containers from the evaporative emission standards and requirements of
Sec. 59.611 and the prohibitions and requirements of Sec. 59.602. You
do not need an exemption for any containers that you own but do not
sell, offer for sale, introduce or deliver for introduction into U.S.
commerce, or import into the United States. Submit your request for an
exemption to the Designated Compliance Officer.
(a) Portable gasoline containers that are intended for export only
and are in fact exported are exempt provided they are clearly labeled
as being for export only. Keep records for five years of all portable
gasoline containers that you manufacture for export. Any introduction
into U.S. commerce for any purpose other than export is considered to
be a violation of Sec. 59.602 by the manufacturer. You do not need to
request this exemption.
(b) You may ask us to exempt portable gasoline containers that you
will purchase, sell, or distribute for the sole purpose of testing them.
(c) You may ask us to exempt portable gasoline containers for the
purpose of national security, as long as your request is endorsed by an
agency of the federal government responsible for national defense. In
your request, explain why you need the exemption.
(d) You may ask us to exempt containers that are designed and
marketed solely for rapidly refueling racing applications which are
designed to create a leak proof seal with the target tank or are
designed to connect with a receiver installed on the target tank. This
exemption is generally intended for containers used to rapidly refuel a
race car during a pit stop and similar containers. In your request,
explain how why these containers are unlikely to be used for nonracing
applications. We may limit these exemptions to those applications that
are allowed to use gasoline exempted under 40 CFR 80.200.
(e) EPA may impose reasonable conditions on any exemption,
including a limit on the number of containers that are covered by an
exemption.
Sec. 59.662 What temporary provisions address hardship due to unusual
circumstances?
(a) After considering the circumstances, we may permit you to
introduce into commerce exempt you from the evaporative emission
standards and requirements of Sec. 59.611 of this subpart and the
prohibitions and requirements of Sec. 59.602 for specified portable
gasoline containers that do not comply with emission standards if all
the following conditions apply:
(1) Unusual circumstances that are clearly outside your control and
that could not have been avoided with reasonable discretion prevent you
from meeting requirements from this subpart.
(2) You exercised prudent planning and were not able to avoid the
violation; you have taken all reasonable steps to minimize the extent
of the nonconformity.
(3) Not having the exemption will jeopardize the solvency of your
company.
(4) No other allowances are available under the regulations in this
chapter to avoid the impending violation.
(b) To apply for an exemption, you must send the Designated Officer
a written request as soon as possible before you are in violation. In
your request, show that you meet all the conditions and requirements in
paragraph (a) of this section.
(c) Include in your request a plan showing how you will meet all
the applicable requirements as quickly as possible.
(d) You must give us other relevant information if we ask for it.
(e) We may include reasonable additional conditions on an approval
granted under this section, including provisions to recover or
otherwise address the lost environmental benefit or paying fees to
offset any economic gain resulting from the exemption.
(f) We may approve extensions of up to one year. We may review and
revise an extension as reasonable under the circumstances.
(g) Add a legible label, written in block letters in English, to a
readily visible part of each container exempted under this section.
This label must prominently include at least the following items:
(1) Your corporate name and trademark.
(2) The statement ``EXEMPT UNDER 40 CFR 59.662.''.
[[Page 15936]]
Sec. 59.663 What are the provisions for extending compliance
deadlines for manufacturers under hardship?
(a) After considering the circumstances, we may extend the
compliance deadline for you to meet new emission standards, as long as
you meet all the conditions and requirements in this section.
(b) To apply for an extension, you must send the Designated
Compliance Officer a written request. In your request, show that all
the following conditions and requirements apply:
(1) You have taken all possible business, technical, and economic
steps to comply.
(2) Show that the burden of compliance costs prevents you from
meeting the requirements of this subpart by the required compliance date.
(3) Not having the exemption will jeopardize the solvency of your
company.
(4) No other allowances are available under the regulations in this
subpart to avoid the impending violation.
(c) In describing the steps you have taken to comply under paragraph
(b)(1) of this section, include at least the following information:
(1) Describe your business plan, showing the range of projects
active or under consideration.
(2) Describe your current and projected financial standing, with
and without the burden of complying in full with the applicable
regulations in this subpart by the required compliance date.
(3) Describe your efforts to raise capital to comply with
regulations in this subpart.
(4) Identify the engineering and technical steps you have taken or
plan to take to comply with regulations in this subpart.
(5) Identify the level of compliance you can achieve. For example,
you may be able to produce containers that meet a somewhat less
stringent emission standard than the regulations in this subpart require.
(d) Include in your request a plan showing how you will meet all
the applicable requirements as quickly as possible.
(e) You must give us other relevant information if we ask for it.
(f) An authorized representative of your company must sign the
request and include the statement: ``All the information in this
request is true and accurate, to the best of my knowledge.''.
(g) Send your request for this extension at least nine months
before the relevant deadline.
(h) We may include reasonable requirements on an approval granted
under this section, including provisions to recover or otherwise
address the lost environmental benefit. For example, we may require
that you meet a less stringent emission standard.
(i) We may approve extensions of up to one year. We may review and
revise an extension as reasonable under the circumstances.
(j) Add a permanent, legible label, written in block letters in
English, to a readily visible part of each container exempted under
this section. This label must prominently include at least the
following items:
(1) Your corporate name and trademark.
(2) The statement ``EXEMPT UNDER 40 CFR 59.663.''.
Sec. 59.664 What are the requirements for importing portable gasoline
containers into the United States?
As specified in this section, we may require you to post a bond if
you import into the U.S. containers that are subject to the standards
of this subpart. See paragraph (f) of this section for the requirements
related to importing containers that have been certified by someone else.
(a) Prior to importing containers into the U.S., we may require you
to post a bond to cover any potential enforcement actions under the
Clean Air Act if you cannot demonstrate to us that you have assets of
an appropriate liquidity readily available in the United States with a
value equal to the retail value of the containers that you will import
during the calendar year.
(b) We may set the value of the bond up to five dollars per container.
(c) You may meet the bond requirements of this section by obtaining
a bond from a third-party surety that is cited in the U.S. Department
of Treasury Circular 570, ``Companies Holding Certificates of Authority
as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring
Companies'' (http://www.fms.treas.gov/c570/c570.html#certified).
(d) If you forfeit some or all of your bond in an enforcement
action, you must post any appropriate bond for continuing importation
within 90 days after you forfeit the bond amount.
(e) You will forfeit the proceeds of the bond posted under this
section if you need to satisfy any United States administrative final
order or judicial judgment against you arising from your conduct in
violation of this subpart.
(f) This paragraph (f) applies if you import for resale containers
that have been certified by someone else. You and the certificate
holder are each responsible for compliance with the requirements of
this subpart and the Clean Air Act. No bond is required under this
section if either you or the certificate holder meet the conditions in
paragraph (a) of this section. Otherwise, the importer must comply with
the bond requirements of this section.
Definitions and Other Reference Information
Sec. 59.680 What definitions apply to this subpart?
The following definitions apply to this subpart. The definitions
apply to all subparts unless we note otherwise. All undefined terms
have the meaning the Act gives to them. The definitions follow:
Act means the Clean Air Act, as amended, 42 U.S.C. 7401--7671q.
Adjustable parameter means any device, system, or element of design
that someone can adjust and that, if adjusted, may affect emissions.
You may ask us to exclude a parameter if you show us that it will not
be adjusted in use in a way that affects emissions.
Certification means the process of obtaining a certificate of
conformity for an emission family that complies with the emission
standards and requirements in this subpart.
Certified emission level means the highest official emission level
in an emission family.
Configuration means a unique combination of hardware (material,
geometry, and size) and calibration within an emission family. Units
within a single configuration differ only with respect to normal
production variability.
Container means portable gasoline container.
Designated Compliance Officer means the Manager, Engine Programs
Group (6405-J), U.S. Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460.
Designated Enforcement Officer means the Director, Air Enforcement
Division (2242A), U.S. Environmental Protection Agency, 1200
Pennsylvania Ave., NW.,Washington, DC 20460.
Emission-control system means any device, system, or element of
design that controls or reduces the regulated evaporative emissions from.
Emission-data unit means a portable gasoline container that is
tested for certification. This includes components tested by EPA.
Emission-related maintenance means maintenance that substantially
affects emissions or is likely to substantially affect emission
deterioration.
Emission family has the meaning given in Sec. 59.625.
[[Page 15937]]
Evaporative means relating to fuel emissions that result from
permeation of fuel through the portable gasoline container materials
and from ventilation of the container.
Good engineering judgment means judgments made consistent with
generally accepted scientific and engineering principles and all
available relevant information. See Sec. 59.603 for the administrative
process we use to evaluate good engineering judgment.
Hydrocarbon (HC) means total hydrocarbon (THC).
Manufacture means the physical and engineering process of designing
and/or constructing a portable gasoline container.
Manufacturer means any person who manufactures a portable gasoline
container for sale in the United States.
Nominal capacity means the expected volumetric working capacity of
a container.
Official emission result means the measured emission rate for an
emission-data unit.
Portable gasoline container means any reusable container designed
and marketed (or otherwise intended) for use by consumers for
receiving, transporting, storing, and dispensing gasoline. For the
purpose of this subpart, all portable fuel containers that are red in
color are deemed to be portable gasoline containers, regardless of how
they are labeled or marketed. Portable fuel containers that are not red
in color and are clearly and permanently labeled for diesel fuel or
kerosene only and not for use with gasoline are not portable gasoline
containers.
Production period means the period in which a portable gasoline
container will be produced under a certificate of conformity. The
maximum production period is five years.
Revoke means to terminate the certificate or an exemption for an
emission family. If we revoke a certificate or exemption, you must
apply for a new certificate or exemption before continuing to introduce
the affected containers into commerce. This does not apply to
containers you no longer possess.
Round has the meaning given in 40 CFR 1065.1001.
Sealed means lacking openings that would allow liquid or vapor to
escape to the atmosphere under normal operating pressures.
Suspend means to temporarily discontinue the certificate or an
exemption for an emission family. If we suspend a certificate, you may
not introduce into commerce portable gasoline containers from that
emission family unless we reinstate the certificate or approve a new
one. If we suspend an exemption, you may not introduce into commerce
containers that were previously covered by the exemption unless we
reinstate the exemption.
Test sample means the collection of portable gasoline containers
selected from the population of an emission family for emission
testing. This may include testing for certification, production-line
testing, or in-use testing.
Test unit means a portable gasoline container in a test sample.
Total hydrocarbon means the combined mass of organic compounds
measured by the specified procedure for measuring total hydrocarbon,
expressed as a hydrocarbon with a hydrogen-to-carbon mass ratio of 1.85:1.
Ultimate purchaser means, with respect to any portable gasoline
container, the first person who in good faith purchases such a
container for purposes other than resale.
Ultraviolet light means electromagnetic radiation with a wavelength
between 300 and 400 nanometers.
United States means the States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, American Samoa, and the U.S. Virgin Islands.
U.S.-directed production volume means the amount of portable
gasoline containers, subject to the requirements of this subpart,
produced by a manufacturer for which the manufacturer has a reasonable
assurance that sale was or will be made to ultimate purchasers in the
United States.
Useful life means the period during which a portable gasoline
container is required to comply with all applicable emission standards.
See Sec. 59.611.
Void means to invalidate a certificate or an exemption ab initio
(i.e. retroactively). Portable gasoline containers introduced into U.S.
commerce under the voided certificate or exemption is a violation of
this subpart, whether or not they were introduced before the
certificate or exemption was voided.
We (us, our) means the Administrator of the Environmental
Protection Agency and any authorized representatives.
Sec. 59.685 What symbols, acronyms, and abbreviations does this
subpart use?
The following symbols, acronyms, and abbreviations apply to this
subpart:
CFR Code of Federal Regulations.
EPA Environmental Protection Agency.
HC hydrocarbon.
NIST National Institute of Standards and Technology.
THC total hydrocarbon.
U.S.C. United States Code.
Sec. 59.695 What provisions apply to confidential information?
(a) Clearly show what you consider confidential by marking,
circling, bracketing, stamping, or some other method.
(b) We will store your confidential information as described in 40
CFR part 2. Also, we will disclose it only as specified in 40 CFR part
2. This applies both to any information you send us and to any
information we collect from inspections, audits, or other site visits.
(c) If you send us a second copy without the confidential
information, we will assume it contains nothing confidential whenever
we need to release information from it.
(d) If you send us information without claiming it is confidential,
we may make it available to the public without further notice to you,
as described in 40 CFR 2.204.
Sec. 59.697 State actions.
The provisions in this subpart do not preclude any State or any
political subdivision of a State from:
(a) Adopting and enforcing any emission standard or limitation
applicable to anyone subject to the provisions of this part; or
(b) Requiring the regulated entity to obtain permits, licenses, or
approvals prior to initiating construction, modification, or operation
of a facility for manufacturing a consumer product.
Sec. 59.698 May EPA enter my facilities for inspections?
(a) We may inspect your portable gasoline containers, testing,
manufacturing processes, storage facilities (including port facilities
for imported containers or other relevant facilities), or records, as
authorized by the Act, to enforce the provisions of this subpart.
Inspectors will have authorizing credentials and will limit inspections
to reasonable times--usually, normal operating hours.
(b) If we come to inspect, we may or may not have a warrant or
court order.
(1) If we do not have a warrant or court order, you may deny us entry.
(2) If we have a warrant or court order, you must allow us to enter
the facility and carry out the activities it describes.
(c) We may seek a warrant or court order authorizing an inspection
described in this section, whether or not we first tried to get your
permission to inspect.
[[Page 15938]]
(d) We may select any facility to do any of the following:
(1) Inspect and monitor any aspect of portable gasoline container
manufacturing, assembly, storage, or other procedures, and any
facilities where you do them.
(2) Inspect and monitor any aspect of test procedures or test-
related activities, including test container selection, preparation,
durability cycles, and maintenance and verification of your test
equipment's calibration.
(3) Inspect and copy records or documents related to assembling,
storing, selecting, and testing a container.
(4) Inspect and photograph any part or aspect of containers or
components use for assembly.
(e) You must give us reasonable help without charge during an
inspection authorized by the Act. For example, you may need to help us
arrange an inspection with the facility's managers, including clerical
support, copying, and translation. You may also need to show us how the
facility operates and answer other questions. If we ask in writing to
see a particular employee at the inspection, you must ensure that he or
she is present (legal counsel may accompany the employee).
(f) If you have facilities in other countries, we expect you to
locate them in places where local law does not keep us from inspecting
as described in this section. We will not try to inspect if we learn
that local law prohibits it, but we may suspend your certificate if we
are not allowed to inspect.
Sec. 59.699 How do I request a hearing?
(a) You may request a hearing under certain circumstances, as
described elsewhere in this subpart. To do this, you must file a
written request with the Designated Compliance Officer, including a
description of your objection and any supporting data, within 30 days
after we make a decision.
(b) For a hearing you request under the provisions of this subpart,
we will approve your request if we find that your request raises a
substantial factual issue.
(c) If we agree to hold a hearing, we will use the procedures
specified in 40 CFR part 1068, subpart G.
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
3. The authority citation for part 80 is revised to read as follows:
Authority: 42 U.S.C. 7414, 7521(1), 7545 and 7601(a).
Subpart D--[Amended]
4. Section 80.41 is amended by redesignating paragraph (e) as
paragraph (e)(1), redesignating paragraph (f) as paragraph (f)(1), and
adding paragraphs (e)(2) and (f)(2) to read as follows:
Sec. 80.41 Standards and requirements for compliance.
* * * * *
(e) * * *
(2) Beginning January 1, 2011, or January 1, 2015 for approved
small refiners under Sec. 80.1340, the toxic air pollutants emissions
performance reduction and benzene content specified in paragraph (e)(1)
of this section shall apply only to reformulated gasoline that is not
subject to the benzene standard of Sec. 80.1230, pursuant to the
provisions of Sec. 80.1235. Beginning January 1, 2007, or January 1,
2008 for approved small refiners under Sec. 80.235, the NOX
emissions performance reduction specified in paragraph (e)(1) of this
section shall no longer apply.
(f) * * *
(2) Beginning January 1, 2011, or January 1, 2015 for approved
small refiners under Sec. 80.1340, the toxic air pollutants emissions
performance reduction and benzene content specified in paragraph (f)(1)
of this section shall apply only to reformulated gasoline that is not
subject to the benzene standard of Sec. 80.1230, pursuant to the
provisions of Sec. 80.1235. Beginning January 1, 2007, or January 1,
2008 for approved small refiners under Sec. 80.235, the NOX
emissions performance reduction specified in paragraph (f)(1) of this
section shall no longer apply.
* * * * *
Subpart E--[Amended]
5. Section 80.101 is amended by revising paragraph (c)(2) to read
as follows:
Sec. 80.101 Standards applicable to refiners and importers.
* * * * *
(c) * * *
(2) Beginning January 1, 1998, each refiner and importer shall be
subject to the Complex Model standards for each averaging period.
However beginning January 1, 2011, or January 1, 2015 for approved
small refiners under Sec. 80.1340, such annual average exhaust toxics
standard shall apply only to conventional gasoline that is not subject
to the benzene standard of Sec. 80.1230, pursuant to the provisions of
Sec. 80.1235. Beginning January 1, 2007, or January 1, 2008 for
approved small refiners under Sec. 80.235, the annual average
NOX emissions standard section shall no longer apply.
* * * * *
Subpart F--[Amended]
6. Section 80.128 is amended by revising paragraph (a) to read as
follows:
Sec. 80.128 Agreed upon procedures for refiners and importers.
* * * * *
(a) Read the refiner's or importer's reports filed with EPA for the
previous year as required by Sec. Sec. 80.75, 80.83(g), 80.105, 80.990
and 80.1354.
* * * * *
Subpart J--[Amended]
7. Section 80.815 is amended by redesignating paragraph (d)(1) as
paragraph (d)(1)(i) and adding paragraph (d)(1)(ii) to read as follows:
Sec. 80.815 What are the gasoline toxics performance requirements for
refiners and importers?
* * * * *
(d) * * *
(1) * * *
(ii) Beginning January 1, 2011, or January 1, 2015 for approved
small refiners under Sec. 80.1340, the gasoline toxics performance
requirements of this subpart shall apply only to gasoline that is not
subject to the benzene standard of Sec. 80.1230, pursuant to the
provisions of Sec. 80.1235.
* * * * *
8. Section 80.1035 is amended by adding paragraph (h) to read as
follows:
Sec. 80.1035 What are the attest engagement requirements for gasoline
toxics compliance applicable to refiners and importers?
* * * * *
(h) Beginning January 1, 2011, or January 1, 2015 for approved
small refiners per Sec. 80.1340, the requirements of this section
shall apply only to gasoline that is not subject to the benzene
standard of Sec. 80.1230, pursuant to the provisions of Sec. 80.1235.
9. Subpart L is added to read as follows:
Subpart L--Gasoline Benzene
Sec.
80.1200--80.1219 [Reserved]
General Information
80.1220 What are the implementation dates for the gasoline benzene program?
80.1225 Who must register with EPA under the gasoline benzene program?
Gasoline Benzene Requirements
80.1230 What are the gasoline benzene requirements for refiners and
importers?
80.1235 What gasoline is subject to the benzene requirements of this
subpart?
[[Page 15939]]
80.1236 What requirements apply to California gasoline?
80.1238 How is a refinery's or importer's annual average benzene
concentration determined?
80.1240 How is a refinery's or importer's compliance with the
gasoline benzene requirements of this subpart determined?
Averaging, Banking and Trading (ABT) Program
80.1270 Who may generate benzene credits under the ABT program?
80.1275 How are early benzene credits generated?
80.1280 How are refinery benzene baselines calculated?
80.1285 How does a refiner apply for a benzene baseline?
80.1290 How are benzene credits generated in 2011 and beyond?
80.1295 How are gasoline benzene credits used?
Hardship Provisions
80.1335 Can a refiner seek temporary relief from the requirements of
this subpart?
80.1336 What if a refiner or importer cannot produce gasoline
conforming to the requirements of this subpart?
Small Refiner Provisions
80.1338 What is the definition of a small refiner for the purpose of
the gasoline benzene requirements of this subpart?
80.1339 Who is not eligible for the provisions for small refiners?
80.1340 How does a refiner obtain approval as a small refiner?
80.1342 What compliance options are available to small refiners
under this subpart?
80.1344 What provisions are available to a large refiner that
acquires one or more of a small refiner's refineries?
Sampling, Testing and Retention Requirements
80.1347 What are the sampling and testing requirements for refiners
and importers?
80.1348 What gasoline sample retention requirements apply to
refiners and importers?
Recordkeeping and Reporting Requirements
80.1350 What records must be kept?
80.1352 What are the pre-compliance reporting requirements for the
gasoline benzene program?
80.1354 What are the reporting requirements for the gasoline benzene
program?
Attest Engagements
80.1375 What are the attest engagement requirements for gasoline
benzene compliance?
Violations and Penalties
80.1400 What acts are prohibited under the gasoline benzene program?
80.1405 What evidence may be used to determine compliance with the
prohibitions and requirements of this subpart and liability for
violations of this subpart?
80.1410 Who is liable for violations under the gasoline benzene program?
80.1415 What penalties apply under the gasoline benzene program?
Foreign Refiners
80.1420 What are the additional requirements under this subpart for
gasoline produced at foreign refineries?
Subpart L--Gasoline Benzene
Sec. Sec. 80.1200-80.1219 [Reserved]
General Information
Sec. 80.1220 What are the implementation dates for the gasoline
benzene program?
(a) Benzene standard. (1) Effective with the annual averaging
period beginning January 1, 2011, gasoline produced by a refiner at
each refinery, or imported into an import facility, must meet the
benzene standard specified in Sec. 80.1230, except as otherwise
specifically provided for in this subpart.
(2) Approved small refiners under Sec. 80.1340 may defer meeting
the benzene standard specified in Sec. 80.1230 until January 1, 2015
as described in Sec. 80.1342.
(b) Early credit generation. (1) Beginning June 1, 2007, each
refinery which has an approved benzene baseline per Sec. 80.1285 may
generate early benzene credits in accordance with the provisions of
Sec. 80.1275.
(2) Early benzene credits may be generated through the end of the
averaging period ending December 31, 2010.
(3) Early benzene credits may be generated through the end of the
averaging period ending December 31, 2014 for approved small refiners
under Sec. 80.1340.
(c) Standard credit generation. (1) Effective with the annual
averaging period beginning January 1, 2011, a refiner for any of its
refineries or an importer for its imported gasoline, may generate
benzene credits in accordance with the provisions of Sec. 80.1290.
(2) Effective with the annual averaging period beginning January 1,
2015, an approved small refiner under Sec. 80.1340, for any of its
refineries, may generate benzene credits in accordance with the
provisions of Sec. 80.1290.
Sec. 80.1225 Who must register with EPA under the gasoline benzene
program?
(a) Refiners and importers that are registered by EPA under Sec.
80.76, Sec. 80.103, Sec. 80.190, or Sec. 80.810 are deemed to be
registered for purposes of this subpart.
(b) Refiners and importers subject to the requirements in Sec.
80.1230 that are not registered by EPA under Sec. 80.76, Sec. 80.103,
Sec. 80.190 or Sec. 80.810 shall provide to EPA the information
required in Sec. 80.76 by September 30, 2010, or not later than three
months in advance of the first date that such person produces or
imports gasoline, whichever is later.
(c) Refiners that plan to generate early credits under Sec.
80.1275 and that are not registered by EPA under Sec. 80.76, Sec.
80.103, Sec. 80.190, or Sec. 80.810 must provide to EPA the
information required in Sec. 80.76 not later than 60 days prior to the
end of the first year of credit generation.
Gasoline Benzene Requirements
Sec. 80.1230 What are the gasoline benzene requirements for refiners
and importers?
(a)(1) Except as specified in paragraph (b) of this section, a
refinery's or importer's average gasoline benzene concentration in any
averaging period shall not exceed 0.62 percent by volume using
conventional rounding methodology.
(2) Compliance with the standard specified in paragraph (a)(1) of
this section, or creation of a deficit in accordance with paragraph (b)
of this section, is determined in accordance with Sec. 80.1240.
(3) The averaging period for achieving compliance with the
requirement of paragraph (a)(1) of this section is January 1 through
December 31 of each calendar year, beginning January 1, 2011, or
beginning January 1, 2015 for approved small refiners under Sec. 80.1340.
(4) Refinery grouping per Sec. 80.101(h) does not apply to
compliance with the gasoline benzene requirement specified in this
paragraph (a).
(5) Gasoline produced at foreign refineries that is subject to the
gasoline benzene requirements per Sec. 80.1235 shall be included in
the importer's compliance determination, except as provided in Sec. 80.1420.
(b) Deficit carry-forward. (1) A refinery or importer creates a
benzene deficit for a given averaging period when its compliance
benzene value, per Sec. 80.1240, is greater than the benzene standard
specified in paragraph (a) of this section.
(2) A refinery or importer may carry the benzene deficit forward to
the calendar year following the year the benzene deficit is created but
only if no deficit had been previously carried forward a deficit to the
year the deficit is created. If a refinery or importer carries forward,
the following provisions apply in the second year:
(i) The refinery or importer must achieve compliance with the
benzene standard specified in paragraph (a) of this section.
(ii) The refinery or importer must achieve further reductions in its
[[Page 15940]]
gasoline benzene concentrations sufficient to offset the benzene
deficit of the previous year.
(iii) Benzene credits may be used, per Sec. 80.1295, to meet the
requirements of paragraphs (b)(2)(i) and (ii) of this section.
(3) In the case of an approved hardship under Sec. 80.1335 or
Sec. 80.1336, EPA may allow a briefly extended period of deficit
carry-forward.
(c) Oxygenate blenders, butane blenders and refiners that produce
gasoline from transmix. (1)(i) Refiners and oxygenate blenders that
only blend butane or oxygenate into gasoline downstream of the refinery
that produced the gasoline or the import facility where the gasoline
was imported, are not subject to the requirements of Sec. 80.1230 for
such gasoline.
(ii) Refiners that produce gasoline by separating gasoline from
transmix are not subject to the requirements of Sec. 80.1230 for this
gasoline.
(2) Any refiner under paragraph (c)(1) of this section that adds
any blendstock or feedstock other than, or in addition to, oxygenate
and/or butane into gasoline downstream of the refinery that produced
the gasoline or the import facility where the gasoline was imported, or
into transmix, or into gasoline produced from transmix, is subject to
the requirements of Sec. 80.1230 for this blendstock or feedstock.
Sec. 80.1235 What gasoline is subject to the benzene requirements of
this subpart?
For the purposes of determining compliance with the requirements of
Sec. 80.1230, all reformulated gasoline, RBOB, and conventional
gasoline or gasoline blending stock per Sec. 80.101(d) are
collectively ``gasoline.'' Unless otherwise specified, all of a
refinery's or importer's gasoline is subject to the standards and
requirements of Sec. 80.1230, with the following exceptions:
(a) Gasoline that is used to fuel aircraft, racing vehicles or
racing boats that are used only in sanctioned racing events, provided that:
(1) Product transfer documents associated with such gasoline, and
any pump stand from which such gasoline is dispensed, identify the
gasoline either as gasoline that is restricted for use in aircraft, or
as gasoline that is restricted for use in racing motor vehicles or
racing boats that are used only in sanctioned events;
(2) The gasoline is completely segregated from all other gasoline
throughout production, distribution and sale to the ultimate consumer;
and
(3) The gasoline is not made available for use as motor vehicle
gasoline, or dispensed for use in motor vehicles, except for motor
vehicles used only in sanctioned racing events.
(b) California gasoline, as defined in Sec. 80.1236.
(c) Gasoline that is exported for sale outside the U.S.
(d) Gasoline used for research, development or testing purposes if
it is exempted for these purposes under the reformulated gasoline and
anti-dumping programs, as applicable.
(e) Gasoline produced pursuant to Sec. 80.1230(c)(1).
Sec. 80.1236 What requirements apply to California gasoline?
(a) Definition. For purposes of this subpart, California gasoline
means any gasoline designated by the refiner or importer as for use
only in California and that is actually used in California.
(b) California gasoline exemption. California gasoline that
complies with all the requirements of this section is exempt from the
requirements in Sec. 80.1230.
(c) Requirements for California gasoline. The following
requirements apply to California gasoline:
(1) Each batch of California gasoline must be designated as such by
its refiner or importer.
(2) Designated California gasoline must be kept segregated from
gasoline that is not California gasoline at all points in the
distribution system.
(3) Designated California gasoline must ultimately be used in the
State of California and not used elsewhere in the United States.
(4) In the case of California gasoline produced outside the State
of California, the transferors and transferees must meet the product
transfer document requirements under Sec. 80.81(g).
(5) Gasoline that is ultimately used in any part of the United
States outside of the State of California must comply with the
requirements specified in Sec. 80.1230, regardless of any designation
as California gasoline.
Sec. 80.1238 How is a refinery's or importer's annual average benzene
concentration determined?
(a) The annual average benzene concentration of gasoline produced
at a refinery or imported by an importer for the applicable averaging
period is calculated according to the following equation:
[GRAPHIC]
[TIFF OMITTED]
TP29MR06.008
Where:
Bavg = Annual average benzene concentration (volume percent
benzene).
i = Individual batch of gasoline produced at the refinery or imported.
n = Total number of batches of gasoline produced at the refinery or
imported during the applicable annual averaging period.
Vi = Volume of gasoline in batch i (gallons).
Bi = Benzene concentration of batch i (volume percent
benzene), per Sec. 80.46(e).
(b) All input batch benzene concentration values used in paragraph
(a) of this section shall be expressed to two decimal places.
(c) Annual average benzene concentration values calculated under
paragraph (a) of this section shall be expressed to two decimal places
using conventional rounding methodology.
(d) A refiner or importer may include the volume of oxygenate added
downstream from the refinery or import facility in the calculation
specified in paragraph (a) of this section, provided the following
requirements are met:
(1) For oxygenate added to conventional gasoline, the refiner or
importer must comply with the requirements of Sec. 80.101(d)(4)(ii)
and (g)(3).
(2) For oxygenate added to RBOB, the refiner or importer must
comply with the requirements of Sec. 80.69(a).
(e) Refiners and importers must exclude from the calculation
specified in paragraph (a) of this section all of the following:
(1) Gasoline that was not produced at the refinery or imported by
the importer.
(2) Except as provided in paragraph (c) of this section, any
blendstocks or unfinished gasoline transferred to others.
(3) Gasoline that has been included in the compliance calculations
for another refinery or importer.
(4) Gasoline exempted from the standards under Sec. 80.1235.
Sec. 80.1240 How is a refinery's or importer's compliance with the
gasoline benzene requirements of this subpart determined?
(a)(1) The compliance benzene value for a refinery or importer is:
[[Page 15941]]
[GRAPHIC]
[TIFF OMITTED]
TP29MR06.009
Where:
CBVy = Compliance benzene value (gallons benzene) for year y.
Vy = Gasoline volume produced or imported in year y (gallons).
Bavg = Annual average benzene concentration (volume percent
benzene), per Sec. 80.1238.
Dy-1 = Benzene deficit from the previous reporting period,
per Sec. 80.1230(b) (gallons benzene).
BC = Banked benzene credits used to show compliance (gallons benzene).
RC = Benzene credits received by the refinery or importer, per Sec.
80.1295(c), used to show compliance (gallons benzene).
(2) If CBVy <= Vy x (0.62)/100, then
compliance is achieved for calendar year y.
(b)(1) A deficit is created when CBVy > Vy x (0.62)/100.
(2) The deficit value to be included in the following year's
compliance calculation per paragraph (a) of this section, is calculated
as follows:
[GRAPHIC]
[TIFF OMITTED]
TP29MR06.010
Averaging, Banking and Trading (ABT) Program
Sec. 80.1270 Who may generate benzene credits under the ABT program?
(a) Early credits. (1) Early credits may be generated under Sec.
80.1275 by a refiner for a refinery with an approved benzene baseline
under Sec. 80.1285.
(2) Early credits may be generated under Sec. 80.1275 only by
refiners that produce gasoline by processing crude oil through refinery
processing units.
(3)(i) A refinery that was shut down during the entire 2004-2005
benzene baseline period is not eligible to generate early credits under
Sec. 80.1275.
(ii) A refinery not in full production, excluding normal refinery
downtime, or not showing consistent or regular gasoline production
activity during 2004-2005 may be eligible to generate early benzene
credits under Sec. 80.1275 upon petition to and approval by EPA, under
Sec. 80.1285.
(b) Standard Credits. (1) Standard credits may be generated under
Sec. 80.1290 by refineries and importers for gasoline produced or
imported for use in the U.S., excluding gasoline exempt from the
benzene standard under the provisions of Sec. 80.1235.
(2) Oxygenate blenders, butane blenders, and transmix producers are
not eligible to generate standard credits under Sec. 80.1290.
Sec. 80.1275 How are early benzene credits generated?
(a) Early benzene credits may be generated only if a refinery's
annual average gasoline benzene concentration is at least 10% lower
than the refinery's approved baseline benzene concentration per Sec.
80.1280.
(b) [Reserved]
(c) The early credit annual averaging periods are as follows:
(1) For 2007, the seven-month period from June 1, 2007, through
December 31, 2007, inclusive.
(2) For 2008, 2009 and 2010, the 12-month calendar year.
(3) For 2011, 2012, 2013, and 2014, which apply only to approved
small refiners per Sec. 80.1340, the 12-month calendar year.
(d) The number of early benzene credits shall be calculated
annually for each applicable averaging period as follows:
(1) Proceed to paragraph (d)(2) of this section under the following
condition. Bavg <= BBase x 0.90
Where:
Bavg = Annual average benzene concentration (volume percent
benzene) of gasoline produced at the refinery, per Sec. 80.1238.
BBase = Baseline benzene concentration (volume percent
benzene) of the refinery, per Sec. 80.1280(b).
(2) Calculate the number of early credits generated by the refinery
for the averaging period as follows:
[GRAPHIC]
[TIFF OMITTED]
TP29MR06.011
Where:
ECy = Early credits generated in year y (gallons benzene).
Bavg = Annual average benzene concentration (volume percent
benzene) of gasoline produced at the refinery, per Sec. 80.1238 that
satisfies the condition of paragraph (d)(1) of this section.
Ve = Total volume of gasoline (gallons) produced during the
annual averaging period at the refinery.
(e) All input benzene concentration values used in paragraph (d) of
this section shall be expressed to two decimal places.
(f) Early benzene credits calculated under paragraph (d) of this
section shall be expressed to the nearest gallon using conventional
rounding methodology.
(g)(1) Early benzene credits shall be calculated separately for
each refinery.
(2) Refiners shall not move gasoline or gasoline blending stocks
from one refinery to another for the purpose of generating early credits.
(h) An importer may not generate early credits.
(i) A foreign refiner with an approved baseline may generate early
credits subject to the provisions of Sec. 80.1420.
Sec. 80.1280 How are refinery benzene baselines calculated?
(a) A refinery's benzene baseline is based on the refinery's 2004-
2005 average gasoline benzene concentration, calculated according to
the following equation:
[GRAPHIC]
[TIFF OMITTED]
TP29MR06.012
Where:
BBase = Benzene baseline concentration (volume percent benzene).
i = Individual batch of gasoline produced at the refinery from January
1, 2004 through December 31, 2005.
n = Total number of batches of gasoline produced at the refinery from
January 1, 2004 through December 31, 2005 (or the total number of
batches of gasoline pursuant to Sec. 80.1285(d)).
Vi = Volume of gasoline in batch i (gallons).
Bi = Benzene content of batch i (volume percent benzene).
(b) All input batch benzene concentration values used in paragraph
(a) of this section shall be expressed to two decimal places.
(c) Baseline benzene concentration values calculated under
paragraph (a) of this section shall be expressed to two decimal places
using conventional rounding methodology.
(d) Any refiner that, under Sec. 80.69 or Sec. 80.101(d)(4),
included oxygenate blended downstream in compliance calculations for
RFG or conventional gasoline for calendar years 2004 or 2005 for a
refinery must include the volume and benzene concentration of this
oxygenate in the baseline calculations for gasoline benzene content for
that refinery under paragraph (a) of this section.
Sec. 80.1285 How does a refiner apply for a benzene baseline?
(a) A refiner must submit an application to EPA which includes the
information specified in paragraph (c) of this section at least 60 days
before the refinery plans to begin generating early credits.
[[Page 15942]]
(b) The benzene baseline application shall be sent to: U.S. EPA,
Attn: Early Gasoline Benzene Credits (6406J), 1200 Pennsylvania Ave.,
NW., Washington, DC 20460. For commercial delivery: U.S. EPA Attn:
Early Gasoline Benzene Credits (6406J), 501 3rd Street, NW.,
Washington, DC 20001.
(c) A benzene baseline application must be submitted for each
refinery that plans to generate early credits under Sec. 80.1275 and
must include the following information:
(1) A listing of the names and addresses of all refineries owned by
the company.
(2) The benzene baseline for gasoline produced in 2004-2005 at the
refinery, calculated in accordance with Sec. 80.1280(b).
(3) Copies of the annual reports required under Sec. 80.75 for RFG
and Sec. 80.105 for conventional gasoline.
(4) A letter signed by the president, chief operating officer, or
chief executive officer, of the company, or his/her designee, stating
that the information contained in the benzene baseline determination is
true to the best of his/her knowledge.
(5) Name, address, phone number, facsimile number and e-mail
address of a corporate contact person.
(d) A refiner, for a refinery that qualifies for generating early
credits under Sec. 80.1270(a)(3)(ii) may submit to EPA a benzene
baseline application per the requirements of this section. The refiner
must also submit information regarding the nature and cause of the
inconsistent production, how it affects the baseline and benzene
concentration, and whether an alternative calculation to the
calculation specified in Sec. 80.1280 produces a more representative
benzene baseline value. EPA, upon consideration of the submitted
information, may approve a benzene baseline for such a refinery.
(e) Within 60 days of receipt of an application under this section,
except for applications submitted in accordance with paragraph (d) of
this section, EPA will notify the refiner of approval of the refinery's
baseline or any deficiencies in the application.
(f) If at any time the baseline submitted in accordance with the
requirements of this section is determined to be incorrect, EPA will
notify the refiner of the corrected baseline.
Sec. 80.1290 How are benzene credits generated in 2011 and beyond?
(a) Gasoline benzene standard credits may be generated by the
following parties during any applicable averaging period specified in
paragraph (b) of this section:
(1) A refiner, at any of its refineries that produce gasoline for
use in the U.S. (excluding gasoline under Sec. 80.1235 that is exempt
from the requirements of this subpart). Credits are generated
separately by each refinery;
(2) Importers, for all of their imported gasoline (excluding
gasoline under Sec. 80.1235 that is exempt from the requirements of
this subpart);
(b) The standard credit averaging periods are the calendar years
beginning with 2011, or beginning with 2015 for approved small
refiners.
(c) [Reserved]
(d)(1) The number of standard credits generated by a refinery or
importer shall be calculated annually according to the following equation:
[GRAPHIC]
[TIFF OMITTED]
TP29MR06.013
Where:
SCy = Standard credits generated in year y (gallons benzene).
Bavg = Annual average benzene concentration for year y
(volume percent benzene), per Sec. 80.1238.
Vy = Total volume of gasoline produced or imported in year y
(gallons).
(2) No credits shall be generated unless the value SCy is positive.
(e) All input benzene concentration values used in paragraph (d) of
this section shall be expressed to two decimal places.
(f) Standard benzene credits calculated under paragraph (d) of this
section shall be expressed to the nearest gallon using conventional
rounding methodology.
(g) Foreign refiners may not generate credits under this section.
Sec. 80.1295 How are gasoline benzene credits used?
(a) Credit use. (1) Gasoline benzene credits generated under
Sec. Sec. 80.1275 and 80.1290 may be used to comply with the gasoline
benzene content requirement of Sec. 80.1230 provided that:
(i) The gasoline benzene credits were generated and reported
according to the requirements of this subpart; and
(ii) The conditions of this section Sec. 80.1295 are met.
(2) Gasoline benzene credits generated under Sec. Sec. 80.1275 and
80.1290 may be used by a refiner or importer to comply with the
gasoline benzene content standard of Sec. 80.1230, may be banked by a
refiner or importer for future use or transfer, may be transferred to
another refinery or importer within a company (intracompany), or may be
transferred to another refinery or importer outside of the company.
(b) Credit banking. Gasoline benzene credits generated by a
refinery or importer may be banked for use in a later compliance
period, or may be transferred to another refiner, refinery, or importer
for use as provided in paragraph (c) of this section.
(c) Credit transfers. (1) Gasoline benzene credits obtained from
another refinery or importer may be used to comply with the gasoline
benzene content requirement of Sec. 80.1230 provided the following
conditions are met:
(i) The credits are generated and reported according to the
requirements of this subpart, and the transferred credit has not
expired, per paragraph (d) of this section.
(ii) Any credit transfer takes place no later than the last day of
February following the calendar year averaging period when the credits
are used.
(iii) The credit has not been transferred more than twice. The
first transfer by the refinery or importer that generated the credit
may only be made to a refiner or importer that intends to use the
credit; if the transferee cannot use the credit, it may make the
second, and final, transfer only to a refinery or importer that intends
to use or terminate the credit. In no case may a credit be transferred
more than twice before being used or terminated.
(iv) The credit transferor has applied any gasoline benzene credits
necessary to meet its own annual compliance requirements (and any
deficit carry-forward, if applicable) before transferring any gasoline
benzene credits to any other refiner or importer.
(v) The credit transferor would not create a deficit as a result of
a credit transfer.
(vi) The transferor supplies to the transferee records indicating
the year the gasoline benzene credits were generated, the identity of
the refiner (and refinery) or importer that generated the gasoline
benzene credits and the identity of the transferring entity if not the
same entity that generated the gasoline benzene credits.
(2) In the case of gasoline benzene credits that have been
calculated or created improperly, or have otherwise been determined to
be invalid, the following provisions apply:
(i) Invalid gasoline benzene credits cannot be used to achieve
compliance with the gasoline benzene content requirement of Sec.
80.1230 regardless of the transferee's good faith belief that the
gasoline benzene credits were valid.
(ii) The refiner or importer that used the gasoline benzene credits
and any
[[Page 15943]]
transferor of the gasoline benzene credits must adjust their credit
records, reports, and compliance calculations as necessary to reflect
the proper gasoline benzene credits.
(iii) Any properly created gasoline benzene credits existing in the
transferor's credit balance following the corrections and adjustments
specified in paragraph (c)(2)(ii) of this section and after the
transferor applies gasoline benzene credits as needed to meet its own
compliance requirements at the end of the compliance period, must first
be applied to correct the invalid transfers to the transferee, before
the transferor uses, trades or banks the gasoline benzene credits.
(d) Credit life. (1) Early credits, per Sec. 80.1275, may be used
for compliance purposes under Sec. 80.1240 for any calendar year
averaging period prior to the 2014 averaging period.
(2) Standard credits, per Sec. 80.1290, shall have a credit life
of 5 calendar year averaging periods after the year in which they were
generated. Example: Standard credits generated during 2014 may be used
to achieve compliance under Sec. 80.1240 for any calendar year
averaging period prior to the 2020 averaging period.
(3) Notwithstanding paragraphs (d)(1) and (d)(2) of this section,
credits traded to or used by approved small refiners per Sec. 80.1340,
have an additional credit life of two calendar year averaging periods.
(e) General limitations on credit use. A refiner or importer
possessing gasoline benzene credits must use all gasoline benzene
credits in its possession prior to applying the credit deficit
provisions of Sec. 80.1230(b).
Hardship Provisions
Sec. 80.1335 Can a refiner seek temporary relief from the
requirements of this subpart?
(a) EPA may permit a refinery to have an extended period of deficit
carry-forward, for the shortest period practicable, per Sec.
80.1230(b), if the refiner demonstrates that:
(1) Unusual circumstances exist that impose extreme hardship and
significantly affect the ability to comply by the applicable date; and
(2) It has made best efforts to comply with the requirements of
this subpart, including making all possible efforts to obtain
sufficient credits to meet the standard.
(b) Applications must be submitted to EPA by September 1, 2009.
(1) Approval of a hardship under this section shall be in the form
an extended period of deficit carry-forward, per Sec. 80.1230(b), for
such period of time as EPA determines is appropriate, but shall not
extend beyond December 31, 2014.
(2) EPA reserves the right to deny applications for appropriate
reasons, including unacceptable environmental impact.
(c)(1) Applications must include a plan demonstrating how the
refiner will comply with the requirements of this subpart as
expeditiously as possible. The plan shall include a showing that
contracts are or will be in place for engineering and construction of
benzene reduction technology, a plan for applying for and obtaining any
permits necessary for construction, a description of plans to obtain
necessary capital, and a detailed estimate of when the requirements of
this subpart will be met.
(2) Applications must include a detailed description of the
refinery configuration and operations including, at minimum, the
following information:
(i) The refinery's total reformer unit throughput capacity;
(ii) The refinery's total crude capacity;
(iii) Total crude capacity of any other refineries owned by the
same entity;
(iv) Total volume of gasoline production at the refinery;
(v) Total volume of other refinery products; and
(vi) Geographic location(s) where the refinery's gasoline will be sold.
(3) Applications must include, at a minimum, the following information:
(i) Detailed descriptions of efforts to obtain capital for refinery
investments;
(ii) Detailed descriptions of efforts to obtain credits;
(iii) Bond rating of entity that owns the refinery; and
(iv) Estimated capital investment needed to comply with the
requirements of this subpart
(4) Applicants must also provide any other relevant information
requested by EPA.
(d) EPA may impose any reasonable conditions on waivers granted
under this section, including the condition that if more credits are
available than was anticipated at the time of the hardship approval,
the extended period of deficit carry-forward may be shortened.
Sec. 80.1336 What if a refiner or importer cannot produce gasoline
conforming to the requirements of this subpart?
In extreme and unusual circumstances (e.g., natural disaster or Act
of God) which are clearly outside the control of the refiner or
importer and which could not have been avoided by the exercise of
prudence, diligence, and due care, EPA may permit a refinery or
importer to extend the deadline for meeting the deficit carry-forward
requirements under Sec. 80.1230(b) for a brief period (e.g., where
appropriate, EPA may allow one or more additional weeks after the last
day of February to purchase credits), provided the refinery or importer
meets all the criteria, requirements and conditions contained in Sec.
80.73(a) through (e).
Small Refiner Provisions
Sec. 80.1338 What is the definition of a small refiner for the
purpose of the gasoline benzene requirements of this subpart?
(a) A small refiner is defined as any person, as defined by 42
U.S.C. 7602(e), that--
(1) Produced gasoline at a refinery by processing crude oil through
refinery processing units from January 1, 2005, through December 31,
2005; and
(2) Employed an average of no more than 1,500 people, based on the
average number of employees for all pay periods from January 1, 2005
through December 31, 2005; and
(3) Had a corporate average crude oil capacity less than or equal
to 155,000 barrels per calendar day (bpcd) for 2005; or
(4) Has been approved by EPA as a small refiner under Sec. 80.1340.
(b) For the purpose of determining the number of employees and the
crude oil capacity under paragraph (a) of this section, the following
determinations shall be observed:
(1) The refiner shall include the employees and crude oil capacity
of any subsidiary companies, any parent company and subsidiaries of the
parent company in which the parent has a controlling interest, and any
joint venture partners.
(2) For any refiner owned by a governmental entity, the number of
employees and total crude oil capacity as specified in paragraph (a) of
this section shall include all employees and crude oil production of
the government to which the governmental entity is a part.
(3) Any refiner owned and controlled by an Alaska Regional or
Village Corporation organized pursuant to the Alaska Native Claims
Settlement Act (43 U.S.C. 1601) is not considered an affiliate of such
entity, or with other concerns owned by such entity, solely because of
their common ownership.
(c) Notwithstanding the provisions of paragraph (a) of this
section, a refiner that reactivates a refinery, which it previously
operated, and that was shut down or non-operational for the entire
period between January 1, 2005, and December 31, 2005, may apply for
small refiner status in accordance with the provisions of Sec. 80.1340.
[[Page 15944]]
Sec. 80.1339 Who is not eligible for the provisions for small refiners?
(a) The following are not eligible for the hardship provisions for
small refiners:
(1) Refiners with refineries built after December 31, 2005;
(2) Refiners that exceed the employee or crude oil capacity
criteria under Sec. 80.1338 but that meet these criteria after
December 31, 2005, regardless of whether the reduction in employees or
crude capacity is due to operational changes at the refinery or a
company sale or reorganization.
(3) Importers.
(4) Refiners that produce gasoline other than by processing crude
oil through refinery processing units.
(b)(1)(i) Refiners that qualify as small under Sec. 80.1338 and
subsequently cease production of gasoline from processing crude oil
through refinery processing units, employ more than 1,500 people or
exceed the 155,000 bpcd crude oil capacity limit after December 31,
2005, as a result of merger with or acquisition of or by another
entity, are disqualified as small refiners, except this shall not apply
in the case of a merger between two previously approved small refiners.
If disqualification occurs, the refiner shall notify EPA in writing no
later than 20 days following this disqualifying event.
(ii) Except as provided under paragraph (b)(1)(iii) of this
section, any refiner whose status changes under this paragraph (b)
shall meet the applicable standards of Sec. 80.1230 within a period of
up to 30 months of the disqualifying event for all of its refineries.
However, such period shall not extend beyond December 31, 2014.
(iii) A refiner may apply to EPA for an additional six months to
comply with the standards of Sec. 80.1230 if more than 30 months will
be required for the necessary engineering, permitting, construction,
and start-up work to be completed. Such applications must include
detailed technical information supporting the need for additional time.
EPA will base its decision to approve additional time on the
information provided by the refiner and on other relevant information.
In no case will EPA extend the compliance date beyond December 31, 2014.
(iv) During the period of time of up to 30 months provided under
paragraph (b)(1)(ii) of this section, and any extension provided under
paragraph (b)(1)(iii) of this section, the refiner may not generate
gasoline benzene credits under Sec. 80.1275 or Sec. 80.1290.
(2) An approved small refiner per Sec. 80.1340 may elect to meet
the requirements of Sec. 80.1230 applicable to non-small refiners by
notifying EPA in writing no later than November 15 prior to the year
that the change will occur. Any refiner whose status changes under this
paragraph (b)(2) shall meet the requirements for non-small refiners
under Sec. 80.1230 beginning with the first averaging period
subsequent to the status change.
Sec. 80.1340 How does a refiner obtain approval as a small refiner?
(a) Applications for small refiner status must be submitted to EPA
by December 31, 2007.
(b) Applications for small refiner status must be sent to: U.S.
EPA, Attn: MSAT2 Benzene (6406J), 1200 Pennsylvania Ave., NW.,
Washington, DC 20460. For commercial delivery: U.S. EPA Attn: MSAT2
Benzene (6406J), 501 3rd Street, NW., Washington, DC 20001.
(c) The small refiner status application must contain the following
information for the company seeking small refiner status, and for all
subsidiary companies, all parent companies, all subsidiaries of the
parent companies, and all joint venture partners:
(1) Employees. (i) A listing of the names and addresses of each
location where any employee worked during the 12 months preceding
January 1, 2006;
(ii) The average number of employees at each location based upon
the number of employees for each pay period for the 12 months preceding
January 1, 2006; and
(iii) The type of business activities carried out at each location.
(iv) In the case of a refiner that reactivates a refinery that it
previously owned and operated and that was shut down or non-operational
between January 1, 2005, and January 1, 2006, include the following:
(A) A listing of the name and address of each location where any
employee of the refiner worked since the refiner acquired or
reactivated the refinery;
(B) The average number of employees at any such reactivated
refinery during each calendar year since the refiner reactivated the
refinery; and
(C) The type of business activities carried out at each location.
(vi) For joint ventures, the total number of employees includes the
combined employee count of all corporate entities in the venture.
(vii) For government-owned refiners, the total employee count
includes all government employees.
(2) Crude oil capacity. (i) The total corporate crude oil capacity
of each refinery as reported to the Energy Information Administration
(EIA) of the U.S. Department of Energy (DOE), for the period January 1,
2005, through December 31, 2005.
(ii) The information submitted to EIA is presumed to be correct. In
cases where a company disagrees with this information, the company may
petition EPA with appropriate data to correct the record when the
company submits its application for small refiner status.
(3) The type of business activity carried out at each location.
(4) For each refinery, an indication of the small refiner option(s)
intended to be utilized at the refinery.
(5) A letter signed by the president, chief operating or chief
executive officer of the company, or his/her designee, stating that the
information contained in the application is true to the best of his/her
knowledge, and that the company owned the refinery as of January 1, 2006.
(6) Name, address, phone number, facsimile number, and E-mail
address of a corporate contact person.
(d) Approval of a small refiner status application will be based on
all information submitted under paragraph (c) of this section and any
other relevant information.
(e) EPA will notify a refiner of approval or disapproval of small
refiner status by letter.
(1) If approved, all refineries of the refiner may defer meeting
the standard specified in Sec. 80.1230 until the annual averaging
period beginning January 1, 2015.
(2) If disapproved, all refineries of the refiner must meet the
standard specified in Sec. 80.1230 beginning with the annual averaging
period beginning January 1, 2011.
(f) If EPA finds that a refiner provided false or inaccurate
information on its application for small refiner status, upon notice
from EPA, the refiner's small refiner status will be void ab initio.
(g) Prior to January 1, 2014, and upon notification to EPA, an
approved small refiner per this section may withdraw its status as a
small refiner. Effective on January 1 of the year following such
notification, the small refiner will become subject to the standards at
Sec. 80.1230.
Sec. 80.1342 What compliance options are available to small refiners
under this subpart?
(a) A refiner that has been approved as a small refiner under Sec.
80.1340 may--
(1) Defer meeting the standard specified in section Sec. 80.1230
until the annual averaging period January 1, 2015; or
(2) Meet the standard specified in Sec. 80.1230 beginning January
1 of any of
[[Page 15945]]
the following annual averaging periods: 2007, 2008, 2009, 2010, 2011,
2012, 2013, and 2014.
(b) The provisions of paragraph (a) of this section shall apply
separately for each of an approved small refiner's refineries.
Sec. 80.1344 What provisions are available to a large refiner that
acquires one or more of a small refiner's refineries?
(a) In the case of a refiner without approved small refiner status
that acquires a refinery from an approved small refiner per Sec.
80.1340, the small refiner provisions of the gasoline benzene program
of this subpart may continue to apply to the acquired refinery for a
period of up to 30 months from the date of acquisition of the refinery.
In no case shall this period extend beyond December 31, 2014.
(b) A refiner may apply to EPA for up to an additional six months
to comply with the standards of Sec. 80.1230 for the acquired refinery
if more than 30 months would be required for the necessary engineering,
permitting, construction, and start-up work to be completed. Such
applications must include detailed technical information supporting the
need for additional time. EPA will base a decision to approve
additional time on information provided by the refiner and on other
relevant information. In no case shall this period extend beyond
December 31, 2014.
(c) A refiner that acquires a refinery from an approved small
refiner per Sec. 80.1340 shall notify EPA in writing no later than 20
days following the acquisition.
Sampling, Testing and Retention Requirements
Sec. 80.1347 What are the sampling and testing requirements for
refiners and importers?
(a) Sample and test each batch of gasoline. Refiners and importers
shall collect a representative sample from each batch of gasoline
produced or imported. Each sample shall be tested in accordance the
methodology specified at Sec. 80.46(e) to determine its benzene
concentration for compliance with the requirements of this subpart.
(b) Batch numbering. The batch numbering convention of Sec.
80.365(b)(2) shall apply to batches of conventional gasoline.
(c) The requirements of this section apply to any refiner or
importer subject to the requirements of this subpart, including those
generating early credits per Sec. 80.1275, all non-small refiners and
importers beginning January 1, 2011, and small refiners beginning
January 1, 2015.
Sec. 80.1348 What gasoline sample retention requirements apply to
refiners and importers?
The gasoline sample retention requirements specified in subpart H
of this part for the gasoline sulfur provisions apply for the purpose
of complying with the requirements of this subpart, except that in
addition to including the sulfur test result as provided by Sec.
80.335(a)(4)(ii), the refiner, importer, or independent laboratory
shall also include with the retained sample the test result for benzene
as conducted pursuant to Sec. 80.46(e).
Recordkeeping and Reporting Requirements
Sec. 80.1350 What records must be kept?
(a) General requirements. The recordkeeping requirements specified
in Sec. 80.74 and Sec. 80.104, as applicable, apply for the purpose
of complying with the requirements of this subpart, however, duplicate
records are not required.
(b) Additional records that refiners and importers shall keep.
Beginning January 1, 2007, any refiner for each of its refineries, and
any importer for the gasoline it imports, shall keep records that
include the following information (including any supporting
calculations as applicable):
(1) Its compliance benzene value per Sec. 80.1240, and the
calculations used to obtain that value.
(2) Its benzene baseline value, per Sec. 80.1280, if the refinery
or importer submitted a benzene baseline application to EPA per Sec.
80.1285;
(3) The number of early benzene credits generated under Sec.
80.1275, separately by year of generation;
(4) The number of early benzene credits obtained, separately by
generating refinery and year of generation;
(5) The number of valid credits in possession of the refinery or
importer at the beginning of each averaging period, separately by
generating facility and year of generation;
(6) The number of standard credits generated by the refinery or
importer under Sec. 80.1290, separately by transferor (if applicable),
and by year of generation;
(7) The number of credits used, separately by generating facility
and year of generation;
(8) If any credits were obtained from, or transferred to, other
parties, for each other party, its name, its EPA refinery or importer
registration number, and the number of credits obtained from, or
transferred to, the other party;
(9) The number of credits that expired at the end of the averaging
period, separately by generating facility and year of generation;
(10) The number of credits that will be carried over into the
subsequent averaging period, separately by generating facility and year
of generation;
(11) Contracts or other commercial documents that establish each
transfer of credits from the transferor to the transferee; and
(12) A copy of all reports submitted to EPA under Sec. Sec.
80.1352 and 80.1354, however, duplicate records are not required.
(c) Length of time records shall be kept. The records required by
this section shall be kept for five years from the end of the annual
averaging period during which they were created, or seven years for
records pertaining to credits traded to a small refiner in accordance
with Sec. 80.1295(d)(3), except where longer record retention is
required elsewhere in this subpart.
(d) Make records available to EPA. On request by EPA, the records
specified in this section shall be provided to the Administrator. For
records that are electronically generated or maintained, the equipment
and software necessary to read the records shall be made available, or
upon approval by EPA, electronic records shall be converted to paper
documents which shall be provided to the Administrator.
Sec. 80.1352 What are the pre-compliance reporting requirements for
the gasoline benzene program?
(a) Except as provided in paragraph (c) of this section, a refiner
for each of its refineries shall submit the following information to
EPA beginning June 1, 2008, and annually thereafter through June 1,
2011, or through June 1, 2015, for small refiners:
(1) Changes to the information submitted in the company's registration;
(2) Changes to the information submitted for any refinery or import
facility registration;
(3) Gasoline production. (i) An estimate of the average daily
volume (in gallons) of gasoline produced at each refinery. This
estimate shall include RFG, RBOB, conventional gasoline and
conventional gasoline blendstock that becomes finished gasoline solely
upon the addition of oxygenate but shall exclude gasoline exempted
pursuant to Sec. 80.1235;
(ii) These volume estimates must be provided for the periods of
June 1, 2007, through December 31, 2007, and calendar years 2008, 2009
and 2010.
(4) Benzene concentration. An estimate of the average gasoline benzene
[[Page 15946]]
concentration corresponding to the time periods specified in paragraph
(a)(3) of this section.
(5) ABT Participation. If the refinery is expecting to participate
in the credit trading program under Sec. 80.1275 and/or Sec. 80.1290,
the actual or estimated, as applicable, numbers of early credits and
standard credits expected to be generated and/or used each year through
2015.
(6) Information on any project schedule by quarter of known or
projected completion date by the stage of the project, for example,
following the five project phases described in EPA's June 2002 Highway
Diesel Progress Review report (EPA420-R-02-016, http://www.epa.gov/
otaq/regs/hd2007/420r02016.pdf): Strategic planning, Planning and
front-end engineering, Detailed engineering and permitting, Procurement
and Construction, and Commissioning and startup;
(7) Basic information regarding the selected technology pathway for
compliance (e.g., precursor re-routing or other technologies, revamp
vs. grassroots, etc.);
(8) Whether capital commitments have been made or are projected to
be made.
(b) The pre-compliance reports due in 2008 and succeeding years
must provide an update of the progress in each of these areas and
actual values where available.
(c) The pre-compliance reporting requirements of this section do
not apply to refineries exempted under the provisions of Sec.
80.1230(c)(1).
Sec. 80.1354 What are the reporting requirements for the gasoline
benzene program?
(a) Beginning with the 2011 annual averaging period, or the 2015
annual averaging period for small refiners, and continuing for each
averaging period thereafter, every refiner, for each of its refineries,
and every importer shall submit to EPA the information required in this
section, and such other information as EPA may require.
(b) Beginning with the 2007 annual averaging period for refiners
generating early credits pursuant to Sec. 80.1275 or Sec. 80.1290(b)
for approved small refiners, every refiner for each of its refineries
shall submit to EPA the information required in this section, and such
other information as EPA may require.
(c) Refiner and importer annual reports. Any refiner, for each of
its refineries, and any importer for the gasoline it imports, shall
submit a Gasoline Benzene Report containing the following information:
(1) Benzene volume percent and volume of any RFG, RBOB, and
conventional gasoline, separately by batch, produced by the refinery or
imported, and the sum of the volumes and the volume-weighted benzene
concentration, in volume percent;
(2) The annual average benzene concentration, per Sec. 80.1240,
Sec. 80.1275 or Sec. 80.1290, as applicable;
(3) Any benzene deficit from the previous reporting period, per
Sec. 80.1230(b);
(4) The number of banked benzene credits from the previous
reporting period;
(5) The number of benzene credits generated under Sec. 80.1275, if
applicable;
(6) The number of benzene credits generated under Sec. 80.1290, if
applicable;
(7) The number of benzene credits transferred to the refinery or
importer, per Sec. 80.1295(c), and the cost of the credits, if
applicable;
(8) The number of benzene credits transferred from the refinery or
importer, per Sec. 80.1295(c), and the price of the credits, if
applicable;
(9) The number of benzene credits terminated or expired;
(10) The compliance benzene value specified in Sec. 80.1240;
(11) The number of banked benzene credits;
(12) Projected credit generation through compliance year 2015; and
(13) Projected credit use through compliance year 2015.
(d) EPA may require submission of additional information to verify
compliance with the requirements of this subpart.
(e) The report required by paragraph (a) of this section shall be:
(1) Submitted on forms and following procedures specified by the
Administrator of EPA;
(2) Submitted to EPA by the last day of February each year for the
prior calendar year averaging period; and
(3) Signed and certified as correct by the owner or a responsible
corporate officer of the refiner or importer.
Attest Engagements
Sec. 80.1375 What are the attest engagement requirements for gasoline
benzene compliance?
In addition to the requirements for attest engagements that apply
to refiners and importers under Sec. Sec. 80.125 through 80.130,
80.410, and 80.1030, the attest engagements for refiners and importers
must include the following procedures and requirements each year.
(a) EPA early credit generation baseline years' reports.
(1) Obtain and read a copy of the refinery's or importer's annual
reports and batch reports filed with EPA for 2004 and 2005 which
contain gasoline benzene and gasoline volume information.
(2) Agree the yearly volumes of gasoline and benzene concentration,
in volume percent and benzene gallons, reported to EPA in the reports
specified in paragraph (a)(1) of this section with the inventory
reconciliation analysis under Sec. 80.128.
(3) Verify that the information in the refinery's or importer's
batch reports filed with EPA under Sec. Sec. 80.75 and 80.105, and any
laboratory test results, agree with the information contained in the
reports specified in paragraph (a)(1) of this section.
(4) Calculate the average benzene concentration for all of the
refinery's or importer's gasoline volume over 2004 and 2005 and verify
that those values agree with the values reported to EPA per Sec. 80.1285.
(b) Baseline for early credit generation. For the first attest
reporting period following approval of a benzene baseline:
(1) Obtain the EPA benzene baseline approval letter for the
refinery to determine the refinery's applicable benzene baseline under
Sec. 80.1285.
(2) Obtain a written representation from the company representative
stating the benzene value used as the refinery's baseline and agree
that number to paragraph (b)(1) of this section and to the reports to EPA.
(c) Early credit generation. The following procedures shall be
completed for a refinery or importer that generates early benzene
credits per Sec. 80.1275:
(1) Obtain the baseline benzene concentration and gasoline volume
from paragraph (a)(4) of this section.
(2) Obtain the annual benzene report per Sec. 80.1354.
(3) If the benzene value under paragraph (c)(2) of this section is
at least 10 percent less than value in paragraph (c)(1) of this
section, compute and report as a finding the difference according to
Sec. 80.1275.
(4) Compute and report as a finding the total number of benzene
credits generated by multiplying the value calculated in paragraph
(c)(3) of this section by the volume of gasoline listed in the report
specified in paragraph (c)(2) of this section, and agree this number
with the number reported to EPA.
(d) Standard credit generation. The following procedures shall be
completed for a refinery or importer that generates benzene credits per
Sec. 80.1290:
[[Page 15947]]
(1) Obtain the annual average benzene value from the annual benzene
report per Sec. 80.1285.
(2) If the annual average benzene value under paragraph (d)(1) of
this section is less than 0.62 percent by volume, compute and report as
a finding the difference according to Sec. 80.1290.
(3) Compute and report as a finding the total number of benzene
credits generated by multiplying the value calculated in paragraph
(d)(2) of this section by the volume of gasoline listed in the report
specified in paragraph (d)(1) of this section, and agree this number
with the number reported to EPA.
(e) Credits required. The following attest procedures shall be
completed for refineries and importers:
(1) Obtain the annual average benzene concentration and volume from
the annual benzene report per Sec. 80.1285.
(2) If the value in paragraph (e)(1) of this section is greater
than 0.62 percent by volume, compute and report as a finding the
difference between 0.62 percent by volume and the value in paragraph
(e)(1) of this section.
(3) Compute and report as a finding the total benzene credits
required by multiplying the value in paragraph (e)(2) of this section
times the volume of gasoline in paragraph (e)(1) of this section, and
agree with the report to EPA.
(4) Obtain the refiner's or importer's representation as to the
portion of the deficit under paragraph (e)(3) of this section that was
resolved with credits, or that was carried forward as a deficit under
Sec. 80.1230(b), and agree with the report to EPA.
(f) Credit purchases and sales. The following attest procedures
shall be completed for a refinery or importer that is a transferor or
transferee of credits during an averaging period:
(1) Obtain contracts or other documents for all credits transferred
to another refinery or importer during the year being reviewed; compute
and report as a finding the number and year of creation of credits
represented in these documents as being transferred; and agree with the
report to EPA.
(2) Obtain contracts or other documents for all credits received
during the year being reviewed; compute and report as a finding the
number and year of creation of credits represented in these documents
as being received; and agree with the report to EPA.
(g) Credit reconciliation. The following attest procedures shall be
completed each year credits were in the refiner's or importer's
possession at any time during the year:
(1) Obtain the credits remaining or the credit deficit from the
previous year from the refiner's or importer's report to EPA for the
previous year.
(2) Compute and report as a finding the net credits remaining at
the conclusion of the year being reviewed by totaling:
(i) Credits remaining from the previous year; plus
(ii) Credits generated under paragraphs (c) and (d) of this
section; plus
(iii) Credits purchased under paragraph (f) of this section; minus
(iv) Credits sold under paragraph (f) of this section; minus
(v) Credits used under paragraphs (e) of this section; minus
(vi) Credits expired; minus
(vii) Credit deficit from the previous year.
(3) Agree the credits remaining or the credit deficit at the
conclusion of the year being reviewed with the report to EPA.
(4) If the refinery or importer had a credit deficit for both the
previous year and the year being reviewed, report this fact as a finding.
Violations and Penalties
Sec. 80.1400 What acts are prohibited under the gasoline benzene program?
No person shall:
(a) Averaging violation. Produce or import gasoline subject to this
subpart that does not comply with the applicable benzene average
standard requirement under Sec. 80.1230.
(b) Causing an averaging violation. Cause another person to commit
an act in violation of paragraph (a) of this section.
(c) Fail to meet the recordkeeping and reporting requirements, or
any other requirements of this subpart.
Sec. 80.1405 What evidence may be used to determine compliance with
the prohibitions and requirements of this subpart and liability for
violations of this subpart?
(a) Compliance with the benzene standard of this subpart shall be
determined based on the benzene concentration of the gasoline, measured
using the methodologies specified in Sec. 80.46(e). Any evidence or
information, including the exclusive use of such evidence or
information, may be used to establish the benzene concentration of the
gasoline if the evidence or information is relevant to whether the
benzene concentration of the gasoline would have been in compliance
with the standard if the appropriate sampling and testing methodologies
had been correctly performed. Such evidence may be obtained from any
source or location and may include, but is not limited to, test results
using methods other than those specified in Sec. 80.46(e), business
records and commercial documents.
(b) Determinations of compliance with the requirements of this
subpart other than the benzene standard, and determinations of
liability for any violation of this subpart, may be based on
information from any source or location. Such information may include,
but is not limited to, business records and commercial documents.
Sec. 80.1410 Who is liable for violations under the gasoline benzene
program?
(a) Persons liable for violations of prohibited acts.
(1) Averaging violation. Any refiner or importer that violates
Sec. 80.1400(a) is liable for a violation of Sec. 80.1400(a).
(2) Causing an averaging violation. Any person that causes another
party to violate Sec. 80.1400(a) is liable for a violation of Sec.
80.1400(b).
(3) Parent corporation liability. Any parent corporation is liable
for any violations of this subpart that are committed by any of its
wholly-owned subsidiaries.
(4) Joint venture and joint owner liability. Each partner to a
joint venture, or each owner of a facility owned by two or more owners,
is jointly and severally liable for any violation of this subpart that
occurs at the joint venture facility or facility that is owned by the
joint owners, or that is committed by the joint venture operation or
any of the joint owners of the facility.
(b) Persons liable for failure to meet other provisions of this subpart.
(1) Any person that fails to meet a provision of this subpart not
addressed in paragraph (a) of this section is liable for a violation of
that provision.
(2) Any person that caused another person to fail to meet a
requirement of this subpart not addressed in paragraph (a) of this
section, is liable for causing a violation of that provision.
Sec. 80.1415 What penalties apply under the gasoline benzene program?
(a) Any person liable for a violation under Sec. 80.1410 is
subject to civil penalties as specified in sections 205 and 211(d) of
the Clean Air Act for every day of each such violation and the amount
of economic benefit or savings resulting from each violation.
(b) Any person liable under Sec. 80.1400(a) for a violation of the
applicable benzene average standard or causing another person to
violate the requirement during any averaging period, is subject to a
separate day of violation for each and every day in the averaging
period. Any person liable
[[Page 15948]]
under Sec. 80.1410(b) for a failure to fulfill any requirement of
credit generation, transfer, use, banking, or deficit carry-forward
correction is subject to a separate violation for each and every day in
the averaging period in which invalid credits are generated, banked,
transferred or used.
(c) Any person liable under Sec. 80.1410(b) for failure to meet,
or causing a failure to meet, a provision of this subpart is liable for
a separate day of violation for each and every day such provision
remains unfulfilled.
Foreign Refiners
Sec. 80.1420 What are the additional requirements under this subpart
for gasoline produced at foreign refineries?
(a) Definitions. (1) A foreign refinery is a refinery that is
located outside the United States, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands (collectively referred to in this section as
``the United States'').
(2) A foreign refiner is a person that meets the definition of
refiner under Sec. 80.2(i) for a foreign refinery.
(3) Benzene-FRGAS means gasoline produced at a foreign refinery
that has been assigned an individual refinery benzene baseline under
Sec. 80.1285, has been approved as a small refiner under Sec.
80.1340, or has been granted temporary relief under Sec. 80.1335, and
that is imported into the United States.
(4) Non-Benzene-FRGAS means
(i) Gasoline meeting any of the conditions specified in paragraph
(a)(3) of this section that is not imported into the United States.
(ii) Gasoline meeting any of the conditions specified in paragraph
(a)(3) of this section during a year when the foreign refiner has opted
to not participate in the Benzene-FRGAS program under paragraph (c)(3)
of this section.
(iii) Gasoline produced at a foreign refinery that has not been
assigned an individual refinery benzene baseline under Sec. 80.1285,
or that has not been approved as a small refiner under Sec. 80.1340,
or that has not been granted temporary relief under Sec. 80.1335.
(5) Certified Benzene-FRGAS means Benzene-FRGAS the foreign refiner
intends to include in the foreign refinery's benzene compliance
calculations under Sec. 80.1240 or credit calculations under Sec.
80.1275 and does include in these calculations when reported to EPA.
(7) Non-Certified Benzene-FRGAS means Benzene-FRGAS that is not
Certified Benzene-FRGAS.
(b) Baseline for early credits. For any foreign refiner to obtain
approval under the benzene foreign refiner program of this subpart for
any refinery in order to generate early credits under Sec. 80.1275, it
must apply for approval under the applicable provisions of this subpart.
(1) The refiner shall follow the procedures, applicable to volume
baselines in Sec. Sec. 80.91 through 80.93 to establish the volume of
gasoline that was produced at the refinery and imported into the United
States during the applicable years for purposes of establishing a
baseline under Sec. 80.1280 for applicable fuels produced for use in
the United States.
(2) In making determinations for foreign refinery baselines EPA
will consider all information supplied by a foreign refiner, and in
addition may rely on any and all appropriate assumptions necessary to
make such determinations.
(3) Where a foreign refiner submits a petition that is incomplete
or inadequate to establish an accurate baseline, and the refiner fails
to correct this deficiency after a request for more information, EPA
will not assign an individual refinery baseline.
(c) General requirements for Benzene-FRGAS foreign refiners. A
foreign refiner of a refinery that is approved under the benzene
foreign refiner program of this subpart must designate each batch of
gasoline produced at the foreign refinery that is exported to the
United States as either Certified Benzene-FRGAS or as Non-Certified
Benzene-FRGAS, except as provided in paragraph (c)(3) of this section.
(1) In the case of Certified Benzene-FRGAS, the foreign refiner
must meet all requirements that apply to refiners under this subpart.
(2) In the case of Non-Certified Benzene-FRGAS, the foreign refiner
shall meet all the following requirements:
(i) The designation requirements in this section;
(ii) The recordkeeping requirements in this section and in Sec.
80.1350;
(iii) The reporting requirements in this section and in Sec. Sec.
80.1352 and 80.1354;
(iv) The product transfer document requirements in this section;
(v) The prohibitions in this section and in Sec. 80.1400; and
(vi) The independent audit requirements in this section and in
Sec. 80.1375.
(3)(i) Any foreign refiner that generates early benzene credits
under Sec. 80.1275 shall designate all Benzene-FRGAS as Certified
Benzene-FRGAS for any year that such credits are generated.
(ii) Any foreign refiner that has been approved to produce gasoline
subject to the benzene foreign refiner program for a foreign refinery
under this subpart may elect to classify no gasoline imported into the
United States as Benzene-FRGAS provided the foreign refiner notifies
EPA of the election no later than November 1 preceding the beginning of
the next compliance period.
(iii) An election under paragraph (c)(3)(ii) of this section shall
be for a 12 month compliance period and apply to all gasoline that is
produced by the foreign refinery that is imported into the United
States, and shall remain in effect for each succeeding year unless and
until the foreign refiner notifies EPA of the termination of the
election. The change in election shall take effect at the beginning of
the next annual compliance period.
(d) Designation, product transfer documents, and foreign refiner
certification. (1) Any foreign refiner of a foreign refinery that has
been approved by EPA to produce gasoline subject to the benzene foreign
refiner program must designate each batch of Benzene-FRGAS as such at
the time the gasoline is produced, unless the refiner has elected to
classify no gasoline exported to the United States as Benzene-FRGAS
under paragraph (c)(3) of this section.
(2) On each occasion when any person transfers custody or title to
any Benzene-FRGAS prior to its being imported into the United States,
it must include the following information as part of the product
transfer document information:
(i) Designation of the gasoline as Certified Benzene-FRGAS or as
Non-Certified Benzene-FRGAS; and
(ii) The name and EPA refinery registration number of the refinery
where the Benzene-FRGAS was produced.
(3) On each occasion when Benzene-FRGAS is loaded onto a vessel or
other transportation mode for transport to the United States, the
foreign refiner shall prepare a certification for each batch of the
Benzene-FRGAS that meets the following requirements.
(i) The certification shall include the report of the independent
third party under paragraph (f) of this section, and the following
additional information:
(A) The name and EPA registration number of the refinery that
produced the Benzene-FRGAS;
(B) The identification of the gasoline as Certified Benzene-FRGAS
or Non-Certified Benzene-FRGAS;
(C) The volume of Benzene-FRGAS being transported, in gallons;
[[Page 15949]]
(D) In the case of Certified Benzene-FRGAS:
(1) The benzene content as determined under paragraph (f) of this
section, and the applicable designations stated in paragraph (d)(2)(i)
of this section; and
(2) A declaration that the Benzene-FRGAS is being included in the
applicable compliance calculations required by EPA under this subpart.
(ii) The certification shall be made part of the product transfer
documents for the Benzene-FRGAS.
(e) Transfers of Benzene-FRGAS to non-United States markets. The
foreign refiner is responsible to ensure that all gasoline classified
as Benzene-FRGAS is imported into the United States. A foreign refiner
may remove the Benzene-FRGAS classification, and the gasoline need not
be imported into the United States, but only if:
(1) The foreign refiner excludes:
(i) The volume of gasoline from the refinery's compliance report
under Sec. 80.1354; and
(ii) In the case of Certified Benzene-FRGAS, the volume of the
gasoline from the compliance report under Sec. 80.1354.
(2) The foreign refiner obtains sufficient evidence in the form of
documentation that the gasoline was not imported into the United States.
(f) Load port independent sampling, testing and refinery
identification. (1) On each occasion that Benzene-FRGAS is loaded onto
a vessel for transport to the United States a foreign refiner shall
have an independent third party:
(i) Inspect the vessel prior to loading and determine the volume of
any tank bottoms;
(ii) Determine the volume of Benzene-FRGAS loaded onto the vessel
(exclusive of any tank bottoms before loading);
(iii) Obtain the EPA-assigned registration number of the foreign
refinery;
(iv) Determine the name and country of registration of the vessel
used to transport the Benzene-FRGAS to the United States; and
(v) Determine the date and time the vessel departs the port serving
the foreign refinery.
(2) On each occasion that Certified Benzene-FRGAS is loaded onto a
vessel for transport to the United States a foreign refiner shall have
an independent third party:
(i) Collect a representative sample of the Certified Benzene-FRGAS
from each vessel compartment subsequent to loading on the vessel and
prior to departure of the vessel from the port serving the foreign refinery;
(ii) Determine the benzene content value for each compartment using
the methodology as specified in Sec. 80.46(e) by one of the following:
(A) The third party analyzing each sample; or
(B) The third party observing the foreign refiner analyze the sample;
(iii) Review original documents that reflect movement and storage
of the Certified Benzene-FRGAS from the refinery to the load port, and
from this review determine:
(A) The refinery at which the Benzene-FRGAS was produced; and
(B) That the Benzene-FRGAS remained segregated from:
(1) Non-Benzene-FRGAS and Non-Certified Benzene-FRGAS; and
(2) Other Certified Benzene-FRGAS produced at a different refinery.
(3) The independent third party shall submit a report:
(i) To the foreign refiner containing the information required
under paragraphs (f)(1) and (f)(2) of this section, to accompany the
product transfer documents for the vessel; and
(ii) To the Administrator containing the information required under
paragraphs (f)(1) and (f)(2) of this section, within thirty days
following the date of the independent third party's inspection. This
report shall include a description of the method used to determine the
identity of the refinery at which the gasoline was produced, assurance
that the gasoline remained segregated as specified in paragraph (n)(1)
of this section, and a description of the gasoline's movement and
storage between production at the source refinery and vessel loading.
(4) The independent third party must:
(i) Be approved in advance by EPA, based on a demonstration of
ability to perform the procedures required in this paragraph (f);
(ii) Be independent under the criteria specified in Sec.
80.65(e)(2)(iii); and
(iii) Sign a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities, facilities and
documents relevant to compliance with the requirements of this paragraph (f).
(g) Comparison of load port and port of entry testing. (1)(i) Any
foreign refiner and any United States importer of Certified Benzene-
FRGAS shall compare the results from the load port testing under
paragraph (f) of this section, with the port of entry testing as
reported under paragraph (o) of this section, for the volume of
gasoline and the benzene content value; except as specified in
paragraph (g)(1)(ii) of this section.
(ii) Where a vessel transporting Certified Benzene-FRGAS off loads
this gasoline at more than one United States port of entry, and the
conditions of paragraph (g)(2)(i) of this section are met at the first
United States port of entry, the requirements of paragraph (g)(2) of
this section do not apply at subsequent ports of entry if the United
States importer obtains a certification from the vessel owner that
meets the requirements of paragraph(s) of this section, that the vessel
has not loaded any gasoline or blendstock between the first United
States port of entry and the subsequent port of entry.
(2)(i) The requirements of this paragraph (g)(2) apply if--
(A) The temperature-corrected volumes determined at the port of
entry and at the load port differ by more than one percent; or
(B) The benzene content value determined at the port of entry is
higher than the benzene content value determined at the load port, and
the amount of this difference is greater than the reproducibility
amount specified for the port of entry test result by the American
Society of Testing and Materials (ASTM) for the test method specified
at Sec. 80.46(e).
(ii) The United States importer and the foreign refiner shall treat
the gasoline as Non-Certified Benzene-FRGAS, and the foreign refiner
shall exclude the gasoline volume from its gasoline volumes
calculations and benzene standard designations under this subpart.
(h) Attest requirements. Refiners, for each annual compliance
period, must arrange to have an attest engagement performed of the
underlying documentation that forms the basis of any report required
under this subpart. The attest engagement must comply with the
procedures and requirements that apply to refiners under Sec. Sec.
80.125 through 80.130, or other applicable attest engagement
provisions, and must be submitted to the Administrator of EPA by August
31 of each year for the prior annual compliance period. The following
additional procedures shall be carried out for any foreign refiner of
Benzene-FRGAS.
(1) The inventory reconciliation analysis under Sec. 80.128(b) and
the tender analysis under Sec. 80.128(c) shall include Non-Benzene-FRGAS.
(2) Obtain separate listings of all tenders of Certified Benzene-
FRGAS and of Non-Certified Benzene-FRGAS, and obtain separate listings
of Certified Benzene-FRGAS based on whether it is small refiner
gasoline, gasoline produced through the use of credits, or other
applicable designation under this subpart. Agree the total volume of
tenders from the listings to the gasoline inventory reconciliation
analysis in Sec. 80.128(b), and to the volumes
[[Page 15950]]
determined by the third party under paragraph (f)(1) of this section.
(3) For each tender under paragraph (h)(2) of this section, where
the gasoline is loaded onto a marine vessel, report as a finding the
name and country of registration of each vessel, and the volumes of
Benzene-FRGAS loaded onto each vessel.
(4) Select a sample from the list of vessels identified in
paragraph (h)(3) of this section used to transport Certified Benzene-
FRGAS, in accordance with the guidelines in Sec. 80.127, and for each
vessel selected perform the following:
(i) Obtain the report of the independent third party, under
paragraph (f) of this section, and of the United States importer under
paragraph (o) of this section.
(A) Agree the information in these reports with regard to vessel
identification, gasoline volumes and benzene content test results.
(B) Identify, and report as a finding, each occasion the load port
and port of entry benzene content and volume results differ by more
than the amounts allowed in paragraph (g) of this section, and
determine whether the foreign refiner adjusted its refinery
calculations as required in paragraph (g) of this section.
(ii) Obtain the documents used by the independent third party to
determine transportation and storage of the Certified Benzene-FRGAS
from the refinery to the load port, under paragraph (f) of this
section. Obtain tank activity records for any storage tank where the
Certified Benzene-FRGAS is stored, and pipeline activity records for
any pipeline used to transport the Certified Benzene-FRGAS, prior to
being loaded onto the vessel. Use these records to determine whether
the Certified Benzene-FRGAS was produced at the refinery that is the
subject of the attest engagement, and whether the Certified Benzene-
FRGAS was mixed with any Non-Certified Benzene-FRGAS, Non-Benzene-
FRGAS, or any Certified Benzene-FRGAS produced at a different refinery.
(5) Select a sample from the list of vessels identified in
paragraph (h)(3) of this section used to transport Certified and Non-
Certified Benzene-FRGAS, in accordance with the guidelines in Sec.
80.127, and for each vessel selected perform the following:
(i) Obtain a commercial document of general circulation that lists
vessel arrivals and departures, and that includes the port and date of
departure of the vessel, and the port of entry and date of arrival of
the vessel.
(ii) Agree the vessel's departure and arrival locations and dates
from the independent third party and United States importer reports to
the information contained in the commercial document.
(6) Obtain separate listings of all tenders of Non-Benzene-FRGAS,
and perform the following:
(i) Agree the total volume and benzene content of tenders from the
listings to the gasoline inventory reconciliation analysis in Sec.
80.128(b).
(ii) Obtain a separate listing of the tenders under this paragraph
(h)(6) where the gasoline is loaded onto a marine vessel. Select a
sample from this listing in accordance with the guidelines in Sec.
80.127, and obtain a commercial document of general circulation that
lists vessel arrivals and departures, and that includes the port and
date of departure and the ports and dates where the gasoline was off
loaded for the selected vessels. Determine and report as a finding the
country where the gasoline was off loaded for each vessel selected.
(7) In order to complete the requirements of this paragraph (h) an
auditor shall:
(i) Be independent of the foreign refiner;
(ii) Be licensed as a Certified Public Accountant in the United
States and a citizen of the United States, or be approved in advance by
EPA based on a demonstration of ability to perform the procedures
required in Sec. Sec. 80.125 through 80.130 and this paragraph (h);
and
(iii) Sign a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities and documents
relevant to compliance with the requirements of Sec. Sec. 80.125
through 80.130 and this paragraph (h).
(i) Foreign refiner commitments. Any foreign refiner shall commit
to and comply with the provisions contained in this paragraph (i) as a
condition to being approved for as a foreign refiner under this subpart.
(1) Any United States Environmental Protection Agency inspector or
auditor must be given full, complete and immediate access to conduct
inspections and audits of the foreign refinery.
(i) Inspections and audits may be either announced in advance by
EPA, or unannounced.
(ii) Access will be provided to any location where:
(A) Gasoline is produced;
(B) Documents related to refinery operations are kept;
(C) Gasoline or blendstock samples are tested or stored; and
(D) Benzene-FRGAS is stored or transported between the foreign
refinery and the United States, including storage tanks, vessels and
pipelines.
(iii) Inspections and audits may be by EPA employees or contractors
to EPA.
(iv) Any documents requested that are related to matters covered by
inspections and audits must be provided to an EPA inspector or auditor
on request.
(v) Inspections and audits by EPA may include review and copying of
any documents related to:
(A) Refinery baseline establishment, if applicable, including the
volume and benzene content of gasoline; transfers of title or custody
of any gasoline or blendstocks whether Benzene-FRGAS or Non-Benzene-
FRGAS, produced at the foreign refinery during the period January 1,
2004 through December 31, 2005, and any work papers related to refinery
baseline establishment;
(B) The volume and benzene content of Benzene-FRGAS;
(C) The proper classification of gasoline as being Benzene-FRGAS or
as not being Benzene-FRGAS, or as Certified Benzene-FRGAS or as Non-
Certified Benzene-FRGAS, and all other relevant designations under this
subpart;
(D) Transfers of title or custody to Benzene-FRGAS;
(E) Sampling and testing of Benzene-FRGAS;
(F) Work performed and reports prepared by independent third
parties and by independent auditors under the requirements of this
section, including work papers; and
(G) Reports prepared for submission to EPA, and any work papers
related to such reports.
(vi) Inspections and audits by EPA may include taking samples of
gasoline, gasoline additives or blendstock, and interviewing employees.
(vii) Any employee of the foreign refiner must be made available
for interview by the EPA inspector or auditor, on request, within a
reasonable time period.
(viii) English language translations of any documents must be
provided to an EPA inspector or auditor, on request, within 10 working days.
(ix) English language interpreters must be provided to accompany
EPA inspectors and auditors, on request.
(2) An agent for service of process located in the District of
Columbia shall be named, and service on this agent constitutes service
on the foreign refiner or any employee of the foreign refiner for any
action by EPA or otherwise by the United States related to the
requirements of this subpart.
(3) The forum for any civil or criminal enforcement action related
to the
[[Page 15951]]
provisions of this section for violations of the Clean Air Act or
regulations promulgated thereunder shall be governed by the Clean Air
Act, including the EPA administrative forum where allowed under the
Clean Air Act.
(4) United States substantive and procedural laws shall apply to
any civil or criminal enforcement action against the foreign refiner or
any employee of the foreign refiner related to the provisions of this
section.
(5) Submitting a petition for participation in the benzene foreign
refiner program or producing and exporting gasoline under any such
program, and all other actions to comply with the requirements of this
subpart relating to participation in any benzene foreign refiner
program, or to establish an individual refinery gasoline benzene
baseline under this subpart constitute actions or activities covered by
and within the meaning of the provisions of 28 U.S.C. 1605(a)(2), but
solely with respect to actions instituted against the foreign refiner,
its agents and employees in any court or other tribunal in the United
States for conduct that violates the requirements applicable to the
foreign refiner under this subpart, including conduct that violates the
False Statements Accountability Act of 1996 (18 U.S.C. 1001) and
section 113(c)(2) of the Clean Air Act (42 U.S.C. 7413).
(6) The foreign refiner, or its agents or employees, will not seek
to detain or to impose civil or criminal remedies against EPA
inspectors or auditors, whether EPA employees or EPA contractors, for
actions performed within the scope of EPA employment related to the
provisions of this section.
(7) The commitment required by this paragraph (i) shall be signed
by the owner or president of the foreign refiner business.
(8) In any case where Benzene-FRGAS produced at a foreign refinery
is stored or transported by another company between the refinery and
the vessel that transports the Benzene-FRGAS to the United States, the
foreign refiner shall obtain from each such other company a commitment
that meets the requirements specified in paragraphs (i)(1) through (7)
of this section, and these commitments shall be included in the foreign
refiner's petition to participate in any benzene foreign refiner program.
(j) Sovereign immunity. By submitting a petition for participation
in any benzene foreign refiner program under this subpart (and
baseline, if applicable) under this section, or by producing and
exporting gasoline to the United States under any such program, the
foreign refiner, and its agents and employees, without exception,
become subject to the full operation of the administrative and judicial
enforcement powers and provisions of the United States without
limitation based on sovereign immunity, with respect to actions
instituted against the foreign refiner, its agents and employees in any
court or other tribunal in the United States for conduct that violates
the requirements applicable to the foreign refiner under this subpart,
including conduct that violates the False Statements Accountability Act
of 1996 (18 U.S.C. 1001) and section 113(c)(2) of the Clean Air Act (42
U.S.C. 7413).
(k) Bond posting. Any foreign refiner shall meet the requirements
of this paragraph (k) as a condition to approval as benzene foreign
refiner under this subpart.
(1) The foreign refiner shall post a bond of the amount calculated
using the following equation:
Bond = G x $ 0.01
Where:
Bond = amount of the bond in U.S. dollars
G = the largest volume of gasoline produced at the foreign refinery and
exported to the United States, in gallons, during a single calendar
year among the most recent of the following calendar years, up to a
maximum of five calendar years: the calendar year immediately preceding
the date the refinery's baseline petition is submitted, the calendar
year the baseline petition is submitted, and each succeeding calendar year.
(2) Bonds shall be posted by:
(i) Paying the amount of the bond to the Treasurer of the United States;
(ii) Obtaining a bond in the proper amount from a third party
surety agent that is payable to satisfy United States administrative or
judicial judgments against the foreign refiner, provided EPA agrees in
advance as to the third party and the nature of the surety agreement;
or
(iii) An alternative commitment that results in assets of an
appropriate liquidity and value being readily available to the United
States, provided EPA agrees in advance as to the alternative commitment.
(3) Bonds posted under this paragraph (k) shall--
(i) Be used to satisfy any judicial judgment that results from an
administrative or judicial enforcement action for conduct in violation
of this subpart, including where such conduct violates the False
Statements Accountability Act of 1996 (18 U.S.C. 1001) and section
113(c)(2) of the Clean Air Act (42 U.S.C. 7413);
(ii) Be provided by a corporate surety that is listed in the United
States Department of Treasury Circular 570 ``Companies Holding
Certificates of Authority as Acceptable Sureties on Federal Bonds'';
and
(iii) Include a commitment that the bond will remain in effect for
at least five years following the end of latest annual reporting period
that the foreign refiner produces gasoline pursuant to the requirements
of this subpart.
(4) On any occasion a foreign refiner bond is used to satisfy any
judgment, the foreign refiner shall increase the bond to cover the
amount used within 90 days of the date the bond is used.
(5) If the bond amount for a foreign refiner increases, the foreign
refiner shall increase the bond to cover the shortfall within 90 days
of the date the bond amount changes. If the bond amount decreases, the
foreign refiner may reduce the amount of the bond beginning 90 days
after the date the bond amount changes.
(l) [Reserved]
(m) English language reports. Any report or other document
submitted to EPA by a foreign refiner shall be in English language, or
shall include an English language translation.
(n) Prohibitions. (1) No person may combine Certified Benzene-FRGAS
with any Non-Certified Benzene-FRGAS or Non-Benzene-FRGAS, and no
person may combine Certified Benzene-FRGAS with any Certified Benzene-
FRGAS produced at a different refinery, until the importer has met all
the requirements of paragraph (o) of this section, except as provided
in paragraph (e) of this section.
(2) No foreign refiner or other person may cause another person to
commit an action prohibited in paragraph (n)(1) of this section, or
that otherwise violates the requirements of this section.
(o) United States importer requirements. Any United States importer
shall meet the following requirements:
(1) Each batch of imported gasoline shall be classified by the
importer as being Benzene-FRGAS or as Non-Benzene-FRGAS, and each batch
classified as Benzene-FRGAS shall be further classified as Certified
Benzene-FRGAS or as Non-Certified Benzene-FRGAS.
(2) Gasoline shall be classified as Certified Benzene-FRGAS or as
Non-Certified Benzene-FRGAS according to the designation by the foreign
refiner if this designation is supported by product transfer documents
prepared by the foreign refiner as required in paragraph
[[Page 15952]]
(d) of this section, unless the gasoline is classified as Non-Certified
Benzene-FRGAS under paragraph (g) of this section. Additionally, the
importer shall comply with all requirements of this subpart applicable
to importers.
(3) For each gasoline batch classified as Benzene-FRGAS, any United
States importer shall perform the following procedures.
(i) In the case of both Certified and Non-Certified Benzene-FRGAS,
have an independent third party:
(A) Determine the volume of gasoline in the vessel;
(B) Use the foreign refiner's Benzene-FRGAS certification to
determine the name and EPA-assigned registration number of the foreign
refinery that produced the Benzene-FRGAS;
(C) Determine the name and country of registration of the vessel
used to transport the Benzene-FRGAS to the United States; and
(D) Determine the date and time the vessel arrives at the United
States port of entry.
(ii) In the case of Certified Benzene-FRGAS, have an independent
third party:
(A) Collect a representative sample from each vessel compartment
subsequent to the vessel's arrival at the United States port of entry
and prior to off loading any gasoline from the vessel;
(B) Obtain the compartment samples; and
(C) Determine the benzene content value of each compartment sample
using the methodology specified at 80.46(e) by the third party
analyzing the sample or by the third party observing the importer
analyze the sample.
(4) Any importer shall submit reports within 30 days following the
date any vessel transporting Benzene-FRGAS arrives at the United States
port of entry:
(i) To the Administrator containing the information determined
under paragraph (o)(3) of this section; and
(ii) To the foreign refiner containing the information determined
under paragraph (o)(3)(ii) of this section, and including
identification of the port at which the product was offloaded.
(5) Any United States importer shall meet all other requirements of
this subpart, for any imported gasoline that is not classified as
Certified Benzene-FRGAS under paragraph (o)(2) of this section.
(p) Truck imports of Certified Benzene-FRGAS produced at a foreign
refinery. (1) Any refiner whose Certified Benzene-FRGAS is transported
into the United States by truck may petition EPA to use alternative
procedures to meet the following requirements:
(i) Certification under paragraph (d)(5) of this section;
(ii) Load port and port of entry sampling and testing under
paragraphs (f) and (g) of this section;
(iii) Attest under paragraph (h) of this section; and
(iv) Importer testing under paragraph (o)(3) of this section.
(2) These alternative procedures must ensure Certified Benzene-
FRGAS remains segregated from Non-Certified Benzene-FRGAS and from Non-
Benzene-FRGAS until it is imported into the United States. The petition
will be evaluated based on whether it adequately addresses the following:
(i) Provisions for monitoring pipeline shipments, if applicable,
from the refinery, that ensure segregation of Certified Benzene-FRGAS
from that refinery from all other gasoline;
(ii) Contracts with any terminals and/or pipelines that receive
and/or transport Certified Benzene-FRGAS, that prohibit the commingling
of Certified Benzene-FRGAS with any of the following:
(A) Other Certified Benzene-FRGAS from other refineries.
(B) All Non-Certified Benzene-FRGAS.
(C) All Non-Benzene-FRGAS;
(iii) Procedures for obtaining and reviewing truck loading records
and United States import documents for Certified Benzene-FRGAS to
ensure that such gasoline is only loaded into trucks making deliveries
to the United States;
(iv) Attest procedures to be conducted annually by an independent
third party that review loading records and import documents based on
volume reconciliation, or other criteria, to confirm that all Certified
Benzene-FRGAS remains segregated throughout the distribution system and
is only loaded into trucks for import into the United States.
(3) The petition required by this section must be submitted to EPA
along with the application for temporary refiner relief individual
refinery benzene standard under this subpart.
(q) Withdrawal or suspension of foreign refiner status. EPA may
withdraw or suspend a foreign refiner's benzene baseline or standard
approval for a foreign refinery where--
(1) A foreign refiner fails to meet any requirement of this section;
(2) A foreign government fails to allow EPA inspections as provided
in paragraph (i)(1) of this section;
(3) A foreign refiner asserts a claim of, or a right to claim,
sovereign immunity in an action to enforce the requirements in this
subpart; or
(4) A foreign refiner fails to pay a civil or criminal penalty that
is not satisfied using the foreign refiner bond specified in paragraph
(k) of this section.
(r) Early use of a foreign refiner benzene baseline. (1) A foreign
refiner may begin using an individual refinery benzene baseline under
this subpart before EPA has approved the baseline, provided that:
(i) A baseline petition has been submitted as required in paragraph
(b) of this section;
(ii) EPA has made a provisional finding that the baseline petition
is complete;
(iii) The foreign refiner has made the commitments required in
paragraph (i) of this section;
(iv) The persons that will meet the independent third party and
independent attest requirements for the foreign refinery have made the
commitments required in paragraphs (f)(3)(iii) and (h)(7)(iii) of this
section; and
(v) The foreign refiner has met the bond requirements of paragraph
(k) of this section.
(2) In any case where a foreign refiner uses an individual refinery
baseline before final approval under paragraph (r)(1) of this section,
and the foreign refinery baseline values that ultimately are approved
by EPA are more stringent than the early baseline values used by the
foreign refiner, the foreign refiner shall recalculate its compliance,
ab initio, using the baseline values approved by the EPA, and the
foreign refiner shall be liable for any resulting violation of the
requirements of this subpart.
(s) Additional requirements for petitions, reports and
certificates. Any petition for approval to produce gasoline subject to
the benzene foreign refiner program, any alternative procedures under
paragraph (p) of this section, any report or other submission required
by paragraph (c), (f)(2), or (i) of this section, and any certification
under paragraph (d)(3) of this section shall be--
(1) Submitted in accordance with procedures specified by the
Administrator, including use of any forms that may be specified by the
Administrator.
(2) Be signed by the president or owner of the foreign refiner
company, or by that person's immediate designee, and shall contain the
following declaration:
I hereby certify: (1) That I have actual authority to sign on
behalf of and to bind [insert name of foreign refiner] with regard
to all statements contained herein; (2) that I am aware that the
information contained herein is being Certified, or submitted to the
United States Environmental Protection Agency, under the
requirements of 40 CFR part 80, subpart L, and that the information is
[[Continued on page 15953]]
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