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

[Federal Register: December 21, 2005 (Volume 70, Number 244)]
[Rules and Regulations]
[Page 75913-75921]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21de05-16]
[[Page 75914]]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[OAR-2003-0217; FRL-8011-4]
RIN 2060-AK04

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

AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.

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

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

ADDRESSES: EPA has established a docket for this action under OAR-2003-
0217. All documents in the docket are listed in the EDOCKET index at
http://www.epa.gov/edocket. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
the disclosure of which is restricted by statute. Certain other
material, such as copyrighted material, is not placed on the Internet
and will be publicly available only in hard copy form. Publicly
available docket materials are available either electronically in
EDOCKET or in hard copy at the Air Docket in the EPA Docket Center,
EPA/DC, EPA West, Room B102, 1301 Constitution Avenue, NW., Washington,
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number for the
Air Docket is (202) 566-1742.

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

SUPPLEMENTARY INFORMATION:

I. General Information

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

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NAICSs codes Examples of potentially
Category \a\ SIC codes \b\ regulated parties
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Industry...................................... 324110 2911 Petroleum refiners.
Industry...................................... 422710 5171 Gasoline Marketers and
422720 5172 Distributors.
----------------------------------------------------------------------------------------------------------------
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could be potentially regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
an entity is regulated by this action, one should carefully examine the
RFG provisions at 40 CFR part 80, particularly Sec. 80.81 dealing
specifically with California gasoline. If you have questions regarding
the applicability of this action to a particular entity, consult the
person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

II. History of the California Enforcement Exemptions

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

[[Page 75915]]

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

------------------------------------------------------------------------
Requirement exempted Citation at 40 CFR 80.xx
------------------------------------------------------------------------
Compliance Surveys.\4\ 80.68
Independent Sampling & Testing....... 80.65(f)
Designation of Gasoline.............. 80.65(d)
Marking of Conventional Gasoline..... 80.65(g) and 80.82
Downstream Oxygenate Blending........ 80.69
Recordkeeping........................ 80.74 and 80.104
Reporting............................ 80.75 and 80.105
Product Transfer Documents........... 80.77
Parameter Value Reconciliation 80.65(e)(2)
Requirements.
Reformulated Gasoline and 80.65(c)
Reformulated Gasoline Blendstock for
Oxygenate Blending (RBOB) Compliance
Requirements.
Annual Compliance Audit Requirements. 80.65(h)
Compliance Attest Engagement subpart F
Requirements.
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California refiners, importers, and blenders were not granted
exemptions from these Federal enforcement requirements with regard to
gasoline delivered for use outside California, because the California
Phase 2 standards and the CARB enforcement program do not apply to
gasoline delivered for use outside of California.
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\4\ Partial exemption from oxygen survey requirement. See 63 FR
34818, 34820-34822 (June 26, 1998). Also see fn. 9.
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The original California enforcement exemptions expired on December
31, 1999 when the Federal Phase II RFG started. The exemptions expired
because they were based on a comparison of California Phase 2 gasoline
and Federal Phase I RFG. An appropriate equivalency determination
comparing California Phase 2 and Federal Phase II gasolines would have
been premature in 1994, when the final RFG regulations were issued.
However, on September 15, 1999, we published a direct final rule
continuing the California enforcement exemptions beyond December 31,
1999.\5\ We took this action after comparing California Phase 2
gasoline and Federal Phase II RFG. In brief, we concluded that:
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\5\ See ``Regulation of Fuels and Fuel Additives, Extension of
California Enforcement Exemptions for Reformulated Gasoline Beyond
December 31, 1999'' Direct Final rule, 64 FR 49992 (September 15, 1999).
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(1) The emissions reductions resulting from the California Phase 2
RFG standards would be equal to or greater than the reductions from the
Federal Phase II RFG standards;
(2) The content standards for benzene under California Phase 2
would be equivalent in practice to the Federal Phase II content
standard and that the oxygen content standard of 2.0 weight percent
would be achieved in Federal RFG areas, and
(3) CARB's compliance and enforcement program was designed to be
sufficiently rigorous to ensure that Federal Phase II requirements
would be met in practice.\6\
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\6\ See the Notice of Proposed Rulemaking (which accompanied the
Direct Rule cited in footnote 5) at 64 FR 50036, 50038-50040
(September 15, 1999).
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III. Today's Action and Response to Comments on the Notice of Proposed
Rulemaking

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

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

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

[[Page 75916]]

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

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

[[Page 75917]]

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

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

[[Page 75918]]

2.7....................................... 8 6.73 45.40 89.00 26.30 1.90 0.63 28.9 32.1 15.0
2.7....................................... 10 6.69 45.40 88.30 25.30 2.80 0.65 29.4 32.3 15.1
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Table 3, below, shows that non-oxygenated CaRFG3 produced under
each of the scenarios that EPA evaluated meets Federal RFG performance
standards. All of the fuels shown in Table 3, which EPA believes to be
reasonably representative of the fuel formulations that refiners would
produce in California without an oxygen content requirement are
predicted to perform better than the Federal RFG per gallon and
averaged standards. (See footnote 9 for a discussion of the oxygen
content requirement in light of the Energy Policy Act of 2005.)

Table 3.--Complex Model Performance of Non-Oxygenated CaRFG3 Using MathPro Gasoline Property Estimates
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Sulfur RVP Aromatics Olefins Benzene Toxics
Ethanol (wt% oxygen) (ppm) (psi) E200 (%) E300 (%) (vol%) (vol%) (vol%) VOC (% ) (%) NOX (%)
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0.0....................................... 8 6.60 47.7 87.4 23.0 5.9 0.57 30.7 32.5 15.1
0.0....................................... 7 6.60 48.7 87.6 28.6 4.7 0.51 30.0 30.4 14.0
0.0....................................... 8 6.60 48.1 87.2 26.9 2.4 0.46 29.7 32.0 14.3
0.0....................................... 10 6.60 47.7 88.0 24.3 3.9 0.49 30.3 32.9 14.8
0.0....................................... 12 6.60 49.0 85.8 24.8 6.0 0.52 30.5 32.2 14.3
0.0....................................... 10 6.60 49.2 87.4 28.6 4.1 0.53 30.0 30.2 13.8
0.0....................................... 12 6.60 47.6 86.8 21.2 6.3 0.52 31.0 33.8 15.3
0.0....................................... 9 6.60 47.9 87.6 25.7 3.9 0.49 30.1 32.2 14.5
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Based upon a comparison of the CaRFG3 flat limit ``recipe'' and
Federal Phase II Complex model standards, as well as a consideration of
possible California fuel formulations certified using the California
Phase 3 predictive model, we have concluded that the NO_X,
VOC and toxics emissions reductions resulting from the CaRFG3 standards
would be equal to or greater than the Federal Phase II RFG standards.
The content standard for benzene for CaRFG3 is equivalent to or
better than the Federal Phase II standards. The California flat limit
benzene standard is 0.80 volume percent and the averaged standard is
0.70 volume percent with a 1.10 volume percent cap. By comparison, the
Federal per gallon benzene standard is 1.00 volume percent and the
averaged standard is 0.95 volume percent with a 1.30 volume percent
cap. EPA retains the authority to sample and test California gasoline
to make sure it meets all applicable Federal standards.
In developing the proposed rule, we considered the design and
implementation of CARB's enforcement program, which includes
enforcement at refineries, import facilities, terminals, and service
stations. CARB's enforcement program is generally outlined in its
regulations and includes requirements that refiners submit annual
compliance plans,\19\ which outline how they will meet CaRFG3
requirements, and that refiners and importers conduct testing and
maintain records of testing performed on batches of gasoline.\20\ CARB
staff summarized information on its actual enforcement activities in
fiscal years 1999-2000 and 2000-2001, indicating that 6.6% and 6.5% of
gasoline sold in California was inspected, during each respective
period. In 1999-2000, the violation rate was 1.9% (based on volumes
sampled) and 0.5% (based on the number of samples). In 2000-2001, the
violation rate was 0.16% (based on volumes sampled) and 1.06% (based on
the number of samples). We believe that, considering the presence of
adequate enforcement provisions in its regulations and CARB's actual
enforcement activities, that the CARB enforcement program is
sufficiently stringent to ensure that the California standards will be
met. For all these reasons, we have determined that it is appropriate
to apply the enforcement exemptions at 40 CFR 80.81 to refiners,
importers, and blenders of CaRFG3.
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\19\ Title 13, CCR section 2269.
\20\ Title 13, CCR section 2270.
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C. Definition of California Gasoline

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

D. Response to Comments

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

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

Under Executive Order 12866, 58 Federal Register 51,735 (October 4,
1993), the Agency must determine whether the regulatory action is
``significant'' and therefore subject to OMB review and the
requirements of the Executive Order. The Order defines ``significant
regulatory action'' as one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;

[[Page 75919]]

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

B. Paperwork Reduction Act

This rule does not impose any new information collection burden.
Today's rule extends enforcement exemptions to refiners of CaRFG3 and
would reduce burdens associated with overlapping Federal and state
requirements, including recordkeeping and reporting requirements.
However, the Office of Management and Budget (OMB), under the
provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., has
previously approved the information collection requirements contained
in the final reformulated gasoline (RFG) and anti-dumping rulemaking
and gasoline sulfur control rulemaking, and has assigned OMB control
numbers 2060-0277 and 202-0308. A copy of the OMB approved Information
Collection Request (ICR) may be obtained from the Collection Strategies
Division; U.S. Environmental Protection Agency (2822T); 1200
Pennsylvania Ave., NW., Washington, DC 20460.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
An Agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.

C. Regulatory Flexibility Act (RFA)

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

D. Unfunded Mandates Reform Act

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

E. Executive Order 13132: Federalism

Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by state and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' are defined in the
Executive Order to include

[[Page 75920]]

regulations that have ``substantial direct effects on the states, on
the relationship between the National Government and the states, or on
the distribution of power and responsibilities among the various levels
of government.''
This rule does not have federalism implications. It does not have
substantial direct effects on the states, on the relationship between
the National Government and the states, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. Today's rule extends enforcement
exemptions to refiners of CaRFG3 and would reduce burdens associated
with overlapping Federal and state requirements, including
recordkeeping and reporting requirements. Thus, Executive Order 13132
does not apply to this rule.

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

Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (59 FR 22951, November 6, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' are defined in the Executive Order to include
regulations that have ``substantial direct effects on one or more
Indian tribes, on the relationship between the Federal Government and
the Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.''
This rule does not have tribal implications. It will not have
substantial direct effects on tribal governments, on the relationship
between the Federal Government and Indian tribes, or on the
distribution of power and responsibilities between the Federal
Government and Indian tribes, as specified in Executive Order 13175.
This rule applies to refiners, importers and blenders of CaRFG3 and
does not impose any enforceable duties on communities of Indian tribal
governments. Thus, Executive Order 13175 does not apply to this rule.

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

Executive Order 13045: Protection of Children from Environmental
Health Risks and Safety Risks (62 FR 19885, April 23, 1997) applies to
any rule that: (1) Is determined to be economically significant as
defined under Executive Order 12866, and (2) concerns an environmental
health or safety risk that EPA has reason to believe may have a
disproportionate effect on children. If the regulatory action meets
both criteria, the Agency must evaluate the environmental health or
safety effects of the planned rule on children, and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
EPA interprets Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under section 5-501 of the Order has the
potential to influence the regulation. This rule is not subject to E.O.
13045, entitled ``Protection of Children from Environmental Health
Risks and Safety Risks'' (62 FR 19885, April 23, 1997), because it does
not involve decisions on environmental health risks or safety risks
that may disproportionately affect children.

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

This rule is not an economically ``significant energy action'' as
defined in Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it does not have a significant adverse effect
on the supply, distribution, or use of energy.

I. National Technology Transfer and Advancement Act

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

J. Statutory Provisions and Legal Authority

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

K. Congressional Review Act

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

List of Subjects in 40 CFR Part 80

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

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

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

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

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

Subpart D--[Amended]

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

[[Page 75921]]

Sec. 80.81 Enforcement exemptions for California gasoline.

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

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