Establishment of Alternative Compliance Periods Under the Anti-
Dumping Program
Related Material
[Federal Register: September 8, 2000 (Volume 65, Number 175)]
[Proposed Rules]
[Page 54447-54454]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se00-17]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-6864-9]
Establishment of Alternative Compliance Periods Under the Anti-
Dumping Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Clean Air Act as amended in 1990 (``the Act'') directs the
Environmental Protection Agency (``EPA'' or ``we'') to issue
regulations requiring reformulated gasoline for major metropolitan
areas with the worst ozone air pollution problems. Other areas with
ozone levels exceeding the public health standards may voluntarily
choose to participate in the federal reformulated gasoline program. In
order to ensure that the ``dirtier'' components of reformulated
gasoline are not dumped into gasoline sold in areas not participating
in the reformulated gasoline program (``conventional gasoline'' areas),
the Act requires EPA to ensure that the quality of conventional
gasoline does not fall below 1990 levels. The Act also mandates that we
establish an appropriate compliance period or compliance periods
associated with meeting the anti-dumping standards. Under the existing
regulations for reformulated gasoline and anti-dumping, the compliance
period is one year. However, we believe that in certain limited
circumstances a longer conventional gasoline anti-dumping may be
appropriate on a temporary basis. Such an alternative compliance period
would be only appropriate for a refiner who produces conventional
gasoline and who is starting up a refinery and facing significant
hardship in complying with the anti-dumping statutory baseline
NOX standard. Moreover, we believe that it would be
appropiate for any refinery subject to an alternative compliance period
to meet additional substantive and administrative requirements to
ensure that there is no environmental detriment as a result of the
longer averaging period. This notice of proposed rulemaking sets forth
proposed procedures for establishing alternative compliance periods
under the anti-dumping program and the proposed standards applicable to
refineries operating under such compliance periods.
DATES: Comments or a request for a public hearing must be received by
October 10, 2000.
ADDRESSES: If you wish to submit comments or request a public hearing,
you should send any written materials to the docket address listed and
to Anne Pastorkovich, Attorney/Advisor, Transportation & Regional
Programs Division, U.S. Environmental Protection Agency, 1200
Pennsylvania Avenue, NW. (6406J), Washington, DC 20460, (202) 564-8987.
Materials relevant to this proposed rule have been placed in docket A-
2000-27 located at U.S. Environmental Protection Agency, Air Docket
Section, Room M-1500, 401 M Street, SW, Washington, DC 20460. The
docket is open for public inspection from 8:00 a.m. until 5:30 p.m.,
Monday through Friday, except on Federal holidays. You may be charged a
reasonable fee for photocopying services.
FOR FURTHER INFORMATION CONTACT: If you would like further information
about this rule or to request a hearing, contact Anne Pastorkovich,
Attorney/Advisor, Transportation & Regional Programs Division, (202)
564-8987.
SUPPLEMENTARY INFORMATION:
I. Regulated Entities
Entities potentially regulated by the proposed action are parties
that produce conventional gasoline. Regulated categories and entities
include:
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Category Examples
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Industry.................................. Gasoline refiners
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This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
proposed action. This table lists all entities that we are now aware
could potentially be regulated by this proposed action. Other types of
entities not listed in this table could also be regulated by this
proposed action. To determine whether your business would be regulated
by this proposed action, you should carefully examine the applicability
criteria in part 80 of Title 40 of the Code of Federal Regulations. If
you have any questions regarding the applicability of this proposed
action to a particular entity, consult the person listed in the
preceding section of this document.
II. Background
This section summarizes the anti-dumping program. Since refiners
who request flexibility under today's proposed rule are likely to elect
to use sulfur-reducing technologies early in order to meet production
requirements under this proposed rule, a brief overview of the Tier 2
gasoline program is included as well.
The Anti-Dumping Program
The Clean Air Act required EPA to establish rules for reformulated
gasoline (RG) designed to result in significant reductions in vehicle
emissions of ozone-forming and toxic air pollutants. Reformulated
gasoline is required to be used in specific metropolitan areas with the
worst ozone problems. Several other areas with ozone levels exceeding
the public health standard have voluntarily chosen to use RFG.
Additionally, the Act required us to establish regulations covering all
gasoline that is not reformulated. Such gasoline is called conventional
gasoline, and the standards governing it are called the anti-dumping
standards. We issued final reformulated gasoline and anti-dumping
regulations on December 15, 1993\1\ and the standards in those
regulations became effective in January 1995.
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\1\ ``Regulation of Fuels and Fuel Additives: Standards for
Reformulated and Conventional Gasoline--Final Rule,'' 59 FR 7812
(February 16, 1994). See 40 CFR part 80, subparts D, E, and F.
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The purpose of anti-dumping standards is to ensure that the quality
of a refiner's conventional gasoline does not get worse once the
reformulated gasoline program begins. To ensure that this does not
happen, the Act requires that each refiner's conventional gasoline be
at least as clean as the gasoline produced by that refiner during a
specific ``baseline'' year. The baseline reference year specified in
the Act is 1990. The anti-dumping program specifically governs the
exhaust toxics and NOX emissions of conventional gasoline.
These emissions are determined using the Complex Model, a tool which
uses the fuel specifications, or parameters, of a gasoline blend to
calculate which emissions associated with that gasoline. The fuel
parameters included in the Complex Model are aromatics, olefins,
benzene, sulfur, oxygen content and oxygenate type, the percent of fuel
evaporated at 200 deg.F and 300 deg.F (E200 and E300, respectively) and
Reid vapor pressure, or RVP.
[[Page 54448]]
Under the anti-dumping program, each refinery and importer has an
individual baseline consisting of a set of values for the Complex Model
fuel parameters and the exhaust toxics and NOX emissions
associated with those values representing the specification of the
gasoline that the refiner produced in 1990. An individual baseline can
be one of two types. The first type is the unique individual baseline.
A refinery or importer has a unique individual baseline if it was in
operation for at least 6 months in 1990 and had sufficient data and
supporting analysis to determine the actual quality of its 1990
gasoline to EPA's satisfaction. Those with unique individual baselines
also have an associated individual baseline volume, which is the volume
of gasoline produced or imported by that refiner in 1990. The other
type of individual baseline is the statutory baseline. The statutory
baseline consists of a set of fixed values for the Complex Model fuel
parameters and the emissions associated with those values which
represent the average quality of all gasoline produced or sold in the
United States in 1990. The summer portion of the statutory baseline was
specified in the Clean Air Act; the corresponding winter portion was
developed by EPA. Together, the summer and winter portions form the
annual average statutory baseline which is specified in 40 CFR Part
80.91(c)(5). There is no individual baseline volume for those
refineries or importers for which the statutory baseline is the
individual baseline.
Compliance with the anti-dumping requirements is determined on an
annual basis. Each batch of gasoline is evaluated under the appropriate
summer or winter portion of the Complex Model; the resulting emissions
calculated for batch are volume-weighted to determine the annual
average exhaust toxics and NOX emissions for the refinery or
importer. The resulting annual average emissions are compared to the
baseline emissions values to determine whether the refinery or importer
is in or out of compliance with its anti-dumping standards.
Section 211(k)(8)(D) of the Act directs us to establish ``an
appropriate compliance period or compliance periods'' to be used for
assessing compliance with the anti-dumping regulations. As mentioned
above, we have established a one year compliance period for anti-
dumping. A one year compliance period is consistent with other fuels
programs utilizing averaging and annual reporting, including the RFG
program. Generally, a one year compliance period is desirable because
it provides an effective monitoring period for environmental purposes
while permitting flexibility with respect to averaging over the
calendar year. A one year period gives more assurance that gross
violations will not occur before the violation is discovered and
appropriate action is taken and that those responsible for the
violation are held accountable. A one year period prevents a company
from violating for several years, generating a long-term environmental
detriment, and then going out of business before it can be held
accountable. A one year period is also simple for compliance accounting
purposes. Although we chose the one year compliance period for the
reasons just mentioned, we recognize that the Act permits us to
establish alternative anti-dumping compliance periods by regulation.
Tier 2 Gasoline
Since the passage of the 1990 Clean Air Act Amendments, the U.S.
has made significant progress in reducing emissions from passenger cars
and light trucks through implementation of programs like RFG and anti-
dumping. Nonetheless, due to increasing vehicle population and vehicle
miles traveled, passenger cars and light duty trucks will continue to
be significant contributors to air pollution. In light of this trend
and to build upon programs aimed at reducing emissions from motor
vehicles and motor vehicle fuels, EPA recently issued regulations
establishing lower sulfur content for all gasoline \2\ (i.e., ``Tier 2
gasoline'') and establishing stricter tailpipe emissions standards for
all passenger vehicles, including sport utility vehicles (SUVs),
minivans, and vans and pick-up trucks under 8,500 lbs. The Tier 2
program will also reduce ozone and particulate matter (PM) pollution.
Gasoline sulfur levels significantly affect NOX emissions.
Since NOX emissions are ozone precursors, a reduction in the
sulfur level of gasoline will reduce ozone pollution. The level of
gasoline sulfur control required under the Tier 2 program will also
benefit the environment by directly reducing emissions of sulfur
compounds.
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\2\ ``Control of Air Pollution from New Motor Vehicles: Tier 2
Motor Vehicles Emissions Standards and Gasoline Sulfur Control
Requirements--Final Rule,'' 65 FR 6698 (February 10, 2000). See also
40 CFR part 80, subpart H for regulations applicable to gasoline
sulfur.
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The Tier 2 gasoline standards will be fully implemented by 2006 by
all refiners except for those subject to geographic phase-in area (GPA)
requirements, who have until 2007, and certain other qualifying
refiners, who have until 2008. (If a hardship extension is granted, an
individual refiner may have until 2010 to meet the final standards.)
The Tier 2 program is structured to permit averaging in order to meet
the sulfur standard, with an average sulfur content standard of 30 ppm
and a per gallon sulfur limit of 80 ppm by the date of full
implementation. Benefits from the Tier 2 gasoline program may be seen
more immediately, as some refiners are expected to start lowering
sulfur levels as early as this year. Those who lead the way in reducing
sulfur earlier than required may generate marketable credits or
allotments. As with the RFG and anti-dumping programs, compliance is
demonstrated based upon a one year compliance period.
III. Today's Proposed Action
Need for and Purpose of Today's Proposed Action
As discussed above, section 211(k)(8)(D) of the Act directs EPA to
establish an appropriate compliance period or compliance periods for
the purpose of assessing compliance with anti-dumping requirements. At
the present time, the only compliance period that has been established
for anti-dumping is a one year compliance period. The one year
compliance period is consistent with the one year period established
under other existing fuels programs and, at the time the anti-dumping
regulations were developed, there was no compelling reason or
identified benefit to specifying any alternative compliance period.
We believe that achieving the Tier 2 gasoline sulfur reductions, at
the refinery level, as soon as possible is an extremely valuable
mechanism for reducing vehicle emissions, perhaps more so than any
other recently promulgated gasoline regulation. We are also aware of at
least one refinery in a start-up mode which would be able to achieve
the applicable Tier 2 gasoline sulfur reductions earlier than required,
but would not be able to comply with its anti-dumping standard, which
is the statutory baseline, in early production years. In order to
comply with its anti-dumping standard, the refiner would have to delay
the start-up process and significantly delay the time frame in which it
could produce gasoline meeting the Tier 2 gasoline sulfur standards.
Because we believe that achieving the Tier 2 gasoline sulfur levels
is critical to reducing ozone levels by reducing emissions of the ozone
precursor NOX (see the discussion in ``Summary of Today's
Proposed Action'' below), we
[[Page 54449]]
believe it would be appropriate to allow an alternative anti-dumping
compliance period for a refinery in start-up mode, provided that the
refiner can show that the refinery will achieve the Tier 2 gasoline
sulfur levels earlier than otherwise required. At the same time, we
want to ensure that no environmental detriment occurs as a result of
the flexibility we are providing, and have included other requirements
the refinery would have to meet which will provide the appropriate
environmental protection. The details of the proposed flexibility are
described below.
Summary of Today's Proposed Action
We are proposing to permit a refinery in start-up mode which is
unable to meet its anti-dumping standard during the start-up process,
but which would otherwise be able to meet the Tier 2 gasoline sulfur
standards earlier than required, to petition the Agency for an
alternative compliance period. The Tier 2 standards for most refiners
take effect in 2006. (See ``Tier 2 Gasoline,'' above, for a more
detailed discussion of refiner compliance dates.) A refinery eligible
for this proposed relief must be starting up production of conventional
gasoline and must never have produced conventional gasoline that was
subject to the anti-dumping regulations. To ensure that the refinery
will meet the applicable Tier 2 gasoline standards early, the
alternative compliance period would be limited to a two to five year
span, as determined by the Agency. Because of the other requirements
associated with this proposed rule, we believe that a refinery would
choose to request the shortest alternative compliance period possible.
Additionally, a refiner would have to show that it would be unable to
meet its anti-dumping NOX requirement under the current, one
year compliance period. While the anti-dumping standard for a refinery
involves both exhaust toxics and NOX emissions, we believe
that the proposed alternative compliance period should only be
available to a refinery upon a showing that it would otherwise be
unable to meet its NOX standard. This is because sulfur
significantly affects NOX emissions,\3\ and decreasing
sulfur will result in significant NOX emission reductions by
moving toward the goal of the low sulfur levels required by the Tier 2
standards. Though a refiner may have difficulty meeting its exhaust
toxics anti-dumping standard, for which fuel benzene and aromatics are
the primary fuel parameters, the refinery units which impact these two
fuel parameters are different than those used to reduce sulfur. (Most
refineries will need to install new equipment in order to reduce sulfur
to the levels required under the Tier 2 standards.) Thus, reducing
benzene and/or aromatics does not contribute to the goal of achieving
the Tier 2 gasoline sulfur levels early, and, consequently, an
alternative compliance period based on the inability to meet the anti-
dumping exhaust toxics standard would not be appropriate given the
considerations underlying today's proposed rule.
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\3\ Under the Complex Model, the tool used to evaluate anti-
dumping performance, olefins is the other fuel parameter which
significantly impacts NOX emissions.
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In addition to meeting the Tier 2 gasoline sulfur standards early,
the gasoline produced by a refinery over the entire alternative
compliance period would have to result in a net NOX benefit
(compared to the statutory baseline) that is at least twice as large as
the total NOX deficit generated during the period of time
during which the refinery produced gasoline that did not comply with
the statutory baseline. Additionally, the refiner would have to
purchase stationary source NOX credits sufficient to offset
any NOX deficit generated (on a quarterly basis) and would
have to meet the specific requirements of this proposed rule, including
additional reporting requirements. By proposing to modify the standards
applicable to refineries with an alternative compliance period, we are
providing appropriate assurance that no environmental disbenefit occurs
as a result of allowing an alternative compliance period.
When regulated entities cut emissions more than is required, the
``extra'' environmental benefit may be considered as a pollution
credit, usually measured in tons, that may be sold or banked for future
use. Emissions trading associations have been created to facilitate the
buying and selling of pollution credits. Marketable NOX
credits are currently generated through NOX reduction
programs in 13 states. In addition, there is a multi-state
NOX emission trading program operating in eight Northeastern
states that are members of the Ozone Transport Commission. Further
information on NOX trading programs is available on the
Internet at www.epa.gov/acidrain/programs.html.
As described below in ``How the Agency Proposes to Act on a
Petition'' and ``The Refiner's Proposed Responsibilities if a Petition
is Granted,'' NOX credits purchased quarterly to offset any
NOX deficit must be held by a refinery that operates under
an adjusted compliance period under this proposed rule. These banked
credits function as collateral against any NOX deficiencies
that the refiner creates, to minimize the possibility of environmental
harm in the event that the refiner does not fulfill its obligation
under the other requirements of this proposed rule. If, as planned, the
refinery eventually produces gasoline that meets and then exceeds the
NOX baseline, the refiner may sell NOX credits
equal to the benefit produced during that quarter. If the refinery
violates the conditions under which its petition is granted, the
NOX credits may be forfeited. The intention of this proposed
provision is that environment will suffer no net loss, although any
NOX deficit may occur in a different location than a
NOX credit was generated. Much of the gasoline in the U.S.
is produced on the Gulf Coast and other coastal areas and shipped
throughout the country, primarily by pipeline. Gasoline is fungible,
and is normally transported in pipelines mixed with other batches that
meet the same specifications. In general, it is not possible to predict
where a particular batch of gasoline included in larger shipment will
end up; as a result, it is not generally possible to predict where a
NOX deficit may occur. Similarly, it is not possible to
predict where the air quality benefit from the doubled payback of any
NOX deficit will occur.
Who May Petition for an Alternative Anti-Dumping Compliance Period
Under this proposed rule, a refiner may petition EPA for an
alternative compliance period for any refinery that is starting up
gasoline production for the first time under the anti-dumping
requirements, that is subject to the statutory baseline, and that can
demonstrate a significant hardship with regard to producing gasoline
conforming to the statutory baseline for NOX in the early
years of production. Flexibility with regard to alternative anti-
dumping compliance periods will be particularly helpful for challenged
refiners (as described in the Tier 2 gasoline sulfur rule), including
small refiners; however, any refiner who meets the threshold conditions
above would be able to submit a petition. The petition may be for a
domestic or foreign refinery. The refiner would have to have specific
plans to bring its gasoline into compliance with the statutory baseline
early enough through the alternative compliance period in order to
achieve the two-fold NOX payback. Furthermore, the refiner
would have to have specific and demonstrable plans to produce gasoline
to pay back any NOX deficit by the end of the requested
compliance
[[Page 54450]]
period. For many refiners, these plans would likely include early
installation of sulfur-reducing technologies necessary to meet the Tier
2 gasoline standards.
When Would Petitions Have To Be Received By?
A refiner who meets the threshold conditions would be able to
petition the Agency for an alternative anti-dumping compliance period.
For reasons discussed in the preceding sections, we believe that the
window during which this flexibility is appropriate is the period
before the Tier 2 gasoline program standards fully apply. Therefore,
petitions for alternative anti-dumping compliance periods of four or
five years in length would have to be received by no later than June 1,
2001. For an alternative compliance period of two or three years in
length, the petition would have to be received no later than June 1,
2003. No alternative anti-dumping compliance period may be designed to
start, or requested to start, after January 1, 2004 or to end after
December 31, 2005.
What a Petition for an Alternative Anti-Dumping Compliance Period Would
Have To Contain
A refiner would be able to petition for an alternative anti-dumping
compliance period of two, three, four, or five years in length. The
petition would have to contain, at a minimum:
The business name and address and any location(s) where
the refiner conducts operations.
The name and contact information for the responsible
corporate officer and a contact person who can provide further
clarification with regard to information in the petition.
A detailed explanation of why the refinery is eligible to
request an alternative anti-dumping compliance period. This explanation
would include documentation showing that the refinery is starting up
production and has never produced conventional gasoline subject to the
anti-dumping regulations and information demonstrating the hardship the
refinery will experience meeting the anti-dumping statutory baseline
NOX standard.
The length of the averaging period requested (2, 3, 4, or
5 years) and a justification for why that length of averaging period is
required.
An estimate as to when the refinery can produce gasoline
that will meet the statutory baseline standard for NOX.
The refinery's estimated gasoline production and average
NOX level for each of the years in which the alternative
averaging period is required.
A detailed description of the current refinery equipment
and configuration.
A detailed description of any changes or enhancements to
the refinery equipment and configuration that will occur during the
alternative averaging period requested.
The current nominal crude capacity of the refinery as
reported to the Energy Information Administration (EIA) of the
Department of Energy (DOE).
A detailed explanation of the refiner's plans to finance
capital improvements at the refinery in order to meet all current
applicable EPA gasoline and diesel fuel quality standards.
A demonstration that the refiner has the funds and
identified sources from which to purchase stationary source
NOX credits sufficient to offset the maximum projected
NOX deficit. An equation for calculating the NOX
deficit and NOX benefit is included in the regulations.
A full disclosure and explanation of any matters of non-
compliance or violations of any environmental statutes or requirements
for which the refiner has received notification by any state, local, or
Federal agency.
A signed agreement by any parent company or, in the case
of a joint venture, individual partners, if applicable, acknowledging
that they will be liable for any violations.
Any other information the Administrator may require in
order to fully evaluate the refiner's petition. Such information would
include requests for clarification of any item(s) included in the
petition that is necessary in order to render a final decision as to
whether to grant or reject the petition.
The above items represent, at a minimum, the topics that we believe
must be addressed in the petition. The refiner may wish to elaborate on
certain topics--e.g., if it faces particular hardship because it is a
small business or if its refinery faces other, unique challenges that
may influence the Agency's decision on the petition.
If we were to find that any refiner has provided false or
inaccurate information in connection with its petition, we propose that
the remedy be to notify the refiner and the application of any
alternative anti-dumping compliance period would be void ab initio.
How the Agency Proposes To Act on a Petition and the Refiner's Proposed
Responsibilities if a Petition Is Granted
Notification of Approval and Disapproval of Petition and Proposed Dates
By Which the Refinery Would Have To Meet the Statutory NOX
Baseline Standard and Pay Back Double the NOX Deficit
We propose to notify a refiner of approval or disapproval of its
petition by mail after considering a complete petition. If approved, we
propose to notify the refiner of the alternative anti-dumping
compliance period approved (i.e., two, three, four, or five years) and
the interim standards that would have to be met. The interim standards
would be as set forth in the regulations and would include two major
standards that the refinery would have to meet. The first standard sets
forth the date by which the refinery would have to start to comply with
the statutory baseline NOX standard, on average, for all its
gasoline. For example, for a two year averaging period, the refiner
would have to hit the first interim standard by the seventh quarter.
Once the first date is reached, the refiner would have to continue to
meet the statutory baseline standard for NOX, on average,
for all gasoline it produces.
The second standard would set forth the date by which the refinery
would have to pay back double the NOX deficit. This date
would correspond to the end of the alternative averaging period. For
example, for a two year averaging period, the refiner would have to pay
back double the NOX deficit by the end of the second year.
Failure to meet one of these standards would result in a violation of
the anti-dumping regulations. The anti-dumping standards, including
NOX emissions, are defined in units of milligrams per mile.
In order to quantify the NOX deficit or benefit in tons
under today's proposed rule, it is necessary to know the variance from
the standard, the volume of gasoline involved and the average fuel
economy for the overall national fleet of gasoline powered vehicles.
For the purpose of these calculations, we are proposing to use the most
current data as presented in the Calendar Year 1999 National Highway
Traffic and Safety Administration report to Congress of 24.5 miles per
gallon. Thus the constant figure in both equations of
2.7 x 10-8 is the product of the above fuel economy factor
and the conversion from milligrams to tons. The average NOX
level and volume of gasoline produced during the quarter are self
explanatory. The equations for calculating NOX
[[Page 54451]]
deficit and benefit are proposed to be as follows:
NOX Deficit:
[GRAPHIC] [TIFF OMITTED] TR08SE00.007
Where:
NOXDef = the NOX deficit for the quarter(s)
the refiner's annual average NOX performance exceeds the
applicable NOX standard of 1461 mg/mile, expressed in
tons.
NOXad = the average volume weighted NOX
emissions performance for the quarter(s) the refiner exceeds the
applicable NOX standard, measured in mg/mile.
Gd = the volume of gasoline produced during the
quarter(s) the refiner exceeds the applicable NOX
standard, measured in gallons.
NOX Benefit:
[GRAPHIC] [TIFF OMITTED] TP08SE00.001
Where:
NOXBen = the NOX benefit during the quarter(s)
the refiner's annual average NOX performance is below the
applicable NOX standard of 1461 mg/mile.
NOXab = the average volume weighted NOX
emissions performance for the quarter(s) the refiner is below the
applicable NOX standard, measured in mg/mile.
Gb = the volume of gasoline produced during the
quarter(s) the refiner is below the applicable NOX
standard, measured in gallons.
The calculations would be performed on a quarterly basis. As an
example, a 10,000 barrel per day refinery would produce 37.8 million
gallons during a given quarter. Assuming the gasoline, on average, met
a NOX standard of 1500 mg/mi, the total NOX
deficit for the quarter would be
[GRAPHIC] [TIFF OMITTED] TP08SE00.002
As an example of how the NOX deficit would have to be
paid back on a two for one basis, assume that the same refinery has a
two year alternative averaging period. Assuming that the refinery were
to produce the same quality and volume of gasoline for the first five
quarters and then began to produce gasoline meeting the statutory
baseline (in order to meet the first standard), the total
NOX deficit, in tons, would be 199 tons. In order to meet
the second standard, the paying back of double the NOX
deficit, the refiner would have to produce a total NOX
benefit of 199 * 2, or 398 tons of NOX benefit. Thus, the
alternative averaging period is designed to ensure that there is no
overall environmental detriment by requiring a certain amount of
NOX overcompliance.
Interim Milestones
A refiner would be able to qualify for an extended averaging period
only if, at the time of the petition, it activates a refinery that
faces substantial demonstrated hardship in producing gasoline which
meets the anti-dumping statutory baseline NOX standards
during the early years of production. EPA believes that this hardship
is most likely to be the result of a lack of the necessary refinery
processing equipment. Moreover, it would be necessary for such a
refiner to obtain this processing equipment in order to begin producing
gasoline that would allow the refinery to comply with the proposed
overall alternative averaging period NOX standard. However,
if such a refiner were to fail to obtain this processing equipment in a
timely manner it is likely the refiner will not be able to offset the
NOX deficit created during the first phase of the extended
averaging period by the required compliance deadline.
For this reason EPA believes it is appropriate for a refiner who
has been granted an extended averaging period to demonstrate that
reasonable progress is being made toward obtaining necessary processing
equipment. As a result, under today's proposed rule EPA is requiring
refiners to include in extended averaging period petitions the expected
dates for key milestones for obtaining necessary processing equipment.
These milestones normally would include the dates for signing the
contract for equipment design, for obtaining necessary permits, for
obtaining financing commitments, and for breaking ground for
construction. During the petition review EPA intends to evaluate the
milestones proposed by the refiner and establish appropriate milestones
that will be incorporated into any petition approval. The refiner would
be required to submit reports to EPA demonstrating these milestones are
met as a contingency for continued operation under the alternative
compliance period.
Upon a refiner's failure to meet a milestone, or failure to submit
a milestone report by the required date, the Administrator would have
the discretion to accelerate the date by which the refiner would have
to produce gasoline that complies with the annual average statutory
baseline NONOX standard, so that the gasoline produced by
the refinery beginning with the quarter immediately following the
quarter during which the failure occurred (and during each subsequent
quarter) would have to meet that standard. That is, a failure to meet a
milestone may result in a requirement for the refinery to begin
producing gasoline that complies with the statutory baseline beginning
with the next quarterly averaging period and continuing thereafter. The
acceleration of the requirement regarding compliance with the annual
average statutory baseline NOX standard would not affect any
of the other standards or requirements applicable to the refinery under
this section (e.g., the refinery would still be required to comply with
the overall alternative averaging period NOX standard by
producing gasoline that overcomplies with the annual average statutory
NOX standard by twice as much as the early NOX
deficit generated by the refinery). Moreover, upon the refiner's
failure to meet a milestone, or failure to submit a milestone report by
the required date, we are proposing that the refiner would forfeit any
NOX credits that it was required to have banked as of that
time. EPA realizes that a refiner in this situation may not be able to
produce gasoline that meets the statutory baseline and may be forced to
produce products other than gasoline, such as blendstocks, or to close
the refinery. However, allowing such a refiner to generate additional
NOX deficits would only result in additional environmental
harm.
Additional Requirements
In addition to the proposed requirements described in the preceding
paragraph, the following general requirements are proposed to apply to
a refinery for which a petition is granted:
The refinery must meet all applicable statutory baseline
standards for an annual average compliance period, except the standard
for NOX. For example, this means that the refinery would
have to comply with the toxics standards on an annual basis.
The refiner must designate all gasoline produced during
the period of time that the refinery does not meet the annual average
statutory baseline
[[Page 54452]]
standards as gasoline with a volatility of 9.0 pounds per square inch
(psi).
A refiner for which a petition is granted must provide a
written demonstration that it has purchased and banked NOX
credits equal to the NOX deficit calculated for the end of
the preceding quarter and must retain these banked credits throughout
the current quarter. The NOX credits are necessary in order
to guarantee that the refinery does not generate a net NOX
detriment. The amount of NOX credits required to be banked
will be calculated each quarter. When the refinery begins to produce
conventional gasoline that, on average, meets the anti-dumping
NOX standard, it may sell NOX credits off in an
amount equal to any NOX benefit generated in the preceding
quarter. We believe that this approach permits more flexibility for the
start-up refinery than an approach that would require them to make a
significant up-front purchase of credits equal to the entire projected
NOX deficit for the alternative averaging period.
A refinery for which a petition is granted may not
generate any Tier 2 sulfur credits or allotments during the entire
alternative anti-dumping compliance period.
A refinery for which a petition is granted must submit
anti-dumping compliance reports more frequently than other conventional
gasoline refineries. This enhanced reporting will ensure that the
refinery is on target with meeting the interim performance goals. The
documents that must be submitted include quarterly batch reports and
anti-dumping averaging reports for gasoline produced during each
quarter, and documents that demonstrate the refiner has purchased and
banked the necessary amount of NOX credits to equal the
NOX deficit calculated for that quarter.
Change in Alternative Averaging Period
At any point during the pendency of the alternative conventional
gasoline anti-dumping compliance period, we are proposing that the
Administrator may, upon application by a refiner, approve a different
alternative compliance period for a refinery already operating subject
to an alternative compliance period. For example, if a refinery
originally received an alternative compliance period with a duration of
2 years beginning on January 1, 2001, at any time prior to the end of
that compliance period (January 1, 2003), the Administrator may approve
an application to assign to the refinery the standards and requirements
that would have been applicable to the refinery had the refinery
originally received one of the other alternative compliance periods.
Any refinery for which a change in the applicable alternative
compliance period is approved would thereafter operate as if the
refinery had originally requested and received such new alternative
compliance period, and would be subject to the standards and other
requirements applicable under such new alternative compliance period.
Consequently, for a refinery with an original alternative compliance
period of 2 years beginning on January 1, 2001 (which would end on
January 1, 2003), for which the Administrator later approves a change
to a 3 year compliance period on January 1, 2002, the termination date
for the new alternative compliance period would be January 1, 2004, and
the refinery would need to begin producing gasoline that complies with
the annual average statutory baseline during the quarter beginning
January 2004.
We are proposing that the Administrator will approve or disapprove
any application for a different alternative compliance period, in
writing, within six months of receipt, and in the case of an approval
will include any conditions or other requirements to which the approval
is subject. No such application may result in an alternative compliance
period that extends beyond January 1, 2006. A refinery for which the
Administrator approves a change in the alternative compliance period
would be subject to all the standards and other requirements of the new
alternative compliance period as well as any additional conditions or
requirements that are included in the approval of the application for a
changed alternative compliance period. Accept as specifically modified
by this section, such refinery would have to continue to comply with
all other standards and other requirements applicable under the
conventional gasoline anti-dumping standards.
IV. Administrative Requirements
A. Executive Order 12866
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 Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another Agency;
(3) Materially alter the budgetary impact of entitlement, 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.
The Agency has determined that this proposed regulation would
result in none of the economic effects set forth in Section 1 of the
Order because it would generally relax the requirements of the anti-
dumping program and provides regulated parties with more flexibility
with respect to compliance with the anti-dumping requirements. Pursuant
to the terms of Executive Order 12866, OMB has notified us that it does
not consider this a ``significant regulatory action'' within the
meaning of the Executive Order and has waived review.
B. 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. This
proposed rule would not have substantial direct effects on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government, as specified in Executive Order 13132. This
proposed rule would permit refiners to petition for alternative anti-
dumping compliance periods and would not impose any substantial direct
effects on the states. Thus, Executive Order 13132 does not apply to
this proposed rule.
C. Executive Order 13084: Consultation and Coordination With Indian
Tribal Governments
Under Executive Order 13084, we may not issue a regulation that is
not
[[Page 54453]]
required by statute, that significantly or uniquely affects the
communities of Indian tribal governments, or that imposes substantial
direct compliance costs on those communities, unless the Federal
government provides the funds necessary to pay the direct compliance
costs incurred by the tribal governments, or we consult with those
governments. If we comply by consulting, Executive Order 13084 requires
us to provide to the Office of Management and Budget, in a separately
identified section of the preamble to the rule, a description of the
extent of our prior consultation with representatives of affected
tribal governments, a summary of the nature of their concerns, and a
statement supporting the need to issue the regulation. In addition,
Executive Order 13084 requires us to develop an effective process
permitting elected and other representatives of Indian tribal
governments ``to provide meaningful and timely input in the development
of regulatory policies on matters that significantly or uniquely affect
their communities.''
Today's proposed rule would not significantly or uniquely affect
the communities of Indian tribal governments. Today's proposed rule
would not create a mandate for any tribal governments. This proposed
rule would apply to gasoline refiners. Today's proposed action would
make some changes that would generally provide flexibility within the
Federal anti-dumping requirements, and does not impose any enforceable
duties on communities of Indian tribal governments. Accordingly, the
requirements of section 3(b) of Executive Order 13084 do not apply to
this proposed rule.
D. Regulatory Flexibility Act (RFA), As Amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et
seq.
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 would not have
a significant economic impact on a substantial number of small
entities. Small entities include small businesses, small organizations,
and small governmental jurisdictions.
For purposes of assessing the impacts of today's proposed rule on
small entities, small entity is defined as: (1) A small business that
has not more than 1,500 employees (13 CFR 121.201); (2) a small
governmental jurisdiction that is a government of a city, county, town,
school district or special district with a population of less than
50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.
After considering the economic impacts of today's proposed rule on
small entities, the Administrator has determined that this proposed
action will 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.'' 5 U.S.C. Sections 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 proposed rule would provide
regulatory relief by permitting regulated parties, including small
entities, to seek an extended anti-dumping compliance period. We have
therefore concluded that today's proposed rule would relieve regulatory
burden for all small entities. We continue to be interested in the
potential impacts of the proposed rule on small entities and welcome
comments on issues related to such impacts.
E. Paperwork Reduction Act
This proposed action establishes a petition process that involves
the collection of information. It also requires reports that will
utilize existing RFG and anti-dumping reporting forms. Refiners that
request alternative compliance periods for anti-dumping are already
subject to anti-dumping reporting requirements, which include annual
compliance reporting, but although refiners of RFG are required to
submit quarterly batch reports and laboratory reports, refiners of
conventional gasoline under the anti-dumping program are not generally
subject to this quarterly reporting requirement. A refiner granted an
alternative compliance period for anti-dumping under this rule would
become subject to quarterly batch reporting and laboratory reports.
Since this constitutes the collection of information as defined by the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq., the existing
Information Collection Request (ICR) for the RFG and anti-dumping
program will be submitted to OMB for approval to the collection of any
information. A separate Federal Register notice will be published
regarding the ICR. The Office of Management and Budget (OMB) has
approved the information collection requirements contained in the final
RFG and anti-dumping rulemaking (See 59 FR 7716, February 16, 1994) and
has assigned OMB control number 2060-0277 (EPA ICR No. 1591.07).
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 our regulations are listed
in 40 CFR part 9 and 48 CFR Chapter 15.
F. 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, we
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 a rule for which a written statement is
needed, section 205 of the UMRA generally requires us 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 us to adopt an alternative other than the least
costly, most cost-effective
[[Page 54454]]
or least burdensome alternative if the Administrator publishes with the
final rule an explanation why that alternative was not adopted. Before
establishing any regulatory requirements that may significantly or
uniquely affect small governments, including tribal governments, an
agency 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
regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising small governments on
compliance with the regulatory requirements.
Today's proposed rule contains no Federal mandates (under the
regulatory provisions of Title II of the UMRA) for State, local or
tribal governments or the private sector. The proposed rule would
impose no enforceable duty on any State, local or tribal governments or
the private sector. This proposed rule applies to gasoline refiners.
Today's proposed action would provide regulated parties with more
flexibility with respect to compliance with the anti-dumping
requirements.
G. Executive Order 13045: Children's Health Protection
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 E.O. 12866, and (2) concerns an environmental health or
safety risk that we have 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.
We interpret Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under section 5-501 of the Order has the
potential to influence the regulation. This proposed rule is not
subject to Executive Order 13045, entitled ``Protection of Children
from Environmental Health Risks and Safety Risks'' (62 FR 19885, April
23, 1997), because it does not involve decisions on environmental
health risks or safety risks that may disproportionately affect
children. This proposed rule permits flexibility in establishing
extended anti-dumping compliance periods in narrow circumstances where
a net environmental benefit is expected.
H. National Technology Transfer and Advancement Act of 1995 (NTTAA)
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 us to use voluntary consensus standards in our 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 us to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards. Today's
proposed action would not establish new technical standards or
analytical test methods, and would not affect existing technical
standards or analytical test methods.
J. Statutory Authority
Sections 114, 211, and 301(a) the Clean Air Act as amended (42
U.S.C. 7414, 7545, and 7601(a)).
List of Subjects in 40 CFR Part 80
Environmental protection, Air pollution control, Anti-dumping,
Reformulated gasoline.
Dated: August 30, 2000.
Carol M. Browner,
Administrator.
[FR Doc. 00-22809 Filed 9-7-00; 8:45 am]
BILLING CODE 6560-50-P
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