ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-5883-3]
RIN 2060-AH48
Regulation of Fuels and Fuel Additives:   Baseline Requirements for Gasoline Produced by
Foreign Refiners
AGENCY:    Environmental Protection Agency (EPA).
ACTION:      Final rule.
SUMMARY:   This final rule revises the requirements for imported conventional gasoline.  The
Agency has revised the rules for conventional gasoline (59 FR 7716, February 16, 1994)  to allow
a foreign refiner to choose to petition EPA to establish an individual baseline reflecting the quality
and quantity of gasoline produced at a foreign refinery in 1990 that was shipped to the United
States.  The foreign refiner is required to meet the same requirements relating to the establishment
and use of individual refinery baselines as are met by domestic refiners.  This final action also
includes additional requirements that address issues that are unique to refiners and refineries
located outside the United States, namely those related to tracking the movement of gasoline from
the refinery to the United States border, monitoring compliance with the requirements applicable
to foreign refiners, and imposition of appropriate sanctions for violations.  EPA will monitor the
quality of imported conventional gasoline, and if it exceeds a specified benchmark, EPA will apply
appropriate remedial action. Under this final action, the baseline for gasoline imported from
refiners without an individual baseline would be adjusted to remedy the exceedance.
     EPA believes this final rulemaking is consistent with the Agency's commitment to fully
protect public health and the environment, and with the U. S. commitment to comply with its
obligations under the World Trade Organization agreement.
DATES:   This final rule is effective August 27, 1997
ADDRESSES:   Materials relevant to the final rule have been placed in Public Docket A-97-26 at
the address below.  Additional materials can be found in Public Dockets A-91-02 and A-92-12,
A-94-25 and A-96-33 located at Room M-1500, Waterside Mall (ground floor), U. S.
Environmental Protection Agency, 401 M Street S.W., Washington, DC 20460. The docket may
be inspected from 8 a.m. until  5:30 p.m. Monday through Friday. A reasonable fee may be
charged by EPA for copying docket materials.
FOR FURTHER INFORMATION CONTACT: Karen Smith, Fuels and Energy Division, U. S.
EPA (6406J), 401 M Street, SW., Washington, DC 20460, Telephone: (202) 233-9674.
SUPPLEMENTARY INFORMATION:
Availability on the TTNBSS
     Copies of this final rule are available electronically from the EPA Internet Web site and via
dial-up modem on the Technology Transfer Network (TTN), which is an electronic bulletin board
system (BBS) operated by EPA's Office of Air Quality Planning and Standards.  Both services are
free of charge, except for your existing cost of Internet connectivity or the cost of the phone call
to TTN.  Users are able to access and download files on their first call using a personal computer
per the following information.  The official Federal Register version is made available on the day
of publication on the primary Internet sites listed below.  The EPA Office of Mobile Sources also
publishes these notices on the secondary Web site listed below and on the TTN BBS.
Internet (Web)
http://www.epa.gov/docs/fedrgstr/EPA-AIR/
(either select desired date or use Search feature)
http://www.epa.gov/OMSWWW/
(look in What's New or under the specific rulemaking topic)
TTNBBS:  The TTNBBS can be accessed with a dial-in phone line and a high-speed modem
(PH# 919-541-5742). The parity of your modem should be set to none, the data bits to 8, and the
stop bits to 1. Either a 1200, 2400, 9600, or 14400 baud modem should be used.  When first
signing on, the user will be required to answer some basic informational questions for registration
purposes. After completing the registration process, proceed through the following series of
menus:
(T) GATEWAY TO TTN TECHNICAL AREAS (Bulletin Boards)
(M) OMS - Mobile Sources Information
(Alerts display a chronological list of recent documents)
(K) Rulemaking and Reporting
At this point, choose the topic (e.g, Fuels) and subtopic (e.g., Reformulated Gasoline) of the
rulemaking, and the system will list all available files in the chosen category in date order with
brief descriptions.  To download a file, type the letter "D" and hit your Enter key.  Then select a
transfer protocol that is supported by the terminal software on your own computer, and pick the
appropriate command on your own software to receive the file using that same protocol.  After
getting the files you want onto your computer, you can quit the TTN BBS with the "G"oodbye
command.
     Please note that due to differences between the software used to develop the document
and the software into which the document may be downloaded, changes in format, page length,
etc. may occur.
Regulated entities.
     Entities regulated by this action are those foreign refiners and importers which produce,
import or distribute gasoline for sale in the United States.  Regulated categories and entities
include:
Category        Examples of Regulated Entities
Industry        Foreign Refiners, Importers.
     This table is not intended to be exhaustive, but rather provides a guide for readers
regarding entities potentially regulated by this action.  This table lists the types of entities that
EPA is now aware could potentially be regulated by this action.  Other types of entities not listed
in the table could also be regulated.  To determine whether your company or facility may
potentially be regulated by this action, you should carefully examine the applicability criteria of
Part 80, Subpart D, of title 40 of the Code of Federal Regulations.  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.
     The remainder of this final rulemaking is organized in the following sections:
I.  Background
     A.  Current Requirements for Imported Gasoline
     B.  May 1994 Proposal
     C.  The WTO Dispute Settlement Proceeding
     D.  Invitation for Public Comment
     E.  Requiring Individual Baselines for Foreign Refiners
     F.  Summary of Comments from NPRM
II.  Description of Final Rule
     A.  Introduction
     B.  Requirements for Foreign Refiners with Individual Refinery Baselines
          1.  Establish Refinery Baselines
          2.  Compliance with CG NOx and Exhaust Toxics Requirements
          3.  Requirements for Tracking Refinery of Origin
          4.  Measures Related to Monitoring Compliance and Enforcement
     C.  Baseline Adjustment for Imported Gasoline that is Not FRGAS
          1.  Introduction
          2.  Monitoring
          3.  An Appropriate Benchmark
          4.  Remedial Action Upon an Exceedance
          5.  Imported Gasoline Subject to the Remedial Action
     D.  Requirements for U. S. Importers
          1.  Imported CG FRGAS
          2.  Imported CG that is not FRGAS
          3.  Imported RFG
     E.  Early Use of Individual Foreign Refinery Baselines
     F.  Requirements for RFG Before 1998
III.  Summary of Changes from Proposal
IV.  Response to Comments
     A.  Optional vs. Mandatory Baselines
     B.  Establishment of Individual Baselines
     C.  Liability:  Party responsible for meeting the gasoline quality requirements for            FRGAS
     D.  Compliance Related Requirements
          1. Sovereign Immunity
          2. Agent for Service of Process
          3.  Bond Requirement
          4.  Foreign Refiner Commitments
          5.  Gasoline Tracking Requirements
          6.  Option to Classify Gasoline as Non-FRGAS
          7.  Third Party Testing Requirements
          8.  Diversion of FRGAS to Non-U. S. Markets
          9.  Attest Requirements
          10.  Imports from Canada by Truck
     E.  Remedial Measures
     F.  Compliance with WTO Obligations
V.  Administrative Designation and Regulatory Analysis
     A.  Public Participation
     B.  Executive Order 12866
     C. Economic Impact and Impact on Small Entities
     D. Paperwork Reduction Act
     E.  Unfunded Mandates
     F.  Submission to Congress and the General Accounting Office
     G.  Statutory Authority
Regulation of Fuels and Fuel Additives
I.   Background:
     A.   Current Requirements for Imported Gasoline
     On December 15, 1993, EPA issued final regulations that establish requirements for
reformulated gasoline (RFG) and conventional gasoline (CG) (together the Gasoline Rule), as
prescribed by section 211(k) of the Clean Air Act (the Act).  See 59 FR 7716 (February 16,
1994).  Under the Gasoline Rule, compliance by refiners and importers with the CG requirements
and certain RFG requirements is measured against baselines that are intended to reflect a
refinery's or importer's 1990 gasoline quality.  Domestic refiners are required to establish
individual refinery baselines of the quality and quantity of the gasoline produced at each refinery in
1990.  Domestic refinery baselines are calculated using, in hierarchical order based on the
availability of data, 1990 gasoline test data (Method 1), 1990 blendstock test data (Method 2), or
post-1990 blendstock and/or gasoline test data (Method 3).  Under the Gasoline Rule domestic
blenders of gasoline and importers of foreign-produced gasoline are treated differently than
domestic refiners in that they are required to establish baselines of the quality and quantity of
gasoline they produced or imported in 1990 using Method 1 data, if available.  However, almost
all blenders and importers lack the actual 1990 test data necessary to establish a baseline using
Method 1 data.  As a result, blenders and importers are assigned the statutory baseline, a baseline
established by EPA in 1993 to approximate average gasoline quality in the United States in 1990,
with the consequence that almost all gasoline produced at foreign refineries is evaluated through
the importer using the statutory baseline.   The baseline-setting scheme is specified in 40
CFR 80.91 through 80.93, and is discussed in the Preamble to the final rule at 59 FR 7791
(February 16, 1994).
       In preparing the Gasoline Rule, EPA focused on three major issues regarding the use of
individual baselines for foreign refiners in the RFG and CG programs.  EPA's overriding
consideration was the ultimate environmental consequences of the baseline-setting scheme.  The
three issues that EPA focused on were: (1) the technical difficulty of using baseline-setting
Methods 2 and 3 to accurately predict the quality of the subset of a foreign refinery's gasoline that
was exported to the U. S. in 1990; (2) the ability of the Agency to adequately verify and enforce
the use of individual foreign refinery baselines, including problems identifying the refinery of
origin of imported gasoline and enforcing gasoline content requirements against a foreign refiner;
and (3) the risk of adverse environmental effects from providing refiners or importers with options
in establishing baselines.
     In developing the Gasoline Rule, EPA considered but did not go forward with allowing
foreign refiners the option of petitioning EPA to establish individual baselines using Methods 1, 2,
and 3, or defaulting to the statutory baseline.  EPA's reasons for not adopting the option at that
time are discussed at 59 FR 7785-7788 (February 16, 1994).  When EPA issued the final rule on
December 15, 1993, however, it was not fully satisfied that the baseline-setting scheme applicable
to importers and foreign refiners was the optimum solution and continued to consider the issue.
     B.   May 1994 Proposal
     In May 1994, EPA proposed to amend the Gasoline Rule to define criteria and procedures
by which foreign refiners would be allowed to establish individual refinery baselines that reflected
the properties and volume of the gasoline that was produced at a foreign refinery in 1990 and
exported for use within the United States.  Under this proposal, if a foreign refiner made the
requisite showing through a petition process EPA would establish an individual foreign refinery
baseline.  U. S. importers of RFG produced at the foreign refinery would have used the individual
foreign refinery baseline values to demonstrate compliance with the limited number of RFG
requirements that are based on individual baselines.  Importers would not have been allowed to
use individual foreign refinery baselines for the CG requirements.   Foreign refinery baselines
would have been used only during the period 1995 through 1997 and only up to a volume of
gasoline each year that equaled the foreign refinery's 1990 baseline volume.  The proposal also
included detailed enforcement and verification procedures.
     Subsequent to the May 1994 proposal, Congress included restrictive language in the
legislation on EPA's appropriations related to the May 1994 proposal.  EPA took no further
action on this proposal.
     C.   The WTO Dispute Settlement Proceeding
     In 1995, the governments of Venezuela and Brazil initiated dispute settlement proceedings
before the World Trade Organization (WTO), challenging as discriminatory the different
treatment applied by the Gasoline Rule to imported gasoline and gasoline produced by U. S.
refiners.  Among other defenses, the United States argued that the rule was justified by the
difficulties associated with implementing and enforcing individual baseline requirements with
respect to foreign refiners and by the potential environmental impact resulting from providing
foreign refiners the choice of employing individual baselines.  The dispute settlement panel
reviewing the matter found the regulation discriminatory under the General Agreement on Tariffs
and Trade 1994 (GATT) and that the United States had not shown that the GATT's health,
enforcement or conservation exceptions applied.   The U. S. appealed, arguing that the measure is
covered by the GATT conservation exception.  The WTO Appellate Body recognized that the
United States had legitimate concerns, and modified the findings of the dispute settlement panel
accordingly, but concluded the rule did not satisfy all the requirements for this exception.  The
Appellate Body based this conclusion on its views that (1) the United States had not adequately
explored options available to deal with its compliance assurance concerns, in particular
international cooperative arrangements, and (2) the United States had been concerned about the
costs of the various regulatory options to domestic refiners but there was no evidence
demonstrating similar concern about the costs to foreign refiners.  The Appellate Body
recommended that the United States bring EPA's regulations into conformity with WTO
obligations, leaving the United States to determine how it would comply.
     On June 19, 1996 after the Administration had consulted with Congress, the United States
advised the WTO that the United States intended to meet U. S. obligations with respect to the
results of the WTO dispute settlement proceedings, that the EPA had initiated an open process to
examine any and all options for compliance, and that a key criterion in evaluating options would
be fully protecting public health and the environment.  On June 28, 1996, EPA published an
invitation for public comment in the Federal Register (61 FR 33703), seeking input and
suggestions from all interested parties.  The comment period closed on September 26, 1996.
     D.   Invitation for Public Comment
     The invitation for public comment was an attempt to identify any and all options available
to the Agency to meet U. S. international obligations in response to the WTO decision.  EPA's
goal was to identify all feasible options that are consistent with EPA's commitment to fully
protect public health and the environment, and at the same time are consistent with the obligations
of the United States under the WTO.
     Specifically, EPA invited comment on:  (1) how to accurately establish a reliable and
verifiable individual baseline for a foreign refinery; (2) how EPA could adequately monitor
compliance with and enforce any baseline requirements; (3) how EPA could effectively determine
the refinery of origin of imported gasoline, so as to determine the appropriate baseline to apply to
the imported gasoline; (4) the potential environmental impacts from implementing any suggested
options; and (5) a method by which EPA could better quantify or characterize potential
environmental impacts of any options proposed.  EPA also requested that commenters provide
information and analysis on the public health, environmental and economic impact associated with
any option presented.
     EPA received sixteen comments from various interested parties during the comment
period.  Additional comments were received subsequent to the comment period.  To review the
comments submitted during the invitation for public comment see Air Docket A-96-33 or 62 FR
24778 under Section D, Invitation for public comment.
     E.   Requiring Individual Baselines for Foreign Refiners
     In preparing the earlier proposal and this final rule EPA attempted to identify any and all
options available to the Agency to meet U. S. international obligations in response to the WTO
decision.  EPA's goal was to identify all feasible options that are consistent with EPA's
commitment to fully protect public health and the environment, and at the same time are
consistent with the obligations of the United States under the WTO.  Comments submitted to
EPA during and after the public comment period, and EPA's consideration of this issue, identified
two broad approaches for consideration involving individual baselines for foreign refineries.
     One approach would require the use of individual baselines (IB) by foreign refiners.  Use
of individual baselines by foreign refiners would be mandatory, not optional.  Under this
approach, EPA would apply basically the same requirements that apply to domestic refiners to
foreign refiners.  For the reasons discussed in the proposal, and later in this notice, EPA is not
adopting this approach.  EPA is instead adopting the approach proposed, which allows foreign
refiners to establish and use an IB but does not mandate it.  EPA will monitor the emissions
quality of imported gasoline and adjust the baselines for gasoline imported from refiners without
an individual baseline if a specified benchmark is exceeded.
     The mandatory approach would require all foreign refiners who market gasoline to the
U. S. to submit petitions to establish an individual refinery baseline, using the same methods and
procedures currently in the regulations.  Once an IB was assigned for a refinery, that IB would be
used in developing a volume weighted compliance baseline.  Under one approach, the foreign
refiner would meet the NOx and exhaust toxics requirements for CG exported to the U. S. by that
foreign refinery, in the same manner as domestic refiners.  Under an alternative approach the
domestic importer would establish a volume weighted compliance baseline reflecting the quantity
and IBs of gasoline imported from various foreign refineries, and the domestic importer would
meet the applicable CG requirements.  In either case, the use of a foreign refinery IB would be
subject to a volume cap, as for domestic refiners.  Foreign refiners would be subject to audits and
inspections to verify the IB and to verify the quantity and quality of gasoline sent to the U. S.
from that foreign refinery.
     Significant additional requirements would also need to be imposed on gasoline imported
under a foreign refiner's IB.  For domestic refiners, almost all gasoline is produced for the U. S.
market and the very small volume that is exported can be readily tracked and subtracted from the
domestic refiner's compliance calculations.  The domestic refiner then bases its CG compliance
calculations on the quality and quantity of finished gasoline when it leaves the refinery.  At that
point it has entered the U. S. gasoline market, and there is no need to track the gasoline or to
segregate it from gasoline produced by another refinery.
     For a foreign refiner, only a portion of the refinery's total production is likely to be sent to
the U. S., ranging from a very small percentage to a significant minority of production.  The
gasoline also may travel through a long and complicated distribution system from the point it
leaves the refinery gate to the point it enters the U. S. market.  However the IB for a specific
foreign refinery would properly apply only to gasoline produced at that foreign refinery, and
would not apply to gasoline produced at a different foreign refinery.
     Several facts would therefore need to be clearly established to properly apply a foreign
refinery's IB to a batch of imported gasoline.  First, the refinery that produced the specific batch
of imported gasoline must be identified.  Second, it must be demonstrated that this batch of
gasoline has not been mixed with gasoline produced by a different foreign refinery with a different
IB, from the point it left the refinery-of-origin to the point it entered the U. S. market.  Third, the
total amount of CG and RFG produced by the foreign refinery and sent to the U. S. market must
be determined, to establish when the volume cap is exceeded.  As with domestic refiners, it would
also be important to track blendstocks produced and sent to the U. S. from a foreign refinery, so a
foreign refiner could not avoid a stringent IB by shipping blendstocks instead of finished gasoline.
Tracking and segregation requirements would need to be adopted to implement this.
     A certain amount of gasoline is imported from fungible gasoline supplies, where the
refinery of origin is not known.  This occurred in 1990, and would be expected to continue to
occur in the future.  It would be reasonable to allow the practice to continue, and gasoline
imported from such sources would continue to be subject to the statutory baseline (SB).
However a mechanism  would need to be imposed so that this supply of fungible gasoline could
not be used as a way to avoid a more stringent IB.
     Under this approach, EPA would need to establish IBs for all foreign refineries, most of
which sent only a small volume of gasoline to the U. S. in 1990.  The methods used to set IBs for
domestic refiners could still be used to establish the quality and quantity of gasoline sent to the
U. S. by a foreign refiner in 1990.  Given the large number of foreign refineries involved and the
potential for widely varying technical and other ability to establish IBs, it is not clear that all
foreign refiners would have the information necessary to establish an accurate IB for gasoline sent
to the U. S. in 1990.
     The Department of Energy (DOE) has advised EPA that this approach could seriously
affect the supply and price of gasoline in the U. S. market.  Currently gasoline is imported into the
U. S. market from a free moving and fungible distribution system for imported gasoline.  The
volume of imported gasoline, while small compared to the total U. S. gasoline supply, can have a
significant impact on gasoline prices.  Imported gasoline tends to moderate price increases by
increasing the sources of gasoline to meet U. S. demand, whether in response to a trend of
increasing demand over time, or a short term supply problem based on local or temporary changes
in domestic supply or demand.
     The mandatory approach outlined above would significantly change the way gasoline is
imported to the U. S. market, greatly increasing the complexity and making it more likely that
gasoline could not be quickly and readily diverted to the U. S. market to meet demand.  This
would make it more likely that imported gasoline would not play the same role that it currently
does in moderating price increases.  The long term supply implications are harder to predict.
     The increase in complexity from this approach is based on the need to ensure that the right
IB is applied to a batch of imported gasoline, that an IB is only used up to the applicable volume
cap, and that parties do not circumvent the appropriate IB by shifting gasoline or blendstocks
through other parties.  Modifying the tracking and monitoring restrictions described above to try
and resolve the supply concerns would increase the risk of adverse environmental effects from this
approach.
     EPA is also concerned that this approach might produce incentives that would tend to
reduce the average quality of imported CG.  For example, gasoline from refiners with cleaner IBs
would be measured against a more stringent baseline than under the current rules, while gasoline
from refiners with dirtier IBs would be measured against a less stringent baseline than under the
current rules.  Additional costs would be associated with segregation, tracking, and other
requirements described above.  To the extent these changes put refiners with clean IBs at an
economic disadvantage compared to refiners with either the SB or an IB dirtier than the SB, it
could potentially push the supply of gasoline away from refiners with clean IBs.
     After evaluating this approach, EPA did not propose it.  While it appears generally neutral
in requiring individual baselines for both domestic and foreign refiners, upon full consideration
this approach presents too great a risk of adverse effects on gasoline supply and prices.  EPA also
has questions as to its potential environmental impact.  The Agency instead proposed the optional
use of individual baselines, with specific provisions for monitoring gasoline quality and remedying
any adverse environmental effects.   EPA's rationale (including the Department of Energy's
analysis) for selecting this option is further outlined below in Section IV. Response to Comments:
Mandatory vs. Optional Baselines.
     F.   Summary of Comments from NPRM
     EPA received comments from nine associations representing various groups including
domestic gasoline producers, domestic importers, and environmental organizations.  Three
domestic refiners individually submitted statements supporting the comments submitted by their
representing associations.  Three foreign refiners commented.  One state environmental
organization submitted favorable comments to the NPRM.  EPA also received comments from the
Commission of the European Communities.
     The issues addressed in the public comments include:  the question of mandatory versus
optional baselines; EPA's use of cost considerations in the final rule; the consideration of seasonal
impacts to prevent additional competitive advantages for foreign refiners; whether or not the
Agency has established appropriate and adequate monitoring, compliance and enforcement
requirements; the requirement for a waiver of sovereign immunity; and the implementation of the
remedial action.  This is not intended to be an exhaustive list of comments.  A complete set of
comments is available from the Air Docket (A-97-26).  The major issues and comments are
addressed in the Response to Comment section of this final rule.
II.  Description of Final Rule
     A.   Introduction
     Today's final action allows foreign refiners the option to establish and use IBs under the
conventional gasoline program.  Specific regulatory provisions will be implemented to ensure that
the optional use of an IB will not lead to adverse environmental impacts.  This involves
monitoring the average quality of imported gasoline, and if a specified benchmark is exceeded,
remedial action will be taken.  The remedial action involves making the requirements for imported
gasoline not subject to an IB more stringent.  This will ensure the environmental neutrality of this
approach.
     Under this final rule, the procedures and methods for setting an IB, as well as the tracking,
segregation and other compliance related provisions described below will all apply.  However,
they will only apply where a foreign refiner chooses to apply for an IB.
     The volume of gasoline that can be imported under the IB for a foreign refinery is limited
in the same manner as for domestic refiners, relative to a refinery's 1990 baseline volume.  Since
the foreign refiner seeks an IB in order to specifically produce gasoline for the U. S. market, the
tracking and segregation requirements noted above should not have a significant impact on the
ready availability of gasoline for import.  The current requirements for imported gasoline will
continue to apply for all of the other gasoline imported into the U. S.
     There was some concern about the possible environmental impact of providing this option
to foreign refiners.  A foreign refiner may only have an economic incentive to seek an IB if it will
be less stringent than the SB.  Gasoline produced by this foreign refiner would then be measured
against this less stringent IB.  Other imported gasoline would be measured against the SB through
the importer.  As compared to the situation in 1990, there would be the potential for the quality of
imported gasoline to degrade from an emissions perspective.
     The size and amount of this impact, however, is difficult to quantify.  It would depend on
the number of foreign refiners that receive an IB, the specific emissions levels of the IBs assigned,
and the volume of gasoline included in the IB.  It would also depend on the source and amount of
CG and RFG imported into the U. S. in a specific year.  It is also hard to quantify to what extent,
if any, foreign refiners who produced gasoline in 1990 that was cleaner that the SB would ship
gasoline that is dirtier than what they shipped in 1990.  These circumstances, as well as the
existence of a volume cap on the use of IB's, and the large variation in the total levels of CG and
RFG imports each year make it difficult to assess in advance the risk of an adverse environmental
impact.
     EPA is addressing these potential environmental concerns in the final rule by:
(1) establishing a benchmark for the quality of imported gasoline that will reasonably identify
when the factors identified above have led to an adverse environmental impact; (2) monitoring
imported gasoline to determine whether the benchmark has been exceeded; and (3) if the
benchmark is exceeded, imposing a remedy that compensates for the adverse environmental
impact.
     The benchmark for imported gasoline quality is the volume-weighted average of the IBs
for domestic refiners.  EPA is finalizing a benchmark for NOx emissions performance set at the
volume weighted average for domestic baselines.  No benchmark is being set at this time for
exhaust toxics emissions performance, as there does not appear to be the same potential for
environmental degradation that there could be for NOx.
     EPA will monitor the quality of imported gasoline based on the annual compliance reports
filed by importers and foreign refiners producing gasoline that is exported to the U. S.  Each year
EPA will evaluate the volume weighted annual average quality of the three prior years and
compare it to the benchmark.  If the average quality of imported gasoline exceeds the benchmark,
NOx requirements for gasoline imported from refiners without an IB (currently set at the SB) will
increase in stringency the following year by an amount equivalent to the exceedance.  This will
occur each time the annual monitoring indicates that the benchmark is exceeded.  If the amount of
an exceedance either increases or decreases, the amount of the remedy will be correspondingly
adjusted on an annual basis.  If the annual monitoring shows that imported gasoline does not
exceed the benchmark, the compliance requirements will be reduced to the SB for the following
year.  The more stringent requirements will apply to all imported gasoline except for gasoline
produced by foreign refiners with an IB.
     This approach meets the goals of environmental protection and compliance with
international obligations, as announced in the June 1996 Invitation for Public Comment, and
avoids the potential supply, price and environmental consequences of the alternative approaches
considered by EPA.
     The remainder of this section describes the contents of this final rule.  The following
sections describe the changes made from the proposal as well as the response to comments
received by the Agency.  The preamble to the proposal also provides additional information
related to provisions that EPA is finalizing without change from the proposal.
     B.   Requirements for Foreign Refiners with Individual Refinery Baselines
          1.   Establish Refinery Baselines
     Under this final action, a foreign refiner has the option of submitting an individual refinery
baseline petition to EPA.   The refinery baseline would reflect the quality and quantity of gasoline
produced at the foreign refinery in 1990 that was exported to the U. S.
     The procedures for establishing individual refinery baselines are located in sections 80.90
through 80.93.   These same procedures were used by domestic refiners to develop their IBs
based on their overall gasoline quantity and quality for 1990.
     EPA is requiring that foreign refiners that elect to develop individual refinery baselines
would also follow these procedures to determine the quality and quantity of gasoline they
produced in 1990 that was exported to the U. S.   As is the case for domestic refiners, under
section 80.92 baseline petitions would have to be supported by the report of an EPA-approved
baseline auditor.
               i.   Required Information
     The requirements for establishing individual baselines for foreign refineries are essentially
the same as the baseline establishment requirements for domestic refineries.  EPA is adopting
additional requirements for foreign refineries that address the unique circumstances associated
with establishing and enforcing the establishment and use of an individual baseline by a foreign
refiner.
     The procedures for developing individual refinery baselines, set forth in sections 80.90
through 80.93, are highlighted below and discussed with respect to foreign refineries.
    A foreign refinery's individual baseline (i.e., quality and quantity information) must be
     calculated using, in hierarchical order based on the availability of data, 1990 gasoline test
     data (Method 1), 1990 blendstock test data (Method 2), or post-1990 blendstock and/or
     gasoline test data (Method 3) to determine the quality and quantity of the subset of
     gasoline exported to the United States in 1990.
    All data collected beginning in 1990 and through the last date of any data collection under
     section 80.91(d)(1)(i)(B) must be used in the development of the foreign refineries
     baseline.
    Baseline petitions must be submitted in the same manner as is required of domestic
     refiners under section 80.93.  Baseline petitions must be submitted before January 1, 2002.
      EPA is requiring the same type and quality of information and level of accuracy in
     establishing a baseline no matter when a foreign refiner applies for a baseline.
    EPA is requiring that in order for a refinery to receive an approved baseline, the refinery
     must commit to give EPA's auditors full access to the foreign refinery to conduct
     announced and unannounced inspections and audits related to the baseline development
     and submission.  EPA baseline audits could occur at any time after a baseline petition has
     been submitted, either before or after EPA approves a refinery baseline.
    Under section 80.93(b)(1)(i) foreign refiners are required to provide any additional
     information requested by EPA to support a baseline submittal or petition, as is required for
     domestic refiners.
    Under section 80.93(c) a separate baseline will be established for each foreign refinery.
     However, as is the case of U. S. refiners a foreign refiner could petition EPA for a single
     refinery baseline for two closely integrated facilities under section 80.91(e)(1).   In
     addition, as is the case for U. S. refiners, a foreign refiner who operates more than one
     refinery with individual baselines would be able to aggregate the baselines of some or all
     of its refineries under section 80.101(h).
    All documentation included in a baseline submission or petition must be in the English
     language or include an English language translation.
               ii.  EPA Action on Baseline Submissions
     As for the domestic refiner baseline approval process, EPA will subject foreign refinery
baseline submissions to an in-depth analysis and review.  EPA also reserves the right to inspect,
audit and review all records or facilities used to generate data submitted to the Agency prior to
acting on a baseline submission or petition.
     After conducting its review of the data and analysis in a baseline submission, EPA will
assign an individual baseline that represents the quality and quantity of gasoline exported to the
U. S. in 1990.  EPA believes that individual refinery baselines can be established for foreign
refineries for which individual baselines are sought to the same degree of confidence as the
baselines established for domestic refineries.  Further guidance on EPA's expectations for the
petition submission and approval process is provided in the proposed rule at 62 FR 24781 (May
6, 1997).
          2.   Compliance with CG NOx and Exhaust Toxics  Requirements
     The gasoline produced at a foreign refinery with an individual refinery baseline that is
imported into the United States is called "Foreign Refinery Gasoline," or "FRGAS."  Foreign
refiners with individual baselines are required to designate all FRGAS into one of two categories:
conventional gasoline FRGAS that is included in the foreign refiner's NOx and exhaust toxics
compliance calculations, which is called "certified FRGAS," and all other FRGAS, which is called
"non-certified FRGAS."   The non-certified FRGAS category includes gasoline that meets the
quality requirements for RFG, as well as gasoline that is not RFG quality and has not been
included in the foreign refiner's NOx and exhaust toxics compliance calculations.
     Foreign refiners who obtain individual foreign refinery baselines will have to meet the NOx
and exhaust toxics emissions performance requirements for all gasoline classified as certified
FRGAS.
     In addition, foreign refiners with an individual refinery baseline will be required to meet all
requirements used to demonstrate compliance with the CG emissions requirements.  Certain
adjustments to these provisions are specified in the regulations to apply them to foreign refiners.
These are the same requirements that apply to domestic refiners, and include the following:
          To register with EPA, section 80.103.
          To designate each batch of FRGAS as certified or non-certified, section 80.65(d).
          To determine the volume and properties of each certified FRGAS batch through
          sampling and testing, section 80.101(i).
          To determine the volume of each batch of non-certified FRGAS in order to
          complete the compliance baseline calculation in section 80.101(f).
          To prepare product transfer documents for FRGAS, sections 80.77 and 80.106.
          To keep certain records for five years, sections 80.74 and 80.104.
          To submit reports to EPA on each batch of FRGAS, on the volume of non-certified FRGAS, and on the annual average quality of certified FRGAS,
          sections 80.75 and 80.105.
          To comply with an annual cap on the volume of specified blendstocks that are
          transferred to others and used to produce gasoline for the U. S., section 80.102.
          To have an independent audit performed of refinery operations each year to review
          certain activities related to the FRGAS requirements, sections 80.125 through
          80.130.  However, the audit procedures for non-certified FRGAS would be limited
          to the procedures that evaluate the quantity of non-certified FRGAS, and audits
          would not be required to include procedures intended to verify information about
          non-certified FRGAS that is unrelated to the compliance baseline calculation, such
          as the quality of non-certified FRGAS quality or VOC-control designations.
     Under section 80.101(f) a compliance baseline for NOx and exhaust toxics compliance is
calculated for each calendar year averaging period based on a refinery's 1990 baseline volume and
baseline NOx and exhaust toxics values, and the total gasoline volume (CG and RFG) produced at
the refinery and imported into the U. S. during the averaging period.   As a result, a foreign
refiner with an individual refinery baseline will be required to establish the volume of U. S. market
gasoline that is non-certified FRGAS in order to calculate the refinery's compliance baseline for
the NOx and exhaust toxics CG requirements  (see footnotes at 62 FR 24782 for further
clarification).
     Therefore, a foreign refiner with an individual refinery baseline will be required to
designate each batch of U. S. market gasoline as certified FRGAS or non-certified FRGAS, to
establish the volume and properties of  gasoline designated as certified FRGAS, and to establish
the volume of gasoline designated as non-certified FRGAS.
     All foreign refiners with individual refinery baselines will be required to submit annual
reports to EPA that demonstrate the average NOx and exhaust toxics emissions for certified
FRGAS meets the refinery's compliance baseline for the averaging period.
     Under today's final action, certified FRGAS will be treated basically under the same rules
as gasoline produced for the U. S. market at a domestic refinery.  The certified FRGAS will be
subject to the same conventional gasoline requirements as the conventional gasoline produced by
domestic refiners.  During 1997, under section 80.101(b)(1) a refinery's annual average for sulfur,
T-90, olefins and exhaust benzene emissions may not exceed its individual baseline for these fuel
characteristics.  Starting in 1998 a refinery's annual average conventional gasoline NOx and
exhaust toxics emissions may not exceed its individual baseline for these fuel characteristics.  In
order to evaluate compliance, however, certified FRGAS must be designated as such at the point
of production, and must be tracked to determine that it in fact is exported to the U. S.
     In order to determine compliance with the NOx and exhaust toxics requirements for
certified FRGAS, the quality and quantity of each batch of certified FRGAS must be determined.
The volume of non-certified FRGAS also will have to be determined, because the compliance
baseline applicable to a refinery depends on the total volume of gasoline produced at a refinery
and imported into the U. S. market, including both certified and non-certified FRGAS.  To
determine the quality and/or quantity of this gasoline, a foreign refiner will have to designate
FRGAS when it is produced.  It also is important that gasoline used in a foreign refinery's
compliance calculation all be designated as FRGAS and actually imported into the U. S.
     In the case of certified FRGAS the foreign refiner must include the gasoline in the
refinery's NOx and exhaust toxics compliance calculations, and meet the refinery tracking
requirements, described below.  Gasoline that is not classified as FRGAS and is not imported into
the U. S. must be excluded from the refinery's compliance calculations, and the refiner is not
required to meet the refinery tracking requirements for this gasoline.
     However, the foreign refiner will continue to be required to include all non-certified
FRGAS in the refinery's compliance baseline calculations and to meet the refinery tracking
requirements for all non-certified FRGAS.  This is necessary in order to prevent adverse
environmental effects.  As in the case of domestic refiners, all gasoline imported into the United
States must be included in a refinery's compliance baseline calculation because a larger volume of
non-certified FRGAS results in a more stringent compliance baseline applicable to the certified
FRGAS.
          3.   Requirements for Tracking Refinery of Origin.
     EPA is finalizing a series of requirements to accurately identify both certified and non-certified FRGAS gasoline upon its arrival into the U. S.  There is the potential for adverse
environmental results if a foreign refiner includes gasoline in its CG NOx and exhaust toxics
compliance calculations that is not imported into the U. S.  In addition, there is environmental risk
if a foreign refiner fails to include in its compliance baseline calculations the volume of any
gasoline that is imported into the U. S.
               i.   Segregation of  FRGAS
     EPA is requiring that certified FRGAS must remain physically segregated from non-certified FRGAS and from certified FRGAS produced at another refinery, from the foreign
refinery to the U. S. port of entry.  As a result of this requirement, when a foreign refiner loads
FRGAS onto a ship for transport to the U. S. the foreign refiner must know the gasoline is
exclusively FRGAS that is being included in the refinery compliance calculations (for certified
FRGAS), or compliance baseline calculations (in the case of non-certified FRGAS).
     This segregation requirement would not prohibit a foreign refiner from combining batches
of certified FRGAS, or combining batches of non-certified FRGAS, that are produced at a single
refinery into larger volumes for shipment.  In addition, where multiple refineries have been
aggregated under  80.101(h), certified FRGAS produced at the aggregated refineries may be
combined, and non-certified FRGAS produced at the aggregated refineries may be combined.
          ii.  Foreign Refiner Certification of FRGAS
     EPA is requiring that foreign refiners of FRGAS prepare a certification, signed by an
appropriate foreign refiner official, for FRGAS when it is loaded onto a ship for transport to the
U. S.  This certification must identify the gasoline as being FRGAS, whether the FRGAS is
certified or non-certified, the foreign refinery where the FRGAS was produced, and the volume of
the FRGAS being transported.  In the case of certified FRGAS the certification must also include
the properties of the gasoline being transported and a declaration that the gasoline is being
included in the NOx and exhaust toxics compliance calculations for the foreign refinery.  A single
declaration may apply to the entire contents of a vessel where the gasoline is only certified
FRGAS or is only non-certified FRGAS.
     The foreign refiner certification must be supported by an inspection by an independent,
EPA-approved third party such as an independent laboratory.  The independent party must
confirm the refinery of origin, guarantee that no prohibited mixing occurred, and determine the
volume and properties of the certified FRGAS, and the volume of non-certified FRGAS.
     The independent party is required to prepare a report on these inspections that becomes a
part of the foreign refiner's certification.  The independent party also must submit an inspection
report to EPA.
               iii. U. S. Importer Receipt of FRGAS
     Under this final rule, the U. S. importer must classify certified-FRGAS as such if the
gasoline is accompanied by a foreign refiner certification that is properly supported by an
independent party's report, and if test results from the load port are consistent with test results
from the U. S. port of entry.
     The regulations require the importer to test the FRGAS, and include criteria for
comparing the load port and port of entry testing.  The test results have to agree, for five specified
parameters (sulfur, benzene, gravity, E200 and E300), within the reproducibility limits for the test
procedures for these parameters.  The two volume determinations, corrected for temperature,
have to agree within one percent.  EPA believes this level of volume correlation is appropriate
because it is well within the level of correlation normally expected in commercial transactions.
EPA understands that protests normally are initiated if ship volume determinations in commercial
dealings differ by 0.5%.
     Importers are required to include in their NOx and exhaust toxics compliance calculations
any FRGAS for which the importer does not obtain a certificate by the foreign refiner supported
by a report prepared by an independent third party, or FRGAS where the load and entry port
comparison is outside the range specified in the regulations.
     In the case of FRGAS for which the importer obtains a properly supported foreign refiner
certificate, but where the volume and/or parameter results from the load port and port of entry do
not meet the range requirements, the gasoline must be imported as non-certified FRGAS.  In
addition, the foreign refiner is required to remove the volume and properties of the FRGAS from
its NOx and exhaust toxics compliance calculations, because the gasoline now is classified as non-certified FRGAS.  However, the foreign refiner must retain the volume of the FRGAS in its
compliance baseline calculation, the same as any other non-certified FRGAS, unless the foreign
refiner can demonstrate that the importer did not classify the gasoline or as RFG or use it to
produce RFG.
     In a case of load port and port of entry test results that are outside the specified range for
certified FRGAS, the regulations also allow the gasoline to retain this classification if the NOx
and exhaust toxics emissions performance based upon port of entry test results is "cleaner" for
both pollutants than the emissions performance based upon the load port test results.
     U. S. importers are required to report to EPA on each batch of FRGAS imported,
identifying the foreign refinery, whether the FRGAS is certified or non-certified, the volume and
properties of certified FRGAS, and the volume of non-certified FRGAS.
               iv.  Attest Engagement Requirements
     Under today's final rule, foreign refiners of FRGAS must meet the independent attest
engagement requirements in sections 80.125 through 80.130, the same as domestic refiners,
although the attest requirements for non-certified FRGAS are limited to those related to the
volume of non-certified FRGAS produced at a foreign refinery.   EPA is adopting additional
attest requirements that relate to the FRGAS requirements.  These attest requirements supplement
the requirements regarding an independent party determination of the refinery that produced
FRGAS loaded onto a ship.  The focus of the attest requirements will be on the foreign refinery
operations, while the requirements for certification by an independent party focus on the
transportation and storage of gasoline from the refinery to the point of ship loading.
     For further details on the procedures an auditor will be required to perform see 62 FR
24784 (May 6, 1997) "Attest Engagement Requirements."
               v.   Requirements for Third Parties
     EPA is requiring that FRGAS sampling, volume and fuel quality determinations and
determinations of refinery of origin at the loading port will have to be performed by an
independent party.  The criteria for independence are the same criteria that apply for the
independent sampling and testing requirement for domestic refiners and importers, and that are
specified at section 80.65(f)(2)(ii).  In addition, persons performing this work must be EPA
approved.  EPA approval will be based on the ability to perform the required work as
demonstrated through a petition process.
     Independent parties will have to agree to allow EPA inspections and audits relative to
their work under the Gasoline Rule for the foreign refiner that are similar to the commitments
required by foreign refiners, described below.
     Third party sampling and testing is a necessary part of the foreign refiner FRGAS
program.  However, in response to comments EPA is modifying these requirements in several
ways for this final rule, as discussed below.
          4.   Measures related to monitoring compliance and enforcement
               i.   Introduction
     The requirements for foreign refiners with individual refinery baselines must be subject to
strong measures for monitoring compliance and enforcing violations, as are domestic refiners.
However, there are a number of unique circumstances associated with monitoring compliance and
enforcing requirements for foreign refiners.  EPA is adopting a range of provisions designed to
address these concerns in a comprehensive manner.  These provisions will promote EPA's ability
to monitor compliance with the requirements related to foreign refinery baselines, to conduct
enforcement actions when violations of these requirements are found, and to impose sanctions
that will constitute a deterrent to future violations.
     The purpose of the provisions is to ensure that EPA's compliance and enforcement
activities with regard to foreign refiners will be on a par with those for domestic refiners, in order
to assure achievement of the environmental objectives of the gasoline programs.
               ii.  Inspections and audits
     EPA intends to inspect and audit foreign refineries with individual baselines and other
facilities located overseas to determine compliance with requirements related to establishing a
baseline,  identifying refineries or origin, and other requirements proposed today.  Foreign refiner
inspections and audits will be like domestic refiner inspections and audits with regard to types of
facilities visited, types of information reviewed, and types of persons who conduct the inspections
and audits.  As with domestic inspections and audits, some of the inspections and audits may be
announced while some will be unannounced.
     With the exception of the limited waiver of sovereign immunity, all aspects of section (ii)
inspections and audits (62 FR 24784-24785, May 6, 1997) outlined in the proposal are adopted
by today's action.  For a detailed list of the inspection and audit requirements refer to that section
of the proposed rule.  EPA's response to comment and final action on the limited waiver of
sovereign immunity is addressed below in section D.
     Where a foreign refiner fails to abide by the terms of the foreign refiner commitments, or a
foreign government fails to allow entry for the purpose of EPA inspections and audits, EPA may
withdraw or suspend the refiner's individual refinery baseline.
               iii. Administrative, civil, and criminal enforcement actions
     A foreign refiner with an individual refinery baseline who submits false documents to EPA
or who fails to meet other requirements will be subject to civil, and in certain cases criminal,
enforcement, and EPA is adopting requirements that will facilitate prosecution of such violations.
These requirements consist of provisions relating to a waiver of sovereign immunity, and
commitments the foreign refiner must include in a baseline petition submitted to EPA.
     Each foreign refiner seeking an individual refinery baseline must identify an agent for
service in the U. S. and agree that service on this agent constitutes service on the foreign refiner
and its employees.  This agent for service need not be a general agent for service; the agent need
only be authorized to accept service by EPA, or otherwise by the U. S., for enforcement actions
related to these regulatory provisions. The agent for service must be located in the District of
Columbia.
     Foreign refiners have to acknowledge that the forum for civil enforcement actions will be
governed by Clean Air Act (CAA) section 205.  CAA section 205(b) specifies that the venue for
district court actions is either the district where the violation occurred or where the defendant
resides or in the Administrator's principal place of business.  However, EPA believes that the
U. S. district court for the District of Columbia would be the appropriate court for violations
related to the requirements proposed today that are committed by defendants who reside outside
the U. S.  Administrative assessment of civil penalties is allowed under CAA section 205(c) where
the penalty amount does not exceed $200,000, or where the EPA Administrator and the Attorney
General jointly determine that a case involving a larger penalty is appropriate for administrative
penalty assessment.
     Foreign refiners of FRGAS must acknowledge that civil and criminal enforcement actions
will use the same U. S. civil and criminal substantive and procedural laws that apply in
enforcement actions against domestic refiners.  All of these requirements are finalized in today's
rulemaking.
               iv.  Sanctions for civil and criminal violations
     The sanctions for civil and criminal violations committed by foreign refiners with
individual refinery baselines or employees of such foreign refiners include the sanctions specified
in the Clean Air Act.  Under CAA section 211(d) the penalty for civil violations of the RFG and
conventional gasoline requirements is up to $25,000 per day of violation plus the amount of
economic benefit or savings resulting from the violation.  Injunctive authority is included under
section 211(d)(2) as well.  CAA section 113(c) specifies that the criminal penalty for first
violations of knowingly making false statements or reports is a fine pursuant to title 18 of the
U. S. Code, or imprisonment for up to 5 years, or both.  The period of maximum imprisonment
and the maximum fine are doubled for repeat convictions.
     Foreign refiners seeking and then operating under an individual refinery baseline must post
a bond with the U. S. Treasury that will be available to satisfy any civil penalty or criminal fine
that is imposed against the refiner or its employees, but only with regards to enforcement of the
regulatory provisions adopted today.  The amount of this bond is $0.01 per gallon of certified
FRGAS imported from the refiner into the U. S. per year, based on the maximum annual volume
of certified FRGAS imports during the most recent five year period during which the foreign
refiner exported certified FRGAS to the U. S. using an individual refinery baseline.  However, the
initial bond amount will be based on the volume of conventional gasoline or certified FRGAS
produced at a foreign refinery that was imported into the U. S. during the year immediately
preceding the year the  baseline petition is submitted.  The foreign refiner must submit with its
baseline petition a bond to reflect this volume, and include with its baseline petition information
necessary to accurately establish the conventional gasoline volume for the preceding year.  The
foreign refiner then each year would take into account in its bond amount calculation the certified
FRGAS volume for an additional year until there is a five year history, at which time the certified
FRGAS volume review would include only the most recent five years.
     As an alternative to posting the bond with the U. S. Treasury, a foreign refiner may meet
the bond requirement by obtaining a bond in the proper amount from a third party surety agent
that would be payable to satisfy U. S. judicial judgments for civil or administrative penalties
against the foreign refiner provided that EPA agrees in advance to the third party and the nature
of the surety agreement.  In addition, the bond requirement may be met by an alternative
commitment that results in assets of an appropriate liquidity and value being readily available to
the United States, provided that EPA agrees in advance to the alternative.
     As with domestic refiners, any violation of a regulatory requirement by a foreign refiner
could result in the imposition of penalties.  For foreign refiners with individual refinery baselines
the assessment of a penalty could then result in the forfeiture of a bond to satisfy the penalty.
This would, for example, include a failure to allow EPA inspections and audits; failure to submit
required audit reports prepared by an independent auditor; or failure to properly identify the
source refinery for FRGAS.
     If a foreign refiner with an individual refinery baseline fails to meet any requirements,
including those that apply to all refiners under the current regulations, and/or the additional
requirements that would apply only to foreign refiners, then EPA may administratively withdraw
or suspend its individual refinery baseline.
     Withdrawal or suspension of an individual refinery baseline may be imposed for all of the
refineries operated by a foreign refiner, or for a subset of a foreign refiner's refineries where
appropriate.  EPA will impose this sanction in a particular case only after evaluating the
circumstances and exercising its discretion based on factors such as egregiousness, willfulness and
prior violations.  The withdrawal or suspension may be imposed for a limited time.
     C.   Baseline Adjustment for Imported Gasoline that is Non-FRGAS or Non-Certified
          FRGAS
          1.   Introduction
     Allowing foreign refiners to choose whether to establish an IB creates a potential for
adverse environmental impact.  This potential is addressed by monitoring the quality of imported
gasoline, comparing it to a benchmark, and taking remedial action if the benchmark is exceeded.
The details of this approach are described below.
          2.   Monitoring
     Under the current regulations, importers submit an annual report concerning the quality of
the CG they import.  See 40 CFR 80.105.  Importers submit an annual report after the end of the
calendar year, comparing the quality of the gasoline they imported against the applicable annual
average requirements.  Starting in 1998, these requirements are for NOx and exhaust toxics
emission performance, determined under the Complex Model.
     Under the current rules, the annual report is due by the last day of February following the
end of the annual averaging period.  An attest engagement report is due by May 30.  The
importer's report must include the total gallons of CG imported, the annual average compliance
baseline, and the annual average for the gasoline imported that calendar year.  The importer must
also include the volume, grade and qualities for each batch of imported gasoline.
     Under today's final rule, importers will continue to submit the reports described above for
CG produced by foreign refiners without an IB.  For gasoline produced by a foreign refiner with
an IB, both the importer and the foreign refiner will submit reports to EPA.  In combination these
reports will contain all of the information submitted for gasoline produced by refiners without an
IB.
     These annual reports submitted by importers and foreign refiners provide EPA with batch
by batch information for all CG imported during that year.  From these, EPA will determine the
volume weighted average quality for all imported CG.  This will be a simple and straightforward
way to monitor imported gasoline quality.  Additional sampling and testing by EPA would be
duplicative, as the importer must sample and test each batch of imported gasoline.  40 CFR
80.101(i).
          3.   An Appropriate Benchmark
     The purpose of the benchmark is to reasonably determine when allowing foreign refiners
the option to use an IB or to not use an IB has caused degradation of the quality of imported
gasoline from 1990 quality of imported gasoline.
     Ideally, EPA would use the volume weighted average of the quality of gasoline sent to the
U. S. by foreign refineries in 1990.  EPA does not have this information, but does have
information on the volume weighted average baselines for domestic refineries.  This average
accounts for approximately 95% of the U. S. gasoline market in 1990, and reflects a wide
diversity in types and kinds of refineries.  There is no available data indicating that gasoline
imported from foreign refineries was not consistent with this average, and absent evidence to the
contrary it is not unreasonable to assume that average foreign gasoline quality in 1990 was
generally equivalent to domestic gasoline quality.  Also it would not be reasonable to measure
overall quality for gasoline produced by foreign refiners using stricter criteria than that applied to
domestic refiners, in the absence of evidence to support such an action.
     The benchmark should be set at a point such that an exceedance of the benchmark
reasonably indicates that the average quality of imported gasoline has degraded from 1990 levels
because of the option provided to foreign refiners in using or not using an IB.  Many additional
factors also affect the average quality of imported gasoline.  For example, there is a wide variety
in the level of imports from year to year.  The source and volume of imports from specific
countries and refineries also varies significantly from year to year.  Despite general trends in
amount and source of imported gasoline, there remains a lot of year to year variability.  A change
in average gasoline quality during any particular year therefore might indicate the effects of
allowing the option for IBs, or it might reflect the unique circumstances of that year, which may
well change the next year.
     Since the existence of an exceedance of the benchmark is designed to detect a multi-year
trend, EPA will use a three year average for comparison against the benchmark.  This will be a
rolling average; e.g. the average for years 1 through 3 will be compared to the benchmark one
year, the next year the average for years 2 through 4 will be compared, and so on.
     EPA is setting this benchmark for NOx at the volume weighted baseline average for
domestic refiners: 1465 mg/mile for NOx.
     For toxics, the evidence to date tends to show there would not likely be an adverse impact
from allowing the option to use IBs.  In 1995, the volume weighted annual average of imported
gasoline for exhaust toxics was 86.64 mg/mile.  This was cleaner than both the statutory baseline
(104.5 mg/mile) and the volume weighted average for domestic baselines (97.34 mg/mile).  In
addition, one foreign refiner that is a major supplier to the U. S. market has submitted detailed
information to EPA on their expected IB, and the information submitted by the foreign refiner to
date indicates that their IB for exhaust toxics would be cleaner than the SB.   Further
information is discussed in the response to comments section.  EPA believes the present
circumstances do not indicate that there is a risk of adverse environmental impact, and a
benchmark  and provisions for remedial action are not needed for exhaust toxics at this time.
Instead, EPA will monitor the average quality of imported gasoline for exhaust toxics as for NOx,
and if an adverse trend occurs EPA will develop a benchmark and remedial provisions analogous
to that adopted for NOx.
     At the start of the program, the volume weighted average for 1998 and 1999 will be
compared to the benchmark, and then the average for 1998, 1999 and 2000, to start the three year
rolling average.  A one year average for 1998 alone would not by itself appear adequate to detect
a multi-year trend, while a two year average would be more effective in this regard.  The effects
of imports in 1998 would be still be fully accounted for, in the two year average including 1999.
Since an IB might start to be used in 1997, EPA will include with the 1998 imports all gasoline
imported in 1997 after the date any gasoline subject to an IB is imported in 1997.
          4.   Remedial action upon an exceedance
     If a volume weighted three year annual average for imported CG exceeds the benchmark
for NOx then EPA will take remedial action.  The remedial action will be an adjustment applied to
the compliance baseline for CG not included in the CG compliance calculations of a foreign
refiner with an IB.  The adjustment to the baseline will equal the amount of the exceedance of the
benchmark.
     This will be reevaluated each year by comparing the average for the three prior years to
the benchmark.  If there is no exceedance, then a prior adjustment will be terminated.  If there is
an exceedance, then a new adjustment will be imposed that equals the amount of the current
exceedance.  For example, if the three year annual average exceeds the NOx benchmark by 5
mg/mile, then the compliance baseline for NOx will be adjusted by 5 mg/mile.  If there is no
exceedance in the next years comparison, then the adjustment will be dropped.
          5.   Imported gasoline subject to the remedial action
     A foreign refiner using an IB will follow the same procedures as a domestic refiner - the
quality of its CG will be measured against the IB of the refiner that produced it.  Foreign refiners
without an IB would have chosen to have their gasoline measured against the SB instead of an IB,
and reasonably could be expected to include refiners whose IB would have been more stringent
than the SB.  It is the use of IBs by some refiners, and the degradation below 1990 quality in CG
produced by foreign refiners without an IB, that has the potential to cause the average CG quality
to be adversely affected when other refiners are subject to an IB.  Since the foreign refiner with an
IB would be acting no differently than domestic refiners with an IB, the remedial action will be
applied to CG imported from refiners without an IB.
     D.   Requirements for U. S. Importers
     Under today's action U. S. importers must meet NOx and  exhaust toxics requirements for
all imported CG that is not designated as certified FRGAS, and must exclude from importer CG
compliance calculations all CG that is designated as certified FRGAS.  A mechanism is provided
by which U. S. importers would demonstrate that imported CG is certified FRGAS.  The baseline
that will apply to U. S. importers of non-FRGAS and non-certified FRGAS will be the statutory
baseline or any adjusted baseline as discussed in section II.C above.  EPA is not changing the
current requirement that U. S. importers meet all requirements for imported RFG.
          1.   Imported Certified FRGAS
     Certified FRGAS must be excluded from the U. S. importer's CG compliance calculations.
This prevents the double counting that would result if certified FRGAS were included in the CG
compliance calculations of both the foreign refiner and the U. S. importer.   However, the U. S.
importer must determine the quality and quantity of certified FRGAS at the U. S. port of entry,
which the importer then reports to the foreign refiner and to EPA in order to be compared with
the foreign load port testing.
     A U. S. importer must classify an imported gasoline batch as certified FRGAS if the
gasoline is accompanied by a certification prepared by the foreign refiner that identifies the
gasoline as certified FRGAS to be included in the foreign refinery CG compliance calculations,
and a report on the certified FRGAS batch prepared by an independent third party, and the load
and entry port comparison is within the specified range.   In this way the U. S. importer acts like a
domestic distributor and would not be responsible for meeting the NOx and exhaust toxics
requirements for this gasoline.  The U. S. importer is not responsible for whether the foreign
refiner meets the annual NOx and exhaust toxics requirements for certified FRGAS, including
whether the foreign refiner properly calculates the refinery's compliance baseline each year.
     However, the U. S. importer is responsible for ensuring the foreign refiner certification
was in fact prepared by the foreign refiner named on the certificate, and that the foreign refinery
has been assigned an individual refinery baseline by EPA.  If a certified FRGAS certification was
not prepared by the named foreign refiner, for example if it is a forgery, the U. S. importer will be
required to classify the gasoline as non-FRGAS and include the gasoline in the importer's CG
compliance calculations.  Similarly, if the certificate accompanying a batch of certified FRGAS
names a foreign refinery that has not been assigned an individual baseline, the U. S. importer will
be required to classify the gasoline as non-FRGAS and include the gasoline in the importer's CG
compliance calculations.  It is necessary to make U. S. importers responsible for accounting for
imported CG in these situations in order to enable EPA to enforce the CG requirements
effectively.  EPA would have great difficulty enforcing requirements against a foreign party who
may have created fraudulent FRGAS certification documents, other than a foreign refiner who has
established an individual refinery baseline.
     EPA believes U. S. importers can easily protect themselves against this type of liability.
EPA will publish on its computer bulletin board the identity of foreign refineries that have been
assigned individual baselines, that may be used by importers to identify legitimate foreign refiners
of FRGAS.  Importers can avoid relying on false certificates by selecting reliable business
partners, or by contacting the foreign refiner to ensure the authenticity of the certificate for any
particular certified FRGAS batch.
     The U. S. importer must use an independent third party to determine information about
each certified FRGAS batch.  The batch quality and quantity must be determined through
sampling and testing prior to off loading the ship, and that will be compared with the quality and
quantity determined at the load port after the ship was loaded.  The independent party also must
use the product transfer documents to determine the identity of the foreign refinery where the
certified FRGAS was produced.  The importer submits a report to the foreign refiner and to EPA
containing the batch information.
     U. S. importers may not classify certified FRGAS as "gasoline treated as blendstock,"
(GTAB), because to do so would result in the same CG being included in two compliance
calculations.  In addition, U. S. importers may not use GTAB procedures to convert certified
FRGAS into RFG, for the same reason that domestic regulated parties are not allowed to convert
CG into RFG.  Conversion of CG into RFG is prohibited because of concern such conversions
could result in degradation of the CG gasoline pool.  For example, in the absence of this
constraint a refiner could produce very clean CG that in fact meets the RFG requirements, include
this gasoline the refiner's CG compliance calculations to offset other dirty CG, and then convert
this gasoline into RFG.  The result of this would be degradation in the average quality of the
refiner's CG.  This same effect would be possible if importers could convert certified FRGAS into
RFG.
          2.   Imported Non-FRGAS or Non-Certified FRGAS
     U. S. importers must meet all current requirements for imported gasoline that is produced
at a foreign refinery without an individual baseline (i.e., non-FRGAS), and for gasoline produced
at a foreign refinery with an individual baseline where the gasoline is not included in the foreign
refinery's NOx and exhaust toxics compliance calculations (i.e., non-certified FRGAS).  If  the
importer classifies the gasoline as conventional, the importer must include the gasoline in its NOx
and exhaust toxics compliance calculations.  However, the baseline used by importers would be
the baseline described in section II.C of this preamble.  If the imported gasoline is classified as
RFG, the importer must meet all RFG quality and other requirements for the gasoline.
     Importers are allowed to use the current GTAB procedures to reblend or reclassify
imported non-FRGAS and non-certified FRGAS.
     In the case of non-FRGAS, importers have no requirements related to tracking the refinery
of origin.  In the case of non-certified FRGAS the importer must meet additional requirements
related to tracking the refinery of origin.  The importer must have an independent laboratory
determine the volume of each non-certified FRGAS batch, and report this volume to the foreign
refiner and to EPA to be compared with the load port volume. The volume of non-certified
FRGAS produced at a foreign refinery with an individual baseline is used to calculate the
refinery's CG compliance baseline, which constitutes a volume cap on use of an individual refinery
baseline.
     E.   Early Use of Individual Foreign Refinery Baselines
     A foreign refiner who submits a petition for an individual refinery baseline may begin using
the individual baseline prior to EPA approval of the baseline petition, provided EPA makes a
preliminary finding the baseline petition is complete, and the foreign refiner also has completed
certain requirements proposed today.  However, any gasoline imported under a requested IB will
be subject to the actual IB assigned by EPA.
     EPA will conduct a completeness evaluation as the first step in baseline review process,
and will notify a foreign refiner of the results of the completeness review on request.  However,
the initial completeness review does not bar EPA from requiring a foreign refiner to submit
additional information later in the baseline review process.
     The additional requirements a foreign refiner will have to complete in order to use an
individual baseline early are related to ensuring EPA's ability to monitor and enforce compliance
by the foreign refiner with all applicable requirements during the early use period.  The particular
requirements that will have to be met are:  (1) the commitments regarding EPA inspections and
the forum for enforcement actions, and (2) the requirements related to posting of a bond.
     If these conditions are met, the foreign refiner may begin classifying gasoline as certified
and non-certified FRGAS, and may use the individual refinery baseline to demonstrate compliance
with the NOx and exhaust toxics requirements.  However, a foreign refiner will be required to
meet the NOx and exhaust toxics requirements for certified FRGAS using the refinery baseline
values that ultimately are approved by EPA.  Thus, if a foreign refiner elects to use an individual
refinery baseline early, and uses baseline values that are less stringent than the baseline values
ultimately approved by EPA, the refiner's compliance with the NOx and exhaust toxics
requirements will nevertheless be measured relative to the approved baseline values.  If this
evaluation results in a violation of the NOx and exhaust toxics requirements, the foreign refiner
will be held liable.
     F.   Requirements for RFG Before 1998
     The scope of this final rule is limited to requirements for conventional gasoline.  The CG
requirements rely on refinery baselines both now and in the future.  The RFG requirements for
sulfur, T-90 and olefin content also rely on individual refinery baselines, but only until the
Complex Model applies beginning in January, 1998.   In the proposed rule EPA requested
comments on whether the regulations should allow individual refinery baselines to be used for
these RFG requirements if a foreign refiner obtains an individual baseline before January, 1998.
The only comments on this issue stated that there would be insufficient time before January, 1998
to justify use of individual baselines for RFG and no commenters requested that this rule apply to
RFG.  This final rule is therefore limited to conventional gasoline.
III.  Summary of Changes from Proposal
     The following list identifies aspects of the proposed rule (62 FR 24776) that were
modified in the final rule.
         The proposal would have required foreign refiners to submit baseline information
          on the foreign refinery's overall gasoline production for 1990.  This requirement is
          deleted in the final rule.  Baseline information must be submitted for the gasoline
          sent to the U. S. in 1990, however, EPA reserves the right to seek further
          information where appropriate.
         The proposal would have required that where a foreign refiner is owned or
          operated by a foreign government, the government would have to sign a waiver of
          sovereign immunity.  The final rule instead includes a regulatory requirement that if
          a foreign refiner establishes and uses an individual baseline it will constitute a
          waiver of sovereign immunity for purposes of EPA or other U. S. enforcement
          actions based on violations of the requirements adopted today.
         The proposal would have required that the foreign refiner post a bond in order to
          receive an individual refinery baseline.  In the final rule the bond requirement and
          bond amount are retained, however the foreign refiner many meet the bond
          requirement with other assets, subject to EPA approval.
         The proposal would have established various requirements relating to verifying the
          source of gasoline imported under an individual baseline -- sampling and testing by
          independent third parties at the load port and discharge port, comparisons of the
          test results, and certifications as to identity and source of the gasoline.  If the
          gasoline failed the load and entry port comparison it would still be included in the
          foreign refiner's compliance calculation.  In addition, no gasoline classified by the
          foreign refiner as intended for the U. S. could be diverted to a non-U. S. market.
          Many of the details of those related provisions have been modified to increase the
          flexibility for importers and foreign refiners, to be consistent with the tracking
          purpose of the provisions, and to take into account any potential for adverse
          environmental impact.
IV.  Response to Comments
     A.  Optional vs. Mandatory Baselines
1.  EPA's Proposal:
     EPA proposed that foreign refiners would be allowed to establish and use
individual baselines, but it would not be mandatory.  If a refiner did not establish and use
an IB, the gasoline they export to the U. S. would be regulated through the importer, and
subject to the importer's baseline.  Specific regulatory provisions would be implemented
to ensure that the option to use an individual baseline would not lead to adverse
environmental impacts.  This would involve monitoring the average quality of imported
gasoline, and if a specified benchmark is exceeded, remedial action would be taken by
adjusting the requirements applicable to imported gasoline.
     Under this approach, the volume of gasoline that could be imported under the
individual baseline for a foreign refinery would be limited in the same manner as for
domestic refiners, relative to a refinery's 1990 baseline volume.
2.  Comments:  Optional versus mandatory individual baseline approach
      Several parties from the domestic refining and distribution industry commented
that EPA should not offer foreign refineries the opportunity to choose between either an
individual baseline or the statutory baseline.  The commenters suggested that offering the
choice discriminates against domestic refiners who do not have the opportunity to choose,
and offers the foreign refiners a competitive advantage.
     These commenters argued that foreign refiners already have a competitive
advantage because they are subject to fewer environmental costs at their refineries relative
to U. S. refiners, and they are not subject to U. S. RFG or anti-dumping regulations on the
majority of their production which is not for the U. S. market.  These commenters urge
EPA to avoid any final regulation which would further upset the competitive balance and
concluded that foreign refiners should be treated in the same manner as domestic refiners.
     These commenters argued that foreign refiners who would otherwise have
individual baselines more stringent than the statutory baseline would not apply for an IB
(their product would be regulated through the importer, who is subject to the statutory
baseline), while those with baselines less stringent than the statutory baseline would
choose to establish and use an individual baseline.  The domestic industry also noted that
many U. S. refiners with baselines more stringent than average could significantly benefit if
they were given the choice of choosing the statutory baseline.
     To avoid this perceived inequity, domestic refiners maintain that if all foreign
refiners are not held to the statutory baseline, then they must be required all to establish an
individual baseline for product shipped to the U. S. in 1990, or domestic refiners should be
offered the same option to operate at the statutory baseline if they choose to do so.
     One commenter stated that EPA is obligated under the Clean Air Act to favor
protecting the environment over energy and economic considerations.  The commenter
stated that in American Petroleum Institute v. EPA (52 F. 3d 113, 1120 (D.C. Cir. 1995),
the court explicitly noted that these non-environmental factors are not to be used as an
independent grant of authority for EPA rulemaking.
     The same commenter suggested that EPA and DOE concerns regarding price and
supply impacts were an inappropriate foundation for this rulemaking.  The commenter
stated that the structure of the Clean Air Act, with its emphasis on protecting public
health, meant that supply or price concerns cannot provide the foundation for this rule.
The commenter concluded that EPA has an overriding obligation to consider air quality
before any other factors, and that obligation should lead EPA to a decision to require
mandatory baselines for all foreign refiners.
     Another commenter suggested that EPA's reliance on DOE's analysis was
inadequate for selecting optional baselines over mandatory baselines.  The commenter, an
association representing certain domestic refiners, stated that they do not believe DOE or
any other organization can credibly quantify the impact of foreign refiner baseline
restrictions on the U. S. market just as DOE could not quantify the impact of baseline
requirements on domestic refiners.
     Another association representing the domestic refining and distribution industry
commented that despite DOE's concerns, a more serious threat to U. S. gasoline supply is
adopting a rule which discriminates against domestic refiners.  The commenter suggested
that domestic refiners' business is extremely sensitive to unequal treatment in the
international marketplace.  The commenter suggested that during a short term supply
emergency, EPA could establish a temporary waiver procedure to provide limited relief
from baseline requirements.  This commenter also suggested that any waiver should apply
to all suppliers in an affected region and not be limited to foreign suppliers.
     Foreign refiners, domestic gasoline marketers and domestic importers and blenders
and others commented that the optional individual baseline is appropriate.
3.  EPA Response:
Optional Baselines for Domestic Refiners
     EPA analyzed two approaches to establishing individual baselines for foreign
refiners.  One involved mandating that all foreign refiners obtain and use an IB in order to
market conventional gasoline in the Untied States, the other approach provided this as an
option but did not mandate it.  For the reasons described in the proposal, and in this
notice, EPA believes there are serious problems with the mandatory approach based on
the risk that it could significantly disrupt the marketing of foreign conventional gasoline to
the United States and therefore have significant impacts on the cost of gasoline.  The
proposal also discussed the potential for degradation in emissions quality of gasoline from
the mandatory baseline approach.  Because of this, EPA proposed and is adopting an
optional approach.
     EPA does not agree that this discriminates against the domestic refining and
distribution industry, or that domestic refiners should be provided the same option.  While
foreign refiners are provided a choice that domestic refiners are not provided, this is
because the supply and price impacts from mandating the use of IBs for imported gasoline
differ significantly from those for domestic gasoline.  In addition, this choice can be
provided to foreign refiners without adverse environmental impacts, through the use of the
baseline adjustment mechanism to monitor and offset any potential degradation in the pool
of imported gasoline.  Providing the same choice to domestic refiners would very likely
lead to a significant degradation of the much larger pool of domestically produced
gasoline, that could only be remedied through an expensive and cost-ineffective
adjustment mechanism.
     In establishing the rules for conventional and reformulated gasoline, EPA
determined that domestic refiners are all able to establish individual baselines.  Under
section 211(k)(8) of the Act, EPA therefore requires that domestic refiners establish and
use IBs.  This is a cost-effective way to ensure that domestically produced conventional
gasoline does not degrade in emissions related quality below 1990 levels.  It has been
successfully implemented without significant disruptions to the supply or price of
conventional gasoline.  Continuing this approach for domestic refiners does not present a
risk of significantly disrupting the gasoline supply and price market.  This would be a
much less cost effective way to keep conventional gasoline quality at 1990 levels than
mandating the use of IBs for domestic refiners.
     Providing domestic refiners the choice between use of an IB and use of the
statutory baseline would likely lead, according to commenters, to many domestic refiners
making this choice.  EPA would have to establish a benchmark and adjustment
mechanism, similar to that proposed for imported gasoline, to monitor for and offset any
degradation of the gasoline pool resulting from providing such an option.  Given the large
volume of gasoline involved, which is much larger than the volume of imported gasoline at
issue here, and the expectation that exercising such a choice to use the SB would be based
on the economic value of producing gasoline designed to meet a less stringent baseline
with the resulting bias for a dirtier gasoline pool, EPA would almost assuredly be called on
to impose an across the board adjustment to baselines for domestic refiners to offset
degradation of the gasoline pool from 1990 levels.  This would result in the kind of
"reformulation" of conventional gasoline to stay at 1990 levels that the mandatory use of
IBs was meant to avoid.
     As compared to gasoline produced by domestic refiners, EPA has two potential
parties whom it can regulate with respect to gasoline produced by foreign refiners.  For
imported gasoline EPA could regulate either the importer, or the foreign refiner.  EPA
therefore has discretion under section 211(k)(8) as to which party, and under what
conditions, it imposes the requirements for conventional gasoline that is imported.  For
example, under the current regulations all foreign produced gasoline is regulated through
the importer, and importers are not provided an option concerning establishment and use
of an IB, while foreign refiners are not directly regulated.
     For the reasons and circumstances described in section I.E. and in the proposal,
EPA has rejected the approach of mandating that all foreign refiners establish and use an
IB in order to market conventional gasoline in the US.  EPA has instead determined that it
is appropriate to continue regulating imported conventional gasoline through the importer
in all cases except those where a foreign refiner has adequate data and chooses to establish
and use an IB.  The concerns on price and supply which lead to rejecting the mandatory
approach for foreign refiners do not apply to domestic refiners, and therefore do not
provide a basis for changing the mandatory approach currently applied for domestic
refiners.  In addition, providing this option to foreign refiners is less likely to lead to a
degradation of the average qualities of imported gasoline than the much more likely
degradation that would occur to the much larger pool of domestically produced gasoline if
the same option were provided to domestic refiners.
     In sum, the mandatory use of IBs for domestic refiners has worked successfully,
without significantly disrupting the supply and cost of conventional gasoline.  Requiring
the same approach for imported conventional gasoline, presents the risk of this kind of
significant disruption.  Providing domestic refiners with an option to establish and use IBs
would very likely lead to a degradation in the emissions quality of conventional gasoline,
over a very large percentage of the total volume of conventional gasoline.  This
degradation could be remedied by a baseline adjustment mechanism, however this would
be a less-cost effective way to avoid such degradation than not providing such an option.
Providing foreign refiners with the option to establish and use an IB presents a risk of
environmental degradation, but this covers a much smaller pool of gasoline and it is
unclear whether and to what extent there will in fact be a degradation in the pool of
imported gasoline.  If there is, it can be readily remedied consistent with the flexibility
currently available to importers and foreign refiners to determine what gasoline is
imported into the US, without the potential supply and price impacts from mandating the
use of IBs for imported gasoline.
Consideration of Environmental Impact of Providing an Option for an Individual Baseline
     Several commenters suggested that the Agency's proposal  put trade and economic
considerations over its concern for protecting the environment.  On the contrary, the
Agency believes that this final rule is fully consistent with the Agency's commitment to
fully protect public health and the environment.
     EPA considered two different approaches to the use of IBs by foreign refiners.  It
is reasonable for EPA to consider the cost impacts of the two approaches and adopt the
one that avoids the risks attendant with seriously disrupting the importation of
conventional gasoline into the U. S.  In this case, the provisions adopted concerning the
option to establish and use and individual baseline will fully protect the public health and
environment, and achieve the Clean Air Act goals for the conventional gasoline program.
This will be achieved without risking significant disruption to the supply or price of
conventional gasoline.
Impact of Mandatory Approach on Gasoline Supply/Price
     Commenters objected that EPA did not have an adequate basis to reject the
mandatory baseline approach based on supply and cost considerations.
     Based on the information presented by DOE, EPA believes that requiring
individual baselines for all foreign refiners presents too great a risk of adverse effects on
gasoline supply and prices.  To fully understand how mandatory baselines for imported
conventional gasoline could impact the gasoline market it is first important to understand
the role imports play in the domestic market.  Foreign imports account for 6%- 8% of
total U. S. gasoline consumption.  Almost all (over 95%) of imports come into Petroleum
Administration for Defense Districts (PADD) I, the U. S. east coast, where they represent
about 20% of total gasoline supply.
     Imported gasoline plays a significant role in the domestic gasoline market.
Imported gasoline augments the supply of gasoline on the east coast of the United States,
an area with an already large demand.  During the summer of 1996, U. S. east coast and
gulf coast refinery operating utilization rates were in excess of 96%. Only about 150
thousand barrels a day of additional domestic gasoline production capacity was available.
However, the market was demanding about 500 thousand barrels a day of additional
gasoline.  Imported gasoline made up the gap with over two-thirds of the imports meeting
a need that could not be served by U. S. refineries.
     One commenter suggested that EPA's optional individual baseline approach
discriminates against domestic refiners to such a degree that domestic refining capacity in
the United States could contract as a result of this unequal treatment, which would have a
more severe impact on the gasoline market in the United States.  However, the current
production rates of east coast and gulf coast refineries would indicate that this
consequence is highly unlikely.   It is clear that U. S. demand for gasoline will continue to
increase at a rate surpassing U. S. production.  The suggestion that domestic refineries
will reduce their production in light of such a demand seems implausible.
     One commenter suggested that EPA establish a temporary waiver procedure to
provide limited relief from baseline requirements during short-term supply emergencies.
Although EPA arguably may have the authority to establish such a waiver provision, it
would be an impracticable solution in this instance.  It is clear from the DOE's analysis
outlined below that the disruption mandatory baselines would cause to the sale and
importation of opportunistic gasoline could leave the U. S. market with a constant risk of
short term supply and price disruptions, and the temporary waiver provision could not be
implemented in a time frame that would eliminate this risk.  Moreover it would require the
U.S. government to arbitrarily determine the appropriate market price of gasoline.
     Much of the gasoline imported into PADD I is shipped into the United States on
an ad hoc basis.  Currently gasoline is imported into the U. S. market from a free moving
and fungible distribution system.  This opportunistic sale of gasoline is an important
element in the U. S., and particularly the east coast, gasoline supply system.  The broad
based use of tracking and monitoring restrictions which would be required by mandatory
individual baselines would eliminate the flexibility necessary to quickly divert opportunistic
gasoline to the U. S. should the market demand it.  This would make it more likely that
imported gasoline would not play the same role that it currently does in moderating price
increases.
     The amount of opportunistic gasoline imported into the United States is not
inconsequential.   DOE's analysis indicates that in 1996, a total of 25 separate importers
brought gasoline, of all types, to the U. S. east coast from about 40 refineries in 28
countries.  Of this amount, over 40% was imported as opportunistic gasoline. The ability
to quickly draw gasoline supplies from various parts of the world to the U. S. market is
important in moderating price swings and meeting consumer demand.
     While most imported gasoline enters the U. S. market on the east coast it impacts
gasoline prices nationwide.  Imported gasoline tends to moderate price increases by
increasing the sources of gasoline to meet U. S. demand.  DOE examined New York
harbor, Chicago and Gulf Coast spot prices for conventional gasoline which showed
highly correlated movements throughout 1996.  The pipelines linkages between PADD III
and PADDs I and II are the key mechanism for linking the prices.
     The DOE analysis concluded that a 1 cent per gallon change in New York spot
prices, driven by a shortage of imports, could affect the over 4 million B/D of
conventional gasoline being used in PADD's I, II and III.  A 1 cent/gallon price change,
lasting as little as one week (typical of the time required to get additional gasoline
shipments to the U. S. east coast from Europe or from the gulf coast by water), could cost
or save gasoline consumers over $10 million.
     While a number of factors are at work in market fluctuations it is clear that the
volume of  imported gasoline is price responsive.  By rapidly providing additional supply,
consumer demand is met without the large price increases that would be necessary to
control gasoline demand.
     EPA disagrees with the comment that an option to establish an individual baseline
should not be provided because it would give foreign refiners a competitive advantage
over domestic refiners.  Foreign refiners who establish an individual baseline will be
subject to the same requirements as domestic refiners, with additional requirements
dictated by their unique circumstances.  Foreign refiners will be required to fulfill the
additional burden of tracking and segregating their imported gasoline to ensure that the
correct individual baseline is being used for the purposes of the compliance calculation.
     Gasoline from foreign refiners who do not establish an individual baseline would be
subject, through the importer, to an adjustment to the importer baseline needed to offset
any adverse environmental impact from a foreign refiner's choice not to seek an individual
baseline.
     As described above, this option is provided to foreign refiners based on the
significant difference in circumstances between applying the mandatory use of individual
baselines to domestic or foreign refiners, and the significant difference in potential adverse
impact on the environment and gasoline supply and prices.
Role of Consideration of Costs
     One commenter argued that EPA's obligation under the Clean Air Act to protect
the environment take priority over costs and economic concerns in this rulemaking.
     EPA's authority to take costs and economic factors into consideration when
establishing rules protective of the environment depends on the terms of the specific
statutory provision at issue.  As in prior rulemakings establishing the conventional gasoline
program, EPA's authority is based on section 211(k)(8) and 211(c)(1) of the Act.  Each of
these provisions gives EPA discretion to take cost and other relevant factors into
consideration when establishing requirements that meet the air quality goals of the
conventional gasoline program.  In the prior rulemakings for the conventional gasoline
program, EPA has taken these factors into consideration when establishing the
requirements needed to meet the air quality requirements of this program.  For example,
EPA's CG requirements include the ability to obtain an adjustment to the IB under certain
circumstances related to economics;  establish testing, recordkeeping and reporting
requirements which reasonably take into account the burden of the measures, and reflect
the decision in the 1993 rulemaking to not establish specific emissions requirements for
VOCs, CO, and non-exhaust toxics, based in part on economic considerations.   In this
case it is also reasonable to consider adverse supply and cost impacts when determining
the appropriate approach.  The statutory provisions noted above provide EPA with the
discretion to consider these factors.
B. Establishment of an Individual Baseline (IB)
     1. Overview
     Comments were submitted on a number of issues with regard to establishment of
individual baselines by foreign refiners.  These issues included the proposed requirement to
submit baseline information on the foreign refinery's overall gasoline production as well as
the subset of gasoline which was sent to the U.S. in 1990; the proposed January 1, 2002
deadline for submittal of foreign refinery baseline petitions; and foreign refinery
aggregation for compliance purposes.
     In summary, EPA is not requiring foreign refiners to submit baseline information
on the foreign refinery's overall gasoline production.  EPA reserves the right to require
such information in a specific case if it is needed to reasonably evaluate a baseline
submission.  EPA is retaining the proposed January 1, 2002 deadline for baseline petition
submittals.  In general, with regard to other baseline issues, such as aggregation, baseline
volumes, and baseline review, audit and approval, EPA is maintaining the same
requirements for foreign refiners as for domestic refiners, as proposed.
     2. Use of total 1990 product data.
     EPA proposed that a foreign refinery would have to submit information regarding
its total 1990 gasoline production as well as information regarding the subset of the
refinery's gasoline production which was sent to the U.S. in 1990.  EPA believed that
information on the total refinery gasoline production would be useful in the calculation
and verification of the quality of the subset of gasoline sent to the U.S. in 1990.
     Commenters indicated that requiring an individual baseline calculation for the total
gasoline production was burdensome, costly, and, in general, of little additional value.
Commenters indicated that the quality of the subset of gasoline sent to the U.S. in 1990
could be accurately determined without the additional information on the refinery's total
gasoline production.  One commenter also stated that EPA previously concluded that the
overall quality from a foreign refinery might bear scant resemblance to the quality of the
portion going to the U.S. market.  This commenter also stated that requiring information
on a foreign refiner's overall gasoline production is wholly unnecessary.
     In general, EPA agrees with the commenters that requiring information in all cases
on the overall 1990 gasoline production of a foreign refinery may be costly and may
provide little additional value.  Thus, EPA will only require that a foreign refiner's baseline
petition contain information relevant to the calculation of the baseline for the subset of
gasoline sent to the U.S. in 1990.  Nonetheless, the calculation of a refinery baseline per
these regulations is complex, with wide variances in the types and amounts of data
available on the subset of 1990 gasoline which came to the U.S.   As with domestic
refiners, EPA reserves the right to request additional information to evaluate a petition for
an IB, where such information in needed to reasonably determine an accurate IB.  In
specific cases this might include much or all of the information pertaining to the refinery's
1990 total gasoline production.
     3. January 2002 deadline
     EPA proposed that baseline submissions would have to be submitted to the
Agency by January 1, 2002.  EPA proposed this date in order to allow for the collection of
both summer and winter data and the preparation of a baseline petition subsequent to June
1, 2000, the scheduled date EPA would announce the average quality of imported gasoline
for the first monitoring period of 1998 and 1999.  Domestic refiners had approximately
one year following issuance of the final regulations in December 1993 to prepare
(including completion of sampling, testing and analysis) and submit their individual
baselines to EPA prior to the start of the program on January 1, 1995.
     EPA received comments indicating that the proposed deadline was appropriate,
and others indicating that such a deadline was unnecessary, and perhaps arbitrary.
Commenters opposing a deadline thought that foreign refiners should be allowed to apply
for an individual baseline when they desire to, for example, when export volumes to the
U.S. increase and/or pricing conditions are favorable.  One commenter questioned whether
baseline petitions would be accepted prior to January 1, 2000, and suggested that EPA
specify a reasonable period of time in which it will act on a baseline submission, as the
commenter indicated EPA did with domestic refiners.
     EPA continues to believe that a deadline for the receipt of foreign refiner baselines
is appropriate in order to avoid the increased uncertainty in determining an individual
baseline too many years after the 1990 time period that an IB is based upon.  A reasonable
deadline such as January 1, 2002 provides foreign refiners several years to exercise the
option provided here, and will assure that EPA has a reasonable factual basis to determine
an accurate IB regarding 1990 gasoline volume and quality.  It will also  maintain
requirements similar to those imposed on domestic refiners.   While a foreign refiner
would not have the right under the regulations to seek an IB after January 1, 2002, after
this date a foreign refiner could still petition EPA to revise this rule and establish an IB,
for example, where the refiner could demonstrate that it is able to establish an accurate
and verifiable IB.
     Foreign refiners may submit a baseline petition to EPA at any time prior to January
1, 2002.  However, if gasoline is imported using an IB while a petition for an IB is
pending, the foreign refiner will be subject to the ultimate approved baseline, which may
change significantly (to their benefit or detriment) from the original submission due to
errors or omissions uncovered during EPA review.  In general, baselines are reviewed in
the order received, but a well prepared and ultimately correct baseline may be approved
prior to a baseline submitted earlier which was less well prepared or incorrect.
     EPA is not establishing a specific time frame to act upon baselines, due to the
many uncertainties, discussed above, regarding the completeness of the original submittals
and the number of questions EPA may have for a refiner before determining that a
submittal is complete, accurate, and appropriate for approval.  The Agency's review of
submissions by domestic refiners took between a few months and two years, depending on
the quality and completeness of the original submission.  EPA will review foreign refiner
baseline submissions in an expeditious and timely manner but cannot specify a time frame
in which a foreign refiner baseline will be acted upon.  Foreign refiners can export
conventional gasoline to the U.S. using and IB under the program requirements finalized
today without an approved baseline.  Foreign refiners should note that once a baseline
petition is submitted and a refiner begins to use an IB, the refiner will be held to
compliance with the ultimately approved baseline.
     4.  Aggregation
     As stated in the proposal, a foreign refiner who operates more than one refinery
with an individual baseline would be able to aggregate the baselines of some or all of its
refineries, as allowed for domestic refiners.
     Commenters said that allowing a foreign refiner to aggregate refineries with both
unique individual baselines and statutory baselines gave additional flexibility to foreign
refiners who would already have the option of having or not having an  individual baseline.
One commenter also stated that foreign refiners should be subject to the same one-time
decision regarding aggregation as domestic refiners.  Commenters also said that foreign
refiners should not be allowed to game the system by electing either an individual baseline
(for refineries dirtier than the statutory baseline) or the statutory baseline (for refineries
cleaner than the statutory baseline) on a refinery-by-refinery basis for facilities owned by a
single entity.  These commenters claimed that allowing some individual baseline refineries
and some statutory baseline refineries under a single owner would "aggravate the
competitive discrimination against domestic refiners."    According to these commenters,
all refineries owned by a single entity should all have either an individual baseline or all
have the statutory baseline, and if a baseline for one of the refineries could not be
established, then no individual baseline should be given to any of the refineries of a single
entity.
     EPA did not propose that all or none of the refineries of a foreign refiner would
have to have an individual baseline, because a central element of the proposal was to
provide foreign refiners an option:  either obtain an individual baseline and fulfill all of the
requirements accompanying the use of an individual baseline by a foreign refinery, or
continue with the current requirements with respect to gasoline produced for the U.S.,
subject to any remedial baseline adjustment.
     Many of the comments above focused on foreign refineries with statutory
baselines.  In fact, under today's rule, no foreign refinery which does not apply for an
individual baseline will have the statutory baseline.  Foreign refineries which apply for and
receive an individual baseline will either have a unique individual baseline or will have the
statutory baseline (with a zero baseline volume) e.g., where the refinery was not in
operation in 1990 or produced no gasoline for the U. S. in 1990.  All other foreign
refineries will have no baseline, and their gasoline will be regulated through the importer's
baseline, typically the statutory baseline. Thus, under this rule, it is possible that some
refineries of a foreign refiner would have an approved individual baseline and some would
have no baseline.  An aggregate baseline (or baselines) of a foreign refiner could only be
composed of the baselines of its facilities with approved individual baselines.  Foreign
refineries without an individual baseline cannot be included in an aggregate baseline.
     A foreign refiner may choose to obtain an individual baseline for one, some, all or
none of its refineries.  Limiting the option to cases where all of a refiner's refineries
receive IBs is counter to the reasons for providing an option.  For example, it would lead
to cases where a foreign refiner wanted to establish an IB for a refinery and had adequate
data to do so, but was precluded from this because it could not establish an IB for a
different refinery, or to situations where EPA or the foreign refiner would have to prove a
negative in order to establish an IB,  i.e., that no IB could be developed for one refinery as
a condition of allowing an IB for a different refinery where the data was available.  These
results would be inconsistent with the general approach of giving foreign refiners an
option to establish individual baselines where they want, and have adequate data to do so.
     In summary, the requirements for aggregating baselines for foreign refiners are the
same as those for domestic refiners, namely, all facilities in an aggregate baseline must
have an assigned individual baseline, either a unique individual baseline or the statutory
baseline.  Aggregate baselines may be composed of some or all of a refiner's refineries
with assigned individual baselines, and a refiner may have more than one aggregate
baseline.  Each refinery, though, can only be part of one aggregation. As with domestic
refiners, the decision to form an aggregate baseline is a one-time decision.
     5. Baseline volumes
     Several commenters indicated that foreign refiners should be subject to the same
baseline volume constraints as domestic refiners, namely, that the individual baseline
applies up to their baseline volume limit, and the statutory baseline applies to all volume in
excess of the baseline volume per the calculation of compliance baseline values in
80.101(f), namely, a volume-weighted average of the individual baseline value and the
corresponding statutory baseline value.  EPA agrees.  EPA proposed and is finalizing a
requirement that foreign refiners would be subject to the same restrictions for individual
baseline volumes as are domestic refiners, per 80.101(f).
     One commenter suggested, that where it is difficult to quantify volumes exported
to the U.S. by a  refiner, that Energy Information Administration (EIA) reported country
totals be used to verify and cap quantities reported by foreign refiners.  The commenter
suggested that the sum of all baseline volumes reported to EPA from a country cannot
exceed the total country volume reported by EIA in 1990.  According to the commenter,
this should be done on a seasonal basis to assure that complex model winter/summer
differences are properly accounted for.
     EPA proposed and is finalizing that those foreign refiners which petition the
Agency for an individual baseline will have to adequately account for the volumes of
gasoline they sent to the U.S. in 1990.  EPA agrees that EIA data would be a useful tool
for checking that the sum of the baseline volumes of each facility did not exceed the 1990
country levels reported in EIA.
     6.  Baseline audits
     Several commenters indicated their concern that foreign refiners submitting
baseline petitions should be subject to the same requirements with regard to review by an
EPA-approved  independent baseline auditor, and EPA audits and approval of baselines.
EPA proposed and is finalizing requirements that all foreign refinery individual baseline
petitions be reviewed by an EPA-approved independent baseline auditor.  Once submitted
to the Agency, they will undergo the same comprehensive and detailed review process
used to evaluate baseline submissions by domestic refiners.
     7.  Miscellaneous
     Several commenters indicated that foreign refiners would have a competitive
advantage vis-a-vis the proposed regulations in a number of areas, including the fact that
they are not subject to conventional gasoline and other environmental requirements for all
of the non-U.S. bound gasoline they produce.  Commenters claimed that clean gasoline for
the U.S. could be made less expensively because foreign refiners could "dump" dirty
components into the gasoline destined for their home markets and other non-U.S. markets
which have fewer restrictions on gasoline quality than the U.S..  One commenter
suggested that a foreign refiner seeking an individual baseline should be required to
demonstrate that it is not, in fact, dumping dirty components into gasoline sold in its home
market.
     EPA acknowledges that foreign refiners may have additional flexibility, as
indicated by commenters.  However, as EPA has indicated previously, section 211(k) of
the Clean Air Act is not aimed at regulating the quality of gasoline used in other countries,
nor at regulating foreign refiners except with regard to the gasoline they send to the U. S.
C. Type of Requirement for FRGAS
     1. Summer vs. Winter averaging
     A few commenters suggested that foreign refiners with individual baselines would
have additional flexibility over domestic refiners because of seasonal differences in the
complex model.  They stated that the same gasoline evaluated under the winter model
produces significantly higher emissions than gasoline evaluated under the summer model,
and because of this, foreign refiners could meet their emission requirements with poorer
quality gasoline by increasing imports of summer gasoline (or importing a lower portion of
winter gasoline) .  Commenters also stated that gasoline imports have traditionally been
higher in the summer.  According to commenters, domestic refiners are essentially limited
to domestic markets and fixed seasonal demand, and do not have the opportunity to
systematically control their summer/winter production.  Commenters suggested that EPA
require foreign refiner compliance on a seasonal basis, or offer the seasonal basis option to
domestic refiners.  One commenter also suggested that the benchmark be based on the last
3 year running average of imported summer gasoline.
     Starting in 1998, compliance with IBs only applies to conventional gasoline for
which only certain exhaust emissions are of concern.  The winter complex model does
produce higher exhaust emissions for a given fuel than the summer version of the model.
However, EPA disagrees that foreign refiners could take advantage of this by
systematically producing more summer than winter gasoline.  First, U.S. gasoline demand
increases nationwide during the summer.  Domestic refiners produce more gasoline in the
summer, and it would seem logical that imports would also increase during the summer.
EPA agrees that domestic refiners are essentially limited to domestic markets, however,
EPA believes that both foreign and domestic refiners are limited to the seasonal demand.
It would not be prudent for a foreign or domestic refiner to market additional volumes of
summer gasoline beyond what it could reasonably expect to be used, because of storage
issues and the fact that, for foreign refiner's with an individual baseline, gasoline in excess
of their baseline volume is evaluated at the statutory baseline, just as for domestic
refiners.
     Providing different averaging periods for foreign and domestic refiners of CG
would not be consistent with EPA's basic approach of applying the same requirements to
foreign and domestic refiners except where clear and convincing reasons call for different
requirements (such as providing an option to establish and use an IB to foreign refiners as
compared to mandating an IB, imposing additional requirements related to tracking of
gasoline and compliance assurance, and establishing a mechanism to offset any adverse
environmental impact from providing the option to establish and use and IB).  In addition,
providing domestic but not foreign refiners with an option to average seasonally would
clearly lead to adverse environmental impacts, as domestic refiners would choose the
averaging period that required less control of gasoline quality.  For these reasons EPA is
not adopting the suggested approach.
     2. Other
     One commenter suggested that foreign refiners have yet another advantage
because they can blend components such as MTBE into their gasoline prior to entry into
the U.S. at the tariff rate for motor fuels while domestic refiners must pay a significantly
higher chemical duty on MTBE imported for gasoline blending.   While the tariff situation
described by the commenter could provide an advantage to foreign refiners, this tariff
differential already exists, and is not a result of, nor will it necessarily be exacerbated by,
today's rule.
D. Liability
1.   Party responsible for meeting the gasoline quality requirements for FRGAS.
     a.   EPA's Proposal
     EPA proposed that a foreign refiner who obtains an individual refinery baseline
would be responsible for meeting the NOx and exhaust toxics requirements for the
conventional gasoline produced at the foreign refinery and imported into the United
States.  This is like the requirements that apply to a domestic refiner, who must meet the
NOx and exhaust toxics and requirements for conventional gasoline produced at the
domestic refinery and used in the United States.  EPA also requested comments on an
alternative option, where the U. S. importer would be responsible for meeting the NOx
and exhaust toxics requirements for imported conventional gasoline produced by a foreign
refiner with an individual refinery baseline, but using the baseline that applies to the
foreign refinery.
     b.   Comments
     EPA received comments from two foreign refiners who supported the alternative
option of making the U. S. importer responsible for meeting the conventional gasoline
NOx and exhaust toxics requirements.  EPA also received comments from a group of
U. S. importers who opposed placing this responsibility on U. S. importers if the importer
would have liability for violations that result if a foreign refiner specifies incorrect baseline
values for specific FRGAS batches.
     One foreign refiner suggested an approach they believe would allow U. S.
importers to meet the NOx and exhaust toxics requirements for imported FRGAS without
risk of incorrect baseline values, by removing any uncertainty regarding the baseline values
that apply to each individual batch of imported FRGAS. This foreign refiner suggested
that for a foreign refiner with an individual baseline, the annual compliance baseline for an
upcoming year would be established at the beginning of that year, using an assumption for
the total volume of gasoline (conventional gasoline plus RFG) that will be produced and
shipped to the U. S. during the upcoming year.
     The foreign refiner suggested that this assumed volume would be the refinery's
prior year volume or the refinery's volume projections for the upcoming year, and that
EPA would approve each foreign refiner's volume assumption in advance of each year.  In
this way the foreign refiner and U. S. importers of that refiner's gasoline would have
certainty at the beginning of each year of the compliance baseline that applies to gasoline
produced at the foreign refinery during the year.  This foreign refiner also suggested that if
the refinery's actual gasoline volume during the year is different than the assumed volume
a correction would be applied to the refinery's compliance baseline in a subsequent year.
     The foreign refiner stated that this approach, as compared to the approach where
the foreign refiner would meet the NOx and exhaust toxics requirements, would be
simpler, more feasible, and would require fewer resources to implement, largely because
U. S. importers would be responsible for demonstrating compliance with the NOx and
exhaust toxics requirements.
     Another foreign refiner commented that in a case where the gasoline produced by
a foreign refiner with an individual refinery baseline is imported into the U. S. by a single
importer, the U. S. importer could take all compliance responsibility for this gasoline.
     c.  EPA's Response.
     EPA is finalizing this foreign refiner requirement as proposed for the following
reasons.
     Requiring U. S. importers to meet the NOx and exhaust toxics requirements for
FRGAS presents an inherent difficulty, in that the compliance baseline that applies to
conventional gasoline is not known until the end of each year.  Domestic refiners are able
to operate with this uncertainty, because the refiner can update a refinery's projected
compliance baseline throughout the year based on gasoline volumes, and the refiner has
the ability to adjust conventional gasoline quality to meet these projections.  In contrast,
U. S. importers of FRGAS would have to rely on the foreign refiner to estimate the
compliance baseline that applies to each FRGAS batch, and the U. S. importer would be
liable if imported conventional gasoline quality failed to meet these projections.  U. S.
importers have commented that it is this uncertainty that most hampers their operations --
that an importer could rely in good faith on the foreign refiner's compliance baseline
estimate, yet the importer would be liable if the estimate ultimately is incorrect.
     While the alternative suggested by one foreign refiner (using EPA-approved
volume projections each year to specify a foreign refinery's compliance baseline at the
beginning of the year) would remove this uncertainty, it has the disadvantage of constantly
requiring corrections in a subsequent year.  It is unlikely a foreign refiner's annual volume
projections will ever exactly match the refinery's actual annual volume.  As a result, if this
approach were adopted EPA probably would be required to calculate and implement
corrections each year for each foreign refinery with an individual baseline.  In addition,
these corrections could not be applied immediately, because a foreign refinery's annual
volume will not be established until reports could be filed, and the correction calculated,
which would necessarily occur in the subsequent year.  As a result, it is likely there would
be a one year lag in applying corrections, e.g., if a foreign refiner's volume projection for
1998 were incorrect the details of this error would not be known until some time in 1999,
and the correction could not occur until 2000.  It is preferable that NOx and exhaust
toxics requirements be met each year without the expectation of constant subsequent
correction, if other considerations are equal.  This also avoids any risk of adverse
environmental consequences that could result if the foreign refiner ceased supplying
gasoline to the United States before the correction could be completed.
     In addition, domestic refiners do not have the option of using an incorrect
compliance baseline each year and correcting for the error in a subsequent year, and there
are no compelling reasons to treat foreign refiners differently in this regard.
     EPA agrees that, in general, it is easier to monitor and enforce requirements that
apply to parties present in the United States such as U. S. importers, as compared to
parties located outside the United States such as foreign refiners.  However, even if EPA
were to adopt the suggested approach of requiring U. S. importers to meet the NOx and
exhaust toxics requirements for FRGAS, foreign refiners of FRGAS would continue to
have significant responsibilities under the regulations that EPA would monitor and
enforce.  The foreign refiner would have to establish individual refinery baselines; submit
supported volume projections to EPA; and meet a range of requirements associated with
establishing the refinery's actual volume of FRGAS each year, including designation of
FRGAS, load port sampling and testing, record keeping and reporting, and attest
requirements.  EPA would have to monitor compliance with these requirements even if
U. S. importers met the NOx and exhaust toxics requirements.
     EPA disagrees with the comment by one foreign refiner that the U. S. importer
could be responsible for meeting all requirements associated with FRGAS where a foreign
refiner's FRGAS is imported by a single U. S. importer.  A foreign refinery's annual
compliance baseline is based on the refinery's volume of conventional gasoline and RFG
FRGAS, and this volume can most properly be established using information available
only at the foreign refinery.  As a result, regardless of the responsibilities assumed by the
U. S. importer the foreign refiner still must, inter alia, keep records, file reports,
commission an attest engagement, and agree to allow EPA inspections and audits.
     On balance, EPA believes the proposed approach of requiring foreign refiners of
FRGAS to meet the NOx and exhaust toxics requirements is the best approach in that it
does not impose unwarranted uncertainties on importers, avoids the uncertainty of
subsequent corrections on a yearly basis, and is consistent with the requirements on
domestic refiners.
2.   Sovereign Immunity and Agent for Service of Process.
     a.   EPA's Proposal
     EPA proposed that where a foreign refiner is owned or operated by a foreign
government, the government would have to issue a waiver of sovereign immunity before
the refiner could obtain an individual refinery baseline.  As proposed, this waiver would
have to be signed by an official of the foreign government at the cabinet secretary level or
higher who has responsibility for the foreign refinery, and would have to specify the
waiver would apply in any case of prosecution by the United States for civil or criminal
violations related to FRGAS requirements including requirements in relevant Clean Air
Act sections and Title 18 United States Code.
     b.   Comments
     EPA received comments addressing the sovereign immunity waiver proposal from
several foreign government-owned refiners and from a domestic association that
represents independent gasoline marketers.  In addition, EPA received comments from
associations representing domestic refiners that generally addressed EPA's proposed
enforcement requirements without specifically discussing the proposed sovereign
immunity waiver requirement.
     The foreign government-owned refiners and the association of domestic marketers
commented that the proposed waiver of sovereign immunity is unnecessary.  One of these
foreign refiners commented that in the antitrust context the U. S. Department of Justice
has taken the position that foreign government-owned corporations operating in the
commercial marketplace are subject to U. S. antitrust laws to the same extent as foreign
private-owned firms.  This commenter concluded that waivers of sovereign immunity are
unnecessary to enforce the antitrust laws, and that this same conclusion also should apply
to enforcement under the Clean Air Act.
     Two other foreign refiners referred to 28 U.S.C. 1605(a)(2) of the Foreign
Sovereign Immunities Act (FSIA), which provides that a foreign sovereign is not entitled
to immunity in an action based on certain "commercial activity."  These commenters
further stated or implied that a foreign refiner, by engaging in the production and sale of
gasoline for export to the U. S., would be covered by the provisions of this section and,
hence, would not be entitled to sovereign immunity under the FSIA with respect to
matters covered by this regulation.  These commenters concluded, as a result, that the
proposed sovereign immunity waiver requirement is unnecessary.  One foreign refiner
commenter said the proposed sovereign immunity waiver requirement is particularly
objectionable if the waiver must be signed by a cabinet secretary.
     One foreign refiner said the proposed scope of the waiver is too broad, because
EPA had proposed that the waiver would need to apply to all provisions of Title 18,
United States Code.  This foreign refiner said, in addition, that sovereign immunity cannot
be a condition for according national treatment under Article III of GATT 1994.
     The association of domestic marketers commented that the proposed requirement
to waive sovereign immunity is inflammatory, and that other proposed enforcement
mechanisms are sufficient for appropriate EPA enforcement, including the possibility of
revoking an individual refinery baseline, and the required foreign refiner commitments
regarding EPA inspections and audits, naming an agent for service, and bond posting.
     The associations representing domestic refiners did not specifically address the
proposed sovereign immunity waiver requirement, but did support EPA's proposed
enforcement requirements in general.  In addition, one of these associations commented
that EPA also should require there be an extradition treaty in place with a foreign
government before allowing a refiner in that country to obtain an individual refinery
baseline.  This commenter stated that in the absence of an extradition treaty there could
not be adequate enforcement of criminal violations.
     c.   EPA's Response.
       EPA continues to believe that to provide adequate enforcement mechanisms
related to the establishment and use of individual baselines by foreign refiners, the issue of
sovereign immunity needs to be addressed for foreign government-owned refiners.
Therefore, EPA has retained a specific provision in the final rule addressing sovereign
immunity.  However, the form of this sovereign immunity provision is being revised based
on EPA's evaluation of the comments and prior U.S. administrative practice in this area.
     Under the FSIA a foreign refiner who obtains an individual refinery baseline from
EPA, exports FRGAS to the United States, and violates requirements applicable to the
foreign refiner under this rule has engaged in the kind of activity that falls within an
exception to sovereign immunity under 28 U.S.C. 1605(a)(2), (commonly referred to as
the "commercial activity" exception) as asserted by the commenters.  However, EPA is
aware of no judicial precedent directly addressing these issues in the context of a
regulatory enforcement action by an agency of the United States.  As a result, a degree of
uncertainty remains on the issue of whether United States courts would rule in all cases
that a foreign refiner who obtains and uses an individual refinery baseline automatically is
ineligible to claim sovereign immunity in the context of an EPA enforcement action for
violations of the FRGAS requirements.
     Under 28 U.S.C. 1605(a)(1) the issue of sovereign immunity can be resolved
where the foreign government waives sovereign immunity.  EPA has evaluated and
adopted an approach to a sovereign immunity waiver that provides EPA with the ability to
effectively enforce the requirements applicable to a foreign refiner, in combination with
other provisions adopted today.  This is similar to the approach used by the U. S.
Department of Transportation in the context of economic licenses issued to foreign air
carriers that are necessary for those carriers to conduct commercial operations in foreign
air transportation to and from the United States.  The DOT approach does not require an
official of the foreign government to sign a separate document waiving sovereign
immunity.  Rather, DOT licenses for foreign air carriers, whether government or privately
owned, include a condition that states, in essence, that operation under the license by a
foreign air carrier constitutes a waiver of sovereign immunity under the FSIA.
     DOT has included this type of waiver of sovereign immunity clause in its foreign
air carrier licenses for several decades, and sovereign immunity has not been raised as an
issue in DOT enforcement of  its requirements against foreign government-owned air
carriers.  Foreign government-owned air carriers have willingly operated under this waiver
of sovereign immunity license term, indicating that this approach for addressing the issue
of sovereign immunity has been acceptable to all foreign governments concerned.
     Based on the success of this administrative approach by another U. S. agency,
EPA is including a similar provision in the foreign refiner final rule that is like the DOT
approach, but uses regulatory language that is somewhat different from the language used
by DOT.  The regulatory language used by EPA acts to preclude a defense of sovereign
immunity for purposes of the FSIA as well as for any enforcement actions that may be
taken which may not be subject to the provisions of the FSIA.  The sole purpose and
effect of the regulatory language is limited to precluding the use of sovereign immunity as
a defense to an otherwise valid EPA or other U. S. enforcement action based on a
violation of the requirements that apply to a foreign refiner as a result of obtaining and
using an individual refinery baseline.
     Under this regulatory provision, when a foreign government-owned refiner submits
a petition to EPA for an individual refinery baseline, the baseline submission constitutes a
waiver of sovereign immunity for purposes of 28 U.S.C. 1605(a)(1) of the FSIA, e.g., for
an enforcement action based on incorrect or fraudulent submissions.  In addition, when a
foreign government-owned refiner operates under an individual refinery baseline by
supplying FRGAS to the U. S., this constitutes an additional waiver of sovereign immunity
under the FSIA, e.g., for enforcement actions based on failure to comply with the exhaust
toxics or NOx emissions requirements, failure to submit reports, or failure to provide
access to inspectors.  This waiver of sovereign immunity would also apply for any
enforcement action not otherwise subject to the FSIA.
     If a foreign government-owned refiner states that it reserves the right to or will
assert a sovereign immunity defense in the context of any EPA enforcement action for
violations of the requirements under these regulations, or in fact raises such a claim, then
EPA may, in addition to other remedies in law, take action to deny or withdraw all
individual refinery baselines that have been issued to the foreign refiner.
3.   Agent for Service of Process
     a.   EPA Proposal
     EPA proposed that in order to obtain an individual refinery baseline a foreign
refiner would be required to name an agent for service of process located in Washington,
D.C.
     b.   Comments
     One foreign government-owned refiner objected to the proposed requirement to
name an agent for service of process located in Washington, D.C. as being unnecessary for
a foreign government-owned refiner.  This commenter stated that the FSIA specifies
procedures for achieving service of process that do not involve a named agent.  In
addition, the commenter said the requirement for an agent for service of process should be
limited to service of process in EPA enforcement actions and should not cover service of
process in non-related actions, such as private commercial claims raised other parties.
     c.   EPA's Response
     EPA remains convinced that the final rule should include a provision as proposed
for all foreign refiners acting under an individual baseline, including foreign refiners that
are foreign government-owned, to name an agent for service of process in Washington,
D.C.  While it is true the FSIA includes procedures for service of process on foreign
government-owned firms, the FSIA procedures are cumbersome at best.   In addition, 28
U.S.C. 1608(b)(1) of the FSIA states that service of process on an agency or
instrumentality of a foreign government may be by delivery of a copy of the summons and
complaint in accordance with any "special arrangement" for service between the plaintiff
and the agency or instrumentality of the foreign government.  EPA believes a foreign
government-owned refiner naming an agent for service of process, as proposed, would
constitute a "special arrangement" for service under 28 U.S.C. 1608(b)(1), and service on
such an agent by EPA would resolve any question regarding whether service has been
accomplished.
     Commenters have not described any reason why it would be difficult or expensive
for a foreign government-owned refiner to name an agent for service of process in
Washington, D.C., but only that there is an alternative under the FSIA.  EPA believes that,
on balance, it is more appropriate to require all foreign refiners seeking an individual
refinery baseline, including foreign government-owned refiners, to name an agent for
service, instead of relying on the alternative under 28 U.S.C. 1608(b)(2) and (3) of the
FSIA.   It will reduce the administrative burden on EPA and will not add any significant
burden on the foreign refiner.
     Finally, EPA agrees that the agent for service of process need not be authorized to
receive process from parties other than EPA or others in the United States government, or
for enforcement actions other than those that result from a foreign refiner having
petitioned for and used an individual refinery baseline.
4.   Bond Requirement.
     a.   EPA Proposal
     EPA proposed that a foreign refiner would be required to post a bond in order to
receive an individual refinery baseline.  The amount proposed for this bond would be
calculated by multiplying the annual volume of conventional gasoline exported to the U. S.
by the foreign refiner, in gallons, times $0.01.  The bond amount that applies each year
would be calculated using the annual volume for the single year that had the greatest
volume among the immediately preceding five years.  EPA also proposed that the bond
requirement could be met if a bond is obtained from a third party surety agent, provided
that EPA approves the surety agreement.
          b.   Comments
     EPA received comments on the bond proposal from two foreign refiners who
opposed requiring bonds or believed them to be unnecessary, and from an association of
domestic refiners who supported the bond proposal.
     One foreign refiner commented that although it could accept a bond requirement,
such a requirement is not necessary.  This commenter also stated that the amount
proposed for the bond is too large, and that the bond amount required for any particular
foreign refiner should be reduced over time based on the refiner's compliance record.  This
commenter stated that bonds need not be for the full amount of any possible liability,
because a lesser, but significant, bond amount would create an incentive for good conduct,
which serves one purpose of a bond.  However, this commenter did not suggest any
alternative bond amount.
     The other foreign refiner, who also objected to the proposed bond requirement,
interpreted the proposal as requiring that bond amounts be calculated based on the
cumulative volume of FRGAS exported to the U.S. by a refiner over the prior five years,
and stated that the bond amount that would result raises questions under Article II and
Article III of the GATT.  This commenter also stated it is aware of no surety agent who
would issue a bond to cover judgments against a foreign refiner for Clean Air Act
violations.  Further, this commenter stated that EPA should rely on penalties other than
bonds, such as imposing a sanction of prohibiting the sale in the U. S. of gasoline
produced by a foreign refiner who has violated the Clean Air Act.
     The association representing certain domestic refiners commented in support of the
bond proposal, stating that posting of bonds by foreign refiners is critical for effective
enforcement.
          c.   EPA's Response.
     A bond requirement was proposed because of concern that collecting a judgment
against a refiner located outside the United States for an enforcement action related to the
requirements of this rule is more difficult than collecting a judgment against a domestic
refiner.  None of the comments refuted this basic concern.  The bond requirement has the
effect of enabling EPA to collect penalties against foreign refiners in a straightforward
manner, analogous to penalty collections against domestic refiners.
     The bond amount EPA proposed, annual conventional gasoline gallons times
$0.01, was based on an estimate of the penalty that could result if a foreign refiner
violated the exhaust toxics or NOx requirements.  These requirements are met based on
average conventional gasoline quality over a calendar year averaging period, and penalty
amounts are calculated, in part, based on the volume of gasoline in violation.  As a result,
it is appropriate to use a foreign refiners's annual conventional gasoline volume as the
yardstick for calculating bond amounts.  Penalty amounts also are based on the amount the
exhaust toxics and/or NOx requirements are exceeded, and for egregious violations
penalty amounts may well exceed $0.01 per gallon.  As a result, the proposed penalty
amount does not cover the maximum possible penalty.  Nevertheless, EPA believes the
proposed amount is appropriate because it ensures that a penalty up to this amount may be
collected, which constitutes a significant incentive for a foreign refiner to avoid violations.
     The comments of one foreign refiner, that bond amounts would be calculated using
the foreign refiner's five year cumulative gasoline volume, were based on an apparent
misunderstanding of the bond proposal.  EPA intends that bond amounts be calculated
using the annual conventional gasoline volume for a single year, that year which has the
highest volume for the preceding five years.  EPA is slightly revising the language in the
bond provision to make this intent clear.  The bond amount applicable each year is
calculated using the single year, among the past five years, when the largest volume of
conventional gasoline was exported to the U.S.
     EPA's review indicates that these concerns appear to be unfounded.  Surety agents
will be available to issue bonds to cover judgments for violations of the FRGAS
requirements.  Representatives of two national associations of surety agents, the Surety
Association of America and the American Surety Association, told EPA there is nothing
inherent in the FRGAS requirements that would prevent surety agents from writing bonds
for foreign refiners as contemplated.  The representatives said the proposed FRGAS bond
requirement is analogous to the bonds required by the U.S. Customs Service, which
routinely are issued by third party surety agents.  These representatives concluded that
foreign refiners can locate third party surety agents who would issue bonds to meet the
FRGAS requirement, and that the annual fee probably would be between one-half and two
percent of the bond amount depending on company-specific factors such as the general
business strength and reputation of the foreign refiner and the type and amount of
collateral offered.
     However, EPA now believes it is possible for a foreign refiner to meet the purpose
and intent of the bond requirement through means other than posting the requisite bond
amount with the Treasurer of the United States or a bond issued by a third party surety.
For example, if a foreign refiner owns assets that are located in the United States it may be
possible for the foreign refiner to pledge these assets in a way that would be equivalent to
posting a cash bond.  As a result, EPA has modified the bond requirement to allow a
foreign refiner to petition EPA to be allowed satisfy the bond requirement through an
alternative means.  EPA will rule on any such petition based on whether there is certainty
as to the ready availability of liquid assets, or easily liquidated assets, that are equal in
value to the bond requirement.
     For the foregoing reasons, EPA is finalizing the proposed bond requirement
modified to allow petitions for alternative bonding mechanisms.
     EPA has included in the final rule a provision that specifies that a foreign refiner's
bond may only be used to satisfy judgments against the foreign refiner that result from
violations of the FRGAS requirements.
     EPA also is adopting a requirement that the bond may be used to satisfy judgments
that result from violations by the foreign refiner for causing another person to violate the
regulations.  For example, the regulations include a prohibition against combining
certified FRGAS with non-certified FRGAS that applies to any person.  If a foreign refiner
causes a third party to violate this prohibition, this would be a violation by the foreign
refiner, and the bond could be used to satisfy a judgment resulting from this violation.
     EPA intends to reevaluate the amount required for bonds after the FRGAS
program has been in place for approximately two years.  Based on EPA's experience in
implementing and enforcing the FRGAS program up to that time EPA will evaluate
whether it should revise the regulations to allow a foreign refiner to submit a petition to
EPA to reduce the required bond amount, based on factors such as its history of
compliance and the strength of quality assurance programs in place at the refinery to
ensure violations will not occur.  EPA invites all parties to consider any modifications of
the bond requirement they believe would be appropriate based on their experience with the
FRGAS program, and to submit these suggestions to EPA at that time.
5.   Foreign Refiner Commitments
     a.   EPA's Proposal
     EPA proposed that a foreign refiner would have to submit as part of their baseline
petition a commitment to allow EPA inspections and audits related to the FRGAS
requirements, and its acceptance of United States courts or administrative tribunals acting
under United States law as the forum for any enforcement action, in order to receive an
individual refinery baseline.  EPA also proposed that this commitment would have to be
signed by the owner or president of the foreign refiner business, or by the relevant
government official in the case of government-owned foreign refiners.
     EPA proposed that the scope of EPA inspections and audits may include
information related to baseline establishment, the quality and quantity of FRGAS, transfers
of FRGAS, sampling and testing of FRGAS, and reports submitted to EPA.
     b.   Comments
     EPA received a comment from a foreign refiner on the proposed commitments
related to allowing EPA inspections and audits.  This commenter stated that while it is
willing to allow EPA inspections and audits, these should relate solely to establishment
and use of an individual refinery baseline.  EPA also received a comment from a domestic
environmental non-governmental organization, expressing the view that the proposed
foreign refiner commitments will be less effective than the authorities available in the
United States for ensuring EPA's ability to conduct an effective enforcement program.
     c.   EPA's Response
     EPA agrees the scope of any EPA inspection or audit to which a foreign refiner
would consent would be limited to matters relevant to compliance with the FRGAS
requirements.  The commitment requirement is limited in this manner.
     The scope of EPA audits of a foreign refiner clearly could include a review of all
information related to baseline establishment, and the quality and quantity of all gasoline
identified by the foreign refiner as FRGAS.  However, EPA auditors also must be able to
verify that gasoline and blendstock not identified as FRGAS by the foreign refiner in fact
went to non-U.S. markets.  If a foreign refiner were able to exclude from its compliance
baseline calculations the volume of any gasoline or blendstock delivered to the U. S., the
compliance baseline values would be inappropriately lenient.  This concern is discussed
more fully, below.  EPA auditors must be able to review documents and other information
related to gasoline not classified as FRGAS by the foreign refiner in order to verify this
gasoline was used in non-U. S. markets and, hence, to guard against this possible form of
cheating.  As a result, the effective scope of EPA audits must include all gasoline and
blendstock produced at a foreign refinery with an individual baseline, and not just the
gasoline classified by the foreign refiner as FRGAS.
     The final regulations are being revised to clarify that the foreign refiner
commitment must be to allow EPA inspections and audits with this scope.
     EPA generally agrees that the required foreign refiner commitments do not give
EPA enforcement authorities that are exactly equivalent in all respects to the authorities
available in the United States, such as the availability of search warrants, injunctions, and
subpoenas.  However, EPA believes the proposed commitments, when honored by the
foreign refiner, will give EPA the ability to effectively enforce the requirements, as is done
domestically.  In addition, EPA has the recourse of withdrawing the individual refinery
baseline of any foreign refiner who fails to honor these commitments.
6.   Gasoline Tracking Requirements
     a.   EPA's Proposal
     EPA proposed a series of requirements intended to allow EPA to ensure that
gasoline, identified on arrival in the U. S. as FRGAS that was produced at a specific
foreign refinery, in fact was produced at that foreign refinery.  These proposed
requirements include the following.
         Foreign refiners with individual baselines would designate all gasoline to be
          imported into the United States as FRGAS when produced.
         A foreign refinery's certified FRGAS would remain segregated from its
          non-certified FRGAS, and from gasoline produced at a different foreign
          refinery until entry into the U. S., except that FRGAS produced at
          refineries that have been aggregated could be combined.
         An independent third party would sample each certified FRGAS batch
          subsequent to loading onboard a vessel, and test for all complex model
          parameters.
         An independent third party would review gasoline transfer documents to
          verify the gasoline loaded onboard a vessel was produced at the foreign
          refinery.
         The foreign refiner would prepare a certification to accompany the vessel
          identifying the gasoline as FRGAS, which would include a report prepared
          by the independent third party.
         U. S. importers would sample and test certified FRGAS on arrival at the
          U. S. port of entry.  The foreign refiner would compare the volume and
          property results from the port of entry testing, with the volume and
          property results from the load port testing.  If the test results differ by more
          than the ranges allowed in section 80.65(e)(1), or if the volume
          measurements differ by more than one percent, the foreign refiner would
          have to adjust its compliance calculations to reflect the discrepancy.
         The U. S. importer would treat the gasoline as certified FRGAS if it
          received the proper certification and third party report, and the load port
          and port of entry test results are consistent.
     b.   Comments and EPA's Responses
          (1)  Option to Classify Gasoline as Non-FRGAS
               (a)  Comment
     One foreign refiner and a group of independent U. S. importers commented that
foreign refiners with individual refinery baselines should have the option of designating
gasoline for the U. S. market as FRGAS or as non-FRGAS.  The conventional gasoline
designated as FRGAS would be subject to the foreign refiner's individual baseline, and the
conventional gasoline designated as non-FRGAS would be treated as any other gasoline
regulated through the U. S. importer, subject to the assigned statutory baseline.
     The U. S. importers stated that this flexibility is desirable in order to increase the
volume of imported conventional gasoline that could be classified as "gasoline treated as
blendstock," or GTAB.  Non-FRGAS then could be blended with other GTAB or
blendstocks where desired, and classified by the importer either as conventional or
reformulated gasoline.  The importer then would account for it in its compliance
calculations.
               (b)  EPA's Response
     In the case of non-certified FRGAS produced by a foreign refiner with an
individual baseline, it is important that the volume of all such gasoline be included in the
compliance baseline calculation of the foreign refiner for conventional gasoline.  Even
though a refinery's annual compliance baseline applies only to the NOx and exhaust toxics
requirements for conventional gasoline, the equation used to calculate the compliance
baseline includes the volume of all gasoline produced at a refinery that is used in the
United States including RFG.   If a foreign refiner were allowed to exclude the volume of
non-certified FRGAS from compliance baseline calculations, the compliance baseline
would be less stringent than if the volume of all certified and non-certified FRGAS were
included.
     The effect of the compliance baseline equation, in the case of a refiner whose
overall gasoline volume exceeds its individual baseline volume, is to move the NOx and
exhaust toxics compliance baseline in the direction of the statutory baseline values.  EPA
assumes that any foreign refiner who obtains an individual refinery baseline will likely have
an individual baseline value for at least one complex model requirement (NOx or exhaust
toxics emissions performance) that is less stringent than the statutory baseline values.
Hence, the effect of the compliance baseline equation for such a refiner is more stringent
for the NOx or exhaust toxics, or for both requirements, and the magnitude of this effect
increases as the volume of the refinery's U. S. export-gasoline increases.
     In the case of conventional gasoline produced by a foreign refiner with an
individual baseline, the reason given by commenters for allowing the foreign refiner to
classify this gasoline as non-FRGAS is to give additional flexibility to the U. S. importer.
This flexibility results from the option of classifying imported conventional gasoline as
GTAB, which under the proposal would only be available if the imported conventional
gasoline is non-FRGAS.  This flexibility is lost if conventional gasoline was classified as
conventional FRGAS because it would have been previously certified by the foreign
refiner and included in the foreign refiner's compliance calculations.
     EPA is concerned that if foreign refiners had the option of classifying conventional
gasoline as FRGAS or as non-FRGAS, a foreign refiner could classify very "clean"
conventional gasoline as non-FRGAS, including gasoline that in facts meets the quality
requirements for reformulated gasoline.  This "clean" conventional gasoline then could be
classified as GTAB by the U. S. importer and reclassified as reformulated gasoline.  In this
way a foreign refiner could avoid including all RFG in its compliance baseline calculations,
which would result in adverse environmental consequences.
     However, this result would not be possible if the foreign refiner includes in its
compliance baseline calculations all gasoline imported into the United States (i.e., all
FRGAS), whether or not the gasoline is included in the foreign refiner's NOx and exhaust
toxics compliance calculations.
     Assuming the foreign refiners counts the volume in its compliance baseline
equation, there is no adverse environmental consequence if the importer can treat the
foreign refiner's gasoline, whether RFG or CG, as GTAB.  If the gasoline is treated as
GTAB, it will be imported subject to the requirements applicable to the importer for either
RFG or CG, depending on how the importer classifies the gasoline.  In both cases the
importer would include the gasoline in it's compliance calculations, and the importer's
compliance requirement would in all cases be more stringent than the CG compliance
baseline for the foreign refiner.
     As a result the final rules establish two categories of FRGAS - "certified FRGAS"
and "non-certified FRGAS."  The foreign refiner designates all gasoline that it produces
and that is sent to the US as FRGAS, and FRGAS is further classified as either certified or
non-certified FRGAS.  The foreign refiner can include gasoline of any quality in the non-certified FRGAS category, including gasoline that meets the quality requirements for RFG
or CG.
     Gasoline classified as certified FRGAS will be subject to the compliance baseline
for NOx and exhaust toxics applicable for the foreign refiner.  The volume of all FRGAS,
certified and non-certified, must be included in the foreign refiner's compliance baseline
calculation.
     The importer may not include certified FRGAS in the importer's NOx and exhaust
toxics compliance calculations.  However, importers must meet requirements for all non-certified FRGAS the same as for non-FRGAS, i.e., non-certified FRGAS must be
classified by the importer as CG or RFG and meet the applicable quality requirements, or
must be classified as GTAB and subsequently meet the CG or RFG requirements.  The
importer may treat any non-certified FRGAS as GTAB.
     As described above, there will be no adverse environmental impact from this.  It
will also increase flexibility under the regulations for both importers and foreign refiners.
     To implement this change, EPA is revising the regulations so that the appropriate
classification, tracking, record-keeping and reporting occurs for non-certified FRGAS.  To
accomplish this, the provisions proposed for "RFG FRGAS" would basically be applied
for all non-certified FRGAS, whether RFG or CG.
     In addition, EPA is adopting an additional flexibility regarding FRGAS
classification that was not proposed.  A foreign refiner who has obtained an individual
refinery baseline may elect each calendar year to not participate in the FRGAS program at
all, provided notice is provided to EPA before the beginning of the calendar year.  If such
a foreign refiner gives timely non-participation notice to EPA, the foreign refiner could not
classify any gasoline, conventional gasoline or RFG, as FRGAS during the calendar year,
and the individual refinery baseline would have no effect for that year.  In this situation the
foreign refiner would not have to meet the gasoline tracking requirements during the year
(designation, independent sampling and testing, attest engagements, etc.), and the refiner
would not have to submit reports to EPA.  However, such a non-participating foreign
refiner would remain subject to EPA audits and enforcement that focus on prior years
when the refiner did participate in the FRGAS program.  As a result, enforcement-related
requirements, such as the refiner commitments and bond, would remain in effect during
any period of non-participation.
     A foreign refiner who has elected the non-participation status could begin
participating again at the beginning of any subsequent year by giving notice to EPA before
the beginning of the year when participation is to begin.
     Also, where a foreign refiner operates multiple refineries with individual baselines
that have been aggregated under section 80.101(h), the foreign refiner is required to make
the same FRGAS election for all refineries in the aggregation.  This consistency
requirement for aggregated refineries is similar to the requirement that aggregation
decisions cannot be modified from year-to-year, that applies to domestic and foreign
refiners.  If a foreign refiner of aggregated refineries could elect non-participation FRGAS
status for only one refinery in the aggregation while electing for the remaining refineries to
participate in the FRGAS program, this would have the effect of changing the aggregation
for the participating refinery or refineries.
     EPA believes the additional flexibility of allowing an annual FRGAS election is
appropriate because there would be no adverse environmental effect if a foreign refiner
with a relatively "dirty" individual baseline elected to not use that baseline.  In that case,
the conventional gasoline would be regulated through the importer, who is subject to the
statutory baseline.
     As a result, EPA is finalizing the regulations to require a foreign refiner with an
individual refinery baseline to classify all gasoline exported to the United States as
FRGAS, or, at the foreign refiner's election, to classify no gasoline as FRGAS.  A foreign
refiner with an individual refinery baseline would not be allowed to classify part of its
gasoline as FRGAS and part as non-FRGAS during a calendar year.
     EPA also is including a provision in the final rule to specifically prohibit a foreign
refiner with an individual baseline from failing to include in the refinery compliance
baseline calculations all gasoline produced at the foreign refinery that is used in the U. S.,
and including any blendstock produced at the foreign refinery that is used to produce RFG
used in the U. S.  If EPA discovers that a foreign refiner with an individual baseline has
produced gasoline that was used in the U. S., but that was not included in the refinery's
compliance baseline calculations, this would be a violation of the prohibition.  In addition,
this also would result in a recalculation of the refinery's compliance baseline for the
relevant year, ab initio, which could result in the foreign refiner violating the revised NOx
and exhaust toxics requirements for that year.  It would be no defense if the gasoline or
blendstock had been transferred to a third party who was responsible for exporting the
gasoline or blendstock to the U. S., even if the foreign refiner had no actual knowledge of
the subsequent U. S. export or if the foreign refiner had a good faith belief the gasoline or
blendstocks would be used only in non-U. S. markets.
     This is similar to the requirement at section 80.67(h)(3) that prohibits domestic
refiners from using improperly created oxygen or benzene credits regardless of any good
faith belief the credits were valid, and if invalid credits are used results in EPA
recalculating the refiner's compliance calculations, ab initio, with the invalid credits being
removed.
     As a result, EPA believes it would be prudent for foreign refiners of FRGAS to
take appropriate commercial steps to ensure they are informed if gasoline or blendstock
transferred to third parties ultimately is exported to the U. S.  If a foreign refiner fails to
take reasonable steps in this regard, and EPA determines that the refiner's gasoline or
blendstock is exported to the U. S. by a third party without being included in the refiner's
compliance baseline calculations, EPA will consider this an aggravating factor in
determining the amount of any penalty imposed against the foreign refiner for the
violation.
          (2)  Third Party Testing Requirements
               (a)  Comments
     EPA received several comments related to the proposed third party testing
requirements and the comparison of load port test results with port of entry test results.
One foreign refiner and an association of domestic gasoline marketers commented that
load port testing is not necessary, and the foreign refiner stated their comment is based on
the view that EPA should require U. S. importers to meet NOx and exhaust toxics
requirements based on testing only at the U. S. port of entry and EPA audits of refinery
records.
     A number of comments were related to factors intended to reduce the costs
associated with third party testing.  Two foreign refiners commented that if third party
testing is required, the load port testing requirement should require analysis only of vessel
composite samples instead of  separate analyses for each vessel compartment.  One foreign
refiner commented that the parameters required to be analyzed should be limited to
gravity, T50, T90, benzene and sulfur, or in the alternative, for NOx and exhaust toxics
emissions performance.  Two foreign refiners commented that the third party tester should
not be required to use an independent laboratory, and instead should be allowed to
observe the testing in the foreign refiner's laboratory or use the foreign refiner's laboratory
equipment, because at present there are no independent laboratory facilities located near
their foreign refineries.
     Two foreign refiners commented that comparisons of load port testing with port of
entry testing should be on the basis of ASTM reproducibility, instead of the comparison
criteria proposed by EPA.
     One foreign refiner also commented that in the case of inconsistent load port - port
of entry test results, the U. S. importer should be responsible for meeting the NOx and
exhaust toxics requirements for the gasoline.
     An association of domestic refiners commented that the proposed requirements for
third party testing are necessary for an effective enforcement program.
               (b)  EPA's Response
     EPA continues to believe third party sampling and testing is a necessary part of the
foreign refiner FRGAS program.  However, in response to comments EPA is modifying
these requirements in several ways in the final rule.
     The primary purpose served by the third party sampling and testing requirements is
to  provide information useful in evaluating whether any event has occurred since the
gasoline was loaded into the vessel that would cast doubt on the identification of the
source refinery of FRGAS.  The NOx and exhaust toxics requirements are met on the
basis of sampling and testing conducted by the foreign refiner at the foreign refinery (not
necessarily at the load port), and is largely unrelated to the third party load port sampling
and testing.  The tracking purpose of the third party testing requirements provides the
focus for evaluating the comments received on this issue.
     In the case of gasoline classified as non-certified FRGAS, EPA now believes that
no third party load port sampling or testing to determine gasoline properties is necessary.
There is no adverse environmental effect if a foreign refiner includes FRGAS in its
compliance baseline calculations even if this gasoline was produced by a different refiner.
As a result, there is little need for third party testing intended to verify gasoline was
produced at the specified foreign refinery, and, hence, EPA is dropping the requirement
for third parties to determine properties of non-certified FRGAS.  However, EPA has
retained the requirement for third party determination of volume for non-certified FRGAS,
because the volume of all FRGAS is important to the accuracy of the compliance baseline
calculation.
     In addition, the foreign refiner is required to prepare a certification to accompany
shipments of non-certified FRGAS that identify the foreign refinery and the volume,
supported by the report of the independent third party.  The requirement also remains that
the U. S. importer must report the volume of non-certified FRGAS to EPA and to the
foreign refiner.  EPA intends to monitor the volumes of non-certified FRGAS used by
foreign refiners in their compliance baseline calculations.  If EPA discovers that the
volume of non-certified FRGAS included in a foreign refiner's compliance baseline
calculation is incorrect (for example, discovers this violation during an audit of the foreign
refinery), EPA will recalculate the refinery's compliance baseline and evaluate the refiner'
compliance with the NOx and exhaust toxics requirements on this basis.
     In the case of gasoline classified as certified FRGAS, EPA believes third party
testing is needed in order to verify the imported gasoline was produced at the named
foreign refinery and subsequent to loading was not mixed with gasoline from a different
foreign refinery.  Only conventional gasoline that is produced at the foreign refinery with
an individual baseline is entitled to use that baseline, and it would be inappropriate for the
foreign refiner or anyone else to substitute conventional gasoline produced at another
refinery.  However, the purpose of third party sampling and testing of certified FRGAS
is limited to identifying the source refinery.  As a result, and in response to comments
received, EPA has revised the parameters that must be tested by the third party, the
manner in which the third party may determine the property values, and the criteria that
are used to compare load port and port of entry test results to more reasonably reflect the
purpose of this sampling and testing.
     The purpose of comparing load port and port of entry test results is to verify the
gasoline on board a vessel on arrival at the U. S. port of entry is the same gasoline that
was loaded by the refiner at the load port, i.e., to verify that the vessel has not stopped en
route to the U. S. to discharge or take on gasoline.  EPA had proposed that this
comparison must be of all complex model parameters.  A foreign refiner commented that
a comparison based on test results for a subset of the complex model parameters would
also meet the purpose of this provision, i.e., test results for sulfur, benzene, T50, T90, and
gravity.  EPA agrees the vessel tracking purpose is served by comparing results for the
suggested parameters, although the distillation terms E200 and E300 that are used in the
complex model are being substituted for the distillation terms T50 and T90 recommended
by the commenter.  It is highly likely the gasoline on board a vessel has not been altered if
the values for these five parameters plus the gasoline volume are unchanged.
     However, it nevertheless is necessary for the foreign refiner to have the third party
determine values for all complex model parameters for certified FRGAS loaded onto the
vessel, so the foreign refiner can correct its NOx compliance and exhaust toxics
calculations in the event the results from load port and port of entry testing are
inconsistent, or the vessel is diverted to a non-U.S. market, as discussed below.  The
additional parameters that must be established for the vessel are aromatics, olefins,
oxygenate and RVP.  These additional parameters may be established by the third party
testing the ship composite sample for them.  In addition, if a vessel is loaded from shore
tanks containing gasoline that has been tested for the additional parameters and the
volume from each shore tank that was loaded is known, the third party may calculate the
additional parameter values for the gasoline that was loaded onto the vessel.
     Thus, the load port testing must be for all complex model parameters, but the
comparison of load port and port of entry samples must be only for the subset of
parameters.
     EPA also now believes the appropriate basis for comparison of load port and port
of entry testing is ASTM reproducibility, as recommended in the comments.  EPA
proposed requiring these comparisons be based on the ranges specified at 40 CFR
80.65(e)(2)(i).  However, these proposed ranges currently are used under the regulations
to compare a refiner's internal test results for RFG with the test results obtained by the
refiner's independent laboratory.  The purpose is to verify the actual quality of the
gasoline, not the source refinery.  A relatively high degree of correlation in test results
would be expected between a refiner and the single independent laboratory selected and
used by the refiner on an ongoing basis.  In contrast, a foreign refiner's load port test
results for FRGAS normally will be compared with port of entry testing conducted by
multiple importers, where unusually high correlation in test results would not be expected.
EPA believes ASTM reproducibility is an appropriate correlation criteria in this situation
in light of the tracking purpose of load port and port of entry test comparisons.  ASTM
reproducibility for most parameters is calculated using the test result obtained in each test,
and the reproducibility value that must be used for each load port - port of entry
comparison must be calculated using the port of entry test result.  The final regulations
are being revised accordingly.
     Also in light of the limited purpose of load port testing, EPA now believes this
testing need not be conducted in an independent laboratory.  This is in contrast to
independent sampling and testing of RFG, which must be conducted at an independent
laboratory.  EPA believes the purpose of load port testing may be achieved if the
independent chemist observes the foreign refiner chemist conduct the required tests or if
the independent chemist uses the foreign refiner's laboratory equipment.  In addition, load
port testing of certified FRGAS could be conducted by the independent third party at an
independent laboratory.  The final regulations are being revised accordingly.
     EPA proposed that load port testing would be conducted separately for each
quantity of gasoline that is not homogeneous with regard to the properties being tested,
i.e., that separate testing would be conducted for each batch.  Commenters stated that
EPA instead should allow parties to conduct load port - port of entry test comparisons on
the basis of vessel composite samples.  Based on the tracking purpose of load port - port
of entry test comparisons, EPA agrees with the commenters' suggestion.  The point of
comparing load port with port of entry test results is to establish that a vessel has not
stopped en route to the United States to add new gasoline.  The gasoline quality and
quantity changes that would result from such a mid-journey stop would be revealed by
comparing the analysis results of vessel composite samples, and EPA now believes there is
no need to require separate comparisons for each gasoline batch being transported on a
vessel.
     EPA proposed that if port of entry test results for certified FRGAS differ from
load port test results by more than the specified ranges, the foreign refiner would be
required to correct its compliance calculations to reflect the port of entry results.  Foreign
refiners objected, stating they sell their gasoline "free on board" (FOB) the foreign load
port, and, hence, have no control and are not responsible for what happens to it
afterwards.
     EPA now believes the proposed approach is not the most appropriate consequence
when port of entry test results are inconsistent with load port test results.  Instead, EPA
believes the U. S. importer should simply treat the gasoline as non-certified FRGAS.  In
the case of inconsistent results from load port and port of entry testing, the implication is
the gasoline was not produced by the foreign refiner or has been mixed with gasoline not
produced by the foreign refiner, and is not entitled to the foreign refinery's individual
baseline.  In addition, the U. S. importer must inform the foreign refiner of the inconsistent
results, and the foreign refiner must adjust its compliance calculations to remove the
qualities and volume of the conventional gasoline from the refinery NOx and exhaust
toxics compliance calculations.
     However, the foreign refiner may not remove the volume from its compliance
baseline calculations.  This is necessary in order to prevent the adverse impacts, described
above, that could occur if foreign refiners of FRGAS or their importers have the option of
classifying conventional gasoline as "non-FRGAS."  Requiring the named foreign refiner
to retain the volume of the non-certified FRGAS in its compliance baseline calculations
even where load port and port of entry test results are inconsistent removes any incentive
for the foreign refiner or its U.S. importer to manipulate test results in order to make them
inconsistent, and in this way to ship to the United States gasoline that could be treated as
"non-FRGAS."
     EPA is providing an exception to this requirement.  In the case of test results
outside the specified ranges the foreign refiner need not retain the volume of the gasoline
in its compliance baseline calculations, where the foreign refiner can demonstrate that the
U.S. importer does not classify the imported gasoline as reformulated gasoline, or use the
imported gasoline to produce reformulated gasoline through the GTAB protocol.  This
exception is appropriate because the potential for adverse environmental effects only exists
where the gasoline is used as reformulated gasoline in the U.S.  EPA intends to review
compliance with this exception when it conducts audits of foreign refiners and U.S.
importers.  If EPA discovers that a foreign refiner excluded the volume of certified
FRGAS from its compliance baseline calculations based on inconsistent load port - port of
entry testing, but the gasoline was classified as reformulated gasoline by the U.S. importer,
the foreign refiner's compliance baseline calculation will be adjusted, ab initio, which could
result in a violation of the NOx and exhaust toxics requirements by the foreign refiner.
This would be true in a case where only a portion of the gasoline at issue has been
classified as reformulated gasoline using the GTAB protocol.  Moreover, the foreign
refiner could not avoid this result even if it had a good faith belief the U.S. importer would
not use the gasoline at issue to produce reformulated gasoline.  The burden is on the
foreign refiner to demonstrate that the gasoline was not classified as reformulated.
     EPA is adopting an additional basis for retaining the certified FRGAS classification
of conventional gasoline, even if the load port and port of entry test results are outside the
specified ranges.  This is based on a comparison of the NOx and exhaust toxics emissions
performance of the FRGAS calculated using load port test results, with the emissions
performance calculated using port of entry test results.  If the port of entry emissions
performance for both NOx and exhaust toxics, in milligrams per mile, is smaller than the
load port emissions performance (i.e., cleaner), the gasoline remains classified as certified
FRGAS regardless of the parameter test results comparisons.  This exception is
appropriate because there is no adverse environmental effect if the quality of the
conventional gasoline improves in terms of NOx and exhaust toxics emissions
performance.  However, this exception would not apply if EPA is able to establish that the
vessel in fact stopped en route to the United States and took on additional gasoline
produced at a different foreign refinery.
7.   Diversion of FRGAS to Non-U. S. Markets
     a.   EPA Proposal
     EPA proposed that all gasoline produced at a foreign refinery with an individual
baseline that is exported to the U. S. must be classified as FRGAS.  However, EPA left
open and requested comment on the issue of whether the regulations should allow FRGAS
to be diverted to a non-U.S. market after production, for example, whether a vessel
containing FRGAS could be diverted to a non-U. S. market.
     b.   Comments
     EPA received comments from two foreign refiners and an association representing
domestic marketers that recommended foreign refiners be given the option of diverting
FRGAS to non-U.S. markets.  The two foreign refiners stated that foreign refiners could
implement commercial procedures that would allow them to know when FRGAS has been
diverted to a non-U.S. market, and the foreign refiner could correct their compliance
calculations accordingly.
     c.   EPA's Response
     EPA now agrees that foreign refiners of FRGAS should be allowed to divert
certified and non-certified FRGAS to non-U.S. markets, provided the foreign refiner
corrects its compliance baseline calculations, and in the case of certified FRGAS its NOx
and exhaust toxics compliance calculations, to reflect the diversion.  In the case of
diverted certified FRGAS, the foreign refiner must use the load port test results, and the
load port volume, as the basis for correcting the NOx and exhaust toxics compliance
calculations.  A foreign refiner may treat FRGAS as having been diverted only if the
foreign refiner is able to demonstrate the gasoline in fact was used outside the U.S.  This
demonstration must be in the form of documents obtained from the recipient of the
gasoline that certify where the gasoline will be used, and that the gasoline will not be
imported into the United States.  Provisions have been included in the final rule to reflect
these requirements.
8.   Attest Requirements
     a.   EPA Proposal
     Under the Gasoline Rule foreign refiners of FRGAS, like domestic refiners, are
required to commission an attest engagement each year.  EPA proposed additional attest
procedures dealing with the FRGAS requirements, that would have to be completed by
foreign refiners of FRGAS.
     b.   Comments
     EPA received comments on the proposed FRGAS attest procedures from a
domestic firm of Certified Public Accountants.  These comments included specific
suggestions regarding the wording used in certain proposed FRGAS attest provisions.
     c.   EPA's Response
     EPA has modified the attest procedures to address the comments received.  In
particular, EPA has included additional details in the attest procedure that requires the
auditor to determine whether FRGAS was produced at the foreign refinery in question,
and whether FRGAS was produced at any non-FRGAS or FRGAS produced at a different
refinery.
9.   Truck Imports
     a.   EPA Proposal
     EPA did not distinguish gasoline that is imported into the U.S. by truck, from
gasoline that is transported by vessel, in the foreign refiner proposed rule.  However, in
implementing the current regulations EPA has allowed an additional option for meeting
the conventional gasoline requirements where the gasoline is imported into the U.S. by
truck, because of the costs associated with every-batch sampling that is required for
imported gasoline.  Under this option truck importers are allowed to demonstrate
compliance with the conventional gasoline requirements based on the quality of gasoline at
the terminal located outside the U.S. where the trucks are loaded.  This quality must meet
the statutory baseline on an every-gallon basis, and not an annual average basis.  The
foreign terminal operator provides the U.S. importer with documents for each truck
loaded at the terminal, that demonstrate the gasoline meets these quality requirements.
These documents must be based on complete sampling and testing by the foreign terminal
operator.  In addition, the U.S. importer must conduct a program of periodic quality
assurance testing of the gasoline dispensed a the foreign terminal to verify the accuracy of
the foreign refiner's documents.  This option was allowed in guidance issued by EPA in
Reformulated Gasoline and Anti-Dumping Questions and Answers (October 29, 1994),
and has been proposed for inclusion in the Gasoline Rule in another rulemaking, 62 FR
37367 (July 11, 1997).
     b.   Comments
     EPA received comments from a coalition of companies who import gasoline into
the United States by truck.  These commenters stated that EPA should structure the
foreign refiner requirements in a manner that allows truck importers to continue using the
testing option described above.
     In particular, these commenters expressed the view that the foreign refiner FRGAS
requirements would effect truck importers only if an individual refinery baseline is sought
by the foreign refiner supplying gasoline to the terminal used by truck importers.  If an
individual refinery baseline is obtained by such a foreign refiner, the commenters suggested
the foreign refinery should be considered analogous to the load port, and the truck loading
terminal should be considered analogous to the U.S. port of entry.  In this way the
gasoline dispensed at the truck loading terminal would have no additional testing
requirements that would be met by the U.S. importer.
     c.   EPA's Response
     Where the foreign refiner has not obtained an individual refinery baseline the
testing option available to truck importers, described above, is unaffected by the foreign
refiner requirements being promulgated.  However, if conventional gasoline imported by a
truck importer is produced at a foreign refinery with an individual baseline the current
importer testing option is not available.  This is true because the truck testing option does
not allow any gasoline to meet NOx and exhaust toxics quality requirements other than
statutory baseline-based requirements.
     EPA believes it may be possible to modify the testing option available to truck
importers for application with gasoline produced at a foreign refinery with an individual
refinery baseline.  However, this is not the most appropriate rulemaking for such a
modification.  As described above, EPA has proposed in a separate rulemaking to include
this truck importer testing option in the regulations, which EPA hopes to complete by the
end of December 1997.  EPA believes it would be most appropriate to address all issues
related to testing by truck importers in that separate rulemaking, including where the
foreign refiner has obtained an individual refinery baseline.  In the meantime, if EPA
receives an individual refinery baseline petition from a foreign refiner that supplies truck
importers, EPA will attempt to address the issue of the truck testing option through
modifying the Question and Answer guidance.
          E.  Remedial Measures
1.   EPA's Proposal.
     Allowing foreign refiners to choose whether to establish an individual baseline
creates a potential for adverse environmental impact.  This would be addressed by
monitoring the quality of imported gasoline, comparing it to a benchmark, and taking
remedial action if the benchmark is exceeded.
     EPA would monitor the entire pool of imported gasoline, and determine the
volume weighted average quality of the gasoline.  This average would be compared to a
benchmark.  The purpose of the benchmark is to reasonably determine when allowing
foreign refiners the option to use or not use an IB has caused degradation of the quality of
imported gasoline from the 1990 quality of imported gasoline.  The best measure of this,
given the absence of actual data on the average quality of gasoline imported in 1990,
would be the volume weighted average baseline for domestic refiners.
     Since the use of a benchmark is designed to detect a multi-year trend stemming
from providing foreign refiners the option to use or not use an IB, as compared to short
term changes in gasoline quality attributable to the many other factors that can affect the
quality of imported gasoline on a year to year basis, EPA proposed to use a three year
rolling average of the quality of imported gasoline.  Thus each year the average quality of
the imported CG for the prior three years would be compared to the benchmark.
     If the benchmark was exceeded, EPA would take remedial action by adjusting the
requirement applicable to imported CG that is not subject to an IB.  The adjustment would
be equal to the amount of the exceedance.  The existence and level of the adjustment
would be evaluated each year by comparing the benchmark to the most recent 3 year
average.  The adjusted requirement would apply to CG imported from refiners without an
IB.
     Under the proposal, a benchmark would be set for NOx emissions but not for
exhaust toxics, as the evidence prior to the proposal indicated that there would not likely
be an adverse impact on toxics from allowing the option to use an IB.  Instead, EPA
would monitor the quality of imported CG for toxics, and if an adverse trend were to
occur EPA would develop at that time an appropriate benchmark and adjustment
mechanism, analogous to that proposed for NOx.
2.   Comments.
     Comments were received from various associations and members of the refining
and distribution industry, importers, gasoline marketers, foreign refiners, a state
environmental office and an environmental group.  Several of the commenters supported
the proposed approach in general, suggesting changes to specific parts of the proposal.
One commenter suggested extending the approach to include all imported and domestic
conventional gasoline, using this mechanism to improve the average quality of fuel in areas
with poor fuel quality.  One commenter from the gasoline refining and distribution
industry opposed the general approach of the proposal arguing that the after-the-fact
approach of the proposal was inappropriate as it would allow air quality to degrade before
remedial action was taken.
     Several commenters suggested changes to the benchmark.  One commenter
suggested that a three year running average of the quality of domestic CG would be a
better way to ensure that imported gasoline was no dirtier than domestic gasoline on
average.  Another commenter suggested that a benchmark based on a one year average
instead of a three year average would be more protective of air quality and therefore more
appropriate.  Another commenters suggested using the statutory baseline as the
benchmark instead of the volume weighted average of domestic refiner IBs.  One
commenter suggested that remedial action should be triggered when the benchmark was
exceeded by an amount reflecting the reproducibility of the test results for NOx emissions.
Finally, one commenter suggested using a national average as the benchmark, done by
individual metropolitan areas.
     While one commenter supported limiting the benchmark to NOx, two commenters
recommended adding a benchmark for toxics.   One commenter questioned EPA's lack of
a benchmark for toxics, given the difficulty in analyzing import data and enforcing
requirements against foreign refiners and the importance of the toxics reductions from the
RFG and CG programs.  Another commenter suggested monitoring exhaust toxics as well
as NOX as domestic refiners are subject to requirements for both, the prior history of the
toxics qualities of imported CG does not assure the quality of future imports of CG, and
the additional monitoring and reporting would not impose significant effort for either EPA
or the affected industry.  This commenter also expressed the view that gasoline produced
outside the US would be likely to have higher toxics on average than that produced in the
US, based on  the on-going phase out of lead, the summer to winter ratio of imports, and
the results of a 1993 National Petroleum Council study on gasoline quality.  In addition,
EPA was cautioned to exclude data from the US Virgin islands in determining the toxics
qualities of imported CG.
     One commenter objected that the adjustment mechanism did not comply with the
legal requirements spelled out by the WTO Appellate Body and Panel, in that it could lead
to subjecting imported gasoline to stricter requirements than identical domestic gasoline.
The commenter argues that even though domestic refiners were required to use an IB,
there could still be changes in the average quality of domestic gasoline yet no adjustment
mechanism was employed in that case.
3.   EPA's Response.
     For the reasons decribed below, EPA is finalizing these provisions as proposed.
     The "after-the-fact" approach of these provisions is based on EPA's inability to
accurately quantify ahead of time the actual adverse impact, if any, from allowing foreign
refiners the option to use or not use an IB.  EPA does believe providing such an option
clearly creates the potential for such an adverse impact, but the size and amount of the
impact is difficult to quantify with any degree of certainty ahead of time, as well as
whether or not it will occur.  It would depend on a variety of factors, some of which
would change from year to year - the number of foreign refiners that receive an IB, the
actual IBs assigned to them, the volume of gasoline included in the IB, the source and
amount of CG and RFG imported each year, and the extent, if any, to which foreign
refiners whose 1990 exports to the U.S. were cleaner on average than the SB would now
ship gasoline that is dirtier than what they exported to the US in 1990.
     No commenter disputed the above, or suggested a way for EPA to fairly quantify
ahead of time the potential  risk of an adverse environmental impact.  Given this
uncertainty, EPA continues to believe that the better course is to monitor imported CG,
measure it against a benchmark designed to reflect a multi-year trend in gasoline quality,
and if the benchmark is exceeded adjust the gasoline quality requirement for imported CG
by an amount that offsets this adverse impact.  EPA also does not believe it is appropriate
to extend this monitoring and adjustment approach to include all CG, both domestic and
imported.  All domestic refiners and blenders of CG have been assigned an IB, and do not
have the option to choose between the SB and an IB.  As a result, for domestic refiners
there is not the same ability to choose a less stringent requirement, based on economic
reasons, with the resulting potential for an adverse environmental impact, as there is for
foreign refiners.  Therefore, there is not the same need to protect against such an adverse
impact for domestically produced gasoline.
     EPA proposed a three year rolling average in the comparison to the benchmark as
it is a better mechanism to detect a multi-year trend.  A one year average was rejected in
the proposal as it might only reflect the year to year volatility in the source and quantities
of imported CG which occur for a variety of reasons independent of the option to use an
IB.  The commenter suggesting the use of a one year average did not provide any
evidence to rebut this view, but argued instead that a one year average would be more
protective of air quality.  EPA is finalizing the three year rolling average as it is a better
mechanism to determine when air quality has been adversely impacted from providing the
option to use an IB, and therefore needs to be protected by an adjustment.
     EPA proposed comparing the average quality of imported CG to the volume
weighted average of the IBs for domestic refiners.  This reflects the central purpose of the
CG program as applied to imported gasoline - to avoid degradation in the quality of
imported gasoline from the quality of gasoline imported in 1990.  As noted in the
proposal, we do not have actual data on the quality of gasoline imported in 1990 and it is
not unreasonable to assume that the average quality of imported gasoline was generally
equivalent to the volume weighted average of IBs for domestic refiners, absent evidence
to the contrary.  The proposed benchmark is based on this view, and no commenter
contested these assumptions or presented evidence to the contrary.  One commenter
suggested comparing imported CG to the average quality of CG currently produced by
domestic refiners, another suggested using a national average done by metropolitan area,
and another suggested comparing it to the SB.  EPA is not adopting these methods
because each of them is a less direct way to meet the purpose identified above.  These
alternatives would be a less certain way to meet the objectives as they are less directly
related to the quality of gasoline imported in 1990.
     EPA disagrees with the suggestion that the remedial action should be triggered
when the benchmark is exceeded by an amount reflecting the reproducibility of the test
results for NOx emissions.  The reproducibility of test results addresses comparisons of
individual test results conducted for example in different labs.  It is not relevant when
comparing averages that are based on numerous data points.  A multi-year rolling average
is an adequate benchmark to determine the existence of an adverse trend, and an additional
element for reproducibility of individual test results is not needed.
     EPA's proposal to establish a benchmark for NOx at this time but not for exhaust
toxics was based on a review of the annual reports submitted by importers for calendar year
1995.  Those reports showed that the average level of exhaust toxics for gasoline imported
in 1995 was significantly cleaner than either the statutory baseline or the volume weighted
average of individual baselines for domestic refiners.  In addition, information previously
submitted by one foreign refiner indicated that the IB they would seek would be cleaner than
the SB for exhaust toxics.  Based on this, EPA did not believe there was enough indication
that there would be an adverse impact on toxics to warrant establishing a benchmark and
adjustment mechanism at this time.  Instead, EPA would monitor the toxics qualities of
imported gasoline and adopt a benchmark and adjustment mechanism in the future if
appropriate.
     None of the commenters provided information or reasons that warrant a different
conclusion.  The claim that data on imported gasoline is hard to analyze is unfounded, as it
is relatively easy to determine the volume weighted average quality of imported gasoline from
the batch reports submitted by importers.  The same information will still be available under
the regulations finalized today; the fact that some of the information may now be submitted
by foreign refiners does not change the availability and quality of the data submitted.  Since
the regulatory changes adopted today will only affect conventional gasoline, there will be no
impact at all on the important toxics reductions obtained in the RFG program.  The fact that
domestic refiners are subject to requirements for both NOx and exhaust toxics is not a reason
to set a benchmark for toxics now, as both importers and foreign refiners with an approved
IB will also be subject to requirements for NOx and exhaust toxics.  While the prior history
of the toxics quality of imported gasoline does not assure that the future quality will be the
same, it does indicate that it is much less likely that a toxics problem will develop from
allowing foreign refiners to use and IB.  Since the proposal was published, EPA has been able
to evaluate the batch reports submitted by importers for calendar year 1996.  The results
follow the same pattern as in 1995 - the average toxics quality of imported gasoline is
significantly cleaner than either the SB or the volume weighted average of the IBs for
domestic refiners.  Data from the Virgin Islands was not included in either the 1995 or 1996
calculations, as this is not considered imported gasoline for purposes of the CG or RFG
regulations.  Data on the actual toxics quality of imported gasoline in 1995 and 1996 provides
concrete evidence for evaluating the risk of an adverse impact on toxics from allowing foreign
refiners an option to use IBs.  This data is more probative on this issue than the potential but
unspecified impacts of lead-phase down on foreign produced gasoline and the overall quality
of gasoline produced overseas in 1993, which would be dominated by gasoline produced and
used overseas as compared to gasoline exported to the U.S.  EPA is therefore not adopting
a benchmark for exhaust toxics at this time, and instead will continue to monitor the average
toxics quality of imported gasoline and will take appropriate action to adopt a benchmark and
adjustment mechanism for exhaust toxics if circumstances develop which warrant such action.
F.  Compliance with WTO Obligations
     Some commenters claimed that certain provisions related to enforcing compliance
with the requirements for establishment and use of an individual baseline, and the mechanism
for remedial measures, were not consistent with the obligations of the United States under the
World Trade Organization agreement.
     This rule meets the commitment of the United States to comply with its obligations
under the World Trade Organization agreement with respect to this matter.  This rule
provides all foreign refiners with the opportunity to apply for and use an individual baseline.
To the limited extent that foreign refiners with individual baselines are to be subject to
different requirements than domestic refiners, great care has been taken to ensure that these
requirements are limited to those that are essential to address issues that are unique to refiners
exporting gasoline to the United States.
V.  Administrative Designation and Regulatory Analysis
A.   Public Participation
     The agency held a public hearing on May 20, 1997, to hear comments on the Notice
of Proposed Rulemaking (62 FR 24776) published on May 6, 1997.  Comments were
provided at the hearing by the National Petroleum Refiner's Association and the Independent
Refiners Coalition.   EPA reviewed and considered written comments on the proposal
submitted by the same groups as well as written comments from various other commenters.
These comments have been presented and addressed in the preamble above.  (See Response
to Comments, Section IV) All comments received by the Agency are located in the EPA Air
Docket A- 97-26.
B.   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.
     Pursuant to the terms of Executive Order 12866, it has been determined that this rule
is a "significant regulatory action," as such, this action was submitted to OMB for review.
C.   Economic Impact and Impact on Small Entities
     EPA has determined that this final rule will not have a significant impact on a
substantial number of small entities because only a limited number of  domestic entities would
be affected by this rule and would be small entities.  In addition, today's action will not significantly change the requirements applicable to importers of gasoline produced by foreign
refineries.    A regulatory flexibility analysis has therefore not been prepared.
     Of the entire population of importers currently reporting to the EPA, somewhat less
than 100 importers that would be subject to today's proposed rule are small entities.  Under
40 CFR. 80.65 and 80.101 the requirements for imported CG must currently be met by the
importer.  The current requirements are based on the statutory baseline while today's final
rule would  require either foreign refiners or  importers to meet the CG requirements using
the baselines of the various foreign refineries.  Other importers would continue to meet the
CG requirements using the statutory baseline or an adjusted baseline.  This will not, however,
have a significant impact on the importer, as the importer will continue to only import
gasoline that allows it to meet the annual average requirements, and such gasoline would
continue to be available from the foreign refineries.  The provision generally corresponds with
existing requirements.  This final rule will continue the requirement that  importers be
responsible for sampling and testing for foreign gasoline imported into the U. S.  Importers
will be responsible for this activity at the port of entry in the U.S.   Importers will rely on the
foreign refiners and the independent party's to establish refinery of origin.  Importers can
accomplish this by making private arrangements with the importing foreign refiner and the
independent party.  The Agency believes that, in general, exercising good business practices
with reputable foreign refiners will tend to eliminate any impact on the importer.  The impact
of today's final rule will therefore either not increase an importers cost, or would do so only
marginally.
     The issue of baselines for imported gasoline is discussed generally in section VII-C
of the Regulatory Impact Analysis that was prepared to support the Final Rule for gasoline.
A copy of this document may be found in the RFG docket, number A-92-12, at the location
identified in the ADDRESSES section of this document.
D.   The Paperwork Reduction Act
     The information collection requirements in this final rule have been submitted for
approval to the Office of Management and Budget (OMB) under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq.  An Information Collection Request (ICR) document has been
prepared by EPA (ICR No. 1591.08)  and a copy may be obtained from Sandy Farmer,
Regulatory Information Division; U.S. Environmental Protection Agency (2136); 401 M St.,
S.W.; Washington, DC 20460 or by calling (202) 260-2740.  The information requirements
are not effective until OMB approves them.
     This final rule will allow foreign refiners to establish individual baselines to
demonstrate compliance with the Agency's gasoline rule.  The information collected will
enable EPA to evaluate imported gasoline in a manner similar to gasoline produced at
domestic refineries.  Section 211(k) specifically recognizes the need for recordkeeping,
reporting and sampling/testing requirements for enforcement of this program.  Because of the
complex nature of the gasoline rule, EPA cannot determine compliance merely by taking
samples of gasoline at various facilities.
Estimated labor and cost burdens for this rule are:
     No. Of Respondents            32
     Total Annual Response         90
     Average labor burden per response  2.1 hours
     Average cost burden per response   $ 1,408
     Total annual hours requested       192 hours
     Total annual capital costs         $126,700.00
Capital cost are those cost associated with testing of gasoline by independent laboratories.
     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.
     Send comments on the Agency's need for this information, the accuracy of the
provided burden estimates, and any suggested methods for minimizing respondent burden,
including through the use of automated collection techniques to the Director, OPPE
Regulatory Information Division, U.S. Environmental Protection Agency (2137), 401 M
Street., S.W., Washington, DC 20460, and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, 725 17th St., N.W., Washington, DC 20503,
marked "Attention: Desk Officer for EPA."  Include the ICR number in any correspondence.
E.   Unfunded Mandates Reform Act
     Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.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.
F.   Submission to Congress and the General Accounting Office
     Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business Regulatory Enforcement
Fairness Act of 1996, EPA submitted a report containing this rule and other required
information to the U.S. Senate, the U. S. House of Representatives and the Comptroller
General of the General Accounting Office prior to publication of the rule in today's Federal
Register.  This rule is not a major rule as defined by 5 U.S.C. 804(2).
G.   Statutory Authority
     The statutory authority for the rules proposed today is granted to EPA by sections
114, 211 (c) and (k), and 301 of the Clean Air Act, as amended, 42 U.S.C. 7414, 7545 (c)
and (k), and 7601.
List of Subjects in 40 CFR Part 80
     Environmental protection, Air pollution control, Fuel additives, Gasoline, Motor
vehicle pollution, Penalties, Reporting and recordkeeping requirements.
Dated:_________8/19/97______________________
___________________________________________________
     Carol M. Browner,
     Administrator.
40 CFR Part 80 is amended as follows:
PART 80--REGULATIONS OF FUELS AND FUEL ADDITIVES
    1. The authority citation for part 80 continues to read as follows:
    Authority: Sections 114, 211 and 301(a) of the Clean Air Act as amended, 42 U.S.C. 7414,
7545 and 7601(a).
    2. Section 80.94 is added to subpart E to read as follows:
 80.94  Requirements for gasoline produced at foreign refineries.
     (a)  Definitions.  (1)  A foreign refinery is a refinery that is located outside the United
States, including the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands (collectively referred to in
this section as "the United States").
     (2)  A foreign refiner is a person who meets the definition of refiner under  80.2(i)
for foreign refinery.
     (3)  "FRGAS" means gasoline produced at a foreign refinery that has been assigned
an individual refinery baseline and that is imported into the United States.
     (4)  "Non-FRGAS" means gasoline that is produced at a foreign refinery that has not
been assigned an individual refinery baseline, gasoline produced at a foreign refinery with an
individual refinery baseline that is not imported into the United States, and gasoline produced
at a foreign refinery with an individual baseline during a year when the foreign refiner has
opted to not participate in the FRGAS program under paragraph (c)(3) of this section.
     (5) "Certified FRGAS" means FRGAS the foreign refiner intends to include in the
foreign refinery's NOx and exhaust toxics compliance calculations under  80.101(g), and
does include in these compliance calculations when reported to EPA.
     (6)  "Non-certified FRGAS" means FRGAS that is not certified FRGAS.
     (b)  Baseline establishment.  Any foreign refiner may submit to EPA a petition for an
individual refinery baseline, under  80.90 through 80.93.
     (1) The provisions for baselines as specified in  80.90 through 80.93  shall apply to
a foreign refinery, except where provided otherwise in this section.
     (2) The baseline for a foreign refinery shall reflect only the volume and properties of
gasoline produced in 1990 that was imported into the United States.
     (3)  A baseline petition shall establish the volume of conventional gasoline produced
at a foreign refinery and imported into the United States during the calendar year immediately
preceding the year the baseline petition is submitted.
     (4)  In making determinations for foreign refinery baselines EPA will consider all
information supplied by a foreign refiner, and in addition may rely on any and all appropriate
assumptions necessary to make such a determination.
     (5)  Where a foreign refiner submits a petition that is incomplete or inadequate to
establish an accurate baseline, and the refiner fails to cure this defect after a request for more
information, then EPA shall not assign an individual refinery baseline.
     (6)  Baseline petitions under this paragraph (b) must be submitted before January 1,
2002.
     (c)  General requirements for foreign refiners with individual refinery baselines.  Any
foreign refiner of a refinery that has been assigned an individual baseline under paragraph (b)
of this section shall designate all gasoline produced at the foreign refinery that is exported to
the United States as either certified FRGAS or as non-certified FRGAS, except as provided
in paragraph (c)(3) of this section.
     (1)(i)   In the case of certified FRGAS, the foreign refiner shall meet all requirements
that apply to refiners under 40 CFR part 80, subparts D, E and F.
     (ii)  If the foreign refinery baseline is assigned, or a foreign refiner begins early use of
a refinery baseline under paragraph (r) of this section, on a date other than January 1, the
compliance baseline for the initial year shall be calculated under  80.101(f) using an adjusted
baseline volume, as follows:
                  AV1990  =  (D/365)  x  V1990
where:
AV1990    =    Adjusted 1990 baseline volume
D    =    Number of days remaining in the year, beginning with the day the foreign
          refinery baseline is approved or the day the foreign refiner begins early use of
          a refinery baseline, whichever is later
V1990     =    Foreign refinery's 1990 baseline volume.
     (2)  In the case of non-certified FRGAS, the foreign refiner shall meet the following
requirements, except the foreign refiner shall substitute the name "non-certified FRGAS" for
the names "reformulated gasoline" or "RBOB" wherever they appear in the following
requirements:
     (i)  The designation requirements in  80.65(d)(1);
     (ii)  The recordkeeping requirements in   80.74(a), and (b)(3);
     (iii)  The reporting requirements in  80.75(a), (m), and (n);
     (iv)  The registration requirements in  80.76;
     (v)  The product transfer document requirements in  80.77(a) through (f), and (j);
     (vi)  The prohibition in  80.78(a)(10), (b) and (c); and
     (vii)  The independent audit requirements in  80.125 through 80.127, 80.128(a)
through (c), and (g) through (i), and 80.130.
     (3) (i)  Any foreign refiner that has been assigned an individual baseline for a foreign
refinery under paragraph (b) of this section may elect to classify no gasoline imported into the
United States as FRGAS, provided the foreign refiner notifies EPA of the election no later
than November 1 of the prior calendar year.
     (ii)  An election under paragraph (c)(3)(i) of this section shall:
     (A)  Be for an entire calendar year averaging period and apply to all gasoline produced
during the calendar year at the foreign refinery that is imported into the United States; and
     (B)  Remain in effect for each succeeding calendar year averaging period, unless and
until the foreign refiner notifies EPA of a termination of the election.  The change in election
shall take effect at the beginning of the next calendar year.
     (iii)  A foreign refiner who has aggregated refineries under  80.101(h) shall make the
same election under paragraph (c)(3)(i) of this section for all refineries in the aggregation.
     (d)  Designation, product transfer documents, and foreign refiner certification.
     (1)  Any foreign refiner of a foreign refinery that has been assigned an individual
baseline shall designate each batch of FRGAS as such at the time the gasoline is produced,
unless the foreign refiner has elected to classify no gasoline exported to the United States as
FRGAS under paragraph (c)(3)(i) of this section.
     (2) On each occasion when any person transfers custody or title to any FRGAS prior
to its being imported into the United States, the following information shall be included as
part of the product transfer document information in   80.77 and 80.106:
     (i)  Identification of the gasoline as certified FRGAS or as non-certified FRGAS; and
     (ii) The name and EPA refinery registration number of the refinery where the FRGAS
was produced.
     (3)  On each occasion when FRGAS is loaded onto a vessel or other transportation
mode for transport to the United States, the foreign refiner shall prepare a certification for
each batch of the FRGAS that meets the following requirements:
     (i)  The certification shall include the report of the independent third party under
paragraph (f) of this section, and the following additional information:
     (A)  The name and EPA registration number of the refinery that produced the
FRGAS;
     (B)  The identification of the gasoline as certified FRGAS or non-certified FRGAS;
     (C)  The volume of FRGAS being transported, in gallons;
     (D)  A declaration that the FRGAS is being included in the compliance baseline
calculations under  80.101(f) for the refinery that produced the FRGAS; and
     (E)  In the case of certified FRGAS:
     (1)  The values for each parameter required to calculate NOx and exhaust toxics
emissions performance as determined under paragraph (f) of this section; and
     (2)  A declaration that the FRGAS is being included in the compliance calculations
under  80.101(g) for the refinery that produced the FRGAS.
     (ii)  The certification shall be made part of the product transfer documents for the
FRGAS.
     (e)  Transfers of FRGAS to non-United States markets.  The foreign refiner is
responsible to ensure that all gasoline classified as FRGAS is imported into the United States.
A foreign refiner may remove the FRGAS classification, and the gasoline need not be
imported into the United States, but only if:
     (1)(i) The foreign refiner excludes:
     (A)  The volume of gasoline from the refinery's compliance baseline calculations under
 80.101(h); and
     (B)  In the case of certified FRGAS, the volume and parameter values of the gasoline
from the compliance calculations under  80.101(g);
     (ii)  The exclusions under paragraph (e)(1)(i) of this section shall be on the basis of
the  parameter and volumes determined under paragraph (f) of this section; and
     (2)  The foreign refiner obtains sufficient evidence in the form of documentation that
the gasoline was not imported into the United States.
     (f)  Load port independent sampling, testing and refinery identification.
     (1) On each occasion FRGAS is loaded onto a vessel for transport to the United
States a foreign refiner shall have an independent third party:
     (i)  Inspect the vessel prior to loading and determine the volume of any tank bottoms;
     (ii) Determine the volume of FRGAS loaded onto the vessel (exclusive of any tank
bottoms present before vessel loading);
     (iii) Obtain the EPA-assigned registration number of the foreign refinery;
     (iv) Determine the name and country of registration of the vessel used to transport the
FRGAS to the United States; and
     (v) Determine the date and time the vessel departs the port serving the foreign
refinery.
     (2) On each occasion certified FRGAS is loaded onto a vessel for transport to the
United States a foreign refiner shall have an independent third party:
     (i) Collect a representative sample of the certified FRGAS from each vessel
compartment subsequent to loading on the vessel and prior to departure of the vessel from
the port serving the foreign refinery;
     (ii)  Prepare a volume-weighted vessel composite sample from the compartment
samples, and determine the values for sulfur, benzene, gravity, E200 and E300 using the
methodologies specified in  80.46, by:
     (A)  The third party analyzing the sample; or
     (B)  The third party observing the foreign refiner analyze the sample;
     (iii)  Determine the values for aromatics, olefins, RVP and each oxygenate specified
in  80.65(e)(2) for the gasoline loaded onto the vessel, by:
     (A)  Completing the analysis procedures under paragraph (f)(2)(ii) of this section for
the additional parameters; or
     (B)  Obtaining from the foreign refiner the test results of samples collected from each
shore tank containing gasoline that was loaded onto the vessel, and calculating the parameter
values for the gasoline loaded onto the vessel from the tank parameter values and the gasoline
volume from each such shore tank that was loaded;
     (iv) Review original documents that reflect movement and storage of the certified
FRGAS from the refinery to the load port, and from this review determine:
     (A) The refinery at which the FRGAS was produced; and
     (B)  That the FRGAS remained segregated from:
     (1)  Non-FRGAS and non-certified FRGAS; and
     (2)  Other certified FRGAS produced at a different refinery, except that certified
FRGAS may be combined with other certified FRGAS produced at refineries that are
aggregated under  80.101(h);
     (3) The independent third party shall submit a report:
     (i)  To the foreign refiner containing the information required under paragraphs (f)(1)
and (2) of this section, to accompany the product transfer documents for the vessel; and
     (ii)  To the Administrator containing the information required under paragraphs (f)(1)
and (2) of this section, within thirty days following the date of the independent third party's
inspection.  This report shall include a description of the method used to determine the
identity of the refinery at which the gasoline was produced, that the gasoline remained
segregated as specified in paragraph (n)(1) of this section, and a description of the gasoline's
movement and storage between production at the source refinery and vessel loading.
     (4) A person may be used to meet the third party requirements in this paragraph (f)
only if:
     (i)  The person is approved in advance by EPA, based on a demonstration of ability
to perform the procedures required in this paragraph (f);
     (ii)  The person is independent under the criteria specified in  80.65(f)(2)(iii); and
     (iii)  The person signs a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities, facilities and documents relevant to
compliance with the requirements of this paragraph (f).
     (g)  Comparison of load port and port of entry testing.
     (1)(i)  Any foreign refiner and any United States importer of certified FRGAS shall
compare the results from the load port testing under paragraph (f) of this section, with the
port of entry testing as reported under paragraph (o) of this section, for the volume of
gasoline, for the parameter values for sulfur, benzene, gravity, E200 and E300, and for the
NOx and exhaust toxics emissions performance; except that
     (ii)   Where a vessel transporting certified FRGAS off loads this gasoline at more than
one United States port of entry, and the conditions of paragraph (g)(2)(i) of this section are
not met at the first United States port of entry, the requirements of paragraph (g) (1) and
(g)(2) of this section do not apply at subsequent ports of entry if the United States importer
obtains a certification from the vessel owner or his immediate designee that the vessel has not
loaded any gasoline or blendstock between the first United States port of entry and the
subsequent port of entry.
     (2)(i)  The requirements of paragraph (g)(2)(ii) apply if:
     (A)(1)  The temperature-corrected volumes determined at the port of entry and at the
load port differ by more than one percent; or
     (2)   For any parameter specified in paragraph (f)(2)(ii) of this section, the values
determined at the port of entry and at the load port differ by more than the reproducibility
amount specified for the port of entry test result by the American Society of Testing and
Materials (ASTM); unless
     (B)  The NOx and exhaust toxics emissions performance, in grams per mile, calculated
using the port of entry test results, are each equal to or less than the NOx and exhaust toxics
emissions performance calculated using the load port test results;
     (ii)  The United States importer and the foreign refiner shall treat the gasoline as non-certified FRGAS, and the foreign refiner shall:
     (A)  Exclude the gasoline volume and properties from its conventional gasoline NOx
and exhaust toxics compliance calculations under  80.101(g); and
     (B)  Include the gasoline volume in its compliance baseline calculation under
 80.101(f), unless the foreign refiner establishes that the United States importer classified the
gasoline only as conventional gasoline and not as reformulated gasoline.
     (h)  Attest requirements.  The following additional procedures shall be carried out by
any foreign refiner of FRGAS as part of the attest engagement for each foreign refinery under
40 C.F.R. Part 80, subpart F.
     (1) Include in the inventory reconciliation analysis under  80.128(b) and the tender
analysis under  80.128(c) non-FRGAS in addition to the gasoline types listed in  80.128(b)
and (c).
     (2)  Obtain separate listings of all tenders of certified FRGAS, and of non-certified
FRGAS.  Agree the total volume of tenders from the listings to the gasoline inventory
reconciliation analysis in  80.128(b), and to the volumes determined by the third party under
paragraph (f)(1) of this section.
     (3)  For each tender under paragraph (h)(2) of this section where the gasoline is
loaded onto a marine vessel, report as a finding the name and country of registration of each
vessel, and the volumes of FRGAS loaded onto each vessel.
     (4)  Select a sample from the list of vessels identified in paragraph (h)(3) of this
section used to transport certified FRGAS, in accordance with the guidelines in  80.127, and
for each vessel selected perform the following:
     (i)  Obtain the report of the independent third party, under paragraph (f) of this
section, and of the United States importer under paragraph (o) of this section.
     (A)  Agree the information in these reports with regard to vessel identification,
gasoline volumes and test results.
     (B)  Identify, and report as a finding, each occasion the load port and port of entry
parameter and volume results differ by more than the amounts allowed in paragraph (g) of this
section, and determine whether the foreign refiner adjusted its refinery calculations as required
in paragraph (g) of this section.
     (ii)  Obtain the documents used by the independent third party to determine
transportation and storage of the certified FRGAS from the refinery to the load port, under
paragraph (f) of this section.  Obtain tank activity records for any storage tank where the
certified FRGAS is stored, and pipeline activity records for any pipeline used to transport the
certified FRGAS, prior to being loaded onto the vessel.  Use these records to determine
whether the certified FRGAS was produced at the refinery that is the subject of the attest
engagement, and whether the certified FRGAS was mixed with any non-certified FRGAS,
non-FRGAS, or any certified FRGAS produced at a different refinery that was not aggregated
under  80.101(h).
     (5)(i)  Select a sample from the list of vessels identified in paragraph (h)(3) of this
section used to transport certified and non-certified FRGAS, in accordance with the
guidelines in  80.127, and for each vessel selected perform the following:
     (ii)  Obtain a commercial document of general circulation that lists vessel arrivals and
departures, and that includes the port and date of departure of the vessel, and the port of
entry and date of arrival of the vessel.  Agree the vessel's departure and arrival locations and
dates from the independent third party and United States importer reports to the information
contained in the commercial document.
     (6)  Obtain separate listings of all tenders of non-FRGAS, and perform the following:
     (i)  Agree the total volume of tenders from the listings to the gasoline inventory
reconciliation analysis in  80.128(b).
     (ii)  Obtain a separate listing of the tenders under paragraph (h)(6) of this section
where the gasoline is loaded onto a marine vessel.  Select a sample from this listing in
accordance with the guidelines in  80.127, and obtain a commercial document of general
circulation that lists vessel arrivals and departures, and that includes the port and date of
departure and the ports and dates where the gasoline was off loaded for the selected vessels.
Determine and report as a finding the country where the gasoline was off loaded for each
vessel selected.
     (7)  In order to complete the requirements of this paragraph (h) an auditor shall:
     (i)  Be independent of the foreign refiner;
     (ii)  Be licensed as a Certified Public Accountant in the United States and a citizen of
the United States, or be approved in advance by EPA based on a demonstration of ability to
perform the procedures required in  80.125 through 130 and this paragraph (h); and
     (iii)  Sign a commitment that contains the provisions specified in paragraph (i) of this
section with regard to activities and documents relevant to compliance with the requirements
of  80.125 through 130 and this paragraph (h).
     (i)  Foreign refiner commitments.  Any foreign refiner shall commit to and comply
with the provisions contained in this paragraph (i) as a condition to being assigned an
individual refinery baseline.
     (1)  Any United States Environmental Protection Agency inspector or auditor will be
given full, complete and immediate access to conduct inspections and audits of the foreign
refinery.
     (i)  Inspections and audits may be either announced in advance by EPA, or
unannounced.
     (ii)  Access will be provided to any location where:
     (A)  Gasoline is produced;
     (B)  Documents related to refinery operations are kept;
     (C)  Gasoline or blendstock samples are tested or stored; and
     (D) FRGAS is stored or transported between the foreign refinery and the United
States, including storage tanks, vessels and pipelines.
     (iii)  Inspections and audits may be by EPA employees or contractors to EPA.
     (iv)  Any documents requested that are related to matters covered by inspections and
audits will be provided to an EPA inspector or auditor on request.
     (v)  Inspections and audits by EPA may include review and copying of any documents
related to:
     (A)  Refinery baseline establishment, including the volume and parameters, and
transfers of title or custody, of any gasoline or blendstocks, whether FRGAS or non-FRGAS,
produced at the foreign refinery during the period January 1, 1990 through the date of the
refinery baseline petition or through the date of the inspection or audit if a baseline petition
has not been approved, and any work papers related to refinery baseline establishment;
     (B)  The parameters and volume of FRGAS;
     (C)  The proper classification of gasoline as being FRGAS or as not being FRGAS,
or as certified FRGAS or as non-certified FRGAS;
     (D)  Transfers of title or custody to FRGAS;
     (E)  Sampling and testing of FRGAS;
     (F)   Work performed and reports prepared by independent third parties and by
independent auditors under the requirements of this section, including work papers; and
     (G)  Reports prepared for submission to EPA, and any work papers related to such
reports.
     (vi)  Inspections and audits by EPA may include taking samples of gasoline or
blendstock, and interviewing employees.
     (vii)  Any employee of the foreign refiner will be made available for interview by the
EPA inspector or auditor, on request, within a reasonable time period.
     (viii)  English language translations of any documents will be provided to an EPA
inspector or auditor, on request, within 10 working days.
     (ix)  English language interpreters will be provided to accompany EPA inspectors and
auditors, on request.
     (2)  An agent for service of process located in the District of Columbia will be named,
and service on this agent constitutes service on the foreign refiner or any officer, or employee
of the foreign refiner for any action by EPA or otherwise by the United States related to the
requirements of 40 CFR part 80, subparts D, E and F.
     (3)  The forum for any civil or criminal enforcement action related to the provisions
of this section for violations of the Clean Air Act or regulations promulgated thereunder shall
be governed by the Clean Air Act, including the EPA administrative forum where allowed
under the Clean Air Act.
     (4)  United States substantive and procedural laws shall apply to any civil or criminal
enforcement action against the foreign refiner or any employee of the foreign refiner related
to the provisions of this section.
     (5)  Submitting a petition for an individual refinery baseline, producing and exporting
gasoline under an individual refinery baseline, and all other actions to comply with the
requirements of 40 CFR part 80, subparts D, E and F relating to the establishment and use
of an individual refinery baseline constitute actions or activities covered by and within the
meaning of 28 U.S.C. 1605(a)(2), but solely with respect to actions instituted against the
foreign refiner, its agents, officers, and employees in any court or other tribunal in the United
States for conduct that violates the requirements applicable to the foreign refiner under 40
CFR part 80, subparts D, E and F, including such conduct that violates Title 18 U.S.C.
section 1001, Clean Air Act section 113(c)(2), or other applicable provisions of the Clean Air
Act.
     (6)  The foreign refiner, or its agents, officers, or employees, will not seek to detain
or to impose civil or criminal remedies against EPA inspectors or auditors, whether EPA
employees or EPA contractors, for actions performed within the scope of EPA employment
related to the provisions of this section.
     (7)  The commitment required by this paragraph (i) shall be signed by the owner or
president of the foreign refiner business.
     (8)  In any case where FRGAS produced at a foreign refinery is stored or transported
by another company between the refinery and the vessel that transports the FRGAS to the
United States, the foreign refiner shall obtain from each such other company a commitment
that meets the requirements specified in paragraphs (i)(1) through (7) of this section, and
these commitments shall be included in the foreign refiner's baseline petition.
     (j)  Sovereign immunity.  By submitting a petition for an individual foreign refinery
baseline under this section, or by producing and exporting gasoline to the United States under
an individual refinery baseline under this section, the foreign refiner, its agents, officers, and
employees, without exception, become subject to the full operation of the administrative and
judicial enforcement powers and provisions of the United States without limitation based on
sovereign immunity, with respect to actions instituted against the foreign refiner, its agents,
officers, and employees in any court or other tribunal in the United States for conduct that
violates the requirements applicable to the foreign refiner under 40 CFR part 80, subparts D,
E and F, including such conduct that violates Title 18 U.S.C. section 1001, Clean Air Act
section 113(c)(2), or other applicable provisions of the Clean Air Act.
     (k)  Bond posting.  Any foreign refiner shall meet the requirements of this paragraph
(k) as a condition to being assigned an individual refinery baseline.
     (1)  The foreign refiner shall post a bond of the amount calculated using the following
equation:
                      Bond = G  x  $ 0.01
 where:
Bond =    amount of the bond in U. S. dollars
G    =    the largest volume of conventional gasoline produced at the foreign refinery
          and exported to the United States, in gallons, during a single calendar year
          among the most recent of the following calendar years, up to a maximum of
          five calendar years:  the calendar year immediately preceding the date the
          baseline petition is submitted, the calendar year the baseline petition is
          submitted, and each succeeding calendar year
     (2)  Bonds shall be posted by:
     (i)  Paying the amount of the bond to the Treasurer of the United States;
     (ii)  Obtaining a bond in the proper amount from a third party surety agent that is
payable to satisfy United States judicial judgments against the foreign refiner, provided EPA
agrees in advance as to the third party and the nature of the surety agreement; or
     (iii)  An alternative commitment that results in assets of an appropriate liquidity and
value being readily available to the United States, provided EPA agrees in advance as to the
alternative commitment.
     (3)  If the bond amount for a foreign refinery increases the foreign refiner shall
increase the bond to cover the shortfall within 90 days of the date the bond amount changes.
If the bond amount decreases, the foreign refiner may reduce the amount of the bond
beginning 90 days after the date the bond amount changes.
     (4)  Bonds posted under this paragraph (k) shall be used to satisfy any judicial
judgment that results from an administrative or judicial enforcement action for conduct in
violation of 40 CFR part 80, subparts D, E and F, including such conduct that violates Title
18 U.S.C. section 1001, Clean Air Act section 113(c)(2), or other applicable provisions of
the Clean Air Act.
     (5)  On any occasion a foreign refiner bond is used to satisfy any judgment, the foreign
refiner shall increase the bond to cover the amount used within 90 days of the date the bond
is used.
     (l)  Blendstock tracking.  For purposes of blendstock tracking by any foreign refiner
under  80.102 by a foreign refiner with an individual refinery baseline, the foreign refiner
may exclude from the calculations required in  80.102(d) the volume of applicable
blendstocks for which the foreign refiner has sufficient evidence in the form of documentation
that the blendstocks were used to produce gasoline used outside the United States.
     (m)  English language reports.  Any report or other document submitted to EPA by
any foreign refiner shall be in the English language, or shall include an English language
translation.
     (n)  Prohibitions.  (1)  No person may combine certified FRGAS with any non-certified FRGAS or non-FRGAS, and no person may combine certified FRGAS with any
certified FRGAS produced at a different refinery that is not aggregated under  80.101(h),
except as provided in paragraph (e) of this section.
     (2)  No foreign refiner or other person may cause another person to commit an action
prohibited in paragraph (n)(1) of this section, or that otherwise violates the requirements of
this section.
     (o)  United States importer requirements.  Any United States importer shall meet the
following requirements.
     (1)  Each batch of imported gasoline shall be classified by the importer as being
FRGAS or as non-FRGAS, and each batch classified as FRGAS shall be further classified as
certified FRGAS or as non-certified FRGAS.
     (2)  Gasoline shall be classified as certified FRGAS or as non-certified FRGAS
according to the designation by the foreign refiner if this designation is supported by product
transfer documents prepared by the foreign refiner as required in paragraph (d) of this section,
unless the gasoline is classified as non-certified FRGAS under paragraph (g) of this section.
     (3)  For each gasoline batch classified as FRGAS, any United States importer shall
perform the following procedures.
     (i)  In the case of both certified and non-certified FRGAS, have an independent third
party:
     (A)  Determine the volume of gasoline in the vessel;
     (B)  Use the foreign refiner's FRGAS certification to determine the name and
EPA-assigned registration number of the foreign refinery that produced the FRGAS;
     (C)  Determine the name and country of registration of the vessel used to transport
the FRGAS to the United States; and
     (D)  Determine the date and time the vessel arrives at the United States port of entry.
     (ii)  In the case of certified FRGAS, have an independent third party:
     (A)  Collect a representative sample from each vessel compartment subsequent to the
vessel's arrival at the United States port of entry and prior to off loading any gasoline from
the vessel;
     (B)  Prepare a volume-weighted vessel composite sample from the compartment
samples; and
     (C)  Determine the values for sulfur, benzene, gravity, E200 and E300 using the
methodologies specified in  80.46, by:
     (1)  The third party analyzing the sample; or
     (2)  The third party observing the importer analyze the sample;
     (4)  Any importer shall submit reports within thirty days following the date any vessel
transporting FRGAS arrives at the United States port of entry:
     (i)  To the Administrator containing the information determined under paragraph
(o)(3) of this section; and
     (ii)  To the foreign refiner containing the information determined under paragraph
(o)(3)(ii) of this section.
     (5)(i)  Any United States importer shall meet the  requirements specified for
conventional gasoline in  80.101 for any imported conventional gasoline that is not classified
as certified FRGAS under paragraph (o)(2) of this section.
     (ii)  The baseline applicable to a United States importer who has not been assigned an
individual importer baseline under  80.91(b)(4) shall be the baseline specified in paragraph
(p) of this section.
     (p)  Importer Baseline.
     (1)  Each calendar year starting in 2000, the Administrator shall calculate the
volume weighted average NOx emissions of imported conventional gasoline for a multi-year period (MYANOx).  This calculation:
     (i)  Shall use the Phase II Complex Model;
     (ii)  Shall include all conventional gasoline in the following categories:
     (A)  Imported conventional gasoline that is classified as conventional gasoline, and
included in the conventional gasoline compliance calculations of importers for each year;
and
     (B)  Imported conventional gasoline that is classified as certified FRGAS, and
included in the conventional gasoline compliance calculations of foreign refiners for each
year;
     (iii)(A)  In 2000 only, shall be for the 1998 and 1999 averaging periods and also
shall include all conventional gasoline classified as FRGAS and included in the
conventional gasoline compliance calculations of a foreign refiner for 1997, and all
conventional gasoline batches not classified as FRGAS that are imported during 1997
beginning on the date the first batch of FRGAS arrives at a United States port of entry;
and
     (B)  Starting in 2001, shall include imported conventional gasoline during the prior
three calendar year averaging periods.
     (2)(i)  If the volume-weighted average NOx emissions (MYANOx), calculated in
paragraph (p)(1) of this section, is greater than 1,465 mg/mile, the Administrator shall
calculate an adjusted baseline for NOx according to the following equation:
       ABNOx = 1,465 mg/mile - (MYANOx  -  1,465 mg/mile)
where:
ABNOx          =    Adjusted NOx baseline, in mg/mile
MYANOx    =    Multi-year average NOx emissions, in mg/mile
     (ii)  For the 1998 and 1999 multi-year averaging period only the value of ABNOx
shall not be larger than 1,480 mg/mile regardless of the calculation under paragraph
(p)(2)(i) of this section.
     (3)(i)      Notwithstanding the provisions of  80.91(b)(4)(iii), the baseline NOx
emissions values applicable to any United States importer who has not been assigned an
individual importer baseline under  80.91(b)(4) shall be the more stringent of the
statutory baseline value for NOx under  80.91(c)(5), or the adjusted NOx baseline
calculated in paragraph (p)(2) of this section.
     (ii) On or before June 1 of each calendar year, the Administrator shall announce
the NOx baseline that applies to importers under this paragraph (p).  If the baseline is an
adjusted baseline, it shall be effective for any conventional gasoline imported beginning
60 days following the Administrator's announcement.  If the baseline is the statutory
baseline, it shall be effective upon announcement.  A baseline shall remain in effect until
the effective date of a subsequent change to the baseline pursuant to this paragraph (p).
     (q)  Withdrawal or suspension of a foreign refinery's baseline  EPA may withdraw or
suspend a baseline that has been assigned to a foreign refinery where:
     (i) A foreign refiner fails to meet any requirement of this section,
     (ii) A foreign government fails to allow EPA inspections as provided in paragraph
(i)(1) of this section;
     (iii) A foreign refiner asserts a claim of, or a right to claim, sovereign immunity in an
action to enforce the requirements in 40 CFR part 80, subparts D, E and F; or
     (iv) A foreign refiner fails to pay a civil or criminal penalty that is not satisfied using
the foreign refiner bond specified in paragraph (k) of this section.
     (r)  Early use of a foreign refinery baseline
     (1)  A foreign refiner may begin using an individual refinery baseline before EPA has
approved the baseline, provided that:
     (i)  A baseline petition has been submitted as required in paragraph (b) of this section;
     (ii)  EPA has made a provisional finding that the baseline petition is complete;
     (iii)  The foreign refiner has made the commitments required in paragraph (i) of this
section;
     (iv)  The persons who will meet the independent third party and independent attest
requirements for the foreign refinery have made the commitments required in paragraphs
(f)(3)(iii) and (h)(7)(iii) of this section; and
     (v)  The foreign refiner has met the bond requirements of paragraph (k) of this section.
     (2)  In any case where a foreign refiner uses an individual refinery baseline before final
approval under paragraph (r)(1) of this section, and the foreign refinery baseline values that
ultimately are approved by EPA are more stringent than the early baseline values used by the
foreign refiner, the foreign refiner shall recalculate its compliance, ab initio, using the baseline
values approved by EPA, and the foreign refiner shall be liable for any resulting violation of
the conventional gasoline requirements.
     (s)  Additional requirements for petitions, reports and certificates. Any petition for a
refinery baseline under paragraph (b) of this section, any report or other submission required
by paragraphs (c), (f)(2), or (i) of this section, and any certification under paragraph (d)(3)
or (g)(1)(ii) of this section shall be:
     (1)  Submitted in accordance with procedures specified by the Administrator,
including use of any forms that may specified by the Administrator.
     (2)  Be signed by the president or owner of the foreign refiner company, or in the case
of (g)(1)(ii) the vessel owner, or by that person's immediate designee, and shall contain the
following declaration:
          "I hereby certify:  (1) that I have actual authority to sign on behalf of
     and to bind [insert name of foreign refiner or vessel owner] with regard to all
     statements contained herein; (2) that I am aware that the information
     contained herein is being certified, or submitted to the United States
     Environmental Protection Agency, under the requirements of 40 CFR part 80,
     subparts D, E and F and that the information is material for determining
     compliance under these regulations; and (3) that I have read and understand
     the information being certified or submitted, and this information is true,
     complete and correct to the best of my knowledge and belief after I have
     taken reasonable and appropriate steps to verify the accuracy thereof.
          I affirm that I have read and understand that the provisions of 40 CFR
     part 80, subparts D, E and F, including 40 CFR 80.94(i), (j) and (k), apply to
     [insert name of foreign refiner or vessel owner].  Pursuant to Clean Air Act
     section 113(c) and Title 18, United States Code, section 1001, the penalty for
     furnishing false, incomplete or misleading information in this certification or
     submission is a fine of up to $10,000, and/or imprisonment for up to five
     years."
BILLING CODE: 6560-50-P