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MEMORANDUM OFFICE OF AIR QUALITY PLANNING ANDSTANDARDS SUBJECT: Removal of Stage II Vapor Recovery in Situations Where Widespread Use of

Onboard Refueling Vapor Recovery is Demonstrated



### DEC 12 2006

FROM . Stephen D

. Page, Director ~~- Office ofAir Quality Planfungfd Standa~ds Margo Tsirigotis Oge, Director UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

RESEARCHTRIANGLE PARK, NC 27711

Office ofTransportation and Air Q T0: Regional Air Division Directors The purpose ofthis memorandum is to provide guidanceto States concerning the removal of Stage II gasoline vapor recovery systems,where States demonstrate to EPAthat widespread use of onboard refueling vapor recovery (ORVR) has occurred in specific portions of the motorvehicle fleet. The specific fleets addressed here include: 1 . initial fueling of new vehicles at automobile assembly plants 2. refueling of rental cars at rental car facilities 3. refueling offlexible fuel vehicles at E85 dispensing pumps Background Stage 11 vapor recovery systems are required to be used at gasoline dispensing facilities located in serious, severe, and extreme non-attainment areas for ozone under section 182(b)(3) of the Clean AirAct (CAA) . States have included these control measures in their federally-approved state implementation plans (SIPs) in the formof generally applicable regulatory requirements governing all gasoline dispensing facilities that exceed the relevant gasoline dispensing throughput criteria. However, section 202(a)(6) of the CAAallows EPA to revise or waive the section 182(b)(3) Stage 11 requirement for theseozone non-attainment areas after the Agencydetermines that ORVRis in widespread use throughout the motor vehicle fleet. CAAsection 202(a)(6) does not specifywhich motorvehicle fleet must be the subject ofa widespread use determination before EPA may revise or waive the section 182(b)(3) Stage II requirement . Nor does the CAA identify what level of ORVRuse in the motor vehicle fleet must be reached before it is "widespread." EPAexpects the possibility of

IntemetAddress (URL) " http://www .epa.gov Recycled/Recyclable . Printedwith Vegetable 011 Based Inks on Recycled Paper (Minimum25%Postconsumer)different rates ofthe implementation of ORVR across different geographic regions and

among different types of motor vehicle fleets within any region. Given this, EPAdoes not believe that CAAsection 202(a)(6) must be read narrowly to allow a widespread use determination andwaiver ofthe Stage II requirement for a given area or area's fleet only if ORVRuse has become widespread throughout the entire United States, or only if ORVRuse has reached a definite level in each area. Rather, EPAbelieves that section 202(a)(6) allows the Agency to apply the widespread use criterion to either the entire motor vehicle fleet in a State or non-attainment area, or to special segments ofthe overall fleet for which ORVRuse is shown to be sufficiently high, and to base widespread use determinations on differing levels of ORVRuse, as appropriate. Moreover, a single national rulemaking is not needed to grant such a waiver for a specific area. Instead, EPAbelieves that the Act allows the Agency to use an area-specific rulemaking approving a SIP revision to issue the section 202(a)(6) waiver for a relevant fleet in anon-attainment area, where a State meets the recommended criteria discussed below . Various metrics have been studied for demonstratingwidespread use of ORVRin motor vehicle fleets. One metric focuses on the percentage ofvehicles in service that are ORVR-equipped. Based on our preliminary analysis, this metric seems to track fairly closely with the percentage ofvehicle miles traveled (VMT) fromORVR-equipped vehicles, and with the percentage ofgasoline sold which is dispensed to ORVR-equippedvehicles. In fact, since newer vehicles tend to be driven more miles than older models, VMTtraveled by ORVR-equippedvehicles and gasoline dispensed to ORVR-equipped vehicles may exceed 95 percent in a 95 percent ORVR-equipped fleet. Another metric that EPAconsidered is when VOCemissions resulting fromthe application of ORVRcontrols alone equal the VOCemissions when both Stage II vapor recovery systems and ORVRcontrols are used, after accounting for incompatibility excess emissions. The incompatibility excess emissions factor relates to losses in control efficiency when certain types ofStage II and ORVR are used together. Studies conducted in three northeastern states indicate that when the percentages of motor vehicles in service with ORVR, vehicle miles traveled by ORVR-equipped vehicles, or gasoline dispensed to ORVRequipped vehicles are above 95 percent, then the widespread use metric based on comparable VOCemissions will likely have been reached . For this reason, EPAbelieves that if 95 percent ofthe vehicles in a fleet have ORVR, then widespread usewill likely have been demonstrated. 1 . Initial Fueling at Automobile Assembly Plants Based on our preliminary analysis, EPAexpects that if a State's submission ofa SIP revision shows that 95 percent ofthe new vehicles fueled at an automobile assembly plant are equipped with ORVR, and that this level of ORVRusewould not decrease, the Agency can determine that widespread use of ORVRhas been achieved for the fleet of motor vehicles that are fueled at that facility. Since model year 2000, all passenger cars have been required to have ORVR . Also since 2006, all light duty trucks, SUVs and medium duty vehicles are required to be equippedwith ORVR . There may be a few

situations, such as the chassis for motorized mobile homes, which still do not have ORVR . However, the number ofthese would be small . It is apparent that at most automobile assembly plants greater than 95 percent ofthe vehicles manufactured would have ORVR

. Many assembly plants manufacture 100 percent ORVRequipped vehicles. Only such new vehicles are expected to be fueled at the automobile assembly plants. States desiring to remove the Stage II requirement for these facilities would need to submit a SIP revision that EPAwould evaluate through notice and comment rulemaking. The SIPwould need to demonstrate that the widespread use benchmark has been achieved andprovide assurance that any facilitywishing to remove Stage II equipment maintains its eligibility for its motor vehicle fleet. Any EPASIP approval would also be subject to the CAAsection 110(1) requirement that the revision not interfere with any applicable requirement concerning attainment and reasonable further progress, or any other requirement ofthe CAA

. 2 . Refueling of Rental Cars at Rental Car Facilities Similarly, EPAexpects that ifa SIP revision submission demonstrates that 95 percent ofthe vehicles in an automobile rental fleet refueling at a rental car facility are equipped with ORVR and that this level of ORVRuse would not decrease, then widespread use of ORVR could be found for the motor vehicle fleet refueling at that facility. Most large rental car companies rent current model vehicles that would all have ORVR . There may be truck rental companies which have older vehicles which do not have ORVRand that would not be able to demonstrate widespread use of ORVRfor their fleets. As discussed above, any SIPrevision would be subject to CAAsection 110(1) and other applicable requirements, and State and local agencies should consider anypotential transportation conformity impacts if Stage II is currently included in a SIP's on-road motor vehicle emissions budget. 3. Refuel ing Flexible Fuel Vehicles at E85 Dispensing Pumps E85 is a motor vehicle fuel that is a blend ofas little as 15 percent gasoline and up to 85 percent ethanol . (In wintertime applications, the ratio may be 30percent gasoline and 70 percent ethanol .) Ethanol is ethyl alcohol, a type of alcohol which can be produced from renewable resources such as corn. Based on the agency's survey ofexisting SIPs, EPA believes that most States have defined "gasoline" (for purposes ofcontrolling emissions of VOCfromrefueling activities) to include gasoline/alcohol blends that have the same volatility as E85

. EPA's guidance for States in developing their Stage II SINin the early 1990s suggested that States use the same definition of "gasoline" as the one found in EPA's Standards of Performance for Bulk Gasoline Terminals at 40C.F.R. 60.501, which includes "any petroleumdistillate or petroleumdistillate/alcohol blend having a Reid vapor pressure of 27.6 kilopascals (kPa) or greater which is used as a fuel for internal combustion engines." EPArecommended using this definition to most broadly reach situations in which refueling of motor vehicles results in evaporative VOCemissions that contribute to ozone nonattainment concentrations, and to avoid a narrow interpretation ofwhat is "gasoline" thatwould allow significant VOCemissions frommotor vehicle refueling activities in nonattainment areas to go uncontrolled. E85 can only be used in specially designed flexible fuel vehicles (FFVs), which have mostly been manufactured since 1998. Since these are newer vehicles, most of themare equipped with ORVR, and every FFVbuilt today has ORVR . Thus, most vehicles refueling at E85 dispensing pumps are already having their evaporative emissions captured, as in the cases of late model rental cars refueling at rental car facilities and newly manufactured cars being fueled for the first time at automobile assemblyplants. EPAestimates that 59 percent of FFVs in current use are equipped with ORVR . The percentage. ofFFVs with ORVRwill continue to climb as older vehicles are taken out ofservice and new modelsjoin the fleet. Across different ozone non-attainment areas and between States, these percentages mayvary. EPAbelieves that encouraging the use of E85 as a motor vehicle fuel reduces emissions ofother air pollutants such as COand benzene, a known human carcinogen, and reduces emissions ofgreenhouse gases. In addition, based on available information, the Agency is concerned that there is currently a lack ofcertified Stage 11 equipment for E85 (which may require different materials ofconstruction than conventional Stage II equipment), and that the timing for when certified E85-compatible equipment will become widely available is uncertain. This may unnecessarily hinder E85 distribution in areas that now require Stage II . Unlike in the cases ofautomobile assembly plants and rental car facilities, EPA is not recommending a specific percentage ofthe FFVfleet that should have ORVRbefore widespread use could be determined. This is because most E85 compatible vehicles are already equipped with ORVRand this percentage is increasing over time, whereas for automobile assembly plants and car rental facilities very high percentages of ORVRuse have in most cases already been reached and are not expected to further increase significantly. The general use of ORVRin FFVs, instead, is expected to significantly increase, as are the miles driven by and amount offuel dispensed to recent ORVR-equipped FFVs compared to those manufactured before 2000 without ORVR . Moreover, we believe that in determining whether widespread use of ORVRhas been demonstrated, it is reasonable under section 202(a)(6) to consider the VOCemissions impacts of removing Stage II, and that those impacts may informthe percentage of ORVRequipped vehicles that would need to be achieved for a specific motor vehicle fleet or in a specific non-attainment area. EPAexpects that the air quality impact ofallowing E85 refueling facilities to operatewithout Stage II controls would likely be minimal in most nonattainment areas. FFVs currently comprise about 2percent ofthe total US fleet. Non-ORVR FFVs are less 1 percent ofthe total U .S. vehicle fleet. EPAestimates that non-ORVR FFVs participate in only about 0 .5 percent ofall refueling events. Furthermore, because ofthe relatively small number ofstations that offer E85 (around 1,000 out of 170,000total refueling stations) EPAbelieves that very few ofthese non-ORVR refueling events actually occur at E85 pumps.Considering the factors discussed above, ifan area can demonstrate that any increase

in emissions caused by operating E85 fueling facilities without Stage II controls is so small as to clearly not interfere with attainment ofthe ozone standard or reasonable further progress or any other applicable CAArequirement, then EPAexpects it could find that ORVRis in widespread use for FFVs when refueling at E85 facilities in this area. These areas could then allow E85 facilities to operatewithout Stage II controls, after modifying their SIPs such that E85 is not included within the definition of "gasoline" for purposes of Stage II vapor recovery controls (or after taking other necessary SIP revision action) . As discussed above, States would need to submit SIP revisions affecting this change to their current Stage II SIPs, which EPAwould evaluate through notice and comment rulemaking, subject to the provisions of CAAsection 110(1) . In addition, State and local agencies should consider ifthere are any transportation conformity impacts related to removing Stage II, if emissions reductions fromStage II are included in a SIP's on-road motor vehicle emissions budget. Dueto the expected rapid growth ofE85 installations, EPAwill explore the development ofways to expedite the SIP revision process for States which are dealing with the E85 issue. General Exclusions fromWidespread Use Determinations States in the ozone transport region (OTR) are still required to apply Stage II, or a comparable measure, in all areas under 184(b)(2) ofthe CAA . This requirement is not affected by anywidespread use determination or waiver ofthe section 182(b)(3) requirement granted under section 202(a)(6) . For the independent section 184(b)(2) "comparable measure" requirement to not prevent an appropriate removal ofStage II controls, OTRStates maywant to revisit their previously approved comparable measure SIPs to consider substituting available non-Stage II measures for the Stage II controls they currently require. Also, some States have chosen to add Stage II vapor recovery systemrequirements in their SIPs for ozone nonattainment areas that are classified in a category lower than "serious." While it is not necessary for States to demonstrate ORVRis in widespread use in moderate or cleaner ozone non-attainment areas, a revision of previously adopted SIP requirements to specifically waive Stage II requirements in such areas would need to comply with the provisions of CAAsection 110(1) and, as described above, consider any transportation conformity impacts as applicable. This guidance for widespread use determinations for special sectors would not necessarily apply to widespread use determinations for the general motor vehicle fleet. Within the overall motor vehicle fleet, the rate of penetration of ORVR-equippedvehicles has not advanced at the same rapid rates as for the fleets discussed in this memorandum . EPA is still considering the possible criteria for determiningwidespread use for the general fleet.