Office of Transportation EPA420-R-05-901 

and Air Quality November 2005

Final Report of the Small 

Business Advocacy Review 

Panel on EPA’s Planned 

Proposed Rule 

Mobile Source Air Toxics: 

Control of Hazardous Air 

Pollutants from Mobile 

Sources 
EPA420-R-05-901 

 November 2005

Final Report of the Small Business Advocacy Review 

Panel on EPA’s Planned Proposed Rule

Mobile Source Air Toxics: Control of Hazardous Air 

Pollutants from Mobile Sources

Office of Policy, Economics and Innovation 

U.S. Environmental Protection Agency

Office of Transportation and Air Quality

U.S. Environmental Protection Agency

U.S. Office of Management and Budget

U.S. Small Business Administration
Table of Contents 

1. INTRODUCTION ......................................................... 1 


2.	 BACKGROUND .......................................................... 3 


2.1	 Background and Regulatory History ................................... 3 


2.1.1	 Highway Light-Duty Vehicles .................................. 5 


2.1.2	 Gasoline ................................................... 5 


2.1.3	 Portable Gasoline Containers ................................... 6 


2.2 	 Description of the Rule and its Scope .................................. 6 


2.2.1	 Vehicles and Fuels ........................................... 6 


2.2.2	 Portable Gasoline Containers ................................... 8 


2.3 	 Related Federal Rules .............................................. 8 


3.	 APPLICABLE SMALL ENTITY DEFINITIONS .................................. 11 


3.1	 Highway Light-Duty Vehicles Small Entity Definitions ................... 11 


3.2	 Gasoline Refiner Small Entity Definitions ............................. 12 


4.	 OVERVIEW OF PROPOSAL UNDER CONSIDERATION ........................... 13 


4.1	 Potential Requirements and Guidelines of the Proposal ................... 13 


4.1.1	 Highway Light-Duty Vehicles ................................. 13 


4.1.2	 Gasoline .................................................. 14 


4.1.3	 Portable Gasoline Containers .................................. 15 


4.2	 Options Likely to be Proposed ....................................... 16 


4.2.1	 Potential Burden Reduction Measures for Highway Light-Duty Vehicles


......................................................... 16 


4.2.2	 Potential Burden Reduction Measures for Gasoline Refiners ......... 16 


4.2.3	 Potential Burden Reduction Measures for Portable Gasoline Container


Manufacturers ............................................. 18 


5.	 SMALL ENTITIES THAT MAY BE SUBJECT TO THE PROPOSED REGULATION ....... 21 


5.1 	 Highway Light-Duty Vehicles ....................................... 21 


5.1.1	 Vehicle Manufacturers ....................................... 21 


5.1.2	 Independent Commercial Importers ............................. 21 


5.1.3	 Alternative Fuel Vehicle Converters ............................ 22 


5.2 	 Gasoline Refiners ................................................. 22 


5.3 	 Portable Gasoline Container Manufacturers ............................ 23 


6.	 SUMMARY OF SMALL ENTITY OUTREACH ................................... 25 


6.1	 Small Entity Outreach ............................................. 25 


6.2	 Summary of EPA's Outreach Meetings with Potential Small Entity 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics 
Representatives on Highway Light-Duty Vehicles, Gasoline, and Portable


Gasoline Containers ............................................... 25 


7.	 LIST OF SMALL ENTITY REPRESENTATIVES ................................. 29 


8. SUMMARY OF COMMENTS FROM POTENTIAL SMALL ENTITY REPRESENTATIVES ... 31 


8.1	 Number and Types of Entities Affected ................................ 31 


8.1.1	 Comments from Vehicle Manufacturer and Gas Can SERs .......... 31 


8.1.2	 Comments from Small Gasoline Refiner SERs .................... 31 


8.2 	 Potential Reporting, Record Keeping, and Compliance ................... 31 


8.2.1	 Comments from Vehicle Manufacturer and Gas Can SERs .......... 31 


8.2.2	 Comments from Small Gasoline Refiner SERs .................... 32 


8.3 	 Related Federal Rules ............................................. 33 


8.3.1	 Comments from Vehicle Manufacturer and Gas Can SERs .......... 33 


8.3.2	 Comments from Small Gasoline Refiner SERs .................... 33 


8.4	 Regulatory Flexibility Alternatives ................................... 34 


8.4.1	 Comments from Vehicle Manufacturer and Gas Can SERs .......... 34 


8.4.2	 Comments from Small Gasoline Refiner SERs .................... 34 


9. PANEL FINDINGS AND DISCUSSIONS ........................................ 35 


9.1	 Number and Types of Entities Affected ................................ 35 


9.2 	 Potential Reporting, Record Keeping, and Compliance ................... 35 


9.2.1	 Highway Light-duty Vehicles and Gas Cans ...................... 35 


9.2.2	 Gasoline Refiners ........................................... 35 


9.2.3	 Gas Cans ................................................. 36 


9.3 	 Related Federal Rules ............................................. 36 


9.3.1	 Highway Light-duty Vehicles ................................. 36 


9.3.2	 Gasoline Refiners ........................................... 36 


9.3.3	 Gas Cans ................................................. 37 


9.4	 Regulatory Flexibility Alternatives ................................... 37 


9.4.1	 Highway Light-Duty Vehicles ................................. 37 


9.4.2	 Gasoline Refiners ........................................... 39 


9.4.3	 Portable Gasoline Container Manufacturers ...................... 43 


10.	 APPENDICES ........................................................... 47 


Appendix A:


Appendix B:


Appendix C:


Appendix D:


List of Materials SBAR Panel Shared With SERs During Panel Outreach ..... 49 


Summary of SBAR Panel's First Small Entity Outreach Meeting ............ 51 


Summary of SBAR Panel's Second Small Entity Outreach Meeting .......... 60 


Written Comments Received from Potential SERs on Outreach Meeting #1 ... 71 


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics 
Appendix E:


Written Comments Received from SERs on Outreach Mtg. #2 .............85 


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics 
Final Report for the Small Business Advocacy Panel 

on EPA's Planned Proposal of "Control of Hazardous Air Pollutants from Mobile Sources" 

1.	 INTRODUCTION 

This report is presented by the Small Business Advocacy Review Panel (SBAR Panel or 

Panel) convened for the proposed rulemaking on the Control of Hazardous Air Pollutants from 

Mobile Sources, currently being developed by the U.S. Environmental Protection Agency (EPA). 

Under Section 609(b) of the Regulatory Flexibility Act (RFA) as amended by the Small Business 

Regulatory Enforcement Fairness Act of 1996 (SBREFA), a Panel is required to be convened 

prior to publication of the initial regulatory flexibility analysis (IRFA) that an agency may be 

required to prepare under the RFA. In addition to EPA's Small Business Advocacy Chairperson, 

this Panel will consist of the Director of EPA's Assessment and Standards Division within the 

Office of Transportation and Air Quality (OTAQ), the Administrator of the Office of Information 

and Regulatory Affairs within the Office of Management and Budget, and the Chief Counsel for 

Advocacy of the Small Business Administration. 

This report includes the following: 

•	 background information on the proposed rule under development; 

•	 information on the types of small entities that would be subject to the proposed rule; 

•	 a summary of the Panel's outreach activities; and, 

•	 the comments and recommendations of the Small Entity Representatives (SERs). 

Section 609(b) of the RFA directs the Panel to report on the comments of small entity 

representatives and its findings on issues related to identified elements of an IRFA under section 

603 of the RFA. Those elements of an IRFA are: 

•	 a description of and, where feasible, an estimate of the number of small entities to which 

the proposed rule will apply; 

•	 a description of the projected reporting, record keeping , and other compliance 

requirements of the proposed rule, including an estimate of the classes of small entities 

which will be subject to the requirements and the type of professional skills necessary for 

preparation of the report or record; 

•	 an identification to the extent practicable, of all relevant Federal rules which may 

duplicate, overlap, or conflict with the proposed rule; and, 

•	 a description of any significant alternatives to the proposed rule which accomplish the 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 1 
stated objectives of applicable statutes and which minimize any significant economic 

impact of the proposed rule on small entities. 

The purpose of the Panel is to gather information to identify potential impacts on small 

entities and to develop options to mitigate these concerns where possible. Once completed, the 

Panel report will be provided to the agency issuing the proposed rule and included in the 

rulemaking record. In light of the Panel report, and where appropriate, the agency issuing the 

proposed rule is to make changes to the draft proposed rule, the IRFA for the proposed rule, or 

the decision on whether an IRFA is required. 

It is important to note that the Panel's findings and discussion will be based on the 

information available at the time the final Panel report is drafted. EPA will continue to conduct 

analyses relevant to the proposed rule, and additional information may be developed or obtained 

during the remainder of the rule development process. The Panel makes its report at a 

preliminary stage of rule development and its report should be considered in that light. At the 

same time, the report provides the Panel and EPA with an opportunity to identify and explore 

potential ways of shaping the proposed rule to minimize the burden of the rule on small entities 

while achieving the rule's purposes. 

Any options identified by the Panel for reducing the rule's regulatory impact on small 

entities may require further analysis and/or data collection to ensure that the options are 

practicable, enforceable, environmentally sound, and, of course, consistent with the Clean Air 

Act. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 2 
2. BACKGROUND 

2.1 Background and Regulatory History 

Air toxics can cause a variety of serious health effects, including cancer. Mobile sources 

are projected to continue to be a significant contributor to emissions of air toxics (which are also 

known as hazardous air pollutants) across the country into the future, notwithstanding EPA rules 

finalized over the past two decades that have been, and will keep on, providing reductions in 

mobile source air toxics (MSAT) emissions. In particular, benzene is one of the most important 

drivers of national cancer risk from air toxics both now and in the future. According to EPA's 

1996 National Air Toxics Assessment, the entire country experiences an elevated cancer risk 

from benzene. Although benzene emissions will be decreasing, EPA's projections indicate that 

cancer risk from benzene will continue to be of potential concern. Based on EPA's recent work 

supporting the development of the upcoming MSAT rulemaking (which examines benzene 

emission trends for 1999, 2007, and other future years), current estimates indicate that mobile 

sources are currently responsible for about 60 percent of benzene emissions (see Figure 1 below 

for 1999 and 2020 estimates).1 Controlling emissions from light-duty highway vehicles, 

gasoline, and portable gasoline containers has important public health and welfare benefits. The 

following sections describe in more detail the effects and regulatory history of light-duty highway 

vehicles, gasoline, and portable gasoline containers. 

1 These mobile source benzene estimates account for final rulemakings that have already been issued. For 

example, the 2004 nonroad diesel rulemaking has been included, but this second MSAT rulemaking has not. Also, 

emissions from gas cans are not included in these estimates. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 3 
Figure 1


Benzene Contribution of All Source Sectors


Source Category Contributions to Benzene 

Emissions, 2020 

Total = 222,000 tons 

Major 

4% 

Area and Other 

30% 

Fires 

22% 

Onroad 

26% 

Nonroad 

18% 

Source Category Contributions to Benzene 

Emissions, 1999 NEI 

Total = 347,000 tons 

Major 

3% Area and Other 

15% 

Fires 

14% 

Onroad 

49% 

Nonroad 

19% 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 4

2.1.1 Highway Light-Duty Vehicles 

Mobile sources will remain a key contributor to overall benzene inventories and other 

volatile organic compounds (VOC) based toxics in the future, even with the expected significant 

reductions in mobile source emissions resulting from other programs. Highway light-duty 

vehicle emissions are still expected to dominate the mobile source VOC and benzene inventories 

in 2020. Highway light-duty vehicles are subject to emissions standards in 40 CFR Part 86. This 

includes passenger cars, light trucks, mini-vans, sport utility vehicles, vans, etc. 

In 2000, EPA issued the Tier 2 Vehicle/Gasoline Sulfur rulemaking, which set new 

emission control requirements for highway light-duty vehicles beginning in 2004. EPA's most 

recent regulation specifically targeting MSATs was published March 29, 2001 (66 FR 17230; see 

http://www.epa.gov/otaq/toxics.htm).2

 The first MSAT rule was issued soon after the Tier 2 rule. 

EPA determined that it needed to evaluate the effects of Tier 2 rules before embarking on another 

major regulatory effort involving the same class of regulated entities. Thus, additional controls 

were not proposed for vehicles in the first MSAT rule. However, in the first MSAT rulemaking, 

the need to further evaluate potential vehicle controls for MSATs in a future rule was discussed. 

Tier 2 remains a very stringent set of requirements which will substantially reduce vehicle 

emissions, including MSATs, into the future. 

2.1.2 Gasoline 

Current toxics standards for gasoline were established through the Reformulated Gasoline 

(RFG) program, Conventional Gasoline (CG) anti-dumping standards, and the 2001 MSAT 

program. The RFG program established a 21.5% reduction in total toxics emissions relative to 

each refinery's 1990 baseline, and a 0.95 volume percent annual average standard for benzene 

(with a per gallon cap of 1.3%). The CG anti-dumping standard maintained the 1990 

refinery-specific exhaust toxics performance baselines. The CG standard does not have a 

specific benzene requirement. The 2001 first MSAT rule is similar to the RFG and 

CG/anti-dumping standards in that it is a toxics emissions performance standard, and was set up 

to lock in over-compliance with RFG and anti-dumping standards at the time of the rule. The 

first MSAT rule standard does not have a specific benzene requirement. The standard applies 

separately to RFG and CG, and it established refinery-specific anti-backsliding toxics standards 

for all gasoline. These standards are generally more stringent than those in the previous 

programs, and thus supersede them. With the upcoming proposed second MSAT rule, EPA aims 

to not just maintain current toxics performance, but rather set the most stringent standards 

feasible considering cost and other factors. In doing so EPA expects to supersede not only 

anti-dumping refinery-specific standards but also the first MSAT rule refinery baselines, and as a 

result the RFG toxics performance and benzene content standards are also likely to be effectively 

superseded. 

2 This rule established refinery-by-refinery anti-backsliding standards for toxics in gasoline (using a 1998-2000 

baseline), but it did not require additional reductions. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 5 
For the second MSAT rule standards, EPA intends to focus on reducing benzene 

emissions from gasoline vehicles and engines. Benzene is the largest contributor to the mobile 

source cancer risk. EPA has also considered targeting other toxics, such as formaldehyde and 

acetaldehyde, through fuel controls, however those options do not appear to be desirable for a 

number of reasons. Formaldehyde emissions are primarily related to MTBE content, which is 

being phased out by most states independent of this rulemaking. Acetaldehyde emissions are 

primarily related to ethanol content, whose use is likely to increase in coming years as a result of 

recent energy legislation. Focusing on other fuel controls, such as sulfur (for overall exhaust 

hydrocarbon emissions), olefins (for 1,3-butadiene emissions) or aromatics (for exhaust benzene 

emissions) either provide small and uncertain benefits or are generally much more costly due to 

their impacts on octane. Importantly, steps taken to reduce these other toxics would also tend to 

increase the need for aromatics in gasoline, increasing benzene emissions. Therefore, the 

proposed rule is likely to focus on controlling benzene emissions. 

2.1.3 Portable Gasoline Containers 

Gasoline is highly volatile and evaporates easily from containers that are not sealed or 

closed properly. Portable fuel containers (gas cans), which are typically used to fuel lawn and 

garden and other gasoline-fueled equipment, represent a significant unregulated source of VOC 

emissions, and they also contribute to elevated MSAT concentrations in homes because they are 

often stored in attached garages. EPA's preliminary estimates are that in 2005, containers emit 

about 360,000 tons of VOC annually nationwide, or about 5 percent of the nationwide mobile 

source inventory. About 4,300 tons of the VOC emitted by gas cans annually is estimated to be 

benzene. Left uncontrolled, a gas can's daily VOC evaporative emissions would be up to 60 

times the VOC evaporative emissions of a new Tier 2 passenger vehicle. Gas can emissions 

come primarily from three sources: gasoline that evaporates from unsealed or open containers, 

permeation emissions from gasoline passing through the walls of the plastic containers, and 

gasoline spillage during use. 

Currently, there are not federal emission control requirements for gas cans. California 

has a program for controlling fuel container emissions. EPA is considering performance-based 

requirements, which are similar to those of California, that lead to the sale of redesigned fuel 

containers nationwide. Were EPA to propose rules, it would be pursuant to the authority of the 

Clean Air Act (CAA) section 183(e). 

2.2 Description of the Rule and its Scope 

2.2.1 Vehicles and Fuels 

Section 202 (l)(2) of the Clean Air Act (CAA) directs EPA to establish requirements to 

control emissions of mobile source air toxics (MSATs) from new motor vehicles and fuels. 

Specifically, this section states that EPA must 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 6 
...promulgate (and from time to time revise) regulations under subsection (a)(1) or section 211(c)(1) 

containing reasonable requirements to control hazardous air pollutants from motor vehicles and motor 

vehicle fuels. The regulations shall contain standards for such fuels or vehicles, or both, which the 

Administrator determines reflect the greatest degree of emission reduction achievable through the 

application of technology which will be available, taking into consideration the standards established 

under subsection (a), the availability and costs of the technology, and noise, energy, and safety factors, 

and lead time....The regulations shall, at a minimum, apply to emissions of benzene and formaldehyde. 

In other words, EPA must determine the maximum amount of emission reduction 

possible through application of technology, and further assess the reasonableness of these 

reductions after considering cost, lead time, and the other enumerated factors. EPA is presently 

developing a proposed rule requiring reduction of MSAT emissions from light-duty highway 

vehicles and gasoline, based upon consideration of all of these factors. 

For VOC and toxics control from light-duty vehicles (beyond the Tier 2 requirements), 

EPA is exploring the alignment of EPA evaporative emission standards with California 

low-emission vehicle (LEV) II standards and new cold temperature exhaust (VOC) emission 

standards. Despite numerical differences in evaporative emission standards, EPA and California 

programs essentially result in a comparable level of stringency today, due to differences in test 

requirements. Thus, harmonizing with California's LEV-II evaporative emission standards would 

streamline certification requirements and would be an anti-backsliding measure, which would 

add certainty that manufacturers would retain their current approach for producing the same level 

of evaporative system hardware nationwide. At this point, EPA would not intend to change the 

Federal evaporative emission test procedures. 

In addition, data suggests that VOC emissions (which include toxic organics) from 

vehicles are significantly higher under cold temperatures (20° F) than under normal testing 

temperatures (75° F). Traditionally, VOC emissions have been controlled for purposes of 

reducing ozone, and cold temperature VOC emissions have not been a focus of emissions control 

efforts. High VOC emissions from vehicles at cold temperatures lead to elevated benzene and 

other toxics levels, and thus, in the context of MSATs it appears appropriate to establish cold 

temperature controls. 

From a fuel standpoint EPA is focused on controlling benzene emissions. Benzene 

emissions can be addressed through both the fuel benzene content and the fuel aromatics content. 

Exhaust benzene emissions are linked more strongly to fuel benzene content than any other fuel 

parameter. Fuel aromatics are also a significant precursor to benzene emissions, however, the 

reduction of aromatics to achieve the same effect as a fuel benzene reduction is much more costly 

because of the deep impact on octane and volume. Therefore, EPA believes that fuel benzene 

control is the most effective approach. 

EPA is in the early stages of developing a proposed program. A detailed approach for 

timing and stringency of the vehicle and fuel requirements has not yet been decided. EPA is 

currently evaluating a program for highway light-duty vehicles that could become effective in the 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 7 
2008-2010 timeframe. For fuels, EPA is considering implementation dates in the 2010 to 2012 

timeframe. 

2.2.2 Portable Gasoline Containers 

EPA is also planning to propose portable gasoline container (gas can) emissions standards 

in the MSAT proposal. Such standards would control VOCs as an ozone precursor and would 

minimize personal exposure to VOC-based toxics such as benzene. EPA would pursue controls 

for gas cans under CAA section 183(e) provisions applying to consumer and commercial 

products. EPA has published a list of several consumer and commercial products to be regulated 

and is in the process of establishing controls for them through rulemaking. Gas cans were not 

considered in the original listing process, but EPA has since identified them as a significant 

contributor to VOC emissions. The first step in controlling emissions from gas cans is to add 

them to the section 183(e) list of consumer and commercial products to be regulated, which 

requires a Federal Register notice but not a rulemaking. EPA intends to issue such a notice. 

Once gas cans are listed, EPA can propose control measures if appropriate. Regulations under 

section 183(e) must require the "best available control," considering technological and economic 

feasibility and health, environmental, and energy impacts. 

EPA is planning to propose performance-based emissions standards for fuel containers in 

order to control evaporative and permeation emissions. EPA is considering implementing the 

program in the 2008-2009 timeframe. The standards would also provide users with fuel savings 

through reduced fuel loss and improved fuel quality by preventing the most volatile components 

in the gasoline from escaping the container. The new containers may also improve safety by 

staying closed and therefore reducing the potential for spills. 

2.3 Related Federal Rules 

The primary federal rules that are related to the proposed MSAT rule under consideration 

are the first MSAT rule (Federal Register Vol. 66, p. 17230, March 29, 2001), the Tier 2 

Vehicle/Gasoline Sulfur rulemaking (Federal Register Vol. 65, p. 6698, February 10, 2000), the 

fuel sulfur rules for highway diesel (Federal Register Vol. 66, p. 5002, January 18, 2001) and 

nonroad diesel (Federal Register Vol. 69, p. 38958, June 29, 2004), and the Cold Temperature 

Carbon Monoxide Rulemaking (Federal Register Vol. 57, p. 31888, July 17, 1992).3 

In addition, the Evaporative Emissions Streamlining Direct Final Rulemaking is expected 

to be published by the end of this year. For gas cans, OSHA has safety regulations for gasoline 

containers used in workplace settings. Cans meeting OSHA requirements, commonly called 

safety cans, are exempt from the California program, and EPA is planning to exempt them from 

the EPA program. 

3 The Cold Temperature Carbon Monoxide rulemaking is the basis for the 20° F test procedure which EPA 

would use. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 8 
Section 1501 of the Energy Policy Act of 2005 (EPACT) requires that EPA implement a 

Renewable Fuels Standard (RFS) program. Beginning in 2006, this program will require 

increasing volumes of renewable fuel to be used in gasoline, until a total of 7.5 billion gallons is 

required in 2012. The most prevalent renewable fuel to be used in gasoline is expected to be 

ethanol. 

There are a wide variety of potential impacts of ethanol blending on MSAT emissions 

that will be evaluated as part of the RFS rulemaking process. In general, as ethanol use 

increases, other sources of octane in gasoline can decrease. Depending on these changes, the 

impact on benzene emissions will vary. The specific effects of ethanol on benzene will be 

addressed in the Regulatory Impact Analysis (RIA) to this rule and in future rulemakings, such as 

the RFS rule. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 9 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 10 
3. APPLICABLE SMALL ENTITY DEFINITIONS 

For purposes of assessing the impacts of the proposed rule on small entities, a small entity 

is defined as: (1) a small business as defined by the Small Business Administration's (SBA) 

regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a 

city, county, town, school district or special district with a population of less than 50,000; and (3) 

a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field. 

Small businesses (as well as large businesses) would be regulated by this rulemaking, but 

not small governmental jurisdictions or small organizations as described above. As set by SBA, 

the categories of small entities that will potentially be affected by this rulemaking are defined in 

the following table: 

Industry Defined as small entity by SBA 

if less than or equal to: 

NAICS Codes 

Light-duty vehicles: 

- vehicle manufacturers (including small volume 

manufacturers) 

- independent commercial importers 

- alternative fuel vehicle converters 

1,000 employees 

$6 million annual sales 

100 employees 

1,000 employees

 $6 million annual sales 

336111 

811111, 811112, 811198 

424720 

335312 

811198 

Gasoline fuel refiners 1500 employees* 324110 

Portable Fuel Container Manufacturers: 

- plastic container manufacturers 

- metal gas can manufacturers 

500 employees 

1,000 employees 

326199 

332431 

* EPA has included in past fuels rulemakings a provision that, in order to qualify for the small refiner flexibilities, a 

refiner must also produce no greater than 155,000 bpcd crude capacity. 

3.1 Highway Light-Duty Vehicles Small Entity Definitions 

To assess how many companies potentially affected by the proposed rule may meet these 

small-entity criteria, EPA first created a database comprised of firms specified in its Certification 

and Fuel Economy Information System (CFEIS) and EPA's independent commercial importers 

(ICIs) and converters lists. Sales and employment data for the parent companies of these firms 

was then found using the Dunn and Bradstreet (and Hoover's) and ReferenceUSA databases. 

Due to the range of manufacturers and ICIs, there are several NAICS codes in which these 

businesses report their sales, but the majority of the manufacturers and ICIs are listed under the 

following major groups, respectively: 33611x - Automobile and Light Duty Motor Vehicle 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 11 
Manufacturing and 8111xx - Automotive Repair and Maintenance. For alternative fuel 

converters, there does not appear to be a prominent NAICS code, and the codes range from 

335312 - Motor and Generator Manufacturing (and/or 336312 - Gasoline Engine and Engine 

Parts Manufacturing) to 811198 - All Other Automotive Repair and Maintenance. 

3.2 Gasoline Refiner Small Entity Definitions 

Information about the characteristics of gasoline refiners comes from sources including 

the Energy Information Administration within the U.S. Department of Energy, oil industry 

literature, and industry searches using Hoover's and Dun and Bradstreet. These refiners fall 

under the Petroleum Refineries category, NAICS code 324110. 

3.3 Portable Gasoline Container Manufacturer Small Entity Definitions 

For manufacturers of portable fuel containers, the SBA size thresholds are 500 employees 

for manufacturers of plastic containers and 1,000 employees for metal gas cans. The NAICS 

codes are 326199 - All Other Plastics Product Manufacturing and 332431 - Metal Can 

Manufacturing. Discussions with industry and searches in databases such as LexisNexis 

Academic and ReferenceUSA (electronic resources) enabled EPA to determine how many 

businesses would be impacted by the proposed rule and may meet the small-entity criteria. The 

latter two sources provided sales and employment data for the parent companies of these 

businesses. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 12 
4. OVERVIEW OF PROPOSAL UNDER CONSIDERATION 

4.1 Potential Requirements and Guidelines of the Proposal 

As described below, various approaches for vehicle, fuel, and gas can standards have 

been suggested during conversations with the SERs. A complete discussion regarding these 

suggested regulatory flexibility options can be found in Section 9 of this Report. EPA is seeking 

input on potential regulatory flexibilities that would be appropriate for small entities in the 

vehicle, gasoline refining, and gas can industries. EPA is also seeking input on what impact the 

suggested approaches would have on small entities, such as cost, lead time needed, and other 

relevant impacts on small entities. This information will help EPA in developing regulatory 

flexibilities for small entities for the upcoming rule. 

4.1.1 Highway Light-Duty Vehicles 

As discussed earlier, EPA is contemplating the proposal of evaporative emission 

standards that are equivalent to California low-emission vehicle (LEV) II standards - see Figure 4 

in Appendix A - and new cold temperature exhaust (VOC) emission standards. Even though 

there are numerical differences in evaporative emission standards, EPA and California programs 

result in a similar level of stringency today due to differences in test requirements (see Figure 5 

in Appendix A). Some manufacturers have indicated that they will produce 50-state evaporative 

systems that meet both sets of standards (essentially all certify 50-state evaporative systems). 

This is the path manufacturers have taken thus far in Tier 2. Based on these commitments, EPA 

has already made the assumption in its MOBILE6 model that manufacturers meet the LEV II 

standards, so EPA does not project additional VOC reductions from this approach. Also, EPA 

does not expect additional costs since EPA expects that manufacturers will continue to produce 

50-state evaporative systems. Therefore, harmonizing with California's LEV-II evaporative 

emission standards would streamline regulatory requirements and be an "anti-backsliding" 

measure, which would codify what some manufacturers have committed to (50-state evaporative 

systems). EPA is currently considering the implementation of these evaporative standards in 

model year 2009 for light-duty vehicles (LDVs) and light light-duty trucks (LLDTs) and model 

year 2010 for heavy light-duty trucks (HLDTs) and medium-duty passenger vehicles (MDPVs). 

EPA intended to for the start dates to coincide with the year after complete phase-in of the Tier 2 

standards for the different classes of vehicles (occurs for HLDTs/MDPvs), but the 2009 start date 

is as soon as practical for the LDVs/LLDTs since the final rulemaking (for this program) is 

expected to be issued during model year 2008. 

In addition, as described earlier, data indicates there is a significant increase in VOC 

emissions from vehicles at cold temperatures (20° F) compared to normal testing temperatures 

(75° F) - see Figures 6 and 7 of Appendix A. On average, VOC test results are 12 times higher at 

20° F than at 75° F for Tier 2 vehicles. At this time, EPA only has a carbon monoxide (CO) 

standard at cold temperatures, and the lack of a cold VOC standard results in a delayed use of 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 13 
VOC emission controls until the engine warms up. At cold temperatures, manufacturers 

currently do not calibrate for VOC emissions control or turn on emission control devices. 

EPA is currently contemplating a cold temperature VOC standard in the range of 2 to 3 

times the 75° F VOC "bin 5" exhaust standard (or a potential proposed standard of 0.2 to 0.3 

grams/mile). EPA is evaluating the need for a slightly higher standard for heavier test weight 

vehicles (HLDTs and MDPVs), due to the fact that they typically have higher engine-out 

emissions. EPA expects that this emission level generally can be achieved through calibration 

alone, and it would not force new emissions control hardware beyond that which manufacturers 

would be installing normally to reach full Tier 2 compliance. Such a standard would only require 

up-front research and development costs, and thus, it would add minimal additional cost to 

vehicles. EPA believes certification burden is likely to be small due to existing cold carbon 

monoxide testing requirements. Most manufacturers are currently measuring hydrocarbon 

emissions during this test (even though they are not currently required to report hydrocarbon), 

and thus, there will be minimal added test burden for cold temperature VOC.4

 At this time, EPA 

is evaluating appropriate forms of a standard: "bin" standards, average standard, and vehicle 

weight-based standards. In addition, EPA is considering a program that would become effective 

in model year 2010 with a possible 4-year phase-in (25%, 50%, 75%, 100% phase-in over 4 year 

period), and for heavier test weight vehicles EPA is contemplating a possible later start date (e.g., 

2012) to begin the phase-in of a standard. 

4.1.2 Gasoline 

As stated above, EPA is focusing on fuel benzene control for the upcoming rule. EPA is 

considering proposing an average fuel benzene content standard in the range of 0.60 to 0.65 

percent volume for all gasoline. To maximize flexibility and reduce the costs of compliance for 

refiners, including small refiners, EPA is considering including a nationwide averaging, banking, 

and trading (ABT) program with no upper limit standard. EPA anticipates generation of early 

credits to begin as early as 2007, depending on the start date of the standard. The current in-use 

benzene content of RFG is 0.62 volume percent on average, so a nationwide standard at this level 

would avoid backsliding in the RFG pool. At the levels EPA is considering, the new standard is 

also likely to supersede the first MSAT rule and eliminate refinery-specific baselines established 

in that program (although the statutory 1.3 volume percent benzene cap in the RFG program will 

continue to apply). 

In the proposal, EPA would request comment on the level of the standard. A lower 

average standard of 0.60 percent would increase the likelihood that California may participate in 

the program. EPA would also seek comment on the need for a maximum average or a per-gallon 

cap in conjunction with this average standard. Finally, EPA would seek comment on whether a 

toxics performance standard should be set (analogous to but more stringent than the current and 

4

 For the new cold temp VOC exhaust requirements, we plan to propose non-methane hydrocarbon standards 

(NMHC). 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 14 
first MSAT rule standard) in lieu of a benzene content standard, and whether sulfur and/or Reid 

vapor pressure (RVP) should also be controlled. 

4.1.3 Portable Gasoline Containers 

There are about 21 million gas cans sold every year, with about 80 million currently in 

use. Without additional controls, EPA has estimated that gas cans would emit about 10 percent 

of mobile source VOCs by 2020. The bulk of evaporative emissions come from consumers not 

properly closing containers. Also, fuel will permeate through the walls of the container, 

contributing to overall evaporative emissions losses. Manufacturers have designed gas cans that 

will close automatically when not in use, which substantially reduces evaporative losses 

(automatically closing spouts include spring-loaded spouts or push button mechanisms to control 

fuel flow). Automatic closing cans also reduce spillage emissions by providing the consumer 

with greater control (the cans stay closed until the consumer has positioned the can for refueling 

the equipment) and also by ensuring there is no spillage if the can is tipped over. For permeation 

control (permeation barrier in the container walls that prevents fuel from passing through), there 

are several technological approaches which have been developed for automotive fuel tanks which 

are now available for other plastic containers such as gas cans. Gas can manufacturers have 

gained experience with these permeation controls through the California program and the 

technologies are well understood (methods include multi-layered cans, fluorination, sulfonation, 

and material additives). 

Based on the use of automatically closing cans and permeation control, EPA is 

considering proposing a diurnal evaporative emissions standard of 0.3 grams/gallon/day. This 

represents about an 85 percent reduction in emissions from uncontrolled levels. EPA estimates 

VOC emissions reductions of roughly 200,000 tons (including about 2,500 tons of benzene) 

when the standards are fully implemented. Testing would be conducted with test fuel containing 

10 percent ethanol to ensure that materials are selected that do not have higher permeation 

emissions when ethanol is present in the in-use fuel. Permeation emissions with some materials, 

especially nylons, can increase significantly with ethanol in the fuel. EPA expects that the 

manufacturers will need a few years of lead time after the standards are finalized in order to 

finalize their designs, certify products, and ramp up production to a national scale, and therefore 

EPA is considering a start date of 2009. EPA estimates that the program would have a small cost 

per ton of VOC reductions, and that fuel savings from reduced emissions would offset much of 

the cost of the overall program. 

California also requires spout designs that automatically shut off when the receiving tank 

is full, much the way a gas pump turns off when a vehicle fuel tank is full. However, this feature 

has not worked well because there is a great deal of variability in receiving equipment fuel tank 

configurations. This has lead to fuel tank overfills (spillage) and consumer complaints. 

California has proposed removing this requirement from their program. EPA plans to discuss the 

option of automatic shut-off requirements in the proposal, but is not planning to propose such 

requirements due to these issues. 

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4.2	 Options Likely to be Proposed 

4.2.1	 Potential Burden Reduction Measures for Highway Light-Duty 

Vehicles 

In addition to the major vehicle manufacturers, three distinct categories of businesses 

relating to highway light-duty vehicles would be covered by the new vehicle standards in this 

proposed rule: small volume manufacturers (SVMs), independent commercial importers (ICIs), 

and alternative fuel vehicle converters. For small business relief pertaining to such entities, EPA 

is evaluating EPA's Tier 2 rule to assess whether the types of small business relief provisions 

adopted in that rule would be appropriate in this context. In the Tier 2 rule, small volume 

manufacturers, ICIs, and alternative fuel vehicle converters benefited from the flexibility 

provisions provided to small entities. One of these provisions allows these entities to opt-out of 

the interim standards during the phase-in years and to then comply with the Tier 2 standards with 

100 percent of their vehicles during the last year of the phase-in period. Another aspect of the 

Tier 2 rule is a one-year hardship provision that will allow these businesses to apply for an 

additional year to meet any of the 100 percent phase-in requirements. Finally, these entities, as 

with all affected entities, are allowed to participate in the Tier 2 averaging, banking, and trading 

(ABT) program. 

EPA is considering the appropriateness of similar provisions in the proposed MSAT 

rulemaking, and EPA encourages feedback from the small entity representatives on the 

usefulness and feasibility of the Tier 2 flexibilities. 

4.2.2 Potential Burden Reduction Measures for Gasoline Refiners 

For the recently finalized or promulgated fuel programs (Tier 2 gasoline, highway diesel, 

and nonroad diesel), EPA included special small refiner provisions. Recognizing that different 

small refiners have different needs, it may be possible and appropriate to have several different 

options in the proposed MSAT rulemaking to address different legitimate needs. In discussions 

with small refiners, several flexibility options were suggested for consideration in the rule, and 

are described below. A full discussion on each of these options, and why they should or should 

not be proposed in the upcoming rule, can be found below in Section 9 of this Report. 

Delay in Standards 

Previous fuel programs have included a delay in the start date of the effective standard for 

small refiners; historically, this delay has been between two to four years. While a delay 

would be dependent on the start date of the program, a delay for small refiners was 

suggested for the upcoming MSAT rule. Such a delay could again be for two, three, or 

four years (and EPA would likely request comment on the time period of the delay). 

Small Refiner "Free" Credits 

A flexible variation on the delay option would be to provide small refiners with free 

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credits for benzene sufficient to delay compliance for some time. This would be similar 

to the delay described above in that it would allow a small refiner to remain at its current 

benzene level for an extended period of time (and EPA would again likely propose two to 

four years); however, the small refiner free credits would be defined in terms of quantity 

of benzene produced rather than time. Under this provision a small refiner could begin 

use of these credits on the effective date of the standard and remain at its current benzene 

level for the free credit period, which would be similar to a delay. Or, the refiner could 

make some reductions to its fuel benzene content, which would enable it to use the free 

credits at a slower rate lasting for a longer period. 

Early ABT Credits 

Prior fuels rules included provisions to allow all refiners to generate credits for early 

compliance with the applicable standards. The proposed MSAT rule is likely to contain 

provisions allowing refiners to earn credits if they reduce their gasoline benzene levels 

prior to the start of the program. If the proposed rulemaking does in fact include a delay 

for small refiners, those that comply with the standards on time could generate credits for 

compliance earlier than otherwise required to do so. The period for generating early 

credits would be dependent on the effective date of the standard and the date of the small 

refiner standard (if a delay is given). 

Extended Credit Life 

The design of the ABT program has not be determined, however if the ABT program 

were to include a limit on the life of the credits, a potential flexibility option that was 

suggested for long-term relief to small refiners is to extend the life of general program 

credits if they are sold to small refiners. Such an option would allow small refiners to 

purchase credits for up to a year beyond when the credits would have otherwise expired to 

encourage trading with small refiners. 

"De Minimis" Exclusion(s) 

Small refiners have suggested a few different versions of a "de minimis exclusion" 

option. The idea behind a de minimis exclusion is that small refiners believe that their 

contribution to the overall national gasoline pool, and therefore their total production of 

benzene, is at a level that does not warrant compliance with a national benzene standard. 

They believe that small refiners should either be exempt from the standards, or be 

allowed to meet a less stringent standard that would be proportional to their contribution 

to the national gasoline pool and/or benzene emissions. 

The two versions of a de minimis exclusion option that were suggested most by the SERs 

were: 1) a partial or complete exemption from the MSAT standards if the small refiner 

could show that it only produces a small amount of gasoline; or, 2) a partial or complete 

exemption from the MSAT standards if the small refiner could show that it only 

contributes a small amount to the emissions in its area. 

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Small Refiner Alternative Standard Option 

The application of an alternate standard for small refiners was suggested as a potential 

flexibility option. Some small refiners expressed that a low benzene standard will be 

especially hard for them to meet because of their unique refinery configurations. These 

refiners suggested the allowance of either a higher benzene content standard or a 

toxics-based standard for small refiners only. 

Alternative Standard-- Toxics Formula Option 

A second, related alternative standard option suggested by small refiners was to allow the 

use of an air toxics formula for small refiners. Such an option would allow a small 

refiner to meet an equivalent air toxics performance standard, which would be determined 

from an air toxics formula, in lieu of the benzene standard. The idea behind this 

suggested option is that a small refiner would be able to enter selected toxics levels, along 

with their benzene level, into a formula (since air toxics performance as determined by 

the Complex Model is currently the basis for the first MSAT rule standards with which 

all refiners must comply). This formula would compute an alternate standard that the 

small refiner could comply with instead of the benzene standard. The toxics formula 

could allow small refiners whose gasoline had very low sulfur and olefin contents to 

comply with an alternate benzene standard that was adjusted to take their sulfur and 

olefin content into consideration. 

Hardship Options 

Previous fuels programs have all included hardship provisions that were available to all 

refiners and importers. Small refiners have suggested that EPA propose the same two 

types of hardships that are currently available in other fuels programs: hardship due to 

extreme unforeseen circumstances and extreme hardship. 

A hardship based on extreme unforeseen circumstances is intended to provide short term 

relief due to unanticipated circumstances beyond the control of the refiner, such as a 

natural disaster or a refinery fire. An extreme hardship is intended to provide short-term 

relief based on extreme circumstances (e.g., extreme financial problems, extreme 

operational or technical problems, etc.) that impose extreme hardship and thus 

significantly affect a refiner's ability to comply with the program requirements by the 

applicable dates. 

4.2.3	 Potential Burden Reduction Measures for Portable Gasoline 

Container Manufacturers 

For manufacturers of gas cans, there is not a past program to refer to since the proposed 

requirements are a new national program. The SBREFA panel sought input from gas can 

manufacturers (small entity representatives - SERs) on what flexibilities would be most useful in 

minimizing the burden on small entities. Some examples of flexibilities implemented in past 

rulemakings for mobile sources include additional lead time to meet standards, modified 

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certification requirements, small volume production flexibility, and hardship provisions that 

allow businesses to apply for an additional year to meet the new requirements. Manufacturers 

would be granted hardship relief, subject to some restrictions, if they provided evidence that, 

despite their best efforts, they cannot meet the implementation dates even with other available 

flexibilities. 

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5. SMALL ENTITIES THAT MAY BE SUBJECT TO THE PROPOSED REGULATION 

5.1 Highway Light-Duty Vehicles 

Based on a preliminary assessment, EPA has identified a total of about 50 businesses that 

would be covered by the new light-duty vehicle standards. However, due to a lack of sales or 

employment data, a few of these entities could not be confirmed for consideration in EPA's 

analysis. Out of these 50 businesses, 21 entities (or 42 percent) fit the SBA criterion of a small 

business. EPA estimates that these entities comprise about 0.02 percent of the total light-duty 

vehicle sales in the U.S. for the year 2004.5 

As described earlier, in addition to major vehicle manufacturers, three distinct categories 

of businesses characterize the above 50 total entities (and the subset of 21 small businesses): 

SVMs, ICIs, and alternative fuel vehicle converters. The below discussion gives more detail on 

these categories. 

5.1.1 Vehicle Manufacturers 

In most cases, new standards for light-duty vehicles would minimally increase the costs 

of vehicle manufacturers to produce these vehicles. In addition to major vehicle manufacturers, 

SVMs are companies that sell less than 15,000 vehicles per year, as defined in past EPA 

regulations, and this status allows vehicle models to be certified under a slightly simpler 

certification process. 

Using information from a preliminary assessment of the industry, EPA identified a total 

of 30 businesses that manufacture vehicles (including about 14 SVMs). The top 10 vehicle 

manufacturers comprise 97 percent of the U.S. total market (there were about 16.9 million total 

U.S. sales for the year 2004), while the other 20 manufacturers (including SVMs), ICIs, and 

converters make up the remaining 3 percent. Of the 30 manufacturers (14 SVMs included), 5 

SVMs fit the SBA definition of a small entity. These five small businesses comprise about 0.01 

percent of the total vehicle sales for the year 2004. Also, these businesses produce vehicles for 

small niche markets, and nearly all of these entities manufacture limited production, high 

performance cars. In addition, there are four other SVMs that EPA believes meet the SBA 

small-entity criterion, but since they are foreign businesses, they cannot be considered in the 

SBREFA work. 

5.1.2 Independent Commercial Importers 

ICIs are companies that hold a Certificate (or certificates) of Conformity permitting them 

to import nonconforming vehicles and to modify these vehicles to meet U.S. emission standards. 

5 Sales information used for this analysis was 2004 data. 

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ICIs are not required meet the emission standards in effect when the vehicle is modified, but 

instead they must meet the emission standards in effect when the vehicle was originally produced 

(with an annual production cap of a total of 50 light-duty vehicles and trucks).6 ICIs would likely 

have minimal increased cost from the new standards. 

Currently 10 ICIs hold EPA certificates, and EPA believes all 10 of these businesses 

would meet the small-entity criteria as defined by SBA. In 2004, collectively they had a total 

U.S. sales of about 300 vehicles, and thus, they comprised about 0.002 percent of the total 

vehicle sales. ICIs modify vehicles for a small niche market, and many of these vehicles are high 

performance cars. 

5.1.3 Alternative Fuel Vehicle Converters 

Alternative fuel vehicle converters are businesses that convert gasoline or diesel vehicles 

to operate on alternative fuel (e.g., compressed natural gas), and converters must seek a 

certificate for all of their vehicle models. Model year 1993 and newer vehicles that are converted 

are required to meet the standards applicable at the time the vehicle was originally certified. 

Converters would likely have minimal increased cost from the new light-duty vehicle standards. 

As with SVMs and ICIs, converters serve a small niche market, and these businesses 

primarily convert vehicles to operate on compressed natural gas (CNG) and liquefied petroleum 

gas (LPG), on a dedicated or dual fuel basis. Based on information from a preliminary 

assessment, EPA identified a total of 10 alternative fuel vehicle converters. Together these 10 

businesses had about 0.02 percent of the total vehicle sales in the U.S. for the year 2004. Out of 

these 10 businesses, 6 meet the SBA small-entity criteria. These 6 converters represent about 

0.01 percent of the total vehicle sales. In addition, EPA believes three of the other converters fit 

the SBA small-entity definitions, but since they are foreign businesses, they cannot be considered 

in the SBREFA work. 

5.2 Gasoline Refiners 

Based on EPA's current analyses, a fuel program for the purpose of controlling air toxics 

would apply to the following entities: domestic refineries that produce gasoline, importers of 

gasoline into the U.S., and foreign refiners of gasoline that export to the U.S.7 Although some 

6 To prevent entities from circumventing Tier 2 light-duty vehicle standards, EPA capped at 50 each ICI's 

annual production of vehicles meeting the original production (OP) year standards when OP year standards are less 

stringent than standards that apply during the year of modification. This does not impact the number of vehicles an ICI 

may produce that are certified to the standards that apply during the year of modification. 

7 California gasoline is exempt from many of EPA's regulations, including the gasoline sulfur requirements and 

the MSAT requirements currently in place. While subject to the reformulated gasoline (RFG) and anti-dumping 

provisions, California refineries have been exempted from several of the enforcement and compliance mechanisms of 

those programs. California refineries could be subject to a proposal, in part depending on the form and the level of the 

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refiners may already have the infrastructure necessary to comply with new fuel controls, others 

would need to install new equipment. There are several processes or technologies which can 

reduce gasoline benzene levels: those which prevent the formation of benzene in the refinery, and 

those which remove or destroy benzene (including both the naturally occurring benzene and that 

formed by reforming units). Refiners' choices of which technologies to use will be based on their 

various refinery operating structures and their specific structural and engineering concerns. 

Refiners throughout the gasoline industry not only vary in size, but also operationally. 

Some refiners' gasoline streams are sold locally, while others pipeline or transport their fuel (via 

trucks, rail cars, and/or ships and barges) to distribute it to various areas of the country. The 

choice of fuel distribution methods can be based on geographic area, proximity to a pipeline (and 

where on the pipeline the refinery is located), or proximity to another method of transporting 

gasoline. 

Because the small refiners that will potentially be affected by the upcoming rulemaking 

vary in their engineering and operating structures, they may have very different concerns based 

on their different refinery structures. However, EPA does believe that small refiners could have 

greater difficulty in complying compared to large refiners, due to factors such as limited access to 

capital, limited operational flexibility, or limited access to benzene markets. 

Based on 2003 data, EPA believes that there are about 116 domestic refineries producing 

gasoline. EPA's current assessment is that 15 refiners meet SBA's criterion of having 1,500 

employees or less. Current data further indicates that these refiners produce about 2.5 percent of 

the total gasoline pool and their contribution to the total mobile source benzene emissions is 

roughly 5 percent. It should be noted that because of the dynamics in the refining industry (i.e., 

mergers and acquisitions) and decisions by some refiners to enter or leave the gasoline market, 

the actual number of refiners that ultimately qualify for small refiner status under an MSAT 

program could be much different than these initial estimates. 

5.3 Portable Gasoline Container Manufacturers 

As discussed earlier, annual sales nationwide of gas cans are about 21 million units. 98 

percent are plastic containers, and 2 percent are metal gas cans. Blow molding equipment is 

relatively costly and large production volumes are necessary to operate profitably. These factors 

seem to limit the number of companies engaged in producing fuel containers, leading to 

significant industry consolidation over the past decade (25 manufacturers in 1985 to 5 in 2004). 

EPA has identified 4 domestic manufacturers and 1 foreign manufacturer. Of these 4 U.S. 

manufacturers, 3 meet the SBA definition of a small entity. One small business accounted for 

over 50 percent of the U.S. sales in 2002, and the other small entities comprised about 10 percent 

of U.S. sales. 

standard. 

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6.	 SUMMARY OF SMALL ENTITY OUTREACH 

6.1	 Small Entity Outreach 

Before beginning the formal SBREFA process, EPA actively engaged in talking to 

entities that would potentially be affected by the upcoming rulemaking. As discussed earlier in 

regard to highway light-duty vehicles, based on information from EPA certification databases 

and non-governmental sales and employment databases, EPA was able to identify the small 

entities within the SVM, ICI, and converter sectors. After identifying these entities for the 

vehicle sector, EPA then began talking to these businesses to locate potential SERs to participate 

in SBREFA. For portable gasoline container manufacturers, EPA participated in a series of 

workshops held by the California Air Resources Board and established initial industry contacts. 

EPA then held several meetings and conference calls with individual manufacturers and with the 

manufacturers as a group to discuss their products and EPA's upcoming proposal. For gasoline 

refiners, based on information from past rulemakings EPA began well in advance of the 

SBREFA process conducting phone conferences and face-to-face meetings with small fuel 

refiners that produce gasoline. This led to the selection of a set of potential SERs that represent a 

cross-section of small refiners. 

EPA provided each business with EPA's fact sheets on the SBREFA process and 

background information on the MSAT rulemaking process. Once potential SERs were 

identified, EPA began having more discussions to better understand the needs of the small 

entities in more detail and outreach meetings was held with the potential SERs on July 19, 2005, 

September 27, 2005 (gasoline refiner SERs) and September 29, 2005 (vehicle and gas can 

manufacturing SERs). 

6.2	 Summary of EPA's Outreach Meetings with Potential Small Entity 

Representatives on Highway Light-Duty Vehicles, Gasoline, and Portable 

Gasoline Containers 

On July 19, 2005 EPA held three separate 1.5 hour meetings with groups of potential 

SERs representing the highway light-duty vehicle industry, gasoline refiners, and portable 

gasoline container manufacturers. Eleven potential SERs participated in the meetings. These 

outreach meetings were held to solicit feedback from the potential SERs on the upcoming 

rulemaking. 

Each section of the outreach meeting consisted of background on the rulemaking process 

and an explanation of the SBREFA Panel process and how it fits into the rulemaking schedule 

from Ken Munis, sitting in for EPA's Small Business Advocacy Chair - Alex Cristofaro. 

Following this was a presentation by EPA staff giving a background and scope of the proposed 

requirements for light-duty vehicles, gasoline, and gas cans. EPA then began a discussion on 

previous alternatives used in past rulemakings and potential ways to modify those alternatives for 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 25 
the upcoming rulemaking, as well as the addition of new alternatives and flexibilities. (See 

Appendix A for the materials sent to potential SERs, Appendix B for discussions/comments raised 

during the Outreach Meeting, and Appendix C for the comments received from potential SERs.) 

EPA asked that the potential SERs provide feedback on the flexibilities provided in the previous 

rulemakings, and specifically, which flexibilities worked best for small entities (and which did 

not), the extent to which they used the flexibilities, and how the flexibilities could be made more 

useful. EPA asked potential SERs to provide these comments by August 2, 2005. 

Following EPA's presentation and a brief question and answer period, a discussion of the 

issues related to this rulemaking ensued. Issues that were raised by the potential SERs during the 

discussion included the items listed below. 

Gas cans 

The gas can manufacturers that participated in the outreach generally asked how the 

national standards will be coordinated with the California program and other 

requirements. One manufacturer stated that the proposed new standards should have 

up-front certification similar to California's requirements. Manufacturers discussed the 

need to have adequate opportunity for sell through at the start of the program. 

Manufacturers want to avoid retailers having to send back non-complying products 

because they have not yet sold when EPA's program begins. Another manufacturer asked 

how EPA's program would relate to OSHA safety requirements for gas cans. In addition, 

EPA discussed why California's automatic shut off control did not work well. 

EPA-OTAQ staff expressed that they would continue to work with gas can SERs to 

develop flexibility options. 

Light-duty vehicles 

The small volume manufacturers, ICIs, and converters that participated had questions 

about the form of the new standards for light-duty vehicles. A converter asked whether 

EPA plans to propose new non-methane organic gas (NMOG) standards or standards that 

are specific to toxics. Concerns about currently being required to test for formaldehyde 

standards were discussed. Also, a converter asked whether testing equipment presently 

existed to test for cold temperature VOC emissions. In addition, certification of 

evaporative emissions systems by EPA versus California was discussed. 

Gasoline refiners 

During the first outreach meeting with the small refiners, those that participated generally 

stated that they believed that small refiners would face challenges in meeting a new 

standard. More specifically, they believe that the rule would be very costly and 

dependence on credits would not be a comfortable situation, with credit availability from 

large refiners being unreliable and possibly expensive. They were also concerned about 

the timing of the standards for this rule, given other upcoming fuel standards. Various 

flexibility options were noted by some gasoline small refiners during pre-Panel outreach 

(these potential options are discussed above in section 3). EPA-OTAQ staff and the 

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small refiner SERs committed to having more discussions to determine appropriate small 

refiner flexibility options. 

During the second outreach meeting with the small refiners, it became evident that the 

"Small Refiner Free Credit Option" was the equivalent of a small refiner delay option 

with the ability to generate credits during the delay period. EPA also felt that a delay 

option would give more flexibility to those small refiners that were planning to increase 

their gasoline production. Following this discussion, EPA and the small refiner SERs 

agreed that a delay with the opportunity to earn credits, and also be able to increase 

production would be the most useful for the small refiners. In addition, EPA discussed 

the possibility of, after the first year of the general program, performing a review of the 

small refiner provisions. Specifically, EPA would evaluate the credit trading program to 

ensure that ample credits are available and trading is occurring. The SERs felt that a 

four-year delay would be the most beneficial delay period because it would allow 

sufficient time (three years) for small refiners to make investments towards compliance 

following the review. 

Please Note: Appendices B and C contain a more detailed summary of the Outreach 

meetings that were held with small refiner SERs. 

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7. LIST OF SMALL ENTITY REPRESENTATIVES 

The following is a list of the SERs that were included in the Panel process: 

Small Volume Auto Manufacturers (Vehicles): 

Panoz Auto Development Company 

John M. Leverett (Engineering) 

Hoschton, GA 

Alternative Fuel Vehicle Converters (Vehicles): 

DRV Energy, Inc. 

Sheri Vanhooser 

Oklahoma City, OK 

IMPCO Technologies/Quantum Technologies 

Karen Szabo Hay 

Cerritos, CA 

Independent Commercial Importers (Vehicles): 

Wallace Environmental Testing 

Les Weaver 

Houston, TX 

Gasoline Refiners: 

U.S. Oil & Refining Company 

Al Cabodi 

Tacoma, WA 

Countrymark Cooperative 

John Stern 

Indianapolis, IN 

Gary-Williams Energy Corporation 

Sally Allen 

Denver, CO 

Dave Roderick 

Wynnewood, OK 

American Refining 

Rick Kucharski 

Bradford, PA 

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Portable Gasoline Container Manufacturers: 

Blitz USA 

Larry Chrisco 

Miami, OK 

Midwest Can Company 

John Trippi, Jr. 

Melrose Park, IL 

No-Spill Research 

Mark Pierce 

Kansas City, MO 

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8. SUMMARY OF COMMENTS FROM POTENTIAL SMALL ENTITY REPRESENTATIVES 

8.1 Number and Types of Entities Affected 

8.1.1 Comments from Vehicle Manufacturer and Gas Can SERs 

Though EPA did not receive specific comments on the number and types of potential 

entities that may be affected by the rulemaking, EPA believes that the potential SERs are in 

agreement with EPA on the number and types of entities that may be affected. As stated 

previously in Section 5, EPA believes that 5 small SVMs, 10 small ICIs, 6 small alternative fuel 

vehicle converters, and 3 small gas can manufacturers could be affected by this rule. 

8.1.2 Comments from Small Gasoline Refiner SERs 

The comments from SERs noted that the small refiners believe that there could be up to 

20 small refiners affected by the MSAT rule. 

8.2 Potential Reporting, Record Keeping, and Compliance 

8.2.1 Comments from Vehicle Manufacturer and Gas Can SERs 

Specific comments on potential reporting and record keeping have not been received. In 

regard to compliance, one vehicle SER wanted to confirm that the proposed cold temperature 

VOC standards for highway light-duty vehicles would be non-methane hydrocarbon standards 

(NMHC) standards. In response, EPA indicated that they would plan to propose NMHC 

standards. In addition, this same SER asked if the testing equipment currently existed to record 

cold temperature NMHC emissions. EPA replied that no equipment upgrade would be needed 

since the equipment would already be in place from the existing cold temperature CO standards, 

where most manufacturers are currently measuring hydrocarbon emissions (even though they are 

not required to report hydrocarbon emissions). 

One gas can SER commented that proposed new gas can standards should have up-front 

certification similar to California's requirements. In response, EPA indicated that they plan to 

propose up-front certification because they want to mare sure gas cans are able to meet the 

standards in-use. For certification, EPA would group together gas cans that have the same 

materials and spout designs. As for flexibility provisions, EPA is considering ways to minimize 

certification testing by having such broad testing and allowing the carry over of data from 

California's program. In addition, SERs also expressed the need to have adequate opportunity for 

sell through at the start of the program. They want to avoid retailers having to send back 

non-complying products because they have not yet sold when EPA's program begins. EPA 

replied that they typically allow normal sell through of products as long as manufacturers do not 

create stockpiles of noncomplying products prior to the start of the program. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 31 
8.2.2 Comments from Small Gasoline Refiner SERs 

One small refiner SER commented that it is difficult to give a description of projected 

reporting, record keeping, and other requirements resulting from the proposed rule until the rule 

is final. He further commented that he believes that all small refiners producing gasoline will be 

required to have additional record keeping, testing, and other activities which will need to be 

preformed by individuals with professional skills. He stated that the nature and number of such 

employees and the type of records and testing will only be known after the rule is adopted but it 

will undoubtedly add considerable record keeping and expense. 

No other small refiner SERs commented on potential reporting and recordkeeping 

associated with the upcoming rulemaking. 

8.2.2.1 Recordkeeping and Reporting Comments 

One small refiner SER commented that it is difficult to give a description of projected 

reporting, record keeping, and other requirements resulting from the proposed rule until the rule 

is final. He further commented that he believes that all small refiners producing gasoline will be 

required to have additional record keeping, testing, and other activities which will need to be 

preformed by individuals with professional skills. He stated that the nature and number of such 

employees and the type of records and testing will only be known after the rule is adopted but it 

will undoubtedly add considerable record keeping and expense. 

The ad-hoc group of small refiners also generally stated that the MSAT rulemaking will 

eliminate many of the refiners' reporting requirements, as it will supersede anti-dumping 

refinery-specific standards and the first MSAT refinery baselines. 

8.2.2.2 Compliance Comments 

The small refiners commented that it is not likely that small refiners will be able to cut 

benzene to the low levels predicted at the costs estimated by EPA's modeling. The small refiners 

also commented that they believe that the costs of compliance for benzene extraction 

technologies appear unrealistic on the basis of the preliminary information currently available to 

small refiners; and that some small refiners are not located in areas where they would be able to 

participate in markets for extracted benzene. The small refiners also commented that they are 

"severely overtaxed" to meet recent and projected environmental regulations, and that additional 

costs associated with the upcoming MSAT rulemaking are a significant concern to them. 

Specifically, the small refiners stated that, in general, they believe that EPA has underestimated 

costs by a factor of two to three. The small refiners also expressed concern over the use of a 

credit trading program for compliance. They noted that "credit trading programs are almost 

impossible to factor into capital investment decisions of this magnitude because the availability 

and cost of credits cannot generally be determined when decisions must be made"; they raised 

concerns that the credits may not be available, or would only be available at a cost that small 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 32 
refiners could not afford The small refiners further noted that it will be difficult for them to 

generate credits for use or sale on the market because of the anticipated difficulty of cutting 

benzene below the standard. 

One small refiner noted that it believes that its refinery would need to make the full 

capital investment for complete benzene reduction, it would not be able to cut its benzene levels 

"in stages", but states that it could only do so with a significant capital investment. The small 

refiner further states that, due to octane losses, it is also concerned that it would not be able to 

produce saleable gasoline if it was to reduce its benzene levels to the anticipated benzene 

standard. Also, this small refiner noted concerns about the fact that its refinery plans to expand 

its refining capacity; it was concerned that any baseline year that is chosen for the MSAT 

program should include room for expansion. The SER specifically suggested that 130% be 

chosen to allow for refinery expansion. 

Another small refiner raised similar concerns about its ability to meet a proposed benzene 

standard in the 0.6 to 0.65 range. It noted the costs of compliance of the rule coupled with its 

costs in relation to other rules, and its potential inability to produce gasoline with a satisfactory 

octane level. The small refiner also stated that it has concerns about using the credit trading 

market as a means to comply with the rule, noting the uncertainty of the availability of credits 

and their costs as its main concern. The refiner further noted that the credits may only be 

available at a cost that it could not afford, or would not be able to recover in the cost of the 

product that is sold. 

8.3 Related Federal Rules 

As discussed later in section 9, there are a few current or proposed Federal rules that are 

related to the upcoming MSAT proposed rule. 

8.3.1 Comments from Vehicle Manufacturer and Gas Can SERs 

As described earlier, a gas can manufacturer asked how the new program EPA is 

considering to propose would relate to OSHA safety requirements for gas cans. For gas cans, 

OSHA has safety regulations for gasoline containers utilized in workplace settings. Cans 

meeting OSHA requirements, commonly called safety cans, are exempt from the California 

program, and EPA is also planning to exempt these cans from the new EPA program. 

Vehicle and gas can SERs did not raise any concerns with other rules. In addition, EPA 

is not aware of any area where the regulations under consideration would directly duplicate or 

overlap with other Federal rules for these entities. 

8.3.2 Comments from Small Gasoline Refiner SERs 

As discussed in more detail in Section 2 and below in Section 9, EPA believes that 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 33 
Section 1501 of the Energy Policy Act of 2005 may slightly overlap with the refiner requirements 

of the upcoming rulemaking in light of the ethanol content requirement in the Act. One small 

refiner commented that it has concerns about blending ethanol into fuel that it would be 

transporting by pipeline. 

8.4 Regulatory Flexibility Alternatives 

All comments received from the potential SERs on potential flexibility alternatives are 

detailed in section 9 and Appendices B through E. In response to these comments, specific 

flexibility provisions are described in section 9. 

8.4.1 Comments from Vehicle Manufacturer and Gas Can SERs 

As discussed in section 9 and Appendices B through E, vehicle and gas can SERs were 

supportive of the flexibility discussed earlier in section 4.2.1 and 4.2.3. In addition, vehicle 

SERs suggested we consider extending the hardship relief provision beyond one year. Also, gas 

can SERs requested that the certification process be simplified (e.g., broaden engine families) 

and that there be additional lead time for the start of the program. 

8.4.2 Comments from Small Gasoline Refiner SERs 

In general, we were in agreement with the small refiner SERs on potential flexibility 

options for the rule that have been discussed throughout this SBREFA process. The SERs noted 

a couple of additional flexibility suggestions (see comments below in Appendix E) which we 

fully discuss, along with those flexibilities that were suggested previously, below in Section 9. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 34 
9. PANEL FINDINGS AND DISCUSSIONS 

9.1 Number and Types of Entities Affected 

Section 5 of this report, "Small Entities That May Be Subject to the Proposed 

Regulation," provides a description of an estimate of the number and types of entities that may 

likely be affected by the proposed rulemaking. These entities include highway light-duty vehicle 

manufacturers (including independent commercial importers and alternative fuel vehicle 

converters), gasoline refiners, and portable gasoline container manufacturers. 

The comments from small refiners noted that there may be up to 20 small refiners 

affected by the upcoming rulemaking. We do not dispute that, when the rulemaking is finalized 

or takes effect, there may be 20 small refiners that will be affected by the rule. However, EPA's 

assessment of 15 small refiners reflects the fact that there are 15 refineries currently producing 

gasoline that will potentially be affected by the rule. The additional five refiners noted in the 

small refiner comments is due to the fact that there may be some additional refineries that are not 

currently in the gasoline market, but may enter the market in the near future and would therefore 

be affected by the rule. 

9.2 Potential Reporting, Record Keeping, and Compliance 

At this point in the rulemaking process, EPA has not yet fully defined a program of 

reporting and record keeping requirements or compliance assurance for the entities that may be 

subject to the proposed rule. As with any emission control program, EPA must have the 

assurance that the regulated entities will meet the emissions standards and all related provisions. 

9.2.1 Highway Light-duty Vehicles and Gas Cans 

For highway light-duty vehicles, EPA expects to propose to continue the reporting, 

recordkeeping, and compliance requirements prescribed for this category in 40 CFR 86. Key 

among these are certification requirements and provisions related to reporting of production, 

emissions information, flexibility use, etc. 

9.2.2 Gasoline Refiners 

For any fuel control program, EPA must have assurance that fuel produced by refiners 

meets the applicable standard. EPA expects that recordkeeping, reporting and compliance 

provisions of the proposed rule will be fairly consistent with those in place today for other fuel 

programs. For example, reporting likely would involve the submission of pre-compliance 

reports, which are already required under the highway and nonroad diesel rules, to give EPA 

general information on refiners' plans and the projected credit availability. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 35 
9.2.3 Gas Cans 

As indicated earlier, there currently are not federal emission control requirements for gas 

cans, and thus, EPA is still developing reporting and record keeping requirements for gas can 

manufacturers that would be subject to the proposed standards. EPA is considering requirements 

that would be similar to those in California (e.g., emissions testing, data submittal). See section 

9.4.3.1 for certification flexibility provisions. 

9.3 Related Federal Rules 

The Panel is aware of a few other current or proposed Federal rules that are related to the 

upcoming proposed rule. The Panel is not aware of any area where the regulations under 

consideration would directly duplicate or overlap with these Federal rules. 

9.3.1 Highway Light-duty Vehicles 

For highway light-duty vehicles, the test procedure in the 1992 Cold Temperature Carbon 

Monoxide Rulemaking is the basis for test procedure we would use for cold temperature VOC 

standards EPA is considering. As indicated earlier, most manufacturers are currently measuring 

hydrocarbon emissions during the cold CO test even though they are not currently required to 

report hydrocarbon. For the proposed new cold VOC requirements, manufacturers would be 

required to report their hydrocarbon emissions (we plan to propose non-methane hydrocarbon 

emission standards). 

In addition, the Evaporative Emissions Streamlining Direct Final Rulemaking is expected 

to be published by the end of this year. This rulemaking will make changes to the evaporative 

and refueling emission regulations for vehicles. These changes are intended to reduce 

manufacturer's certification testing burden, clarify requirements, and better harmonize federal 

and California test procedures. As indicated earlier, the proposed new evaporative emission 

standards for this second MSAT rulemaking would harmonize with California's LEV-II 

evaporative emission standards and further streamline certification requirements (in addition to 

the Evaporative Emissions Streamlining rulemaking). For this MSAT rulemaking, we would not 

intend to change the Federal evaporative or refueling emission test procedures, and we would not 

be duplicating or overlapping with any of the test procedure revisions found in the Evaporative 

Emissions Streamlining rulemaking. 

9.3.2 Gasoline Refiners 

As noted above in section 2.3 ("Related Federal Rules"), the Renewable Fuels Standard 

program may have some impact on this rulemaking. Some refiners noted in their comments 

concerns over the ability to produce a saleable product upon reducing their benzene levels (due to 

a reduction in octane when benzene is removed). The most prevalent renewable fuel is expected 

to be ethanol, and since ethanol has a high octane number relative to gasoline, its mandated use 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 36 
may offset some of the octane losses resulting from new controls on gasoline benzene content. 

The Panel has also discussed the possibility of allowing small refiners to receive credits 

of some sort, under the MSAT rule, for blending ethanol into their gasoline. This could help to 

alleviate problems of reduced octane and will help further the goals of the Renewable Fuels 

Standard. EPA noted that it may be possible in some circumstances for a refiner to obtain credit 

for the downstream blending of ethanol (dilution effect). For example, a sub-octane gasoline that 

could not be sold if ethanol were not blended into it downstream. However, EPA also noted that 

receiving credits for blending ethanol could be available to all refiners in the MSAT program. 

EPA noted that it would have to consider this more carefully, before any final decisions were 

made on this. The Panel recommends that EPA propose a credit for refineries for 

benzene-content dilution due to the downstream blending of ethanol, but the Panel acknowledges 

that such a regulatory scheme may be unreasonably difficult to design and implement effectively. 

The Panel also notes that some refiners may be required to obtain permits from state and 

local air pollution control agencies under the Clean Air Act's New Source Review program prior 

to constructing the desulfurization equipment needed to meet the standards. 

9.3.3 Gas Cans 

As indicated in section 2.3, for gas cans, OSHA has safety regulations for gasoline 

containers used in workplace settings. Gas cans meeting OSHA requirements, commonly called 

safety cans, are exempt from the California program, and EPA is planning to exempt them from 

the EPA program. 

9.4 Regulatory Flexibility Alternatives 

Due to the potential cost and technology challenges that small businesses may face as a 

result of the upcoming rulemaking, the Panel recommends a group of complementary flexibility 

alternatives that would work together to help mitigate any negative impacts on small businesses. 

The Panel also seeks comment on some flexibility options in the development of the upcoming 

rule. The alternatives discussed throughout the Panel process include those offered in previous 

or current EPA rulemakings, as well as alternatives suggested by SERs and Panel members, and 

the Panel recommends that all are considered in the development of the upcoming rule. 

9.4.1 Highway Light-Duty Vehicles 

As discussed earlier in section 4.2.1 and 5.1, in addition to the major vehicle 

manufacturers, three distinct categories of businesses relating to highway light-duty vehicles 

would be covered by the new vehicle standards: small volume manufacturers (SVMs), 

independent commercial importers (ICIs), and alternative fuel vehicle converters. Small volume 

manufacturers are entities that sell less than 15,000 vehicles per year, and this status allows 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 37 
vehicle models to be certified under a slightly simpler certification process. Thus, for 

certification purposes (and for the sake of simplicity for discussions within this section), SVMs 

include ICIs and alternative fuel vehicle converters since they sell less than 15,000 vehicles per 

year. 

The Panel identified 21 out of 50 entities covered by the vehicle standards that qualify as 

small businesses (5 manufacturers, 10 ICIs, and 6 converters) under the SBA definition.8

 Four of 

these companies participated as SERs. As also described in section 4.2.1 (and similar to 

provisions in the Tier 2 rule), we sought comment from the SERs on allowing small entities to 

simply comply with the proposed evaporative emission and cold temperature VOC standards 

with 100 percent of their vehicles during the last year of the phase-in period. In addition, we 

asked for comment on a one-year hardship provision that will allow these businesses to apply for 

an additional year to meet any of the 100 percent phase-in requirements. SERs were supportive 

of these two types of flexibility provisions. However, SERs requested that we consider 

providing a hardship provision that would apply for more than one year in order to reduce the 

burden associated with reapplying for relief every year. 

9.4.1.1 Regulatory Flexibility Options for Highway Light-Duty 

Vehicles 

In these types of vehicle businesses, predicting sales is difficult and it is often necessary 

to rely on others for technology. Moreover, percentage phase-in requirements pose a dilemma 

for an entity such as an SVM that has a limited product line (e.g., makes vehicles in one or two 

test groups). Thus, similar to the flexibility provisions implemented in the Tier 2 rule, the Panel 

recommends that we allow SVMs, manufacturers with sales less than 15,000 vehicles per year 

(includes all vehicle small entities that would be affected by this rule, which are the majority of 

SVMs) the following flexibility options for meeting cold temperature VOC standards and 

evaporative emission standards. 

For cold VOC standards, the Panel recommends that SVMs simply comply with the 

standards with 100 percent of their vehicles during the last year of the 4 year phase-in period. 

For example, if the standard for light-duty vehicles and light light-duty trucks (0 to 6,000 pounds 

GVWR) begins in 2010 and ends in 2013 (25%, 50%, 75%, 100% phase-in over 4 years), the 

SVM provision would be 100 percent in 2013. If the standard for heavy light-duty trucks and 

medium-duty passenger vehicles (greater than 6,000 pounds GVWR) starts in 2012 (25%, 50%, 

75%, 100% phase-in over 4 years), the SVM provision would be 100 percent in 2015. 

In regard to evaporative emission standards, the Panel recommends that since the 

evaporative emissions standards will not have phase-in years, we allow SVMs to simply comply 

with standards during the third year of the program (we have implemented similar provisions in 

8

 About 34 out of 50 entities are SVMs - sell less than 15,000 vehicles per year, and 21 of these 34 SVMs are 

small businesses as defined by SBA criteria. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 38 
past rulemakings). For a 2009 start date for light-duty vehicles and light light-duty trucks, SVMs 

would need to meet the evaporative emission standards in 2011. For a 2010 implementation date 

for heavy light-duty trucks and medium-duty passenger vehicles, SVMs would need to comply in 

2012. 

EPA believes that these flexibility options offer an opportunity to reduce the burden on 

vehicle small businesses while at the same time meeting the regulatory goals of EPA. Further, 

these options will not put small entities at a significant disadvantage as they will be in 

compliance with the standards in the long run and the options will give them more lead time to 

comply. 

9.4.1.2 Hardship Provisions for Highway Light-Duty Vehicles 

In addition, the Panel recommends that hardship provisions be extended to SVMs for the 

cold temperature VOC and evaporative emission standards. SVMs would be allowed to apply 

(EPA would need to review and approve application) for up to an additional 2 years to meet the 

100 percent phase-in requirements for cold VOC and the delayed requirement for evaporative 

emissions. Appeals for such hardship relief must be made in writing, must be submitted before 

the earliest date of noncompliance, must include evidence that the noncompliance will occur 

despite the manufacturer's best efforts to comply, and must include evidence that severe 

economic hardship will be faced by the company if the relief is not granted. The above 

provisions should effectively provide more time. 

9.4.2 Gasoline Refiners 

Discussed below are the options that were suggested above in Section 4.2.2 ("Potential 

Burden Reduction Measures for Gasoline Refiners"). These options were discussed at length 

during both the September 27, 2005 Outreach Meeting and the Panel Convening. In some cases, 

as noted below, discussions regarding some of the previously suggested options led to the 

development of different potential options. 

Delay in Standards 

As noted above, previous EPA fuel programs have included two to four year delays in the 

start date of the effective standards for small refiners. The length of time for a delay is 

dependent on the effective date of the rule, however, the Panel recommends that a 

four-year delay period should be proposed for small refiners. A four-year delay would be 

needed in order to allow for a review of the ABT program, as discussed below, to occur 

one year after implementation but still three years prior to the small refiner compliance 

deadline. EPA also noted that a delay option would also allow for small refiners to be 

able to expand their production capacity, which one of the SERs noted that it planned to 

do in the near future. The SER suggested that small refiners be allowed to expand their 

production capacity up to 130% beyond the baseline that is chosen for the MSAT rule; 

however, EPA stated that it is unclear at this time what the amount of such an expansion 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 39 
should be. The Panel is in support of allowing for refinery expansion and recommends 

that refinery expansion be provided for in the rule. 

Early ABT Credits 

The Panel recommends that early credit generation be afforded to small refiners that take 

some steps to meet the benzene requirement prior to the effective date of the standard. 

Depending on the start date of the program, and coupled with the four-year delay option, 

a small refiner could have a total credit generation period of five to seven years. While 

prior fuels programs have given early credits only to refiners who have met the applicable 

standard early, the Panel is in support of letting refiners (small, as well as non-small, 

refiners) generate credits for reductions to their benzene emissions levels. 

Small Refiner "Free" Credits 

During discussions in the SER Outreach Meeting #2, EPA discussed the fact that 

allowing small refiners to receive "free credits" equal to four years was quite similar to, 

and actually less flexible than, a four-year delay option; especially when the delay option 

is combined with the opportunity for small refiners to generate credits during the delay 

period. Further, as stated above, a delay option would also allow for small refiners to 

expand their production capacity. Therefore, the Panel recommends that EPA pursue a 

delay option (with the opportunity to generate early credits). 

Extended Credit Life 

The flexibility option would only be available if the general ABT program included a 

limit on credit life. During Panel discussions, it was noted that some Panel members 

were not in support of limited credit life for the general program. EPA has not yet 

determined the design of the MSAT ABT program; however, EPA is likely to propose a 

program that does not place limits on credit life. The Panel recommends that EPA 

propose a program that does not place a limit on credit life. 

Program Review 

EPA has plans to design the MSAT program so that refiners can either make investments 

in technology to reduce benzene or purchase credits in order to comply with the rule. Due 

to the wide variation in gasoline refiners' situations, it may be more economically sound 

for some refiners to purchase and use credits. Small refiners voiced concerns about 

having to rely on a credit market for compliance. Specifically, these small refiners feared 

that there could be a shortage of credits or that the cost of credits could be so high that the 

option to purchase credits for compliance would be cost prohibitive. During the second 

Outreach Meeting, it was suggested that EPA perform a review of the credit program and 

small refiner flexibility options one year after the general program starts. 

Such a review could take into account the number of early credits generated, as well as 

the number of credits generated and sold during the first year of the program. Further, if 

EPA does require the submission of pre-compliance reports from all refiners, this will aid 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 40 
EPA in assessing the ABT program prior to performing the review. If small refiners are 

given the recommended four-year delay, a review after the first year of the program 

would still provide small refiners with the three years that it was suggested would be 

needed for these refiners to obtain financing and perform engineering and construction for 

benzene reduction equipment. The Panel supports this review. Should the review 

conclude that changes to either the program or the small refiner provisions are necessary, 

the Panel recommends that EPA also consider some of the suggestions provided by the 

small refiners (their comments are located in Appendix E), such as: 

•	 the review should occur within the first year of the program to allow small 

refiners three additional years before capital investments must be made; 

•	 the general MSAT program should require pre-compliance reporting (similar to 

EPA's highway and nonroad diesel rules); 

•	 following the review, EPA should revisit the small refiner provisions if it is found 

that the credit trading market does not exist, or if credits are only available at a 

cost that would not allow small refiners to purchase credits for compliance; and, 

•	 the review should offer ways either to help the credit market, or help small 

refiners gain access to credits (e.g., EPA could 'create' credits to introduce to the 

market, EPA could impose additional requirements to encourage trading with 

small refiners, etc.). 

In addition, the Panel recommends that EPA consider in this rulemaking establishing an 

additional hardship provision to assist those small refiners that cannot comply with the 

MSAT with a viable credit market. (This suggested hardship provision was also 

suggested by the small refiners in their comments, located in Appendix E, below). This 

hardship provision would address concerns that, for some small refineries, compliance 

may be technically feasible only through the purchase of credits and it may not be 

economically feasible to purchase those credits. This flexibility would be provided to a 

small refiner on a case-by-case basis following the review and based on a summary, by 

the refiner, of technical or financial infeasibility (or some other type of similar situation 

that would render its compliance with the standard difficult). This hardship provision 

might include further delays and/or a slightly relaxed standard on an individual refinery 

basis for a duration of two years; in addition, provision might allow the refinery to 

request, and EPA grant, multiple extensions of the flexibility until the refinery's material 

situation changes. The panel understands that EPA may need to modify or rescind this 

provision, should it be implemented, based on the results of the program review. 

The Panel also notes that, when combined with the four-year delay option, this will afford 

small refiners with the knowledge of the credit trading market's status before they would 

need to invest capital. Thus, the Panel supports and recommends a review of the ABT 

program after the first year of the general program. 

Small Refiner Alternate Standards 

The allowance of a higher benzene content standard, or a separate toxics standard, for 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 41 
small refiners was also suggested as a flexibility option. As mentioned above, in all 

previous EPA fuel programs, small refiners have at some time been required to meet the 

general program standards. Therefore, this option is not recommended by the Panel for 

proposal as a flexibility option; however the Panel does recommend that EPA consider 

this as a possible option if, after the review, EPA determines that more flexibility options 

are needed. 

Alternate Standards Option- Air Toxics Formula 

Alternate standards options were suggested by SERs in order to assist those with very low 

sulfur and aromatics content in complying with the MSAT program. Such a standard 

would, theoretically, allow a small refiner to meet some sort of total toxics-based formula 

(an "air toxics" formula) instead of a benzene standard. Upon further study, EPA found 

that, unfortunately, the refiners who are very low in sulfur and olefins tend to also be high 

in aromatics. Consequently, a toxics performance standard equivalent in stringency to a 

benzene standard would be unlikely to provide small refiners with any significant relief, 

and in some cases could provide a more stringent standard. As the Panel's goal is to 

recommend flexibility options that provide meaningful relief to small entities, the Panel 

does not recommend this option for inclusion in the rule. 

"De Minimis" Exclusion 

The small refiner SERs have suggested that they should receive a de minimis exemption 

due to the fact that they do not contribute heavily to the total national benzene emissions. 

While prior EPA fuels rulemakings have offered flexibility options for approved small 

refiners-- some of which allow small refiners to delay compliance-- EPA notes that none 

of these programs have allowed a complete exemption from the standards, and that small 

refiners have had to comply with the overall program standards by a known date. EPA 

also noted that legally it may be difficult to justify the allowance of such an exclusion; 

from a policy standpoint, a de minimis option is not preferred. The Panel has discussed 

this fully, and therefore does not recommend that a de minimis exclusion option be 

proposed for small refiners for the MSAT program. 

Hardship Options 

EPA has stated that it does intend to propose the extreme unforeseen circumstances 

hardship and extreme hardship provisions (for all gasoline refiners and importers), similar 

to those in prior EPA fuels programs. As previously stated, a hardship based on extreme 

unforeseen circumstances is intended to provide short term relief due to unanticipated 

circumstances beyond the control of the refiner, such as a natural disaster or a refinery 

fire; an extreme hardship is intended to provide short-term relief based on extreme 

circumstances (e.g., extreme financial problems, extreme operational or technical 

problems, etc.) that impose extreme hardship and thus significantly affect a refiner's 

ability to comply with the program requirements by the applicable dates. The Panel 

agrees with the proposal of such provisions and recommends that EPA include them in 

the MSAT rulemaking. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 42 
The Panel recommends that EPA propose a four-year delay, early credit generation, the 

three various hardship options, and the review of the ABT program in the upcoming 

MSAT rulemaking. 

9.4.3 Portable Gasoline Container Manufacturers 

The Panel identified 3 out of 5 gas can manufacturers that meet the SBA definition of a 

small entity. All three companies participated as SERs. The concerns raised by SERs are 

described below in this section. 

9.4.3.1 Regulatory Flexibility Options for Portable Gasoline Container 

Manufacturers 

EPA believes that the flexibility options discussed below offer an opportunity to reduce 

the burden on gas can manufacturers while simultaneously meeting EPA's regulatory goals. 

Since nearly all gas can manufacturers are small entities and they account for about 60 percent of 

sales, we plan to extend the flexibility options to all gas can manufacturers. Moreover, 

implementation of the program would be much simpler by doing so. The options will not put 

small entities at a significant disadvantage. 

Design Certification 

The process of certification is a business cost and lead time issue, which potentially 

places a disproportionate burden on small entities. Certification is a fixed cost of doing business 

which is potentially more burdensome on a unit cost basis for small entities if they have 

relatively low production volumes. It is potentially an even greater challenge since small entities 

will likely contract emission testing work to other parties. 

Manufacturers could demonstrate the durability of their gas cans based in part on 

emissions test data from designs using the same permeation barriers and materials. Under a 

design-based certification program a manufacturer would provide evidence in the application for 

certification that their container would meet the applicable standards based on its design (e.g., 

use of a particular permeation barrier). The manufacturer would submit adequate engineering 

and other information about its individual design such that EPA could determine that the 

emissions performance of their individual design would not be negatively impacted by slosh, UV 

exposure, and/or pressure cycling (whichever tests the manufacturer is proposing to not run prior 

to emissions testing). This approach would allow manufacturers to potentially minimize the 

amount of durability testing (slosh, UV exposure, and pressure cycling) that must occur prior to 

running the certification emissions test. The Panel recommends that EPA propose to permit 

small entities to use design certification in lieu of running any or all of the durability aging cycles 

noted above. 

Broaden Certification Families 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 43 
This approach would relax the criteria used to determine what constitutes a certification 

family. It would allow small businesses to limit their certification families (and therefore their 

certification testing burden), rather than testing all of the various size containers in a 

manufacturer's product line. Some small entities may be able to put all of their various size 

containers into a single certification family. Manufacturers would then certify their containers 

using the "worst case" configuration within the family. To be grouped together, containers 

would need to be manufactured using the same materials and processes even though they are of 

different sizes. The Panel recommends that EPA propose this approach. 

Additional Lead-time 

One SER discussed the possibility that additional lead-time may be needed beyond 2009 

to ramp-up production of complying cans. During the outreach meeting, the SER said they 

would be discussing lead-time with their tooling suppliers and would provide additional input on 

the need for additional lead-time to the panel during the comment period. The panel, however, 

did not receive additional input from the SER. Since it may take additional time for the SERs to 

gather information to fully evaluate whether or not additional lead-time is needed beyond the 

2009 start date, the Panel recommends that EPA discuss lead-time in the proposal and request 

comments on the need for additional lead-time to allow manufacturers to ramp up to a 

nationwide program. 

Product Sell-through 

SERs raised concerns that during the transition period after the start of the program, that 

retailers not be required to pull noncomplying products from store shelves. SERs believed this 

would cause significant hardship for manufacturers and retailers and could lead to the old 

product being scrapped. The SERs recommended that EPA require newly manufactured 

products to meet the new standards after the start date of the program, but allow normal sell 

through of old products. SERs noted that all cans are currently marked with a production date 

stamp. EPA explained that we typically allow normal sell through of products as long as 

manufacturers do not create stockpiles of noncomplying products prior to the start of the 

program. The panel recommends that EPA propose this same approach for gas cans. 

9.4.3.2 Hardship Provisions for Portable Gasoline Container 

Manufacturers 

The Panel recommends that EPA propose two types of hardship programs for small gas 

can manufacturers. The first type of hardship program would allow small manufacturers to 

petition EPA for limited additional lead-time to comply with the standards. A manufacturer 

would have to make the case that it has taken all possible business, technical, and economic steps 

to comply but the burden of compliance costs or would have a significant adverse effect on the 

company's solvency. Hardship relief could include requirements for interim emission reductions. 

The length of the hardship relief would be established during the initial review and would likely 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 44 
need to be reviewed annually thereafter. EPA anticipates that one to two years would normally 

be sufficient. The second hardship program would allow small manufacturers to apply for 

hardship relief if circumstances outside their control cause the failure to comply (i.e. supply 

contract broken by parts supplier) and if failure to sell the subject containers would have a major 

impact on the company's solvency. The terms and timeframe of the relief would depend on the 

specific circumstances of the company and the situation involved. As part of its application, a 

company would be required to provide a compliance plan detailing when and how it would 

achieve compliance with the standards under both types of hardship relief. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 45 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 46 
10. APPENDICES 

Appendix A: List of Materials SBAR Panel Shared With SERs During Panel Outreach 

Appendix B: Summary of SBAR Panel's First Small Entity Outreach Meeting 

Appendix C: Summary of SBAR Panel's Second Small Entity Outreach Meeting 

Appendix D: Written Comments Received from Potential SERs on Outreach Meeting #1 

Appendix E: Written Comments Received from Potential SERs on Outreach Meeting #2 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 47 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 48 
Appendix A:


List of Materials SBAR Panel Shared With SERs During


Panel Outreach


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 49 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 50 
Appendix B:


Summary of SBAR Panel's First Small Entity Outreach


Meeting


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 51 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 52 
Discussion and Summary of Comments


During July 19, 2005 Outreach Meeting


Background 

On July 19, 2005, EPA held three 1.5 hour meetings with Small Entity Representatives 

(SERs) representing the light-duty vehicles, gas can, and gasoline refining industry. EPA plans 

to propose a Mobile Source Air Toxics (MSAT) rulemaking in early 2006. 

The outreach meeting was held to describe EPA's plans to date, and to solicit feedback 

from the SERs on the upcoming rulemaking. EPA is working closely with the SERs to develop 

regulations for these industries to protect public health and the environment, while avoiding (as 

much as possible) disproportionate burdens on small businesses. Once the federal Small 

Business Advocacy Review (SBAR) Panel convenes, the SERs, most of whom attended the 

Outreach Meeting, will aid this process by providing comments to the Panel. Ultimately, the 

Panel will draft a report providing recommendations on the proposed rulemaking. The report 

will then be sent to EPA for consideration in the proposed rule while it is being developed. 

Introduction 

Each Outreach Meeting consisted of background on the rulemaking process and an 

explanation of the SBREFA Panel process from Ken Munis, on behalf of EPA's Small Business 

Advocacy Chair, Alex Cristofaro. Following this were presentations by EPA- OTAQ staff on the 

rulemaking and prior rulemaking flexibilities. Discussions then began on the challenges small 

businesses may face in complying with the rule, and potential ways to modify the rule 

provisions/offer regulatory flexibility. 

Light-Duty Vehicles 

IMPCO Technologies/Quantum Technologies 

Karen Szabo Hay of IMPCO Technologies/Quantum Technologies participated by phone 

in the outreach meeting. She asked whether we plan to propose more stringent 

non-methane organic gas (NMOG) standards for highway light-duty vehicles that are not 

specific to toxics. 

Response from EPA staff: We plan to propose VOC standards. You will see reductions 

in VOC based toxics with more stringent VOC standards. For new cold temp VOC 

exhaust requirements, we plan to have non-methane hydrocarbon standards (NMHC), 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 53 
which are easier to test. For the new evaporative emission standards, the standards 

would be hydrocarbon (HC) standards. 

In addition, Karen asked if the testing equipment currently existed to record cold 

temperature VOC emissions. 

Response from EPA staff: No equipment upgrade would be needed (equipment for 

existing cold temperature carbon monoxide standards, etc. is already in place). 

Also, Karen indicated that the existing flexibilities (for Tier 2 program, etc.) provided for 

small volume manufacturers are helpful and good. 

Wallace Environmental Testing 

Les Weaver of Wallace Environmental Testing participated by phone in the outreach 

meeting. In regard to independent commercial importers, Les commented that for the 

Tier 2 requirements if you import a model year 2000 vehicle (as an example), you need to 

meet the standards in effect on the date that the vehicle was originally manufactured - not 

the standards in effect on the date of import. 

Also, he commented that for formaldehyde standards the OEM typically receives a waiver 

from testing for these standards. This may apply to alternative fuel converters as well. 

Response from EPA staff: EPA is getting clarification of these issues from EPA 

certification staff, and we will communicate back with the SERs. 

DRV Energy, Inc. 

Sheri Vanhooser of DRV Energy, Inc. participated by phone in the outreach meeting. In 

regard to certification for alternative fuel vehicles (and conversions), she asked whether 

California would accept federal certification. Sheri indicated that the California 

certification process was much slower and difficult to work through than the EPA process 

Response from EPA staff: EPA is getting clarification of these issues from EPA 

certification staff, and we will communicate back with the SERs. 

In addition, she suggested that they were being required to test formaldehyde as a separate 

entity for their conversion of conventional vehicles to operate on alternative fuel. They 

would be required to run an additional test since the OEM was not required to run the 

formaldehyde test. 

Response from EPA staff: There are formaldehyde testing requirements in place. 

However, EPA is getting clarification of these issues from EPA certification staff, and we 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 54 
will communicate back with the SERs. 

Gas Cans 

Blitz USA 

Chuck Craig of Blitz USA was in attendance at the outreach meeting. He commented 

that the proposed new standards for portable gasoline containers should have up-front 

certification similar to California's gas can requirements. 

Response from EPA staff: Yes, we will have up-front certification because we want to 

make sure gas cans meet the standards in-use. For certification, we plan to group 

together gas cans that have the same materials and spout designs. As flexibility 

provisions, EPA is considering ways to minimize certification testing by having such 

broad testing and allowing the carry over of data from California's program. 

For purposes of durability, Chuck indicated that they build gas cans to compensate for 

sloshing that may occur during the life of the can. Yet, he suggested that sloshing is 

much more of an issue for gas tanks (tanks installed on motor vehicles and nonroad 

equipment) since gas cans tend to sit for most of their lives. 

Response from EPA staff: Sloshing from gas cans placed in the back of trucks is fairly 

common, and it is something that we plan to account for in the certification testing 

requirements. 

In addition, Chuck also mentioned that Ohio may adopt the requirements equivalent to 

the California gas can program, but it is possible they may wait for the EPA program. 

In regard to automatic shut-off control for gas cans, he explained that such a design has 

not worked well because some equipment with small tanks (e.g., weed eaters) needs time 

to reach equilibrium during refueling, and the test equipment that California used to 

develop the requirements for such controls is based on a larger tank than is typically 

found in the field. 

Response from EPA staff: We do not plan to propose such requirements due to such 

issues. 

In closing, Chuck welcomed EPA's efforts to discuss the proposed requirements earlier 

rather than later. He indicated that it is helpful to be discussing the program before the 

"ball starts rolling." This approach is better than that taken by California. 

No-Spill Research 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 55 
Mark Pierce of No-Spill Research participated by phone in the outreach meeting. He 

asked how we were coordinating with OSHA, United Nations, or other gas can 

requirements. 

Response from EPA staff: EPA is setting emissions performance requirements rather 

than design requirements and believes that manufacturers will be able to meet the 

emissions standards without impacting their ability to meet other standards. We asked 

the manufacturers to let EPA know of any potential conflicts between the standards we 

plan to propose and other design considerations. 

Midwest Can Company 

John Trippi of Midwest Can Company participated by phone in the outreach meeting. He 

asked how this national program will be coordinated with the California and other state 

programs. 

Response from EPA staff: California will have their own program, and EPA's program 

will be separate from California's program. The programs are likely to be very similar 

and we expect manufacturers to develop a single product that can be sold nationwide. 

Other states will need to decide if they want to retain a separate program or defer to the 

EPA program, but because there will be little difference between the two, we would 

expect most states to defer to the national program. 

Gasoline Refiners 

Meeting Attendees 

SERs (via teleconference): 

Sally Allen 

Al Cabodi 

John Stern 

Rick Kucharski, et al 

Gary-Williams Energy Corporation 

U.S. Oil and Refining Company 

Countrymark Cooperative, Inc. 

American Refining 

EPA: 

Julie Boledovich 

Chris Brunner 

Aron Butler 

Jeff Herzog 

Chris Lieske 

Paul Machiele 

Bryan Manning 

Robin Moran 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

EPA, Office of Transportation and Air Quality 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 56 
Ken Munis 

Kathryn Sargeant 

Steven Silverman 

Tia Sutton 

Jennifer Vernon 

Mark Wilson 

Lester Wyborny 

EPA, Small Business Advocacy Chair (SBAC) Staff 

EPA, Office of Transportation and Air Quality 

EPA, Office of General Counsel 

EPA, Office of Transportation and Air Quality 

EPA, SBAC Staff 

EPA, SBAC Staff 

EPA, Office of Transportation and Air Quality 

OMB: 

David Rostker 

SBA, Office of Advocacy: 

Keith Holman 

Charlie Maresca 

Overview of the Meeting 

As stated above, OTAQ staff gave short presentations to ensure that the SERs and Panel 

members were informed about the MSAT rule. First, a brief presentation was given about the 

MSAT rule in general. This presentation discussed the first MSAT rule and why EPA is 

promulgating another MSAT rule, including the environmental benefits of a new MSAT rule. 

Following this, a presentation was given on the role that gasoline fuel plays in mobile source air 

toxics and the fuel controls that OTAQ is considering for the rulemaking. Lastly, a presentation 

was given discussing previous flexibilities given to small entities, mainly small refiners, in recent 

OTAQ rulemakings. 

Following the presentation and a brief question and answer period, a discussion of the 

issues related to this rulemaking and potential small refiner flexibilities then ensued. 

Discussion of Issues 

The small refiners that participated all generally stated that they believed that small 

refiners would face a challenge in meeting a new standard. Namely, it was mentioned that the 

rule would be costly and that they believe a couple of the compliance flexibilities would be 

expensive, and may not be reliable. Small refiners were also concerned about the timing of the 

standards for the MSAT rule, given other recent and upcoming fuel standards. Small refiners 

expressed concern about the fact that reliance on an ABT program. The SERs believe that 

credits may not be available, or that they may be available but not at a cost that small refiners 

would be able to afford. The SERs also noted that for some refiners, further reductions in 

benzene would result in reductions in octane-- these refiners were concerned that they may not be 

able to produce saleable gasoline. 

Various flexibility options were noted by some gasoline small refiners during pre-Panel 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 57 
outreach, and these potential options (listed below) were discussed at the Outreach Meeting. 

OTAQ staff and the small refiner SERs committed to having more discussions to determine 

appropriate small refiner flexibility options. 

Potential MSAT flexibility options: 

•	 Give small refiners more time to comply. 

-	 Discussion and response from EPA staff: Such a flexibility has been 

offered in previous fsuel rulemakings, and small refiners feel that this 

flexibility is quite beneficial to them. EPA indicated that a two to three 

year delay would be a choice that should be clearly available. 

•	 A credit program is also a clear option, according to EPA, though it has yet to be 

designed. 

- Discussion and response from EPA staff: SERs asked if it would be 

possible to set up a credit banking and trading program so that there is a 

credit market that can be counted on. A per gallon or maximum average 

limit that would not apply to small refiners was mentioned as a way to 

increase the likelihood of the availability of credits for small refiners. 

SERs also suggested that perhaps small refiners could earn credits through 

NESHAP that could be applied to gasoline benzene. Other suggestions 

that came out of the ABT program discussion were to insure that credits 

were being sold to small refiners by either reserving a small portion of the 

credits on the market for small refiners only or requiring that credits be 

offered to small refiners before they can be sold to other non-small 

refiners. EPA stated that it would look into various options of how to 

encourage credit trading with small refiners. 

•	 A de minimis exclusion option, perhaps designed like NESHAP, if the small 

refiner can show low numbers for other toxics; perhaps there should be caps set 

for sulfur and olefins. 

- Discussion and response from EPA staff: The SERs suggested that the 

fact that their contribution to the total gasoline produced should be taken 

into account, and therefore small refiners should be given some type of 

exclusion, a de minimis exclusion, due to the small amount of gasoline 

they produce (which, they stated, would likely be directly proportional to 

their contribution to the total benzene emissions). EPA stated that since 

MSAT is a technology-based rule (and NESHAP was risk-based) a de 

minimis exclusion may not be a feasible flexibility option, EPA stated that 

it would look into this more and provide more information for the SERs 

on de minimis rulings. EPA also noted that in all of its previous 

rulemakings, small refiners have had to comply with the applicable 

standard at some point; small refiners have never been completely 

exempted from the standards. 

•	 An air toxics formula for small refiners on an interim or permanent basis. 

- Discussion and response from EPA staff: The discussion surrounding this 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 58 
potential flexibility option was similar to that surrounding a de minimis 

option. Some SERs noted that their sulfur and olefins levels were quite 

low and suggested that there be an alternate standard for small refiners that 

would take these into account. The idea behind this option was that, 

instead of a benzene standard, small refiners would comply with an 

alternate standard that was based on their sulfur and/or other air toxics 

levels. 

•	 Allow higher benzene content for small refiners. 

-	 Discussion and response from EPA staff: Small refiners suggested this 

option, which is similar to a de minimis exemption. With this flexibility 

option, small refiners would be given a separate benzene standard that 

would be higher than the general MSAT program benzene standard. EPA 

again mentioned that small refiners have never been give complete 

exemptions from the standards that have been set in prior fuels 

rulemakings. 

•	 Hardship provisions 

-	 Discussion and response from EPA staff: Small refiners noted that all 

previous fuels rulemakings have included some type of hardship 

provisions for refiners that cannot comply with the standards. EPA stated 

that it plans to include similar hardship provisions that are in past and 

current fuels rulemakings (extreme unforeseen circumstances hardship and 

extreme hardship provisions). 

Next Steps 

Following the discussions, SERs were asked to provide as much information as they 

could by close of business (COB) August 2, 2005 in order for the Panel to have useful feedback 

prior to the Panel Convening. (The written comments received from the SERs are located in 

Appendix D of this report.) 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 59 
Appendix C:


Summary of SBAR Panel's Second Small Entity Outreach


Meeting


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 60 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 61 
Summary from EPA's 9/27/05 Outreach Meeting with Fuel Refiner SERs 

Background 

On September 27th, 2005 from 10:00am to 12:00 p.m. (EST), EPA held a two hour 

meeting with Small Entity Representatives (SERs) representing the gasoline refining industry on 

the Mobile Source Air Toxics (MSAT) rulemaking that is to be proposed in early 2006. 

This outreach meeting, which was the second meeting held with the small refiner SERs 

during this MSAT SBREFA process, was held to discuss in more detail potential small refiner 

flexibility options and update the SERs on EPA's current plans for the MSAT rulemaking. EPA 

continues to work closely with gasoline refiners to develop regulations for these industries to 

protect public health and the environment, while avoiding (as much as possible) disproportionate 

burdens on small businesses. The Outreach Packet that was provided to SERs prior to this 

meeting contained very detailed questions that we asked of the SERs to provide as much 

feedback as possible to aid EPA, and the Panel as a whole, in developing flexibility provisions 

that will help mitigate the effects of the rule on small businesses. 

Meeting Attendees 

SERsIn person: 

Sally Allen Gary-Williams Energy Corporation 

Al Cabodi U.S. Oil and Refining Company 

Rick Kucharski American Refining 

Steve Sherk American Refining 

John Stern Countrymark Cooperative, Inc. 

By phone: 

Don Keck American Refining 

Dave Roderick Gary-Williams Energy Corporation 

EPA Staff: 

Julie Boledovich EPA, Office of Transportation and Air Quality 

Chris Brunner EPA, Office of Transportation and Air Quality 

Aron Butler EPA, Office of Transportation and Air Quality 

Jeff Herzog EPA, Office of Transportation and Air Quality 

Chris Lieske EPA, Office of Transportation and Air Quality 

Paul Machiele EPA, Office of Transportation and Air Quality 

Bryan Manning EPA, Office of Transportation and Air Quality 

Ken Munis EPA, Small Business Advocacy Chair (SBAC) Staff 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 62 
Kathryn Sargeant EPA, Office of Transportation and Air Quality


Steven Silverman EPA, Office of General Counsel


Tia Sutton EPA, Office of Transportation and Air Quality


Jennifer Vernon EPA, SBAC Staff


Mark Wilson EPA, SBAC Staff


Lester Wyborny EPA, Office of Transportation and Air Quality


OMB:


David Rostker


SBA, Office of Advocacy:


Keith Holman


Joe Johnson


Shawn McGibbon


Overview of the Meeting


As the SERs had participated in a previous Outreach Meeting (and most of the small 

refiner SERs are well-versed in SBREFA processes), the Panel did not spend much time on 

background and introductory material at the start of this meeting; rather, an in-depth discussion 

of the flexibilities and other items detailed in the Packet began. In the Outreach Packet that 

SERs received, EPA provided a discussion on the flexibility options that had been suggested up 

to this point. 

Following the discussion, SERs were reminded of the importance of their comments and 

asked that they provide as detailed comments as possible. 

Discussion of Issues 

The small refiner SERs reiterated that they believed that small refiners would face 

significant challenges in meeting the benzene standard. Namely, it was mentioned that the rule 

would be costly, small refiners were not sure that reliance on a credit market would be feasible 

for them, and that meeting the benzene standard could result in the production of gasoline that is 

not saleable (due to a loss in octane). As previously stated, the Outreach Packet listed various 

flexibility options that were to be discussed during the meeting, these options were: 

•	 Small refiner delay- to allow small refiners with two to four years of delay prior to 

meeting the MSAT standard (similar to previous fuels programs) 

•	 Providing small refiners with "free" credits equal to a certain period of time (2 to 

4 years) which could be extended if the refiner made any reductions in its benzene 

emissions level, the credits could be traded and sold like any other ABT credits 

•	 Generation of early credits, prior to the start of the general program standards, if 

the refiner made any reductions in its benzene emissions level 

•	 If the rule were to include a limit on credit life, a potential flexibility option would 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 63 
be to allow for an extended life on ABT credits for small refiners only 

•	 A de minimis exclusion option 

•	 An air toxics formula, or alternate air toxics standard, for small refiners on an 

interim or permanent basis 

•	 Allowance of a separate benzene standard for small refiners 

•	 Hardship provisions 

Upon further discussion of these potential options, it was discovered that the free credit 

option and the delay option were very similar, and that the delay option actually offered more 

flexibility to the small refiners. Within this option, the potential of a review of the ABT program 

one year after the program begins was also discussed. The small refiners were generally in 

agreement with this option. The SERs stated that they have concerns that EPA is anticipating 

that some refiners would purchase credits to comply with the benzene standard; the SERs were 

concerned about reliance on the credit market for compliance because of the fact that credits may 

not be available or would only be available at a high price (that they could not afford). 

Also discussed were the legal issues that come with the proposal of a de minimis option, 

and how such an option may not be feasible in a technology-based rule like the MSAT rule; the 

alternative air toxics standards options; and the small refiner benzene standard (these are all 

discussed fully in Section 9.4.2, above). EPA also discussed the fact that it would in fact be 

including hardship provisions similar to those offered in other fuels programs. 

Lastly, the Panel discussed with the small refiner SERs their estimates on costs and their 

individual refinery set-ups and how the rule would affect them. In general, the SERs commented 

that they believed that the rule was going to be costly. EPA responded by noting that it took 

those concerns into account and believed that some refiners, namely small refiners, would most 

likely purchase credits to comply with the benzene standard as this would be more economical 

for them. The SERs also stated that the rule would be more costly for them than EPA's model 

predicted- one SER noted that, on average, EPA's cost estimates underestimated costs for the 

small refiners by a factor of two or three. SERs were also encouraged to provide information on 

costs in their written comments. 

Next Steps 

SERs were again asked to provide as much information as they could by close of business 

(COB) October 14, 2005 in order to have useful feedback prior to the Panel convening. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 64 
Discussion and Summary of Comments 

During September 29, 2005 Outreach Meeting 

(Vehicle and Gas Can SERs) 

Light-Duty Vehicles 

IMPCO Technologies/Quantum Technologies 

Karen Szabo Hay of IMPCO Technologies/Quantum Technologies participated by phone 

in the outreach meeting. She wanted to confirm that the proposed new cold temperature 

VOC standards for highway light-duty vehicles would be NMHC standards. 

Response from EPA staff: Yes, we plan to propose non-methane hydrocarbon standards 

(NMHC) for the cold temperature VOC requirements. 

Similar to the first outreach meeting, Karen asked if the testing equipment currently 

existed to record cold temperature NMHC emissions. 

Response from EPA staff (same as response from 1st outreach meeting): No equipment 

upgrade would be needed (equipment for existing cold temperature carbon monoxide 

standards, etc. is already in place). 

Karen questioned whether the evaporative hydrocarbon emissions test procedure is 

capable of measuring NMHC. 

Response from EPA staff: At the meeting, we indicated that we will get clarification of 

this issue from EPA certification staff, and we will communicate back with the SERs. 

Below is EPA's follow-up response. 

The evaporative emission test procedure is capable of measuring the methane 

concentration separately, which would lead to the calculation of NMHC. According to 

EPA's SPECIATE database, the methane fraction in evaporative emissions from 

light-duty gasoline vehicles is 0.4%. (The methane evaporative emissions from gasoline 

are likely less than 0.4% since windshield washer fluid emits methane.) Compressed 

natural gas (CNG) vehicles should have sealed fuel systems, and any methane found in 

their evaporative emissions would likely be due to leaks from this system and not from 

fuel evaporation, which would indicate a malfunctioning fuel system. (Methane 

evaporative emissions from CNG vehicles could also be from non-fuel emissions - e.g., 

from interior trim, tires, windshield washer fluid, but based on the methane fraction 

found for gasoline vehicles, such emissions would be small.) Since there is a minimal 

amount of methane emissions from evaporation, there is not a compelling reason to have 

a separate measurement and calculation to determine NMHC (nearly all evaporative 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 65 
hydrocarbons are NMHC). Moreover, the evaporative emission standard is expressed in 

terms of total hydrocarbons today, and if we were to require a separate NMHC 

measurement, it would likely be somewhat more costly for the industry, without an added 

environmental or compliance benefit. 

In addition, Karen asked whether any other SERs had performed cold temperature CO 

test and collected VOC data. 

Response from Les Weaver of Wallace Environmental Testing: At a minimum, we have 

collected total hydrocarbon data during the cold CO test, and we may have also captured 

the breakdown of hydrocarbons. It will not be difficult to meet the cold temperature 

NMHC standard that EPA is considering to propose. 

Response from EPA staff: The current cold CO standards do not apply to compressed 

natural gas (CNG) vehicles, and thus, NMHC data has likely not been collected for these 

vehicles. In addition, the new cold NMHC standards will not apply to CNG vehicles. 

Karen expressed that with the current high gas prices, there is a now lot more interest in 

natural gas vehicles. 

Wallace Environmental Testing 

Les Weaver of Wallace Environmental Testing participated by phone in the outreach 

meeting. For the new evaporative emission standards EPA is considering (align with 

California's LEV II standards), Les indicated he was concerned that the increased 

stringency of these standards would be an issue for some small volume manufacturers of 

gasoline vehicles. In particular, he suggested it would be difficult to meet LEV II 

standards for vehicles tested on Federal gasoline (indolene is the test fuel), which has a 

higher fuel volatility compared to California gasoline. He realized that the larger 

manufacturers have 50-state evaporative systems that currently meet both Tier 2 and LEV 

II standards, but he was still concerned that the more stringent LEV II standards may be a 

problem for some SVMs. 

Response from EPA staff: The California LEV II evaporative emission standards are 

numerically more stringent than EPA's Tier 2 standards, but due to differences in 

California and EPA evaporative test requirements some manufacturers view the 

programs as similar in stringency. The main driver of this viewpoint is that the Tier 2 

evaporative program requires manufacturers to certify the durability of their evaporative 

emission systems using a fuel containing the maximum allowable concentration of 

alcohols (highest alcohol level allowed by EPA in the fuel on which the vehicle is 

intended to operate, i.e., a "worst case" test fuel). Under current requirements, this fuel 

would be about 10 percent ethanol by volume. California does not require this provision. 

To compensate for the increased vulnerability of system components to alcohol fuel, 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 66 
manufacturers have indicated that they will produce a more durable evaporative 

emission system than the Tier 2 numerical standards would imply, using the same low 

permeability hoses and low loss connections and seals planned for California LEV II 

vehicles. 

Combined with the maximum alcohol fuel content for durability testing, the other key 

differences between the federal and California test requirements that lead to the 

viewpoint that the Tier 2 and LEV II standards have a similar level of stringency are as 

follows: fuel volatilities, diurnal temperature cycles, and running loss test temperatures. 

The EPA fuel volatility requirement is 2 Reid Vapor Pressure (RVP) greater than that of 

California. For the high end of the diurnal temperature range, EPA has a 9 degrees F 

lower temperature compared to California. Also, EPA's running loss temperature is 10 

degrees F less. 

In addition, the current certification database indicates that essentially all manufacturers 

certify 50-state systems that meet both sets of standards. For those few systems (which 

are 50-state systems) that do not meet both sets of standards, manufacturers have 

indicated this is due to the phase-in allowed for the evaporative emission programs (100 

percent phase-in not required until 2007 for Tier 2 and 2006 for LEV II). 

EPA staff asked Les if the new evaporative standards would change the current 

evaporative system modification process for ICIs. Les indicated that modification 

process for ICIs in complying with the new standards would not be much different than 

today's process. Similar to today, he expressed that ICIs would buy evaporative emission 

system canisters and hoses so imported vehicles would meet U.S. emission standards. 

For the new standards, it would likely be different canisters and hoses. 

Panoz Auto Development Company 

Mac Yousry, who is assisting Panoz's John Leverett in this process, participated by phone 

in the outreach meeting. Mac asked whether or not we would consider providing a 

hardship provision that would apply for more than one year (Tier 2 rule established a 

one-year hardship provision for small volume manufacturers). All SERs indicated that 

they supported this request. 

Response from EPA Staff: We will consider the need and basis for a hardship provision 

greater than one year in the context of appropriate relief for vehicle SERs during the 

Panel process. 

DRV Energy, Inc. 

Sheri Vanhooser of DRV Energy, Inc. participated by phone in the outreach meeting. She 

asked that no more test burden be placed on the alternative fuel vehicle industry since 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 67 
these vehicles achieve better emission levels. In addition, Sheri indicated that there is 

much more interest in natural gas vehicles due to the increased gas prices. 

Gas Cans 

Blitz USA 

Chuck Craig of Blitz USA was in attendance at the outreach meeting. He commented 

that nothing in the proposed new standards for portable gasoline containers is more 

stringent than California's gas can requirements. 

In addition, Chuck raised concerns that during the transition period after the start of the 

program, that retailers not be required to pull noncomplying products from store shelves. 

He believed this would cause significant hardship for manufacturers and retailers and 

could lead to the old product being scrapped. Chuck recommended that EPA require 

newly manufactured products to meet the new standards after the start date of the 

program, but allow normal sell through of old products. He noted that all cans are 

currently marked with a production date stamp. 

Response from EPA staff: We typically allow normal sell through of products as long as 

manufacturers do not create stockpiles of noncomplying products prior to the start of the 

program. 

In addition, Chuck indicated that Ohio plans to adopt the California gas can requirements. 

However, Ohio plans to modify its program to match EPA's requirements if EPA 

promulgates these new standards. 

Response from EPA staff: States with the old California program (with automatic shut-off 

control requirements) will have to modify their program since California is proposing to 

revise their program. 

Chuck Craig also discussed the possibility that additional lead-time may be needed 

beyond 2009 to ramp-up production of complying cans. He expressed that they would be 

discussing lead-time with their tooling suppliers and would provide additional input on 

the need for additional lead-time to the panel during the comment period. 

Response from EPA staff: We would welcome such input for the Panel process. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 68 
Midwest Can Company 

John Trippi of Midwest Can Company participated by phone in the outreach meeting. He 

also indicated that additional lead-time may be needed beyond 2009 to ramp-up 

production of complying cans. 

In addition, he expressed that he did not expect that there would be major changes in the 

gas can spout design compared to the California requirements. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 69 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 70 
Appendix D:


Written Comments Received from Potential SERs on


Outreach Meeting #1


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 71 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 72 
Highway Light-Duty Vehicles


Potential SER Written Comments #1: DRV Energy, Inc.


E-mail Sent to EPA on 8/8/2005 

Bryan, 

It may be too late for comments, but I was out of town last week and did not realize the deadline 

had passed. The only point that I wanted to reiterate was for EPA to talk to CARB about 

allowing the acceptance of EPA Certification as a reciprocating process for the Small Volume 

Manufacturers if the EPA standards were made more uniform to CARB, since EPA allows it for 

CARB. After all, we are struggling to help the clean air initiatives that EPA and CARB are in 

the business of requiring. We are not the enemy, but are attempting to comply with more 

stringent emissions while offering some relief from foreign oil through domestic fuels. 

I believe that I had already made these points in our conference call discussion, but in the event 

that written comments can still be supplied, I hope they are helpful. Thanks so much for your 

coordination efforts. 

Best regards, 

Sheri Vanhooser 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 73 
Gasoline Refiners


Potential SER Written Comments #2: Small Refiners


Comments Submitted to EPA 

RE SBREFA panel on MSAT 2 Rulemaking 

On behalf of U.S. Small Refiners 

August 2, 2005 

EPA has indicated that a second Mobil Source Air Toxics (MSAT 2) rulemaking will be issued 

within the next year with at least the following goals: 

•	 To replace the current refinery specific and anti-dumping standards with one 

standard applicable to all; 

•	 To eliminate reliance on individual refinery baselines; 

•	 To establish a flexible but equitable program with one standard for reformulated 

(RFG) and conventional (CG) gasoline; 

•	 To meet stringent standards set by the Clean Air Act. 

During our discussions, EPA has also said that the rulemaking will focus on benzene control; 

other parameters (e.g., sulfur, RVP) will not be addressed at this time, but may in a future 

rulemaking. Fuel benzene content will probably be cut to an average of .6 to .65 volume percent. 

A credit trading program, which EPA is trying to craft, will probably be nationwide. The 

effective date will be 2010 at the earliest and 2012 at the latest. 

There are approximately 20 U.S. small refiners falling within the EPA definition of small 

business refiner (with a capacity of not more than 155,000 BPD and fewer than 1500 total 

employees). Although not all currently make gasoline, some are considering entrance into the 

gasoline market. We have worked together for many years in an ad hoc coalition which has 

enabled us to share views, exchange relevant information, and work cooperatively on issues of 

importance, even survival. This rulemaking is expected to have significant, if not devastating 

impact on the majority of the small refiner group. 

As background to specific small refiner suggestions for MSAT 2 flexibilities, we submit the 

following important general observations. 

1.	 Small refining companies are located across the country, from Pennsylvania to the 

West Coast. They vary greatly in operational configuration, capacity, product 

slate, marketing area and capacity. There is generally no single regulatory 

approach which assists all small refiners equally. 

2.	 In terms of operating configuration, they can be loosely grouped into two different 

types: 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 74 
a.	 Conversion refineries which have crude units, fluid catalytic cracking 

(FCC) units, alkylation units, reformers and perhaps isomerization units; 

and 

b.	 Non-conversion or hydroskimming refineries which have crude units, 

reformers and possibly isomerization units. 

3.	 EPA's assessment of what benzene reduction may be operationally and/or 

economically feasible for small refiners is apparently based on a MathPro model 

which has not generated accurate small refiner data. 

a.	 At least four small refiners have compared their specific company data on 

estimated summertime gasoline blendstock volumes with the EPA/Math 

Pro data and discovered significant discrepancies. Although EPA 

estimated average benzene levels, for example, may be close to the actual, 

the actual percentages of benzene in different blendstocks are different. 

Therefore a refinery's ability to route, process and treat blendstocks to 

further cut benzene (and retain octane) has been significantly 

misrepresented. 

b.	 One result is that EPA/MathPro imply small refiners can meet reduced 

benzene targets with current equipment and relatively modest capital 

investments. That conclusion is not correct. 

c.	 EPA says it is unlikely that the model can be changed before this 

rulemaking. The agency may be able to use corrected individual company 

data separately. EPA has acknowledged, however, that small refiners will 

probably not be able to cut benzene to the low levels predicted at the costs 

estimated in the MathPro model. 

d.	 EPA's estimates of the costs, availability and applicability of new benzene 

extraction technologies appear unrealistic on the basis of the preliminary 

information available to small refiners. Gary-Williams Energy Corporation 

(55,000 BPD) estimates, for example, that capital costs could be as high as 

$20 million; Countrymark (25,000 BPD) estimates $10 million. 

4.	 The market for extracted benzene is very different from that projected by EPA. 

EPA suggests that small refiners' benzene reduction costs can be offset to some 

extent by benzene sales. Small refiners dispute this assertion because: 

a.	 The major benzene markets are chemical plants in the Gulf Coast area; 

few small refiners are situated to take advantage of those markets. 

b.	 Transporting benzene out of the small refiners' local market areas would 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 75 
be costly and counterproductive. 

c.	 Large refiners, particularly those with chemical facilities, stand to profit by 

generating more benzene for their own operations. This further 

disadvantages small refiners. 

d.	 Handling of extracted benzene is difficult and expensive. This means 

additional operating costs - over and above the capital costs for benzene 

extraction. 

5.	 Small refiners produce a very small proportion of the national, regional and/or 

PADD gasoline pools; in most if not all areas of small refiner operations, their 

gasoline and therefore benzene production is on average probably less than 1% of 

the pool. 

6.	 Small refiners are already severely "overtaxed" to meet recent and projected 

environmental regulations, including Tier 2 gasoline desulfurization and highway 

and off-road diesel desulfurization. EPA's "Refinery Initiative"/ NSR activities 

have in some cases and may in others impose additional major capital costs. 

Future lower standards for locomotive and marine diesel may be anticipated. 

MSAT 2 may be the straw that breaks the camel's back. 

7.	 Credit trading programs are almost impossible to factor into capital investment 

decisions of this magnitude because the availability and cost of credits cannot 

generally be determined when decisions must be made. Small refiners will not be 

able to generate credits for their own use or sale because of the difficulty, if not 

impossibility, of cutting benzene below the anticipated standard. 

Possible Flexibilities 

As noted, there is no single approach which will assist all small refiners other than a complete 

exemption from a proposed low benzene standard. We ask that such an exemption be 

considered. 

There are several flexibilities that we hope will be reviewed during the SBREFA panel. These 

include (not in any order of priority): 

1.	 Small refiners should be allowed to meet a higher benzene cap and/or average. 

2.	 Small refiners should have additional time to comply. Although more time would 

not, of course, free small refiners from the capital costs and operating challenges 

(eg: making a marketable grade of gasoline), it might provide helpful information 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 76 
about which technologies work, their costs and the stability of an ABT program. 

3.	 A small refiner that produces less than x% of the total gasoline pool in a region 

(state, region or PADD) should be exempt from the new MSAT 2 benzene 

cap/average. 

4.	 A small refiner meeting the NESHAP de minimus level (<10 mg/yr) without 

utilizing benzene extraction equipment for waste water should either be exempt 

from the new MSAT 2 benzene cap/average or subject to a higher cap/average. 

The small refiners in this category would continue to control toxics under the 

existing program. 

5.	 A small refiner with an annual average toxics value (per Gasoline Toxics 

Performance Requirements (40 CFR, Part 80 - Regulation of Fuels and Fuel 

Additives) that is X % less than the compliance baseline could earn a de minumus 

exclusion and either be exempt from the new MSAT 2 benzene cap or subject to a 

higher cap. 

6.	 A small refiner that produces ultra clean fuels with the exception of benzene -- as 

measured in terms of sulfur and olefin content -- should be subject to a higher 

benzene cap/average. A small refiner with less than 10 ppm sulfur (pool average) 

and 1.0% olefins (pool average) would have to average not more than X% 

benzene in their average gasoline pool. The benzene percentage could be based on 

a formula that takes into account lower sulfur and olefins, so that the lower the 

sulfur or olefin content, the higher the allowable benzene content. 

7.	 A small refiner with an annual average toxics value that is X % less than the 

compliance baseline could earn toxics credits that could be applied against a 

benzene cap/average. This concept is consistent with the current gasoline toxics 

regulation, under which a refinery generates toxics credits when its annual average 

toxics value is less than the compliance baseline; those credits may be used to 

offset a toxics deficit in the following calendar year. This approach offers the 

advantage that, unlike the benzene ABT program under consideration, the small 

refiner can earn credits for its own use (or sale) rather than having to purchase 

them in a volatile credit market. 

8.	 A small refiner should be eligible for an exemption or a higher benzene 

cap/average on the basis of an economic analysis of the incremental costs of 

compliance. This flexibility might operate like the Pennsylvania NOx and VOC 

control programs for which EPA provided guidance for incremental cost limits. 

The basis of such an approach is that the cost per ton for benzene removal will be 

less for larger refiners than small companies. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 77 
9.	 Small refiners should be eligible for hardship provisions like those included in the 

Clean Fuels regulations. 

We look forward to the opportunity to review these assumptions and suggestions with the 

SBREFA panel. 

(See attached for list of endorsing companies.) 

Endorsing Companies 

Several small refiners have asked to be listed as endorsing these comments. Please note, 

however, that some of the above-mentioned flexibilities would not help and might actually 

disadvantage some refiners if they were offered as the only options. One company has said, for 

example, that if only #s 5 and 7 were available, they could be harmed. 

Age Refining, Inc. 

San Antonio, TX 

American Refining Company 

Bradford, PA. 

Calumet Shreveport Refinery 

Shreveport, LA 

Countrymark Cooperative, Inc. 

Mt. Vernon, IN 

Frontier Refining Company 

" Cheyenne, WY 

" El Dorado, KS 

Gary-Williams Energy Corp. 

Denver, Co 

" Wynnewood Refining Company, Wynnewood, OK 

Holly Corporation 

" Montana Refining Co., Great Falls, MT 

" Navajo Refining Co., Artesia, NM 

" Holly Refining & Marketing Co Woods Cross Refinery, West Bountiful, UT 

Petro Star Inc. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 78 
" North Pole, AK 

" Valdez, AK 

Placid Refining Company 

Dallas, TX 

Silver Eagle Refining Co. 

Woods Cross, UT 

U.S. Oil and Refining Co. 

Tacoma, WA 

Western Refining Co 

El Paso, TX 

Wyoming Refining Co. 

Newcastle, WY. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 79 
Gasoline Refiners


Potential SER Written Comments #3: Gary-Williams Energy Corporation


Gary-Williams Energy Corporation 

Comments Submitted to EPA 

RE SBREFA panel on MSAT 2 Rulemaking 

August 2, 2005 

As a Small Entity Representative for the Second Mobile Source Air Toxics SBREFA panel, 

Gary-Williams Energy Corporation would like to submit the following comments as requested in 

the July 19, 2005 conference call with EPA, OMB and SBA. 

We endorse the comments submitted on behalf of small refiners as a group and will not duplicate 

them in any detail here. We intend instead to point out which of the suggested flexibilities might 

assist us to operate economically. 

This Company 

Gary-Williams Energy Corporation is an independent oil and gas company headquartered in 

Denver, Colorado. Refining and marketing are our key businesses. Our primary asset is a 

wholly-owned subsidiary, Wynnewood Refining Company, which operates a 55,000 bpd 

petroleum refinery in Wynnewood, OK, about 60 miles south of Okalahoma City. The refinery 

makes gasoline, diesel fuel, military jet fuel, asphalt, and solvents. These products are marketed 

wholesale primarily to jobbers. We have no retail sales. There is a small marketing office in 

Oklahoma City. We employ about 250 people in Colorado and Oklahoma. 

EPA Assumptions Questioned 

As noted in the small refiner group comments, we are concerned that EPA's assessment, via the 

MathPro model, of the amount of benzene reduction feasible for this company is based on 

inaccurate data. Because the percentages of benzene in our blendstocks are different from those 

used by MathPro, our ability to route, process and treat blendstocks to further cut benzene (and 

retain octane) has been significantly misrepresented. We have provided EPA with the correct 

information on a confidential basis. We believe that our costs to meet the suggested stringent 

EPA benzene standards may be as high as $20 million, significantly higher than EPA's estimate. 

We also want to clarify, because of our rural, mid-continent location, that we do not believe that 

we have any markets for extracted benzene. 

Possible Flexibilities 

Given the high costs of further benzene extraction, the extensive cost burdens already imposed 

on us by other EPA regulations and the relatively insignificant emissions contamination resulting 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 80 
from vehicle-burn of our gasoline, we request that the SBREFA panel consider a complete 

exemption from a proposed low benzene standard 

If a general exemption is not possible, we fully support a regulatory approach that offers a variety 

of flexibilities for small refiners. Of the several flexibilities outlined in the small refiner group 

comments, however, only a few might help us. These include: 

1.	 A higher benzene cap and/or average. We understand that EPA may now be 

considering a standard that addresses only an annual average without a specific 

cap. We greatly prefer an averaging approach. In our case, unless the average is at 

least 1.2 volume percent, we will still be required to make the full investment for 

benzene reduction. We are not aware of any technology that would allow us to cut 

benzene proportionately for less cost 

2.	 Additional time to comply - at least five years. EPA has mentioned two years. 

That lead time, we believe, will not be sufficient to compile helpful information 

about which technologies work, their costs and the stability of an ABT program. 

3.	 Exemption from the new MSAT 2 benzene cap/average if we produce less than 

X% of the total U.S. gasoline pool (or perhaps region or PADD). 

4.	 Exemption from the new MSAT 2 benzene cap/average if we meet the NESHAP 

de minimus level (<10 mg/yr) without utilizing benzene extraction equipment for 

waste water. Or, as an alternative, compliance with a higher (1.2 %) average. We 

would expect to continue to control toxics under the existing program. 

5.	 Exemption (or compliance with a higher average) if our annual average toxics 

value is at or less than the compliance baseline. Please note that with our current 

configuration our annual average toxics value is generally close to the toxics 

equations standard, so that a significant reduction below that would not benefit us. 

We would still have to make the full benzene reduction capital investment. Refer 

to comments in #1 above. 

6.	 Opportunity to earn toxics credits that could be applied against a benzene average 

if our annual average toxics value is at or less than the compliance. Once again, 

however, we fear this option will not benefit us because of the comments above in 

#1 and #5. 

7.	 Eligibility for an exemption or a higher benzene average on the basis of an 

economic analysis of the incremental costs of compliance. The basis for such an 

approach is that the cost per ton for benzene removal will be less for larger 

refiners than small companies. It would be essential, however, that we and other 

small refiners confer with EPA about the components of such an analysis in order 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 81 
to come to an understanding of small refiner economics and relative disadvantage. 

Thank you for your consideration of these comments. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 82

Gas Cans


Potential SER Written Comments #4: Blitz USA


Attached to E-mail Sent to EPA on 8/2/2005 

Chris Lieske 

200 Traverwood Drive 

Ann Arbor, MI 48105 

Dear Chris, 

Listed below are some of the comments Blitz has on the new proposed PFC regulation. 

With the evaporative emission level EPA is considering and the durability tests involved, we feel 

that co-extrusion will be the best solution for the foreseeable future. Capital investment in new 

machines and retrofit of machines that are capable of being retrofitted will be approximately 7­

10 times as costly as when we prepared for California based on the number of cans that will be 

needed nationwide. The lead time for delivery of a new co-ex capable machine is 6-8 months 

with a setup time of 2-3 months and a cost of 2-2.5 million. These lead times would probably be 

longer if the number of machines needed are as great as would be expected. Since the rules will 

be nationwide, some of our current machines and all of our assets (tools and molds) dedicated to 

producing our current nozzles will be rendered obsolete for our purposes. The good news is that 

with our experience in building California cans, the training time should be reduced. 

Although our current nozzles meet the requirements of the proposed regulation as we understand 

it, we are working on our next generation of nozzles. We are looking at creating a nozzle that is 

more intuitive in its use and thus more user friendly. If we developed this nozzle within the next 

two years, we may not have the time to get it certified by the 2009 date. 

The biggest concern we have is the transition period. When we started in California, the old style 

cans in our inventory could be sold in other states. Only the stores in California needed a sell 

through period to clear their shelves and warehouses. If, as was the case, some of the stores 

could not get rid of their cans, they expected us to take them back and give credit. With the rule 

going nationwide, Blitz and the industry will have no outlet for the old non-certified cans. If we 

are forced by our customers to take cans back, we will have no alternative but to scrap the cans at 

the great expense this will entail. One possible solution is to have no set time table for sell 

through. If the can has a manufactured date stamp that is before the implementation date, the 

store would be allowed to sell that can. The manufacturers would not be allowed to manufacture 

any cans after the implementation date that are not certified. As reorders come in, the new cans 

would eventually replace all of the old cans on the shelves. 

Blitz currently produces a metal can that is DOT approved. When the new regulation takes 

place, we are not certain yet as to whether we would still be able to produce a can that would 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 83 
meet the requirements plus still pass the requirements of the DOT regulations. 

This could take this can off the market. 

One of the biggest roadblocks we ran into in California and some of the other states that have 

adopted the regulation was consumer education and knowledge. The average user as well as 

some of the retail outlets did not see the benefits or the necessity for the newer nozzles. A 

nationwide education program sponsored by EPA or one of the other government entities would 

help alleviate this problem. 

We are not sure how the compliance and enforcement level of the new regulation will be 

conducted. We believe that this must be clear before the regulation is completed. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 84 
Appendix E:


Written Comments Received from SERs on Outreach Mtg.


#2


SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 85 
SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 86 
SER Written Comments # 1:


Small Refiner Group Comments


Mr. Alexander Cristofaro 

Small Business Advocacy Chair 

c/o Mr. Mark Wilson 

1200 Pennsylvania Avenue NW 

MC1803A 

Washington, DC 20460 

Wilson.mark@epa.gov 

RE: Mobile Source Air Toxics: 

Control of Hazardous Air pollutants from Mobile Sources 

SMALL REFINER COMMENTS 

October 14, 2005 

Dear Mr. Cristofaro: 

In your letter of September 19, 2005, you asked Small Entity Representatives to comment on the 

above noted planned proposed regulation (MSAT 2) and specifically referred us to questions in 

Section D of the enclosure as well as issues specified in your covering letter. 

As we noted in comments submitted to you on August 2, 2005, there are approximately 20 U.S. 

small refiners falling within the EPA definition of small business refiner (with a capacity of not 

more than 155,000 BPD and fewer than 1,500 total employees). Although not all currently make 

gasoline, some are considering entrance into the gasoline market. We have worked together for 

many years in an ad hoc coalition which has enabled us to share views, exchange relevant 

information, and work cooperatively on issues of importance, even survival. This rulemaking is 

expected to have significant, if not devastating impact on the majority of the small refiner group 

Small refining companies are located across the country, from Pennsylvania to the West Coast. 

They vary greatly in operational configuration, product slate, marketing area and capacity. Some 

do not now make gasoline or are subject to California regulations. There is generally no single 

regulatory approach which assists all small refiners equally. Therefore the small refiner 

flexibilities included in EPA rulemakings are particularly important to the continuing operation 

of the small refiner segment of the industry. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 87 
Basic Provisions of Proposed Rule 

It is our understanding, from the September 19 materials noted above and from the SBREFA 

Panel discussions on September 27, 2005, the MSAT 2 proposals now under consideration for 

small refiners include the following highlights: 

•	 The rule will establish a single annual average benzene standard applicable at the refinery 

gate -- not higher than .62 volume percent. There will be no downstream standards. 

•	 This rulemaking will supersede anti-dumping refinery-specific standards and the first 

MSAT refinery baselines, thus eliminating many of the refiners' reporting requirements. 

•	 The proposed rule will be issued by EPA not later than February 28, 2006. The rule will 

be finalized within a year. The purpose of the baseline is only for calculating and 

generating credits. The effective date will probably be 2011. The proposed benzene 

baseline period will be 2004-2005. The proposed volume baseline year will be 2010. 

•	 There will be a nationwide averaging, banking and trading credit program (ABT) for 

refiners of all sizes with provisions for earning early credits. 

•	 The effective date of the rule for small refiners will be at least four years after the 

effective date for non-small refiners. 

Small Refiners Endorse Proposed Flexibilities 

During the September 27 Panel discussions, small refiner flexibility options were clarified and 

revised somewhat from those outlined in Section B of the September 19 document. Small 

refiners endorse those revisions, with some additional comments as noted below. The flexibilities 

should include: 

1.	 An effective credit generation and trading program which is essential to small 

refiners. The ABT program for all refiners should start in 2007 to enhance the 

probability that sufficient credits will be available at a reasonable price for those 

refiners who find it economically and/or technically unfeasible to meet the new 

benzene standard and still produce market-grade gasoline. Therefore, there should 

be no specified credit life; instead they should be continuously available. 

2.	 Provisions for small refiners to generate credits if - at any time before the small 

refiner compliance date --they make operational or equipment changes that reduce 

benzene levels at least 10% below their benzene baseline. 

3.	 A guaranteed review of the ABT program, particularly as it impacts small refiners, 

within one year of the rule's effective date for small refiners, with a specified and 

limited review period. If the small refiner compliance date is 2015 (four years 

after an anticipated general compliance date of 2011), the ABT program review 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 88 
should include early compliance reporting to obtain on-going information about 

the availability of credits and be completed not later than 12.31.2011. Small 

refiners should be consulted during the review period and the expectation should 

be that the design of the small refiner credit program can be substantively revised 

if necessary. 

•	 Small refiners need at least three years lead time to obtain financing, 

engineer and construct the equipment needed to cut benzene to the 

proposed standard and to design and construct systems which will then be 

required to maintain octane levels. The small refiner compliance date 

should be no sooner than three years after completion of the ABT review. 

•	 The proposed rule will specify the types of issues that will be covered in 

the review, such as the availability of credits to small refiners, their costs 

and possible approaches if it is determined that the credit market is 

dysfunctional. 

•	 EPA should consider establishing and perhaps administering a small 

refiner credit bank if warranted by the review. These credits could be 

purchased from EPA at a cost which should be established up front and 

should not exceed the operating cost to saturate benzene (Bensat 

operating cost). It is critically important that the cost of credits be known 

in advance to allow small refiners to plan appropriately. Small refiners 

must be included in the cost determination discussions. 

•	 EPA should develop a mechanism through which a small refiner can hold 

in escrow funds expended to purchase credits. This would allow a small 

refiner which has paid for credits but which subsequently decides that it is 

technically, financially and operationally possible to cut its benzene to the 

compliance standard to recoup its credit expenditure and to apply that 

instead to the capital investment necessary for benzene reduction. 

Needless-to-say, since the goal is to reduce benzene in gasoline, such a 

program would be to the national benefit. 

•	 There should be a de minimis exemption option (or a higher benzene 

standard) at least on a case-by-case basis and also a hardship exemption 

which is not temporary in nature on a case by case basis. It is our 

understanding that EPA's legal counsel believes that general exemptions to 

the rule could be challenged in court and that they could not successfully 

defend such a challenge. The small refiner entity representatives have 

requested a copy of that opinion and may elect to seek their own 

independent legal opinion on the issue. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 89 
In any case, however, EPA should offer small refiner flexibility options by 

including in the regulation a de minimis exemption where it is determined 

that a refiner would have extreme difficulty complying with the .62 

benzene level and still be able to produce marketable gasoline and that the 

amount of gasoline produced by the small refiner would have a de minimis 

effect in the marketing area and on the program. 

The small refiners also feel that a hardship exemption provision on a case 

by case basis which is not limited in time but subject to EPA review 

should also be included. Such an exemption would be available where a 

small refiner could show that even after installing state of the art 

equipment and making every other reasonable effort that it cannot comply 

with the .62 benzene level and produce marketable gasoline. EPA could 

set a higher benzene level for that small refiner and periodically review 

whether or not the small refiner could comply with the regulation. EPA 

would also include a backsliding provision and limit refinery expansion 

under such circumstances. We again emphasize that the total gasoline 

production of all small refiners is actually de minimis as to the overall 

benzene removal program. 

In any case, the rule should offer -- as small refiner flexibility -- the option 

for a small refiner to seek an individual facility exemption or higher 

facility benzene standard on the grounds that the facility's gasoline 

benzene levels are a very small percentage of the benzene produced in a 

given area. 

4.	 The rule should recognize the importance of encouraging and enabling the 

expansion of refinery capacity by allowing the benzene baseline volume percent to 

apply to at least 130% of the volume baseline and/or including in the volume 

baseline all expansion for which plans and construction contracts are in place 

during the volume baseline year - even if the expansion has not yet been 

completed. 

5.	 Small refiners should be eligible for short term hardship options based on extreme 

unforeseen circumstances (eg: natural disaster, refinery fire) and/or extreme 

hardship (eg: financial or operational problems). 

If you have questions or need additional information, please do not hesitate to contact any of the 

companies listed below or Sally V. Allen, Vice President of Administration and Governmental 

Affairs, Gary-Williams Energy Corporation at 303.628.3800 X460 (sallen@gwec.com). 

Thank you very much for your consideration of these comments. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 90 
The following companies endorse this statement: 

ALON USA, San Antonio, TX 

American Refining Group, Bradford, PA 

Calumet Lubricants, Shreveport, LA 

Countrymark Cooperative, Mt. Vernon, IN 

Frontier Refining and Marketing, Inc., Denver, CO, Cheyenne WY and 

El Dorado, KS 

Gary-Williams Energy Corp, Denver, CO 

Wynnewood Refining Co OK 

Holly Corporation, Dallas, TX 

• Woods Cross Refining, UT 

• Navajo Refining, NM 

• Montana Refining, MT 

Placid Refining Company, Dallas, TX and Port Allen, LA 

Silver Eagle Refining, Woods Cross UT and Evanston,WY 

Somerset Refining, Somerset, KY 

Western Refining Company, El Paso, TX 

Wyoming Refining Company, Denver CO and New Castle, WY 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 91 
SER Written Comments # 2:


Gary-Williams Energy Corporation


Mr. Alexander Cristofaro 

Small Business Advocacy Chair 

c/o Mr. Mark Wilson 

1200 Pennsylvania Avenue NW 

MC1803A 

Washington, DC 20460 

Wilson.mark@epa.gov 

RE: Mobile Source Air Toxics: 

Control of Hazardous Air pollutants from Mobile Sources 

October 14, 2005 

Dear Mr. Cristofaro: 

In your letter of September 19, 2005, you asked Small Entity Representatives to comment on the 

above noted planned proposed regulation (MSAT 2) and specifically referred us to questions in 

Section D of the enclosure as well as issues outlined in your covering letter. 

As a Small Entity Representative, Gary-Williams Energy Corporation would like to submit the 

following comments. (Please see also our earlier comments dated August 2, 2005.) 

This Company 

Gary-Williams Energy Corporation is an independent oil and gas company headquartered in 

Denver, Colorado. Refining and marketing are our key businesses. Our primary asset is a 

wholly-owned subsidiary, Wynnewood Refining Company, which operates a 55,000 bpd 

petroleum refinery in Wynnewood, OK, about 60 miles south of Okalahoma City. The refinery 

makes gasoline, diesel fuel, military jet fuel, asphalt, and solvents. These products are marketed 

wholesale primarily to jobbers. We have no retail sales. There is a small marketing office in 

Oklahoma City. We employ about 250 people in Colorado and Oklahoma. 

Endorsement of General Small Refiner Statement 

For several years we have worked with an ad hoc coalition of small refiners on other 

rulemakings. We strongly endorse the MSAT 2 statement submitted by the group of small 

refiners -- also dated October 14, 2005 - and support the need for small refiner flexibilities with 

this rulemaking. We will not duplicate the group statement in any detail here, but incorporate it 

by reference in this submission. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 92 
GWEC company-specific comments 

You asked for specific comments about the impact of the proposed flexibilities on our 

operations. In summary: 

1.	 Our gasoline benzene content is on average 1.4 volume percent. On the basis of 

information we have been able to accumulate to date, we believe we can cut 

benzene to .62 volume percent only with significant capital investment. We are 

not completely convinced that - even then - we will be able to generate sufficient 

octane to make market-grade gasoline. Our first preference would be to allow 

small refiners a higher benzene standard of at least 1.4 volume percent. We thus 

endorse the concept of a case-by-case de minimis exclusion or higher benzene 

standard option or long-term hardship exemption particularly if - at some later 

date - it is determined to be operationally unfeasible for us to make market grade 

gasoline. 

2.	 We strongly endorse an ABT program with special consideration for small refiner 

needs, including a complete review after one year of the small refiner compliance 

date and the possibility of holding small refiner credit payments in escrow for 

possible future capital investments. The usefulness of such a program for us will 

depend directly on the availability and cost of credits. We do not at this time 

believe we can generate sufficient credits internally to allow us to delay capital 

investment much if at all beyond the small refiner compliance date. We do not 

believe that we can cut benzene in stages. Therefore we will be required to make 

the full capital investment early in the compliance period. There may be some 

operating cost savings until the full compliance deadline. 

3.	 We believe that we will require at least three years lead time from the time it 

becomes clear that we must make benzene reduction capital investments (rather 

than relying on credits) to obtain financing, plan, engineer, construct and start-up 

new equipment. In addition, it will be important that we avoid competing for the 

same engineering and construction resources as non-small refiners and that there 

is time to determine the effectiveness and cost-efficiency of available technology. 

4.	 We endorse setting the benzene baseline years at 2004-2005 so that companies 

will be unable to manipulate their baseline. On the other hand, because we are 

planning to expand our refinery capacity from 55,000 bpd to 70,000 bpd, we 

strongly endorse provisions that would encourage such significant and risky 

investment - such as a 2010 volume baseline with at least a 130% volume 

limitation and/or inclusion in the volume baseline of all expansion for which plans 

and construction contracts are in place during the volume baseline year -- even if 

the expansion has not yet been completed. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 93 
Project Financing 

You specifically asked what we estimate our costs to be and how we would plan to finance 

MSAT 2 compliance capital costs. 

We have been able to obtain financing needed to comply with the Ultra Low Sulfur Diesel Rule 

from the group of banks which provides working capital and letters of credit for our general 

operations. They are providing term debt which must be amortized over the five year period 

beginning in September 2006. We are hopeful that once the ULSD loan is amortized, we will be 

able to approach the same group to structure a lending facility for a benzene project. 

We are not sufficiently far along in our analysis of refinery expansion costs and risk/return ratios 

to have determined financing availability or to have arranged financing options. Our expansion 

cost analysis is complicated by the possible future unknown cost impact of the EPA refinery 

initiative/New Source Review program. We are watching current federal legislative initiatives to 

encourage refinery expansion with interest. 

We now produce an average of 33,000 bls (1.39 million gals) of gasoline/day. On a very 

preliminary basis, after conversations with UOP, we now estimate that total benzene reduction 

capital costs could range between $30 and $45 million. 

Process Total Low Cost Total High Cost 

Install platformate splitter and Bensat unit to $10 million $20 million 

remove platformate stream benzene 

Expand isom unit or add another to recoup lost $ 5 million $10 million 

octane 

Install hydrogen plant (if necessary) $15 million $15 million 

Total $30 million $45 million 

It is our understanding that EPA has estimated our total capital cost for a Bensat unit at $5.7 

million. Clearly, our estimates significantly exceed that amount. 

We appreciate your consideration of these comments and would be happy to respond to questions 

or provide further information if that would be helpful. I can be reached at 303.628.3800 X460 or 

sallen@gwec.com. 

Sincerely yours, 

GARY-WILLIAMS ENERGY CORPORATION 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 94 
Sally V. Allen 

Vice President, Administration and Governmental Affairs 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 95

SER Written Comments # 3:


Countrymark Cooperative


COUNTRYMARK COOPERATIVE, LLP 

October 13, 2005 

Mr. Alexander Cristofaro 

c/o Mark Wilson 

1200 Pennsylvania Avenue, NW 

MC 1803A 

Washington, D.C. 20460 

Dear Sir: 

In your letter dated September 19, 2005 to Small Entity Representatives (SERs) concerning the 

proposed regulation reducing the content of benzene in gasoline the SERs were asked to 

comment on the regulatory flexibility analysis elements set out in the letter. Countrymark 

Cooperative, LLP (Countrymark) has the following comments concerning the five area listed in 

the letter: 

1.	 It is Countrymark's opinion that all small refiners who refine gasoline will be 

impacted by the proposed rule. The impact will vary from small refiner to small 

refiner but will without a doubt effect over twenty (20) small refiners in their 

ability to operate and could threaten their possible existence. 

2.	 Until the proposed rule is final, it is difficult to give a description of projected 

reporting, record keeping, and other requirements resulting from the proposed 

rule. However, all small refiners producing gasoline will be required to have 

additional record keeping, testing, and other activities which will need to be 

preformed by individuals with professional skills. The nature and number of such 

employees and the type of records and testing will only be known after the rule is 

adopted but it will undoubtedly add considerable record keeping and expense. 

3.	 It would be difficult to set out all relevant federal rules that may be duplicated, 

overlapped or conflict with the proposed rule. However, all small refiners are 

presently coping with three recent rules adopted by EPA concerning the sulfur 

content of gasoline and diesel fuels. Again, the exact nature of the proposed rule 

will have a great deal to do with how it might effect the sulfur regulations 

previously adopted by EPA. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 96 
4.	 The impact of previous regulations on small refiners has been significant and a 

number of small refineries have closed in the last fifteen (15) years. The 

environmental regulations have contributed to many of these closures. The 

number of regulations recently adopted by EPA concerning sulfur content of fuels 

has resulted in substantial expense to all small refiners and has created operational 

problems in order to produce the fuels mandated by EPA. The amount of capital 

needed to comply with these regulations has far exceeded the return on such 

capital. 

The proposed rule is much more complicated as it effects refinery operations more 

than the previous regulations. The previous regulations could be complied with in 

most cases by adding additional equipment. However, in some cases, the 

reduction of benzene to the proposed level could be such that it would be 

impossible for a refinery to produce marketable gasoline with a satisfactory octane 

level even if the equipment to reduce benzene is installed. 

Since small refiners are spread out all over the United States and make a small 

percentage of the gasoline refined, exempting small refiners would have a 

minimal impact in the overall benzene level. A proposed rule which would allow 

small refiners to produce gasoline at their present benzene levels and provide for 

no backsliding, would seem to be the most desirable and effective way to proceed. 

This would minimize any significant impact of the proposed Rule on small refiner 

entities without damaging the overall result desired by EPA. 

5.	 It is possible that if the benzene level is reduced to .62 that some small refiners 

will not be able to survive as gasoline producers and whether or not this will result 

in small refineries closing will remain to be seen. The possibility is definitely real 

and any community which has a small refinery will be substantially impacted by 

the closing. Jobs will be lost, small businesses will no longer have the refinery as 

a customer, and the income generated in the community by the refinery will cease 

to exist. Of all the regulations which have been proposed and adopted by EPA 

this proposed rule could have the most significant impact on small refiners. 

Attached to the above letter in Section D were other substantive questions for SERs on the 

Mobile Source Air Toxic Rulemaking. Countrymark's answers to those questions are as follows: 

1.	 Overall Response to Potential Small Refiner Options. The small refiner options 

set out in Section B each have some merit, however, two problems exist. FirstDoes the small refiner have ample funds to make the necessary improvements to 

the refinery to meet the proposed benzene levels? Second - Even if a small refiner 

could obtain the necessary funds to install the equipment could the refinery 

operate in such a manner as to produce marketable grade with a sufficient octane 

level. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 97 
In most cases, we believe it will be difficult for small refiners to meet the second 

requirement. Thus, the only logical option, which will allow the small refiners to 

be sure to continue produce marketable gasoline is to allow small refiners to 

continue to produce gasoline with a benzene level equal to the present level. 

Certain restrictions could be placed in order to prevent backsliding and even some 

requirements to make every effort without adding additional equipment to lower 

benzene levels. 

2.	 Level of the Standard. Countrymark has previously provided to the panel and 

EPA its comments concerning the proposed level of .62 and we refer you to those 

comments concerning the impact of the level on Countrymarks operation. 

Without question, to comply Countrymark will have to add additional expensive 

equipment which will not result in any return on investment but will simply be an 

additional expense as will be the continuing operational expenses of such 

equipment. It is uncertain if the equipment which is now available and affordable 

could actually place Countrymark in a position to provide marketable gasoline. 

Without the income from gasoline it is doubtful that Countymark refinery could 

continue to operate. 

3.	 Cost Compliance and Leadtime. We do not agree with EPA's preliminary 

estimates of refinery level costs for the MSAT II program. The reference to an 

eight million barrel per day unit is obviously erroneous since we know of no 

refinery of that size anywhere in the world. We believe that the proper figure was 

an 8,000 barrel per day, however, since that figure is incorrect, we then question 

the rest of the calculations in that paragraph. The cost figures provided by EPA 

for Countrymark were 2.7 million dollars for the necessary equipment and an 

operating cost estimate of 1.14 cents a gallon. We are attaching an evaluation by 

our Refinery Manager marked "Attachment A" which contains estimates of both 

the capital costs for the necessary equipment and the operating costs per gallon of 

gasoline produced. He estimates the capital costs for installation of a BenSat unit 

at 7.4 million dollars with a operating costs of 1.3 cents per gallon. He also points 

out the operating problems that would result even if the equipment could be 

financed and installed. In his opinion even with the equipment it would be 

difficult if not impossible for Countrymark to achieve a .62 benzene level. We 

would also point out that in our opinion it would be difficult for Countrymark to 

recover the additional capital and operating costs. 

The leadtime to install any equipment from initial planning to construction and 

startup would be considerable. We are not in a position at this time to provide an 

estimate of the time involved in complying with the proposed regulations since we 

are in the process of installing the necessary equipment to comply with the EPA 

rules to remove of sulfur from diesel fuels and after that, installing the necessary 

equipment to reduce sulfur in gasoline. 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 98 
Until these two projects are completed it would be very difficult for us to estimate 

the necessary leadtime to comply with the proposed rule. Undoubtedly, 

considerable time would be involved, since it would first be necessary to line up 

financing for the installation of the additional equipment necessary to remove 

benzene. Countrymark has already undertaken projects costing in excess of $40 

million dollars and additional financing for benzene removable equipment will be 

difficult to obtain if not impossible. Secondly, obtaining the necessary permits 

will take considerable time since we are already experiencing permitting delays 

for the other projects. Our best estimate at this time is that it would take in excess 

of four (4) years to comply with the proposed rule. 

4.	 Financing. We have already touched on the financing problem. It was very 

difficult for Countrymark to arrange financing for the hydro-treater. We have yet 

to obtain financing for the necessary equipment to desulfurize gasoline and 

because Countrymark has been determined by EPA to be a "Branded Refiner", it 

will have the expense of establishing a very costly and time consuming testing 

program. We do not see any of the options including free credits as being helpful 

in obtaining the necessary financing. 

5.	 Credit Trading Program. We have never been positive about credit trading 

programs because of the uncertainty of the availability of credits and their costs. 

Certainly with the other projects we are involved in, it would not be possible for 

Countrymark to obtain credits for early compliance. If credits are available and 

purchased, the additional costs for such credits are generally not recoverable in 

the cost of the product. We would not envision purchasing credits in order to 

continue to produce gasoline, as we feel it would make gasoline refining 

unprofitable. In conversations with other small refiners we have not found anyone 

who feels that a credit program is the answer to the continued existence of a small 

refiner. 

6.	 Small Entity Burden and Regulatory Flexibilities. We have previously touched on 

this in our comments above. We feel the burden on small refiners of adding 

additional equipment to remove benzene and the problems it creates in the 

operation of our refinery, is disproportionate to the benefit resulting in the 

reduction in benzene from our present level to the level in the proposed 

rulemaking. Each successive EPA regulation heaped upon small refiners results 

in complicating refinery operations and reducing the ability of the small refiner to 

be profitable. 

This is the fourth such regulation in recent years and each has placed a cost 

burden disproportionate to their ability to create profits from their operations. We 

have already suggested that the best option to be granted to small refiners is to 

allow them to operate at their present benzene level and provide restrictions so 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 99 
there is no back sliding. 

EPA could provide incentives to small refiners to reduce benzene content through 

operational methods without having to install additional expensive equipment. 

We have previously pointed out that small refiners produce a small percentage of 

gasoline nationwide and in their marketing areas and that their continued 

operation at their present benzene levels would not materially impact the goals of 

the EPA in reducing benzene levels in gasoline nationwide. 

7.	 Other Comments. The present EPA regulations will have the effect of reducing 

the amount of motor fuels available while at the same time there has been little or 

no increase in refinery capacity except for creep in refinery capacity. No new 

refineries have been constructed in the United States in many years and to our 

knowledge only one is planned and it is having difficulty obtaining the necessary 

permits. Any new refineries will take years to come on stream. Many small 

refiners and even some mid sized refiners have gone out of business. We recently 

see how vulnerable our refinery capacity is to interruptions due to weather or 

electrical outages. The result of the proposed regulation will without a doubt 

reduce the amount of gasoline available through the domestic refining complex. 

We hear government officials, business leaders and the general public 

complaining about the high prices of refined fuels and their concerns about our 

nation being dependent on off shore refined products. They stress the need for 

more refining capacity thus reducing our dependency. Yet, on the other hand, the 

EPA regulations continue to reduce the amount of domestic refined product 

available which results in increased dependence on off shore sources and 

increases the price of refined product to the consumer. It would seem that this is 

not the time to adopt yet another rule that could force the closure of some 

refineries and will definitely reduce the amount of gasoline produced. 

We are sure that it is not EPA's intention to cause any small refiner to cease 

operations or to reduce the amount of refined product available from domestic 

sources. In order to assure continued operations by small refiners, we believe the 

regulation should have both both a refinery by refinery de minimis exemption 

provision and also a hardship provision which would not be temporary but would 

allow a small refiner to operate until such time as it could meet the .62 benzene 

level. In either EPA could take into consideration the benzene level of the 

refinery, the location of the refinery which reference to any non-attainment area, 

the amount of gasoline produced, the area in which the gasoline is marketed, the 

percentage of gasoline that refiner produced compared to the total gasoline either 

refined or marketed in its PADD, and the overall effect of exempting the refiner 

on the program to reduce benzene. In the case of the hardship exemption, EPA 

could put certain restrictions or set timetables for later reduction of benzene by the 

small refiner or it could establish a higher benzene level than required by the 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics	 Page 100 
regulation but lower than the base period benzene level of the small refiner. In 

both cases, EPA could establish a benzene level for the refiner in order to prevent 

backsliding. 

We again call your attention to the comments of our Refinery Manager which is 

marked "Attachment A" concerning the problems Countrymark will experience at 

its refinery even if it can obtain financing to install the necessary equipment in an 

attempt to achieve a benzene level of .62. The problem could be alleviated if 

Countrymark is allowed to blend ethanol into a gasoline component with a 

benzene level above .62 at its terminals. Ethanol cannot be blended at a refinery 

to achieve the .62 benzene level and then shipped through a pipeline because of 

the its nature to pickup moisture. We would ask that EPA provide in its 

regulation to allow a small refiner to achieve the .62 benzene level by allowing 

blending of ethanol into a gasoline component which leaves the refinery above 

.62 but could be reduced to the .62 level by blending of ethanol at a terminal. 

Because of the severe impact this regulation will have on small refiner and 

because they are all different and will have great difficulty complying, we feel that 

it is necessary to have a de minimis exemption and a hardship exemption on a 

case by case basis and we recommend such to EPA. 

We ask the SBREFA Panel to recommend to EPA to reconsider the benzene level proposed in 

this rule for small refiners and set the level taking into consideration the problems that small 

refiners will experience in attempting to reduce benzene to .62. We also ask the Panel to 

recommend the inclusion of both a de minimis and a hardship exemption on a case by case basis. 

Countrymark appreciates the opportunity to be involved in the SBREFA process and to provide 

these comments to the SEBFRA Panel and the EPA and we look forward to working with both as 

this regulation moves forward. 

Sincerely, 

John H. Stern 

Vice President 

SBAR Panel Report for the SBAR Panel on Mobile Source Air Toxics Page 101