Air and Radiation EPA420-S-05-005

June 2005

California Oxygen

Waiver Decision
EPA420-S-05-005

June 2005

California Oxygen Waiver Decision

Transportation and Regional Programs Division

Office of Transportation and Air Quality

U.S. Environmental Protection Agency
1

Executive Summary

The Clean Air Act requires that all reformulated gasoline (RFG) must meet an

oxygen content requirement. In March, 1999, California Governor Gray Davis issued an

order banning use of MTBE in gasoline starting January 1, 2003 (later changed to

January 1, 2004) and in April, 1999, he requested that EPA waive the RFG oxygen

content requirement for federal RFG in California. EPA may grant a waiver of the

oxygen content requirement under Section 211(k)(2)(B) of the Act, if EPA determines

that compliance with the oxygen content requirement would "prevent or interfere with

the attainment by the area of a national primary ambient air quality standard." 

California’s claim was that a waiver would provide California gasoline

manufacturers flexibility to produce either oxygenated or non-oxygenated RFG, and this

would result in less emissions related to ozone and particulate matter than if all the

gasoline were oxygenated.

EPA performed a complex analysis, prior to its June 12, 2001 decision, to

evaluate the emissions impact of a waiver under several refining scenarios. The

analysis included 1) refinery modeling to predict the properties of California gasoline

with and without a waiver, and 2) generation and use of models to predict changes in

vehicle and nonroad emissions in the California fleet, based upon changes in fuel

properties induced by a waiver.

EPA’s initial evaluation of the emissions impacts of a waiver showed an expected

reduction in oxides of nitrogen (NOx), increase in carbon monoxide (CO), and significant

uncertainty about the overall impact on volatile organic compounds (VOC). There was

no clear evidence that the emissions changes from a waiver would tend to reduce

ozone, and, in fact, it was possible that it could increase ozone.

EPA’s position was that a minimum threshold criterion for granting of a waiver

was a clear demonstration of the impacts of a waiver on any applicable NAAQS, and a

showing that it would aid in attaining at least one National Ambient Air Quality Standard

(NAAQS) and would not hinder attaining any other NAAQS. On June 12, 2001, EPA

denied the waiver request because the impact of a waiver on ozone was uncertain - it

was not clear whether a waiver of the oxygen content requirement would cause ozone

levels to decrease or increase. In light of this, EPA did not evaluate the effect a waiver

would have on particulate matter (PM). 

The State of California petitioned for judicial review of EPA’s decision to deny the

waiver. See Davis v. EPA, 348 F.3d 772 (9th Cir. 2003). The Court largely upheld

EPA’s interpretation of the Act and its application to California’s request for a waiver. 

However, the Court found that EPA had abused its discretion by refusing to evaluate the

effect that an oxygen content waiver would have on California’s efforts to comply with

the PM NAAQS. Accordingly, the court vacated EPA's decision and remanded it to the
2

agency with instructions to review the waiver request with full consideration of the

effects of a waiver on both the ozone and PM NAAQS.

On February 2, 2004, California submitted new information in a letter to EPA. 

The submission contained new analyses and information regarding commingling and

permeation emissions associated with the use of ethanol, as well as analyses pertaining

to the relationship of NOx emissions to PM formation. 

The February 2, 2004 submission from California EPA contained an analysis

which examined the contribution of ammonium nitrate to PM10 and PM-2.5 in California,

and in turn, the contribution of NOx emissions to ammonium nitrate and ultimately to PM

concentrations. The analysis relied upon monitored PM10 and PM2.5 concentrations at

stations in the San Joaquin Valley (SJV) and the South Coast (SC), and also used

chemical mass balance (CMB) modeling performed in conjunction with the SJV and SC

State Implementation Plans (SIPs) for PM10. California’s analysis indicates that the

higher NOx emissions associated with compliance with the RFG oxygen content

requirement in California are likely to contribute to higher PM10 and PM2.5

concentrations in SJV and SC such that a waiver of the oxygen content requirement

would be expected to lead directionally to reduced PM concentrations.

After careful consideration of CARB’s analysis, we believe that the evidence

before EPA establishes a clear directional relationship between a waiver of the RFG

oxygen content requirement in California and PM formation in SJV and SC.

With regard to ozone, EPA’s June, 2001 decision to deny California’s request for

an oxygen content waiver was based on the conclusion that the directional effect of a

waiver on VOC emissions was uncertain. In its February 2, 2004 submission, California

provided additional information and analysis relating to commingling and permeation

VOC emissions due to using ethanol for meeting the oxygen content requirement in

RFG. This information addresses:

• The degree to which a waiver will result in increased emissions of VOC due to

commingling of gasoline with ethanol and gasoline without ethanol

• VOC permeation increases from nonroad equipment and gasoline cans that

result from an increased use of ethanol in gasoline

The February 2, 2004 submission included several documents relevant to

California’s revised commingling and permeation analyses. To support the revised

commingling estimates, California included a California Air Resources Board (CARB)

Commingling Study that provided recent data on California consumer fueling habits and

direct measurements of Reid Vapor Pressure (RVP) increases in consumers’ vehicle

fuel tanks. The report also contained estimates using a simulation model. California
1

 The commingling and permeation reports are cited and discussed in the body of this

document.

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provided two technical reports relevant to permeation emissions.1 Both of these reports

contained results from test programs where ethanol and non-ethanol gasolines were

used. 

California’s more recent commingling analysis uses assumptions that are

reasonable interpretations from the only real-world studies available for California

consumer habits associated with re-fueling. Consequently, it is reasonable to reassess

the impact of an oxygen content waiver on VOC emissions in light of the new data

submitted. California’s analysis leads us to revise our previously estimated ranges of

commingling RVP increases in such a fashion that we believe the best estimate is now

similar to the estimate made by California in their most recent submission.

California, as previously noted, also submitted estimates of the additional VOC

emission reductions that could occur with a waiver, based on a reduction of permeation

related emissions. California’s revised estimate from off-road engines appears to be

technically reasonable. The study appears to present an experimental design that can

be expected to reasonably estimate at least overall permeation emission changes due

to the use of ethanol in off-road engines.

Similarly, the study of permeation emissions from containers appears to be

adequately designed to reasonably estimate increased permeation emissions from

containers with ethanol gasoline, recognizing there is little or no additional information

available on the subject.

When this new information regarding ethanol-blended gasoline was incorporated

into their previous analysis, California estimated that total VOC emissions in the South

Coast Air Basin (SCAB) would decrease with an oxygen content waiver.

EPA independently calculated revised estimates of expected VOC emissions

changes from a waiver for the scenarios where ethanol was blended at 2.0 weight

percent oxygen, the blending level currently used in California and expected to be used

in the future. In addition to evaluating the commingling effect representing California’s

estimate of the likely waiver impact, EPA also evaluated net changes assuming a

higher, more conservative commingling effect. EPA also used the permeation VOC

impacts which California reported. This revised analysis estimates net VOC reductions

for each of these scenarios at both levels of commingling impact. The analysis shows

that, in all scenarios, net VOC emissions would be expected to decrease with an oxygen

content waiver.

With these revised estimates, total VOC and NOx emissions are likely to

decrease with a waiver while CO emissions are likely to increase. The decreases in
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NOx and VOCs would be expected to directionally reduce ozone. The increase in CO

may have an adverse impact on ozone. However, CO is far less reactive in contributing

to ozone production than either VOC or NOx. The effect on ozone of the increase in

CO emissions and the effect on ozone of the decrease in VOC emissions are expected

to approximately offset each other. When the beneficial effect of a reduction in NOx

emissions is also taken into account, it is readily apparent that the effect of decreases in

these more important ozone-forming emissions more than offsets the effect of CO

increases. In light of this revised analysis, EPA concludes that the overall impact on

emissions is slight. We found that total VOC and NOx emissions are likely to decrease

with a waiver while CO emissions are likely to increase. The net change in emissions

would likely have an overall benefit in terms of ozone, for all scenarios considered. 

In the previous decision to deny California’s waiver request, EPA included

considerable discussion of the waiver authority under Section 211(k)(2)(B). EPA

explained that it had significant discretion in interpreting this provision, and described a

three step decision-making process. First, it was important that there be a clear

demonstration of the impact of a waiver on each applicable NAAQS. This was because

EPA believed it should not grant a waiver unless, at a minimum, there was a clear

demonstration that granting a waiver would aid attainment of at least one NAAQS and

would not hinder attainment for any other NAAQS. Once this initial threshold had been

met, EPA would then determine whether the impact that had been demonstrated

amounted to prevention or interference with attainment. Finally, EPA stated that even if

prevention or interference with attainment was found, EPA retained discretion to

consider additional factors other than the impact on attainment of the NAAQS in

determining whether to grant or deny a waiver

In this case, EPA has determined that California has satisfied the initial threshold

of the waiver analysis. Therefore, EPA has interpreted and applied the statutory

requirement that compliance with the oxygen content requirement must prevent or

interfere with attainment before a waiver may be granted. In interpreting this provision,

EPA evaluated the text of section 211(k)(2)(B), other similar provisions, and the

legislative history. EPA concludes that the phrase “prevent or interfere with attainment”

as used in section 211(k)(2)(B) should be interpreted as follows. Preventing attainment

means compliance with the oxygen content requirement has an impact that clearly

stands as an absolute or practical barrier to achieving attainment. Interfering with

attainment means compliance with the oxygen content requirement has an impact that

clearly leads to achieving attainment at a later date than with a waiver. 

This interpretation is supported by the text of the Act and EPA’s interpretation of

similar provisions. It also provides an appropriate balance of the factors important to

Congress in adopting the RFG oxygen content requirement. The legislative history

makes it clear that Congress enacted the oxygen content requirement in the RFG

program to further several important Congressional goals, and expected that the

benefits from the oxygen content requirement should not be readily foregone. EPA’s

interpretation recognizes the air quality and non-air quality factors that Congress
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identified. EPA’s interpretation preserves these benefits unless EPA determines that 

waiving the oxygen content requirement would change the date when an area would

attain a primary NAAQS. EPA believes that the appropriate balance of the factors

important to Congress calls for an interpretation of prevention or interference with

attainment that is keyed to whether or not there is a clear demonstration that a waiver

would in fact accelerate attainment of a NAAQS or would clearly avoid a delay of

attainment. 

California has not made such a demonstration in this case. With respect to

PM10, EPA has approved attainment demonstrations that show attainment by the

specified attainment date, without reliance on the reductions from a waiver. California

has not clearly demonstrated that approval of a waiver would in fact lead to an earlier

attainment date, and there has been no commitment by the state to such a result. With

respect to PM2.5, no demonstration has been made by California as to when or how

any of the federal RFG areas will achieve attainment of the PM 2.5 NAAQS. As such

California has not demonstrated that approval of a waiver would either accelerate the

date attainment is achieved or would avoid a delay in achieving attainment. Similar

analyses apply for ozone. Therefore, California has not clearly demonstrated that

compliance with the oxygen content requirement prevents or interferes with attainment

of the ozone or PM NAAQS in California.

Even where it is shown that the oxygen content requirement prevents or

interferes with attainment of NAAQS, the statute provides that EPA “may” grant a

waiver. EPA believes that it has the discretion to deny a waiver even where EPA

determines that compliance with the oxygen content requirement prevents or interferes

with attainment. In exercising this discretion, EPA could consider, among other possible

factors, any potentially negative effects of a waiver on public health or welfare not

limited to air quality impacts, as well as considering the non-air quality benefits that

Congress sought to promote through the RFG program. In this case, even if EPA

accepted California’s definition of prevention or interference with attainment and

determined that the circumstances in California are consistent with such definition, EPA

would deny the waiver.

In the federal RFG areas of California, ethanol is currently the oxygenate used to

supply the oxygen content required under section 211(k)(2)(B). Basically, all federal

RFG in California is blended with ethanol to meet this requirement. EPA’s analysis

indicates that if a waiver were granted, there would be a significant reduction in the

percentage of RFG that would use ethanol. This reduction in the use of ethanol would

undermine the potential benefits vis a vis energy security and support for rural and

agricultural economy that Congress expected from the oxygen content requirement.

The ethanol used in California can be expected to provide a reduction in fossil

fuel use compared to the gasoline that it replaces. This fossil fuel savings reduces

reliance on importation of crude oil and other sources of fossil fuel energy. The

California Energy Commission in a presentation it made before the National Association
2 “Ethanol Use in California’s Gasoline: Policy Drivers and Challenges”, presented by Pat

Perez, Manager, Transportation Fuels Office, California Energy Commission; available at 

http://www.energy.ca.gov/ethanol/documents/2004-02-09_PEREZ_EHANOLGAS.PDF 

6

of State Energy Officials on February 9, 2004 projected that by 2010, ethanol use in

federal RFG alone would be approximately 1 billion gallons in California.2 A significant

percentage of this displacement would not occur if a waiver were granted.

Granting California’s request for a waiver would reduce fossil fuel savings gained

from the use of ethanol, and would generate less support for our agricultural and rural

economies. At the same time, California has not clearly demonstrated that a waiver

would in fact accelerate attainment of a NAAQS or would clearly avoid a delay of

attainment. These factors support a denial of California’s request, even if EPA

accepted California’s views and determined, for purposes of section 211(k)(2)(B), that

the circumstances found here would constitute prevention or interference with

attainment of the ozone or PM NAAQS in California.
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I. BACKGROUND

A. California’s request for a waiver from the oxygen requirement

The Clean Air Act requires that all reformulated gasoline must meet an oxygen

content requirement. In March, 1999, Governor Gray Davis of California issued an

order banning the use of MTBE in gasoline starting January 1, 2003 (later changed to

January 1, 2004) and in April, 1999, he requested that EPA waive the RFG oxygen

content requirement for California. EPA may grant a waiver of the oxygen content

requirement under Section 211(k)(2)(B) of the Act, if EPA determines that compliance

with the oxygen content requirement would "prevent or interfere with the attainment by

the area of a national primary ambient air quality standard."

From that time through February, 2000, California submitted several analyses in

support of the request and EPA staff spent the remainder of 2000 evaluating the waiver

request. California’s argument was that a waiver would provide California gasoline

manufacturers the flexibility to produce either oxygenated or non-oxygenated RFG, and

this could result in less emissions than if all the gasoline were oxygenated.

EPA performed a complex analysis to evaluate the emissions impact of a waiver

under several refining scenarios. The analysis included 1) refinery modeling to predict

the properties of California gasoline with and without a waiver, and 2) generation and

use of models to predict changes in vehicle and nonroad emissions in the California

fleet, based upon changes in fuel properties induced by a waiver.

EPA’s initial evaluation prior to June, 2001, of the emissions impacts of a waiver

showed 1) a likely decrease in NOx under various gasoline scenarios, 2) an increase

in CO under these scenarios, and 3) significant uncertainty about the change in VOC

emissions. The VOC emissions impact ranged from a decrease in VOC to an increase,

largely depending on the amount of VOC increases from commingling of ethanol

gasoline with non-oxygenated gasoline in vehicle fuel tanks. Given an expected

reduction in NOx, increase in CO, and significant uncertainty about the overall VOC

impact, there was no clear evidence that the emissions changes from a waiver would

tend to reduce ozone, and, in fact, it appeared possible that it could increase ozone.

EPA’s position was that a minimum threshold for granting of a waiver was a clear

demonstration of the impacts of a waiver on any applicable NAAQS, and a showing that

it would aid in attaining at least one National Ambient Air Qaulity Standard (NAAQS)

and would not hinder attaining any other NAAQS. On June 12, 2001, EPA denied the

waiver request because the impact of a waiver on ozone was uncertain - it was not clear

whether a waiver of the oxygen content requirement would cause ozone levels to
3 Commingling refers to the RVP increase (with resultant emission increase) that occurs

when non-ethanol and ethanol-oxygenated gasoline blends are mixed in vehicle gas

tanks. Since the presence of ethanol causes an increase in the volatility of the gasoline

(as measured by the Reid Vapor Pressure or RVP), such commingling would contribute to

an increase in evaporative VOC emissions. Permeation refers to the escape of gasoline

constituents through the walls of non-metallic fuel lines and gasoline tanks. These soft

components of automotive fuel systems tend to be more permeable to ethanol than to

other hydrocarbons in gasoline. Thus, ethanol-RFG blends tend to result in an increase in

evaporative emissions due to permeation through these components.

8

decrease or increase. In light of this, EPA did not evaluate the effect a waiver would

have on particulate matter (PM). 

B. Judicial Review of EPA’s Denial

The State of California petitioned for judicial review of EPA’s decision to deny the

waiver. See Davis v. EPA, 348 F.3d 772 (9th Cir. 2003). The Court held that the

statute affords broad discretion to EPA in responding to state requests for waivers of the

RFG oxygen content requirement. The Court upheld EPA’s interpretation of the statute

as requiring that a state must “clearly demonstrate” the impact of a waiver with respect

to applicable NAAQS. The Court reviewed EPA’s technical analysis of the potential

impact of an oxygen content wavier on California ozone levels, and upheld EPA’s

conclusion that California had failed to clearly demonstrate whether the waiver would

actually help to reduce ozone levels. Id. at 780-83. However, the Court concluded that

EPA abused its discretion by refusing to evaluate the effect that an oxygen content

waiver would have on California’s efforts to comply with the PM NAAQS. Accordingly,

the court vacated EPA's decision and remanded it to the agency with instructions to

review the waiver request with full consideration of the effects of a waiver on both the

ozone and PM NAAQS. Id. at 787.

C. California’s Supplemental Application

On February 2, 2004, California submitted new information in a letter to EPA. 

The submission contained new analyses and information regarding commingling and

permeation3

, as well as analyses pertaining to the relationship of NOx emissions to PM

formation. California also presented its views on why the emissions impact amounted

to prevention or interference with attainment of the ozone and PM NAAQS.
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II. EMISSIONS ANALYSIS

A. Particulate Matter

1. Establishment of directional relationship between NOx and VOC emissions

and PM concentrations

The February 2, 2004 submission from California EPA contained an analysis

prepared by the Planning and Technical Support Division of the California Air

Resources Board which examined the contribution of ammonium nitrate to PM10 and

PM-2.5 in California, and in turn, the contribution of NOx emissions to ammonium nitrate

and ultimately to PM concentrations. The analysis relied upon monitored PM10 and

PM2.5 concentrations at stations in the San Joaquin Valley (SJV) and the South Coast

(SC), and also used chemical mass balance (CMB) modeling performed in conjunction

with the SJV and SC PM10 attainment plans. 

Analysis of the chemical composition data collected at monitors in SJV and SC

indicate that ammonium nitrate – a secondary particle formed from directly emitted NOx

and ammonia compounds from pollution sources – makes up a large fraction of PM10

and a larger fraction of PM2.5 mass. As discussed in Attachment 1 of California EPA’s

February 2, 2004 submittal, approximately 20 to 30 percent of the annual average

PM10 mass and 30 to 40 percent of the annual average PM2.5 mass is ammonium

nitrate. (Document V.C.6A filed in EPA docket A-2000-10). The ammonium nitrate

fraction has been shown to be most responsive to changes in NOx emissions, and – to

a much lesser extent – to changes in VOC emissions. Thus, California relied on this in

defining the directional relationship between NOx emissions and formation of secondary

PM10 and PM2.5; i.e., PM concentrations vary directly with NOx and VOC emissions. 

As such, decreases in NOx and VOC emissions result in decreases in PM

concentrations.

2. Quantification of effect of NOx and VOC emission changes on PM

concentrations

Having established the directional relationship between NOx and VOC emissions

to PM concentrations, the SJV and SC in preparing their attainment plans for PM10 

then established a mathematical relationship between NOx emissions and secondary

particulate (i.e., ammonium nitrate) formation in the respective air basins. They did this

through CMB modeling which incorporated grid-based photochemical aerosol modeling

(UAM-Aero). The UAM-Aero model was run for a gridded emission inventory of the SJV

and SC modeling domains. The modeling results were compared with monitored values

of PM10 and there was overall agreement between the measured and simulated

concentration. The districts examined the modeled effect of emissions at those monitor

locations in each respective basin that recorded the highest PM10 values. Based on

the percentage amount by which PM-10 concentrations exceed both the 24-hour and

annual standards in the San Joaquin Valley and South Coast, the 24-hour PM-10
10

standard is the most difficult to attain in the San Joaquin Valley; and in the South Coast

it is the annual standard. 

The CMB modeling provided both the directional relationship between NOx

emissions and PM10 and PM2.5, and an apportionment of the nitrate fraction of

particulate matter. CARB, in preparing the analysis submitted to U.S. EPA in the

February 2, 2004 package, then used the UAM-Aero results to calculate a conversion

factor for NOx emissions and VOC emissions to nitrate fraction for each of the monitor

locations at which the peak PM10 values were recorded in SJV and SC. The

proportionality ratio thus calculated was 1.5 NOx to one nitrate. CARB then calculated

the effect of changes in NOx and VOC emissions on the 24-hour particulate

concentration at the peak PM10 monitoring locations (Bakersfield-Golden in SJV and

Riverside-Rubidoux in SC) by applying the proportionality ratio combined with a specific

change in NOx and VOC emissions to modeled PM10 concentrations at those locations. 

In this manner, the incremental effect of changes in NOx and VOC emissions on PM-10 

was obtained by calculating the change in PM10 associated with a change in NOx and

VOC emissions by tons per day using the proportionality ratio.

Based on this technique, CARB showed that a change of 10 tons/day of NOx

would change the peak 24-hour PM-10 concentration by 1.5 :g/m3 at the BakersfieldGolden monitor station in SJV, and 0.12 :g/m3

 at the Riverside-Rubidoux station in SC. 

Changing VOC emissions by the same amount showed a much smaller effect on PM-10

concentration of 0.14 :g/m3

 in at the Bakersfield-Golden monitor station in SJV, and

0.011 :g/m3

 at the Riverside-Rubidoux station in SC. For the annual average, CARB

used a simple linear rollback approach for estimating the effect of NOx and VOC

changes on PM10, rather than the proportional rollback established on a receptorspecific basis. That is, they applied a uniform proportion based on application of the

UAM-LT model which provided annual average PM10 total mass and composition. The

change in annual PM10 concentration for a 10 ton/day change in NOx emissions was

still an order of magnitude larger than from the same 10 ton/day change in VOC

emissions.

Finally, CARB assumed that emission reductions that lower PM10 concentrations

will also lower PM2.5 concentrations stating “[b]ecause almost all of the ammonium

nitrate and secondary organic carbon can be found in the PM2.5 size fraction, the

results presented for PM10 also are applicable for PM2.5.”
4 “Technical Support Document: Analysis of California’s Request for Waiver of the

Reformulated Gasoline Oxygen Content Requirement for California Covered Areas”

(EPA-420-R-01-016; June, 2001. Available at

http://www.epa.gov/otaq/regs/fuels/rfg/r01016.pdf )

5 On May 24, 2004, EPA received a submission from the Renewable Fuels Association

(RFA) which comments on various aspects of California’s request for a waiver from the

oxygen content requirement including analyses regarding changes In PM and ozone

associated with a waiver. The substance of these comments are either discussed within

the body of this document or are addressed in an EPA memorandum to the Docket

entitled “Response to comments submitted by the Renewable Fuels Association. (Docket

A-2000-10, document V-D-1)

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3. Effect of oxygen requirement in RFG on PM formation in SJV and SC

Using the mathematical relationships established above, CARB then assessed

the effect of compliance with the RFG oxygen content requirement on formation of PM. 

They did this by using the NOx and VOC emission estimates presented for Scenario 1

in Table 31 on page 122 of U.S. EPA’s Technical Support Document for the denial of

California’s request for a waiver.4

 This scenario provides the highest VOC emission

increase (9.23 tons/day) of the scenarios that we examined associated with a waiver of

the oxygen requirement in RFG in California, and a NOx decrease of 6.6 tons/day. 

Using these emission changes in combination with the proportionality ratio discussed

above, CARB calculated that these emissions changes would result in an overall

reduction in PM concentrations, since the reductions in PM are driven by the NOx

reductions. The increase in VOC emissions under the worst-case scenario defined

above would increase the PM concentrations slightly, but the net effect would be an

overall reduction in PM concentrations. Specifically, the 6.6 tons/day reduction in NOx

emissions from a waiver would result in a reduction in peak 24-hr PM10 concentrations

of 0.9 :g/m3 while the VOC emissions increase of 9.23 tons/day would increase the 24-

hr PM10 concentrations by 0.13 :g/m3. Similarly, the above NOx emission change

would result in a decrease in annual PM10 by 0.07 :g/m3, while the increase in VOC

emissions would increase annual PM10 by 0.01 :g/m3.

4. Validity of California’s argument for particulate matter

The approach that CARB used in its analysis of the effect of oxygen content in

RFG on PM10 and PM2.5 in SJV and SC indicates the same NOx/PM-10 directional

relationship relied upon in the attainment demonstrations for these air basins. The

analysis indicates that the higher NOx emissions associated with compliance with the

RFG oxygen content requirement in California are likely to contribute to higher PM10

and PM2.5 concentrations in SJV and SC than with a waiver.5

After careful consideration of CARB’s analysis, we believe that the evidence

before EPA establishes the relationship between oxygen in RFG in California and

increased PM formation in SJV and SC.
6 EPA evaluated twelve “no waiver” to “waiver” scenarios. Each scenario consisted of sets

of “no waiver” and “waiver” fuel properties predicted by refinery modeling with a specific

set of assumptions. Ethanol-oxygenated and non-oxygenated gasoline were predicted to

share the market if a waiver were granted, and market shares as well as properties were

significant in EPA’s analysis. 

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B. VOC and ozone analysis

1. Analysis leading to EPA’s June, 2001 Decision to Deny

The analysis which supported EPA’s June, 2001 decision to deny California’s

request for an oxygen content waiver, concluded that the directional effect of a waiver

on VOC emissions was uncertain. EPA separately estimated several types of VOC

emissions changes that could occur with a waiver and summed them to estimate the net

VOC change for the twelve scenarios evaluated.6

 Specifically, EPA considered:

• Exhaust emission changes resulting from predicted “no waiver” to “waiver”

changes in emission-related fuel parameters, including but not limited to oxygen

content.

• Evaporative VOC emission changes resulting from predicted differences in asblended RVP.

• Changes in permeation VOC emissions resulting from differences in ethanol

content.

• Changes in VOC emissions related to RVP changes caused by commingling of

ethanol-oxygenated and non-oxygenated gasoline in vehicle fuel tanks.

Our analysis predicted that the impact of a waiver on VOC emissions would be

mixed, that is, the effect of a waiver on the VOC sources listed above would not be

directionally the same in each case. First, exhaust VOC emissions would increase with

a waiver, as indicated when EPA’s VOC emissions model is used to predict exhaust

VOC emissions from the fuels that our refinery analysis indicates are likely to be

produced with and without a waiver. Second, the refinery modeling indicates that the

RVP of both oxygenated and non-oxygenated fuels produced under a waiver would be

lower than without a waiver, with a consequent reduction in “as-blended” evaporative

emissions. Third, the smaller proportion of gasoline containing ethanol in the waiver

case would also tend to reduce VOC emissions from permeation. In the absence of any

commingling considerations (discussed below), the net result of these opposite exhaust

and non-exhaust effects would be a reduction in VOC emissions with a waiver, though

the magnitude of the reduction varies across scenarios. Finally, regarding commingling,

EPA concluded that commingling of ethanol and non-oxygenated gasoline in vehicles
7 When California established its Phase 3 RFG standards, it adopted a 0.1 psi reduction in

allowable RVP (from Phase2) to compensate for the expected increase in VOC

associated with commingling if a waiver were granted. If this 0.1 psi reduction in

allowable RVP were credited against the additional 0.2 psi equivalent increase in VOC

emissions from commingling, the net increase in VOC emissions expected from a

commingling effect would be 0.1 psi. The 0.1 and 0.2 psi equivalent increases cited here

take CARB’s adjustment into account. As noted in its June, 2001 decision document,

EPA did not need to decide whether it was appropriate to offset the expected increase in

emissions from commingling with the 0.1 psi RVP reduction adopted by CARB. Based on

EPA’s estimates of the likely range of commingling effects and VOC emissions, even if

the 0.1 psi offset had been applied, net VOC changes, hence the effect of the waiver on

ozone, was uncertain.

13

would be more prevalent with an oxygen content waiver than without, since refinery

modeling predicted that a substantial amount of ethanol would be used even if a waiver

were granted resulting in a mixed ethanol and non-ethanol gasoline market. 

Consequently, the commingling component of VOC emissions would be higher with a

waiver, potentially offsetting the net reduction from the other VOC changes.

CARB estimated that commingling would have the effect of raising the RVP of

gasoline by about 0.1 psi. EPA considered CARB’s analysis, but concluded that a 0.2

psi commingling effect (or even higher) was at least as likely. In addition to ethanol

market share, the commingling effect is very sensitive to such variables as brand

loyalty, initial amount of gasoline in the tank when it is refueled, and how much gasoline

is added. A limited amount of data to quantify these factors had been collected, and

used in models to estimate commingling effects. Since commingling is very sensitive to

factors which had been only crudely estimated, EPA concluded that a plausible case

can be made for commingling effects ranging from 0.1 psi to 0.3 psi. 

EPA concluded that, depending on the scenario, the net VOC change with a

waiver might be directionally positive or negative depending upon the estimated

commingling component associated with VOC emissions. With a 0.1 psi commingling

RVP increase, EPA predicted net VOC emission increases in two of the twelve

scenarios evaluated. With a 0.2 psi commingling RVP increase, net emission increases

were predicted for seven of the twelve scenarios.7

EPA’s analysis considered the effect of the waiver on VOC emissions of both onroad and off-road sources. EPA explicitly included exhaust, as-blended evaporative and

commingling VOC emission changes from non-road sources in its estimate of the VOC

emissions impact of a waiver. CARB estimated, in its February 7, 2000 submission,

that the difference in VOC emissions due to permeation losses when comparing nonoxygenated gasoline to gasoline/ethanol blends with 2.0 weight percent oxygen is about

13 tons/day for all federal RFG areas, assuming 100 percent penetration of nonoxygenated fuels. EPA quantified permeation effects by adjusting proportionally for

various non-oxygenated penetrations and oxygen contents different than 2.0 weight

percent, assuming that 60 percent of these permeation losses would represent the
8 Although Sacramento and San Diego were also federal RFG areas, EPA’s initial waiver

analysis estimated tons per day emission changes for the SCAQMD (Los Angeles area)

only. EPA focused on the SCAQMD because 1) CARB claimed that the SCAQMD and

Sacramento Metropolitan Air Quality Management District needed additional NOx

reductions for these areas to attain the National Ambient Air Quality Standards (NAAQS)

for ozone and particulate matter and 2) SCAQMD is by far the largest of these areas in

gasoline sales.

9 EPA noted in the June, 2001 decision document that there is much uncertainty about the

estimation of permeation and other emissions on off-road vehicles/engines as discussed

in detail in the Technical Support Document. CARB did not provide an estimate of nonroad permeation emissions changes in its February 7, 2000 waiver submission. Since

there would have been a high degree of uncertainty associated with any estimate of nonroad permeation emissions changes and little information with which to derive such an

estimate, EPA did not attempt to quantify non-road permeation in its initial waiver

analysis.

10 “Demonstration that the U.S. Environmental Protection Agency Must Grant California A

Waiver From The Federal Reformulated Gasoline Oxygen Mandate on Remand From The

U.S. Court of Appeals for the Ninth Circuit”, December, 2003 and revised, May 11, 2004.

14

South Coast Air Quality Management District (SCAQMD).8 EPA understood that this

13 tons/day CARB permeation estimate, which formed the basis for EPA’s permeation

estimates, represented on-road vehicles. Although we assumed that there would be a

permeation VOC emission change associated with non-road sources, we did not include

an estimate of this change in our analysis.9

2. Revised VOC Analysis

a. New VOC Information Submitted by California

In its February 2, 2004 submission, California provided additional information and

analysis relating to commingling and permeation VOC emissions. California claims that,

in light of this new evidence, EPA’s finding that a waiver of the oxygen mandate might

adversely affect VOC emissions and therefore increase ozone levels can no longer be

justified. Importantly, on May 11, 2004, California submitted a revised “demonstration

document”10 correcting some information in the original document. This information

addresses:

• The degree to which a waiver will result in increased emissions of VOC due to

commingling

• VOC permeation increases from nonroad equipment and gasoline cans that

result from an increased use of ethanol in gasoline
11 “Draft Assessment of the Real-World Impacts of Commingling California Phase 3

Reformulated Gasoline”, August 2003

12 California Air Resources Board, “Evaporative Emissions from Off-road Equipment”, June

22, 2001

13 “Test Protocol and Results for the Determination of Permeation Rates from High Density

Polyethylene Containers & Barrier Surface Treatment Feasability Study”, May 17, 1999

15

California claims that the likely commingling effect from a waiver is an RVP

increase of approximately 0.06 psi. California included estimates of the net VOC

change that would result with a commingling increase of 0.06 psi, if all other

components of the VOC emission change were as EPA previously estimated. These

revised VOC emission estimates, for the twelve scenarios which EPA previously

considered, all showed a net VOC emission decrease with an oxygen content waiver.

These decreases ranged from 0.08 to12.70 tons/day. 

California also estimated the nonroad permeation VOC emission decreases that

would occur with a waiver, and added these negative changes to the net results of

including the changes in commingling discussed above. When these changes were

incorporated, California estimated that total VOC emissions in the South Coast Air

Basin (SCAB) would decrease from 3.06 to18.38 tons per day with an oxygen content

waiver.

The February 2, 2004 submission included several documents relevant to

California’s revised commingling and permeation analyses. To support the revised

commingling estimates California included a CARB Commingling Study that provided

recent data on California consumer fueling habits from observations of almost 400

fuelings, and direct measurements of RVP increases in consumers’ vehicle fuel tanks.11

The report also contained estimates of commingling RVP increases using a simulation

model. California provided two technical reports relevant to permeation emissions; one

addressing evaporative emissions from small engines (“the off-road study”),12 and one

addressing permeation from containers (“the container study”).13 Both of these reports

contained results from test programs where ethanol and non-ethanol gasolines were

used.

b. EPA’s consideration of the new information and analysis

(1) Commingling

As noted, CARB had previously estimated the likely commingling effect to be

about 0.1 psi with an oxygen waiver in effect. EPA did not reject this estimate, but

concluded that 0.1 psi represented the low end of the likely range of commingling
14 This model is described in SAE paper 940765, “In-Use Volatility Impact of Commingling

Ethanol and Non-Ethanol Fuels” Peter J. Caffrey and Paul A. Machiele, US EPA

15 Using a “simplified” analysis CARB calculated the RVP boost for each possible outcome

under two scenarios (three refills with initial tank volume at the quarter tank level and 4

refills at the half tank level) and averaged the results for each scenario. CARB’s and

EPA’s commingling analyses are discussed in detail in both the June, 2001 decision

document and the June, 2001 Technical Support Document.

16 The simulation model was developed by Dr. David M. Rocke, University of California,

Davis.

16

effects. Both CARB’s estimate and EPA’s range of estimates were based on certain

assumptions about owner refueling behavior. 

While EPA used a model to help predict the possible magnitude of the

commingling effect, the model was not explicitly designed to predict the commingling

effect in California.14 This model allowed the user to specify several input parameters,

including oxygenated fuel market share, and to select from a limited number of curves

representing owner loyalty and refueling behavior. While these “loyalty” and “fill” curves

in the EPA model were based, to an extent, on actual data, these data were not

necessarily representative of consumer behavior in either the entire state of California

or in the SCAQMD. 

CARB relied primarily on a “simplified” analysis, rather than a computer

simulation, to estimate the potential commingling RVP increase.15 CARB did employ a

computer-based commingling simulation model (UCD model), to estimate an

adjustment factor to adjust “simplified” calculations based on a 10 volume percent

ethanol content in oxygenated gasoline to a situation with gasoline having a lower

oxygen content.16 (CARB estimated that the commingling RVP increase with 5.7

volume percent ethanol content is about 80% of that at 10 volume percent, all else

being equal.) The UCD model, which CARB used only to a limited extent to support its

initial 0.1 psi commingling estimate, is capable of estimating RVP increases under a

variety of consumer refueling behaviors. Different behaviors are modeled by changing

the values of certain inputs to the model. These inputs are parameters of probability

distributions which the model uses to simulate various aspects of refueling behavior. 

Although this model may provide an estimate of the commingling RVP increase

consistent with a particular set of inputs, appropriate values of these inputs must be

chosen to estimate a “real world” commingling RVP increase applicable to a specific

geographic area, such as the South Coast Air Basin (SCAB). It is difficult or impossible

to do this with any confidence without data to provide a means to estimate appropriate

input parameters. Consequently, even had CARB used this model more extensively in

its initial commingling analysis, it would have provided little additional validation of its

commingling estimate.
17 The commingling RVP estimates cited in the previous paragraph were for the”base” case. 

A range of estimates is given because CARB estimated the RVP increase at nine different

ethanol market shares reflecting the range of market shares that EPA’s refinery modeling

predicted. While California cited the base case results in its updated waiver request,

CARB’s commingling report also provides estimates for “more conservative” (greater

RVP increase) and “less conservative “ (smaller RVP increase) cases. The range of

estimates for the “more conservative” case was 0.072 -0.087 psi for 6 volume percent

ethanol, and 0.081- 0.097 psi for 7.7 volume percent ethanol blends.

17

 In summary, in EPA’s previous evaluation of California’s waiver request, neither 

CARB nor EPA estimates of the commingling effect utilized California-specific

information on consumer refueling habits. Both estimates relied on consideration of

certain hypothetical situations. While EPA’s analysis may have been more rigorous in

the sense that it relied more heavily on a computer simulation model, there was no

compelling argument to demonstrate that EPA’s estimates of the commingling effect

were more likely to be correct than CARB’s. EPA acknowledged the uncertainty of its

estimates, and accordingly considered a range of possible commingling RVP increases

applicable to all the scenarios.

As previously noted, California’s new submission included a draft report

documenting its commingling field study in which actual data were collected and

analyzed. Data were collected in three areas: Lake Tahoe, the Bay Area and Los

Angeles. This field study included actual measurements of RVP and oxygenate content

of gasoline in vehicles before and after refueling, as well as in the dispensed fuel. While

this study did measure RVP increases that occur when ethanol and non-ethanol

gasolines are commingled during refueling, it does not directly estimate the

commingling RVP increase that would occur with an oxygen content waiver, or with the

substitution of ethanol for MTBE in California gasoline. Rather, these measurements

can be used with certain other data and assumptions to derive an estimate of these

commingling impacts. Using this approach, the study estimated a statewide

commingling impact of 0.07 psi. 

Since the study also collected data relating to consumer brand loyalty, and other

fueling habits, results from the study could also be used to estimate certain of the input

parameters for the UCD commingling simulation model. Using this approach, California

estimated average statewide commingling impacts of 0.055-0.069 psi RVP for 6 volume

percent ethanol blends and 0.062-0.077 psi RVP for 7.7 volume percent ethanol

blends.17 CARB also concluded that the likely commingling effect from a waiver is an

average RVP increase of approximately 0.06 psi.

CARB’s estimates of commingling using the above model-based approach still

required certain assumptions, as would any analysis of potential commingling given the

available data. For example, CARB assumed that commingling would occur only in

vehicles operated by “non-loyal” consumers, and the estimates of overall commingling
18 The field study measured consumer brand loyalty by asking owners if a different brand of

gasoline was used in the last fueling of the vehicle. 

19 EPA initially considered scenarios where ethanol would be used at 2.7 weight percent

oxygen (7.7 volume percent ethanol), as well as scenarios where ethanol would be used

at 2.0 weight percent oxygen (6 volume percent ethanol). In our initial analysis we

assumed the same range of commingling increases for all of the scenarios. However, for

a given market share, we would expect the commingling impact to be less with 2.0 weight

percent ethanol-oxygenated gasoline than with 2.7 weight percent, as reflected in the

18

were weighted accordingly.18 In fact, it may very well be that loyal and non-loyal

consumers can only seldom be completely categorized as such. Still, just as loyal

consumers may, from time to time, purchase “other-brand” gasoline, non-loyal

consumers may often purchase gasoline from the same station over several successive

purchases. Also, the UCD model requires the user to specify, among other inputs, the

parameters of a probability distribution describing consumers propensity to purchase

ethanol gasoline. This information was not explicitly measured by the field study

survey, and CARB’s analysis involved assuming varying values for the parameters of

this distribution (i.e., the “base”, “more conservative” and “less conservative” cases cited

earlier). This bounding approach appears to us to be reasonable without more definitive

data.

In short, EPA believes that California’s more recent commingling analysis has

merit since CARB’s resulting assumptions are reasonable interpretations from the only

real-world studies available for California consumer habits associated with commingling. 

Consequently, it is reasonable to reassess the impact of an oxygen content waiver on

VOC emissions in light of the new data submitted. Such an analysis revises our

previously estimated ranges of commingling RVP increases in such a fashion that we

believe the best estimate lies somewhere within the range of estimates utilized by

California in their most recent submission. EPA has reached this conclusion because:

• Unlike California’s and EPA’s previous analyses, the analysis is based on data

that are recent, California-specific, and, in part, specific to the Los Angeles area.

• Model input parameters are derived from these real-world data.

• Although alternative analyses with different assumptions are possible, EPA

cannot reject California’s assumptions. In fact, utilizing CARB’s assumptions on

brand loyalty and other inputs resulting from their more recent study, EPA’s own

modeling approach, as utilized in our original decisions, would produce similarly

lower commingling effects.

• It is widely known that California refiners have, in fact, generally used ethanol at

2.0 weight percent oxygen (6 volume percent ethanol) rather than 2.7 weight

percent (7.7 volume percent ethanol). Such usage would also directionally

reduce the commingling effect.19
CARB estimates.

20 See the table on page 23 of California’s demonstration document. 

21 EPA verified the VOC change estimates at 0.06 psi, and the results shown are in good

agreement with EPA’s calculations. Any small differences are apparently due to round-off

and to California’s linear extrapolation of these estimates from results of EPA’s earlier

analysis, rather than calculating them directly using the methodology described in EPA’s

June, 2001 Technical Support Document.

19

In summary, EPA considers California’s range of estimates of 0.055 psi to 0.087

psi RVP increase to be a reasonable range of estimates of the likely impact of a waiver.

Thus, it is reasonable to evaluate the impact of the waiver on VOC emissions with some

limited number of values approximating this range. California utilized what it believed to

be the most reasonable point estimate of 0.06 psi for the commingling effect. 

California’s demonstration document estimated that, if this estimate of commingling is

utilized, net VOC emissions changes in EPA’s original VOC analysis would show

decreases for the waiver case. Furthermore, these decreases would range from 0.08

tons/day to 12.70 tons/day for the twelve scenarios previously evaluated.20 Our own

review indicates that these estimates are correct.21 Since we now know that refiners

have chosen to blend ethanol at 2.0 weight percent oxygen, it is also reasonable to

restrict this analysis to the four previously modeled scenarios where ethanol is blended

at 2.0 weight percent with or without a waiver. Additionally, these four scenarios were

the “worst case” VOC scenarios in EPA’s initial analysis. California’s estimate, verified

by EPA, of the emission decreases for these scenarios ranged from 0.08 tons/day to

5.23 tons/day. Thus, if the commingling effect is 0.06 psi, we would estimate that VOC

emissions would decrease with a waiver, assuming that there was no reason to revise

other aspects of our initial estimate of waiver-related VOC changes. (As is discussed

below in the section on permeation, further revisions of these net VOC changes are

warranted.)

As explained in footnote [19], CARB evaluated several commingling cases based

upon EPA’s twelve originally outlined scenarios and using better or worse case

assumptions about other factors affecting commingling not measured by the study. The

upper end estimate of the range of what CARB believes to be the most likely

commingling case for 6 volume percent ethanol blends was 0.069 psi. CARB also

estimated an even more conservative commingling case upper end estimate of 0.087

psi. If no revisions are made to other aspects of our previous VOC estimates, we

estimate that VOC emissions will increase with a waiver for two of the four remaining

scenarios when the commingling impact increases slightly above 0.06 psi. At 0.07 psi,

net VOC increases for these two scenarios are approximately 0.5 tons/day, and at 0.09

psi, net increases are approximately 1.8 tons/day. Although California’s commingling

study does shed substantial light on the input parameters (e.g., brand loyalty, etc.) that

are needed to estimate commingling effects, this study is not definitive. For example,
22 “Evaporative Emissions from Off-road Equipment” June 22, 2001. Average hot soak and

diurnal test evaporative emission increases of 48% and 49% were reported for the

commercial pump fuel containing ethanol relative to a commercial pump fuel containing

MTBE. These procedures measure evaporative emissions related to fuel volatility (RVP),

but also measure any permeation emissions that occur during the testing. Factors other

than volatility influence permeation emissions. If both gasolines had the same volatility

characteristics, it would be reasonable to assume that the difference in emissions

measured during this testing is entirely due to permeation. However, these two gasolines

had different volatility characteristics. Consequently, only a portion of the emissions

difference is attributable to permeation.

23 See “ARB Responses to U.S. EPA Questions on Ethanol Permeation (May 24, 2004) “

submitted as an attachment to a May 24, 2004 e-mail from Win Satiawan to Dave Kortum

(Docket A-2000-10, document V.C.24b).

24 CARB stated: “In the 2001 ARB study, “ Evaporative Emissions from Off-road

Equipment,” off-road engines using 5.7 percent ethanol gasoline (average RVP 7.28 psi)

increased total evaporative emissions by about 49 percent compared to the same engines

using MTBE fuel (average RVP 6.87 psi). Adjusting for ‘as-blended’ RVP discrepancy

between the two fuels results in ethanol permeation rate of about 43 percent, an

approximately six percent reduction to account for higher evaporative emissions of

ethanol fuel. This adjustment is a function of RVP only, and was computed as percent

difference in RVP relative to the MTBE fuel (i.e., 0.41 * 100% / 6.87). For all practical

purposes, this linear interpolation method is acceptable over a small range of RVP, which,

20

as is discussed above, CARB’s commingling study did not fully consider the variation

that may occur in brand loyalty beyond the scope of its study. Consequently EPA

believes it is reasonable to also consider the higher more conservative estimates of

commingling effects presented by CARB. Therefore, in Table 1 below, we have fully

considered the highest estimate (0.09 psi) along with the estimate deemed by CARB to

be the most reasonable (0.06 psi).

(2) Permeation

California’s demonstration document includes estimates of permeation VOC

emission increases from non-marine small engines using ethanol gasoline. California

based this estimate on its off-road study test results of five lawn mowers using

commercial California gasoline containing 6 percent ethanol.22 In its original

demonstration document, California claimed that evaporative emissions increased by up

to 49 percent, and applied this factor to the approximately 20 tons per day evaporative

emissions from non-marine off-road engines statewide, resulting in a 10 ton per day

evaporative emissions increase, or about 4 tons per day in the SCAB. Subsequent

submissions by CARB23 recognized that the RVP of the two fuels used in the study

differed. CARB utilized a linear interpolation method to account for the difference in

evaporative emissions between the engines tested with ethanol and those tested with

MTBE gasoline due to this difference in RVP.24 When these RVP differences were
in this case, is close to laboratory instrument reproducibility (ASTM D323-58, 0.21 psi

RVP).”

25 “Technical Support Document: Analysis of California’s Request for Waiver of the

Reformulated Gasoline Oxygen Content Requirement for California Covered Areas.”,

p119, June, 2001.

26 Referring to Table 1 at the end of this section, net VOC changes would be as follows if

EPA’s approach were utilized: at 0.06 psi boost the total VOC changes would be -2.96, -

2.38, -8.51 and -6.56 tpd and at 0.09 boost the total VOC changes would be -0.98, -0.40, -

6.60 and -4.64 tpd.

21

taken into account, CARB concluded that the ethanol permeation increased overall

evaporative emissions by 43 percent. This results in an 8.6 ton per day statewide

increase, with (allocating 40 percent of these emissions to the SCAB as in their

demonstration document) about 3.4 tons per day in the SCAB. 

CARB’s approach to attributing a portion of the measured evaporative emissions

difference to permeation is a simplified approach but there is little data available to

evaluate offroad permeation emissions or, indeed, even to evaluate evaporative

emissions generally for offroad equipment. In our original decision, EPA utilized a

model developed for onroad vehicles to estimate offroad evaporative emissions

increases for both the waiver and no waiver case, and we recognized that such data

and conclusions should be viewed with some caution given the much smaller amount of

data available for offroad engines.25 Nevertheless, this model could be used, as an

alternative to CARB’s linear interpolation approach, to estimate the portion of the

measured evaporative emissions difference that is attributable to volatility differences

(i.e., RVP), rather than permeation. Use of the model would provide at least one check

of the validity of CARB’s approach. Using the method that we used to calculate nonroad (as-well as on-road) VOC changes due to RVP in the initial waiver analysis, which

was based on CA's EMFAC7G on-road emissions model, we would estimate a 16.38

percent VOC increase due to RVP increasing from 6.87 to 7.28 psi, the RVP differences

in the CARB permeation study. Consequently, we assume that the remainder of the

total VOC increase from CARB’s offroad permeation study ( 32.28%) is due to

permeation. If our offroad permeation estimate of about 32 percent is used instead of

CARB’s 43 percent estimate, there is little change in the net effect and no change in

direction of VOC emissions for all waiver versus no waiver scenarios.26 Since both

approaches yield similar results and the same conclusions, and since there are no good

data to support one approach over the other, we utilized CARB’s 43 percent estimate

for purposes of calculating offroad emissions effects.

Additionally, the CARB off-road study compared permeation emissions of offroad equipment utilizing an MTBE fuel to equipment using an ethanol fuel. The more

appropriate comparison would be between an ethanol fuel and an all-hydrocarbon fuel

since MTBE fuels would not be utilized in a waiver situation due to California’s banning

of such fuels. EPA has seen no evidence to support the conclusion that MTBE fuels
27 CARB stated “[a]ccording to Harold Haskew, an expert in fuel permeation issues,

permeation rate difference between MTBE and non-oxy fuel is very small and negligible. 

As a result, ethanol gasoline permeation rate relative to non-oxy base fuel is assumed the

same relative to MTBE (i.e., 43 percent).” The final report on a Coordinating Research

Council test program to evaluate permeation emissions from automotive systems found

that the permeation differences between MTBE and non-oxygenated gasoline were not

statistically significant. (“Fuel Permeation from Automotive Systems”, Final Report, CRC

Project No. E-65, September 2004). We are unaware of any comparable study specific to

off-road vehicles and equipment.

28 California’s cites a total inventory of VOC emissions from gasoline containers statewide

as 10 tpd. Off-road evaporative emission estimates were adopted from the ARB staff’s

report, “Proposed California Phase 3 Reformulated Gasoline Regulations: Initial

Statement of Reasons,” October 22, 1999, Appendix M, Table K3, page M-6

(http://www.arb.ca.gov/regact/carfg3/appm.pdf). This shows statewide gasoline container

evaporative emissions of about 14 tons per day, excluding pleasure craft.

29 For the four scenarios where oxygen is used at 2% with or without a waiver, the off-road +

container permeation totals in Table 1 would change from -3.77, -2.90,-4.29 and -2.90

tons/day to -3.41,-2.62,-3.88 and -2.62 tons/day.

22

result in permeation effects substantially different than from non-oxygenated gasoline,

and, in its May 13, 2004 submission cited previously, California cited testimony from an

expert that “permeation rate difference between MTBE and non-oxy fuel is very small

and negligible.” 27 EPA, therefore, believes that the use of the fuels in the study

provides information also applicable for comparing permeation rates of ethanol fuels to

all-hydrocarbon fuels.

California used results from the container study, cited earlier, to estimate

potential permeation emission increases from storing ethanol gasoline in portable fuel

containers. It states that the test results indicated that the presence of about 5.25

volume percent ethanol in gasoline increases permeation emissions from untreated

containers by about 45 percent, or about 4.5 tons per day statewide or about 1.8 tons

per day for the SCAB.28

The demonstration document concludes that the two studies showed that adding

5-6 percent ethanol to all gasoline would increase SCAB permeation emissions by

about 5.8 tons per day. With the small correction to the off-road engine permeation

estimate discussed above, this number should be revised to about 5.2 tons per day.

Table 1 of California’s revised demonstration document includes estimates of additional

tons per day permeation losses applicable to each of the scenarios which EPA modeled

for the SCAB. This table does not reflect the correction to the permeation estimates.29

This revised estimate of 3.4 tons per day from off-road engines in the SCAB

appears to be sound in that it is consistent with the measured 49 percent increase in

emissions found in California’s off-road permeation study, corrected to 43 percent to

account for volatility differences between the test fuels. This is further supported by
30 California stated in its demonstration document that the Coordinating Research Council

(CRC) was in the process of conducting a permeation test program using fuel system

components extracted from 10 California vehicles selected based on their contribution to

the California on-road fleet. The CRC study results were published before EPA issued its

decision, so EPA considered the study in order to determine if the results suggested that

there were substantial inaccuracies in the analysis or conclusions contained in California’s

submission and in this decision document. This is described in a memorandum

“Consideration of the CRC Permeation Study in Evaluation of California’s Revised RFG

Oxygen Content Waiver Request” [see docket OAR-2004-0038]. The memorandum

concludes that the CRC results suggest that previous analyses have not over-estimated

ethanol-related on-road permeation impacts and may have underestimated them. 

However, EPA has not revised the on-road permeation emission estimates in this

decision document since substitution of earlier on-road permeation estimates with revised

estimates based on the CRC study would not impact EPA’s qualitative conclusions

regarding the net effect of the waiver on VOC emissions. Additionally, considerable

review is needed to determine how to best use the CRC data to estimate permeation

emission impacts.

23

EPA’s alternative method of evaluating the data contained in that study. Thus, the

study appears to present a sound experimental design to at least grossly estimate

overall permeation emission changes due to the use of ethanol in off-road engines. 

There does not appear to be information that would dispute these findings. 30

Similarly, the study of permeation emissions from containers appears to be

adequately designed to make an estimate of increased permeation emissions from

containers with ethanol gasoline, especially in light of the fact that little or no additional

information is available on the subject.

Consequently, while there is still uncertainty associated with permeation VOC

estimates, EPA concludes:

• There is sufficient technical basis to include an estimate of off-road permeation

VOC emission changes in an evaluation of the effects of an oxygen content

waiver on emissions, and

• Based on the technical information submitted, the off-road permeation reductions

with a waiver claimed in California’s demonstration document appear reasonable.

(3) Revised Estimates of Waiver Impacts on VOC and Potential Impact on

Ozone

EPA has prepared revised estimates of no waiver to waiver VOC emissions

changes for the scenarios where ethanol was blended at 2.0 weight percent oxygen. In

addition to the changes based on a commingling effect of 0.06 psi, representing

California’s estimate of the likely waiver impact, we have evaluated net changes
31 “Technical Support Document: Analysis of California’s Request for Waiver of the

Reformulated Gasoline Oxygen Content Requirement for California Covered Areas.”,

p126, 127, June, 2001.

32 In its original submissions (CARB February 7, 2000 submission, EPA Docket A-2000-10,

Number II-D-20 and 21), California argued that increases in CO resulting from a waiver

are offset by decreases in VOC emissions and presented relative reactivity factors for CO

and VOC. If EPA were to apply California’s reactivity factors, or similar factors, to our

current emissions estimates presented below, we generally agree that the CO increases

are approximately offset by decreases in emissions of VOC. This issue is also addressed

in our “Response to Comments submitted by Renewable Fuels Association” (docket A2000-10, document V.D.1).

24

assuming a commingling effect of 0.09 psi. This represents the upper limit of

California’s estimate for the “more conservative” case for 6 volume percent ethanol (2

weight percent oxygen) blends. EPA has also used the off-road and container

permeation VOC impacts which California reported. This revised analysis estimates net

VOC reductions for each of these scenarios at both levels of commingling impact. 

Results are shown in Table 1, along with the oxides of nitrogen (NOx) and carbon

monoxide (CO) emission change estimates from EPA’s initial 2001 analysis. 

With these revised estimates, total VOC and NOx emissions are likely to

decrease with a waiver while CO emissions are likely to increase. Consequently, EPA

can no longer reasonably conclude that the effect of a waiver on ozone is uncertain

because of the uncertainty in the direction of the VOC change. The increase in CO may

have an adverse impact on ozone. However, as was discussed in EPA’s previous

decision,31 CO is far less reactive in contributing to ozone than either VOC or NOx. The

effect on ozone of the increase in CO emissions and the effect on ozone of the

decrease in VOC emissions are expected to approximately offset each other.32 When

the beneficial effect of a reduction in NOx emissions is also taken into account, it is

readily apparent that the effect of decreases in these more important ozone-forming

emissions more than offsets the effect of the CO increases. In light of this revised

analysis, with a waiver it is most likely that VOC and NOx would decrease, CO would

increase, and the net change would have an overall benefit in terms of ozone for all

likely scenarios.
33 Results from the column are labeled “VOC no boost” in Table 1 of EPA’s June, 2001 decision document. C

off-road exhaust emissions effects, on- and off-road as blended RVP effects, and onroad permeation effectearlier in this section, California claimed that any commingling resulting from a waiver would be offset by Ca

more stringent (by 0.1 psi) RVP standard in its CARFG3 regulations. This column and the adjoining “0 psi that such an offset should be taken into account. In fact, EPA does not need to decide whether such an acsince all scenarios result in the same directional conclusions regarding VOC.

34 Estimated total VOC change if California’s estimate of off-road and container permeation is included and th

i.e. RVP increase due to commingling (boost) is 0 psi.

35 Estimated total VOC change if off-road and container permeation is included and the commingling boost is 

“most likely” estimate. This column is equivalent to the column labeled “Total VOC” in Table 31 of Californidemonstration document. These are EPA’s calculations, which differ trivially from California’s.

36 Estimated total VOC change if off-road and container permeation is included and the commingling boost is 

of California’s “more conservative” case.

25

Table 1: Waiver Impacts at Various Commingling-Related RVP Boosts (Revised)

Waiver Case Oxygen Market Sharesand Oxy Levels

Emission Inventory Changes (tons/day)

No WaiverOxy Level

Waiver OxyLevel

NationwideMTBE Use

UnocalPatent

% Oxyfuel % NonOxyfuel Year-round Oxygen

Avg

NOx VOC

baseline33

VOCwith allpermeation,0 psi boost34

VOCwith allpermeation0.06 psiboost35

2.0 2.0 Reduced Patent not

avoided

35 65 1.0 -6.60 -4.02 -7.43 -3.5

2.0 2.0 Continues Patent not

avoided

50 50 1.3 -5.08 -4.10 -6.72 -2.8

2.0 2.0 Reduced Patent

avoided

26 74 0.9 -7.20 -9.05 -12.93 -9.1

2.0 2.0 Continues Patent

avoided

50 50 1.3 -4.84 -8.17 -10.79 -6.9
37 “Technical Support Document: Analysis of California’s Request for Waiver of the

Reformulated Gasoline Oxygen Content Requirement for California Covered Areas”;

EPA420-R-01-016; June 2001. Available at

http://www.epa.gov/otaq/regs/fuels/rfg/r01016.pdf

26

III. DETERMINATION OF WHETHER COMPLIANCE WITH THE OXYGEN

CONTENT REQUIREMENT PREVENTS OR INTERFERES WITH

ATTAINMENT OF THE PM OR OZONE NAAQS

A. Legal framework for waiver decisions 

EPA’s previous decision to deny California’s waiver request included

considerable discussion of EPA’s authority under Section 211(k)(2)(B). (See Appendix

A of the Technical Support Document37). EPA explained that it had significant discretion

in interpreting section 211(k)(2)(B), and described a three step decision making

process. First, it was important that there be a clear demonstration of the impact of a

waiver on each applicable NAAQS. This was because EPA believed it should not grant

a waiver unless, at a minimum, there was a clear demonstration that granting a waiving

would aid attainment of at least one NAAQS and would not hinder attainment for any

other NAAQS. Once this initial threshold had been met, EPA would then determine

whether the impact that had been demonstrated amounted to prevention or interference

with attainment. Finally, EPA believed that even if prevention or interference was

found, EPA retained discretion to consider additional factors other than impact on

attainment of the NAAQS in determining whether to grant or deny a waiver.

EPA’s prior denial was based on California’s failure to satisfy the initial threshold

of the decision making process. EPA found that there was no clear demonstration of

whether a waiver would help or hinder attainment of the ozone NAAQS. EPA denied

the waiver on this basis without considering the impacts of a waiver on the PM NAAQS. 

Thus, EPA did not make any final decision or interpretation regarding the second or

third steps of the decision making process.

In the Davis case, the United States Court of Appeals for the Ninth Circuit upheld

EPA’s interpretation that California must “clearly demonstrate” the impact of a waiver for

each applicable NAAQS. However, the Court rejected EPA’s denial of the waiver 

because EPA had not considered the impact of a waiver on PM as well as on ozone. 

EPA had denied California’s request because it failed to clearly demonstrate that a

waiver would not hinder attainment of the ozone NAAQS. EPA had not considered the

impact on PM, based on EPA’s view of the minimum initial threshold of the decision

making process. The Davis court held that EPA abused its discretion by not evaluating

the effect that an oxygen content waiver would have on California’s efforts to comply

with the PM NAAQS.

As described in section II of this document, California has addressed the factual

concerns relating to VOC emissions that EPA noted in its previous denial of the State’s

waiver request. EPA finds that the net change in emissions that would result from a
38 It’s important to note that EPA did not reach this second step in the initial denial, and

EPA’s interpretation of this statutory criteria was not before the Davis court.

39 Letter from California EPA Secretary Terry Tamminen to U.S. EPA Administrator Michael

O. Leavitt. February 2 letter, page 2. 

40 Supra at note 10, p.9.

41 Supra at note 10, p.9,10.

42 Supra at note 10, p.8.

43 Id.

27

waiver would be expected to directionally contribute to reduced ambient levels of ozone

and PM. Thus, California has satisfied the first step of EPA’s decision making process. 

EPA therefore proceeds to interpret and apply the key phrase “prevent or interfere with

attainment,” which is at the heart of the second step of the analysis.38

California argues that “the substantial net increases in PM resulting from the

federal oxygen requirement, coupled with the current PM nonattainment status of most

federal RFG areas in the state, produce a situation where the federal RFG oxygen

requirement prevents or interferes with the attainment of the NAAQS for PM10 and

PM2.5.”39 California notes that the substantial NOx increases from the federal RFG

oxygen mandate “contribute to PM10 or PM2.5 concentrations in the federal RFG areas

in California. It necessarily follows that these NOx increases prevent or interfere with

attainment of the PM10 or PM2.5 NAAQS in those areas where the ambient standards

are not presently attained.”40 Thus, California’s basic view is that prevention or

interference is shown whenever compliance with the oxygen content requirement would

increase emissions that contribute to ambient air concentrations of a criteria pollutant, in

an area that is in nonattainment for that criteria pollutant. 

California argues that the approval of an attainment demonstration for PM10 for

two areas, San Joaquin Valley and the South Coast, does not change this conclusion. 

First, a waiver would bring immediate reductions that would bring the area closer to

attaining the NAAQS for PM10 in the interim. Second, although the attainment

demonstration is based on emissions inventories without a waiver, denial of a waiver

prevents the areas from relying on the additional emissions reductions that a waiver

would provide. Finally, with respect to PM2.5, California states that significant

additional unidentified control measures are need for PM2.5 attainment, and the oxygen

mandate therefore clearly prevents or interferes with attainment of the PM2.5 NAAQS.41

California also argues that “a waiver of the federal oxygenate requirement would

provide an additional margin of safety in assuring attainment of the federal PM10

standards in [the San Joaquin Valley and the South Coast area] as well as facilitate

more expeditious attainment.”42 With respect to PM2.5, California states that

“significant further emissions reductions beyond those specified for PM10 will be

needed,” and therefore “additional reductions in NOx emissions will be essential in

achieving the federal PM2.5 standards in these areas.”43
44 Supra at note 10, p1.

45 Id.

46 Attachment to letter from California Air Resources Board Executive Officer, Michael P.

Kenney to U.S. EPA Assistant Administrator Robert Perciasepe, July 9, 1999, p. 1.

47 Attachment to letter from California Air Resources Board Executive Officer, Michael P.

Kenney to U.S. EPA Assistant Administrator Robert Perciasepe, December 24, 1999 pp.

12,13.

28

With respect to ozone, California states that the analysis of the “federal RFG

oxygen mandate shows substantial increases in the combined emissions of NOx and

VOC, the two principal precursors of ozone.”44 California claims that “based on the data

and analysis now available, California has adequately demonstrated that a waiver will

assist the State’s efforts to attain and maintain the NAAQS for ozone.” As a result,

California concludes that the oxygen mandate “likely interferes with attainment of the

ozone NAAQS, and the Clean Air Act provides no basis for US EPA to deny a waiver

based on the unlikely possibility that a waiver might hinder ozone attainment.”45 In it’s

original application, California stated without further analysis that “the loss of additional

benefits from the California program will interfere with attainment” of the ozone NAAQS,

and would “delay attainment of the ozone standard” in all three federal RFG areas.46 

In a subsequent submission, California stated that a waiver would result in “significant

additional NOx reduction” and, therefore “denial of the waiver will prevent or interfere

with attainment and maintenance of the national ambient air quality standard.” 

California noted that it’s 1994 demonstration of attainment in its 1-hour ozone SIP relies

on NOx reductions. The additional reductions from a waiver would therefore “help

expedite the attainment of the ozone standard.” Any reduction in ozone precursors can

be considered crucial to expeditious attainment of the standards.”47

The core element of California’s argument is that the existence of reductions in

emissions from a waiver would lead to a reduction in ambient concentrations of a

criteria pollutant, and the reduction in emissions is by itself enough to show that

compliance with the oxygen content requirement prevents or interferes with attainment

in a non-attainment area. California argues that additional reductions from a waiver

would in all cases provide aid, of greater or lesser degree, in ensuring attainment of the

ozone or PM NAAQS, and additional reductions would in all cases reduce the degree

of nonattainment in the interim. California concludes that a waiver will therefore 

“facilitate” earlier attainment than that specified in the PM10 attainment demonstrations,

or would “expedite” attainment, or avoid “delaying” attainment, but does not

demonstrate how this result would flow from the emissions reductions expected from

the grant of a waiver. California makes no demonstration that a waiver would in fact

lead to attainment any earlier with a waiver than without a waiver. 

Under California’s suggested approach, EPA would logically approve a waiver in

any situation where a waiver would produce emissions reductions that would reduce a

criteria pollutant in a non-attainment area. The mere existence of the additional

reductions, by themselves, would appear to always meet the criteria suggested by

California, irrespective of any impact on the actual date attainment is achieved. 
48 For example, see the following from the floor debate on the Conference Committee bill: 1

Leg. Hist. at 851-856 (Sen. Durenberger); 1 Leg. Hist. at 1154-71 (Sen. Simpson); 1 Leg.

Hist. at 969 (Sen. Baucus); 1 Leg. Hist. at 1073 (Sen. Dole); 1 Leg. Hist. at 1187 (Rep.

Dingell); 1 Leg. Hist. at 11.95 (Rep. Waxman); 1 Leg. Hist. at 1209 (Rep. Sharp); 1 Leg.

Hist. at 1263-67 (Rep. Madigan); 1 Leg. Hist. at 1315 (Rep. Hall); 1 Leg. Hist. at 1435

(Rep. Richardson). Similar statements were made during consideration of the respective

House and Senate bills. 

29

EPA does not accept this interpretation of “prevent or interfere with attainment.” 

For the reasons discussed below, EPA concludes that the phrase “prevent or interfere

with attainment” as used in section 211(k)(2)(B) should be interpreted as follows. 

Preventing attainment means compliance with the oxygen content requirement has an

impact that clearly stands as an absolute or practical barrier to achieving attainment. 

Interfering with attainment means compliance with the oxygen content requirement has

an impact that clearly leads to achieving attainment at a later date than with a waiver 

The text of section 211(k)(2)(B) supports this interpretation. Congress provided

that EPA may waive the oxygen content requirement upon a determination that

compliance with the requirement “would prevent or interfere with the attainment” of a

primary NAAQS. Congress did not define the phrase “prevent or interfere with

attainment,” but the text implies that actual achievement of attainment is the primary

focus of the provision. For example, Congress did not refer to progress towards

attainment, as it did in section 110(l), or to minimizing the degree of nonattainment, but

instead referred to prevention or interference with the status of attainment. 

The legislative history of this provision supports the view that oxygen content

waivers should not be granted lightly. As noted in Davis, 348 F.3d 772, 780, the

legislative history indicates that Congress wanted EPA to closely scrutinize waiver

requests. During consideration of the 1990 Clean Air Act Amendments, Senator

Simpson urged EPA to “avoid a proliferation of too many different oxygen levels when it

grants partial oxygen content waivers, to solve NOx cap or NAAQS problems under

other provisions of § 211(k).” Id; see 136 Cong. Rec. 3504, 3522 (1990), reprinted in

Committee on Environment and Public Works, 103rd Cong., 4A Legislative History of the

Clean Air Act Amendments of 1990 at 1170. The Conference Report indicated that

“waiver of the oxygen requirements by petition must be the exception rather than the

rule.” Id. at 1024 . The Conference Report also stated that waiver applicants should be

required to “demonstrate that they are trying to comply with [the oxygen content]

provision within their capabilities.” Id. 

The legislative history makes it clear that Congress enacted the oxygen content

requirement to further important Congressional goals, and expected that the benefits

from the oxygen content requirement should not be readily foregone. The legislative

history shows that Congress required the use of oxygenates to provide a form of clean

gasoline octane that produced potential benefits for the U.S. agricultural economy and

promoted energy security through the use of renewable fuels such as ethanol. The air

quality impact of the oxygen content requirement focused on the ability of oxygenates to

reduce air toxics, while the waiver provision was adopted to address concerns about

potential adverse air quality impacts on attaining a NAAQS.48 EPA’s interpretation

recognizes these additional air quality and non-air quality impacts that Congress
30

identified, and reflects Congress’ desire that these additional benefits not be readily

foregone. EPA’s interpretation preserves these benefits unless EPA determines that

removing the oxygen content requirement would change the date when an area would

attain a primary NAAQS.

EPA has also taken into consideration its interpretation of a similar provision in

section 110(l). Section 110(l) addresses revisions to State SIPs and provides that EPA

“shall not approve a revision of a plan if the revision would interfere with any applicable

requirement concerning attainment and reasonable further progress . . . or any other

applicable requirement of this chapter.” EPA has interpreted this section as allowing

EPA to approve a State amendment to a SIP so long as the amendment will not cause

a delay in attainment, prevent a State from demonstrating reasonable further progress

on the dates required, or otherwise fail to meet a requirement of the Act. Thus, EPA

can approve SIP revisions that allow an increase in emissions, as long as such increase

does not delay the date when attainment is achieved, or have the other effects noted

above. See generally Navistar International Trans. Co. v. EPA, 941 F.2d 1339 (6th Cir.

1991).

For example, in general a State can demonstrate that amending or dropping an

approved control program does not interfere with attainment where the State can

demonstrate that without the control program the area will still attain as expeditiously as

practicable but not later than the applicable attainment deadline. Alternatively, in

general a State could show that the SIP revision preserves the status quo with respect

to air quality impact, either by getting substitute reductions from other programs or

showing there is no increased ambient air impact with the SIP revision. The evidence

required of a State to show noninterference may vary depending on the type of SIP

revision at issue. For example, if a SIP revision would cause an increase in emissions,

the revision generally would not be approved unless the State provides equivalent

emissions reductions or takes the further step of affirmatively demonstrating that the

revision would not delay attainment or otherwise interfere with any other applicable

requirement of the Act.

EPA believes it is also appropriate to focus the evaluation of a waiver under

section 211(k)(2)(B) on whether attainment would be delayed by compliance with the

oxygen content requirement. Under EPA’s interpretation of interference with attainment

under section 211(k)(2)(B), interference is based on the effect that a change in

emissions would have on achieving attainment. Interference would occur where

compliance with the oxygen content requirement has been clearly shown to delay

attainment. 

For purposes of section 211(k)(2)(B), EPA believes it is appropriate in all cases

to require a clear evidentiary demonstration that compliance with the oxygen content

requirement leads to a delay in attainment. As noted above, Congress adopted the

RFG requirement for a variety of air quality and non-air quality reasons, and expected
49 This Congressional expectation is also reflected in the fact that a waiver may be granted

only if there is interference with attainment - interference with any other applicable

requirement of the Act is not sufficient to meet the threshold for a waiver. This limitation

on the discretionary waiver authority under section 211(k)(2)(B) is in contrast to the much

broader scope of section 110(l), where Congress expressly provided for disapproval of a

SIP revision if it interferes with any applicable requirement of the Act, not just attainment.

50 In a similar situation, under section 211(c)(4)(C), the burden is on the State to make the

appropriate evidentiary demonstration to show that the state fuel program is “necessary to

achieve attainment.” EPA is applying the same approach here - the burden is on the

State to submit information sufficient to show that compliance with the oxygen content

requirement will cause a delay in NAAQS attainment. 

31

that the benefits from this requirement should not be easily or readily foregone.49

Requiring the State to demonstrate that removing the oxygen content requirement

would change the date when an area would attain a primary NAAQS is an appropriate

way to preserve these benefits. Based on this, EPA believes it is appropriate to take a

somewhat different approach implementing section 211(k)(2)(B) compared to section

110(l). EPA is placing the burden on the State in all cases where an RFG oxygen

content waiver is sought to clearly demonstrate that compliance with the oxygen content

requirement interferes with attainment. Showing that the oxygen content requirement

causes an increase in emissions does not satisfy this burden; the State must also

clearly show that such emissions increase leads to a delay in attainment. Requiring this

showing by the State implements the core principle embodied in the concept of

interference, common to both section 211(k)(2)(B) and section 110(l), and adopts an

evidentiary burden to demonstrate interference for purposes of section 211(k)(2)(B) that

sets an appropriate threshold for the exercise of this discretionary waiver authority.50

 

Under California’s interpretation, almost any level of NOx emissions reductions

from a waiver would reduce PM concentrations, and would increase the “margin of

safety” built into a SIP’s approved attainment demonstration. In addition almost any

level of additional reductions has the potential in the abstract to arguably “facilitate” to

some degree earlier attainment than specified in an approved SIP, and in the abstract

could directionally help a State to attain in situations where an attainment SIP had not

yet been submitted or approved. However EPA believes that this would set the criteria

for a waiver too low and does not properly reflect Congress’ desire that a waiver should

be the exception rather than the rule. It would basically rely on speculation about the

potential effect of a waiver on a future attainment date, instead of requiring a clear

demonstration that such an effect will occur. It would too lightly forego the variety of

benefits Congress expected from the oxygen content requirement. EPA believes that a

more appropriate balance of the factors important to Congress calls for an interpretation

of prevention or interference with attainment that is keyed to whether there is a clear

demonstration that a waiver would in fact lead to earlier attainment of a NAAQS by

either advancing attainment or avoiding a delay of attainment.

As discussed below, California has not made such a demonstration in this case. 

With respect to PM10, EPA has approved attainment demonstrations in California that

do not rely on the reductions from a waiver. California has not clearly demonstrated

that approval of a waiver would in fact lead to an earlier PM10 attainment date, and

there has been no commitment by the State to such a result. With respect to PM2.5, no
51 Should California submit a demonstration that approval of a waiver would lead to earlier

NAAQS attainment, EPA would review that submission and may find that interference

exists, applying the legal framework discussed above. 

52 Because California assumed use of oxygenated RFG in its approved SIPs, it is clear that

EPA’s denial of California’s waiver request conforms to the SIPs for purposes of section

176(c) of the CAA. Furthermore, under EPA’s general conformity regulations, only those

emissions which are “caused by” a federal action, need to be addressed through a

conformity analysis. In other words, conformity applies only if the “emissions would not

otherwise occur in the absence of the Federal action.” See 40 CFR §§ 93.152 (definitions

of “caused by,” “direct emissions” and “indirect emissions”), 93.153(b). The requirement

to use oxygenated RFG in California is not, however, “caused by” EPA’s denial of

California’s waiver request. Instead, it occurs by operation of the Clean Air Act. Thus, if

California had never submitted a request for an oxygen waiver, no EPA action would be

required for the oxygenated RFG requirements to apply there. EPA’s waiver denial itself

does not increase emissions compared to what would occur if EPA took no action. .

Because any emissions related to the oxygen content of RFG in California will not be

“caused by” EPA’s action on California’s waiver request, there are no “direct emissions” or

“indirect emissions” resulting from the EPA action, and the denial of California’s waiver

request does not trigger the requirement under section 176(c) and EPA's implementing

regulations for EPA to make a conformity determination. See 40 CFR 93.152, 93.153(b). 

32

demonstration has been made by California as to when or how any of the federal RFG

areas will achieve attainment of the PM 2.5 NAAQS. As such California has not

demonstrated that approval of a waiver would either accelerate the date attainment is

achieved or would avoid a delay in achieving attainment. Similar analyses apply for

ozone.51

Even where it is shown that the oxygen content requirement prevents or

interferes with attainment of NAAQS, the statute provides that EPA “may” grant a

waiver. EPA believes that it therefore has the discretion to deny a waiver even where

there has been a determination of prevention or interference with attainment. In

exercising this discretion, EPA could consider, among other possible factors, any

potentially negative effects of a waiver on public health or welfare not limited to air

quality impacts, as well as considering the non-air quality benefits that Congress sought

to promote through the RFG program. As discussed later, even if EPA accepted

California’s views on what constitutes prevention or interference with attainment, EPA

would deny the waiver under this third step.52

B. Consideration of attainment of the PM and ozone NAAQS in RFG areas in

California

In this section we examine the current status of California’s SIPs for attainment of

the PM and ozone NAAQS in the federal RFG areas. 

1. Attainment of the PM10 NAAQS in the SJV

 As noted above, the SJV is in non-attainment of the PM10 NAAQS and is

classified as a serious PM-10 nonattainment area. Under the Clean Air Act, the initial
33

attainment deadline for such areas was December 31, 2001. Because that date has

passed, California was therefore required to develop a plan that provides for expeditious

attainment of the PM-10 NAAQS, and for an annual reduction in PM-10 or PM-10

precursors emissions of at least five percent until attainment. California submitted the

PM10 plan for SJV on August 19, 2003. On February 4, 2004, EPA published a

proposal to approve California’s San Joaquin Valley plan to attain the federal standards

for PM10. 69 FR 5412. On April 28, 2004, EPA issued a final rule approving the plan. 

As explained in the rulemaking, EPA approved an attainment date of 2010. 

California’s PM-10 attainment plan relies on reductions from sources of NOx as

well as from sources of directly emitted PM-10 to achieve attainment. California has

demonstrated that attainment will be achieved as expeditiously as practicable, that the

CAA section 189(d) five percent requirement is met, and that reasonable further

progress (RFP) and quantitative milestones will be achieved. We also approved 

various vehicle, engine, and fuel programs for mobile source categories that are not

federally preempted as meeting the requirement of Best Available Control Measures

(BACM). The measures include: California heavy-duty diesel vehicle standards; lowemission Vehicle (LEV) 2 and CAP 2000 California exhaust and evaporative emissions

standards; heavy-duty diesel engine standards for 2007 and later; gasoline–Phase III

California RFG regulations; diesel fuel regulations for motor vehicles; the Carl Moyer

Program, providing funding to pay for the incremental costs of cleaner on-road, off-road,

marine, locomotive and other non-road sources; and the school bus idling regulations. 

We approved the programs as meeting BACM for the mobile source and fuels

categories, “since the State’s measures (supplemented by Federal controls for certain

mobile source categories) reflect the most stringent emission control programs currently

available, taking into account economic and technological feasibility.” 69 FR 5419.

California’s plan for attainment relies on reductions from control measures that

have already been adopted, as well as reductions from a variety of control measures

that are under development or consideration but have not yet been adopted, covering

both mobile sources and other sources. Based on California’s expeditious action in

adopting and preparing to adopt control measures, EPA determined that an attainment

date of 2010 is as expeditious as practicable under the circumstances. EPA also

explained that it expected California to continue to investigate opportunities to

“accelerate progress” as new control opportunities arise, and to expeditiously implement

feasible control measures. 69 FR 5426. This reflects the need to accelerate the

attainment date if practicable, as well as the need to comply with the deadlines for

reductions under the 5% and reasonable further progress plan.

With respect to the various mobile source control measures still under

development and consideration, California identified a number of specific measures. 

Based on California’s’s submission, EPA approved an enforceable commitment by the

State to adopt mobile source measures between 2002 and 2008 “that will achieve an

additional 10 tons/day of NOx, and 0.5 tons/day of PM-10 by 2010.” 69 FR 5426. 

These measures, while necessary for the attainment demonstration, have not yet been
53 A separate enforceable commitment was approved with respect to control of emissions of

PM10, from sources such as agricultural sources.

34

adopted and implemented. Thus, the enforceable commitment is an enforceable SIP

obligation to achieve the additional reductions by 2010.53

EPA determined that the circumstances presented by SJV warranted

consideration of approval of the enforceable commitment. Among other things, EPA

concluded that the nature and content of the commitment and the expected regulatory

actions underlying them would not “interfere” with meeting the requirements for

reasonable further progress, the annual schedule of 5% reductions. In effect, EPA was

confident that the enforceable commitment would not lead to a delay in the deadlines

that had to be met under the reasonable further progress requirements. EPA then

considered the commitment, and approved it because it addresses a limited portion of

the PM10 plan, the State and District are capable of fulfilling their commitment, and the

commitment is for a reasonable and appropriate period of time. Finally, EPA approved

an enforceable commitment for a mid-course review, that will include a complete

reassessment of all Plan elements including the attainment demonstration and control

measures, with a SIP revision based on the review to be submitted by March 31, 2006. 

69 FR 5427-29. 

In summary, the PM10 SIP approved for SJV demonstrates attainment by 2010,

which is as expeditiously as practicable, based on measures already adopted or

measures already under consideration or development and that will be adopted. A midcourse review will be conducted to re-evaluate the elements of the Plan. The measures

are expected to both satisfy all requirements for interim reductions, such as reasonable

further progress, as well as achieve attainment by 2010. The additional NOx reductions

from a waiver are not relied on to support any of the determinations underlying the SIP

approval.

EPA concludes based on the current circumstances and the SJV PM10 SIP that

denial of a waiver would not change the orderly implementation of the Plan and would

not change the underlying basis in the SIP approval for expecting that SJV would in fact

attain by 2010. California has not demonstrated that compliance with the oxygen

content requirement either stands as an absolute or practical barrier to attainment of the

PM-10 NAAQS in the SJV, or that approval of a waiver would lead to an earlier

attainment date than would be obtained without a waiver. Therefore, California has not

shown that the oxygen content requirement prevents or interferes with attainment of the

PM-10 NAAQS in the SJV. 

 

2. Attainment of the PM-10 NAAQS in the South Coast

On December 17, 2002, EPA published a proposal to approve California’s SIP

for the South Coast to provide for attainment of the PM-10 NAAQS. 67 FR 77212. EPA
35

published its final approval on April 18, 2003. 68 FR 19316. EPA proposed to extend

the attainment date of December 31, 2001 to December 31, 2006.

We have determined that, like the PM-10 SIP for SJV, the South Coast SIP

contains a series of control measures as well as enforceable commitments and that

EPA’s approval was based on reductions of PM-10, NOx, SOx, and VOCs without

relying for such attainment on EPA granting a waiver of the RFG oxygen content

requirement. 

As in the case of the PM-10 SIP for SJV discussed above, the plan provides for

timely reduction of PM-10 and precursor emissions and a demonstration that the

NAAQS will be achieved by 2006, independent of a waiver being granted. California

has not demonstrated that compliance with the oxygen content requirement either

stands as an absolute or practical barrier to attainment of the PM-10 NAAQS, or that

approval of a waiver would lead to an earlier attainment date than would be obtained

without a waiver. Therefore, California has not shown that the oxygen content

requirement prevents or interferes with attainment of the PM-10 NAAQS in the South

Coast.

3. Attainment of the 1 hr. ozone NAAQS in the South Coast

On February 8, 2000, EPA published a proposal to approve California’s SIP for

South Coast to provide for attainment of the ozone NAAQS. 65 FR 6091. EPA 

published its final approval on April 10, 2004. 69 FR 18903. EPA approved an

attainment date of 2010.

We have reviewed these plans and have determined that, like the PM-10 SIP for

SJV, the South Coast SIP for 1-hour ozone contains a series of control measures as

well as enforceable commitments and that EPA’s approval was based on reductions of

NOx and VOCs without relying for such attainment on EPA granting a waiver of the

RFG oxygen content requirement. 

 The plan provides for timely reduction of NOx and VOC emissions and a

demonstration that the NAAQS will be achieved by 2010, independent of a waiver being

granted. California has not demonstrated that compliance with the oxygen content

requirement either stands as an absolute or practical barrier to attainment of the 1-hour

ozone NAAQS in the South Coast, or that approval of a waiver would lead to an earlier

attainment date than would be obtained without a waiver. Therefore, California has not

shown that the oxygen content requirement prevents or interferes with attainment of the

1-hour ozone NAAQS in the South Coast.

4. Attainment of the 1 hr. ozone NAAQS in the SJV

Upon enactment of the 1990 Clean Air Act Amendments, the San Joaquin Valley

Air Basin (“SJVAB”) was classified as a Serious ozone nonattainment area for the 1-
54 The previous ROP plan for SJV, entitled “Amended 2002 and 2005 Rate of Progress Plan

for San Joaquin Valley Ozone,” was adopted by the San Joaquin Valley Air Pollution

Control District on December 31, 2002 and submitted to EPA by the State on April 10,

2003. 

36

hour ozone standard with an attainment date of no later than November 15, 1999. In a

rule published on November 8, 2001, EPA found that the SJVAB failed to attain the 1-

hour ozone standard by the required serious area attainment date (1999) and

reclassified the SJVAB (excluding Eastern Kern) to Severe ozone nonattainment

(effective December 10, 2001) with an attainment date of no later than November 15,

2005. RFG was required as of December 10, 2002. 

Unable to demonstrate attainment by the Severe area attainment date of 2005,

the State of California, on behalf of the San Joaquin Valley Unified Air Pollution Control

District (“District”), voluntarily requested, pursuant to CAA §181(b)(3), to be reclassified

Extreme ozone nonattainment. EPA granted the State’s request, effective May 17,

2004, in a rulemaking dated April 16, 2004 (69 FR 20550). Our final rule required the

State to submit by November 15, 2004, an extreme ozone plan for the San Joaquin

Valley that provided for the attainment of the one-hour ozone standard as expeditiously

as practicable, but no later than November 15, 2010. The State submitted its extreme

area ozone plan for the San Joaquin Valley on November 15, 2004 (“2004 Ozone Plan”)

which includes a modeled attainment demonstration and a Rate of Progress (“ROP”)

plan for milestone years 2008 and 2010.54

The 2004 Ozone Plan demonstrates the 2008 and 2010 ROP milestones will be

met, and attainment of the 1-hour ozone standard will be achieved by 2010. Starting

with a predicted 2010 baseline inventory of 367.6 tpd VOC emissions, and 401.7 tpd

NOx emissions, the 2004 Ozone Plan relies on the following NOx and VOC emission

reductions to achieve the required ROP and attainment goals– 

C State and District commitments already approved into the SJV PM-10 plan (total

= 11.9 tpd VOC, 41.2 tpd VOC). 

 

C New State and District commitments in the Extreme Ozone plan (total = 36 tpd

VOC, 11.9 tpd NOx).

C Reductions from long-term measures (i.e., §182(e)(5)) (total = 5 tpd VOC, 5 tpd

NOx). 

 California has not demonstrated that compliance with the oxygen content

requirement either stands as an absolute or practical barrier to attainment of the 1-hour

ozone NAAQS in the SJV, or that approval of a waiver would lead to an earlier

attainment date than would be obtained without a waiver. Therefore, California has not

shown that the oxygen content requirement prevents or interferes with attainment of the

1-hour ozone NAAQS in the SJV.
37

5. Attainment of the PM10 and 1 hr. Ozone NAAQS for Sacramento and San

Diego

On March 20, 2003, EPA published a proposal to approve California’s plan to

provide for attainment of the 1 hr. ozone NAAQS for San Diego. 68 FR 13653. EPA 

published its final approval on June 26, 2003. 68 FR 37976. EPA published a proposal

to approve California’s plan to provide for attainment of the 1 hr. ozone NAAQS for

Sacramento on March 18, 1996. 61 FR 10920. EPA published its final approval on

January 8, 1997. 62 FR 1150.

EPA has reviewed these plans for the RFG covered areas of Sacramento and

San Diego and has verified that in each plan the State has projected attainment with the

1 hr. ozone NAAQS by the applicable attainment date without relying on EPA granting a

waiver of the RFG oxygen content requirement. 

 California has not demonstrated that compliance with the oxygen content

requirement either stands as an absolute or practical barrier to attainment of the PM-10

or 1-hour ozone NAAQS in Sacramento or San Diego, or that approval of a waiver

would lead to an earlier attainment date in either of these areas than would be obtained

without a waiver. Therefore, California has not shown that the oxygen content

requirement prevents or interferes with attainment of the PM-10 or 1-hour ozone

NAAQS in Sacramento or San Diego. 

San Diego is in attainment of the PM-10 NAAQS. EPA has determined that the

Sacramento area has attained the NAAQS for PM-10, as noticed in the February 15,

2002 Federal Register. 67 FR 7082. California has not demonstrated that approval of

a waiver would avoid or delay a return to nonattainment. 

6. Attainment of the PM2.5 and 8 hr Ozone NAAQS in the Federal RFG Areas in

California

At this time, no demonstration has been made by California as to when or how

any of the federal RFG areas will achieve attainment of the PM 2.5 or the 8 hr ozone

NAAQS. As such California has not demonstrated that compliance with the oxygen

content requirement either stands as an absolute or practical barrier to attainment of the

NAAQS, or that approval of a waiver would lead to an earlier attainment date than

would be obtained without a waiver. Therefore, California has not shown that the

oxygen content requirement prevents or interferes with attainment of the PM 2.5 or 8-

hour ozone NAAQS in the Federal RFG areas in California.

C. Determination Regarding Prevention or Interference with Attainment

EPA finds that California has not clearly demonstrated that compliance with the

oxygen content requirement prevents or interferes with attainment of either the PM or
55 “Ethanol Use in California’s Gasoline: Policy Drivers and Challenges”, presented by Pat

Perez, Manager, Transportation Fuels Office, California Energy Commission; available at 

http://www.energy.ca.gov/ethanol/documents/2004-02-09_PEREZ_EHANOLGAS.PDF 

38

ozone NAAQS for any federal RFG area in California, for purposes of section

211(k)(2)(B), because California has not demonstrated that compliance with the oxygen

content requirement stands as an absolute or practical barrier to achieving attainment,

or that compliance clearly leads to achieving attainment at a later date than with a

waiver.

D. Consideration of Additional Factors

While California has not met the criteria of preventing or interfering with

attainment, EPA has also considered what action it would take if EPA adopted

California’s view of prevention or interference with attainment, and, using that approach,

found that this requirement was met for California. In such a case, as discussed in

section III.A., EPA would still have the discretion to consider factors other than

attainment of the NAAQS in deciding whether to grant California’s request for a waiver.

 In the federal RFG areas of California, ethanol is currently the oxygenate used

to supply the oxygen content required under section 211(k)(2)(B). Basically all federal

RFG in California is blended with ethanol to meet this requirement. EPA’s analysis

indicates that if a waiver were granted there would be a significant reduction in the

percentage of RFG that would use ethanol. This reduction in the use of ethanol would

undermine the potential benefits vis a vis energy security and support for rural and

agricultural economy that Congress expected from the oxygen content requirement.

The ethanol used in California can be expected to provide a clear reduction in

fossil fuel use compared to the gasoline that it replaces. This fossil fuel savings

reduces reliance on importation of crude oil and other sources of fossil fuel energy. The

California Energy Commission in a presentation it made before the National Association

of State Energy Officials on February 9, 2004 projected that by 2010, ethanol use in

federal RFG alone would displace approximately 1 billion gallons of gasoline in

California.55 A significant percentage of this displacement would not occur if a waiver

were granted.

Studies have evaluated the effects on fossil fuel energy use of using ethanol

blended with gasoline compared with the effects of using gasoline in a mid-size

passenger car. Such studies have considered the petroleum and energy use

associated with chemicals manufacturing, farming of corn and biomass, ethanol

production and ethanol combustion. For gasoline energy use, such studies considered

petroleum and energy use associated with petroleum recovery and refining, and

gasoline combustion. The results of such analyses show that by displacing gasoline
56 For example, see: “Effects of Fuel Ethanol Use on Fuel-Cycle Energy and Greenhouse

Gas Emissions”; M. Wang, C. Saricks, and D. Santini; January 1999 (ANL/ESD-38)

57 The Agency is aware of studies that suggest the production of ethanol consumes more

fossil fuel than it displaces (e.g. see "Ethanol Fuels: Energy Balance, Economics, and

Environmental Impacts are Negative," by David Pimentel, Natural Resources Research

(Vol., 12, No. 2); however, the Agency has reviewed these studies and supports the

findings, cited in footnote fifty-six above, from the Department of Energy’s Argonne

National Laboratory that indicate a net positive fuel balance achieved with ethanol. 

39

consumed in the U.S., ethanol use reduces the amount of fossil fuels used to make

motor vehicle fuel.56, 57 

Granting California’s request for a waiver would reduce the level of fossil fuel 

savings gained from the use of ethanol, and would generate less support for our

agricultural and rural economies. At the same time, California has not clearly

demonstrated that a waiver would lead to an earlier attainment date for a NAAQS than

would be obtained without a waiver. These factors support a denial of California’s

request pursuant to EPA’s discretionary authority, even if EPA accepted California’s

view and determined, for purposes of section 211(k)(2)(B), that under the present

circumstances compliance with the RFG oxygen content requirement prevents or

interferes with attainment of the ozone and PM NAAQS in California.

IV. Conclusion

EPA denies California’s request for a waiver as there has been no clear

demonstration that compliance with the oxygen content requirement prevents or

interferes with attainment of either the PM or ozone NAAQS. Even if EPA adopted

California’s view and determined that the evidence before the agency demonstrates that

compliance with the oxygen content requirement prevents or interferes with attainment,

EPA would exercise it’s discretion and deny the waiver for the reasons described above.