[Federal Register Volume 62, Number 224 (Thursday, November 20, 1997)]
[Proposed Rules]
[Pages 61942-61948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30517]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[AZ-MA-002-CGB; FRL-5925-6]


Approval and Promulgation of State Implementation Plans; 
Arizona--Maricopa County Ozone and PM<INF>10</INF> Nonattainment Areas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: EPA is proposing to approve a State Implementation Plan (SIP) 
revision submitted by the State of Arizona on September 15, 1997, 
establishing Cleaner Burning Gasoline (CBG) fuel requirements for 
gasoline distributed in the Phoenix (Maricopa County) ozone 
nonattainment area. Arizona has developed these fuel requirements to 
reduce emissions of volatile organic compounds (VOC) and particulates 
(PM<INF>10</INF>) in accordance with the requirements of the Clean Air 
Act (CAA). EPA is proposing to approve Arizona's fuel requirements into 
the Arizona SIP because either they are not preempted by federal fuels 
requirements or to the extent that they are or may be preempted, since 
EPA is proposing to find that the requirements are necessary for the 
Maricopa area to attain the national ambient air quality standards 
(NAAQS) for ozone and particulates.

DATES: Comments on this proposed rule must be received in writing by 
December 22, 1997.

ADDRESSES: Written comments should be sent to the Region IX contact 
listed below. Copies of the SIP revision are available in the docket 
for this rulemaking, which is open for public inspection at the 
addresses below. A copy of this notice is also available on EPA Region 
IX's website at http://www.epa.gov/region09.

Air Planning Office (AIR-2), Air Division, Region IX, U.S. 
Environmental Protection Agency, 75 Hawthorne Street, San Francisco, CA 
94105
Arizona Department of Environmental Quality, Office of Outreach and 
Information, First Floor, 3033 N. Central Avenue, Phoenix, Arizona 
85012.

FOR FURTHER INFORMATION CONTACT: Karina O'Connor, Air Planning Office, 
AIR-2, Air Division, U.S. Environmental Protection Agency, Region IX, 
75 Hawthorne Street, San Francisco, CA 94105, Telephone: (415) 744-
1247.

SUPPLEMENTARY INFORMATION:

I. Background

A. Arizona CBG

    The State CBG fuel program for the Maricopa area establishes limits 
on gasoline properties and gasoline emission standards which will 
reduce emissions of volatile organic compounds (VOCs), oxides of 
nitrogen (NO<INF>X</INF>), carbon monoxide (CO) and particulates (PM). 
Under the program, a variety of different fuels will be able to meet 
the fuel standards during different implementation periods (see Table 
1). Starting June of 1998 through September 30, 1998, gasoline sold in 
Maricopa County must meet standards similar to EPA's Phase I 
reformulated gas (RFG) program or California's Phase II RFG program. 
Under the EPA Phase I RFG standards, the Arizona Department of 
Environmental Quality (ADEQ) estimates that VOC emissions will be 
reduced by 8.7 tons per summer day (tpsd), NO<INF>X</INF> emissions by 
0.2 tpsd, CO emissions by 118.6 tpsd and PM<INF>10</INF> emissions by 
0.27 tpsd. With California RFG, ADEQ estimates that VOC emissions will 
be reduced by 14.1 tpsd, NO<INF>X</INF> emissions by 8.2 tpd, CO 
emission by 198 tpsd and PM<INF>10</INF> by 0.76 tpsd.
    California Phase II RFG can be used to comply with the Arizona fuel 
program during all implementation periods since, starting May 1, 1999, 
gasoline must meet standards similar to EPA's Phase II RFG program or 
California's RFG program. Under the CBG Type 1 standards, ADEQ 
estimates that VOC emissions will be reduced by 12.5 tpsd, 
NO<INF>X</INF> emissions by 2.0 tpsd, CO emissions by 143.3 tpsd and 
PM<INF>10</INF> by 0.4 tpsd.

                             Table 1.--Fuel Types Meeting Arizona CBG Fuel Standards                            
----------------------------------------------------------------------------------------------------------------
             Fuel type                    Fuel designation                    Implementation period             
----------------------------------------------------------------------------------------------------------------
CBG Type 1.........................  EPA's Phase II RFG........  June 1999-Future.                              
CBG Type 2.........................  California Phase II RFG...  June 1998-Future.                              
CBG Type 3.........................  EPA's Phase I RFG.........  June-September 30, 1998.                       
----------------------------------------------------------------------------------------------------------------

    During both implementation periods, gasoline sold in the Maricopa 
area can comply with either of the two sets of specified standards 
included in the program. Therefore the actual emission reductions 
benefits during either period

[[Page 61943]]

are difficult to estimate without specific knowledge of the market 
penetration of each of the two acceptable fuels. However, emission 
reductions should, at a minimum, reach the levels that would result 
from the specific performance standards associated with CBG Types 1 and 
3 during both periods because the corresponding CBG Type 2 standards 
are, in all instances, more stringent. These emissions reductions will 
help the Maricopa area attain the NAAQS for both ozone and 
particulates.

B. Clean Air Act Requirements

    In determining the approvability of a SIP revision, EPA must 
evaluate the proposed revision for consistency with the requirements of 
the CAA and EPA regulations, as found in section 110 and part D of the 
CAA and 40 CFR part 51 (Requirements for Preparation, Adoption, and 
Submittal of Implementation Plans).
    For SIP revisions addressing certain fuel measures, an additional 
statutory requirement applies. CAA section 211(c)(4)(A) prohibits state 
regulation of a fuel characteristic or component for which EPA has 
adopted a control or prohibition under section 211(c)(1), unless the 
state control is identical to the federal control. Section 211(c)(4)(C) 
provides an exception to this preemption if EPA approves the state 
requirements in a SIP. Section 211(c)(4)(C) states that the 
Administrator may approve preempted state fuel standards in a SIP:

    * * * only if [s]he finds that the State control or prohibition 
is necessary to achieve the national primary or secondary ambient 
air quality standard which the plan implements. The Administrator 
may find that a State control or prohibition is necessary to achieve 
that standard if no other measures that would bring about timely 
attainment exist, or if other measures exist and are technically 
possible to implement, but are unreasonable or impracticable. The 
Administrator may make a finding of necessity even if the plan for 
the area does not contain an approved demonstration of timely 
attainment.

EPA's August 1997 ``Guidance on Use of Opt-in to RFG and Low RVP 
Requirements in Ozone SIPS'' gives further guidance on what EPA is 
likely to consider in making a finding of necessity.

C. History of Related Actions

    Under the Clean Air Act Amendments of 1990, the Phoenix area was 
classified as a moderate nonattainment area for both ozone and 
PM<INF>10</INF>. The moderate ozone attainment deadline was November 
15, 1996; the moderate PM<INF>10</INF> attainment deadline was December 
31, 1994. In 1997, the Phoenix area was reclassified as serious for 
ozone with an attainment deadline of no later than November 15, 1999. 
In 1996, the Phoenix area was reclassified as serious for 
PM<INF>10</INF> with an attainment deadline of no later than December 
31, 2001.<SUP>1</SUP>
---------------------------------------------------------------------------

    \1\ See 56 FR 56694 (November 6, 1991), CAA Sections 181(a)(1) 
and 188(c)(1), 62 FR 60001 (November 6, 1997) and CAA Section 
181(a)(1), 61 FR 21372 (May 10, 1996) and CAA Section 188(c)(2).
---------------------------------------------------------------------------

    The State, the Maricopa County air pollution control agency, and 
the local jurisdictions in Maricopa County have adopted and implemented 
a broad range of ozone control measures including a summertime low Reid 
Vapor Pressure (RVP) limit of 7.0 psi for gasoline, an enhanced 
inspection and maintenance (I/M) program, stage II vapor recovery, an 
employer trip reduction program, many transportation control measures, 
and numerous stationary and area source VOC controls. On November 12, 
1993, in support of one of these measures, the Arizona legislature 
passed section 13 of Arizona House Bill (HB) 2001 (1993 Special 
Session), originally codified in Arizona Revised Statutes (ARS) at 
section 41-2083(E).<SUP>2</SUP> This provision limited the maximum 
summer vapor pressure (or RVP) of gasoline fuel sold in the Maricopa 
area to 7.0 psi beginning May 31, 1995 through September 30, 1995, and 
applying from May 31 through September 30 of each year thereafter. 
Gasoline distributed in the Maricopa area by refineries, importers, 
carriers, retail stations and other end users who sell or dispense 
gasoline must meet the 7.0 psi limit during those periods.
---------------------------------------------------------------------------

    \2\ This section is currently codified in the ARS as section 41-
2083(F).
---------------------------------------------------------------------------

    On January 17, 1997, Governor Symington applied to EPA to include 
the Maricopa County ozone nonattainment area in the federal RFG program 
and the State submitted section 13 of HB 2001 to EPA as a SIP revision 
on April 29, 1997. Because this State fuel requirement established a 
control on RVP of 7.0 psi, not identical to the federal fuel RVP 
requirements applicable to the area (i.e., federal conventional 
gasoline RVP limit of 7.8 psi, federal phase I RFG RVP limit of 7.2 psi 
or federal phase II volatility limit of 7.8 psi), Arizona's fuel 
requirement was preempted under section 211(c)(4)(A) of the CAA. 
Pursuant to the Governor's letter and section 211(k)(6) of the CAA, EPA 
approved Governor Symington's request to opt in to the federal RFG 
program on June 3, 1997. 62 FR 30260. EPA also published a direct final 
approval of Arizona's low RVP SIP revision on June 11, 1997. 62 FR 
31734. In approving the RVP SIP revision, EPA found under section 
211(c)(4)(C) that the State's fuel requirement is necessary for the 
Maricopa area to attain the NAAQS for ozone.
    The State also enacted HB 2307 which authorized the establishment 
of a more stringent State reformulated gasoline program.<SUP>3</SUP> HB 
2307 was passed as an emergency measure, requiring ADEQ and the Arizona 
Department of Weights and Measures (ADWM) to adopt interim rules 
reflecting the fuel requirements included in the bill. The two agencies 
implemented a facilitated rulemaking process over the next three months 
which resulted in the publication of proposed rules on July 15, 1997 
and a public hearing on August 15, 1997. ADEQ adopted these proposed 
rules as the Arizona CBG Interim Rule on September 12, 1997 following a 
public comment period.
---------------------------------------------------------------------------

    \3\ The State reformulated gasoline rules are codified in the 
ARS as section 41-2124. Section 41-2123 of HB 2307 also contains 
wintertime oxygenate requirements for fuels. The bill changed the 
effective dates of the oxygenate requirements from October 15 to 
November 15 through March 31 of each year.
---------------------------------------------------------------------------

C. State Submittal

    In a September 12, 1997 letter, Russell Rhoades, Director, ADEQ, 
requested that EPA approve the CBG Interim Rule as a revision to the 
Arizona SIP and a CAA section 211(c)(4)(C) waiver. See ``Arizona 
Cleaner Burning Gasoline Interim Rule SIP Revision and Clean Air Act 
211(c)(4)(C) Waiver Request,'' September 1997. The SIP revision package 
includes: (1) Arizona laws providing the State authority for submittal 
of SIP revisions; (2) a SIP completeness checklist; (3) the CBG Interim 
Rule; (4) a request for a waiver from federal preemption pursuant to 
CAA section 211(c)(4)(C); (5) a letter from the Arizona Attorney 
General concerning the status of the States authority to enforce the 
rule out-of-state; and (6) HB 2307.
    As additional supporting technical documentation for the section 
211(c)(4)(C) waiver request, the States CBG SIP submittal includes: (1) 
An Assessment of Fuel Formulation Options for Maricopa (see Attachment 
3, Exhibit 2, Appendix A); (2) Demonstration of CO impacts of the 
proposed fuel formulations (see Attachment 3, Exhibit 2, Appendix G and 
Appendix K); (3) Demonstrations of NO<INF>X</INF>/PM impacts of the 
proposed fuel regulations (see Attachment 3, Exhibit 2, Appendix M); 
and (4) the Urban Airshed Model (UAM) modeling demonstration from the 
draft Voluntary Early Ozone Plan (VEOP)(see Attachment 3, Exhibit 6, 
Appendix B).

[[Page 61944]]

The modeling used 1996 as the base year and evaluated the effects of 
existing and future control measures. Arizona's CBG requirements are 
built into the 1996 base year inventory and modeled out to the 1999, 
and 2010 projected attainment years.
    To allow the Arizona CBG program to substitute for the federal RFG 
program, on September 15, 1997 the State also submitted a separate 
letter to Administrator Browner, requesting to opt out of the federal 
RFG program, effective June 1, 1998, contingent upon EPA approval of 
the Arizona SIP revision and the associated waiver request. In 
response, Dick Wilson, Acting Assistant Administrator for Air and 
Radiation, EPA, sent a letter to Governor Hull on October 3, 1997, 
which states that upon Region IX publication of a final approval of a 
SIP revision incorporating the CBG Interim Rule, the Office of Mobile 
Sources will notify the State and publish a notice in the Federal 
Register approving Arizona's opt-out from the federal RFG program.
    Arizona submitted a further addendum to the SIP revision on October 
21, 1997, which contained additional technical materials supporting the 
State's waiver request.

II. EPA Evaluation of SIP Submittal

A. General SIP Requirements

    As discussed below, EPA has evaluated the SIP revision and has 
determined that it is consistent with the requirements of the CAA and 
EPA regulations. On November 13, 1997, EPA found that the September 12, 
1997 SIP revision conformed to EPA's completeness criteria in 40 CFR 
part 51, Appendix V.
    Information regarding enforcement and compliance assurance for the 
SIP revision can be found in the ARS (specifically in Article 6, 
Chapter 15, Department of Weights and Measures, of Title 41) and the 
Arizona Administrative Code (AAC). The Arizona Department of Weights 
and Measures (ADWM) implements the CBG rule and has the necessary 
authority under ARS 41-2124.C, ARS 41-2124.01.B, ARS 41-2065.A.4, .14, 
and .16, and ARS 41-2065.D to obtain samples (AAC R20-2-721), test (AAC 
R20-2-759), and complete surveys (AAC R20-2-760). Any person violating 
the CBG rule is subject to prosecution pursuant to ARS 41-2113.B.4, 
civil penalties pursuant to ARS 41-2115 and stop-use, stop-sale, hold 
and removal orders pursuant to ARS 41-2066.A.2 (AAC R20-2-762). The SIP 
submittal also contains a letter from the Arizona Attorney Generals 
office regarding enforceability of the Arizona CBG rule outside of the 
Arizona State boundaries and a letter from the ADWM regarding gasoline 
sampling analysis timeframes. EPA has concluded that these provisions 
confer on the State the requisite authority to enforce compliance with 
the CBG Interim Rule.

B. Section 211(c)(4)

1. Federal Preemption
    The CBG Interim Rule establishes state gasoline standards. As 
discussed above, CAA section 211(c)(4)(A) preempts certain state fuel 
regulations by prohibiting a state from prescribing or attempting to 
enforce ``any control or prohibition respecting any characteristic or 
component of a fuel or fuel additive'' for the purposes of motor 
vehicle emission control, if the Administrator has prescribed under 
section 211(c)(1), ``a control or prohibition applicable to such 
characteristic or component of the fuel or fuel additive,'' unless the 
state prohibition is identical to the prohibition or control prescribed 
by the Administrator.
    The CBG Interim Rule establishes three types of gasoline standards. 
For 1998, the requirements for CBG Types 2 and 3 gasoline apply. In 
addition, all Arizona CBG must meet specified fuel property limits for 
that year.\4\ For 1999 and beyond, the requirements for CBG Types 1 and 
2 gasoline would apply. In addition, all Arizona CBG would have to meet 
the fuel property limits specified for that time period.\5\ These 
proposed types of gasoline include performance standards as well as 
requirements for specific fuel parameters. EPA's analysis of preemption 
addresses the following standards in the CBG Interim Rule: performance 
standards for NO<INF>X</INF> and VOC (under gasoline Types 1 and 3); 
performance standards for NO<INF>X</INF> and HC (under Type 2); and 
parameter specifications for oxygen, sulfur, olefins, aromatic HC, T50, 
and T90 (under gasoline Type 2).
---------------------------------------------------------------------------

    \4\ AAC R20-2-751.01.A.
    \5\ AAC R20-2-751.A.
---------------------------------------------------------------------------

    To determine whether a state fuel requirement is preempted by a 
federal requirement, EPA compares the applicable federal fuel 
requirements in the area with the proposed state fuel requirements. For 
the purposes of this analysis, the federal fuel requirement in the 
Phoenix ozone nonattainment area is federal conventional gasoline. 
While Arizona has opted into the federal RFG program for the 1997 
season, the State has requested to opt out of the program before the 
State CBG requirements would apply.\6\ Once the State has opted out of 
the federal RFG program, the applicable federal requirements would be 
those for conventional gasoline. The federal requirements for 
conventional gasoline include a NO<INF>X</INF> performance standard. 
CBG Types 1 and 3 also contain a NO<INF>X</INF> performance standard, 
so the CBG NO<INF>X</INF> performance standard is preempted. The CBG 
Interim Rule would allow refiners to meet the requirements for Type 2 
gasoline in lieu of the requirements for CBG Type 1 or 3 gasoline. 
Whether the specifications for CBG Type 2 are preempted is less clear. 
The CBG Type 2 specifications include performance standards for 
NO<INF>X</INF> and HC and requirements for the fuel parameters sulfur, 
olefins and aromatic HCs. The federal conventional gasoline standards 
do not include requirements for these specific parameters. However, 
refiners are required to use an emissions performance model that 
determines NO<INF>X</INF> and HC performance based in part on these 
fuel parameters.
---------------------------------------------------------------------------

    \6\ The opt-out is contingent on the CBG requirements becoming 
effective upon EPA's approval of the regulations in the SIP.
---------------------------------------------------------------------------

    In this rulemaking, EPA does not need to determine whether these 
types of State fuel requirements are preempted under section 
211(c)(4)(A) prior to acting on the proposed revision to the Arizona 
SIP. If the sulfur, olefins and aromatic HC requirements are not 
preempted, there is no bar to EPA approving them as a SIP revision. If 
they are preempted, EPA would be able to approve these requirements as 
necessary under section 211(c)(4)(C) if EPA could approve the 
NO<INF>X</INF> performance standard as a SIP revision. Sulfur, olefins 
and aromatic HC requirements all reduce NO<INF>X</INF> emissions. Under 
Type 1 or 3 CBG, refiners would obtain NO<INF>X</INF> reductions 
through a NO<INF>X</INF> performance standard, and under Type 2 CBG, 
refiners would obtain comparable NO<INF>X</INF> reductions through 
sulfur, olefins and aromatic HC requirements. If EPA finds the 
NO<INF>X</INF> reductions produced by the NO<INF>X</INF> performance 
standard under CBG Types 1 and 3 to be necessary, then the comparable 
reductions produced by the alternative of CBG Type 2 gasoline would 
also be necessary. Thus, based on EPA's finding, discussed below, that 
NO<INF>X</INF> reductions are necessary under section 211(c)(4)(C), EPA 
is proposing to approve the sulfur, olefins and aromatic HC 
requirements as well.
    The CBG Interim Rule also requires refiners to meet a VOC 
performance standard (under CBG Types 1 and 3 gasoline); or a HC 
performance standard or oxygen, T50 and T90 requirements

[[Page 61945]]

(under CBG Type 2 gasoline). Federal conventional gasoline requirements 
do not include a VOC performance standard or controls on these specific 
parameters. However, refiners are required to meet summertime 
volatility limits, and are required to use an emissions performance 
model that determines NO<INF>X</INF> performance based in part on the 
same fuel parameters as those used in the CBG Interim Rule. In this 
rulemaking, EPA does not need to determine whether these types of state 
fuel requirements are preempted under section 211(c)(4)(A) if EPA finds 
that these fuel requirements are necessary for the Phoenix 
nonattainment area to meet the ozone NAAQS. Of course, if these 
requirements are not preempted, there is no bar to approving them as a 
SIP revision.
    Arizona has already demonstrated that its 7.0 psi RVP requirement 
is necessary under section 211(c)(4)(C) to meet the ozone NAAQS in the 
Phoenix area.<SUP>7</SUP> Compliance with either the VOC performance 
standard or the HC performance standard or the oxygen, T50 and T90 
requirements would produce some additional VOC reductions beyond those 
produced by the 7.0 psi RVP requirement. As with the NO<INF>X</INF> 
performance standard and the alternative fuel parameter requirements 
discussed above, refiners would obtain comparable VOC reductions 
through either the VOC performance standard or the oxygen, T50 and T90 
requirements. Thus, if EPA finds the VOC reductions produced by the 
NO<INF>X</INF> performance standard under CBG Type 1 and 3 gasoline to 
be necessary, then the comparable emissions reductions produced by the 
alternative of CBG Type 2 gasoline would also be necessary. EPA is 
proposing to approve the VOC performance standard and the oxygen, T50 
and T90 requirements because either they are not preempted under 
section 211(c)(4)(C) or to the extent that they are or may be 
preempted, EPA is proposing, as discussed below, that they are 
necessary and hence approvable under section 211(c)(4)(C).
---------------------------------------------------------------------------

    \7\ See 62 FR 31734 (June 11, 1997).
---------------------------------------------------------------------------

2. Finding of Necessity
    As discussed below, EPA is proposing to find that the CBG 
NO<INF>X</INF> performance standards are necessary for the Phoenix 
PM<INF>10</INF> nonattainment area to meet the PM<INF>10</INF> NAAQS, 
and that the CBG VOC and HC performance standards, and the oxygen, T50 
and T90 requirements are necessary for the Phoenix ozone nonattainment 
area to meet the ozone NAAQS.
    To make this determination, EPA must consider whether there are 
other reasonable and practicable measures available that would produce 
sufficient emissions reductions to attain the ozone and PM<INF>10</INF> 
standards without implementation of the CBG requirements. In 
considering other measures for the purpose of demonstrating necessity 
under section 211(c)(4)(C), EPA agrees that Arizona need not submit an 
evaluation of alternative fuels measures. As discussed above, the State 
conducted an extensive public process to evaluate emissions control 
options, including fuels options. Arizona not only considered other 
fuels options, including opt-in to federal RFG, it has actually 
implemented this measure for a limited time. However, Arizona did not 
address retention of RFG or other fuels measures in its section 
211(c)(4)(C) submission, and EPA concurs with this approach. EPA 
interprets the reference to ``other measures'' that must be evaluated 
as generally not encompassing other state fuels measures, including 
state opt-in to federal RFG. The Agency believes that the Act does not 
call for a comparison between state fuels measures to determine which 
measures are unreasonable or impracticable, but rather section 
211(c)(4) is intended to ensure that a state resorts to a fuel measure 
only if there are no available practicable and reasonable nonfuels 
measures. Thus, in demonstrating that measures other than requiring CBG 
gasoline are unreasonable or impracticable, a state need not address 
the reasonableness or practicability of other state fuel measures.
    To determine whether the State gasoline VOC performance standards 
are necessary to meet the ozone NAAQS, EPA must consider whether there 
are other reasonable and practicable measures available to produce the 
needed emission reductions for ozone control. As mentioned previously, 
the State and local governments have adopted and implemented a broad 
range of ozone control measures. In addition, the ADEQ has developed a 
Voluntary Early Ozone Plan (VEOP) including air quality modeling and 
additional control measures.
    EPA examined Urban Airshed Modeling (UAM) completed for the VEOP, 
which evaluated the effects of existing and future VOC control 
measures, to support the necessity finding for this 
rulemaking.<SUP>8</SUP> The fifteen control measures that were 
evaluated for 1999 <SUP>9</SUP> are: (1) purge test in I/M (evaluated 
for 2010); (2) final I/M cutpoints; (3) I/M testing of constant 4-by-4 
vehicles; (4) federal RFG (both Phase I and Phase II RFG at 7.2 psi 
RVP; (5) adoption of California standards for off-road mobile sources; 
(6) voluntary catalyst replacement program; (7) voluntary vehicle 
retirement program; (8) voluntary commercial lawn mower replacement; 
(9) new standards for the use of industrial cleaning solvents; (10) 
alternative fuels tax incentives; (11) Motor Vehicle Division 
registration enforcement and mandatory insurance; (12) pollution 
prevention; (13) temporary power at construction sites; (14) 
alternative-fuelled buses; and (15) traffic light synchronization. (See 
Appendix H, Exhibit 2, Attachment 3 of the SIP submittal.)
---------------------------------------------------------------------------

    \8\ The control measure analysis submitted for the VEOP should 
be considered a preliminary draft analysis. The Phoenix 
nonattainment area was originally classified as moderate but was 
reclassified to serious after the VEOP was completed. Arizona is 
currently developing a serious area plan. However, the plan has not 
been completed in time for inclusion in this SIP revision and 
therefore could not be examined to support the necessity finding.
    \9\ 1999 was chosen as the modeling year because it is the next 
ozone attainment date in the Clean Air Act after 1996. See CAA 
181(a)(1).
---------------------------------------------------------------------------

    Results from the modeling demonstration showed that, using Arizona 
CBG gasoline (modeled as federal RFG or California RFP with an RVP of 
7.0 psi) plus all other measures identified, the Maricopa area would 
still fail to attain the 0.12 ppm ozone NAAQS in 1999. The VEOP 
indicates that ozone control measures need to show a 13 percent 
reduction of ambient ozone to attain the standard in 1999. The percent 
reduction from Federal Phase II RFG and California Phase II RFG is 3.9 
percent and 2.6 percent respectively. The total percent reduction 
available from the measures examined in the VEOP is less than 6 
percent.
    If the State's CBG VOC emissions performance standards were not 
implemented, the projected shortfall in emissions reductions would be 
larger. EPA recognizes that these estimates for reductions needed, 
reductions produced by various measures, and the scope of the measures 
available are all based on analysis that will be further refined and 
updated as the State's serious area plan is developed. Nevertheless, 
EPA is basing today's action on the information available to the Agency 
at this time, which does not indicate that there are other reasonable 
and practicable measures available to the State that would fill the 
projected emissions reduction shortfall. Hence, EPA proposes to find 
that the CBG VOC emissions performance standards are necessary for 
attainment of the ozone

[[Page 61946]]

NAAQS, and EPA proposes to approve them as a revision to the Arizona 
SIP for the Phoenix ozone nonattainment area.
    The State, the Maricopa County air pollution control agency, and 
the local jurisdictions in Maricopa County have adopted and implemented 
a broad range of particulate control measures and are currently 
considering additional controls in the course of developing the serious 
area PM<INF>10</INF> plan for the Maricopa County nonattainment area. 
The State's submission in support of the necessity demonstration 
includes both measures that are currently being implemented or for 
which commitments are in place, and various additional measures being 
considered for implementation in the serious area plan.
    The air quality modeling submitted by ADEQ shows that 
implementation of all of the PM<INF>10</INF> control measures 
identified by the State would still result in an emissions shortfall 
and the area would need an additional 2.4 percent reduction in the 
ambient concentrations of PM<INF>10</INF> to demonstrate attainment of 
the PM<INF>10</INF> NAAQS. The State's analysis projects that two 
additional measures, paving 100% of unpaved roads and controlling 100% 
of shoulders and access points, would produce sufficient emissions 
reductions to eliminate this shortfall. However, Arizona has 
characterized these measures as unreasonable for purposes of section 
211(c)(4)(C) and hence inappropriate to consider as available control 
measures in the necessity demonstration.
    EPA agrees that, for purposes of section 211(c)(4)(C), both paving 
100% of unpaved roads and controlling 100% of shoulders and access 
points would be unreasonable measures to implement in the Phoenix area 
in comparison to the CBG NO<INF>X</INF> performance standard. In 
determining whether a control measure is unreasonable or impracticable 
for purposes of section 211(c)(4)(C), reasonableness and practicability 
should be determined taking into account a comparison with the fuel 
measure that the state is petitioning to adopt. EPA must assess whether 
it would be reasonable and practicable to require the other control 
measure in light of the potential availability of the preempted state 
fuel control. Finding another measure unreasonable or impracticable 
under this criterion does not necessarily imply that the measure would 
be unreasonable or impracticable for other areas, for the same area 
under different circumstances, or for the same area under an analysis 
outside of the section 211(c)(4)(C) context.<SUP>10</SUP> For further 
discussion of this criterion see ``Guidance on Use of Opt-In to RFG and 
Low RVP Requirements in Ozone SIPs,'' U.S. EPA, Office of Mobile 
Sources, August 1997.
---------------------------------------------------------------------------

    \10\ For example, given the different criterion for EPA's 
section 211(c)(4)(C) evaluation, today's proposed finding does not 
in any way prejudge the question of whether these same measures 
might be reasonable in the context of the requirements in section 
189 (a) and (b) for reasonably available control (RACM) and best 
available control measures (BACM) for PM<INF>10</INF> control.
---------------------------------------------------------------------------

    Controlling PM<INF>10</INF> through paving 100% of unpaved roads 
and controlling 100% of shoulders and access points raises concerns 
regarding costs, feasibility, timing, administrative burdens, and 
burdens on individual citizens. ADEQ estimates the capital cost of 
paving 100% of unpaved roads to be $59.4 million, which is $54 million 
more than ADEQ's identified alternative of chemically controlling 100% 
of unpaved roads and would only reduce emissions by an additional 1.9%. 
To control 100% of shoulders and access points through installing curbs 
on 100% of paved road shoulders and paving 100% of access points to 
paved roads, ADEQ estimates a capital cost of $733.3 million, which is 
$366.65 million more than the estimated cost of its identified 
alternative measure which would be to control 50% of shoulders and 
access points. In addition, ADEQ has serious concerns about the 
feasibility of successfully paving all unpaved roads in the area with 
greater than 120 Average Daily Travel (ADT) miles and controlling all 
shoulders and access points before the attainment date of December 31, 
2001. Besides the significant capital expenditure associated with these 
measures, implementation of these measures would impose a substantial 
administrative burden on local and state agencies and would require 
significant coordination of local and state agencies. In addition, 
motorists throughout the area would experience the inconveniences and 
delays associated with extensive road construction projects.
    In comparison to the measures discussed above, the infrastructure 
for implementation of the fuel measure is already in place. This 
significantly reduces the burden on the implementing refineries, and 
would allow implementation of the measure to begin as early as the 
summer of 1998. Most of the compliance burden associated with the 
measures will be felt by a limited number of fuel suppliers. In 
addition, most of the compliance and implementation burdens associated 
with CBG have already been shown to be necessary for compliance with 
the ozone NAAQS. Therefore any additional burden for compliance with 
NO<INF>X</INF> performance standards will be minimal. Finally, 
implementation of the measure would require only limited new 
coordination efforts between ADEQ and ADWM. Thus, in comparison to the 
CBG NO<INF>X</INF> performance standard, for the purposes of section 
211(c)(4)(C), it would be unreasonable to require paving 100% of 
unpaved roads and controlling 100% of shoulders and access points in 
the Phoenix area in the timeframe considered here. <SUP>11</SUP>
---------------------------------------------------------------------------

    \11\ See footnote 10 and related discussion above for 
explanation of limited applicability of this proposed finding.
---------------------------------------------------------------------------

    Because the State is currently working on the underlying analysis 
for the serious area PM<INF>10</INF> plan for the Maricopa County 
nonattainment area, due December 10, 1997, EPA notes that the 
information relied on here is preliminary. The State may further refine 
its estimates of the emissions reductions needed, the emissions 
reductions produced by various control measures, and the scope of 
control measures available. Nevertheless, the information submitted by 
the State indicates that even with the implementation of all reasonable 
and practicable control measures known to be available at this time, 
including CBG, <SUP>12</SUP> additional emissions reductions will be 
needed for timely attainment of the PM<INF>10</INF> standard. 
Therefore, EPA proposes to find that the NO<INF>X</INF> performance 
standard in the CBG requirements is necessary for attainment of the 
PM<INF>10</INF> standard, and EPA proposes to approve this requirement 
as a revision to the Arizona SIP for the Phoenix PM<INF>10</INF> 
nonattainment area. <SUP>13</SUP>
---------------------------------------------------------------------------

    \12\ Arizona CBG was included in the modeling analysis as 
Federal RFG, Phase II at 100% market share.
    \13\ In its September 12, 1997 letter, ADEQ submitted the CBG 
Interim Rule as a revision to the Arizona ozone SIP. In order for 
EPA to take final action approving the CBG rule into the Arizona 
PM<INF>10</INF> SIP, the State will need to formally submit the rule 
as a revision to that SIP. ADEQ has informed EPA that it intends to 
do so in the near future.
---------------------------------------------------------------------------

C. Enforceability

    The ADWM has developed requirements for every entity in the 
gasoline distribution system to ensure that Maricopa County will 
receive gasoline that meets the state CBG standards. <SUP>14</SUP> The 
requirements, which include registration of gasoline suppliers, testing 
and sampling, compliance surveys, and record keeping and reporting, 
apply to (1) service stations, (2) fleet owners, (3) third party 
terminals, (4) pipelines and fuel transporters, (4) oxygenate blenders, 
and

[[Page 61947]]

(5) producers and importers of CBG. The requirements imposed by the CBG 
rule apply to activity occurring both within and outside of the State 
of Arizona. The State Attorney General's office has provided an 
analysis concluding that the State has full authority to enforce the 
rules and the associated requirements beyond the State borders.
---------------------------------------------------------------------------

    \14\ AAC R20-2-751. Area A Arizona CBG Requirements--1999 and 
AAC R20-2-751.01 Area A Arizona CBG Requirements--1998.
---------------------------------------------------------------------------

    Before any CBG suppliers may produce or import CBG, it must 
register with the ADWM.<SUP>15</SUP> These suppliers include any 
refiner, importer, oxygenate blender, pipeline or third party terminal 
who will produce, supply or have custody of Arizona CBG after June 1, 
1998. These registered suppliers must certify that each batch of gas 
meets the CBG standards as described in the Interim Rule. They must 
retain records of the sampling for five years; supply these records to 
ADWM, if requested, within 20 days; and notify ADWM of transport 
methods other than pipelines. They must also maintain a quality 
assurance/quality control (QA/QC) program to verify the accuracy and 
effectiveness of fuel testing or use an independent laboratory to 
complete testing (unless computer-controlled in-line blending equipment 
is in operation which is supplying audit reports to EPA and ADWM under 
40 CFR 80.65(f)(4)).<SUP>16</SUP>
---------------------------------------------------------------------------

    \15\ AAC R20-2-750. Registration Pertaining to Arizona CBG or 
AZRBOB.
    \16\ AAC R20-2-752. General Requirements for Registered 
Suppliers.
---------------------------------------------------------------------------

    Registered oxygenate blenders must follow the blending requirements 
submitted by the registered supplier and comply with additional 
blending requirements. For all terminal blending facilities, registered 
blenders must determine the oxygen content and volume of final blends 
before such blends leave the oxygen blending facility. Oxygenate 
blenders completing operations in gasoline delivery trucks must 
implement a quality assurance sampling and testing program. In-line 
blending operators using computer controlled blending must sample the 
fuel after the addition of oxygenate and prior to combining the batch 
with other gasoline, and they must notify the pipeline and ADWM of any 
batch which does not contain the specified type and amount of 
oxygenate. Oxygenate blenders must keep records of sampling and 
shipments for five years and make those records available within 20 
days of a request.<SUP>17</SUP>
---------------------------------------------------------------------------

    \17\ AAC R20-2-755. Additional Requirements Pertaining to AZRBOB 
and Downstrean Oxygenate Blending.
---------------------------------------------------------------------------

    Registered pipelines and third party terminals may not accept 
Arizona CBG from a supplier that is not registered with ADWM and that 
cannot submit written verification that the gasoline meets CBG 
standards. These gasoline transporters must also complete sampling of 
all CBG batches, report non-compliance of any batches with CBG 
standards within 24-hours of sampling to ADWM, and develop a QA/QC 
program to demonstrate the accuracy and effectiveness of the laboratory 
testing. Pipelines must also submit a monthly report to ADWM 
summarizing the results of laboratory testing of all Arizona CBG that 
has entered a pipeline (including the present location of the fuel 
sample).<SUP>18</SUP>
---------------------------------------------------------------------------

    \18\ AAC R20-2-753. General Requirements for Pipelines and Third 
Party Terminals.
---------------------------------------------------------------------------

    Fleet owners and service stations do not have to sample gasoline. 
However, they must retain on-site records for their most recent four 
deliveries, which verify the quantity and identify of each grade of 
motor fuel delivered. Service stations and fleet owners may maintain 
these records for the remainder of the previous 12 months off-site if 
the records are made available within two working days from the time of 
a request. These records shall contain: the name and address of the 
transferor and transferee; the volume, minimum octane rating, VOC and 
NO<INF>X</INF> reduction percentage standards, and origination point of 
the CBG; the date of transfer, proper identification of the gasoline as 
Arizona CBG or AZRBOB;<SUP>19</SUP> and the type and quantity of 
oxygenate contained in the Arizona CBG or identification of the product 
as AZRBOB, a statement that it does not comply with CBG standards 
without the addition of oxygenate, and the oxygenate types and amount 
needed to meet the properties claimed by the registered 
supplier.<SUP>20</SUP>
---------------------------------------------------------------------------

    \19\ AZBOB, as defined in the CBG Interim Rule (AAC R20-2-701.3) 
is ``a petroleum-derived liquid which is intended to be or is 
represented as a product that will constitute Arizona CBG upon the 
addition of a specified type and percentage (or range of 
percentages) of oxygenate to the product after the product has been 
supplied from the production or import facility at which it was 
produced or imported.''
    \20\ AAC R20-2-709. Records Retention Requirements for Service 
Stations and Fleet Owners.
---------------------------------------------------------------------------

    To maintain compliance with Arizona CBG standards, in addition to 
the ongoing registration, testing,<SUP>21</SUP> quality assurance and 
recordkeeping activities described above, ADWM will conduct compliance 
surveys throughout the year.<SUP>22</SUP> Each producer and importer of 
CBG must contribute to the costs of two surveys of CBG quality in 
Phoenix in the summer of 1998, followed by two surveys during the 
summer and winter seasons <SUP>23</SUP> for each following year, based 
on gasoline samples collected at retail outlets. Each compliance survey 
will be conducted by an independent surveyor who will develop a survey 
plan with committed funding for the season, to be submitted to ADWM by 
April 1 of each year. These surveys will cover compliance with VOC and 
NO<INF>X</INF> reduction levels and average levels of RVP, T50, T90, 
aromatic hydrocarbons, olefins, sulfur and oxygen. The results of each 
survey will be submitted to ADWM within thirty days following 
completion of the survey. If the survey or other testing indicates that 
the gasoline does not meet CBG VOC or NO<INF>X</INF> reduction 
averaging <SUP>24</SUP> percentage standards, the registered supplier 
must pay penalties and comply with more stringent applicable flat per 
gallon standards during a probationary period. For example, on each 
occasion that a sample fails a VOC emission reductions survey on or 
after May 1, 1999, the VOC emissions performance reduction and the 
minimum per gallon percentage reduction shall be increased by an 
absolute 1.0%, not to exceed the VOC percent emission reduction per 
gallon standard. <SUP>25</SUP>
---------------------------------------------------------------------------

    \21\ AAC R20-2-759. Testing Methodologies.
    \22\ AAC R20-2-760. Compliance Surveys.
    \23\ The summer season will last from May 1 through September 15 
and the winter season will last from November 1 through March 15 of 
each year.
    \24\ Under the CBG rule, if they submit to compliance surveys, 
registered suppliers can initially elect to comply with an average 
VOC reduction standards of 29 percent with a minium per gallon 
reduction of 25 percent instead of a flat per gallon percent 
reduction standard of 27.5 percent. See AAC R20-2-751.01.
    \25\ AAC R20-2-751.01(F) Area A Arizona CGB Requirements--1999 
and Later, Consequences of failure to comply with averages.
---------------------------------------------------------------------------

D. Proposed Action

    EPA has evaluated the submitted SIP revision and has determined 
that it is consistent with the CAA and EPA regulations. EPA has also 
found that the various CBG requirements are either not preempted by 
federal fuel requirements or are necessary for the Phoenix 
nonattainment area to attain the ozone and PM<INF>10</INF> NAAQS, 
pursuant to CAA. Therefore, EPA is proposing to approve the Arizona CBG 
Interim Rule into the Arizona SIP for the Phoenix ozone and 
PM<INF>10</INF> nonattainment areas under section 110(k)(3) of the CAA 
as meeting the requirements of section 110(a) and part D.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future implementation 
plan. Each request for revision to the state implementation plan shall 
be considered separately in light of specific technical, economic,

[[Page 61948]]

and environmental factors and in relation to relevant statutory and 
regulatory requirements.

V. Administrative Requirements

A. Executive Order 12866

    This action has been classified as a Table 3 action for signature 
by the Regional Administrator under the procedures published in the 
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a 
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for 
Air and Radiation. The Office of Management and Budget (OMB) has 
exempted this regulatory action from E.O. 12866 review.

B. Regulatory Flexibility

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 600 et seq., 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small not-for-profit 
enterprises, and small governmental jurisdictions. This proposed rule 
would not have a significant impact on a substantial number of small 
entities because this federal action authorizes and approves 
requirements previously adopted by the State, and imposes no new 
requirements. Therefore, because this proposed action does not impose 
any new requirements, the Administrator certifies that it does not have 
a significant impact on any small entities affected. Moreover, due to 
the nature of the Federal-State relationship under the CAA, preparation 
of a flexibility analysis would constitute Federal inquiry into the 
economic reasonableness of state action. The Clean Air Act forbids EPA 
to base its actions concerning SIPs on such grounds. Union Electric Co. 
v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

C. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(Unfunded Mandates Act), signed into law on March 22, 1995, EPA must 
prepare a budgetary impact statement to accompany any proposed or final 
rule that includes a Federal mandate that may result in expenditures to 
State, local, and tribal governments in the aggregate, or to the 
private sector, of $100 million or more in any one year. Under section 
205, EPA must select the most cost-effective and least burdensome 
alternative that achieves the objectives of the rule and is consistent 
with statutory requirements. Section 203 requires EPA to establish a 
plan for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that this proposed approval action does not 
include a Federal mandate that may result in expenditures of $100 
million or more to either State, local, and tribal governments in the 
aggregate, or to the private sector in any one year. This proposed 
Federal action authorizes and approves requirements previously adopted 
by the State, and imposes no new requirements. Accordingly, no 
additional costs to State, local, or tribal governments, or to the 
private sector, will result from this proposed action.

    Dated: November 14, 1997.
Felicia Marcus,
Regional Administrator.
[FR Doc. 97-30517 Filed 11-19-97; 8:45 am]
BILLING CODE 6560-50-P