***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 1 of 169 EO12866_E15 Misfueling Mitigation Measures Rule 2060 - A Q17 Final Rulemaking Document

_2011/03 /2 8
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 80 [EPA - HQ - OAR- 2010 - 0448; FRL - XXXX - X] RIN 2060 - AQ17 Regulation To Mitigate the Misfueling of Vehicles and Engines With Gasoline Containing Greater Than Ten Volume Percent Ethanol and Modifications to the Reformulated and Conventional Gasoline Programs
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final Rule.

_______________________________________ ________________________________ SUMMARY: In two recent actions under the Clean Air Act (CAA), EPA granted partial waivers that allow gasoline containing greater than 10 volume percent (vol%) ethanol up to 15 vol% ethanol (E15) to be introduced into comm erce for use in model y ear (MY) 2001 and newer light - duty motor vehicles, subject to certain conditions. In today ’s action, EPA is establishing several measures to mitigate misfueling of other vehicles, engines and equipment with E15 and the potential emi ssions consequences of misfueling. Specificall y, the rule prohibits the use of gasoline containing more than 10 vol% ethanol in vehicles, engines and equipment not covered***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 2 of 169 by the partial waiver decisions. The final rule also requires all E15 gasoline fue l dispensers to have a specific label when a retail station or wholesale - purchaser consumer chooses to sell E15. In addition, the rule requires that product transfer documents (PTDs) specifying ethanol content and Reid Vapor Pressure (RVP) accompan y the transfer of gasoline blended with ethanol, and a survey of retail stations to ensure compliance with E15 labeling, ethanol content and other requirements. The rule also modifies the Reformulated Gasoline (RFG) program by making changes related to the use o f E15.
DATES: This final rule is effective on [insert date] , 30 day s after publication in the Federal Register.
ADDRESSES: EPA has established a docket for this action under Docket ID No. EPA - HQ OAR - 2010 - 0448 . All documents in the docket are listed on the www.regulations.gov web site. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted b y statute. Certain other material, such as cop yri ghted material, is not placed on the Internet and will be publicly available only

in hard copy

form. Publicly available docket materials are available either electronicall y through www.regulations.gov or in hard cop y at the Air and Radiation Docket and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday , excluding legal holiday s. The telephone number for the Public Reading Room is (202) 566

– 1744, and the telephone number for the Air Docket is (202) 566

– 1742.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 3 of 169 FOR FURTHER INFORMATION CONTACT: Robert K. Anderson, Office of Transpiration and Air Qu alit y, Compliance and Innovative Strategies Division, Environmental Protection Agency , 1310 L St., N.W., Washington, D.C.; telephone number: 202 - 343 - 9817; fax number: 202 - 343 - 2800; e - mail address: anderson.robert @epa.gov . SUPPLEMENTARY INFORMATION: Does this Action Apply to Me? Entities potentially

affected by

this action include those involved with the production, importation, distribution, marketing, or retailing of diesel fuel and production of gasoline. Categories and entities affected b y this action include: Category NAICS 1

Codes SI C 2

Codes Examples of Potentially Regulated Entities Industry Industry Industry Industry Industry Industry 324110

325193 424710 424720
454319 447190 2911

2869 5171 5172
5989 5541 Petroleum Refineries

Ethyl alcohol manufacturing Petroleum bulk stations and terminals Petroleum and petroleum products merchant wholesalers Other fuel dealers Gasoline service stations Marine service stations Truck stops***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 4 of 169 This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely

to be affected by

this action; however, other t ypes of entities not listed in the table could also be affected. To determine whether your entity is affected by this action, you should examine the applicability criteria of Parts 79 and 80 of title 40 of the Code of Federal Regulations. If you have any question regarding applicability of this action to a particular entity , consult the person in the preceding FOR FURTHER INFORMATION CONTACT section.
Outline of This Preamble I. Executive Summary A. Proposed Rule B. Final Mitigation Measures C. Other Mitigation Measures D. Emissions Impacts of the Rule E. Related Regulatory

Changes F. Li ability

I ssues II. Background A. Statutory

Authorit y B. E15 Partial Waivers C. The Proposed Misfueling Mitigation Measures Rule D. Reasons for the Actions in this Rulemaking III. Misfueling Mitigation Program A. Misfueling Prohibition***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 5 of 169 B. Labeling Requirements 1. Proposed approach 2. Consideration of Comments a. Choice of Word for Warning b. Description of Motor Vehicles That Can Use E15 c. Statements About Prohibition and Damage d. Addressing Non - English Speakers e. Portable Containers f. Color , Size, Shape, Font, and Placement of the Label g. Separate Labels for Different Levels of Ethanol 3. Final Pump L abeling Requirements C . Product Transfer Document Requirements 1. PTD Requirements Downstream of the Point of Ethanol Addition 2. PTD Requirements Up to and Including the Point of Ethanol Addition 3. General PTD Requirements D. Ongoing Implementation Survey 1. Proposed Approaches and Consideration of Comments a. General Survey

Comments b. Survey

Option 1 c. Survey

Option 2 2. Final Survey

Requirements E. Program Outreach F. Other Misfueling Mitigation Measures***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 6 of 1 69 1. Need for More Mitigation Measures 2. Specific Suggestions for Additional Mitigation Measures a. Distinctive Hand Warmers for E15 Dispensers b. Key pad/Touch Screen In formation/Confirmation c. Radio Frequency

I dentification (RFID) d. Requiring the Continued Availability of E10 and/or E0 G. Modification of the Complex Model and VOC Adjustment Rule 1. Proposed Approach and Consideration of Comments a. Representation of VOC Emissions from Permeation in the Complex Model b. Representation of NOx and Toxic Emissions in the Complex Model c. Adequacy

of the Guerreri/Caffrey

Study Used to Justify

Modification of the Complex Model d. Representation of Other Renewable Fuels and Fuel Additives at Levels in the Complex Model e. Modification of the VOC Adjustment for RFG in Chicago and Milwaukee 2. Final Approach Concerning the Complex Model and the VOC Adjustment Rule IV . Other Is sues Addressed by Commenters A. Cost of Compliance B. The Applicability

of the Statutory

1.0 psi RVP Waiver to E15 C. RVP and E15 Underground Storage Tank Transition D. Credit for RFG Downstream Ox ygenate Blending***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 7 of 169 E. Compliance, Enforcement and Warrant y 1. Propose d Approach 2. Consideration of Comments a. Prohibited Acts and Liability Provisions b. Emissions Warranty

I ssues for Vehicles, Engines, and Equipment c. Other Issues Outside of CAA Jurisdiction 3. Final Requirements F. Technical Basis for the Rule G. The Effect of the Rule on the Misfueling Mitigation Conditions of the Partial Waivers H. E15 Emissions and Anti - backsliding V. Statutory

and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review B. Paperwork Reduction Act C. Regulatory

Flexibility

Act D. Unfunded Mandates Reform Act E. Executive Order 13132 (Federalism) F. Executive Order 13175 G. Executive Order 13045: Protection of Children from Envir onmental Health Risks and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply , Distribution, or Use I. National Technology

Transfer and Advancement Act***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 8 of 169 J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and L ow - Income Populations. K. Congressional Review Act VI . Legal Authority

and Judicial Review A. Legal Authorit y B. Judicial Review I. Executive Summary In today ’s final rule, EPA is establ ishing several measures to mitigate the potential that E15 1 might be used to fuel vehicles, engines and equipment for which E15 has not been approved for introduction into commerce. These regulations are being issued in conjunction with EPA’s two recent d ecisions to grant partial waivers for E15 under section 211(f)(4) of the Clean Air Act (CAA or the Act). The partial waivers allow the introduction into commerce of E15 for use in model ye ar (MY) 2001 and newer light - dut y motor vehicles (cars, light - dut y trucks and medium - dut y passenger vehicles). The E15 partial waivers impose a number of conditions designed to help ensure that E15 is introduced into commerce for use only in MY2001 and newer light - duty motor vehicles and in flexible - fueled vehicles, and not for use in any other vehicles, engines or equipment. Some of the regulatory provisions in this action parallel those waiver conditions and are expected to be a more efficient way to minimize in - use emission increases that might result from misfueling with E15. The misfueling mitigation measures adopted today

ensure that fuel providers have a strong incentive to properl y blend and

1 For purposes of this preamble, E15 refers to gasoline - ethanol blended fuels that contain greater than 10 vol% and no more than 15 vol% ethanol content.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 9 of 169 label E15 and consumers have a strong incentive to avoid misfueling. By effectivel y addressing the potential for misfuelin g, the measures should also have the benefit of facilitating the successful introduction of E15 into commerce.
A. Proposed Rule EPA proposed four regulatory provisions to address concerns about potential misfueling: (1) a prohibition against the use of gasoline containing more than 10 vol% ethanol in vehicles, engines and equipment not covered b y the partial waiver decisions, specifically MY2000 and older motor vehicles, heavy - dut y gasoline engines and vehicles, on and off - highway motorcycles, 2 and nonro ad engines, vehicles, and equipment; 3 (2) labeling requirements for fuel pumps that dispense E15 to alert consumers to the appropriate and lawful use of the fuel; (3) the addition to product transfer documents (PTDs) of information regarding the ethanol co ntent of, or the level of ethanol that may be added to, fuel being sold to retail stations or wholesale purchaser - consumers so that E15 may be properl y blended and labeled; and (4) an ongoing implementation survey

requirement to ensure that E15 is in fact being properly blended and labeled (75 FR 68044, Nov. 4, 2010). EPA explained that it has used such strategies to implement several fuels programs over the past 30 y ears, and that the proposed measures should effectivel y mitigate misfueling and the associ ated emissions impacts while enabling the use of E15 in appropriate motor vehicles. The E15 misfueling mitigation waiver conditions and a substantial consumer education and outreach effort will also contribute to achieving this result. The Agency

asked f or comment on its proposed requirements and on several other options,

2 Off - highway motorcycles are considered nonroad vehicles but for purposes of this preamble on and off - highway mo torcycles are referred to collectively as “motorcycles.” 3 For purposes of this preamble, nonroad engines, vehicles, and equipment are referred to as “nonroad products.”***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 10 of 169 including whether additional misfueling mitigation measures might be appropriate. EPA received over 80 comments from fuel providers, manufacturers of vehicles, engines and gasoline - powered equipment, boat owners, States, and environmental groups. While a number of comments raised continuing concerns with EPA’s decision to grant the par tial waivers, all acknowledged the importance of an effective misfueling mitigation program and provided thoughtful suggestions about how the Agency ’s proposed regulations might be improved or supplemented.
B. Final Mitigation Measures After carefully

cons idering the public comments, we are finalizing the four proposed misfueling mitigation measures with a number of changes designed to enhance their effectiveness and more carefull y tailor them to their purpose. Specifically, we are adopting the prohibition on misfueling. The comments we received were generall y supportive of the prohibition in view of EPA’s decision to den y the E15 waiver request for MY2000 and older light - duty motor vehicles, heavy - dut y gasoline engines and vehicles, motorcycles and nonroa d products because of the emissions increases that could result if E15 (or higher gasoline - ethanol blends) were used, particularly over time, in those vehicles, engines and products. With adoption of the misfueling prohibition, gasoline and ethanol produc ers, distributors, retailers and consumers have a legal obligation not to make, distribute, sell or use gasoline containing more than 10 vol% ethanol for or in vehicles, engines and equipment not covered by the partial waiver decisions. To provide consum ers with information at the pump to avoid misfueling, we are adopting***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 11 of 169 an E15 pump label that reflects man y commenters’ suggestions and our consultation with consumer labeling experts at the Federal Trade Commission (FTC). 4 Before EPA issued its partial wa iver decisions, FTC had proposed labels for gasoline - ethanol blends containing more than 10 vol% ethanol to address issues within its jurisdiction. Commenters on our proposed E15 label urged us to work with FTC to develop a coordinated labeling program to avoid multiple, potentially

conflicting labels. Commenters also recommended that we seek advice from labeling experts. In developing today ’s final labeling requirements, we consulted with FTC consumer labeling experts and other staff about effective lab el design and potential coordination with FTC labels. EPA’s final E15 label incorporates public and FTC staff suggestions for more simply and effectivel y communicating the information consumers need to avoid misfueling with E15. The label also adopts FTC’ s color scheme for alternative fuel labels and other aspects of the design of FTC’s proposed gasoline - ethanol blend labels so that the two agencies’ labels could work together as a coordinated labeling scheme for gasoline - ethanol blends containing more tha n 10 vol% ethanol. We believe that the final E15 label provides consumers with the key information they need about the appropriate use of E15. Today ’s rule also includes PTD and implementation survey requirements that have been revised and refined in res ponse to public comments to better accomplish their purpose. We are requiring that PTDs provide more pertinent information, and we are providing more flexibility in how that information is convey ed to help ensure that fuel producers, distributors and reta ilers have the information they need to properly blend, track and label E15. For survey s of whether E15 is being properl y blended and labeled, we are providing options that allow the businesses

4 The FTC has experience designing labels to help consumers make informed decisions at the point - of - sale. See , e.g. , 16 CFR Part 305 (EnergyGuide and Light Bulb labels); 16 CFR Parts 306 and 309 (Automotive Fuel labels); and 16 C FR Part 423 (Clothing Care labels).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 12 of 169 involved to match the geographic scope of an ongoing survey t o their business plans and to share the cost of survey s among themselves as they see fit. We are also requiring that survey s collect RVP information for fuel samples labeled as E15 to help ensure implementation of the waiver condition that E15 be limited to 9.0 psi RVP in the summertime. In the aggregate, these measures will provide strong incentives for fuel providers to properl y blend and label E15 and for consumers to avoid misfueling. Relatedly , we are adopting our proposed interpretation that CAA sec tion 211(h)(4) provides a 1.0 psi RVP waiver and related compliance provision only to gasoline - ethanol blended fuels containing between nine and 10 vol% ethanol, in light of the terms and legislative history of the relevant statutory

provisions.
C. Other Mi tigation Measures EPA received a number of comments expressing concern that the proposed misfueling mitigation measures would not adequatel y mitigate misfueling. Several of the comments suggested that the Agency issue one or more additional measures in this final rule, although only a few commenters provided specific recommendations. A later section of this notice reviews those comments and EPA’s anal ys is of several other measures. Overall, we conclude that the misfueling mitigation measures required b y today ’s rule should be effective, and that requiring additional measures is not necessary or appropriate at this time. As explained in the proposed rule, EPA drew on its experience with the recent transition to ultra - low sulfur diesel (UL SD) in developing the E15 misfueling mitigation proposal. Several commenters contended that the transition to unleaded gasoline that occurred several decades ago***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 13 of 169 provided more applicable lessons, including the need for additional mitigation measures. After considering th ose comments, and as fully discussed later in this notice, EPA continues to believe that the misfueling mitigation measures adopted today are reasonable, appropriate and sufficient to address E15 misfueling concerns. We expect that the E15 label will prov ide consumers with the key information they

need to make appropriate fuel choices, and that the prohibition against misfueling will provide additional incentives for all parties to minimize misfueling. The PTD and survey

requirements will provide fuel ble nders, distributors and retailers with the information they

need to properl y blend, track and label E15 and confirmation that E15 has been properl y made and sold. In addition to these required measures, retailers and other fuel providers may employ any other strategies they

believe would further reduce the risk of misfueling under their particular circumstances. For example, retailers that serve a significant population of boat or small equipment owners can evaluate whether it is appropriate under their c ircumstances to post signs that specifically address misfueling of those products. We encourage consideration of additional measures as may be helpful in a fuel provider’s specific circumstances. By taking additional, tailored steps, retailers and other fuel providers can provide examples of other misfueling mitigation measures that may also be effective in reducing the risk of misfueling. In deciding what mitigation measures to require at this time, we also considered what we do, and do not, know about the introduction of E15 into the marketplace. The partial waivers that EPA has granted to E15 do not require that E15 be made or sold. The waivers merel y allow fuel or fuel additive manufacturers to introduce E15 into commerce if they meet the waivers’ conditions. Other federal, state and local requirements must also be addressed before E15 may be sold. While EPA is working to address issues within its jurisdiction, it is ultimately up to businesses to decide whether, when and how to market E15. In li ght of the various decisions that***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 14 of 169 need to be made b y various parties, we expect that the transition to E15, like the transition to E10, will occur over several y ears and begin in some parts of the country before becoming broadly available. In the process, business decisions will be made about how to market E15 (e.g., the price of E15 and its use for a particular grade of gasoline). As the transition to E15 occurs, we plan to work with industry , state, environmental and consumer stakeholders to track deve lopments and evaluate the effectiveness of the mitigation measures required b y today’s rule. We are already in the process of working with the ethanol industry and other stakeholders to help establish a public education and outreach campaign to assist fue l producers, distributors, retailers and consumers in understanding how E15 may be made, distributed, sold and used. Our recent experience with the transition to UL SD fuel shows that a stakeholder - led campaign can work s yn ergistically with labeling requir ements and provide another means of providing important information to everyone involved in fuel production, distribution and use. Establishing a similar campaign for E15 can also provide a forum for identifying and resolving any issues that may

develop a s E15 moves into the marketplace.
D. Emissions Impacts of the Rule These misfueling mitigation regulations are issued under CAA section 211(c) to mitigate and minimize the emission increases that would occur if E15 (or a higher gasoline - ethanol blend) is used in vehicles, engines, and products for which the E15 waiver was denied, specifically , MY2000 and older motor vehicles and all heav y - duty gasoline engines and vehicles, motorcycles and nonroad products. As described below in Section IV.F and in the E15 partial waiver decisions, our assessment of the potential emission consequences of E15 use indicates that the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 15 of 169 emission - related components of MY2001 and newer light - dut y motor vehicles are durable for use on gasoline - ethanol blends up to E15. This conclusion is based on the results of the Department of Energy

(DOE) Catal ys t Study

and other relevant test programs, as well as the Agency ’s engineering assessment of advances in motor vehicle technology and materials that have taken place in response to a series of important exhaust and evaporative emissions requirements since 2000 and in - use experience with E10. Unlike for MY2001 and newer motor vehicles, there is very little, if any , test data with respect to the effect of E15 use in MY2000 and older light - dut y motor vehicles and all heav y duty gasoline engines and vehicles, motorcycles, and nonroad products. In addition, our engineering assessment for these vehicles, engines, and products identifies a number of emission - related concerns with the use of E15 (or a higher gasoline - ethanol blend). For motor vehicles, these conc erns include the potential for cataly st deterioration or cataly st failure as well as material compatibility

issues that could lead to extremely elevated exhaust and evaporative emissions. For motorcycles and nonroad products, the misfueling concerns inclu de the potential for elevated exhaust and evaporative emissions, as well as the potential for emissions impacts related to engine failure from overheating. It is not possible to precisely quantify the frequency at which these vehicles, engines, and produc ts might experience problems with the use of E15. However, we believe that emission - related problems could potentially occur with enough frequency that the avoided emissions increases from reduced or prevented misfueling would more than outweigh the relatively low cost imposed by

the required misfueling mitigation regulations. The potential emission increases from misfueling warrant today’s action, even if a very low percentage of vehicles, engines, and products experience problems.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 16 of 169 E. Related Regulatory Changes In addition to misfueling mitigation measures, t oday ’s action also finalizes slight modifications to the Reformulated Gasoline (RFG) and Anti - dumping (conventional) gasoline fuels programs to open the way for refiners and importers to produce and certify gasoline containing up to 15 vol% ethanol. For gasoline to be sold in the U.S., it must comply with the RFG and Anti - dumping standards. To compl y with the RFG and Anti - dumping standards, the emissions performance of gasoline is calculated usi ng a model, called the Complex Model, which predicts the emissions of regulated pollutants based on the measured values of certain fuel properties. The equations in the model were limited to an ox ygen content of no more than 4.0% by weight in gasoline, wh ich is the maximum possible amount of oxygen in E10. EPA has modified the Complex Model to allow fuel manufacturers to certify batches of E15 fuel and made a related change to certain volatile organic compound (VOC) standards, in response to comments.
F. L iability Issues In today ’s notice, EPA also addresses issues that many commenters raised concerning liability or responsibility

for potential consequences of the use of, or transition to, E15. According to a number of commenters, fuel providers are unlik ely to sell E15 until liability issues are resolved. EPA is not in a position to resolve all of the liability issues raised b y commenters, but we do address those within our jurisdiction and clarify the responsibilities of various parties, including fuel producers, distributors, retailers, product manufacturers and***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 17 of 169 consumers, for compliance with misfueling prohibitions and vehicle and engine warranty and other requirements under the Clean Air Act. In general, we believe the long - standing approach of EPA’s fuels programs and warrant y regulations to assigning respective responsibilities for compliance with our regulations is also appropriate for E15. We believe that the required label and other misfueling mitigation measures will minimize consumer use of E1 5 in other vehicles and products and an y liability issues that might arise from or be attributed to misfueling with E15. A public outreach campaign is expected to reinforce the misfueling mitigation measures. Also, to the extent fuel providers determine that it is appropriate to further reduce the risk or potential of consumer misfueling, they may take additional misfueling mitigation measures that they believe could be useful in showing they did not encourage or otherwise cause the misfueling. With reg ard to other transition issues within EPA’s jurisdiction, we are continuing to make progress in developing guidance for determining whether existing underground storage tank sy stems are compatible for storing E15. We also plan to work with stakeholders to monitor and facilitate efforts to address other transition issues involving state, local and other requirements. II. Background A. Statutory Authority CAA section 211(f)( 1) makes it unlawful for any manufacturer of any

fuel or fuel additive to first introduce into commerce, or to increase the concentration in use of, any fuel or***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 18 of 169 fuel additive for use in motor vehicles manufactured after model year 1974 unless it is substantially

similar to any

fuel or fuel additive utilized in the certification of any model y ear 1975, or subsequent model y ear, vehicle or engine under section 206 of the Act. Section 211(f)(4) of the Act provides that upon application by an y fuel or fuel addi tive manufacturer, the Administrator may waive the prohibition of section 211(f)(1). A waiver may be granted if the Administrator determines that the applicant has established that the fuel or fuel additive , and the emission products of such fuel or fuel additive , will not cause or contribute to a failure of an y emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine or nonroad vehicle in which such device or s ys tem is used) to achieve compliance with the emission standards to which the vehicle or engine has been certified. In other words, the Administrator may grant a waiver for an otherwise prohibited fuel or fuel additive if the applicant can demonstrate that the fuel or fuel additive will not cause or contribute to engines, vehicles or equipment failing to meet their emissions standards over their useful life. EPA previously

issued a ‘‘substantially

similar’’ interpretive rule for unleaded gasoline which allows ox ygen content up to 2.7% by w eight for certain ethers and alcohols. 5 E10 contains approximately

3.5% oxygen b y weight, which means E10 is not ‘‘substantially similar’’ to certification fuel under the current interpretation. As explained at 44 FR 20777 (April 6, 1979), E10 received a waiver of the substantiall y similar prohibition by operation of law because EPA did not grant or deny a waiver request for E10 within 180 day s of receiving that request. At the time of the E10 waiver request, CAA section 211(f)(4) provided for waivers to be granted b y operation of law, but that aspect of section 211(f)(4) was later removed b y the Energy Independence and Security Act of 2007.
5 56 FR 5352 (February 11, 1991).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 19 of 169 Section 211(c)(1) of the Act allows the Administrator, by regulation, to “ control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of an y fuel or fuel additive for use in a motor vehicle, motor vehicle engine, or nonroad engine or nonroad vehicle (A) if, in the judgment of the Administrator, an y fuel or fuel additive or an y emissi on product of such fuel or fuel additive causes, or contributes, to air pollution or water pollution (including an y degradation in the quality of groundwater) that may reasonably

be anticipated to endanger the public health or welfare, or (B) if emission p roducts of such fuel or fuel additive will impair to a significant degree the performance of an y emission control device or s ys tem which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it would b e in general use were such regulation to be promulgated.” The regulations adopted today are pursuant to this authority , as well as the recordkeeping and information collection authority under CAA sections 208 and 114.
B. E15 Partial Waivers In 2009, Growth Energy

and 54 ethanol manufacturers submitted an application under section 211(f)(4) of the CAA for a waiver for gasoline - ethanol blends of up to 15 vol% ethanol. 6 On April 21, 2009, EPA published notice of receipt of the application and requested p ublic comment on all aspects of the application to assist the Administrator in determining whether the statutory basis for granting the waiver request had been met (74 FR 18228). On October 13, 2010, EPA took two actions on the waiver request based on th e information available at that time (“October Waiver Decision”). 7 First, it partially approved

6 Since E15 has greater than 2.7 w t% oxygen content, E15 needs a w aiver under CAA section 211(f)(4). 7 75 FR 68094 (November 4, 2010).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 20 of 169 Growth Energy ’s waiver request to allow the introduction of E15 into commerce for use in MY2007 and newer light - duty motor vehicles, subject to several conditi ons. The October Waiver Decision was based on a determination that E15 will not cause or contribute to a failure of MY2007 and newer light - dut y motor vehicles to achieve compliance with the emissions standards to which they

were certified under section 20 6 of the CAA over their useful lives. Second, the Agency

denied the waiver request for MY2000 and older light - duty motor vehicles, heav y - dut y gasoline engines and vehicles, highway and off - highway motorcycles, and other nonroad engines, vehicles, and equi pment. The Agency also deferred making a decision on the waiver request for MY2001

–2006 light - duty motor vehicles to await the results of additional testing being conducted by the Department of Energy (DOE). On January 21, 2011, EPA partially approved Gr owth Energy ’s waiver request to allow the introduction of E15 into commerce for use in MY2001 - 2006 light - dut y motor vehicles after receiving and anal yz ing the completed DOE test data (“January Waiver Decision”). 8 EPA issued the partial waiver decisions wi th several conditions. The conditions apply to the upstream parties subject to the partial waiver (gasoline refiners/importers, ethanol producers/importers, and ethanol blenders that introduce E15 into commerce), and are designed to ensure that when E15 i s introduced into commerce, it will only be used in the appropriate light - duty motor vehicles. Some of the conditions call for the ethanol blenders, fuel manufacturers (gasoline refiners/importers), and fuel additive manufacturers (ethanol producers/impor

ters) to take various actions to control the distribution and use of their product so that E15 is only

used in approved motor vehicles. The partial waiver decisions impose different conditions on the different parties. Gasoline refiners/importers, ethano l producers/importers, and ethanol blenders that introduce E15 into commerce are all responsible for making sure that 8 76 FR 4662 (January 26, 2011).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 21 of 169 appropriate labeling occurs on fuel pumps to mitigate potential misfueling. However, this condition, in particular, may be difficult for these parties to satisfy given their limited control over actions taken at retail. These parties are also responsible for conducting fuel pump labeling survey s to ensure that pumps are properl y labeled and that the correct ethanol blends are loaded into the appropriate tanks at retail stations. Gasoline refiners/importers, ethanol producers/importers, and ethanol blenders must also use PTDs to properl y document information regarding the ethanol blends to help ensure proper blending and distribution.
C. The Proposed Misfueling Mitigation Measures Rule On October 13, 2010, EPA issued a proposed rule to mitigate misfueling and maximize the likelihood that E15 is used only in vehicles for which its sale is approved. As we explained, the proposed rule was developed to help ensure that E15 is introduced into commerce for use only in MY2001 and newer light - duty motor vehicles and in flexible - fueled vehicles, and not for use in an y other vehicles, engines or equipment. 9 Some of the proposed regulatory provis ions parallel the partial E15 waiver decision conditions and were expected to be more effective and efficient than the waiver conditions alone in minimizing in - use emissions increases that could result from misfueling with E15. EPA held one public heari ng regarding the proposed rule on November 16, 2010, in Chicago, IL. The public comment period for the proposal ended on January 3, 2011, and approximately

80 public comments were submitted. Today ’s final rule contains a brief summary of the major comments received, and our responses, on several topics, including the proposed misfueling mitigation measures, changes to the Complex Model, and other issues discussed in 9 75 FR 68044 (No vember 4, 2010).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 22 of 169 the proposal. Responses to comments not addressed here can be found in a separate document entitled “E15 Misfueling Mitigation Measures Rule Response to Public Comments” which is available in the public docket for this rule [citation]. D. Reasons for the Actions in this Rulemaking In granting partial waivers for E15, EPA imposed vari ous conditions on fuel or fuel additive manufacturers that use the waivers, including conditions designed to minimize the potential for misfueling. EPA realizes that ethanol blenders, fuel manufacturers, and ethanol producers may

have difficulty

satisfying the conditions outlined in the E15 partial waiver decisions, particularl y the fuel pump labeling requirements. Most retail stations are independentl y owned and operated, which may make it difficult for the ethanol blenders, fuel manufacturers, and ethanol producers to ensure that labels are properly placed on fuel pumps dispensing E15. However, under CAA section 211(f)(4), EPA can place conditions on fuel or fuel manufacturers but cannot place conditions directly on other parties in the fuel distribution sy stem. For example, EPA placed the partial waiver conditions on ethanol blenders, fuel manufacturers, and ethanol producers , the parties subject to the prohibition in section 211(f)(1) and thus the parties that benefit from the partial waiver of that prohibition if they choose to make and distribute E15, and not on retail stations. This tends to make implementation of the waiver conditions, and thus mitigation of misfueling, more difficult and make distribution of E15 less practicable. EPA believes that the provisions adopted in today ’s final rulemaking (i.e. fuel pump labeling, PTDs , and an ongoing implementation survey) , are a direct and effective way to***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 23 of 169 minimize the potential for misfueling. Under CAA section 211(c), EPA has the authorit y to adopt appropriate controls or prohibitions on the distribution and sale of fuels and fuel additives to avoid emissions increases. EPA’s use of this authority will do that. Today ’s rule adopts provisions that create strong incentives to properly blend and label E15 and avoid misfueling. It provides EPA with appropriate tools for regulatory oversight of the ethanol blenders, fuel manufacturers, and ethanol producers introducing E15 into commerce . The new provisions, collectively , wil l maximize the likelihood that E15 is used only in approved motor vehicles and minimize the potential for emission increases that might otherwise occur. The specific provisions are discussed in detail in Section III. By effectivel y addressing the potenti al for misfueling, the measures should also have the benefit of facilitating the successful introduction of E15 into commerce. III. Misfueling Mitigation Program As explained above, CAA section 211(c) authorizes EPA to control or prohibit the distribution of a fuel or fuel additive when it will significantl y impair emission control sy stems or the emission products from that fuel or fuel additive will cause or contribute to air pollution that we reasonabl y anticipate may endanger public health or welfare. As described in detail below, EPA is exercising this authority to establish a prohibition on the use of gasoline containing more than 10 vol% ethanol in vehicles, engines and equipment not covered b y the partial waiver decisions (i.e., MY2000 and older light - dut y motor vehicles, and in all heav y - dut y gasoline engines and vehicles, motorcycles and nonroad products) in order to prevent or minimize emission increases that could otherwise occur. We are also requiring gasoline retail***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 24 of 169 stations and wholesale purchaser - consumer facilities that sell E15 to properly label their E15 pumps. To effectuate these prohibitions, and to more generall y limit the use of E15 to MY2001 and newer light - dut y motor vehicles, we are also requiring that relevant information be conveyed by PTDs, and that a survey

designed to demonstrate compliance with labeling, ethanol content and related requirements be conducted. As we described in our pr oposed rule, there are four important components of an effective E15 misfueling mitigation strategy . First, a prohibition on misfueling establishes a legal barrier against production, distribution, sale or use of gasoline containing more than 10 vol% ethanol in vehicles, engines and equipment not covered b y the partial waiver decisions because of the potential consequences for emissions standards compliance violations by those vehicles, engines and equipment. The prohibition is broadly applicable, includi ng to consumers. Second, effective labeling is needed to provide consumers with the information they need to avoid misfueling, including information about the prohibition on misfueling and the potential consequences of misfueling. To be effective, labeli ng must be done at the point of sale where the consumer is choosing which fuel to use. Third, retail stations, wholesale purchaser consumers and fuel blenders need assurance regarding the ethanol content and RVP of the fuel (or blendstock) that they

purch ase so they

can properly

blend, store and label E15 and other fuels. The use of proper documentation in the form of PTDs has proven to be an effective means of ensuring that retail stations and other fuel providers know what fuel they are purchasing. Fourth, appropriate labeling and fuel sampling survey s are necessary to ensure implementation of E15 content, RVP and labeling requirements that are in turn important to mitigating misfueling and the emissions consequences of misfueling. Today ’s rule adopts provisions covering all of these areas. The Agency has used this general strategy to implement several fuels***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 25 of 169 programs, including the unleaded gasoline program, the RFG program, and the UL SD program. The fourth component of an effective misfueling mitigat ion strategy is public outreach and consumer education. Our experience has shown that consumers need to be engaged through a variet y of media to ensure that accurate information is timely convey ed to the owners and operators of vehicles, engines and equip ment. EPA proposed establishing a misfueling prohibition and E15 labeling, PTD and survey requirements, and sought comments on those and any additional mitigation measures that might be needed to minimize misfueling with E15. The following sections of thi s final rule describe each of the proposed measures, the comments we received about that measure, our response to those comments, and the final decisions we made in light of the comments and other available information. We also discuss several suggestions that some commenters made for other possible mitigation measures, and our conclusion that no additional measures should be required at this time. A. Misfueling Prohibition We proposed to prohibit the use of gasoline containing more than 10 vol% ethano l in vehicles, engines and equipment not covered b y the partial waiver decisions, specificall y MY2000 and older motor vehicles, heav y - dut y gasoline engines and vehicles, on and offhighway motorcycles, and nonroad engines, vehicles, and equipment. 10 The prohibition is similar in nature to the prohibition on producers of fuels and fuel additives under section 211(f)(1). However, the prohibition in section 211(f)(1) only applies to these upstream parties.

10 Flexible fuel vehicles (FFVs) are designed to meet EPA’s emissions standards on any blend of gasoline and ethanol up to 85% ethanol. FFVs are not subject to either the waiver denial or the misfueling prohibition adopted in this rule.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 26 of 169 The proposed prohibition would also apply at the retail level as well as to upstream fuel providers and consumers, so that all parties involved in fueling gasoline - powered products would have a legal obligation to avoid misfueling the vehicles, engines and equipment not covered b y the partial waiver s. Most public commenters that addressed this provision supported it in view of EPA’s decision to deny

a waiver for introduction of E15 into commerce for use in MY2000 and older motor vehicles, heav y - duty gasoline engines and vehicles, on and off - highway motorcycles, and nonroad engines, vehicles, and equipment. EPA based its denial on the lack of test data on the effect of E15 on emissions from these products and the Agency ’s engineering judgment that E15 would likely

result in significant exceedances of emission standards by these products. Several commenters disputed the needed for a misfueling prohibition because, in their view, E15 would not have adverse emissions consequences for the vehicles, engines and equipment not covered by the partial waiver s. In making this argument, the commenters were essentially

taking issue with EPA’s decision to deny the E15 waiver for these products. However, the commenters did not provide, and EPA is not aware of, an y new information or anal ys is that would support a finding that E15 may be used by

the vehicles, engines and equipment not covered by the partial waivers without significant adverse consequences for their emission control performance. We are therefore issuing the misfueling prohibition as proposed.

B . Labeling Requirements
1. Proposed Approach***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 27 of 169 We proposed that gasoline pumps dispensing E15 be labeled and that this label be applied to any pump dispensing gasoline greater than 10 vol% ethanol but not more than 15 vol% ethanol. We also solicited comment on whether separate labels should be required for other gasoline - ethanol blends to avoid potential consumer confusion. Specificall y, we proposed that the language on the E15 label have four components: (1) an ethanol content information component; (2 ) a legal approval component; (3) a technical warning component; and (4) a legal warning component. We explained that together these four components highlight the critical information that we considered necessary to inform consumers about the appropriate use of E15 and the potential consequences of inappropriate uses. The ethanol content information component of the label informs consumers of the maximum ethanol content the fuel may contain. We proposed that this component of the label read: “This fuel c ontains 15% ethanol maximum.” The legal approval component of the label includes information that informs consumers of the ty pes and model years of vehicles for which E15 may be used. At the time of the proposal, EPA had granted a partial waiver of E15 allowing its sale for use only in MY2007 and later light - dut y motor vehicles. Based on that partial waiver, the Agency proposed that the legal approval portion of the label read as follows: Use only in: 2007 and newer gasoline cars 2007 and newer light - duty trucks Flex - fuel vehicles.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 28 of 169 As noted above, EPA later issued a second partial waiver decision that allowed E15 to be introduced into commerce for MY2001 - 2006 light - duty motor vehicles. Taken together, the two partial waivers allow E15 to be sol d for use in MY2001 and newer light - duty motor vehicles, as well as in vehicles designed and certified to run on gasoline and gasoline - ethanol blends as high as E85 (“flex - fuel vehicles”). EPA noted in the proposed rule that if we granted a partial waiver for MY2001 - 2006 light - duty motor vehicles, we would modify this component of the final label accordingl y. The technical warning component of the label alerts consumers that use of E15 in other engines, vehicles, and equipment might cause damage to thes e products. This warning reflects the results of EPA’s analysis of available test and other data and its engineering assessment concerning the potential impact of E15 on emission controls and other aspects of vehicle design, materials and operation that c an affect emissions. EPA proposed the following language: “This fuel might damage other vehicles or engines.” We also proposed that the word “Caution” be placed at the top of the label, and solicited comment on other words that could be used to alert con sumers, and specifically asked for comment on the alternative word “Attention.” The legal warning c omponent of the label informs consumers that using E15 in a vehicle or engine for which E15 is not allowed violates the Agency ’s prohibition against misfue ling . Based on the language currentl y used on the low - sulfur diesel (LSD) label (see 40 CFR §80.570), the Agency

proposed that the E15 label read as follows: “Federal law prohibits its use in other vehicles and engines.” Putting the four components tog ether in a manner intended to attract consumer’s attention, the Agency

proposed the following E15 label:***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 29 of 169 2. Consideration of Comments We solicited comments on the above label, where it should be placed and whether labeling should be required for thre e other levels of gasoline - ethanol blends: (1) E10; (2) blends containing between 15 and 85 vol% ethanol; and (3) E85. We also sought advice from the FTC’s labeling experts and discussed with FTC staff the issue of labeling additional gasoline ethanol ble nds, which FTC was considering for other purposes. We shared with FTC staff the suggestions made in public comments on the proposed E15 label, and they provided us with information about effective label design, recommendations for addressing some of the i ssues raised in the comments, and assistance in designing the final label. We also considered the appropriateness of coordinating EPA labels and FTC labels. Most of the public comments on the proposed E15 label made specific recommendations for improvement with respect to wording and/or design. Overall, there was a wide spectrum of***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 30 of 169 suggestions reflecting the different perspectives of ethanol producers, oil refiners, gasoline retailers, and manufacturers and users of vehicles, engines and equipment. Comme nters generall y agreed with the need for labels, but differed about how best to alert consumers and provide them with information for avoiding misfueling, without discouraging or chilling appropriate use of E15 in MY2001 and newer light - duty motor vehicles . One commenter also recommended that EPA allow fuel providers to develop and submit for approval an alternative label, a flexibility

afforded by

the Agency ’s UL SD program. Specific suggestions fell into the following categories which are discussed in mo re detail below:

 Choice of word for warning

 Description of vehicles that can use E15

 Prohibition statement

 Statement about E15 causing damage

 Addressing non - English speakers

 Portable gasoline containers

 Color, shape, and placement of labels

 Separate labels for different levels of ethanol a. Choice of Word for Warning
Commenters were divided between those who believed that use of “CAUTION!” on the proposed label would deter appropriate use of E15, and those who believed that it would not be effective at preventing misfueling. Two commenters stated that an y kind of a warning word may result in skepticism and concern about E15 use in MY2001 and newer light - duty motor vehicles,***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 31 of 169 and suggested that no warning word be used. They argued that the proposed lab el would not promote the successful introduction of this new fuel into the marketplace. Other commenters expressed concern that the proposed label was not strong enough and recommended that “WARNI NG” or “STOP” be used. In these commenters’ opinion, the l abel on its own must provide for adequate informed consent to prevent misfueling and consumer lawsuits concerning possible damage from misfueling. The purpose of today ’s rule is to mitigate potential misfueling and the emissions increases that could occ ur as a result of misfueling. We are therefore exercising our authority to address the emission consequences of misfueling. The Agency recognizes, however, that while the label needs to effectively communicate to consumers about misfueling, it should avo id deterring E15’s use in motor vehicles for which its sale and use is allowed. We discussed this issue with FTC’s consumer labeling experts who advised that the word “ATTENTION” would more likely

attract consumer notice without the risk of discouraging a ppropriate use of the fuel. After considering the comments and FTC’s advice, we are finalizing use of “ATTENTION” instead of “CAUTION.” Use of “ATTENTION” strikes the right balance between alerting consumers about the improper use of E15 and scaring them away from appropriate use of E15. FTC staff also suggested that “ATTENTION” be placed at an angle in the upper left corner of the label to help draw consumers’ ey es to it (see Section III.A.2. for further details), and we are adopting that placement. We believe that “ATTENTION” so placed, and in combination with other label information alerting consumers to the potential for damage from misfueling (discussed below), will effectively communicate that care must be taken in f ueling with E15 without unduly discouraging its proper use.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 32 of 169 b. Description of Motor Vehicles That Can Use E15 Many commenters suggested rewording the label’s references to the motor vehicles that can use E15 to clarify

and/or streamline those refere nces. Several also suggested that the label state that E15 is “

Approved for use in 2001 and newer vehicles” (emphasis added). Two commenters noted that use of E15 in flex - fuel vehicles is independent of model y ear and that flex - fuel vehicles should be li sted first. Some commenters expressed concern that sport utility vehicles (SUVs) and minivans were not explicitly mentioned in the label even though both vehicle t ypes are medium - duty passenger vehicles covered b y the partial waivers. They suggested that there be a consumer - friendl y reference for these vehicles. We agree with commenters that the language can and should be clarified and streamlined in a way more readil y understood by consumers. The partial waivers allow E15 to be sold for use in MY2001 and newer “light - dut y motor vehicles,” meaning cars, light - duty trucks and medium - duty

passenger vehicles. Light - duty trucks and medium - duty passenger vehicles are regulatory

terms that encompass a range of vehicles including all but the largest pick - up trucks, mini - vans and SUVs. FTC staff generall y advised that the E15 label be as concise as possible since consumers are much less apt to read detailed labels, particularl y in the context of routine activities like buying gasoline. With that in mind, we are finalizing the phrase “2001 and newer passenger vehicles” as the reference to the t ypes of gasoline - fueled motor vehicles that may use E15. The common denominator of virtually all of the relevant vehicle t ypes is that they are used to transport people . “Passenger vehicle” is a common term and should be more effective in conveying the t ypes of gasoline - fueled motor vehicles for which E15 can be sold and used. Since all flex - fuel vehicles are made to use gasoline - ethanol blends up to E85, all may use E 15.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 33 of 169 We are leaving the reference to passenger vehicles first in the list of the types of motor vehicles that can use E15. In most of the country , gasoline - fueled vehicles are much more common than flex - fuel vehicles, and under the partial waiver decisio ns E15 is approved for use in only MY2001 and newer passenger vehicles. The reference to passenger vehicles and the model y ear limitation is thus more relevant and important to more consumers, and so should precede the reference to flex - fuel vehicles.

We are not adopting the suggestions to include the phrases “approved for use in” or “model year” in referring to the vehicle t ypes that may use E15. EPA’s partial waiver decisions are not approvals for use of E15 in the general sense that term is used; they are waivers allowing E15 to be introduced into commerce for use in certain motor vehicles. The Agency ’s role in the waiver proceeding is limited to determining whether E15 meets the criteria for a waiver under CAA section 211(f)(4) and in this rulemaking under section 211(c) to minimizing the potential for an y misfueling that might occur. As for prefacing the reference to 2001 and newer passenger vehicles with “model year,” any potential benefit of adding that phrase is outweighed b y the risk that the additional wording may decrease the effectiveness of the label. Consumers are likel y to understand the reference to 2001 as indicating model y ear, and we are mindful that labels with more words are less apt to be read. Therefore, today ’s final rule will require the following language on the label:
“Use onl y in

 2001 and newer passenger vehicles

 Flex - fuel vehicles ”***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 34 of 169 c. Statements About Prohibition and Damage Commenters were generally supportive of the proposed statements on prohibition and damag e, but suggested variations in the wording and order of the statements to clarify their scope and meaning. Most commenters stated that it is essential to include a statement that "this fuel may damage” other vehicles, engines and equipment for consumers t o have the information they need to avoid misfueling. However, several commenters objected to including any damage statement because they

believe available information does not support that E15 may cause damage. In contrast, one commenter argued that the proposed damage statement should communicate that, in the commenter’s view, significant phy sical injuries may result from using E15 in lawn mowers, chain saws, and other equipment. A number of commenters noted that the proposal’s reference to other “ve hicles and engines” would not necessarily convey the various kinds of gasoline - powered equipment that should not use E15. Specificall y, one commenter pointed out that “engine” is not a term that consumers use to describe lawn and garden equipment, boats and other nonroad equipment. Two commenters suggested using graphic s ymbols or icons to depict some of the common ty pes of nonroad vehicles and equipment for which E15 use would be prohibited. One commenter provided sample icons of a boat, motorcycle, cha insaw, lawnmower and snowmobile, each depicted in a circle with a slash or X across the image to convey to consumers that E15 should not be used in those products. Along the same lines, one commenter suggested including on the label a list of the various kinds of vehicles, engines and equipment that should not use E15. Other commenters provided further suggestions for improving the wording of the damage and prohibition statements. Three commenters suggested that the label clarify that “Federal law***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 35 of 169 prohib its use in all other vehicles and nonroad engines and equipment . ” Another stated that the label should be consistent with other EPA labels and should state: “Federal law prohibits use in all other model year vehicles and engines.” (Suggested additional words in italics.) In addition to the prohibition and damage statements, some commenters suggested adding to the label statements that fuel econom y would be adversel y affected and that consumers should consult manufacturers’ fuel recommendations. Af ter considering all of the comments, we continue to believe that a damage statement is necessary and appropriate for the E15 label. As explained in the October Waiver Decision, EPA denied the E15 waiver request with respect to MY2000 and older light - duty motor vehicles and all heav y - dut y engines, motorcycles and nonroad equipment because (1) available data is insufficient to show that E15 would not cause or contribute to a failure b y these products to meet emission standards, and (2) our engineering judgme nt is that E15 may adversely

affect the emissions control performance of these products, particularl y over time. The waiver decisions also considered materials compatibility , operability , and maintenance issues related to E15 and their potential impact on emissions. A statement that E15 use in those products “may cause damage” is consistent with and supported b y EPA’s technical anal ys is for its decision to deny the waiver request for introduction of E15 into commerce for use in these products. Including the damage statement is also critical to the effectiveness of the E15 label, since consumers are more likely to compl y with the label’s direction if they understand that harm might otherwise occur. We do agree with commenters’ suggestion that a reference to “equipment” is needed on the label. The label as proposed used the word “engines” to refer to engines in all nonroad equipment. After considering the comments, we agree that most consumers think in terms of the ty pes of equipment they

own or operate, not the engines that power the equipment. However,***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 36 of 169 given the extremely

broad range of equipment that uses gasoline engines, we believe it would be infeasible and counterproductive to attempt to include even a partial list of the ty pes of products that sho uld not use E15. As noted above, labels generall y need to be brief and succinct to be effective. Also, a partial list would run the risk of implying that t ypes of equipment not included on the list are suitable for E15 use. We are therefore choosing the phrase “gasoline - powered equipment” to refer to the many ty pes of equipment that have gasoline engines. We are also including a reference to boats since man y consumers may not consider boats to be either “vehicles” or “equipment.” Moreover, representati ves of boat manufacturers and users expressed particular concerns about the potential for, and consequences of, misfueling boat engines. We are otherwise combining and revising the wording of the prohibition and damage language on the label to reduce the number of words and increase the directness, and therefore the effectiveness, of the message, in a manner suggested b y FTC staff. We are not adopting some commenters’ suggestions that the label provide a warning that injury might occur if misfueling results in product malfunction. In considering all the information before the Agency (i.e. test data and other information provided by the waiver applicants and in public comments submitted on the waiver and on the proposed rule), we determined that the information does not provide a clear enough basis for including a separate warning about risk of injury in addition to the warning about the potential for damage. We disagree with the suggestion to include statements that fuel econom y would be adversel y affected and that consumers should consult the manufacturer’s fuel recommendation. The purpose of EPA’s label is to prevent misfueling. Also, the effect of E15 on fuel econom y depends on a number of factors (e.g., manner of vehicle operation) that cannot be easily***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 37 of 169 communicated on a label. Similarly , mention of manufacturers’ fuel recommendations may confuse consumers, since E15 only rec entl y received partial waivers allowing its sale for use in certain vehicles. It is not yet available in the marketplace, and thus would not be specifically referenced in an y existing manual or manufacturer’s specifications. Today ’s final rule will the refore require the following damage and prohibition message at the bottom of the label: “Don’t use in other vehicles, boats, or gasoline powered equipment. It may cause damage and is prohibited by federal law.” We carefully

considered the suggestion t o add graphic icons to the label to help convey what products can, or cannot, use E15, and have decided not to require icons for several reasons. First, the icons suggested for the on - highway vehicles that can, or cannot use, E15 rel y on text to convey mu ch of their message. Those icons also depict a passenger car, which is only one of several vehicle t ypes that can use E15 if from the specified model ye ars. In addition, the other icons portray

onl y some of the nonroad vehicles and equipment that cannot use E15, raising the issue noted above concerning partial lists: depicting some equipment but not other equipment may lead consumers to think E15 can be used in the ty pes of equipment not depicted. Use of multiple icons would also make the label more den se and complicated. In light of these considerations, we are not including icons in the final label. However, fuel providers may

post supplemental labels or signs that they believe would be useful for informing their customers. We are also adopting the suggestion made b y one commenter to allow fuel providers to submit to EPA for approval an alternative label. There are a number of***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 38 of 169 circumstances that may

make it appropriate for a retailer to make small changes in the shape or size of the label and/or in clude additional information. (It should be noted that the addition of information, including icons, would require enlarging the label so that all of the information on the label may

be easily read). To the extent a fuel provider believes icons would be helpful to its customers, it may

post them on its own signs and/or develop and submit an alternative E15 label including appropriate icons for EPA consideration and approval. d. Addressing Non - English Speakers Two commenters expressed concern that th e label needs to accommodate non - English speakers, and pointed out that a relativel y high percentage of commercial landscapers that purchase fuel for lawn, garden, and forestry products may

not be able to read or comprehend an English - narrative label. The y suggested that the final label should contain generic s ymbols or icons to clearl y and strongl y convey the necessary warnings. We have addressed the use of icons above, but have also considered whether labels in other languages should be used. We appr eciate the importance of conveying the necessary information to those who do not speak or read English. However, we are not requiring multi lingual labels at this time because we do not have enough information to determine under what circumstances one or more additional languages should be added to the label. The commenters suggesting that labels accommodate non - English speakers did not provide information that would allow us to make these determinations. Also, a label in two or more languages would nece ssarily

be longer and may

detract from the effectiveness of the label as a whole. We will continue to consider whether bi - or multi - lingual signs would be appropriate, and will work with***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 39 of 169 stakeholders to address this issue through public outreach and education as E15 enters the market. As noted above, retailers may also post additional labels or signs, including in other languages. Further, today’s rule provides the option of seeking EPA approval of an alternative label that could incorporate languages in addition to English. Under the regulations, retailers could submit translated versions of the final label to EPA for approval. Retailers thus have the flexibility to use signs and/or labels conveying information in any language they

believe is appropriate for their customers.
e. Portable Containers Some commenters expressed concern that the label by itself would not be effective at preventing misfueling of boats and other nonroad vehicles and equipment. The commenters pointed out that nonroad produ cts are generall y fueled from portable containers, which are in turn fueled at the same time and location that motor vehicles are fueled. The commenters stated that any fuel dispensing nozzle used to fill a motor vehicle could also be used to fill the portable container. One commenter urged that the labels for pumps dispensing fuels greater than E10 should also warn against those fuels being dispensed into portable containers. We considered this suggestion but have decided that prohibiting the dispensing of E15 into portable containers is not necessary or appropriate. The prohibition established by today ’s rule extends to misfueling of E15 into nonroad products, including by use of portable containers, so a separate ban on E15 use in portable containers is not needed to effectuate the prohibition. Banning use of such containers for E15 would also prevent their legitimate use, including in emergencies, for motor vehicles that may fuel with E15. The outreach campaign being***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 40 of 169 developed can help consumers und erstand that use of E15 in portable containers is limited to fueling the t yp es of motor vehicles that may use E15. f. Color, Size, Shape, Font, and Placement of the Label There was general agreement among commenters that labels for gasoline - ethanol blends should be uniform in color, size, and shape for easy identification. Commenters were divided, however, on what the color and shape should be, with some commenters focused on what combination would stand out and/or be more legible, and others emphas izing coordination with other labels. Several different color schemes, including FTC’s for its proposed gasoline - ethanol blend labels, were suggested. Shapes other than squares were also urged, with octagonal and triangular shapes specifically recommende d since they are already

associated with stop and hazard signs, respectively. One commenter recommended that rather than requiring a one - size - fits - all label, EPA should allow gasoline marketers to determine the color scheme and appropriate size of the E1 5 label. Another commenter specificall y cited experience with EPA’s UL SD regulations, which did not specify

the color and size of the labels required for that program. This commenter pointed out that while retailers initially welcomed the opportunity to design their own labels, ultimately

the lack of consistency

in label design resulted in confusion and uncertaint y with respect to compliance and enforcement. The commenter recommended that EPA should adopt specific label size, color, dimension and design requirements similar to those specified for dispenser labels under FTC regulations. With respect to placement of the label, commenters generall y suggested that labels***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 41 of 169 should be placed directl y above, below or next to the E15 pump nozzle or the button a consumer would use to select E15 from among several fuel choices. One commenter recommended that for pumps that use one hose to dispense several grades of gasoline the label should be on the button for selecting the grade for which E15 is used. For pumps with multiple hoses, this commenter suggested the label could appear in the same location as the octane ratings for the other hoses (or above/below the octane rating). We agree with commenters that the E15 label design should generall y be uniform for eas y identification and utility . Significant variations in label design could thwart the goal of associating the label with E15 and making the label readily recognized and understood. At the same time, we recognize that slight modifications in size or shape may be useful or appropriate for a retailer’s particular circumstances. For example, some slight changes in shape may be necessary to allow the label to be placed where consumers will see it when they are selecting what fuel to bu y. The flexibility affo rded by

today ’s regulations will give retailers the option to develop an alternative label that works with their pumps. However, alternative labels must include the four required components of the E15 label, must be as legible as the required label, and must be similar enough in design that their use would not confuse consumers or undermine the utility of relativel y consistent labeling of E15. We have decided to use FTC’s proposed color scheme and general design so that the two agencies’ labels could wo rk together as a coordinated labeling scheme for gasoline - ethanol blends. FTC recentl y deferred making a decision on the ethanol labeling portion of their proposed fuel rating rule because more time was needed to address the issue. 11 FTC’s proposal was b ased in part on existing FTC rules for labeling alternative fuels (see 16 CFR Parts 306 and

11 F TC press release “FTC Issues Final Amendments to Its Fuel Rating Rule, Including New Octane Rating Method” available at http://www.ftc.gov/opa/2011/03/fuellabel.shtm [accessed March 21, 2011].***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 42 of 169 309). Those rules specify the color scheme that the FTC used for its proposed labels for gasoline - ethanol blends. The FTC’s alternative fuel labels provide a gene rally consistent color scheme for alternative fuels so consumers may readily recognize pumps and other dispensers that deliver those fuels. In view of the existing FTC rules for alternative fuel labeling and FTC’s further consideration of gasoline - ethanol blend labeling, we are adopting the proposed FTC color scheme so that E15 labels may become part of a broader, coordinated scheme for labeling alternative fuels in general and gasoline - ethanol blends in particular. Consumers are more likel y to understand the import of both agencies’ labels if they see relativel y consistent labels across the relevant t ypes of fuel. In addition, FTC’s proposed labels uses colors, fonts, shape and other design aspects that make its labels noticeable, easily understood, and consistent with labeling conventions. An E15 label similar in appearance should thus be similarly effective. We also note that we varied the font size of different parts of the E15 label in light of FTC consumer labeling staff advice that use of larger f onts for the most important information would help draw consumers' attention and make it more likely they would read the label. We agree with the comments that the label should be placed where consumers will see it when they

are selecting which fuel to bu y. We recognize, however, that pump designs vary widely and evolve over time. In particular, pumps that use one hose to dispe nse several grades of gasoline raise the issue of where to place the label so that it is associated with the selector button for E15 fuel. Given the wide variet y of pumps, we are not specifying the exact placement of the label on every

t ype of pump, but w e are requiring that retailers place the E15 label where consumers will see it when they are making their fuel selection. In the case of pumps with one nozzle dispensing several grades of gasoline, the regulations direct the retailer to place the label ab ove the selector button dispensing E15 or otherwise place it so that it is clear which button is***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 43 of 169 dispensing E15. Using the flexibility afforded by the regulations for alternative labels, some retailers may

want to put a variation of the E15 label on the s elector button itself. We note also that in response to our request for comment on whether the designation of “E15” be placed at the top of the label, man y commenters agreed that this should be done. Today ’s rule will require that “E15” be so placed.

g. Separate Labels for Different Levels of Ethanol
Most commenters stated that there is no need to label E0 or E10. These commenters noted that since the purpose of the rule is to minimize misfueling with E15, EPA labeling should be limited to fuels c ontaining more than 10 vol% ethanol. Several other commenters recommended labels for E0 and every level of gasoline - ethanol blend (including E10) to provide a comprehensive s ys tem for identifying the amount ethanol in the gasoline being sold. We have con cluded that it is not useful or necessary to label E0 or E10. Both fuels are prevalent in the market now, and both may be used by

virtuall y all vehicles, engines and nonroad equipment. Requiring labels for E0 and E10 might help consumers understand the s pectrum of gasoline - ethanol blends that are available, but they are not needed to help minimize misfueling. “E0” and “E10” labels may also cause some confusion. Many pumps dispensing E10 are already labeled under state law, and adding a new label would b e duplicative and may lead some consumers to think that E10 is a new t ype of gasoline. We believe that labeling onl y E15 pumps will help make clear to consumers that E15 is indeed a new and different blend, and that attention needs to be paid to avoid mis fueling with it. Thus, today ’s rule will not require labels for E0 and E10.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 44 of 169 Commenters were divided on whether additional labels were needed for E85, for blends between E15 and E85, and for blender - pumps (pumps that dispense a range of gasoline - ethanol blends). One commenter stated that no additional labels were necessary and that requiring an additional label for these fuels would likely be counterproductive to the consumer education underway in states where mid - level gasoline - ethanol blends and E85 ar e already available. Some commenters believed that such labels were necessary , with some favoring labels that indicate a range of ethanol levels and other urging that labels specify the precise, or close to the precise, level of ethanol being dispensed (e .g., E20, E30, E40 and so on.). As mentioned above, FTC is considering labels for mid - level gasoline - ethanol blends. FTC alread y requires labels for E85 and other alternative fuels. There are currentl y about 2,300 E85 pumps and 215 blender pumps dispensi ng mid - and high - level gasoline - ethanol blends. These pumps ty

pically have labels or other signage that clearly identifies mid - and high - level gasoline - ethanol blends as such, indicates which nozzle or selector button dispenses those higher blends, and co mmunicates that the blends are for flex - fuel vehicles onl y. Most alternative fuel labels subject to current FTC regulations must also use the color scheme that we have adopted for the E15 label. In light of these circumstances, we believe that it is suf ficient and appropriate for EPA to require labels only

for E15 pumps at this time. There are relativel y few pumps dispensing mid and high - levels of gasoline - ethanol blends, and their current labels and signage are generall y designed to attract attention and make clear that the fuel they dispense is for flex - fuel vehicles only . The E15 label we are requiring will provide appropriate information for E15, and should not lead to misfueling with higher gasoline - ethanol blends. In our view, an owner of a MY20 00 car, for example, is not likely to read the E15 label, learn that it is inappropriate for his or her***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 45 of 169 motor vehicle, move to an E30 or E85 pump, and buy that fuel instead. Also, as discussed below, the labels that EPA could require in this rulemaking fo r higher gasoline - ethanol blends could cause consumer confusion. FTC is continuing to consider labeling for mid - level gasoline ethanol blends, and we anticipate that the two agencies will continue to consult about ethanol labeling. (For example, EPA and FTC staff are working to prevent duplicative labeling.) As we work with our stakeholders to help the public understand the appropriate use of E15, we will share information and insights with FTC for their consideration. 12 Since the misfueling prohibition established by today ’s rule applies to gasoline - ethanol blends greater than E10, and not just E15, EPA considered whether to require a label for higher blends in order to provide information about the prohibition. We concluded, however, that such labels would more likel y confuse consumers than help them avoid misfueling. The prohibition established in this rule reflects and is based largely on the same information and engineering assessment supporting EPA’s decision to den y a waiver for E15 to be introdu ced into commerce for use in MY2000 and older light - dut y vehicles, heav y - dut y engines, motorcycles and nonroad engines and equipment. In this rulemaking, we are not addressing the emissions impact of blends above E15 on MY2001 and newer light - duty vehicle s. Therefore, the misfueling prohibition that we are promulgating in this rule applies only to the vehicles, engines and equipment not covered by the E15 partial waivers. In this context, any EPA labels for blends greater than E15 would accordingl y carry a misfueling prohibition statement that would reference onl y MY2000 and older light - duty vehicles, heavy - duty

engines, motorcycles and
12 We considered requiring EPA labels for higher gasoline - ethanol blends that combined the information on EPA’s label and FTC’s proposed labels. How ever, FTC’s proposed labels contain a more general damage statement as well as direction to check the owner’ s manual. For the reasons discussed above, w e do not believe it is appropriate to include the reference to owners’ manuals on EPA’s E15 label. Also, it is not clear that EPA could require labels for the particular ranges of blends for which FTC proposed labels (e.g., 30 - 40%, 10 - 70%). Since we do not have data to show differences in emission consequences for those particular ranges for all types of vehicles, engines or equipment, we do not believe it would be appropriate for EPA to require labels for thos e particular ranges. In any event, we do not want to presume the conclusion of FTC’s consideration of ethanol labeling.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 46 of 169 nonroad engines and equipment, and not MY2001 and newer light - dut y vehicles. However, such labels might leave the mistaken impression that blends greater than E15 are currentl y lawful for gasoline - fueled MY2001 and newer light - dut y motor vehicles, when they are not. Under CAA section 211(f)(1), those higher blends may be introduced into commerce only for sale for flex fue l vehicles. As discussed above, the current labels on pumps dispensing higher gasoline ethanol blends ty

pically provide that information. Given the scope of this rulemaking, we have concluded that adopting EPA labels in this rulemaking for higher gasolin e - ethanol blends could be confusing and counterproductive. In sum, we expect the E15 label will serve EPA’s purpose in providing consumers with the information they

need to avoid misfueling with E15, and that it is not appropriate to adopt labeling requi rements for blends above E15 in this rulemaking.
3. Final Pump L abeling Requirements Today ’s final rule requires the wording and general color and design aspects of the label described above. In addition, we are allowing retailers the flexibility to submit alternative labels to EPA for approval. Such alternatives may potentially

include the addition of icons and other languages, and small changes in shape and size (except to the extent a larger size is necessary to accommodate more information), but must include the four required components of the E15 label. We are not requiring labels for other gasoline - ethanol blends. Thus, only the E15 label is required for pumps dispensing that fuel. Placement of the label will depend on the ty pe of pump that is used. In the case of pumps***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 47 of 169 with one nozzle dispensing several grades of gasoline, the regulations direct the retailer to place the label above the selector button dispensing E15 or otherwise p lace it so that it is clear which button is dispensing E15. In the case of pumps with a nozzle for each grade, the regulation directs the retailer to place the label where consumers will see it when they are making their fuel selection. The final E15 la

bel is as follows:

C. Product Transfer Document Requirements EPA proposed several additions to existing PTD requirements to provide the information needed for fuel providers to properl y blend and label E15 fuel. EPA has previously established similar requirements for PTDs for reformulated gasoline and blendstocks to help ensure downstream compliance with national RFG standards. As we explained in the proposed rule, the potential introduction of E15 into the marketplace makes it important to include a dditional***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 48 of 169 information on the PTDs that accompan y the transfer of gasoline and gasoline blendstocks used for ox ygenate blending, both for reformulated gasoline and conventional gasoline. We also noted that the ty

pe of additional information needed differs for businesses upstream versus downstream of the point of ethanol addition. M ost commenters agreed that PTD changes are necessary to minimize misfueling and to help ensure downstream compliance with our fuels regulations as E15 enters the market
. 1. PTD Requirements Downstream of the Point of Ethanol Addition EPA proposed to include on PTDs language indicating the amount of ethanol in the blend and the summertime RVP standards applicable to the blend so that downstream marketers can properl y label E15 f

uel and avoid commingling fuels that could result in RVP and other violations. 13 EPA proposed that the following statements be included on PTDs for pure gasoline (E0) and the various gasoline - ethanol blends downstream of the point where ethanol blending takes place: For E0: ‘‘E0: Contains no ethanol. The RVP does not exceed [Fill in appropriate value]’’ For E10: ‘‘E10: Contains between 9 and 10 volume percent ethanol. The RVP does not exceed [Fill in appropriate value]’’ For E15: ‘‘E15: Contains up to 15 v olume percent ethanol. The RVP does not exceed [Fill in appropriate value]’’ For EXX: ‘‘EXX

— Conta ins up to XX% ethanol.

13 As was indicated in the proposed regulations, the RVP language would be required for PTDs only for the summertime RVP season.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 49 of 169 ‘‘EXX’’ refers to fuels blends above E15, up to and including E85 and fuel blends below 9 volume percent ethanol. The maximum potential ethanol content of the fuel would be required to be specified on the PTD in the place of ‘‘XX’’. Most comments were generall y supportive of the language as proposed. One commenter recommended that the language on PTDs for gasoline - ethanol blends should be simplified and standardized, and should read: “Contains at least ## volume percent ethanol and up to ## volume percent ethanol. RVP does not exceed ## psi.” EPA agrees that standardizing the language for gasoline - ethanol blends is simpler and easier to understand, and is finalizing changes to the required PTD language for gasoline - ethanol blends to reflect this. For E0, we are finalizing the language to read as proposed (i.e., “E0: Contains no ethanol”), since the standardized language suggest ed b y commenters contains more information than necessary for gasoline containing no ethanol. Another commenter argued that the language “ The RVP does not exceed [Fill in appropriate value]” is unnecessary , as the petroleum industry has a long history

of d istributing gasoline with the correct RVP to the correct area, and E15 will not change this situation. In contrast, another commenter stated that the proposed requirements to include ethanol content and maximum RVP on the PTD downstream of the point of bl ending would be beneficial, because it would alleviate the need for additional downstream testing. After considering the public comments, EPA concludes that, downstream of the point where ethanol blending takes place, information on the maximum ethanol co ncentration and RVP of gasoline and gasoline - ethanol blends is needed to help ensure that shipments of E15 and other fuel are delivered into the appropriate storage tanks at retail and fleet fueling facilities and not improperly commingled.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 50 of 169 The introducti on of E15 into the marketplace will increase the complexity of blending, distributing and selling fuel. The required additions to PTDs will help fuel providers compl y with E15 labeling requirements, the summertime RVP requirements for E0, E10 and E15, and the prohibition against misfueling with E15 (including gasoline - ethanol blends greater than 10 vol% ethanol and up to 15 vol% ethanol) . Therefore, EPA is finalizing the requirement that information on the maximum ethanol concentration and RVP of gasoline and gasoline - ethanol blends be included on PTDs downstream of the point of ethanol addition. EPA also requested comment on whether additional language on E10 PTDs is needed to inform parties that a blend containing between 9 and 10 vol% ethanol which b enefits from the 1.0 psi RVP waiver under CAA section 211(h) may not be commingled with E0 or a gasoline ethanol blend that contains less than 9 or more than 10 vol% ethanol. We received comments advocating that EPA require that PTDs for gasoline - ethanol blends higher than 10 vol% ethanol state that those volumes are not eligible for the 1.0 psi RVP waiver. O ne commenter also suggested that, to avoid downstream commingling of E10 and other fuels not eligible for the 1.0 psi RVP waiver, EPA should incorpo rate additional language into the E10 PTDs stating: “This blend is subject to the 1.0 psi RVP waiver. Do not blend with gasoline containing an ything other than between 9 and 10 vol % ethanol.” EPA has decided to include the suggested language to provide clarit y and avert potential instances of improper commingling of fuels eligible for the 1.0 psi RVP waiver and those that are not. Thus, we are finalizing a requirement that for gasoline ethanol blends containing between 9 and 10 vol% ethanol, the PTD mus t state: “The 1.0 psi RVP waiver applies to this gasoline. Do not mix with gasoline containing an ything other than between 9 and 10 vol% ethanol.”***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 51 of 169 2. PTD Requirements Up to and Including the Point of Ethanol Addition EPA proposed that PTDs for gasoli ne or gasoline blendstock used for ox ygenate blending (BOBs) in the manufacture of gasoline - ethanol blends that are subject to summertime RVP controls include the maximum RVP of the BOB to avoid improper blending of E15 or commingling with E15 and other fu els. We also proposed that such PTDs in non - RFG areas indicate what ethanol concentration is suitable to be blended with the BOB to facilitate ethanol blender compliance with applicable EPA summertime RVP requirements. Specificall y, we proposed that the following statements be included on the PTDs for BOBs in non - RFG areas: ‘‘Suitable for blending with ethanol at a concentration up to 15 volume % ethanol’’ or, in the case of a BOB designed to take advantage of the 1 psi allowance for E10 in 40 CFR 80.27( d)(2): ‘‘Designed for the special RVP provisions for ethanol blends that contain between 9 and 10 volume % ethanol’’ ‘‘The RVP of this blendstock/base gasoline for oxygenate blending does not exceed [Fill in appropriate value]’’ Comments were generally s upportive of the proposed language, although EPA received a comment stating that the requirement to include the RVP of a BOB on the PTD is not useful because regulated parties are already prohibited from releasing a finished product onto the market that ex ceeds the regional and/or seasonal RVP requirements. The commenter argued that the proposed requirement overcomplicates an approach that has worked well in the past and that***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 52 of 169 PTD requirements for BOBs should be flexible and need onl y contain the type and l evel of oxygenate with which the BOB should be blended, with additional language included at the discretion of the regulated party . However, while the current approach to compliance with the relevant RVP requirements may work under current conditions, in light of the increasing complexity

that will come with the entry of E15 into the market, EPA believes that, upstream of the point where E10 and E15 are manufactured, the maximum RVP is needed on the PTDs for BOBs to facilitate ethanol blender compliance wi th the applicable EPA summertime RVP requirements. In order to help ensure that the proposed blendstock commingling restrictions are observed, we requested comment on whether the following language should be added to the PTD for a BOB designed to take advantage of the 1.0 psi allowance for E10: ‘‘The use of this gasoline to manufacture a gasoline - ethanol blend with less than 9 vol% ethanol or E15 may cause an RVP violation.’’ Some commenters argued that the proposed changes to the PTD language do not suffi ciently

address the consequences of blending additional levels of ethanol in gasoline bey ond 10 vol% and that language similar to what EPA proposed should be added to the final regulations. One commenter stated that the final rule must ensure that PTDs make it clear that any gasoline - ethanol blends above E10 do not receive the 1.0 psi RVP waiver. The commenter suggested that EPA require the following language on PTDs for fuel for which the waiver does not apply : “Adding ethanol to this product will result in a blend higher than E10 which will not qualify for the one pound waiver.” After considering these comments, EPA has decided to require the additional suggested language on PTDs for BOBs designed to take advantage of the 1.0 psi RVP allowance. This PT D language will serve to remind blenders that gasoline - ethanol blends containing more than 10 vol % ethanol do not receive the 1 psi RVP waiver.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 53 of 169 Furthermore, the PTD language clarifies the proper amount of ethanol with which the associated fuel may be ble nded. EPA believes that this additional PTD language will help prevent downstream violations of the RVP requirements for E15 and other fuels. In conclusion, for PTDs for gasoline or BOBs up to and including the point of ethanol addition, we are requiring the following language: ‘‘Suitable for blending with ethanol at a concentration up to 15 vol % ethanol’’ or, in the case of a BOB designed to take advantage of the 1.0 psi allowance for E10 in 40 CFR 80.27(d)(2): ‘‘Suitable for the special RVP provisio ns for ethanol blends that contain between 9 and 10 vol % ethanol.’’ ‘‘The RVP of this blendstock/gasoline for ox ygenate blending does not exceed [Fill in appropriate value] psi.’’ “The use of this gasoline to manufacture a gasoline - ethanol blend contain ing an ything other than between 9 and 10 vol % ethanol may cause a summertime RVP violation.”
3. General PTD Requirements We proposed several general PTD requirements so that the specific information discussed above is useful to the various parties involved in fuel production, distribution and marketing. Specificall y, we proposed that on each occasion when an y person transfe rs custody and/or ownership of an y gasoline or gasoline blendstock used for ox ygenate blending, the transferor would be required to provide the transferee with an appropriate PTD identifying the gasoline/blendstock and its characteristics (as defined below ), as well as such general***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 54 of 169 information as the names and addresses of the transferor and transferee, the volume of product being transferred, the location of the product on the date of transfer, and other specific information. We proposed that all parties b e required to retain PTDs for a period of not less than five y ears and provide them to EPA upon request. We also proposed that PTDs be required to be used by all parties in the distribution chain down to the point where the product is sold, dispensed, or otherwise made available to the ultimate consumer. We proposed that PTDs would be required to travel in some manner (paper or electronically) with the volume of blendstock or fuel being transferred. Additionally , we proposed that product codes could be used to convey the information required as long as the codes are clearl y understood by each transferee, but that the full proposed text would need to be included on the PTD for transfers to truck carriers, retailers, or wholesale purchaser consumers. We received comments indicating that space is limited on the physical PTDs, and that EPA should allow for the use of abbreviations and the printing of text on the back of the PTD, provided a clear reference to the back is made on the front. While EPA does re quire certain language to be included on PTDs, we generall y do not specify the form that the PTD must take. We agree that printing on the back of a PTD is appropriate, provided all the required language is included on the PTD and a clear reference to the printing on the back is made on the front of the PTD. Therefore, EPA is allowing parties to print required language on the back of the PTD, provided there is a clear reference on the front. The commenter also suggests the use of “%” in place of “percent” and “vol” in the place of “volume.” EPA agrees that the use of these particular abbreviations is reasonable as they are generall y understood by industry, and is allowing for the use of “%” in place of “percent” and “vol” in the place of “volume.” Finall y, we received comments stating that, if product codes can be used on PTDs as***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 55 of 169 proposed b y EPA, EPA should also require a product code key on the PTD, as the use of product codes in the current distribution chain has created confusion. EPA believes that th e limitations proposed for the use of product codes are sufficient to prevent confusion, as those parties who might be confused b y the use of product codes will not receive PTDs that contain them. Specificall y, the proposed requirement stipulated that pro duct codes may not be included on PTDs for transfers to truck carriers, retailers, or wholesale purchaser consumers, since these parties are more likel y to be unfamiliar with the meaning of product codes. Therefore, EPA is allowing for the use of product codes on the PTD provided the codes are clearl y understood by each transferee, and is requiring that the full proposed text be included on the PTD for transfers to truck carriers, retailers, or wholesale purchaser consumers. Although EPA is not requiring a product code key

on PTDs, parties are encouraged to include them whenever it would be useful to others in understanding product codes downstream in the distribution chain. The final rule makes the PTD requirements applicable beginning November 1, 2011, t o allow sufficient time for all the relevant parties in the fuel distribution chain to comply . Businesses wishing to begin marketing E15 prior to that date may do so by explaining in the plan required b y the E15 partial waiver conditions how the PTD requi rements of the partial waivers will be addressed. (As discussed in a later section of this notice, businesses that introduce E15 into commerce do so under the E15 partial waivers and must comply with the partial waiver conditions. Today ’s rule will facil itate compliance with some conditions, but do not supplant them.) Under the waivers, plans must be submitted to EPA to address the waivers’ misfueling mitigation conditions, which include PTD and survey requirements. Prior to the effective date for compl iance with the PTD requirements of today ’s rule, such a plan should describe how PTDs for gasoline, blendstocks or gasoline - ethanol blends would be utilized by the various***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 56 of 169 parties involved in marketing E15 before the compliance date for today ’s PTD regulat ions. Such a plan could follow the PTD approach finalized in today ’s rule to help ensure that appropriate labeling of pumps will occur and that compliant fuel will be dispensed. In this way , a plan for the introduction of E15 may be implemented prior to the compliance date for PTDs as specified in today ’s rule.
D. Ongoing Implementation Survey Consistent with the misfueling mitigation conditions of the E15 partial waivers, EPA proposed that the parties involved in making, distributing and selling E15 be responsible for conducting an ongoing survey of the implementation of the labeling, ethanol content and RVP requirements for E15. 14 As we explained, the purpose of the survey program is to help ensure that labeling requirements are being met downstream, that the appropriate level of ethanol content is being properl y blended and documented in fuel shipments, and that the RVP limitation of the E15 partial waivers is being met. The survey would also deter violations of the ethanol content, labeling and RVP requirements. EPA proposed to provide responsible parties with the flexibility to conduct survey s that reflected the geographical scope of their plans for E15 distribution and sale. Survey Option 1 would allow an individual or group of gasoline produce r(s)/importer(s), ethanol producer(s)/importer(s), and/or oxygenate blender(s) to conduct a local or regional survey if their E15 business plans are limited in geographical scope. Survey Option 2 would allow responsible parties to conduct a nationwide sur vey , which would likely

become the most efficient option as businesses decide to sell E15 in more parts of the country . EPA explained that the flexibility 14 See 75 FR 68054 - 68056.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 57 of 169 afforded b y these two options would be appropriate given the likelihood that E15 will gradually expand into the marketplace. Based on the history of the transition to E10, we expect that sale of E15 will initially

begin in a relativel y small number of retail stations in a few geographic areas. In that case, it may

make sense for responsible parties to comply with survey

requirements via Survey Option 1 to limit costs. If E15 expands beyond a few areas, Survey Option 2 may become more cost - effective. The parties involved in selling E15 can thus decide which survey option makes the most sense for their circumstances.
1. Proposed Approaches and Consideration of Comments a. General Survey

Comments In the NPRM, we proposed that ethanol producers/importers, gasoline producers/importers, and oxygenate blenders involved in introducing E15 into the market be responsible for carrying out the proposed survey provisions. Several commenters stated that it w ould make little sense to include ethanol or gasoline producers/importers as required participants in the survey given their lack of direct control over relevant regulated activities (e.g. proper labeling at a retail station or blending too much ethanol into gasoline). These commenters also stated that the proposal would unnecessarily and inappropriately

shift EPA’s compliance and enforcement obligations onto industry , and that EPA should fund and conduct the survey itself. Some commenters specificall y ar gued that the sole responsibility of complying with survey requirements should be on ethanol blenders and marketers that choose to blend and market E15. Some commenters also stated that unlike the RFG and ULSD survey programs,***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 58 of 169 which allow responsible part ies to reduce compliance costs and/or help establish alternative affirmative defenses to fuel standard violations, the E15 survey program provides no benefits to the responsible parties and may add an additional level of complexity that would hinder the introduction of E15 into commerce. When EPA granted the partial waivers allowing E15 to be introduced into commerce for MY2001 and newer light - duty motor vehicles, it placed a survey requirement on the fuel and fuel additive manufacturers (i.e. gasoline manu facturers/importers, ethanol producers/importers, and oxygenate blenders) that introduce E15 into commerce as a waiver condition in order to mitigate misfueling. Since fuel and fuel additive manufacturers are the parties that are subject to the CAA sectio n 211(f)(4) prohibition that was partially waived for E15, they

are the parties that, under the partial waivers of the prohibition, bear the obligation to introduce E15 in a manner that avoids misfueling if they

choose to make use of the waivers. For a si milar reason, to minimize the misfueling that might result from the introduction of E15 into commerce for use b y some vehicles but not other vehicles, EPA proposed that these parties be subject to the survey requirements under the misfueling mitigation regulations. This aspect of the proposal also ensures that compliance with the survey requirements of the rule (at 40 CFR 80.1502) would help satisfy

the survey

conditions of the partial waiver decision. After considering the public comments, we have conclud ed that it is appropriate for the parties involved in making and selling E15 to be responsible for conducting survey s that assess implementation of the E15 partial waiver conditions related to misfueling mitigation. The partial waivers allow businesses to introduce E15 into commerce for use in MY2001 and newer motor vehicles. To the extent businesses desire to avail themselves of the opportunity to make and sell E15, they should also bear the cost of monitoring compliance with misfueling mitigation adopte d***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 59 of 169 in today ’s action. EPA has required regulated parties to conduct survey s in the RFG and ULSD programs if they

choose to take advantage of regulatory provisions that provide greater compliance flexibility

made possible by

the survey s. For E15, EPA has g ranted partial waivers that make it necessary

for those who take advantage of the waivers to take certain steps to mitigate misfueling and limit RVP and thereby avoid the emission increases and standard exceedances that would otherwise result. Although th e case for survey s in the RFG, ULSD and E15 contexts is not entirely the same, the common, compelling thread is that when regulated parties seek opportunities that may heighten the risk of emission increases, they should be responsible for taking steps to offset or minimize that risk. In all three cases, survey s are an effective means of reducing risk

– and at relativel y low cost. Moreover, complying with survey requirements will help responsible parties satisfy waiver conditions and introduce E15 into co mmerce, and will also help establish an affirmative defense to violations found downstream for upstream parties. For these reasons, EPA is finalizing the list of responsible parties as proposed. 15 EPA also received comments that it should make survey plans and results available to the public. EPA will make plans and results available in the same manner as it has made plans and data from both the RFG and UL SD survey programs available to the public. For example, EPA

15 Under the final rule, any oxygenate blender that blends a gasoline that contains greater than 10 vol% and less than or equal to 15 vol% ethanol is responsible for satisfying the survey program requirements along with the gasoline and ethanol producers/importers that manufacture, introduce into commerce, sell or offer for sale E15, or base gasoline, BOB, or ethanol that is intended for use in the manufacture of E15. To help blenders be aw are of those gasoline and ethanol producers/imp orters, today’s regulations provide that a gasoline producer/importer intends a base gasoline or a BOB for use in manufacturing E15 if a producer/importer amends its registration to include E15 under 40 CFR 79 or designates that their base gasoline or BOB may be suitable for the addition of up to 15 vol% ethanol in the PTDs accompanying the fuel or blendstock (see discussion of PTD requirements in Section III.B.). In addition, under the regulations, any ethanol producer/importer that sends ethanol into the marketplace is assumed to intend that the ethanol may be used to manufacture E15 unless the ethanol producer/importer demonstrates (e.g., through contracts) that its ethanol is not for use in the manufacture of E15.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 60 of 169 has provided the Clean Diesel Fuel Alliance (CDFA) with quarterly summary data of the performance of the ULSD survey program for publication on the public CDFA website. EPA is committed to providing timely data to the public and will di sseminate E15 survey data through avenues similar to those utilized in previous survey programs. Some commenters suggested that EPA should require that survey s include visual monitoring of pumps in order to observe and record customer behavior to determin e the rate of actual misfueling. Other commenters suggested that EPA should conduct its own survey to monitor actual misfueling rates at retail stations. EPA does not believe that it is necessary to require that survey s include visual monitoring at this time. As the transition to E15 occurs, we plan to work with industry, state, environmental and consumer stakeholders to track developments and evaluate the effectiveness of the required misfueling mitigation measures, including the prohibition against mis fueling with E15. Also, as noted previously , we are working with ethanol and other stakeholders to help establish a public education and outreach campaign to assist fuel producers, distributors, retailers and consumers in understanding how E15 may be made , distributed, sold and used. That effort can help identify and resolve misfueling issues that may develop as E15 moves into the marketplace. EPA proposed to include the testing of fuel samples for RVP to ensure that E15 being sold at retail stations wa s in compliance with the RVP condition of the E15 waiver and that an E10 fuel that used the 1.0 psi RVP waiver under CAA section 211(h) was not commingled with E15, which must have a lower RVP in the summertime. EPA received a number of comments both in f avor of and opposed to including RVP testing. Those who were opposed argued that determining RVP levels of E15 and other fuels was unrelated to misfueling, that existing RVP controls have proven effective over time, and that it was up to EPA to enforce RV P requirements***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 61 of 169 with the aid of states without imposing additional costs on industry . EPA continues to believe that it is necessary and appropriate for the surveys to measure the RVP of fuel samples from pumps labeled as dispensing E15. For E15 to be law full y sold under the partial waivers, it must have the proper ethanol content, not exceed 9.0 psi RVP in the summertime, and be dispensed from properl y labeled pumps. It is thus appropriate for the survey s to measure the RVP of fuel labeled as E15 in orde r to determine whether E15 is being properl y blended and sold under the partial waivers. However, EPA believes that the comments opposing RVP sampling for fuels being dispensed from pumps not labeled for E15 have merit. For example, a fuel with an ethano l content above 10 vol% up to 15 vol% that is dispensed from a pump lacking the E15 label is not covered by the partial waivers, and its sale violates the misfueling prohibition established in today ’s rule, regardless of its RVP. We also believe that th e current controls on summertime RVP established in 40 CFR 80.27 adequately ensure that E0 and E10 meet the applicable RVP standards. We are therefore limiting the requirement to measure RVP to fuels being sold and labeled as E15. One commenter asked that the survey be fair and balanced and not place any undue burdens on small petroleum marketers and retailers. EPA is committed to not placing undue burdens on small businesses. Retailers do not have an y obligations to conduct a survey; however, they

are r esponsible for complying with E15 labeling requirements if they choose to sell E15, and they

are subject to the prohibition against misfueling with E15. EPA believes that by allowing two survey

options, it is providing marketers and other small businesses flexibility to determine which survey method is most practical if they choose to sell E15. b. Survey

Option 1***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 62 of 169 EPA received man y comments about Survey Option 1. Some commenters argued that Survey Option 1 would not provide the Agency with accurate info rmation to the degree that a nationwide survey

would, because a geographically limited survey

would not necessaril y detect E15 sent beyond the areas covered b y the survey . Some commenters urged that we eliminate Option 1 altogether. These commenters pointed out that the national UL SD and RFG survey programs have been effective and that there was no reason to deviate from such an approach for E15. The Agency

continues to believe that Survey Option 1 is appropriate to provide for parties that choose to manu facture, market, or sell E15. Unlike the UL SD and RFG programs, which regulated the content of fuels that were already distributed and sold, E15 will likely enter the market first in a few areas of country and then graduall y expand to other areas over tim e. Under these circumstances, it is appropriate to provide businesses that decide to sell E15 in a limited area with the option of developing a relatively localized survey . EPA believes that Survey Option 1 can provide the same rigor as a nationwide surv ey for the areas potentially affected b y business decisions to sell E15 in a limited area. Survey Option 1, as finalized today, includes survey

requirements (e.g. sampling and testing methods) similar to those applicable to the national survey . Also, to be approved, surveys under Survey Option 1 will have to take a robust approach to surveyingaffected areas considering the fuel distribution network for those areas. EPA provides a similar opportunity to conduct localized or individual survey s under the RFG and ULSD survey

programs, and we believe that it is appropriate to provide parties making, marketing and selling E15 the opportunity to choose which approach is most economical and effective in ensuring proper ethanol content and labeling downstream. W e are also clarifying the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 63 of 169 language at § 80.1502(a) to reflect that a survey program conducted under Survey Option 1 must adhere to requirements for robustness similar to those applicable to a national survey . Other commenters argued that Survey Option 1 is overly

broad and not practical. These commenters stated that as written the proposed regulations implied that all gasoline refiners/importers and ethanol producers/importers would have to survey each area their products could enter even though they would have no idea whether their products are being used to blend E15. In response to these comments, it is important to clarify that the obligation to conduct a survey applies onl y to those parties that decide to make, distribute or sell E15 or their gasoline or ethanol for use in E15 . Any part y that chooses not to manufacture, market, and/or sell E15 does not need to comply

with the rule’s survey

requirements. Any

part y that chooses to market ethanol, gasoline, or gasoline blend stock as appropriate for use in E15 is subject to the survey requirement. If a part y wants to use Survey Option 1, the part y will need to limit where its fuel or fuel additive is sold and distributed. I f a part y does not want to limit the distribution of its product, then Option 1 would likely not be appropriate for that part y. The choice is up to each party considering how the part y decides to market their fuel or fuel additive

– with or without any limitation on its eventual use downstream. There are many benefits associated with deciding to market a fuel or fuel additive without limitation, but a companion responsibility is to then develop a survey

program that is appropriate to the distribution of the product. One commenter suggested that a survey of five percent of the station s that sold a responsible part y’s fuel in a prior ye ar be deemed sufficiently representative. This commenter suggested that for the first y ear of sampling under Option 1, the responsible party should conduct a survey that represents the higher of either: ( 1) five percent of the responsible party ’s estimate of the number of stations that will sell the responsible party ’s E15 during the first survey y ear; or***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 64 of 169 (2) five percent of the stations where the responsible part y sold fuels containing ethanol the prior y ear. This commenter pointed out that five percent was approximately the number of stations EPA proposed be surveyed annuall y under Survey Option 2. EPA does not agree with this approach to determining the minimum number of stations to be sampled. The Age ncy chose the number of samples required under Survey Option 2 using an appropriate statistical approach based on the previous performance of the similar UL SD survey program. The number of samples required under that program, and proposed for Survey Optio n 2, can fluctuate year to year since the number of samples is based in part on noncompliance rates; therefore, more than five percent of retail stations may need to be sampled in a particular survey y ear. Furthermore, the number of samples for a survey c onducted under Survey

Option 1 can vary considerably

depending on the size and scope of the individual survey plan. Since survey plans should use statistical means to determine the appropriate number of samples needed to comply

with the general survey

requirements being adopted , the Agency believes it would be inappropriate to specify

a minimum number of samples or percentage of stations to be sampled. The Agency

believes that the proposed approach to determining sample size provides appropriate flexibili ty to responsible parties. Therefore, EPA is finalizing Survey Option 1 as proposed. c. Survey Option 2
EPA received man y comments about most aspects of proposed Survey Option 2, the nationwide ethanol content and E15 labeling survey. Several commente rs stated that the proposed requirements that a fuel sample be shipped on the same day it is collected, and that the sample be anal yz ed for ethanol content within 24 hours, are unnecessary to ensure program***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 65 of 169 integrit y, are not practically feasible, and create unnecessary additional costs. We believe that these comments have merit. We chose 24 hours to be consistent with the fuel sample transport and anal ys is deadlines required in the UL SD and RFG survey programs. However, commenters noted that the indepen dent survey association that has conducted the UL SD and RFG survey programs for the past 15 y ears has shown that it is not practical to find a shipping carrier that will consistently

meet the required 24 - hour schedule. One commenter suggested that EPA all ow the use of ground shipment service, which takes in general 1 - 5 day s to be received at the lab. This commenter also pointed out that for testing samples, due to the volume of samples that will need to be anal yz ed, 72 hours would be a best case scenario, with 10 - 12 business day s being more realistic. EPA believes that it should impose practical, cost - effective requirements regarding the shipping and testing of fuel samples collected as part of the survey s. Therefore, EPA will require that samples be ship ped from the retail station to the laboratory for anal ys is within 5 day s. Additionally , EPA is requiring that samples be analyzed and reported to EPA for both oxygen content and RVP, if applicable, within 10 day s of receipt at the laboratory . These chang es will reduce the costs of conducting the survey . However, EPA is not changing UL SD and RFG survey requirements at this time since we did not propose to make changes to those survey programs in the NPRM. EPA may adjust the time allotted for shipment and anal ys is of fuel samples for these programs in an upcoming rulemaking. EPA also received comments suggesting that survey s begin only after E15 has achieved a certain level of market penetration considering data from the previous year. One commenter speci ficall y suggested that the survey ye ar begin on July 1 instead of January

1 of the ye ar E15 is introduced into commerce. EPA does not believe that it is appropriate for survey s to begin only***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 66 of 169 after E15 has been on the market. The purpose of the survey is to help ensure that E15 is being properl y blended and labeled so that misfueling is minimized. That purpose needs to be served from the time E15 first enters the market. Also, we do not believe it is feasible to determine whether an area has exceeded an y level of market penetration without accurate survey data upon which to base that determination. Additionally , the misfueling waiver conditions require that a survey plan be approved by

EPA and that implementation of the plan begin before E15 may be intro duced into commerce. EPA believes that it is best to keep the final survey requirements consistent with the misfueling conditions outlined in its partial waiver decisions. EPA does not agree that changing the start date of the survey from January

1 to July 1 would be beneficial since, if E15 actuall y enters the market earlier in the ye ar, the later start date would delay

delivery of information needed on a more real - time basis to minimize labeling and other problems that could lead to misfueling. The survey programs for the other fuel programs have been conducted with a January 1 start date and for a normal calendar year, and there is no reason to believe that an E15 survey could not also be conducted on the same schedule. Furthermore, the existing and proposed survey programs break survey s down into four quarterl y survey s that ensure that EPA is receiving more real - time information on a regular basis that is not tied to any

particular start date. Therefore, EPA is finalizing the survey timing requireme nts as proposed. EPA proposed that a nationwide ethanol content and E15 labeling survey conducted under Survey

Option 2 have a minimum of 7,500 samples annuall y and that the next y ear’s survey sample size be determined by the equation found at 40 CFR 80.15 02 based on the previous y ear’s non - compliance rates. EPA also sought comment on whether it should allow a smaller number of samples in the first years of the nationwide survey in order to reduce burden.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 67 of 169 EPA received comments that suggested that EPA shou ld require fewer or more samples than proposed. For example, one commenter suggested that EPA sample 20 percent of the retail stations nationwide. Another commenter suggested a reduction in the number of samples in the first y ear since E15 will not likel y be sold at many retail stations the first year it is introduced into commerce. The sample size methodology and minimum sample size EPA proposed were based on statistical principles and past survey experience with similar programs. Reducing the sample size even in the first y ear would compromise the statistical rigor, and therefore the effectiveness, of the program. If, as expected, E15 is initially marketed and sold in a limited geographic area, responsible parties that wish to market and sell E15 cou ld take advantage of Survey Option 1 to reduce the required number of samples. On the other hand, increasing the minimum number of samples does not provide much more information given the large number of samples already required and the substantial increa se in costs that a larger number of samples would entail, which would pose an unnecessary burden on responsible parties. However, as part of the survey plan approval process, EPA will consider whether a higher minimum sample size may be methodologicall y n ecessary under some circumstances to maintain the rigor of a nationwide survey program. In the regulations issued today , EPA is finalizing the sample size methodology and minimum sample size of 7,500 samples per ye ar as proposed. One commenter questioned whether proof that a surveyor had been paid must be sent to EPA by the proposed deadline since EPA could bring an enforcement action under the Clean Air Act if the survey

was not conducted according to the approved plan. The Agency believes that the requi rements that the survey plan be contracted and paid for in advance are important to***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 68 of 169 ensuring that the required survey s will occur. 16 EPA has made this a requirement of both the RFG and ULSD survey

programs, and the cost of providing proof of pay ment to the Agency

is minimal. EPA is making changes to the survey provision governing revoking approval of a survey plan to more closel y conform to the method provided for in the UL SD regulations 17 of ensuring that survey plans serve their intended purpose and that this goal is fulfilled until the expiration of the plan. 18 Given the importance of a robust survey for effective implementation of ethanol content, labeling and related requirements, if experience with an approved survey plan proves that it is inadequate in practice, EPA may revoke it. Before deciding whether to revoke a plan, EPA will generall y work with the submitter to make ch anges necessary to remed y the plan’s flaws. If satisfactory

amendments cannot be achieved, EPA may decide to revoke its approval of the survey plan. In the event a survey plan is revoked, distribution of the E15 authorized for introduction into commerce under the E15 partial waivers based, in part, on the survey plan would have to cease until such time as a replacement survey is approved. To ensure that the E15 survey provisions create incentives similar to those created by the UL SD program for developing and implementing effective survey plans, the regulations being promulgated today

include a provision for voiding a survey plan ab initio under appropriate circumstances. If EPA determines that approval of a survey plan was based on false, misleading or i ncomplete information, or if there is a failure to fulfill or cause to be fulfilled any requirements of the survey, EPA may void ab initio the approved survey plan. EPA’s y ears of experience in approving applications that authorize distribution of motor v ehicles, nonroad vehicles and engines, and fuels based on compliance with applicable Agency regulations confirm

16 Contracting and paying for a survey also m ark commencement of a survey for related regulatory purposes. 17 See 40 C.F.R. §§ 80.613(e)(10)(v) and 80.613(e)(12). 18 These provisions apply to surveys approved under options 1 or 2.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 69 of 169 the importance of basing approval determinations on information that is true, clearly stated and comprehensive, and on ensuring implementation o f the terms of the application. Given the importance of E15 survey s to effective implementation of E15 misfueling mitigation measures, providing that survey

plans may

be voided ab initio under appropriate circumstances will help ensure that plans are prop erly developed, supported and implemented. E15 distributed based on a plan whose approval was secured with false, misleading or incomplete information, or a plan whose requirements are not fulfilled, was not distributed in compliance with the conditions o f the waiver. In considering whether it is appropriate to void a survey plan ab initio, EPA will review the information that was submitted in support of the plan. EPA will regard information that is not true to be false information; information that, wh ile true, may lead a reasonable person to an incorrect conclusion to be misleading information; 19 and information that is missing elements necessary for a full understanding of the information that was presented to be incomplete information. Survey

plans w ith these kinds of information flaws are inherently unreliable, and effectivel y prevent EPA from conducting a meaningful review of the survey plan and from basing its decision to approve the plan on complete and accurate information. Thus, when EPA discov ers that its approval of a survey plan was based on false, misleading or incomplete information, EPA may

decide to treat its approval as never having been granted. In addition, as dis cussed above, EPA is requiring proof of a valid contract for conducting the survey and pay ment for the survey

to be provided to EPA to help ensure that the survey is implemented. If, despite the fact that EPA receives this proof, the requirements of a survey plan are not fulfilled,

19 For example, a plan implemented by a survey association that is misleadingly described in the plan as independent of and free from obligation to ethanol blenders and producers, gasoline refiners and ethanol and gasoline importers or their employees, but which is in fact not independent of or free from such obligation, yields survey results that are inherently unreliable. Such a plan may be voided ab initio .***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 70 of 169 EPA may treat the survey

plan as never havi ng been granted b y voiding it ab initio . Distribution of E15 under an y survey plan that is voided ab initio would have to cease until such time as a replacement survey

is approved, and E15 that was distributed based on that plan will be deemed to have bee n distributed in violation of 40 C.F.R. § 80.1504(a)(2).
2. Final Survey

Requirements In today ’s rule, EPA is finalizing both survey options. After carefully

considering all of the comments received pertaining to the survey requirements, EPA is finali zing Survey Option 1 as proposed. In additional, EPA is finalizing most elements of Survey Option 2 as proposed. However, Survey

Option 2 as finalized does not require RVP testing of fuel samples from pumps not labeled for E15, and provides more time f or the shipping and testing of samples. Finall y, EPA is revising provisions to permit both revoking and voiding ab initio approval of survey plans in appropriate circumstances. E. Program Outreach In the NPRM we pointed out that a public education and outreach program for E15 will be important to help mitigate misfueling that could result in increased emissions and vehicle or engine damage. We also noted that the industry - lead outreach campaign for the UL SD program helped successfully

transition the nation to UL SD while mitigating most misfueling. Almost all commenters agreed that an effective outreach program would be essential to mitigate E15 misfueling, and some cited the ULSD outreach effort as an example of how EPA***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 71 of 169 and affected stakeholders could work together to aid in the transition to E15 and minimize misfueling. Recommendations included a dedicated website, use of EPA’s online Green Vehicle Guide, use of other media, pamphlets at retail outlets, and consumer interaction via key pad entry at the pump. There were also comments that EPA should establish and lead the outreach program. EPA agrees that public outreach and consumer education are key to effectively

mitigating misfueling. However, we believe that industry needs to take the lead in suc h efforts. Our recent experience with the transition to UL SD shows that a stakeholder - led outreach campaign can work sy nergisticall y with labeling requirements and provide another means of providing important information to everyone involved in fuel produ ction, distribution and use. The UL SD outreach program also shows that industry is better situated to coordinate with the parties involved in the production, transport, and marketing of E15. More importantly , businesses interact with consumers (via adver tising, a web site, pamphlets, etc.) about the fuels they sell, and those that decide to sell E15 will need to make decisions about how to promote E15 in a manner that also minimizes misfueling. As noted previously , the introduction of E15 into the market is likely

to start in a limited number of areas and grow over time. In these circumstances it is even more appropriate that the parties who choose to market this product take the lead in outreach and consumer education in the areas the product is introdu ced. In light of these considerations, EPA believes that primary responsibility

for public outreach and education about E15 appropriatel y rests with the businesses that decide to make and sell E15. As we did for the UL SD program, we intend to activel y ass ist in the development and implementation of an outreach and education campaign for E15 when it enters the market. We are alread y in the process of working with ethanol and other stakeholders to help establish such a***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 72 of 169 campaign. As that process moves forward, we will help ensure that a broad range of stakeholders are kept informed so they may become involved as they see fit. F. Other Misfueling Mitigation Measures In the proposed rule, we explained our expectation that the misfueling mitigation provisions we were proposing would adequatel y address misfueling mitigation concerns. We based our expectation on the relativel y recent transition to UL SD when similar measures were employ ed to help minimize misfueling of new ve hicles and engines that were designed and built to achieve stringent emission standards when operated on ULSD. However, we also recognized that there could be other means for addressing misfueling, as suggested b y APIin its misfueling mitigation measures scoping study . 20 Inthe NPRM, we discussed several suggestions covered in API ’s study

and sought comment on those and any other measures that industry or other stakeholders considered necessary or helpful to mitigate misfueling with E15 . We received many

comments recommending that EPA implement or study one or more mitigation measures in addition to those we proposed. This section contains a brief summary of major comments and our responses to those comments. It begins with a discussion of the general issue of whether the proposed misfueling mitigation measures are sufficient to mitigate misfueling, and then considers several specific measures suggested b y commenters for inclusion in today ’s final rule. Responses to comments not addressed in this sect ion can be found in the “E15 Misfueling Mitigation Measures Response to Public Comments.”

20 “Evaluation of Measures to Mitigate Misfueling of Mid - to High - Ethanol Blend Fuels at Fuel Dispensing Facilities,” American Petroleum Institute, EPA Docket # E PA - HQ - OAR - 2010 - 0448.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 73 of 169 1. Need for More Mitigation Measures Many commenters expressed strong concern that the proposed suite of misfueling mitigation measures would not be sufficient to minimize potential misfueling with E15. They took issue with EPA’s comparison of the potential for misfueling with E15 to the potential for misfueling under EPA’s UL SD program, and contended that the more instructive comparison is to the transition to unleaded fuel, where EPA required additional mitigation measures. The commenters generally argued that the transition to UL SD did not provide the best or most appropriate point of reference for designing a misfueling mitigation program for several reasons . First, EPA regulations required that ULSD replace low sulfur diesel (L SD) fuel over several ye ars, whereas, according to the commenters, E0, E10, and E15 will coexist in the marketplace for an indefinite period, increasing the likelihood of misfueling. Second, the commenters noted that the potential harm from LSD was to newer engines, while the potential harm from E15 is to older engines. For ULSD, they noted there was opportunity for vehicle manufacturers to educate new diesel vehicle consumers at the time of purchase about the risks of misfueling, with this information reinforced in the owner's manual and on the vehicles themselves. For E15, the commenters explained, there is no similar opportunity for consumer education. While the commenters acknow ledged that vehicle turnover will decrease the number of MY2000 and older light - duty motor vehicles in the U.S. vehicle fleet, they stated that the rate of vehicle turnover is decreasing as vehicle qualit y and durability have improved and will take decades to complete. Representatives of boat manufacturers and owners also noted that many larger boats have longer useful lives than passenger vehicles. A third reason for concern, according to commenters, is that E15 may be priced less than E10 or E0, adding a cost incentive***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 74 of 169 for misfueling. Many of these commenters contended that the transition to unleaded gasoline was at least as relevant to the design of E15 misfueling mitigation measures as the transition to USLD. (Similar to the transition to UL SD, the transition to unleaded gasoline occurred as a result of new emission standards that required new emission control equipment that would be harmed b y lead in gasoline.) The commenters noted that the measures established to reduce misfueling of new motor vehi cles with leaded gasoline included ph ysical constraints

– specifically , vehicle fuel inlets and gasoline nozzles designed so that new vehicles requiring unleaded gasoline could only accept nozzles dispensing unleaded gasoline. The commenters pointed out that even these constraints did not prevent all misfueling, particularly when leaded gasoline was priced less than unleaded gasoline. After carefully

considering these comments, EPA continues to believe that the comparison to the UL SD program is valid and provides an appropriate basis for designing the E15 misfueling mitigation program. LSD and ULSD were available in the market at the same time for several years, just as E15 is expected to be available along with E10 and/or E0 for a number of ye ars. In th e case of both USLD and E15, the potential for engine damage and associated repair costs exists if misfueling occurs. EPA believes that consumers have a strong interest in avoiding repair and replacement costs, whether their vehicles or gasoline - powered e quipment are new or old. Owners may expect to get less use from their older vehicles and equipment, but that does not mean that they will put their possessions at risk, absent a strong price incentive (discussed below). An essential element of a misfueli ng mitigation program is alerting consumers to that risk. For ULSD, pump labeling was important for notifying consumers of newer vehicles and engines of the need to use ULSD and the consequences of***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 75 of 169 misfueling. The E15 label will serve the same purpose fo r owners of older motor vehicles and other products for which E15 is not allowed. For UL SD, industry established the Clean Diesel Fuel Alliance to educate diesel product consumers about the importance of avoiding misfueling with L SD. EPA is working with E15 stakeholders to help establish a similar public education effort for E15. Overall, the transition to USLD posed misfueling issues similar to those that will be raised b y E15’s entry

into the market, making the misfueling mitigation measures emplo yed i n the UL SD program appropriate models for mitigating misfueling with E15. Commenters did not provide sufficient evidence or rationale to persuade us that use of phy sical constraints to prevent misfueling with leaded gasoline means that similar, phy sical measures are necessary

for E15. A key

difference between E15 and leaded gasoline is that misfueling with E15 could result in driveability and operability

issues with older motor vehicles and nonroad equipment, while unleaded gasoline did not affect the driveability of vehicles designed to run on leaded gasoline. The E15 label will inform consumers that misfueling with E15 may cause damage, and a public education effort can reinforce that message. Also, consumers today

have more and easier access to more information about how to maintain their vehicles for best performance and durability . Another factor that contributed to misfueling with leaded gasoline was the perception that the higher octane of leaded gasoline, ty picall y 89 anti - knock index (AKI) ve rsus 87 AKI for most unleaded gasoline, made leaded gasoline a better fuel. An even stronger factor was price. Leaded gasoline was t ypi cally five or more cents per gallon cheaper than unleaded gasoline, at a time when gasoline was less than a dollar per gallon. With the perception of no harm from misfueling and the loss of higher octane, some consumers saw no reason to spend the extra money on unleaded gasoline. Such is not the case for E15. Depending on the availability of***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 76 of 169 ethanol, which can vary

by s eason, E15 could be priced somewhat more or less than E0/E10 with a comparable octane. Considering that recent gasoline prices have frequently fluctuated and exceeded two or three dollars per gallon, it does not seem likely that consumers would risk damag ing their vehicles or equipment for small incremental savings. Public outreach can also help remind consumers of the cost consequences of misfueling. At the same time, we agree that if E15 is priced less than E10 or E0, the risk of misfueling may

incre ase if consumers believe that they can save more money

by purchasing E15 and do not consider or believe the savings are more than they would pay

to repair or replace their vehicles or equipment sooner than might otherwise occur. However, it is too earl y t o know how E15 will be marketed, including how it will be priced. EPA will work with stakeholders to monitor the transition to E15 and the effectiveness of the mitigation measures being required b y today ’s rule. In the meantime, it is worth noting that the prohibition against misfueling with E15 is applicable to both fuel providers and users. As discussed later in this notice, retailers can avoid liability

for consumer misfueling if they properly label E15 pumps and can show that they did not encourage o r otherwise cause misfueling. In general, fuel providers are encouraged to consider whether their particular circumstances would make it useful to take additional, tailored steps to avoid consumer misfueling. In sum, as with the UL SD program, we belie ve that the misfueling measures being finalized today

for E15 will work together so that fuel providers have a strong incentive to properl y blend and label E15 and consumers have a strong incentive to avoid misfueling. An industry - led public outreach camp aign can reinforce how and wh y it is important to avoid misfueling. In evaluating the need for additional mitigation measures, we also considered the fact that***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 77 of 169 there is currentl y significant uncertaint y about where, when and how E15 will enter the marke t. While the partial waiver decisions removed one legal barrier to introducing E15 into commerce, other steps must be taken to address additional federal, state and local requirements, including registering the fuel as required by the Clean Air Act and de termining the compatibility of fuel storage and dispensing equipment under various federal, state and local regulations. Ultimately , businesses must decide whether and how to introduce E15 into the market. We expect that the transition to E15, like the transition to E10, will take time and begin in some parts of the country before becoming broadl y available. In the process, business decisions will be made about how to market E15 (e.g., price of E15, its use for a particular grade of gasoline, types of pumps used to dispense it) that will bear on what, if an y, additional measures may be useful to mitigate misfueling, including the specific suggestions assessed below. In light of these various considerations, we have concluded that it is neither necessary nor appropriate to require additional misfueling mitigation measures as part of today ’s final rule. As the transition to E15 occurs, we plan to work with industry , state, environmental and consumer stakeholders to track developments and evaluate the effect iveness of the required misfueling mitigation measures. As noted previously , we are working with ethanol and other stakeholders to help establish a public education and outreach campaign to assist fuel producers, distributors, retailers and consumers in understanding how E15 may be made, distributed, sold and used. That effort can also help identify and resolve misfueling issues that may develop as E15 moves into the marketplace. In the meantime, if fuel providers believe additional measures will further reduce the risk of misfueling under their particular circumstances, they may take such actions. For example, retailers that serve a significant population of boat or small equipment owners may

decide it is appropriate under their specific circumstances t o post signs***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 78 of 169 that specificall y address misfueling of those products. By taking additional tailored steps, retailers and other fuel providers can provide examples of other measures that may prove effective in further reducing the risk of misfueling.
2. Specific Suggestions for Additional Mitigation Measures We examined the feasibility and utility

of several specific misfueling mitigation measures suggested b y public commenters for adoption in the final rule. As described below, each of the suggestions presents implementation, feasibility or cost issues. The re is also little empirical data about the relative effectiveness of these measures. Given the uncertainties about the transition to E15 and the need for and effectiveness of the suggested measures , we have concluded that it is not appropriate to require them at this time, although fuel providers are encouraged to develop and deplo y these and other measures as they deem appropriate for their circumstances. a. Distinctive Hand Warmers for E15 Dispensers As discussed in the NPRM, the APIstudy consid ered the use of different colored “hand warmers” or “nozzle grips” (the flexible plastic sheath that covers the part of the pump nozzle that is gripped when dispensing gasoline) to distinguish E15 fuel dispensers from other fuel dispensers. A number of co mmenters recommended the adoption of such hand warmers, suggesting that EPA require E15 hand warmers to be a uniform and unique color and/or texture nationwide to indicate to consumers that E15 is different than other gasoline and not appropriate for all m otor vehicles. Some commenters also suggested complementary signs to highlight the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 79 of 169 distinctive hand warmer. We carefully

considered the workability and utility

of this measure. Hand warmers are low cost and are replaced periodicall y, so this option coul d be relativel y inexpensive and eas y to implement. However, this option could be challenging to implement for a number of other reasons. First, there is no industry standard color scheme for hand warmers. An assigned color for E15 hand warmers could con flict with, or be confusing in the context of, retail stations’ existing color schemes. To address this issue, we considered whether to require E15 hand warmers with a noticeably different texture or bearing the text “E15.” However, there is currentl y no available data for determining whether or to what degree such differences would be effective in drawing consumers’ attention more than the required label itself. We also identified another implementation challenge concerning pumps that use a single noz zle to dispense multiple grades of gasoline. Many existing pumps use a single nozzle to dispense multiple grades of gasoline, such as regular grade (e.g., 87 octane), premium grade (e.g., 92 octane), and a mid - grade (e.g., 89 octane). Consumers push a button to select the grade of gasoline desired and then use the single nozzle to dispense the fuel selected. It is likely that E15 may be marketed as one, but not all, grades of gasoline, especially in the near term. Requiring an E15 hand warmer on the noz zle of these pumps could be misleading or confusing to consumers if the dispenser supplies not only E15 but also E10 or E0. In light of these issues and the lack of information about the effectiveness of uniquely colored or textured hand warmers, we hav e concluded that it is not appropriate to require this measure in today ’s final rule. At the same time, we think distinctive hand warmers might prove useful in many

circumstances, and we encourage retailers to consider whether their use might provide cust omers with a useful visual or textual cue given their stations’ pump ty pes, color***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 80 of 169 schemes or other relevant attributes. b. Key pad/Touch Screen Information/Confirmation
Some commenters stated that EPA should require all fuel pumps dispensing E15 to require affirmative confirmation from consumers that they wish to purchase E15. The commenters suggested this could be accomplished through a mandatory electronic key

pad approval (tied to fuel grade selection), in which the consumer would need to confirm the use of E15 prior to purchase. Some commenters argued that the sale of E15 should be prohibited from pumps that do not have an electronic key pad. Commenters favoring this measure did not provide specific information about how affirmative confirmation using electronic key pads or touch screens could be implemented. EPA agrees that requiring affirmative confirmation from consumers before they fuel with E15 could help consumers avoid misfueling with E15. However, based on the limited information provided by

commenters, it does not appear that this measure could be implemented using available technology or software. The electronic key pad used for credit/debit card transactions do not generally interface with the fuel selector such that the pump can be loc ked if the consumer makes an inappropriate selection. Providing an interactive process for selecting E15 would likely

require substantial upgrades to the point - of - sale s ys tem of the dispensers. We have therefore decided that available information does no t support requiring this measure at this time. However, retailers may develop and implement key pad - based methods for providing consumers with further information or opportunities to make appropriate fuel choices.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 81 of 169 c. Radio Frequency

I dentification (RFID ) Some commenters suggested the use of RFID technology as another misfueling mitigation measure. RFID technology is already

used in fuel dispenser activation and purchasing sy stems. For example, one oil company uses RFID technology

in a tag or card that provides a "contactless" pay

ment s ystem that provides members with a quick way to pay for purchases at participating stations. The tag has a built - in chip and radio frequency antenna that allows it to communicate with readers at gasoline dispensers. F or this option to be useful in mitigating misfueling with E15, MY2001 and newer motor vehicles would need to be retrofitted with an RFID device that allows E15 to be dispensed into the motor vehicle. Some commenters indicated that the device installation is relatively simple (for example, a consumer could have a device installed during an oil change). One commenter estimated the cost of an RFID ring tag to be $50 - 75 and installation of the tag around the fuel inlet to be $12.50. R etrofitting of fuel disp ensers with a companion RFID device would raise larger cost and implementation issues. One commenter indicated a cost of $500 for installing an RFID reader per fuel dispenser nozzle and $10,000 to $20,000 to install a central controller per facility per d ispenser to upgrade software for security purposes. Based on the information provided, this measure, while potentially effective, raises a number of significant issues. First, it would require the owners of MY2001 and newer light - dut y motor vehicles, which can lawfully use E15, to spend time and money to install devices so that owners of vehicles and equipment that cannot lawfully use E15 cannot dispense E15 into those vehicles or equipment. Second, it is not clear whether or how consumers could be pe rsuaded or required to install the RFID technology . Third, the cost to retail stations would likely be***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 82 of 169 considerable. Particularly given the uncertainties about the transition to E15, it seems highl y unlikely the benefits of this measure would outweigh it s costs. In light of these issues, we determined that adoption of this measure would be inappropriate. d. Requiring the Continued Availability of E10 and/or E0 Several commenters urged EPA to require the continued availability of E10 and/or E0 so that owners of older motor vehicles and other products for which E15 is not allowed can find the fuel they need. These commenters noted that E10 has, over time, largely displaced E0 in the marketplace and that in some areas of the country it is already

di fficult to locate pure gasoline. They expressed concern that E15 could similarly displace E10, particularl y if economic factors and the Renewable Fuel Standard result in broad adoption of E15. They argued that unless E10 remains available, owners of vehi cles and products for which E15 is not allowed may have no choice but to misfuel with E15. EPA recognizes that misfueling will be prevented only if appropriate fuels remain available. However, in considering the future availability of E10, it is important to remember that EPA’s partial waiver decision allows, but does not require, E15 to be sol d. There are also a number of other steps that must be taken before E15 can be legally sold. In light of the many decisions and adjustments that fuel producers, distributors, and marketers would need to make to sell E15, EPA expects that any significant market shift to E15 will take at least several years. In the meantime, fuel providers will make decisions about the extent to which, and at what price, E10 (or E0) will remain available. Until E15 enters the market and further developments take place, requiring the continued availability of E10 (or E0) would be premature and potentiall y***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 83 of 169 unnecessary . As the transition to E15 occurs, we will work with fuel producers, distributors, and marketers to monitor the availability of E15, E10, and E0 so that an y pro blems can be addressed on a timely

basis. G. Modification of the Complex Model and VOC Adjustment Rule To measure compliance with the RFG and anti - dumping standards, the emissions performance of gasoline is calculated using a model, called the Complex Model, which predicts the emissions level of each regulated pollutant based on the measured values of certain gasoline properties. Currently , the amount of oxygen that can be used as input to the Complex Model is limited to no more than 4.0% by weight in gasoline for which the ox ygenate is ethanol. This level is equivalent to the maximum amount of oxygen in gasoline containing 10 vol% ethanol, or E10. 21 The emissions level as computed by the Complex Model is compared to the baseline emissions for each p ollutant, and the percent reduction is then calculated. The standards for VOC, NOx, and toxics are stated in terms of percent reductions from the baseline. Under the Clean Air Act, baseline emissions must be based on 1990 vehicle technology, not current fleets, nor off - road equipment. For gasoline to be sold in the U.S., it must comply with the standards. Refiners are therefore required to certify that their fuel meets the standards by using the Complex Model. For the RFG areas of Chicago and Milwaukee , RFG that contains 10 vol% ethanol is given an adjustment of the VOC performance standard, resulting in a slightly less stringent requirement.

21 Because the percent by weight of oxygen in the fuel varies depending on the density of the fuel, the limit in the Com plex Model is currently 4.0 w eight percent to reflect the maximum amount of oxygen associated with E10. In mo st fu els, however, this volume is equivalent to 3.5 to 3.7 weight percent oxygen.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 84 of 169 1. Proposed Approach and Consideration of Comments Because the Act specifies that the emissions performance for RFG is to be measured against a baseline that represents 1990 vehicle technology , we were not able to use current emissions test data on motor vehicles using E15 gasoline as a basis for evaluating appropriate changes to the VOC equation. Instead, we r elied on a study conducted in 1994 by

Guerrieri, et al (Guerrieri/Caffrey

study) that examined the exhaust emissions from 1990 vehicles using gasoline with ethanol levels varying from 0 to 40 volume percent. 22 Based on the study findings, we are reasonabl y confident that the average VOC emissions for ethanol blends greater than E10 up to and including E15 will be no worse than for E10, for 1990 technology motor vehicles. This outcome is consistent with our engineering judgment. The study’s data showed th at on average exhaust hydrocarbon emissions increased from E10 to E12, but then decreased beyond E12. While the study does not provide sufficient data to determine the precise VOC emission effect between E10 and E15, the linear regression results presente d in the study indicate a decreasing trend in h ydrocarbon emissions with increased ethanol in gasoline. In the NPRM, we therefore proposed to modify the model to allow additional levels of oxygen, up to 5.8% by weight, to be input to the model with the VO C emissions effects modeled the same as if it contained 4.0% b y weight ox ygen. 23 Most comments received supported the proposed change to the Complex Model. Some commenters were concerned over how permeation effects would be considered, the

22 Guerrieri, David A., Peter Caffrey, and Venkatesch Rao; Investigation Into the Vehicle Exhaust Emissions of High Percentage Ethanol Blends”; SAE Technical Paper Series; 950777; presented at International Congress and Exposition; Detroit, Michigan; March, 1995. 23 The level of 5.8% by weight of oxygen is the potential maximum oxygen level associated with E15 due to lighter than average gasoline components. The typical weight of ox ygen in E15 is in the range of 5.2%.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 85 of 169 representatio n of NOx and toxic emissions by the Complex Model, and whether the Complex Model should be modified to allow increased ox ygen levels from all renewable fuels. Two comments also suggested that the VOC adjustment that applies in Chicago and Milwaukee should be modified to allow RFG that contains up to 15% ethanol to have the same VOC standard as E10. We discuss these comments in further detail below. a. Representation of VOC Emissions from Permeation in the Complex Model One commenter pointed out that wi th respect to the effect of increased ethanol levels on VOC emissions, the Guerrieri/Caffrey study examined only

exhaust VOC emissions. Evaporative VOC emissions were not investigated. The commenter pointed out that permeation emissions are a concern with ethanol, and that the Complex Model should reflect such increases. The commenter stated, “ At a minimum, EPA must conduct permeation testing on relevant fuel sy stem materials to determine how permeation rates vary with ethanol content (i.e. does the rate change between El0 and El 5)
. EPA should then modify the Complex Model to reflect the change in permeation related evaporative emissions from the zero percent ethanol baseline.” We acknowledge that the referenced study did not address evapor ative emissions. However, evaporative permeation was not tested during development of the Complex Model. Thus, the model never reflected permeation emissions for an y level of ethanol (E0, E10, E15 or any values in between). Recent data from CRC show that permeation emissions increase with higher levels of ethanol, but that the effects of E15 are likel y to be comparable to E10. 24 It would be inappropriate to modify the model to account for E15 permeation emissions and not for

24 Enhanced Evaporative Emission Vehicles (CRC Report: E - 77 - 2), March 2010, and Evaporative Emissions from In - Use Vehicles: Test Fleet Expansion (CRC Report: E - 77 - 2b), June 2010.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 86 of 169 E0 and E10. Taking this into consideration, along with the data from CRC, we believe it is appropriate to treat E15 as if it were E10 and therefore not add the effect of permeation to the model since the changes in permeation emissions from E15 are comparable to those with E10. Major changes to the Complex Model such as would be needed to reflect permeation emissions for different levels of ethanol are beyond the scope of this rulemaking. b. Representation of NOx and Toxic Emissions in the Complex Model One commenter expressed co ncern that the Guerrieri/Caffrey study showed that NOx emissions on the six vehicles tested increased with increasing levels of ethanol. The commenter suggested that we therefore should modify the equations of the Complex Model to account for such increas es in NOx. The NOx emission performance requirements for RFG and conventional gasoline (CG) have not been applicable to most refiners since January 1, 2007, when the Tier 2 gasoline average sulfur standard of 30 ppm took effect (see 40 CFR section 80.41 (e)(2)(i) for RFG; and section 80.101(c)(3)(i)) for CG). This is the case for all refiners as of January 1, 2011 (see sections 80.41(e)(2)(ii), 80.101(c)(3)(ii)). The applicability of the Complex Model to gasoline certification has thus become limited as EPA’s more recent clean gasoline standards take effect and require even greater emission reductions than those required b y the RFG program. As a result, an y NOx increases associated with E15 are not relevant as there is no current NOx performance standar d for RFG or CG. The Complex Model is no longer used for modeling NOx performance. The same commenter also raised concern over our approach to air toxics. Specificall y, in***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 87 of 169 the NPRM, we stated that we would not need to modify the Complex Model for air tox ics because beginning January 1, 2011, the air toxics emission standards no longer appl y for gasoline subject to the new mobile source air toxic 2 (MSAT2) nationwide benzene standard for gasoline (see 40 CFR section 80.41(e)(3) for RFG; and section 80.101( c)(4) for CG). We noted, thought, that small refiners can take advantage of the option for delay ed compliance with the MSAT2 benzene standard until January 1, 2015. We stated that since small r efiners t ypically certify CG as E0, with oxygenate blended do wnstream, their compliance with the toxics performance standard should be unaffected b y the increase in ethanol content from E10 to E15. In addition, no small refiners currentl y produce RFG or are expected to produce RFG. Thus, there is no need to revise the Complex Model for purposes of the toxics performance standard. The commenter recommended that EPA revise the complex model for antidumping toxics to account for E15, and maintained that even if there are currentl y no small refiners producing RFG, EPA cannot preclude the possibility that they may do so in the future. However, to make the relevant change to the Complex Model would be a major undertaking and would not be warranted until small refiners indicate that they will start making RFG in the futur e.

c. Adequacy

of the Guerrieri/Caffrey

Study Used to Justify

Modification of the Complex Model One commenter stated that the Guerrieri/Caffrey study that we used to document the effects of increased levels of ethanol on exhaust VOC emissions is inadequate. The commenter contended that the Guerrieri/Caffrey study used six vehicles, whereas the original study used to***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 88 of 169 develop the Complex Model was based on 19 vehicles. In addition, the commenter points out that the gasoline for the Guerrieri/Caffrey study is not representative of the gasoline that is sold, since neither the low sulfur gasoline rule nor the mobile source toxics rule was in effect a t that time. With respect to the gasoline used in the Guerrieri/Caffrey study , we point out that the gasoline used for the study to develop the Complex Model was also different than today ’s. In fact, the gasolines used for both the original Complex Model study and the Guerrieri/Caffrey study were the same, providing some level of consistency between them. Both were designed to reflect the statutory

baseline fuel for these standards, 1990 fuel, not today ’s fuel. We note also that conducting an additional anal ys is to modify the Complex Model would be time - consuming and expensive and would not be warranted. The Guerrieri/Caffrey study provides data that allows EPA to estimate with reasonable confidence what would be the likely effect on exhaust emissions o f blends of E15 in RFG. As stated in the preamble of the NPRM, the outcome of that study was consistent with our engineering judgment. That is, the general trend across vehicles of all ages is that the addition of ethanol to gasoline tends to lower VOC e missions due to its enleanment effect during open loop operation. d. Representation of Other Renewable Fuels and Fuel Additives at Levels in the Complex Model We proposed modifying the Complex Model only for increased levels of oxygen associated with E15. Two commenters suggested that the modification not be limited only to ethanol but to all renewable fuels and fuel additives that supply oxygen up to the new 5.8 weight***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 89 of 169 percent level. We believe that this comment has merit, since the Complex Model treats the parameter of ox ygen independentl y of the ox ygenate which supplies it. In other words, the model was developed using fuel ox ygen level as an input independent of which ox ygenate contributed the ox ygen. We agree with the commenters that it is not necessary to limit the higher levels of ox ygen in RFG (i.e., above 4.0 up to 5.8 percent b y weight) onl y to ethanol. We will therefore modify

the regulation to allow the Complex Model to accept oxygen levels up to 5.8 percent b y weight from any ox ygenate, the most likely being a renewable additive. However, it should be noted that this change to the Complex Model has no effect on any other restrictions applicable to such fuels. For example this modification to the Complex Model does not relieve any part y from the substantially similar prohibition in section 211(f)(4) of the Act or the need to receive a waiver of this prohibition. e. Modification of the VOC Adjustment for RFG in Chicago and Milwaukee Two commenters pointed out that the regulations fo r RFG (at 40 CFR 80.41) currently allow for an adjustment of the VOC performance standard for RFG containing between 9 and 10 vol% ethanol in the Chicago and Milwaukee RFG areas. For RFG sold in these areas, the adjustment allows for a slightly lower emis sion reduction of VOCs as computed by the Complex Model. The amount of this adjustment is equivalent to a decrease in the RVP by approximately 0.3 psi. Since we proposed to allow the Complex Model to accommodate ethanol in RFG up to 15 vol%, one commente r argued that we should also allow such blends to be eligible for the VOC adjustment. The other commenter stated that unlike the 1.0 psi waiver for conventional gasoline, the VOC adjustment for RFG is not a statutory requirement and that “the policy***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 90 of 169 ratio nale behind the adjusted standard for E - 10 applies equally to E - 15.” The commenter also stated that not extending the VOC adjustment in Chicago and Milwaukee to E15 would present additional logistical and financial challenges including the creation and st orage of a lower RVP blendstock for splash - blending E - 15. The VOC adjustment rule was promulgated in 2001 when RFG had an oxygen content requirement. E10 was t ypically used in the Chicago and Milwaukee RFG areas, resulting in generall y a higher ox ygen c ontent in these areas than in other RFG areas. EPA’s reasons for adopting the VOC adjustment rule can be found at 66 FR 37164 (July 17, 2001). In essence, at that time EPA determined that, for purposes of ozone, the higher ox ygen levels in E10 led to gre ater reductions in CO which offset to some extent VOC emissions. EPA reduced the VOC performance standard for E10 consistent with this offset. Today ’s rulemaking is limited to consideration of issues associated with the entry of E15 into commerce. E PA is not in a position to reevaluate, and is not reevaluating, whether the VOC adjustment provision for E10 continues to be appropriate. The onl y issue before EPA in this rulemaking is whether the adjusted VOC performance standard should be extended to E 15, given that it currentl y applies to E10. In addition, it should be noted that section 1504 of the Energy Policy Act of 2005 (EPAct) requires that EPA remove the VOC performance standards for VOC control region 2 that are currentl y in section 80.41, and instead appl y the standards in 80.41 for VOC control region 1 for all RFG areas. When EPA implements this EPAct provision it will consolidate the northern and southern VOC performance standards for RFG, adopting the southern VOC performance standards for all RFG areas. At that point the adjusted VOC performance standard would no longer apply in the Chicago and Milwaukee RFG areas. EPA intends to address this EPAct provision in a future rulemaking, such as the upcoming Tier 3***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 91 of 169 rulemaking. However, EPA is not in a position to make these broad changes to the VOC performance standards in this rulemaking, as it is limited just to issues associated with E15. In that context, EPA believes it is appropriate to extend the current adjusted VOC performance stand ard to E15. If the adjusted VOC standard is extended and E15 is introduced into these RFG areas, it will likely replace E10. EPA expects that the base blend of gasoline would not change whether it is used to produce E10 or E15 RFG. By replacing E10, E15 RFG would directionally

lead to greater reductions in VOC emissions in - use, as E15 produces a slightly lower increase in RVP than E10. In addition, E15 would likely lead to greater reductions in CO compared to E10, because of the increased oxygen content . Extending the adjusted VOC performance standard to E15 would therefore likely lead to somewhat greater reductions in VOCs and CO than would occur if the adjusted VOC standard is not extended to E15. This increase in emissions reductions is consistent w ith the provisions of section 211(k), and starts to move at least directionally in a manner consistent with the EPAct provision. As such it is appropriate at this time to make the narrow revision of extending the adjusted VOC standard to E15.
2. Final Approach Concerning the Complex Model and the VOC Adjustment Rule For the reasons discussed above, EPA is revising the Complex Model generally as proposed. The equations in the Complex Model relating to NOx and toxics will not be changed. The Complex Model will be modified to allow oxygen inputs greater than 4.0 percent and up to 5.8 percent b y weight. Today ’s rule also modifies 40 CFR 80.41 so that the VOC adjustment in effect for Chicago and Milwaukee will appl y to RFG with ethanol content between 9 and 15***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 92 of 169 vol%.
IV. Other Issues Addressed by Commenters
A. Cost of Compliance We calculated the proposed cost of compliance based on the periodic capital costs of labeling fuel dispensers, the onetime costs of the PTD requirements, and the annual cost of the survey requirements. The cost of the proposed labeling requirements was estimated at $1.04 million per y ear on an annualized basis. This estimate was conservative (tends to overestimate costs) as it was based on a label being placed on all pumps at all stations. Since we are requiring only labels at E15 pump s and we did not receive information indicating that our cost estimate for labeling was low, we are using the same estimate for the cost of the labeling requirement for the final rule. Our estimate for the cost of the proposed PTD requirements in the NPRM was $0.56 million per y ear. We did not receive comments to the contrary . We have revised this estimate to $0.45 million per y ear. The revised estimate is based on a one - time cost of $4.1 million to regulated parties to modify the formatting of their ex isting PTDs to accommodate the new information which will be required as a result of the rule. After the one - time modification of PTD formatting is complete, we believe that there would be no significant additional costs associated with communicating the additional information required b y today’s rule to downstream parties in the distribution sy stem (either in electronic or paper form). By amortizing the one - time reformatting costs over a period of 15 y ears at a 7% cost of capital, we arrive at an***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 93 of 169 annuali zed cost of $450,000 for the PTD requirements. We estimated the cost to implement the proposed survey provisions for conventional gasoline at $2 million per y ear and the cost of adding the proposed survey requirements to the existing RFG survey

at $50,00 0 per ye ar. We also estimated that the cost of RVP testing of the samples would be $200,000 per year. One commenter stated that EPA underestimated survey costs because the proposed requirement for same - day shipping would increase costs by as much as $1 m illion per y ear. For the final rule, we have removed the requirement for expedited shipping, so the basis for the commenter’s concern is no longer applicable. Since in the final rule we are requiring RVP testing only of samples labeled as E15, we estimat e that no more than $100,000 will be necessary to complete such testing. Thus, the total cost of the final survey requirements is estimated to be $2.15 million per year. The total estimated cost of all the requirements is $3.64 million per y ear, slight ly lower than the $3.75 million we estimated in the NPRM. We stated in the NPRM that the misfueling mitigation measures would reduce the potential for misfueling and consequent emission increases and repairs to nonroad products and MY2000 and older motor vehicles. We also stated that while there are no data to estimate the frequency at which emission increases and repairs or other potential complications might occur with misfueling in the absence of today ’s rule, even if these consequences were avoided fo r onl y a tin y fraction of vehicles and equipment not covered by the partial waivers (as opposed to actions taken independentl y b y industry in response to conditions on the partial waiver), the savings would still far exceed the costs of compliance. In rea ching this view, we considered the avoided costs of repairing or replacing catal ys ts, although the costs of other repairs and emission increases might also be avoided. We expected that emissions - related consequences would occur with enough frequency that the benefits of the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 94 of 169 proposed rule’s requirements would clearl y outweigh the relativel y low costs. See 75 FR 68044, 68058, 081 (Nov. 4, 2010). During the public comment period for the proposed rule, additional information that might be useful to estimatin g costs or benefits was not submitted and did not otherwise become available. As a result, we continue to expect that the benefits of today ’s final rule will significantl y outweigh the rule’s low costs. One commenter stated that our anal ys is failed to co nsider the cost for controlling the additional emissions from E15 at service stations, as well as the potential impacts to ground water and the associated costs of upgrading underground storage tank s ys tems and the dispensers that deliver the fuel to the m otor vehicle. The commenter argued that EPA must consider and include the costs associated with installing equipment to protect ground water and the air from releases and emissions due to an y incompatibility of USTs and Stage I vapor recovery equipment wi th E15. Specificall y, the commenter stated that dispensing E15 using Stage I and Stage II vapor recovery

equipment at retail gasoline stations could result in increased emissions, and noted that currently

no Stage I or Stage II equipment are listed as app roved for fuels beyond E10. Also, the commenter stated that EPA had not considered the potential impacts to ground water presumabl y from leakage of underground storage tanks in the event of E15 incompatibility . The commenter, citing the results of the DO E's National Renewable Energy L aboratory

(NREL) report of November 12, 2010, stated that there are significant operational or material incompatibilities between legacy equipment and E15. The commenter asserted that the cost to replace a dispenser or an un derground storage tank that may leak and release product to the ground water should also be included. It is important to recognize that the cost impacts we are evaluating for the final rule are the costs associated with implementing the regulatory require ments established by the rule.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 95 of 169 These regulatory

requirements will apply

only to the extent fuel providers decide to make and sell E15. Neither the partial waivers nor today ’s rule require that E15 be made or sold. Therefore, while some retail stations m ay need to make upgrades in order to sell E15, the cost of making an y upgrades is not attributable to any regulatory requirement adopted in this rule. If equipment upgrades are made as needed to dispense E15, it will be because retailers decide to sell E1 5, not because of a requirement to do so. We have therefore estimated the costs of implementing the requirements adopted by this rule for labeling, PTDs and survey s. While the commenter provided no information on costs of potential equipment upgrades, we recognize that there may be additional costs like those noted by the commenter associated with distributing and selling E15. However, those costs are not relevant to an evaluation of the costs of the requirements adopted in this rulemaking. B. The Appl icability of the Statutory 1.0 psi RVP Waiver to E15 EPA proposed that CAA section 211(h)(4) should be interpreted “as limiting the 1.0 psi waiver [that the section provides] to gasoline - ethanol blends that contain 10 vol% ethanol, including limiting th e provision concerning ‘deemed to be in full compliance’ to the same 10 vol% gasoline - ethanol blends.” 75 FR 68061. We explained that EPA implements CAA section 211(h)(4) through 40 CFR §80.27(d), which provides that gasoline - ethanol blends that contain at least 9 vol% ethanol and not more than 10 vol% ethanol qualify for the 1.0 psi waiver of the applicable RVP standard. We requested comment on whether section 211(h) could be interpreted such that E15 would also be eligible for the RVP provisions in sec tion 211(h)(4). 75 FR 68081. We received several comments arguing that section 211(h)(4) should be read to appl y***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 96 of 169 to E15 and urging the Agency to amend the relevant regulations to reflect this reading. We also received several comments supporting our pro posed interpretation. In today’s rule, we are confirming our view that section 211(h)(4) limits the 1 psi waiver to fuel blends containing gasoline and 9 - 10 vol% ethanol, including limiting the provision concerning “deemed to be in full compliance” to the same 9 - 10 vol% gasoline - ethanol blends. Evaporative emissions from motor vehicles and off - highway equipment are a major source of volatile organic compounds (VOCs) that contribute to ozone. The amount of evaporative emissions from a gasoline blend is clo sely related to its volatility , which generall y increases when ethanol is blended with gasoline. RVP is the most common measure of gasoline volatility under ambient conditions. In 1989, EPA began reducing gasoline volatility by limiting its RVP. We provi ded an interim RVP level that was 1 psi higher “for gasoline - ethanol blends commonly

known as gasohol.” 54 FR 11868, 11879 (March 22, 1989). In 1990, we promulgated additional RVP regulations that continued to provide a 1.0 psi RVP allowance for E10 so a s not to require a special low - RVP blending gasoline. 55 FR 23658, 23660 (June 11, 1990). Subsequently , in the 1990 CAA amendments, Congress largel y codified our RVP regulations by

adding a new section 211(h). That provision established 9.0 psi as the m aximum RVP during the high ozone season, with authorit y for EPA to set a more stringent RVP level under certain circumstances. In section 211(h)(4), Congress also established that the RVP limit for fuel blends containing gasoline and 10 percent denatured anh ydrous ethanol would be 1 psi higher than the RVP standard otherwise established in section 211(h). This is referred to as the 1 psi waiver. “For fuel blends containing gasoline and 10 percent denatured anhydrous ethanol, the Reid vapor pressure limit ation under this subsection shall be one pound per square inch (psi)***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 97 of 169 greater than the applicable Reid vapor pressure limitations established under paragraph (1).” Section 211(h)(4). Congress also enacted a conditional defense against liability for violat ions of the RVP level allowed under the 1 psi waiver b y stating that “[p]rovided; however, That a distributor, blender, marketer, reseller, carrier, retailer, or wholesale purchaser - consumer shall be deemed to be in full compliance with the provisions of this subsection and the regulations promulgated thereunder if it can demonstrate that

– (A) the gasoline portion of the blend complies with the Reid vapor pressure limitations promulgated pursuant to this subsection; (B) the ethanol portion of the blend doe s not exceed its waiver condition under subsection (f)(4) of this section; and (C) no additional alcohol or other additive has been added to increase the Reid Vapor Pressure of the ethanol portion of this blend.” Section 211(h)(4). This is referred to as the “deemed to be in full compliance” or the “deemed to comply” provision. Following the 1990 amendments, EPA modified its RVP regulations to conform to the new provisions. In that rulemaking EPA “did not propos[e] any change to the current requirement th at the blend contain between 9 and 10 per cent ethanol (b y volume) to obtain the one psi allowance.” 56 FR 64704, 64708 (December 12, 1991). We explained that “this is consistent with Congressional intent [because] the nature of the blending process . . . further complicates a requirement that the ethanol portion of the blend be exactly 10 percent ethanol. ” 56 FR 24245. We also explained that the deemed to be in full compliance provision was “a new defense against liability

for violation of the ethanol blend RVP requirement [and that] EPA believes that this statutorily mandated defense is in addition to and does not supersede an y of the defenses currently

contained in the regulations.” 56 FR 64708. Additionally , EPA explained that this provision would allow “a party to demonstrate the elements of the new defense by production of a certification from the facility from which the gasoline is received [and that] this***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 98 of 169 defense is limited to ethanol blends which meet the minimum 9 percent requirement in the re gulations and the maximum 10 percent requirement.” 56 FR 64708. In the Energy

Policy Act of 2005 (EPAct), Congress removed the requirement that reformulated gasoline contain oxygenate additives, and mandated that increasing volumes of renewable fuel be used in gasoline. In recognition of the expected increase in ethanol use resulting from these provisions, Congress added section 211(h)(5) to allow States to obtain an exclusion from the less stringent RVP limit under section 211(h)(4) fort air quality re asons. “Upon notification, accompanied by supporting documentation, from the Governor of a State that the RVP limitation established by paragraph (4) will increase emissions that contribute to air pollution in any

area in the State, the Administrator shal l, by regulation, apply , in lieu of the RVP limitation established by paragraph (4), the RVP limitation established by paragraph (1) to all fuel blends containing gasoline and 10 percent denatured anhydrous ethanol [sold] in the area during the high ozone season.” Section 211(h)(5). The legislative history

of the 1 psi waiver provision shows that it is for fuel blends containing gasoline and 10 percent ethanol. The purpose of the 1 psi waiver provision was to facilitate the participation of ethanol in the transportation fuel industry while also limiting gasoline volatility

resulting from ethanol blending. Congress also intended for this provision to remove the possibility

that ethanol blends would be used to circumvent the gasoline volatility restrictions. In 1987, prior to adoption of the 1990 Amendments, Congress considered a legislative provision that was identical in relevant part to section 211(h)(4). The legislative history of this provision shows that Congress based the 1 psi waiver on technical data indicating that blending gasoline with ethanol so that it contains 9 - 10 vol% ethanol results in an approximate 1 psi RVP increase. In sum, the text of section 211(h)(4) and this legislative history***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 99 of 169 supports EPA’s interpretation, adopted in the 1991 rul emaking, that the 1 psi waiver onl y applies to gasoline blends containing 9 - 10 vol% ethanol. In the 1991 rulemaking EPA also interpreted the deemed to compl y provision in section 211(h)(4) as establishing an alternative compliance mechanism closel y tied to the 1 psi waiver. It was interpreted as a conditional defense against liability for those parties who blend ethanol into gasoline to achieve 9 - 10% ethanol b y volume. EPA continues to interpret the deemed to comply provision in this manner, such that i t does not apply to ethanol blends greater than 10% by volume. This is consistent with the text and legislative history of section 211(h)(4) and (h)(5). As noted above, in 1987 Congress considered a bill containing language identical in relevant part to section 211(h)(4). The provisions in that 1987 Senate bill were in response to EPA’s 1987 proposed RVP rule, in which EPA proposed a 1 psi waiver for ethanol blends, but conditioned this waiver on the final blend being tested for RVP. The deemed to compl y provision was Congress’ response to concerns that this was an impractical and overly burdensome way

to implement a 1 psi waiver for 10% gasohol. The Senate bill describes the deemed to compl y provision as an alternative enforcement arrangement that simp lified compliance with the 1 psi waiver. Thus, the deemed to comply provision is tied to the 1 psi waiver, and is designed to provide blenders the practical benefits of the 1 psi RVP waiver. It is not intended as a separate authorization for a relaxed RV P limit independent of the provision for a 1 psi waiver for 9 - 10% blends. The text of the deemed to comply provision supports this interpretation. The provision is an addition after the 1 psi waiver that modifies the 1 psi waiver for 9 - 10% blends. It is not written as a free standing RVP limit that acts separate and apart from the 1 psi waiver for 9 - 10%***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 100 of 169 blends of ethanol. Its reference to section 211(f)(4) is an indication that Congress was well aware of the existing section 211(f)(4) waiver conditions for 10 % ethanol by volume. Itrefers to the ethanol blend not exceeding its section 211(f)(4) waiver conditions, and does not explicitly refer to 10% ethanol, but the condition of “not exceed[ing]” the section 211(f)(4) waiver limit cannot be read liter ally . A literal reading of this phrase would mean that blends containing 1%, or 2%, or 5% ethanol would all be blends that are deemed to comply , as they do not exceed the section 211(f)(4) waiver limit. Such a broad reading would make the 1 psi waiver fo r 9 - 10% blends meaningless. Moreover, had Congress intended that the deemed to comply provision would establish a different ethanol content for ethanol blends that would be eligible for a relaxed RVP limit, whether higher or lower content, it could have e xpressly employ ed terms to that effect. The deemed to comply

provision and the 1 psi waiver provision are each given consistent meaning b y limiting the deemed to compl y provision to a subset of lawful ethanol blends. The text of these provisions and thei r legislative history indicate that the deemed to comply provision was designed to address the same subset of ethanol blends that receive the 1 psi waver

– blends of 9 - 10% ethanol. It was not a separate and free standing RVP provision aimed at another, larger subset of lawful ethanol blends, whether above or below 9 - 10% blends. Instead it was tied closely to the 1 psi waiver provision and limits the range of ethanol blends that can take advantage of the deemed to comply provision to blends of 9 - 10% ethano l. Further support for this view is provided in the action Congress took in 2005 when it adopted section 211(h)(5). This provision treats the RVP limitation of section 211(h)(4) as a whole - it refers to the RVP “limitation established by paragraph (4) ” and provides that when a State notifies EPA that such limitation increases emissions that contribute to air pollution in the State, then EPA is to apply the RVP limits of paragraph (1) “in lieu of the [RVP] limitation***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 101 of 169 established by

paragraph (4)” for bl ends of 10% ethanol. It draws no distinction between the 1 psi waiver provision and the deemed to compl y provision when referring to the RVP limitation in section 211(h)(4). Section 211(h)(5) recognizes the potential that the relaxed RVP limit in section 211(h)(4) could increase emissions that contribute to air pollution, and provides States with an appropriate solution. When a State notifies EPA that the RVP limit under section 211(h)(4) is contributing to an air pollution problem, EPA is to apply the m ore stringent RVP limit under paragraph (1) in lieu of the relaxed limit allowed under section 211(h)(4). These more stringent RVP limits are applied to blends of 9 - 10% ethanol. A straightforward reading of this provision is that Congress intended to pro vide States a meaningful and complete solution to emissions increases stemming from the relaxed RVP provisions in section 211(h)(4), not a partial solution. I f the deemed to comply provision is read as appl yi ng to ethanol blends above or below 9 - 10% ethan ol, however, this provision would provide no relief for emissions from various ethanol blends different from 9 - 10% ethanol, including E15. There is no indication Congress intended such a partial and inconsistent solution. Both the text and legislative hi story of this provision indicate Congress viewed section 211(h)(5) as addressing the potential for air pollution problems from the relaxed RVP limit in section 211(h)(4), which applies to blends of 9 - 10% ethanol. In sum, EPA views these three provisions

– the 1 psi waiver and the deemed to comply provision in section 211(h)(4), and the State relief provision in section 211(h)(5)

– as related provisions that should be interpreted together in a way that harmonizes them and provides significance and a balan ced meaning to each of them. EPA believes that this is reasonabl y done by viewing the 1 psi waiver provision in section 211(h)(4) as appl yi ng to blends of 9 - 10% ethanol; by

viewing the deemed to compl y provision as appl yi ng to the same subset of 9 - 10%***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 102 of 169 eth anol blends, and not applying to blends above or below the range of 9 - 10%; and by viewing the provision for relief to States in section 211(h)(5) as appl yi ng to the same subset of 9 - 10% ethanol blends. This is consistent with the text and legislative hist ory of the three provisions, which indicate that the RVP provisions in section 211(h)(4) are intended to work together to facilitate the use of ethanol blends of 9 - 10%, that the deemed to comply provision is not a free standing or separate provision that a ddresses fuels different from those covered b y the 1 psi waiver, and that the provision for States in section 211(h)(5) is intended to provide relief co extensive with the RVP limits in section 211(h)(4). This interpretation harmonizes all three provision s, gives each of them significant meaning, avoids making an y of the provisions meaningless, and reasonably balances the various interests Congress was addressing in these provisions

– controlling the RVP of gasoline and ethanol blends in a way that facilit ates the practical downstream blending of ethanol while also preserving the ability of States to address the increased emissions associated with a relaxed RVP limit for ethanol blends. Some commenters argued that section 211(h) should be interpreted such that E15 is eligible for the 1 psi waiver in section 211(h)(4), and that under section 211(h)(4) the 1 psi waiver applies to fuels that contain a minimum of 10% ethanol, while section 211(f)(4) sets the maximum ethanol content under the deemed to comply p rovision. None of the commenters discussed section 211(h)((5) or explained how their respective interpretations would interact with section 211(h)(5). For the reasons discussed above, EPA does not agree with the commenters’ arguments. For a full discus sion of the comments and EPA’s response, see the Response to Comments document, which is in the docket for this rulemaking. C. RVP and E15 Underground Storage Tank Transition***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 103 of 169 In the NPRM, we pointed out the potential problems that could occur if a higher RVP E10 fuel (i.e., E10 fuel that took advantage of the statutory 1.0 psi RVP waiver) is commingled in underground storage tanks with a lower RVP E15 fuel (i.e., E15 fuel that met the summertime conventional gasoline RVP standard without the 1.0 psi RVP increase, since the statutory 1.0 psi RVP waiver is not applicable to E15, and that also complied with the condition of the partial waivers limiting the summertime volatility of E15 to 9 psi). Commingling of these fuels would ty picall y be an issue whe n a retail station decides to transition from selling E10 to E15, or E15 to E10, during the summertime ozone season. In these circumstances, if the retail station does not completely

remove all E10 from a tank before E15 is added to the tank (or E15 befor e E10 is added), the gasoline fuel remaining in the dispensing station tank would likely violate the applicable RVP standards as well as the 9 psi RVP condition of the E15 partial waivers. For example, if a quantity

of E10 at 10.0 psi RVP is blended with a quantit y of E15 at 9.0 psi RVP, the resulting blend would have an ethanol content somewhere above 10 vol% (but below 15 vol%). The resulting blend would also have an RVP above 9.0 psi. Since the blend is above 10 vol% ethanol, it would not qualify for the 1.0 psi waiver. It would also be subject to the 9 psi RVP condition of the partial waivers, since the waivers cover an y gasoline - ethanol blend above 10 vol% ethanol up to 15 vol% ethanol. In this way, commingling would likely result in fuel that does not comply

with applicable RVP limits or the RVP condition of the partial waivers. As mentioned in the NPRM, section 211(t) of the Clean Air Act, adopted in the Energy Policy Act of 2005, allows retail stations to blend compliant reformulated gasoline b atches of non - ethanol blended and ethanol - blended gasoline in storage tanks twice a y ear as long as the duration of the blending period is no longer than 10 consecutive calendar day s. However, the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 104 of 169 authority granted to the Agency

for the transition of fuel s in underground storage tanks was specificall y limited to the case of reformulated gasoline, and this provision does not authorize a change in the RVP standards for blending down of E10 and E15 over time in non - reformulated gasoline areas. We sought comm ent on the issue of tank transition between E10 and E15 fuels and way s that the Agency could address this issue so that tank transition might be more easil y accomplished. A related issue is whether to specificall y disallow the commingling of E10 and E15 or of blendstocks produced specificall y for blending E10 and E15. In the NPRM we proposed a specific regulation that would prohibit combining “an y base gasoline or conventional blendstock for ox ygenate blending intended for blending with E10 that took advantage of the 1 psi waiver applicable for 9 - 10 volume percent gasoline - ethanol blends with any gasoline or conventional blendstock for ox ygenate blending intended for blending with E15, unless the resultant combination is designated, in its entirety , as an E 10 blendstock for oxygenate blending”. Additionally , we proposed to prohibit combining “any gasoline - ethanol blend containing E10 that took advantage of the 1 psi waiver applicable to 9 - 10 volume percent gasoline - ethanol blends, with any

gasoline containi ng E0 or an y gasoline blend containing E15”. (75 FR 68089, November 4, 2010). Such a prohibition would aid in preventing mixing that would result in gasoline in dispensing tanks that does not comply with the RVP standards due to tank transitions as described above. Regarding tank transition in reformulated gasoline areas and a possible commingling prohibition, one commenter stated that it opposed a specific commingling prohibition because existing rules already prohibit application of the 1 psi RVP waiver to other than E10 and an y tank transition from E10 to E15 would likely happen only

once. The commenter further stated***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 105 of 169 that if such a prohibition is necessary , it should apply onl y in summer months. Other commenters also opposed a commingling prohibition and generally stated that such a prohibition would create unnecessary difficulties in introducing E15 into commerce. As explained above, the 1.0 psi RVP waiver for conventional gasoline applies only to E10 blends, and it is already a violation of RVP st andards to have an RVP higher than the standards for fuels not qualifying for the 1.0 psi RVP exemption, such as E15. Furthermore, it is correct that an y prohibition against commingling, like the current RVP limitations, would apply only during the summer

time ozone season. We also recognize that current regulatory requirements make it a violation to have higher RVP than allowed when commingling E10 and E15 in retail tanks. However, we believe that specific commingling regulations can provide additional, useful directions and incentive not to blend E10 and E15 in a way that would produce summertime conventional gasoline that violates the applicable RVP standard (and the 9 psi RVP limitation of the partial waivers). The prohibition against combining gasoli ne or blendstocks for E10 and E15 production prior to blending makes it clear that such blending will result in a blendstock that will in turn result in an unlawful gasoline (unless it is only used to make E10). In addition, the prohibition against commin gling of E15 with E10 blends, which would likely occur in a dispensing tank, will help prevent unintended commingling of the two blends in dispensing tanks. Regarding summertime transitions, the additional prohibition makes it clear that commingling these ty

pes of fuel without one or the other fuel being completely drawn down in the tank is, in fact, prohibited. We are therefore adopting the commingling prohibitions as proposed. The PTDs described elsewhere in today ’s final rule will help ensure that par ties in the distribution chain are adequately aware of the fuel they

are distributing and loading into underground dispensing tanks and will clearly aid parties in avoiding violations.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 106 of 169 Comments were received supporting the idea that relief should be grant ed to retail stations transitioning between E10 and E15. However, the onl y specific suggestion received was to apply the statutory

1 psi RVP waiver to E15. As discussed above, EPA interprets the relevant provisions of the Clean Air Act as authorizing the 1 psi RVP waiver onl y for gasoline - ethanol blends containing 9 - 10 vol% ethanol. In addition, we note that over the past several y ears most dispensing facilities with underground tanks have transitioned from E0 to E10 without significant difficulties. Tr ansitioning tanks between E0 and E10 presents the same practical challenges as transitioning between E10 and E15 in terms of RVP compliance issues. Transitions between E0 and E10 has ty pically been accomplished by

making the transition during the winterti me when the RVP compliance issue is not relevant, or during the summertime by drawing down the tank to effectively empty the tank prior to introducing the new fuel. These strategies should also be effective for transitioning to E15. For all of these reas ons, we are not adopting an y specific regulatory program for providing relief to retail stations in transitioning from E10 to E15. D. Credit for RFG Downstream Oxygenate Blending As stated in the NPRM, refiners (or importers) of reformulated blendstock for oxygenate blending (RBOB) are permitted to take credit for downstream ox ygenate blending when complying with RFG standards if certain conditions are met. 40 CFR 80.69. To do so, the refiner’s or importer’s RBOB must be accompanied by a PTD that spec ifies the ty pe and amount of ox ygenate that must be added. In addition, the refiner or importer must have direct oversight of the addition of the ox ygenate or, in the alternative, a survey of all RFG areas supplied b y the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 107 of 169 refiner(s) or importer(s) must be performed to show that the requisite amount of oxygenate is added as specified b y the PTD. In either case, EPA requested comment regarding how credit for RFG downstream ox ygenate blending should be dealt with in light of the potential introduction of E15 into the RFG marketplace. One commenter noted that PTDs and survey s should be sufficient to ensure that the requisite amount of ox yg enate is added downstream so that the refiner can claim credit for the oxygenate addition when producing RBOB for RFG produ ction. As pointed out above, the regulations at 40 CFR 80.69 already allow credit for RFG downstream ox ygenate blending through either direct oversight or an ox yg enate survey for RFG areas utilizing a specific amount and ty pe of oxygenate for blending purp oses. Both of these approaches can accommodate blending of E15 if such blending were to be utilized in adding oxygenate downstream to produce RFG. Importantly , when utilizing either of these approaches, the refiner or importer must specify in the PTD for the RBOB the t ype and amount of ox ygenate that must be added, such that the oxygenate addition will produce RFG that meets applicable standards (such as benzene and VOC) that “formed the basis for the refiner’s or importer’s compliance determination for these parameters.” 25 This would mean, for example, that if a refiner or importer wants to take credit for downstream blending of E15, they must either directl y supervise the addition of E15 to their RBOB or conduct an appropriate survey to show that E15 has been added as directed in the PTD. Therefore, considering existing requirements such as direct oversight, survey s, and PTDs, we conclude that no regulatory change is needed regarding credit for RFG downstream ox ygenate blending. E. Compliance, Enforcement and Warranty 25 40 CFR80.69(a)(10).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 108 of 169 We proposed liability

and penalty

provisions for the proposed misfueling mitigation measures similar to the liability and penalty

provisions found in other EPA fuels regulations. Many commenters raised issues concerning liability for violations of the proposed misfueling mitigation measures and other potential consequences of the use of, or transition to, E15. According to a number of commenters, fuel providers are unlikely to sell E15 until a variety of different liability

issue s are resolved. Although EPA is not in a position to address all of the liability issues raised by

commenters, in this section we address those within our jurisdiction and clarify the responsibilities of various parties, including fuel producers, distributors, retailers, product manufacturers and consumers, for compliance with Agency misfueling prohibitions and CAA vehicle and engine warranty and other requirements under the Act. Ingeneral, we believe the long - standing approach of EPA’s fuels programs and vehicle, engine, and equipment emissions warrant y regulations to assigning respective responsibilities for compliance with our regulations is also appropriate for E15. We expect the required label and other misfueling mitigation measures, as reinforced by a public outreach campaign, will minimize consumer use of E15 in vehicles, engines, and products not covered by the partial waiver decisions. The misfueling mitigation program should in turn minimize any liability that might arise under the CAA or our regulations regarding misfueling with E15. With regard to other transition issues within EPA’s jurisdiction, we are continuing to make progress in developing guidance for determining whether existing underground storage tank sy stems are compatible for s toring E15. We also plan to work with stakeholders to monitor and facilitate efforts to address other transition issues involving state, local and other requirements.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 109 of 169 1. Proposed Approach In the NPRM, we proposed specific prohibited acts for general misfueling mitigation purposes related to the distribution, sale, and use of gasoline containing greater than 10 vol% ethanol. We also proposed related liabilit y and penalty provisions for noncompliance with the proposed prohibited acts. These proposed liabilit y and penalt y provisions included presumptive liability for parties in the fuel distribution sy stem (consistent with presumptive liability provisions of other EPA fuels programs), affirmative defenses for liable parties, and penalties for violation s. With respect to prohibited acts, we proposed that all fuel providers (producers, manufacturers, distributors, wholesale purchaser - consumers, and retailers) would be prohibited from selling, introducing into commerce, or causing or allowing the sale or i ntroduction into commerce of gasoline containing greater than 10 vol% ethanol into MY2000 and older light - duty motor vehicles, an y heavy - dut y gasoline vehicle, any motorcycle and all types of nonroad equipment. In addition, we proposed that fuel distribut ors who transport or store gasoline ethanol blends, gasoline or blendstock for ethanol blending would be prohibited from increasing the ethanol content to exceed the value noted on the PTD. We also proposed that retailers and wholesale purchaser - consumers would be prohibited from dispensing E15 unless they comply with the dispenser labeling requirements. The final labeling and other misfueling mitigation requirements are discussed in section III.A. of this notice. The liability

and penalty

provisions d iscussed in the proposal are similar to the liability and penalt y provisions found in other EPA fuel regulations. Specifically, EPA fuels programs***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 110 of 169 generall y include a liability scheme for violations of prohibited acts that involves a rebuttable presumptio n of liability

in specified circumstances. Under this approach, liability is imposed on the part y in the fuel distribution sy stem that controls the facility where the violation occurred and those parties, ty

picall y upstream in the fuel distribution sy stem from the initially listed party , whose prohibited activities could have caused the nonconformity to exist. 26 We emphasized in the proposal that an y person who commits a prohibited act, or causes another person to commit a prohibited act, would also be lia ble for a violation, so most parties in the chain of distribution would be subject to the rebuttable presumption of liability for committing prohibited actions or causing violations b y other parties. 27 The presumptive liability approach for violations of p rohibited acts in our fuels programs also includes affirmative defenses to prohibited acts. Generall y, affirmative defenses require a demonstration of all of the following: (1) the fuel provider did not commit or cause the violation; (2) the fuel provider has PTDs indicating the fuel was in compliance at its facility ; and (3) except for retailers and wholesale purchaser - consumers, the fuel provider conducted a qualit y assurance program. In the proposal, we stated that if a consumer was liable for introduc ing gasoline with an ethanol content greater than 10 vol% into a vehicle, engine, or product not covered b y the E15 partial waivers, then a self - service retailer would ty

pically not be held liable for the consumer misfueling if the retailer’s dispensers we re labeled appropriatel y and did not condone or facilitate the misfueling. While the NPRM proposed general misfueling mitigation provisions, it did not specificall y address emissions warranties for vehicles, engines, and equipment or the effect of

26 As noted in the p ream

ble to the proposed rule, an additional type of liability, vicarious liability, is imposed on branded refiners under EPA’s fuels programs. 27 As noted previously in this preamble, consumers are among the parties subject to the prohibition on misfueling with E15.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 111 of 169 E15 use on the warranties. However, warranties are addressed b y other EPA regulations and the effect of E15 use on the warranties is no different than the effect of other legal fuels on the warranties. EPA regulations require emission - related parts to be warranted that they are free from defects in materials and workmanship which cause failure to meet emissions standards and that at the time of sale the vehicles are designed, built, and equipped in compliance with EPA’s regulations. ( See CAA section 207(a).) There is also a performance warranty that applies in certain cases for the short testing conducted b y state inspection and maintenance programs. ( See CAA section 207(b).) The emissions warranty for light - dut y motor vehicles is typi call y two ye ars or 24,000 miles, except for the warrant y for emission control computers and catal yt ic converters, which is eight y ears or 80,000 miles. Other vehicles and equipment may have warranties of a different duration, or warranties measured in hours of operation. Warranties may be made conditional on the use of a specified fuel as long as it is available, and the condition is appropriatel y noted in the owner’s manual. (See e.g. 40 C.F.R. §§ 85.2104, 1068.115). Despite the condition, however, manufacturers may not deny a warrant y based on the use of a different fuel if that fuel did not cause the problem for which the warranty claim is made.
2. Consideration of Comments a. Prohibited Acts and Liability Provisions Commenters suggested that the proposed regulations do not, but should, prohibit intentional misfueling of vehicles with E15. We believe that the proposed regulations did include this prohibition. Specificall y, the proposed regulations would prohibit consumer***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 112 of 169 misfueling, whether intentional or not, and we are retaining that provision in today ’s final rule. Thus, today ’s final rule prohibits any person from introducing or causing the introduction of gasoline containing greater than 10 vol% ethanol into vehicles, engines, and produ cts not covered b y the E15 partial waivers, and prohibits causing or allowing the introduction of gasoline containing greater than 10 vol% ethanol into such vehicles, engines, and products. Concerning retailers’ liability , some commenters suggested that where a retailer complies with the E15 labeling requirements, the retailer should be completel y immune from liability in the event that misfueling by consumers occurs. Other commenters sugges ted that proper labeling should shield retailers from liability absent evidence that the retailer encouraged or facilitated the misfueling. In contrast, still other commenters suggested that retailers be required to activel y assess if misfueling is in fac t occurring at self - serve pumps. We do not believe that retailers should be provided with blanket immunity based on labeling alone. The obligation of a retailer is to not misfuel and to not cause misfueling. Misfueling may occur in or as a result of varied circumstances, making a bright line provision

– such as the suggested blanket immunity if dispensers are properl y labeled

– problematic. For example, proper labeling b y a retailer that is located at a marina and that sells fuel almost exclusively for use in boats may

not be enough to avoid liability

for misfueling of boats with E15. The variet y of circumstances in which fueling occurs also do not warrant a blanket requirement of some specific degree of active oversight by the retailer. We therefore b elieve that it is appropriate to continue to appl y the liability provisions of the misfueling mitigation regulations generall y as proposed. The provisions finalized today

are substantially

the same as the liability

provisions of other regulations governin g the sale and use of fuels governed b y the Act, and we believe that those provisions are effective. Like those regulations, today ’s final regulations specify which regulated parties can be***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 113 of 169 held liable for infractions of the requirements, and allows asser tion of defenses to such liability if a part y meets specified conditions. For retailers, as well as other regulated parties, one of those conditions is that the prohibited act was not committed or caused b y the party. Commenters suggested that EPA spec ify in the regulations that a retailer did not “cause” misfueling at properl y labeled pumps if the retailer did not condone or facilitate the misfueling. EPA does not believe that adding such a specification to the regulation is merited, for the reasons d iscussed above. If a misfueling violation does occur, we will assess all of the circumstances pertaining to the violation to assess whether a defense of lack of causation is valid, and if not, the severit y of the violation. EPA will take into considerati on all actions taken by the retailer to avoid misfueling. For the reasons discussed in Section III of this notice, today ’s rule requires that several specific misfueling mitigation measures be implemented and does not require that additional measures be e mploy ed at this time. However, retailers may choose to employ

a variet y of other measures, such as obtaining confirmation that the consumer desires to dispense E15 or equipping pumps that dispense only E15 with a distinctly

colored nozzle hand warmer, as they consider appropriate for their circumstances. A part y does not need to employ such measures in order to establish an affirmative defense to a presumption of liability , but EPA will consider an y additional measures that a part y has taken in assessing all of the circumstances that pertain to a violation. Similarly , commenters also suggested that where a branded supplier of E15 complies with the labeling and other provisions, and has implemented a program notifying its retailers of the requirements of the law, it should be immune from liability if misfueling does occur. Based on EPA’s experience with other fuels programs, EPA does not believe that merel y notifying retailers about the requirements should immunize branded suppliers from liability for vi olations***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 114 of 169 at retailers. As a result, EPA is not changing those defenses in the rule promulgated today . However, for a misfueling violation b y a consumer at a branded retailer, EPA will consider all of the circumstances pertaining to the violation to asses s whether a branded refiner’s defense of lack of causation is valid, and if not, the severit y of the violation. b. Emissions Warranty

Issues for Vehicles, Engines, and Equipment Commenters expressed concern that motor vehicle manufacturers might voi d the emissions warrant y of motor vehicles based on use of E15 and/ or that warranty claims will increase in number as a result of E15 use. Based on the test data and anal ysis on which the E15 partial waivers were based, EPA believes that voiding a warranty claim will occur infrequentl y if at all for MY2001 and newer light - duty vehicles (i.e., those for which the E15 partial waivers allow E15 to be sold for use) fueled with E15. For light - dut y and other motor vehicles not covered b y the partial waivers, E PA notes that to avoid honoring an owner’s warranty , a manufacturer must not only specify in the owner’s manual that use of fuel meeting E15 specifications would adversel y affect the motor vehicle’s emission control system, but also must show that use of E 15 was relevant to the reason that the motor vehicle failed to meet the warranty . EPA regulations for nonroad equipment impose similar conditions on voiding warranties for nonroad equipment. In light of the misfueling prohibition and labeling requirement s adopted in today ’s rule, we expect that consumers will have both the information and incentive they

need to avoid misfueling with E15 and any damage to emission controls that misfueling could cause. Commenters also stated that imposing a burden on manufacturers to show that E15 was***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 115 of 169 the cause of a failure is unfair, and that manufacturers will be required to report more defects to EPA. Manufacturers currently make such determinations under the warranty provisions, as well as the defect reporting provis ions (see 40 CFR §§ 85.1901 et. seq., 1068.501). As with other emissions warrant y related circumstances, manufacturers are in the best position to investigate and determine the cause of defects and emissions failures of their vehicles or equipment, and th ey are best equipped to make determinations regarding whether a warranty should be honored. We are interested in learning about an y defects, or investigations of defects that are required to be reported, including those involving defects that may be relat ed to use of E15, including misfueling with E15. However, we note that EPA will only order a recall based on a determination that a substantial number of vehicles would fail to meet their emissions standards when the motor vehicle is properl y maintained and used (see e.g. 40 CFR § 85.1802(a)).
c. Other Issues Outside of CAA Jurisdiction Commenters expressed concern that consumers will make monetary claims against E15 retailers for damage to their vehicles or equipment related to E15 use. They aske d that EPA indemnify

retailers against such claims. As noted above, EPA does not believe that such damage will occur when E15 is properl y used. In addition, the provisions adopted today provide a strong incentive for all parties, including consumers, to avoid misfueling. We also plan to work with stakeholders on an outreach effort, which should further limit misfueling incidences. However, we have no authority

to, and do not intend to, address issues of liability that might be raised in litigation betwe en private parties. EPA is only addressing issues relevant to its exercise of authority under the Clean Air Act.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 116 of 169 Commenters expressed concern that E15 misfueling could result in personal injury to consumers, leading to safety recalls by

other federal agencies, among other things. They also suggested that EPA should address materials compatibility and safety

issues regarding E15 and dispensing equipment and storage tanks. Other agencies act under their own authorities, and EPA is not in a position to address in this rule actions that may or may not be taken b y other agencies in the future. As noted previously , EPA is developing final guidance for determining the compatibility

of existing underground storage tanks with E15. The issues of materials compatibility

and safety

issues regarding dispensing equipment are addressed by state and/or local requirements.
3. Final Requirements With respect to compliance and enforcement associated with prohibited acts to mitigate misfueling, today ’s final rule includes liability requirements that are consistent with the liability requirements of other EPA fuels programs

– retailers and other parties are presumptively liable for consumer misfueling and other violations, but parties are not liable if they can show they did not cause the misfueling. Consumers are also liable for misfueling their own vehicles, engines or products. Regarding vehicle, engine, and equipment emissions warranties, under EPA warranty regulations, manufacturers may condition an emissions warrant y on the use of a specific fuel but they may not deny a warranty

on the use of a different fuel if that fuel did not cause problems.
F. Technical Basis for the Rule***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 117 of 169 These misfueling mitigation regulations are issued under CAA section 211(c) in order to prevent or minimize the emission increases that would occur if E15 is used in vehicles, engines, and products for which the waiver has been denied, specificall y, MY2000 and older motor vehicles and all heavy - duty gasoline engines and vehicles, mo torcycles and nonroad products. As described in the NPRM and E15 partial waiver decisions, our assessment of the potential emission consequences of E15 use indicates that the emission - related components of MY2001 and newer light - dut y motor vehicles are durable for use on gasoline - ethanol blends up to E15. This conclusion is based on the results of DOE’s Catalyst Study and other relevant test programs, as well as the Agency ’s engineering assessment of advances in motor vehicle technology (primarily control of the air - to - fuel ratio matched with advancements in cataly st formulations) and materials that have taken place in response to a series of important exhaust and evaporative emission requirements since MY2000 and in - use experience with E10. These require ments include the National Low Emission Vehicle and Tier 2 motor vehicle emission standards, Supplemental Federal Test Procedure compliance requirements, in - use durability requirements (required b y the Compliance Assurance Program of 2000), enhanced evapor ative emission standards, and E10 evaporative durabilit y requirements. Unlike for MY2001 and newer motor vehicles, there is very little, if any , test data with respect the effect of E15 use in MY2000 and older light - duty motor vehicles and all heavy - dut y gasoline engines and vehicles, motorcycles, and nonroad products. In ad dition, our engineering assessment for these vehicles, engines, and products identifies a number of emission - related concerns with the use of E15. For motor vehicles and heav y - dut y gasoline engines and vehicles, these concerns include the potential for catal ys t deterioration or catal ys t failure, as well as***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 118 of 169 materials compatibility

issues that could lead to extremely elevated exhaust and evaporative emissions. For motorcycles and nonroad products, the misfueling concerns include the potential for elevated e xhaust and evaporative emissions, as well as the potential for emissions impacts related to engine failure from overheating. As motorcycles and nonroad products have not been regulated as long as motor vehicles, and have much more diverse applications, th ey have not benefitted from the same advancements in technology as motor vehicles and could experience combustion and materials compatibility problems leading to increased emissions if operated on E15. Based on these concerns, we proposed to prohibit the use of gasoline - ethanol blends greater than 10 vol% in MY2000 and older motor vehicles, and all heavy - duty gasoline engines and vehicles, motorcycles, and nonroad products and invited comment on the prohibition’s applicability

t o those vehicles, engines, and products. While some commenters stated that we should approve E15 for all motor vehicles, those comments pertain to the waiver decisions. We received no comments on our emissions - related technical justification for the prop osed misfueling mitigation measures under CAA section 211(c). It is worth noting that while the labeling requirements covered in Section III apply to E15, the prohibitions discussed in this section apply to gasoline - ethanol blends greater than 10 vol% (e .g., 20 vol% ethanol). This is consistent with our engineering assessment discussed in the NPRM which was based, in part, on enleanment of the air - to - fuel ratio. Ethanol enleans the air - to - fuel ratio which leads to increased exhaust gas temperatures and therefore potentially incremental deterioration of emission control hardware and performance over time. This enleanment stems from the fact that ethanol contains oxygen and consequently requires a lower air - to - fuel ratio to achieve the stoichiometric (ide al) mixture for combustion. Vehicles, engines,***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 119 of 169 and equipment designed to operate on gasoline will therefore run leaner when operating on gasoline - ethanol blends. Older motor vehicles, heavy - duty gasoline engines and vehicles, motorcycles, and especially nonroad products cannot fully compensate for the change in the stoichiometric air - to - fuel ratio as ethanol concentration increases. Over time, this enleanment caused b y ethanol may

lead to thermal degradation of the emissions control hardware and ultimate ly

catal ys t failure. Higher ethanol concentration will exacerbate the enleanment effect in these vehicles, engines, and equipment and therefore increase the potential of thermal degradation and risk of cataly st failure. In addition to enleanment, ethanol can cause materials compatibility

issues which may

lead to other component failure and ultimately exhaust and/or evaporative emission increases. Materials compatibility with ethanol is time, condition (e.g., temperature, pressure), and concentration depe ndent. Therefore, for older motor vehicles, heav y duty gasoline engines and vehicles, motorcycles, and nonroad products, the potential for materials compatibility

issues increases with higher ethanol concentration. We received no comments that the misfue ling prohibition should be narrowed to E15. It is not possible to precisely quantify the frequency

at which these vehicles, engines, and products might experience problems with the use of E15. However, we believe that emission related problems could potentially occur with enough frequency that the resulting emissions increases that would be avoided by avoiding misfueling would outweigh the relativel y low cost imposed by

the required misfueling mitigation regulations. The potential emission increases from misfueling warrant today ’s action, even if a very low percentage of vehicles, engines, and products experiences problems. As discussed above, the savings that would be achieved by avoiding misfueling also far outweigh the costs of this rule. Therefore, w e are finalizing the misfueling mitigation measures we proposed with some refinements to make them more***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 120 of 169 effective and/or less burdensome. G. The Effect of the Rule on the Misfueling Mitigation Conditions of the Partial Waivers In the NPRM, the Agency noted that some of the proposed misfueling safeguards parallel the conditions of the partial waiver decisions, and were expected to be a more efficient way to help ensure that the conditions of the waiver were met. 28 One commenter suggested that if the pro posed misfueling mitigation measures were adopted, EPA should remove or alter the misfueling mitigation conditions of the partial waivers to avoid placing requirements on industry that would be duplicative and unnecessary . Specifically , the commenter stat ed that fuel and fuel additive manufacturers should not have to submit plans to EPA that explain how a fuel or fuel additive manufacturer would meet the misfueling mitigation conditions of the partial waivers. In response to the commenter’s suggestion, it is important to clarify that the purpose of this rule is to mitigate misfueling with E15 that lawfully has been introduced into commerce under the terms of the waiver. The waiver conditions, and implementation of the waiver conditions, address a closely related but different issue

– when, how and b y whom E15 can be introduced into commerce under the partial waiver decisions. This rule only addresses the issue of mitigating misfueling in the event E15 is lawfully introduced into commerce under the partial waivers, and is issued under EPA’s authorit y under section 211(c). In this rulemaking EPA did

28 75 FR 68044, 68046 (November 4, 2010). The partial w aiver decisions require that fuel and fuel additive manufacturers (i.e. gasoline producers/importers, ethanol producers/importers, and oxygenate blenders) submit to EPA a plan prior to introduction of E15 into commerce that demonstrates how the fuel or fuel additive manufacturer will implement reasonable measures to ensure that misfueling does not occur in vehicles and engines not approved for use of E15 . Reasonable measures to ensure against misfueling include, but are not limited to, fuel pump labeling, proper documentation of ethanol content on PTDs, and the implementation of an ongoing survey program, in addition to any other reasonable measures EPA determines are appropriate. See 75 FR 6 8149 - 68150.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 121 of 169 not propose and is not taking an y action under section 211(f) with respect to the partial waivers that were previously

issued. For example, in this rulemaking EPA is not modifying an y of the conditions of the waivers, or making an y decisions as to whether they have been met. Decisions related to compliance with the conditions on the waivers will be made separate and apart from this rulemaking. EPA recognizes that one result of today ’s rule is that it will likely be easier for parties to show compliance with the misfueling mitigation conditions of the partial waivers. However, today ’s rule does not replace or supplant the waiver conditions themselves. The par tial waivers allow E15 to be lawfull y introduced into commerce for use in MY2001 and newer light - dut y motor vehicles if certain conditions are met. Fuel and fuel additive manufacturers that desire to make and sell E15 must do so in compliance with the wai vers’ conditions, which include submission of a misfueling mitigation plan that provides, among other things, for E15 pump labels, PTDs indicating ethanol content and an ongoing survey of implementation of E15 content and labeling requirements. Today ’s ru le will likely simplify compliance with many

aspects of the required plan. For example, a fuel or fuel additive manufacturer may decide to reference the labeling and PTD requirements of the rule as part of its plan to meet the counterpart conditions of th e waivers. EPA also expects that parties will be able to submit a single survey plan that will meet both the waiver condition as well as the separate regulatory requirements related to the survey adopted in this rule. Since the partial waivers and the ru le require that survey plans be submitted to EPA for approval, EPA expects that compliance with the survey requirements of the waiver conditions and the rule will be accomplished with a single submission and approval process, covering both this rule and th e waiver condition.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 122 of 169 EPA believes that the misfueling mitigation plans submitted under the partial waivers will be especiall y useful when E15 is first introduced into the market. For instance, man y downstream parties may

not be aware of the new requirements that appl y to E15 (e.g., E15 pump labeling) early

in any transition to E15. The first plans under the partial waivers may thus usefully address how the fuel or fuel additive manufacturer will work with downstream parties to ensure that the misfueling m itigations measures adopted today are properly

implemented. Similarly , it may

be appropriate for an ethanol manufacturer registered under 40 CFR Part 79 to sell ethanol for use in manufacturing E15 to address in its plan how parties that might use its pro duct to make E15 will be informed of the misfueling mitigation requirements to which those parties would become subject under this rule (e.g., labeling, PTDs) if they make E15. Such parties would include, for example, businesses that blend ethanol into ga soline to produce E15.
H. E15 Emissions and Anti - backsliding In the NPRM and in the partial waiver decisions, EPA discussed the relationship between the ethanol content of a gasoline - ethanol blended fuel and NOx emissions. EPA concluded that, in genera l, as ethanol concentrations in gasoline increase, so do NOx emissions. The Agency received several comments that argued that potential NOx emission increases from E15 use would add to the formation of ground - level ozone and potentially adversely

affect p ublic health. Additionally , some commenters noted that such NOx increases would add to the challenge some states and cities face in meeting the current national air quality standards for ozone and that EPA should take action to ameliorate potential advers e emissions effects from E15 use. Although such action is outside of the scope of today ’s rulemaking, the Agency has been performing***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 123 of 169 anal ys is needed to support the anti - backsliding analy sis required under the Energy Independence and Securit y Act of 2007. We are now in the process of assessing possible control measures to offset the potential increases in ozone and particulate matter that are expected to result from the increased use of renewable fuels required b y the Energy Independence and Security Act o f 2007 and in response to the May 21, 2010, Presidential Memorandum Regarding Fuel Efficiency Standards. (NOx emissions contribute to the formation of both pollutants.) We will incorporate the results of our analy sis under this assessment in a proposal on new motor vehicle and fuel control measures. V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a "significant regulatory

action.” This action may raise novel legal or policy issues. Accordingl y, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any

changes made in response to OMB recommendations have been documented in the docket for this action. B. Paperwork Reduction Act This rule contains new information requirements which will be submitted for ap proval to***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 124 of 169 the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. These information collection requirements are not enforceable until OMB approves them. This final rule contains information collection provisio ns that permit a party to appl y for approval of an alternative or additional E15 label. We anticipate that this provision will be utilized by

some refiners for their branded retailers, as well as b y some individual retailers and wholesale purchaser - consum ers. A part y ma y elect to satisfy the survey requirements of this rule individually rather than through using a nationwide survey option (i.e., they

may elect “Survey

Option 1” as described above in section III.C). In such circumstances, the individual in formation collection requirements associated with “Survey Option 1” will apply . Parties that may be subject to survey information collection requirements include gasoline refiners, gasoline and ethanol importers, gasoline and ethanol blenders (including t erminals and carriers), and ethanol producers. Under the terms of the E15 partial waiver, fuel and fuel additive manufacturers must submit a written plan to EPA for approval. 29 The plan must include provisions designed to prevent misfueling. The plan must be submitted by all fuel and fuel additive manufacturers, regardless of whether a party elects “Survey

Option 1” (individual) or “Survey Option 2” (nationwide). Parties that may be subject to this information collection item may include gasoline refiners, gasoline and ethanol importers, gasoline and ethanol blenders (including terminals and carriers), and ethanol producers. This rule contains provisions related to product transfer documents (PTDs). Parties upstream of the retail station or wholesale purchaser - consumer will be required to develop and 29 75 FR 68094, 68149 - 68150 (November 4, 2010).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 125 of 169 program new codes and statements for PTDs. These codes will reflect the ethanol content, as well as the Reid Vapor pressure ( RVP), as described in section III.B. Parties subject to this one time burden include gasoline refiners, gasoline and ethanol importers, and gasoline and ethanol blenders (including terminals and carriers). In addition to the one time burden of establish ing/programming codes and statements for PTDs, parties will be required to apply the new codes and statements to PTDs as part of the normal course of business. Ty pically , refiners and wholesale purchaser - consumers who are not acting as blenders merel y acc ept PTDs given to them by upstream parties. The following parties may have the burden of applying codes and statements: gasoline refiners, gasoline and ethanol importers, gasoline and ethanol blenders (including terminals and carriers). EPA estimate s that there will be a total of 6,211 respondents, submitting a total of 44,010,211 responses annually . We estimate an annual total of 37,350 hours for all respondents and responses. The total annual cost of this information collection request is estimat ed at $4,102,524. We estimate that the average annual burden per respondent is six (6) hours and that the average annual cost per respondent is $661. We estimate an average of .000849 hours per response. (It should be noted that the reason for this short average time per response is that nearl y all of the responses will take approximately one second and represent the time it takes to apply an automated code or statement to a PTD.) Burden means the total time, effort, or financial resources expended b y p ersons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and sy stems for the purposes of collecting, validating, and verifying information, processing and***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 126 of 169 maintaining information, and disclosing and providing information; adjust the existing way s to comply with an y previously

applicable instructions and requirements; train personnel to be able to respond to a c ollection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it display s a currently

valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15. C. Regulatory Flexibility Act The Regulatory

Flexibility

Act (RFA) generall y requires an agency to prepare a regulatory

flexibility

analy sis of any

rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or an y other statute unless the agency c ertifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of to day ’s rule on small entities, small entity is defined as: (1) A small business as defined b y the Small Business Administration’s (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city , count y, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not - for - profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of to day ’s final rule on small entities, I certify***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 127 of 169 that this action will not have a significant economic impact on a substantial number of small entities. The small entities directly regulated by

this final rule are petroleum refiners and importers, ethanol pro ducers, ethanol blenders, gasoline terminals, gasoline stations with convenience stores, and other gasoline stations. While there are small entities in each of these market sectors as discussed in Section III.F., the cost impact on any particular entity

i s expected to be a tiny

fraction of annual revenues.
D. Unfunded Mandates Reform Act This rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and Tribal governments, in the aggregate, or the p rivate sector in any one y ear. The total annual cost is expected to be $3.64 million. Thus, this rule is not subject to the requirements of sections 202 or 205 of UMRA. This rule is also not subject to the requirements of section 203 of UMRA because it c ontains no regulatory

requirements that might significantly or uniquel y affect small governments. This action primarily affects the private sector, specifically petroleum refiners and importers, ethanol producers, ethanol blenders, gasoline terminals, gas oline stations with convenience stores, and other gasoline stations. E. Executive Order 13132 (Federalism) This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the nat ional government and the States, or on***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 128 of 169 the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 . An y preemption of State or local controls under section 211(c)(4)(A), based on issuance of this rule under section 211(c)(1), would only appl y to State or local controls adopted for purposes of motor vehicle emissions control. This rule will be implemented at the Federal level and impose compliance costs onl y on petroleum refiners and importer s, gasoline stations with convenience stores, and other gasoline stations. Thus, Executive Order 13132 does not apply to this action . In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicited comment on the proposed action from State and local officials. The Agency did not receive any comments from states or local g overnments that cited a concern over state preemption or federalism.
F. Executive Order 13175 This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). This rule will be implemented at the Federal level and impose compliance costs onl y on petroleum refiners, importers, ox ygenate blenders, gasoline stations with convenience stores, and other gasoline stations. Thus, Executive Order 13175 does not apply to this action.
G. Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 129 of 169 EPA interprets EO 13 045 (62 FR 19885, April 23, 1997) as appl yi ng only to those regulatory

actions that concern health or safet y risks, such that the anal ys is required under section 5

– 501 of the EO has the potential to influence the regulation. This action is not subject to EO 13045 because it does not establish an environmental standard intended to mitigate health or safet y risks. H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use
This action is not a ‘‘si gnificant energy action’’ as defined in Executive Order 13211 (66 FR 28355 (May

22, 2001)), because it is not likely to have a significant adverse effect on the supply , distribution, or use of energy . This final rule has a labeling requirement, a prohibit ion against the use of gasoline containing more than 10 vol% ethanol in vehicles, engines and equipment not covered by the partial waiver decisions, a PTD requirement; and a survey requirement. There is no cost for the prohibition. The cost of the label is estimated at $5 per y ear per service station. This is a tiny fraction of the station’s annual sales, and is not expected to significantl y affect energy distribution. The cost of the PTD requirement is estimated at $0.45 million per y ear. This cost is a one - time cost to reformat PTDs amortized over 15 years; an y additional costs are expected to be insignificant. The total cost of the survey requirements is estimated to be $2.15 million per y ear. The projected total cost of the final provisions is $3. 64 million per y ear (see section IV for a more detailed discussion of these estimated costs). These***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 130 of 169 costs are not expected to increase the cost of energy production or distribution in excess of one percent. Therefore, this final action is not expected to have a significant adverse energy effect. I. National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (‘‘NTTAA’’), Public Law 104

– 113, 12(d) (15 U.S.C. 272 note) directs EPA to use vo luntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling proc edures, and business practices) that are developed or adopted b y voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary

consensus standar ds. This action does not involve technical standards. Therefore, EPA did not consider the use of an y voluntary consensus standards.
J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low - Income Popul ations Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental just ice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 131 of 169 environmental effects of their programs, policies, and activities on minority populations and low income populations in the United States. EPA has determined that this final rule will not have disproportionatel y high and adverse human health or environmental effects on minority or low - income populations because it increases the level of environmental protection for all affected populations without having any disproportionately

high and adverse human health or environmental effects on any population, including an y minorit y or low - income population. This action would affect all gasoline stations that choose to sell E15 and therefo re will not affect any particular area disproportionatel y. K. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 et seq., as added b y the Small Business Regulatory

Enforcement Fairness Act of 1996, generall y provides that before a rule may take effect, the agency

promulgating the rule must submit a rule report, which includes a cop y of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other req uired information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A Major rule cannot take effect until 60 day s after it is published in the Federal Register. This action is not a “major rule” as defined b y 5 U.S.C. 804(2). This rule will be effective [insert date 30 days after publication in the Federal Register] . VI. Legal Authority and Judicial Review***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 132 of 169 A. Legal Authority As explained above , we are finalizing the misfueling mitigation measures pursuant to our authority under CAA section 211(c)(1). This section gives EPA authority to “control or prohibit the manufacture, introduction into commerce, offering for sale, or sale” of any fuel or fuel additive (A) whose emission products, in the judgment of the Administrator, cause or contribute to air pollution “which may be reasonabl y anticipated to endanger public health or welfare” or (B) whose emission products “will impair to a significant de gree the performance of an y emission control device or sy stem which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it would be in general use” were the fuel control or prohibition adopted. In S ection VII 30 of the proposed rule, we explained how under section 211(c)(1), EPA may adopt a fuel control if at least one of the two criteria above is met. We are also explained that we were proposing the misfueling mitigation measures based on both of the se criteria. We stated that under section 211(c)(1)(B), we believed that E15 would significantl y impair the emission control sy stems used in MY2000 and older light - dut y motor vehicles, heav y - dut y gasoline engines and vehicles, highway and off - highway moto rcycles, and all nonroad products . This led to our conclusion that under section 211(c)(1)(A), the likel y result would be increased HC, CO and NOx emissions when these particular engines, vehicles and nonroad products use E15. EPA received no comments on our anal ys is in Section VII during the public comment period. Therefore, EPA is finalizing these misfueling mitigation measures under our authority in

30 Section VII. “What is our legal authority for proposing these misfueling mitigation measures?” 75 FR 68044, 68081 (November 4, 2010).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 133 of 169 section 211(c)(1). We fully incorporate b y reference our anal ys is in Sectio n VII of the proposed rule as our basis for doing so since our rationale is the same for this final action. B. Judicial Review Under section 307(b)(1) of the Clean Air Act (CAA ), judicial review of these final rules is available only

by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit by [INSERT DATE 60 DAYS FROM DATE OF PUBLICATION] . Under section 307(b)(2) of the CAA, the requirements established by these final rules may

not be challenged separatel y in any civil or criminal proceedings brought b y EPA to enforce these requirements. Section 307(d)(7)(B) of the CAA further provides that “[o]nly an objection to a rule or proc edure which was raised with reasonable specificity during the period for public comment (including an y public hearing) may be raised during judicial review.” This section also provides a mechanism for us to convene a proceeding for reconsideration, “[i]f the person raising an objection can demonstrate to the EPA that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specifie d for judicial review) and if such objection is of central relevance to the outcome of the rule.” An y person seeking to make such a demonstration to us should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, Ariel Rios Building, 1200 Penns yl vania Ave., NW, Washington, DC 20460, with a copy to both the person(s) listed in the preceding FOR FURTHER INFORMATION CONTACT section, and the Associate General Counsel for the Air and Radiation L aw Office, Office of Gener al Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave., NW,***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 134 of 169 Washington, DC 20460.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 135 of 169 List of Subjects in 40 CFR Part 80 Environmental protection, Air pollution control, Fuel additives, Diesel, Gasoline, Imports, Incorporation by reference, Labeli ng, Motor vehicle pollution, Penalties, Reporting and recordkeeping requirements. Date: April XX, 2011.

___________________________ Lisa P. Jackson Administrator For the reasons set forth in the preamble, 40 CFR part 80 is proposed to be amended as follo ws: PART 80
–REGULATION OF FUEL AND FUEL ADDITIVES 1. The authorit y citation for part 80 continues to read as follows: Authority: 42 U.S.C. 7414, 7542, 7545, and 7601(a). 2. Section 80.40(c)(1) is amended to read as follows: § 80.40 Fuel Certification Procedures. * * * * * (c)(1) Adjusted VOC gasoline for purposes of the general requirements in

80.65(d)(2)(ii), and the certification procedures in this section is gasoline that contains 10 to 15 volume percent ethanol, or RBOB intended for blending with 10 to 15 volume percent ethanol, that is intended for use in the areas described at***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 136 of 169 80.70(f) and (i), and is designated b y the refiner as adjusted VOC gasoline subject to less stringent VOC standards in 80.41(e) and (f). In order for adjusted VOC gasoline to qualify

for the regulatory

treatment specified in 80.41(e) and (f), reformulated gasoline must contain denatured, anhydrous ethanol. The concentration of the ethanol, excluding the required denaturing agent, must be at least 9 percent and no more than 1 5 percent (b y volume) of the gasoline. The ethanol content of the gasoline shall be determined by use of one of the testing methodologies specified in 80.46(g). * * * * *
3. Section 80.45 is amended by adding a new paragraph (c)(1)(iii)(C) to read as foll ows: § 80.45 Complex emissions model. * * * * * (c) * * * (1) * * * (iii) * * * (C) During Phase II, fuels with an oxygen concentration greater than 4.0 weight

percent and not more than 5.8 weight percent shall be evaluated with the OXY fuel parameter set equal to 4.0 percent b y weight when calculating VOCE using the equations described in paragraphs (c)(1)(i) and (c)(1)(ii) of this section. * * * * ****E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 137 of 169 4. A new subpart N is added to read as follows: Subpart N
– –Additional Requirements for Gasoline - Ethan ol Blends Sec. 80.1500 Definitions.
80.1501 What are the labeling requirements that appl y to retailers and wholesale

purchaser - consumers of gasoline - ethanol blends that contain greater than 10.0 volume percent ethanol and not more than 15.0 volume percent ethanol?
80.1502 What are the survey requirements for gasoline - ethanol blends?
80.1503 What are the product transfer document requirements for gasoline ethanol blends, gasolines, and conventional blendstocks for ox ygenate blending subject to this subpart?
80.1504 What acts are prohibited under this subpart?
80.1505 Who is liable for violations of this subpart?
80.1506 What penalties apply under this subpart?
80.1507 What are the defenses for acts prohibited under this subpart?***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 138 of 169 80.1508 What evidence may be used to determine compliance with the requirements of this subpart and liability

for violations of this subpart? Subpart N
– –Additional Provisions for Gasoline - Ethanol Blends § 80.1500 Definitions.

The definitions in § 80.2 apply to this subpart. For purposes of this subpart only : (a) Blendstock for ox ygenate blending means gasoline blendstock which could

become gasoline solel y upon the addition of an oxygenate. (b) Conventional blendstock for ox ygenate blending means gasoline ble ndstock

which could become conventional gasoline solely upon the addition of an oxygenate. (c) Carrier has the same meaning as defined in § 80.2(t). (d) Conventional gasoline has the same meaning as defined in § 80.2(ff) (e) E0 means a gasoline that cont ains no ethanol. (f) E10 means a gasoline - ethanol blend that contains at least 9.0 and no more than

10.0 volume percent ethanol. (g) E15 means a gasoline - ethanol blend that contains greater than 10.0 volume

percent ethanol and not more than 15.0 volume p ercent ethanol. (h) EX means a gasoline

– ethanol blend that contains less than 9 volume percent

ethanol where X equals the maximum volume percent ethanol in the gasoline ethanol blend. (i) EXX means a gasoline

– ethanol blend above E15 where XX equals the maximum

volume percent ethanol in the gasoline - ethanol blend.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 139 of 169 (j) Ethanol blender has the same meaning as defined in § 80.2(v). (k) Ethanol importer means a person who brings ethanol into the United States

(including from the Commonwealth of Puerto Rico , the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands) for use in motor vehicles and nonroad engines. (l) Ethanol producer means any person who owns, leases, operates, controls, or supervises a facility

that produces ethanol for use in motor vehicles or nonroad engines. (m) Flex - fuel vehicle has the same meaning as flexible - fuel vehicle as defined in §

86.1803 - 01. (n) Fuel dispenser means the apparatus used to dispense fuel into motor vehicles or

nonroad vehicles, engines or equipment , or into a portable fuel container as defined at § 59.680. (o) Gasoline has the same meaning as defined in § 80.2(c). (p) Gasoline importer means an importer as defined in § 80.2(r) that imports gasoline

or gasoline blending stocks that could become gasoline solely upon the addition of ox ygenates. (q) Gasoline refiner means a refiner as defined as in § 80.2(i) that produces gasoline

or gasoli ne blending stocks that could become gasoline solely upon the addition of ox ygenates. (r) Ox ygenate blender has the same meaning as defined in § 80.2(mm). (s) Ox ygenate blending facility has the same meaning as defined in § 80.2(ll).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 140 of 169 (t) Regulatory control periods has the same meaning as defined in § 80.27(a)(2)(ii) or in any State Implementation Plan (SIP) approved or promulgated under §§ 110 or 172 of the Clean Air Act. (u) Retail outlet has the same meaning as defined § 80.2(j). (v) Retailer has the same meaning as defined in § 80.2(k). (w) Survey

series means the four quarterl y survey s that comprise a survey program. (x) Sampling strata means the three t ypes of areas sampled during a survey which

include the following: (1) Densely

populated areas; (2) Transportation corridors; and (3) Rural areas. (y) Wholesale purchaser - consumer has the same meaning as defined in § 80.2(o). § 80.1501 What are the labeling requirements that apply to retailers and wholesale

purchaser - consumers of gasoline - ethano l blends that contain greater than 10.0 volume percent ethanol and not more than 15.0 volume percent ethanol? (a) Any

retailer or wholesale purchaser - consumer who sells, dispenses, or offers for sale or dispensing, gasoline - ethanol blends that contain gre ater than 10.0 volume percent ethanol and not more than 15.0 volume percent ethanol shall affix the following conspicuous and legible label to the fuel dispenser: ATTENTION E15 Up to 15% ethanol***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 141 of 169 Use only in ▪ 2001 and newer passenger vehicles ▪ Flex - fuel vehicles Don’t use in other vehicles, boats, or gasoline - powered equipment. It may cause damage and is prohibited by Federal law. (b) Labels under this section shall meet the following requirements for appearance

and placement: (1) Dimensions. The label shall measure 3 and 5/8 inches wide b y 3 and 1/8 inches

high. (2) Placement. The label shall be placed on the upper two - thirds of each fuel

dispenser where the consumer will see the label when selecting a fuel to purchase. For dispensers wi th one nozzle, the label shall be placed above the button or other control used for selecting E15, or in an y other manner which clearl y indicates which control is used to select E15. For dispensers with multiple nozzles, the label shall be placed in the l ocation that is most likely to be seen by

the consumer at the time of selection of E15. (3) Text. The text shall be justified and the fonts and backgrounds shall be as

described in paragraphs (b)(3)(i) through (vi) and (b)(4)(i) through (iv).***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 142 of 169 (i) The word “ATTENTION” shall be in 20 - point, orange, Helvetica Neue LT 77

Bold Condensed font, and shall be placed in the top 1.25 inches of the label as further described in (b)(4(iii) below. (ii) The word “E15” shall be in 42 - point, orange, Helvetica Black font, and shall be

placed in the top 1.25 inches of the label. (iii) The ethanol content: “Up to 15% ethanol” shall be in 14 - point, center - justified, orange, Helvetica Black font in the top 1.25 inches of the label, below the word E15. (iv) The words “Use onl y in” shall be in 20 - point, left - justified, black, Helvetica Bold font in the top 1.25 inches of the label. (v) The words, and s ymbols “ ▪ 2001 and newer passenger vehicles ▪ Flex - fuel

vehicles” shall be in 14 - point, left - justified, black, Helvetica Bol d font. (vi) The remaining two sentences shall be in 12 - point, left - justified, Helvetica Bold font, except that the word “prohibited” in the second sentence shall be in 12 - point, black, Helvetica Black Italics font. (4) Color. (i) The background of the top 1.25 inches of the label shall be black. (ii) The background of the bottom 1.75 inches of the label shall be orange. (iii) The label shall have on the upper left side of the label a diagonal orange stripe

that is .3125 inches tall. The stripe shall be placed as far down and across the label as is necessary

so as to as to create a black triangle of the upper left corner of the label whose vertical side is contiguous to the vertical edge of the label and is.4375 inches long, and whose horizontal side is contiguous to the horizontal***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 143 of 169 edge of the label and is 1.0 inches long. The word “ATTENTION” shall be centered to the upper edge of this stripe. (5) Alternative labels to those specified in this section may be used if approved by EPA in advance. Such labels must contain all of the informational elements specified in subsection (a) of this section, and must use colors and other design elements similar in substance and appearance to the label required by this section. Such labels may

differ in size and sh ape from the label required b y this section only to a small degree, except to the extent a larger label is necessary to accommodate additional information or translation of label information. (i) If you use U.S. Mail, send a request for approval of an alt ernative label to: U.S.

EPA, Attn: E15 Alternative Label Request, 6406J, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. (ii) If you use an overnight or courier service, send a request for approval of an

alternative label to: U.S. EPA, Attn: E15 Alter native Label Request, 6406J, 1310 L Street, NW., 6th Floor, Washington, DC 20005. (202) 343 - 9038. § 80.1502 What are the survey requirements related to gasoline - ethanol blends?

Any gasoline refiner, gasoline importer, ethanol blender, ethanol producer, or ethanol importer who manufactures, introduces into commerce, sells or offers for sale E15, gasoline, blendstock for ox ygenate blending, ethanol, or gasoline ethanol blend that i s intended for use in or as E15 shall comply with the survey program requirements in either paragraph (a) or paragraph (b) of this section. These same parties are also subject to paragraphs (c), (d) and (e) of this section regardless of whether they choos e the survey program requirements in paragraph***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 144 of 169 (a) or paragraph (b) of this section. In the case of ethanol producers and ethanol importers, the ethanol that is produced or imported shall be deemed as intended for use in E15 unless an ethanol producer or an ethanol importer demonstrates that it was not intended for such use. (a) Survey

option 1 . In order to satisfy the survey

program requirements, an y gasoline refiner, gasoline importer, ethanol blender, ethanol producer, or ethanol importer who manufa ctures, introduces into commerce, sells or offers for sale E15, gasoline, blendstock for ox ygenate blending, ethanol, or gasoline - ethanol blend intended for use in or as E15 shall properly conduct a program of compliance survey s in accordance with a survey program plan which has been approved b y EPA in all areas which may be reasonably

expected to be supplied with their gasoline, blendstock for ox ygenate blending, ethanol, or gasoline ethanol blend if these may be used to manufacture E15 or as E15 at an y ti me during the ye ar. Such approval shall be based upon the survey program plan meeting the following criteria: (1) The survey program shall consist of at least quarterly survey s which shall occur during the following time periods in every y ear during whi ch the gasoline refiner, gasoline importer, ethanol blender, ethanol producer, or ethanol importer introduces E15 into commerce: (i) One survey during the period January 1 through March 31; (ii) One survey during the period April 1 through June 30; (iii ) One survey during the period July

1 through September 30; and (iv) One survey during the period October 1 through December 31.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 145 of 169 (2) The survey program plan shall meet all of the requirements of paragraph (b),) except paragraphs (b)(4)(ii) and (b)(4)(v) of this section. The survey program plan shall specify

the sampling strata, clusters and area, and number of samples to be included. Notwithstanding paragraph (b)(2), in order to compl y with this paragraph the survey

plan need not be conducted by a conso rtium. (b) Survey

option 2. (1) To comply with the requirements under this paragraph (b), any gasoline refiner, gasoline importer, ethanol blender, ethanol producer, or ethanol importer who manufactures, introduces into commerce, sells or offers for sale E15, gasoline, blendstock for ox ygenate blending, ethanol, or gasoline - ethanol blend intended for use in or as E15 must participate in a consortium which arranges to have an independent survey association conduct a statistically valid program of comp liance survey s pursuant to a survey program plan which has been approved b y EPA, in accordance with the requirements of paragraphs (b)(2) through (b)(4) and (b)(6) of this section. (2) The consortium survey program under this paragraph (b) must be: (i) Planned and conducted by a survey association that is independent of the ethanol blenders, ethanol producers, ethanol importers, gasoline refiners, and/or gasoline importers that arrange to have the survey conducted. In order to be considered indepen dent: (A) Representatives of the survey association shall not be an employ ee of an y ethanol***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 146 of 169 blender, ethanol producer, ethanol importer, gasoline refiner, or gasoline importer; (B) The survey association shall be free from any obligation to or interest in any ethanol blender, ethanol producer, ethanol importer, gasoline refiner, or gasoline importer; and (C) The ethanol blenders, ethanol producers, ethanol importers, gasoline refin ers,

and/or gasoline importers that arrange to have the survey conducted shall be free from an y obligation to or interest in the survey association. (ii) Conducted at retail outlets that sell gasoline; and (iii) Represent all gasoline dispensed natio nwide. (3) Independent Survey Association Requirements . The consortium described in paragraph (b)(1) of this section shall require the independent survey association conducting the survey s to: (i) Submit to EPA for approval each calendar ye ar a prop osed survey program plan in accordance with the requirements of paragraph (b)(4) of this section. (ii) Obtain samples of gasoline offered for sale at gasoline retail outlets in accordance

with the survey

program plan approved under this paragraph (b) , or immediately notify EPA of any

refusal of retail outlets to allow samples to be taken. (iii) Test, or arrange to be tested, the samples required under paragraph (b)(3)(ii) of

this section for Reid vapor pressure (RVP), and oxygenate content as fol lows: (A) Samples collected at retail outlets shall be shipped the same day the samples are collected via ground service to the laboratory and anal yz ed for oxygenate content. Samples collected at a dispenser labeled E15 in any manner, or at a tank se rving***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 147 of 169 such a dispenser, shall also be anal yz ed for RVP. Such anal ys is shall be completed within 10 days after receipt of the sample in the laboratory . Nothing in this section shall be interpreted to require RVP testing of a sample from any dispenser or tank serving it unless the dispenser is labeled E15 in any manner. (B) Any

laboratory

to be used by

the independent survey

association for oxygenate or RVP testing shall be approved b y EPA and its test method for determining ox ygenate content shall be a m ethod permitted under § 80.46(g), and its test method for determining RVP shall be the method permitted under § 80.46(b). (iv) Inthe case of any test that yields a result that does not match the label affixed to the product (e.g., a sample greater th an 15.0 volume percent ethanol dispensed from a fuel dispenser labeled as “E15” or a sample containing greater than 10.0 volume percent ethanol and not more than 15.0 volume percent ethanol dispensed from a fuel dispenser not labeled as “E15”), or the RVP standard of §80.27(a)(2), the independent survey association shall, within 24 hours after the laboratory

receives the sample, send notification of the test result as follows: (A) In the case of a sample collected at a retail outlet at which the brand name of a

gasoline refiner or gasoline importer is displayed, to the gasoline refiner or gasoline importer, and EPA. This initial notification to a gasoline refiner or gasoline importer shall include specific information concerning the name and address o f the retail outlet, contact information, the brand, and the ethanol content, and the RVP if required, of the sample.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 148 of 169 (B) In the case of a sample collected at other retail outlets, to the retailer and EPA,

and such notice shall contain the same informatio n as in paragraph (b)(3)(iv)(A) of this section. (C) The independent survey association shall provide notice to the identified contact person or persons for each party in writing (which includes e - mail or facsimile) and, if requested b y the identified contact person, by telephone. (v) Confirm that each fuel dispenser sampled is labeled as required in § 80.1501 by

confirming that: (A) The label meets the appearance and content requirements of § 80.1501. (B) The label is located on the fuel dispenser according to the requirements in

§ 80.1501. (vi) In the case of a fuel dispenser that is improperl y labeled, or whose fuel does not

meet the RVP standards of §80.27(a)(2) the survey association shall provide notice as provided in paragraphs (b)(2)(iv)(A) through (C) of this section. (vii) Provide to EPA quarterl y and annual summary survey reports which include the

information specified in paragraph (b)(5) of this section. (viii) Maintain all records relating to the survey s conducted under this paragraph (b) for

a period of at least five (5) y ears. (ix) Permit any representative of EPA to monitor at any time the conducting of the survey s, including sample collection, transportation, storage, and anal ys is. (4) Survey

Plan Design Requirements. The proposed survey program plan required under paragraph (b)(3)(i) of this section shall, at a minimum, include the following:***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 149 of 169 (i) Number of Survey s. The survey program plan shall include four quarterl y survey s each calendar ye ar. The four quarterl y survey s collectivel y are called the survey series as defined in § 80.1500. (ii) Sampling Areas. The survey program plan shall inclu de sampling in all sampling strata, as defined in § 80.1500, during each survey . These sampling strata shall be further divided into discrete sampling areas or clusters. Each survey shall include sampling in at least 40 sampling areas in each stratum wh ich are randomly

selected. (iii) No advance notice of survey s . The survey plan shall include procedures to keep the identification of the sampling areas that are included in an y survey plan confidential from an y regulated part y prior to the beginn ing of a survey in an area. However, this information shall not be kept confidential from EPA. (iv) Retail outlet selection. (A) The retail outlets to be sampled in a sampling area shall be selected from among

all retail outlets in the sampling area that sell gasoline, with the probability of selection proportionate to the volume of gasoline sold at the retail outlets; the sample should also include retail outlets with different brand names as well as those retail outlets that are unbranded. (B) In the case of an y retail outlet from which a sample of gasoline was collected

during a survey

and determined to have an ethanol content that does not match the fuel dispenser label (e.g. a sample greater than 15.0 volum e percent ethanol dispensed from a fuel dispenser labeled as “E15” or a sample with greater than 10.0 volume percent ethanol and not more than 15.0 volume percent ethanol***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 150 of 1 69 dispensed from a fuel dispenser not labeled as “E15”) or determined to have a dispens er containing fuel whose RVP does not comply with §80.27(a)(2), that retail outlet shall be included in the subsequent survey . (C) One sample of each product dispensed as gasoline shall be collected at each retail

outlet, and separate samples shall be taken that represent the gasoline contained in each gasoline storage tank unless collection of separate samples is not practicable. (v) Number of samples. (A) The minimum number of samples to be included in the survey plan for each calendar year sha ll be calculated as follows:

Where: n = minimum number of samples in a y ear - long survey series. However, in no case shall n be smaller than 7,500. Z  = upper percentile point from the normal distribution to achieve a

one - tailed 95% confidence level (5%  - level). Thus, Z  equals 1.645. Z  = upper percentile point to achieve 95% power. Thus, Z  equals

1.645.

= the maximum proportion of non - compliant stations for a region to be deemed compliant. In this test, the parameter needs to be 5% or greater, i.e., 5% or more of the stations, within a stratum such that 1 

###  

#   

#   

#   n b a n 

### Su F F St arc arc Z Z n        ) )] sin( ) sin( [ * 4 ( 2 0 1 2 

### 

  ***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 151 of 169 the region is considered non - compliant. For this survey , will be 5%. = the underl yi ng proportion of non - compliant stations in a sample. For the first survey

plan, will be 2.3%. For subsequent survey plans, will be the average of the proportion of stations found to be non - compliant over the previous four survey s. Stn = number of sampling strata. For purposes of this survey program, Stn equals 3. F a = adjustment factor for the number of extra samples required to

compensate for collected samples that cannot be included in the survey , based on the number of additional samples required during the previous four survey s. However, in no case shall the value of F a be smaller than 1.1. F b = adjustment factor for the number of samples required to resample

each retail outlet with test results exceeding the labeled amount (e.g. a sample greater than 15.0 volume perc ent ethanol dispensed from a fuel dispenser labeled as “E15”, a sample with greater than 10.0 volume percent ethanol and not more than 15.0 volume percent ethanol dispensed from a fuel dispenser not labeled as “E15”), or a sample dispensed from a fuel disp enser labeled as “E15” with greater than the applicable seasonal and geographic RVP pursuant to § 80.27, based on the rate of resampling required 1 

### 

o 

o 

o ***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 152 of 169 during the previous four survey s. However, in no case shall the value of F b be smaller than 1.1. Sun = numbe r of survey s per y ear. For purposes of this survey program, Sun equals 4. (B) The number of samples determined pursuant to paragraph (b)(4)(v)(A) of this

section, after being incremented as necessary to allocate whole numbers of samples to each cluste r, shall be distributed approximately equally for the quarterl y survey s conducted during the calendar year. (5) Summary

survey reports. The quarterly

and annual summary

survey reports required under paragraph (b)(3)(vii) of this section shall include the following information: (i) An identification of the parties that are participating in the survey . (ii) The identification of each sampling area included in a survey and the dates that the s amples were collected in that area. (iii) For each retail outlet sampled: (A) The identification of the retail outlet; (B) The gasoline refiner or gasoline importer brand name display ed, if any ; (C) The fuel dispenser labeling (e.g., “E15”); (D) The sample test result for oxygenate content, and RVP result, if any ; (E) The test method used to determine ox ygenate content under § 80.46(g); and (F) The test method used to determine RVP under § 80.46(b). (iv) Ethanol level summary statistics by

brand and unbranded for each sampling area, strata, and survey series. These summary

statistics shall:***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 153 of 169 (A) In clude the number of samples, the average, median and range of ethanol

content, expressed in volume percent. (B) [Reserved] (v) The quarterly reports required under this paragraph (b)(5) are due 60 day s following the end of the quarter. The annual reports required under this paragraph (b)(5) are due 60 day s following the end of the calendar ye ar. (vi) The reports required under thi s paragraph (b)(5) shall be submitted to EPA in

an electronic spreadsheet. (c) Procedures for obtaining approval of survey plan and providing required notices. The first year in which a survey program is conducted may consist of onl y a portion of a calendar ye ar ending on December 31 (i.e. in the initial year, a survey program may

begin on a date after January 1, but would still end on December 31). Subsequent survey

programs shall be conducted on a calendar y ear basis. The procedure for obtaining EPA approval of a survey program plan under paragraph (b) or paragraph (c) is as follows: (1) For the first y ear in which a survey will be conducted, a survey program plan that complies with the requirements of paragraph (a) or paragraph (b) must be submitted to EPA no later than 60 day s prior to the date on which the survey program is to begin. (2) For subsequent y ears in which a survey will be conducted, a survey program plan that complies with the requirements of paragraph (a) or paragraph (b) must be submitted to EPA no later than November 1 of the y ear preceding the calendar ye ar in which the survey

will be conducted.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 154 of 169 (3) The survey program plan must be signed b y a responsible officer of the consortium which arranges to have an independent surveyor conduct the survey program. (4) The survey program plan must be sent to the following address: Director, Compliance and Innovative Strategies Divi sion, U.S. Environmental Protection Agency , 1200 Penns yl vania Ave., N.W. Mail Code 6506J, Washington, D.C. 20460. (5) EPA will send a letter to the part y submitting the survey program plan that indicates whether EPA approves or disapproves the survey p lan. (6) The approving official for a survey plan under this section is the Director of the Compliance and Innovative Strategies Division, Office of Transportation and Air Quality . (7) Any

notifications or reports required to be submitted to EPA under this section must be directed to the official designated in paragraph (b)(6)(iv) of this section. (d) Independent surveyor contract. (1) For the first y ear in which a survey program will be conducted, no later than 30 day s preceding the st art of the survey , the contract with the independent surveyor shall be in effect, and an amount of money necessary

to carry out the entire survey plan shall be paid to the independent surveyor or placed into an escrow account with instructions to the escro w agent to pay the money

to the independent surveyor during the course of the conduct of the survey plan. (2) For subsequent y ears in which a survey program will be conducted, no later than***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 155 of 169 December 1 of the ye ar preceding the ye ar in which the survey w ill be conducted, the contract with the independent surveyor shall be in effect, and an amount of money necessary

to carry out the entire survey plan shall be paid to the independent surveyor or placed into an escrow account with instructions to the escrow agent to pay

the money

to the independent surveyor during the course of the conduct of the survey plan. (3) For the first y ear in which a survey program will be conducted, no later than 15 day s preceding the start of the survey EPA must receive a copy of the contract with the independent surveyor and proof that the money necessary

to carry out the survey plan has either been paid to the independent surveyor or placed into an escrow account; if the money has been placed into an escrow account, a copy of the escrow agreement must to be sent to the official designated in paragraph (b)(6)(iv) of this section. (4) For subsequent y ears in which a survey program will be conducted, no l ater than December 15 of the ye ar preceding the ye ar in which the survey will be conducted, EPA must receive a cop y of the contract with the independent surveyor and proof that the money necessary

to carry out the survey

plan has either been paid to the i ndependent surveyor or placed into an escrow account; if placed into an escrow account, a cop y of the escrow agreement must be sent to the official designated in paragraph (b)(6)(iv) of this section. (e) Consequences of failure to fulfill requirements. A failure to fulfill or cause to be

fulfilled an y of***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 156 of 169 the requirements of this section is a prohibited act under Clean Air Act section 211(c) and § 80.1504. (1) EPA may

revoke its approval of a survey plan under this section for cause, including, but not limited to, an EPA determination that the approved survey plan has proved to be inadequate in practice. (2) EPA may

void ab initio its approval of a survey plan if EPA’s approval was based on false information, misleading information, or incomplete infor mation, or if there was a failure to fulfill, or cause to be fulfilled, any of the requirements of the survey plan. § 80.1503 What are the product transfer document requirements for gasoline - ethanol

blends, gasolines, and conventional blendstocks for o xygenate blending subject to this subpart? (a) Product transfer documentation for conventional blendstock for ox ygenate

blending, or gasoline transferred upstream of an ethanol blending facility . (1) In addition to any other product transfer document requirements under 40 CFR part 80, on each occasion after October 31, 2011, when an y person transfers custody or title to any

conventional blendstock for oxygenate blending which could become conventional gasoline solely upon the addition of ethan ol, or gasoline upstream of an oxygenate blending facility , as defined in § 80.2(ll), the transferor shall provide to the transferee product transfer documents which include the following information: (i) The name and address of the transferor;***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 157 of 169 (ii) Th e name and address of the transferee; (iii) The volume of conventional blendstock for ox ygenate blending or gasoline being

transferred; (iv) The location of the conventional blendstock for oxygenate blending or gasoline at

the time of the transfe r; (v) The date of the transfer; (vi) For gasoline during the regulatory control periods defined in § 80.27(a)(2)(ii) or any SI P approved or promulgated under §§ 110 or 172 of the Clean Air Act: (A) The maximum RVP, as determined b y a method permitte d

under § 80.46(c), stated in the following format: “The RVP of this gasoline does not exceed [fill in appropriate value]”; and (B) For gasoline designed for the special provisions for gasoline - ethanol blends in §

80.27(d)(2), information about the ethanol content and RVP in paragraphs (1) through (3), with insertions as indicated : (1) “Suitable for the special RVP provisions for ethanol blends that contain between 9

and 10 vol % ethanol.” (2) “The RVP of this blendstock/gasoline for ox ygenate blendi ng does not exceed

[Fill in appropriate value] psi. (3) The use of this gasoline to manufacture a gasoline - ethanol blend containing

any thing other than between 9 and 10 volume percent ethanol may cause a summertime RVP violation.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 158 of 169 (C) For gasoline not described in paragraph (a)(vi)(B) of this section, information

regarding the suitable ethanol content, stated in the following format: “Suitable for blending with ethanol at a concentration of no more than 15 vol % ethanol.” (2) The requirements in paragraph ( a)(1) do not apply to reformulated gasoline

blendstock for ox ygenate blending, as defined in § 80.2(kk), which are subject to the product transfer document requirements of § 80.69 and § 80.77. (b) Product transfer documentation for gasoline transferred downstream of an

oxygenate blending facility . (1) In addition to any other product transfer document requirements under 40 CFR part 80, on each occasion after October 31, 2011, when an y person transfers custody or title to any

gasoline - ethanol blend do wnstream of an ox ygenate blending facility , as defined in § 80.2(ll), except for transfers to the ultimate consumer, the transferor shall provide to the transferee product transfer documents which include the following information: (i) The name and addre ss of the transferor; (ii) The name and address of the transferee; (iii) The volume of gasoline being transferred; (iv) The location of the gasoline at the time of the transfer; (v) The date of the transfer; and (vi) One of the statements detailed in paragraph (b)(1)(vi)(A) though (E) which

accuratel y describes the gasoline - ethanol blend. The information regarding the ethanol content of the fuel is required year - round. The information regarding the***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 159 of 169 RVP of the fuel is only

required for gasoline during the regulatory control periods. (A) For gasoline containing no ethanol (E0), the following statement; “E0: Contains

no ethanol. The RVP does not exceed [fill in appropriate value] psi.” (B) For gasoline containing less than 9.0 volume percent ethanol, the following

statement: “EX

– Contains up to X% ethanol. The RVP does not exceed [fill in appropriate value] psi.” The term X refers to the maximum volume percent ethanol present in the gasoline. (C) For gasoline containing between 9.0 and 10 .0 volume percent ethanol (E10), the

following statement: “E10: Contains between 9 and 10 vol % ethanol. The RVP does not exceed [fill in appropriate value] psi. The 1.0 psi RVP waiver applies to this gasoline. Do not mix with gasoline containing an ything other than between 9 and 10 vol % ethanol.” (D) For gasoline containing greater than 10.0 volume percent and not more than 15.0

volume percent ethanol (E15), the following statement: “E15: Contains up to 15 vol % ethanol. The RVP does not exceed [fill in appropriate value] psi;” or (E) For all other gasoline that contains ethanol, the following statement: “EXX Contains no more th an XX% ethanol,” where XX equals the volume % ethanol. (2) Except for transfers to truck carriers, retailers, or wholesale purchaser - consumers,

product codes may

be used to convey

the information required under paragraph (b)(1) of this section if su ch codes are clearl y understood by each transferee. (c) The records required b y this section must be kept by the transferor and transferee***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 160 of 169 for five (5) years from the date they were created or received b y each part y in the distribution sy stem. (d) On request b y EPA, the records required b y this section must be made available

to the Administrator or the Administrator’s authorized representative. For records that are electronically

generated or maintained, the equipment or software necessary to read th e records shall be made available, or, if requested by EPA, electronic records shall be converted to paper documents. § 80.1504 What acts are prohibited under this subpart?

No person shall --- (a) (1) Sell, introduce, cause or permit the sale or intro duction of gasoline containing greater than 10.0 volume percent ethanol (i.e., greater than E10) into any model y ear 2000 or older light - dut y gasoline motor vehicle, an y heav y - duty gasoline motor vehicle or engine, an y highway or off - highway motorcycle, or an y gasoline - powered nonroad engines, vehicles or equipment. (2) Manufacture or introduce into commerce E15 in any calendar y ear for use in an area prior to commencement of a survey approved under 80.1502 for that area. (3) Notwithstanding paragraphs (a)(1) and (a)(2) of this section, no person shall be

prohibited from manufacturing, selling, introducing, or causing or allowing the sale or introduction of gasoline containing greater than 10.0 volume percent ethanol into any

flex - fuel vehicle. (b) Sell, offer for sale, dispense, or otherwise make available at a retail or wholesale***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 161 of 169 purchaser - consumer facility E15 that is not correctly

labeled in accordance with § 80.1501; (c) Fail to fully or timely implement, or cause a failure to fully or timel y implement, an approved survey

required under §80.1502; (d) Fail to generate, use, transfer and maintain product transfer documents that

accuratel y reflect the t yp e of product, ethanol content, maximum RVP, and other information required under § 80.1503 ; (e) Improperl y blend, or cause the improper blending of, ethanol into

conventional blendstock for ox ygenate blending, gasoline or gasoline already containing ethanol, in a manner inconsistent with the information on the product transfer document under § 80.1503(a)(1)(vi) or § 80.1503(b)(1)(vi); (f) For gasoline during the regulatory control periods, combine an y gasoline or conventional blendstock for ox ygenate blending intended for blending with E10 that qualifies for the 1 psi allowance under the special regulatory treatment as provided b y § 80.27(d) applicable to 9 - 10 volume percent gasoline - ethanol blends with any

gasoline or conventional blendstock for oxygenate blending intended for blending with E15, unless the resultant combination is design ated, in its entirety , as an E10 blendstock for oxygenate blending. (g) For gasoline during the regulatory control periods, combine an y gasoline - ethanol blend containing E10 that qualifies for the 1 psi allowance under the special regulatory

treatment as provided by § 80.27(d) applicable to 9 - 10 volume percent gasoline - ethanol blends, with any gasoline containing E0 or any gasoline blend containing E15.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 162 of 169 (h) Fail to meet an y other requirement of this subpart. (i) Cause another person to commit an act i n violation of paragraphs (a) through (h)

of this section. § 80.1505 Who is liable for violations of this subpart? (a) Persons liable . An y person who violates § 80.1504(a) through (i) is liable for the

violation. In addition, when the gasoline contained in any storage tank at any facility owned, leased, operated, controlled or supervised by an y gasoline refiner, gasoline importer, ox ygenate blender, carrier, distributor, reseller, retailer, or wholesale purchaser - consumer is found in violation o f the prohibitions described in §80.1504(a), and (c) through (i), the following persons shall be deemed in violation: (1) Each gasoline refiner, gasoline importer, ox ygenate blender, carrier, distributor,

reseller, retailer, or wholesale purchaser - consum er who owns, leases, operates, controls or supervises the facility where the violation is found. (2) Each gasoline refiner or gasoline importer whose corporate, trade, or brand name,

or whose marketing subsidiary 's corporate, trade, or brand name, appears at the facility where the violation is found. (3) Each gasoline refiner, gasoline importer, ox ygenate blender, distributor, and

reseller who manufactured, imported, sold, offered for sale, dispensed, supplied, offered for suppl y, stored, transported, or caused the transportation of an y gasoline which is in the storage tank containing gasoline found to be in violation.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 163 of 169 (4) Each carrier who dispensed, supplied, stored, or transported an y gasoline which is

in the storage tank containing gasoline found to be in violation, provided that EPA demonstrates, b y reasonably specific showings using direct or circumstantial evidence, that the carrier caused the violation. (b) For label violations under § 80.1504(b), onl y the wholesale purchaser - consumer

or retailer and the branded gasoline refiner or branded gasoline importer, if any , shall be liable. (c) Each partner to a joint venture, or each owner of a facility owned by

two or more owners, is jointly

and severall y liable for an y violation of this subpart that occ urs at the joint venture facility or a facility

that is owned by

the joint owners, or a facility that is committed by

the joint venture operation or any of the joint owners of the facility . (d) Any

parent corporation is liable for any violations of this subpart that are committed by

an y of its solely - owned subsidiaries. § 80.1506 What penalties apply under this subpart? (a) Any

person under § 80.1505 who is liable for a violation under § 80.1504 is subject to an administrative or civil penalt y, as specified in sections 205 and 211(d) of the Clean Air Act, for every day of each such violation and the amount of economic benefit or savings resulting from the violation. (b) (1) An y violation of an y requirement that pertains to the ethanol content of

gasoline shall constitute a separate day of violation for each and every day such gasoline giving rise to such violations remains any place in the gasoline***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 164 of 169 distribution sy stem, beginning on the day that the gasoline that violates such requirement is p roduced or imported and distributed and/or offered for sale, and ending on the last day

that an y such gasoline is offered for sale or is dispensed to any ultimate consumer for use in any motor vehicle, unless the violation is corrected b y altering the prop erties and characteristics of the gasoline giving rise to the violations and any

mixture of gasolines that contains any of the gasoline giving rise to the violations such that the gasoline or mixture of gasolines has the properties and characteristics that would have existed if the gasoline giving rise to the violations had been produced or imported in compliance with all requirements that pertain to the ethanol content of gasoline.. (2) For the purposes of this paragraph (b), the length of time the gasoli ne in question

remained in the gasoline distribution sy stem shall be deemed to be 25 day s; unless the respective part y or EPA demonstrates b y reasonably specific showings, using direct or circumstantial evidence, that the gasoline giving rise to the violations remained an y place in the gasoline distribution system for fewer than or more than 25 day s. (c) Any

violation of an y affirmative requirement or prohibition not included in paragraph (b) of this section shall constitute a separate day of violation for each and every day such affirmative requirement is not properl y accomplished, and/or for each and every

day the prohibited activity

continues. For those violations that may be ongoing each and every day the prohibited activity

continues shall constitute a separate day

of violation.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 165 of 169 § 80.1507 What are the defenses for acts prohibited under this subpart? (a) Defenses for prohibited activities. (1) In an y case in which a gasoline refiner, gasoline importer, ox ygenate blender,

carrier, distributor, reseller, retailer, or wholesale purchaser - consumer would be in violation under § 80.1504(a), and (c) through (i) it shall be deemed not in violation if it can demonstrate: (i) That the regulated part y or its employ ee or agent did not commit, cause, or

co ntribute to another person’s causing the violation; (ii) That product transfer documents account for all of the gasoline in the storage

tank found in violation and indicate that the gasoline met relevant requirements; and (iii) (A) That it has conducted a quality assurance program, including a sampling and testing program, as described in paragraph (b) of this section; (B) A carrier may rel y on the sampling and testing program carried out b y another party , including the part y that owns the gasoline in question, provided that the sampling and testing program is carried out properly . (2) (i) Where a violation is found at a facility which is operating under the corporate, trade or brand name of a refiner, that refiner must show, in addition to the defense elements required b y paragraph (a)(1) of this section, that the violation was caused b y: (A) An act in violation of law (other than the Act or this part), or an act of sabotage or

vandalism;***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 166 of 169 (B) The action of an y reseller, distributor, ox ygenate blender, carrier, or a retailer or

wholesale purchaser - consumer supplied by any of these persons, in violation of a contractual undertaking imposed by the gasoline refiner designed to prevent such action, and despite pe riodic sampling and testing by the gasoline refiner to ensure compliance with such contractual obligation; or (C) The action of an y carrier or other distributor not subject to a contract with the

gasoline refiner but engaged b y the gasoline refiner for tr ansportation of gasoline, despite specification or inspection of procedures and equipment b y the gasoline refiner which are reasonably calculated to prevent such action. (ii) In this paragraph (a), to show that the violation “was caused” b y an y of the

spe cified actions the party must demonstrate by

reasonably

specific showings using direct or circumstantial evidence, that the violation was caused or must have been caused b y another. (3) For label violations under § 80.1504(b), the branded gasoline refiner or branded

gasoline importer shall not be deemed liable if the requirements of paragraph (b)(4) of this section are met. (b) Quality

assurance program. Inorder to demonstrate an acceptable quality assurance program for gasoline at all points in the gasoline distribution network, other than at retail outlets and wholesale purchaser - consumer facilities, a party must present evidence of the following in addition to other regular appropriate quality assurance procedures and practices. (1) A periodic sampling and testing program to determine if the gasoline contains

applicable maximum and/or minimum volume percent of ethanol.***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 167 of 169 (2) That on each occasion when gasoline is found in noncompliance with one of the

requirements referred to i n paragraph (b)(1) of this section: (i) The part y immediatel y ceases selling, offering for sale, dispensing, suppl yi ng,

offering for supply , storing, transporting, or causing the transportation of the violating product; and (ii) The part y promptl y remedies the violation (such as by removing the violating product or adding more complying product until the applicable requirements are achieved). (3) An oversight program conducted by a carrier under paragraph (b)(1) of this section need not include periodic sampling and testing of gasoline in a tank truck operated b y a common carrier, but in lieu of such tank truck sampling and testing the common carrier shall demonstrate evidence of an oversight program for monitoring compliance wi th the requirements of §80.1504 relating to the transport or storage of gasoline b y tank truck, such as appropriate guidance to drivers on compliance with applicable requirements and the periodic review of records normally received in the ordinary course of business concerning gasoline quality and delivery . (4) The periodic sampling and testing program specified in paragraph (b)(1) of this

section shall be deemed to have been in effect during the relevant time period for any part y, includin g branded gasoline refiners and branded gasoline importers, if: (i) An EPA approved survey program under § 80.1502 was in effect and was implemented fully

and properly ;***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 168 of 169 (ii) Any

retailer at which a violation was discovered allowed survey inspecto rs to take samples and inspect labels; and (iii) For truck loading terminals and truck distributors that perform ox ygenate

blending, additional quality assurance procedures and practices were in place, such as regular checks to reconcile volumes of ethanol in inventory and regular checks of equipment for proper ethanol blend rates. § 80.1508 What evidence may be used to determine compliance with the requirements

of this subpart and liability for violations of this subpart? (a) Compliance with the re quirements of this subpart pertaining to the ethanol content

of gasoline shall be determined based on the ethanol level of the gasoline, measured using the methodologies specified in § 80.46(g). An y evidence or information, including the exclusive use of such evidence or information, may be used to establish the ethanol content of gasoline if the evidence or information is relevant to whether the ethanol content of gasoline would have been in compliance with the requirements of this subpart if the appropri ate sampling and testing methodology

had been correctly

performed. Such evidence may be obtained from an y source or location and may include, but is not limited to, test results using methods other than those specified in § 80.46(g), business records, and commercial documents. (b) Determinations of compliance with the requirements of this subpart other than

those pertaining to the ethanol content of gasoline, and determinations of liability for an y violation of this subpart, may be based on information obtained from any***E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review***

Page 169 of 169 source or lo cation. Such information may include, but is not limited to, business records and commercial documents.