OAR Box 1818 

Prepped by Ollie Stewart 

Document Number: 

27) ll-C-24 

Docket Number: 

A-87-11 

Primed 11/6/2008 3:12:44 PM Sheet 27 of 79 

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON. D.C. 20460 

JUL 2 I 1987 

Honorable John D. Dingell 

Chairman, Subcommittee on 

Oversight and Investigations 

Committee on Energy and Commerce 

House of Representatives 

Washington, D.C. 20515 

Dear Mr. Chairman: 

THE ADMINISTRATOR 

ENVIRONMENTAL PROTECTION 

AGENCY 

AUG! 8 1987 

CENTRAL DOCKET 

I am writing in response to your letter of May 8, 1987. 

In your letter, you reauested that we respond to a number of 

questions relating to the gas marketing issue. A response 

to those questions is enclosed. You also asked us to clarify 

our position for the League of Women Voters on sanctions.. 

A copy of our sanctions fact sheet which was sent to that 

organization is also enclosed. 

I also wish to take this opportunity to thank you for 

your May 15, 1987 letter. In that letter, you raised the 

issue of the safety of onboard vehicle controls. As I 

stated at the April 27 hearing, EPA is giving this issue a 

thorough examination, and we have formally sought the comment 

of the National Highway Transportation Administration. We 

will be sending you additional information on the issue 

in our forthcoming response to your letters of June 23 arid 

June 29. 

Thank you for your continued interest in these matters. 

Sincerely, 

5/ 

Lee M. Thomas 

Enclosures 

cc: Charles A. Bowsher 

Comptroller General 

General Accounting Office 
P.3 

Question 1 

What do you mean by the term "major"? When did you meet and which 

manufacturers met with you? What were they told at that time about 

the scope and timing of the proposed draft rule? I observe that in 

the case of lead-time, the Environmental Protection Agency (EPA) 

documents show that EPA relies on 1984 public comments which long 

predate the Red Border rule now at OMB. Such comments seem quite 

stale and of questionable relevancy to a rule that never, even existed 

in 1984. An April 24 lette r to you from the industry providing a new 

cost study urges at least four years for non-heavy duty vehicles. In 

regard to those 1984 commentators, which commentators recommended 24 

months and which commentators recommended more time? Did the 1984 

document cover heavy duty vehicles? 

Response to Question 1 

EPA has had a variety of meetings with both automobile manufacturers 

and MVMA concerning onboard vapor recovery systems. These meetings have 

ranged from staff level discussions of technical issues (such as required 

hardware, test procedures and safety) to senior management level briefings 

from interested manufacturers. While manufacturers clearly have raised 

questions related to onboard safety, none have identified problems that 

could not be solved with straightforward engineering solutions. For 

example, in a December 22, 1986 letter, MVMA and AIA identified what 

they considered to be the "key safety considerations" associated with 

onboard controls. These were fuel system integrity during a crash, 

fuel spitback and fuel dispensing nozzle failure. As indicated in 

EPA's response to that letter (of which you already have a copy), we 

agree that such considerations must be factored into onboard system 

designs, but all the information we have indicates that this can readily 

be done. 

Turning to the issue of leadtime, recent comments from NHTSA and 

others have focused on the idea that adequate leadtime is a key to 

onboard system safety. In response to this comment, EPA has indicated 

its flexibility and willingness to consider new information on this • 

issue. This could include considering more leadtime, a phase-in of the 

requirement, or a combination of both of these, especially if additional 

leadtime would allow time for safety improvements. As indicated in 

prior comments, we are fully ccmmitted to providing an appropriate 

amount of leadtime. We would expect leadtime to be a key issue in an 

onboard vapor recovery proposal. Leadtime issues would be fully aired 

and resolved through the public rulemaking process, including consideration of all relevant comments on the proposal. Although the issue of 

leadtime for heavy-duty vehicles was covered in our 1984 analysis, we 

would expect to receive further comments on this subject also. 
P.4 

Question 2 

Have you met with the heavy-duty manufacturers? What have they 

said about safety and lead-time? 

Response to Question 2 

Although we have met with several manufacturers of heavy-duty vehicles, 

we have not yet had meetings specifically concerning safety and leadtime 

issues for such vehicles, nor have they approached us regarding these 

issues. EPA has, however, met with the Office of Motor Carrier Safety 

(OMCS) within the Department of Transportation specifically to discuss 

heavy-duty vehicle safety. Our safety analysis to date has found that, 

as for passenger cars, onboard controls for heavy-duty vehicles are 

basically extensions of current evaporative controls. Safety considerations 

for heavy-duty vehicles are, therefore, similar to those for other vehicles. 

What differences there are (e.g., the need for a larger onboard canister 

or differences in specific crash test requirements) do not substantially 

change the safety issues involved. 
P.5 

Question 3 

The new April 1987 motor vehicle industry-sponsored cost study 

provided to you on April 24 shows significantly different cost comparisons 

than those suggested by EPA in the Red Border draft. I request your 

comments on the study indicating where you agree or disagree and if you 

disagree, please explain why. 

Response to Question 3 

Based upon a preliminary review of the April 1987 motor vehicle-industry 

sponsored cost study, we identified several apparent problems in their 

analysis, as well as a need for additional information in many other 

areas so we can complete our review. We have since met with the contractors 

who did the study to obtain additional clarifications arid are now proceeding 

with our review. We will supply the results to you as soon as they are 

available. Overall, there appear to be significant deficiencies in the 

study which explain most of the differences between its results and ours. 

These were briefly described in a lette r of May 8, 1987 to MVMA from 

Assistant Administrator for Air and Radiation Craig Potter (copy enclosed). 
P.6 

Question 4(a) 

Please identify all of the charcoal suppliers and canister makers 

for the domestic industry. When and how did these suppliers provide this 

response to EPA? Please provide the correspondence. If oral, please set 

forth the questions asked. 

Response to Question 4(a) 

The major domestic producers of activated carbon are Calgon, Westvaco, 

ICI (Nont), Atochem, Husky, and Barnebey-Cheney. North American Carbon 

is not a producer, but rather a supplier of imported activated carbon. 

To date, we have not requested written responses fran these manufacturers 

on the questions you have raised. Specific estimates of such things as 

operating capacity and energy costs are often proprietary because they 

directly relate to competitive marketing issues. 

You also asked about the producers of canisters for the domestic 

industry. Ford and Chrysler make their own canisters. Rochester Products, 

a subsidiary of GM, makes GM canisters. Evart, a subsidiary of AMC, 

makes AMC canisters. Canisters for foreign cars produced in the U.S. are 

generally made by the parent company and imported to the U.S. 
P.7 

Questions 4(b) and 4(c) 

Did the above reply cover all vehicles subject to the proposed rule? 

If not, why not? What is the current size of canisters for passenger 

vehicles, light duty trucks, and heavy duty vehicles? Also please provide 

the amount of charcoal required. What will be the new canister size and 

charcoal requirement for each such vehicle? 

Response to Questions 4(b) and 4(c) 

Of the current domestic activated carbon suppliers, Calgon and 

Westvaco account for an estimated 85 percent of the carbon market for 

domestically produced automobiles, which is approximately 10-12 million 

pounds per year. This is about five percent of the 200 million pounds 

per year of domestic production of granulated and powdered carbon. The 

amounts of carbon typically used to control evaporative emissions and the 

additional amounts that EPA believes will be needed to control refueling 

emissions for light-duty vehicles, light-duty trucks and heavy-duty 

vehicles are shown in the attached table. (The external dimensions of the 

canisters would be about 10 percent greater than the required charcoal 

volumes.) We estimate the total additional amount of carbon required for 

onboard refueling controls for all gasoline-fueled vehicles (light-duty 

vehicles, light-duty trucks, heavy-duty trucks) to be between 23 million 

pounds per year, assuming 9.0 RVP in-use fuel and 30 million pounds per 

year, assuming 11.5 RVP in-use fuel. This amounts to about 10-15 percent 

of current production. Both in the past and in recent conversations, 

major manufacturers have indicated it would take at most 18 months to two 

years leadtime to increase capacity by this amount. A representative of 

one manufacturer stated that his company could meet a 30 million pound 

per year requirement with their current idle capacity. He cited a Stanford 

Research Institute study of the carbon industry which indicates that the 

current domestic market is only at 2/3 of full utilization. Based on 

these comments, EPA believes that activated carbon manufacturers will be 

easily able to meet the increased carbon requirement for all vehicles. 
TABLE REFERENCED IN RESPONSE TO 4(b) and 4(c ) 

Average Fuel 

Tank Size : 

EstiiTated Amounts of Activated Carbon 

Needed t o Control Evaporative and Refueling Emissions 

Light-Duty Light-Duty . Heavy-Duty 

Light-Duty Truck Truck Truck ITo 

Vehicles (singl e tank) (dual tank) (singl e tank) 

12.2 gal. 16.3 gal. 32.6 gal. 20 gal. 

Heavy-Duty 

Truck lib 

(dual tank) 

40 gal. 

Heavy-Duty Heavy-Duty 

Truck VI Truck VI 

(single tank) (dual tank) 

30 gal. 80 gal. 

Typical Amount 

of Carbon Presently 

used in Integratei 

Evaporative 

Canisters: 850 ml 850 ml. 1500 ml 1400 ml 2@ 1400 ml 1400 ml 2@ 1400 ml 

Additional Amount 

of Carbon Needed 

to Control Refueling 

Emissions with: 

11.5 RVP fuel: 

9.0 RVP fuel: 

2440 ml 

2020 ml 

3260 ml 

2700 ml 

6520 ml 

5400 ml 

4000 ml 

3310 ml 

8000 ml 

6630 ml 

5990 ml 

4970 inl 

15980 ml 

13250 ml 
P.9 

Question 4(d) 

Your agency's ft&fy regarding the energy use is not responsive. 

American Carbon made specific estimates of the "Btu" needs. I request 

that you consult with the Department of Energy (DOE) and the charcoal 

suppliers about the firms1s contentions and indicate where you and DOE 

agree or disagree. 

Response to Question 4(d) 

As for the specific energy requirements for producing activated 

carbon, i t is difficult to evaluate North American Carbon's estimate of 

the amount of energy used in manufacturing activated carbon since most 

manufacturers consider information regarding their manufacturing processes 

and energy needs to be proprietary, in any case, the energy cost to the 

manufacturer is completely recovered in the cost of the product. Therefore, 

the impact of this energy use is fully accounted for in our analyses. It 

should also be noted that, compared to the energy content of the recovered 

refueling vapors (which are , of course, currently being lost), the 

energy involved in charcoal production is extremely small. Furthermore, 

the cost of activated carbon is typically only about one dolla r per 

pound, and even with the additional amount required for onboard controls, 

automotive-type carbon accounts for only a small fraction of the tota l 

activated carbon market. Thus, i t does not seem likely that additional 

production of activated carbon for automotive purposes could be a measurable 

drain to the economy or to the nation's energy reserves. 

Pursuant to your request that we consult with the Department of 

Energy (DOE) on this matter, I have sent a copy of this response to the 

Department of Energy. 
P.10 

Question 5(a)(1) 

What are cities like New York, Houston, Detroit, Los Angeles, and 

others to do while EPA is improving the models? 

Response to Question 5(a)(1) 

The Urban Airshed Model has been widely evaluated and is the model 

recommended in EPA's modeling guidelines. The model is publicly available 

from the National Technical Information Service (NTIS), and EPA has no 

immediate plans for changing the model. A new version of EKMA, with an 

updated chemical mechanism, and related guidance is anticipated for 

release late this summer, before any SIP calls are made. Thus, there 

should be no significant delays for SIP preparation in major urban areas. 

At this time, cities with ozone problems can do a number of things. 

EPA believes that, in most cases, existing SIP regulations can be more 

fully implemented. EPA has notified the Governors of States with ozone 

nonattainment problems and has suggested specific ways these areas could 

reduce VOC emissions. 

States could also undertake efforts to improve the data bases needed 

for developing revised SIPs. Most cities with ozone problems have been 

allocated grant funds for developing necessary inputs for the EKMA model, 

specifically for improving and updating emission inventories and for 

collecting ambient data. Use of improved data bases in modeling analyses 

should enhance the States' ability to determine appropriate control 

requirements. 
P.11 

i ' Question 5(a)(2) 

How can-anyone rely on such inaccurate models? 

Response to Question 5(a)(2) 

Given the inherently complex chemical and physical and processes involved, 

I believe that the models we have developed actually give quite good performance. 

For example, GAO found that the accuracy of Airshed is generally within 

plus or minus 30 percent. However, the basis for GAO's range of accuracy 

(plus 314 percent to minus 84 percent) is unknown. It appears to be a 

misunderstanding of the data they analyzed or a misstatement of the 

appropriate factors. We have found that the tendency for Airshed to 

under-predict is slight and can vary from city-to-city, and over-predictions 

may occur in sane cases. 

EKMA guidance requires that a predicted ozone level be within + 30 percent 

of the monitored level for the day to be used for estimating control targets. 

When the model predicts higher than + 30 percent of the observed ozone level, 

the day is not used in the ozone control strategy demonstration. EKMA estimates of the level of control required compare very favorably (i.e., generally 

within + 10 percent) with Airshed results. We recognize the limitations of 

all air quality management tools and we continue to strive to improve them. 

However, it is likely that there will always be uncertainties associated with 

air quality modeling. 

Question 5(a)(3) 

I note that even the latest models will likely result in greater hydrocarbon 

inventories than previously projected and the need for even greater controls, 

making attainment even more difficult or impossible. 

Response to Question 5(a)(3) 

It is true that improvements in mobile and stationary source emission 

estimating procedures may result in greater hydrocarbon inventories. At 

this time, it is not certain what level of additional controls will be 

necessary to provide for attainment. City-specific analysis would be needed 

to determine the level of additional controls that may be needed. 
P.12 

Question 5(b) 

Could the improvements, if made after the States submit revised SIPs, 

cause those SIP revisions to be out-of-date almost as written? 

Response to Question 5(b) 

Updated model-related guidance, as well as guidance on developing emission 

inventories, is expected to be available in the late summer, prior to SIP 

calls and well before revised SIPs are submitted to EPA. Thus, it is 

unlikely that SIP revisions will be out-of-date almost as written. However, 

we anticipate that there will be a need to periodically update the SIP analysis 

as new and better information becomes available. 

Question 5(c) 

In your April 24 lette r to the Subcommittee, you indicate that your • 

agency is getting ready to change the area subject to modeled control 

requirements. The lette r states: 

"As part of revised ozone policies under consideration 

within the Agency, stationary control requirements/ 

regulations could be identical throughout an MSA. In 

the case of metropolitan complexes, such as New York, 

requirements could then be the same throughout a 

CMSA or possibly even a larger area. In the case of 

New York, this could mean similar controls throughout 

the northern half of New Jersey, New York City, 

Long Island, New York through Orange County, and the 

southwestern third of Connecticut. 

When will the States and the public leam what your requirements will be? 

Response to Question 5(c) 

In the past, one of the major flaws in ozone planning activities was 

the underestimating of the geographic area of control. Control measures 

were often not applied as broadly as needed within metropolitan areas to 

bring those areas into attainment. We believe that broader geographic 

areas are needed for planning (such as MSA's or CMSA's).' We are currently 

developing our post-1987 strategy which we expect to propose for public 

comment, in the late summer. At that time, we expect to solicit public 

comments on the concept of an "expanded planning and/or control area". 
P.13 

10 

Question 6 

There have been 3 Mobile models and now EPA is developing a 

fourth to be completed late in 1987. Why has EPA never evaluated the 

model? What does it mean that EPA has "improved" the model on the 

basis of "user comments" and has evaluated "some parts"? What is the 

uncertainty regarding the "assumptions" used for Mobile models? 

Response to Question 6 

EPA is evaluating various aspects of the MOBILE models on a continuous 

basis. Examples of steps in this evaluation process follow: 

a. Collect and analyze emission measurements of new 

vehicles to augment the model. 

b. Analyze current travel surveys to verify or update 

trips per day, vehicle miles traveled, etc. 

c. Conduct studies to predict the type and predominance 

of the emission control technologies that will 

represent the future. 

d. Hold workshops to present EPA data, elicit comments, 

gather new sources of information from industry and 

the model users. 

The development of a new model is the result of this evaluation 

process. 

The models are empirical models. They are based on actual 

emission measurements of vehicles operated by the public. Thus, contrary 

to GAO statements, model predictions represent actual emission levels. 

Although actual emission measurements form the core of the models, 

many assumptions about the emissions behavior of the future fleet 

have to be made. EPA is continuously testing vehicles to gather more 

emissions data. This testing is focused on the currently operated 

models that will best represent the future fleet. EPA incorporates 

the new data to form the next MOBILE model. 

Generally, improvements to the model based on user comments 

would be related to ease of operation or usage. Occasionally, other 

organizations (such as an auto manufacturer, state air pollution 

control agency, or private consulting firm) alert EPA to sources of 

data that may be useful for the model. EPA evaluates that new data 

and may incorporate the information into the next model if it is 
P.14 

11 

appropriate. Examples of such data that EPA is currently evaluating are: 

emissions data collected at low ambient temperatures, some provided by 

Alaska and some provided by the government of Canada; travel survey 

information collected by GM; vehicle registration trends used by the 

Departjnent of Energy. 

Most of the assumptions in the MOBILE models regard predicting 

future fleet characteristics. The uncertainty in these assumptions 

relate to how accurately EPA predicts the future in terms of: the type 

of vehicles, their emission control technology, their emissions behavior 

(particularly for technologies that are not represented in the current 

fleet), the relative mix of technology types, the age distribution of 

vehicles, the VMT characteristics, etc. EPA forecasts these parameters 

with available information from manufacturer product plans, technology 

trends, emission measurements from prototype or advanced technology 

vehicles, and historical data. 
P.15 

12 

•Tz- Question 6(c) 

In your April 24 letter, you said: 

"To some extent, each successive round of SIP planning may inevitably 

require reevaluation of the specific reduction targets as our measurement 

and modelling capabilities improve, and as we respond to demographic 

changes, industrial growth, and other factors that are imperfectly 

predictable and that directly or indirectly affect air quality. We expect, 

however, that in the next round we will have significantly better tools 

to predict the environmental effect of emissions reductions, and that 

reductions that we predict to be necessary to attain the NAAQS will 

corresporxj more accurately to actual results. The only way to avoid this 

would be to adjust the models to virtually eliminate any uncertainty of 

attainment but this would result in drastic overcontrol, and would impose 

unreasonable costs and burdens. 

We believe that emissions targets can eventually be met if several 

steps are taken. The effectiveness of current controls must be improved. 

SIP's must set achievable reduction goals and a strategy of attainment by 

a specific date, and the progress of implementing controls must be 

tracked and corrections made as necessary. This will be a long-term process 

in many areas. However, areas are implementing current controls and 

ozone levels have improved. With a sustained effort by EPA and States, 

we believe that in most cases it is possible to identify and implement 

enough controls over time to meet the new reduction targets. (Underlining 

supplied.) 

What enforcement measures in each Region with nonattainment areas 

have you taken in 1985, 1986, and 1987 to carry out present requirements 

and what is your agency's enforcement plan for the future? 

Response to Question 6(c) 

During FY 85, 86 and 87, the Agency has moved aggressively to 

identify violators in nonattaining areas by requiring States to inspect 

major stationary sources each year and one half of the smaller (Class A2) 

sources each year. These violators are designated as "significant violators" 

and the resolution of their compliance status by State agencies, local 

agencies, or EPA is monitored according to the Agency's guidance. For 

the three year period covered in your question, over one half of the 1500 

significant violations that have been tracked for resolution are VOC 

related violations. EPA plans to continue this effort. We will also 

begin a review of regulation effectiveness which will help to assure that 

expected emission reductions are achieved. 

The goals of the Agency's enforcement plan for the future are to 

work with the States to assure that the plans that are developed and 

approved are adeguately funded and are implemented in an effective, 

expeditious manner to achieve the emission reductions needed for attaining and maintaining the ambient standards. 
P.16 

13 

To measure and assure progress, States are now required to inspect 

major VOC sources in nonattainment areas each year and develop and implement 

strategies t© assure that a majority of small VOC sources are in compliance. 

In addition, State and local agencies are required to show yearly efforts 

to gather air quality and emissions data, determine source compliance or 

implementation progress, and compare updated information with that used 

in the initial demonstration of attainment. 

In their demonstration of attainment, States must continue to project 

future emission reductions resulting from scheduled implementation of 

various measures. Once approved, these future annual emission reductions 

would serve as reasonable further progress (RFP) targets. That is, each 

year the State would be required to demonstrate that its measures have 

achieved their intended effect. In addition, every 3 years the State 

would be required to show that its total emission inventory is at or 

below the level indicated in the demonstration. If the total emissions 

for the area are above the level in the demonstration, corrective action 

would be taken to achieve the necessary reductions. Periodically (every 

6 years to coincide with every other detailed emission inventory), States 

would reexamine their demonstrations of attainment based on up-to-date 

emission levels, modeling techniques, emission factors, and air quality 

levels. In addition, each year States and EPA Regional Offices will 

continue to evaluate selected SIP regulations and programs to determine 

whether they are achieving their intended effect. 

To ensure that progress continues as planned in the attainment 

demonstration, EPA will conditionally approve SIP's. Major problems in 

implementing the SIP could result in the rescinding of the approval and 

the possible imposition of sanctions. 

With regard to mobile sources, the Agency has been aggressively 

enforcing the Act's mobile source provisions. With respect to enforcing 

the Clean Air Act requirement for a vehicle inspection and maintenance 

program (either specifically for extension areas under Section 172(b)(11) 

(B) or indirectly as part of an overall attainment strategy for other 

areas), EPA has taken the following actions in 1985, 1986, and 1987. 

In 1985, EPA enforced SIP requirements in three states by imposing 

or continuing sanctions for failure to adopt and implement an I/M 

program. In Medford, Oregon, EPA imposed Section 176(a) highway funding 

limitations and Section 316(b) sewage treatment funding sanctions on 

May 3, 1985. The Oregon Legislature adopted an I/M program for Medford 

and all sanctions were removed on June 25, 1985. 

In Albuquerque, New Mexico, EPA imposed Section 176(a) limitations 

on April 3, 1985. These sanctions remain in effect. 
P.17 

14 

During 1985, Section 176(a) and 316(b) sanctions initially imposed 

in 1980 remained in effect in Kenton and Campbell Counties, Kentucky, 

for failure to adopt I/M. On October 28, 1986, EPA lifted sanctions in 

those counties upon the adoption of an I/M program. 

On January 21, 1986, EPA proposed Section 176(a) limitations for 

Indiana for failure to adopt certain elements of an acceptable I/M 

program. These limitations were not finalized because of constructive 

steps taken by the State. 

On February 25, 1987, EPA proposed Section 316(b) limitations 

for Albuguerque. These limitations have not yet been finalized. 

EPA also conducts field audits of vehicle anti-tampering programs 

(ATPs) after one year of full operation. These are generally done as 

part of the National Air Audit System. Follow-up audits are also 

conducted to further study particular issues or problems. The primary 

purpose of these audits is to allow EPA to ensure that each program is 

being implemented and enforced in a manner consistent with its State • 

Implementation Plan (SIP) commitment. A secondary purpose of these 

audits is to evaluate the overall effectiveness and efficiency of 

each program. 

Field audits identify weak and strong design elements. They also 

uncover those program elements which have not been implemented properly. 

Both inspector and local auditor knowledge can be tested. The lack of 

proper equipment or the use of improper inspection procedures can be 

documented. 

The results of these audits are sent to the State or local government 

in the form of an audit or trip report. EPA works with these governments 

to correct the identified problems. 
P.18 

15 

The following audits of anti-tampering programs have been or will 

be conducted by EPA in FY 1985, 1986, and i987. 

FY 1985 

New York City, NY 

Atlanta, GA 

St. Louis, MO 

Charlotte, NC 

Houston, TX 

Portland, OR 

Denver, CO 

FY 1986 

Salt Lake City, UT 

Atlanta, GA 

Los Angeles, CA 

San Francisco, CA 

Sacramento, CA 

Boise, ID 

Houston, TX 

Fairbanks, AK 

Anchorage, AK 

Massachusetts 

Maine 

FY 1987 

Baton Rouge, LA 

Provo, UT 

Tulsa, OK 

Dallas, TX 

New Jersey 

Covington, KY 

Miami, FL 

St. Louis, MO 

El Paso, TX 

Atlanta, GA 

Charlotte, NC 

Salt Lake City, UT 

Future audit areas have not been finalized. 
P.19 

16 

Question 7(a) 

Following the sending of your recent letters to the Governors, the 

Region V Administrator sent letters to al l of the States in the Region 

asking, among other things, for the State s to identify al l SIP commitments, 

provide a summary of their status, and other extensive data about the 

commitments. The Region gave each stat e 60 days from April 3 t o reply. 

What difference does i t make as to the status of the commitments, if 

the SIP revisions are stil l not approved or disapproved? Is EPA suggesting 

that the States must enforce commitments for which they have no assurance 

that EPA is satisfied with them? Did al l Regions send similar letters ? 

Response t o Question 7(a) 

The letters sent to the States by the EPA Regional Offices referred 

only to ccmmitments in EPA-approved plans. This serie s of letters was 

begun when the Administrator sent letters to 42 State Governors in April 

1987. These letters described EPA's plans to ensure that State and local 

agencies were implementing the commitments in their approved plans. 

These letters began a three part evaluation process: 

(1) Review of al l federally approved control commitments in SIP's to 

determine whether al l ccmmitments and regulations had been adopted; 

(2) Review and determination as to whether adopted measures were 

technically adequate and met minimum national standards for consistency; 

(3) Initiatio n of a comprehensive and ongoing program to determine 

whether adopted measures are being effectively implemented. 

The first two phases should be completed in the short term, but the 

third phase will take longer. The Region V letters you cited are part of 

the first phase. 
P.20 

17 

Question 7(b) 

Doesn't EPA have all the information on commitments from their audits 

and reasonable further progress reports? Isn't this going to result in 

massive paperwork for the States and extensive delay? 

Response to Question 7(b) 

The EPA does not feel that the first phase of this activity (looking 

at control commitments) will result in extra paperwork or delay. We must 

verify with the States the status of all past commitments and "conditional 

approvals" of ozone and CO SIP's. This will serve as a double check on 

existing audit and reasonable further progress material and fill in the 

remaining information gaps. Once this new information has been obtained 

we will be able to take appropriate action if there is a pattern of State 

failure to implement its plan. 
P.21 

18 

Question 7(c) 

EEA's Region IX Administrator, in a March 26 letter, indicates that 

same of the commitments in California's South Coast Air Basin SIP included 

measures that depended upon developnent of new technologies "which were 

believed to be realistically achievable by the projected adoption date," 

but they were not carried out. Also, some of the commitments were relaxed. 

Is this situation unique to California? Please explain. How are these 

situations to be considered in the new round of correspondence? 

Response to Question 7(c) 

At this point, we do not know the answers to these questions. We 

expect to receive answers through the letters sent to the Governors and 

to the Environmental Commissioners this spring. This is the material 

mentioned in the first two points in the answer to question 7(a) above. 

These responses are expected later this summer. 
P.22 

19 

QUESTION 7(d) 

Mayor Koch has written to us and expressed concerns that ozone 

controls might affect growth in New York. The Region IX Administrator, 

in discussing the effects of growth and meteorology on ozone controls in 

California, said that the South Coast needed an emission reduction of 

75 percent in hydrocarbons to reach attainment. She said: 

"In the time since the 1979 and 1982 SIP's were developed, 

population and industrial growth have been exceeded in California. 

As a direc t result of this growth, California nonattainment areas 

have generally failed to achieve the SIPs* predicted levels of 

emission reductions. 

Even the application of extraordinary control measures using best 

available control technologies and fuels (e.g. , methanol and 

electrification) is not believed to be sufficient to assure a 

75 percent reduction in South Coast hydrocarbon emissions. 

Based on currently available information, however, i t is believed 

to be extremely unlikely that hydrocarbon reductions as great as 

30-40 percent could be achieved in the next several years; ongoing 

analyses will reveal whether such a goal is realistic for the year 

2000. It is important to recognize that the extreme reduction target 

for the South Coast results from the high level of current emissions 

in the basin combined with the area's particularly adverse 

meteorology and topography, which promote ozone formation and 

persistence. 

All the easy controls have already been applied in California,, and 

further reductions must now largely depend upon accumulating small 

reductions from thousands of minor sources through new rules that 

are particularly difficult and expensive to enforce. 

How is EPA addressing this growth issue in its planning aixi SIP call criteria ? 

RESPONSE TO QUESTION 7(d) 

One of the key ingredients in projecting attainment is the application 

of proper and realisti c growth factors. While typically having been 

embedded in overall source emissions inventory increases and in percentage 

increases in vehicle miles traveled in the past, the use of improper 

growth allowances can have a major impact on the attainment demonstration. 

Under-prediction of growth can result in not achieving the amount of 

emissions reduction required, while over-prediction can result in 

unnecessary control. The EPA is considering a proposal which would 

require that al l growth factors, whether positive or negative, be submitted 
P.23 

20 

with documentation to substantiate their use. In the case where a negative 

or zero growth factor is applied, EPA would closely track those sources 

or categories of sources through the Reasonable Further Progress (RFP) 

requirements. Should this tracking show that these growth factors are, 

in fact, positive, EPA may require the revision of the plan to correct 

such deficiencies. 

As opposed to applying an overall, or category specific growth rate, 

EPA may propose that for each individual stationary source listed in the 

base year inventory, the projected emissions for each source must be 

based upon documented growth information and that the growth data be 

submitted as part of the SIP revision. 

Where RFP tracking shows substantial deviation from the growth assumed, 

EPA would notify the State and may reguire that the SIP be revised to 

account for these changes. 

The EPA proposal might also reguire documentation of all projection 

parameters associated wtih mobile source emissions and projections of 

transportation control measures. Documentation shall include stating the 

current (base year) value for a parameter and the value for the projected 

year and the bases for selecting that particular value. 

Under any plan, states would have to demonstrate how they would come 

into attainment despite any expected growth. To accomplish this, it 

may be necessary for areas to choose to implement control strategies which 

are aimed at halting or severely limiting growth. We are inclined to 

believe that specific requirements which would fundamentally affect growth 

should be decided on by the state and local governments, and should not 

be federally prescribed. 
21 

Question 8(a) 

• 

The Subcommittee has provided you with a copy of my April 22 memorandum 

to the Members and the attached staff document. At pages 55-57, the 

American Petroleum Institut e (API) does not appear to be in full agreement 

with EPA. API has a different recommendation. Please respond to the API 

recommendation arxj explain its impact on the motor vehicle industry. 

Please also identify the API comments that you disagree with (in whole or 

part) and explain why. Does EPA know what "octane improvers" will be 

used by the industry as i t removes butane and is EPA satisfied that they 

have no adverse health or enviroimental consequences? In light of API's 

comments on the impact of the reduction on butane, please consult with 

the DOE about the impact of surplus butane on the butane market and on 

natural gas production and provide the results thereof. 

Response to Question 8(a) 

In their lette r to you, API recommends that EPA limit gasoline 

volatilit y to ASTM recommendations and change certification fuel volatilit y 

accordingly t o 11.5 psi RVP. As this scenario matches in-use and certification 

fuel RVP, i t is one of the long-term control scenarios being evaluated by 

EPA in its draft Notice of Proposed Rulemaking currently under review by 

OMB. We are evaluating matching certification and in-use RVPs a t lower 

RVP levels, as well. We are basing our evaluation of the various 

scenarios on: 1) the environmental need for VOC emission reductions, and 

2) the incremental cost effectiveness at which they are obtained. At the 

present time those scenarios which call for lower in-use and certificatio n 

fuel iWP match-ups provide the greatest emission reductions, but do so a t 

the greatest cost per ton. As API does not show that the emission reduction 

associated with in-use RVP control below ASTM levels is not needed or not 

cost-effective, i t is difficult for us to respond to their recommendation. 

Regarding the impact of API's recommendation on the motor vehicle 

industry, i t clearly places the greatest burden on the vehicle manufacturers 

while only requiring oi l companies to al l do what is now roughly the 

average practice. Auto manufacturers would have to increase the siz e of 

their evaporative emission control canisters and redesign their fuel 

metering and caniste r purge systems to purge more vapors. The latte r 

could involve upgrading the purge control valve for more precise control, 

but in general would primarily involve improving the efficiency of equipment 

already present. The tota l cost of raising certification fuel RVP to 

11.5 psi is estimated to be roughly $3-5 per vehicle in the long run, 

with or without onboard refueling controls in place. 
P.25 

22 

API mentions that under this approach average volatility would in 

fact be reduced because gasoline that currently exceeds the ASTM limits 

would be eliminated. This is true as roughly half of all gasoline currently 

being marketed violates the ASTM limits. API goes on to say that it 

would be likely that all refiners and blenders would blend gasolines 

below the standard to guard against unintentionally violating the standard 

because of measurement inaccuracies, etc. This would depend upon how EPA 

set the standard and how it was enforced. It would be our goal that 

average) in-use gasoline meet whatever volatility standards would be 

imposed, so it is possible that we would allow an enforcement margin 

in-use which would take into account testing inaccuracies, etc. Thus, we 

would not expect a significant amount of control below the level of EPA's 

standard. Since, nationally, average gasoline RVP is generally at the 

ASTM limits, we do not expect much in-use RVP control to occur, on average, 

with an 11.5 RVP scenario. 

API also refers to the lags in the distribution system and that some 

control gasoline would enter the system prior to the control period and 

remain in the system after the control period was over. EPA agrees with 

this although we are still attempting to improve our estimate of both' the 

amount of time and the amount of gasoline for which this occurs. In 

setting the RVP control period, which would be based on environmental 

need, we plan to take into account the fact that some gasoline will be 

controlled both before and after the legal enforcement period. We also 

plan to consider both the costs and benefits of that gasoline which would 

be controlled outside of the legal enforcement period. 

Finally, API refers to the fact that other gasoline specifications, 

such as distillation characteristics, sometimes iimit RVP to levels below 

the ASTM recommendations. This does appear to be true in some cases. 

However, should EPA restrict RVP to levels below the ASTM standards, it 

is less likely that these other distillation characteristics would affect 

volatility. Also, there are still many cities in which the gasoline on 

average exceeds the ASTM levels. Thus, these non-RVP distillation characteristics do not have enough of an impact to merit not controlling RVP. 

With regard to EPA's agreement or disagreement with API's other 

comments, it is difficult to be specific since API's comments are fairly 

general. For example, API states that volatility reductions below the 

current ASTM standards could have severe consequences for refiners and 

could make the US strongly dependent on foreign imports to supply needed 

octane. Also, it states that these consequences would be suffered in 

exchange for uncertain or minimal environmental benefits. Certainly EPA 

agrees that significant volatility reductions below the current ASTM 

standards would have significant consequences for refiners and that some 

of the octane currently supplied by butane in the summer would have to be 

made up. However, we do not believe costs of 0.5-1.0 cents per gallon, 
P.26 

23 . 

as predicted by API, would be unreasonable. This is especially true since 

most of this cost will come from replacing cheap butane with more expensive 

butane-free gasoline and all refiners will have to remove essentially the 

same amount of butane. Thus, this cost will be experienced across the 

board by all-domestic refiners as well as importers. As this small price 

increase will have little, if any, effect on demand, we fully expect that 

all refiners will be able to pass on their costs to the consumer, causing 

minimal economic hardship on refiners. 

With respect to maintaining octane levels, butane is a relatively 

high octane component. However, as API states in their comments, butane's 

octane is only 91-92. Thus, removing butane from premium unleaded gasoline 

(an ever increasing percentage of all fuel) will have no effect and will 

have only a small effect on regular leaded and regular unleaded gasoline's 

octane. Even the most severe case that EPA is caisidering (i.e., controlling 

summertime gasoline in Class C areas to 8.0 psi RVP) would only reduce 

the average octane of the total gasoline pool by 0.25 octane numbers. By 

comparison, this is far less than the effect of lead phasedown. 

EPA also recognizes that any significant amount of RVP reduction 

below the ASTM standards (e.g., more than a 1 psi reduction) would reguire 

leadtime to design and build octane generation equipment. Given that the 

industry will have had time to fully respond to lead phasedown by using 

additional octane-enhancing equipment, we are talking about a small 

incremental effort that will be needed to replace the octane lost from 

butane. As EPA is not aware of any information that will support the 

contention that high octane components can be more cheaply produced 

overseas than domestically, it would appear that only a decision by the 

domestic refiners not to generate this octane danestically would result 

in greater imports of high octane components. 

In fact, one of the octane-enhancing responses that the industry has 

been making to lead phasedown has been to increase use of oxygenates, 

particularly methyl tertiary-butyl ether (MTBE). MTBE is produced from 

methanol and iscbutylene. Iscbutylene can be produced from either isobutane 

or normal butane. If a significant amount of butane is removed from 

summertime gasoline, the price of normal butane could indeed drop. This 

could make MTBE produced from normal butane and methanol very cost-competitive 

and this MTBE could actually directly replace both the octane and gasoline 

volume lost when butane is removed, causing very little net effect on 

other refinery operations. EPA is currently investigating this possibility. 

Based on our existing refinery modeling, which did not" take into 

account the possibility that MTBE production could be increased, EPA 

believes that refiners will take a number of approaches in replacing both 

the volume and the octane lost when butane is removed. This is similar 

to what we have seen wit.i respect to the industry's response to lead 

phasedown. We believe rr\.t industry will build more isomerization and/or 

alkylation capacity to i^^ase octane and will increase the severity of 

their current reforming e.^ucity as well as use improved catalysts in 

their catalytic crackers '. v produce higher octane products. 
P.27 

24 

The particula r octane additive that EPA is most concerned about 

environmentally is benzene. Our current refinery models are not accurate 

enough to predict how much benzene would be used nationwide. However, 

our refinery modeling does indicate that the aromatic content of gasoline 

would go up slightly with the reduction of RVP. However, this increase 

is less than proportional to the amount of butane that would be taken out 

of gasoline. Thus, i t appears that refineries would economically opt for 

approaches to increasing octane that are not based on increasing aromatic 

content. Assuming that fuel benzene content varie s proportionately with 

aromatics content, the reduction in benzene emissions resulting from the 

control of RVP a t least balances the increase in benzene emissions that 

could result from increasing the benzene content of fuel. Thus, we do 

not believe that there would be any net increase in benzene emissions due 

to RVP control. 

The impact of RVP control on the nation's crude oi l imports depends 

on how the butane taken out of gasoline is subsequently used. If none of 

the excess butane goes toward gasoline production, then we would expect 

tota l crude oil usage to increase roughly 0.1 and 0.8 percent for 1.0 and 

2.5 psi RVP reductions, respectively. These figures include the fact 

that if butane is taken out of gasoline, gasoline's eneryy content and 

the in-use fuel economy of vehicles will increase, resulting in fewer 

tota l number of gallons being consumed. 

Under this scenario, excess butane will likely be used as a petrochemical 

feedstock; the net result being reduced consumption of natural gas and 

i ts associated natural gas liquids, such as ethane, propane and butane. 

On the other hand, as indicated above, there are a number of ways in 

which butane could be converted directly into low volatility , high octane 

gasoline components. One is alkylation and the other is MTBE. If the 

excess butane were to be used in eithe r of these two processes, then the 

impact on refinery operation would be even less and the impact on crude 

o i l and natural gas usage would be much less. There is a third option — 

storage of the excess butane in the summer until afte r the control period. 

The stored butane could then be mixed directly into gasoline. This 

storage and subsequent use may or may not result in an increase in RVP 

during the non-control period, since butane is in relatively short supply 

in the winter and commands a much higher value relative to gasoline in 

the winter than in the summer. Thus, this increased availabilit y of 

butane in the winter may simply result in less butane being taken away 

fran its other wintertime uses and its price not increasing as dramatically 

during the winter. 

As indicated in my previous letter, the estimates of refinery costs 

that API quotes appear to be reasonable as they are based on EPA's study 

by our contractor Bonner & Moore. I reiterat e however, that while these 

are the costs to refiners, we fully expect them to be recovered through 

increased gasoline costs of 0.5-1. per gallon and, thus, tha t they will 

have a minor impact on refinery profitability . 

I have sent this response to the Department of Energy and requested 

that they provide both yourself and EPA with their comments. 
P.28 

25 

Question 8(b) 

As I understand the situation, the waiver for gasohoi under the law 

was granted automatically after EPA inaction and there is no provision 

that gasoline with gasohoi shall not exceed the "ASTM standard" for any 

area? Is that correct. 

Response to Question 8(b) 

Your understanding is correct. There is no volatility restriction 

in the gasbhol waiver. The only requirements are those contained in the 

original waiver request, i.e . that the ethanol be anhydrous and that 

it not exceed 10 percent by volume of the gasoline/ethanol blend. 
P.29 

26 

Question 8(c) 

(i) To what extent has EPA, working with the Bureau, NHTSA, NCWM, 

API, MVMA, and STAPPA/ALAPCO, sought to ensure tht aU pumps in every 

State are properly labeled and that ASTM standards are adopted and 

enforced? If this has not happened, should it not begin to happen? Can 

EPA require such labeling as part of this rulemaking? If not, why not? 

(ii) What are the "approved" levels of alcohol to gasoline? Is that 

the EPA approved level? 

(iii) The Bureau states that EPA "does not have an organizational 

membership in ASTM, although they have informally attended ASTM meetings? 

Who at EPA attends? Why is EPA not a member? Should EPA join? 

(iv) The Bureau said that the NCWM Committee on law and regulations 

"is planning to recommend a motor fuel law and regulation to be adopted 

by the NCWM that would require gasoline and gasoline-alcohol blends to 

meet the ASTM proposed specification for automotive spark-ignition 

engine fuel, 'except that volatility standards for unleaded gasoline 

blends containing up to 10 percent ethanol shall not be more restrictive 

than those adopted under the U.S. Envirormental Protection Agency Clean 

Air Act waivers.'" Given the waiver granted by EPA, is that exception 

quite a significant loophole for ethanol? Enclosed is a relevant 

letter , dated August 26, 1986, from the Chairman of NCWM. 

Response to Question 8(c) 

(i) EPA has not taken any action to require the labeling of 

gasoline pumps as to alcohol content. We are aware of the potential 

effect of fuels containing high proportions of alcohol on vehicle fuel 

systems, particularly rubber parts such as fuel lines. Under section 211 

of the Clean Air Act, the Environmental Protection Agency must approve 

through a waiver process the addition of alcohols (beyond certain low 

levels) and other additives to unleaded gasoline. The Agency has granted 

a limited number of waivers, with restrictions to assure that resultant 

vehicle air pollution emissions do not exceed applicable standards. (The 

gasohoi waiver discussed above was granted by operation of law because 

the Administrator did not act within the statutorily prescribed time 

period and, therefore, it contains no restrictions.) 

Methanol (wood alcohol) is the alcohol that has caused the most 

concern. Ethanol (grain alcohol) use in gasoline (gasohoi) has caused 

relatively few problems. Unleaded gasoline blends containing methanol 

are currently approved for low percentages of methanol (generally 5 

percent) with a requirement for a cosolvent alcohol which, among 

other things, tends to reduce the propensity to weaken rubber parts. 
P.30 

27 

Since EPA does not approve a fuel blend unless we are convinced i t 

will not cause o r contribute t o vehicles exceeding emission standards, 

we have not had a reason to require a labeling program. As noted in 

your letter, many state s have adopted, o r are considering, labeling 

reguirements, and we have no objection to such actions. 

It should also be noted that in the U.S. Coast Guard's March 1987 

report to the Congress on alcohol-blended gasoline in recreational 

boats, i t concluded "Nearly al l States that have significant sale s of 

alcohol-blended gasoline reguire a disclosure label on the gasoline 

pump that informs consumers of the presence and type of alcohol so that 

they can make purchasing decisions. In view of the State labeling 

programs, no further Federal legislation or regulation is recommended." 

However, you should be aware that we believe we do have the authority 

to require such labeling, and that we could impose this requirement if 

i t is necessary to achieve regulatory goals. We are considering proposing 

volatilit y regulations containing alcohol pump and invoice labeling 

requirements that would apply if alcohol-gasoline blends are made 

subject to different regulatory standards than "straignt " gasoline. 

In that case, we believe labeling would assist enforcement efforts. 

(ii) The statement in the EPA Region VIII lette r concerning "approved 

levels of alcohol" referred to alcohoi levels in gasoline allowed under 

the Clean Air Act section 211(f) "substantially similar" interpretive rule 

and waivers granted under section 211(f). 

(iii) The Engineering Operations Division (EOD) of EPA's Office 

of Mobile Sources (OMS) does have an organizational membership in ASTM 

(membership # AA 6725300). Although personnel from tha t office have 

not yet attended any ASTM meetings, EOD is currently participating in 

the latest ASTM round robin evaluation of volatilit y testing methods. 

In addition, a staff engineer from the Emission Control Technology 

Division (ECTD) of OMS (which has the lead responsibility for the 

volatilit y rulemaking) attended the most recent ASTM meeting on gasoline 

vapor pressure (held in Savannah, Georgia on December 11, 1986) and 

discussed EPA's volatilit y study. An OMS staff person attended the 

ASTM meeting on this subject in Cincinnati in June 1987. 

(iv) The NCWM committee recomendation would exempt ethanolgasoline blends from volatilit y requirements because, as noted above, 

the existing gasohoi waiver does not contain any controls on this fuel 

characteristic . However, any Federal controls on volatilit y would 

preempt any stat e and local emission-related provisions (unless identical 

to the Federal controls) on this matter, subject to the exceptions to 

preemption specified in section 211(c)(4) of the Clean Air Act. 
P.31 

28 

Question 8(d) 

My enclosed-letter to DOT shows that the volatility of some gasoline 

is very high. Some suggest that this could result from one jobber adding 

alcohol, selling to another jobber who also adds alcohol, and so forth. 

Is that possible? Is that legal? Does the proposed Red Border rule 

prevent or control that possibility or any other that may occur not at 

the refinery but in the distribution chain? 

Response to Question 8(d) 

The addition of alcohol can increase the volatility of fuel, and 

addition of this substance by more than one jobber could significantly 

increase product volatility. 

At this time, the addition of alcohol to unleaded gasoline is prohibited 

by Section 211(f) of the Clean Air Act, except as provided in the "substantially 

similar" policy and the waivers granted under Section 211(f)(4) of the 

Clean Air Act. For example, while the gasohoi waiver does not restrict 

volatility per se, it does limit ethanol content to 10% by volume. 

Moreover, the methanol waivers contain restrictions on both volatility 

and methanol content. These restrictions apply no matter how many, or 

how few, times alcohol is added to a base gasoline. 

We are considering a proposed volatility rule that would apply to 

fuel at any point in the distribution network from refinery (or importer) 

shipping tanks to retail and fleet pumps. Alcohol-gasoline blends probably 

would also be subject to such controls, although perhaps at less stringent 

levels than "straight" gasoline. We are considering controlling and 

restricting the layering of alcohol at various levels in the distribution 

chain. 
P.32 

29 

Question 8(e) 

Your April 24 reply to my question 16 provides a table of "Waiver 

Requests Granted Under 211(f)(4)" and states that no waiver requests are 

pending. Ife-also discusses a 1981 "Substantially similar" interpretative 

rule which "applies to all unleaded gasoline including 'hydrocarbon-only' 

fuel, and therefore imposes an RVP limit of psi on all staff memorandum 

does not show any ASTM area as high as 15 psi. Where are the Class E 

areas? Why is that limit so high? Is it needed? 

Please explain why EPA is suggesting "options" for RVP limits on the 

"waived fuels" and will the limits apply to the "Gas Plus or gasohoi 

waiver" which new has "no limit on RVP." What does Secretary Dole think 

about this option approach as it relates to onboard controls and safety? 

Response to Question 8(e) 

Enclosed is a copy of ASTM D 439, standard specifications for automotive 

gasoline. Table 1 provides the specifications for the volatility classes 

A through E. Class E has a maximum RVP limit of 15 psi. Table 2 shows 

when and where Class E fuels are appropriate. Class E is a wintertime 

fuel and the higher RVP is necessary for easy starting and combustion in 

cold weather. However, we do not believe that a Class E fuel in Virginia 

in December, for example, necessarily needs to have as high an RVP as a 

Class E fuel in Maine that month. However, with only five volatility 

classes to cover the variations in climate and altitude occurring throughout 

the year across the entire U.S., the grouping of areas with seemingly 

wide climatic variation is to be expected. 

Regarding EPA's options for the volatility control of alcohol blends, 

the options themselves, I believe, are mutually understood and correctly 

presented in your April 22, 1987 memorandum. As currently drafted, they 

would apply to fuel currently marketed under the "Gas Plus or gasohoi" 

waiver. 

The reason for suggesting options at this time is that no single 

approach clearly resolves all of the potential economic and environmental 

consequences. Allowing ethanol to continue to be splash blended with any 

legal gasoline maintains the current Federal policy of providing incentives 

for ethanol blending in gasoline, but allows the ozone impact of gasohoi 

to be much greater than that of gasoline. Requiring both blends and 

straight gasoline to meet the same RVP standard equates their ozone 

impact, but will raise the cost of gasohoi relative to gasolir>e. This 

latter effect will reduce the value of ethanol' relative to gasoline and 

likely adversely affect ethanol sales. EPA desires to more fully understand 

the consequences of all the options before deciding on a regulatory 

approach. 
£33 

30 

Question 8(f) 

API agrees with me that "some API member companies market alcoholcontaining fuels, while others do not." That split in their membership 

makes it difficult for them to speak or comment on this alcohol issue as 

an organization. Enclosed is a letter one API-member firm, Marathon, 

wrote recently to Vice President Bush about the issue of Federal-State 

support for alcohol added fuels, other firms, like Shell, also do not 

add alcohol. What effects will EPA make to ascertain the competitive 

impacts among API members relative to your options? 

Response to Question 8(f) 

Marathon, in their letter, states that a federally-mandated gasohoi 

program would depress butane prices and, thus, negatively affect butane 

producers. Whether or not this would occur will be one of many issues 

addressed by the newly established inter-agency work group on alcohol 

fuels, chaired by Vice President Bush. EPA, in its volatility rule, is 

not considering mandating alcohol blends. The two primary options available 

to EPA to address the volatility of alcohol blends are: 1) require them 

to meet the same volatility standard as gasoline, and 2) allow alcohol 

blends to meet a standard 1.0 FVP higher than that for gasoline which 

would allow the splash blending of ethanol into otherwise legal gasoline. 

There are also numerous variations of these two major options, such as 

delaying the implementation of option 1) above for a number of years, 

applying option 1) only in non-attainment areas, etc. 

Each of these options has the potential for competitive impacts. 

The continued allowance of splash-blending would continue the competitive 

effects occurring when Congress granted gasohoi an excise tax credit and 

EPA did not deny the request for a Clean Air Act Section 211(f) waiver. 

In this case, gasoline price sets ethanol price and not vice versa, so 

gasoline producers would not be affected much by this option, except that 

part of their market for gasoline may be removed. If, on the other hand, 

gasohoi must meet the same RVP standard as gasoline, we would expect the 

price of ethanol to adjust itself to the price of other RVP and octane 

boosters and not vice versa. Thus, most gasoline producers would again 

be relatively unaffected. 

Those gasoline producers who also produce ethanol would be affected, 

but only regarding the ethanol side of their business and in the same way 

as those ethanol producers not in the gasoline business. As ethanol 

production is a very minor part of any major oil company's operations, 

they would be affected far less than some other ethanol producers, where 

ethanol is their main or sole line of business. Ethanol-producing oil 

companies are also in the best position to coordinate the production and 

distribution of low-RVP gasoline for ethanol blending under the "same 

standard" approach. Also, since any gasoline producer has the freedom to 

also produce ethanol, any competitive effects between oil companies 

producing ethanol and those that do not are a result of their own business 

decisions. Thus, our analysis of competitive effects has focused on the 

ethanol industry and not on the oil industry. 
P.34 

31 

Question 9 

What is the basis for the RVP lead times in the Red Border proposal? 

Are they too short, considering the API comments? 

Response to Question 9 

Refiners will respond to any in-use volatility limitations primarily 

by reducing the amount of butane that is blended into gasoline. This 

reduction of butane will require the refiner to process a higher volume 

of crude oil to make up for the lost butane volume. The refiner would 

require littl e or no leadtime in order to perform these actions, since 

underutilized crude processing capacity exists today. Butane, however, 

is a high octane component and its removal will slightly increase refinery 

octane requirements. The leadtime associated with volatility control is 

needed to allow octane-short refiners time to construct new facilities. 

The amount of leadtime required for refiners was determined from a 

report entitled, "Cost and Feasibility of Gasoline Volatility Reductions," 

which was prepared by Sobotka and Company for the EPA in 1986. The 

report found that due to lead phasedown, which takes full effect in 1988, 

the ability of the industry to replace the octane lost with volatility 

control would be limited in the short term (1- 3 years). The analysis 

estimated that the RVP of summer gasoline could only be reduced by 1.0-1.4 

psi below ASTM limits in this timeframe without any additional investments. 

Four years appears to be a sufficient amount of time between publication 

of a final rule and implementation of commercial fuel RVP standards more 

than 1.0-1.4 psi RVP below ASTM limits. This leadtime should allow 

sufficient time for the design and construction of new octane generating 

capacity. We have received no detailed technical information from API to 

the contrary. This figure also appears reasonable in light of the industry's 

response to lead phasedown. 
P.35 

32 

"""Sy- Quest ion 10 

The American Petroleum Institute advises us, in an April 24 letter, 

that, based on their analyses "The significance of the nonattainment 

problem is analler and also'more manageable when more realistic measures 

of ozone progress are considered." Please provide us the results of your 

review of the API studies and the actions that you plan, if any, after 

reviewing them. 

Response to Question 10 

The API study points out that in typical non-attainment areas, the 

ozone standard is violated on only a few days per year. The contention 

is apparently that a small number of violations is tolerable from a 

public health standpoint. By law, all NAAQS are set to protect against 

known or anticipated adverse health effects with a margin of safety. 

This includes both short-term and long-term effects. During periods when 

the standard is violated, health scientists have clearly cautioned us 

that the health of the general public may not be fully protected. This 

includes short durations when the standard is violated as well as longer 

term exceedances. The Agency is, as you know, now in the process of 

reviewing the ozone NAAQS. 
33 

Question 11 

At the subcommittee hearing, I pointed out that three U.S. Courts of 

Appeals have held that "EPA must act on proposed revisions within four 

months" which is the requirement for the SIP's. I have also noted these 

holdings in a recent letter to you regarding fugitive dust in Michigan. 

In fact, the 5th Circuit, in American Cyanamide Co. v. U.S. EPA, 

February 20, 1987, said: 

"To hold otherwise would intrude upon the logical pattern 

of the State and Federal relationship set up in the statute 

which recognized in the time limit the important role of the 

States." 

Yet I understand that as to many of the ozone nonattainment areas, listed 

by EPA in the category of "No action" or "in the Mill," these SIP's or 

revisions have been pending at EPA for far more than four months. Why 

is EPA not complying with the statutory requirement, as interpreted by 

three Courts of Appeals? Does the four-month requirement in the law 

apply to proposed and final action and how does it relate to the requirements 

of section 307? 

Response to Question 11 

As you are aware, the 4 month Clean Air Act deadline for review and 

approval of SIP's is extremely tight. Over the years, SIP's and SIP 

revisions have become increasingly complex and numerous so that it is 

very time consuming to process even the simplest ones. 

In addition, we have to comply with the Administrative Procedures 

Act and give the public ample opportunity to comment on our proposals 

before we do final rulemaking. Our philosophy has been to work as closely 

with the States as possible so that SIP revisions are approvable rather 

than take the alternative route of quickly processing disapprovals. We 

have always felt that this is the best for everyone. In light of the 

American Cyanamide decision, this approach will probably have to be changed. 

We have attempted to accelerate the SIP review process for specific 

groups of high priority SIP's. For instance, we are doing this right now 

for 10-15 ozone/carbon monoxide SIP's. 
34 

Question 12 

Your April 24 reply to my question 24 was helpful. But the 

legislation in Illinois and Maryland raises the question of whether, in 

light of the statutory requirements for SIPS (e.g., sec. 110(a)(2)(F)) 

and the provisions of section 105 and 107 and other provisions of the 

Clean Air Act, those states are operating in accordance with the law 

and are still eligible for grants. (The enclosed bills show that New 

Jersey is also considering such laws and that State has commitments in 

its SIP that are clearly not consistent with those bills.) The law 

allows States to be more stringent, but not more restrictive. I request 

your views and that of the GAO, on this matter. What has EPA done to 

inform the Governor of these States that such laws are not consistent 

with the Act? 

Response to Question 12 

Only if a state has made a commitment to implement Stage II in its 

SIP would a subsequent statutory bar on implementation of Stage II call 

into question the state's eligibility for section 105 grants. Illinois 

has not relied on stage II reductions in any approved attainment demonstration. Moreover, measures other than Stage II could conceivably achieve 

adequate emission reductions. Accordingly, the Illinois' legislative 

prohibition contravenes nothing in the SIP or the Clean Air Act. Similarly, 

because Maryland committed only to studying the feasibility of Stage II 

as an additional control measure and did not rely on Stage II reductions 

in its attainment demonstration, Maryland's legislative provision is not 

inconsistent with its SIP. Nor is it necessarily inconsistent with 

ultimate attainment. 

New Jersey, on the other hand, by attributing emission reductions to 

Stage II in its attainment demonstration, has made a commitment to implement 

Stage II. Legislative action precluding its implementation would indeed 

be inconsistent with those commitments. However, New Jersey's proposed 

legislation is far less inhibitory than an outright prohibition of Stage II 

in that it provides for implementation of Stage II not only if EPA has 

mandated it, but also if EPA has issued a SIP call or no other control is 

available. Furthermore, a bill introduced simultaneously concerning onboard controls suggests that New Jersey is considering adequate substitutes 

for Stage II. Of course, these changes would have to be incorporated 

into the SIP. 

New Jersey is well aware of its commitments under its SIP. In 

January of this year, the Administrator conveyed to New Jersey that the 

state was unlikely to attain, and reminded it of its commitment to Stage II 

or an adequate substitute. Having received no response, EPA again 

sent a letter to the Governor of New Jersey in early April. The letter 

discussed the possibility of non-implementation sanctions. Should the 

letters prove ineffective and the legislation move forward, EPA will take 

further action to ensure that New Jersey fulfills its SIP commitments.