[Federal Register Volume 89, Number 41 (Thursday, February 29, 2024)]
[Rules and Regulations]
[Pages 14760-14775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04023]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 1090

[EPA-HQ-OAR-2022-0513; FRL-9845-02-OAR]
RIN 2060-AV73


Request From States for Removal of Gasoline Volatility Waiver

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Pursuant to provisions specified by the Clean Air Act (CAA), 
the Governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, 
South Dakota, and Wisconsin submitted petitions requesting that EPA 
remove the 1-pound per square inch (psi) Reid vapor pressure (RVP) 
waiver for summer gasoline-ethanol blended fuels containing 10 percent 
ethanol (E10). EPA is acting on those petitions by removing the 1-psi 
waiver in those States effective April 28, 2025. This action also 
finalizes regulatory amendments to implement the removal of the 1-psi 
waiver for E10 in those States, as well as a regulatory process by 
which a State may request to reinstate the 1-psi waiver. Finally, 
consistent with a decision issued by the United States Court of Appeals 
for the D.C. Circuit on July 2, 2021, this action removes regulations 
that extended the 1-psi waiver to gasoline-ethanol blends between 10 
and 15 percent ethanol (E15).

DATES: This rule is effective on April 29, 2024.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2022-0513. All documents in the docket are listed on the 
https://www.regulations.gov website. Although listed in the index, some 
information is not publicly available, e.g., confidential business 
information (CBI) or other information whose disclosure is restricted 
by statute. Certain other material is not available on the internet and 
will be publicly available only in hard copy form. Publicly available 
docket materials are available electronically through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For questions regarding this action, 
contact Lauren Michaels, Office of Transportation and Air Quality, 
Compliance Division, Environmental Protection Agency, 2000 Traverwood 
Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4640; email 
address: <a href="/cdn-cgi/l/email-protection#d7babeb4bfb6b2bba4f9bbb6a2a5b2b997b2a7b6f9b0b8a1"><span class="__cf_email__" data-cfemail="65080c060d040009164b09041017000b250015044b020a13">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Does this action apply to me?

    Entities potentially affected by this final rule are those involved 
with the production, distribution, and sale of transportation fuels, 
including gasoline and diesel fuel. Potentially affected categories 
include:

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                                                        Examples of
           Category              NAICS \1\ code     potentially affected
                                                          entities
------------------------------------------------------------------------
Industry.....................              211130  Natural gas liquids
                                                    extraction and
                                                    fractionation.
Industry.....................              221210  Natural gas
                                                    production and
                                                    distribution.
Industry.....................              324110  Petroleum refineries
                                                    (including
                                                    importers).
Industry.....................              325110  Butane and pentane
                                                    manufacturers.
Industry.....................              325193  Ethyl alcohol
                                                    manufacturing.
Industry.....................              325199  Manufacturers of
                                                    gasoline additives.
Industry.....................              424710  Petroleum bulk
                                                    stations and
                                                    terminals.
Industry.....................              424720  Petroleum and
                                                    petroleum products
                                                    wholesalers.
Industry.....................      447110, 447190  Fuel retailers.
Industry.....................              454310  Other fuel dealers.
Industry.....................              486910  Natural gas liquids
                                                    pipelines, refined
                                                    petroleum products
                                                    pipelines.
Industry.....................              493190  Other warehousing and
                                                    storage--bulk
                                                    petroleum storage.
------------------------------------------------------------------------
\1\ North American Industry Classification System (NAICS).

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be affected by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be affected by this action. Other types of entities 
not listed in the table could also be affected. To determine whether 
your entity would be affected by this action, you should carefully 
examine the applicability criteria in 40 CFR part 1090. If you have any 
questions regarding the applicability of this action to a particular 
entity, consult the person listed in the FOR FURTHER INFORMATION 
CONTACT section.

Table of Contents

I. Executive Summary
II. Volatility Control Background and History
III. Statutory Authority and Provisions To Remove the 1-psi Waiver
IV. Petitions for Removal of the 1-psi Waiver and Supporting 
Documentation
    A. Petition Background and History
    B. Evaluation of Petitions for Removal of the 1-psi Waiver
V. Fuel System Impacts
    A. Production
    B. Distribution
    C. Retail Operations
VI. Implementation and Effective Date
    A. Statutory Provisions
    B. Finding of Insufficient Supply for 2024 and Renewal of 
Extension of Effective Date
VII. Cost and Price Impacts
VIII. Associated Regulatory Provisions

[[Page 14761]]

    A. New Designation and Associated PTD Language
    B. Regulatory Reinstatement Mechanism
IX. Removal of the 1-psi Waiver for E15
    A. Background
    B. Affected Provisions
X. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 14094: Modernizing Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental 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 (NTTAA) and 
1 CFR Part 51
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act (CRA)

I. Executive Summary

    In this action, EPA is responding to petitions from eight State 
Governors to remove the 1-psi (pound per square inch) waiver for 
gasoline-ethanol blends containing 10 percent ethanol (E10). The 
Governors made their requests pursuant to Clean Air Act (CAA) section 
211(h)(5), which provides that EPA shall remove the 1-psi waiver by 
regulation upon a demonstration by a Governor that the 1-psi waiver 
increases emissions in their State.
    After review of the modeling results presented by the Governors in 
their petitions, on March 6, 2023, EPA proposed to remove the 1-psi 
waiver with an effective date of April 28, 2024--and sought comment on 
delaying the effective date to April 28, 2025--in the following eight 
States: Illinois, Iowa, Nebraska, Minnesota, Missouri, Ohio, South 
Dakota, and Wisconsin.\1\ On March 21, 2023, EPA held a public hearing 
on the proposal, at which various perspectives on the proposed action 
were presented, and subsequently many comments were submitted to EPA on 
the proposed action. After the close of the public comment period, EPA 
also received numerous petitions to delay the proposed effective date 
of the removal of the 1-psi waiver.\2\ Following review of public 
comments on the proposal and the extension petitions received, in this 
action EPA is removing the 1-psi waiver and instead applying the 9.0 
psi RVP (Reid Vapor Pressure) standard under CAA section 211(h)(1) 
effective April 28, 2025, in the following eight States: Illinois, 
Iowa, Nebraska, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin.
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    \1\ 88 FR 13758.
    \2\ We refer to these petitions as ``extension petitions'' 
throughout this preamble.
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    Throughout this document we discuss key comments provided by 
stakeholders on the proposal and provide our response. Additional 
detail is provided in the Response to Comments (RTC) document and 
Technical Support Document (TSD) \3\ for this action.
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    \3\ ``Request From States for Removal of Gasoline Volatility 
Waiver: Technical Support Document and Cost Analysis,'' available in 
the docket for this action.
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II. Volatility Control Background and History

    EPA first took regulatory action to control the volatility of 
gasoline in 1987.\4\ Because higher gasoline volatility leads to higher 
evaporative emissions, EPA regulates the RVP--a measure of fuel 
volatility--of gasoline during summer months in order to reduce 
volatile organic compound (VOC) emissions that contribute to the 
formation of smog (ground-level ozone).\5\ The volatility of fuel 
depends on the refinery's decisions in formulating its gasoline. 
Subsequent to EPA's actions, Congress enacted the CAA Amendments of 
1990, which included statutory volatility provisions for summer 
gasoline. These provisions largely codified EPA's regulatory approach, 
including establishing a 9.0 psi RVP standard for gasoline volatility 
in the summer.\6\ Because blending ethanol into gasoline increases the 
volatility of the resulting fuel blend due to chemical differences 
between ethanol and gasoline, Congress also codified a 1-psi waiver for 
E10, allowing such blends to have a 1.0-psi higher RVP than otherwise 
allowed for gasoline, consistent with EPA's prior regulatory 
approach.\7\ This allowance only applies to gasoline-ethanol blends 
containing between 9 and 10 percent ethanol, and does not extend to 
gasoline-ethanol blends containing greater than 10 percent ethanol.\8\ 
The 1-psi waiver also does not apply to reformulated gasoline (RFG).
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    \4\ See 52 FR 31274 (August 19, 1987); Subsequent regulatory 
actions occurred in 1989 and 1990. 54 FR 11868 (March 22, 1989); 55 
FR 23658 (June 11, 1990).
    \5\ Gasoline must have volatility in the proper range to prevent 
driveability, performance, and emissions problems. If the volatility 
is too low, the gasoline will not ignite properly; if the volatility 
is too high, the vehicle may experience vapor lock. Importantly for 
this action, excessively high volatility also leads to increased 
evaporative emissions from the vehicle. Vehicle evaporative emission 
control systems are designed and certified on gasoline with a 
volatility of 9.0 psi RVP. Higher volatility gasoline may overwhelm 
the vehicle's evaporative control system, leading to a condition 
described as ``breakthrough'' of the cannister and mostly 
uncontrolled evaporative emissions.
    \6\ CAA section 211(h)(1). CAA section 211(h)(1) requires EPA to 
establish volatility requirements--that is, a restriction on RVP--
during the high ozone season. To implement these requirements, EPA 
defines ``high ozone season'' or ``summer season'' at 40 CFR 1090.80 
as ``the period from June 1 through September 15 for retailers and 
wholesale purchaser consumers, and May 1 through September 15 for 
all other persons, or an RVP control period specified in a state 
implementation plan if it is longer.'' In general practice by 
industry and for purposes of this preamble, the high ozone season is 
referred to as the ``summer'' or ``summer season'' and gasoline 
produced to be used during the high ozone season is called ``summer 
gasoline.'' EPA's regulations do not impose any volatility 
requirements on any type of blend of gasoline outside of the summer 
season.
    \7\ CAA section 211(h)(4).
    \8\ The statutory 1-psi waiver is codified at 40 CFR 
1090.215(a).
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    At the time the provision was enacted, the 1-psi waiver applied to 
a relatively small portion of the gasoline sold in the United States. 
Today, however, almost all gasoline sold is E10, and thus the 1-psi 
waiver increases the volatility of most gasoline.
    On April 28, 2022, the Governors of Illinois, Iowa, Kansas, 
Minnesota, Nebraska, North Dakota, South Dakota, and Wisconsin 
submitted a petition for the removal of the 1-psi waiver for E10 in 
their States beginning in the summer of 2023, pursuant to CAA section 
211(h)(5).\9\ On June 10, 2022, the Governor of Ohio also submitted a 
petition requesting the removal of the 1-psi waiver in that State.\10\ 
On July 21, 2022, the Governor of Kansas notified EPA that they were 
rescinding their petition for removal of the 1-psi waiver in 
Kansas.\11\ On October 13, 2022, the Governor of North Dakota notified 
EPA that they were rescinding their petition for removal of the 1-psi 
waiver in North Dakota.\12\ On December 21, 2022, the Governor of 
Missouri submitted a petition requesting the removal of the 1-psi 
waiver in that State.\13\ This action refers to the eight remaining 
States of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South 
Dakota, and Wisconsin as the ``petitioning states.'' The petitions 
included modeling results indicating reductions in VOCs, nitrogen

[[Page 14762]]

oxides (NO<INF>X</INF>), and carbon monoxide (CO).
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    \9\ ``April 28, 2022 Letter from Eight States,'' available in 
the docket for this action.
    \10\ ``June 10, 2022 Letter from Ohio,'' available in the docket 
for this action.
    \11\ ``July 21, 2022 Letter from Kansas,'' available in the 
docket for this action.
    \12\ ``October 12, 2022 Letter from North Dakota,'' available in 
the docket for this action.
    \13\ ``December 21, 2022 Letter from Missouri,'' available in 
the docket for this action.
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III. Statutory Authority and Provisions To Remove the 1-psi Waiver

    This rulemaking modifies EPA's fuel quality regulations in 40 CFR 
part 1090 to remove the 1-psi waiver that is applicable to fuel blends 
containing gasoline and 10 percent ethanol for the petitioning States. 
While we proposed to make such a change effective for the summer of 
2024, after further careful consideration of comments and consultation 
with various agencies we are instead finalizing removal of the 1-psi 
waiver in these States beginning April 28, 2025.
    CAA section 211(h)(1) requires EPA to ``promulgate regulations 
making it unlawful . . . during the high ozone season . . . to sell . . 
. or introduce into commerce gasoline with a Reid Vapor Pressure in 
excess of 9.0 pounds per square inch (psi).'' For nonattainment areas, 
CAA section 211(h)(1) also allows EPA to set a lower (i.e., more 
stringent) RVP standard, as well as to define the term ``high ozone 
season.'' CAA section 211(h)(4) provides in relevant part that ``[f]or 
fuel blends containing gasoline and 10 percent denatured anhydrous 
ethanol, the Reid vapor pressure limitation under this subsection shall 
be one pound per square inch (psi) greater than the applicable Reid 
vapor pressure limitations established under [section 211(h)(1)].'' CAA 
section 211(h)(5), which was enacted as part of the Energy Policy Act 
of 2005 (EPAct), provides in relevant part that ``[u]pon notification, 
accompanied by supporting documentation, from the Governor of a State 
that the [waiver in section 211(h)(4)], will increase emissions that 
contribute to air pollution in any area of the State, the Administrator 
shall, by regulation, apply, [the volatility limit under section 
211(h)(1)].'' Thus, regulatory action under CAA section 211(h)(5) would 
remove the 1-psi waiver for E10 and generally apply the RVP standard 
under CAA section 211(h)(1).
    Prior to the April 28, 2022 petition, no Governor had ever 
submitted a petition under CAA section 211(h)(5) to EPA, and thus we 
are interpreting this statutory provision for the first time in this 
action. In this context, we find that the use of the prescriptive 
statutory language ``shall'' provides limited, if any, discretion for 
EPA to consider other issues such as economic impacts of removing the 
1-psi waiver. Such impacts may instead be taken into consideration by a 
Governor when deciding whether to submit a petition to EPA.\14\ Here, 
EPA's role is only to evaluate the supporting documentation provided by 
the Governors.\15\ If EPA concludes that the supporting documentation, 
as required by the statute, demonstrates emissions increases with the 
1-psi waiver in place, then CAA section 211(h)(5) requires EPA to 
promulgate regulations to remove the 1-psi waiver as requested.
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    \14\ Considerations like this were cited by the Governors of 
Kansas and North Dakota in rescinding their petitions.
    \15\ Legislative history suggests that the supporting 
documentation need not be as stringent as that called for under CAA 
section 211(c)(4)(C). See Senate Report 106-426 at 12 (September 28, 
2000). Under CAA section 211(c)(4)(C) a state must make a 
``necessity'' showing prior to EPA approval of a fuel measure into 
the state implementation plan. The ``Guidance on Use of Opt-in to 
RFG and Low RVP Requirements in Ozone SIPs,'' August 1997, gives 
further guidance on factors EPA is likely to consider in making a 
finding of ``necessity'' under CAA section 211(c)(4)(C).
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    In response to the proposal, we received comments suggesting that 
the Governors cannot meet the statutory criteria in CAA section 
211(h)(5) because E10 is now the dominant fuel in the marketplace. 
Commenters suggested that the statutory language that the 1-psi waiver 
``will increase emissions'' cannot be satisfied, because any emissions 
impacts from the 1-psi waiver have already occurred. We disagree with 
the comment. CAA section 211(h)(5)(A)--which was promulgated in 2005--
requires EPA to remove the 1-psi waiver if it ``will increase emissions 
that contribute to air pollution . . . during the high ozone season.'' 
The term ``will'' connotes consideration of emissions that are expected 
in the future and as relevant here during the ``high ozone season.'' 
\16\ Further, as instructed in CAA section 211(h)(1), we have defined 
``high ozone season'' as the period from ``June 1 through September 15 
for retailers and [whole purchaser consumers], and May 1 through 
September 15 for all other persons.'' \17\ We therefore read the phrase 
as calling for the consideration of emissions that are expected in the 
petitioning States during future high ozone seasons and conclude that 
because the Governors have demonstrated that the 1-psi waiver will 
increase VOC emissions during the high ozone season, the statutory 
criteria for removal of the 1-psi waiver has been met. We further 
address this comment in the RTC document.
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    \16\ This reading is like, for example, our reading of ``will'' 
in CAA section 110(a)(2)(D)(i). (The term ``will'' in CAA section 
110(a)(2)(D) means that State implementation plans are required to 
eliminate the appropriate amounts of emissions that presently, or 
that are expected in the future, contribute significantly to 
nonattainment downwind. 63 FR 57375 (October 27, 1998)).
    \17\ 40 CFR 1090.80.
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    Additionally, as we posited in the proposal, we do not interpret 
this provision as requiring a demonstration of a reduction in emissions 
of all pollutants that contribute to air pollution in the petitioning 
States, as advocated for by some commenters. Such a demonstration could 
not have been contemplated by Congress, as lowering the volatility of 
fuel was specifically the intent set out in CAA section 211(h)(1), 
which calls for EPA to set RVP standards to address ``evaporative 
emissions.'' As such, reducing the volatility of gasoline would be 
expected to have differing impacts on emissions of different 
pollutants.\18\ Further, Congress was silent on the air pollutants that 
EPA should consider in responding to petitions for removal of the 1-psi 
waiver. Specifically, under CAA section 211(h)(5), EPA is to remove the 
1-psi waiver if it ``increase[s] emissions that contribute to air 
pollution.'' This contrasts with, for example, CAA section 
110(a)(2)(D)(i), which prohibits sources in a State from emitting ``any 
air pollutant which will contribute significantly to nonattainment'' in 
another State. Air pollution could result from a myriad of sources, 
including listed hazardous air pollutants, criteria pollutants, and 
greenhouse gases, and thus would appear to be a rather expansive term. 
Reducing RVP, however, is a volatility control measure as explained 
earlier in Section II. In short, CAA section 211(h)(1) requires EPA to 
set RVP standards to address ``evaporative emissions.'' Additionally, 
EPA has consistently explained that adding 10 percent ethanol to 
gasoline causes roughly a 1.0 psi RVP increase in the blend's 
volatility, which is the premise for the 1-psi waiver contained in CAA 
section 211(h)(4) and the subject of this action.\19\ EPA is of the 
view, therefore, that it is reasonable to consider ``air pollution'' 
emanating from emissions of such gasoline and thus, that it may be most 
appropriate to evaluate the impact of the 1-psi waiver for E10 on VOC 
emissions in addressing petitions to remove the 1-psi waiver under CAA 
section 211(h)(5). We thus find that demonstration of increased VOC 
emissions with the 1-psi waiver in place is sufficient to grant the 
petitions for

[[Page 14763]]

removal of the waiver. Even were EPA to look at the modeled emissions 
impacts on several other pollutants (e.g., CO and NO<INF>X</INF>), 
those reductions, in addition to the reduction in VOCs, also satisfy 
the requirements of the statute and justify granting the petitions.
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    \18\ For an example of analysis and modeling of emission impacts 
available at the time CAA section 211(h)(5) was enacted, see 
``User's Guide to MOBILE6.1 and MOBILE6.2: Mobile Source Emission 
Factor Model,'' EPA-420-R-02-028, October 2002.
    \19\ See, e.g., 52 FR 31274 at 31292 (August 19, 1987).
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    Further, EPA views the Motor Vehicle Emissions Simulator (MOVES) as 
an appropriate tool for use in modeling the emission impacts required 
by CAA section 211(h)(5). The MOVES runs performed by the petitioning 
States compared emissions from motor vehicles and nonroad vehicles and 
equipment with and without the 1-psi waiver for E10 in each State in 
the summer. In the past, similar analyses have been used to support 
prior EPA actions for Federal and State fuel programs.\20\
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    \20\ For example, on June 7, 2017, EPA published a final rule to 
relax the federal 7.8 psi RVP standard in the Nashville, TN area (82 
FR 26354) and on March 12, 2021, EPA published two final rules that 
removed approved regulations from the Kansas and Missouri SIPs that 
required the sale of 7.0 psi RVP gasoline in the Kansas City, KS-MO 
area (86 FR 14000 and 86 FR 14007).
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IV. Petitions for Removal of the 1-psi Waiver and Supporting 
Documentation

A. Petition Background and History

    During the fall of 2021, EPA received several letters from States 
requesting that EPA engage in a dialogue about mechanisms to provide 
parity between E10 and E15 with respect to gasoline volatility 
standards.\21\ Specifically, the letters referred to CAA section 
211(h)(5) and inquired about as to what type of ``supporting 
documentation'' should accompany such a request. EPA organized and 
participated in a series of meetings with representatives from various 
Midwestern States that had expressed interest in removing the 1-psi 
waiver. In those meetings, EPA indicated that MOVES modeling would be 
an appropriate tool to use for this purpose given its ability to model 
the emissions impacts of changes in gasoline volatility and given our 
past reliance on MOVES modeling runs in similar contexts.
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    \21\ See ``October 13, 2021 Letter from Kansas,'' and ``November 
4, 2021 Letter from Seven States,'' available in the docket for this 
action.
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    On April 28, 2022, the Governors of Illinois, Iowa, Kansas, 
Minnesota, Nebraska, North Dakota, South Dakota, and Wisconsin 
submitted a joint petition to EPA for the removal of the 1-psi waiver 
for E10 in their respective States. The petition specifically requested 
the removal of the 1-psi waiver for E10 as a permanent solution for 
providing year-round E15 in those States beginning in the summer of 
2023. As accompanying documentation, the petition provided quantified 
reductions in VOC, NO<INF>X</INF>, and CO emissions as a result of 
removing the 1-psi waiver in each State based on MOVES modeling. 
Subsequent to this submittal, the Governors of Kansas and North Dakota 
rescinded their petitions to remove the 1-psi waiver for E10 in those 
States.\22\ Therefore, we are not taking any action on the 1-psi waiver 
for E10 in Kansas and North Dakota in this action.
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    \22\ See ``July 21, 2022 Letter from Kansas,'' and ``October 12, 
2022 Letter from North Dakota,'' available in the docket for this 
action.
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    On June 10, 2022, the Governor of Ohio also submitted a petition 
requesting the removal of the 1-psi waiver for E10 beginning in the 
summer of 2023. The petition provided quantified reductions in VOC, 
NO<INF>X</INF>, and CO emissions in Ohio based on MOVES modeling.
    On December 21, 2022, the Governor of Missouri also submitted a 
petition requesting the removal of the 1-psi waiver for E10 beginning 
in the summer of 2023. The petition provided quantified reductions in 
VOC, NO<INF>X</INF>, and CO emissions in Missouri based on MOVES 
modeling.
    Subsequent to submission of the petitions, all petitioning States 
except Missouri provided EPA with additional emissions modeling 
documentation, including for particulate matter (PM) and benzene.\23\ 
The original data submitted showed a decrease in VOC, NO<INF>X</INF>, 
and CO emissions with removal of the 1-psi waiver for E10, while the 
additional data demonstrated an increase in PM for both nonroad and on-
road emissions with removal of the 1-psi waiver. The benzene results 
demonstrated an increase in benzene on-road emissions and a decrease in 
benzene nonroad emissions. While the additional data on modeled 
emissions impacts on other pollutants may not be necessary to make the 
statutory demonstration, it does provide additional information about 
the potential emissions impacts of this action.
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    \23\ See ``Emissions Impacts of the Elimination of the 1-psi RVP 
Waiver for E10,'' May 9, 2022; and ``Emissions Impacts of the 
Elimination of the 1-psi RVP Waiver for E10 in Ohio,'' June 10, 
2022, available in the docket for this action. While we did not 
receive additional information from Missouri about other pollutants 
as we received from the other petitioning states, we anticipate 
directionally similar trends as shown in the information from the 
other states. RVP reduction is a volatility control measure and EPA 
has consistently explained that adding 10 percent ethanol to 
gasoline causes roughly a 1.0 psi RVP increase in the blend's 
volatility. As EPA explained in its rulemakings to regulate 
volatility of fuel that preceded enactment of CAA section 211(h), 
evaporative hydrocarbon emissions are VOCs and contribute to the 
formation of ozone in the atmosphere, particularly in the summer 
months due to direct sunlight and high ambient temperatures. EPA 
regulated the volatility of gasoline to control the emissions of 
VOCs. Congress, in enacting CAA section 211(h), which largely 
codified EPA's volatility regulations, thus also logically intended 
to address VOCs by requiring volatility controls. It is therefore 
reasonable and most appropriate to evaluate the impact of the 1-psi 
volatility waiver for E10 on VOC emissions in addressing petitions 
to remove the 1-psi waiver under CAA section 211(h)(5). See also 52 
FR 31274 (August 19, 1987); 54 FR 11868 (March 22, 1989); and 55 FR 
23658 (June 11, 1990).
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    All the petitioning States requested removal of the 1-psi waiver in 
all areas within their State where the limitation under CAA section 
211(h)(4) applies. Therefore, the requests did not include areas within 
the States where RFG is required because the 1-psi waiver does not 
apply to RFG. The petitioning States also requested that the removal of 
the 1-psi waiver should take effect for the 2023 high ozone season, 
without further discussion. The States noted that rescinding the 1-psi 
waiver for E10 would support year-round sales of E15.

B. Evaluation of Petitions for Removal of the 1-psi Waiver

    The petitioning States provided technical documentation with their 
petitions to demonstrate the reduction of emissions with the removal of 
the 1-psi waiver as required by CAA section 211(h)(5) in the form of 
MOVES modeling results.\24\ The results for each State were based on a 
single day in July 2023, which is during the high ozone season. 
Comparative results demonstrate the change in emissions from the 
current 10.0 psi RVP standard to the alternative 9.0 psi RVP standard 
as contemplated by the statute.\25\ A summary of the emissions impacts 
of removing the 1-psi waiver for E10 for each State is provided in 
Table V-1.\26\
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    \24\ EPA developed MOVES to estimate air pollution emissions 
from on-road and nonroad mobile sources.
    \25\ Further information about the MOVES runs, including inputs 
and nonroad data, is available in the docket for this action.
    \26\ EPA's evaluation of the MOVES model input data and 
assumptions, and results, can be found in the TSD.

[[Page 14764]]



                           Table V-1--Change of Mobile Source Emissions in 2023 MOVES3.01 Sources From 10.0 psi to 9.0 psi RVP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Pollutant/precursor
                                                 -------------------------------------------------------------------------------------------------------
                      State                          VOCs        CO        NOX       PM2.5       PM10     Benzene    Toluene    Ethylbenzene     Xylene
                                                  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)     (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Illinois........................................       -0.9      -0.19      -0.05       0.09       0.10       -0.2       -1.5            -0.9       -0.9
Iowa............................................       -1.8      -0.44      -0.09       0.14       0.15       -0.1       -3.3            -2.1       -2.1
Minnesota.......................................       -2.7      -0.52      -0.09       0.15       0.16       -1.3       -4.2            -3.0       -3.1
Missouri........................................      -0.66      -0.41      -0.14        N/A        N/A        N/A        N/A             N/A        N/A
Nebraska........................................       -2.6      -0.48      -0.09       0.17       0.18       -0.6       -4.4            -2.9       -3.0
Ohio............................................       -1.6      -0.45      -0.13       0.30       0.32       0.08       -2.8            -2.0       -2.0
South Dakota....................................       -2.9      -0.53      -0.06       0.08       0.08       -1.1       -4.8            -3.4       -3.3
Wisconsin.......................................       -1.7      -0.44      -0.10       0.21       0.22       -0.3       -2.7            -1.8       -1.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As with the proposal, we have assessed the supporting documentation 
provided by the petitioning States and find that the MOVES modeling 
results submitted to EPA demonstrate a reduction in emissions of 
multiple pollutants (e.g., VOCs, CO, and NO<INF>X</INF>) that 
contribute to air pollution within each State upon removal of the 1-psi 
waiver for E10, as required under CAA section 211(h)(5).\27\ We note 
that the same documentation also shows an increase in emissions of 
other pollutants such as PM. As discussed in Section III, we do not 
interpret the statute as requiring reductions in all pollutants. 
Documentation of air pollutant emissions reductions--particularly 
VOCs--is sufficient. While some commenters suggested that EPA should 
not focus on particular pollutants and ignore others, we instead 
conclude that demonstration of a decrease in VOC emissions is 
sufficient to satisfy the statutory requirements and justify granting 
the petitions.
---------------------------------------------------------------------------

    \27\ Evaporative emissions from gasoline--specifically VOCs--are 
precursors to the formation of tropospheric ozone and contribute to 
the nation's ground-level ozone problem. NO<INF>X</INF> and CO can 
also be ozone precursors. Exposure to ground level ozone can reduce 
lung function (thereby aggravating asthma or other respiratory 
conditions), increase susceptibility to respiratory infection, and 
may contribute to premature death in people with heart and lung 
disease.
---------------------------------------------------------------------------

    Therefore, based on the Governors' petitions and the supporting 
documentation provided, we are removing the 1-psi waiver for E10 sold 
in the petitioning States and, as required by CAA section 211(h)(5), 
promulgating the 9.0 psi RVP standard contained in CAA section 
211(h)(1) for the petitioning States. For the reasons discussed in 
Section VIII., such a change will be effective on April 28, 2025, given 
our determination of insufficient supply in 2023 and the renewal of 
that extension for one year based on a determination of insufficient 
supply in 2024.

V. Fuel System Impacts

    In this section, we discuss the potential impacts of removing the 
1-psi waiver in the petitioning States on the fuel production and 
distribution system, including impacts that would potentially affect 
gasoline refineries, pipelines, fuel terminals, retail outlets, and, 
ultimately, consumers.\28\ Significant portions of this discussion were 
provided in the proposal, and have now been updated based on additional 
information provided from commenters and discussions with industry. We 
received comment from ethanol interests suggesting that gasoline supply 
concerns were overstated and manageable, even for 2023. We also 
received comment and supporting analysis from refining and pipeline 
stakeholders expressing concern over the gasoline supply and resulting 
cost and price impacts in support of their requests to further delay 
implementation of the 1-psi waiver removal, as well as additional 
petitions requesting delay to 2025 or later. The discussion in this 
section is not specific to a particular year or determination of 
sufficiency of supply. Section VI provides our determination of 
insufficient supply for 2024.
---------------------------------------------------------------------------

    \28\ Further detail on this topic is available in the TSD.
---------------------------------------------------------------------------

    In short, this action will require a lower-volatility conventional 
gasoline before oxygenate blending (CBOB) \29\ to be produced by 
refineries and distributed by pipelines and terminals, resulting in a 
lower-volatility blended fuel ultimately sold at retail outlets in the 
petitioning States.\30\
---------------------------------------------------------------------------

    \29\ Gasoline before oxygenate blending (BOB) means gasoline for 
which a gasoline manufacturer has accounted for oxygenate (e.g., 
denatured fuel ethanol) added downstream. See 40 CFR 1090.90. BOB is 
subject to all requirements and standards that apply to gasoline 
under EPA's fuel quality regulations, and refineries typically 
formulate their BOBs with the intent that it will be blended 
downstream with ten percent ethanol content to maintain compliance 
with EPA and industry specifications. Conventional BOB (CBOB) is BOB 
produced or imported for areas outside of RFG areas otherwise known 
as conventional areas.
    \30\ Because the gasoline distribution system has been 
configured to utilize 10 percent ethanol and optimized to utilize 
the octane value of ethanol, we expect ethanol will be blended at 
least at the same levels it is blended today. Thus, we anticipate 
that E10 will continue to be the dominant form of gasoline supplied 
to the region, but will now be blended into a lower-volatility 
blendstock produced by refineries.
---------------------------------------------------------------------------

    We first note that volatility controls for gasoline differ across 
various States and regions within States. Summer gasoline for use in 
the continental U.S. must comply with either the Federal RVP standard 
of 9.0 psi or the more stringent RVP standard of 7.8 psi, unless the 
summer gasoline is either for use in an RFG covered area, is subject to 
California's gasoline regulations, or EPA has waived preemption and 
approved a State request to adopt a more stringent RVP standard into a 
State Implementation Plan (SIP). Most of the U.S. utilizes 
``conventional gasoline,'' for which the Federal RVP standard is 9.0 
psi, with a 1.0 psi waiver for gasoline blended with 10 percent 
ethanol. There are also areas that utilize conventional gasoline for 
which the Federal RVP standard is 7.8 psi, and in such regions, the 1.0 
psi waiver also applies for gasoline blended with 10 percent 
ethanol.\31\ Several States have ``boutique'' low-RVP fuel programs or 
SIP programs \32\ that allow the 1-psi waiver for gasoline blended with 
10 percent ethanol.\33\ Some boutique fuel programs, or SIP-approved 
fuel programs, however, disallow the 1-psi waiver for gasoline blended 
with 10 percent ethanol and in those areas, such gasoline must meet the 
applicable State RVP standard of either 9.0 psi, 7.8 psi, or 7.0 
psi.\34\ Additionally, approximately 30 percent of the

[[Page 14765]]

gasoline sold in the U.S. is RFG, which must meet a 7.4 psi RVP 
standard.\35\ The 1-psi waiver does not apply to RFG, and thus E10 that 
is sold in RFG areas must meet the 7.4 psi RVP standard. This action 
removes the 1-psi waiver only for conventional gasoline that is sold in 
the petitioning States and does not apply to gasoline sold in RFG or 
SIP program areas. However, due to the interconnected nature of 
gasoline distribution, and the changes required for a new fuel type, 
impacts on gasoline quality and supply are expected to extend beyond 
the petitioning States, as further described below.
---------------------------------------------------------------------------

    \31\ 40 CFR 1090.215(a)(2) and (b)(1).
    \32\ Of particular note for this action, seven counties in 
southeast Michigan that border Ohio have an RVP standard of 7.0 psi 
in the summer, with a 1-psi waiver for E10.
    \33\ See https://www.epa.gov/gasoline-standards/state-fuels.
    \34\ 40 CFR 1090.215(b)(3). See also https://www.epa.gov/gasoline-standards/state-fuels.
    \35\ 40 CFR 1090.215(a)(3). The Chicago and St. Louis areas are 
such RFG areas.
---------------------------------------------------------------------------

    Before discussing the various steps required to produce and 
distribute the new lower-volatility gasoline,\36\ it is useful to 
describe the gasoline fuel supply system that is interdependent on its 
different parts to bring a fuel to market. The first step is fuel 
production, in which refineries refine crude oil using various 
processing units and then blend the various blendstocks together in 
finished gasoline tanks. The next step is fuel distribution, in which 
the gasoline in these tanks is transported through the fuel 
distribution system to the final market, mostly by pipelines.\37\ These 
pipelines transport a wide variety of fuels and other products (e.g., 
gasoline, diesel fuel, jet fuel, heating oil, petroleum blendstocks, 
etc.), including an array of different grades and types of gasoline 
(e.g., conventional gasoline, RFG, boutique fuels, and regular and 
premium grades of each). Each grade and type of gasoline must be 
segregated from other grades and types to preserve the physical 
properties of each product. When a pipeline reaches a juncture where it 
branches out to two different pipelines serving different gasoline 
markets, a set of short-term storage tanks (``breakout tanks'') are 
necessary to offload the fuel from the upstream pipeline to enable 
scheduling the various fuels through the two downstream pipelines. 
Pipeline systems often have many branches from upstream to downstream 
pipelines to enable moving the fuel to the downstream markets, and 
breakout tanks serve an important function in the fuel distribution 
system. For example, there are approximately 110 breakout tank 
locations within the petitioning States alone. Pipeline transportation 
of gasoline to market also involves downstream product terminals and 
bulk plants, which accumulate gasoline from pipelines and other bulk 
distribution systems and distribute the gasoline to retail outlets via 
tank trucks loaded at terminal racks. Each rack can load a premium 
grade and regular grade gasoline, but some racks can load additional 
grades and types of gasoline.
---------------------------------------------------------------------------

    \36\ We refer to this new lower-volatility gasoline as ``low-RVP 
gasoline'' throughout this preamble.
    \37\ If all gasoline in the country was required to shift to 
low-RVP gasoline, the impacts would be limited to just refineries. 
The rest of the fuel distribution system would merely distribute the 
replacement low-RVP gasoline instead. However, since this action 
only applies to the eight petitioning states, a new additional type 
of gasoline is required for the distribution system to also handle.
---------------------------------------------------------------------------

    To minimize other impacts and enable production and distribution of 
low-RVP gasoline, refiners and fuel distributors will need time to make 
capital investments to optimize the fuel production and distribution 
system to replace the gasoline solely in the petitioning States with 
low-RVP gasoline. Without capital investments, which can take two years 
or more to complete, the limited availability of additional storage 
tanks for the new low-RVP gasoline grades--particularly at pipeline 
breakout tank locations, but also at refineries and downstream 
terminals--may result in low-RVP gasoline being sold within both the 
petitioning States and the immediately adjacent non-petitioning States. 
This would increase the volume of low-RVP gasoline needed to be 
produced and distributed to satisfy demand. Over time, we expect 
refiners and fuel distributors to invest in and optimize the fuel 
production and distribution system to more efficiently target low-RVP 
gasoline solely to the petitioning States.

A. Production

    Refiners will need to make modifications to their refinery 
operations to supply low-RVP gasoline. There are 11 petroleum 
refineries located within the petitioning States; that number increases 
to 40 when refineries located in States that border the petitioning 
States are included. Further, additional refineries outside of the 
immediate region may also modify their operations to provide low-RVP 
gasoline, as some of the gasoline supply for the petitioning States 
also historically comes from refineries located further west, east, and 
south, such as refineries in the Gulf Coast.\38\ For example, gasoline 
sold in Iowa is often produced by refineries located in Texas and 
distributed via pipeline. Therefore, this action could result in 
changes in refinery operations both within and outside of the 
petitioning States and extend to refineries in the Gulf Coast. Prior to 
the implementation of this rule, most refineries producing gasoline for 
use in the petitioning States produce a CBOB with an RVP of 9.0 psi 
during the summer season, with the 1-psi waiver allowing the final 
gasoline-ethanol blend to meet an RVP standard of 10.0 psi when 10 
percent ethanol is added to the CBOB downstream. With the removal of 
the 1-psi waiver and to enable the final gasoline-ethanol blend to 
comply with the resulting 9.0 psi RVP standard, refineries that choose 
to continue producing CBOB for use within the petitioning States will 
need to make changes to their operations to reduce the volatility of 
the CBOB distributed to these States to ~8.0 psi.\39\ For most 
refineries operating within and near the petitioning States, removal of 
the 1-psi waiver will likely result in the refinery choosing to only 
produce low-RVP CBOB. Refineries operating outside the petitioning 
States will choose to either produce only low-RVP CBOB for distribution 
to the petitioning and adjacent States, continue to produce only the 
current ~9.0 psi RVP CBOB for distribution to areas outside the 
petitioning States, or both. The limited availability of existing 
blending/storage tanks at a refinery to handle both gasoline types may 
prevent the refinery from producing both blendstocks without further 
capital investment.\40\ One commenter submitted a survey with data from 
refiners in and around petitioning States, which provided information 
regarding what refiners may have to do to meet the 9.0 psi RVP standard 
and is further discussed below.\41\ Nevertheless, at this time, we 
cannot predict which of the refineries that currently produce fuel for 
use in the petitioning States will choose to produce low-RVP CBOB for 
use in the petitioning States and potentially the

[[Page 14766]]

surrounding States. Unlike a nationwide change to the RVP of CBOB, the 
regional nature of this action means that not all refineries must 
adjust their refining processes to reduce the RVP of their CBOB. While 
it is highly likely that refineries that supply gasoline only to the 
petitioning States will adjust their refinery processes to reduce the 
RVP of their CBOB, these refineries could choose to avoid the necessary 
investments and provide 9.0 psi RVP CBOB to non-petitioning States 
instead if they are able to reach those markets.
---------------------------------------------------------------------------

    \38\ According to the Energy Information Administration (EIA), 
64 million barrels of gasoline were shipped from Petroleum 
Administration for Defense District (PADD) 3 (Gulf Coast) into PADD 
2 (Midwest), which corresponds to about 8 percent of the volume of 
gasoline consumed in PADD 2. EIA, ``Petroleum & Other Liquids; 
Movements by Pipeline, Tanker, Barge and Rail between PAD Districts; 
PADD 3 to PADD 2,'' https://www.eia.gov/dnav/pet/pet_move_ptb_dc_R20-R30_mbbl_m.htm.
    \39\ We refer to this new lower-volatility CBOB as ``low-RVP 
CBOB'' throughout this preamble.
    \40\ Certain areas within the petitioning states and other 
states already have more stringent RVP standards during the summer. 
Gasoline that refineries produce for these areas would be unaffected 
by this final rule. Refineries that produce 6.8 psi RVP CBOB for 7.8 
psi RVP areas, or 6.4 psi RVP RBOB for RFG areas, could expand 
production of these gasoline types for use in the petitioning states 
rather than create a new gasoline type at 8.0 psi RVP. This may 
reduce distribution cost complexity, but in exchange increase 
refinery production cost and lower gasoline production volume.
    \41\ Comment submitted by the American Fuel and Petrochemical 
Manufacturers (AFPM), Docket Item No. EPA-HQ-OAR-2022-0513-0077.
---------------------------------------------------------------------------

    Throughout the year, refineries must adjust the volatility of their 
gasoline--typically lowering the volatility of the gasoline in the 
summer and increasing the volatility in the winter by adjusting the 
quantity of light hydrocarbons in their gasoline. Refineries typically 
control gasoline volatility by adjusting the amount of butane in 
gasoline, but sometimes they need to also modify the amount of pentane 
or natural gas liquids (NGLs). Refineries providing fuel to the 
petitioning States will have to modify their summer gasoline production 
operations and potentially add capital equipment to accommodate the 9.0 
psi RVP standard. A refinery's ability to adapt to the 9.0 psi RVP 
standard and the time that it takes to do so depends on the refinery's 
structure, operations, and the mix of crude oil types that it 
processes.\42\
---------------------------------------------------------------------------

    \42\ Further discussion of the changes we expect from refineries 
associated with removal of the 1-psi waiver is available in the TSD.
---------------------------------------------------------------------------

    In addition to contributing to gasoline's volatility, butane also 
contributes to gasoline's octane and volume. Thus, when removing 
butane, refineries must also make other changes to replace the lost 
octane to keep the gasoline consistent and in compliance with EPA 
regulations and industry specifications. Refineries could produce more 
alkylate or reformate, which are two high octane gasoline blendstocks, 
to make up the lost octane. We estimate that the amount of butane that 
would have to be removed to produce a gasoline 1-psi lower in RVP 
amounts to about two volume percent of the volume of gasoline. However, 
comments from the refining industry described how at least some 
refineries would need to not only remove butane, but some less-volatile 
hydrocarbons as well (e.g., light straight run naphtha (LSR) or NGLs). 
Since LSR and NGLs are less volatile than butane, refineries would need 
to remove significantly more of those hydrocarbons to realize the same 
1-psi reduction in RVP, perhaps up to 10 volume percent. Such a change 
would have a smaller reduction in octane, however. Removing butane and 
these other light hydrocarbons from the summer gasoline sold in the 
petitioning States would reduce the supply of gasoline in those States.
    Regardless of how a refinery is modified to reduce the RVP of its 
gasoline, it will result in additional output of the removed butane or 
other light hydrocarbons. If excess onsite butane storage capacity is 
available, the refinery has the option of saving excess butane on-site 
for use in winter gasoline production, which would minimize the cost 
impact of producing low-RVP CBOB. However, if excess butane storage is 
not available, the refinery would then need to store it offsite (e.g., 
in caverns), sell it, or export it. This may require additional butane 
railcars and refinery upgrades for handling railcars to transport the 
butane. Refineries may also utilize some portion of the butane as a 
feedstock to their alkylation unit. In the near term, the large influx 
of excess butane may exceed the existing storage capacity, transport 
capacity, amount desired in the markets, or alkylation unit capacity. 
Without an outlet for the excess butane, this could then limit the 
refinery's ability to produce low-RVP CBOB, further reducing the supply 
of low-RVP gasoline. If a refinery is removing LSR or NGLs from its 
gasoline, these gasoline blendstocks could be sold to another refinery 
that could blend them into its gasoline, but the purchasing refinery 
would then need to remove butane to compensate for the RVP impact of 
the LSR or NGLs. This gasoline blendstock switching would help to 
offset the volume reductions associated with producing low-RVP CBOB.
    Given the high demand for gasoline in the summer months, refineries 
often begin producing summer gasoline for storage well ahead of the 
upcoming high ozone season. This process can begin as early as December 
of the year prior to the applicable high ozone season, and thus storage 
of a differing volatility of fuel could impact the refinery's ability 
to utilize the fuel the next summer without further modification.

B. Distribution

    As discussed above, removal of the 1-psi waiver will require 
refineries that distribute gasoline to the petitioning States to 
produce low-RVP CBOB. There are three primary groups within the 
distribution chain that will be impacted: refineries, pipelines (with 
their breakout terminals), and downstream product terminals.
1. Refinery Distribution
    Most refineries have an onsite terminal with numerous product 
storage tanks wherein they accumulate and store the range of products 
that they produce prior to placing the products into the distribution 
system. Once a refinery accumulates a sufficient volume of a gasoline 
type and confirms that it meets the applicable gasoline specifications, 
the refinery then schedules the shipment of that batch of gasoline to 
downstream markets. Shipment can occur via an onsite product terminal 
analogous to that discussed in Section V.B.3 where trucks load product 
and deliver to retail outlets. However, most gasoline produced by 
refineries is loaded onto product pipelines for delivery to downstream 
product terminals. In some cases, refineries also distribute product by 
rail or barge. For those refineries that distribute most or all of 
their gasoline to the petitioning States, removal of the 1-psi waiver 
will have little impact on their distribution operations. They can 
switch over their existing product tanks to hold only low-RVP CBOB. 
Instead of transitioning from winter CBOB RVP levels (up to 15 psi) to 
a 9.0 psi RVP CBOB in the summer, they would instead transition to low-
RVP CBOB. However, refineries that produce gasoline for both 
petitioning and non-petitioning States will likely need additional 
tanks, pipes, manifolds, and control systems to store the additional 
grades of gasoline. The time needed to plan, design, permit, and 
construct additional tankage is typically on the order of two or more 
years. Until this can be accomplished, a refinery that lacks the 
additional tankage will likely need to shift all its production to low-
RVP CBOB. However, this can be avoided if unused systems already exist 
or other products are discontinued.\43\ The market may go through a 
``sorting out'' process, wherein some refineries shift their historic 
markets, with some changing to producing only low-RVP CBOB and others 
continuing to produce only 9.0 psi RVP CBOB. This could result in some 
low-RVP CBOB flowing in from outside the petitioning States (e.g., from 
Gulf Coast refineries). Due to tankage and logistical limitations, some 
refineries serving both markets may initially shift all their 
production to low-RVP CBOB. This would result in low-RVP CBOB being 
distributed to the surrounding States, which would ease gasoline supply 
availability concerns,

[[Page 14767]]

but at the same time add to the overall reduction of gasoline supply 
due to butane and other light hydrocarbon removal. Terminals servicing 
low-RVP CBOB outside the petitioning States that have butane blending 
facilities could purchase some of the excess butane being removed by 
refineries and inject it into their CBOB to bring the fuel up to 9.0 
psi RVP since the gasoline in their area would not require the low-RVP 
fuel.
---------------------------------------------------------------------------

    \43\ Alternatively, some refineries may shift all premium grade 
fuel to low-RVP CBOB, while producing both 9.0 psi and low-RVP CBOBs 
for regular grade fuel.
---------------------------------------------------------------------------

    For those refineries that have excess tankage or invest in new 
tankage to allow the production of both 9.0 psi and low-RVP CBOB, they 
would also need to adjust their operations and schedules for loading 
gasoline blendstock onto pipelines, barges, or rail to split their 
production into separate product streams. These logistical changes 
would initially take some period of time in order to occur smoothly and 
safely, but should streamline over time.
2. Pipelines and Pipeline Breakout Terminals
    Most fuel in the U.S. flows from refineries to consumer markets via 
pipeline systems. As described in the TSD, there are several pipeline 
systems serving the petitioning States, the vast majority of which 
serve both petitioning and non-petitioning States. Consequently, the 
addition of the low-RVP CBOB in the petitioning States will require 
significant changes in the operations of the pipeline systems. What is 
currently one large conventional fuel market distributing primarily 9.0 
psi RVP CBOB will also need to distribute the new low-RVP CBOB. There 
will thus be a period where the pipeline systems go through a planning 
and optimization process to assess what gasoline type must be supplied 
to the pipeline to comply with the new fuel requirement. If a pipeline 
primarily serving the petitioning States is only equipped with breakout 
tanks compatible with a single gasoline type, the pipeline company will 
likely mandate that refiners solely provide that gasoline type. 
Decisions from refineries on whether they will supply low-RVP CBOB, and 
at what volumes, will be necessary to inform the planning and 
optimization process by pipeline systems. All of this can have impacts 
on gasoline supply not only to the petitioning States, but also to the 
surrounding States in the short term. Having the wrong fuel types in 
the wrong volume can result in an inability for the pipeline to move 
fuel in and out of tankage as needed, which, in turn, can result in 
significant supply disruption not only for the gasoline type in 
question, but also for all the fuels shipped on the pipeline. For the 
longer term, due to the market splitting into different types, some 
areas in the petitioning States may lose access to available markets of 
supply, which may then lead to more frequent shortfalls in supply 
during times of disruption (e.g., refinery fire, pipeline outage, 
hurricane, etc.).
    Some pipeline companies operate a fungible distribution system. 
This allows them to collect a standard type of gasoline from refineries 
into their system, ``transport'' the barrels virtually, and draw out 
identical barrels at their destination. The barrels delivered are not 
actually the purchased barrels from the refinery, but rather the same 
product from a different refinery meeting the same product 
specifications. An additional type of gasoline would disrupt their 
ability to function as efficiently using the fungible system. This 
increases the complexity associated with ensuring products can be 
distributed to locations in the timeframe needed to ensure supply to 
the market.
    The most significant impact on pipeline operations caused by the 
removal of the 1-psi waiver, however, will be on pipeline breakout 
tankage operations. Breakout tankage is required at junctions where 
pipelines connect with other pipelines that have differing schedules 
and flow rates. Thus, the pipelines typically need tankage to store 
every grade and type of product distributed on the pipeline, with the 
size and configuration of the tankage matched to the product and 
pipeline batch sizes. If new regular and premium grades of low-RVP CBOB 
need to be shipped on the pipeline, then it may require the addition of 
new tankage at these breakout tank facilities. The planning, 
permitting, and construction of such additional tankage would require 
two or more years and is likely to be an issue at many breakout tankage 
facilities both inside and outside the petitioning States. Until this 
additional breakout tankage can be brought into service, an impacted 
pipeline serving the petitioning States may be restricted to solely 
distributing either 9.0 psi or low-RVP CBOB, limiting gasoline supply 
to either the petitioning States or the surrounding States, and in turn 
restricting what the refineries shipping on the pipeline are able to 
produce if the pipeline restrictions do not allow for the distribution 
of a particular type of gasoline. Some pipelines may opt to carry one 
fuel type and some the other, limiting the product offerings at the 
various downstream product terminals. As with the refineries, it may be 
that due to tankage and logistical limitations, pipelines currently 
serving both petitioning and non-petitioning States will have to 
initially shift all the gasoline they carry to low-RVP CBOB, which is 
fungible in both markets. This will result in low-RVP CBOB being 
supplied in the surrounding States and additional reduction in supply 
of gasoline due to the necessary removal of butane and other light 
hydrocarbons. Pipelines would have the option to blend in butane during 
gasoline transport to the States with the 1-psi waiver that are located 
at the end of the pipeline systems (e.g., North Dakota and Michigan). 
This would provide a market for some of the excess butane from 
refineries producing low-RVP CBOB and could reduce consumer costs in 
the border States by blending up to 9.0 psi RVP CBOB. It could also 
allow more low-RVP CBOB to be produced if there are constraints in the 
markets for butane. However, like refineries, many pipeline and 
terminal facilities do not currently have the existing infrastructure 
to utilize butane blending. Additional tankage and equipment may be 
needed to maximize the potential of this opportunity.
3. Product Terminals
    The potential impact of the removal of the 1-psi waiver on product 
terminals varies depending on whether the terminals provide gasoline 
only to the petitioning States, or to non-petitioning States as well. 
Those terminals that only provide gasoline to the petitioning States 
will be little impacted, as they will simply take delivery of 
replacement grades of low-RVP CBOB beginning in the spring leading into 
the summer season. They will not have to contend with adding additional 
fuel grades and types and the tankage and logistics associated with 
them. This will most likely not be the case for terminals that serve 
areas both within and outside the petitioning States. If such terminals 
do not have sufficient onsite tankage capacity to handle the additional 
regular and premium grades of low-RVP CBOB, then they will need to 
either add the tankage or choose to serve one market or the other. The 
decision to serve a particular market or fuel type may also be dictated 
by a fuel marketer on the retail side. Both options could have gasoline 
supply, cost, and price impacts both within the petitioning States and 
in the surrounding areas the terminals serve. Approximately 75 such 
terminals are located close to the borders (i.e., 30 miles) between 
petitioning States and

[[Page 14768]]

non-petitioning States.\44\ These terminals are more likely to provide 
gasoline to both petitioning and non-petitioning States and will need 
to change their gasoline distribution patterns if they lack extra 
tankage to handle the additional low-RVP CBOB grades. Since terminals 
can serve gasoline markets up to 200 miles away, the number of 
terminals impacted could be significantly greater. If limitations in 
the fuel distribution system cause low-RVP CBOB to be sold in a 
significant portion of the surrounding States to improve fungibility of 
gasoline near the petitioning States, the potential impact on terminals 
will be reduced.
---------------------------------------------------------------------------

    \44\ EIA, U.S. Energy Atlas--Oil and Natural Gas Maps, https://www.eia.gov/maps.
---------------------------------------------------------------------------

    Regardless of whether a terminal serves only the petitioning 
States, or also non-petitioning States, all terminals will be impacted 
to some degree by a somewhat more challenging transition in the spring 
from winter to summer fuel due to the removal of the 1-psi waiver, 
particularly in the first year. While this transition occurs every year 
as the terminals blend down the volatility of the CBOB they have in 
storage from the higher RVP of winter CBOB to the lower RVP of summer 
CBOB, the change of having to blend down an additional 1.0 psi to 
accommodate low-RVP CBOB instead of 9.0 psi RVP CBOB will require some 
additional time and incur additional cost. In order to achieve the 
volatility of low-RVP CBOB, pipelines and terminals will likely need to 
blend down their winter CBOB with a summer CBOB that has an RVP as low 
as 6.0 psi during this transition period. Additionally, terminals will 
likely take steps to ensure their tanks are drained as low as possible 
prior to receiving a low-RVP CBOB to ensure the finished gasoline will 
comply with the 9.0 psi RVP standard, which could result in additional 
delays before the low-RVP CBOB begins moving to markets. This will 
likely occur more frequently at terminals located within and near the 
border of the petitioning States.
4. Tank Trucks
    Moving gasoline to market also involves tank trucks that deliver 
the gasoline to retail outlets. For terminals located within the 
petitioning States, their operations should be little impacted by the 
removal of the 1-psi waiver; they will simply pick up a different type 
of gasoline from the product terminal than they did before and can 
transport it to market, even outside the petitioning States if the 
terminal normally covers the area. However, depending on the changes in 
product offering at the terminals, there may still be considerable 
stress on their operations. If some refineries, pipelines, or terminals 
limit their product offering to either 9.0 psi or low-RVP CBOB, 
especially in the near term, then the tank trucks would need to shift 
their operations accordingly. In some cases where there is a loss of 
fuel fungibility, this is expected to increase the distances traveled, 
which may in turn require the purchase of additional tank trucks and 
hiring of additional drivers. As with the rest of the fuel distribution 
system, this can all be accomplished, but will take some time for the 
market to respond and optimize around the new norms.

C. Retail Operations

    The removal of the 1-psi waiver and resulting transition from 10.0 
psi RVP gasoline to 9.0 psi RVP gasoline received from the terminal 
should be minor for retail outlets--they will simply take delivery of 
the lower-volatility gasoline from the terminal. The most noticeable 
effects will be seen at retail outlets near the borders of States 
maintaining the 1-psi waiver, as the cost of 9.0 psi RVP gasoline 
within the petitioning States is likely to be higher than that of 10.0 
psi RVP gasoline across the border in non-petitioning States. Retailers 
within the petitioning States may have to charge higher prices to 
recoup this cost, which could result in consumers preferentially 
choosing to refill at stations across the border when possible.\45\ 
Retail operations located near State lines on the border of petitioning 
and non-petitioning States may have issues scheduling gasoline 
shipments to their retail outlets if tank trucks are shipping their 
gasoline from terminals located further away and if there is an initial 
shortage of tank truck operators, particularly at the beginning of the 
transition to the new 9.0 psi RVP gasoline. As with the rest of the 
distribution system, this can all be accomplished, but will take some 
time for the market to respond and optimize around the new norms.
---------------------------------------------------------------------------

    \45\ This phenomenon is observed today in SIP and RFG areas.
---------------------------------------------------------------------------

VI. Implementation and Effective Date

A. Statutory Provisions

    Under CAA section 211(h)(5)(C), the regulations removing the 1-psi 
waiver shall take effect on the later of: (1) The first day of the 
first high ozone season for the area that begins after the date of 
receipt of the notification; or (2) 1 year after the date of receipt of 
the notification. The high ozone season is defined in EPA's regulations 
as ``June 1 through September 15 for retailers and [wholesale purchaser 
consumers (WPCs)], and May 1 through September 15 for all other 
persons,'' which includes gasoline distribution terminals.\46\
---------------------------------------------------------------------------

    \46\ 40 CFR 1090.80. We note that given the current definition 
of ``high ozone season,'' the later date will always be one year 
after receipt of the request from a Governor.
---------------------------------------------------------------------------

    In applying this provision for the petition dated April 28, 2022, 
the later date is April 28, 2023. Therefore, the earliest date on which 
the removal of the 1-psi waiver for Illinois, Iowa, Nebraska, 
Minnesota, South Dakota, and Wisconsin could have been effective was 
April 28, 2023. This date would have been in advance of the high ozone 
season beginning May 1, 2023. For the petition from Ohio, dated June 
10, 2022, the later date is June 10, 2023. This would have placed the 
effective date within the 2023 high ozone season (i.e., 10 days after 
the beginning of the high ozone season for retailers and WPCs, and 41 
days after the beginning of the high ozone season for all other 
parties). Finally, for the petition from Missouri, dated December 21, 
2022, the later date is December 21, 2023.\47\ This would have placed 
the effective date after the 2023 high ozone season.
---------------------------------------------------------------------------

    \47\ We recognize that the Missouri petition requested that the 
removal take effect for the 2023 high ozone season. However, such an 
effective date was not permissible under CAA section 211(h)(5)(C).
---------------------------------------------------------------------------

    Further, under CAA section 211(h)(5)(C), the effective date can be 
extended if EPA, on its own motion or on petition from any person, 
after consultation with the Secretary of Energy, determines there would 
be an insufficient supply of gasoline in a State that has requested the 
removal of the 1-psi waiver for E10.\48\ Section 211(h)(5)(C) further 
provides that the effective date can be extended for not more than one 
year, and that EPA may renew the extension for two additional periods, 
each of which shall not exceed one year.
---------------------------------------------------------------------------

    \48\ CAA section 211(h)(5)(C)(ii).
---------------------------------------------------------------------------

    As described above, EPA is allowed to extend the effective date of 
the removal of the 1-psi waiver upon a finding of ``insufficient supply 
of gasoline in the [petitioning] state'' that would result from ``the 
promulgation of the regulations [to remove the 1-psi waiver].'' \49\ 
``Insufficient supply of gasoline'' is not defined in the statute, and 
thus EPA is interpreting and applying the phrase in a manner that is 
consistent with the structure of the statute, historical application of 
similar

[[Page 14769]]

or related provisions, and congressional intent. We interpret 
``insufficient supply of gasoline'' to require a demonstration that 
gasoline supply disruptions would result from removal of the 1-psi 
waiver, such that the necessary quantities of gasoline may not be 
available in the States at the time they are required. It is 
particularly appropriate in this case to consider the possibility of 
supply disruptions because this action calls for a different type of 
gasoline to be physically produced and transported to and within the 
petitioning States. CAA section 211(h)(5) also indicates that our 
analysis of ``insufficient supply'' should be ``in the State'' 
petitioning for the removal of the 1-psi waiver. That is, if there was 
insufficient supply only in a single State, we could extend the 
effective date for that State only. This contrasts with CAA section 
211(c)(4)(C)(iii)(I), which calls for consideration of supply 
constraints in ``the smallest geographic area.'' Therefore, our 
analysis properly considers any state-specific factors, and examines 
the supply in the State.
---------------------------------------------------------------------------

    \49\ CAA section 211(h)(5)(C).
---------------------------------------------------------------------------

    In considering the likelihood of supply disruptions, we look to the 
entire production and distribution chain, from the refineries where 
gasoline is produced, through distribution systems such as pipelines 
and trucking, and ultimately to the retail outlets. This reading is 
also similar to EPA's interpretation of other provisions in CAA section 
211 that call for consideration of constraints on fuel supply when EPA 
is acting on petitions within the fuels program. For instance, CAA 
section 211(k)(6)(A)(ii) allows EPA, after consultation with the 
Department of Energy, to extend the effective date for a State that has 
petitioned to opt into the RFG program for a period that is up to one 
year from the date of receipt of the petition upon a finding of 
insufficient domestic capacity to produce RFG. A related provision in 
CAA section 211(k)(6)(B)(iii) allows EPA to extend the effective date 
for areas within the ozone transport region established under CAA 
section 184 that opt into RFG, upon a finding of insufficient capacity 
to supply RFG. Like the phrase ``insufficient supply of gasoline'' in 
CAA section 211(h)(5)(C), the statute does not define either 
``insufficient domestic capacity'' or ``insufficient capacity to supply 
RFG.'' But in acting on petitions to opt into the RFG program, EPA has 
explained that setting the effective date allows EPA to consider any 
sudden and unexpected increases in the demand for RFG on the local 
supply and distribution system that is caused by an opt-in.\50\
---------------------------------------------------------------------------

    \50\ 62 FR 30261, 30263 (June 3, 1997) (``Section 211(k)(6)(A) 
of the Act gives the Administrator discretion to `establish an 
effective date * * * as he deems appropriate* * *.' EPA interprets 
this provision to mean that it has broad discretion to consider any 
factors reasonably relevant to the timing of the effective date. 
This would include factors that affect industry and the potential 
opt-in area. The factors that affect industry could include 
productive capacity and capability, other markets for RFG, oxygenate 
supply, cost, lead time, supply logistics for the area, potential 
price spikes, and potential disruption to business.'')
---------------------------------------------------------------------------

    EPA's reading of ``adequate supply'' in CAA section 
211(c)(4)(C)(ii) comports with our interpretation of CAA section 
211(h)(5)(C) given that Congress intended for EPA to act in certain 
unique emergency circumstances to relieve supply disruptions within the 
``motor fuel distribution system.'' \51\ And while ``motor fuel 
distribution system'' is not defined in the statute, EPA's historical 
practice in granting waivers under CAA section 211(c)(4)(C)(ii) has 
been to consider all stages of the gasoline production and distribution 
system within States that are experiencing emergency circumstances.
---------------------------------------------------------------------------

    \51\ CAA section 211(c)(4)(C)(iii)(V).
---------------------------------------------------------------------------

    In contrast, the phrase ``insufficient supply of gasoline'' differs 
from other sub-provisions of CAA section 211 allowing for waivers of 
applicable requirements as well as implementation delays that use 
language such as ``inadequate domestic supply.'' \52\ The D.C. Circuit 
has provided guidance on the meaning of ``inadequate domestic supply'' 
in CAA section 211(o)(7)(A)(ii), finding that EPA may properly consider 
``supply side factors--such as production and import capacity,'' but 
not downstream effects.\53\ The court, in viewing the statutory scheme 
of the RFS program, further specified that the supply of renewable fuel 
to refiners, blenders, and importers properly considers the factors 
necessary to get renewable fuel to refiners, blenders, and importers, 
but not to market actors ``downstream from refiners, importers, and 
blenders.'' We find that the analysis under CAA section 211(h)(5) 
extends to include market actors downstream from refiners, importers, 
and blenders, as the gasoline distribution system is a key component to 
the availability of gasoline in the State.\54\ The analysis properly 
considers production factors, as well as the distribution of fuel from 
the refinery, through the distribution chain (including pipelines and 
terminals) to the ultimate endpoint of the gasoline distribution 
chain--the retail outlet. Further, CAA section 211(h)(5) explicitly 
contemplates the ``supply of gasoline in the State.''
---------------------------------------------------------------------------

    \52\ CAA sections 211(m)(3)(C) and (o)(7)(A)(ii).
    \53\ Americans for Clean Energy v. EPA, 864 F.3d 691, 710 
(2017).
    \54\ CAA section 211(h)(5)(C) explicitly contemplates the 
``supply of gasoline in the State.''
---------------------------------------------------------------------------

    Finally, we note that consideration of the effective date for this 
action properly considers supply to the ultimate consumer given the 
statutory language ``in the State.'' Therefore, our analysis of 
``insufficient supply of gasoline'' properly considers all stages of 
the gasoline production and distribution system, from the refinery to 
the retail outlet.

B. Finding of Insufficient Supply for 2024 and Renewal of Extension of 
Effective Date

    CAA section 211(h)(5)(C)(ii)(I) requires a determination of 
insufficient supply of gasoline in order to extend the effective date 
of the removal of the 1-psi waiver. We determined that a 2023 
implementation date would result in insufficient supply of gasoline and 
proposed an effective date of April 28, 2024, for removal of the 1-psi 
waiver in all petitioning States.\55\ We also sought comment on 
renewing the extension of the effective date for removal of the 1-psi 
waiver for an additional year (i.e., until the summer of 2025).\56\ We 
received comments for and against the proposed effective date. 
Commenters against the proposed dates argued that we could still 
implement the rule for the 2023 summer season, despite the mere two 
weeks between the end of the comment period and the beginning of the 
2023 summer season for terminals and refiners. Commenters in support of 
the proposed delay argued that a 2023 effective date would be either 
``impractical'' or ``impossible.''
---------------------------------------------------------------------------

    \55\ At proposal, we further explained that the effective date 
for Ohio, would have been within the 2023 high ozone season (i.e., 
10 days after the beginning of the high ozone season for retailers 
and WPCs, and 41 days after the beginning of the high ozone season 
for all other parties), while the effective date for Missouri would 
have been December 21, 2023, or after the 2023 high ozone season. 88 
FR 13762 (March 6, 2023).
    \56\ 88 FR 13767 (March 6, 2023).
---------------------------------------------------------------------------

    Further, in response to and after the proposal, we received 
petitions from numerous stakeholders requesting a delay of the proposed 
effective date until either 2025 or 2026. These stakeholders posited 
that the extension of the effective date would be supported by the 
Administrator's finding of insufficient supply of gasoline pursuant to 
CAA section 211(h)(5)(C)(ii)(I).\57\

[[Page 14770]]

After consideration of comments and extension petitions, EPA is acting 
on its own motion to renew the extension of the proposed effective date 
for an additional year from April 28, 2024, to April 28, 2025. In sum, 
the circumstances that justified a finding of insufficient supply of 
gasoline and extension of the effective date for 2023 have not 
attenuated. Additionally, we have consulted with the Department of 
Energy, consistent with the CAA section 211(h)(5)(C)(ii)(I). We are not 
acting on petitions that requested a 2026 effective date, and these 
petitions remain pending. In this section we discuss our finding that 
there would be an insufficient supply of gasoline in 2024.
---------------------------------------------------------------------------

    \57\ Petition from Magellan (September 16, 2022); Petition from 
API (September 23, 2022); Petition from Flint Hills Resources 
(September 29, 2022); Petition from Phillips 66 (September 29, 
2022); Petition from AFPM and other parties (October 14, 2022); 
Petition from HF Sinclair (October 17, 2022); Petition from Magellan 
(August 19, 2023); Petition from Kevin Stitt, Governor of Oklahoma 
(August 25, 2023); Petition from API (September 29, 2023); Petition 
from AFPM (September 29, 2023); Petition from Sarah Huckabee 
Sanders, Governor of Arkansas (October 9, 2023); Petition from 
Superior Refining (October 13, 2023); Petition from Phillips 66 
(October 18, 2023); Petition from CountryMark (October 25, 2023); 
Petition from Yesway (November 1, 2023); Petition from HF Sinclair 
(November 15, 2023).
---------------------------------------------------------------------------

    At proposal, we provided the rationale for our determination of 
insufficient supply for 2023; we assessed the following three supply 
constraints: (1) Low gasoline inventories; (2) The limited time 
available for coordination between various parties to make the 
necessary physical changes to the gasoline production and distribution 
infrastructure; and (3) The physical loss of supply necessary to 
produce low-RVP CBOB. We determined that these constraints would likely 
have led to supply disruptions in the petitioning States in 2023.\58\
---------------------------------------------------------------------------

    \58\ Our detailed finding of insufficient supply for 2023 can be 
found at 88 FR 13767 (March 6, 2023).
---------------------------------------------------------------------------

    We have now assessed gasoline supply impacts associated with an 
effective date in 2024 and updated our analyses of these supply 
constraints.\59\ As discussed further in detail below and in the TSD, 
our updated analyses found: (1) Continued low gasoline inventories in 
PADD 2; (2) The limited time available after the promulgation of this 
action for coordination between various parties to make the necessary 
physical changes to the gasoline production and distribution 
infrastructure; and (3) Greater reduction in supply as a result of the 
removal of the 1-psi waiver than estimated at the time of the proposal. 
We also considered the following: (1) The lack of sufficient time to 
make the capital investments and physical changes to refineries and the 
fuel distribution system; and (2) Less flexibility within the fuel 
distribution system than had been anticipated to adequately mitigate 
the supply reduction until such time as the capital and physical 
changes can be made. We are therefore renewing the extension of the 
delay of the effective date for an additional year to April 28, 2025.
---------------------------------------------------------------------------

    \59\ EPA also received several petitions for further delay 
beyond 2024. See Petition from Magellan (August 25, 2023); Petition 
from Kevin Stitt, Governor of Oklahoma (August 25, 2023); Petition 
from API (September 29, 2023); Petition from AFPM (September 29, 
2023); Petition from Sarah Huckabee Sanders, Governor of Arkansas 
(October 9, 2023); Petition from Superior Refining (October 13, 
2023); Petition from Phillips 66 (October 18, 2023); Petition from 
CountryMark (October 25, 2023); Petition from Yesway (November 1, 
2023); Petition from HF Sinclair (November 15, 2023).
---------------------------------------------------------------------------

    Since proposal, we have conducted an updated analysis to quantify 
the reduction in gasoline supply that would result from the removal of 
the 1-psi waiver. At proposal, we estimated the reduction in supply as 
20 thousand barrels per day (kbpd) based on the removal of light 
hydrocarbons--mostly butane--to reduce the volatility of CBOB.\60\ In 
response to our proposal, AFPM commissioned a study of supply 
reductions that quantified the reduction in gasoline supply at 88-120 
kbpd.\61\ We also conducted a series of meetings with refiners 
regarding the supply impacts associated with the removal of the 1-psi 
waiver in the petitioning States.\62\ As further described in the TSD, 
based on our discussions with refiners and our review of the comments, 
we now estimate that gasoline production by refineries supplying 
gasoline to the petitioning States would likely decrease by 30-80 kbpd 
as a result of the transition to low-RVP CBOB. Our estimate increased 
from the proposal primarily because a significant number of refineries 
that choose to produce low-RVP CBOB will need to reduce other less-
volatile hydrocarbons (e.g., NGLs), which will have a larger impact on 
gasoline supply. On average, refineries producing low-RVP CBOB are 
estimated to produce 3-4 percent less gasoline compared to producing 
9.0 psi RVP CBOB, particularly when removal of the 1-psi waiver is 
first implemented. We acknowledge that the possibility of drawing down 
gasoline inventories, increasing gasoline supply from other regions 
(e.g., Gulf Coast), and reblending some higher-volatility gasoline 
blendstocks at terminals in non-petitioning States could mitigate the 
supply reduction to some extent. However, we believe that these 
mitigating actions would fall far short of offsetting the projected 
supply reductions for the 2024 summer season.
---------------------------------------------------------------------------

    \60\ ``Technical Support Document for the Proposed Removal of 
the 1-psi Waiver,'' available in the docket for this action.
    \61\ Baker and O'Brien, ``Midwest States Gasoline RVP--1 psi 
Waiver Study, Report for American Fuel and Petrochemical 
Manufacturers,'' February 24, 2023. Submitted as part of comments 
from AFPM, Docket Item No. EPA-HQ-OAR-2022-0513-0077.
    \62\ Memorandum to the Docket: Meeting Log for Requests from 
States to Remove the Gasoline Volatility Waiver.
---------------------------------------------------------------------------

    Further, at proposal we noted that while the gasoline inventories 
in PADD 2 (the affected region) was low, we believed that it would 
likely return closer to historic levels due to the previously shut-down 
Midwest refineries returning to operation. However, even though these 
refineries have since come back online--increasing gasoline production 
in the region--the gasoline inventories in PADD 2 \63\ have continued 
to be at levels of concern.\64\ Furthermore, we have been made aware of 
the fact that refiners have had a heavy maintenance season at their 
refineries in the fall of 2023 and are planning a heavy maintenance 
season for the first quarter of 2024. This means that gasoline 
production capacity will be taken offline for several months at a key 
time during the winter season when gasoline inventories are typically 
replenished prior to the next summer season.\65\ Additionally, gasoline 
demand is still expected to increase. EIA estimates that national 
gasoline demand will increase by 60 kbpd in 2024 compared to 2023, 
further straining gasoline inventories and supply.\66\ Thus, we 
anticipate that gasoline inventories in PADD 2 will not recover 
sufficiently by the 2024 summer season to alleviate the estimated loss 
of gasoline supply that would occur when low-RVP CBOB is produced. 
Further, due to a separate and unrelated regulatory action, the 
prohibition on sale of conventional gasoline in the Denver metropolitan 
area began on November 7, 2023. This means that

[[Page 14771]]

gasoline sold in that area must comply with a 7.4 psi RVP requirement 
beginning with the 2024 summer season.\67\ This is expected to cause an 
additional 5-10 kbpd reduction in gasoline supply in the same 2024 
summer season. Although Denver is not in a petitioning State, some 
gasoline is currently supplied to this region from refineries that also 
produce gasoline for the petitioning States, resulting in additional 
strain on gasoline supply in the region.
---------------------------------------------------------------------------

    \63\ Low gasoline inventories in PADD 2 were an additional bases 
for the emergency fuel waivers issued under CAA section 
211(c)(4)(C)(ii)(I) during the summer of 2023. See Letter from EPA 
Administrator to Governors, ``May 1, 2023, E15 Reid Vapor Pressure 
Fuel Waiver,'' April 28, 2023 (``The Midwest region--the region that 
has the most ability to increase supply with blending an increased 
percentage of ethanol--has gasoline stocks below the five-year 
seasonal average for this time of year.'').
    \64\ Based on our discussions with EIA, gasoline supply begins 
to be a concern when gasoline inventories drop below the 5-year 
minimum for any particular PADD.
    \65\ Bloomberg News, ``Nearly 2.5 Million Barrels a Day of US 
Refining Capacity to Shut for Fall Maintenance,'' October 2, 2023, 
https://www.bnnbloomberg.ca/nearly-2-5-million-barrels-a-day-of-us-refining-capacity-to-shut-for-fall-maintenance-1.1979186.
    \66\ EIA, Annual Energy Outlook (AEO) 2023, Table 11, https://www.eia.gov/outlooks/aeo. AEO 2023 also estimates that gasoline 
demand will decrease by 140 kbpd in 2025 relative to 2024.
    \67\ 87 FR 60926, 60932-33 (October 7, 2022).
---------------------------------------------------------------------------

    As also described in Section V and the TSD, capital investments 
will be necessary for some refiners and fuel distributors to 
accommodate a transition to low-RVP CBOB in the petitioning States. 
This includes investments for the storage of additional gasoline types 
and grades, storage of excess butane and LSR, and associated measures 
for piping, pumping, and spill containment. We also anticipate that 
refineries would need to debottleneck debutanizers and octane-producing 
units to enable the production of low-RVP CBOB.\68\ These capital 
investments typically require time to come online. For example, 
projects to debottleneck existing refinery units typically require 2-
2.5 years to engineer, design, purchase, permit and install. Under an 
assumption that refiners and fuel distributors could have begun the 
planning process for debottlenecking a refinery unit or installing a 
gasoline storage tank after the first State filed its petition in April 
2022, or after EPA proposed to remove the 1-psi waiver in the 
petitioning States in early 2023, there would be insufficient time 
prior to the summer of 2024 to complete the desired capital additions. 
However, based on discussions with refiners, pipeline operators, and 
terminal operators, as well as public comments, many of the needed 
capital investments were not initiated in 2022 due in part to: (1) The 
uncertainty created by several States rescinding their petitions during 
2022; (2) The emergency fuel waivers under CAA section 
211(c)(4)(C)(ii)(I) extending the 1-psi RVP waiver to E15 during the 
2023 summer season; \69\ and (3) Potential congressional action that 
would extend the 1-psi waiver to E15 nationwide.\70\ Without initiation 
in 2022, many of the necessary capital investments are unlikely to be 
completed by the summer of 2024.
---------------------------------------------------------------------------

    \68\ Capital grassroots projects typically require 3-4 years to 
engineer, design, purchase, permit and install. Smaller projects 
that can ``debottleneck'' individual refinery units (e.g., replacing 
a furnace, heat exchanger, or reactor) typically require 2-2.5 years 
to complete, while much smaller projects (e.g., replacing a valve or 
pump or adding or increasing the size of piping) may be designed and 
completed in a year or less. These types of capital investments can 
help a refinery produce additional low-RVP CBOB. Shell, ``Thriving 
in the new reality: Refinery revamp projects FAQ; Shell Catalysts 
and Technologies,'' https://www.shell.com/business-customers/catalysts-technologies/resources-library/refinery-revamp-faq.html.
    \69\ From April 28, 2023, to August 28, 2023, EPA issued a 
waiver under CAA section 211(c)(4)(C)(ii)(I) that facilitated E15 
sales during the summer of 2023.
    \70\ See, e.g., comments from Magellan (Docket Item No. EPA-HQ-
OAR-2022-0513-0042), API (Docket Item No. EPA-HQ-OAR-2022-0513-
0056), and HF Sinclair (Docket Item No. EPA-HQ-OAR-2022-0513-0076).
---------------------------------------------------------------------------

    In addition, supplying the new low-RVP CBOB will require 
coordinated investments, planning, and actions between refineries, 
pipelines and other fuel distribution companies, terminals, and retail 
outlets. Typically, this coordination occurs before winter to provide 
the fuel production and distribution system a chance to make the proper 
preparations; we are now past the point in the calendar when such 
coordination typically occurs. We are also entering into the timeframe 
when most refineries have already started producing summer gasoline. As 
such, refineries will not have sufficient and appropriate notice to 
begin modifying their fuel supply for the summer of 2024.
    Finally, we assumed at proposal that flexibility within the fuel 
production and distribution system could allow refiners and fuel 
distributors to mitigate the projected 2024 summer season supply 
reduction until such time as capital and physical changes could be 
completed. However, based on subsequent comment and analysis, we now 
believe that the existing flexibility would not be sufficient, 
particularly in light of the larger anticipated supply reduction and 
lingering low gasoline inventories in PADD 2.
    For the above-mentioned reasons, supported by additional detail and 
analysis in the TSD, we are making a determination that there will be 
an insufficient supply of gasoline in the petitioning States in the 
2024 summer season and, therefore, are renewing the extension of the 
effective date of the removal of the 1-psi waiver by an additional year 
to April 28, 2025.\71\
---------------------------------------------------------------------------

    \71\ Discussion of the supply circumstances in the summer of 
2025 is available in TSD Section 7.
---------------------------------------------------------------------------

VII. Cost and Price Impacts

    There are associated costs with the changes to the refining and 
gasoline distribution systems described in Sections V and VI. Part of 
the costs will be incurred by the refining sector, while another 
portion will be incurred by the gasoline distribution system. Gasoline 
refining costs will increase due to several factors, the largest 
portion of which is the lost opportunity cost for refiners having to 
sell the removed light hydrocarbon material at lower market prices 
instead of blending this material into high value summer gasoline. To 
the extent that refiners and distributers install capital equipment, 
there are also additional capital and associated operating costs that 
will need to be recouped over time. These costs will be passed along to 
consumers in the petitioning and surrounding States in the form of 
higher gasoline prices.
    With respect to consumer fuel prices, while fuel prices generally 
reflect fuel costs in the competitive gasoline market, this may not be 
the case when removal of the 1-psi waiver is first implemented, as 
gasoline supply will be reduced and not yet recovered. Due to the 
reduced supply, there will likely be a reduction in PADD 2 gasoline 
inventories, which could further increase gasoline prices. Due to the 
challenges that some refiners may have in producing low-RVP CBOB and 
the associated impacts on gasoline inventories, fuel prices will likely 
exceed fuel costs because the marginal cost producer will set the fuel 
price. This will likely affect gasoline prices in both petitioning and 
non-petitioning States and result in higher gasoline prices at the pump 
for consumers. The potential cost and price impacts due to the removal 
of the 1-psi waiver are discussed in more detail in the TSD.
    As discussed above, under the relevant CAA provisions, upon 
receiving a petition from a State Governor that is accompanied by a 
successful demonstration of emissions increases as a result of the 1-
psi waiver, EPA is required to remove the 1-psi waiver in the areas 
requested by the Governor. In deciding whether to grant the petition, 
the statute does not provide EPA with the authority to consider fuel 
cost or price impacts and we assume that any fuel cost or price impacts 
to consumers were taken into consideration by the Governors of the 
petitioning States in submitting their petitions. Therefore, regardless 
of the magnitude of the impact of this action on fuel costs or prices, 
EPA has not considered them in this action.

VIII. Associated Regulatory Provisions

    In the NPRM, we proposed changes to the fuel quality regulations at 
40 CFR part 1090 to implement the removal of the 1-psi waiver in the 
petitioning States. Specifically, we proposed to include new 
designation and associated product transfer document (PTD) language 
requirements and a regulatory

[[Page 14772]]

mechanism for States to request the reinstatement of the 1-psi waiver 
under CAA section 211(h)(5). We are finalizing these changes as 
proposed, and we respond to comments received on the proposed 
regulatory changes in the RTC document.

A. New Designation and Associated PTD Language

    We are finalizing as proposed a new designation and associated PTD 
language for summer CBOB in States where the 1-psi waiver for E10 has 
been removed under CAA section 211(h)(5).\72\ Designations and PTD 
language requirements help ensure that batches of fuel are distributed 
and used in a manner consistent with EPA's fuel quality requirements. 
Without proper designation, summer gasolines with different 
volatilities intended for use in different areas may get commingled in 
a fungible system, causing the introduction and use of non-compliant 
gasoline in areas that require lower-volatility fuels in the summer. 
Similarly, PTD language serves to ensure that parties in the fuel 
distribution chain are aware of the designation of the fuel and 
accompanying Federal requirements for the distribution and use of the 
fuel. Because we are finalizing requirements for a new type of summer 
CBOB in this action, we need to create a new designation and 
accompanying PTD language to ensure that the new CBOB is distributed 
and used consistent with the RVP requirements.
---------------------------------------------------------------------------

    \72\ The designation and PTD language requirements for gasoline 
are located at 40 CFR 1090.1010 and 1090.1110, respectively.
---------------------------------------------------------------------------

    In this action, we are requiring gasoline manufacturers to 
designate summer CBOB for use in States where we have removed the 1-psi 
waiver as ``Low-RVP Summer CBOB.'' We are also finalizing as proposed 
related changes to the PTD language requirements so that gasoline 
manufacturers that produce Low-RVP Summer CBOB can accurately and 
consistently describe the fuel designation. All other designation and 
PTD provisions will still apply (e.g., those designations related to 
the blending of ethanol). We believe this approach is the most 
straight-forward method for updating the designation and PTD 
requirements for Low-RVP Summer CBOB.

B. Regulatory Reinstatement Mechanism

    We are finalizing as proposed a regulatory mechanism for States to 
request the reinstatement of the 1-psi waiver under CAA section 
211(h)(5). This regulatory mechanism will be available for the 
petitioning States, as well as any other State for which EPA removes 
the 1-psi waiver under CAA section 211(h)(5) in the future. The 
regulations provide all States with criteria under which such a request 
could be made and granted. We modeled the regulatory mechanism for 
reinstatement of the 1-psi waiver on the regulations in 40 CFR 1090.295 
that allow for the removal of 7.8 psi RVP standard.\73\ Under the 
reinstatement mechanism, we are requiring that the State only has to 
request the reinstatement of the 1-psi waiver in order for EPA to 
reinstate it; however, if the State has relied on the 1-psi waiver 
removal in a SIP, either pending or approved, EPA, in consultation with 
the State, must determine if such a SIP must be revised. If a revision 
is necessary, the State must revise the SIP and EPA must approve the 
revision prior to the effective date of the reinstatement of the 1-psi 
waiver. Such requests must include a requested effective date, and any 
such effective date must be at least 90 days after EPA's written 
notification to the State that their request has been approved.
---------------------------------------------------------------------------

    \73\ We are not reopening the regulations associated with 
removal of a federal 7.8 psi low-RVP program in a given area (40 CFR 
1090.295) or the regulations that allow states to opt-out of the 
federal RFG program (40 CFR 1090.290).
---------------------------------------------------------------------------

IX. Removal of the 1-psi Waiver for E15

    This action also amends 40 CFR part 1090 to reflect the 2021 court 
decision in American Fuel and Petrochemical Manufacturers (AFPM) v. 
EPA, 3 F.4th 373 (D.C. Cir. 2021), vacating the 1-psi volatility waiver 
for E15 in 40 CFR 1090.215(b)(2). The Administrative Procedure Act, 5 
U.S.C. 553(b)(3)(B), provides that, when an agency for good cause finds 
that notice and public procedures are impracticable, unnecessary, or 
contrary to the public interest, the agency may issue a rule without 
providing notice and an opportunity for public comment. EPA has 
determined that there is good cause for amending these provisions 
without prior proposal and opportunity for public comment because the 
correction of 40 CFR part 1090 is a ministerial act to effectuate the 
court order and public notice and comment is unnecessary and would 
serve no useful purpose. Modification of the regulations to eliminate 
the 1-psi waiver for E15 at 40 CFR 1090.215(b)(2) has no legal effect 
beyond fulfilling the court's vacatur in AFPM v. EPA and is ministerial 
in nature. The court issued its mandate on September 17, 2021, at which 
point the vacatur became effective.

A. Background

    In June 2019, EPA finalized a rule modifying volatility regulations 
for gasoline-ethanol blends containing more than 10 and up to 15 
percent ethanol to provide a 1-psi RVP volatility ``waiver.'' The rule 
was challenged in the D.C. Circuit by AFPM and other groups in June 
2019. The court issued its decision on July 2, 2021, vacating the 
volatility rule, and subsequently issued the mandate for its decision 
on September 17, 2021.
    This action updates our regulations to reflect the court's vacatur 
of the volatility rule. Subsequent to the promulgation of the 
volatility rule and the corresponding regulations at 40 CFR 80.27, in 
December 2020, EPA finalized its fuels regulatory streamlining effort 
and transposed the regulations, with minor changes, to 40 CFR 
1090.215.\74\ We are now making the necessary amendments to the 
regulations at 40 CFR 1090.215 to be consistent with the court's 
vacatur.
---------------------------------------------------------------------------

    \74\ 85 FR 78412 (December 4, 2020).
---------------------------------------------------------------------------

    We are also clarifying the status of the ``substantially similar'' 
determination for gasoline made in the same action. Because the 2019 
interpretative rule \75\ was promulgated solely for the purpose of 
providing the 1-psi waiver to E15, and because the court vacated the 
entire volatility rule, the 2019 interpretative rule is rescinded.\76\ 
Thus, the only ``substantially similar'' determinations for gasoline 
are: (1) The 1991 interpretative rule,\77\ and (2) The 2008 
interpretative rule.\78\
---------------------------------------------------------------------------

    \75\ 84 FR 26980 (June 10, 2019).
    \76\ See 84 FR 26980, 26983 (June 10, 2019) (``In sum, all 
actions we are taking today constitute a single, cohesive effort, 
and as such we do not intend for any of these individual actions to 
be severable'').
    \77\ 56 FR 5352 (February 11, 1991).
    \78\ 73 FR 22277 (April 25, 2008).
---------------------------------------------------------------------------

    Finally, in the same rulemaking action, EPA promulgated regulations 
related to the RFS credit or ``RIN'' market.\79\ These regulations were 
not challenged, were severable from the action to extend the 1-psi 
waiver to E15, and remain in place. EPA is noting this for 
informational purposes only; we are not reopening these RFS regulations 
here.
---------------------------------------------------------------------------

    \79\ 84 FR 26980 (June 10, 2019).
---------------------------------------------------------------------------

B. Affected Provisions

    This final rule amends the fuel quality regulations at 40 CFR part 
1090, subparts C and R, to remove the 1-psi waiver for E15 contained in 
40 CFR 1090.215(b)(2) and 1090.1720(e) by replacing the phrases ``15 
volume percent'' and ``15 percent'' with ``10 volume percent'' and ``10 
percent,''

[[Page 14773]]

respectively. As explained above, removal of the 1-psi waiver for E15 
corrects the CFR to conform to the court's order in AFPM v. EPA, has no 
legal effect beyond fulfilling the court's vacatur, and is ministerial 
in nature. The court issued the mandate for its decision on September 
17, 2021, at which point the vacatur became effective.

X. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 14094: Modernizing Regulatory Review

    This action is a ``significant regulatory action,'' as defined 
under section 3(f)(1) of Executive Order 12866, as amended by Executive 
Order 14094. Accordingly, EPA submitted this action to the Office of 
Management and Budget (OMB) for Executive Order 12866 review. 
Documentation of any changes made in response to the Executive Order 
12866 review is available in the docket. EPA prepared an analysis of 
the potential costs and benefits associated with this action. This 
analysis is presented in the TSD, available in the docket for this 
action.

B. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden 
under the PRA. OMB has previously approved the information collection 
activities contained in the existing regulations and has assigned OMB 
control number 2060-0731. This action removes the 1-psi waiver in eight 
States. It does not alter practices used by the existing recordkeeping 
and reporting requirements, nor does it change the number or type of 
respondents and the manner in which they satisfy the fuel designation 
and PTD requirements.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. The 
small entities subject to the requirements of this action are small 
refiners (which are defined at 13 CFR 121.201) that produce or 
distribute gasoline in Illinois, Iowa, Minnesota, Missouri, Nebraska, 
Ohio, South Dakota, or Wisconsin. This action removes the 1-psi waiver 
for E10 in these States. EPA is not aware of any small refiner that 
operates in these States. However, EPA is aware of at least one small 
refiner that distributes a portion of the gasoline it produces to some 
of the petitioning States, and thus will be affected this action. 
Therefore, to evaluate the impacts of this action on small entities, we 
have conducted a screening analysis to assess whether we should make a 
finding that this action will not have a significant economic impact on 
a substantial number of small entities.\80\ Currently available 
information shows that the impact on small entities from implementation 
of this rule will not be significant. As discussed in Section VII and 
the TSD, we expect that refiners, including small refiners, will be 
able to recover the cost associated with the removal of the 1-psi 
waiver through higher gasoline prices in the petitioning and 
surrounding States. Even if we were to assume that the cost of 
producing low-RVP CBOB was not recovered by refiners, a cost-to-sales 
ratio test shows that the costs to small refiners of the removal of the 
1-psi waiver are far less than 1 percent of the value of their sales. 
Furthermore, the removal of the 1-psi waiver in these States does not 
substantively alter the regulatory requirements on parties that make 
and distribute gasoline. We have therefore concluded that this action 
will not have any significant adverse economic impact on directly 
regulated small entities.
---------------------------------------------------------------------------

    \80\ See TSD Section 8.
---------------------------------------------------------------------------

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or 
more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. This action 
implements mandates specifically and explicitly set forth in CAA 
section 211(h)(5) and we believe that this action represents the least 
costly, most cost-effective approach to achieve the statutory 
requirements.

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 national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have Tribal implications as specified in 
Executive Order 13175. This action will be implemented at the State 
level and would affect gasoline refiners, blenders, marketers, 
distributors, and importers. Tribal governments would be affected only 
to the extent they produce, purchase, and use gasoline. Thus, Executive 
Order 13175 does not apply to this action.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that EPA has reason to believe may disproportionately affect children, 
per the definition of ``covered regulatory action'' in section 2-202 of 
the Executive Order. Therefore, this action is not subject to Executive 
Order 13045 because it implements specific standards established by 
Congress in statutes.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy. This action removes the 1-psi waiver 
for eight States. As discussed in Section V, it will require changes to 
the production and distribution of gasoline, which is expected to have 
some short- and long-term impacts on gasoline supply and cost in the 
affected areas, but we believe the market will be able to accommodate 
the change without any significant disruption.

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR 
Part 51

    This action does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    EPA believes that the human health and environmental conditions 
that exist prior to this action do not result in disproportionate and 
adverse effects on communities with environmental justice concerns. 
Numerous studies have found that environmental hazards such as air 
pollution are more prevalent in areas where people of color and low-
income populations represent a higher fraction of the population 
compared to the general population. In addition, there is ample 
evidence that people who reside in close proximity to major roadways 
are disproportionately represented by

[[Page 14774]]

people of color and people with low income.
    EPA believes that this action is not likely to result in new 
disproportionate and adverse effects on communities with environmental 
justice concerns. This is because any emissions impacts of this action 
are small. As described in Section IV.B, MOVES modeling performed by 
the States in support of their petitions demonstrated a reduction in 
VOCs, CO, and NO<INF>X</INF>, as well as potential increases in 
emissions of pollutants such as PM. This action is being implemented at 
the request of the Governors of the petitioning States and EPA lacks 
discretion to deny such requests as described in Section III.
    EPA additionally identified and addressed EJ concerns by providing 
the relevant emissions information in this rulemaking action and 
providing an opportunity for public comment on this rule. We received 
no comments related to EJ concerns.
    The information supporting this Executive Order review is contained 
in this preamble and the ``Evaluation of MOVES Modeling and Results,'' 
available in the docket for this action.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action meets the criteria set forth in 5 U.S.C. 
804(2).

List of Subjects in 40 CFR Part 1090

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Fuel additives, Gasoline, Petroleum, Renewable 
fuel.

Michael S. Regan,
Administrator.

    For the reasons set forth in the preamble, EPA amends 40 CFR part 
1090 as follows:

PART 1090--REGULATION OF FUELS, FUEL ADDITIVES, AND REGULATED 
BLENDSTOCKS

0
1. The authority citation for part 1090 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7521, 7522-7525, 7541, 7542, 7543, 
7545, 7547, 7550, and 7601.

Subpart C--Gasoline Standards

0
2. Amend Sec.  1090.215 by:
0
a. In paragraph (b)(2), removing the text ``than 15'' and adding in its 
place the text ``than 10''; and
0
b. Revising paragraph (b)(3).
    The revision reads as follows:


Sec.  1090.215  Gasoline RVP Standards.

* * * * *
    (b) * * *
    (3)(i) RFG and SIP-controlled gasoline that does not allow for the 
ethanol 1.0 psi waiver does not qualify for the special regulatory 
treatment specified in paragraph (b)(1) of this section.
    (ii) Gasoline subject to the 9.0 psi maximum RVP per-gallon 
standard in paragraph (a)(1) of this section in the following areas is 
excluded from the special regulatory treatment specified in paragraph 
(b)(1) of this section:

Table 2 to Paragraph (b)(3)(ii)--Areas Excluded From the Ethanol 1.0 psi
                                 Waiver
------------------------------------------------------------------------
              State                  Counties         Effective date
------------------------------------------------------------------------
Illinois........................  All..........  April 28, 2025.
Iowa............................  All..........  April 28, 2025.
Minnesota.......................  All..........  April 28, 2025.
Missouri........................  All..........  April 28, 2025.
Nebraska........................  All..........  April 28, 2025.
Ohio............................  All..........  April 28, 2025.
South Dakota....................  All..........  April 28, 2025.
Wisconsin.......................  All..........  April 28, 2025.
------------------------------------------------------------------------

* * * * *

0
3. Add Sec.  1090.297 to read as follows:


Sec.  1090.297  Procedures for reinstating the 1.0 psi RVP allowance 
for E10.

    (a) EPA may approve a request from a State asking to reinstate the 
ethanol 1.0 psi waiver specified in Sec.  1090.215(b)(1) for any area 
(or portion of an area) specified in Sec.  1090.215(b)(3)(ii) if it 
meets the requirements of paragraph (b) of this section. If EPA 
approves such a request, an effective date will be set as specified in 
paragraph (c) of this section. EPA will notify the State in writing of 
EPA's action on the request and the effective date of the reinstatement 
upon approval of the request.
    (b) The request must be signed by the Governor of the State, or the 
Governor's authorized representative, and must include all the 
following:
    (1) A geographic description of each area (or portion of such area) 
that is covered by the request.
    (2) A description of all the means in which emissions reduction 
from the removal of the ethanol 1.0 psi waiver are relied upon in any 
approved SIP or in any submitted SIP that has not yet been approved by 
EPA, if applicable.
    (3) For any area covered by the request where emissions reductions 
from the removal of the ethanol 1.0 psi waiver are relied upon as 
specified in paragraph (b)(2) of this section, the request must include 
the following information:
    (i) Identify whether the State is withdrawing any submitted SIP 
that has not yet been approved.
    (ii)(A) Identify whether the State intends to submit a SIP revision 
to any approved SIP or any submitted SIP that has not yet been 
approved, which relies on emissions reductions from the removal of the 
ethanol 1.0 psi waiver, and describe any control measures that the 
State plans to submit to EPA for approval to replace the emissions 
reductions from the removal of the ethanol 1.0 psi waiver.
    (B) A description of the State's plans and schedule for adopting 
and submitting any revision to any approved SIP or any submitted SIP 
that has not yet been approved.
    (iii) If the State is not withdrawing any submitted SIP that has 
not yet been approved and does not intend to submit a revision to any 
approved SIP or any submitted SIP that has not yet been approved, 
describe why no revision is necessary.
    (4) A requested effective date of the reinstatement of the ethanol 
1.0 psi waiver.
    (5) The Governor of a State, or the Governor's authorized 
representative, must submit additional information needed to administer 
the reinstatement of the ethanol 1.0 psi waiver upon request by EPA.
    (c)(1) Except as specified in paragraph (c)(2) of this section, EPA 
will set an effective date of the reinstatement of the ethanol 1.0 psi 
waiver as requested by the Governor, or the Governor's authorized 
representative, but no less than 90 days from EPA's written 
notification to the State approving the reinstatement request.
    (2) Where emissions reductions from the removal of the ethanol 1.0 
psi waiver are included in an approved SIP or any submitted SIP that 
has not yet been approved, EPA will set an effective date of the 
reinstatement of the ethanol 1.0 psi waiver as requested by the 
Governor, or the Governor's authorized representative, but no less than 
90 days from the effective date of EPA approval of the SIP revision 
that removes the emissions reductions from the ethanol 1.0 psi waiver, 
and, if necessary, provides emissions reductions to make up for those 
from the ethanol 1.0 psi waiver reinstatement.
    (d) EPA will publish a document in the Federal Register announcing 
the approval of any ethanol 1.0 psi waiver reinstatement request and 
its effective date.
    (e) Upon the effective date for the reinstatement of the ethanol 
1.0 psi waiver in a subject area (or portion of a subject area) 
included in an approved

[[Page 14775]]

request, the ethanol 1.0 psi waiver will apply in such subject area.

Subpart K--Batch Certification and Designation

0
4. Amend Sec.  1090.1010 by redesignating paragraph (a)(2)(iii) as 
(a)(2)(iv) and adding a new paragraph (a)(2)(iii) to read as follows:


Sec.  1090.1010  Designation requirements for gasoline and regulated 
blendstocks.

    (a) * * *
    (2) * * *
    (iii) If the CBOB is excluded from the special regulatory treatment 
for ethanol under Sec.  1090.215(b)(3)(ii), Low-RVP Summer CBOB.
* * * * *

Subpart L--Product Transfer Documents

0
5. Amend Sec.  1090.1110 by redesignating paragraph (b)(2)(i)(C) as 
(b)(2)(i)(D) and adding a new paragraph (b)(2)(i)(C) to read as 
follows:


Sec.  1090.1110  PTD requirements for gasoline, gasoline additives, and 
gasoline regulated blendstocks.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (C) ``Low-RVP CBOB. This product does not meet the requirements for 
summer reformulated gasoline.''
* * * * *

Subpart R--Compliance and Enforcement Provisions


Sec.  1090.1720  [Amended]

0
6. Amend Sec.  1090.1720, in paragraphs (e) introductory text and 
(e)(2), by removing the text ``15 percent'' and adding in its place the 
text ``10 percent''.

[FR Doc. 2024-04023 Filed 2-28-24; 8:45 am]
BILLING CODE 6560-50-P


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