Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 15077

Dated: March 21, 1997

Carol M. Browner,

Administrator.

40 CFR part 80 is amended as follows:

PART 80—REGULATION OF FUELS

AND FUEL ADDITIVES

1. The authority citation for part 80

continues to read as follows:

Authority: Sections 114, 211 and 301(a) of

the Clean Air Act as amended (42 U.S.C.

7414, 7545, and 7601(a)).

2. Section 80.70 is amended by

revising paragraph (k) to read as follows:

§ 80.70 Covered areas.

* * * * *

(k) Any other area currently or

previously classified under 40 CFR part

81, subpart C as a marginal, moderate,

serious, or severe ozone nonattainment

area as of November 15, 1990, or any

time later, may be included on petition

of the governor of the state in which the

area is located.

* * * * *

[FR Doc. 97–7954 Filed 3–27–97; 8:45 am]

BILLING CODE 6560–50–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 80

[FRL–5803–6]

Transitional and General Opt Out

Procedures for Phase II Reformulated

Gasoline Requirements

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of proposed rule making.

SUMMARY: In this document EPA is

proposing to change the regulations for

states to opt-out of the federal

reformulated gasoline (RFG) program for

areas where a state had previously

voluntarily opted into the program.

Under this proposal, if a state has not

submitted an opt-out petition to EPA by

December 31, 1997, it must participate

in Phase II RFG until December 31,

2003. The Agency believes this

proposed process is necessary to ensure

a smooth transition between the two

phases of the reformulated gasoline

program.

The Agency is also proposing, that

effective January 1, 2004, the current

opt-out procedures, which provide that

EPA-approved opt-out petitions become

effective 90 days from approval, become

effective again.

In addition, this proposed rule would

require that states decide and submit to

EPA a complete opt-out petition by

December 31, 1997, if they want an optin area to continue to participate in

Phase I of the RFG program up to

December 31, 1999, but do not wish to

participate in Phase II of the program.

This action does not affect the

policies for opting in to the RFG

program. In a separate action EPA is

publishing a notice of proposed

rulemaking, simultaneous with this

proposal, which would permit former

ozone nonattainment areas to opt into

the federal reformulated gasoline

program. EPA has not made a final

determination on the policy for

attainment area RFG implementation.

DATES: The Agency will hold a public

hearing on this proposal if one is

requested by April 4, 1997. If a public

hearing is held, it will take place on

April 18, 1997.

If a public hearing is held on this

proposal, comments must be received

by May 19, 1997. If a hearing is not

held, comments must be receved by

April 28, 1997. Please direct all

correspondence to the address shown

below.

To request a hearing, or to find out if

and where a hearing is held, please call

Christine Hawk at (202) 233–9000.

ADDRESSES: Comments should be

submitted (in duplicate, if possible) to

Air Docket Section, Mail Code 6102,

U.S. Environmental Protection Agency,

401 M Street, SW, Washington, DC

20460. A copy should also be sent to

Ms. Christine Hawk at U.S.

Environmental Protection Agency,

Office of Air and Radiation, 401 M

Street, SW (6406J), Washington, DC

20460.

Materials relevant to this notice have

been placed in Docket A–94–68. The

docket is located at the Air Docket

Section, Mail Code 6102, U.S.

Environmental Protection Agency, 401

M Street, SW, Washington, DC 20460, in

room M–1500 Waterside Mall.

Documents may be inspected from 8:00

a.m. to 5:30 p.m. A reasonable fee may

be charged for copying docket material.

FOR FURTHER INFORMATION CONTACT:

Christine Hawk or Diane Turchetta at

U.S. Environmental Protection Agency

Office of Air and Radiation, 401 M

Street, SW (6406J), Washington, DC

20460, (202) 233–9000.

SUPPLEMENTARY INFORMATION: A copy of

this action is available on the OAQPS

Technology Transfer Network Bulletin

Board System (TTNBBS) and on the

Office of Mobile Sources’ World Wide

Web cite, http://www.epa.gov/

OMSWWW. The TTNBBS can be

accessed with a dial-in phone line and

a high-speed modem (PH# 919–541–

5742). The parity of your modem should

be set to none, the data bits to 8, and

the stop bits to 1. Either a 1200, 2400,

or 9600 baud modem should be used.

When first signing on, the user will be

required to answer some basic

informational questions for registration

purposes. After completing the

registration process, proceed through

the following series of menus:

(M) OMS

(K) Rulemaking and Reporting

(3) Fuels

(9) Reformulated gasoline

A list of ZIP files will be shown, all

of which are related to the reformulated

gasoline rulemaking process. Today’s

action will be in the form of a ZIP file

and can be identified by the following

title: OPTOUT.ZIP. To download this

file, type the instructions below and

transfer according to the appropriate

software on your computer:

<D>ownload, <P>rotocol, <E>xamine,

<N>ew, <L>ist, or <H>elp Selection or

<CR> to exit: D filename.zip

You will be given a list of transfer

protocols from which you must choose

one that matches with the terminal

software on your own computer. The

software should then be opened and

directed to receive the file using the

same protocol. Programs and

instructions for de-archiving

compressed files can be found via

<S>ystems Utilities from the top menu,

under <A>rchivers/de-archivers. Please

note that due to differences between the

software used to develop the document

and the software into which the

document may be downloaded, changes

in format, page length, etc. may occur.

Regulated Entities

Entities potentially regulated by this

action are those which produce, supply

or distribute motor gasoline. Regulated

categories and entities include:

Category Examples of regulated entities

Industry ...................... Petroleum refiners,

motor gasoline distributors and retailers.

State governments .... State departments of

environmental protection.

This table is not intended to be

exhaustive, but rather provides a guide

for readers regarding entities likely to be

regulated by this action. This table lists

the types of entities that EPA is now

aware could potentially be regulated by

this action. Other types of entities not

listed in the table could also be

regulated. To determine whether your

business is regulated by this action, you
15078 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

1EPA recognizes that there are currently ten areas

required to use Federal Reformulated Gasoline and

that these areas currently do not have an opt-out

option. Those areas are: Los Angeles—Anaheim—

Riverside, CA; San Diego County, CA; Hartford—

New Britain—Middletown—New Haven—

Meriden—Waterbury, CT; New York—Northern

New Jersey—Long Island—Connecticut area;

Philadelphia—Wilmington—Trenton—Cecil

County, MD; Chicago—Gary—Lake County, IL—

Indiana—Wisconsin area; Baltimore, MD;

Houston—Galveston—Brazoria, TX; Milwaukee—

Racine, WI; Sacramento, CA.

should carefully examine the list of

areas covered by the reformulated

gasoline program in § 80.70 of title 40 of

the Code of Federal Regulations. If you

have questions regarding the

applicability of this action to a

particular entity, consult the person

listed in the preceding FOR FURTHER

INFORMATION CONTACT section.

Extended Summary

Based upon EPA and industry

concerns regarding smooth

implementation of Phase II of the RFG

program and public comments that were

solicited in the Notice of Proposed

Rulemaking [60 FR 31269] published

June 14, 1995, EPA is proposing the

following changes to the existing optout rule, which provides criteria and

general procedures for states to opt-out

of the RFG program through December

31, 1997. 61 FR 35673 (July 8, 1996).

This notice applies to areas where the

state voluntarily opted into the program

and subsequently decides to withdraw

from the reformulated gasoline program,

an action referred to as ‘‘opt-out.’’ This

proposed rule provides the Agency’s

rules concerning criteria and procedures

for states to opt-out certain areas from

the RFG program after December 31,

1997. This proposal would not change

the process a state must follow to

petition for removal from the program or

the criteria used by EPA to evaluate a

request. This proposal does change the

time period before the opt-out becomes

effective for opt-out petitions received

from January 1, 1998, through December

31, 2003. This period includes the first

four years of Phase II (January 1, 2000,

to December 31, 2003). The proposal

also maintains the requirements that the

governor, or the governor’s authorized

representative, submit an opt-out

petition.

This proposal specifies that for all

opt-out petitions received as of

December 31, 1997, the existing

procedures will apply and that the

effective date that an area will be

removed from the list of covered areas

defined in 40 CFR § 80.70 will be 90

days (or more at a state’s request) from

the date of EPA’s letter of notification to

the Governor of the requesting state or

from the effective date of an agency

approval of a revision to the State

Implementation Plan (SIP) where

applicable. States which have opted in

to the RFG program that do not submit

a completed opt-out request by

December 31, 1997 and subsequently

submit an opt-out request before January

1, 2004, will be required to participate

in the federal RFG program, including

Phase II of the program, until December

31, 2003. The opt-out request will be

effective January 1, 2004 or 90 days

from the Agency written notification to

the State approving the opt-out petition,

whichever date is later. Today’s

proposed requirements will also cover

those areas opting into the RFG program

subsequent to December 31, 1997. (i.e.

areas opting-in during the transitional

period must remain in the program at

least until December 31, 2003). The optout procedures would revert back to the

existing rule (90 day requirements) as of

January 1, 2004.

Today’s proposal will help provide

certainty to the industry as it makes

decisions that are likely to affect the

supply and cost of reformulated

gasoline, which in turn could affect the

cost-effectiveness of Phase II RFG.

Additionally, the proposal maintains

the flexibility that states have in air

quality planning to the degree possible

and practicable.

I. EPA’s Proposal for Opt-out Petitions

Received January 1, 1998 Through

December 31, 2003; and After December

31, 2003

A. Background

The federal reformulated gasoline

(RFG) program is designed to reduce

ozone levels and air toxics in areas of

the country that are required to or

volunteer to adopt the program.

Reformulated gasoline reduces vehicle

emissions of the ozone precursors,

specifically volatile organic compounds

(VOC), through fuel reformulation.

Reformulated gasoline also achieves a

significant reduction in air toxics. In

Phase II of the program nitrogen oxides

(NOX), another precursor of ozone, are

also reduced. The 1990 Amendments to

the Clean Air Act require reformulated

gasoline in the nine largest cities with

the highest levels of ozone.1 In section

211(k)(6), Congress provided the

opportunity for states to opt-in to the

RFG program for other ozone

nonattainment areas.

EPA issued final rules establishing

requirements for reformulated gasoline

on December 15, 1993. 59 FR 7716

(February 16, 1994). During the

development of the RFG rule, a number

of states inquired as to whether they

would be permitted to opt-out of the

RFG program at a future date, or opt-out

of certain of the requirements. This was

based on their concern that the air

quality benefits of RFG, given their

specific needs, might not warrant the

cost of the program, specifically

focusing on the more stringent

standards in Phase II of the program

(starting in the year 2000). States with

that concern wished to retain the

flexibility to opt-out of the program.

Other states indicated they viewed RFG

as an interim strategy to help bring their

nonattainment areas into attainment

sooner than would otherwise be the

case.

The regulation issued on December

15, 1993, did not include procedures for

opting-out of the RFG program because

EPA had not proposed and was not

ready to adopt such procedures. Since

then, the Agency has adopted general

procedures for future opt-outs. 61 FR

35673 (July 8, 1996). These procedures

apply to opt-out petitions received

through December 31, 1997. Today’s

proposal provides new procedures for

opt-out petitions received between

January 1, 1998, through December 31,

2003. The existing procedures in place

today will take effect again beginning

January 1, 2004.

In the proposal to the previous optout rulemaking, EPA outlined its

rationale for determining that it is

appropriate to interpret section 211(k)

as authorizing states to opt-out of the

program. 60 FR 31269 (June 14, 1995).

EPA concluded that any conditions on

opting out should be focused on

achieving a reasonable transition out of

the program. There were two primary

areas of concern to the Agency. The first

was coordination of air quality

planning. The second involved

appropriate lead time for industry to

transition out of the program.

Today’s proposal addresses this lead

time concern by changing the

conditions for opting out during the

period from January 1, 1998, to

December 31, 2003. Before the effective

date for Phase II RFG (January 1, 2000)

approaches, industry must make

investments decisions based in part on

anticipated demand for RFG. Small,

unanticipated changes in demand,

whether due to market forces or

changing regulatory requirements, can

make cost recovery of investment

difficult, and cause gasoline prices to

rise or fall. Higher gasoline costs caused

by regulatory uncertainty would

diminish the benefits and costeffectiveness of EPA’s RFG program.

Thus, EPA believes it must consider

these special circumstances which affect

industry directly and consumers

indirectly and propose appropriate
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 15079

changes to the opt-out procedures.

Therefore, EPA today is proposing that

states must decide by a certain date

(December 31, 1997) if they intend for

opt-in areas to participate in Phase I

RFG up to December 31, 1999, and/or to

participate in Phase II RFG, which

begins on January 1, 2000. If a state has

not submitted an opt-out petition by

December 31, 1997, it must continue to

participate in Phase I RFG through

December 31, 1999, and participate in

Phase II RFG until December 31, 2003.

B. Statutory Authority

The statutory authority for the action

in this rule is granted to EPA by section

211(c) and (k) and section 301(a) of the

Clean Air Act as amended, 42 U.S.C.

7545 (c) and (k) and 7601(a). For a more

complete discussion of statutory

authority, see the proposal for general

rules establishing criteria and

procedures for states to opt-out of the

RFG program. 60 FR 31271 (June 14,

1995).

As discussed there, EPA believes it is

appropriate to interpret section 211(k)

as authorizing states to opt-out of the

RFG program, provided that a process is

established for a reasonable transition

out of the program. EPA believes

allowing states to opt-out is consistent

with the Act’s recognition that states

have the primary responsibility to

develop a mix of appropriate control

strategies needed to reach attainment

with the NAAQS. Given this deference

to state decision making, it follows that

the conditions on opting out should be

geared towards achieving a reasonable

transition out of the RFG program, as

compared to requiring a state to justify

its decision.

EPA has identified two principal

areas of concern in this regard. The first

involves coordination of air quality

planning. The second involves

appropriate lead time for industry to

transition out of the program. Today’s

proposal addresses the latter concern.

EPA’s authority allows it the discretion

to authorize opt-outs in a way that

balances the interests of the parties

affected by the regulations. The rule

establishing opt-out criteria and

procedures placed only limited

conditions on the states, focusing on the

information that must be submitted

before EPA may approve an opt-out

request. The rule also generally required

a 90-day time period to pass before an

EPA-approved opt-out became effective.

Today, EPA is proposing to lengthen

this time period for certain future optouts because it believes the

circumstances affecting industry have

changed enough to warrant an

appropriate change.

Today’s proposal changes the

conditions for opting out during the

period from January 1, 1998 to

December 31, 2003. As the effective date

for Phase II RFG (January 1, 2000)

approaches, industry must make

investment decisions based in part on

anticipated demand for reformulated

gasoline. These decisions are likely to

affect supply and ultimately affect the

cost of reformulated gasoline.

Uncertainty of supply and cost

fluctuations could cause problems for

and possibly diminish the benefits and

cost-effectiveness of EPA’s RFG

program. Section 211(k) of the Act

requires that reformulated gasoline

achieve the greatest reductions in VOCs

and toxics emissions, ‘‘taking into

consideration the cost of achieving such

emission reductions . . .’’ Thus, EPA

believes it must consider these

circumstances affecting industry that

could potentially affect cost. EPA’s

proposal is designed to reduce the

potential for adverse cost and supply

impacts on the reformulated gasoline

program.

C. Need for a Required Participation

Period Until January 1, 2004

Under EPA’s current opt-out

provisions, some states may effectively

opt-out of the reformulated gasoline

program as of 90 days from the date EPA

approves a state petition for the opt-out.

61 FR 35673 (July 8, 1996). The U.S.

Department of Energy expressed its

concerns in comments during the

previous rulemaking that such a time

frame to opt-out by states who originally

intended to participate in Phase II of the

reformulated gasoline program makes it

more difficult for refiners to recover

their investments in refinery facilities

needed to comply with the requirements

of Phase II reformulated gasoline. (Air

Docket A–94–68) The Department

further explained in its comments that

the ability to price gasoline at a level

that recovers investments depends very

heavily on marginal supply and

demand. Small unanticipated changes

in demand, whether due to market

forces or changing regulatory

requirements, can make cost recovery of

investment difficult, and cause gasoline

prices to rise or fall.

EPA shares the Department’s concerns

and, in the interest of minimizing the

adverse supply and cost impacts for this

gasoline program, is proposing a

required participation period for

reformulated gasoline opt-in areas

intending to participate in Phase II of

the reformulated gasoline program.

Refinery investments for Phase II RFG

have been estimated by the U.S.

Department of Energy to be about $1

billion for East Coast refiners and $2

billion for Gulf Coast PADD III refiners.

Refiners who expect to be producing

Phase II reformulated gasoline starting

January 1, 2000, and who need

additional facilities to meet the

requirements of that gasoline, are likely

to be making commitments to refinery

investments through 1997, two years in

advance of the Phase II start date. This

decision to invest in the refining

equipment needed to comply with

Phase II is based on each refiner’s

product capabilities and likely

anticipated demand for Phase II

reformulated gasoline.

To comply with the Phase II

requirements in 2000, each refiner is

uniquely situated. For those refiners

that plan to modify their refineries,

different levels of investment would be

required. The largest investments are

expected to be made in the areas of

desulfurization and alkylation to control

sulfur and olefins. Some are expected to

make early refinery changes to come

into compliance with the complex

model requirements in 1998. While the

economic burden of Phase II compliance

will fall disproportionately on some

refiners, the Agency’s main concern in

this proposal is to provide a stable

regulatory environment which will not

inhibit cost recovery, given that this

could lead to supply problems and cost

fluctuations that could diminish the

overall cost-effectiveness of the RFG

program.

The Agency, in its estimates of the

Phase II reformulated gasoline program

costs [as stated in the regulatory impact

analysis (RIA) for the final RFG

rulemaking 59 FR 7716], has assumed a

10 percent real rate of return. Based on

this assumed rate of return, refiners

would need a six year investment

recovery period. The Agency is

soliciting comments on the range of

investment recovery periods needed by

the refineries who plan to invest capital

in refining equipment for Phase II

reformulated gasoline, the impact of

future opt-outs on this period, and the

expected impacts on supply and cost

from such opt-outs.

The time required to recover refinery

investments is highly variable,

depending on a number of factors,

including the size and type of

investment, the refiner’s financial

situation and market conditions. The

U.S. Department of Energy believes,

based on the National Petroleum

Council 1993 refinery study and on the

Department’s own examination of this

issue, that at a minimum, a four-year

period is required for the industry as a

whole to recover its Phase II

investments. The Department also
15080 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

emphasized that an eight-year period

was more adequate given the current

competitive gasoline market.

If the Agency were to extend the

current opt-out provisions, it would

reduce the ability of refiners to plan for

a relatively stable level of demand for

Phase II reformulated gasoline and

refiners would have a disincentive to

invest in Phase II of the reformulated

gasoline program. Without greater

assurance of the markets for Phase II

reformulated gasoline for a period

sufficient for investment recovery,

refiners may limit or delay investment

and prepare for a smaller than currentlypredicted reformulated gasoline

demand. Refiners could minimize their

production of and stocks for

reformulated gasoline to protect refiners

and gasoline distributors from the

potential loss of reformulated gasoline

markets. If refiners react to uncertain

market conditions in these ways, there

would be the increased potential for

reformulated gasoline cost increase and

supply shortages.

These potential actions, taken by

refiners reacting to Phase II

reformulated gasoline market

uncertainty, would increase costs to

refiners, ultimately resulting in higher

gasoline prices for consumers. Limited

or delayed investment in Phase II

reformulated gasoline would create the

potential for spot shortages or some

refiners may attempt to quickly recoup

their investment in Phase II, both

situations causing gasoline price

increases. EPA is concerned that the

cost-effectiveness of the reformulated

gasoline program would be jeopardized

by regulatory uncertainty, as it pertains

to the regulated community’s ability to

plan for providing the manufacturing

capacity to produce reformulated

gasoline to specified control areas.

Section 211(k) of the Clean Air Act

Amendments of 1990 requires that

reformulated gasoline achieve the

greatest reductions in volatile organic

compounds (VOCs) and toxics

emissions, ‘‘taking into consideration

the cost of achieving such emission

reductions . . .’’ Today’s proposal is

designed to reduce the potential for the

adverse cost and supply impacts on the

reformulated gasoline program.

The Agency is not trying to assure

that all refiners will recover investments

made in Phase II reformulated gasoline

production in a given time period. EPA

is instead seeking to structure the

federal reformulated gasoline program

in a way that minimizes the potential

cost and supply impacts that could

occur to refiners, thereby making it

difficult to recover investments

associated with producing this product.

A refiner’s decision to invest in

reformulated gasoline is based, in part,

upon an opt-in state’s decision to have

EPA require the sale of RFG in a

particular area. Reformulated gasoline

market uncertainty is increased when

opt-in states are not bound to remain in

the reformulated gasoline program and

by the relatively simple process for

states to opt out of the reformulated

gasoline program provided for in the

existing rule.

EPA is committed to ensuring that

areas around the country attain the

National Ambient Air Quality Standards

(NAAQS), including the ozone standard.

EPA recognizes, however, that under the

Clean Air Act the states play a primary

role in attaining the NAAQS, including

choosing those control measures they

prefer to include in their plans to attain

and maintain the NAAQS. EPA is

committed to maintaining, to a degree

possible and practicable, the flexibility

that states have in air quality planning

by establishing procedures to opt out

and substitute alternative control

measures where the state considers

appropriate.

EPA believes that today’s proposal

achieves a balance between allowing

states with voluntary RFG areas the

flexibility to opt-out of the program and

giving industry a certain level of

assurance as to a predictable demand for

Phase II reformulated gasoline during

the important investment recovery

period of the program’s early years.

Today’s proposal helps maintain a

consistent market, adequate supplies

and reasonable prices, thus maintaining

the reformulated gasoline program’s

cost-effectiveness. EPA’s own estimate

of Phase II reformulated gasoline costs

suggests consideration of a required

participation period of six years, but the

Agency believes that requiring

reformulated gasoline in opt-in states for

a period greater than four years may

create a disincentive for continued

participation in those areas where this

program is currently considered a costeffective control measure for the control

of ground-level ozone and toxics.

Although a longer recovery period of six

or eight years may be needed by some

refiners to fully recover all Phase II

investments and less time for those who

already have the capability to produce

Phase II reformulated gasoline, the

ability of states to opt-out again after

2004 does not mean that such opt-outs

will occur. Refiners in general will still

have significant demand for Phase II

RFG for many years after 2004. EPA is

proposing four years to attempt to strike

a balance between the potential adverse

impacts if refiners have too short of a

time to recoup their Phase II

investments and the need of states for

some flexibility in using reformulated

gasoline. EPA further believes that this

balance benefits reformulated gasoline

consumers by attempting to provide

market consistency which should

encourage adequate supplies and

reasonable prices.

D. Effective Date for Approved Opt-Out

Petitions

Today’s proposal changes the date on

which EPA-approved opt-out petitions

become effective for opt-out petitions

received January 1, 1998, through

December 31, 2003.

This proposal modifies the existing

requirement for any opt-out request

received between January 1, 1998, and

January 1, 2004. States which

previously opted in to the RFG program

that do not submit an opt-out request by

December 31, 1997, and subsequently

submit a completed opt-out request

before January 1, 2004, will be required

to participate in Phase II of the program

until December 31, 2003. The opt-out

request will be effective January 1, 2004

or 90 days from the Agency’s written

notification to the State approving the

opt-out petition, whichever is later.

If a state submits an opt-out request

prior to December 31, 1997, the state

can designate the opt-out to occur at any

future date beyond the minimum 90-day

period required under current opt-out

procedures as long as it is not a date

beyond December 31, 1999. For

example, a state could submit an opt-out

request before the December 31, 1997,

deadline which specifies that the optout would not be effective until the end

of the year 1999. Areas opting into the

RFG program subsequent to December

31, 1997, will be treated the same as

areas opting in prior to that date and

will also be included in Phase II of the

program until December 31, 2003.

EPA also proposes that, beginning on

January 1, 2004, opt-out requests from

states again be approved based on the

opt-out provisions in effect before

January 1, 1998.

EPA requests comments on two

specific possible variations to this

proposal in anticipation of interest in

these options by outside parties:

(1) a possible exception to the

required participation for areas which

are redesignated as attainment areas

during the period of January 1, 1998,

through December 31, 2003. Such an

exception would allow an opt-out

request to be approved by EPA using the

same 90 day opt-out effective date

applicable before December 31, 1997

[See 61 FR 35673, July 8, 1996.]

(2) a similar participation period for

areas first opting into the RFG program
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 15081

2 See 58 FR 51735 (October 4, 1993). 3 Id. at section 3(f)(1)–(4).

subsequent to December 31, 1999,

requiring these area to participate in

Phase II of the program for at least four

years from the date of their opt-in. This

variation would establish the effective

date for the removal of an area from the

program as January 1, 2004, or 90 days

from the Agency’s written notification

approving the opt-out, or four years

from the effective date of their opt-in,

whichever date is later, for all opt-out

requests received after January 1, 2000.

II. Environmental Impact

If an area opts out of the reformulated

gasoline program, it will not receive the

reductions in VOCs, oxides of nitrogen

(NOx), and air toxics that are expected

from this program. Instead, the areas

would be subject to the federal controls

on Reid vapor pressure for gasoline in

the summertime, and would only

receive control of NOx and air toxics

through the requirements of the

conventional gasoline anti-dumping

program. These latter requirements are

designed to ensure that gasoline quality

does not degrade from the levels found

in 1990. These areas would be foregoing

the air quality benefits obtained from

the use of reformulated gasoline.

In this proposal, EPA continues to

recognize that states have the primary

responsibility to develop the mix of

control strategies needed to attain and

maintain the NAAQS, and should have

flexibility in determining the mix of

control measures needed to meet their

air pollution goals. However, the

proposal also seeks to ensure through

the required participation period that

the potential for a state to decide to optout of Phase II of the RFG program does

not cause adverse impacts on the market

demand for RFG and thus maintains the

cost-effectiveness of the RFG program.

EPA expects that states will in fact act

prudently in exercising their ability to

opt-out under these rules. Any

environmental impacts of opting out

are, therefore, not expected to occur in

isolation, but in a context of states

exercising their responsibility and

developing appropriate control

strategies for their areas’ air pollution

goals.

III. Executive Order 12866

Under Executive Order 12866,2 the

Agency must determine whether a

regulation is ‘‘significant’’ and therefore

subject to OMB review and the

requirements of the Executive Order.

The Order defines ‘‘significant

regulatory action’’ as one that is likely

to result in a rule that may:

(1) Have an annual effect on the

economy of $100 million or more, or

adversely affect in a material way the

economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or tribal governments of

communities;

(2) Create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency;

(3) Materially alter the budgetary

impact of entitlements, grants, user fees,

or loan programs or the rights and

obligations of recipients thereof, or

(4) Raise novel legal or policy issues

arising out of legal mandates, the

President’s priorities, or the principles

set forth in this Executive Order.3

Pursuant to the terms of Executive

Order 12866, Office of Management and

Budget (OMB) has notified EPA that it

considers this a significant regulatory

action within the meaning of the

Executive Order. EPA submitted this

action to OMB for review. Changes

made in response to OMB suggestions or

recommendations will be documented

in the public record.

IV. Unfunded Mandates

Under Section 202 of the Unfunded

Mandates Reform Act of 1995

(‘‘UMRA’’), Public Law 104–4, EPA

must prepare a budgetary impact

statement to accompany any general

notice of proposed rulemaking or final

rule that includes a Federal mandate

which may result in estimated costs to

State, local, or tribal governments in the

aggregate, or to the private sector, of

$100 million or more. Under Section

205, for any rule subject to Section 202

EPA generally must select the least

costly, most cost-effective, or least

burdensome alternative that achieves

the objectives of the rule and is

consistent with statutory requirements.

Under Section 203, before establishing

any regulatory requirements that may

significantly or uniquely affect small

governments, EPA must take steps to

inform and advise small governments of

the requirements and enable them to

provide input.

EPA has determined that today’s

proposed rule does not trigger the

requirements of UMRA. The rule does

not include a Federal mandate that may

result in estimated annual costs to State,

local, or tribal governments in the

aggregate, or to the private sector, of

$100 million or more, and it does not

establish regulatory requirements that

may significantly or uniquely affect

small governments.

V. Economic Impact and Impact on

Small Entities

Pursuant to section 605(b) of the

Regulatory Flexibility Act, 5 U.S.C.

605(b), the Administrator certifies that

this rule will not have a significant

impact on a substantial number of small

entities. This proposed rule is not

expected to result in any additional

compliance cost to regulated parties and

in fact is expected to decrease

compliance costs and decrease costs to

consumers in the affected areas by

providing more certainty for regulated

parties. This proposed rule imposes no

new requirements on states.

With respect to the portion of today’s

action which proposes to require

participation until January 1, 2004, of

opt-in areas unless they request to optout prior to January 1, 1998, today’s

proposal is not expected to result in any

additional compliance cost to regulated

parties. It does no more than maintain

the status quo for those entities who

have been supplying reformulated

gasoline to the reformulated gasoline

opt-in areas and imposes no additional

requirements on parties that must

comply with the RFG regulations.

With respect to the portion of today’s

proposed rule which would apply to

opt-out requests applied for on or after

January 1, 2004, the proposed rule is not

expected to result in any additional

compliance cost to regulated parties and

in fact is expected to decrease

compliance costs to those entities who

previously supplied reformulated

gasoline to the area opting out. This rule

also establishes a transition period

which maximizes affected parties’

ability to plan for smooth transition

from the reformulated gasoline program,

minimizing disruption to the motor

gasoline marketplace. This transition

period is reasonably expected to allow

parties to turn over existing stocks of

reformulated gasoline to conventional

gasoline.

VI. Paperwork Reduction Act

This action does not add any new

requirements under the provisions of

the Paperwork Reduction Act, 44 U.S.C.

3501 et seq. The Office of Management

and Budget (OMB) has approved the

information collection requirements

contained in the final FRG/antidumping rule and has assigned OMB

control number 2060–0277 (EPA ICR

No. 1591.03).

Burden means the total time, effort, or

financial resources expended by persons

to generate, maintain, retain, or disclose

or provide information to or for a

Federal agency. This includes the time

needed to review instructions; develop,
15082 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

acquire, install, and utilize technology

and systems for the purposes of

collecting, validating, and verifying

information, processing and

maintaining information, and disclosing

and providing information; adjust the

existing ways to comply with any

previously applicable instructions and

requirements; train personnel to be able

to respond to a collection of

information; search data sources;

complete and review the collection of

information; and transmit or otherwise

disclose the information.

An Agency may not conduct or

sponsor, and a person is not required to

respond to a collection of information

unless it displays a currently valid OMB

control number. The OMB control

numbers for EPA’s regulations are listed

in 40 CFR Part 9 and 48 CFR Chapter

15.

List of Subjects in 40 CFR Part 80

Environmental protection, Air

pollution control, Fuel additives,

Gasoline, Motor vehicle pollution.

Dated: March 21, 1997.

Carol M. Browner,

Administrator.

40 CFR Part 80 is proposed to be

amended as follows:

PART 80—REGULATION OF FUELS

AND FUEL ADDITIVES

1. The authority citation for part 80

continues to read as follows:

Authority: Section 114, 211 and 301(a) of

the Clean Air Act as amended (42 U.S.C.

7414, 7545, and 7601(a)).

2. Section 80.72 is amended by

revising paragraphs (a), (c)(1) and (c)(2)

and by adding paragraphs (c)(3) through

(c)(7) to read as follows:

§ 80.72 Procedures for opting out of the

covered areas.

(a) In accordance with paragraph (b)

of this section, the Administrator may

approve a petition from a state asking

for removal of any opt-in area, or

portion of an opt-in area, from inclusion

as a covered area under § 80.70. If the

Administrator approves a petition, he or

she shall set an effective date as

provided in paragraph (c) of this

section. The Administrator shall notify

the state in writing of the Agency’s

action on the petition and the effective

date of the removal when the petition is

approved.

* * * * *

(c)(1) For opt-out petitions received

prior to and including December 31,

1997, except as provided in paragraph

(c)(2) of this section, the Administrator

shall set an effective date for removal of

an area under paragraph (a) of this

section as requested by the Governor,

but no less than 90 days from the

Agency’s written notification to the state

approving the opt-out petition, and no

later than December 31, 1999.

(2) For opt-out petitions received

prior to and including December 31,

1997, where reformulated gasoline is

contained as an element of any plan or

plan revision that has been approved by

the Agency, other than as a contingency

measure consisting of a future opt-in,

then the effective date under paragraph

(a) of this section shall be 90 days from

the effective date for Agency approval of

a revision to the plan that removes

reformulated gasoline as a control

measure.

(3) For opt-out petitions received

January 1, 1998 through December 31,

2003, except as provided in paragraph

(c)(4) of this section, the Administrator

shall set January 1, 2004 or 90 days from

the Agency’s written notification to the

state approving the opt-out petition,

whichever date is later, as the effective

date for removal of an area under

paragraph (a) of this section.

(4) For opt-out petitions received

January 1, 1998 through December 31,

2003, where reformulated gasoline is

contained as an element of any plan or

plan revision that has been approved by

the Agency, other than as a contingency

measure consisting of a future opt-in,

then the effective date for removal of an

area under paragraph (a) this section

shall be January 1, 2004, or 90 days from

the effective date for Agency approval of

a revision to the plan that removes

reformulated gasoline as a control

measure, whichever date is later.

(5) For opt-out petitions received on

or after January 1, 2004, except as

provided in paragraph (c)(6) of this

section, the Administrator shall set an

effective date for removal of an area as

requested by the Governor, but no less

than 90 days from the Agency’s written

notification to the state approving the

opt-out petition.

(6) For opt-out petitions received on

or after January 1, 2004, where

reformulated gasoline is contained as an

element of any plan or plan revision

that has been approved by the Agency,

other than as a contingency measure

consisting of a future opt-in, then the

effective date for removal of an area

under paragraph (a) of this section shall

be 90 days from the effective date for

Agency approval of a revision to the

plan that removes reformulated gasoline

as a control measure.

(7) An area opting into the RFG

program after December 31, 1997, will

be subject to all requirements of this

section.

* * * * *

[FR Doc. 97–7953 Filed 3–27–97; 8:45 am]

BILLING CODE 6560–50–P