National Petrochemical & Refiners Association 1667 K Street, NW

Suite 700 202.457.0480 voice

202.457.0486 fax Charles T. Drevna

President

Washington, DC

20006 cdrevna@npra.org

VIA FEDERAL EXPRESS AND ELECTRONIC MAIL

August 17, 2011

Administrator Lisa P. Jackson U.S. Environmental Protection Agency Room 300, Ariel Rios Building 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460 (jackson.lisa@epa.gov)

Assistant Administrator Gina McCarthy U.S. Environmental Protection Agency

Office of Air and Radiation Ariel Rios Building, Mail Code 6101A 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460 (mccarthy.gina@epa.gov)

RE: Request for Partial Reconsideration of Stay of EPA’s “Misfueling Rule” 76 Fed. Reg. 44,406 (July 25, 2011)

Dear Administrator Jackson and Assistant Administrator McCarthy:

The National Petrochemical & Refiners A ssociation (“NPRA”) requests that the Environmental Protection Agency (“EPA”) reco nsider certain provisions of the July 25, 2011 final rule regarding the misfueling of vehicles and engines with gasoline-ethanol blends (“Final Misfueling Rule”) 1 . NPRA requests that EPA reconsider regulatory requirements and implementation policies affecting 10 percen t gasoline-ethanol blen ds (“E10”), including product transfer document requir ements applicable to E10, and labeling, survey and product transfer requirements that apply to gasoline-etha nol blends that will be considered to contain greater than 10 and less than 15 volume percent ethanol (“E15”). Th ese provisions of the Final Misfueling Rule were not subject to public notice and commen t in violation of

1 Regulation To Mitigate the Misfueling of Ve hicles and Engines With Gasoline Containing

Greater Than Ten Volume Percent Ethanol a nd Modifications to the Reformulated and Conventional Gasoline Program, 76 Fed. Reg. 44,406 (July 25, 2011).Page 2

requirements contained in the Clean Air Act (“CAA”) and the Administrative Procedure Act (“APA”).

NPRA additionally requests that EPA stay and toll the effective date and compliance obligations for new labeling, survey and product tr ansfer requirements co ntained in the Final Misfueling Rule. Since EPA determ ined that this rule was not a “major rule” as defined in the Congressional Review Act, the requirements of the rule will become effective on August 25, 2011. EPA has authority under the CAA to stay the effectiveness of a rule for a period

not to exceed three months. 2 Section 705 of the APA also authorizes the postponement of effective dates of a final rule pending judici al review and based on a finding that justice requires this result. EPA should use such availa ble authorities to ensure that portions of the Final Misfueling Rule that were not subject to public notice and review not be implemented. A stay would also allow EPA the opportunity to reconsider and revise the Final Misfueling Rule. Given the impending compliance date, we as k for your prompt attention to this matter.

I. EPA Failed to Provide Notice of Substa ntive Changes to Proposed Misfueling Regulations Affecting Labeling, Survey and Product Transfer Requirements.

In the Final Misfueling Rule, EP A explained that it was exerci sing legal authority contained in CAA section 211(c)(1) “to es tablish a prohibition on the use of gasoline containing more than 10 vol% ethanol in vehicles, engines and equipment not covered by [partial waiver decisions to allow certain MY 2000 on-road vehicles].” 3 In other words, EPA intended that regulations prevent vehicles and engines whic h cannot use gasoline-ethanol blends greater than E10 from being fueled with gasoline-et hanol blends with an ethanol concentration higher than E10. EPA sought to prevent olde r light duty vehicles, heavy-duty vehicles, motorcycles and non-road vehicles and engines from using new ethanol blends that could contain more ethanol than E10 blends currently in use.

The Final Misfueling Rule, however, has a mu ch broader effect. Due to changes to regulatory language that were not proposed or discussed in the preamble of the proposed misfueling rule 4 , the Final Misfueling Rule effectively lowers the acceptable level of ethanol in E10. It does this by redefining gasoline-et hanol blends that can be considered E10 for purposes of labeling, survey and product transfer documents, imposing a new requirement

that such blends contain no more than 10.0 volume percent ethanol . This new regulatory definition not only conflicts with all previous regulatory definitions and practices regarding E10 – but is unnecessary to implement partial waiver decisions allowing the use of E15

which formed the basis and rationale of the entire Final Misfueling Rule.

2 See CAA section 307(d)(7)(B).

3 76 Fed. Reg. at 44,411.

4 75 Fed. Reg.68,044 (November 4, 2010)Page 3

On its face, the Final Misfueling Rule does not al ign with either of th e partial waivers that EPA has promulgated to increase the allowable ethanol content of gasoline to 15%. Both the partial waiver for MY 2007 and newer light duty vehicles 5 and the partial waiver for MY 2001 through MY 2006 light-duty motor vehicles 6 explicitly reference 10 volume percent

ethanol. EPA provides in both final ac tions that “the waiver a pplies to the blending of greater than 10 vol% and no more than 15 vol% anhyrdous ethanol into gasoline.” 7 As demonstrated below, this regulatory standard has been consistently defined and implemented to allow “rounding down” of gasoline-ethanol bl ends that are tested as containing slightly more ethanol that 10 percent by volume.

Previous to both partial waivers for E15 a nd the Final Misfueling Rule, E10 has been considered to be a fuel “consisting of 90% unleaded gasoline and 10% ethyl alcohol.” 8 This

definition and EPA’s CAA section 211(f) waiver for E10 has been in effect for 32 years and broadly utilized in the fuel marketplace. EP A, moreover, has repeatedly indicated that the 1978 waiver for gasoline-ethanol blends was based on an upper limit of 10%. 9 Therefore, it was to be expected that EPA’s proposed mi sfueling rule retained previous regulatory definitions for E10, explicitly defining this fu el as “a gasoline-ethanol blend that contains between 9 and 10 volume percent ethanol.” 10

In the proposed rule, all requirements related to labeling, surveys and product transfer

documents referenced a volume ethanol content of 10%. In specific, EPA proposed that:

(1) Any retailer or wholesale purchaser-consumer who sells, dispenses, or offers for sale or dispensing “gasoline-ethanol bl ends that contain greater than 10 volume percent ethanol” affix a specific labe l to the fuel dispenser. 11 (Emphasis added). (2) Survey requirements applicable to E15 re quire sending notifications of test results

within 24 hours after a labor atory receives a sample containing greater than 10 volume percent ethanol. 12

5 75 Fed. Reg. 68,094 (November 4, 2010).

6 76 Fed. Reg. 4,662 (January 26, 2011).

7 75 Fed. Reg. at 68, 149 and 76 Fed. Reg. at 4,682. Both citations reference paragraph 2 of the partial and condition wa iver granted for vehicles subject to the waiver.

8 68 Fed. Reg. 20,777 (April 6, 1979).

9 See for example: Letter from Adam M. Kushner to Bob Greco regarding Gasoline Ethanol Blends, July 31, 2008, referring to gasoline bl ended with “more th an 10% ethanol”.

10 75 Fed. Reg. at 68,085.

11 See 40 C.F.R. 80.1501(a) 75 Fed. Reg. at 68,086.

12 See 40 C.F.R. 80.1502(b)(3)(iv) 75 Fed. Reg. at 68,087.Page 4

(3) Survey requirements applicable to E15 specifi cally apply to retail outlets if a sample of gasoline collected contains greater than 10 volume percent ethanol. 13

(4) Product transfer documents contain cert ain statements for gasoline containing

between 9 and 10 volume percent ethanol. 14

(5) Product transfer documents contain certain statements for gasoline containing greater

than 10 volume percent and not more than 15 volume percent ethanol. 15

The Final Misfueling Rule, however, replaced “10” with “10.0” in each instance of the regulatory text cited above as well as replaced “9” with “9.0” and “15” with “15.0” in the same provisions. In each instance where EPA had proposed a whole number in the regulatory text of the misfueling rule, the Fina l Misfueling Rule added a decimal point and an additional digit, yielding a regulat ory standard expressed to 1/10 th of a volume percent. Thus, without any notice or discussion of this action, EPA changed regulatory standards and requirements in the Final Misfueling Rule th at address major substantive portions of the rulemaking, i.e ., labeling requirements, survey requir ements and product transfer documents.

This result was neither anticipated by NP RA or, to NPRA’s knowledge, by any other commenters to the proposed misfueling rule. It was therefore not only impracticable for

NPRA to comment on this matter in accord ance with CAA section 307(d)(7)(B), but impossible. The preamble of the proposed rule contained no discussion that EPA intended to change regulatory requ irements applicable to the sale and transfer of E10 by imposing a “10.0” standard or by making similar change s to the proposed 9 and 15 volume percent values. The proposed regulatory language also contained no language or hint that EPA was considering changing part of its historic defi nition of E10. A search of the Response to Comments document also yields no discussion on this matter.

Instead, the only rationale that is offered for the la beling, survey and product transfer requirements are that these requirements are nece ssary in order to avert misfueling that could occur under EPA’s decision to gr ant partial waivers for the sale and transfer of E15 16 The

13 See 40 C.F.R. 80.1502(b)(4)(iv)(B) Id

.

14 See 40 C.F.R. 80.1503(b)(1)(vi)(C) 75 Fed. Reg. 68,089.

15 See 40 C.F.R. 80.1503(b)(1)(vi)(D) Id

.

16 The Final Misfueling Rule notes that “[t]hese regulations ar e being issued in conjunction with EPA’s two recent decisions to grant part ial waivers for E15 unde r section 211(f)(4) of the Clean Air Act . . . The E15 partial waiv ers impose a number of conditions designed to help ensure that E15 is introduced into commerce for use only in MY 2001 and new lightduty motor vehicles and in flexible-fueled vehicl es . . .[s]ome of the re gulatory provisions in this action parallel those waiver conditions and are expected to be a more efficient way to minimize in-use emission increases that might result from misfueling with E15.” 76 Fed. Reg. at 44, 407.Page 5

technical basis for the final rule reiterates concerns regarding the potential for catalyst deterioration in older vehicles and equipment, elevated exhaust and evaporative emissions and engine failure from overheating. 17 But all these matters and concerns relate to using a gasoline-ethanol blend other than the blend currently used – E10. EPA’s analysis of both partial waivers was with resp ect to 10% volume ethanol, not 10.0% volume ethanol. Thus, not only did EPA fail to provide any notice for changing the regulatory definition of E10, but the agency also did not provide any rationale, technical support or data that would support changing the standard from 10% to 10.0%.

II. The Final Misfueling Rule Changes Previo us EPA Regulatory Implementation and Guidance Without Required Rulemaking

Ethanol can be splash-blended into gasoline f eedstock. While due care is taken in this practice and in the transport, handling and storage of E10, the actual ethanol content of E10 can slightly vary. EPA has recognized that ethanol-gasoline blends are subject to small variances and has expl icitly allowed such variances to occur.

EPA has made clear that the 10 percent parame ter in E10 is subject to “rounding down.” As indicated in 2006, “Each of EPA’s motor vehicl e fuel standards indicates the number of significant digits which should be present in an observed measurement number to be compared to the standard for the purpose of demonstrating compliance. The appropriate number of significant digits to determine comp liance with a fuel standard regulation or to report on a reporting form should be determined from the method outlined in section 3.1 of the ASTM standard practice E 29-02 . . . a test method used to measure certain fuel parameter may provide more signi ficant digits in its output than specific in the standard. When this situation occurs, th e regulated party should round thei r test result to determine if they are in compliance with the standard.” 18 EPA has also made clea r that “[r]eferencing the [ASTM] rounding method . . . provides consiste nt guidance for the regulated community when determining whether a test result is in conformance with our motor vehicle

standards.” 19

ASTM methods 20 provide that where specification limits indicate a particular value, the limits “are taken to imply that, for purpose of determining conformance with specifications,

an observed value or a calculated value should be rounded to the nearest [value that conforms

17 See Section IV.F of the Final Misf ueling Rule. 76 Fed. Reg. at 44,439.

18 71 Fed. Reg. 16,492, 16,496 (April 3, 2006).

19 71 Fed. Reg. at 16,497.

20 Standard Practice for Using Signifi cant Digits in Test Data to Determine Conformance with Specifications , ASTM International, Designation E29-06b, 07/24/2007.Page 6

to the limit].” 21 ASTM further indicates that rounding procedure is to “round down” all

values of 4 or below where this value is the “beyond the last place to be retained.” 22 Thus, under ASTM methods, E10 volume percentage m easurements at least 10.4 and below should

be considered to constitute E10.

Without notice either as to the agency’s intent to take this specific action – or to amend existing regulations, guidance and determinations respecting E10 23 – EPA has redefined E10 in the Final Misfueling Rule a nd applied various regulatory requi rements on the basis of this

redefinition. The net result of this action is to change a re gulatory definition and agency interpretation that allowed gasoline-ethanol bl ends of 10.4 and below to constitute E10 to a regulatory definition and agency interpretation that E10 can contain no more than 10.0 volume percent ethanol.

While measures of 1/10 th of 1 percent may appear nominally small, the effect of the Final Misfueling Rule is to substantia lly change current practices re garding the sale , transfer and marketing of E10 throughout the United Stat es. With no allowance for “rounding down,” EPA has tightened requirements for E10 which will effectively ensure that less ethanol is used in this fuel. As the agency well know s, those subject to regulatory requirements will often impose a margin of safety to ensure th at their products meet EPA specifications.

Therefore a 10.0 standard has the potentially to significant redu ce the amount of ethanol used to produce E10. In order to meet a 10.0 standard, it is likely that ethanol blenders and others in the supply chain will use a gasoline-ethanol level that is significantly below 10.0. Such a result would appear contrary to EPA’s efforts to implement an E15 standard that is designed

to result in the use of more ethanol in the United States.

An unintended consequence is that a gasoline blend with 10.3 vol% ethanol qualifies for the one psi RVP waiver and is deemed by the Agen cy to be E15. EPA did not intend for any E15 to qualify for the one psi RVP waiver if the area is subject to a maximum 9.0 psi RVP standard during the summer months.

EPA should also consider the very real ramificat ions of making such a substantial change in the fuel distribution system within 30 days of final rule publication in the Federal Register. As noted above, NPRA could uncover no comment s in the docket which referenced this issue. Yet the regulated community now has a ma tter of days to comply with the final rule. Such a situation is demanding both of the Agen cy’s immediate attenti on and action to stay the final rule provisions that produce this result.

21 Id . at 4.1.3 Rounding Methods.

22 Id . at 6.4.1.

23 As noted earlier, the 1978 “Gasohol” waiver and both partial waiv ers for E15 reference E10 as previously defined and express the standard in terms of 10% not 10.0%.Page 7

III. Conclusion

EPA should take prompt action on this petition an d stay the effective da te of all portions of the Final Misfueling Rule that utilize the new standard of 10.0 ethanol volume percentage. Since these provisions take effect on August 24, tim e is of the essence. NPRA stands ready

to work with EPA to resolve this matter in an expeditious fashion.

If you have any questions, please contact Tim Hogan at 202-552-8462.

Sincerely,

Charles T. Drevna President, NPRA

cc Margo Oge

Chet France Paul Argyropoulos

Jeff Kodish

Paul Machiele

Karl Simon Tim Hogan