[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35673-35680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16668]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-5528-6]


General Procedures to Opt Out of the Reformulated Gasoline 
Requirements; Removal of Jefferson County, Albany and Buffalo, New 
York; Twenty-eight Counties in Pennsylvania; and Hancock and Waldo 
Counties in Maine From the Reformulated Gasoline Program

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: This final rule establishes the criteria and general 
procedures for states to opt out of the federal reformulated gasoline 
program for ozone non-attainment areas where the state had previously 
voluntarily opted into the program. This action describes the petition 
process a state must follow to be removed from the program, the 
criteria used by EPA to approve a petition, and the transition period 
before the opt-out becomes effective. This final rule also removes 
Jefferson County and the Albany and Buffalo areas in New York; twenty-
eight counties in Pennsylvania; and Hancock and Waldo counties in Maine 
from the list of covered areas identified in Sec. 80.70 of the 
reformulated gasoline rule.
    Today's action only applies to opt-out requests submitted by states 
prior to December 31, 1997, unless this final rule is superseded by 
another rule which pertains to new criteria and general procedures for 
reformulated gasoline program opt-outs. The Agency intends to propose 
and solicit comments on separate opt-out procedures for subsequent 
requests to opt out of the reformulated gasoline program.

EFFECTIVE DATE: This final rule is effective August 7, 1996.

FOR FURTHER INFORMATION CONTACT: Mark Coryell, U.S. Environmental 
Protection Agency Office of Air and Radiation, 401 M Street, SW 
(6406J), Washington, DC 20460, (202) 233-9014. Also, contact Christine 
Hawk at (202) 233-9672 or Pat Childers at (202) 233-9415.

SUPPLEMENTARY INFORMATION:

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 should carefully examine 
the list of areas covered by the reformulated gasoline program in 
Sec. 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.
    A copy of this action is available on the OAQPS Technology Transfer 
Network Bulletin Board System (TTNBBS). 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, 9600, 24.4K, or 48.8K 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.

[[Page 35674]]

    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.

Extended Summary

    Based upon public comments that were solicited in the Notice of 
Proposed Rulemaking (60 FR 31269) published June 14, 1995, EPA has made 
the following decisions that are contained in this final rule.
    This final rule provides the Agency's general rules concerning 
criteria and procedures for states to opt out certain non-attainment 
areas from the federal reformulated gasoline (RFG) program. This action 
applies to non-attainment 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 rule 
describes the process a state must follow to petition for removal from 
the program, the criteria used by EPA to evaluate a request, and the 
transition period before the opt-out becomes effective.
    This final rule authorizes the EPA's Administrator to approve a 
petition to opt out all or a portion of an opt-in area. The final rule 
requires that the governor submit the opt-out petition, or the 
governor's authorized representative. It must include specific 
information on how, if at all, reformulated gasoline has been relied 
upon by the state in state or local implementation plans, or revisions 
to such plans, both pending or already approved.
    This final rule specifies the effective date that an area will be 
removed from the list of covered areas defined in Sec. 80.70 of the 
reformulated gasoline rule. If reformulated gasoline was included as a 
control measure in an approved State Implementation Plan (e.g. to 
demonstrate attainment or maintenance), then the opt-out would not 
become effective until 90 days from the effective date for Agency 
approval of a revision to the state plan removing reformulated gasoline 
as a control. If reformulated gasoline was relied upon in a plan 
pending Agency approval, then the opt-out would become effective 90 
days from the date EPA provides written notification to the state that 
the petition has been approved. If the state does not have a plan or 
did not rely on reformulated gasoline in a pending plan, then the 
effective date is the same as for pending plans described above. The 
Agency would also publish a Federal Register notice announcing the 
approval of the petition and the effective date for the opt-out.
    This final rule also removes Jefferson County and the Albany and 
Buffalo areas in New York (a total of nine counties in New York); the 
twenty-eight opt-in counties in Pennsylvania; and Hancock and Waldo 
counties in Maine from the list of covered areas defined by Sec. 80.70 
of the reformulated gasoline rule per the request of the States of New 
York, Pennsylvania and Maine. This is based on requests from the 
Governors of New York, Pennsylvania and Maine that these areas opt out 
of this federal program. In a separate action signed by the EPA 
Administrator on December 29, 1994, EPA stayed the application of the 
reformulated gasoline regulations in these areas effective January 1, 
1995 until July 1, 1995. 60 FR 2696 (January 11, 1995). EPA proposed to 
extend this stay until final action was taken on the opt-out requests. 
60 FR 31269 (June 14, 1995). In a separate action signed by the EPA 
Administrator the Agency extended the stay on June 30, 1995. 60 FR 
35488 (July 10, 1995).
    The regulations adopted in today's action for processing opt-outs 
from the reformulated gasoline requirements would be applicable for 
opt-out petitions received or under Agency consideration beginning June 
21, 1996, until December 31, 1997, unless superseded by a subsequent 
rulemaking.

I. General Procedures for EPA's Processing of Future Opt-Out Requests

A. Background

    The federal reformulated gasoline (RFG) program is designed to 
reduce ozone levels in the largest metropolitan areas of the U.S. with 
the worst ground level ozone problems by reducing 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 (NO<INF>x), another precursor of ozone, are also 
reduced. The 1990 Amendments to the Clean Air Act requires reformulated 
gasoline in the nine largest cities with the highest levels of ozone. 
In section 211(k)(6), Congress provided the opportunity for states to 
opt-in to the RFG program for their other 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). Such states 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. However, the 
Agency did indicate that it intended to propose such procedures in a 
separate rule.

B. Statutory Authority

    The statutory authority for 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). A discussion of EPA's statutory 
authority may be found in the preamble to the proposal, at 60 FR 31271 
(June 14, 1995).

C. General Rulemaking vs. Notice and Comment Rulemaking for Each Opt-
Out Request

    In the NPRM, EPA proposed a general rule that would apply for all 
future opt-out requests. Some industry representatives and associations 
provided opposing comments. Some commenters argued that under section 
307(d) of the Act, EPA must provide public notice and a comment period 
for each opt-out request. They argued that EPA must conduct rulemaking 
for each opt-out request to consider the

[[Page 35675]]

ramifications of each opt-out request, for example, on long-term costs 
to state, local and tribal governments and private industry and 
possible adverse regional air quality consequences. Other commenters, 
however, preferred the Agency's proposal to develop general opt-out 
procedures rather than conduct a rulemaking for each state opt-out 
request.
    EPA does not agree that a separate rulemaking must be conducted for 
each future opt-out request. Through this rulemaking, EPA is 
establishing a petition based process that will address, on a case by 
case basis, future individual state requests to opt out of the federal 
RFG program. The regulations establish clear and objective criteria for 
EPA to apply in these future non-rulemaking, adjudication actions. 
These criteria address when a state's petition is complete and the 
appropriate transition time under the regulations. This application of 
regulatory criteria on a case by case basis to future individual 
situations does not require notice and comment rulemaking, either under 
section 307(d) of the Clean Air Act or the Administrative Procedure 
Act.
    It is not uncommon for the Agency to establish such a petition 
based process within a regulatory structure, in order to apply the 
criteria established in a regulation to a wide variety of individual 
cases. The reformulated gasoline regulations, for example, include a 
petition process for approval of individual baseline, augmentations of 
the complex model, exemptions, alternative test procedures, and the 
like. EPA believes that approach is most appropriate here as well, as 
it will allow for expeditious and consistent Agency action on the 
individual opt-out requests presented by states.
    EPA believes that the general procedures adopted here will provide 
consistent opt-out decisions. This rule will also provide greater 
certainty in the market than individual rulemakings could provide. 
Lastly, this rule will provide quick approval for opt-out requests 
while maintaining a sufficient transition period to minimize costly 
market disruptions.
    In certain cases, the affected parties will be able to comment on 
the state action. In those states where the reformulated gasoline 
program is included as a part of an approved state implementation plan 
(SIP), affected parties that are concerned with the impacts of an opt-
out would have the opportunity to comment on a state's revised plan 
that removes reformulated gasoline as an air control measure.
    The Agency is not taking action today on the portion of the 
proposed notice concerning the question whether the Agency has the 
discretion under section 211(k) of the act to allow attainment areas to 
opt into this federal program. EPA has received comments on this 
question and is reviewing options that would permit opt-in 
opportunities to be expanded. EPA anticipates announcing a policy 
shortly.

D. Applicability

    The regulations adopted in today's action for processing opt-outs 
from the reformulated gasoline requirements would be applicable for 
opt-out petitions received or under Agency consideration beginning June 
21, 1996, until December 31, 1997, unless superseded by a subsequent 
rulemaking.
    EPA received comments that complying with the Phase II reformulated 
gasoline requirements involves significantly greater capital investment 
than for the Phase I requirements. The transition periods set forth in 
today's rule for opting out of Phase I reformulated gasoline 
requirements would be, according to the comments, grossly inadequate 
for industry to recover in a reasonable time frame investment costs 
associated with the Phase II. EPA recognizes these different 
circumstances may call for different opt-out provisions and intends to 
propose separate rules for opting out areas from the Phase II 
reformulated gasoline requirements.

E. Petition Process

    In the NPRM, EPA proposed that a state may petition the EPA to opt 
out of the reformulated gasoline program. Under the proposal, a 
petition would have to include specific information about how the 
program is used in a State Implementation Plan. If a state did include 
the reformulated gasoline program as a control measure in such plan or 
revision submitted to EPA for approval, then the state would have to 
describe if and how it intended to replace reformulated gasoline as a 
control measure. In addition, the state would need to identify whether 
it intended to submit a revision and, if so, when.
    Several commenters raised concerns about the impacts that approved 
petitions would have on air quality, especially in nonattainment areas, 
since reformulated gasoline provides significant clean air benefits. A 
fuels association commented that petitions should demonstrate that 
there will be no unacceptable adverse air quality impacts to other 
areas or other states. Industry representatives commented that 
nonattainment areas should not be permitted to opt out unless the state 
has binding commitments to adopt substitute measures to achieve 
attainment. Another commenter cautioned that a petition should not be 
approved if there is adequate showing that opting out would cause the 
area to return to nonatttainment status. Regarding opportunity for 
public consideration, an association remarked that the petition process 
should include a formal comment period.
    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 its plans to attain 
and maintain the NAAQS. Today's action maintains the flexibility that 
states have in air quality planning by honoring their right to opt out 
and substitute alternative control measures where the state considers 
appropriate. EPA believes that the state should retain flexibility to 
revise the SIP by selecting control measures it desires to include in 
its plan as long as it makes the necessary demonstrations under the 
Act.
    To begin the opt-out process, this final rule requires that a 
Governor, or his or her authorized representative, submit an opt-out 
petition to the Administrator of the Agency. The opt-out petition must 
include information describing how, if at all, reformulated gasoline 
has been relied upon by the state in its State Implementation Plans, 
revisions to such plans, or redesignation requests, both pending or 
already approved. This would include, for example, attainment as well 
as maintenance plans. The petition must also include a geographic 
description of the opt-out area.
    In the case where a state has included reformulated gasoline in a 
pending plan submission, the petition must identify whether the state 
is withdrawing the plan and what alternative air quality control 
measures, if any, that the state intends to use to replace RFG. In the 
case where a state intends to submit a revision to an approved plan or 
to a pending SIP submission, the petition must identify this intention 
as well as the alternative air quality control measures that will be 
substituted for reformulated gasoline to reach or maintain compliance 
with the federal ozone standard. Furthermore, the petition must include 
the status of any proposed revision to an approved plan or pending SIP 
submission and the projected schedule for the revised plan. In the 
event a state does not intend on

[[Page 35676]]

revising an approved plan or pending SIP submission, the petition must 
include a description why no revision is considered necessary. A 
revision may not be considered necessary, for instance, if the proposed 
opt-out area does not need to rely on reformulated gasoline to achieve 
or maintain attainment.
    The purpose of the information required in the petition is to 
provide EPA the assurance that a state has considered the programmatic 
effects of the requested opt-out. For instance, EPA expects that states 
will fully consider the effects that an RFG opt-out would have on its 
SIP or 15% VOC rate of progress plan as well as its overall ability to 
attain and maintain the federal ozone standard. Through this petition 
exercise, a state may find that alternative control measures may not 
offer the cost-effectiveness, immediate benefits, or ancillary benefits 
such as toxics reduction that reformulated gasoline provides. Thus 
careful planning is needed by the state since reductions from other 
sources may be much less practicable, depending on the state's 
circumstances. Reformulated gasoline is one of the most cost-effective 
measures for ozone control available and also yields significant air 
toxics benefits. EPA believes that the information requirement will 
address some of the commenters' concerns that states consider the 
effects on air quality of their decision to opt out, stated earlier in 
this section.
    After a state submits a petition, the Agency will review the 
document to determine whether it contains all of the required 
information. Once the Agency determines that the petition is complete 
with the required elements, EPA will send a letter to the state 
approving the petition and identifying the effective date of the opt-
out. For those instances where the state does not include federal RFG 
in an approved plan, the effective date shall be 90 days from the date 
of the notification to the state. When the state has included RFG in an 
approved plan, the effective date will be 90 days from the effective 
date for Agency approval of a revision to the plan that removes 
reformulated gasoline as a control measure.

F. Transition Period

    In the NPRM, EPA proposed to make the effective date for an opt-out 
dependent upon whether or not a state has an approved plan in place. If 
reformulated gasoline was relied upon as a control measure in an 
approved plan, EPA proposed to make the opt-out effective 30 days after 
the Agency had approved an appropriate revision to the state plan. If 
reformulated gasoline was not relied upon in an approved or pending 
SIP, SIP revision, or redesignation request, EPA proposed to make the 
opt-out become effective 30 days from receipt of a complete opt-out 
petition. If reformulated gasoline was relied upon as a control measure 
in a plan revision that had been submitted to the Agency but was still 
pending Agency approval, and the Agency had found the plan to be 
complete and/or made a protectiveness finding under 40 CFR Secs. 51.448 
and 93.128, EPA proposed to make the opt-out effective 120 days from 
the date a complete petition is received. When the state had a pending 
plan revision that the Agency had determined complete and/or for which 
the Agency had made a protectiveness finding and the state decided to 
withdraw the submission or indicated to the Agency the state's 
intention to submit a revision, EPA proposed to make the opt-out 
effective 30 days from receipt of a complete petition from the state, 
as described above and specified in the proposed regulatory language.
    EPA received numerous comments on two aspects of the proposal. 
First, the majority of the commenters indicated that the proposed time 
period between the approval of an opt-out and the date the opt-out 
becomes effective (referred to in this preamble as the transition 
period) is insufficient for industry to change the supply of gasoline 
from reformulated gasoline to conventional without significant 
disruption to the supply infrastructure. Second, commenters recommended 
that the opt-out process should be more orderly, with the Agency giving 
expeditious and clear notification to the public as to when the opt-out 
becomes effective.
    In response to the comments received on the timing of opt-outs, EPA 
is adopting opt-out provisions that are modified from the proposal. 
First, today's action provides for a single 90 day transition period. 
In determining an appropriate length of time for the transition period, 
EPA weighed the need for industry to plan and implement a change in 
gasoline throughout the distribution system to the retail stations 
against the request from states to opt out in a timely manner. The 
majority of commenters indicated that 60 to 90 days would be adequate 
for industry to turn over existing stocks of reformulated gasoline to 
conventional gasoline. Also, based upon comments from state 
associations, as well as EPA's experience in other opt-outs, states are 
concerned that the Agency make a timely decision on the opt-out and 
generally consider a 90-day transition period reasonable once the opt-
out approval by the Agency has been made.
    This action finalizes a single transition period, not two periods 
as proposed. In the NPRM, states with plan revisions containing RFG 
pending before the Agency would be opted out of the RFG program in 120 
days, but a state could shorten this period to 30 days simply by 
withdrawing the pending plan revision or indicating to EPA the state's 
intention to submit a revision to the pending plan. These two 
conditions provide little impediment to a state to effectively opt out 
in 30 days. Therefore, EPA believes that a single transition period 
length will simplify an opt-out and maximize affected parties's ability 
to plan for a smooth transition from the reformulated gasoline program.
    EPA is also modifying the procedure for initiating the 90 day count 
for the transition period. Several commenters noted, and EPA concurs, 
that in some cases the proposed procedures not only would have created 
uncertainty surrounding the transition period start date, but also 
would have effectively shortened the proposed transition period. In the 
NPRM, EPA proposed to make the transition period begin upon receipt of 
a complete petition. As commenters pointed out, this method would 
create uncertainty about whether the petition was complete on the day 
that the Agency received the petition and did not provide a means for 
communicating the petition's approval or effective date to the 
regulated industry.
    EPA believes that in those cases where reformulated gasoline is 
relied upon as a control measure in an approved plan, the procedures 
for re-approval of the state plan, with notice, comment, and 
publication of the revision, would sufficiently address commenters' 
concerns about clear notification of Agency action. Therefore, if RFG 
is relied upon as a control measure in an approved plan, the opt-out 
would become effective 90 days after the effective date of the Agency's 
approval of an appropriate revision to the state plan. Notice of this 
action would be published in the Federal Register. Prior to this notice 
in the Federal Register, the state must also submit a complete petition 
to opt out of the reformulated gasoline program.
    Where reformulated gasoline is relied upon as a control measure in 
a plan revision pending before the Agency, or is not relied upon in any 
plan, the state must petition the Agency to opt out of the reformulated 
gasoline program, and the opt-out will be effective 90 days after the 
Agency notifies the state that the state's petition is approved. The

[[Page 35677]]

Agency will provide written notification to the state indicating EPA's 
approval of the petition. The 90-day transition clock will start from 
the date of the approval notification sent to the opt-out state. To 
facilitate an orderly opt-out process and minimize any uncertainties 
that may result from an opt-out, EPA intends to quickly review opt-out 
petitions and expeditiously notify the public of the effective date of 
opt-outs. EPA intends to make a decision on the state's petition within 
two weeks from receipt of the petition. EPA will promptly notify the 
state and publish a notice in the Federal Register notifying the public 
of the effective date of the opt-out, thereby giving consistent and 
timely information to the affected parties. The Agency will make every 
effort to notify the associations of affected industries and states 
after EPA has approved a state's opt-out petition. In addition EPA will 
announce the opt-out's effective date on the OAQPS Technology Transfer 
Network Bulletin Board System (TTNBBS). For information on how to 
access this system, see the SUPPLEMENTARY INFORMATION section of this 
rule for details.
    Finally, at a state's request, the opt-out could be effective later 
than 90 days after the start of the transition period. In such a case, 
a state must indicate in its petition to the Agency the desired 
effective date for the opt-out. In this scenario, EPA recommends that a 
state consider an opt-out date which becomes effective on one of the 
reformulated gasoline program's natural transition points. EPA received 
comments supporting opt-out effective dates that are consistent with 
the natural transition points. These natural transition points are 
identified as January 1, the start of the averaging season, and May 1 
and September 15, the beginning and end, respectively, of the VOC 
control season. The Agency understands these concerns and will support 
state efforts to accommodate these natural transition points.

G. Cyclic Opt-outs and Opt-ins by a State

    The reformulated gasoline program is a cost-effective program 
designed to reduce ozone levels in participating metropolitan areas. 
But the cost effectiveness of the reformulated gasoline program is 
jeopardized by regulatory uncertainty, as it pertains to the regulated 
community's ability to plan for providing the manufacturing capacity to 
produce oxygenate and reformulated gasoline to specified control areas. 
Specifically, the uncertainty is increased by the perceived absence of 
long term commitment to the reformulated gasoline program by those 
states who opted into the reformulated gasoline program and by the 
relatively simple process for states to opt out of the reformulated 
gasoline program provided for in this final rule.
    EPA understands and expects that before a state submits an opt-out 
petition it will have given thoughtful consideration to the air quality 
consequences of its action and considered the substitute control 
measures that may be needed to achieve air quality standards and 
protect the health of its citizens. Therefore, the Agency believes it 
is improbable that a state would seek to reverse an opt-out decision by 
shortly thereafter requesting to opt back into the program.
    However, comments from the oil industry expressed their concern 
that states may engage in a cycle of opt-ins and opt-outs. The Agency 
agrees that the integrity of the reformulated gasoline program would be 
jeopardized if states maintained a cycle of opt-ins and opt-outs, e.g. 
to create a customized seasonal program. The reformulated gasoline 
program is a year-round program.
    Given the limited applicability of this final rule to December 31, 
1997, EPA believes that it is unlikely that states would have the 
opportunity to complete a cycle of opt-out and opt-in. Although this 
final rule effectively allows states to quickly opt out of the 
reformulated gasoline program, the Agency may set the effective date of 
opt-in up to one year from the date of a governor's opt-in application. 
Section 211(k)(6). States would not be able to plan, with any 
certainty, the timing of opt-ins and opt-outs which would create a 
seasonal reformulated gasoline program. EPA does not believe that 
current conditions warrant any further restrictions on opt-ins and opt-
outs. EPA may promulgate restrictions in the future if it is determined 
in the future that cyclic opt-outs and opt-ins are occurring.

H. Effect on Averaging

    Under the RFG regulations, refiners and importers may elect to meet 
certain RFG standards either on a per-gallon basis or on average. This 
election, which must be made separately for each parameter and 
separately for each calendar year, applies to all RFG produced at a 
refinery by a refiner, or imported by an importer, during a calendar 
year.
    Some commenters indicated that a refiner or importer who elects to 
comply with the RFG standards on average may be adversely affected by 
an area opting out of the RFG program during an averaging period. This 
could occur where a refiner's or importer's average is out of 
compliance at the time of an unanticipated opt-out, and reduced future 
production or importation of RFG due to the opt-out results in the 
refiner or importer having insufficient volume in the remainder of the 
averaging period to bring the average into compliance.
    EPA believes that the 90 day (minimum) transition period provides 
adequate time for refiners and importers to adjust to changes in the 
RFG market which may be attributed to opt-outs and that it is unlikely 
that a refiner's or importer's ability to comply with the RFG standards 
on average would be significantly impaired if an area opts out of the 
RFG program. As a result, EPA is not providing regulatory relief in 
today's action for such a possibility. Nevertheless, in setting a 
potential penalty in an enforcement action for violation of the RFG 
averaging standards, EPA will consider the effects of any opt-outs if 
the refiner or importer is able to demonstrate (1) that it would have 
been in compliance but for the opt-out, and (2) that it took all 
reasonable steps to address the averaging problem caused by the opt-
out.

II. New York's, Pennsylvania's and Maine's Requests to Remove Selected 
Opt-In Areas From the Requirements of the Reformulated Gasoline Program

A. Introduction

    In the NPRM, EPA proposed to grant the petitions from the governors 
of the States of New York, Pennsylvania and Maine to remove Jefferson 
County and the Albany and Buffalo areas in New York (a total of nine 
counties in New York); the twenty-eight opt-in counties in 
Pennsylvania; and Hancock and Waldo counties in Maine from the list of 
covered areas defined by section 80.70 of the reformulated gasoline 
rule.
    Jefferson County and the other eight New York counties affected by 
this proposal were included as covered areas in EPA's reformulated 
gasoline regulations based on Governor Mario Cuomo's request of October 
28, 1991, that these areas be included under the Act's opt-in provision 
for ozone nonattainment areas (57 FR 7926, March 5, 1992). See 40 CFR 
80.70(j)(10)(vi). On November 29, 1994, EPA received a petition from 
the Commissioner of New York's Department of Environmental 
Conservation, Mr. Langdon Marsh, to remove Jefferson County from the 
list of areas covered by the requirements of the reformulated gasoline 
program. EPA understands that Commissioner Marsh was acting for 
Governor Cuomo in this

[[Page 35678]]

matter. The Administrator responded to the State's request in a letter 
to Commissioner Marsh dated December 12, 1994, stating EPA's intention 
to grant New York's request, and conduct rulemaking to implement this. 
In the letter of December 12, addressing the opt-out request for 
Jefferson County, the Administrator also indicated that effective 
January 1, 1995, and until the rulemaking to remove Jefferson County 
from the list of covered areas is completed, EPA would not enforce the 
reformulated gasoline requirements in Jefferson County for reformulated 
gasoline violations arising after January 1, 1995. This was based on 
the particular circumstances in Jefferson County.
    On December 23, 1994, Commissioner Marsh of New York's Department 
of Environmental Conservation wrote to further request the opt-out of 
the Albany and Buffalo areas which include the counties of Albany, 
Greene, Montgomery, Rennsselaer, Saratoga, Schenectady, Erie and 
Niagara. EPA Assistant Administrator for Air and Radiation, Mary 
Nichols, responded to the state's request in a letter to Commissioner 
Marsh dated December 28, 1994, stating EPA's intention to grant New 
York's request, and conduct rulemaking to implement this. The December 
28 letter also indicated EPA's intent to stay the reformulated gasoline 
regulations from January 1, 1995, until July 1, 1995, in the specified 
counties while the Agency completes rulemaking to appropriately change 
the regulations. The letter stated, however, that the requirements of 
the reformulated gasoline program would apply in these areas until the 
stay becomes effective January 1, 1995.
    Twenty-eight counties in Pennsylvania were included as covered 
areas in EPA's reformulated gasoline regulations based on Governor 
Robert P. Casey's request dated September 25, 1991. See 40 CFR 
80.70(j)(11)(i) through (xxviii). The counties referred to are listed 
as follows: Adams, Allegheny, Armstrong, Beaver, Berks, Blair, Butler, 
Cambria, Carbon, Columbia, Cumberland, Dauphin, Erie, Fayette, 
Lackawanna, Lancaster, Lebanon, Lehigh, Luzerne, Mercer, Monroe, 
Somerset, Northhampton, Perry, Washington, Westmoreland, Wyoming and 
York. On December 1, 1994, EPA received a petition from Governor Casey 
to remove these twenty-eight counties from the list of covered areas 
defined by Sec. 80.70 of the reformulated gasoline rule. As with New 
York's request, the Administrator responded to the State's request in a 
letter to Governor Casey dated December 12, 1994, stating EPA's 
intention to grant Pennsylvania's request, and conduct rulemaking to 
implement this. Effective January 1, 1995, and until formal rulemaking 
to remove the twenty-eight counties from the list of covered areas is 
completed, EPA would not enforce the reformulated gasoline requirements 
in these twenty-eight counties for reformulated gasoline violations 
arising after January 1, 1995. This was based on the particular 
circumstances in Pennsylvania. EPA has reserved its authority to 
enforce the reformulated gasoline program for violations that may have 
occurred prior to January 1, 1995.
    Hancock and Waldo Counties in Maine were included as covered areas 
in EPA's reformulated gasoline regulation based on Governor John R. 
McKernan's request of June 26, 1991, that these counties be included 
under the Act's opt-in provision for ozone nonattainment areas. (56 FR 
46119, September 10, 1991) See 40 CFR 80.70(j)(5)(viii) and (ix). On 
December 27, EPA received a petition from the Acting Commissioner of 
Maine's Department of Environmental Protection, Ms. Deborah Garrett, to 
remove Hancock and Waldo Counties in Maine from the list of areas 
covered by the requirements of the reformulated gasoline program. EPA 
understands that Commissioner Garrett is acting for Governor McKernan 
in this matter. EPA Assistant Administrator for Air and Radiation, Mary 
Nichols, responded to the state's request in a letter to Commissioner 
Garrett, dated December 28, 1994, stating EPA's intention to grant 
Maine's request, and conduct rulemaking to implement this. The December 
28 letter also stated EPA's intent to stay the reformulated gasoline 
regulations from January 1, 1995 until July 1, 1995, in the specified 
counties while the Agency completes rulemaking to appropriately change 
the regulations. However, EPA has reserved its authority to enforce the 
reformulated gasoline program for violations that may have occurred 
prior to January 1, 1995.
    In separate notices signed by the EPA Administrator on December 29, 
1994, and June 30, 1995, and for the reasons described therein, EPA has 
stayed the program in these thirty-nine counties, or portions thereof, 
effective January 1, 1995, until such time as the Agency completed 
rulemaking on the proposed opt-out for these areas. (60 FR 2696, 
January 11, 1995; 60 FR 35488, July 10, 1995) Based on this chronology, 
EPA proposed that these areas be removed from the reformulated gasoline 
program effective upon the issuance of final action in this rulemaking. 
(60 FR 31269, June 14, 1995)

B. EPA Grants New York's, Pennsylvania's and Maine's Requests To Remove 
Selected Opt-In Areas From the Requirements of the Reformulated 
Gasoline Program

    EPA believes that 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. 
60 FR 31269 (June 14, 1995). The Agency has considered two key aspects 
in granting these opt-outs: the first involves coordination of air 
quality planning, and the second involves appropriate lead time for 
industry to transition out of the program.
    With respect to air quality planning, EPA believes there is no 
reason to delay the removal of the 39 affected counties, or portions of 
counties, in New York, Pennsylvania and Maine. These areas do not 
include or rely on reformulated gasoline as a control measure in any 
state implementation plan, maintenance plan or 15% rate of progress 
plan. Even if reformulated gasoline is included as a contingency 
measure in a maintenance plan for the redesignation packages, allowing 
an area to opt out now would not interfere with implementing that 
contingency. The areas could opt into the reformulated gasoline program 
in the future, if necessary, within the restrictions outlined in 
section 211 (k)(6) of the Act.
    As indicated above, the reformulated gasoline program is currently 
stayed in all of the affected areas, and Agency consideration of an 
appropriate lead time for industry to change the supply of gasoline is 
unnecessary.
    Therefore, in today's action, EPA removes Jefferson County and the 
Albany and Buffalo areas in New York (a total of nine counties in New 
York); the twenty-eight opt-in counties in Pennsylvania; and Hancock 
and Waldo counties in Maine from the list of covered areas defined by 
Sec. 80.70 of the reformulated gasoline rule as of July 8, 1996.

III. Environmental Impact

    If an area opts out of the reformulated gasoline program, it will 
not receive the reductions in volatile organic compounds, oxides of 
nitrogen (NO<INF>X), 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 receive 
control of NO<INF>X 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

[[Page 35679]]

degrade from the levels found in 1990. These areas would be foregoing 
the air quality benefits obtained from the use of reformulated 
gasoline.
    However, as discussed in the proposal, one of the central concepts 
behind this rule is a recognition 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. EPA expects that states will in fact act prudently in 
exercising their rights 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.

IV. Regulatory Flexibility Analysis

    This 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's 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. 
Accordingly, EPA has determined that it is not necessary to prepare 
regulatory flexibility analysis in connection with this final rule. EPA 
has determined that this rule will have no significant adverse effect 
on substantial number of small businesses.

V. Public Participation

A. Public Comments

    The Agency received submissions during the comment period for the 
NPRM from 36 commenters. Copies of all of the written comments 
submitted to EPA, as well as records of all oral comments received 
during the comment period, can be obtained from the docket for this 
rule (see ADDRESSES).
    The Agency received comments from the public on three major issues: 
the opt-out process, EPA's authority to promulgate a rule on opt-outs, 
and transition period. A summary of these comments along with the 
Agency's responses are located throughout the preamble above. 
Discussion of public comments on the proposed opt-out process and the 
Agency response can be located in Section I, Parts C and E of this 
preamble. Discussion of public comments on the proposed transition 
periods and the Agency response can be found in Section I, Part F. The 
Agency response to comments on statutory authority are located in 
Section I, Part B and in the preamble to the proposal, at 60 FR 31271.
    The docket also contains a document that provides a more detailed 
summary of the comments, including some issues not covered in this 
preamble because they were minor or less contentious issues, and EPA's 
rationale for its response.

B. Public Hearing

    The Agency held a public hearing on July 5, 1995 to hear comments 
on the Notice of Proposed Rulemaking (60 FR 31269) published June 14, 
1995. Comments at the hearing were provided by representatives of the 
oil industry and fuel oxygenate producers. These comments have been 
presented and addressed in the preamble above.

VI. Executive Order 12866

    Under Executive Order 12866 <SUP>1, 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\ See 58 FR 51735 (October 4, 1993).
---------------------------------------------------------------------------

    (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.<SUP>2
---------------------------------------------------------------------------

    \2\ Id. at section 3(f)(1)-(4).
---------------------------------------------------------------------------

    It has been determined that this rule is not a ``significant 
regulatory action'' under the terms of Executive Order 12866 and is 
therefore not subject to OMB review.

VII. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``UMRA''), Pub.L. 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 the final rule promulgated today 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.

VIII. Judicial Review

    Because this final action is nationally applicable, under section 
307(b)(1) of the Clean Air Act judicial review of this action is 
available only by the filing of a petition for review in the U.S. Court 
of Appeals for the D.C. Circuit within sixty days of publication of 
this action in the Federal Register.

VIIII. Submission to Congress and the General Accounting Office

    Under section 801(a)(1)(A) of the Administrative Procedures Act 
(APA) as amended by the Small Business Regulatory Enforcement Fairness 
Act of 1996, EPA submitted a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives and the Comptroller General of the General Accounting 
Office prior to publication of the rule in today's Federal Register. 
This rule is not a ``major rule'' as defined by section 804(2) of the 
APA as amended.

List of Subjects in 40 CFR Part 80

    Environmental protection, Air pollution control, Fuel additives, 
Gasoline, Motor vehicle pollution.

    Dated: June 21, 1996.
Carol M. Browner,
Administrator.

    40 CFR part 80 is amended as follows:

[[Page 35680]]

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 80.2 is amended by adding paragraph (vv) to read as 
follows:


Sec. 80.2  Definitions.

* * * * *
    Opt-in area. An area which becomes a covered area under Sec. 80.70 
pursuant to section 211(k)(6) of the Clean Air Act.
    3. Section 80.70 is amended by revising paragraph (j) introductory 
text; by removing paragraphs (j)(5)(viii), (5)(ix), (j)(10)(i), 
(10)(iii), (10)(v) through (10)(xi); by redesignating paragraphs 
(j)(10)(ii) and (iv) as (10)(i) and (10)(ii); by removing paragraph 
(j)(11) and redesignating (j)(12) through (14) as (j)(11) through (13) 
respectively; and by adding a new paragraph (l) to read as follows:


Sec. 80.70  Covered areas.

* * * * *
    (j) The ozone nonattainment areas listed in this paragraph (j) are 
covered areas for purposes of subparts D, E, and F of this part. The 
geographic extent of each covered area listed in this paragraph (j) 
shall be the nonattainment area boundaries as specified in 40 CFR part 
81, subpart C:
* * * * *
    (l) Upon the effective date for removal under Sec. 80.72(a), the 
geographic area covered by such approval shall no longer be considered 
a covered area for purposes of subparts D, E and F of this part.
    4. Section 80.72 is added to read as follows:


Sec. 80.72  Procedures for opting out of the covered areas.

    (a) For petitions received prior to and including December 31, 1997 
and 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 Sec. 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.
    (b) To be approved under paragraph (a) of this section, a petition 
must be signed by the governor of a state, or his or her authorized 
representative, and must include the following:
    (1) A geographic description of each opt-in area, or portion of 
each opt-in area, which is covered by the petition;
    (2) A description of all ways in which reformulated gasoline is 
relied upon as a control measure in any approved state or local 
implementation plan or plan revision, or in any submission to the 
Agency containing any proposed plan or plan revision (and any 
associated request for redesignation) that is pending before the Agency 
when the petition is submitted; and
    (3) For any opt-in areas covered by the petition for which 
reformulated gasoline is relied upon as a control measure as described 
under paragraph (b)(2) of this section, the petition shall include the 
following information:
    (i) Identify whether the state is withdrawing any such pending plan 
submission;
    (ii)(A) Identify whether the state intends to submit a revision to 
any such approved plan provision or pending plan submission that does 
not rely on reformulated gasoline as a control measure, and describe 
the alternative air quality measures, if any, that the state plans to 
use to replace reformulated gasoline as a control measure;
    (B) A description of the current status of any proposed revision to 
any such approved plan provision or pending plan submission, as well as 
a projected schedule for submission of such proposed revision;
    (iii) If the state is not withdrawing any such pending plan 
submission and does not intend to submit a revision to any such 
approved plan provision or pending plan submission, describe why no 
revision is necessary;
    (iv) If reformulated gasoline is relied upon in any pending plan 
submission, other than as a contingency measure consisting of a future 
opt-in, and the Agency has found such pending plan submission complete 
or made a protectiveness finding under 40 CFR 51.448 and 93.128, 
demonstrate whether the removal of the reformulated gasoline program 
will affect the completeness and/or protectiveness determinations;
    (4) The Governor of a State, or his or her authorized 
representative, shall submit additional information upon request of the 
Administrator,
    (c) (1) 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 of 90 days from the Agency's written 
notification to the state approving the opt-out petition.
    (2) If 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.
    (d) The Administrator shall publish a notice in the Federal 
Register announcing the approval of any petition under paragraph (a) of 
this section, and the effective date for removal.

[FR Doc. 96-16668 Filed 7-5-96; 8:45 am]
BILLING CODE 6560-50-P