[Federal Register Volume 61, Number 132 (Tuesday, July 9, 1996)]
[Rules and Regulations]
[Pages 35960-35962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17318]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[FRL-5532-6]
RIN 2060-AD27


Regulation of Fuels and Fuel Additives; Standards for 
Reformulated Gasoline

AGENCY: Environmental Protection Agency (EPA).

ACTION: Petition for reconsideration; request for comment.

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SUMMARY: EPA requests comment on a petition submitted to EPA by the 
American Petroleum Institute (API). The petition, submitted pursuant to 
section 553(e) of the Administrative Procedure Act, requests 
reconsideration of the Phase II reformulated gasoline reduction 
standard for oxides of nitrogen (NO<INF>X).

DATES: Comments must be received on or before September 9, 1996.

ADDRESSES: Interested parties may submit written comments (in 
triplicate, if possible) to: EPA Air and Radiation Docket, Attention 
Docket No. A-96-27, room M-1500 (mail code 6102), 401 M St., SW, 
Washington, D.C. 20460. The docket may be inspected at this location 
from 8:30 a.m. until 5:30 p.m. weekdays. The docket may also be reached 
by telephone at (202) 260-7548. As provided in 40 CFR part 2, a 
reasonable fee may be charged by EPA for photocopying.

FOR FURTHER INFORMATION CONTACT: Debbie Wood, Office of Mobile Sources, 
Fuels and Energy Division, (202) 233-9000.

[[Page 35961]]

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

    On February 16, 1994, EPA published a final rule establishing 
emission reduction and other performance standards for reformulated 
gasoline (RFG), including provisions for the certification of RFG and 
enforcement of RFG standards, and establishing certain requirements 
regarding unreformulated or conventional gasoline (59 FR 7716). The 
purpose of the RFG program is to improve air quality by requiring that 
gasoline be reformulated to reduce emissions from motor vehicles of 
toxics and tropospheric ozone-forming compounds, as specified by 
section 211(k)(1) of the Clean Air Act (CAA or the Act). Section 211(k) 
mandates that RFG be sold in the nine largest metropolitan areas with 
the most severe summertime ozone levels; RFG must also be sold in other 
ozone nonattainment areas that choose to participate or ``opt in'' to 
the program. The Act further prohibits conventional gasoline sold in 
the rest of the country from becoming any more polluting than it was in 
1990 by requiring that each refiner's and importer's gasoline be as 
clean, on average, as it was in 1990; this statutory prohibition has 
resulted in requirements referred to as the ``anti-dumping'' program.
    The Act mandates certain requirements for the RFG program. Section 
211(k)(1) directs EPA to issue regulations that:

* * * require the greatest reduction in emissions of ozone forming 
volatile organic compounds (during the high ozone season) and 
emissions of toxic air pollutants (during the entire year) 
achievable through the reformulation of conventional gasoline, 
taking into consideration the cost of achieving such emission 
reductions, any nonair-quality and other air-quality related health 
and environmental impacts and energy requirements.

Section 211(k)(3) specifies the minimum requirement for reduction of 
volatile organic compounds (VOC) and toxics for 1995 through 1999, or 
Phase I of the RFG program; the section specifies that EPA must require 
the more stringent of a formula fuel or an emission reduction 
performance standard, measured on a mass basis, equal to 15 percent of 
baseline emissions. Baseline emissions are the emissions of 1990 model 
year technology vehicles operated on a specified baseline gasoline. 
Section 211(k)(2) compositional specifications for RFG include a 2.0 
weight percent oxygen minimum and a 1.0 volume percent benzene maximum. 
Section 211(k)(2) also specifies that NO<INF>X emissions may not 
increase in RFG.
    For the year 2000 and beyond, or Phase II of the RFG program, the 
Act specifies that the VOC and toxics performance standards must be no 
less than either a formula fuel or a 25 percent reduction from baseline 
emissions, whichever is more stringent. EPA can adjust these standards 
upward or downward taking into account such factors as feasibility and 
cost, but in no case can they be less than 20 percent.
    Shortly after passage of the CAA Amendments in 1990, EPA entered 
into a regulatory negotiation with interested parties to develop 
specific proposals for implementing both the RFG and anti-dumping 
programs. In August 1991, the negotiating committee reached consensus 
on a program outline, addressing emission content standards for Phase I 
(1995-2000), emission models, certification, use of averaging and 
credits, and other important program elements.
    The regulatory negotiation conducted by EPA did not, however, 
address Phase II VOC and toxics standards, nor did it address a 
reduction in NO<INF>X emissions beyond the statutory cap imposed under 
section 211(k)(2)(A). The final rule promulgated by EPA closely 
followed the outline agreed to in the negotiated rulemaking. The final 
rule also adopted a NO<INF>X reduction performance standard for Phase 
II RFG, relying on authority under section 211(c)(1)(A).
    In proposing and promulgating a NO<INF>X reduction standard, EPA 
analyzed the costs and benefits, along with other relevant factors, 
including EPA's view that NO<INF>X reductions are important to achieve 
attainment of the ozone National Ambient Air Quality Standard (NAAQS) 
in many nonattainment areas. In the final rule, EPA discussed recent 
studies which indicate that NO<INF>X control is an effective ozone 
control strategy for the northeast as well as the Lake Michigan area 
(59 FR 7751). EPA also noted that there are non-ozone benefits from 
NO<INF>X control, such as reduced acid rain and improved visibility (59 
FR 7751). In considering the feasibility of section 202 motor vehicle 
controls prior to regulating fuels, EPA cited several reasons for the 
promulgation of a NO<INF>X reduction standard (59 FR 7752): (1) 
Significant emission reductions would be achieved right away, in the 
summer of 2000, with no delay based on fleet turnover time. (2) A 
NO<INF>X reduction standard for gasoline would act to reduce emissions 
from all mobile sources that use gasoline, whether on-highway or 
nonroad. (3) The fuel control is specifically aimed at areas of the 
country that are in nonattainment for ozone, and is limited in time to 
that part of the year when ozone is of most concern. (4) The expected 
increase in vehicle miles traveled over time leads EPA to believe that 
this fuel control is needed to continue to achieve the in-use NO<INF>X 
emission reductions necessary for many areas of the country to reach 
attainment for ozone. (5) The performance standard adopted minimizes 
any concern that a fuel control could interfere in the production 
process by directing refiners on how to make their product.
    EPA estimates that the Phase II NO<INF>X emission reduction 
standard of 6.8 percent on average will reduce summertime NO<INF>X 
emissions from gasoline-powered mobile sources by approximately 22,000 
tons annually. Cost-effectiveness is estimated at $5,000 per ton of 
NO<INF>X reduction.
    In December 1995, API submitted a petition to EPA requesting 
reconsideration of the Phase II RFG NO<INF>X standard or, at a minimum, 
suspension of the effective date of the standard. API bases its request 
for reconsideration on three arguments: (1) The standard is 
inconsistent with the CAA Amendments of 1990 and the 1991 negotiated 
rulemaking. (2) Air quality benefits of the standard are overstated. 
(3) The standard is not a cost-effective strategy for ozone control. 
These arguments were also submitted to EPA by API as comments during 
the RFG rulemaking; the final rule preamble discusses these arguments 
and explains EPA's reasons for promulgating the NO<INF>X reduction 
standard (see 59 FR 7716, 7744-7756).
    An initial review of the API petition indicates that it presents no 
compelling new evidence or argument that would warrant revisiting the 
decision made in promulgating the Phase II NO<INF>X reduction standard. 
However, to ensure that our conclusions on the appropriateness of the 
NO<INF>X reduction standard remain well-founded, EPA will review any 
relevant and available new information on costs and benefits that has 
been developed since promulgation of the final rule. EPA solicits 
comment on the issues raised in the petition. The arguments presented 
in the API petition are summarized below. A complete copy of the API 
petition may be found in the docket for this notice.

II. Summary of API Petition

A. Consistency With CAA and Negotiated Rulemaking

    API's first argument is that EPA's Phase II RFG NOG5X standard is 
inconsistent with the CAA Amendments of 1990 and the 1991 negotiated 
rulemaking. API cites provisions of the Act that specifically require 
reductions in various pollutants, and contrasts that

[[Page 35962]]

with the ``no NO<INF>X increase'' approach taken toward RFG in section 
211(k). API also notes that the 1991 negotiated rulemaking agreement 
does not address a Phase II NO<INF>X reduction, and that the focus of 
debate was whether de minimis increases in NO<INF>X would satisfy the 
no NO<INF>X increase standard. For discussion of these arguments in the 
RFG final rule, see, for example, 59 FR 7744-7745.

B. Air Quality Benefits

    API's second argument is that the ozone benefits of the Phase II 
RFG NO<INF>X standard are overstated. API argues that the primary basis 
for the Phase II NO<INF>X standard is ozone attainment, and cites data 
from EPA's Trends Report (U.S. EPA, National Air Quality and Emissions 
Trends Report 1993, EPA 454/R-94-026, October 1994 at 6.) that progress 
toward ozone attainment has been made. API also notes that the Act 
imposes substantial obligations on states to attain ozone standards.
    API claims that in promulgating the Phase II RFG NO<INF>X standard, 
EPA emphasized those parts of studies (such as Rethinking the Ozone 
Problem in Urban and Regional Air Pollution, National Research Council, 
National Academy Press, Washington, D.C. 1991) that showed NO<INF>X to 
be an effective ozone control strategy, while discounting those which 
indicate that NO<INF>X control can be counterproductive.
    API discusses EPA's authority under CAA section 182 to grant 
waivers from certain CAA local NO<INF>X reduction requirements. The 
petition states that the section 182(f) waiver requirement recognizes 
that local NO<INF>X reductions may not be necessary or helpful to 
attainment of the ozone standard. Although the overwhelming majority of 
section 182(f) waivers have been granted because additional NO<INF>X 
reductions are not needed for attainment of the ozone NAAQS, the 
petition notes that, in a few cases, photochemical modeling has 
indicated that increased NO<INF>X reductions may exacerbate peak ozone 
in an urban core. The petition cites three cases where modeling has 
shown that increased NO<INF>X reductions may exacerbate peak ozone 
concentrations: Chicago, Milwaukee, and Houston, three of the nine 
cities required to use RFG. API notes the conditional nature of section 
182(f) waivers.
    API argues that given continued progress toward ozone NAAQS 
attainment, imposition of Phase II NO<INF>X reductions applicable in 
all RFG areas is ``plainly incongruous'' with the granting of waivers 
under section 182(f). API also argues that EPA's claim that air quality 
benefits in addition to reduced ozone will result from the Phase II 
NO<INF>X standard (e.g., less acid rain, reduced nitrate deposition, 
and improved visibility), is speculative. These arguments are discussed 
in the RFG final rule at, for example, 59 FR 7746 and 7751.

C. Cost-effectiveness

    API argues that EPA has understated the impact of the Phase II 
NO<INF>X reduction standard on costs and refiner flexibility. API 
claims that if more accurate sulfur removal (``desulfurization'') costs 
were employed, EPA's cost per ton of NO<INF>X removed would increase to 
over $10,000. Moreover, API argues that EPA's cost effectiveness 
analysis does not take into account that NO<INF>X reductions in some 
areas do not contribute to ozone attainment; API claims that if the 
benefit of NO<INF>X reductions in Chicago, Milwaukee and Houston, which 
have been granted conditional section 182(f) waivers, is reduced to 
zero or less, EPA's cost-effectiveness estimate would rise from $5,000 
to $7,500 per ton.
    API also argues that EPA should have included a more extensive 
array of stationary source NO<INF>X control measures that compare 
favorably to EPA's cost-effectiveness estimate, particularly if that 
estimate is changed in light of API's arguments on desulfurization 
costs and reduced ozone benefits.
    Finally, API argues that major stationary sources offer more 
potential for overall reduction in air pollution, and that the cost-
effectiveness of Phase II NO<INF>X controls is higher than stationary 
combustion sources with lower potential for overall NO<INF>X reduction. 
API argues that, unlike mobile source control, major stationary source 
control can be targeted to avoid the cost of NO<INF>X control where it 
is not needed and any adverse effect on ozone because of atmospheric 
chemistry. API's arguments are discussed in the RFG final rule at, for 
example, 59 FR 7752-7754.

III. Request for Comment

    EPA requests comment on all the issues raised in API's petition for 
reconsideration. EPA is also interested in the potential impact of a 
delay in implementation or elimination of the Phase II RFG NO<INF>X 
standard on state implementation plans for attaining compliance with 
the ozone NAAQS. EPA solicits new information on costs and air quality 
benefits associated with the Phase II RFG NO<INF>X reduction standard, 
including non-ozone air quality benefits.

IV. Conclusion

    After considering all public comments and any other relevant 
information available to EPA, the agency will make a decision regarding 
API's petition for reconsideration.

    Dated: June 28, 1996.
Mary D. Nichols,
Assistant Administrator, Office of Air and Radiation.
[FR Doc. 96-17318 Filed 7-8-96; 8:45 am]
BILLING CODE 6560-50-P