Document ID: EPA-HQ-OAR-2005-0170-0004
Agency: epa
Document Type: Proposed Rule
Title: Regulation of Fuels and Fuel Additives: Removal of Reformulated Gasoline Oxygen Content Requirement for California Gasoline and Revision of Commingling Prohibition To Address Non-Oxygenated Reformulated Gasoline in California
Posted Date: 2006-02-22T13:58:57Z

[Federal Register: February 22, 2006 (Volume 71, Number 35)]
[Proposed Rules]               
[Page 9064-9070]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22fe06-39]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2005-0170; FRL-8035-3]

 
Regulation of Fuels and Fuel Additives: Removal of Reformulated 
Gasoline Oxygen Content Requirement for California Gasoline and 
Revision of Commingling Prohibition To Address Non-Oxygenated 
Reformulated Gasoline in California

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: In the Energy Policy Act of 2005 (Energy Act), Congress 
removed the oxygen content requirement for reformulated gasoline (RFG) 
in Section 211(k) of the Clean Air Act (CAA). The Energy Act specified 
that this change was to be immediately effective in California, and 
that it would be effective 270 days after enactment for the rest of the 
country. This proposed rule would amend the fuels regulations to remove 
the oxygen content requirement for RFG for gasoline produced and sold 
for use in California, thereby making the fuels regulations consistent 
with amended Section 211(k). In addition, for gasoline produced and 
sold for use in California, this rule would extend the current 
prohibition against combining VOC-controlled RFG blended with ethanol 
with VOC-controlled RFG blended with any other type of oxygenate from 
January 1 through September 15, to also prohibit combining VOC-
controlled RFG blended with ethanol with non-oxygenated VOC-controlled 
RFG during that time period, except in limited circumstances authorized 
by the Act.
    The removal of the RFG oxygen content requirement and revision of 
the commingling prohibition for gasoline produced and sold for use in 
all areas of the country is being published in a separate rulemaking 
that would have a later effective date than this California specific 
rulemaking.
    In the ``Rules and Regulations'' section of the Federal Register, 
we are issuing these amendments to the RFG regulations as a direct 
final rule without prior proposal because we view them as 
noncontroversial amendments and anticipate no adverse comment. We have 
explained our reasons for these amendments in the preamble to the 
direct final rule. If we receive no adverse comment, we will not take 
further action on this proposed rule. If we receive adverse comment, we 
will withdraw the direct final fuel and it will not take effect. We 
will address all public comments in a subsequent final rule based on 
this proposed rule. We will not institute a second comment period on 
this action. Any parties interested in commenting must do so at this 
time.

DATES: Comments: Comments must be received on or before March 24, 2006. 
Under the Paperwork Reduction Act, comments on the information 
collection provisions must be received by OMB on or before March 24, 
2006.
    Hearings: If EPA receives a request from a person wishing to speak 
at a public hearing by March 9, 2006, a public hearing will be held on 
March 24, 2006. If a public hearing is requested, it will be held at a 
time and location to be announced in a subsequent Federal Register 
notice. To request to speak at a public hearing, send a request to the 
contact in FOR FURTHER INFORMATION CONTACT.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2005-0170 by one of the following methods:
    1. http://www.regulations.gov. Follow the on-line instructions for 

submitting comments.
    2. E-mail: Group A-AND-R-DOCKET@epa.gov. Attention Docket ID No. 
OAR-2005-0170.
    4. Mail: Air and Radiation Docket, Environmental Protection Agency, 
Mailcode: 6406J, 1200 Pennsylvania Ave., NW., Washington, DC 20460. 
Please include a total of two copies. In addition, please mail a copy 
of your comments on the information collection provisions to the Office 
of Information and Regulatory Affairs, Office of Management and Budget 
(OMB), Attn: Desk Officer for EPA, 725 17th St. NW., Washington, DC 
20503.
    5. Hand Delivery: EPA Docket Center, Environmental Protection 
Agency, 1301 Constitution Avenue, NW, Room B102, Mail Code 6102T, 
Washington, DC 20460. Such deliveries are only accepted during the 
Docket's normal hours of operation, and special arrangements should be 
made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2005-0170. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 

provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site 

is an ``anonymous access'' systems, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through http://www.regulations.gov your e-mail address will be 

automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm
.

    We are only taking comment on issues related to the removal of the 
oxygen requirement for RFG produced and sold for use in California, and 
the provisions regarding the combining of ethanol blended California 
RFG with non-oxygenated California RFG and provisions for retailers 
regarding the combining of ethanol blended California RFG with non-
ethanol blended California RFG. Comments on any other issues or 
provisions in the RFG regulations are beyond the scope of this 
rulemaking.
    Docket: All documents in the docket are listed in the http://www.regulations.gov
 index. Although listed in the index, some 

information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material,

[[Page 9065]]

will be publicly available only in hard copy. Publicly available docket 
materials are available either electronically in http://www.regulations.gov
 or in hard copy at the Air and Radiation Docket, 

EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, 
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding legal holidays. The telephone number for the 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Air and Radiation Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Marilyn Bennett, Transportation and 
Regional Programs Division, Office of Transportation and Air Quality 
(6406J), Environmental Protection Agency, 1200 Pennsylvania Avenue, 
NW., Washington, DC 20460; telephone number: (202) 343-9624; fax 
number: (202) 343-2803; e-mail address: mbennett@epa.gov.

SUPPLEMENTARY INFORMATION: For further information, please see the 
information provided in the direct final action that is located in the 
``Rules and Regulations'' section of this Federal Register publication.

I. General Information

A. Does This Action Apply to Me?

    Entities potentially affected by this action include those involved 
with the production and importation of conventional gasoline motor 
fuel. Regulated categories and entities affected by this action 
include:

------------------------------------------------------------------------
                       NAICS codes   SIC codes   Examples of potentially
       Category            \a\          \b\         regulated parties
------------------------------------------------------------------------
Industry.............       324110         2911  Petroleum Refiners,
                                                  Importers.
Industry.............       422710         5171  Gasoline Marketers and
                                                  Distributors.
                            422720         5172  .......................
Industry.............       484220         4212  Gasoline Carriers.
                            484230         4213  .......................
------------------------------------------------------------------------
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

    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 be potentially regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your entity is regulated by this action, you should carefully examine 
the applicability criteria of Part 80, subparts D, E and F of title 40 
of the Code of Federal Regulations. If you have any question regarding 
applicability of this action to a particular entity, consult the person 
in the preceding FOR FURTHER INFORMATION CONTACT section above.

B. What Should I Consider as I Prepare My Comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through 
http://www.regulations.gov or e-mail. Clearly mark the part or all of 

the information that you claim to be CBI. For CBI information in a disk 
or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM 
as CBI and then identify electronically within the disk or CD ROM the 
specific information that is claimed as CBI). In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR Part 2.
    2. Tips for Preparing Your Comments. When submitting comments, 
remember to:
    1. Identify the rulemaking by docket number and other identifying 
information (subject heading, Federal Register date and page number).
    2. Follow directions--The agency may ask you to respond to specific 
questions or organize comments by referencing a Code of Federal 
Regulations (CFR) part or section number.
    3. Explain why you agree or disagree; suggest alternatives and 
substitute language for your requested changes.
    4. Describe any assumptions and provide any technical information 
and/or data that you used.
    5. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    6. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    7. Explain your views as clearly as possible, avoiding the use of 
profanity or personal threats.
    8. Make sure to submit your comments by the comment period deadline 
identified.
    3. Docket Copying Costs. You may be charged a reasonable fee for 
photocopying docket materials, as provided in 40 CFR part 2.

C. Outline of This Preamble

I. General Information
II. Removal of the RFG Oxygen Content Requirement for California 
Gasoline
III. Combining Ethanol Blended RFG With Non-Ethanol Blended RFG
IV. Environmental Effects of This Action
V. Statutory and Executive Order Reviews
VI. Statutory Provisions and Legal Authority

II. Removal of the RFG Oxygen Content Requirement for California 
Gasoline

    Section 211(k) of the 1990 Amendments to the CAA required 
reformulated gasoline (RFG) to contain oxygen in an amount that equals 
or exceeds 2.0 weight percent. CAA Section 211(k)(2)(B). Accordingly, 
EPA's current regulations require RFG refiners, importers and oxygenate 
blenders to meet a 2.0 or greater weight percent oxygen content 
standard. 40 CFR 80.41. Recently, Congress passed legislation which 
amended Section 211(k) of the CAA to remove the RFG oxygen 
requirement.\1\ The Energy Act specified that this change was to be 
immediately effective in California, and that it would be effective 270 
days after enactment for the rest of the country. To make the fuels 
rules consistent with the current Section 211(k), today's rule would 
modify the RFG regulations to remove the oxygen standard in Sec.  80.41 
for gasoline produced and sold for use in California.\2\ (Modifications 
to the RFG regulations to remove the oxygen standard for gasoline 
produced and sold for use in all areas of the country are

[[Page 9066]]

being published in a separate rulemaking.)
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    \1\ Energy Policy Act of 2005, Pub. L. 109-58 (HR6), section 
1504(a), 119 STAT 594, 1076-1077(2005).
    \2\ The RFG regulations were promulgated under authority of CAA 
Section 211(c) as well as CAA Section 211(k). The regulations were 
adopted under section 211(c) primarily for the purpose of applying 
the preemption provisions in Section 211(c)(4). See 59 FR 7809 
(February 16, 1994.)
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    Today's rule also would modify other provisions of the RFG 
regulations which relate to the removal of the oxygen content 
requirement for gasoline produced and sold for use in California. The 
modifications to the affected sections are listed in the following 
table:
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    \3\ The regulations also include oxygen minimum standards for 
simple model RFG and Phase I complex Model RFG, and an oxygen 
maximum standard for simple model RFG. See Sec. Sec.  80.41(a) 
through (d), and (g). These standards are no longer in effect and 
today's rule would not modify the regulations to remove these 
standards or compliance requirements relating to these standards, 
except where such requirements are included in provisions requiring 
other changes in today's rule.

Sec.  Sec.   80.41(e) and (f).............  Would remove the per-gallon
                                             and averaged oxygen
                                             standards for Phase II
                                             Complex Model RFG for
                                             gasoline produced and sold
                                             for use in California.\3\
Sec.   80.41(o)...........................  Would add a provision which
                                             specifies that the
                                             requirements in Sec.
                                             80.41(o) do not apply to
                                             California gasoline.
Sec.   80.78(a)...........................  Would remove the prohibition
                                             against producing and
                                             marketing California RFG
                                             that does not meet the
                                             oxygen minimum standard
                                             since the oxygen standard
                                             has been removed. Also
                                             would remove requirements
                                             for California gasoline to
                                             meet the oxygen minimum
                                             standard during transition
                                             from RBOB to RFG in a
                                             storage tank. (Today's rule
                                             also would remove the
                                             provision in Sec.
                                             80.78(a)(1) regarding
                                             compliance with the maximum
                                             oxygen standard in Sec.
                                             80.41 for simple model RFG.
                                             See footnote 3.)
Sec.   80.79..............................  Would remove quality
                                             assurance requirement to
                                             test California gasoline
                                             for compliance with the
                                             oxygen standard.
Sec.   80.81(d)...........................  Would remove requirement for
                                             oxygenate blenders to
                                             exclude California gasoline
                                             from compliance
                                             calculations since
                                             oxygenate blenders are no
                                             longer required to
                                             demonstrate compliance with
                                             a standard.
Sec.   80.81(e)...........................  Would remove Sec.
                                             80.81(e)(2) which required
                                             refiners, importers and
                                             oxygenate blenders to
                                             provide written
                                             notification to EPA to
                                             produce or import gasoline
                                             certified under Title 13 of
                                             the California Code of
                                             Regulations, sections 2265
                                             or 2266, or to comply with
                                             an oxygen content
                                             compliance survey option,
                                             since these requirements
                                             related to ensuring
                                             compliance with the Federal
                                             RFG oxygen content
                                             standard. Also removes
                                             reference to oxygenate
                                             blenders in Sec.
                                             80.81(e)(3) regarding
                                             withdrawal of California
                                             gasoline exemptions for
                                             parties who have violated
                                             California or federal RFG
                                             regulations.
Sec.   80.81(h)...........................  Would remove provisions for
                                             oxygenate blenders to use
                                             California test methods for
                                             purposes of compliance
                                             testing, since oxygenate
                                             blenders are no longer
                                             required to conduct testing
                                             for compliance with the
                                             oxygen standard.

III. Combining Ethanol Blended California RFG With Non-Ethanol Blended 
California RFG

    As discussed above, Section 211(k) required RFG to contain a 
minimum of 2.0 weight percent oxygen, and the current fuels regulations 
reflect this requirement. Refiners, importers and oxygenate blenders 
have used different oxygenates to meet this requirement. RFG that 
contains ethanol must be specially blended to account for the RVP 
``boost'' that ethanol provides, and the consequent possibility of 
increased VOC emissions. EPA's existing regulations prohibit the 
commingling of ethanol-blended RFG with RFG containing other oxygenates 
because the non-ethanol RFG is typically not able to be mixed with 
ethanol and still comply with the VOC performance standards. Since all 
RFG is currently required to contain oxygen, the regulations do not now 
contain a prohibition against combining ethanol-blended RFG with non-
oxygenated RFG. With the removal of the oxygen content requirement for 
RFG, EPA expects that refiners and importers will be producing some RFG 
without oxygen and some with ethanol or other oxygenates. Mixing 
ethanol-blended RFG with non-oxygenated RFG has the same potential to 
create an RVP ``boost'' for the non-oxygenated gasoline as mixing 
ethanol-blended RFG with RFG blended with other oxygenates. This is of 
particular concern regarding RFG because most refiners and importers 
comply with the RFG VOC emissions performance standard on an annual 
average basis calculated at the point of production or importation. All 
downstream parties are prohibited from marketing RFG which does not 
comply with a less stringent downstream VOC standard. However, even 
though the combined gasoline may meet the downstream VOC standard, 
combining ethanol-blended RFG with non-oxygenated RFG may cause some 
gasoline to have VOC emissions which are higher on average than the 
gasoline as produced or imported. Thus, with regard to gasoline 
produced and sold for use in California, today's rule would extend the 
commingling prohibition currently in the fuels regulations to include a 
prohibition against combining VOC-controlled ethanol-blended RFG with 
VOC-controlled non-oxygenated RFG during the period January 1 through 
September 15, with one exception, described below.
    The Energy Act contains a provision which specifically addresses 
the combining of ethanol-blended RFG with non-ethanol-blended RFG.\4\ 
Under this new provision, retail outlets are allowed to sell non-
ethanol-blended RFG which has been combined with ethanol-blended RFG 
under certain conditions. First, each batch of gasoline to be blended 
must have been ``individually certified as in compliance with 
subsections (h) and (k) prior to being blended.'' Second, the retailer 
must notify EPA prior to combining the gasolines and identify the exact 
location of the retail outlet and specific tank in which the gasoline 
is to be combined. Third, the retailer must retain, and, upon request 
by EPA, make available for inspection certifications accounting for all 
gasoline at the retail outlet. Fourth, retailers are prohibited from 
combining VOC-controlled gasoline with non-VOC-controlled gasoline 
between June 1 and September 15. Retailers are also limited with regard 
to the frequency in which batches of non-ethanol-blended RFG may be 
combined with ethanol-blended RFG. Retailers may combine such batches 
of RFG a maximum of two periods between May 1 and September 15. Each 
period may be no more than ten consecutive calendar days. This proposed 
rule would implement this provision of the Energy Act for California 
gasoline. A separate rule will implement this provision for the rest of 
the country, with a later effective date coinciding with the removal of 
the RFG oxygen content requirement for such areas.
---------------------------------------------------------------------------

    \4\ Energy Policy Act of 2005, Pub. L. 109-58 (HR6), section 
1513, 119 STAT 594, 1088-1090 (2005).
---------------------------------------------------------------------------

    This new provision will typically be used by retail outlets to 
change from the use of RFG containing ethanol to RFG not containing 
ethanol or vice versa. (Such a change is usually referred to as a 
``tank turnover.'') Such blending can result in additional VOC 
emissions,

[[Page 9067]]

perhaps resulting in gasoline that does not comply with downstream VOC 
standards. The Energy Act is unclear as to when the gasoline in the 
tank where blending occurs must be in compliance with the downstream 
VOC standard.
    EPA has already promulgated regulations setting out a methodology 
for making tank turnovers. 40 CFR 80.78(a)(10). EPA believes retailers 
and wholesale purchaser-consumers should have additional flexibility 
during the time that they are converting their tanks from one type of 
RFG to another, while minimizing the time period during which non-
compliant gasoline is present in their tanks and being sold. Today's 
changes would provide additional flexibility to the regulated parties 
by interpreting the Energy Act to provide retailers and wholesale 
purchaser-consumers with relief from compliance with the downstream VOC 
standard during the ten-day blending period, but requiring that the 
gasoline in the tank thereafter be in compliance or be deemed in 
compliance with the downstream VOC standard.
    To provide assurance that gasoline is in compliance with the 
downstream VOC standard after the ten-day period, today's regulations 
would provide two options for retailers and wholesale purchaser-
consumers. Under the first option, the retailer may add both ethanol-
blended RFG and non-ethanol-blended RFG to the same tank an unlimited 
number of times during the ten-day period, but must test the gasoline 
in the tank at the end of the ten-day period to make sure that the RFG 
is in compliance with the VOC standard. Under the second option, the 
retailer must draw the tank down as much as practicable at the start of 
the ten-day period, before RFG of another type is added to the tank, 
and add only RFG of one type to the tank during the ten-day period. 
That is, the retailer may not add both ethanol-blended RFG and non-
ethanol-blended RFG to the tank during the ten-day period, but may add 
only one of these types of RFG. EPA believes that when retailers and 
wholesale purchaser-consumers use this second option it is likely that 
their gasoline will comply with the downstream VOC standard at the end 
of the ten-day period, so that testing will not be necessary. We also 
believe that this approach is compatible with current practices of most 
retailers and wholesale purchaser-consumers, and expect that most will 
find it preferable to testing at the end of the ten-day period.
    The commingling provisions would apply at a retail level such that 
each retailer may take advantage of a maximum of two ten-day blending 
periods between May 1 and September 15 of each calendar year. Thus, the 
options described above would be available to each retail outlet for 
each of two ten-day periods during the VOC control period. During each 
ten-day period the options would be available for all tanks at that 
retail outlet.
    Regarding the requirement that each batch of gasoline to be blended 
must have been individually certified as in compliance with subsections 
(h) and (k), EPA notes that all gasoline in compliance with RFG 
requirements is deemed certified under Section 211(k) pursuant to Sec.  
80.40(a). Section 211(h) addresses RVP requirements for gasoline, but 
EPA does not have a program to certify gasoline as in compliance with 
this provision. For purposes of the commingling exception for retail 
outlets incorporated today in Sec.  80.78(a)(8), EPA would deem 
gasoline that is in compliance with the regulatory requirements 
implementing Section 211(h) to be certified under that section. 
Regarding the requirement that retailers retain and make available to 
EPA upon request ``certifications'' accounting for all gasoline at the 
retail outlet, EPA would deem this requirement fulfilled where the 
retailer retains and makes available to EPA, upon request, the product 
transfer documentation required under Sec.  80.77 for all gasoline at 
the retail outlet.
    Under this proposed rule, the provisions which allow retailers to 
sell non-ethanol-blended California RFG that has been combined with 
ethanol-blended California RFG would also apply to wholesale purchaser-
consumers. Like retailers, wholesale purchaser-consumers are parties 
who dispense gasoline into vehicles, and EPA interprets the Energy Act 
reference to retailers as applying equally to them. As a result, 
wholesale purchaser-consumers are treated in the same manner as 
retailers under this rule. This is consistent with the manner in which 
wholesale purchaser-consumers have been treated in the past under the 
fuels regulations.
    Most of the provisions of this rule are necessary to implement 
amendments to the Clean Air Act included in the Energy Act that 
eliminate the RFG oxygen content requirement and allow limited 
commingling of ethanol-blended and non-ethanol-blended RFG. The 
extension of the general commingling prohibition in the fuels 
regulations to cover non-oxygenated RFG is necessary because of the 
Energy Act amendments, but is issued pursuant to authority of CAA 
Section 211(k). This provision extends the current program to reflect 
the presence of non-oxygenated RFG, and is designed to enhance 
environmental benefits of the RFG program at reasonable cost to 
regulated parties.

IV. Environmental Effects of This Action

    We anticipate that little or no environmental impact would occur as 
a result of today's proposed action to remove the oxygenate requirement 
for RFG. The RFG standards consist of content and emission performance 
standards. Refiners and importers would have to continue to meet all 
the emission performance standards for RFG whether or not the RFG 
contains any oxygenate. This includes both the VOC and NOX 
emission performance standards, as well as the air toxics emission 
performance standards which were tightened in the mobile source air 
toxics (MSAT) rule in 2001.\5\ New MSAT standards currently under 
development are anticipated to achieve even greater air toxics emission 
reductions.
---------------------------------------------------------------------------

    \5\ 66 FR 17230 (March 29, 2001).
---------------------------------------------------------------------------

    We have analyzed the potential impacts on emissions that could 
result from removal of the oxygenate requirement in the context of 
requests for waivers of the Federal oxygen requirement.\6\ We found 
that changes in ethanol use could lead to small increases in some 
emissions and small decreases in others while still meeting the RFG 
performance standards. These potential impacts are associated with the 
degree to which ethanol would continue to be blended into RFG after 
removal of the oxygen requirement. Past analyses have projected 
significant use of ethanol in RFG in California despite removal of the 
oxygenate requirement.\7\ Given current gasoline prices and the 
tightness in the gasoline market, the favorable economics of ethanol 
blending, a continuing concern over MTBE use by refiners, the emission 
performance standards still in place for RFG, and the upcoming 
renewable fuels mandate,\8\ we believe that ethanol will continue to be 
used in RFG in California after the oxygen requirement is

[[Page 9068]]

removed. As a result, we believe that the removal of the oxygenate 
mandate would have little or no environmental impact in the near 
future. We will be looking at the long term effect of oxygenate use in 
the context of the rulemaking to implement the renewable fuels mandate.
---------------------------------------------------------------------------

    \6\ See e.g., California Oxygen Waiver Decision, EPA420-S-05-005 
(June 2005); Analysis of and Action on New York Department of 
Conservation's Request for a Waiver of the Oxygen Content 
Requirement in Federal Reformulated Gasoline, EPA420-D-05-06 (June 
2005).
    \7\ Technical Support Document: Analysis of California's Request 
for Waiver of the Reformulated Gasoline Oxygen Content Requirement 
for California Covered Areas, EPA420-R-01-016 (June 2001).
    \8\ Energy Policy Act of 2005, Pub. L. 109-58 (HR6), section 
1501, 119 STAT 594, 1067-1076, (2005).
---------------------------------------------------------------------------

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866, (58 FR 51735 (October 4, 1993)) the 
Agency must determine whether the regulatory action 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 or 
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 
the Executive Order.
    It has been determined that this direct final rule does not satisfy 
the criteria stated above. As a result, this rule is not a 
``significant regulatory action'' under the terms of Executive Order 
12866 and is therefore not subject to OMB review. Today's rule would 
remove certain requirements for all refiners, importers and oxygenate 
blenders of RFG in California. As a result, this rule is expected to 
greatly reduce overall compliance costs for all refiners, importers and 
oxygenate blenders of California RFG. This rule also would provide 
options for gasoline retailers in California to commingle certain 
compliant gasolines which otherwise would be prohibited from being 
commingled. Although there may be small compliance costs associated 
with one of these options, we believe that the additional flexibility 
provided by this option would reduce overall compliance costs for these 
parties.

B. Paperwork Reduction Act

    This proposed action would not impose any new information 
collection burden. Refiners, importers and oxygenate blenders of 
California RFG are exempt from the reporting and recordkeeping 
requirements under the RFG regulations. 40 CFR 80.81. Therefore, the 
removal of the oxygen requirement for California RFG would not have any 
ICR implications for refiners, importers and oxygenate blenders of 
California RFG. Small testing costs may be associated with one of the 
options for California gasoline retailers to commingle compliant 
gasolines. However, these testing costs are expected to be minimal and 
would be greatly outweighed by the flexibility provided by the option 
to commingle compliant gasolines. The Office of Management and Budget 
(OMB) has previously approved the information collection requirements 
contained in the existing regulations in 40 CFR Part 80 under the 
provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and 
has assigned OMB control number 2060-0277, EPA ICR number 1591.15. A 
copy of the OMB approved Information Collection Request (ICR) may be 
obtained from Susan Auby, Collection Strategies Division; U.S. 
Environmental Protection Agency (2822T); 1200 Pennsylvania Ave., NW., 
Washington, DC 20460 or by calling (202) 566-1672.
    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, 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 in 40 CFR are listed in 40 CFR Part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedures Act or any other statute unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's regulations at 13 CFR 121.201); 
(2) a small governmental jurisdiction that is a government of a city, 
county, town, school district or special district with a population of 
less than 50,000; and (3) a small organization that is any not-for-
profit enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of today's rule on small 
entities, EPA certifies that this action would not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' 5 U.S.C. 603 
and 604. Thus, an agency may conclude that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule.
    This proposed rule would remove certain requirements for all 
refiners, importers and oxygenate blenders of California RFG, including 
small business refiners, importers and oxygenate blenders. 
Specifically, this rule would remove the burden on refiners, importers 
and oxygenate blenders to comply with the RFG oxygen requirement and 
associated compliance requirements. This rule also would provide 
options for gasoline retailers to commingle certain compliant gasolines 
which otherwise would be prohibited from being commingled. Although one 
option requires some compliance testing, the testing costs are expected 
to be minimal. As a result, we have concluded that this proposed rule, 
overall, would relieve regulatory burden for small entities subject to 
the RFG regulations. We continue to be interested in the potential 
impacts of the proposed rule on small entities and

[[Page 9069]]

welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    This proposed rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local or 
tribal governments or the private sector that will result in 
expenditures of $100 million or more. This rule would affect gasoline 
refiners, importers and oxygenate blenders by removing the oxygen 
content requirement for RFG and associated compliance requirements, and 
would allow gasoline retailers options for commingling compliant 
gasolines which otherwise would be prohibited from being commingled. 
This rule would have the overall effect of reducing the burden of the 
RFG regulations on these regulated parties. Therefore, the requirements 
of the Unfunded Mandates Act do not apply to this action.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This proposed rule does not have federalism implications. It would 
not have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. This rule would remove the 
burden on regulated parties of having to comply with the oxygen 
standard for RFG in California, and would allow gasoline retailers to 
commingle certain compliant gasolines which otherwise would be 
prohibited from being commingled. Thus, Executive Order 13132 does not 
apply to this rule.

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

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian tribes, on 
the relationship between the Federal government and the Indian tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian tribes.''
    This proposed rule does not have tribal implications. It would not 
have substantial direct effects on tribal governments, on the 
relationship between the Federal government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes, as specified in Executive Order 13175. 
This rule would apply to gasoline refiners, importers, oxygenate 
blenders and retailers who supply RFG in California. This action 
contains certain modifications to the Federal requirements for RFG, and 
would not impose any enforceable duties on communities of Indian tribal 
governments. Thus, Executive Order 13175 does not apply to this rule.

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

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under the Order has the potential to influence 
the regulation. This proposed rule is not subject to Executive Order 
13045 because it is not economically significant and does not establish 
an environmental standard intended to mitigate health or safety risks.

H. Executive Order 13211: Acts That Significantly Affect Energy Supply, 
Distribution, or Use

    This proposed rule is not an economically ``significant energy 
action'' as defined in Executive Order 13211, ``Actions Concerning 
Regulations That Significantly Affect Energy Supply, Distribution, or 
Use'' (66 FR 28355 (May 22, 2001)) because it does not have a 
significant adverse effect on the supply, distribution, or use of 
energy. This rule would eliminate the oxygen content requirement for 
RFG in California. This change would have the effect of reducing 
burdens on suppliers of RFG, which, in turn, may have a positive effect 
on gasoline supplies. RFG refiners and blenders may continue to use 
oxygenates at their discretion where and when it is most economical to 
do so. With the implementation of the renewable fuels standard also 
contained in the Energy Act, the blending of

[[Page 9070]]

ethanol, in particular, into gasoline is expected to increase 
considerably, not decrease. Therefore, despite this action to remove 
the oxygenate mandate for RFG in California, when viewed in the context 
of companion energy legislation, overall use of oxygenates is expected 
to increase in the future. This rule also would allow gasoline 
retailers to commingle certain compliant gasolines which otherwise 
would be prohibited from being commingled. This also may have a 
positive effect on gasoline supplies.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Pub. L. 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This proposed would not establish new technical standards within 
the meaning of the NTTAA. Therefore, EPA did not consider the use of 
any voluntary consensus standards.

VI. Statutory Provisions and Legal Authority

    The statutory authority for the actions in today's direct final 
rule comes from sections 211(c), 211(k) and 301(a) of the CAA.

List of Subjects in 40 CFR Part 80

    Environmental protection, Air pollution control, Fuel additives, 
Gasoline, Motor vehicle pollution, Reporting and recordkeeping 
requirements.

    Dated: February 14, 2006.
Stephen L. Johnson,
Administrator.
[FR Doc. 06-1614 Filed 2-21-06; 8:45 am]

BILLING CODE 6560-50-P