Document ID: EPA-HQ-OAR-2005-0170-0013
Agency: epa
Document Type: Rule
Title: Regulation of Fuels and Fuel Additives: Removal of Reformulated Gasoline Oxygen Content Requirement
Posted Date: 2006-05-08T11:49:11Z

[Federal Register: May 8, 2006 (Volume 71, Number 88)]
[Rules and Regulations]               
[Page 26691-26702]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08my06-11]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2005-0170; FRL-8167-5]

 
Regulation of Fuels and Fuel Additives: Removal of Reformulated 
Gasoline Oxygen Content Requirement

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final Rule.

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SUMMARY: In the Energy Policy Act of 2005 (Energy Policy Act), Congress 
amended section 211(k) of the Clean Air Act (CAA) to remove the oxygen 
content requirement for reformulated gasoline (RFG). On February 22, 
2006, EPA published a direct final rule to amend regulations to remove 
the oxygen content standard and associated compliance requirements from 
the RFG regulations. We stated in the direct final rule that if EPA 
received adverse comment, we would publish a timely withdrawal of the 
provisions on which we received adverse comment and address the adverse 
comments in a subsequent final rule based on a parallel notice of 
proposed rulemaking also published on February 22, 2006. We received 
adverse comment on the amendments to remove the oxygen content standard 
in the direct final rule. As a result, in a separate action we are 
withdrawing those amendments from the direct final rule. This final 
action addresses the adverse comments we received and finalizes the 
removal of the oxygen content standard and associated compliance 
requirements from the RFG regulations.

DATES: This final rule is effective on May 5, 2006.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2005-0170. All documents in the docket are listed on the 
http://www.regulations.gov Web site. Although listed in the index, some 

information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically through 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: Bennett.marilyn@epa.gov.

SUPPLEMENTARY INFORMATION:

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 reformulated gasoline motor 
fuel. Regulated categories and entities affected by this action 
include:

----------------------------------------------------------------------------------------------------------------
           Category             NAICS codes a     SIC codes b       Examples of potentially  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. Outline of This Preamble

I. General Information
II. Direct Final Rule/Notice of Proposed Rulemaking
III. Response to Comments and Discussion
IV. Conclusion
V. Action
VI. Statutory and Executive Order Reviews
VII. Statutory Provisions and Legal Authority

II. Direct Final Rule/Notice of Proposed Rulemaking

    In the Energy Policy Act, Congress amended section 211(k) of the 
CAA to remove the 2.0 weight percent oxygen content requirement for 
RFG.\1\ Congress specified that the effective date for the removal of 
the oxygen content requirement in the CAA is 270 days from enactment of 
the Energy Policy Act for gasoline sold in all states except 
California.\2\ To be consistent with the current CAA section 211(k), on 
February 22, 2006, EPA published a direct final rule designed to remove 
the oxygen content standard and associated compliance requirements from 
the RFG regulations in 40 CFR part 80, effective on May 5, 2006 (270 
days from enactment of the Energy Policy Act).\3\ 71

[[Page 26692]]

FR 8973. We stated in the direct final rule that if EPA received 
adverse comment, we would publish a timely withdrawal of the provisions 
on which we received adverse comment and address all public comments in 
a subsequent final rule based on a parallel notice of proposed 
rulemaking also published on February 22, 2006. We received adverse 
comment on the removal of the oxygen content standard in the direct 
final rule. As a result, in a separate action we are withdrawing those 
amendments from the direct final rule. This final action addresses the 
adverse comments we received and finalizes the amendments which remove 
the oxygen content standard and associated compliance requirements from 
the RFG regulations in 40 CFR part 80.
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    \1\ Energy Policy Act of 2005, Public Law No. 109-58 (HR6), 
section 1504(a), 119 STAT 594, 1076-1077 (2005).
    \2\ Congress removed the oxygen content requirement in CAA 
section 211(k) for California gasoline effective upon enactment of 
the Energy Policy Act. In a direct final rule published on February 
22, 2006, EPA removed the oxygen content requirement from the RFG 
regulations for California gasoline, effective April 24, 2006. 71 FR 
8965. Thus, this rule does not address California requirements.
    \3\ The direct final rule also amended the regulations at 40 CFR 
part 80 to revise a prohibition against commingling ethanol-blended 
VOC-controlled RFG with non-ethanol-blended VOC-controlled RFG, and 
implemented a provision of the Energy Policy Act which allows 
retailers to commingle ethanol-blended RFG with non-ethanol-blended 
RFG under certain limited circumstances. Energy Policy Act of 2005, 
Public Law 109-58 (HR6), section 1513, 119 STAT 594, 1088-1090 
(2005). We did not receive adverse comment on the amendments to the 
commingling prohibition or on the retailer commingling provisions 
during the 30-day comment period. The effective date for those 
amendments and provisions is May 5, 2006.
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    As discussed below, Congress considered the issue of lead-time 
regarding the transition to an RFG program that does not mandate an 
oxygen requirement, and specifically determined that 270 days from 
enactment of the Energy Policy Act provides an appropriate amount of 
lead-time. We believe it is appropriate to effect the removal of the 
oxygen content standard from the RFG regulations in a manner that is 
consistent with Congress' clear determination regarding lead-time. 
Therefore, this final rule is effective May 5, 2006. Although the 
Administrative Procedures Act generally requires that publication of a 
rule in the Federal Register take place thirty days before its 
effective date, this requirement is not applicable where, as here, a 
rule relieves a restriction.

III. Response to Comments and Discussion

    We received adverse comments on the direct final rule from three 
parties. Two of the parties stated that the removal of the RFG oxygen 
content requirement will result in the discontinued use of MTBE because 
refiners believe that the oxygen requirement provides a legal defense 
in leaking underground storage tank lawsuits involving MTBE. These 
commenters believe that refiners will attempt to replace MTBE with 
ethanol to meet the RFG performance standards, but argue that supplies 
of ethanol are inadequate to provide the volumes needed to replace MTBE 
in 2006. The commenters acknowledge that Congress eliminated the oxygen 
content requirement to provide refiners with greater flexibility to 
make RFG; nevertheless, they believe that an abrupt shift from MTBE-
blended RFG to ethanol-blended RFG will cause a shortage in gasoline 
supplies, higher gasoline prices, and distribution problems relating to 
rail, barge and terminal availability. These commenters also believe 
that the removal of the oxygen content requirement will result in an 
increase in aggregate ozone-causing emissions, since, relative to MTBE-
blended RFG, ethanol-blended RFG has a higher Reid Vapor Pressure 
causing VOC emissions to increase, and yields higher emissions of air 
toxics, NOX and VOC emissions associated with permeation. To 
mitigate the impacts of removing the oxygen content standard, these 
commenters urge EPA to issue a transition rule. The commenters suggest 
that in developing such a transition rule, EPA should examine the 
dynamics of gasoline production and assess any adverse impacts on 
gasoline supplies and cost, determine the feasibility of transporting 
increased quantities of ethanol and ascertain whether an adequate 
delivery infrastructure exists to prevent gasoline shortfalls, and 
quantify the effect of additional permeation emissions and take these 
into account. They believe that the transition rule should expressly 
preempt future state common law product defect claims regarding EPA-
approved fuels or fuel additives and affirm that MTBE is not a 
defective product. They also believe that EPA should increase the RFG 
VOC reduction requirement to address backsliding that they believe will 
occur if MTBE-blended RFG is replaced with ethanol-blended RFG or non-
oxygenated RFG. One of the commenters believes that EPA should include 
a VOC control season oxygen content standard under its CAA 211(c) 
authority.
    EPA believes that it should revise the RFG regulations in a way 
that is consistent with Congress' decision in enacting the Energy 
Policy Act provisions to repeal the oxygenate requirement for RFG. 
During the course of its consideration and final action to approve the 
Energy Policy Act, Congress specifically determined that there should 
not be an oxygen content requirement in the RFG provisions in section 
211(k) of the CAA, and determined how much lead-time should be provided 
for the transition to a program where the CAA did not mandate an oxygen 
content standard. In the legislative provisions it drafted and approved 
on this matter, Congress explicitly struck all oxygenate content 
requirements for RFG from the CAA and provided precise applicability 
dates for the removal of this requirement in California and the rest of 
the United States. Given Congress' clear decision that the oxygen 
content mandate is removed from the RFG provisions in the CAA in 
California as of August 8, 2005 and in all other states as of May 5, 
2006, EPA believes that it is appropriate to revise the RFG regulations 
in a manner that conforms to this specific decision by Congress. As 
discussed below, EPA does not believe that the current circumstances 
warrant any different course of action. In fact, it is notable that 
Congress had before it many of the issues involving MTBE that are 
raised by the commenters, yet it did not act to condition removal of 
the oxygenate requirement based on any finding or interpretation by EPA 
with respect to these matters.
    With respect to comments received with regard to promulgation of a 
transition rule to mitigate the impacts of removing the oxygen content 
requirement, EPA adopted the RFG regulations, including the oxygen 
content requirement, in 1994. EPA noted that it was adopting the 
regulations pursuant to its authority under section 211(k) of the CAA, 
and explained that it was also appropriate to issue the regulations 
under section 211(c)'s general authority to regulate fuels and fuel 
additives. EPA issued the RFG rules under both parts of section 211 for 
a limited reason, so that the express preemption provision in section 
211(c)(4)(A) would apply to the federal fuel program issued under 
section 211(k). See 59 FR 7716, 7809 (February 16, 1994). Now that 
Congress has amended section 211(k) to remove the oxygen content 
requirement, it is fully consistent with Congress' decision and with 
the reasoning of EPA's prior rulemaking to remove this requirement from 
the current RFG regulations.
    We believe that delaying the removal of the oxygen content 
requirement from the RFG regulations and issuing a transition rule is 
likely to be more disruptive to the production and distribution of RFG 
than removal by May 5 of the oxygen requirement from the regulations. 
It is not likely to provide solutions to the concerns raised by 
commenters. First, because of the refiner liability concerns discussed 
above, and Congress' removal of the oxygen content requirement from 
section 211(k) of the CAA and related adoption of a renewable fuels 
mandate in the Energy Policy Act, the shift from MTBE-blended RFG to 
ethanol-blended RFG will likely occur regardless of when EPA removes 
the RFG oxygen content requirement from the regulations. It is 
therefore uncertain

[[Page 26693]]

whether there would be any significant difference in MTBE use even if 
EPA were to adopt a transition rule. In fact, major suppliers for 
months have been planning and investing in a transition away from MTBE 
and to ethanol before the 2006 summer driving season and they have in 
many, perhaps most cases, already completed that transition.\4\ Second, 
some refiners and distributors have indicated that uncertainty is of 
the greatest concern to the RFG production and distribution industry, 
and have urged EPA to finalize the removal of the oxygen requirement 
from the regulations as soon as possible. These refiners and 
distributors believe that certainty regarding the effective date of the 
removal of the oxygen requirement is needed by refiners and 
distributors to minimize potential supply impacts. No refiners or other 
parties in the distribution system have indicated that the immediate 
removal of the oxygen requirement would cause additional supply or 
distribution problems, or would solve or reduce any difficulties in 
making the transition. Many assumed that Congress's May 5 date was a 
certain date for elimination of the oxygen content requirement.\5\ A 
transitional delay in this program would create more uncertainty for 
those planning on May 5 as the certain date and could clearly disrupt 
potential plans for gasoline manufacturers who were considering the use 
of non-oxygenated RFG. EPA believes that, if anything, delaying the 
removal would disrupt the production and distribution of RFG and would 
not solve or alleviate any of the economic or supply concerns raised by 
commenters. Last, with regard to the commenters' air quality concerns, 
the removal of the oxygen content requirement from the regulations does 
not change any of the emissions performance standards that RFG must 
meet. To the extent the commenters are raising concerns about the 
underlying emissions performance standards for RFG, we believe that 
this rulemaking is not the appropriate action in which to address these 
concerns. We intend to conduct a broad analysis of the impact of 
ethanol-blended gasoline on air quality in the context of a separate 
rulemaking to implement the renewable fuels mandate in the Energy 
Policy Act. In addition Congress mandated that within two years of 
enactment of the Energy Policy Act, that EPA conduct a study of the 
effects on public health related to substitutes (such as ethanol) for 
MTBE in gasoline. See amended CAA section 211(b)(4). EPA believes it is 
not appropriate to try to resolve the questions raised by commenters 
prior to the development of the information expected through these 
analyses, and that EPA should not delay removal of the oxygen content 
requirement for the reasons described above. For these reasons, we 
believe that the benefits of finalizing the removal of the oxygen 
requirement from the regulations and the likely adverse impact of a 
transition rule clearly outweigh the uncertain benefits of a transition 
rule.
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    \4\ Memorandum to Docket from Chris McKenna (April 24, 2006); 
Energy Information Administration, ``Eliminating MTBE in Gasoline in 
2006'' (February 22, 2006).
    \5\ Letter to William Wehrum, USEPA, from Edward Murphy, 
American Petroleum Institute, Bob Slaughter, National Petrochemical 
and Refiners Association, Gregory M. Scott, Society of Independent 
Gasoline Marketers Association, John Eichberger, National 
Association of Convenience Stores, Joe Sparano, Western Petroleum 
Association, dated December 9, 2005.
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    A third commenter expressed concern that use of non-oxygenated RFG 
may result in increased air toxics and other harmful air pollutants. 
This commenter believes that the rule removing the oxygen content 
requirement should require non-oxygenated RFG to maintain the air 
quality benefits derived from the oxygen requirement. The commenter is 
particularly concerned that over-compliance with the air toxics 
standards may not be maintained with the introduction of non-oxygenated 
RFG.
    First, we note that, although refiners will have the flexibility to 
produce RFG without oxygen, they nevertheless must meet all other 
standards and requirements for RFG, including the VOC, NOX 
and toxics emissions performance standards. In addition, the Mobile 
Source Air Toxics (MSAT) rule imposes baseline requirements designed to 
maintain 1998-2000 levels of over-compliance with the toxics emissions 
performance standards.\6\ We believe, and discussions with refiners 
confirm, that many, probably the vast majority of refiners and 
importers will continue to use oxygenates in order to meet these 
standards. In the Energy Policy Act, Congress considered the need for 
even more stringent controls on air toxics, and addressed this need by 
requiring EPA to revise the baseline years for toxics compliance.\7\ 
Finally, EPA recently proposed additional controls on benzene and other 
air toxics, which we believe will meet or exceed the additional 
controls mandated by the Energy Policy Act.\8\ We believe that these 
controls are appropriate and will ensure that there will be no loss in 
air quality benefits resulting from the removal of the RFG oxygen 
content requirement. In summary, first, Congress considered the need 
for increased toxics controls in association with other measures in the 
Energy Policy Act and EPA will defer to the decisions made by Congress 
and, second, EPA has already proposed other methods of controlling 
toxics under its authority in section 211 of the Clean Air Act.
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    \6\ 66 FR 17230 (March 29, 2001).
    \7\ Energy Policy Act of 2005, Public Law No. 109-58 (HR6), 
Sec.  1504(b), 119 STAT, 1077-1078 (2005).
    \8\ 71 FR 15804 (March 29, 2006).
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IV. Conclusion

    EPA concludes that it is appropriate to remove the oxygen content 
requirement from the RFG regulations at this time. This is consistent 
with Congress' recent decision on this issue, and a delay in making 
this change to the RFG regulations would not be appropriate under 
current circumstances.

V. Action

    This action finalizes, as proposed, the amendments to 40 CFR part 
80 which remove the oxygen content standard and associated compliance 
requirements from the RFG regulations. The affected sections are listed 
in the following table: \9\
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    \9\ This final action also lifts a stay, previously published on 
November 28, 1994 (59 FR 60715), which was in effect regarding Sec.  
80.65(d)(2)(vi) and Sec.  80.129(a), (d)(3)(iii), (d)(3)(iv), and 
(d)(3)(v). The stay is no longer appropriate in light of today's 
amendments to these sections.

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Sec.   80.2(ii)..............  Removes oxygen in the definition of
                                ``reformulated gasoline credit.'' With
                                the removal of the oxygen standard,
                                there is no basis for the generation of
                                oxygen credits.
Sec.   80.41(e) and (f) \10\.  Removes the per-gallon and averaged
                                oxygen standards for Phase II Complex
                                Model RFG.
Sec.   80.41(o)..............  Removes the provisions relating to oxygen
                                survey failures. With the removal of the
                                oxygen standard, oxygen surveys will no
                                longer be needed.
Sec.   80.41(q)..............  Removes reference to Sec.   80.41(o).
                                Also removes reference to oxygenate
                                blenders since oxygenate blenders were
                                subject only to adjusted standards in
                                the case of an oxygen survey failure and
                                not any other survey failure.

[[Page 26694]]

Sec.   80.65 heading.........  Removes oxygenate blenders from the
                                heading since oxygenate blenders were
                                only responsible for demonstrating
                                compliance with the oxygen standard
                                which has been removed.
Sec.   80.65(c)..............  Removes requirements relating to
                                compliance with the oxygen standard
                                which have been removed.
Sec.   80.65(d)..............  Removes the designation requirement
                                relating to oxygen content, removes the
                                RBOB designation categories of ``any
                                oxygenate'' and ``ether only,'' and adds
                                a requirement for RBOB to be designated
                                regarding the type and amount of
                                oxygenate required to be added.
Sec.   80.65(h)..............  Removes the requirement for oxygenate
                                blenders to comply with the audit
                                requirements under subpart F since they
                                will no longer be required to
                                demonstrate compliance with the oxygen
                                standard.
Sec.   80.67(a)..............  Removes the option to comply with the
                                oxygen standard on average for oxygenate
                                blenders since there no longer is an
                                oxygen standard. Also removes provisions
                                for refiners and importers to use
                                gasoline that exceeds the average
                                standard for oxygen to offset gasoline
                                which does not achieve the average
                                standard for oxygen.
Sec.   80.67(b)..............  Removes requirements relating to
                                oxygenate blenders who meet the oxygen
                                standard on average, since there no
                                longer is an oxygen standard.
Sec.   80.67(f)..............  Removes requirements relating to
                                compliance with the oxygen standard on
                                average since there no longer is an
                                oxygen standard.
Sec.   80.67(g)..............  Removes requirements relating to
                                compliance calculations for meeting the
                                oxygen standard on average, since there
                                no longer is an oxygen standard. Also
                                removes requirements relating to the
                                generation and use of oxygen credits.
                                Specifies two compliance calculation
                                options for average xygen content for
                                2006.
Sec.   80.67(h)..............  Removes requirements relating to the
                                transfer of oxygen credits.
Sec.   80.68(a) and (b)......  Removes references to oxygenate blenders
                                since, with the removal of the
                                requirement for oxygen survey, they are
                                no longer subject to survey
                                requirements. Also removes reference to
                                oxygen regarding consequences of a
                                failure to conduct a required survey.
Sec.   80.68(c)..............  Removes general survey requirements
                                relating to oxygen surveys.
Sec.   80.73.................  Clarifies the applicability of this
                                section to oxygenate blenders.
Sec.   80.74(c)..............  Removes recordkeeping requirements for
                                oxygenate blenders who comply with the
                                oxygen standard on average, since they
                                no longer will be required to
                                demonstrate compliance with an oxygen
                                standard. Also removes reference to
                                ``types'' of credits, since there now is
                                only one type of credit (i.e., benzene.)
Sec.   80.74(d)..............  Revises this paragraph to clarify
                                recordkeeping requirements for oxygenate
                                blenders.
Sec.   80.75 heading and       Removes reporting requirements for
 paragraph (a).                 oxygenate blenders since they no longer
                                will be required to demonstrate
                                compliance with an oxygen standard.
Sec.   80.75(f)..............  Removes requirement for submitting oxygen
                                averaging reports since there no longer
                                is a requirement to comply with the
                                oxygen standard.
Sec.   80.75(h)..............  Removes credit transfer report
                                requirements for oxygen credits, since
                                oxygen credits will no longer be
                                generated.
Sec.   80.75(i)..............  Removes requirement for oxygenate
                                blenders to submit a report identifying
                                each covered area that was supplied with
                                averaged RFG, since they no longer will
                                be required to demonstrate compliance
                                with an oxygen standard.
Sec.   80.75(l)..............  Removes reporting requirement for
                                oxygenate blenders who comply with the
                                oxygen standard on a per-gallon basis,
                                since they are no longer required to
                                demonstrate compliance with an oxygen
                                standard.
Sec.   80.75(m)..............  Removes requirement for oxygenate
                                blenders to submit a report of the audit
                                required under Sec.   80.65(h), since
                                oxygenate blenders will no longer be
                                required to comply with the audit
                                requirement.
Sec.   80.75(n)..............  Removes requirement for oxygenate
                                blenders to have reports signed and
                                certified, since they no longer will be
                                required to submit reports under this
                                section.
Sec.   80.76(a)..............  Clarifies registration requirements for
                                oxygenate blenders.
Sec.   80.77(g)..............  Removes product transfer documentation
                                requirement for oxygen content.
Sec.   80.77(i)..............  Removes requirement for RBOB to be
                                identified on product transfer documents
                                as suitable for blending with ``any-
                                oxygenate,'' ``ether-only,'' since these
                                categories have been removed.
Sec.   80.78(a)..............  Removes the prohibition against producing
                                and marketing RFG that does not meet the
                                oxygen minimum standard since the oxygen
                                standard has been removed. Also removes
                                requirements to meet the oxygen minimum
                                standard during transition from RBOB to
                                RFG in a storage tank. (Today's rule
                                also removes 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.................  Removes quality assurance requirement to
                                test for compliance with the oxygen
                                standard.
Sec.   80.81(b)..............  Removes exemptions for California
                                gasoline survey and independent analysis
                                requirements for oxygenate blenders
                                since they are no longer subject to
                                these requirements.
Sec.   80.125(a), (c) and (d)  Removes attest engagement auditor
                                requirements for(c) and (d) oxygenate
                                blenders, since they are no longer
                                required to conduct attest engagement
                                audits.
Sec.   80.126(b).............  Revises attest engagement definition of
                                credit trading records to remove
                                reference to oxygen credits.
Sec.   80.128(e).............  Removes reference to RBOB designations
                                of``any-oxygenate'' and ``ether-only''
                                with regard to refiner and importer
                                contracts with downstream oxygenate
                                blenders, since these designations have
                                been removed from the regulations.
Sec.   80.129................  Removes and reserves this section which
                                provided for alternative attest
                                engagement procedures for oxygenate
                                blenders, since they are no longer
                                required to conduct attest audits.
Sec.   80.130(a).............  Removes requirement for a certified
                                public accountant or an internal auditor
                                certified by the Institute of Internal
                                Auditors, Inc. to issue an attest
                                engagement report to blenders, since
                                they are no longer required to conduct
                                attest audits. Removes requirement for
                                blenders to providea copy of the
                                auditor's report to EPA.

[[Page 26695]]

Sec.   80.133(h).............  Removes references to ``any-oxygenate''
                                and ``ether-only'' RBOB under Sec.
                                80.69(a)(8) since this section has been
                                removed.
Sec.   80.134................  Removes this section which provides
                                attest procedures for oxygenate blenders
                                since they are no longer required to
                                conduct attest audits.
------------------------------------------------------------------------

    Today's rule also modifies the provisions for downstream oxygenate 
blending in Sec.  80.69. Under the current regulations, some refiners 
and importers produce or import a product called ``reformulated 
gasoline blendstock for oxygenate blending,'' or RBOB, which is 
gasoline that becomes RFG upon the addition of an oxygenate. The 
refiner or importer of the RBOB determines the type(s) and amount (or 
range of amounts) of oxygenate that must be added to the RBOB. The RBOB 
is then transported to an oxygenate blender downstream from the refiner 
or importer who adds the type and amount of oxygenate designated for 
the RBOB by the refiner or importer. The RBOB refiner or importer 
includes the designated amount of oxygenate in its emissions 
performance compliance calculations for the RBOB; however, it is the 
oxygenate blender who actually adds the oxygenate to the RBOB to comply 
with the 2.0 weight percent oxygen standard for the RFG that is 
produced by blending oxygenate into the RBOB. The regulations require 
oxygenate blenders to conduct testing for oxygen content to ensure that 
each batch of RFG complies with the oxygen standard. With the removal 
of the oxygen standard, the current requirement for oxygenate blenders 
to conduct testing to ensure compliance with the oxygen standard will 
no longer be necessary. Accordingly, the provisions for oxygenate 
blenders in Sec.  80.69 have been modified to remove the requirement 
for oxygenate blenders to test RFG for compliance with the oxygen 
standard.
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    \10\ 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 does 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.
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    Although there will no longer be an oxygen content requirement for 
RFG, we believe that many refiners and importers will want to continue 
to include oxygenate blended downstream in their emissions performance 
compliance calculations. As a result, the category of RBOB is being 
retained and RBOB refiners and importers will continue to be required 
to comply with the contract and quality assurance (QA) oversight 
requirements in Sec.  80.69.\11\ Because oxygenate blenders will no 
longer be conducting testing to ensure compliance with the oxygen 
standard, we believe that RBOB refiner or importer compliance with the 
contract and QA oversight requirements will be necessary for RBOB 
designated to be blended with any amount of oxygenate, including an 
amount of oxygenate that would result in RFG containing 2.0 weight 
percent (or less) oxygen. As a result, the generic categories of 
oxygenate in Sec.  80.69(a)(8) are eliminated by today's rule and RBOB 
refiners and importers will be required to comply with the contract and 
QA oversight requirements in Sec.  80.69 for any RBOB produced or 
imported. This approach is consistent with the oversight requirements 
in Sec.  80.101(d)(4) for refiners and importers of conventional 
gasoline who wish to include oxygen added downstream from the refinery 
or importer in anti-dumping emissions compliance calculations.
---------------------------------------------------------------------------

    \11\ EPA intends to promulgate a rule which will allow RBOB 
refiners and importers to use an alternative method of quality 
assurance (QA) oversight of downstream oxygenate blenders in lieu of 
the contract and QA requirements in Sec. Sec.  80.69(a)(6) and 
(a)(7). This alternative method consists of a QA sampling and 
testing survey program carried out by an independent surveyor 
pursuant to a survey plan approved by EPA. EPA is currently allowing 
use of this alternative QA method under a grant of enforcement 
discretion that is scheduled to expire when the rule is promulgated, 
or December 31, 2007, whichever is earlier. See Letter to Edward H. 
Murphy, Downstream General Manager, American Petroleum Institute, 
dated December 22, 2005, from Grant Y. Nakayama, Assistant 
Administrator, Office of Enforcement and Compliance Assurance, U.S. 
Environmental Protection Agency.
---------------------------------------------------------------------------

    Although oxygenate blenders will no longer be subject to the oxygen 
standard and associated testing requirements, we believe that the 
current requirements for oxygenate blenders to be registered with EPA, 
to add the specific type(s) and amount (or range of amounts) of 
oxygenate designated for the RBOB, and to maintain records of their 
blending operation continue to be necessary in order to ensure 
compliance with, and facilitate enforcement of, the emissions 
performance standards for the RFG produced by blending oxygenate with 
RBOB downstream. As a result, these oxygenate blender requirements are 
being retained.
    The effective date for the removal of the oxygen requirement will 
occur during 2006. As a result, refiners, importers and oxygenate 
blenders will be subject to the oxygen standard for the months in 2006 
prior to the effective date of this rule. The current regulations allow 
parties to demonstrate compliance either on a per-gallon basis or on an 
annual average basis. Since the oxygen content standard is being 
removed during an annual averaging period, EPA has modified the 
regulations to reflect this change and to clarify how parties would 
demonstrate compliance with the average oxygen content standard for 
2006. Parties may demonstrate compliance based on the average oxygen 
content of RFG during the months prior to the effective date for the 
removal of the oxygen content requirement. In addition, any refiner, 
importer or oxygenate blender may demonstrate compliance based on all 
of the oxygenated RFG it produces or imports during 2006. This means a 
refiner or importer has two options to show compliance with the average 
oxygen content standard for 2006. The first option looks only at the 
RFG produced or imported from January 1, 2006 through the effective 
date of this rule. During this time period, the per-gallon minimum was 
in place for RFG, so all of the RFG would have been oxygenated. The 
refiner or importer would be in compliance if they could show that they 
meet the 2.1% average standard based on the volume and oxygen content 
of all of the RFG produced or imported during this time period. The 
second option looks at the RFG produced or imported from January 1, 
2006 through December 31, 2006. Since there is no per gallon minimum 
for oxygen content starting from the effective date of this rule, some 
but not necessarily all of the RFG produced during the year would have 
been oxygenated. The refiner or importer would be in compliance if they 
could show that they meet the 2.1% average standard based on the RFG 
volume and oxygen content of all of the oxygenated RFG produced or 
imported during this time period, i.e., the entire year. Any non-
oxygenated RFG produced or imported after the effective date of the 
rule may be excluded from compliance calculations.

[[Page 26696]]

VI. 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 final rule 
removes certain requirements applicable to refiners, importers and 
oxygenate blenders of RFG. As such this rule is expected to reduce 
overall compliance costs for all refiners, importers and oxygenate 
blenders.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
This rule will have the effect of reducing the burdens on certain 
regulated parties under the reformulated gasoline regulations. All 
parties currently subject to the requirement to submit an annual oxygen 
averaging report will no longer be required to submit such report. 
Oxygenate blenders currently subject to the following requirements will 
no longer be subject to these requirements and associated burdens: RFG 
batch reports, RFG annual reports, RFG survey reports, and RFG attest 
engagement reports. The Office of Management and Budget (OMB) has 
previously approved the information collection requirements contained 
in the existing regulations at 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. 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

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this rule.
    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 has concluded that this action will 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 final rule removes certain requirements applicable to all 
refiners, importers and oxygenate blenders of RFG, including small 
business refiners, importers and oxygenate blenders. Specifically, this 
rule removes the burden on refiners, importers and oxygenate blenders 
to comply with the RFG oxygen requirement and associated compliance 
requirements. Although in certain situations some refiners and 
importers, including some small refiners and importers, may be required 
to conduct some additional oversight of oxygenate blenders, we believe 
that the burden of any additional oversight will be of minor 
significance compared to the relief from the burden of complying with 
the oxygen requirement. We have therefore concluded that today's final 
rule will relieve regulatory burden for all small entities subject to 
the RFG regulations.

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

[[Page 26697]]

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.
    Today's final 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 affects gasoline 
refiners, importers and oxygenate blenders by removing the oxygen 
content requirement for RFG and associated compliance requirements. As 
a result, this rule will 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 final rule does not have federalism implications. It will 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 removes the oxygen 
standard for RFG. The requirements of the rule will be enforced by the 
Federal government at the national level. 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 final rule does not have tribal implications. It will 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 applies to gasoline refiners and importers who supply RFG, 
and to other parties downstream in the gasoline distribution system. 
Today's action contains certain modifications to the federal 
requirements for RFG, and does 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 final 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 final 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 eliminates the oxygen content requirement for RFG and 
associated compliance requirements. This change will 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 
ethanol, in particular, into gasoline is expected to increase 
considerably, not decrease. Therefore, despite this action to remove 
the oxygenate mandate in RFG, when viewed in the context of companion 
energy legislation, overall use of oxygenates is expected to increase 
in the future.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 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 final rule does not establish new technical standards within 
the meaning of the NTTAA. Therefore, EPA did not consider the use of 
any voluntary consensus standards.

[[Page 26698]]

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit 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 United States prior 
to publication of the rule in the Federal Register. A ``major rule'' 
cannot take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(a).

K. Clean Air Act Section 307(d)

    This rule is subject to section 307(d) of the CAA. Section 
307(d)(7)(B) provides that ``[o]nly an objection to a rule or procedure 
which was raised with reasonable specificity during the period for 
public comment (including any public hearing) may be raised during 
judicial review.'' This section also provides a mechanism for the EPA 
to convene a proceeding for reconsideration, ``[i]f the person raising 
an objection can demonstrate to the EPA that it was impracticable to 
raise such objection within [the period for public comment] or if the 
grounds for such objection arose after the period for public comment 
(but within the time specified for judicial review) and if such 
objection is of central relevance to the outcome of the rule.'' Any 
person seeking to make such a demonstration to the EPA should submit a 
Petition for Reconsideration to the Office of the Administrator, U.S. 
EPA, Room 3000, Ariel Rios Building, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460, with a copy to both the person(s) listed in the 
preceding FOR FURTHER INFORMATION CONTACT section, and the Director of 
the Air and Radiation Law Office, Office of General Counsel (Mail Code 
2344A), U.S. EPA, 1200 Pennsylvania Ave., NW., Washington, DC 20004.

VII. Statutory Provisions and Legal Authority

    The statutory authority for the actions in today's direct final 
rule comes from section 211 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: May 2, 2006.
Stephen L. Johnson,
Administrator.

0
40 CFR part 80 is amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

0
1. The authority citation for part 80 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7545 and 7601(a)).

0
2. The stay on Sec.  80.65(d)(2)(vi) and Sec.  80.129(a), (d)(3)(iii), 
(d)(3)(iv), and (d)(3)(v), published on November 28, 1994 (59 FR 60715) 
is lifted.

Subpart A--[Amended]

0
3. Section 80.2 is amended by revising paragraph (ii) to read as 
follows:

Sec.  80.2  Definitions.

* * * * *
    (ii) Reformulated gasoline credit means the unit of measure for the 
paper transfer of benzene content resulting from reformulated gasoline 
which contains less than 0.95 volume percent benzene.
* * * * *

Subpart D--[Amended]

0
4. Section 80.41 is amended by:
0
a. In the table in paragraph (e), removing the entry

    ``Oxygen content (percent, by weight) (does not apply to gasoline 
subject to the provisions in Sec.  80.81) * * * >=2.0 ;''

0
b. In the table in paragraph (f), removing the entry

    ``Oxygen content (percent by weight) (does not apply to gasoline 
subject to the provisions in Sec.  80.81):
    Standard * * * >=2.1
    Per-Gallon Minimum >=1.5''

0
b. Removing and reserving paragraph (o); and
0
c. Revising paragraph (q) heading and introductory text and (q)(1) to 
read as follows:

Sec.  80.41  Standards and requirements for compliance.

* * * * *
    (o) [Reserved]
* * * * *
    (q) Refineries and importers subject to adjusted standards. 
Standards for average compliance that are adjusted to be more or less 
stringent by operation of paragraphs (k), (l) (m) or (n) of this 
section apply to average reformulated gasoline produced at each 
refinery or imported by each importer as follows:
    (1) Adjusted standards for a covered area apply to averaged 
reformulated gasoline that is produced at a refinery if:
    (i) Any averaged reformulated gasoline from that refinery supplied 
the covered area during any year a survey was conducted which gave rise 
to a standards adjustment; or
    (ii) Any averaged reformulated gasoline from that refinery supplies 
the covered area during any year that the standards are more stringent 
than the initial standards; unless
    (iii) The refiner is able to show that the volume of averaged 
reformulated gasoline from a refinery that supplied the covered area 
during any years under paragraphs (q)(1)(i) or (ii) of this section was 
less than one percent of the reformulated gasoline produced at the 
refinery during that year, or 100,000 barrels, whichever is less.
* * * * *

0
5. Section 80.65 is amended by:
0
a. Revising the heading;
0
b. Revising paragraphs (c)(1)(ii) and (c)(3), removing paragraph 
(c)(1)(iii) and removing and reserving paragraph (c)(2);
0
c. Removing and reserving (d)(2)(v)(D); revising paragraph (d)(2)(vi) 
and (d)(3); and
0
d. Revising paragraph (h) to read as follows:

Sec.  80.65  General requirements for refiners and importers.

* * * * *
    (c) * * *
    (1) * * *
    (ii) Those standards and requirements it designated under paragraph 
(d) of this section for average compliance on an average basis over the 
applicable averaging period.
    (2) [Reserved]
    (3)(i) For each averaging period, and separately for each parameter 
that may be met either per-gallon or on average, any refiner shall 
designate for each refinery, or any importer shall designate its 
gasoline or RBOB as being subject to the standard applicable to that 
parameter on either a per-gallon or average basis. For any specific 
averaging period and parameter all batches of gasoline or RBOB shall be 
designated as being subject to the per-gallon standard, or all batches 
of gasoline and RBOB shall be designated as being subject to the 
average standard. For any specific averaging period and parameter a 
refiner for a refinery, or any importer may not designate certain 
batches as being subject to the per-gallon standard and others as being 
subject to the average standard.
    (ii) In the event any refiner for a refinery, or any importer fails 
to meet

[[Page 26699]]

the requirements of paragraph (c)(3)(i) of this section and for a 
specific averaging period and parameter designates certain batches as 
being subject to the per-gallon standard and others as being subject to 
the average, all batches produced or imported during the averaging 
period that were designated as being subject to the average standard 
shall, ab initio, be redesignated as being subject to the per-gallon 
standard. This redesignation shall apply regardless of whether the 
batches in question met or failed to meet the per-gallon standard for 
the parameter in question.
    (d) * * *
    (2) * * *
    (v) * * *
    (D) [Reserved]
* * * * *
    (vi) In the case of RBOB, the gasoline must be designated as RBOB 
and the designation must include the type(s) and amount(s) of oxygenate 
required to be blended with the RBOB.
    (3) Every batch of reformulated or conventional gasoline or RBOB 
produced or imported at each refinery or import facility shall be 
assigned a number (the ``batch number''), consisting of the EPA-
assigned refiner or importer registration number, the EPA facility 
registration number, the last two digits of the year in which the batch 
was produced, and a unique number for the batch, beginning with the 
number one for the first batch produced or imported each calendar year 
and each subsequent batch during the calendar year being assigned the 
next sequential number (e.g., 4321-54321-95-000001, 4321-543321-95-
000002, etc.)
* * * * *
    (h) Compliance audits. Any refiner and importer of any reformulated 
gasoline or RBOB shall have the reformulated gasoline and RBOB it 
produced or imported during each calendar year audited for compliance 
with the requirements of this subpart D, in accordance with the 
requirements of subpart F, at the conclusion of each calendar year.
* * * * *

0
6. Section 80.67 is amended by:
0
a. Revising paragraphs (a)(1) and (a)(2)(i)(A);
0
b. Removing and reserving paragraph (b)(3);
0
c. Removing and reserving paragraph (f);
0
d. Revising paragraphs (g) introductory text, (g)(3), (g)(5) 
introductory text, (g)(6) introductory text, removing and reserving 
paragraphs (g)(5)(i) and (g)(6)(i); adding paragraph (g)(7); and
0
e. Revising paragraphs (h)(1) introductory text, (h)(1)(iv), (h)(1)(v) 
and (h)(3)(ii), and removing paragraphs (h)(1)(vi), (h)(1)(vii) and 
(h)(1)(viii), to read as follows:

Sec.  80.67  Compliance on average

* * * * *
    (a) * * *
    (1) Any refiner or importer that complies with the compliance 
survey requirements of Sec.  80.68 has the option of meeting the 
standards specified in Sec.  80.41 for average compliance in addition 
to the option of meeting the standards specified in Sec.  80.41 for 
per-gallon compliance; any refiner or importer that does not comply 
with the survey requirements must meet the standards specified in Sec.  
80.41 for per-gallon compliance, and does not have the option of 
meeting standards on average.
    (2)(i)(A) A refiner or importer that produces or imports 
reformulated gasoline that exceeds the average standard for benzene 
(but not for other parameters that have average standards) may use such 
gasoline to offset reformulated gasoline which does not achieve this 
average standard, but only if the reformulated gasoline that does not 
achieve this average standard is sold to ultimate consumers in the same 
covered area as was the reformulated gasoline which exceeds the average 
standard; provided that:
* * * * *
    (b) * * *
    (3) [Reserved]
* * * * *
    (f) [Reserved]
    (g) Compliance calculation. To determine compliance with the 
averaged standards in Sec.  80.41, any refiner for each of its 
refineries at which averaged reformulated gasoline or RBOB is produced, 
and any importer that imports averaged reformulated gasoline or RBOB 
shall, for each averaging period and for each portion of gasoline for 
which standards must be separately achieved, and for each relevant 
standard, calculate:
* * * * *
    (3) For the VOC, NOX, and toxics emissions performance 
standards, the actual totals must be equal to or greater than the 
compliance totals to achieve compliance.
* * * * *
    (5) If the actual total for the benzene standard is greater than 
the compliance total, credits for this parameter must be obtained from 
another refiner or importer in order to achieve compliance:
    (i) [Reserved]
* * * * *
    (6) If the actual total for the benzene standard is less than the 
compliance totals, credits for this parameter are generated.
    (i) [Reserved]
* * * * *
    (7) In 2006 only, compliance with the oxygen standards in Sec.  
80.41 may be based on the volume and oxygen content of all reformulated 
gasoline produced or imported during the period January 1, 2006, 
through May 5, 2006 or the volume and oxygen content of all oxygenated 
reformulated gasoline produced or imported during the 2006 annual 
averaging period (January 1 through December 31).
    (h) * * *
    (1) Compliance with the averaged standards specified in Sec.  80.41 
for benzene (but for no other standards or requirements) may be 
achieved through the transfer of benzene credits provided that:
* * * * *
    (iv) The credits are transferred, either through inter-company or 
intra-company transfers, directly from the refiner or importer that 
creates the credits to the refiner or importer that uses the credits to 
achieve compliance; and
    (v) Benzene credits are not used to achieve compliance with the 
maximum benzene content standards in Sec.  80.41.
* * * * *
    (3) * * *
    (ii) No refiner or importer may create, report, or transfer 
improperly created credits; and
* * * * *

0
7. Section 80.68 is amended by revising paragraphs (a) introductory 
text, (a)(3), (b) introductory text, (b)(4)(i), (b)(4)(ii), (c)(3), 
(c)(4)(i), and (c)(13)(v)(L), and removing and reserving paragraph 
(c)(12) to read as follows:

Sec.  80.68  Compliance surveys.

    (a) Compliance survey option 1. In order to satisfy the compliance 
survey requirements, any refiner or importer shall properly conduct a 
program of compliance surveys in accordance with a survey program plan 
which has been approved by the Administrator of EPA in each covered 
area which is supplied with any gasoline for which compliance is 
achieved on average that is produced by that refinery or imported by 
that importer. Such approval shall be based upon the survey program 
plan meeting the following criteria:
* * * * *
    (3) In the event that any refiner or importer fails to properly 
carry out an approved survey program, the refiner or

[[Page 26700]]

importer shall achieve compliance with all applicable standards on a 
per-gallon basis for the calendar year in which the failure occurs, and 
may not achieve compliance with any standard on an average basis during 
this calendar year. This requirement to achieve compliance per-gallon 
shall apply ab initio to the beginning of any calendar year in which 
the failure occurs, regardless of when during the year the failure 
occurs.
    (b) Compliance survey option 2. A refiner or importer shall be 
deemed to have satisfied the compliance survey requirements described 
in paragraph (a) of this section if a comprehensive program of surveys 
is properly conducted in accordance with a survey program plan which 
has been approved by the Administrator of EPA. Such approval shall be 
based upon the survey program plan meeting the following criteria:
* * * * *
    (4) * * *
    (i) Each refiner or importer who supplied any reformulated gasoline 
or RBOB to the covered area and who has not satisfied the survey 
requirements described in paragraph (a) of this section shall be deemed 
to have failed to carry out an approved survey program; and
    (ii) The covered area will be deemed to have failed surveys for VOC 
and NOX emissions performance, and survey series for benzene 
and toxic and NOX emissions performance.
    (c) * * *
    (3)(i) A VOC survey and a NOX survey shall consist of 
any survey conducted during the period June 1 through September 15;
    (ii) A sample of gasoline taken at a retail outlet or wholesale 
purchaser-consumer facility that has within the past 30 days commingled 
ethanol blended reformulated gasoline with non-ethanol blended 
reformulated gasoline in accordance with the provisions in Sec.  
80.78(a)(8) shall not be used in a VOC survey required under this 
section.
    (4)(i) A toxics and benzene survey series shall consist of all 
surveys conducted in a single covered area during a single calendar 
year.
* * * * *
    (12) [Reserved]
    (13) * * *
    (v) * * *
    (L) The average toxics emissions reduction percentage for simple 
model samples and the percentage for complex model samples, the average 
benzene percentage, and for each survey conducted during the period 
June 1 through September 15, the average VOC emissions reduction 
percentage for simple model samples and the percentage for complex 
model samples, and the average NOX emissions reduction 
percentage for all complex model samples;
* * * * *

0
8. Section 80.69 is amended by:
0
a. Revising paragraphs (a)(6)(ii) and (iii), (a)(10) introductory text, 
removing and reserving paragraphs (a)(8) and (a)(9), and removing 
paragraph (a)(6)(iv);
0
b. Revising paragraph (b);
0
c. Removing and reserving paragraph (c);
0
d. Revising paragraph (d); and
0
e. Revising paragraph (e), to read as follows:

Sec.  80.69  Requirements for downstream oxygenate blending.

* * * * *
    (a) * * *
    (6) * * *
    (ii) Allow the refiner or importer to conduct the quality assurance 
sampling and testing required under this paragraph (a); and
    (iii) Stop selling any gasoline found not to comply with the 
standards under which the RBOB was produced or imported.
* * * * *
    (8) [Reserved]
    (9) [Reserved]
    (10) Specify in the product transfer documentation for the RBOB 
each oxygenate type or types and amount or range of amounts which, if 
blended with the RBOB will result in reformulated gasoline which:
* * * * *
    (b) Requirements for oxygenate blenders. For all RBOB received by 
any oxygenate blender, the oxygenate blender shall:
    (1) Add oxygenate of the type(s) and amount (or within the range of 
amounts) specified in the product transfer documents for the RBOB; and
    (2) Meet the recordkeeping requirements specified in Sec.  80.74.
    (c) [Reserved]
    (d) Requirements for distributors dispensing RBOB into trucks for 
blending. Any distributor who dispenses any RBOB into any truck which 
delivers gasoline to retail outlets or wholesale purchase-consumer 
facilities, shall for such RBOB so dispensed:
    (1) Transfer the RBOB only to an oxygenate blender who has 
registered with the Administrator or EPA as such; and
    (2) Obtain from the oxygenate blender the oxygenate blender's EPA 
registration number.
    (e) Additional requirements for oxygenate blenders who blend 
oxygenate in trucks. Any oxygenate blender who obtains any RBOB in any 
gasoline delivery truck shall on each occasion it obtains RBOB from a 
distributor, supply the distributor with the oxygenate blender's EPA 
registration number.

0
9. Section 80.73 is amended by revising the introductory text to read 
as follows:

Sec.  80.73  Inability to produce conforming gasoline in extraordinary 
circumstances.

    In appropriate extreme and unusual circumstances (e.g., natural 
disaster or Act of God) which are clearly outside the control of the 
refiner, importer, or oxygenate blender and which could not have been 
avoided by the exercise of prudence, diligence, and due care, EPA may 
permit a refiner, importer, or oxygenate blender, for a brief period, 
to distribute gasoline which does not meet the requirements for 
reformulated gasoline, or does not contain the type(s) and amount(s) of 
oxygenate required under Sec.  80.69(b)(1), if:
* * * * *

0
10. Section 80.74 is amended by revising paragraph (c) introductory 
text, (c)(2), and (d) introductory text to read as follows:

Sec.  80.74  Recordkeeping requirements.

* * * * *
    (c) Refiners and importers of averaged gasoline. In addition to 
other requirements of this section, any refiner or importer who 
produces or imports any reformulated gasoline for which compliance with 
one or more applicable standard is determined on an average shall 
maintain records containing the following information:
* * * * *
    (2) For any credits bought, sold, traded or transferred pursuant to 
Sec.  80.67(h), the dates of the transactions, the names and EPA 
registration numbers of the parties involved, and the number of credits 
transferred.
    (d) Oxygenate blenders. Any oxygenate blender who blends any 
oxygenate with any RBOB shall, for each occasion such blending occurs, 
maintain records containing the following:
* * * * *

0
11. Section 80.75 is amended as follows:
0
a. By revising the introductory text;
0
b. By revising paragraph (a) introductory text and removing and 
reserving paragraph (a)(2);
0
c. By removing and reserving paragraph (f); and

[[Page 26701]]

0
d. By revising paragraphs (h), (i), (l), (m), and (n)(2).
    The revisions read as follows:

Sec.  80.75  Reporting requirements.

    Any refiner or importer shall report as specified in this section, 
and shall report such other information as the Administrator may 
require.
    (a) Quarterly reports for reformulated gasoline. Any refiner or 
importer that produces or imports any reformulated gasoline or RBOB 
shall submit quarterly reports to the Administrator for each refinery 
at which such reformulated gasoline or RBOB was produced and for all 
such reformulated gasoline or RBOB imported by each importer.
* * * * *
    (2) * * *
    (vii) [Reserved]
* * * * *
    (f) [Reserved]
* * * * *
    (h) Credit transfer reports. As an additional part of the fourth 
quarterly report required by this section, any refiner or importer 
shall, for each refinery or importer, supply the following information 
for any benzene credits that are transferred from or to another 
refinery or importer:
    (1) The names, EPA-assigned registration numbers and facility 
identification numbers of the transferor and transferee of the credits;
    (2) The number(s) of credits that were transferred; and
    (3) The date(s) of the transaction(s).
    (i) Covered areas of gasoline use report. Any refiner that produced 
any reformulated gasoline that was to meet any reformulated gasoline 
standard on average (``averaged reformulated gasoline'') shall, for 
each refinery at which such averaged reformulated gasoline was produced 
submit to the Administrator, with the fourth quarterly report, a report 
that contains the identity of each covered area that was supplied with 
any averaged reformulated gasoline produced at each refinery during the 
previous year.
* * * * *
    (l) Reports for per-gallon compliance gasoline. In the case of 
reformulated gasoline or RBOB for which compliance with each of the 
standards set forth in Sec.  80.41 is achieved on a per-gallon basis, 
the refiner or importer shall submit to the Administrator, by the last 
day of February of each year beginning in 1996, a report of the volume 
of each designated reformulated gasoline or RBOB produced or imported 
during the previous calendar year for which compliance is achieved on a 
per-gallon basis, and a statement that each gallon of this reformulated 
gasoline or RBOB met the applicable standards.
    (m) Reports of compliance audits. Any refiner or importer shall 
cause to be submitted to the Administrator, by May 31 of each year, the 
report of the compliance audit required by Sec.  80.65(h).
    (n) * * *
    (2) Signed and certified as correct by the owner or a responsible 
corporate officer of the refiner or importer.
* * * * *

0
12. Section 80.76 is amended by revising paragraph (a) to read as 
follows:

Sec.  80.76  Registration of refiners, importers or oxygenate blenders.

    (a) Registration with the Administrator of EPA is required for any 
refiner and importer that produces or imports any reformulated gasoline 
or RBOB, and any oxygenate blender that blends oxygenate into RBOB.
* * * * *

0
13. Section 80.77 is amended by removing and reserving paragraph 
(g)(2)(ii) and revising paragraph (i)(2) to read as follows:

Sec.  80.77  Product transfer documentation.

* * * * *
    (g) * * *
    (2) * * *
    (ii) [Reserved]
* * * * *
    (i) * * *
    (2) The oxygenate type(s) and amount(s) that are intended for 
blending with the RBOB;
* * * * *

0
14. Section 80.78 is amended by removing and reserving paragraph 
(a)(1)(ii) and revising paragraph (a)(11)(iv) to read as follows:

Sec.  80.78  Controls and prohibitions on reformulated gasoline.

* * * * *
    (a) * * *
    (1) * * *
    (ii) [Reserved]
* * * * *
    (11) * * *
    (iv) When transitioning from RBOB to reformulated gasoline, the 
reformulated gasoline must meet all applicable standards that apply at 
the terminal subsequent to any oxygenate blending;
* * * * *

0
15. Section 80.79 is amended by revising paragraph (c)(1) to read as 
follows:

Sec.  80.79  Liability for violations of the prohibited activities.

* * * * *
    (c) * * *
    (1) Of a periodic sampling and testing program to determine if the 
applicable maximum and/or minimum standards for benzene, RVP, or VOC 
emission performance are met.
* * * * *

0
16. Section 80.81 is amended by revising paragraphs (b)(1) and (b)(2) 
to read as follows:

Sec.  80.81  Enforcement exemptions for California gasoline.

* * * * *
    (b)(1) Any refiner or importer of gasoline that is sold, intended 
for sale, or made available for sale as a motor fuel in the State of 
California is, with regard to such gasoline, exempt from the compliance 
survey provisions contained in Sec.  80.68.
    (2) Any refiner or importer of California gasoline is, with regard 
to such gasoline, exempt from the independent analysis requirements 
contained in Sec.  80.65(f).
* * * * *

Subpart F--[Amended]

0
17. Section 80.125 is amended by revising paragraphs (a), (c) and (d) 
introductory text, to read as follows:

Sec.  80.125  Attest engagements.

    (a) Any refiner and importer subject to the requirements of this 
subpart F shall engage an independent certified public accountant, or 
firm of such accountants (hereinafter referred to in this subpart F as 
``CPA''), to perform an agreed-upon procedures attestation engagement 
of the underlying documentation that forms the basis of the reports 
required by Sec. Sec.  80.75 and 80.105.
* * * * *
    (c) The CPA may complete the requirements of this subpart F with 
the assistance of internal auditors who are employees or agents of the 
refiner or importer, so long as such assistance is in accordance with 
the Statements on Standards for Attestation Engagements.
    (d) Notwithstanding the requirements of paragraph (a) of this 
section, any refiner or importer may satisfy the requirements of this 
subpart F if the requirements of this subpart F are completed by an 
auditor who is an employee of the refiner or importer, provided that 
such employee:
* * * * *

0
18. Section 80.126 is amended by revising paragraph (b) to read as 
follows:

Sec.  80.126  Definitions.

* * * * *
    (b) Credit Trading Records. Credit trading records shall include 
worksheets and EPA reports showing actual and complying totals for 
benzene; credit calculation worksheets; contracts; letter

[[Page 26702]]

agreements; and invoices and other documentation evidencing the 
transfer of credits.
* * * * *

0
19. Section 80.128 is amended by revising paragraph (e)(2) to read as 
follows:

Sec.  80.128  Alternative agreed upon procedures for refiners and 
importers.

* * * * *
    (e) * * *
    (2) Determine that the requisite contract was in place with the 
downstream blender designating the required blending procedures;
* * * * *

Sec.  80.129  [Removed]

0
20. Section 80.129 is removed and reserved.

0
21. Section 80.130 is amended by revising paragraph (a) to read as 
follows:

Sec.  80.130  Agreed upon procedures reports.

    (a) Reports. (1) The CPA or CIA shall issue to the refiner or 
importer a report summarizing the procedures performed in the findings 
in accordance with the attest engagement or internal audit performed in 
compliance with this subpart.
    (2) The refiner or importer shall provide a copy of the auditor's 
report to the EPA within the time specified in Sec.  80.75(m).
* * * * *

0
22. Section 80.133 is amended by revising paragraphs (h)(1) and (h)(4) 
to read as follows:

Sec.  80.133  Agreed upon procedures for refiners and importers.

* * * * *
    (h) * * *
    (1) Obtain from the refiner or importer the oxygenate type and 
volume, and oxygen volume required to be hand blended with the RBOB, in 
accordance with Sec.  80.69(a)(2).
* * * * *
    (4) Perform the following procedures for each batch report included 
in paragraph (h)(4)(i)(B) of this section:
    (i) Obtain and inspect a copy of the executed contract with the 
downstream oxygenate blender (or with an intermediate owner), and 
confirm that the contract:
    (A) Was in effect at the time of the corresponding RBOB transfer; 
and
    (B) Allowed the company to sample and test the reformulated 
gasoline made by the blender.
    (ii) Obtain a listing of RBOB blended by downstream oxygenate 
blenders and the refinery's or importer's oversight test results, and 
select a representative sample, in accordance with the guidelines in 
Sec.  80.127, from the listing of test results and for each test 
selected perform the following:
    (A) Obtain the laboratory analysis for the batch, and agree the 
type of oxygenate used and the oxygenate content appearing in the 
laboratory analysis to the instructions stated on the product transfer 
documents corresponding to a RBOB receipt immediately preceding the 
laboratory analysis and used in producing the reformulated gasoline 
batch selected within the acceptable ranges set forth at Sec.  
80.65(e)(2)(i);
    (B) Calculate the frequency of sampling and testing or the volume 
blended between the test selected and the next test; and
    (C) Agree the frequency of sampling and testing or the volume 
blended between the test selected and the next test to the sampling and 
testing frequency rates stated in Sec.  80.69(a)(7).
* * * * *

Sec.  80.134  [Removed]

0
23. Section 80.134 is removed.

[FR Doc. 06-4252 Filed 5-5-06; 8:45 am]

BILLING CODE 6560-50-P