

[Federal Register: February 22, 2006 (Volume 71, Number 35)]
[Rules and Regulations]               
[Page 8965-8973]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22fe06-16]                         

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2005-0170; FRL-8035-2]

 
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: Direct final rule.

-----------------------------------------------------------------------

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 direct final rule amends the fuels regulations to remove 
the oxygen content requirement for RFG for gasoline produced and sold 
for use in California, thereby making the fuels

[[Page 8966]]

regulations consistent with amended Section 211(k). In addition, for 
gasoline produced and sold for use in California, this rule extends 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 direct final 
rule that will have a later effective date than this California 
specific rulemaking.

DATES: This rule is effective on April 24, 2006, without further notice 
unless we receive adverse comment by March 24, 2006. If EPA receives 
adverse comment, we will publish a timely withdrawal in the Federal 
Register informing the public that the portion of the final rule on 
which adverse comment was received will not take effect. Those portions 
of the rule on which adverse comment was not received will go into 
effect on the effective date noted above.

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 is an ``anonymous access'' system, 

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, will be publicly available only in hard copy 
form. 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: EPA is publishing this rule without prior 
proposal because we view this action to be noncontroversial and 
anticipate no adverse comment. However, in the ``Proposed Rules'' 
section of today's Federal Register publication, we are publishing a 
separate document that will serve as the proposal to adopt the 
provisions in this Direct Final Rule if adverse comments are filed. 
This rule will be effective on April 24, 2006 without further notice 
except to the extent that we receive adverse comment by March 24, 2006. 
If EPA receives adverse comment, we will publish a timely withdrawal in 
the Federal Register informing the public that the portion of the rule 
on which adverse comment was received will not take effect. We will 
address all public comments in a subsequent final rule based on the 
proposed rule. We will not institute a second comment period on this 
action. Any parties interested in commenting must do so at this time. 
Any distinct amendment, paragraph, or section of today's rule for which 
we do not receive adverse comment will become effective on the date set 
out above, notwithstanding any adverse comment on any other distinct 
amendment, paragraph, or section of today's rule.

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:

[[Page 8967]]



------------------------------------------------------------------------
                                                           Examples of
                              NAICS codes   SIC codes      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 California RFG With Non-Ethanol 
Blended California 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 modifies 
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 being published in a 
separate rulemaking.)
---------------------------------------------------------------------------

    \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.)
---------------------------------------------------------------------------

    Today's rule also modifies 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:
---------------------------------------------------------------------------

    \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 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.

Sec.  Sec.   80.41(e) and (f)...................  Removes 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).................................  Adds a provision which
                                                   specifies that the
                                                   requirements in Sec.
                                                    80.41(o) do not
                                                   apply to California
                                                   gasoline.

[[Page 8968]]


Sec.   80.78(a).................................  Removes the
                                                   prohibition against
                                                   producing and
                                                   marketing California
                                                   RFG that does not
                                                   meet the oxygen
                                                   minimum standard
                                                   since the oxygen
                                                   standard has been
                                                   removed. Also removes
                                                   requirements for
                                                   California gasoline
                                                   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 California
                                                   gasoline for
                                                   compliance with the
                                                   oxygen standard.
Sec.   80.81(d).................................  Removes 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).................................  Removes 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).................................  Removes 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 extends 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 direct 
final rule implements this provision of the Energy Act for California 
gasoline. A separate direct final 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, 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 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,

[[Page 8969]]

today's regulations provide that there be two options available 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 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 are available to each retail outlet for each of 
two ten-day periods during the VOC control period. During each ten-day 
period the options are 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 will 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 will 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 direct final rule, the provisions which allow retailers 
to sell non-ethanol-blended California RFG that has been combined with 
ethanol-blended California RFG 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

    Little or no environmental impact is anticipated to occur as a 
result of today's action to remove the oxygenate requirement for 
California RFG. The RFG standards consist of content and emission 
performance standards. Refiners and importers will 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 will 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 removed. As a 
result, we believe that the removal of the oxygenate mandate will 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;

[[Page 8970]]

    (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 removes 
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 provides 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 will reduce overall compliance costs for these parties.

B. Paperwork Reduction Act

    This action does 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 will 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 will 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, I certify 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 direct final rule removes certain requirements for all 
refiners, importers and oxygenate blenders of California 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. This rule also provides 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 direct final 
rule, overall, will relieve regulatory burden for 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 8971]]

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 direct 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, and 
allows gasoline retailers options for commingling compliant gasolines 
which otherwise would be prohibited from being commingled. 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 direct 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 burden on regulated parties of having to comply with the oxygen 
standard for RFG in California, and allows 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 direct 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, importers, oxygenate blenders 
and retailers who supply RFG in California. This 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 direct 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 direct 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 in 
California. 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 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 allows 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''), 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.

[[Page 8972]]

    This direct 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.

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.

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.

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)).

Subpart D--[Amended]

0
2. Section 80.41 is amended by:
0
a. In the tables in paragraphs (e) and (f), revising the entries 
``Oxygen content (percent, by weight)''; and
0
b. adding paragraph (o)(4), to read as follows:


Sec.  80.41  Standards and requirements for compliance.

* * * * *
    (e) * * *





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

                                * * * * *


    (f) * * *





                                * * * * *
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

                                * * * * *


* * * * *
    (o) * * *
    (4) Paragraph (o) of this section does not apply to gasoline 
subject to the provisions in Sec.  80.81.
* * * * *

0
3. Section 80.78 is amended by adding paragraphs (a)(1)(ii)(C), 
(a)(8)(i) through (iv), and (a)(11)(iv)(D) to read as follows:


Sec.  80.78  Controls and prohibitions on reformulated gasoline.

* * * * *
    (a) * * *
    (1) * * *
    (ii) * * *
    (C) Paragraph (a)(1)(ii)(A) does not apply to gasoline subject to 
the provisions in Sec.  80.81.
* * * * *
    (8) * * *
    (i) For gasoline that is subject to the provisions in Sec.  80.81, 
no person may combine any ethanol-blended VOC-controlled reformulated 
gasoline with any non-ethanol-blended VOC-controlled reformulated 
gasoline during the period January 1 through September 15, except that:
    (ii) Retailers and wholesale purchaser-consumers may combine at a 
retail outlet or wholesale purchaser-consumer facility ethanol-blended 
VOC-controlled reformulated gasoline with non-ethanol-blended VOC-
controlled reformulated gasoline, provided that the retailer or 
wholesale purchaser-consumer:
    (A) Combines only batches of reformulated gasoline that have been 
certified under this subpart;
    (B) Notifies EPA prior to combining the gasolines and identifies 
the exact location of the retail outlet or wholesale purchase-consumer 
facility and the specific tank in which the gasolines will be combined;
    (C) Retains and, upon request by EPA, makes available for 
inspection product transfer documentation accounting for all gasoline 
at the retail outlet or wholesale purchaser-consumer facility; and
    (D) Does not combine any VOC-controlled gasoline with any non-VOC 
controlled gasoline between June 1 and September 15 of each calendar 
year;
    (iii) A retailer or wholesale purchaser-consumer may combine 
ethanol-blended reformulated gasoline with non-ethanol-blended 
reformulated gasoline under paragraph (a)(8)(ii) of this section a 
maximum of two periods between May 1 and September 15 of each calendar 
year, each such period to extend for a period of no more than ten 
consecutive calendar days. At the end of the ten-day period, the 
gasoline must be in compliance with the VOC minimum standard under 
Sec.  80.41.
    (A) The retailer or wholesale purchaser-consumer may demonstrate 
compliance with the VOC minimum standard by testing the gasoline at the 
end of the ten-day period using the test methods in Sec.  80.46, where 
the test results show that the gasoline meets the VOC minimum standard. 
Under this option, the retailer or wholesale purchaser-consumer may add 
both ethanol blended reformulated gasoline and non-ethanol blended 
reformulated gasoline to the same tank an unlimited number of times 
during the ten-day period; or

[[Page 8973]]

    (B) The retailer or wholesale purchaser-consumer will be deemed in 
compliance with the VOC minimum standard where the retailer or 
wholesale purchaser-consumer draws the tank down as low as practicable 
before receiving product of the other type into the tank and receives 
only product of the other type into the tank during the ten-day period. 
Under this option, the retailer or wholesale purchaser-consumer is not 
required to test the gasoline at the end of the ten-day period.
    (iv) Nothing in paragraphs (a)(8)(ii) or (iii) of this section 
shall preempt existing State laws or regulations regulating the 
combining of ethanol-blended reformulated gasoline with non-ethanol-
blended reformulated gasoline or prohibit a State from adopting such 
laws or regulations in the future.
* * * * *
    (11) * * *
    (iv) * * *
    (D) Paragraphs (a)(11)(iv)(A) and (C) of this section do not apply 
to gasoline subject to the provisions in Sec.  80.81.
* * * * *

0
4. Section 80.79 is amended by adding paragraph (a)(5) and adding a 
sentence at the end of paragraph (c)(1), to read as follows:


Sec.  80.79  Liability for violations of the prohibited activities.

    (a) * * *
    (5) Notwithstanding the provisions in paragraphs (a)(1) through 
(a)(4) of this section, for gasoline subject to the provisions in Sec.  
80.81:
    (i) Only a retailer or wholesale purchaser-consumer shall be deemed 
in violation for combining gasolines in a manner that is in 
inconsistent with Sec.  80.78(a)(8)(ii) or (iii), or for gasoline which 
does not comply with the VOC minimum standard under Sec.  80.41 after 
the retailer or wholesale purchaser-consumer combines or causes the 
combining of compliant gasolines in a manner inconsistent with Sec.  
80.78(a)(8)(ii) or (iii);
    (ii) No person shall be deemed in violation for gasoline which does 
not comply with the VOC minimum standard under Sec.  80.41 where the 
non-compliance is solely due to the combining of compliant gasolines by 
a retailer or wholesale purchaser-consumer in a manner that is 
consistent with Sec.  80.78(a)(8)(ii) and (iii).
* * * * *
    (c) * * *
    (1) * * * For gasoline subject to the provisions in Sec.  80.81, a 
party is not required to conduct periodic sampling and testing to 
determine compliance with the oxygen minimum standard.
* * * * *

0
5. Section 80.81 is amended by revising paragraphs (d), (e)(3), and 
(h)(1) introductory text, and removing and reserving paragraph (e)(2) 
to read as follows:


Sec.  80.81  Enforcement exemptions for California gasoline.

* * * * *
    (d) Any refiner or importer that produces or imports gasoline that 
is sold, intended for sale, or made available for sale as a motor 
vehicle fuel in the State of California subsequent to March 1, 1996, 
shall demonstrate compliance with the standards specified in Sec. Sec.  
80.41 and 80.90 by excluding the volume and properties of such gasoline 
from all conventional gasoline and reformulated gasoline that it 
produces or imports that is not sold, intended for sale, or made 
available for sale as a motor vehicle fuel in the State of California 
subsequent to such date. The exemption provided in this section does 
not exempt any refiner or importer from demonstrating compliance with 
such standards for all gasoline that it produces or imports.
    (e) * * *
    (2) [Reserved]
    (3)(i) Such exemption provisions shall not apply to any refiner or 
importer of California gasoline who has been assessed a civil, criminal 
or administrative penalty for a violation of subpart D, E or F of this 
part or for a violation of the California Phase 2 reformulated gasoline 
regulations set forth in Title 13, California Code of Regulations, 
sections 2260 et seq., effective 90 days after the date of final agency 
or district court adjudication of such penalty assessment.
    (ii) Any refiner or importer subject to the provisions of paragraph 
(e)(3)(i) of this section may submit a petition to the Administrator 
for relief, in whole or in part, from the applicability of such 
provisions, for good cause. Good cause may include a showing that the 
violation for which a penalty was assessed was not a substantial 
violation of the Federal California reformulated gasoline regulations.
* * * * *
    (h)(1) For the purposes of the batch sampling and analysis 
requirements contained in Sec.  80.65(e)(1) and Sec.  
80.101(i)(1)(i)(A), any refiner or importer of California gasoline may 
use a sampling and/or analysis methodology prescribed in Title 13, 
California Code of Regulations, section 2260 et seq. (as amended July 
2, 1996), in lieu of any applicable methodology specified in Sec.  
80.46, with regards to:
* * * * *
[FR Doc. 06-1613 Filed 2-21-06; 8:45 am]

BILLING CODE 6560-50-P
