[Federal Register Volume 79, Number 65 (Friday, April 4, 2014)]
[Proposed Rules]
[Pages 18850-18866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07423]
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FEDERAL TRADE COMMISSION
16 CFR Part 306
Automotive Fuel Ratings, Certification and Posting
AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission proposes amendments to its Rule for Automotive
Fuel Ratings, Certification and Posting (``Fuel Rating Rule'' or
``Rule'') that would adopt and revise rating, certification, and
labeling requirements for ethanol-gasoline blends and would allow an
alternative octane rating method. The proposed amendments further the
Rule's goal of helping purchasers identify the correct fuel for their
vehicles.
DATES: Comments on the proposed information requests must be received
on or before June 2, 2014.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Fuel Rating Rule
Review, 16 CFR Part 306, Project No. R811005'' on your comment, and
file your comment online at https://ftcpublic.commentworks.com/ftc/autofuelratingscertnprm by following the instructions on the web-based
form. If you prefer to file your comment on paper, mail or deliver your
comment to the following address: Federal Trade Commission, Office of
the Secretary, Room H-113 (Annex N), 600 Pennsylvania Avenue NW.,
Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Miriam Lederer, (202) 326-2975,
Division of Enforcement, Bureau of Consumer Protection, Federal Trade
Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Federal Trade Commission proposes amending its Fuel Rating
Rule, 16 CFR part 306, to provide: (1) Revised rating, certification,
and labeling requirements for blends of gasoline and more than 10
percent ethanol (``ethanol blends''); and 2) an additional octane
rating method for gasoline. The Commission previously proposed
amendments governing ethanol blends in a 2010 Notice of Proposed
Rulemaking (``2010 NPRM'').\1\ After reviewing the comments, the
Commission responded in April 2011 by publishing final amendments
addressing other issues. Specifically, the Commission approved a new
octane rating method and declined to amend the biodiesel and biomass-
based diesel provisions.\2\ The Commission deferred consideration of
ethanol blend labeling to consider an Environmental Protection Agency
(``EPA'') decision permitting the use of ethanol blends between 10 to
15 percent concentration (``E15'') in 2001 and newer conventional
vehicles.\3\ The Commission now proposes ethanol-labeling amendments in
response to comments received on the 2010 NPRM proposals, EPA's action,
and changes in an ASTM International specification regarding ethanol.
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\1\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Notice of Proposed Rulemaking (``2010
NPRM''), 75 FR 12470 (Mar. 16, 2010).
\2\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Final Rule Amendments (``2011 Final
Amendments''), 76 FR 19684 (Apr. 8, 2011).
\3\ EPA made this decision through a two-step process. First,
the agency approved E15 for 2007 and newer vehicles. Environmental
Protection Agency: Partial Grant and Partial Denial of Clean Air Act
Waiver Application Submitted by Growth Energy to Increase the
Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the
Administrator (``EPA Waiver Decision I''), 75 FR 68094 (Nov. 4,
2010). Then, it expanded its approval to 2001 and newer vehicles,
based on additional test data. Environmental Protection Agency,
Partial Grant of Clean Air Act Waiver Application Submitted by
Growth Energy to Increase the Allowable Ethanol Content of Gasoline
to 15 Percent; Decision of the Administrator (``EPA Waiver Decision
II''), 76 FR 4662 (Jan. 26, 2011). For ease of discussion, this
document refers to them together as the EPA ``waiver decision.''
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The amendments proposed today retain the 2010 NPRM's proposal that
entities rate and certify all ethanol blends, but alter the proposed
ethanol label's disclosures, to provide consumers with more precise
concentration and suitability information. The new proposed amendments
also exempt EPA-approved E15 from the Commission's labeling
requirements.
The Commission also proposes an additional octane rating method
that
[[Page 18851]]
uses infrared sensor technology (the ``infrared method'') to measure
gasoline octane levels. Although the Commission did not propose this
rating method in the 2010 NPRM, several commenters, including state
regulatory agencies, supported its use.
To accomplish these goals, this document first provides background
on the Fuel Rating Rule, ethanol blends, and this rulemaking's
procedural history. Then, it discusses the additions to the record
since the 2010 NPRM.\4\ Finally, it responds to the new record evidence
and describes the new proposed amendments in detail.
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\4\ For a discussion of comments regarding other issues, see
2011 Final Amendments, 76 FR at 19686-87.
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II. Background
A. The Fuel Rating Rule
The Commission first promulgated the Fuel Rating Rule, 16 CFR Part
306 (then titled the ``Octane Certification and Posting Rule''), in
1979, in accordance with the Petroleum Marketing Practices Act
(``PMPA''), 15 U.S.C. 2801 et seq.\5\ The Rule originally applied only
to gasoline. In 1993, pursuant to PMPA amendments, the Commission
expanded the Rule to cover all alternative liquid fuels.\6\ Currently,
the Rule identifies a non-exhaustive list of ``alternative liquid
automotive fuels.'' That list does not include ethanol blends below 70
percent concentration.\7\
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\5\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Final Rule, 44 FR 19160 (Mar. 30, 1979).
\6\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Final Rule (``1993 Final Rule''), 58 FR
41356 (Aug. 3, 1993).
\7\ 16 CFR 306.0(i)(2).
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PMPA authorizes the Commission to require octane ratings, cetane
ratings (for diesel fuel), or ``another form of rating'' that it
determines is more appropriate to carry out the Act's purposes. For
alternative fuels, the 1993 amendments require a rating that is ``the
commonly used name of the fuel with a disclosure of the amount,
expressed as a minimum percentage by volume, of the principal component
of the fuel.'' \8\ In promulgating those amendments, the Commission
determined that this rating was appropriate because octane ratings
might mislead consumers to believe that gasoline and alternative fuels
are interchangeable and that alternative fuels' high octane ratings
``signif[y] higher quality and better performance.'' \9\
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\8\ 16 CFR 306.0(j)(2). For blends with more than 5 percent
biodiesel or biomass-based diesel, the rating is a ``disclosure of
the biomass-based diesel or biodiesel component, expressed as a
percentage by volume.'' 16 CFR 306.0(j)(3).
\9\ 58 FR at 41361.
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The Fuel Rating Rule designates methods for rating and certifying
fuels, as well as posting the ratings at the point of sale. The Rule
also requires refiners, importers, and producers of any liquid
automotive fuel to determine a fuel's ``automotive fuel rating'' before
transferring it to a distributor or retailer. Any covered entity,
including a distributor, that transfers a fuel must certify the fuel's
rating to the transferee either by including it in papers accompanying
the transfer or by letter.\10\ The Rule also requires retailers to post
the fuel rating by adhering a label to the retail fuel pump; the Rule
provides precise specifications regarding the content, size, color, and
font of the labels.\11\
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\10\ 16 CFR 306.6.
\11\ 16 CFR 306.10; 306.12.
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B. Ethanol
Ethanol is a renewable fuel made from corn or other plant
materials.\12\ Fuel producers and retailers can blend ethanol with
gasoline in various concentrations. Almost all gasoline in the United
States contains ethanol in a low-level blend composed of up to 10
percent ethanol and 90 percent gasoline.\13\ EPA recently approved the
use of E15 in conventional vehicles model year (``MY'') 2001 and newer,
subject to certain conditions.\14\
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\12\ See www.afdc.energy.gov/fuels/ethanol.html.
\13\ See www.afdc.energy.gov/fuels/ethanol_blends.html.
\14\ EPA Waiver Decision II, 76 FR 4662.
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C. Procedural History
This rulemaking began in 2009 when the Commission solicited general
comments on the Fuel Rating Rule.\15\ After reviewing those comments,
the Commission published the 2010 NPRM proposing, among other things,
three changes to the Fuel Rating Rule's ethanol fuel provisions. First,
the proposed amendments required rating ethanol-gasoline blends by the
percentage of ethanol, rather than the currently required ``principal
component,'' in order to accurately label ethanol blends below 50
percent concentration. Second, the proposed amendments defined a new
class of ethanol blends containing more than 10 but less than 70
percent ethanol as ``mid-level ethanol blends.'' Third, the proposed
amendments added new labeling requirements for ethanol blends. For mid-
level ethanol blends, the labels would disclose the ethanol content as
a broad range of ``10 to 70 percent ethanol,'' a narrower range, or a
specific percentage. For all ethanol blends, the proposed labels
contained the additional disclosures ``may harm some vehicles'' and
``check owner's manual.'' The Commission explained that the labels'
``additional information should assist consumers in identifying the
proper fuel for their vehicles.'' \16\
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\15\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Request for Public Comments, 74 FR 9054
(Mar. 2, 2009).
\16\ 2010 NPRM, 75 FR at 12474.
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As described in detail below, commenters responding to the 2010
NPRM objected to several aspects of the proposed ethanol labeling
requirements and suggested various revisions. Generally, they favored a
more precise disclosure of the fuel's ethanol concentration and a more
specific disclosure concerning the fuel's proper use. They also
encouraged the FTC to coordinate its labeling requirements with EPA's
developing labeling requirements for E15. In addition, many commenters
urged the Commission to allow the infrared method as an additional
octane rating method.\17\
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\17\ Commenters had not previously mentioned the infrared
method, and the Commission did not propose it in the 2010 NPM.
Therefore, the Commission declined to issue final amendments
including the infrared method without providing notice and
opportunity for comment on it. 2011 Final Amendments, 76 FR at
19689.
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On April 8, 2011, in light of the commenters' feedback and EPA's
pending E15 rulemaking, the Commission published final amendments
addressing the 2010 NPRM's non-ethanol provisions but announced that it
would consider issuing ethanol-labeling amendments and the infrared
method at a later date.\18\
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\18\ Id.
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III. The Record
The Commission received 54 comments in response to the 2010 NPRM
that addressed ethanol labeling.\19\ In addition, EPA issued final
rules governing use of E15 in conventional cars, including a pump label
for E15 dispensers. Furthermore, ASTM International (``ASTM'')
substantially revised its ethanol fuel specification for ethanol
percentages in higher concentration ethanol blends. Finally, the
Commission received many comments, including from industry, state
regulatory agencies, and a consumer advocacy group supporting the use
of the infrared method in testing octane.
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\19\ These comments are located at: www.ftc.gov/os/comments/fuelratingnprm.
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A. Comments Received in Response to the 2010 NPRM's Proposed Ethanol
Labeling
Commenters generally objected to the 2010 ethanol-labeling
proposal, but
[[Page 18852]]
their reasons differed. The Renewable Fuels Association (``RFA'') and
Growth Energy, an association of ethanol producers, argued that the FTC
lacks legal authority to promulgate the proposed labeling requirements.
In addition, these commenters, along with other individuals and
businesses, asserted that the proposed labels' suitability disclosures,
``May harm some vehicles'' and ``Check owner's manual,'' unfairly
conveyed a negative message about the fuel.\20\ In contrast, other
commenters, including consumer groups, petroleum industry members and
organizations, engine manufacturer organizations, and state regulators,
argued that the risks from ethanol misfueling necessitated stronger
suitability language and a more precise disclosure regarding the
percentage of ethanol in the fuel.\21\
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\20\ The following commenters specifically supported Growth
Energy's comment: Bob Haskins Racing; ``Eichstadt''; Kurt Felker;
Donna Funk; ``Gill''; David Gloer; ``Kelleher''; Kelley Manning; and
Jonathan Overly. In addition to commenters supporting Growth Energy,
the following individuals and entities submitted brief comments
voicing support for ethanol fuels and/or criticisms of the proposed
labels as unfair to those fuels: Dale Calendine; James Foley;
Michael Green; Kelly Hansen; ``Jarman''; Steve Murphy; William
Nankervis; Philbro; POET Biorefining; Patrick Reid; and Dan Sanders.
Growth Energy, RFA, ICM, Inc., and the American Coalition for
Ethanol (``ACE''), along with the other commenters identified in
this footnote are hereinafter referred to collectively as ``ethanol-
industry commenters.'' The Commission recognizes that some of these
commenters may not be ethanol industry members or employees, and is
using the term only as shorthand for the purposes of this document.
\21\ Specifically, these commenters were: The Center for Auto
Safety; the American Petroleum Institute; Marathon Petroleum
Company, LLC; the Alliance of Automobile Manufacturers; the
Association of International Automobile Manufacturers; the Clean
Vehicle Education Foundation; the Alliance for a Sane Alternative
Fuels Environment; the National Marine Manufacturers Association;
the Tennessee, New York, and Missouri Departments of Agriculture;
and the New York Department of Environmental Conservation.
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1. Objections to the Proposed Labeling Requirements as Beyond the FTC's
Authority
RFA and Growth Energy argued that PMPA did not authorize the FTC to
require the ethanol labels proposed in the 2010 NPRM. They asserted
that PMPA permitted the FTC to require that retailers display only
``automotive fuel rating[s].'' \22\ RFA asserted that, under PMPA, the
term ``automotive fuel rating'' does not include ``representations as
to the quality of the fuel or potential impacts on vehicle
performance.'' \23\ They therefore argued that the proposed disclosure
``May harm some vehicles/Check owner's manual'' did not fall within the
definition of ``automotive fuel rating.'' \24\ Moreover, RFA viewed the
proposed disclosures as denigrating to the ethanol blends' performance
and quality and, therefore, beyond PMPA's authority.\25\
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\22\ PMPA's definition of ``automotive fuel ratings'' includes:
Octane ratings; cetane ratings; or ``another form of rating
determined by the Federal Trade Commission, after consultation with
[ASTM], to be more appropriate to carry out the purposes of this
subchapter with respect to the automotive fuel concerned. 15 U.S.C.
2821(17)(C).
\23\ RFA comment at 3.
\24\ Id.
\25\ RFA comment at 3.
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Growth Energy likewise focused on the definition of ``automotive
fuel rating,'' arguing that the statute's intent was only to require
octane, cetane, or similar ratings. The Act states: ``The term
`automotive fuel rating' means (A) the octane rating of an automotive
spark-ignition engine fuel; and (B) if provided for by the Federal
Trade Commission by rule, the cetane rating of diesel fuel oils; or (C)
another form of rating. . . .'' \26\ Growth Energy argued that the use
of ``and'' and ``or'' evidences an intent that the FTC require either
octane and cetane ratings or another, similar rating in their
place.\27\
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\26\ 15 U.S.C. 2821(17) (emphasis added).
\27\ Growth Energy comment at 11.
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Growth Energy further asserted that principles of statutory
construction require the Commission to read ``another form of rating''
in light of the other listed ratings. Thus, according to Growth Energy,
the statutory language ``makes it unambiguous that Congress wanted to
require any other rating forms that the FTC might attempt to promulgate
to be similar in purpose to octane or cetane ratings.'' \28\
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\28\ Id. at 11-12.
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In further support of their reading of PMPA, Growth Energy and RFA
cited statements in the Congressional Record regarding the 1992
amendments to the statute.\29\ In particular, Growth Energy cited
statements describing the amendments as extending the statute's octane
rating requirements to other fuels, thereby allowing consumers to
compare different fuels' octane ratings.\30\ RFA noted that in its 1993
rulemaking, the Commission relied upon legislative history describing
an intent to ensure that consumers ``have a right to know what they pay
for, and . . . dealers have a right to know that their competitors are
not cheating.'' \31\ Growth Energy and RFA maintained that these
statements foreclosed interpreting ``automotive fuel rating'' to
include the proposed disclosures.\32\
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\29\ Growth Energy also cited the original PMPA's legislative
history as indicating intent to require retailers to post only
octane ratings. Growth Energy comment at 7.
\30\ Growth Energy comment at 8.
\31\ RFA comment at 2-3 (internal quotation marks omitted).
\32\ Id. at 3; Growth Energy Comment at 8. Growth Energy made
two additional arguments related to process. First, it argued that
the Commission has not fulfilled its obligation under PMPA to
consult with ASTM. Growth Energy comment at 13. Second, it argued
that the Commission must assess how the proposed disclosures further
the ``objectives of an octane rating'' before requiring an
alternative rating. Id. at 14.
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2. Objections to the Proposed Labels
Commenters disagreed about the form and content of the proposed
ethanol disclosures. Ethanol-industry commenters viewed the disclosures
as excessive and urged what they characterized as more neutral content.
In contrast, consumer groups, petroleum industry groups, auto and other
engine manufacturing groups, as well as individual commenters,
criticized the disclosures as inadequate given the risks of using
ethanol blends in conventional vehicles.
a. Criticism of Proposed Labels as Unnecessary and Unfair
Ethanol-industry commenters presented several arguments that the
proposed ethanol labels were unnecessary and unfair. As discussed
below, three of these commenters disputed evidence that ethanol blends
harm conventional engines, and all asserted that the proposed labels
denigrated ethanol blends. In addition, several argued that the amended
Rule would unfairly require the proposed disclosures only for ethanol
blends rather than all alternative fuels. To address these issues,
almost all of these commenters \33\ suggested, among other things,
replacing the proposed language with ``flex-fuel vehicles only,'' or
substantially similar language.\34\
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\33\ RFA opposed any narrative disclosure, arguing that ``[t]he
ethanol content of the fuel is sufficient to inform consumers'' of
misfueling risk. RFA comment at 8.
\34\ See, e.g., ACE comment at 2; ICM, Inc. comment at 2. Growth
Energy favored voluntary labeling guidelines that would include
``Flex Fuel Vehicles Only'' on the labels. Growth Energy comment at
18-19.
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As a threshold issue, three commenters disagreed that the evidence
established that there is a significant risk to consumers' vehicles
from ethanol fuel use. RFA stated that earlier comments noting
potential risks from ethanol ``provide no evidence that mid-level
ethanol blends or E85 will damage conventional vehicles,'' explaining:
There are many ongoing projects researching the effects of E15
and E20 on vehicle engine, catalysts, Powertrain systems, fuel
system damper, level sensors, and general material compatibility.
This research
[[Page 18853]]
is not complete, and it is incorrect to state confirmatively that
blends above 10 percent ethanol by volume are not appropriate for
certain vehicles . . . . [E]vidence to date . . . indicates that
mid-level ethanol blends do not harm motor vehicles.\35\
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\35\ RFA comment at 6-7.
Growth Energy concurred, asserting ``[t]he statement that midlevel
blends `MAY HARM SOME VEHICLES' has no apparent basis in the record,
other than two comment letters unaccompanied by any technical or
market-research analysis.'' \36\ ACE likewise argued that the need for
``may harm some vehicles'' is ``unsupported by any of the data'' in the
March 2009 record.\37\
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\36\ Growth Energy comment at 15.
\37\ ACE comment at 2.
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ACE and RFA asserted that the Rule's current requirements already
prevent misfueling, relying on a 2009 comment asserting that ethanol
misfueling is virtually nonexistent.\38\ Thus, RFA concluded, ``using
the commonly used name of alternative fuels with a disclosure of the
amount . . . of the principal component of the fuel provides sufficient
information for consumers.'' \39\
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\38\ Id. at 1; RFA comment at 3. The Alliance of Automobile
Manufacturers (``AAM'') submitted the referenced comment, which
observed that ``pump labeling of E85 dispensers appears to have been
successful'' because reports of misfueling have been ``virtually
nonexistent.'' See 2010 NPRM, 75 FR at 12471 for further discussion.
As discussed below, evidence submitted in response to the NPRM
contradicts AAM's comment.
\39\ RFA comment at 3.
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Growth Energy, ACE, RFA, and the other ethanol-industry commenters
also argued that the proposed labels' ``negative statements'' would
mislead consumers by suggesting that they should not use ethanol blends
in any type of vehicle.\40\ In particular, Growth Energy expressed
concern that the term ``some'' would confuse consumers, leaving them
``wondering if [their] vehicle fits within the `some' category'' and,
thereby, deterring flex-fuel vehicle owners from purchasing ethanol
blends.\41\ ICM, Inc., an agricultural and renewable energy company,
concurred, stating that consumers could perceive the labels as a
warning, thereby improperly influencing their purchasing decisions.\42\
ACE asserted that ``any fuel `MAY HARM SOME VEHICLES,' '' so the
proposed labels would unfairly discourage use of ethanol blends by
suggesting to a consumer that ``his/her vehicle may be [one] that would
be harmed.'' \43\ According to ACE, the proposed labels would likely
``lead a flex fuel vehicle owner to question whether a mid-level blend
or E85 is suitable for the very type of vehicle that was designed to
use that fuel.'' \44\ In addition, many other individual and business
commenters described the labels as a ``gross misrepresentation of the
fuel,'' \45\ and argued that requiring suitability language only for
ethanol blends treats like fuels inconsistently.\46\
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\40\ See, e.g., id. at 5. Other commenters voiced similar
concerns. The Petroleum Marketers Association of America (``PMAA'')
asserted that the proposed language would ``confuse consumers and
raise an unwarranted suspicion'' that ethanol blends could damage
cars regardless of concentration. PMAA comment at 2. In addition,
the Tennessee Department of Agriculture, while not characterizing
the suitability language as distorting or disparaging, expressed
concern that the labels would lead flex-fuel vehicle owners to avoid
ethanol fuel. Tennessee Department of Agriculture comment at 2.
\41\ Growth Energy comment at 15.
\42\ ICM, Inc. comment at 1.
\43\ ACE comment at 2.
\44\ Id.
\45\ See, e.g., David Gloer comment; Kurt Felker comment;
Patrick Reid comment.
\46\ RFA comment at 6. AAM also acknowledged the inconsistency
of requiring suitability language for some but not all fuels, but
proposed addressing it by requiring the same advisory language for
blends of gasoline and methanol, an alcohol-based fuel, as well as
for biodiesel fuels. AAM comment at 2.
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Finally, Growth Energy, ACE, and all other ethanol-industry
commenters that addressed the issue criticized the proposed labels'
orange background. Specifically, they argued that orange was an
inappropriate color because the transportation sector traditionally has
used that color to signal caution.\47\
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\47\ See, e.g., ACE comment at 2; Growth Energy comment at 18;
ICM, Inc. comment at 2.
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To remedy the perceived content and format flaws, Growth Energy,
ACE, and other ethanol-industry commenters, as well as some state
regulators, suggested a ``For Flex-Fuel Vehicles Only'' disclosure (or
substantially similar language), and an octane disclosure.\48\
Commenter ICM, Inc. explained:
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\48\ See, e.g., Growth Energy comment at 18-19; ACE comment at 2
(``The simple addition of the phrase `For Flex-Fuel Vehicles Only'
would be a change that we would support.''); ICM, Inc. comment at 2;
Patrick Reid comment; David Gloer comment. Growth Energy, consistent
with its interpretation of PMPA, supported this type of disclosure
only on a voluntary basis.
This clear warning statement will protect consumers against
improper fueling of their vehicles while not discouraging the market
access and use of alternative fuels containing ethanol. . . . In
addition, we strongly recommend including an octane rating
requirement for alternative fuels containing ethanol. The FTC's
proposed label for alternative fuels does not have the critical
octane rating which ensures that consumers can choose the
appropriate octane level for their engine.\49\
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\49\ ICM, Inc. comment at 2.
The Tennessee Department of Agriculture supported replacing ``May harm
some vehicles'' with ``For flexible fuel vehicles only,'' but favored
retaining ``Check owner's manual.'' \50\ The New York Department of
Environmental Conservation supported an octane disclosure on ethanol
labels, but only in conjunction with a disclosure of ethanol content
and ``any appropriate limitation on use of the fuel in order to prevent
misfueling.'' \51\ In addition, Growth Energy and other ethanol-
industry commenters proposed changing the required background to blue,
asserting that a dark blue background for ethanol blends would
``distinguish[ ] these fuels from the other alternative fuels.'' \52\
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\50\ Tennessee Department of Agriculture comment at 2.
\51\ New York Department of Environmental Conservation comment
at 2.
\52\ Growth Energy comment at 18; see also, e.g., Patrick Reid
comment; David Gloer comment.
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b. Criticism of Proposed Labels as Insufficient To Warn Against Risks
In contrast, some commenters supported revising the proposed labels
to include stronger misfueling disclosures. In addition, some of these
commenters criticized the proposed labels' failure to address non-
automotive devices, such as lawn equipment. Notably, all of these
commenters proposed adding a ``For Flex-Fuel Vehicles Only''
disclosure, and most supported additional disclosure language.
Many commenters voiced concerns that the proposed labels would not
prevent misfueling. For example, Marathon Petroleum Company, LLC
(``Marathon'') stated that it ``does not believe that [the] FTC's
current proposal to label mid-level ethanol blends . . . is enough of a
consumer warning to prevent mis-fueling and advise the consumer of the
potential dangers.'' \53\ The American Petroleum Institute (``API'')
agreed, explaining:
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\53\ Marathon comment at 1.
[The proposed] language is inadequate because it fails to warn
consumers that mid-level ethanol blends may cause damage to, and may
not be used in, any equipment other than Flexible-Fuel Vehicles
(``FFVs''). . . . [O]nly FFVs are currently permitted by EPA to use
blends containing greater than 10 vol% ethanol. Use in non-FFVs is a
violation of federal law. . . . Therefore, strong language is
necessary to clarify that only specialty vehicles can use these
fuels.\54\
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\54\ API comment at 3.
Similarly, the Association of International Automobile Manufacturers
(``AIAM'') supported stronger language because EPA does not allow
distribution of ethanol fuel for use in conventional vehicles.\55\
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\55\ AIAM comment at 2.
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[[Page 18854]]
In addition, several commenters noted that misfueling can cause
significant engine damage. For example, the Center for Auto Safety
(``CAS''), a nonprofit consumer group, noted EPA's prohibition and
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explained:
Depending upon the percentage of ethanol in the fuel blend and
the number of misfueling events, misfueling a non-FFV with mid-level
or higher ethanol and gasoline blends can cause: An increase in HC
and NOX emissions, malfunction of the engine, degradation
of the catalyst or engine, and invalidation of the manufacturer
warranty on the vehicle emissions control systems[.] \56\
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\56\ CAS comment at 2 (citations omitted).
The Clean Vehicle Education Foundation (``CVEF'') similarly noted that
misfueling potentially causes ``failure of the fuel system on the
vehicle due to degradation of the elastomers and galvanic corrosion.''
\57\ PMAA likewise argued that the proposed labels are ``not
sufficient'' because ethanol misfueling ``could void automobile
warranties, damage catalytic converters, increase tailpipe emissions
and expose petroleum retailers to increased risk of liability.'' \58\
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\57\ CVEF comment at 1.
\58\ PMAA comment at 1-2. See also The Alliance for a Safe
Alternative Fuels Environment (``AllSAFE'') comment at 4
(``[Conventional vehicles] may experience emissions control device
failures, operability issues, and equipment failures when operated
on fuels greater than E-10.'').
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Moreover, Petroleum Marketers and Convenience Stores of Iowa
(``PMCI''), an Iowa fuel retailer group, reported that ethanol
misfueling occurs in the absence of labeling.\59\ Notably, this
contradicts AAM's comment in the March 2009 record that ethanol
misfueling is virtually nonexistent.
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\59\ Specifically, PMCI related that ``[i]n Iowa where Mid-Level
Ethanol blends and E85 are widely available and heavily promoted by
interested groups, instances of misfueling occur frequently enough
to be a cause for concern among retailers.'' PMCI comment at 1. See
also PMAA comment at 1 (stating that ``misfueling would increase''
in the absence of labeling).
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In addition, commenters AllSAFE, the National Marine Manufacturers
Association (``NMMA''), and several individual commenters \60\
criticized the proposed labels for inadequately warning non-automotive
engine owners of ethanol misfueling risks.\61\ AllSAFE explained that
use of ethanol blends in non-automotive engines can cause ``emissions
control device failures, operability issues, and equipment failures,''
which can present safety risks for those devices' users.\62\ NMMA noted
that ethanol blends can adversely impact boat engines.\63\
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\60\ See, e.g., Louis Ehlers comment (supporting an ethanol
disclosure so consumers can select proper fuel for use in
airplanes).
\61\ Several petroleum companies and associations agreed that
ethanol fuels pose risks to non-road engines. See, e.g., Marathon
comment at 1.
\62\ AllSAFE comment at 4.
\63\ NMMA comment at 4. See also EPA Waiver Decision I, 75 FR at
68129-37 (discussing non-suitability of E15 for non-road engines,
vehicles, and equipment).
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Despite disagreeing with ethanol-industry commenters about the need
to alert consumers of misfueling risks, commenters favoring stronger
labels recommended a ``For Flex-Fuel Vehicles Only'' disclosure, albeit
generally as part of a longer advisory. For example, commenters
AllSAFE, NMMA, and API supported adding a ``Flex-Fuel Vehicles Only''
disclosure. AllSAFE and NMMA supported this additional disclosure in
conjunction with an advisement that the law prohibits use of ethanol
blends in an exhaustive list of non-automotive engines and
equipment.\64\ API supported the disclosure along with legal
prohibition language, an advisement that the fuel ``may damage'' non
flex-fuel vehicles, and the word ``WARNING.'' \65\ Commenters CVEF,
Marathon, AIAM, and PMCI also favored ``For Flex-Fuel Vehicles Only''
(or something very similar).\66\ Similarly, CAS supported a ``Flexible-
Fuel Vehicles Only'' labeling scheme, along with requiring
``conspicuous signs indicating that [ethanol] fuels are for FFVs only''
and pump nozzle labels stating ``For FFV use only.'' \67\
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\64\ AllSAFE comment at 12; NMMA comment at 5. In addition,
AllSAFE proposed going beyond labeling and requiring a ``visible
gap'' between gasoline and ethanol fuel pumps. AllSAFE comment at 5.
\65\ API comment at 4.
\66\ CVEF comment at 1; Marathon comment at 2; AIAM comment at
2; PMCI comment at 2. In addition, the Missouri Department of
Agriculture (``MDA'') noted that the National Conference on Weights
and Measures (``NCWM'') has adopted model regulations requiring
ethanol fuel labels reading: ``For Use in Flexible Fuels Vehicles
(FFV) Only.'' MDA comment at 2.
\67\ CAS comment at 2.
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3. Objections to Proposed Ethanol Concentration Disclosures
In the 2010 NPRM, the Commission proposed continuing to allow
labels for ethanol blends above 70 percent concentration to disclose
the minimum amount in the blend, while requiring ``mid-level ethanol
blend'' labels to disclose a range of 10 to 70 percent, a narrower
range, or the exact percentage of ethanol in the blend. Of the fourteen
commenters that addressed this issue, all but one favored a more
specific fuel-concentration disclosure. Several argued that consumers
needed more specificity because fuel economy decreases as ethanol
concentration increases, affecting consumers' overall fuel costs. CVEF
explained:
Ethanol has a lower volumetric energy density than gasoline. A
blend of ethanol in gasoline will have a lower energy density than
the base gasoline by an amount proportional to the volume -% ethanol
in the blended fuel. Ethanol . . . has an energy density of
approximately 76,000 BTU/gallon. . . . Gasoline . . . [has] an
energy density generally measured in the range of 109,000 to 119,000
BTU/gallon. . . . [Thus,] for every 1% addition of ethanol in
gasoline, the energy density of the fuel blend will drop by about
0.33%. . . . As the volumetric energy density of the fuel goes down,
so does the vehicle's fuel economy.\68\
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\68\ CVEF comment at 2 (citations omitted). CVEF's comment cited
two studies of ethanol fuel economy supporting its observations. No
commenter presented data contradicting those studies.
Individual commenter James Hyde submitted a similar analysis, and
observed that the disparity in energy densities between gasoline and
---------------------------------------------------------------------------
ethanol can affect consumers' overall fuel costs:
[S]ince ethanol contains considerably less energy [than] does
petroleum-derived gasoline, the consumer must purchase more gallons
of mixtures to drive the same distance[,] . . . and so reducing the
value to a consumer while also reducing the supplier's cost . . . .
The consumer who is unaware of these differences may be [led] to
believe that a fuel with a lower cost per gallon and a higher posted
octane is a better value.\69\
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\69\ James Hyde comment at 1.
In addition, AAM noted that vehicle ethanol tolerances will likely vary
in the future, and consumers will need a more specific disclosure ``to
protect their vehicles and related warranties when selecting fuel.''
\70\
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\70\ AAM comment at 1. AAM also suggested changing the
disclosure thresholds from 10 and 70 percent to 11 and 69 to further
mitigate the risk of consumer confusion about selecting the proper
fuel. Id. at 2.
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Thus, CVEF and AAM, as well as the Tennessee, New York, and
Missouri Departments of Agriculture, and the New York Department of
Environmental Conservation, supported more precise concentration
disclosures.\71\ MDA supported a disclosure of the exact ethanol
percentage.\72\ Others suggested allowing some flexibility. For
example,
[[Page 18855]]
the Tennessee Department of Agriculture supported rounding to the
nearest interval of 10 (e.g., disclose 62 percent ethanol as 60
percent) because such rounding would ``provide[ ] reasonable
flexibility, and also provide[ ] sufficient information for the
consumer to make an informed choice.'' \73\
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\71\ CVEF comment at 1; AAM comment at 1; Tennessee Department
of Agriculture comment at 2; New York Department of Agriculture and
Markets comment at 1; MDA comment at 1; New York Department of
Environmental Conservation comment at 2; AllSAFE comment at 8-9. As
an alternative means of addressing the problem, Hyde suggested
adopting unit pricing based on gasoline-gallon equivalents rather
than an ethanol content disclosure. James Hyde comment at 2. AllSAFE
similarly requested that the Commission use its authority under the
FTC Act to require fuel labeling according to energy content (e.g.,
a label disclosing the BTU per gallon of fuel sold). AllSAFE comment
at 10-11.
\72\ MDA comment at 1. MDA favored an exact disclosure for only
blends below 70 percent concentration. Id.
\73\ Tennessee Department of Agriculture comment at 2.
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Significantly, ethanol-industry commenters also recommended a more
precise content disclosure. Growth Energy, for example, favored an
exact percentage disclosure because ``ethanol concentration has an
impact on the economics of the purchase, and the consumer needs to know
more precisely the concentration of the ethanol in the fuel to make an
informed decision regarding the purchase.'' \74\ Comments submitted by
individual ethanol supporters suggested a disclosure grouped in
intervals of 10, allowing the actual fuel concentration to vary from as
much as 10 percent more than the disclosed amount to 10 percent less
than that amount (e.g., a blend disclosed as 20 percent could vary
between 18 and 22 percent, while a blend disclosed as 30 percent could
vary between 27 and 33 percent).\75\
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\74\ Growth Energy comment at 17-18.
\75\ See, e.g., ICM, Inc. comment at 2; David Gloer comment.
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One commenter, PMCI, did not support a more precise disclosure.
Instead, it praised the Commission's proposal as giving ``retailers the
flexibility to account for relative changes in the prices of gasoline
and ethanol.'' \76\
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\76\ PMCI comment at 1. In addition to comments regarding
precise disclosure, API urged that the Commission ensure consistency
with EPA regulations by defining mid-level ethanol blends and E85
according to their percentages of pure, rather than denatured,
ethanol. API comment at 1-2. As part of the ethanol production
process, manufacturers add a small amount of denaturant, usually
gasoline, to the ethanol before distributing it. The proposed
amendments define ethanol fuels according to their ethanol volume,
exclusive of denaturant, to remain consistent with EPA regulations.
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B. EPA E15 Waiver
When the Commission issued the 2010 NPRM, EPA was considering an
application to allow E15 in conventional vehicles, pursuant to its
authority under the Clean Air Act, Section 211(f)(4), to grant
``waivers'' to non-gasoline fuels for use in conventional cars.\77\
Several commenters urged the FTC to coordinate with EPA to avoid
conflicts in the labeling requirements.\78\
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\77\ See EPA Waiver Decision I, 75 FR at 68099. Section 211(f)
of the Clean Air Act bans alternative fuels, including ethanol
blends, from being introduced into commerce unless EPA affirmatively
permits them for certain vehicles. See 42 U.S.C. 7545(f).
\78\ For example, Growth Energy argued that if EPA approved the
waiver request, the FTC's proposed Fuel Rating Rule amendments would
require a label for E15 advising consumers of potential vehicle
harm, even though EPA had approved the fuel for all vehicles. Growth
Energy comment at 17. API and other commenters urged the Commission
to ``communicate and coordinate with [EPA] to develop a common
dispenser labeling scheme.'' API comment at 1. See also AAM comment
at 2; AIAM comment at 2; AllSAFE comment at 6-7; NMMA comment at 2;
National Petrochemical & Refiners Association (``NPRA'') comment at
2; New York Department of Environmental Conservation comment at 1;
New York State Department of Agriculture and Markets comment at 2-3.
Marathon, PMAA, and Valero recommended delaying any rulemaking until
EPA issued a decision on the waiver petition. Marathon comment at 1-
2; PMAA comment at 2; Valero comment at 1.
---------------------------------------------------------------------------
After the 2010 NPRM comment period closed, EPA granted a waiver
that permitted light-duty \79\ conventional vehicles, MY2001 and later,
to use EPA-approved E15 blends. The waiver requires that this fuel meet
certain fuel quality standards.\80\ Moreover, EPA soon thereafter
promulgated complementary regulations to help prevent misfueling.\81\
The regulations include: (1) A prohibition on misfueling by ``gasoline
and ethanol producers, distributors, retailers, and consumers'' and (2)
``labeling requirements for fuel pumps that dispense E15 to alert
consumers to the appropriate and lawful use of the fuel.'' \82\
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\79\ ``Light-duty'' vehicles include passenger cars, light-duty
trucks, and medium-duty passenger vehicles. See EPA Waiver Decision
I, 75 FR at 68095.
\80\ EPA Waiver Decision I, 75 FR at 68149-50.
\81\ Regulation to Mitigate the Misfueling of Vehicles and
Engines With Gasoline Containing Greater Than Ten Volume Percent
Ethanol and Modifications to the Reformulated and Conventional
Gasoline Programs; Final Rule (``Final Rule to Mitigate
Misfueling''), 40 CFR Part 80, 76 FR 44406, 44407 (July 25, 2011).
\82\ Id. EPA promulgated these anti-misfueling measures under
Section 211(c) of the Clean Air Act, which authorizes that agency to
``control or prohibit the manufacture, introduction into commerce,
offering for sale, or sale'' of a fuel if it determines that use of
the fuel will impair emission control systems or have other
environmental impacts. 42 U.S.C. 7545(c).
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1. EPA's Prohibition Against Misfueling
Relying on its technical and engineering expertise, EPA prohibited
the use of E15 and higher blends in certain vehicles and engines
because it found that ethanol has properties that can damage older
conventional cars, heavy-duty gasoline engines and vehicles,
motorcycles, and nonroad products.\83\ Specifically, ethanol increases
the air-fuel ratio, causing the fuel to burn hotter.\84\ Hotter burning
fuel can damage catalytic converters over time and lead to other
component failure.\85\ In motorcycles and nonroad products, EPA raised
engine-failure concerns from overheating. Therefore, EPA declined to
approve ethanol blends above 10 percent for use in older conventional
vehicles, heavy-duty gasoline engines and vehicles, motorcycles, or
nonroad products, unless it had reliable \86\ test data showing a lack
of harm.\87\
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\83\ EPA prohibited the use of E15 in MY2000 and older vehicles,
heavy-duty gasoline engines and vehicles, motorcycles, and all
nonroad products (which includes marine applications), ``based on
potential effects of E15 in four areas: (1) Exhaust emissions--
immediate and long-term (known as durability); (2) evaporative
emissions--immediate and long-term; (3) the impact of materials
compatibility on emissions; and (4) the impact of driveability and
operability on emissions.'' EPA Waiver Decision II, 76 FR at 4663.
Later, in EPA's Final Rule to Mitigate Misfueling, EPA explained
that its ``engineering assessment for these vehicles, engines, and
products identifies a number of emission-related concerns with the
use of E15.'' 76 FR at 44439.
\84\ EPA Waiver Decision I, 75 FR at 68103.
\85\ Id.
\86\ EPA found that tests cited by Growth Energy in its waiver
application were not sufficient to show a lack of potential harm to
older vehicles. Id. at 68104.
\87\ Id. at 68095. Currently, it is illegal to distribute
ethanol blends above 15 percent concentration for use in
conventional vehicles. 42 U.S.C. 7545(f).
---------------------------------------------------------------------------
As part of EPA's waiver, the agency promulgated complementary
regulations that, among other things, prohibit misfueling in older
conventional cars, heavy-duty gasoline engines, motorcycles, and non-
road engines.\88\ This prohibition ``establishes a legal barrier
against production, distribution, sale or use of gasoline containing
more than 10 vol% ethanol in vehicles, engines and equipment not
covered by the partial waiver decisions . . . . The prohibition is
broadly applicable, including to consumers.'' \89\ In response to a
question regarding to whom the prohibition applied, EPA responded:
---------------------------------------------------------------------------
\88\ EPA did not address the emissions impacts of blends above
E15 for newer, light-duty conventional vehicles. See Final Rule to
Mitigate Misfueling, 76 FR at 44417. However, it is currently
illegal to distribute those blends for use in conventional vehicles
because EPA has not granted a waiver allowing ethanol blends in
those vehicles. See 42 U.S.C. 7545(f).
\89\ Final Rule to Mitigate Misfueling, 76 FR at 44411; see also
40 CFR 80.1504(a) (amendment as codified).
[T]he proposed regulations would prohibit consumer misfueling,
whether intentional or not, and we are retaining that provision in
today's final rule. Thus, today's final rule prohibits any person
from introducing or causing the introduction of gasoline containing
greater than 10 vol% ethanol into vehicles, engines, and products
not covered by the E15 partial waivers, and prohibits causing or
allowing the introduction of gasoline containing greater than 10
vol%
[[Page 18856]]
ethanol into such vehicles, engines, and products.\90\
---------------------------------------------------------------------------
\90\ Final Rule to Mitigate Misfueling, 76 FR at 44437 (emphasis
in original). This misfueling prohibition does not extend to
ethanol-blend use in newer conventional vehicles.
Section 80.1506 of the final rule provides that any person who
misfuels ``is subject to an administrative or civil penalty, as
specified in sections 205 and 211(d) of the Clean Air Act, for every
day of each violation and the amount of economic benefit or savings
resulting from the violation.'' \91\
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\91\ 40 CFR 80.1506 (amendment as codified); see also 76 FR at
44449 .
---------------------------------------------------------------------------
2. EPA's Labeling Requirements
EPA also promulgated labeling requirements to prevent misfueling of
E15 in non-approved engines. In formulating its E15 label, EPA
``consulted with FTC consumer labeling experts and other staff about
effective label design and potential coordination with FTC labels.''
\92\ As a result, EPA's final E15 label, shown below, ``adopts FTC's
color scheme for alternative fuel labels and other aspects of the
design of FTC's proposed gasoline-ethanol blend labels, such as size,
shape, and font . . . .'' \93\ In addition, EPA's label included the
warning: ``Don't use in other vehicles, boats, or gasoline-powered
equipment. It may cause damage and is prohibited by federal law.'' \94\
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\92\ Final Rule to Mitigate Misfueling, 76 FR at 44408.
\93\ Id.
\94\ Id. at 44418.
[GRAPHIC] [TIFF OMITTED] TP04AP14.031
EPA explained that this ``damage statement'' was ``necessary and
appropriate for the E15 label . . . because (1) [a]vailable data is
insufficient to show that E15 would not cause or contribute to a
failure by these products to meet emission standards, and (2) [EPA's]
engineering judgment is that E15 may adversely affect the emissions
control performance of these products, particularly over time.'' \95\
EPA continued:
---------------------------------------------------------------------------
\95\ Id. at 44414.
A statement that E15 use in those products `may cause damage' is
consistent with and supported by EPA's technical analysis for its
decision to deny the waiver request for introduction of E15 into
commerce for use in these products. Including the damage statement
is also critical to the effectiveness of the E15 label, since
consumers are more likely to comply with the label's direction if
---------------------------------------------------------------------------
they understand that harm might otherwise occur.\96\
\96\ Id. at 44415.
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C. ASTM Ethanol Specification
In proposing labeling requirements, the 2010 NPRM relied in part on
ASTM's specification for high concentration ethanol blends, ASTM D5798.
At that time, ASTM D5798 characterized ethanol blends of at least 70
percent concentration as ``E85.'' Therefore, the Commission proposed
amendments differentiating E85 and lower concentration ethanol blends.
Two commenters objected. Growth Energy and API both noted that,
subsequent to publication of the NPRM, ASTM had lowered the E85 blend
threshold, making the ``85'' number less useful to consumers.\97\ API
noted that ASTM was considering lowering the blend threshold even
further, and urged the Commission to ``draft the rule to allow for such
changes.'' \98\ In addition, Growth Energy noted that ``E85 is
problematic'' because it ``does not represent[ ] the true ethanol
concentration of all fuels'' labeled as such and, therefore,
recommended a ``new name'' for the fuel.\99\
---------------------------------------------------------------------------
\97\ Growth Energy comment at 4-5; API comment at 2.
\98\ API comment at 2. RFA argued that the FTC lacked authority
to define new fuels such as ``Mid-Level Ethanol blends'' as
``alternative fuels,'' pointing to a definition of that term in the
Energy Policy Act of 1992 authorizing DOE to determine which fuels
qualify as alternative fuels. RFA comment at 4.
\99\ Growth Energy comment 4, 5.
---------------------------------------------------------------------------
After the comment period closed, ASTM further lowered D5798's
concentration threshold and ceased using the term ``E85.'' The standard
now applies to fuels of at least 51 percent concentration and replaces
the term ``E85'' with ``Ethanol Flex-Fuel.''
D. Comments Supporting the Infrared Method
Several commenters supported amending the Fuel Rating Rule to allow
use of the Infrared Method as an additional octane rating method.
Tesoro, a manufacturer and marketer of petroleum products, explained
that the Infrared Method provides more precise and accurate results, an
ability to sample gasoline more efficiently, and reduced costs to
industry.\100\ Specifically, Tesoro reported:
\100\ Tesoro comment at 1-2. Tesoro also submitted additional
material to Commission staff during the comment period, which is
included in the record and available on the same Web page as the
comments.
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[[Page 18857]]
A recent interlaboratory study was conducted to demonstrate the
accuracy and precision of infrared analyzers for octane. Based on
the results of that study involving six laboratories, near infrared
analyzers showed significantly better precision over ASTM D2699 and
D2700 octane [methods].\101\
---------------------------------------------------------------------------
\101\ Id. at 2.
Tesoro further reported that, due in part to greater reliability,
``[o]ver 25 states use infrared analyzers for screening fuel samples
[to test octane levels] in the field as well as in the laboratory.''
\102\
---------------------------------------------------------------------------
\102\ Id. at 4.
---------------------------------------------------------------------------
Tesoro further suggested that the Commission could ensure the
accuracy of infrared method ratings by providing that, in the case of a
discrepancy between infrared results and results derived through the
traditional ASTM D2699 and D2700 methods, the D2699/2700 methods would
be the ``referee test.'' \103\
---------------------------------------------------------------------------
\103\ Id. at 6.
---------------------------------------------------------------------------
Tesoro recommended amending the Rule to allow the method only
insofar as the method conforms to ASTM D6122, ``Standard Practice for
Validation of the Performance of Multivariate Infrared
Spectrophotometers,'' and as set out in that protocol to correlate with
the ASTM D2699 and D2700 methods.\104\ In addition, Tesoro submitted
specific language to effect its proposed change.\105\
---------------------------------------------------------------------------
\104\ Id. at 7.
\105\ Id. at 8. Petroleum industry members and representatives
ConocoPhillips, Flint Hills Resources LP, Marathon, Suncor Energy
USA, NPRA, and Valero Energy Corporation (``Valero'') also supported
the Infrared Method. ConocoPhillips comment at 2; Flint Hills
Resources comment; Marathon comment at 2; Suncor Energy USA comment;
NPRA comment at 3; Valero comment at 1.
---------------------------------------------------------------------------
Several state regulators also supported approving the infrared
method. For example, the Washington State Department of Agriculture
reported that it ``has used portable infrared octane analyzers
successfully in the field to test octane levels on gasoline motor fuels
for over 10 years'' and that it has ``found portable infrared analyzers
to be an accurate and low cost tool in determining octane level
compliance.'' \106\ Additionally, the National Conference on Weights
and Measures (``NCWM'') provided a survey showing that 17 of 24
regulatory agencies surveyed use the Infrared Method to determine if
fuel dispensed at a pump has the same octane rating as posted on the
label.\107\
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\106\ Washington State Department of Agriculture comment; see
also Massachusetts Division of Standards comment (supporting the
Infrared Method); Nevada Department of Agriculture comment (same);
North Carolina Department of Agriculture and Consumer Services
comment (same).
\107\ NCWM comment at 3-4.
---------------------------------------------------------------------------
Significantly, the CAS supported the method. CAS explained that
allowing the method would ease enforcement and, therefore, benefit
consumers:
Many states now use infrared analyzers to determine octane
because they are cheaper, more accurate and permit greater number[s]
of dispensing pump inspections per day than using octane engines. .
. . Approving infrared analyzers calibrated to measure octane would
allow greater levels of enforcement and increased quality control by
refiners at lower cost.\108\
---------------------------------------------------------------------------
\108\ CAS comment at 2.
---------------------------------------------------------------------------
IV. Proposed Rule Amendments
In light of the comments, EPA's waiver decision, and the revision
to ASTM D5798, the Commission now proposes: (1) New requirements for
rating, certification, and labeling of ethanol blends; and (2)
amendments allowing use of the Infrared Method.
A. Ethanol Fuel Amendments
The following proposed amendments require labels for ethanol
blends, excluding EPA-approved E15, to state ``USE ONLY IN FLEX-FUEL
VEHICLES/MAY HARM OTHER ENGINES'' and to disclose the percentage
ethanol content rounded to the nearest interval of 10. These amendments
differ from those proposed in the 2010 NPRM in four ways. First, the
new amendments do not distinguish between ``mid-level ethanol blends''
and ``E85.'' As noted by API and Growth Energy, the term ``E85'' no
longer accurately describes higher concentration ethanol blends and,
therefore, could confuse consumers about such fuel's ethanol
concentration. Second, the new proposed amendments revise the
disclosures in light of views from both ethanol-industry commenters and
those arguing for a stronger label using ``flex-fuel vehicle only'' and
a more precise concentration disclosure. Third, the amendments address
the request for additional language to prevent misfueling harm to non
flex-fuel vehicles and engines. Finally, the amendments exempt fuel
that meets EPA's E15 waiver.
The discussion below first describes the amendments and then
explains the Commission's legal authority to promulgate them.
1. Definitions
In order to establish requirements for rating, certifying, and
labeling ethanol blends, the 2010 NPRM proposed using the term ``mid-
level ethanol blend'' to describe blends of over 10, but not more than
70, percent ethanol and adding that term to the Rule's list of
alternative fuels. Although the 2010 NPRM did not propose defining
ethanol blends at greater concentrations, it did propose a separate
label for such fuels that would describe the fuel as ``E85.''
Based on ASTM amendments, providing different labels for ``mid-
level'' blends and ``E85'' is no longer appropriate. The revised D5798
does not use the term ``E85,'' and there is no other basis in the
record to distinguish between blends above and below that
concentration. Moreover, as Growth Energy noted, allowing labels to use
``E85'' to described fuels meeting the revised D5798's concentration
level of 51 percent could mislead consumers.
Thus, the Commission now proposes adding to the Fuel Rating Rule's
non-exhaustive alternative fuel list a single, new defined term,
``ethanol blend,'' that covers all concentrations of ethanol blends
above 10 percent.\109\ This will facilitate uniform labeling
requirements for ethanol blends, which should assist consumers in
quickly identifying ethanol blends at pumps.\110\
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\109\ As explained below, the new proposed amendments would
exempt EPA-approved E15 from the Rule's labeling requirements,
provided that retailers use EPA's required label.
\110\ The new term would be codified at Sec. 306.0(i)(2)(iii).
RFA argued that this section should not include ethanol blends as
alternative fuels because the Energy Policy Act of 1992 specifies
DOE as the agency that determines whether fuels are ``alternative''
for certain purposes. RFA's argument is inapposite because the
Commission's rulemaking is under PMPA, which authorizes the FTC to
provide labeling for all liquid automotive fuels, regardless of
whether they are also designated as alternative by DOE. See 15
U.S.C. 2821(6).
---------------------------------------------------------------------------
2. Rating and Certification
The Commission reaffirms its 1993 determination that ``another form
of rating'' is more appropriate for ethanol blends than an octane
rating.\111\ Requiring octane ratings for ethanol blends might
incorrectly suggest that those blends are interchangeable with
gasoline. As discussed in the 1993 rulemaking, not only would an octane
rating not provide useful information to consumers, it might deceive
them about the suitability of the fuel for their vehicles. Ethanol
blends have naturally occurring high octane levels. Conventional
vehicle owners might misinterpret those blends' higher octane content
as signifying that they are better for conventional gasoline
engines.\112\
---------------------------------------------------------------------------
\111\ See 15 U.S.C. 2821(17); 1993 Final Rule, 58 FR 41361.
\112\ 1993 Final Rule, 58 FR at 41361.
---------------------------------------------------------------------------
Consistent with this finding, the 2010 NPRM proposed new rating and
certification provisions to clarify that
[[Page 18858]]
covered entities must rate ethanol blends by ``the percentage of
ethanol contained in the fuel,'' and not by the percentage of the
principal component of the fuel. This change is necessary to require
ethanol-content labeling for blends below 50 percent concentration. Two
commenters supported this change,\113\ and no commenters took issue
with the proposal. Accordingly, the amendments proposed today require
rating ethanol blends by ethanol content.
---------------------------------------------------------------------------
\113\ PMAA comment at 1; Tennessee Department of Agriculture
comment at 1.
---------------------------------------------------------------------------
The 2010 NPRM also proposed an amendment providing that a
certification of ethanol content letter remains valid only as long as
the fuel transferred contains the same percentage of ethanol as
previous fuel transfers covered by the letter.\114\ For most
alternative fuels, a certification letter remains valid if a
transferred fuel has the same or a higher concentration than certified
because an increase in concentration will not trigger different
labeling requirements. An increase or decrease in concentration for
ethanol blends, however, may trigger different concentration
disclosures. For example, if a fuel's ethanol concentration increases
from 26 percent to 38 percent, the label, as discussed below, must
disclose a higher concentration level. No commenter objected to the
2010 proposal; therefore, the Commission proposes it again here.
---------------------------------------------------------------------------
\114\ Section 306.6(b) allows fuel transferors to provide
certifications through a letter to the transferee rather than
through a document accompanying each fuel shipment.
---------------------------------------------------------------------------
3. Labeling
The 2010 NPRM proposed adding new labeling requirements for ethanol
blends. The proposed amendments required labels disclosing the fuel's
suitability for different vehicles by stating:
MAY HARM SOME VEHICLES
CHECK OWNER'S MANUAL
The proposed amendments also would have required ethanol blends below
70 percent concentration to disclose that the fuels contained between
10 to 70 percent ethanol, a narrower range, or the precise amount of
ethanol in the blend.
Commenters generally objected to both the disclosures and the 10-70
content range. They also urged the Commission to coordinate with EPA to
prevent duplicative or inconsistent labeling requirements. The new
proposed amendments address both issues.
a. Text
Some commenters objected that the 2010 NPRM advisory disclosure was
excessive, and others objected that it was insufficient. Ethanol-
industry commenters asserted that: (1) The record did not establish
that ethanol blends would harm conventional vehicles; (2) the
disclosure was unnecessary; (3) the disclosure would discourage proper
use of ethanol blends; and (4) requiring the additional disclosure
would be unfair. Conversely, some commenters argued for stronger and
more precise language, noting the EPA prohibition on use in
conventional vehicles, risk of engine damage, damage to the vehicle's
emissions system, and other problems.
Nevertheless, all but one of the comments \115\ supported a ``use
only in flex-fuel vehicles'' disclosure. In addition, NCWM has adopted
model state regulations requiring ethanol fuel labels that state ``For
Use in Flexible Fuel Vehicles (FFV) Only.'' \116\ Many commenters also
stressed the need for additional disclosures to prevent misfueling.
---------------------------------------------------------------------------
\115\ RFA comment at 8 (arguing that ethanol-content disclosure
is sufficient).
\116\ MDA comment at 2. NCWM's comment did not address this
issue.
---------------------------------------------------------------------------
In light of these comments, the new proposed amendments replace the
2010 NPRM's proposed disclosure with ``USE ONLY IN FLEX-FUEL VEHICLES/
MAY HARM OTHER ENGINES.'' These two disclosures should explain the
significance of the ethanol-concentration rating without misleading
flex-fuel vehicle owners about the fuel's suitability for their cars.
Specifically, ``USE ONLY IN FLEX-FUEL VEHICLES'' provides a simple,
unambiguous direction to consumers that they can use ethanol blends in
their flex-fuel vehicles. This direction eliminates the need for
consumers to consult their owner's manuals. And, ``MAY HARM OTHER
ENGINES'' alerts consumers that use in other engines may have serious
consequences.
Given consumers' unfamiliarity with ethanol blends, a bare ethanol-
concentration disclosure will not provide sufficient information for
many consumers to understand whether the fuel is appropriate for their
engines. Accordingly, the proposed text conveys the significance of the
ethanol concentration and the potential risk of damage to consumers'
cars, which are often among their most expensive purchases.
Additionally, this disclosure should alert consumers not to use the
fuel in their non-vehicular engines (e.g., lawn mowers, motor
boats).\117\
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\117\ The Commission declines to require additional language
suggested by commenters. The specificity of the proposed disclosure
should sufficiently apprise owners of conventional vehicles and non-
automotive devices that ethanol fuels are not appropriate for their
engines. Furthermore, additional language may dilute the
disclosures' message and lessen their effectiveness.
---------------------------------------------------------------------------
Ethanol-industry commenters' criticism of the 2010 NPRM's labels is
either inapplicable to the revised disclosures or unpersuasive. The
Energy Independence and Security Act's renewable fuel mandate will
likely ensure that ethanol blends are an increasing part of the fuel
market, thereby exposing many more consumers to pumps dispensing those
blends.\118\ The record, however, shows a risk that misfueling may harm
conventional vehicles and non-road engines.\119\ As EPA explained,
``[e]thanol impacts motor vehicles in two primary ways. First, . . .
ethanol enleans the [air/fuel] ratio (increases the proportion of
oxygen relative to hydrocarbons) which can lead to increased exhaust
gas temperatures and potentially increase incremental deterioration of
emission control hardware and performance over time, possibly causing
catalyst failure. Second, ethanol can cause materials compatibility
issues, which may lead to other component failures.'' \120\
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\118\ See 2010 NPRM, 75 FR at 12471. On November 15th, EPA
proposed reducing the 2014 renewable mandate due to a limited market
and production capacity for renewables. See Proposed 2014 Standards
for the Renewable Fuel Standard Program, 40 CFR Part 80, 78 FR 71732
(Nov. 29, 2013). However, EPA indicated that it remained committed
to increasing the amount of renewable fuel in the market. See id. at
71738 (``[O]ur intent is to develop an approach that puts the
[Renewable Fuel Standard] program on a manageable trajectory while
supporting continued growth in renewable fuels over time.'').
\119\ See section III.A.2.b, supra.
\120\ EPA Waiver Decision I, 75 FR at 68103.
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EPA ultimately held that these general concerns were allayed only
with regard to the use of E15 in light-duty conventional vehicles
MY2001 and newer. However, that agency also found, based on its
technical and engineering experience, that ethanol potentially damages
older conventional cars, heavy-duty engines, motorcycles, and non-road
engines, explaining:
Older motor vehicles, heavy-duty gasoline engines and vehicles,
motorcycles, and especially nonroad products cannot fully compensate
for the change in the stoichiometric air-to-fuel ratio as ethanol
concentration increases. Over time, this enleanment caused by
ethanol may lead to thermal degradation of the emissions control
hardware and ultimately catalyst failure. Higher ethanol
concentration will exacerbate the enleanment effect in these
vehicles, engines, and equipment and therefore
[[Page 18859]]
increase the potential of thermal degradation and risk of catalyst
failure. In addition to enleanment, ethanol can cause materials
compatibility issues which may lead to other component failure and
ultimately exhaust and/or evaporative emission increases. . . . For
older motor vehicles, heavy-duty gasoline engines and vehicles,
motorcycles, and nonroad products, the potential for materials
compatibility issues increases with higher ethanol
concentration.\121\
\121\ Final Rule to Mitigate Misfueling, 40 CFR Part 80, 76 FR
at 44439.
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The Commission seeks evidence regarding the harm or benefits of ethanol
blends to non flex-fuel engines, including newer conventional
vehicles.\122\
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\122\ The Commission is aware of all studies cited in EPA's
waiver decision.
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The lack of EPA approval for ethanol blends, other than E15, in non
flex-fuel engines further supports a label with the two-prong notice.
Specifically, distribution of such blends to non flex-fuel vehicles is
prohibited by the Clean Air Act.\123\ In addition, EPA regulations
expose consumers and retailers to liability for misfueling MY 2000 and
older light-duty vehicles, as well as all motorcycles, heavy-duty
vehicles, and non-road engines.\124\ Therefore, consumers need clear
guidance regarding the engines for which those blends are appropriate,
so that they can make an informed choice.
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\123\ 42 U.S.C. 7545(f).
\124\ Final Rule to Mitigate Misfueling, 76 FR at 44437. See
also 40 CFR 80.1504(a)(1) (codification of misfueling prohibition).
---------------------------------------------------------------------------
The commenters' other concerns are also not persuasive. The concern
that the 2010 NPRM's ``MAY HARM SOME VEHICLES'' disclosure would lead
flex-fuel vehicle owners to wrongly conclude that their vehicles fit
into the ``some'' category does not apply to the revised disclosure.
Although ``MAY HARM OTHER ENGINES'' is similar, it does not raise the
same concern because it emphasizes that the fuel potentially harms only
``other'' (i.e., non flex-fuel) engines. In addition, the new
disclosures advise, more prominently and in larger text, that the fuel
is indeed suitable for flex-fuel vehicles. This disclosure would also
appear appropriate even if, at this rulemaking's conclusion, the record
is unsettled about whether ethanol blends are suitable for some newer
model conventional vehicles. The proposed disclosure states only that
the fuel ``may'' harm other engines, not that it would necessarily harm
all such engines.
The Commission also disagrees with the claim that any disclosures
are unfair because they apply only to ethanol blends. EPA has
promulgated extensive rules to mitigate potential misfueling of EPA-
approved E15. The Commission has no evidence indicating that other
alternative fuels carry a similar risk. If the Commission obtains
evidence demonstrating that another fuel poses similar misfueling and
consumer confusion risks, the Commission will consider similar
suitability ratings for those fuels.\125\ In promulgating regulations,
agencies need not take an all-or-nothing approach but may proceed
incrementally.\126\
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\125\ The proposed amendments do not adopt CAS' proposal to
require separate signs and pump nozzle disclosures or AllSAFE's
proposal to require a visible gap between ethanol pumps and other
fuel pumps. There is no evidence that such additional steps are
necessary to prevent misfueling.
\126\ Investment Co. Inst. v. CFTC, 891 F. Supp. 2d 162, 187
(D.D.C. 2012) (``[A]gencies, like legislatures, do not generally
resolve massive problems in one fell regulatory swoop.'') (quotation
omitted); City of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989)
(``[A]gencies have great discretion to treat a problem
partially.'').
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b. Percentage Disclosure
The 2010 NPRM proposed requiring that ethanol blends below 70
percent concentration have a label disclosing that the fuel contained
between 10 and 70 percent ethanol. Retailers would have had the option
of disclosing a narrower range or an exact percentage. Commenters
generally favored requiring a more precise content disclosure because
fuels with higher concentrations of ethanol have worse fuel economy. In
addition, commenters noted that future vehicle fleets might have
varying ethanol tolerances, which will require more precise content
disclosures. Significantly, both ethanol-industry and other commenters
supported such disclosures.
In light of these comments, the Commission proposes requiring
ethanol percentage disclosures rounded to the nearest factor of 10
(e.g., retailers can label fuels at 26 and 34 percent concentrations as
30% Ethanol).\127\ Requiring this more precise disclosure would help
flex-fuel vehicle owners make informed choices about ethanol blends,
while presenting consumers with numbers that are easy to use.\128\
Rounding also benefits retailers by allowing them to alter their blends
by small percentages without the expense of changing labels. However,
the Commission notes that consumers purchasing ethanol blends with
rounded-down disclosures may receive less than expected fuel
efficiency. Thus, the Commission invites comment on the costs and
benefits of this approach for retailers and consumers.
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\127\ This approach will address concerns of commenters
supporting energy-content labeling.
\128\ The Commission proposes adopting the Tennessee Department
of Agriculture's rounding approach rather than the ethanol-industry
commenters' 10 percent tolerance approach because it is simpler.
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c. Label Specifications
The proposed amendments retain the size, font, and format
requirements proposed in the 2010 NPRM.\129\ These requirements are
consistent with those in place for most of the alternative liquid fuels
covered by the Rule. The new proposed amendments require Helvetica
Black type, or equivalent type style, as the Rule requires for all
other labels. They also propose a sample ethanol fuel label.\130\
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\129\ The new amendments also propose deleting the Rule's sample
label for ``E-100'' (i.e., ethanol not mixed with gasoline) because
the record does not show any retail sales of such fuels.
\130\ The Rule's recordkeeping provisions (16 CFR 306.7, 306.9,
and 306.11) without amendment will require covered entities to
maintain records supporting the rating of any ethanol fuel they
produce, transfer, or sell.
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The proposed ethanol fuel label requires an orange background (PMS
1495 or its equivalent). Orange is the color for all alternative fuels
except biodiesel and will enable retail consumers to distinguish
ethanol blends from gasoline. Several ethanol-industry commenters
objected to orange, asserting that it is associated with caution and,
thus, places the fuel at a competitive disadvantage. The Commission
disagrees.
First, because the Rule currently requires an orange label for
almost all alternative fuels (including ethanol blends), excepting
ethanol blends would result in inconsistent treatment. Second, orange,
a bright color, will help ensure that consumers notice the label and,
therefore, prevent misfueling. Finally, EPA's E15 label uses the same
orange background to coordinate with the FTC. Therefore, using orange
will promote a consistent labeling scheme for all ethanol blends.
A proposed sample label is at the end of this document. The
Commission invites comment on how consumers will perceive and
understand the label's information about the rating, and whether the
label will prevent misfueling.
d. E15 Exemption
To prevent consumer confusion and avoid unnecessary burden on
industry, the new proposed amendments exempt fuel meeting EPA's E15
waiver from labeling requirements. The Commission provides this
exemption for two reasons. First, EPA is better situated to tailor its
labeling requirements to reflect
[[Page 18860]]
the waiver's evolving scope.\131\ Second, exempting EPA-approved E15
from the FTC rule will avoid unduly burdening industry with redundant
labels. Moreover, the proposed exemption is narrowly tailored to ensure
that only E15 blends that obtain an EPA waiver, and therefore are
labeled according to EPA rules, are exempt from the FTC's labeling
requirements.
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\131\ As noted above, the EPA waiver allows fuel with 15 percent
ethanol in conventional vehicles. If EPA later determines that
conventional vehicles can tolerate ethanol concentrations above 15
percent, the Commission can revise the Fuel Rating Rule to
accommodate that determination.
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4. PMPA Authorizes the Ethanol Amendments
Growth Energy and RFA argued that PMPA does not authorize the
Commission to propose labels with disclosures about ethanol blends'
suitability for consumers' vehicles. The Commission disagrees.
PMPA authorizes the Commission to require automotive fuel labels
``displaying the automotive fuel rating of automotive fuel at the point
of sale.'' \132\ PMPA further defines ``automotive fuel rating'' to
include octane ratings; cetane ratings; or ``another form of rating
determined by the Federal Trade Commission, after consultation with
[ASTM],\133\ to be more appropriate to carry out the purposes of this
subchapter with respect to the automotive fuel concerned.'' \134\
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\132\ 15 U.S.C. 2823(c)(1)(B).
\133\ Growth Energy relied on this language to argue that the
Commission cannot promulgate alternative fuel ratings without ASTM
consultation that is ``subject to public review and comment.''
Growth Energy comment at 13. Growth Energy did not cite any
authority for this interpretation. Nonetheless, Commission staff has
consulted with ASTM throughout this rulemaking, and, as discussed
below, is relying in part on an ASTM standard to justify abandoning
a special label for ``E85.''
\134\ 15 U.S.C. 2821(17). PMPA also empowers the Commission to
define relevant terms used in the statute. 15 U.S.C. 2823(a).
---------------------------------------------------------------------------
As the Commission explained in 1993, one of PMPA's purposes is to
give ``purchasers the information they need to choose the correct type
or grade of fuel for their vehicles.'' \135\ For example, the
legislative history reveals that Congress designed PMPA to ``increase
consumer confidence in and information about motor fuels'' and ensure
that ``motorists have a right to know what they are getting and what
they are paying for.'' \136\ And it expresses specific concern about
engine damage and stresses the need ``to assist [motorists] in the
purchase of suitable gasoline for their motor vehicles.'' \137\
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\135\ 1993 Final Rule, 58 FR at 41356.
\136\ H. Rep. No. 102-474(I) (1992).
\137\ S. Rep. No. 95-731 (1978).
---------------------------------------------------------------------------
Accordingly, the Commission determined that PMPA authorizes it to
require fuel ratings that inform consumers about the content of
alternative fuels to prevent misfueling. In evaluating options for
rating alternative fuels, the Commission concluded, ``automotive fuel
rating'' encompasses text necessary to ``assure consumers that they are
purchasing a product that satisfies automobile engine minimum content
requirements, which may be specified in their owner's manuals.'' \138\
Thus, since 1993 the Commission has interpreted automotive fuel ratings
to include information necessary to prevent misfueling, such as fuel
descriptors.\139\
---------------------------------------------------------------------------
\138\ 1993 Final Rule, 58 FR at 41364-65.
\139\ The Rule's current alternative fuel labels require a
descriptor at the top of the label that identifies the fuel. For
example, retailers must label liquefied petroleum gas as ``LPG.'' 16
CFR 306.10(f)(5).
---------------------------------------------------------------------------
Consistent with its 1993 determination, the Commission finds that
the proposed ethanol-content disclosure accompanied by explanatory
language regarding the suitability of the fuel is more appropriate than
an octane rating for ethanol blends. The proposed disclosures further
PMPA's purpose of helping consumers choose the correct fuel and
preventing engine damage. Thus, the proposed label appears to fall
squarely within the Commission's statutory authority to prescribe
labels disclosing fuel ratings.
This interpretation comports with the plain meaning of ``rating,''
which includes ``[t]he value of a property or condition that is claimed
to be standard, optimal, or limiting for a device, engine, etc.; a
rated value.'' \140\ Significantly, a ``rating'' does not encompass
only numeric rankings of superiority or quality, but includes a
``condition'' that is standard or ``limiting'' for engines. Therefore,
a rating can consist of a content description and suitability language
communicating whether the rated item is proper, or improper, for
certain devices, including engines.
---------------------------------------------------------------------------
\140\ Oxford English Dictionary Online (2013), http://www.oed.com/view/Entry/158481?rskey=MGAeBQ&result=1&isAdvanced=false#eid (last visited
March 18, 2014) (emphasis added).
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One example is film ratings (G, PG, PG13, R, and NC17). Those
ratings do not identify any quantity or embody any qualitative score.
Instead, they provide guidance on the suitability of particular films
for particular audiences, and include explanatory text, e.g., ``PG-13;
PARENTS STRONGLY CAUTIONED; SOME MATERIAL MAY BE INAPPROPRIATE FOR
CHILDREN UNDER 13.'' \141\ Similarly, the FTC's statutory authorization
to adopt, for labeling purposes, ``another form of rating'' in lieu of
octane measurements encompasses the authority to require labels
alerting consumers to the suitability of particular fuel blends for
particular engines.
---------------------------------------------------------------------------
\141\ See Motion Picture Association of America, How to Read a
Rating, www.mpaa.org/ratings/how-to-read-a-rating.
---------------------------------------------------------------------------
Growth Energy and RFA made four arguments to support their position
that the disclosures the Commission proposed in 2010 are inconsistent
with the statute. The Commission is inclined to reject these arguments.
First, RFA argued that language about a fuel's suitability for certain
engines cannot be a rating because it is a ``representation[] as to the
quality of the fuel or potential impacts on vehicle performance.''
\142\ This is incorrect and inapposite. Neither the statute nor the
plain meaning of the term ``rating'' excludes ratings based on fuel
quality or performance; even an octane rating constitutes a
representation about the fuel's ``quality'' and ``performance'' impact.
In any event, the proposed disclosures do not include a generalized
``quality'' description of the fuel, but merely clarify the implication
of the fuel's ethanol percentage and its suitability for certain
engines in order to prevent misfueling and potential engine damage.
---------------------------------------------------------------------------
\142\ RFA comment at 3.
---------------------------------------------------------------------------
Second, Growth Energy noted PMPA's list of permissible ratings uses
the conjunctive ``and'' between octane and cetane ratings, and the
disjunctive ``or'' between those two ratings and ``another form of
rating.'' Growth Energy argued that this language demonstrates
Congress' intent to authorize only octane and cetane ratings or, in
their place, a rating that ``would carry out the same purpose'' as
these ratings. This language, however, appears to have the opposite
import. Specifically, the use of the disjunctive ``or'' after the
conjunctive ``and'' signals that the phrase ``another form of rating''
could include types of rating distinct from those linked in the
previous conjunctive list. Moreover, the statutory text authorizes the
Commission to determine that another form of rating is ``more
appropriate to carry out the purposes of this subchapter.'' (Emphasis
supplied). The reference to ``the purposes of this subchapter'' is a
reference to PMPA as a whole, which broadly seeks to allow consumers to
make informed decisions for all types of fuel, including alternative
fuel blends. The Commission, therefore, provisionally concludes that
the proposed label is no
[[Page 18861]]
less appropriate or consistent with the PMPA's purposes than the
ratings the Commission has required for the past 20 years.
Third, Growth Energy argued that the Commission must interpret
``another form of rating'' to be similar in purpose to octane or cetane
ratings under the principle of ejusdem generis, a canon of statutory
construction under which a general term following a specific one is
often understood as a reference to subjects akin to the one with the
specific enumeration. However, the Supreme Court has held that ``[t]his
canon does not control . . . when the whole context dictates a
different conclusion.'' \143\ That is the case here. Again, when
Congress initially enacted PMPA, it pursued a general purpose of
ensuring informed consumer choice at the pump, and it specifically
directed the FTC to ensure accurate octane metrics because those are
the main consumer concerns that arise in connection with the sale of
ordinary gasoline. But because Congress understood that consumer-
protection concerns will evolve with changes in fuel technology, it
deliberately built flexibility into this statutory scheme by allowing
the FTC to prescribe ``another form of rating'' that is ``more
appropriate'' to carry out the consumer-protection purposes of PMPA. It
would appear to defeat, not serve, that congressional policy choice to
hamstring the FTC's consumer-protection authority as Growth Energy
proposes here.
---------------------------------------------------------------------------
\143\ Norfolk & W. Ry. v. American Train Dispatchers Ass'n, 499
U.S. 117, 129 (1991).
---------------------------------------------------------------------------
Finally, both Growth Energy and RFA argued that, notwithstanding
the PMPA's plain language authorizing alternative forms of rating,
legislative history precludes the Commission's interpretation of the
term ``rating'' under PMPA. Specifically, Growth Energy cited
statements describing the 1992 PMPA amendments as expanding the
statute's octane rating requirements to other fuels. RFA noted that in
its 1993 rulemaking, the Commission relied upon statements in the
legislative history that consumers ``have a right to know what they pay
for.'' \144\ However, the history cited by Growth Energy does not
preclude the Commission's interpretation, and the history cited by RFA
supports the Commission's interpretation. First, the statements cited
by Growth Energy simply note the expansion of the statute's coverage to
alternative fuels and do not refer specifically to the meaning of
``automotive fuel rating.'' \145\ Moreover, to the extent this history
could be read as requiring octane ratings for alternative fuels, it is
directly contradicted by the statutory language, which explicitly
allows ratings other than octane ratings. Finally, the statement cited
by RFA declares an intent to ensure that fuel retailers provide
consumers with the information they need to choose the correct fuel for
their vehicles.\146\
---------------------------------------------------------------------------
\144\ RFA comment at 2.
\145\ Significantly, the cited statements include the
observation that one of the PMPA amendments' goals ``is to improve
the information available to consumers.'' Growth Energy comment at
8. See also H. Rep. No. 102-474(I) (1992) (explaining that ``this
legislation attempts to increase confidence in and information about
motor fuels); S. Rep. No. 95-731 (1978) (expressing concern about
engine damage and noting the need ``to assist [motorists] in the
purchase of suitable gasoline for their motor vehicles).
\146\ Growth Energy and RFA made two ancillary arguments for a
narrow reading of ``automotive fuel rating.'' First, RFA argued that
the proposed language is misleading and, therefore, not a proper
rating. For reasons explained above, the Commission does not agree
that the proposed labels are misleading. Second, Growth Energy
argued that before requiring a rating other than an octane or cetane
rating, the Commission must consider how the alternative rating
furthers the objectives of an octane rating. Growth Energy appears
to base this argument on an assumption that PMPA's objective is to
require octane ratings for all fuels. As explained above, that view
of PMPA's purpose is contrary to its text.
---------------------------------------------------------------------------
B. Infrared Method
All commenters that addressed allowing automotive fuel rating
through infrared spectrophotometers supported doing so. Significantly,
these commenters included business, consumer groups, and state
regulators. Their comments indicate that the infrared method is a more
accurate and cost-effective means of measuring octane. Moreover, the
record indicates widespread use of the method by state regulatory
agencies.
In light of this strong support, the Commission proposes adding the
infrared method to the Fuel Rating Rule's list of approved octane
rating methods. Specifically, the amendment would allow use of octane
measurement by infrared spectrophotometers that are correlated with
ASTM D2699 and D2700, the octane rating methods specified in PMPA, and
conform to ASTM D6122 (``Standard Practice for the Validation of the
Performance of Multivariate Infrared Spectrophotometers''). For
businesses, such an amendment should lower costs. For consumers, it
should reduce the risk of inaccurate measurements.
The Commission does not propose adopting Tesoro's suggestion to
designate D2699 and D2700 as ``referee tests.'' Tesoro appears to be
recommending that the Rule provide that a fuel's rating derived through
the infrared method is invalid if it differs from the rating derived
through D2699 and D2700. However, the record does not show that D2699
and D2700 are superior to the infrared method. Thus, there is no reason
to favor one approved rating method over another.
V. Request for Comment
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 2, 2014.
Write ``Fuel Rating Rule Review, 16 CFR Part 306, Project No. 811005''
on your comment. Your comment--including your name and your state--will
be placed on the public record of this proceeding, including, to the
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the
Commission tries to remove individuals' home contact information from
comments before placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment doesn't include any
sensitive personal information, such as anyone's Social Security
number, date of birth, driver's license number or other state
identification number or foreign country equivalent, passport number,
financial account number, or credit or debit card number. You are also
solely responsible for making sure that your comment does not include
any sensitive health information, such as medical records or other
individually identifiable health information. In addition, don't
include any ``[t]rade secret or any commercial or financial information
which is . . . privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names. If you
want the Commission to give your comment confidential treatment, you
must file it in paper form, with a request for confidential treatment,
and you have to follow the procedure explained in FTC Rule 4.9(c), 16
CFR 4.9(c).\147\ Your comment will be kept confidential only if the FTC
General Counsel grants your request in
[[Page 18862]]
accordance with the law and the public interest.
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\147\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/autofuelratingscertnprm, by following the instruction on the web-
based form. If this Notice appears at http://www.regulations.gov, you
also may file a comment through that Web site.
If you file your comment on paper, write ``Fuel Rating Rule Review,
16 CFR Part 306, Project No. R811005'' on your comment and on the
envelope, and mail or deliver it to the following address: Federal
Trade Commission, Office of the Secretary, Room H-113 (Annex N), 600
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your
paper comment to the Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
NPRM and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before June 2, 2014. You can find more information,
including routine uses permitted by the Privacy Act, in the
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
The Commission invites members of the public to comment on any
issues or concerns they believe are relevant or appropriate to the
Commission's consideration of proposed amendments. The Commission
requests that comments provide factual data upon which they are based.
In addition to the issues raised above, the Commission solicits public
comment on the following questions and the costs and benefits to
industry members and consumers of each of the proposals. These
questions are designed to assist the public and should not be construed
as a limitation on the issues on which public comment may be submitted.
1. What evidence exists regarding whether ethanol blends can harm
engines, including newer conventional vehicle engines? Is there
evidence showing that harm is more likely at higher ethanol-
concentration levels, and, if so, what levels?
2. What evidence exists regarding consumers misfueling with ethanol
blends? If misfueling is occurring, is it happening with greater
frequency in any particular geographical region or with fuel containing
any particular ethanol concentration? Do ethanol blend pumps currently
contain any disclosures? If so, what do those disclosures say? Are they
voluntary or required by state law? Do they effectively prevent
misfueling?
3. How would consumers understand the disclosures on the proposed
label? Would the ``MAY HARM OTHER ENGINES'' deter any lawful use of
ethanol blends? Would ``USE ONLY IN FLEX-FUEL VEHICLES'' alone be
sufficient to advise consumers not to use ethanol blends in other
engines? Provide all evidence, including consumer surveys or copy
tests, supporting your response.
4. What costs on businesses and consumers would the proposed
requirement to disclose ethanol content rounded to the nearest tenth
impose? What benefits to businesses and consumers would the proposed
requirement provide? Provide all evidence supporting your response.
For purposes of the Paperwork Reduction Act, 44 U.S.C. 3501-3521
(``PRA''), the Commission also invites comments on (1) whether the
proposed modifications to the current rating, certification, and
labeling requirements are necessary and/or will be practically useful;
(2) the accuracy of the associated burden estimates; (3) how to improve
the quality, utility, and clarity of the labels; and (4) how to
minimize further the burden of the collections of information.
Your responses to the points immediately above additionally should
be sent to the Office of Management and Budget. If sent by U.S. mail,
they should be addressed to Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: Desk Officer for
the Federal Trade Commission, New Executive Office Building, Docket
Library, Room 10102, 725 17th Street NW., Washington, DC 20503.
Comments sent to OMB by U.S. postal mail, however, are subject to
delays due to heightened security precautions. Thus, comments should
instead be sent by facsimile to (202) 395-5167.
VI. Paperwork Reduction Act
The proposed amendments allowing the infrared method do not impose
any burdens because they merely provide an alternative means of
compliance. However, the proposed certification and labeling
requirements for ethanol blends constitute a ``collection of
information'' under the PRA.
Consistent with the Fuel Rating Rule's requirements for other
alternative fuels, under the proposed amendments, refiners, producers,
importers, distributors, and retailers of ethanol blends must retain,
for one year, records of any delivery tickets, letters of
certification, or tests upon which they based the automotive fuel
ratings that they certify or post.\148\ The covered parties also must
make these records available for inspection by staff of the Commission
and EPA or by persons authorized by those agencies. Finally, retailers
must produce, distribute, and post fuel-rating labels on pumps.
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\148\ See the Fuel Rating Rule's recordkeeping requirements, 16
CFR 306.7; 306.9; and 306.11.
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In the 2010 NPRM, the Commission provided estimated recordkeeping
and disclosure burdens for entities covered under the Rule and sought
comment on the accuracy of those estimates. The Commission believes
that the changes made since the 2010 NPRM do not affect the previous
burden estimates. Below, the Commission discusses those estimates.
The Commission estimated the burden associated with the Rule's
recordkeeping requirements for the sale of automotive fuels to be no
more than 5 minutes per year (or 1/12th of an hour) per industry
member, and no more than 1/8th of an hour per year per industry member
for the Rule's disclosure requirements.\149\ Consistent with OMB
regulations that implement the PRA, these estimates reflect solely the
burden incremental to the usual and customary recordkeeping and
disclosure activities performed by affected entities in the ordinary
course of business. See 5 CFR 1320.3(b)(2).
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\149\ See, e.g., Federal Trade Commission: Automotive Fuel
Ratings, Certification and Posting: Final Rule on Biodiesel
Labeling, 73 FR at 40161. Staff has previously estimated that
retailers of automotive fuels incur an average burden of
approximately one hour to produce, distribute, and post fuel-rating
labels. Because the labels are durable, staff has concluded that
only about one of every eight retailers incur this burden each year.
Hence, the Rule's disclosure requirement will impose an annual
burden of 1/8th of an hour, on average, per retailer.
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Because the procedures for distributing and selling ethanol blends
are not substantially different from those for other fuels, the
Commission expects that, consistent with practices in the fuel industry
generally, the covered parties will record the fuel rating
certification on documents (e.g., shipping receipts) already in use, or
will use a letter of certification. Furthermore, the Commission expects
that labeling of ethanol-fuel pumps will be consistent, generally, with
practices in the fuel industry. Accordingly, the PRA burden will be the
same as that for other automotive fuels: 1/12th of an hour per
[[Page 18863]]
year for recordkeeping and 1/8th of an hour per year for disclosure.
The U.S. Department of Energy (``DOE'') indicates 2,667 ethanol
retailers nationwide, and the U.S Energy Information Administration
indicates 193 ethanol fuel production plants.\150\ Thus, assuming that
each ethanol retailer and producer will spend 1/12th of an hour per
year complying with the proposed recordkeeping requirements, and each
ethanol retailer will spend 1/8th of an hour per year complying with
the proposed disclosure requirements, the Commission estimates the
incremental annual burden to be 238 hours, rounded, for recordkeeping
(1/12th of an hour x 2,860 entities) and 333 hours, rounded, for
disclosure (1/8th of an hour x 2,667), combined, 571 hours.
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\150\ See http://www.afdc.energy.gov/fuels/ethanol_locations.html (last visited Feb. 26, 2014); http://www.eia.gov/petroleum/ethanolcapacity/ (last visited Feb. 26, 2014).
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Labor costs are derived by applying appropriate hourly cost figures
to the burden hours described above. Applying an average hourly wage
for producers of $30.56, and an average hourly wage for retailers of
$10.54 to the estimated affected population, labor costs total
$6,338.66 (($30.56 x 16 hours) + ($10.54 x 555 hours)) for
recordkeeping and disclosure burden.\151\
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\151\ See http://www.bls.gov/iag/tgs/iag211.htm#earnings (Bureau
of Labor Statistics, December 2013 Current Employment Statistics,
Average Hourly Earnings for Oil and Gas Extraction Production and
Nonsupervisory Employees); http://www.bls.gov/iag/tgs/iag447.htm
(Bureau of Labor Statistics, December 2013 Current Employment
Statistics, Average Hourly Earnings for Gasoline Station Production
and Nonsupervisory Employees).
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The Rule does not impose any capital costs for producers,
importers, or distributors of ethanol blends. Retailers, however, do
incur the cost of procuring and replacing fuel dispenser labels to
comply with the Rule. Staff has previously estimated that the price per
automotive fuel label is fifty cents and that the average automotive
fuel retailer has six dispensers. PMAA, however, stated that the cost
of labels ranges from one to two dollars. Conservatively applying the
upper end from PMAA's estimate results in an initial cost to retailers
of $12 (6 pumps x $2). Regarding label replacement, staff has
previously estimated a dispenser useful life range of 6 to 10 years.
Assuming a useful life of 8 years, the mean of that range, replacement
labeling will not be necessary for well beyond the relevant time frame,
i.e., the immediate 3-year PRA clearance sought. Accordingly, averaging
solely the $12 labeling cost at inception per retailer over that
period, annualized labeling cost per retailer will be $4. Cumulative
labeling cost would thus be $10,668 (2,667 retailers x $4 each,
annualized).\152\
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\152\ This reflects strictly the incremental (and annualized)
PRA costs of the ethanol amendments. Cumulative capital/non-labor
costs for the current Rule under existing OMB clearance (Control No.
3084-0068) is $88,600.
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VII. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires an
agency to provide an Initial Regulatory Flexibility Analysis with a
proposed rule unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
See 5 U.S.C. 603-605.
The FTC finds that the proposed amendments will not have a
significant economic impact on a substantial number of small entities.
The amendment allowing alternative octane measurements does not impose
any new costs on covered entities because it merely gives those
entities the option of using a different octane rating method than what
the Rule currently requires. As explained in Section VI above, the
Commission expects each ethanol retailer and producer to spend, at
most, 5 minutes per year complying with the recordkeeping requirements,
and each ethanol retailer to spend 1/8th of an hour per year complying
with the new ethanol disclosure requirements.\153\ As also explained in
Section VI, staff estimates an average hourly wage for producers of
$30.56, and for retailers of $10.54. Even assuming that all ethanol
producers and retailers are small entities, compliance with the
recordkeeping requirements will cost producers an estimated $2.55
($30.56 x 1/12th of an hour) and cost retailers an estimated $0.88
($10.54 x 1/12th of an hour). In addition, under the same conservative
assumptions, compliance with the disclosure requirements will cost
retailers an estimated $1.32 ($10.54. x 1/8th of an hour). Finally, as
discussed in Section VI, the Commission estimates annualized capital
costs as $4.
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\153\ The Commission assumes that ethanol-blend producers and
distributors would determine the ethanol percentage in their blends
and include it with the blends' transfer documents.
---------------------------------------------------------------------------
This document serves as notice to the Small Business Administration
of the agency's certification of no effect. Nonetheless, the Commission
has prepared the following analysis.
A. Reasons why the Commission is Proposing the Amendments
The Commission proposes these amendments in response to the
emergence of ethanol blends as a retail fuel and the likely increased
availability of such blends. As discussed above, the proposed
amendments will further PMPA's objective of giving consumers
information necessary to choose the correct fuel for their vehicles.
B. Statement of the Objectives and Legal Basis of the Amendments
These amendments provide requirements for rating and certifying
ethanol blends and requirements for labeling blends of more than 10
percent ethanol, with an exemption for EPA-approved E15. Thus, they
provide a mechanism for fuel pumps dispensing ethanol blends to post a
rating that will alert consumers to the fuel's ethanol content and the
suitability of that fuel for their vehicles, pursuant to PMPA, 15
U.S.C. 2801 et seq.
C. Estimate of the Number of Small Entities to Which the Proposed
Amendments Will Apply
Retailers of ethanol blends will be classified as small businesses
if they satisfy the Small Business Administration's relevant size
standards, as determined by the Small Business Size Standards component
of the North American Industry Classification System (``NAICS''). The
closest NAICS size standard relevant to this rulemaking is for
``Gasoline Stations with Convenience Stores.'' That standard classifies
retailers with a maximum $27 million in annual receipts as small
businesses.\154\ As discussed above, DOE reports 2,667 ethanol fueling
stations.\155\ DOE does not provide information on those retailers'
revenue. Therefore, the Commission seeks comment on how many of those
retailers qualify as small businesses.
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\154\ See http://www.sba.gov/content/small-business-size-standards. (last visited Dec. 31, 2013).
\155\ See www.afdc.energy.gov/afdc/fuels/stations_counts.html
(last visited Dec. 31, 2013).
---------------------------------------------------------------------------
D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
The proposed amendments make clear that the Fuel Rating Rule's
recordkeeping, certification, and labeling requirements apply to
ethanol blends. Small entities potentially affected are producers,
importers, distributors, and retailers of those blends. The Commission
expects that the recordkeeping, certification, and labeling tasks are
done by industry members in the normal course of their business.
Accordingly, we do not expect the proposed amendments to require any
professional skills beyond those
[[Page 18864]]
already employed by industry members, namely, administrative.
E. Identification of Overlapping Federal Rules
The Commission is not aware of any relevant Federal Rules that
would duplicate, overlap, or conflict with the proposed amendments. The
amendments specifically exempt EPA-approved E15 blends, which must be
labeled under EPA rules.
F. Alternatives Considered
As explained above, PMPA requires retailers of liquid automotive
fuels to post labels at the point of sale displaying those fuels'
ratings. The posting requirements in the proposed amendments are
minimal and, as noted above, do not require creating any separate
documents because covered parties may use documents already in use,
such as invoices, to certify a fuel's rating. Moreover, the Commission
cannot exempt small businesses from the Rule and still communicate fuel
rating information to consumers. Furthermore, the amendments minimize
what, if any, economic impact there is from the labeling requirements.
Finally, because PMPA requires point-of-sale labels, the Rule must
require retailers to incur the costs of posting those labels.
Therefore, the Commission concludes that there are no significant
alternative measures that would accomplish the objectives of PMPA and
further minimize the burden on small entities.
VIII. Public Hearings
Persons desiring a public hearing should notify the Commission no
later than May 5, 2014. If there is interest in a public hearing, it
will take place at a time and date to be announced in a subsequent
notice. If a hearing is held, persons desiring an appointment to
testify must submit to the Commission a complete statement in advance,
which will be entered into the record in full. As a general rule, oral
statements should not exceed 10 minutes. If there is a hearing, the
Commission will provide further instructions in a notice announcing the
hearing.
IX. Communications by Outside Parties to the Commissioners or Their
Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any Commissioner or Commissioner's advisor will be
placed on the public record. See 16 CFR 1.26(b)(5).
X. Proposed Rule
List of Subjects in 16 CFR Part 306
Fuel ratings, Trade practices, Incorporation by reference.
For the reasons discussed in the preamble, the Federal Trade
Commission proposes to amend title 16, chapter I, subchapter C, of the
Code of Federal Regulations, part 306, as follows:
PART 306--AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING
0
1. The authority citation for part 306 continues to read as follows:
Authority: 15 U.S.C. 2801 et seq.; 42 U.S.C. 17021.
0
2. Amend Sec. 306.0 by revising paragraphs (b), (i), and (j), and
adding paragraph (o), to read as follows:
Sec. 306.0 Definitions.
* * * * *
(b) Research octane number and motor octane number. (1) These terms
have the meanings given such terms in the specifications of ASTM
International (``ASTM'') entitled ``Standard Specification for
Automotive Spark-Ignition Engine Fuel (published November 2010)''
designated D4814-10b and, with respect to any grade or type of
gasoline, are determined in accordance with one of the following test
methods or protocols:
(i) ASTM D2699-09, ''Standard Test Method for Research Octane
Number of Spark-Ignition Engine Fuel (published November 2009)'' and
ASTM D2700-09, ``Standard Test Method for Motor Octane Number of Spark-
Ignition Engine Fuel (published November 2009)'';
(ii) ASTM D2885-10, ``Standard Test Method for Determination of
Octane Number of Spark-Ignition Engine Fuels by On-Line Direct
Comparison Technique (published March 2010);'' or
(iii) ASTM D6122-10, ``Standard Practice for Validation of the
Performance of Multivariate Infrared Spectrophotometers,'' which is
correlated with ASTM D2699-09 and ASTM D2700-09.
(2) The incorporations by reference of ASTM D4814-10b, ASTM D6122-
10, ASTM D2699-09, ASTM D2700-09, and ASTM D2885-10 in paragraph (b)(1)
of this Section, and in Sec. 306.5(a), were approved by the Director
of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR
part 51. Copies of ASTM D4814-10b, ASTM D6122-10, ASTM D2699-09, ASTM
D2700-09, and ASTM D2885-10, may be obtained from ASTM International,
100 Barr Harbor Drive, West Conshohocken, PA 19428, or may be inspected
at the Federal Trade Commission, Public Reference Room, Room 130, 600
Pennsylvania Avenue NW, Washington, DC, or at the National Archives and
Records Administration (``NARA''). For information on the availability
of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.
* * * * *
(i) Automotive fuel. This term means liquid fuel of a type
distributed for use as a fuel in any motor vehicle, and the term
includes, but is not limited to:
(1) Gasoline, an automotive spark-ignition engine fuel, which
includes, but is not limited to, gasohol (generally a mixture of
approximately 90 percent unleaded gasoline and 10 percent ethanol) and
fuels developed to comply with the Clean Air Act, 42 U.S.C. 7401 et
seq., such as reformulated gasoline and oxygenated gasoline; and
(2) Alternative liquid automotive fuels, including, but not limited
to:
(i) Methanol, denatured ethanol, and other alcohols;
(ii) Mixtures containing 85 percent or more by volume of methanol
and/or other alcohols, excluding ethanol (or such other percentage, as
provided by either the Secretary of the United States Department of
Energy, by rule), with gasoline or other fuels;
(iii) Ethanol blends;
(iv) Liquefied natural gas;
(v) Liquefied petroleum gas;
(vi) Coal-derived liquid fuels;
(vii) Biodiesel;
(viii) Biomass-based diesel;
(ix) Biodiesel blends containing more than 5 percent biodiesel by
volume; and
(x) Biomass-based diesel blends containing more than 5 percent
biomass-based diesel by volume.
* * * * *
(j) Automotive fuel rating means. (1) For gasoline, the octane
rating.
(2) For an alternative liquid automotive fuel other than biodiesel,
biomass-based diesel, biodiesel blends, biomass-based diesel blends,
and ethanol blends, the commonly used name of the fuel with a
disclosure of the amount, expressed as the minimum percentage by
volume, of the principal component of the fuel. A disclosure of other
components, expressed as the minimum percentage by volume, may be
included, if desired.
(3) For biomass-based diesel, biodiesel, biomass-based diesel
blends with more than 5 percent biomass-based diesel, and biodiesel
blends with more than 5 percent biodiesel, a disclosure of the biomass-
based diesel or biodiesel
[[Page 18865]]
component, expressed as the percentage by volume.
(4) For ethanol blends, a disclosure of the ethanol component,
expressed as the percentage by volume and the text ``USE ONLY IN FLEX-
FUEL VEHICLES/MAY HARM OTHER ENGINES.''
* * * * *
(o) Ethanol blend means a mixture of gasoline and ethanol
containing more than 10 percent ethanol;
0
3. Revise Sec. 306.5 to read as follows:
Sec. 306.5 Automotive fuel rating.
If you are a refiner, importer, or producer, you must determine the
automotive fuel rating of all automotive fuel before you transfer it.
You can do that yourself or through a testing lab.
(a) To determine the automotive fuel rating of gasoline, add the
research octane number and the motor octane number and divide by two,
as explained by ASTM D4814-10b, ``Standard Specifications for
Automotive Spark-Ignition Engine Fuel,'' (incorporated by reference,
see Sec. 306.0(b)(2)). To determine the research octane and motor
octane numbers you may do one of the following:
(1) Use ASTM standard test method ASTM D2699-09, ``Standard Test
Method for Research Octane Number of Spark-Ignition Engine Fuel''
(incorporated by reference, see Sec. 306.0(b)(2)), to determine the
research octane number, and ASTM standard test method ASTM D2700-09,
``Standard Test Method for Motor Octane Number of Spark-Ignition Engine
Fuel'' (incorporated by reference, see Sec. 306.0(b)(2)), to determine
the motor octane number;
(2) Use the test method set forth in ASTM D2885-10, ``Standard Test
Method for Determination of Octane Number of Spark-Ignition Engine
Fuels by On-Line Direct Comparison Technique'' (incorporated by
reference, see Sec. 306.0(b)(2)); or
(3) Use a multivariate infrared spectrophotometer, as described in
Section 6.1.1 of ASTM D6122-10, ``Standard Practice for Validation of
the Performance of Multivariate Infrared Spectrophotometers,'' to
determine the research octane number and the motor octane number
following the procedures set forth in ASTM D6122-10 to correlate the
measured research and motor octane numbers with the results of test
methods ASTM D2699-09 and ASTM D2700-09 (incorporated by reference, see
Sec. 306.0(b)(2)).
(b) To determine automotive fuel ratings for alternative liquid
automotive fuels other than ethanol blends, biodiesel blends, and
biomass-based diesel blends, you must possess a reasonable basis,
consisting of competent and reliable evidence, for the percentage by
volume of the principal component of the alternative liquid automotive
fuel that you must disclose. In the case of biodiesel blends, you must
possess a reasonable basis, consisting of competent and reliable
evidence, for the percentage of biodiesel contained in the fuel. In the
case of biomass-based diesel blends, you must possess a reasonable
basis, consisting of competent and reliable evidence, for the
percentage of biomass-based diesel contained in the fuel. In the case
of ethanol blends, you must possess a reasonable basis, consisting of
competent and reliable evidence, for the percentage of ethanol
contained in the fuel. You also must have a reasonable basis,
consisting of competent and reliable evidence, for the minimum
percentages by volume of other components that you choose to disclose.
0
4. Revise Sec. 306.6(b) to read as follows:
Sec. 306.6 Certification.
* * * * *
(b) Give the person a letter or other written statement. This
letter must include the date, your name, the other person's name, and
the automotive fuel rating of any automotive fuel you will transfer to
that person from the date of the letter onwards. Octane rating numbers
may be rounded to a whole or half number equal to or less than the
number determined by you. This letter of certification will be good
until you transfer automotive fuel with a lower automotive fuel rating,
except that a letter certifying the fuel rating of biomass-based
diesel, biodiesel, a biomass-based diesel blend, a biodiesel blend, or
an ethanol blend will be good only until you transfer those fuels with
a different automotive fuel rating, whether the rating is higher or
lower. When this happens, you must certify the automotive fuel rating
of the new automotive fuel either with a delivery ticket or by sending
a new letter of certification.
* * * * *
0
5. Revise Sec. 306.10(a) and (f) to read as follows:
Sec. 306.10 Automotive fuel rating posting.
(a) If you are a retailer, you must post the automotive fuel rating
of all automotive fuel you sell to consumers. You must do this by
putting at least one label on each face of each dispenser through which
you sell automotive fuel. If you are selling two or more kinds of
automotive fuel with different automotive fuel ratings from a single
dispenser, you must put separate labels for each kind of automotive
fuel on each face of the dispenser. Provided, however, that you do not
need to post the automotive fuel rating of a mixture of gasoline and
ethanol containing more than 10 but not more than 15 percent ethanol if
the face of the dispenser is labelled in accordance with 40 CFR
80.1501.
* * * * *
(f) The following examples of automotive fuel rating disclosures
for some presently available alternative liquid automotive fuels are
meant to serve as illustrations of compliance with this part, but do
not limit the Rule's coverage to only the mentioned fuels:
(1) ``Methanol/Minimum ---- % Methanol''
(2) ``---- % Ethanol/Use only in Flex-Fuel Vehicles/May harm other
engines''
(3) ``M85/Minimum ---- % Methanol''
(4) ``LPG/Minimum ---- % Propane'' or ``LPG/Minimum ---- % Propane and
---- % Butane''
(5) ``LNG/Minimum ---- % Methane''
(6) ``B20 Biodiesel Blend/contains biomass-based diesel or biodiesel in
quantities between 5 percent and 20 percent''
(7) ``20% Biomass-Based Diesel Blend/contains biomass-based diesel or
biodiesel in quantities between 5 percent and 20 percent''
(8) ``B100 Biodiesel/contains 100 percent biodiesel''
(9) ``100% Biomass-Based Diesel/contains 100 percent biomass-based
diesel''
* * * * *
0
6. Amend Sec. 306.12 by re-designating existing paragraphs (a)(4)
through (9) as paragraphs (a)(5) through (10), respectively; by adding
new paragraph (a)(4); by removing the illustration of the ``E-100''
label in paragraph (f); and by adding a new illustration after the
existing illustrations in paragraph (f), to read as follows:
Sec. 306.12 Labels.
* * * * *
(a) * * *
(4) For ethanol blends. (i) The label is 3 inches (7.62 cm) wide h
2 1/2 inches (6.35 cm) long. ``Helvetica Black'' or equivalent type is
used throughout. The type in the band is centered both horizontally and
vertically. The band at the top of the label contains one of the
following:
(A) The numerical value representing the volume percentage of
ethanol in the fuel followed by the percentage sign and then by the
term ``ETHANOL''; or
(B) The numerical value representing the volume percentage of
ethanol in the fuel, rounded to the nearest factor of 10, followed by
the percentage sign and then the term ``ETHANOL.''
[[Page 18866]]
(ii) The band should measure 1 inch (2.54 cm) deep. The percentage
disclosure and the word ``ETHANOL'' are in 24 point font. The type
below the black band is centered vertically and horizontally. The first
line is the text: ``USE ONLY IN.'' It is in 16 point font, except for
the word ``ONLY,'' which is in 26 point font. The word ``ONLY'' is
underlined with a 2 point (or thick) underline. The second line is in
16 point font, at least 1/8 inch (.32 cm) below the first line, and is
the text: ``FLEX-FUEL VEHICLES.'' The third line is in 10 point font,
at least 1/8 inch (.32 cm) below the first line, and is the text ``MAY
HARM OTHER ENGINES.''
* * * * *
(f) * * *
[GRAPHIC] [TIFF OMITTED] TP04AP14.032
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2014-07423 Filed 4-3-14; 8:45 am]
BILLING CODE 6750-01-P