[Federal Register Volume 60, Number 205 (Tuesday, October 24, 1995)] [Rules and Regulations] [Pages 54435-54439] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-26316] ======================================================================= ----------------------------------------------------------------------- ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [AK 6-1-6587a; FRL-5293-5] Approval and Promulgation of Air Quality Implementation Plans; Alaska AGENCY: Environmental Protection Agency (EPA). ACTION: Direct final rule. ----------------------------------------------------------------------- SUMMARY: EPA approves a State Implementation Plan (SIP) revision submitted by the State of Alaska implementing an oxygenated gasoline program in the Municipality of Anchorage. This SIP revision was submitted to satisfy the requirement of section 211(m) of the Clean Air Act, as amended (the ``Act''), which requires all carbon monoxide (CO) nonattainment areas with a design value of 9.5 parts per million (ppm) or greater based generally on 1988 and 1989 air quality monitoring data to implement an oxygenated gasoline program. In the proposed rules section of this Federal Register, EPA is proposing approval of and soliciting public comment on this requested SIP revision. If adverse comments are received on this direct final rule, EPA will withdraw this direct final rule and address the comments received in a subsequent final rule on the related proposed rule. No additional opportunity for public comment will be provided. Unless this direct final rule is withdrawn, EPA will conduct no further rulemaking on this requested SIP revision. DATES: This action is effective on December 26, 1995 unless adverse or critical comments are received by November 24, 1995. If the effective date is delayed, timely notice will be published in the Federal Register. ADDRESSES: Written comments should be addressed to: Montel Livingston, Office of Air (AT-082), EPA, Docket #AK 6-1-6587, 1200 Sixth Avenue, Seattle, Washington 98101. Documents that are incorporated by reference are available for public inspection at the Air and Radiation Docket and Information Center, Environmental Protection Agency, 401 M Street, SW, Washington, D.C. 20460. Copies of material submitted to EPA may be examined during normal business hours at the following locations: EPA, Region 10, Air & Radiation Branch, 1200 Sixth Avenue (AT-082), Seattle, Washington 98101, and the Alaska Department of Environmental Conservation, 410 Willoughby, Suite 105, Juneau, Alaska 99801-1795. FOR FURTHER INFORMATION CONTACT: Montel Livingston, Office of Air (AT- 082), EPA, Seattle, Washington 98101, (206) 553-0180. SUPPLEMENTARY INFORMATION: I. Introduction Motor vehicles are significant contributors of CO emissions. An important measure for reducing these emissions is the use of cleaner- burning oxygenated gasoline. Extra oxygen enhances fuel combustion and helps to offset fuel-rich operating conditions, particularly during vehicle starting, which are more prevalent in the winter. Section 211(m) of the Act requires certain States to submit revisions to their SIPs and implement oxygenated gasoline programs by no later than November 1, 1992. This requirement applies to States with CO nonattainment areas with design values of 9.5 ppm or more based generally on 1988 and 1989 data. Each State's oxygenated gasoline program must require gasoline for the specified control area to contain not less than 2.7 percent oxygen by weight during that portion of the year in which the areas are prone to high ambient concentrations of CO. Under section 211(m)(2), the oxygenated gasoline requirements are to cover generally all gasoline sold or dispensed in the larger of the Consolidated Metropolitan Statistical Area (CMSA) or the Metropolitan Statistical Area (MSA) in which the nonattainment area is located. Under section 211(m)(2), the length of the control period, to be established by the EPA Administrator, shall not be less than four months unless a State can demonstrate that, because of meteorological conditions, a reduced control period will assure that there will be no carbon monoxide exceedances outside of such reduced period. EPA announced guidance on the establishment of control periods by area in the Federal Register on October 20, 1992 (57 FR 47769). In addition to the guidance on establishment of control period by area, EPA has issued additional guidance related to the oxygenated gasoline program. On October 20, 1992 (57 FR 47769) EPA announced the availability of oxygenated gasoline credit program guidelines in the Federal Register. Under a credit program, marketable oxygen credits may be generated from the sale of gasoline with a higher oxygen content than is required (i.e. an oxygen content greater than 2.7 percent by weight). These oxygen credits may be used to offset the sale of gasoline with a lower oxygen content than is required. Where a credit program has been [[Page 54436]] adopted, EPA's guidelines provide that no gallon of gasoline should contain less than 2.0 percent oxygen by weight. II. Background for This Action Under section 211(m) of the Act, Alaska was required to submit a revised SIP under section 110 and part D of title I, which includes an oxygenated gasoline program for the Municipality of Anchorage. EPA reaffirmed the boundaries of the Municipality of Anchorage on November 6, 1991 (56 FR 56694); the oxygenated gasoline requirements cover generally all gasoline sold or dispensed in the MSA boundary. The oxygenated gasoline program was implemented as scheduled on November 1, 1992. However, within a short period of time, the State received health and driveability complaints from the general public regarding the use of Methyl Tertiary Butyl Ether (MTBE) blended gasoline, and the Governor of Alaska made a decision to temporarily suspend the oxygenated fuels program while the State investigated the complaints. The U.S. Congress approved a one-year exemption for Alaska from the oxygenated fuel requirements as a rider to the 1994 Federal funding appropriations bill. During this suspension, a series of studies began which included health, driveability, and effectiveness at cold temperatures using oxygenated gasoline in climate fluctuations such as the Municipalities of Anchorage and Fairbanks experience. Also, Alaska reviewed other options to demonstrate attainment of the CO National Ambient Air Quality Standards (NAAQS) if oxygenated gasoline continued to be suspended. As a result, Anchorage chose to implement an oxygenated fuel program using an ethanol blend, consisting of 10 percent ethanol blend with an oxygen content of 3.5 percent. It was fully implemented on January 1, 1995 and continued through March 31, 1995. This initial control period for Anchorage using an enthanol blend was successful with the general public and for air quality--there were no exceedances of the CO NAAQS. In subsequent years, the program will operate from November 1 through March 31. The Oxygenated Gasoline Requirements (18 AAC 53.005-18 AAC 53.190) were submitted to EPA on March 24, 1994, as a revision to the Alaska SIP, with its amendments adopted through March 19, 1994 by the Alaska Department of Envirnomental Conservation. EPA summarizes its analysis of the State submittal below: Type of Program and Oxygen Content Requirement As discussed above, section 211(m)(2) of the Act requires that gasoline sold or dispensed for use in the specified control areas contain not less than 2.7 percent oxygen by weight. Under section 211(m)(5), the EPA Administrator issued guidelines for credit programs allowing the use of marketable oxygen credits. Alaska has elected to require control area responsible parties (CARs) to supply an average of at least 2.7 percent oxygen for each control area serviced. A CAR is defined as a person who owns oxygenated gasoline that is sold or dispensed from a control area terminal. A blender CAR is, in general, a party downstream from a terminal who blends oxygenates into gasoline or who otherwise changes the oxygen content of the gasoline intended for use in a control area. To achieve an average of 2.7 percent oxygen, a blender will be allowed to supply oxygenated gasoline with a minimum of 2.0 percent oxygen and a maximum of 3.7 percent. Each gallon of fuel pumped by the retailer must be, at minimum, 2.0 percent oxygen by weight. Trading of oxygen credits is allowed. The following sections of this notice address some specific elements of the State's submittal. Applicability and Program Scope The State regulations provide that the Alaska Department of Environmental Conservation (ADEC) will issue a public notice establishing a control period applicable to the Municipality of Anchorage. Not less than 75 days before the control period begins, ADEC will publish the notice in a newspaper serving Anchorage and will send the notice to each CAR and blender CAR registered with ADEC since the former control period of November 1, 1992. ADEC established its control period in accordance with its oxygenated gasoline requirements (18 AAC 53.010) for the Municipality of Anchorage, and this first year's ethanol-blended fuel program for Anchorage began January 1, 1995 (allowing Alaskan refiners adequate initial setup time to get the program in place). In subsequent years, Alaska has established that the oxygenated gasoline program will operate from November 1 through March 1. This control period is consistent with EPA guidance. EPA guidance suggests that all gasoline sold or dispensed for use within a given control area and during a given control period should comply with the average of 2.7 percent oxygen content requirement and should contain not less than 2.0 percent oxygen by weight. Marketable oxygen credits should be used or traded only within the boundaries of the control area in which they were created and only during the applicable control period. Alaska's oxygenated gasoline program has both an ``averaging period'' compliance scheme and a ``per-gallon'' compliance scheme. When registering, each blender must choose whether to comply on an average basis or on a per gallon basis. Under the averaging period scheme, all gasoline sold or dispensed within the control area during a given averaging period must be, on average, at least 2.7 percent by weight. In addition, any gasoline sold or dispensed to an ultimate consumer within the control area and averaging period must contain at least 2.0 percent oxygen by weight. The averaging period in Alaska's program will be typically November 1 through March 1. The blender may also choose to comply on a per-gallon basis. Under the per-gallon compliance scheme, each gallon of gasoline offered for use in a control area must contain at least 2.7 percent oxygen by weight. These requirements are consistent with EPA guidance. Registration and Reporting Requirements EPA's credit program guidelines suggest that all parties intending to trade marketable oxygen credits should register with the State at least 30 days in advance of each control season. The 30 day time period is intended to allow the State flexibility. Upon acceptance, the State should issue CAR identification numbers. EPA guidelines indicate that no party should be allowed to generate, trade, buy or sell credits without a CAR identification number. Under Alaska's regulations, at least 30 days before the beginning of the control period in which a person meets the definition of CAR or blender CAR, or at least 30 days before conducting activities as a CAR or blender CAR, that person shall petition for registration as a CAR or blender CAR. Registration requests must be on forms approved by and available from ADEC. ADEC will issue each blender a permit containing a unique identification number within 30 days after submission of a registration application. CARs and blender CARs shall pay a registration fee of $100 at the time of application to compensate for the costs of implementing the requirements of the oxygenated gasoline program. CAR or blender CARs shall also pay a preliminary annual fee at the time of registration, which is based on the [[Page 54437]] volume of gallons of oxygenated gasoline that CAR or blender CAR blended for use within each control area during the preceding averaging period. On or before May 1, CAR or blender CARs shall pay a final annual fee that is based on the volume of gallons of oxygenated gasoline blended for use within each control area during the preceding averaging period, minus the preliminary annual fee. If the preliminary annual fee is greater than the determined final annual fee amount due, no additional fee is due and ADEC will refund the excess fees paid by June 15. EPA has also specified that records should be retained by all parties in the gasoline distribution system. EPA's guidelines impose responsibilities on various parties in the gasoline industry. Persons who produce or import gasoline (refiners and importers) are responsible for assuring that the gasoline is tested and that the accompanying documentation accurately reflects oxygen content. Persons who transport, store, or sell gasoline (refiners, importers, blenders, distributors, resellers, retailers, wholesale purchaser-consumers) have various responsibilities associated with assuring that only oxygenated gasoline is sold or dispensed for use in control areas. Terminal owners and operators are responsible for assuring that the oxygen content of the gasoline they receive, handle, or dispense is accurate. Retailers and wholesale purchaser consumers are responsible for assuring that gasoline intended for sale during the control period contains at least 2.0 percent oxygen by weight. Under Alaska's regulations, at the end of the control period, CARs and blender CARs must have an audit conducted by an independent certified public accountant that consists of a review of the supporting documentation used to prepare reports required under the oxygenated program, for accuracy, completeness, and conformance with the requirements of the program. In addition, CARs and blender CARs must submit a report no later than 30 days after the last day of each averaging period that shows compliance with the requirements of the oxygenated gasoline program. Also, interim reports are due for November, December and January of each averaging period, no later than 30 days after the last day of each month. Reports must be filed on forms approved by ADEC. Alaska's rule allows a reporting time frame of 30 days rather than EPA's suggested 15 days. EPA feels that providing businesses extra reporting time will not compromise environmental benefits. EPA guidelines suggest that all parties in the gasoline distribution network who are located or do business within a control area, and whose product is eventually sold into the control area for ultimate use, should be required to keep records concerning certain day-to-day activities. Under these guidelines, refiners and importers should be required to keep a copy of all the tests that are performed on batches of gasoline prior to shipment, as well as copies of the bills of lading or transfer documents for each batch. Terminal owners and operators and CARS and blender CARS should be required to keep records of both the gasoline they receive from upstream parties, as well as copies of all the tests performed and records created before the gasoline was transferred to a downstream party. Alaska's program is consistent with these suggested provisions. EPA guidelines recommend that CARs and blender CARs commission an annual attest engagement, performed by either an internal auditor or independent Certified Public Accountant (CPA). The guidelines encourage the State to provide the internal auditor or CPA with standardized forms specifying the methodology to be used for attest engagements. Alaska's program requires that CARs or blender CARs submit to an attest engagement conducted by an independent CPA, within 120 days after the end of an averaging period. Therefore, Alaska's program meets EPA's recommendations for attest engagements. Blenders may use attest engagements as a defense to liability. If EPA notes that the State's program suffers from compliance problems related to lack of attest engagements, EPA may require the use of attest engagements as a corrective action. Prohibited Activities EPA's credit program guidelines contain provisions designed to ensure that gasoline failing to meet the 2.0 percent by weight minimum oxygen content requirement is not available for use within a control area. Alaska's regulations provide that CARs or blender CARs may not transfer gasoline for use in a control area that contains less than the minimum percent of oxygen by weight to parties who are not themselves registered as CARs or blender CARs. Under EPA's credit program guidelines, regulated parties, including refiners, importers, oxygenate blenders, carriers, distributors, or resellers should comply with recordkeeping requirements. In addition, Alaska's regulations provide that a terminal that sells or dispenses gasoline intended for use in a control area should accept gasoline only if transfer documentation accompanies it, or unless the terminal is a blender registered in compliance with 18 AAC 53.070. Misrepresenting the oxygen content of the gasoline in accompanying documents is a violation. Transfer documents must accompany the gasoline in every link of the gasoline distribution network except for the final consumer. Non-oxygenated gasoline may not be sold in any control area during the control period. Transfer Documents EPA's credit program guidelines specify that transfer documents should include the following information: Date of the transfer; name and address of the transferor and transferee; the volume of the gasoline that is being transferred; the proper identification of the gasoline as oxygenated or nonoxygenated; the location of the gasoline at the time of the transfer; the type of oxygenate; and the oxygen content of the gasoline (for transfers upstream of the control area terminal and for transfers between CARs, including the oxygenate volume of the gasoline). Records are to be kept in a location where they are available for State review. Alaska's requirements related to transfer documentation meets EPA's recommendation. These transfer document requirements will enhance the enforcement of the oxygenated gasoline regulation by providing a paper trail for each gasoline sample taken by State enforcement personnel. Enforcement and Penalty Schedules The State oversight agency enforces the oxygenated gasoline regulations. Each State should devise a comprehensive penalty schedule. Penalties should reflect the severity of a party's violation, the compliance history of the party, and the potential environmental harm associated with the violation. With the consent of the owner or operator, ADEC or its designee will, in its discretion, enter the premises of any business subject to the requirements of the oxygenated gasoline program to determine that business's compliance with the program by inspecting all relevant records and equipment and taking gasoline samples for testing. Alaska Statutes, Title 46, Water, Air, Energy and Environmental Conservation, Sections 46.03.760 and 46.03.790, provide for both civil and criminal penalties for oxygenated fuel violations. Civil and criminal penalties include fines up to $10,000 per day for each violation. [[Page 54438]] Test Methods and Laboratory Review EPA's sampling procedures are detailed in appendix D of 40 CFR part 80. EPA has recommended, in its credit program guidelines, that States adopt these sampling procedures. Alaska has adopted EPA sampling procedures. For the purpose of determining compliance with the requirements of these guidelines, Alaska's regulation includes a test method. EPA's guidelines recommend the use of the OFID test, although parties may elect to use ASTM-D4815-89 or another method, if approved by EPA. Alaska has elected to use the test method specified in ASTM-D4815-89. Labeling EPA was required to issue Federal labeling regulations under section 211(m)(4) of the Act. These regulations, published in the Federal Register on October 20, 1992, require the following statement be posted for a per-gallon program or credit program with a minimum oxygen content requirement: ``The gasoline dispensed from this pump is oxygenated and will reduce carbon monoxide pollution from motor vehicles.'' 40 CFR 80.35(a)(1). The Federal regulation also specifies the appearance and placement requirements for the labels. 40 CFR 80.35(a). EPA has strongly recommended that States adopt their own labeling regulations, consistent with the Federal regulation, and Alaska has done so. EPA therefore approves Alaska's labeling requirement. EPA's review of the material indicates that the State has adopted an oxygenated gasoline program for the Municipality of Anchorage in accordance with the requirements of the Act. EPA approves the Alaska SIP revision for an oxygenated gasoline program for the Municipality of Anchorage, 18 AAC 53, Fuel Requirements for Motor Vehicles, Article 1 (Oxygenated Gasoline Requirements, 18 AAC 53.005--18 AAC 53.190) and Article 9 (General Provisions, 18 AAC 53.990), submitted March 24, 1994, including amendments to the Alaska regulations adopted through March 19, 1994. Temporary Variance Included as part of the State's oxygenated gasoline requirements at 18 AAC 53.150 is a provision for a temporary variance from the oxygenated gasoline requirements. Under this provision, a temporary variance may be granted after a public hearing only in narrowly defined, extreme and unusual circumstances where a refiner can show that for reasons beyond its control, it cannot comply with the oxygenated gasoline requirements for a defined period of time. A refiner must show that all of the conditions listed in the regulation are met, including that it exercised prudent planning to avoid noncompliance, and that all reasonable steps were taken to minimize the noncompliance. The provision also requires the refiner to show that compliance with the requirements for oxygenated gasoline will be achieved as soon as possible and to agree to offset all or a portion of the excess emissions associated with the use of nonconforming gasoline, where practicable. In addition, the applicant must state a proposed date by which compliance will be achieved or reestablished. The State will hold a public hearing to determine whether, and under what conditions and to what extent, a temporary variance is necessary and will be permitted. At least two weeks before the public hearing, the State will give written notice to the applicant and EPA, and will publish notice of the hearing in a newspaper of general circulation in the Anchorage control area. EPA is approving this narrowly crafted provision to permit temporary variances by finding it consistent with previous EPA guidance to the states to address the situation where extraordinary circumstances do not allow a regulated party to comply with the oxygenated gasoline program under Section 211(m). On October 20, 1992 (57 FR 47769), EPA announced the availability of oxygenated gasoline credit program guidelines in the Federal Register. In that document, ``Guidelines for Oxygenated Gasoline Credit Programs under Section 211(m) of the CAA,'' EPA wrote that ``in appropriate extreme and unusual circumstances which are clearly outside the control of the refiner and which could not have been avoided by the exercise of prudence, diligence and due care, states should consider allowing a refiner, for a brief period, to distribute'' nonconforming fuel. III. Conclusion EPA, in this action, is approving this revision to the Alaska SIP for an oxygenated gasoline program. IV. Administrative Review Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA must prepare a regulatory flexibility analysis assessing the impact of any proposed or final rule on small entities. 5 U.S.C. 603 and 604. Alternatively, EPA may certify that the rule will not have a significant impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and government entities with jurisdiction over populations of less than 50,000. SIP approvals under section 110 and subchapter I, Part D of the Act do not create any new requirements, but simply approve requirements that the state is already imposing. Therefore, because the federal SIP- approval does not impose any new requirements, I certify that it does not have a significant impact on any small entities affected. Moreover, due to the nature of the federal-state relationship under the Act, preparation of a regulatory flexibility analysis would constitute federal inquiry into the economic reasonableness of state action. The Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co. v. U.S.E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2). Under Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 million or more. Under Section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule. EPA has determined that the approval action promulgated does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action approves pre- existing requirements under State or local law, and imposes no new Federal requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action. The EPA has reviewed this request for revision of the federally- approved SIP for conformance with the provisions of the 1990 Clean Air Act Amendments enacted on November 15, 1990. The EPA has determined that this action conforms with those requirements. Nothing in this action should be construed as permitting or allowing or [[Page 54439]] establishing a precedent for any future request for revision to any SIP. Each request for revision to the SIP shall be considered separately in light of specific technical, economic and environmental factors and in relation to relevant statutory and regulatory requirements. This action has been classified as a Table 3 action for signature by the Regional Administrator under the procedures published in the Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for Air and Radiation. The Office of Management and Budget (OMB) has exempted this regulatory action from E.O. 12866 review. The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in a separate document in this Federal Register publication, the EPA is proposing to approve the SIP revision should adverse or critical comments be filed. This action will be effective December 26, 1995 unless, by November 24, 1995, adverse or critical comments are received. If the EPA receives such comments, this action will be withdrawn before the effective date by publishing a subsequent document that will withdraw the final action. All public comments received will be addressed in a subsequent final rule based on this action serving as a proposed rule. The EPA will not institute a second comment period on this action. Any parties interested in commenting on this action should do so at this time. If no such comments are received, the public is advised that this action will be effective December 26, 1995. Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 26, 1995. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2), 42 U.S.C. 7607(b)(2)). List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Carbon monoxide, Hydrocarbons, Incorporation by reference, Ozone, Volatile organic compounds. Note: Incorporation by reference of the Implementation Plan for the State of Alaska was approved by the Director of the Office of Federal Register on July 1, 1982. Dated: August 30, 1995. Chuck Clarke, Regional Administrator. Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows: PART 52--[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401-7671q. Subpart C--Alaska 2. Section 52.70 is amended by adding paragraph (c)(22) to read as follows: Sec. 52.70 Identification of plan. * * * * * (c) * * * (22) On March 24, 1994, ADEC submitted a revision to its SIP for the State of Alaska addressing the attainment and maintenance of the National Ambient Air Quality Standards for carbon monoxide in the Anchorage carbon monoxide nonattainment area. (i) Incorporation by reference. (A) March 24, 1994 letter from Alaska Governor Walter Hickel to EPA Regional Administrator Chuck Clarke including as a revision to the SIP the State of Alaska, Department of Environmental Conservation, 18 AAC 53, ``Fuel Requirements for Motor Vehicles,'' (Article 1, 18 AAC 53.005--18 AAC 53.190 and Article 9, 18 AAC 53.990) with amendments adopted through March 19, 1994. * * * * * [FR Doc. 95-26316 Filed 10-23-95; 8:45 am] BILLING CODE 6560-50-P