[Federal Register: May 6, 2003 (Volume 68, Number 87)]
[Proposed Rules]
[Page 24311-24321]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my03-30]
[[Page 24311]]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-7491-9]
Extension of Alternative Compliance Periods Under the Anti-
Dumping Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: Today's proposal would amend the provisions that EPA
promulgated on September 8, 2000, when we published a direct final rule
allowing start-up refineries to apply for a conventional gasoline anti-
dumping compliance period of longer than one year. Alternative
compliance periods are available only to start-up refineries that are
facing significant hardship in complying with the anti-dumping
statutory baseline oxides of nitrogen (NOX) standard.
Today's proposal would amend the alternative anti-dumping compliance
period provisions to permit an alternative compliance period of up to
seven years for start-up refineries owned by small refiners (but in no
case extending beyond calendar year 2007), while requiring refineries
to provide additional environmental benefits for any cumulative
NOX deficits remaining at the end of the fifth or sixth
calendar years of any alternative compliance period.
A refinery with an alternative compliance period is allowed to
produce gasoline that does not comply with the statutory anti-dumping
NOX standard on an annual average basis, thereby generating
a NOX emissions deficit in the early part of the alternative
compliance period. However, the refinery must produce NOX
emissions benefits before the end of the alternative compliance period
that make up for these early deficits and that provide an additional
environmental NOX benefit at least equivalent to the overall
cumulative NOX deficit generated during the course of the
alternative compliance period. To track its NOX compliance,
the refinery must calculate its NOX emissions benefit or
deficit on a quarterly basis using specified equations. This proposed
rule would modify the method for determining a refiner's quarterly
NOX emissions deficit or benefit for a refinery with an
approved alternative compliance period, to account for ordinary
seasonal variation in gasoline quality and use of different seasonal
versions of the Complex Model. The net determination of NOX
deficit or benefit would be unaffected. This proposal would also allow
a refinery to meet all or some of the over-compliance requirement by
purchasing and retiring NOX emissions credits instead of
requiring the refinery to over-comply based on the actual performance
of the gasoline it produces over the course of the alternative
compliance period.
Additionally, this proposed rule would allow a start-up refinery to
petition to receive the less stringent anti-dumping statutory baseline
exhaust toxics value as its conventional gasoline mobile source air
toxics (MSAT) standard for all or part of its alternative anti-dumping
compliance period. Thereafter, the refinery's conventional gasoline
MSAT standard would be the MSAT conventional gasoline default baseline
value.
Finally, this proposed rule would make a correction to the
quarterly reporting requirements for start-up refineries that have been
granted an alternative anti-dumping compliance period. The existing
regulation was accidentally promulgated without language requiring that
quarterly reports be signed and certified by a responsible corporate
officer. Today's proposal would correct that omission.
DATES: Comments or a request for a public hearing must be received by
June 5, 2003.
ADDRESSES: To request a public hearing, please contact Anne
Pastorkovich, Attorney/Advisor, Transportation & Regional Programs
Division, U.S. Environmental Protection Agency, 1200 Pennsylvania
Avenue, NW., (6406J), Washington, DC 20460 or by e-mail to
pastorkovich.anne-marie@epa.gov. No confidential business information
(CBI) should be submitted by e-mail.
EPA has established a public docket for this proposed rule under
Docket ID No. OAR-2003-0007, which is available for public viewing at
the Air and Radiation Docket and Information Center (EPA/DC) in the EPA
Docket Center, EPA West, Room B102, 1301 Constitution Avenue, NW.,
Washington DC. The EPA Docket Center Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Reading Room is (202) 566-1744,
and the telephone number for the Air and Radiation Docket and
Information Center is (202) 566-1742. An electronic version of the
public docket is available through EPA Dockets (EDOCKET) at http://www.epa.gov/edocket.
Use EDOCKET to submit or view public comments,
access the index listings of the contents of the public docket, and to
access those documents in the public docket that are available
electronically. Once in the system, select ``search,'' then key in the
docket ID number identified above.
Any comments related to the proposed rule should be submitted to
EPA within 30 days of this notice, and according to the following
detailed instructions: Submit your comments to EPA online using EDOCKET
(our preferred method) or by mail to EPA Docket Center, Environmental
Protection Agency (6102T), 1200 Pennsylvania Avenue, NW., Washington,
DC 20460.
EPA's policy is the public comments, whether submitted
electronically or in paper format, will be made available for public
viewing in EDOCKET as EPA receives them and without change, unless the
comment contains copyrighted material, CBI, or other information whose
public disclosure is otherwise restricted by statute, is not included
in the official public docket, and will not be available for public
viewing in EDOCKET. For further information about the electronic
docket, see EPA's Federal Register notice describing the electronic
docket at 67 FR 38102 (May 31, 2002), or go to http://www.epa.gov/edocket
.
FOR FURTHER INFORMATION CONTACT: If you would like further information
about this rule or to request a hearing, contact Anne Pastorkovich,
Attorney/Advisor, Transportation & Regional Programs Division, (202)
564-8987, or by e-mail to pastorkovich.anne-marie@epa.gov.
SUPPLEMENTARY INFORMATION:
I. Regulated Entities
Entities potentially regulated by the action are parties that
produce conventional gasoline. Regulated categories and entities
include:
----------------------------------------------------------------------------------------------------------------
Category NAICS Code * SIC Code ** Example
----------------------------------------------------------------------------------------------------------------
Industry................................... 324120 2911 Petroleum refiners.
----------------------------------------------------------------------------------------------------------------
* North American Industry Classification System.
[[Page 24312]]
** Standard Industry Classification System Code.
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists all entities that we are now aware could
potentially be regulated by this action. Other types of entities not
listed in this table could also be regulated by this action. To
determine whether your business is regulated by this action, you should
carefully examine the applicability criteria in part 80 of Title 40 of
the Code of Federal Regulations. If you have any questions regarding
the applicability of this action to a particular entity, consult the
person listed in the preceding section of this document.
II. Background
The Clean Air Act requires EPA to establish rules for reformulated
gasoline (RFG) designed to reduce vehicle emissions of ozone-forming
volatile organic compounds (VOCs) and toxic air pollutants. The Act
requires refiners, importers, and blenders to sell only reformulated
gasoline in specific ``covered areas'' with the worst ozone problems.
Other areas with ozone levels exceeding the public health standard have
voluntarily chosen to become RFG covered areas. Additionally, the Act
required us to establish regulations covering all gasoline that is not
reformulated. Such gasoline is called conventional gasoline, and the
standards governing it are called the anti-dumping standards. We issued
final reformulated gasoline and anti-dumping regulations on December
15, 1993\1\ and the standards in those regulations became effective in
January 1995.
---------------------------------------------------------------------------
\1\ ``Regulation of Fuels and Fuel Additives: Standards for
Reformulated and Conventional Gasoline--Final Rule,'' 59 FR 7812
(February 16, 1994). See 40 CFR part 80, subparts D, E, and F.
---------------------------------------------------------------------------
The purpose of the anti-dumping standards is to ensure that the
quality of a refiner's conventional gasoline does not get worse once
the reformulated gasoline program begins. To ensure that this does not
happen, the Act requires that each refiner's conventional gasoline be
at least as clean as the gasoline produced by that refiner during the
``baseline'' year 1990. The anti-dumping program specifically governs
the exhaust toxics and NOX emissions of conventional
gasoline. These emissions are determined using the Complex Model, a
tool which uses the fuel content specifications, or parameters, of a
gasoline blend to calculate the emissions associated with that
gasoline. The fuel parameters included in the Complex Model are
aromatics, olefins, benzene, sulfur, oxygen content and oxygenate type,
the percent of fuel evaporated at 200[deg]F and 300[deg]F (E200 and
E300, respectively) and Reid vapor pressure (``RVP'').
Under the anti-dumping program, each refinery and importer has an
individual baseline consisting of a set of values for the Complex Model
fuel parameters and the exhaust toxics and NOX emissions
associated with those values representing the emissions performance of
the gasoline that the refiner produced in 1990. An individual baseline
can be one of two types. The first type is the unique individual
baseline. A refinery or importer has a unique individual baseline if it
was in operation for at least 6 months in 1990 and had sufficient data
and supporting analysis to determine the actual quality of its 1990
gasoline to EPA's satisfaction. Those with unique individual baselines
also have an associated individual baseline volume, which is the volume
of gasoline produced or imported by that refiner in 1990. The other
type of individual baseline is the statutory baseline. The statutory
baseline consists of a set of fixed values for the Complex Model fuel
parameters and the emissions associated with those values which
represent the average quality of all gasoline produced or sold in the
United States in 1990. The summer portion of the statutory baseline was
specified in the Clean Air Act; the corresponding winter portion was
developed by EPA. Together, the summer and winter portions form the
annual average statutory baseline which is specified in 40 CFR
80.91(c)(5). There is no individual baseline volume for those
refineries or importers for whom the statutory baseline is the
individual baseline.
Compliance with the anti-dumping requirements is generally
determined on an annual basis. Each batch of gasoline is evaluated
under the appropriate summer or winter portion of the Complex Model;
the resulting emissions calculated for each batch are volume-weighted
to determine the annual average exhaust toxics and NOX
emissions for the refinery or importer. Then, the annual average
emissions are compared to the applicable baseline emissions values to
determine whether the refinery or importer is in or out of compliance
with its anti-dumping standards.
Section 211(k)(8)(D) of the Act directs us to establish ``an
appropriate compliance period or compliance periods'' to be used for
assessing compliance with the anti-dumping regulations. As mentioned
above, a one year compliance period is the norm. However, on September
8, 2000 we published a rule that allows a refiner to apply for an
alternative compliance period under 40 CFR 80.101(k) for a start-up
refinery.\2\ To receive an alternative anti-dumping compliance period
the refiner must show that it is starting up a refinery that will
produce conventional gasoline and that it faces significant hardship in
meeting the anti-dumping statutory baseline NOX standard.
EPA may approve an alternative compliance period for any domestic or
foreign refiner that meets these conditions. If EPA approves the
application, we may establish a compliance period of two, three, four,
or five years. Under Sec. 80.101(k)(6)(iv), no compliance period may
exceed five years or extend beyond January 1, 2006. This date was
picked because it represented the deadline for Tier 2 gasoline sulfur
standards for most refiners. When EPA approves an alternative
compliance period it also establishes milestones that require the
refinery to begin meeting the annual statutory baseline by a specified
date. Moreover, the refinery must produce gasoline by the end of the
alternative compliance period that generates NOX emissions
benefits that are equal to double the cumulative NOX deficit
that the refinery generates during the alternative compliance period.
Under the existing regulations, NOX emission benefits may
only be generated by gasoline that is produced by the refiner and that
over-complies with the annual NOX baseline standard. The
refinery must also bank stationary source NOX credits or
allowances equivalent to the NOX deficit it generates on a
quarterly basis until it begins to produce gasoline that meets or
exceeds the NOX statutory baseline standard.
---------------------------------------------------------------------------
\2\ For more information, see ``Establishment of Alternative
Compliance Periods under the Anti-Dumping Program''--Direct Final
Rule, 65 FR 54423 (September 8, 2000).
---------------------------------------------------------------------------
III. Today's Proposed Action
A. Maximum Duration of Alternative Compliance Periods for Small
Refiners
This proposed rule would allow small start-up refiners to request
an alternative compliance period under Sec. 80.101(k) of up to seven
years, so long as that period does not extend beyond December 31, 2007.
As with all applications for alternative anti-dumping compliance
[[Page 24313]]
periods, the Administrator would act upon the petition within six
months. EPA believes that this change is appropriate for the reasons
outlined below.
The alternative anti-dumping compliance period provisions at 40 CFR
80.101(k) are designed for refiners that are starting up production of
conventional gasoline and could achieve the Tier 2 gasoline sulfur
reductions earlier than required, but are facing significant hardship
in complying with the anti-dumping statutory NOX standard.
Under this provision, such a refiner may request an alternative anti-
dumping compliance period of greater than the ordinary one year
(currently alternative compliance periods of two, three, four or five
years are available). Any refinery subject to an alternative compliance
period must meet various substantive and administrative requirements to
ensure that there is no environmental detriment as a result of the
longer compliance period. Such a refinery must produce a benefit that
is equal to twice any NOX deficit it produces during the
alternative compliance period. Sulfur significantly affects
NOX emissions, and decreasing sulfur will result in
significant NOX emissions reductions. Therefore, a refinery
granted an alternative anti-dumping compliance period would almost
certainly need to install sulfur-reducing technologies (such as those
necessary to meet the Tier 2 gasoline standards) before the end of its
alternative compliance period in order to generate the NOX
benefits needed to meet its overall NOX obligations.\3\ In
fact, one purpose for permitting a refinery to have an alternative
anti-dumping compliance period was to promote refinery plans to meet
the Tier 2 sulfur levels earlier than otherwise required.\4\
---------------------------------------------------------------------------
\3\ See 65 FR 54423, 54426 (September 8, 2000).
\4\ Id. at 54425.
---------------------------------------------------------------------------
The existing regulations regarding alternative anti-dumping
compliance periods make no distinctions based on refinery size.
However, small refiners starting up a new refinery may face greater
hardships than larger refineries in raising funds for construction of
refinery units and installation of equipment to reduce gasoline sulfur.
Under existing Sec. 80.101(k), a refiner may request a compliance
period of up to five years and no compliance period may extend beyond
January 1, 2006. We selected the January 1, 2006 date as the latest
date for any alternative compliance period because it is the date by
which most refiners must meet the 30 ppm average Tier 2 gasoline sulfur
standards under 40 CFR 80.195 and must already have installed sulfur
reduction technology. Because a refiner that complies with the 30 ppm
sulfur requirement will also most likely comply with the annual average
statutory anti-dumping NOX baseline,\5\ an alternative
compliance period extending beyond this date would be unhelpful.
Moreover, one of the intended benefits of the alternative compliance
baseline provisions is to encourage early reductions in gasoline
sulfur.
---------------------------------------------------------------------------
\5\ The NOX emissions performance of a refinery's
gasoline improves dramatically when the refinery reduces the sulfur
content of its gasoline, due to the effect of sulfur content on
NOX emissions as calculated by the Complex Model.
---------------------------------------------------------------------------
However, if a refiner is a small refiner under the Tier 2 gasoline
sulfur regulation, then full compliance with the regulations is not
required until January 1, 2008.\6\ Thus, an alternative anti-dumping
compliance period extending beyond calendar year 2005 may prove
beneficial for a small refiner, and also is consistent with EPA intent
to encourage early reductions in sulfur content. For example, small
refiners may face particular hardship in raising capital and bringing
new refinery units on line, including de-sulfurization equipment. In
fact, one small refiner with an approved alternative compliance period
believes that it will have difficulty complying within the five year
maximum period under Sec. 80.101(k), and believes that a longer
compliance period would be appropriate. The existing regulations for
alternative anti-dumping compliance periods at Sec. 80.101(k) contain
no provision for a compliance period that exceeds five years or that
extends beyond January 1, 2006. However, we believe that it may be
appropriate to allow small refiners to petition for an alternative
anti-dumping compliance period of up to seven years, as long as the
compliance period does not extend beyond calendar year 2007 (when small
refiners generally will have to meet the Tier 2 sulfur requirements).
This proposed approach would provide additional flexibility to small
start-up refineries. Additionally, it would be extremely difficult for
a refinery to generate the NOX benefits necessary to
compensate for the cumulative NOX deficits generated during
its alternative compliance period without implementing sulfur-reducing
technologies as soon as possible and producing low sulfur gasoline
earlier than otherwise required. Therefore, even with an alternative
period extending through 2007, we believe that we would realize the
intended benefits of early sulfur reductions.
---------------------------------------------------------------------------
\6\ See 40 CFR 80.260 and 80.553. Under certain circumstances, a
refiner may have until 2010 to meet the final gasoline sulfur
standards. However, we expect that most small refiners will fully
comply with the 30 pm average Tier 2 gasoline sulfur standard by
January 1, 2008.
---------------------------------------------------------------------------
For any new alternative compliance period petitions, in order for a
refinery to receive an alternative compliance period that exceeds five
years or that extends beyond calendar year 2005, we propose that the
refiner demonstrate that it is a ``small refiner'' for purposes of
EPA's Tier 2 low sulfur gasoline regulations \7\ and explain the
conditions that justify the alternative compliance period requested.
For a refinery that already has an alternative anti-dumping compliance
period, and that wants to extend its compliance period beyond five
years or calendar year 2005, we propose that the refiner submit a
petition describing the hardships that make a longer alternative anti-
dumping compliance period appropriate and demonstrating that it is a
small refiner. Specifically, any refiner requesting an alternative
compliance period of more than five years, or extending beyond calendar
year 2005, must include all information required under Sec.
80.101(k)(2), appropriately updated to reflect current conditions. Such
a refiner would have to include a clear explanation as to the hardship
that makes it infeasible for it, as a small refiner, to meet the
applicable milestones and standards within five years or by January 1,
2006, whichever comes first. The refiner must show that it is has
received approval as a small refiner under the Tier 2 gasoline sulfur
regulations and that the conditions of that approval are still
applicable. The application must be submitted by no later than January
1, 2004. We chose this date since it permits reasonable time after
promulgation of this regulation for a refiner to apply for the
flexibility, while ensuring that timely decisions are made to produce
sufficient clean gasoline for compliance purposes. The Administrator
will act on the application within six months of receipt and will issue
an approval or disapproval, in writing, including any conditions or
other requirements to which the approval is subject.
---------------------------------------------------------------------------
\7\ See 40 CFR 80.225--80.235
---------------------------------------------------------------------------
Under this proposal, if EPA were to determine that the
circumstances described in a petition warrant an extended compliance
period, we would be able to grant a refinery an alternative compliance
period of up to seven years total, so long as the alternative period
would not extend beyond calendar year 2007. If EPA were to grant an
alternative
[[Page 24314]]
anti-dumping compliance period of more than five years, or extending
beyond calendar year 2005, EPA's approval would provide for appropriate
milestones and other requirements. If EPA were to approve an extension
to an existing alternative compliance period, we would adjust the
compliance dates and other requirements as appropriate to reflect the
new alternative compliance period.
We propose that, if EPA finds that a refiner has provided false or
misleading information in connection with any application relating to
an alternative anti-dumping compliance period, we would notify the
refiner that its application and any alternative compliance period that
relies on such application would be void ab initio.
We propose that, if a refiner's status changes at any time during
an alternative anti-dumping compliance period and the refiner is no
longer eligible for the small refiner hardship provisions of the Tier 2
gasoline rule, then any refineries owned or operated by such refiner
would no longer be eligible for an alternative anti-dumping compliance
period that extends longer than five years or beyond calendar year
2005.\8\ Any change in a refinery's alternative compliance period
eligibility would become effective with the first full annual averaging
period following the refiners loss of small refiner status. The
refinery would be required to notify EPA immediately of any change in
small refiner status under the Tier 2 gasoline regulation.\9\
---------------------------------------------------------------------------
\8\ See 40 CFR 80.230.
\9\ See 40 CFR 80.230(b).
---------------------------------------------------------------------------
For any refinery with an alternative compliance period that exceeds
five years, EPA proposed to require the refinery to provide additional
NOX benefits (above and beyond those benefits required to
provide a double payback of cumulative NOX deficits) if the
refinery has any cumulative NOX deficits remaining at the
termination of the fifth or sixth years of its alternative compliance
period. As discussed in the September 8, 2000 action, we believe that a
one year compliance period should be the norm, even though alternative
anti-dumping compliance periods of up to five years may be appropriate
in limited circumstances. We continue to believe that the shortest,
appropriate compliance period is the correct one and we want to
minimize any potential for short-term or long-term environmental
detriment. We want to encourage refiners to meet the anti-dumping
statutory baseline NOX standard, on average, for all of
their gasoline as soon as possible. Any refinery that is granted an
alternative anti-dumping compliance period of up to five years must
produce a net NOX benefit by the end of the applicable
period. In the case of a small refinery with an alternative compliance
period of more than five years, we believe it is reasonable to require
the refinery to provide additional NOX benefits if the
refinery has not made substantial gains by the end of the fifth year of
the compliance period, because such requirement will provide a
deterrent against delays in the production of cleaner gasoline.
Moreover, this requirement functions to minimize the potential for any
environmental harm that might occur in the event that a refinery fails
to meet its obligations under its alternative anti-dumping compliance
period. The longer a refinery's alternative compliance period, the
greater the potential for a refinery to generate a large NOX
deficit, and the greater the potential risk to the environment if the
refiner cannot meet its obligations. Thus, for an extended alternative
compliance period, when a refinery carries NOX deficits too
late into its compliance period, we believe it is appropriate for EPA
to impose prophylactic requirements in the form of additional
NOX benefit obligations.
For every ton of NOX deficit remaining upon the
expiration of the fifth year of any alternative anti-dumping compliance
period, the small refiner would be required to provide an additional
\1/2\-ton of NOX benefit by the end of the alternative
compliance period. These additional NOX benefits are in
addition to all other requirements of Sec. 80.101(k). Similarly, for
every ton of NOX deficit remaining upon the expiration of
the sixth year of any alternative compliance period, the refiner would
be required to provide an additional 1-ton of NOX benefit by
the end of alternative compliance period. We propose that these
additional tons of NOX benefit may come from actual
emissions benefits from gasoline that the refinery produces, or from
the purchase and retirement of marketable NOX allowances or
credits as discussed earlier in this notice.
B. Using NOX Credits or Allowances To Satisfy Double Payback
Provisions
Today's proposed rule would allow refiners to purchase and retire
marketable stationary source NOX allowances or credits in
order to satisfy the requirements for up to one-half of the total
NOX payback under Sec. 80.101(k)(2). However, a refinery
would have to compensate for the entire cumulative NOX
deficit that it generates over the alternative compliance period by
producing NOX benefits from gasoline that the refinery
actually produces before the end of the alternative compliance period
(measured in tons of NOX).
Existing Sec. 80.101(k) requires refiners both to compensate for
all NOX deficits generated during the alternative compliance
period, and to generate additional NOX benefits before the
end of the alternative compliance period. Accordingly, half of the
total NOX payback represents repayment for ``dirtier''
gasoline produced earlier in the compliance period. The second half of
the NOX payback (beyond the break-even point) represents a
precautionary surplus environmental benefit. Currently, all
NOX benefits must come from cleaner gasoline that the
refinery actually produces. However, we believe it is appropriate to
permit this surplus benefit to be paid in terms of either actual
emission reductions from gasoline that the refinery produces, or from
the purchase and retirement of marketable NOX allowances or
credits. This would allow additional flexibility for the refiner to
invest in and develop infrastructure at the refinery, including
infrastructure needed to comply with the Tier 2 gasoline sulfur
requirements early. In order to pay back the actual NOX
deficit created in the earlier part of an alternative anti-dumping
compliance period, a refinery would have to begin producing adequate
quantities of low sulfur/low NOX gasoline to meet its multi-
year average compliance obligations by the end of the applicable
alternative compliance period. Discussions with an affected refiner
have confirmed this understanding.
To provide for NOX benefits by way of NOX
credits or allowances, a refiner would have to appropriately retire
NOX credits or allowances on a timely basis. A refiner may
acquire stationary source NOX credits or allowances for
purposes of satisfying up to half of its total NOX repayment
obligations under Sec. 80.101(k)(2) from any of several state
stationary source programs covered by an approved state implementation
plan (SIP), such as the Ozone Transport Commission (OTC) NOX
Budget Program.\10\ In order to be applied toward the refiners
NOX payback obligations, the allowances or credits must be
current, marketable allowances or credits and must actually be retired
by EPA or the administering state agency, and the retired credits or
allowances must reflect actual NOX emissions reductions. It
is the refiner's
[[Page 24315]]
responsibility to ensure that the credits or allowances are legitimate
and are actually retired.
---------------------------------------------------------------------------
\10\ See http://www.epa.gov/airmarkets/progsregs/noxview.html
for more detailed information about NOX allowances and
credits.
---------------------------------------------------------------------------
C. Correction of Quarterly Compliance Equations and Quarterly Reporting
Requirements
Today's proposed rule would change the equations for calculating
quarterly NOX deficits and benefits to reflect ordinary
seasonal variation in gasoline quality and differences in the
applicable seasonal versions of the Complex Model. The current
regulations require a refiner to purchase NOX credits when,
on a quarterly basis, its average NOX emissions exceed the
annual statutory NOX value. As stated in the September 8,
2000, rule, ``* * * credits function as collateral against any
NOX deficiency that the refiner creates to minimize the
possibility of environmental harm in the event the refinery does not
fulfill its obligation under the other requirements of the rule.''
EPA believes that the current method of calculating NOX
emissions deficits and benefits at Sec. 80.101(k)(3)(ii) may have the
unintended effect of creating an unnecessary pattern of buying and
selling because of the combined effects of seasonal gasoline quality
and the application of seasonal versions of the Complex Model. EPA
believes that we can achieve the same environmental outcome with the
changes contained in today's action while avoiding the unnecessary
outlay of capital by the refiner at a time when the refiner is
operating under an alternative compliance period specifically to reduce
the impact of financial constraints.
On a quarterly basis, gasoline production during the first and
fourth quarters of the calendar year is almost all, if not entirely,
winter gasoline for most refiners. Winter gasoline is not only gasoline
with different properties (like higher RVP) than summer gasoline, but
it must also be evaluated using the winter Complex Model (which is
substantively different from the summer Complex Model used for gasoline
produced during the summer months). For a given fuel composition (based
on fuel properties used in the Complex Model), the winter Complex Model
yields higher emissions than the summer Complex Model. Winter emissions
determined using the Complex Model will always be higher than annual
emissions determined by combining winter and summer results from the
Complex Model.\11\ Thus, under the current equation for calculating
NOX deficit and benefit under Sec. 80.101(k)(3), a refiner
will almost always have to purchase credits for the first and fourth
quarters simply because the equation requires the comparison of the
quarterly production against the annual average. A refiner could
produce extremely clean winter gasoline in these quarters in order to
not have to purchase credits under Sec. 80.101, but it is unlikely
that a refiner in start-up mode would be able to produce such clean
gasoline.
---------------------------------------------------------------------------
\11\ The annual statutory baseline value for NOX
emissions is 1461 milligrams per mile (mg/mile). (See Sec.
80.91(c)(5)(iv).) The summer and winter statutory baseline values
for NOX are 1340 and 1540 mg/mile, respectively. These
were determined by inputting the summer and winter statutory
baseline fuel parameters into the summer or winter Complex Model,
respectively. (See Sec. 80.45(b).) The annual statutory
NOX baseline emissions value was determined from the
weighting of the summer and winter baseline emissions using a 0.396
fraction of summer and a 0.604 fraction of winter gasoline.
---------------------------------------------------------------------------
In the second and third quarters, winter gasoline constitutes
roughly 20-30 percent of total gasoline production. Because of the
inclusion of summer gasoline, second and third quarter NOX
emissions determined via the Complex Model are generally less than the
annual statutory NOX value. In fact, under Sec.
80.101(k)(3)(ii), this overcompliance in the second and third quarters
(resulting in a quarterly NOX benefit) would likely more
than exceed the deficit created in the first and fourth quarters,
allowing those credits to be sold.
Thus, as a result of the combined effects of seasonal gasoline
quality and the provisions of the Complex Model, the current manner in
which NOX benefit and deficit are determined can cause a
refiner with an alternative compliance period to expend capital, on a
regular basis, to purchase credits to cover NOX deficits
caused by the production of winter gasoline in the first and fourth
quarters and to then be able to, regularly, sell those credits back
following production of a mix of summer and winter gasoline in the
second and third quarters.
EPA believes that today's proposed rule, which would modify the
equations at Sec. 80.101(k)(3) used to calculate the quarterly
NOX deficit or benefit, would not change the environmental
protection aspects intended under Sec. 80.101(k) and would facilitate
start-up refineries' ability to install sulfur reducing technology and
introduce cleaner gasoline to the market sooner. For the limited
application of determining an approved refiner's quarterly
NOX deficit or benefit for purposes of determining the
refinery's obligations regarding the purchase of collateral
NOX credits, today's proposed rule would provide that the
refiner's quarterly NOX emissions will be compared to a
quarterly NOX emissions value rather than to the annual
statutory baseline NOX emissions value. The quarterly and
annual NOX values (to which the refinery's NOX
emissions are compared) are based on the statutory NOX
seasonal values. A memo detailing the calculation of quarterly
NOX values has been placed in the docket.
Additionally, the September 8, 2000 rule omitted the requirement
that quarterly reports be signed and certified by the owner or a
responsible corporate officer of the refinery. This requirement is
included in other fuels programs that have periodic compliance
reporting. This proposed rule would correct the previous omission and
require that quarterly reports be appropriately signed and certified.
D. Use of Conventional Gasoline Baseline Toxics Requirement as MSAT
Baseline
This proposed rule would allow a refinery with an approved
alternative anti-dumping compliance period to petition EPA to
substitute the anti-dumping statutory baseline toxic value for the
mobile source air toxics (MSAT) default toxics baseline for some or all
of a refinery's alternative anti-dumping compliance period. On March
29, 2001, EPA published a rule for the control of emissions of
hazardous air pollutants from mobile sources.\12\ This rule is
generally known as the Mobile Source Air Toxics, or ``MSAT,'' rule.
This rule requires that the average toxics emissions of gasoline
produced or imported during each annual averaging period not exceed the
average toxics emissions of gasoline produced or imported during the
baseline period 1998-2000. Toxics emissions must be determined on a
refinery or importer basis, and must be determined separately for
reformulated gasoline and conventional gasoline.
---------------------------------------------------------------------------
\12\ 66 FR 17230.
---------------------------------------------------------------------------
The MSAT regulations specify that a refinery or importer must
determine a unique individual baseline if it has data on gasoline
produced or imported over at least a 12 month period between January 1,
1998 and December 31, 2000. The regulations further specify that a
refinery or importer which does not have the appropriate gasoline data
shall have the default baseline values specified at 40 CFR
80.855(b)(1). The default baseline values represent the national
average toxics performance values of gasoline produced and imported
during the baseline period.
The regulations governing the alternative anti-dumping averaging
provisions at Sec. 80.101(k) provide for
[[Page 24316]]
approved refiners to have the anti-dumping statutory baseline exhaust
toxics emissions values specified at Sec. 80.91(c)(5) as their anti-
dumping standard. As discussed above, the alternative anti-dumping
averaging regulations were finalized on September 8, 2000, and apply to
refiners which had never produced gasoline subject to the anti-dumping
requirements. Thus, a refiner approved for an alternative anti-dumping
averaging period would not meet the 12 month requirement for
establishing an individual MSAT baseline, and would be subject to the
MSAT default baseline values at Sec. 80.855(b)(1). The conventional
gasoline MSAT default baseline toxics performance value of
approximately 94 mg/mile is a more stringent standard than the anti-
dumping statutory baseline value of approximately 104 mg/mile.
The intent of the alternative averaging period provisions is to
provide additional flexibility to approved refiners during the start-up
of a refinery. The September 8, 2000, rule specifically excluded a
start-up refinery's inability to meet its anti-dumping toxics standard
as cause to petition for an alternative averaging period because the
refinery units which impact benzene and aromatics (the primary fuel
components affecting toxics performance) are different than those used
to reduce sulfur (which leads to reduced NOX emissions).
However, in that rule, EPA also required petitioning refiners to
include a detailed description of the current and future state of the
refinery equipment (processing units). During the course of adding
refinery processing units and bringing them up to normal operational
levels, gasoline quality can fluctuate significantly. The operational
levels and throughput of the processing units is dependent on the
target standard(s). Refinery process units produce a variety of
blendstocks which have a wide range of properties. Some blendstocks are
higher in sulfur or olefins, fuel parameters which significantly affect
NOX emissions. Other blendstocks are higher in benzene and
aromatics, two fuel parameters which contribute significantly to toxics
performance as determined by the Complex Model. If a processing unit
which produces a blendstock stream high in benzene or aromatics is put
into operation first, toxics levels would be expected to be higher than
when the gasoline is composed of many blendstocks, including those
blendstocks with low benzene and aromatics levels which will dilute the
high benzene and aromatics blendstocks' effect on toxics performance.
Because of the variations in gasoline fuel quality that can occur
during startup (as streams are added and then brought to normal
operational levels), EPA believes that some start-up refineries may not
be able to achieve the MSAT default baseline toxics performance, and
that it may be appropriate for EPA to allow a refiner with an approved
alternative anti-dumping averaging period to comply with the less
stringent anti-dumping statutory baseline value as its conventional
gasoline MSAT standard for some or all of its alternative averaging
period. We propose to require that the refiner petition EPA for
approval to use the anti-dumping statutory baseline value as its MSAT
compliance baseline for a limited period of time not to exceed its
alternative anti-dumping period. The refiner would have to specify the
cost and/or technological constraints that make it infeasible for the
refinery to achieve compliance with the MSAT compliance baseline value
specified in Sec. 80.855(b), and the expected time-line for achieving
compliance with that requirement (including achievable incremental
improvements in toxics performance). We propose that, when EPA approves
a refiner's petition, it will establish a date by which the refinery
must comply with the MSAT default baseline. Upon expiration of the
period during which the refinery may use the anti-dumping statutory
baseline toxics value as its MSAT compliance baseline, the refinery
would be subject to the MSAT compliance baseline value specified at
Sec. 80.855(b). We believe that requiring the refiner to specify its
technological and cost constraints, and basing the approval of such a
petition on that information, is consistent with the Clean Air Act
requirement at 202(l)(2).
E. Effects of Today's Proposed Rule
The environmental effects of today's proposed rule would be
minimal, as only one refinery has received an approved alternative
anti-dumping averaging period so far. No new refineries have been
constructed since 1997, and only five refineries have been reactivated
since 1997.
The economic effects of today's action are likely to be positive,
on a small, local scale. Refinery start-up, with a less stringent
toxics standard, would be able to proceed more quickly. Additionally,
the cost of complying with a more stringent standard would not be
imposed, and thus would not be passed on to consumers.
IV. Administrative Requirements
A. Executive Order 12866: Regulatory Planning and Review
Under Executive Order 12866, (58 FR 51,735 (October 4, 1993)) the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
Executive Order. The Order defines ``significant regulatory action'' as
one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
This proposed rule is not a significant regulatory action within
the meaning of the Executive Order. It would not have an annual effect
on the economy of $100 million or more and it is not expected to have
any adverse economic effects as described in the Order. This proposed
rule does not raise issues of consistency with the actions taken or
planned by other agencies, will not materially alter the cited
budgetary impacts, and does not raise any novel legal or policy issues
as defined in the Order.
B. Paperwork Reduction Act
This proposed rule would not add any new requirements involving the
collection of information as defined by the Paperwork Reduction Act, 44
U.S.C. 3501 et seq. Today's proposed rule would only permit more
flexibility to parties under an existing petitioning process for anti-
dumping. OMB has approved the information collection requirements
contained in the final reformulated gasoline (RFG) and anti-dumping
rulemaking and has assigned OMB control number 2060-0277. To the extent
that this rule affects the MSAT provisions, the OMB control number for
the information requirements will be listed in an amendment to 40 CFR
part 9 in a subsequent Federal Register document after OMB approves the
ICR. The information requirements are not enforceable until OMB
approves them.
[[Page 24317]]
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information. An Agency may not
conduct or sponsor, and a person is not required to respond to a
collection of information unless it displays a currently valid OMB
control number. The OMB control numbers for EPA's regulations are
listed in 40 CFR part 9 and 48 CFR chapter 15.
C. Regulatory Flexibility Act
The RFA generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, small organizations, and small
governmental jurisdictions.
For purposes of assessing the impacts of today's proposed rule on
small entities, small entity is defined as: (1) A small business that
has not more than 1,500 employees (13 CFR 121.201); (2) a small
governmental jurisdiction that is a government of a city, county, town,
school district or special district with a population of less than
50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.
This proposed rule would grant small entities that are start-up
refineries additional flexibility for purposes of meeting the existing
NOX performance requirements under the conventional gasoline
anti-dumping program and the toxics baseline under the mobile source
air toxics (MSAT) program. In general, this proposed rule would allow
small start-up refineries to apply for an alternative anti-dumping
averaging period of up to seven years. It would allow refineries with
an alternative averaging period to purchase NOX credits to
provide the required annual average over-compliance by the end of the
extended compliance period, instead of requiring actual NOX
performance over-compliance. Today's proposed rule would allow refiners
with an alternative averaging period to petition to have the annual
average anti-dumping statutory toxics baseline as their MSAT baseline
for some or all of an extended averaging period. Therefore, today's
proposed rule would relieve existing regulatory burdens for small
entities.
D. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to state, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.
Today's proposed rule contains no federal mandates (under the
regulatory provisions of Title II of the UMRA) for state, local or
tribal governments or the private sector. This proposed rule would
impose no enforceable duty on any state, local or tribal governments or
the private sector.
E. Executive Order 13132: Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This proposed rule does not have federalism implications. It would
not have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. The proposed rule would permit
start-up refineries reasonable flexibility in meeting anti-dumping and
MSAT requirements. Thus, Executive Order 13132 does not apply to this
proposed rule.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on one or more Indian tribes, on
the relationship between the Federal government and the Indian tribes,
or on the distribution of power and responsibilities between the
Federal government and Indian tribes.''
This proposed rule does not have tribal implications. It would not
have substantial direct effects on tribal governments, on the
relationship between the Federal government and Indian tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian tribes, as specified in Executive Order 13175.
This proposed rule applies to start-up refineries, including small
businesses and grants reasonable flexibility in meeting anti-dumping
and MSAT
[[Page 24318]]
requirements. This proposed rule, if adopted, would modify the Federal
anti-dumping and MSAT requirements, but does not impose any enforceable
duties on communities of Indian tribal governments. Thus, Executive
Order 13175 does not apply to this proposed rule.
G. Executive Order 13045: Protection of Children From Environmental
Health & Safety Risks
Executive Order 13045: Protection of Children from Environmental
Health Risks and Safety Risks (62 FR 19885, April 23, 1997) applies to
any rule that: (1) is determined to be economically significant as
defined under Executive Order 12866, and (2) concerns an environmental
health or safety risk that EPA has reason to believe may have a
disproportionate effect on children. If the regulatory action meets
both criteria, the Agency must evaluate the environmental health or
safety effects of the planned rule on children, and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
EPA interprets Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under section 5-501 of the Order has the
potential to influence the regulation. This proposed rule is not
subject to Executive Order 13045, entitled ``Protection of Children
from Environmental Health Risks and Safety Risks'' (62 FR 19885, April
23, 1997), because it does not involve decisions on environmental
health risks or safety risks that may disproportionately affect
children.
H. Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution or Use
This proposed rule is not an economically ``significant energy
action'' as defined in Executive Order 13211, ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355 (May 22, 2001)) because it does not have a
significant adverse effect on the supply, distribution, or use of
energy. If adopted, this proposed rule would allow additional
flexibility in meeting alternative anti-dumping compliance periods.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272
note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. The NTTAA directs EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
This proposed rule does not involve technical standards. Therefore,
EPA did not consider the use of any voluntary consensus standards.
J. Statutory Authority
Sections 114, 211, and 301(a) of the Clean Air Act as amended (42
U.S.C. 7414, 7545, and 7601(a)). Today's proposed rule, and each
element of today's action, including the promulgation or revision of
regulations pertaining to fuels and fuel additives under section 211 of
the Clean Air Act constitutes rulemaking under Clean Air Act section
307(d). See 42 U.S.C. 7606(d)(1).
List of Subjects in 40 CFR Part 80
Environmental Protection, Fuel additives, Gasoline, Imports,
Labeling, Motor vehicle pollution, Penalties, Reporting and
recordkeeping requirements.
Dated: April 25, 2003.
Christine Todd Whitman,
Administrator.
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
1. The authority citation for part 80 is proposed to continue to
read as follows:
Authority: Section 114, 211, and 301(a) of the Clean Air Act as
amended (42 U.S.C. 7414, 7545, and 7601(a)).
2. Section 80.101 is proposed to be amended by revising paragraphs
(a), (k)(3)(i) through (k)(3)(iii), (k)(3)(vi)(B)(2) and (3),
(k)(3)(viii), and (k)(6)(iv), and adding paragraph (l) to read as
follows:
Sec. 80.101 Standards applicable to refiners and importers.
* * * * *
(a) Averaging period. The averaging period for the standards
specified in this section shall be January 1 through December 31,
except as provided in paragraphs (k) and (l) of this section.
* * * * *
(k) * * *
(3) * * *
(i) A refinery shall meet the following deadlines for compliance
with the stautory baseline, depending on the length of the alternative
averaging period applicable to the refinery:
----------------------------------------------------------------------------------------------------------------
Compliance
period must Refinery must comply with the statutory baseline NOX
Length of compliance period in start no later standard, on average, for gasoline produced beginning with
years than January the . . .
1st of
----------------------------------------------------------------------------------------------------------------
2................................. 2004 7th quarter and all subsequent quarters.
3................................. 2003 10th quarter and all subsequent quarters.
4................................. 2002 13th quarter and all subsequent quarters.
5................................. 2001 16th quarter and all subsequent quarters.
----------------------------------------------------------------------------------------------------------------
(ii)(A) By the end of the applicable alternative averaging period,
the refinery must generate a net NOX benefit (compared to
the statutory baseline) that is at least twice as large as the total
NOX deficit generated during the period of time during which
the refiner produced gasoline that did not comply with the statutory
baseline.
(B) At least one-half of the total NOX benefit required
under paragraph (k)(3)(ii)(A) of this section must be generated by
production of conventional gasoline at the refinery that is cleaner
than the statutory baseline NOX standard, as calculated on a
quarterly basis in accordance with the provision of this paragraph
(k)(3)(ii) of this section.
(C) Any portion of the total NOX benefit beyond that
portion described under paragraph (k)(3)(ii)(B) of this section may
come from either the
[[Page 24319]]
production of conventional gasoline at the refinery that is cleaner
than the statutory baseline NOX standard, as calculated on a
quarterly basis, or from the purchase and retirement of stationary
source NOX credits or allowances, as provided in paragraph
(k)(3)(iii) of this section.
(D) For the purposes of this Sec. Sec. 80.101(k) and 80.101(l),
the NOX deficit in tons shall be calculated in accordance
with the following equation:
NOXDef = (NOXad - NOXsea)* Gd*2.7 x
10-8
Where:
NOXDef = the NOX deficit, in tons, for a calendar
quarter in which the refiner's NOX performance for that
quarter exceeds NOXsea.
NOXad = the average volume weighted NOX emissions
performance, in mg/mile, for a calendar quarter in which the refiner
exceeds NOXsea.
NOXsea = quarterly statutory NOX performance
values. First calendar quarter = 1540 mg/mile; Second calendar quarter
= 1383 mg/mile; Third calendar quarter = 1381 mg/mile; Fourth calendar
quarter = 1540 mg/mile.
Gd = the volume of gasoline produced during a quarter in which the
refiner exceeds the applicable NOX standard, measured in
gallons.
(E) For the purposes of this Sec. Sec. 80.101(k) and 80.101(l),
the NOX benefit in tons shall be calculated in accordance
with the following equation:
NOXBen = (NOXsea - NOXab)* Gd*2.7 x
10-8
Where:
NOXBen = the NOX benefit, in tons, for a calendar
quarter in which the refiner's NOX performance for that
quarter is below NOXsea.
NOXab = the average volume weighted NOX emissions
performance, in mg/mile, for a calendar quarter in which the refiner is
below NOXsea.
NOXsea = quarterly statutory NOX performance
values. First calendar quarter = 1540 mg/mile; Second calendar quarter
= 1383 mg/mile; Third calendar quarter = 1381 mg/mile; Fourth calendar
quarter = 1540 mg/mile.
Gb = the volume of gasoline produced during a quarter in
which the refiner is below the applicable NOX standard,
measured in gallons.
(iii) NOX Credits and Allowances. (A) Within 60 days of
the end of each quarter for which the refinery produces gasoline for
which there is a NOX deficit, the refiner shall purchase
stationary source NOX credits or allowances that are equal
to or greater than the amount of the NOX deficit generated
during the quarter, and provide written demonstration of such
transaction to the Administrator. These NOX credits or
allowances are in addition to any NOX credits or allowances
purchased during any previous quarters. NOX deficit is to be
calculated on a quarterly basis in accordance with the equation in
paragraph (k)(3)(ii)(D) of this section.
(B) No NOX credits or allowances purchased by the
refiner may contribute to the refinery's compliance with the
requirements of paragraphs (k)(3)(ii)(B) of this section.
(C) The refinery may sell NOX credits or allowances
purchased under this paragraph (k)(3)(iii) only in an amount equal to
or less than any NOX benefit that the refinery generates
subsequently through the production of conventional gasoline at the
refinery that is cleaner than the statutory baseline NOX
standard, as calculated on a quarterly basis. A refiner may retire
credits or allowances purchased under this paragraph (k)(3)(iii) at any
time.
(D) For purposes of satisfying a refinery's obligations under
paragraphs (k)(3)(ii)(C), (k)(3)(iii)(A) or (l)(6)(ii) of this section,
any NOX credits or allowances that a refiner purchases must
have been validly generated as part of a state stationary source
program covered by an approved state implementation plan (SIP) and must
be current and marketable NOX credits or allowances. It
shall be the refiner's responsibility to ensure that NOX
credits or allowances are valid, current and marketable.
(E) In order to be retired, NOX allowances or credits
must be retired by EPA or the administering state agency, as provided
for in the applicable state implementation plan (SIP). It shall be the
refiner's responsibility to ensure that NOX credits or
allowances are actually retired and that retirement is reflected in the
records of EPA or the administering state agency.
* * * * *
(vi) * * *
(B)(1) * * *
(2) A statement of the number of NOX credits or
allowances purchased, sold or retired during the quarter and a current
total, based upon all quarters, indicating the current balance of
NOX credits or allowances; and
(3) Any contractual documents, or other documents, evidencing the
purchasing, banking or retiring of NOX credits or
allowances.
(viii)(A) The refiner shall submit reports demonstrating compliance
with deadline requirements under paragraph (k)(3)(vii) of this section
no later than 30 days after the applicable deadline occurs. Upon
failure to meet a deadline requirement under paragraph (k)(3)(vii) of
this section, the Administrator may accelerate the date by which the
refiner would have to produce gasoline that complies with the annual
average statutory baseline NOX standard under paragraph
(k)(3)(i) or (l)(6)(i) of this section such that the gasoline produced
by the refinery beginning with the quarter immediately following the
quarter during which the failure occurred (and during each subsequent
quarter) would have to meet that standard. The acceleration of the
requirement under paragraph (k)(3)(i) or (l)(6)(i) of this section,
regarding compliance with the annual average statutory baseline
NOX standard, does not affect the applicability of any other
standard or requirement applicable to the refinery under this or any
other section of the Act (e.g., the refinery must still comply with the
overall alternative averaging period NOX requirements in
paragraph (k)(3)(ii) of this section).
(B) The reports required by this paragraph shall be on forms and
following procedures specified by the Administrator of the EPA and
signed and certified as correct by the owner or a responsible corporate
officer of the refiner.
* * * * *
(6) * * *
(iv) No application may result in an alternative compliance period
that extends beyond January 1, 2006, except as provided in paragraph
(l) of this section.
* * * * *
(l) Special alternative anti-dumping averaging period provisions
for small refineries.
(1) Eligibility for petition. A refiner who has been granted small
refiner status under Sec. 80.235 and who meets the eligibility
requirements in paragraph (k)(1) of this section may petition for an
alternative compliance period that is greater than five years and/or
that extends beyond January 1, 2006, provided that such application is
submitted by January 1, 2004. No application under this paragraph (l)
may result in an alternative compliance period that extends beyond
January 1, 2008.
(2) Application process. Applications must be submitted to the
Administrator by January 1, 2004 to the following address: U.S. EPA--
Attn: Anti-Dumping Compliance Period (6406J), 1200 Pennsylvania Avenue,
NW., Washington, DC 20460 (certified mail/return receipt) or U.S. EPA--
Attn: Anti-
[[Page 24320]]
Dumping Compliance Period (6406J), Transportation & Regional Programs
Division, 501 3rd Street, NW., Washington, DC 20001 (express mail/
return receipt).
(3) Contents of the application petition. Each petition must
include:
(i) The information and signed statements specified for all
petitioners under Sec. 80.101(k)(2);
(ii) A description of the hardships that make it infeasible, on a
cost and/or technological basis, for the refinery to comply with an
alternative anti-dumping compliance baseline of five years or less, or
that ends on or before January 1, 2006.
(iii) A quarterly timeline, from the date of the application,
indicating the expected NOX emissions performance of the
refinery's conventional gasoline, and the reasons for any expected non-
compliance with the statutory baseline standard for NOX on a
quarterly basis (for example, a particular gasoline blendstock-
producing unit not yet installed). The timeline shall include the date
by which the refinery will produce conventional gasoline that complies
with the annual average statutory NOX baseline on a
quarterly basis as determined according to Sec. 80.101(k)(3)(ii).
(iv) A demonstration that the conditions for which the refinery was
granted small refiner status under Sec. 80.235 are still applicable.
(v) Information already submitted to the Administrator as part of a
prior petition under paragraph (k) of this section, shall be updated if
applicable.
(4) Approval or disapproval of petitions. The Administrator may
approve a petition under this paragraph (l) if it includes information
sufficient to demonstrate to the Administrator's satisfaction that cost
and/or technological constraints make it infeasible for the refinery to
comply with an alternative anti-dumping compliance baseline of five
years or less, or that ends on or before January 1, 2006. The
Administrator will approve or deny the petition in writing within six
months of receipt. An approval will include any conditions or
requirements to which the approval is subject.
(5) Cessation of Extended Alternative Compliance Period.
(i) Refineries that qualify as small under Sec. 80.223, and that
later are disqualified under Sec. 80.230(b), will be subject to the
statutory anti-dumping baseline on an annual average basis beginning
the calendar year immediately following the refinery's change in
status.
(ii) If the Administrator finds that a refiner provided false or
inaccurate information on its application for small refiner status,
upon notice from the Administrator, the refiner's extended alternative
compliance period will be void ab initio.
(6) Compliance requirements for qualifying small refiners.
(i) If the refiner's application for an extended compliance period
under this paragraph (l) is approved, then the refinery must comply
with the statutory baseline NOX standard, on average, for
gasoline produced beginning by not later than the 19th quarter (for a
six year compliance period) or by no later than the 22nd quarter (for a
seven year compliance period).
(ii) The refinery must meet all other applicable requirements in
paragraph (k) of this section, including the production of a net
NOX benefit under paragraph (k)(3)(ii) of this section,
except that the following provisions shall apply:
(A) For any cumulative NOX deficit remaining at the
expiration of the fifth year, based on the NOX emission
performance of gasoline actually produced at the refinery, and as
calculated under paragraph (k)(3)(ii) of this section, the refiner
shall provide an additional NOX benefit equal to one half
ton of NOX emissions per ton of deficit remaining by the end
of the refinery's alternative anti-dumping averaging period.
(B) For any cumulative NOX deficit remaining at the
expiration of the sixth year, based on the NOX emission
performance of gasoline actually produced at the refinery, and as
calculated under paragraph (k)(3)(ii) of this section, the refiner
shall provide an additional NOX benefit equal to one ton of
NOX emissions per ton of deficit remaining by the end of the
refinery's alternative anti-dumping averaging period.
(C) The additional NOX benefits required under this
paragraph (l)(6)(ii) may come from the production of gasoline at the
refinery that is cleaner than the statutory baseline or from the
purchase and retirement of stationary source NOX credits or
allowances as provided in paragraph (k)(3)(iii) of this section.
3. Paragraph (c) is added to Sec. 80.855 to read as follows:
Sec. 80.855 How is the compliance baseline determined?
* * * * *
(c)(1) Eligibility to petition. A refiner who has been granted an
alternative anti-dumping averaging period under Sec. 80.101(k) may
petition the Administrator to have the statutory baseline exhaust
toxics emissions, Phase II value specified in Sec. 80.91(c)(5)(iv) as
its compliance baseline for the purposes of this subpart J for one or
more of the years of the refiner's approved alternative anti-dumping
averaging period.
(2) Application process. Applications must be submitted to the
Administrator by January 1, 2004 to the following address: U.S. EPA--
Attn: Anti-Dumping Compliance Period (6406J), 1200 Pennsylvania Avenue,
NW., Washington, DC 20460 (certified mail/return receipt) or U.S. EPA--
Attn: Anti-Dumping Compliance Period (6406J), Transportation & Regional
Programs Division, 501 3rd Street, NW., Washington, DC 20001 (express
mail/return receipt).
(3) Contents of the application petition. Each petition must
include:
(i) A copy of the refinery's approval for an alternative averaging
period under Sec. 80.101(k).
(ii) A description of the hardships that make it infeasible, on a
cost and/or technological basis, for the refinery to comply with the
compliance baseline specified in paragraph (b) of this section.
(iii) A quarterly timeline, from the date of the application,
indicating the expected exhaust toxics emissions performance of the
refinery's conventional gasoline, and the reasons for any expected non-
compliance with the compliance baseline specified in paragraph (b) of
this section (for example, a particular gasoline blendstock-producing
unit not yet installed). The timeline shall include the date by which
the refinery will produce conventional gasoline that complies with the
baseline specified in paragraph (b) of this section on an annual
average basis.
(4) Approval or disapproval of petitions. (i) The Administrator may
approve a petition if it includes information sufficient to demonstrate
to the Administrator's satisfaction that cost and/or technological
constraints make it infeasible for the refinery to comply with the
baseline specified in paragraph (b) of this section. The Administrator
will approve or deny a petition in writing within six months of
receipt.
(ii)(A) Each approval will specify the date by which the refinery
must comply with the baseline specified in paragraph (b) of this
section. No petition approval shall allow for use of the statutory
baseline exhaust toxics emissions, Phase II value as a refinery's
compliance baseline under this subpart J beyond the last day of a
refinery's alternative anti-dumping averaging period under Sec.
80.101(k) or Sec. 80.101(l).
[[Page 24321]]
(B) An approval may include any conditions or other requirements to
which the approval is subject.
(5) Effective date for petition. (i) Beginning with the averaging
period immediately following the end of the approved period under
paragraph (c)(4) of this section, the compliance baseline for the
purposes of this subpart J shall be as specified in paragraph (b) of
this section.
(ii) Notwithstanding the requirement specified in paragraph
(c)(5)(i) of this section, if at any time the alternative compliance
period approved under Sec. 80.101(k) or Sec. 80.101(l) ceases to
apply, the approval granted under this paragraph (c) shall also cease
to apply.
[FR Doc. 03-10890 Filed 5-5-03; 8:45 am]
BILLING CODE 6560-50-P