Final Regulatory Impact Analysis and
    Summary and Analysis of Comments
Phase II Gasoline Volatility Regulations


                May 1990
  U.S. Environmental Protection Agency
       Office of  Air and Radiation
        Office of Mobile Sources

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  Final Regulatory Impact Analysis and
    Summary and Analysis of Comments
Phase II Gasoline Volatility Regulations


                May 1990
  U.S. Environmental Protection Agency
       Office  of  Air  and Radiation
        Office of Mobile Sources

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                       Table of Contents
                                                          Page
Chapter 1 - Introduction                                   1-1

Chapter 2 - Period, Location, and Levels of Volatility
             Control                                       2-1

I.   Synopsis of NPRM Analysis                             2-1

II.  Synopsis of Phase I Volatility Control                2-1

III. Phase II RVP Control:  Summary and Analysis of
      Comments                                             2-2

     A.  Control Period
     B.  Location of Volatility Control
          1.  Equivalent Emissions Analysis
          2.  Assignment of RVP Class Designations
     C.   Levels of RVP Control for Classes 'A1, 'B1, and 'C'
Chapter 3 - Environmental Impact         '                  3-1

I.   Need For Ozone Control                                3-1

     A.   Synopsis of NPRM
     B.   Summary and Analysis of Comments
          1.  Ozone Health Effects and Standards
          2.  Extent of Ozone Problem
          3.  Neces.sary Control Programs
     C.   Final Analysis

II.  Emission Factors                                      3-7

     A.   Synopsis of NPRM
     B.   Summary and Analysis of Comments
          1.  Evaporative Emissions Model
          2.  Fuel Weathering
          3.  Emission Factor Modeling Inputs
     C.   Emission Factor Results

III. Emission Inventories                                  3-23

     A.   Synopsis of NPRM
     B.   Summary and Analysis of Comments
     C.   Emission Inventory Results

IV.  Ozone Modeling                                        3-31

     A.   Air Quality Projections
          1.  Synopsis of NPRM
          2.  Summary and Analysis of Comments
          3.  Final Analysis
     B.   Butane and Oxygenate Reactivity  and
           Oxygenated Blend Environmental  Impacts
          1.  Synopsis of NPRM
          2.  Summary and Analysis of Comments

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V.   Effects of RVP Control on Benzene Emissions and       3-44
      Health Effects

     A.   Synopsis of the NPRM
          1.  Benzene Emissions as a Function of Fuel
               Parameters
          2.  Effect of RVP Control on Fuel Composition
          3.  Effect of RVP Control on Benzene Emissions
          4.  Nationwide Benzene Emissions
          5.  Cancer Incidence Analysis
     B.   Summary and Analysis of Comments
     C.   Final Analysis


Chapter 4 - Economic Impact                                4-1

I.   Refining Costs                                        4-1

     A.   Synopsis of NPRM Analysis
     B.   Summary and Analysis of Comments
          1.  Feasibility of and Leadtime for
               the Second Phase of RVP Controls
          2.  Cost of RVP Control
     C.   Refinery Cost of RVP Control

II.  Effect of Volatility Control on the Butane and        4-25
      Pentane Markets

     A.   Synopsis of NPRM Analysis
          1.  Displacement of Butane
          2.  Economic Effects of Butane Displacement
     B.   Summary and Analysis of Comments
          1.  Displacement of Butane
              a.  Amount Displaced
              b.  Effects of Replacing Displaced
                   Butane
          2.  Economic Effects of Butane Displacement
              a.  Depression of Butane Prices
              b.  Alternative Uses for Butane
          3.  Displacement of Pentane

III. Effect of Volatility Regulations on Imports           4-32

IV.  Effect of Volatility Regulations on Increased
      Energy Density and Evaporative Emissions Recovery    4-34

V.   Effect of Volatility Regulations on Driveability
      and Safety                                           4-35

     A.   Synopsis of Draft Regulatory Impact Analysis
          l.  Volatility Increases and Driveability
               Problems
          2.  Driveability Cost Estimation
     B.   Summary and Analysis of Comments
          1.  Hot Temperature Driveability
          2.  Cold Temperature Driveability
          3.  Cold Temperature Low Volatility Fuel
               Safety
          4.  Hot Temperature Fuel Safety

                               ii

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VI.  Enforcement Cost of Volatility Regulations            4-51

                                         i

Chapter 5 - Analysis of Alternatives                       5-1

I.    Background                                            5-1

     A.   Introduction
     B.   Synopsis of NPRM Methodology
     C.   Summary and Analysis of Comments
          1.  Basic Model
     D.   Synopsis of Phase I Final Analysis

II.  Phase  II Volatility Control                           5-5

     A.   Summary of Methodology
     B.   Summary and Analysis of Comments
     C.   Inputs for C/E Calculations    ;
     D.   Cost-Effectiveness Results


Chapter 6 - Control of Volatility of Alcohol-Blended
             Fuels                       .                  6-1

I.   Background                                            6-1

II.  Ethanol Blends                                        6-1

     A.   Air: Quality Related Issues
          1.  Summary and Analysis  of Comments
     B.   Economic Issues
          1.  Summary and Analysis  of Comments

III. Methanol Blends                                       6-4

     A.   Summary and Analysis of Comments
                               111

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                           CHAPTER 1

                          INTRODUCTION

     This   document    comprises    most   of    the    technical
documentaitori  supporting  the second of two phases  of  national
gasoline volatility control  proposed on August  19,   1987  (52  FR
31274).    In   addition,   this   document   summarizes   comments
received on  Phase  II control  and  presents  EPA's responses  to
them.  Further documentation for  Phase  II  regulations including
analysis of  enforcement comments  exists  in the  Phase  I  Final
Rule  (54 FR 11868)  and in the Final Regulatory  Impact Analysis
supporting  that  action.    In   addition,   EPA   has  assembled
responses  to  a number  of questions  regarding  enforcement  and
implementation of  RVP  controls  (see Docket  A-85-21,  Document
IV-A-10).

     The   analyses   presented   in  this   document   incorporate
several assumptions about  characteristics  of an  ultimate Phase
II program,  as described  below.   If  the  final  program differs
in   minor   respects  from  the   program   assumed   here,   the
conclusions  reached in  this document  should  be taken  in that
context.

     For purposes  of  analysis   in this  document,   EPA  assumes
that  a Phase II gasoline  volatility control program  will be a
national   program   (excepting   Hawaii   and  Alaska)   reducing
volatility  during  the  months  of  common ozone  violation.   The
air  quality  and  economic  impact  analyses  assume a  set  of Reid
Vapor  Pressure (RVP)  standards  beginning in 1992 and varying by
state  according  to  climate  and  elevation.   The climate-based
analysis is described in Chapter 2.

     Following  this  introduction, .Chapter  2   also  addresses
questions of timing,  location,  and levels  of control.  Chapters
3  and 4 analyze air  quality and economic issues, respectively.
Finally, Chapters 5 and 6  analyze alternatives  for  alcohol-free
gasoline and alcohol blends, respectively.

     A limited  supply  of  individual   copies  of  this document
will  be available through  Ms.  Jackie  McManus,   U.S.  EPA,  2565
Plymouth Road, Ann Arbor,  MI  48105 (phone: 313-668-4756).

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                           CHAPTER 2

      PERIOD, LOCATION, AND LEVELS  OF VOLATILITY CONTROL


     Synopsis of NPRM
     In the  volatility control  NPRM  (52  FR 31274, August  19,
1987),  EPA proposed  to limit  the  volatility level  of  gasoline
for  the  period  of  May  16  through  September  15  in order  to
control evaporative  emissions  and reduce  high  levels of  ozone
present in many  urban areas  across  the country.   The  proposal
called for  volatility levels  reduced  to  9.0 psi  RVP  in  ASTM
Class  C  areas,   with  proportional  reductions   in  all  other
classes in  order  to achieve  equivalent   emissions  nationwide.
The current state-by-state ASTM  class designations  were used in
the proposal with  the exception that  dual-classification  areas
were assigned the  lower of  the two volatility classes.    Hawaii
and Alaska were  exempted  from the program due to the  fact  that
they have no  ozone"  problem  and  both  have  independent  gasoline
supply networks.

     Due  to  the  necessary  lead  time   for  this   level   of
volatility reduction,  the control  strategy was  split  into  two
phases.  The first phase  would reduce volatility to  levels  for
which  very  little  new  capital  expenditure would be  needed.
This first phase was  proposed  to begin in  the  summer  of  1989
and  limit  volatility  levels  to  10.5  psi  RVP in Class  C  areas
with proportional  reductions  in Classes   A and  B.   The  final
level  of  control  (9.0   psi   RVP   in   Class   C  -areas   with
proportional reductions  in  Classes  A  and B) was   proposed  to
begin in the summer of 1992.

II.  Synopsis of Phase I Volatility Control

     The final  rule  for the  first  phase  of volatility control,
which  took  into  account the comments  in  response  to  the  NPRM
pertaining to  Phase  I control,  was   published  in   1989  (54  FR
11868,  March 22,  1989).    It  was  enforced beginning  in  the
summer  of  1989.   The  three  main  issues  in the   rulemaking—
period of  control,  location  of  control,  and levels of RVP  in
Classes A,  B, and C  are summarized below.

     To  determine   the  period  of  enforcement  we  took  into
account the  transition times  needed   to blend  gasoline to  and
from  the  control  levels  (six  weeks   at  the beginning of  the
season and one week  at the end) .   The period of  enforcement for
terminals and  all upstream  parties  is May  1  through September
15.  For  service  stations and other  end  users,  the  period  is
June  1  through September  15.  This  later  date  at the beginning
of  the control  season  allows the  gasoline at  retail  stations
with   slower   turnover  times   more   time  to   blend  down  to
controlled  levels.   These   small  stations  mav  otherwise  need

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                              2-2
to  try  to  influence  the  refiners  to  begin  production  of
controlled  fuel  earlier   on  .their  behalf,  with   uncertain
results.   Due  to  the short  lead  time available,   the  program's
start was delayed for the summer  of 1989  only.

     Volatility classifications  for  each  state ' or part  of  a
state  were   changed   slightly    from  ASTM   classifications.
Although EPA proposed in  the NPRM to  require  the  lower of  the
two  RVP  classes  for  states which  had  dual-classifications
according to the ASTM system,  this approach was  reexamined  for
the Phase I final  rule.   Based on whether or not  the  state was
in nonattainment of  the  ozone  standard and on  the uncontrolled
diurnal  index  (UDI)  for  that   state,   the  more  appropriate
classification was determined.  The  UDI  analysis  was  also  done
for single-classification states  to  determine  if  any changes to
the ASTM classification system would  enhance the  workability of
the  control  program without  the  loss  of  nonattainment-area
emission  benefits.    It   was determined  that  a   more  relaxed
standard during some months  of the control period would be more
appropriate  for  some  states.    A list  of  these  states  and
months,  along  with a list of the final  Phase  I classifications
of each  state  in  each  month can   be  found  in  the   Phase  I  Final
RIA.

     Although EPA  had  proposed in the NPRM  to  limit volatility
for Phase I to  10.5,  9.1, and 8.2 psi in  Classes C,  B, and A,
respectively,  the  final  regulation  limited  volatility to  10.5,
9.5 and  9.0 psi.   The  changes for Class  B and A  areas  assured
that new capital  equipment, and  thus greater  lead time,  would
not  be needed  to  reduce  volatility  levels  below  9.5  RVP  in
Class B areas and below 9.0 RVP in Class A areas.

Ill.  Phase II RVP Control:  Summary and Analysis of Comments

     The  second phase  of  volatility control  was  proposed to
begin  in May  of  1992   and  to  further   reduce  the   levels  of
gasoline volatility  down to 9.0,   7.8 and  7.0 psi  RVP  for  Class
C,  B,   and A   areas,  respectively.   Comments  received  which
pertain  to the  period,  location,  and levels of Phase  II control
are  summarized below with EPA's  responses  to these  comments.
Although   EPA   addressed   all    comments   dealing   with   the
state-by-state volatility classifications  for the Phase  I  final
rule,  EPA has  reviewed  those Phase I classifications  in greater
detail and the results are presented below in Section  III.B.

     A.    Control Period

     The  topic  of  the  period   during  which  RVP   should  be
controlled  involves  two  related  issues:   l)  how  long   of   a
transition period  is needed to  blend fuel  in  the distribution
system down  to compliance levels, and 2)  which months or  parts
of months need  control.   Based on these answers  an appropriate

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                              2-3
period  of  control  can   be   determined.    These   topics   are
addressed below.

     The majority  of  comments pertaining to the  control  period
dealt with the transition times necessary to blend  the gasoline
down  to  the  desired   volatility  level.   These  comments  are
mentioned  in.  more detail  in  Chapter  1 of  the  Final RIA  for
Phase I.   These  comments  also apply to a Phase  II  program,   In
brief, the comments mentioned that because the  RVP  reduction in
the  proposal  is  greater  than  the  current   winter-to-summer
reduction, more transition time will be necessary to blend down
the  uncontrolled high  RVP fuel  to  the controlled  RVP levels.
An  analysis  of the transition phase was  done  in  the Phase  I
FRIA  and   average  transition   times  were   calculated.    The
analysis  also  showed  that,   although  Phase II   reductions  are
deeper,   transition  times  for a Phase  II program  should  be
essentially the  same  as for  the  Phase  I program.   Therefore,
the  average transition time  at  the beginning  of   the control
period  should  be about six  weeks.   At the  end of   the control
period,   the  average  transition time  was  calculated  to be only
one  week.   These figures  include the  effect  of backmixing  in
storage  tanks  and  the  average   transportation  times to  the
terminals  in pipelines  and from terminals to service stations.

     Other  comments  referred to  potential  problems  of safety,
driveability,  and  increased  HC emissions  during the transition
period  due to  low-RVP   fuel  reaching  the  consumer  early  in the
transition  period  when there  may still  be cooler temperatures.
EPA  does not believe  such problems will  occur   in  any general
way  during the transition.   A more detailed  response to  these
comments is found in Chapter 4 of this Phase II Final RIA.

     The other key topic dealing  with the  control period  is the
length  of  time the regulated fuel need be  required.  In Phase
I,  the  length  of the control  period  was  selected  based  on the
need  for  ozone  control (i.e., during  the  period  of  the year
most ozone exceedances  occurred).   The  analysis  used to support
this  selection  is  described  in   the  Phase I Final  RIA.   For
Phase II,  the control period  was  re-evaluated   based on updated
ozone   exceedance  data.   In  this  analysis,   95.5   percent  of
nonattainment  area ozone  exceedances for  1986-88 (excluding CA
and  Houston)  occur during the Phase I period of May  1 through
September  15.  Table  2-1  shows the number of  ozone  exceedances
for  each  semimonthly  period  during  those 3  years,   indicating
that  1.9 percent of  exceedances  occurred in late April and 0.8
percent occurred in late  September;  only 2.1 percent occur in
the  nonsummer period from  October  1 through April 15.

     As  shown   in  the Phase  I  Final  RIA  analysis  of  RVP
transition  time  for  the   70th  percentile   refinery,   since
dispensed  RVPs  would   be  near controlled levels  a  few  weeks
earlier than  required,  substantial control would result in late
April before a  May  1   starting date.   However,  since  dispensed

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                              2-4
                           Table 2-1

                   1986-88 Nationwide Ozone
            Exceedances  (Excluding  CA and Houston)
                                    Number of •       Percentage
                                    Exceedances       of  Total

January 1-15                            0              0.0
January 16-31                           2              0.1
February 1-15                           1              0.1
February 16-28                          1              0.1
March 1-15                              5              0.3
March 16-31                             6              0.3
April 1-15                              2              0.1
April 16-30                            35              1.9
May 1-15                               26              1.4
May 16-31             .                154              8.2
June 1-15                             147              7.8
June 16 - 30                            352             18.7
July 1-15                             303             16.1
July 16 - 31                            379             20.1
August 1-15                           284             15 . 1
August 16 - 31                          121              6.4
September 1-15                         34              1.8
September 16-30                        15             -0.8
October 1-15                            6              0.4
October 16-31                           8              0.4
November 1-15                           0              0.0.
November 16-30                          l              o.l
December 1-15                           l              O.l
December 16 - 31                       	l              0 .1
                                       1884            100.0

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                              2-5
RVPs would increase  relatively  quickly  after  the control period
ends, the  effects  of RVP  control  would extend  perhaps  a  week
after a  September  15 ending  date.   When these  conclusions  are
superimposed on the  distribution of  ozone exceedances  in Table
2-1, the  Phase  I control  period  of May 1 through  September  15
continues to  be  the appropriate period to assure  control  from
mid-April  into  late  September,   when  ozone  exceedances  are
frequent.-

     B.     Location of Volatility Control

     EPA  received  several  comments  in response   to  the  NPRM
regarding  the location  of  the various  classes of  controlled
fuel.  These  were responded  to  in detail  in  the Final  RIA  for
Phase I and are summarized below.

     In the NPRM, as discussed  earlier, EPA proposed to enforce
standards during the control period based  generally on the ASTM
monthly   volatility   classes  and  boundaries.   However,   EPA
proposed  to  eliminate   all transition  (dual-classification)
months,  requiring   instead  the  lower   of  the  two  volatility
classes   during  those   months.    Various  responses   to  this
proposed  scenario  were  received.   Marathon  and Phillips  both
supported  using  the ASTM  schedule.    Phillips  also  commented
that the  transition months  should be kept.   The California Air
Resources Board  (GARB),  on the other  hand,  did not  agree with
enforcing  the ASTM   classifications or  boundaries  as they apply
to California.  They requested that the new  system  should match
California's  current RVP requirements.

     Other comments  were received  which dealt with the required
location  of   the  controlled  fuel.   Some  comments   stated  that
controlled  fuel  should  only  be  required  where  it  is  needed
(i.e.,  in  ozone  nonattainment  areas).   Others  stated  that
refiners  cannot  generally segregate fuel between attainment and
nonattainment  areas, but  rather  only  over   broad  geographical
areas.    Distribution  problems,  some  comments  stated,  would
appear  as  a  result  of  a  patchwork  of  different  volatility
controls  across the  country.             ;

     With  these comments in  mind,   the  "map"  for Phase  I  of
volatility  control  was  developed.  The "map" was  based mainly
on  the  ASTM  state  volatility classifications.  ASTM based their
classifications  on   an  early understanding  of  RVP  effects  on
driveability.   Phase  I   improved  upon  this  system  for  air
quality purposes by  modeling  the effect of RVP on emissions.

     For  this second phase  of  volatility control,  an improved
modeling  analysis  was  possible,  which  was  based  on  achieving
equivalent vehicle  emissions across  the country.  This analysis
was  the  basis for  determining state volatility classifications,
and  is described below.

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                              2-6
     1.     Equivalent Emissions Analysis

     EPA decided to  do  a new analysis to  improve  upon  the ASTM
system of RVP designations  across  the country.   MOBILE  4.0  was
available  and  was  used  for  this   analysis,  which  aimed  at
determining  an  RVP  for  each  state   in  each month  that  would
result  in  equivalent vehicle emissions nationwide.   MOBILE4.0
was used to  determine RVPs  for each state  for  the months  May
through October  which would  result  in emissions  equivalent  to
the average  of those  in Phase I Class  C  areas  in July when
using 9.0 RVP fuel.

     Temperatures  for use in  the MOBILE4  runs were generated as
follows:  First, temperature  data were obtained  for all  ozone
monitors on  days  when  the ozone  level  exceeded  0.08  ppm.   As
temperature  data  are  not  available  from  the  ozone  monitor
station, temperatures were  taken  from the weather station most
representative of  the  conditions  in  the  immediate  vicinity  of
the ambient  monitor.  Ozone observation  data were used from the
years  1985-87,  the  most  recent  data  available  at the  time.
Then,  temperatures from  days  of high-ozone measurements in each
month  at  each monitor  were matched  with  the  date  of  the
observation.   Using  these  temperature data,  MOBILE4.0  was used
to calculate  an  emission factor for  each  of the  top  ten  ozone
days  in each month at each monitor.  Next,  for  each month,  the
average  emission  factor  at  each monitor  was  calculated.   A
state's RVP  for  each month  was then calculated as the RVP which
corresponded to the  population-weighted  average  emission factor
of all monitors in the state.

     As  some  Northwest   states   had  no  ozone  data,   the
temperatures  used  for these  states  for  May through  September
were the 30-year July-average temperatures.

     A  more  detailed explanation  of  this  analysis  is  given in
the report "Methodology  for Estimating the  Reid  Vapor  Pressure
that Results  in  Equivalent  Nationwide Motor Vehicle Hydrocarbon
Emissions."C1]

     Due to unusual  circumstances, four exceptions to  the above
methodology  were  made.    First,  due to   California's  rapidly
changing meteorology from moderate coastal temperatures to arid
inland  temperatures,  the  temperature  monitors  used  in  the
calculation  of  an  equivalent  emission  RVP  for  California were
rechosen.  The  computer  analysis  originally used monitors from
the moderate, coastal areas for areas where inland temperatures
were    more     appropriate,     thereby    assigning   California
unexpectedly  high  RVPs   throughout   the   summer,   Therefore,
different  weather  stations  expected  to  have more  appropriate
temperatures  for   the  cities   involved  were  used for  matching
ozone observations with temperatures.

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                              2-7
     There was  an  anomaly  in  Arkansas where  an extremely  low
RVP  was   assigned  to  the  state  in  July while  no  other  state
around it was  assigned such a  low RVP.  On  closer  examination,
we found  that  this  assignment  was  due to  high  temperatures in
Little Rock, which is not  an  ozone nonattainment  area.   Also,
Memphis,   Tennessee,  whose  CMSA includes  the only nonattainment
area in Arkansas,  was  not  used in the RVP  calculation  as  there
were no  monitors for  the Memphis CMSA in Arkansas.   Therefore,
the  July  RVP  of  Arkansas  was  set  by  simply  substituting
Tennessee's calculated July RVP.

     Another exception to  the  equivalent  emission  analysis was
in New Jersey.   Here, a  very  low RVP was  assigned  in  May and
June when no  state  around  it  was  as low,  while  its  RVP went
much  higher  for  the  hotter   summer  months  of  July  through
September.   We found  this  to  be caused by two or  three days
each  month  of  unusually  high  New   York  City  temperatures
(specifically,   the New York City portion of New Jersey).  The
New  York  City  population  was   enough  to  outweigh  those  of
Atlantic  City  and Philadelphia,  bringing New  Jersey's  RVP down
very  low.   However,  contrary  to   expectations,   these  high
temperatures did not  appear at other  New  York  City locations.
Because  of  this   anomaly,  New Jersey was  reassigned   an RVP,
excluding these extreme days from New  York City in May and June.

     Finally,  the  District  of  Columbia  was assigned Virginia's
calculated  summertime  RVPs, since there  were not  enough  ozone
(and thus temperature) data to form a basis for an  independent
calculation of RVP for the District.

     The  calculated  equivalent  emission RVPs for each state are
presented  in Table  2-2.   These values  incorporate  the changes
described above.

     2.    Assignment  of RVP Class Designations

     In   order   to   maintain  simplicity,  EPA  decided  against
assigning   individual  RVP  standards  to   states,  but  decided
instead  to  maintain  the approach established by  ASTM of  having
three  summertime  volatility  classes.  These  classes   will be
designated  as   'A1,  'B',  and  'C1  in order   to  distinguish  them
from ASTM classes  A, B, and C.

     As   part  of  the  equivalent  emission  analysis described
previously,  states were assigned  individual RVPs for each month
which  would  result   in  emissions in  each  state  comparable to
those  of  the average  Phase I Class  'C'  state  with  9.0  RVP  fuel
in  July.tl]   The  analysis  then  analytically  picked RVP  ranges
for  Classes  'A',  'B',  and  'C1 which  would result in  the minimum
mean-squared  difference between  the emission inventory for the
class  and  that  of  the  baseline Class  'C' areas.   The  ranges

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                              2-8


                           Table 2-2

             Equivalent Emission RVP Calculations

State                May    June   July   Aug    Sept

Alabama              9.6    8.2    7.9    7.9    9.1
Arizona              7.0    7.0    7.0    7.0    7.0
Arkansas             9.3    8.6    7.9*   7.9    8.7
California**         8.7    8.0    7.5    7.6    8.2
Colorado             9.1    7.6    7.0    7.4    9.0
Connect icut          9.4    9.5    8.7    8.9   10.2
Delaware             9.5    9.0    8.6    9.1    9.5
Dist. of Columbia*** 8.9    9.3    8.3    8.4    9.0
Florida              8.9    8.1    8.2    7.9    8.5
Georgia              9.4    8.2    7.7    8.2    9.3
Idaho                8.8    8.8    8.8    8.8    8.8
Illinois             9.7    8.8    8.8    8.9    9.6
Indiana              9.6    8.9    9.0    9.3    9.6
Iowa                 9.7    8.8    8.4    9.2    9.6
Kansas               9.8    8.5    7.7    8.3    8.6
Kentucky             9.5    9.3    8.6    8.8    9.6
Louisiana            9.5    8.6    8.0    8.1    8.6
Maine                9.8   10.0    9.6    9.3   10.1
Maryland             9.2    8.9    8.4    8.5    9.5
Massachusetts        9.6    9.8    9.6    9.3    9.8
Michigan             9.5    9.4    8.9    9.5    9.9
Minnesota            9.7    8.7    9.2    9.8    	
Mississippi          9.5    8.4    7.6    7.9    8.9
Missouri             9.6    8.7    8.0    8.8    9.2
Montana              9.8    9.8    9.8    9.8    9.8
Nebraska             9.8    8.5    8.4    9.3    9.4
Nevada               7.7    7.0    7.0    7.0    7.9
New Hampshire       10.0    9.9    9.4    9.5   10.2
New Jersey           8.3    8.2****8.8    8.8    9.7
New Mexico           9.2    7.8    7.0    7.1    8.9
New York             9.1    9.2    8.8    9.3    9.6
North Carolina       9.6    8.6    7.9    8.1    9.6
North Dakota         9.9    9.9    9.9    9.9    9.9
Ohio  '               9.7    9.5    9.2    9.3    9.8
Oklahoma             9.5    9.1    7.9    8.0    8.8
Oregon               8.9    8.5    8.0    7.8    9.1
Pennsylvania         9.5    9.2    9.0    9.3   10.0
Rhode Island         9.3    9.6    9.4    9.3    9.9
South Carolina       9.4    8.3    7.5    8.0    9.4
South Dakota         9.4    9.4    9.4    9.4    9.4
Tennessee            9.6    8.7    7.9    8.1    9.2
Texas                9.2    8.4    7.7    7.6    8.3

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                              2-9


                     Table 2-2 -  (Cont'd)

             Equivalent Emission  RVP Calculations

State                May .   June   July   Aug    Sept

Utah                 8.9    7.1    7.0     7.0
Vermont             10.0    9.8    9.5     9.3
Virginia             8.9    9.3    8.3     8.4
Washington          10.0    9.6    9.3     9.2
West Virginia        9.6    9.6    8.8     8.9
Wisconsin            9.5    8.5    9.3     9.8    9.6
Wyoming              9.7    9.7    9.7     9.7    9.7
*    The  only nonattainment  area  in Arkansas  is  in  Memphis
     CMSA.   Since  Little  Rock  dominated  the  calculation  of
     average temperature, we substituted Tennessee's July RVP.
**   California  RVP values  are adjusted,  as  described  in  the
     text.
***  Lacking  sufficient  data  specific   to Washington  DC,  we
     assigned Virginia's calculated RVPs to the District.
**** Recalculated  ignoring the  disproportionate  effect  of  New
     York City, as described in the text.

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                             2-10
chosen by this analysis were the following:
           Class 'A1
           Class 'B'
           Class 'C'
                       7.0 psi RVP
                       7.1-8.5 psi RVP
                      >_8.6 psi RVP
The midpoints of the  RVP  ranges were then  used as the  RVP  for
each class of fuel.   This  resulted in 7.0 and 7.8 psi RVP fuel,
respectively, for Classes  'A1  and 'B'.   Class  'C1 fuel  was  set
at 9.0 ps i RVP.

     With the availability  of  equivalent  emission RVPs for each
state  in  each month  (May  through September;  October data  was
not  used),   it  seemed  appropriate to  assign  the states,  when
possible,   into  the   class   that   resulted    in   the   best
approximation to  equivalent  emissions  for them  individually.
Therefore,   although   it   meant  deviating  from  the  minimum
mean-squared  difference,  EPA chose  to  reassign  the  RV? ranges
per class.  The cutoff points for  each  class  were the midpoints
between  the  proposed  standards of 7.0  and  7.8  RVP,  and between
7.8 and 9.0 RVP.  Thus, the following breakdown was used:
           Class 'A1:  7.0-7.3 psi RVP
           Class 'B1:  7.4-8.4 psi RVP
           Class 'C1 :  >_8 . 5 psi RVP
                       >_8.5 psi RVP

     Table   2-3   presents    the    equivalent    emission   RVP
designations when  this breakdown  is applied to  the calculated
values  presented  in  Table  2-2.    (In  order   to   check  the
appropriateness of the  7.0 and 7.8 psi RVPs  in  Classes  'A'  and
'B',  respectively,  a  separate analysis  was performed   and  is
discussed in the next section.)

     C.    Levels of RVP Control for Classes  'A', '3', and 'C'

     In  the  NPRM,  EPA  proposed an  RVP  standard of  9.0  psi  in
Class  'C'  areas with  standards  representing proportional  RVP
reductions  in   Classes  'A'  and 'B'  (the  percent  reduction  in
going  from  11.5 to  9.0   in  Class  'C1  being  applied also  to
Classes  'A1  and 'B', to -result in  levels  of 7.0 and 7.8 psi).
Many  of  the comments disagreed with  this  approach  and  stated
that   the   RVP   levels   should   be  based    on   equivalent
cost-effectiveness  in  each  class  rather  than  proportional
reductions.      Those    opposed   to   proportional   volatility
reductions stated that  proportional reductions  outside of Class
'C'  areas  are  not  cost-effective.   NRDC  commented that  the
amount of control  in  an area should  be  based on how much need
the area has for control.

     Some comments also stated that the final RVP levels should
not create cost burdens that disproportionately affect refiners
(i.e.,   refiners supplying Classes 'A' and 'B'  should not carry
the greatest cost burden).   The Petroleum Marketers Association

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                             2-11


                           Table 2-3

           Equivalent Emission Analysis Designations

State                May    June   July   Aug    Sept

Alabama              9.0    7.8    7.8    7.8    9.0
Arizona              9.0    7.0    7.0    7.0    7.0
Arkansas         .    9.0    7.8    7.8    7.8    9.0
California           9.0    7.8    7.8    7.8    7.8
Colorado             9.0    7.8    7.8    7.8    9.0
Connecticut          9.0    9.0    9.0    9.0    9.0
Delaware             9.0    9.0    9.0    9.0    9.0
Dist. of Columbia    9.0    9.0    7.8    7.8    9.0
Florida              9.0    7.8    7.8    7.8    9.0
Georgia              9.0    7.8    7.8    7.8    9.0
Idaho                9.0    9.0    9.0    9.0    9.0
Illinois             9.0    9.0    9.0    9.0    9.0
Indiana              9.0    9.0    9.0    9.0    9.0
Iowa                 9.0    9.0    9.0    9.0    9.0
Kansas               9.0    7.8    7.8    7.8    9.0
Kentucky             9.0    9.0    9.0    9.0    9.0
Louisiana            9.0    7.8    7.8    7.8    9.0
Maine                9.0    9.0    9.0    9.0    9.0
Maryland             9.0    9.0    7.8    9.0    9.0
Massachusetts   .     9.0    9.0    9.0    9.0    9.0
Michigan             9.0    9.0    9.0    9.0    9.0
Minnesota            9.0    9.0    9.0    9,0    9.0
Mississippi          9.0    7.8    7.8    7.8    9.0
Missouri "           9.0    7.8    7.8    7.8    9.0
Montana              9.0    9.0    9.0    9.0    9.0
Nebraska             9.0    9.0    9.0    9.0    9.0
Nevada               9.0    7.8    7.8    7.8    7.8
New Hampshire        9.0    9.0    9.0    9.0    9.0
New Jersey           9.0    9.0    9.0    9.0    9.0
New Mexico           9.0    7.8    7.8    7.8    9.0
New York             9.0    9.0    9.0    9.0    9.0
North Carolina       9.0    7.8    7.8    7.8    9.0
North Dakota         9.0    9.0    9.0    9.0    9.0
Ohio                 9.0    9.0    9.0    9.0    9.0
Oklahoma             9.0    7.8    7.8    7.8    9.0
Oregon               9.0    7.8    7.8    7.8    9.0
Pennsylvania         9.0    9.0    9.0    9.0    9.0
Rhode  Island         9.0    9.0    9.0    9.0    9.0
South Carolina       9.0    7.8     7.8    7.8    9.0
South Dakota         9.0    9.0    9.0    9.0    9.0
Tennessee            9.0    7.8     7.8    7.8    9.0
Texas                9.0    7.8     7.8    7.8    7.8
Utah                 9.0    7.0     7.0    7.0    7.0
Vermont              9.0    9.0     9.0    9.0    9.0
Virginia             9.0    9.0     7.8    7.8    9.0

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                             2-12


                      Table 2-3  (cont'd)

           Equivalent Emission Analysis Designations

State                May    June   July   Aug

Washington           9.0    9.0    9.0    9.0
West Virginia        9.0    9.0    9.0    9.0
Wisconsin            9.0    9.0    9.0    9.0
Wyoming              9.0    9.0    9.0    9.0

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                             2-13
of  America  stated  that  the  reductions  should  not   be   so
stringent as  to  harm independent sources of  supply,  regardless
of how the reductions are taken.

     From  these  comments  there  appear  to  be  at  least  three
alternatives  for  determining the  RVP  level  for  each  class:
equivalent   cost-effectiveness    in   each   class,    equivalent
emissions  across  the country,  or RVPs based on the  extent  of
need in  the  area.   EPA  has in the past and  in this  final  rule
used cost-effectiveness  as one way to compare control programs
among one  another  (see  Chapter  5).   For  this  control program,
by  using equivalent  cost-effectiveness,  necessary  control  in
some  areas   would  be   foregone  even   though   it   may   be
cost-effective.  The  option  of  establishing  RVPs based  on  the
extent  of  need  in  the  area  would  be  of   interest  in  that
especially   bad   areas   for  ozone   would   receive   additional
control.   However,  in  a  national  fuel  regulatory  program,
significant  variations  among   local  control  levels  is  not
consistent with the more regional nature  of  the gasoline supply
system.    EPA  believes   that  focusing on equivalent  emissions
nationwide,  as based on climatic  conditions  and elevation,  is
the  most appropriate approach.   In  this  case,  control  in  all
three classes is very cost-effective despite  the  fact  that some
classes  are  relatively  lower  or  higher  in  cost-effectiveness
(again,   see Chapter 5).

     Although  EPA  proposed  an  approach   of   proportional
reductions  in RVP  in   each  class,  the method of  equivalent
emissions  in  each  class  now  appears  actually  to  be  more
consistent with  our  goal.   This is due to the fact  that use of
proportional RVP reductions  focuses on  the  amount of  change in
RVP   (and   emissions)    rather  than  on  the  final   level   of
emissions.  Therefore, EPA calculated RVPs  for each  class based
on  the  analysis  of comparable  vehicle emissions   across  the
country  described previously.

     In  the  NPRM,  EPA proposed  numerical volatility  levels  of
9.0,  7.8  and   7.0  psi  RVP  in  Classes  'C',  'B',  and  'A',
respectively.    The  appropriateness   of   these  proportional
reduction   standards   was  checked   by   using  the   equivalent
emissions  analysis  described  previously.    By  using the  RVP
limits  for  each class as  described above (7.0-7.3  psi for 'A',
7.4-8.4  psi  for  'B'),  states in  Classes 'A'  and  'B'  in July
were  segregated.   For each of the  two  classes, July RVP levels
for  each  state   in  the   class  were   population-weighted  to
generate a  population-weighted  average  RVP  level for  both Class
 'A1  and  Class  'B'.   This  population-weighting of   equivalent
emission RVPs  resulted  in average levels of  7.0  and 7.8 psi RVP
for   Classes  'A'   and   'B1,   respectively,   confirming   the
appropriateness  of the proposed  levels.

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                             2-14 .
                    References (Chapter 2)


     1.     "Methodology for  Estimating  the Reid Vapor  Pressure
that Results in Equivalent Nationwide Motor  Vehicle  Hydrocarbon
Emissions,"  Mark  A.  Wolcott,  EPA,  OAR,  QMS,  ECTD,  TEB  and
Dennis F. Kahlbaum,  Computer Sciences Corporation,  June, 1990.

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                           CHAPTER 3

                     ENVIRONMENTAL  IMPACT

     This chapter  examines  the environmental  impact  associated
with a  second phase of  RVP controls as proposed  to  follow the
Phase I program  promulgated in 1989.   It  discusses  the control
of volatile organic  compounds  (VOC)  emissions in order to lower
tropospheric  ozone  levels;   including  discussions of  the  need
for ozone  control,  the  expected  emission  reduction  effect from
RVP  controls,  and  the  impact  of  these  controls  on  ozone
attainment.

I.   Need For Ozone Control

     A.    Synopsis of NPRM

     Ozone  is  a  powerful  oxidant  which  is  formed  in  the
troposphere by photochemical  reactions of  VOC  and   oxides  of
nitrogen   (NOx).    Ozone  'affects   humans   by  irritating  the
respiratory  system  and  reducing   lung  function.   Laboratory
studies suggest that  it  also may actually damage lung  and other
tissues.  This damage  may impair  breathing  and  reduce immunity
to  disease for  people  in  good  health,  and  may  be  even more
severe  for  people with  pre-existing respiratory  diseases.   In
plants,  oxidation  by  ozone  can  impair  tissue  function  and
reduce  the  yield of some crops.   Oxidation  by  ozone  may also
damage materials such as  rubber products.

     Based  on the air quality analysis presented in the NPRM,
many areas  of the nation continued  to  violate the  ozone NAAQS.
During  the  three-year  period  of  1982-1984,  EPA determined that
73  urban  areas  throughout   the  nation   exceeded   the  ozone
standard.  Twelve of these  areas were located in California.

     In  order  to  determine  the need  for   future  hydrocarbon
control,  EPA  not  only   looked  at  the present  state of  air
quality with  respect  to  ozone, but  also at projected  future air
quality  trends.   Estimates   of   future  air  quality  without
further  controls  were  made  for the  61  non-California  urban
nonattainment  areas.   Since  California  has  separate vehicle
standards,  and thus California vehicles were not accounted for
in  EPA's  vehicle emission  model,  California was  excluded from
the  analysis.   Current  attainment  areas were excluded from the
future  air  quality  projections   even  though   some   attainment
areas  were  close  to the  standard and may have been projected to
become nonattainment areas  in  the future.

     The  air  quality  modeling  relied  on  certain   assumptions
regarding  emission rates,  growth rates,  control  technologies,
emission  standards,  and  control  efficiencies.   Based  on these
analyses  of  future air quality, EPA projected that there  likely
would  be  improvements  in air  quality  from 1988 to  1995  due to
the  effect   of   current  emission  standards   for  mobile  and
stationary  sources, but that most  of the  large urban  areas

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                              3-2
modeled will  remain  in  nonattainment  throughout  this  period.
However,  without  further  controls,  growth  was  projected  to
offset these improvements  and  to cause  the air  quality  problem
to worsen  after  1995.   Based on estimates made  by the EPA,  VOC
emission  reductions  of  50  to  80  percent   appeared   to   be
necessary to bring some urban areas into compliance for ozone.

     B.    Summary and Analysis of Comments

     The  comments  received   concerning   the   need   for  ozone
control addressed several different aspects of  this  issue.   The
comments  can  be  divided, into three  main areas: 1)  the health
effects of ozone exposures, 2) the extent  of the ozone problem,
and 3) the more general issue of the type of control  needed.

     1.    Ozone Health Effects and Standards

     Comments  on health  effects varied  greatly.    The  Natural
Resources Defense Council  (NRDC) stated  that  at concentrations
of  50  percent  of the current  ozone  NAAQS, suppression  of  the
immune  system  has  been  observed  in  laboratory animals.   The
American  Lung  Association  (ALA)  also  agreed  that  the  current
ozone  standard does not  adequately protect public health.   ALA
commented   that   clinical  studies   have   shown  that  adverse
respiratory  health   effects   result   from  experimental  ozone
exposure  at the  current  standard level.   The  Northeast States
for Coordinated  Air Use  Management  (NESCAUM) stated that ozone
pollution  is   one of  the  most  serious  and widespread  public
health problems  in  the northeastern part  of the country.   They
also  stated that recent  health  data  strongly  suggest that  the
existing   ozone  NAAQS may  not  be  strict  enough  to  protect
public  health.   Others  commented,  though,  that  any  health
effects are very short  term  in nature and that  those  showing
health  effects  recover  quickly.   API  commented that the  line
between attainment  and nonattainment  seems  arbitrary and  that
it  is  improbable that  any real public health  consequences  are
associated   with   the   transition   from   nonattainment   to
attainment.  Related   to  agricultural effects,  NESCAUM  claimed
that much terrestrial  damage has  occurred due  to ozone exposure
at  ambient  concentrations  well  below  the  current   health
standard.

     Commenting  on  the margin  of  safety  required by  the Clean
Air Act,  Chrysler felt that it  is  irrelevant  whether  or not an
area  is  projected to  be in borderline compliance,  as  long  as
they  reach attainment.  They  felt  that there  already exists   a
significant safety margin  built  into  the  current ozone standard
to  protect public health.  Therefore,  Chrysler argued,  as long
as  compliance  occurs, no  extra margin  of  safety   is  needed.
NRDC,  however,  stated  that  recent  scientific evidence  shows
that  the   ozone  NAAQS will  have to  be tightened  in order  to
protect the public health with an adequate margin of safety.

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                              3-3
     These comments indicate that additional  information  may be
needed in order to  resolve  concerns  about the appropriate level
of the  ozone standard.  This  rulemaking, however,  is not  the
proper  forum  to   attempt  such  a  resolution.    The  Agency  is
already investigating this issue in  its  periodic  (5-year  cycle)
review   of   each   NAAQS.     Should   it   be  determined   that
modifications to the current ozone standard  are  necessary,  they
will be  made in a  separate  rulemaking.   At  this time,  control
decisions have to be based on the current NAAQS standard.

     In  response  to Chrysler's  comment,  it  is  true  that  the
Clean Air Act  requires an adequate margin of  safety  to  protect
the  public   health.   Thus,   EPA  does  not base   its  regulatory
decisions on areas that  are in "borderline  attainment."   This
does not, however,  mean that the extent  of an area's  compliance
is  irrelevant.   Concerns  such  as   NKDC's   on   the  margin  of
safety,  as  well  as  concerns  about  the  accuracy  of  ozone
projections, make  the  projection  of  an area to be in borderline
attainment very significant.

     2.    Extent of Ozone Problem

     Regardless  of the  level  of ozone  at  which an  unhealthy
environment  exists,  the  extent  of  the  ozone  problem  in  this
nation is also under debate.   Phillips  Petroleum commented that
few  urban areas frequently or  significantly exceed  the  ozone
standard.    It  also  commented  that,  with  the  exception  of
Southern  California,  the ozone problem  is  largely unnoticed by
the general  public since exceedances of the  ozone  standard are
so  few.   Other  commenters  also  noted  that  on  an hour-by-hour
basis,  most areas  are in  compliance with  the  ozone  standard
more  than 99  percent  of the time.   API agreed with  EPA that
there  is  an ozone problem;  however, it  felt this problem has
been  overstated by  the  EPA.   Sun  Oil  also felt that  EPA has
overstated  the  problem.   They believe that,  except for  the Los
Angeles  area,  most nonattainment  areas are  in  compliance with
the  ozone  standard  during  most of the  summer  ozone  season.
MVMA  commented  that  EPA  has already  determined through its
NAAQS process  that an ozone  concentration  of 0.12 ppm  or less
is  by definition  adequate to  protect public health and welfare
from any  adverse effects.

     Many  commenters  claimed that  EPA  has  overestimated the
current   ozone   problem   because  the  method  for  determining
whether  or  riot an area  was  in attainment was  erroneous.   They
feel  that the method does not represent a quantitative view of
ozone  exposure and  that  it  overstates  exposure duration and
total  population  exposure.   Sohio  and API  both commented that
determining  attainment or nonattainment  with a  single  monitor
is  unrealistic and  overstates the  problem.   Sohio  feels that
the   average  of   all  monitors   in  the  area   may   be  more
representative  of  typical  ozone season  air quality.   API and
Sohio  stated  that overall  ozone  levels  are  well   below the

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                              3-4
standard,  but  that  the  current  method  of  reporting  ozone
nonattainment data  does  not show  that.   Sohio also  feels  that
since  the  design value  is based  on a  reading  from a  single
monitor, it  does not show the progress which  has been achieved
in  reducing  ambient ozone  levels;   therefore,   it  does  not
measure  the  extent  of  nonattainment.   Sohio  commented  that
monitors  with  exceedances  may  not  be  in  highly  populated
areas.   It   said   that   in   most  nonattainment   areas,   the
population living or working in the area is much  lower than the
total  population.    API  and Sohio also stated  that  under  the
current   method,    one    year's    data,    even   if    it    is
uncharacteristic, is enough to keep  an  area  out  of attainment
for a three-year period.    One  last commenter  questioned whether
or  not  a  one-hour  standard  for  ozone  was  appropriate.   They
believe that a more  practical  long-term solution  would be going
to an eight or twenty-four hour average standard.

     EPA does  not  deny  that  ozone levels  in urban  areas  are
generally  below the  level of  the standard  of  0.125 ppm  the
majority of  the  time,  nor does   it  claim  that  its monitoring
system  reports   an   ozone  level to which  the entire  area  is
exposed.   Nevertheless,    it  does  maintain  that  its  current
method  of  determining  air  quality,  with  respect  to  ozone
levels,  is reasonable.   This  is  because the  Agency considered
these  issues  in setting  the level of the standard.   As  part of
that process, it was decided  that one-hour ozone concentrations
greater  than  0.125  ppm,  in any part of an  area,  more than once
per year would  be  indicative  of  unacceptable  air quality.   EPA
will  consider   comments  on modifying the  nature  of  the  ozone
standard at  the  appropriate  time  in its  review of  the  ozone
NAAQS.   However,   as  noted   before,   such  modifications  are
clearly beyond  the  scope of this rulemaking.

     3.    Necessary Control Programs

     Many  commenters  stated   that because  many  areas  in  the
nation still have not reached  attainment  of  the ozone standard,
further  control of  HC emissions  is necessary.  Some commenters
argued   for  volatility  controls,  some  argued  for  refueling
and/or  improved vehicle  evaporative  controls, and  some argued
for  both.    The  Texas   Air  Control  Board  felt  that  onboard
controls would  be  a very cost  effective strategy,  as  did API
and many other  commenters.  API,  however,  does note that before
forcing  costly  hydrocarbon controls,  it  would be useful to have
a  better understanding  of the  role of  NOx  in ozone formation,
the  role  of  transport,  and the  overall  hydrocarbon  inventory.
API  cited  the   "National   Acid Precipitation  Report,"  which,
according  to API,  stated  that  two-thirds  of  VOC  emissions east
of  the Mississippi  and  three-fourths  of  VOC  emissions  west of
the Mississippi  are  from natural sources.

     The   Conservation  Law  Foundation  of  New  England  (CLF)
agreed  with  EPA's   assumption  behind the  proposed volatility

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                              3-5
rule  that  vehicle-based  controls  alone  are  not  enough  to
address the  short-term  ozone  nonattainraent  problem.   This  is
because emission reductions  from  such  controls only occur after
a long period of time  needed for fleet turnover.   It  also  felt
that  EPA  was  correct   in  realizing  that  emission  reductions
beyond those  available  at  zero  cost  are  necessary to  achieve
short-term air  quality  improvement.   It felt  that the  in-use
fuel volatility restrictions  are  technically feasible  and  cost
effective, and thus should be adopted.

     NRDC  and  the  American  Lung  Association  felt  that  VOC
reductions  beyond   those  currently  required  in  nonattainment
areas  are  necessary to  protect  public health.  They  felt  that
volatility, onboard, and Stage II  controls  are  all  necessary to
achieve attainment.  NRDC stated that $2000  per  ton should not
be  a  cost-effectiveness   ceiling  for  ozone   or  carcinogen
controls.

     NESCAUM,  in   commenting  on  the  ozone  problem  in  the
Northeast,  stated  that   long-term  attainment   of  the  ozone
standard  can  only  be   reached  through  a  region-wide  program
based on all available control strategies.  It  also felt that a
reason  for  the  failure  to  attain  the  ozone  standard  in the
Northeast  has  been an  incomplete understanding of  the  complex
process  of  ozone  formation.  This  would  lead  some  states to
underestimate  the   required  reductions  to  meet  the  ozone
standard,  and  to   overestimate  the ozone  reductions  obtained
from various control measures.

     Some  commenters,   however,   felt  that   ever-worsening  air
quality  is  not  a  problem.   Therefore,   they claim  that  no
nationwide   "crash"  program  is  needed  to  reduce  emissions.
Toyota felt  that the effectiveness  of current control programs
was being underestimated by EPA.

     Clearly  there  is  disagreement  as to whether  the  proposed
controls   are  necessary.    However,  none   of  these  comments
provided  sufficient rationale to  change EPA's position  on VOC
control.   The  Agency remains  convinced  that  cost-effective VOC
controls  are the most  appropriate ozone strategy  at  this time.
(It should be  noted that ,no cost-effectiveness ceiling of $2000
per ton,  or  of  any other  value,  has  been  established  by EPA.)
Thus,  the argument  presented by  commenters  who  argue against
implementing  any program that in  and  of itself only  reduces a
small  fraction  of   total  VOC,  such  as the  control of refueling
emissions  which  only   account   for   two  percent  of  the  VOC
inventory,  is not  valid.   There  are  several important factors
in deciding  whether or  not  certain VOC controls are reasonable,
including  the  cost  effectiveness of the controls as well as the
size  of  the emission   reduction.   However,   the   size  of  the
emission  reduction is not  the most important  factor  since the
-benefits   of  many  •smaller   programs   can   account  for   large
emissions  reductions when considered together.

-------
                              3-6
     EPA  recognizes  that  natural  VOC  emissions  can  play  an
important  role  in  ozone  formation,  and,  in  fact,   EPA  is
investigating this issue.  The other  issues such as  the role of
NOx and  of  transport in ozone formation  are  also  important and
are being investigated  further.   Nevertheless, this   does  not
alter  the fact  that control of  VOC emissions is  an  effective
means of reducing ozone levels.

     C.    Final Analysis

     As  stated  previously,  the  environmental  impact  analysis
contained in the  NPRM  was based  on ozone data collected from.
1982 to  1984.   For  this  analysis  of the  second  phase  of  RVP
controls, the  most recently  available  ozone  data from 1986 to
1988 was used.   The large number of  nonattainment  areas and the
high levels  of ozone show that ozone  remains a problem in many
large  urban  areas.   Based  on the  1986  to 1988  data,  EPA  -has
determined  that there  are  currently  101  areas   exceeding  the
NAAQS ozone standard, with 10 of these located  in California.

     In estimating the  environmental impacts  of a  second phase
of  RVP   controls,  EPA  based   its  analysis  on  the  same
nonattainment  areas which  have   been  considered  by  the  EPA
contractor,   E.H.  Pechan,  in its  analysis  of  the  recent Clean
Air Act  amendments.[1]   In performing  their  analyses,  Pechan
combined  the   Massachusetts  nonattainment    areas  into  one
statewide area,  they eliminated the non-urban areas,  eliminated
those  areas  with  an ozone  design value below 0.125  ppm  (the
EKMA  model   cannot  predict  changes  for  such  a  small  ozone
decrease), and eliminated the areas where  ozone  transport from
other  areas  is  considered to be  the  cause  of  nonattainment.
After  these  adjustments  are  made,  81  nationwide  urban ozone
nonattainment  areas remain based on  the  1986  to 1988 data, with
10 of these  located  in California.

     It  should be  noted that  in performing this  analysis for
the second  phase of volatility  controls, EPA  has  modified its
approach  to   the  nonattainment   situation  in  two  additional
ways.  First,  in the time since the  first phase of controls was
promulgated,   several  Northeast   states  have   begun  regulating
summer gasoline  RVP  to  9.0 psi,  the  same level EPA recommended
in  Chapter   2  for  Class  C  areas.   Because  these  states  (New
York,  New Jersey,  Delaware,  Massachusetts,  Connecticut,  Rhode
Island, Vermont, New Hampshire,  and Maine)  have already started
controlling  RVP  to the  levels  EPA  would have  promulgated with
this second  phase of controls, they are  not  considered in this
analysis.   Therefore,   the  environmental  impact  analysis,  as
well  as  the economic  impact  analysis,  do not include effects
which would  be experienced  in these  Northeast states.

     Second, unlike the  analysis  for  the  first  phase  of  RVP
controls, California has been included  in  this analysis  of the
second  phase  of  volatility  controls.   California   currently

-------
                              3-7
regulates summer  gasoline RVP  to 9.0 psi.   This RVP  is  lower
than the level which EPA  promulgated for Class  B areas  in  the
first phase of controls;  therefore,  the EPA regulations had no
impact on  California.   However,  the RVP  level   recommended  in
Chapter 2 for  California  is  7.8 psi for most months.   For  this
reason, California  now  will  be  required to lower their  summer
gasoline  volatility  even  further.    Thus,  the  environmental
impacts  and  economic   impacts  which  will  be  experienced  in
California  have   been   included   in  this  second  phase of  RVP
controls analysis.

     It should be noted  that  MOBILE4.0   is  based on  emissions
data  from  vehicles certified  to  meet   the Federal  emissions
standards.   However, California vehicles are required  to  meet a
separate  set  of   standards  and  often  have different  vehicle
designs  which  lead  to  different  emissions  characteristics.
Therefore,   a  special  version   of   MOBILE4.0   which  included
California  vehicle emission  estimates,   was used  to  estimate
California  emissions.    An   explanation   of  the  differences
between the release MOBILE4.0  and special  California  MOBILE4.0
models are described in a recent EPA memorandum.[2]

     After  these  two  adjustments have been taken into account,
EPA   has   determined   that   there   are   70    non-Northeast
nonattainraent  areas,   with   10  of   these  areas  located  in
California.    Table 3-1  contains a  list  of the non-Northeast
ozone  nonattainment areas used for this  analysis based on 1986
to 1988 data.

     Based  on  the air  quality modeling  performed by  EPA  it is
estimated that with the  current Federal motor  vehicle program
and  Phase I RVP  controls, but without the second phase  of RVP
controls, 67  of   the 70  non-Northeast  urban ozone nonattainment
areas  would  still be   in  nonattainment  for  ozone   in  1990,
decreasing  to  54  areas  in  1995,  52  areas  in  2000,  and
increasing  to  58   areas  in  2005,  and  staying  at that  level  in
2010.   Therefore,  further VOC  controls  appear  to  be necessary
to  assist  most   of  the  current  ozone  nonattainment  areas  to
reach  attainment  in the future.

II.  Emission Factors

     A.     Synopsis of NPRM

     As  an  initial step to estimating the environmental impacts
of the control options,  a computer model was used to  calculate
vehicle  HC  emission factors  in  grams per  mile   for  a range of
potential   control  programs.    The   emission    factors   were
calculated  for exhaust,  evaporative,  and refueling hydrocarbon
(HC)  emissions,   and  were combined  with  estimates  of vehicle
miles  travelled   (VMT)  and  stationary   source   inventories  to
obtain VOC  inventory  projections  of  future  VOC  emissions  as
described in  Section  III.A below.  The  inventory projections in

-------
                                            Table 3-1
               Nationwide Urban Ozone Nonattainment Area  Input Data For MOBILE4.0
1986-88 Ozone
Nonattainment Area
 State of Massachusetts
 Greater Connecticut CMSA
 Manchester-Nashua, NH
 Portland, ME NECMA
 Portsmouth-Dover-Roch.,
   NH-ME
 Providence, RI CMSA
 Atlantic City, NJ
 Buffalo, NY CMSA
 Glens Falls, NY
 New York, NY CMSA
 Poughkeepsie, NY
 Allentown-Bethlehem,
   PA-NJ
 Altoona, PA
 Baltimore, MD
 Charleston, WV
 Erie, PA
 Ha rr i sburg-Lebanon-
   Carlisle, PA
 Huntington-Ashland,
   WV-KY-OH
 Johnstown, PA
 Lancaster, PA
 Norfolk-Va. Beach-
   Newport News, VA
 Parkersburg-Marietta
   WV-OH  .
 Philadelphia, PA CMSA
 Pittsburg, PA CMSA
 Reading, PA
 Richmond-Petersburg, VA
1987 Avg
In-Use
RVP (psi)

10.8
10.8
10.8
10.8
10.8
10.8
11.3
11.2
11.2
11.2
11.2
11.3
11.3
11.0
11.0
11.7
11.3
Summer Avg
Temperature
(°I
Max
79.1
81.9
77.8
76.7
80.9
79.1
82.9
77.4
79.5
83.1
84.6
83.1
80.9
85.0
84.5
75.7
84.8
••)
Min
62.6
58.7
57.6
54.4
54.7
60.2
63.0
58.7
56.7
65.7
60.2
60.4
57.6
64.3
62.6
58.2
63.2
Top
Day

Max
90.7
93.9
91.7
90.2
90.5
88.0
92.0
88.3
96.0
94.5
87.8
93.1
94.5
96.9
94.1
88.7
95.1
Ten Ozone
Temperature
(°F)
Min
68.6
67.9
61.9
64.1
62.2
63.8
68.1
65.1
61.0
74.1
69.0
68.6
69.2
69.9
66.5
66.2
69.0
1986-88
Ozone Design
Value (ppm)

.170
.140
.140
.160
.180
.160
.140
.130
.130
.220
.140
.130
.130
.180
.140
.130
.140
11.0

11.3
11.3
11.0

11.7
84.6   63.1
83.7
84.9
85.0
58.2
59.4
68.1
84.4   62.9
91.1

95.4
92.8
93.2

93.5
60.5

69.2
67.2
71.5

65.4
                                                                      OO
.170

,130
.130
,130

,150
11.3
11.3
11.3
11.0
84.9
82.5
84.0
86.7
64.4
63.4
63.8
65.5
95.1
90.2
94.3
93.8
72.0
61.2
68.9
69.5
.200
.150
.140
.140

-------
                        Table 3-1 (Cont'd)

Nationwide Urban Ozone Nonattainment Area Input Data For MOBILE4.0
1986-88 Ozone
Nonattainment Area

Scranton-Wilkes-Barre,
PA
Sharon, PA
Washington, DC-MD-VA
York, PA
Atlanta, GA
Birmingham, AL
Charlotte-Gastonia-
Rock Hill, NC
Fayetteville, NC
Greensboro-Winston
Sal em-High Point, NC
Greenvi 1 le-Spartanburg ,
SC
Knoxville, TN
Lexington-Fayette, KY
Louisville, KY-IN
Memphis, TN-AR-MS
Miami, FL CMSA
Montgomery, AL
Nashville, TN
Owensboro, KY
Raleigh-Durham, NC
Tampa-St. Petersburg-
Clearwater, FL
Canton, OH
Chicago, IL CMSA
Cincinnati, OH CMSA
Cleveland, OH CMSA
Columbus, Oil
Dayton-Springfield, OH
Detroit, MI CMSA
Grand Rapids, MI
1987 Avg
In-Use
RVP (psi)

11.3

11.3
11.0
11.3
10.6
10.6
10.6

10.6
10.6

10.6

10.6
11.6
11.6
10.5
10.2
10.6
10.6
11.6
10.6
10.2

11.7
11.6
11.7
11.7
11.7
11.7
11.6
11.6
Summer Avg
Temperature
Top Ten Ozone
Day Temperature
(°F) (°F)
Max
80.9

85.3
86.5
85.8
85.8
89.5
87.4

89.2
86.4

86.8

87.1
85.2
86.0
90.3
89.0
90.1
89.0
88.7
86.7
90.1

81.1
82.8
85.4
80.1
83.5
83.3
81.3
81.5
Min
59.1

60.7
67.1
60.3
68.2
68.2
67.3

67.6
65.4

67.7

66.8
64.3
64.8
70.0
75.1
70.3
67.5
64.7
65.5
73.2

59.1
63.2
64.2
59.5
60.5
62.7
61.6
57.8
Max
92.5

91.3
95.2
94.4
94.8
94.9
94.0

94.4
93.7

93.2

97.5
92.8
91.7
94.2
88.8
97.0
95.0
96.7
95.3
89.7

94.2
94.7
94.3
92.3
95.7
93.2
93.2
94.5
Min
66.4

63.5
73.2
67.3
70.5
68.3
69.7

65.8
68.5

68.0

65.9
68.3
65.2
71.4
65.9
67.6
68.3
67.9
68.9
68.9

66.3
70.3
68.7
64.9
65.0
67.1
71.9
67.2
                                                                          1986-88
                                                                        Ozone Design
                                                                        Value (ppm)
                                                                           .130

                                                                           .130
                                                                           .170
                                                                           .130
                                                                           .170
                                                                           .140
                                                                           .150

                                                                           .130
                                                                           .150

                                                                           .140

                                                                           .140
                                                                           .130
                                                                           .170
                                                                           .150
                                                                           .150
                                                                           .140
                                                                           .140
                                                                           .140
                                                                           .140
                                                                           .130

                                                                           .140
                                                                           .190
                                                                           .160
                                                                           .150
                                                                           ,130
                                                                           ,140
                                                                           ,140
                                                                           ,140

-------
                        Table 3-1 (Cont'd)

Nationwide Urban Ozone Nonattainment Area Input Data For MOBILE4.0
1986-88 Ozone
Nonattainment Area

Lafayette-
West Lafayette, IN
Milwaukee, WI CMSA
Muskegon, MI
Sheboygan, WI
Toledo, OH
Youngstown, OH-PA
Baton Rouge, LA
Beaumont-Port Arthur, TX
Dallas, TX CMSA
El Paso, TX
Houston, TX CMSA
Lake Charles, LA
Kansas City, MO-KS
St. Louis, MO-IL
Salt Lake City-
Ogden, UT
Bakersfield, CA
Fresno, CA
Los Angeles, CA CMSA
Modesto, CA
Phoenix, AZ
Sacramento, CA
San Diego, CA
San Francisco, CA CMSA
Santa Barbara-
Santa Maria-Lompoc, CA
Stockton, CA
Visalia-Tulare-
Porterville, CA
Portland, OR CMSA
1987 Avg
In-Use
RVP (psi)

11.6

11.6
11.6
11.6
11.6
11.7
10.5
9.8
9.8
9.0
9.8
10.5
9.8
10.2
9.7

8.6
8.6
8.6
8.6
8.5
8.6
8.6
8.6
8.6

8.6
8.6

10.8
Summer Avg
Temperature
<°]
Max
84.5

78.5
78.6
79.5
82.3
80.2
90.9
91.5
94.2
94.1
93.2
90.7
85.8
86.9
88.2

95.7
94.9
81.1
91.8
102.8
90.2
81.1
79.5
73.1

91.9
96.8

76.4
?)
Min
60.4

57.2
57.8
57.0
59.1
57.8
71.7
73.1
72.7
68.0
72.0
72.9
67.7
66.9
56.8

63.2
60.4
62.5
57.4
73.8
56.4
58.7
53.3
56.0

57.3
59.7

54.0
Top Ten Ozone
Day Temperature
(°F
Max
96.3

90.9
89.8
90.9
94.1
92.2
88.6
88.2
98.2
91.5
87.3
89.3
94.9
94.3
94.1

98.0
101.8
89.6
96.9
105.8
101.5
87.1
94.9
78.2

95.2
102.7

94.8
) ^-2.3
Min
69.0

67.4
72.2
63.6
63.8
63.8
65.2
65.2
73.4
56.4
61.2
65.8
71.8
73.3
61.7

66.7
67.0
64.5
60.4
81.0
62.5
59.8
60.3
51.2

58.6
69.4

60.6
                                                                          1986-88
                                                                        Ozone Design
                                                                        Value (ppm)
                                                                           .130

                                                                           .180
                                                                           .180
                                                                           .170
                                                                           .140
                                                                           .130
                                                                           .160
                                                                           .170
                                                                           .140
                                                                           .170
                                                                           .190
                                                                           .130
                                                                           .130
                                                                           .160
                                                                           .140

                                                                           .160
                                                                           .170
                                                                           .330
                                                                           .140
                                                                           .140
                                                                           .170
                                                                           .180
                                                                           .140
                                                                           ,130

                                                                           .140
                                                                           .150

                                                                           ,150
I
I—•
o

-------
                             3-11
turn were used to determine  the  total  emission reductions  from
the various control  options.

     The version of EPA's  computer  emissions  model used for the
Draft  RIA analysis  was  an   improved  version  of  the  MOBILES
emission  factor  model  (hereafter  referred  to  as  MOBILES.9).
Since  evaporative  emissions  are  dependent   on   temperature,
MOBILES.9  allowed  for  the   use  of  climatic  data  reflecting
actual  temperatures  in the  areas modeled.   In the  Draft  RIA
analysis,  two different   types  of  city-specific  temperatures
were used  for the different  analyses  performed.   The  first set
was  used  for  projecting  the   environmental   impact  of  RVP
controls and  the second set  was  used in assessing  the economic
impacts of RVP controls.

     Environmental impacts were modeled  using temperatures from
the design value day  between 1982 and 1984.  (The  design value
is  defined to  be  the fourth  highest  one-hour   ambient  ozone
concentration occurring over three years.)  EPA used  the design
value  day temperature  in projecting  emission inventories and
ozone attainment status as one way of  recognizing  that the days
on  which high ozone  levels  occur are  the days on which ozone
levels must "be reduced in order  for an  area  to meet  the ozone
NAAQS.   Inventory projections  based  on  the  design  value day
temperatures  were  chosen to appropriately  compare  and  rank
various control programs.

     Economic: related  impacts were  based on emission reductions
which  used July  average  temperatures  rather  than  design value
day  temperatures.   The results  of these MOBILES.9  runs were
used  to  calculate  both  the  evaporative  emissions  recovery
credit  (the  value of the  fuel saved due to reduced evaporative
emissions  losses  with  lower RVP gasoline)  and the  attainment
area  VOC  emissions  reduction  credit.   EPA  used the  average
temperature approach because  the  economic  savings  of recovering
evaporative  emissions  and reducing  attainment area  emissions
occur  throughout  the  summer, not just  on high ozone  days.  In
particular,  the  average  temperatures  during  the  month  of July
were used because they  correspond to the in-use fuel volatility
survey, data  used  in  this  study.   Based  on the  July average
temperatures,  EPA  calculated the  emission  factors   (and  then
emission   inventories   and   emission   reductions)   for   the
projection  years  under   various  control  options.   Both  the
evaporative   recovery  credit  and  the  attainment  area  VOC
emission  reductions  credit were  used  in  determining  the  final
cost-effectiveness of RVP  controls.

     For  city  specific  RVPs to use   in  the emission  factor
model,  EPA used  in-use  survey  data which  represented  average
volatilities  for  nonalcohol-containing  unleaded   gasolines  in
the summer months.   Survey  RVP  levels  from  1983  were  used to
develop the  1983  base year  inventories.   The  1985  survey RVP

-------
                             3-12
data were  used  to project inventories in all  of  the projection
years assuming no RVP controls existed.  For these  1985 values,
if the  area  surveyed had  an  RVP less than  the ASTM  limit  for
that area,  the ASTM limit was  used in place of  the  surveyed  RVP
level.   This  was done based  on  the assumption that  the RVP in
the  area  would  continue  to  rise  until it  reached  the  ASTM
limit.   If no RVP  data  were  available for  a  given nonattainment
area, the RVP of the nearest  survey  area was  used.   Also,  the
most appropriate RVP value would be  that  for  the  month during
which  the  design  value  day  occurred.   Since  the  volatility
surveys were  performed  only  in July, if  the  design  value  day
was not in July, the design value day RVP was  determined by  the
ASTM class  limit  for the month in which  the  design  value  day
occurred.   However, for six areas where the July  survey RVP  was
higher  than the July ASTM class limit for that  area,  the ASTM
class  limit   for  the  month  in  which  the   design  value  day
occurred plus  the  difference between the July survey  RVP  and
the July ASTM class RVP limit  was used.

     In  addition   to   city-specific  temperatures   and  RVPs,
city-specific alcohol-blend market  shares  were used  in the  RVP
modeling.   EPA  estimated that alcohol blends  have an  RVP that
is  1.0 psi  higher  than the  base  gasoline.    The  market-share
data  was  also  used   to  evaluate   the   impact   of  various
alternative treatments  of alcohol  blends.   In the  modeling it
was  assumed that the RVP  of  gasohol was 1.2  psi  greater than
that  of gasoline   (i.e.,  1.0 psi  RVP  effect with  a  0.2  psi
average commingling effect).   In those scenarios  where alcohol
blends  were   required  to meet  the  same  RVP restrictions  as
gasoline,   the  in-use RVP  of  alcohol  blends  was  assumed  to  be
0.2 psi greater  than gasoline, due solely to  commingling.

     The above  city-specific  inputs were  incorporated into the
MOBILES.9  model  which then calculated HC  emission  factors  for
each  of  the  urban,  non-California  ozone  nonattainment  areas
modeled.   These  nonattainment area emission  factors  were then
converted   into   nationwide   emission  factors   based   on   a
population-weighted   average   of   the   individual   emission
factors.    Fleetwide   exhaust,   evaporative,    and   refueling
emission   factors   were   calculated  for  each  gasoline-fueled
vehicle category (LDV, LDT, and HDV).

     B.    Summary  and Analysis of Comments

     In  general,   comments   on   the   evaporative  and  exhaust
emissions  models,  used  for  the NPRM analysis  fell  into  the
following  four   categories:   1)  the  validity  of  the emissions
model  correlations developed  for predicting vehicle emissions,
2) the  effect  of weathering  of  in-use fuel on emissions,  3) the
representativeness  of  temperature,  RVP  and  tank  fill  level
inputs  used to  calculate emission factors,  and 4) the magnitude
of the  effect of ethanol blends on evaporative emissions.

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                             3-13
     These  comments  are  now examined  in  the light  of a  new
emissions model developed by EPA.   In the  time since  the  NPRM
was  released  in  August  1987,  EPA  has  revised  the  MOBILES
emissions model and  issued  MOBILE4.0.   The MOBILE4.0  emissions
model, which  has  been used  as  the basis for  the  environmental
impact analysis for  today's  rule,  has  incorporated many  of  the
comments  related  to modeling  evaporative emissions which  were
received on the NPRM.  Comments  on the first three  of  the areas
listed above  are  examined  in the following  section.  The effect
of ethanol  blends  on emissions  will be  examined in Section IV
of this chapter.

     1.    Evaporative Emissions Model

     As   mentioned   above,   comments   were   received   which
questioned   the   validity   of   the   evaporative   emissions
correlations  developed  in MOBILES.9.   API and -Sun  Refining and
Marketing Company  expressed  concern over  the  representativeness
of the data base  used  for  emissions  modeling.  Texaco and API
pointed  out  that  the  UDI  equations  for   predicting  diurnal
emissions were  derived  from an  EPA  data base  limited to three
RVP  test conditions.   SOHIO  and ARCO   stated  that  there  is
insufficient  data to  indicate  that  emissions  are reduced as
volatility  is dropped below  9.0  psi  RVP.   As  an alternative to
EPA's  model,  a number of oil and  auto companies  submitted,  and
recommended that EPA use, a  model  recently  developed by Radian,
Inc.  under the auspices of the Coordinating Resource Council.

     As   previously  mentioned,   EPA's   computer   model   for
calculating calendar-year, fleet-average  motor vehicle emission
factors  for various gaseous pollutants has been released in an
updated   version,   MOBILE4.0.    The  differences   in   emission
modeling  calculations between EPA's.earlier  version, MOBILES.9,
and  the  updated  version,   MOBILE4.0,  are  primarily  that  an
assessment  of. vehicle  running  losses  has been added, the effect
of   RVP  and  • temperature   on   exhaust   emissions   has  been
reassessed,  and  the  form   of  the uncontrolled diurnal  index
(UDI)  and  hot  soak  correlations  has  been   changed  with  new
regression  coefficients  calculated.   However,  before explaining
these  modeling  changes,  it  is  necessary  to respond  to  the
comments  submitted  by  API  and  Sun  Refining  and  Marketing
Company  which  questioned the  representativeness   of   the  data
base upon which the  emissions model is based.

     API  correctly  pointed  out  that  the  data base   used  for
MOBILE4.0 is  the  emission  factor (EF)  vehicle testing performed
by EPA.   API  then claimed that  testing equipment and facilities
used  by EPA led to  an overestimation of  evaporative emissions.
For  diurnal emissions,  API  stated that EPA's method of using an
external  thermocouple to measure  the diurnal  temperature range
(60°  to 84°F, a rise of 24°F) for the fuel  tank resulted in an
actual diurnal  temperature  rise  of  between 26°F  to 30°F.   For

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                             3-14
hot-soak   emissions,    API    stated   that   EPA's   ventilation
conditions in  the  dynamometer  rooms  result  in  unrealistically
high fuel  tank temperatures prior to the  hot-soak.   API claims
that   these   problems  cause   EPA   to   greatly   overestimate
evaporative emissions from vehicles.

     EPA has  studied  the accuracy of different  methods  of fuel
temperature  measurement  in  the  past.    In  one   study,  EPA
compared  fuel  temperatures  measured with  a temperature  probe
placed  inside  a  fuel  tank  versus  a  thermocouple  attached
externally to  the  tank with  an epoxy compound,  the current EF
method  for measuring  fuel  temperature.    The   results  of  the
testing  showed  that  during  a  diurnal  test,  the  differance
between the externally  measured temperature and  the internally
measured fuel  temperature was  never  more  than  2°F  and  in many
cases  there was  no  difference between the  two  measurements.[3]
Therefore, EPA  believes  that  the external thermocouple method
used for  measuring  fuel  temperature  when  testing EF  vehicles,
provides   an   accurate  measurement   of   the   diurnal   test
temperatures and does  not lead to an overestimation  of  diurnal
emissions.

     EPA  has  also  investigated the  amount  of cooling vehicles
receive while  operated on  the  dynamometer versus being driven
on  the road  on  a  typical  summer day.   The result of  one EPA
test program showed that  for two  of the  four vehicles  tested,
on  the road  fuel  temperature  increases  were  higher than the
fuel temperature  rises on  the  dynamometer.  For the  remaining
two  vehicles,  on  the  road fuel  temperature  rises were   lower
than or equal  to dynamometer fuel temperature rises.[4]  Based
on  these  results   it   appears  that  the  amount  of  cooling  a
vehicle receives while  being driven  on  the road versus on the
dynamometer is highly  dependent on the vehicle model.   For some
vehicles the amount of  cooling received on  the  dynamometer may
be  less  than would  be  experienced  in-use, while  for   other
vehicles, the  amount of cooling received  on the  dynamometer may
be  actually more  than  would  be  experienced  in-use.   Due  to
limited amount of  data on  vehicle cooling  and  the  conflicting
results  of current data,  EPA  believes that its use  of the EF
data for  the  MOBILE4.0  emissions model is  appropriate.    Should
more   data  on  vehicle  cooling  become  available  which   could
improve the  model,  EPA will consider  those results  in  future
revisions of the model.

     Sun  Refining  and  Marketing presented  test   data  for  a
single vehicle  showing  that  it  was  the  difference  in  the
high-end  volatility (T90)  of  EPA's  9.0  psi  and 11.5  psi RVP
test  fuels,   and not  RVP,   that  caused  the exhaust  emissions
effect.   In  contrast,   EPA's  own comprehensive  testing  of  a
vehicle  showed  that   it  was   a  difference  in   the   amount  of
hydrocarbon vapors  generated in the  tank during the test  (which
were greater with the higher RVP  fuel), that caused  the exhaust
emissions  effect.[5]   In  addition,  recent  running  loss test

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                             3-15
results  also  indicate  that  exhaust  emissions  are  strongly
affected by  the  amount of  hydrocarbon  vapors generated  in  the
tank,  much  more  than EPA's  emissions  factor  testing  would
indicate.[6]    Thus,   even   if  part  of  the  exhaust  emissions
effect  seen  with  the  emission  factor  testing  is  due  to
differences  in  Tgg,   the   overall   exhaust   emissions  effect
estimated  using  EPA's    emissions   factor'   testing   likely
underestimates  the   exhaust   emissions   effect    which  occurs
in-use.  Thus, the emission factor data  base will  continue to
be used.

     Regarding changes  to   the emissions  model,  the  issue  of
temperature  and  RVP  correction  factors  for  exhaust emissions
has   been   reassessed  in   MOBILE4.0.     Whereas    the   former
correction factors  were based solely on 75° FTP  testing,  the
new MOBILE4.0 analysis contains correction  factors which adjust
exhaust emissions  for RVP   as  well  as  temperature,  by utilizing
new   emissions  data.[7]    In   addition,   based   on  available
emissions  data for  vehicles  operated  on  fuels  below  9.0  psi
RVP,  EPA has  determined that  there  is  no consistent effect of
fuel   volatility   on   exhaust   emissions.   Therefore,  no  RVP
exhaust correction factor is applied for RVPs below 9.0 psi.

     Also  related  to  exhaust  emissions  modeling,   API provided
comments to  the  effect that due  to the  unrepresentative nature
of the FTP and the emission factor test  program,  EPA's exhaust
emission  HC   benefit   due   to  RVP  control  does  not  apply to
typical  in-use vehicle  operation,  and   is  thus  significantly
overstated.   Factors  affecting exhaust HC  emissions claimed in
support  of this  comment  were high  FTP   ambient  temperatures,
unrepresentative   fuel   tank   heating,   canister   loading   by
excessive  diurnal   emissions,   EF  testing   bias,   EF   data
manipulation  techniques,  and  cold temperature,  low volatility
driveability problems.

      In response to the first  point,  it  is true  that the soak
temperatures  used  by  EPA  in the  initial  emission factor testing
are  higher than  average  summer  overnight  low  temperatures in
Class  C areas.  However, the  overnight   low  temperature is not
representative  of  all  driving that  takes  place  with vehicles
over  a 24  hour period.   In  fact,  due to  a non-linearity of the
effect of  RVP  on  exhaust  emissions  with  temperatures,  it is
more  appropriate  to   err on the high  side with temperature than
on the low side  if one's goal  is to  represent the  nation as  a
whole.   This  is  especially true  since  EPA's main  concern is
high  ozone days which also  tend to  be the days with the highest
temperature.    All  this aside,   with EPA's  reanalysis  of  the
issue,  RVP correction factors  are now determined  as a  function
of   temperature   using  data  collected   at  a   variety  of
temperatures.  As  a  result, this comment should no  longer be  a
concern.

      In  response  to  the  second  point,   even  if  the fuel  tank
heating  during  the  20  minute   FTP  were  higher   than   that

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                             3-16
typically seen  during  in-use operation  for 20  minutes,   it  is
still  well  within  the  range  found  in-use  especially on high
ozone days with high solar  loading.   In addition,  since  excess
emissions tend  to  increase faster with  increasing temperature,
in order  to  represent  the  nation as  a whole,  an  increase  in
temperature higher than  just the  average is more representative
of average canister  loading from excess evaporative emissions.
Also,  as  a  final note,  since  the testing  is  done consistently
for    all    fuels    and    temperature     conditions,     any
unrepresentativeness  in   fuel  tank  heating would have  little
effect on the RVP  correction factors  since  they  are  the  ratio
of the exhaust emissions  under a given condition to  those  at
75°F  with 9.0  RVP  fuel.   As  a  result,  the  effects  of  any
possible  excessive  fuel  tank heating for the  most part cancels
out of the equation.

     In  API's  third  point, they suggested  that  the  diurnal
procedure loads the  evaporative  canister to an unrepresentative
degree  compared  to  in-use  diurnals  just  prior  to  exhaust
testing,  causing  exhaust  emissions  to  increase  during  the
subsequent  testing.   While  it   is  true  that   the  initial
conditions of  the canister  prior  to testing  may significantly
affect  the  exhaust  emissions  measured during  the  FTP,  EPA
believes  many  vehicles  probably  experience very  high canister
loadings, especially on  high temperature  days.   In  any  event,
although  EPA  disagrees  with   the   statement  that  our  test
procedure  loads  the  canister  unrepresentatively  compared  to
in-use,  this  is not important  since for both the case of 75°F
using  9.0 RVP  and the  case being   compared  to  it,   the same
diurnal  procedure  is  followed.   Thus,  the  magnitude of  the
diurnal tends to  cancel  out of  the  equation used  to determine
the exhaust correction factors.

     In  API's  fourth point they suggest that  EPA was only able
to show  an RVP  effect through  an  -unjustified manipulation  of
the  data and testing  sequence.   In actuality,   the  RVP   effect
had been  masked by the test order  prior to EPA's  change.  The
testing  on  low  RVP  fuels maintained adequate  canister capacity
to minimize the  effects  of the  subsequent  testing  on high RVP
fuels.   By switching  the  order,  this  effect was eliminated.
However,  in this case,  one might  argue  that  the  measured  effect
is   smaller  than   actual,   since  the  canister  tends   to  be
overloaded prior to  testing on  the  low  RVP fuels,  resulting  in
a  greater than  normal  amount  of  purge  hydrocarbon  from  the
canister, and thus  a dampening of  the  real effect  of lowering
RVP.   The fact  that the  RVP effect seen in the  EF data  is not
simply a  result  of the testing procedure is supported by other
studies   now  incorporated  into  the  analysis  which   all  show
similar results.[7]

     In   their   fifth   point,   API    stated   that   due   to
cold-temperature  low-volatility  driveability  problems EPA has
misrepresented  the  effect  of  volatility  control  on  exhaust
emissions.   In  support  of  this  API  provided data  which they

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                             3-17
claimed demonstrated the  fact  that  the effect of RVP on exhaust
emissions  is  non-linear  with  minimum exhaust  HC occurring  at
approximately 8-9 psi RVP,  and that as temperatures  are reduced
below standard  FTP  temperatures, the  effect of  RVP to  reduce
exhaust  HC is  minimized  and  in  fact  is reversed at  realistic
Summer (55°F) and Spring/Fall (43°F) average morning  lows.

     In   Chapter   4   of   this   analysis,   the   issue   of
cold-temperature  low-volatility  driveability  is  discussed  in
detail.   That  analysis  shows  that at  temperatures  and  RVPs
substantially   below  those   mentioned   here   no   significant
driveability  effects  were encountered.  Since  the  majority  of
vehicle  travel  occurs  at temperatures  well above  the  average
morning  lows,  test  temperatures  of  75°F or  higher  may be  the
most  representative  (especially if  the non-linearity - of  the
effect  of  volatility  on   exhaust  emissions   is   taken  into
account).

     The  data  provided  by  API  consisted  of three studies  by
Chevron,  one  by Exxon  for API,  two  by  ATL  for  API  (one
currently  in  progress),  and one by CARB.   (The final results of
the second ATL  program  were not  available  at the time  of this
analysis.)    In -addition  to  the  test  program  results,  API
pointed  out  that  CARB  recently  proposed  an  in-use  summer
gasoline   RVP   standard  of  8.0  psi   citing similar  emissions
increases  at  7.0 psi as a reason  for not lowering  RVP  below 8.0
psi.

     It  has  long  been recognized that ambient temperature has a
strong effect on  exhaust  emissions  due  mainly to  its  effect  on
fuel  distribution,   fuel/air  mixing,  catalyst  lightoff,  etc.
However,  the  effect of   RVP   is  a  more   recently  discovered
effect,  which results mainly from its effect on the quantity of
evaporative  emissions being purged  to  the  engine.   Thus,  it  is
not  strictly an RVP effect, but  an RVP  and temperature effect,
or more  accurately  a true vapor pressure (TVP) effect.

     The  CARB exhaust emissions  analysis   is  based  on  four  of
the  five test  programs which  API referenced  that  measured the
effect  of low  RVP  on exhaust emissions.   Their  analysis shows
that  depending  on   the  age of  the vehicle,  exhaust  emissions
stay  the same  or decrease as RVP  is  reduced until  around 8.0
psi   (at   either  80°F  or   55°F),  and  exhaust  emissions  are
projected  to  rise   slightly by  about  four  to  eight  percent,
depending  upon  the  ambient  temperature,   as RVP  is  decreased
below   8.0  psi.    However,   when   other   volatility  related
emissions   reductions   are   included,   such   as   evaporative
emissions  and  stationary source emissions  reductions (running
losses  were  not  included  in  the CARB  estimates),  the overall
emissions  inventory continues to decrease  until an RVP  of 7.2
psi  in  1990  and an RVP  of 7.6  psi  in 2000.   CARB points out
that  their analysis  is  based on the  exhaust emissions results
at  FTP  conditions  because  FTP  temperatures are representative
of  average   summer  temperatures.   They did not   include  the

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                             3-18
effects of  lower temperature  on  emissions  in  their  analysis
because GARB  believes that  the  highest ozone levels  typically
occur on days with the highest  temperatures.

     We  agree  with  CARB's  position  that   high   ozone  days
typically occur  on  days with high temperatures.   Therefore,  at
typical  high   ozone   day   temperatures,   the  reductions   in
evaporative  and  running   loss   emissions   which   result  from
lowering RVP below  9.0  psi, should more  than offset  any small
increases  in exhaust  emissions   which  might  occur.   Based  on
CARB's analysis, this  appears to  be true for  the Phase II Class
B  areas  (of  which California  is  one),  since  EPA's  Phase  II
Class B RVP  limit  is  7.8 psi,  slightly higher than  the 7.6  psi
value  indicated in the  GARB analysis'  to  be where  the overall
inventory begins to increase as RVP is lowered.

     With  regard to  Phase  II  Class  A  areas, -the  available
emissions data  are not  directly applicable  since  the testing
was  not  done  at temperatures  which  would  be  experienced  on
typical  high  ozone  days.   However,  vapor  pressure  related
phenomenon  under  Class  A  RVP  and  temperatures   should   be
comparable  to  Class  B  RVP and temperatures.   Therefore,  we
would expect that a similar trend would occur in Class A areas
as  exists   for   Class  B  areas.   In  other  words,   any exhaust
emissions increase  at low  RVPs  (which  the  previously mentioned
data  shows  would  decrease  as  the  ambient  temperature rises)
should  be  more  than  offset  by  decreases  in  vapor-related
emissions,  especially when running losses  are included, as  RVP
is  lowered  from the current Class  A  level of  9.0  psi  to  7.0
psi.  In addition,  the  benefits  of  RVP reduction on evaporative
emissions and running losses would be expected to  be greater in
Class  A areas  than  in Class  B  areas because  of  the higher
temperatures.

     Evidence that  driveability problems  (presumably  the cause
of  any  exhaust  emissions increase at low RVPs)  should not be a
serious concern at  RVP  levels below  9.0 psi  is the  fact that
vehicle manufacturers have  supported these RVP  levels in their
comments on the original volatility  proposal.  Again,  it is an
issue  of  actual vapor  pressure  conditions  in the geographical
area  under   consideration,  not  the   RVP  limit.    Based  on  the
Phase  II  RVP  limit for California,  EPA agrees with  CARS that
driveability and any  exhaust emissions  effects should  not be a
serious concern with  an RVP of  7.8  psi  in California.  At  the
same time, for  a Phase   II  Class  A  area, an  RVP as  low as  7.0
psi  should  not   lead to  any serious  concerns  with driveability
or  exhaust emissions  increases,  due  to the higher  temperatures
which occur in Class A areas compared to Class B areas.

     MOBILE4.0   treats   running-loss  emissions    (evaporative
hydrocarbons  emitted   when  the  vehicle   is   in   operation)
differently  than MOBILES.   In  MOBILES, running  loss  emissions
were  assumed  to be  zero.   Since   1986,  EPA  has  contracted
Automotive  Testing  Laboratories,  Inc.  (ATL), to  test vehicles

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                             3-19
to  define  the  quantity  of  evaporative running  losses.   The
results from these  test programs  were  analyzed  and have  been
used for estimating running loss emissions in MOBILE4.0.[7]

     With MOBILE4.0,  evaporative  emissions  are  calculated  by
the  same method  used  for  the  Draft  RIA  and  the  analysis
performed for the Final RIA  for the first phase of RVP  controls
with  minor  changes.   These  changes  include  the  form  of  the
equation  used   for  estimating   diurnal  emissions  and   the
regression coefficients calculated  for  the  equation as well  as
the equation and  regression coefficients used  to  calculate hot
soak  emissions.   The  diurnal index  equation  used  in  MOPILE4.0
differs  from  that  of  MOBILES.9   in  that  the  first   order
dependence of  the diurnal  index  (DI)  on  UDI  was  found to  be
insignificant and subsequently  deleted  leaving  the DI with only
a  second  order dependence  on  UDI.[7]   In addition,  MOBILE4.0
hot soak emissions  are  adjusted by ambient temperatures  as well
as  by  fuel  RVP.    The  regression  coefficients  for each  were
recalculated from a larger  test data base.[7]

     The Radian model at this point in its development contains
a  number  of  major  disadvantages  relative to EPA's  which argue
against  its  use  at this time.   First,  and  foremost,  the model
is  entirely  statistical,  consisting  of correlations  of  data
versus  test  parameters.   This  prevents  its use outside  of the
test  conditions,   since   no   engineering  model   is  used  to
demonstrate  the  validity  of  extrapolation.   Unfortunately,  the
range  of  summer  climates  occurring  in the U.S.  is  much wider
than  the range of test  data.   Therefore, extrapolations must be
performed in order to model in-use conditions.

     Second,  some of  Radian's statistical  techniques  result in
the  consistent underestimation of  measured  emissions even at
the test conditions.  This arbitrarily leads to  a  reduction in
the estimated effect of RVP on emissions, which is unacceptable.

     Third,  the  most  apparent  advantage  of  the Radian  model in
estimating  partial  diurnals  may  not   be   as  strong   as  it
initially  appears.    Diurnal  emissions   are   a  function  of
available canister  capacity,  as  well as  the quantity of  fuel
tank  vapors  directed  to the  canister.   Recent modeling  by EPA
of the  interaction  of tank vapors,  canister loadings,  and purge
rates   to  the   engine   indicates  that  canisters  are  likely
saturated at the end of the day.[8]   In addition,  EPA's  running
loss  testing confirms  that  many vehicles' canisters  are 'fully
loaded  at today's RVPs on  high  temperature  days typical  of high
ozone   conditions.[9]    Thus,   EPA's   emission   factor   test
conditions  of  a  complete  diurnal  with a  purged  canister  are
almost  certainly more  accurate than  Radian's  partial  diurnals
with  a  purged  canister  (reality being a  combination of  partial
and full diurnals with a saturated canister).

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                             3-20
     2.     Fuel Weathering

     Comments  submitted  by  Texaco,  General  Motors,  and  API
maintained that  the  effects  of  weathering  were not  considered
in  the  DRIA  vehicle evaporative  emission  analysis.   However,
EPA  stated  in  the  Draft  RIA  that  fuel  weathering  was  an
important  factor  in assessing  vehicle  evaporative  emissions
and, in fact,  the  decrease  in vehicle fuel  RVP  as a  result  of
the weathering phenomenon was taken into account in the diurnal
evaporative emission  analysis based  on  MOBILES.9.  The  effect
of weathering  and  the variability  of in-use fuel tank levels on
diurnal   emissions  were   incorporated   into   the  model   by
determining  a fuel  tank  fill  level  which  accounted for  the
effects  of fuel  weathering,   RVP   variability,  average  in-use
fuel  tank  level,  as  well  as  daily temperature  variability.
Fuel  weathering  was  not  included  in  the  hot-soak  emissions
analysis  for  the  NPRM  because  neither  ambient  temperature
effects nor the  effect  of temperature and RVP variability were
included .in the hot-soak model.

     The  MOBILE4.0 emissions  model now  incorporates  the effect
of weathering on diurnal emissions  as well  as hot-soak,  running
loss and  exhaust emissions.   The manner  in which weathering has
been  taken into account  by  MOBILE4.0  is more  straightforward
than  in  MOBILES. 9.  The MOBILE4.0  correlation for RVP loss due
to  weathering,  determined as  a  function of  the  fuel's  initial
RVP  and   maximum  daily   temperature,   was  based  on  a  fuel
weathering  model  developed  by  Radian,   Inc.  for  Coordinating
Resource  Council.    For  a  more   complete  discussion  of  how
MOBILE4.0   incorporates    fuel    weathering   into   emissions
calculations,  the  reader  is  directed  to the EPA  memorandum on
MOBILE4.0.[7]   It  should  be noted  that  for  this  analysis,
weathered  RVP was allowed  to drop below  7.0  psi  for  running
loss   emissions   determination.     (The   standard   version  of
MOBILE4.0 resets RVP to 7.0 psi.)

     3.    Emission Factor Modeling Inputs

     In  general,  comments  were  received  which  related  to the
representativeness of  the  data  used  to calculate evaporative
emission  factors.   Several  of the  areas  on  which comments were
received  included temperature data,  RVP values,  in-use  fuel
tank  fill levels  and  air  quality projection data.  (A summary
and  analysis  of comments covering air  quality  projection data
inputs  including  emission source growth  rates  and  inventory
data  will be presented  in  Section  III  of this chapter  on
Emission  Inventories.)

     Some  commenters  questioned  the number  of   nonattainment
areas that should  be included  in the  analysis.   Both the Office
of  Management  and  Budget   (OMB)  and  Multinational  Business
Services  (MBS)  stated  that only those  areas expected to  be in
nonattainment  in the future  (which EPA  projects  to  decline in
the  mid-  to  late-1990s and  then   increase  after  2000  without
further controls)  should be included.

-------
                             3-21
     Texaco objected to  the use  of  temperatures from  a  single
design value  day  for estimating  emissions.   The Motor  Vehicle
Manufacturers  of  America   (MVMA)  commented  that  there  is  no
clear relationship between  the  design  value level  and  the  July
average temperatures used.   MVMA feels  that  better correlation
with temperature could be obtained with  an  ozone statistic  more
robust than  the design value.  When MVMA  repeated  the analysis
to  calculate  inventory  projections,   it  used  30-year  daily
average minimum and maximum  temperature data for  July whereas
EPA used  the design value  day  minimum  and maximum temperature
data  for   each city.   MVMA  noted  that  in   some  cities  this
resulted in higher temperatures, while in  others it resulted in
lower temperatures.

     Commenters also  stated that EPA  should  not have increased
each  area's   RVP   to   the  ASTM  maximum  limit  if   it   was
historically  below  that  limit.   They   stated   that  the  fuel
distribution  system was  such,  that  lower limits  in  adjacent
states often kept fuel in a given state below its maximum level.

     In the  reanalysis  which  MVMA  had done,  they  used  more
city-specific  data   than  EPA,  which  they say   is  preferable.
Whereas EPA used a 1983  implementation date for  I/M programs
for  all cities, MVMA  used city-specific  implementation  dates.
MVMA  also  accounted for Stage  II controls  being implemented in
New  York,   New Jersey  and St.  Louis,  and  used city-specific
model year start dates and vehicle classes.

     The  choice of  1983  as the base  year  for the  analysis was
thought by  some to  introduce significant error  in  the results.
Sun- Oil  stated  that the  summer  of  1983 was  unseasonably  warm
and  had  an  unusually  large  number  of  ozone exceedances.   It
felt  that EPA  must develop  statistical attainment  data using
normal  temperature  information  determined  over  an  extended
period  of  time (15-30  years).   MVMA also commented  that EPA
selected  an unrepresentative base  year  design   level  on which
the air quality calculations were based.

     MBS  noted that their  analysis used a  30-year  model of the
fleet,  instead of  a 20-year model  like  EPA used.   They  feel
that  this  is  appropriate  because vehicles more than  20 years
old   contribute  significantly   to   total   fuel  consumption.
Chrysler  stated that  MVMA statistics  show that fleet turnover
is  slower  than that used in the NPRM  (i.e.,  it  takes 15 years,
they  said,  not 13  years,  for 90 percent  of  cars and trucks to
be  replaced).

     For  the second phase of RVP controls, EPA  has updated and
improved  much  of  our  analysis,  which  in  turn  addresses  these
comments.   For example,  the  most recent three-year  period for
which  design values exist  at the time of  this analysis  is 1986
to  1988.    Therefore,  the  nonattainment analysis  is  based  on
these  three years and EPA  believes  that the  middle year,  1987,
is  the most  appropriate year  for the base year.

-------
                             3-22
     In regard to temperature  inputs,  MVMA is correct in noting
that there  is  no clear  relationship  between  the ozone  design
value  and  July  average  temperatures.   This  is  not  surprising
considering  there  are  many other  city-specific  factors  that
could  impact  the magnitude  of the  design value,  such  as  VOC
emissions  and  VOC/NOx  ratios.   Therefore,   for  determining
emissions  inventories  for  future attainment  projections,  EPA
has based its  analysis  on  the  days  with  the ten  highest ozone
exceedances in each nonattainment  area,  or all of the days with
exceedances  if there  were  fewer  than  ten  exceedances   for  a
given  area.  (In some  cities where there were  two or more days
which  had  the tenth  highest  ozone  exceedances,  all of  those
days were  included in  the  analysis.   So  in  some cases there
were cities where  more than  ten  days  were   included   in  the
temperature  analysis.)   Based  on actual  temperature data  for
these days, the minimum and maximum temperatures  on each  of  the
days was determined.   A straight  average  of  these temperatures
for  both  the  minimum  and maximum  temperatures  was  calculated
and  used   for   the  city   specific   temperature  inputs.   For
determining  emissions   recovery  credits  and  attainment  area
credits,  where  the  average  ozone  season emission level  is
important,   EPA now' uses  the  average of  the  30-year  average
daily  minimum  and  maximum temperatures   for   June,  July  and
August.  The temperatures  used for  both  of these analyses  are
contained in Table 3-1.

     In  regards  to  city-specific  RVP  inputs,  EPA  no   longer
assumes each city's RVP  is at  the ASTM limit.   Instead  EPA  has
used 1987  MVMA summer  fuel  survey results to  determine   actual
in-use RVP  levels  prior  to  RVP  controls.   In  those  cities  for
which  no  RVP  survey  results  are  available,  the RVP  from  the
nearest  city   for  which  survey   results   existed    (either
geographically or  based on  likely  fuel  distribution patterns)
was used.   After  implementation  of  the  volatility regulations,
we  assumed  that RVP  levels dropped  to those  specified  in  the
first  phase of  RVP  controls  and  then   to   those   RVP   levels
specified in today's rule.   The  city-specific RVPs used  in this
analysis are contained in Table 3-1.

     Regarding other city-specific inputs,  EPA has been able to
account  for  other  city-specific  inputs  with  the  MOBILE4.0
emissions model.   In addition  to temperature and  RVP,   EPA  has
incorporated city-specific I/M programs,  city-specific Stage II
programs,  as  well  as   city-specific  growth  rates  into  this
analysis.   The result  of  this approach  is expected  to increase
the  accuracy  of  estimating  the  impact  of  RVP  control on  a
nationwide basis.

     Regarding the  comments  on nonattainment  areas  it has been
Agency policy to include the most  recent  nonattainment areas in
air  quality analyses.   Analyses based on future projections of
attainment  or  nonattainment would be  very dependent  upon  the
assumptions used in making the projections, which could  lead to

-------
                             3-23
significant policy  problems.   The  potential for  such  problems
can be  seen  in the  large  number of  ozone nonattainment  areas
which occurred in 1988  due  to  a hotter than normal summer,   For
this reason,  EPA  will base this analysis on the  nonattainment
situation during  1986 to 1988,  the most recent data  available
at the time of the analysis.

     Finally,   while  it  is  true  that  a  30-year  model  of  the
vehicle  fleet is  likely  to  be  more accurate  than a  20-year
model,  the difference would not  be  expected to  be substantial.
EPA's model accounts  for  all model-years more than 19  years old
on an aggregate basis.   This  is reasonable since  such  vehicles
account  for   less  than  one percent  of  vehicle-miles  traveled
(VMT).   In addition, since  Chrysler did  not  include information
about the  model  years  involved  in the  MVMA  study showing  90
percent of vehicles being  replaced  after 15 years",  it  is  not
possible  to   resolve  the  difference   from   EPA's  estimate.
However,  if  for  example  the MVMA  estimate involved  different
model  years  than  EPA's,  that  might  explain  the  two  year
difference since  vehicle sales  vary  from year  to year  due  to
economic influences.

     C.     Emission Factor Results

     Tables  3-2  and 3-3  contain  the  MOBILE4.0  non-Northeast
(labeled   "Non-NESCAUM")   ozone  nonattainment  area   emission
factors  based on the  top 10  ozone  day temperatures  and  the
summer average temperatures, respectively.   Each table contains
an  overall  vehicle  fleet  emission  factor,   as  well  as  the
emission  factors  for  each  vehicle  class  (i.e.,  light-duty
gasoline   vehicles,   light-duty  gasoline   trucks,   heavy-duty
gasoline  vehicles  and  diesel   vehicles).   In  addition,  each
table  contains  total  NMHC emission  factors  as  well   as  the
individual   emission   components   including   exhaust   NMHC,
evaporative  NMHC,  refueling  NMHC  and  running  loss NMHC.   As
described  earlier,  the emission  factors from Table 3-2 (based
on  top  10  ozone  temperatures)  were  used  in projecting  the
environmental  impact of RVP control.   The emission factors  in
Table 3-3  (based on  summer average temperatures)  were  used in
determining the  economic credits due  to  recovered evaporative
emissions  and  attainment  areas  emission reductions  (see Chapter
5).

III. Emission  Inventories

     A.    Synopsis  of NPRM

     Using the calculated  nationwide  emission  factors,  the NPRM
inventory   projections   of    future    VOC   emissions   were
estimated.      Non-California,   urban,    nonattainment   area
inventories  were  calculated  for  both  mobile  and stationary
sources, both  as  a  whole  and  subdivided into several individual
source  categories using assumptions concerning growth rates and
future technological  improvements.

-------
LDGV
              Table 3-2



MOBILE4 VMT Weighted Emission Factors (g/mi)


   Phase II Volatility Option Evaluation


        Temperature Profiles: Top 10


         Areas Analyzed:  Non-NESCAUM



                    LDGT
                                                                       HDGV


Base
Phase I
9.5 psi
9.0 psi
P II+0.5
Phase II

Base
Phase I
9.5 psi
9.0 psi
P II+0.5
Phase II

Base
Phase I
9.5 psi
9.0 psi
P I 1+0.5
Phase II


5
5
5
5
5
5

2
2
2
2
2
2







1987

.784
.784
. 784
.784
.784
.784

.362
.362
.362
.362
.362
.362

.541
.541
.541
.54 1
.541
.54 1


4
3
3
3
3
3

1
1
1
1
1
1

1
0
0
0
0
0
1990

502
961
961
961
961
961

748
701
701
701
701
701

1 14
970
970
970
970
970


3
2
2
2
2
1

1
1
0
0
0
0

0
0
0
0
0
0
1995

.230
.735
.425
. 222
. 107
.966

.077
.029
.993
.990
.989
.988

. 729
.618
.553
.465
.424
.381


2
2
1
1
1
1

0
0
0
0
0
0

0
0
0
0
0
0
2000

.690
.215
.914
.733
.626
.501

.801
.753
.718
.713
.712
.712

.554
.458
.403
.326
.288
. 250
2005

2.
2.
1 .
1 .
1 .
1 .

0.
0.
0.
0.
0.
0.

0.
0.
0.
0.
0.
0.

61 1
148
856
678
569
447

776
728
693
689
688
688

51 1
421
370
296
259
222

2
2
1
1
1
1

0
0
0
0
0
0

0
0
0
0
0
0
2010

.588
. 130
.842
.665
.554
.432
•
.768
.721
.687
.683
.681
.681

.500
.411
.361
.289
.251
.215


6
6
6
6
6
6

3
3
3
3
3
3

1
1
1
1
1
1
1987

.016
.016
.016
.016
.016
.016

.291
.291
.291
.291
.291
.291

.288
.288
.288
.288
.288
.288
1990 1995
Total
4.483 3.053
4. 156 2.776
4. 156 2.635
4. 156 2.468
4. 156 2.352
4. 156 2.242
Exhaust
2.432 1.540
2.368 1 .470
2.368 1 .425
2.368 1.418
2.368 1.415
2.368 1.414
Evaporat
0.942 0.647
0.832 0.563
0.832 0.525
0.832 0.442
0.832 0.391
0.832 0.352
2000
NMHC
2.455
2.201
2.072
1 .927
1 .824
1 .729
NMHC
. 190
. 1 18
.072
.064
.062
.061
2005

2.
2.
1 .
1 .
1 .
1 .

1 .
1 .
1 .
0.
0.
0.

357
1 12
989
847
743
650

1 18
048
004
997
994
993

2
2
1
1
1
1

1
1
0
0
0
0
2010

.337
.096
.976
.834
.729
.638

. 109
.040
.996
.989
.986
.985


13
13
13
13
13
13

5
5
5
5
5
5
1987

.017
.017
.017
.017
.017
.017

.530
.530
.530
.530
.530
.530


9
8
8
a
a
8

3
3
3
3
3
3
1990

.335
.605
.605
.605
.605
.605

.645
.618
.618
.618
.618
.618
1995

6.
6.
6.
5.
5.
4.

2.
2.
2.
2.
2.
2.

988
390
088
61 1
317
967

508
468
440
437
436
436

6
5
5
4
4
4

2
2
2
2
2
2
2000

.231
.672
.398
.949
.663
.327

. 143
.098
.067
.062
.062
.061


5
5
5
4
4
4

2
1
1
1
1
1
2005

.871
.335
.077
.644
.363
.036

.017
.970
.937
.932
.931
.931
2010

5.855
5.324
5.069
4.637
4.352
4.025

2.011
.964
.932
.927
.926
.926
ive NMHC
0.492
0.420
0.389
0.318
0.274
0.240
0.
0.
0.
0.
0.
0.
474
406
377
309
264
233
0
0
0
0
0
0
.466
.399
.372
.304
.260
.228
4
4
4
4
4
4
.403
.403
.403
.403
.403
.403
2
2
2
2
2
2
.905
.581
.581
.581
.581
.581





•
884
635
494
282
171
078
1
1
1
1
0
0
.558
.330
.205
.018
.919
.838
1
1
1
0
0
0
.366
. 150
.032
.860
.770
.695
1 .364
1 . 149
1 .032
0.860
0.768
0.694
Refuel ing NMHC
Base
Phase I
9.5 psi
9.0 psi
P U + 0.5
Phase II

Base
Phase 1
9.5 psi
9.0 psi
P 11+0.5
Phase I I
0
0
0
0
0
0

1
1
1
1
1
1
. 243
.243
.243
. 243
. 243
. 243

.fa3b
.63B
.638
.638
.638
.638
0
0
0
0
0
0







2 17
207
207
207
207
207

422
OB3
083
083
OB3
083
0
0
0
0
0
0

1
0
0
0
0
0
. 195
. 186
. 178
. 170
. 166
. 158

. L'2b
.902
.700
.596
.528
.439
0
0
0
0
0
0

1
0
0
0
0
0
. 188
. 180
. 172
. 165
. 160
. 152

. 146
.824
.621
.528
.465
.387
0.
0.
0.
0.
0.
0.

, _
0 .
0.
0.
0.
0.
188
179
172
164
160
152

137
820
621
528
463
385
0
0
0
0
0
0

1
0
0
0
0
0
. 188
. 180
. 173
. 164
. 160
. 152

. 132
.818
.622
.528
.462
.384
0
0
0
0
0
0

1
1
1
1
1
1
. 287
. 287
.287
. 287
.287
. 287

. 150
. 150
. 150
. 150
. 150
. 150
0.263 0.248
0.252 0.238
0.252 0.229
0.252 0.219
0.252 0.212
0.252 0.201
Runn i ng
0.846 0.618
0.704 0.506
0.704 0.456
0.704 0.389
0.704 0.334
0.704 0.274
0. 243
0.234
0.226
0.216
0.208
0. 198
Loss
0.530
0.430
0.386
0.328
0.280
0.230
0.
0.
0.
0.
0.
0.
243
234
226
216
208
198
0
0
0
0
0
0
. 244
.234
.226
.216
.209
. 198
0
0
6
0
0
0
.547
.547
.547
.547
.547
.547
0
0
0
0
0
0
.513
.490
.490
.490
.490
.490
0.
0.
0.
0.
0.
0.
479
457
439
419
407
386
0
0
0
0
0
0
.454
.434
.418
.399
.386
.367
0
0
0
0
0
0
.443
.423
.407
.389
.377
.358
0.440
0.420
0.404
0.386
0.374
0.355
NMHC
0.
0.
0.
0.
0.
0.
521
424
382
326
277
227
0
0
0
0
0
0
.518
.422
.382
.325
.275
.226
2
2
2
2
2
2
.536
.536
.536
.536
.536
.536
2
1
1
1
1
1
. 27 1
.916
.916
.916
.916
.916
2.





1 18
830
7 14
473
303
067
2
1
1
1
1
1
.076
.810
. 709
.470
. 295
.061
2





.044
.792
.701
.463
. 285
.052
2.041
1 . 791
1 .701
1 .463
1 .283
1 .050
                                                                                                 I
                                                                                                NJ
                                                                                                -C-

-------
Base
Phase I
9.5 psi
9.0 psi
P I 1+0.5
Phase II
Base
Phase I
9.5 psi
9.0 psi
P 11+0.5
Phase II
                                 Table  3-2  (Cont.)

                         MOBILE4 VMT Weighted Emission Factors  (g/m1)

                            Phase II Volatility Option Evaluation

                                 Temperature Profiles: Top  10

                                  Areas Analyzed: Non-NESCAUM
                             DSLV

            1987   1990   1995   2000  2005  2010
                                                     A I I Veh

                                       1987  1990  1995  2000  2005  2010
                               Total  NMHC

2.697 2.250  1.703  1.496  1.452  1.448   5.845 4.495 3.180 2.628 2.534 2.509
                                      5.845 4.016 2.757 2.233 2.155 2.138
                                      5.845 4.016 2.499 1.991 1.924 1.914
                                      5.845 4.016 2.310 1.825 1.763 1.754
                                      5.845 4.016 2.198 1.722 1.660 1.650
                                      5.845 4.016 2.068 1.609 1.550 1.540
2.697 2.250 1.703 1.496  1.452  1.448
2.697 2.250 1.703 1.496  1.452  1.448
2.697 2.250 1.703 1.496  1.452  1.448
2.697 2.250 1.703 1.496  1.452  1.448
2.697 2.250 1.703 1.496  1.452  1.448
                              Exhaust  NMHC

0.572 0.566 0.442 0.443 0.468 0.485   2.520  .866 1.164 0.887 0.855 0.852
0.572 0.566 0.442 0.443  0.468  0.485
0.572 0.566 0.442 0.443  0.468  0.485
0.572 0.566 0.442 0.443  0.468  0.485
0.572 0.566 0.442 0.443  0.468  0.485
0.572 0.566 0.442 0.443  0.468  0.485
                                      2.520
                                      2.520
                                      2.520
                                      2.520
.818 1.114 0.837 0.806 0.803
.818 1.079 0.802 0.772 0.77O
.818 1.075 0.797 0.768 0.765
.818 1.073 0.796 0.766 0.764
                                                2.520 1.818 1.073 0.795 0.765 0.763
                                                                                              OJ
                                                                                               I
                                                                                              r-o
                                       Evaporative NMHC
Base
Phase I
9.5 psi
9.0 psi
P 11+0.5
Phase 11
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000.0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
                                       .491  1.067  0.693  0.522 0.481  0.470
                                       .491  0.932  0.591  0.435 0.400  0.391
                                       .491  0.932  0.534  0.388 0.356  0.349
                                       .491  0.932  0.450  0.316 0.288  0.281
                                       .491  0.932  0.407  0.278 0.251  0.244
                                       .491  0,932  0.367  0.242 0.217  0.211
                                        Refuel ing NMHC
Base
Phase 1
9.5 psi
9.0 psi
P 1^0.5
Phase II
Babe
Phase 1
9.5 pbi
9.0 ps i
P 11+0.5
Phase II
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
                                      0.248  0.222  0.200 0.192 0
                                      0. 248  0.212  0.19
                                      0.248  0.212  0.184 0
                                      0.248  0.212  0.175 0.169 0
                                      0. 248  0.212  0.171 0.164 0
                   191 0.191
           0. 184 0. 182 0. 183
             176 0.176 0.176
                   168 0.168
                   163 0.163
                                      0.248  0.212  0.162  0.156 0.155 0.155
                                       Running Loss NMHC
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
0.000 0.000 0.000 0.000 0.000  0.000
                                      1.503  1.265  1.049  0.951  0.929 0.916
                                       .503  0.979  0.786  0.701  0.688 0.681
                                       .503  0.979  0.629  0.549  0.542 0.539
                                       .503  0.979  0.536  0.467  0.461 0.459
                                       .503  0.979  0.473  0.409  0.402 0.399
                                       .503  0.979  0.392  0.340  0.334 0.331

-------
                                                        Table  3-3


                                           MOBILE4 VMT Weighted  Emission Factors (g/mi)

                                              Phase II Volatility  Option Evaluation

                                                   Temperature Profiles:  Summer

                                                    Areas Analyzed:  Non-NESCAUM
                             LDGV                               LDGT                                  HDGV

            1987   1990   1995  2000  2005  2010   1987   1990   1995  2000   2005  2010   1987  1990  1995  2000   2005   2010


                                                            Total NMHC
Base
Phase I
9.5 psi
9.0 psi
P II+0.5
Phase 1 I
4
4
4
4
4
4
509
509
509
509
509
509
3
3
3
3
3
3
49
1
1
1
1
1
5 2.488 2.083 2.032 2.019 5.215 3.883 2.626 2.102 2.014
2.143 1.752 1.707 1.697 5.215 3.620 2.404 1.900 1.B17
1.989 1.605 1.563 1.554 5.215 3.620 2.313 1.817 1.738
1.823 1.449 1.409 1.400 5.215 3.620 2.168 1.687 1.611
1.748 1.380 1.338 1.328 5.215 3.620 2.087 1.617 1.540
1.645 1.284 1.243 1.233 5.215 3.620 2.001 1.542 1.467
.998
.804
.727
.601
.529
.456
1 1 .383
1 1 .383
1 1 .383
1 1 .383
1 1 .383
1 1 .383
8.030
7 .382
7.382
7 .382
7.382
7.382
5.924
5.373
5.131
4.767
4.518
4.268
5.248 4
4.726 4
4.501 4
4. 159 3
3.921 3
3.684 3
938 4.928
434 4.428
218 4.215
889 3.885
658 3.651
429 3.422
                                                           Exhaust NMHC
Base
Phase I
9.5 psi
9.0 psi
P II+0.5
Phase II
Base
Phase I
9.5 psi
9.0 psi
P II+O.b
Phase 11
Base
Phase I
9.5 psi
9.0 psi
P II + 0.5
Phase I I
Base
Phase I
9.5 psi
9.0 psi
P I 1 + 0.5
Phase II
2. 225
2. 225
2. 225
2. 225
2. 225
2.225
.647 1.023 0.780 0.756 0.748
.609 0.981 0.737 0.713 0.706
.609 0.955 0.710 0.686 0.679
.609 0.937 0.691 0.668 0.661
.609 0.943 0.697 0.673 0.666
.609 0.935 0.690 0.666 0.659
 .010 0.734 0.493 0.38B  0.367  0.362
 .010 0.659 0.433 0.334  0.314  0.309
 .010 0.659 0.395 0.299  0.281  0.277
 .010 0.659 0.335 0.245  0.227  0.223
 .010 0.659 0.297 0.209  0.193  0.188
 .010 0.659 0.266 0.180  0.164  0.160
0.243 0.217 0.195 0.188  0.188  0.188
0.243 0.207 0.186 0.180  0.179  0.180
0.243 0.207 0.178 0.172  0.172  0.173
0.243 0.207 0.170 0.165  0.164  0.164
0.243 0.207 0.166 0.160  0.160  0.160
0.243 0.207 0.158 0.152  0.152  0.152
 .030 0.897 0.777 0.726 0.722 0.720
 .030 G.b36 O.b42 0.501  O.bOl 0.501
 .030 0.636 0.461 0.424 0.425 0.426
 .030 0.636 0.381 0.349 0.350 0.350
 .030 0.636 0.342 0.314 0.313 0.313
1.030 0.636 0.285 0.262 0.262 0.262
3.121 2.314
3.121 2.261
3.121 2.261
3.121 2.261
3.121 2.261
3.121 2.261
1.480 1.157 1.088 1.079
 .418 1.092 1.025 1.017
 .386 1.058 0.992 0.984
 .359 1.030 0.964 0.957
 .365 1.036 0.969 0.962
 .355 1.026 0.960 0.952
                                         Evaporative  NMHC

                                .070  0.764  0.504  0.365 0.350 0.344
                                .070  0.696  0.453  0.323 0.310 0.305
                                .070  0.696  0.428  0.304 0.293 0.289
                                .070  0.696  0.366  0.252 0.243 0.239
                                .070  0.696  0.320  0.212 0.203 0.199
                                .070  0.696  0.288  0.186 0.178 0.175

                                         Refuel ing NMHC
5.272 3.477 2.419  2.083  1.974
5.272 3.450 2.380  2.038  1.926
5.272 3.450 2.354  2.010  1.897
5.272 3.450 2.339  1.992  1.878
5.272 3.450 2.345  1.998  1.885
5.272 3.450 2.338  1.990  1.877
.969
. 922
.893
.874
.880
.872
                                      3.886 2.529 1.608 1.314 1.142  1.141
                                      3.886 2.292 1.432 1.156 0.993  0.992
                                      3.886 2.292 1.327 1.063 0.906  0.906
                                      3.886 2.292 1.152 0.910 0.765  0.766
                                      3.886 2.292 1.037 0.809 0.673  0.672
                                      3.886 2.292 0.952 0.736 0.607  0.606
                                                0.287 0.263 0.248 0.243  0.243  0.244  0.547 0.513 0.479 0.454 0.443  0.440
                              0.287 0.252
                              0.287 0.252  0
                              0.287 0.252  0
            0.238 0.234 0.234  0.234
              229 0.226 0.226  0.226
              219 0.216 0.216  0.216
                              0.287  0.252  0.212  0.208 0.208 0.209
                              0.287  0.252  0.201  0.198 0.198 0.198

                                         Running  Loss NMHC

                              0.737  0.541  0.394  0.337 0.332 0.331
                              0.737  0.412  0.296  0.251 0.249 0.248
                              0.737  0.412  0.270  0.229 0.228 0.228
                              0.737  0.412  0.224  0.190 0.189 0.189
                              0.737  0.412  0.191  0.161 0.159 0.159
                              0.737  0.412  0.157  0.132 0.131 0.131
                         0.547 0.490  0.457  0.434 0.423 0.420
                         0.547 0.490  0.439  0.418 0.407 0.404
                         0.547 0.490  0.419  0.399 0.389 0.386
                         0.547 0.490  0.407  0.386 0.377 0.374
                         0.547 0.490  0.386  0.367 0.358 0.355
                                       .677  1.510 1.418 1.396 1.379  1.379
                                       .677  1.149 1.104 1.098 1.092  1.094
                                       .677  1.149 1.010 1.010 1.008  1.011
                                       .677  1.149 0.856 0.858 0.857  0.860
                                       .677  1.149 0.729 0.727 0.724  0.725
                                       .677  1.149 0.592 0.590 0.588  0.588
                                                                                                                               I
                                                                                                                               1X3

-------
                                 Table  3-3  (Cont.)

                         MOBILE4 VMT Weighted Emission Factors  (g/m1)

                            Phase II Volatility Option Evaluation

                                 Temperature Profiles: Summer

                                  Areas  Analyzed: Non-NESCAUM
                             DSLV

           1987   1990   1995   2000  2005  2010
                                                     Al1 Veh

                                       1987  1990  1995  2000  2005  2010
Base
Phase I
9.5 psi
9.0 psi
P I 1*0.5
Phase II
2.697 2.250 1.703
2.697 2.250 1.703
2.697 2.250 1.703
2.697 2.250 1.703
2.697 2.250 1.703
2.697 2.250 1.703
.496
.496
.496
.496
.496
.496
.452
.452
.452
.452
.452
.452
.448 4
.448 4
.448 4
.448 4
.448 4
.448 4
                               Total  NMHC

                                .448   4.699 3.605 2.540 2.111 2.046 2.033
                                      4.699 3.256 2.236 1.828 1.772 1.763
                                      4.699 3.256 2.102 1.704 1.652 1.646
                                      4.699 3.256 1.946 1.561 1.512 1.507
                                      4.699 3.256 1.870 1.492 1.443 1.437
                                      4.699 3.256 1.774 1.405 1.358 1.353

                              Exhaust  NMHC
Base
Phase I
9.5 ps i
9.0 ps i
P I 1+0.5
Phase II
Base
Phase I
9.5 psi
9.0 psi
P 11+0.5
Phase 1 1
Base
Phase 1
9.5 ps i
9.0 psi
P I HO. 5
Phase I I
BdSU
Phase I
9.5 ps i
9.0 ps i
P I 1 + 0.5
Phase 1 I
0.572 0.566 0.442 0.443 0.468  0.485
0.572 0.566 0.442 0.443 0.468  0.485
0.572 0.566 0.442 0.443 0.468  0.485
0.572 0.566 0.442 0.443 0.468  0.485
0.572 0.566 0.442 0.443 0.468  0.485
0.572 0.566 0.442 0.443 0.468  0.485
2
2
2
2
2
2
381
381
381
381
381
381
1 . 765
1 .726
1 . 726
1 .726
1 .726
1 .726
.111
.068
.041
.023
.028
.021
0
0
0
0
0
0
.864
.819
.792
.773
.779
.771
0.
0.
0.
0.
0.
0.
834
790
763
744
749
742
0
0
0
0
0
0
831
787
761
742
747
740
                                       Evaporative NMHC
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
                                      1.037  0.743 0.489 0.375 0.351  0.345
                                      1.037  0.670 0.432 0.325 0.303  0.298
                                      1.037  0.670 0.397 0.295 0.275  0.271
0.000 0.000 0.000 0.000 0.000 0.000   1.037 0.670 0.338 0.243 0.225 0.221
0.000 0.000 0.000 0.000 0.000 0.000   1.037 0.670 0.299 0.207 0.190 0.186
0.000 0.000 0.000 0.000 0.000 0.000   1.037 0.670 0.269 0.180 0.164 0.160

                             Refuel ing  NMHC

0.000 0.000 0.000 0.000 0.000 0.000   0.248 0.222 0.200 0.192 0.191 0.191
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
                                      0.248  0.212 0.191  0.184 0.182 0.183
                                      0.248  0.212 0.184  0.176 0.176 0.176
                                      0.248  0.212 0.17S  0.169 0.168 0.168
                                      0.248  0.
                                      0.248  0.
.212 0.171  0.164 0.163 0.163
.212 0.162  0.156 0.155 0.155
                                       Running Loss .NMHC
                                      0.950 0.801  0.666 0.604 0.592 0.585
                                      0.950 0.575  0.471 0.424 0.418 0.415
                                      0.950 0.575  0.406 0.364 0.360 0.358
0.000 0.000 0.000 0.000 0.000  0.000   0.950 0.575  0.336 0.300 0.297 0.295
0.000 0.000 0.000 0.000 0.000  0.000   0.950 0.575  0.299 0.267 0.263 0.261
0.000 0.000 0.000 0.000 0.000  0.000   0.950 0.575  0.248 0.222 0.219 0.217
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 O.OOQ 0.000 0.000 0.000
                                                                                              U)
                                                                                               I
                                                                                              NJ
                                                                                              —I

-------
                             3-28
     These   inventory  projections   were  used   to   generate
projected  emission  reductions  associated  with  each  control
strategy  which in  turn were  used  in  ranking the  strategies.
The nonattainment  area  inventories were  used  as input  for  the
ozone  air   quality  modeling  and   for   estimating   the  cost
effectiveness  of  RVP controls.   In  modeling  the  environmental
impacts  of  RVP  control,  the  analysis  used  emission  factors
based  on  the  ozone  design  value day  conditions.   Nationwide
inventory  projections for the calculation of economic  credits
due to  RVP  control were made  using emission factors based on
July average temperatures for the nonattainment areas.

     B.    Summary and Analysis of Comments

     MVMA  objected  to some of the adjustments made to the NEDS
inventory  for  the   base  year  1983.    They  felt   that  the
adjustments   tended  to   decrease  the   contribution   of  all
stationary  sources  to  total  NMHC  emissions,   and   thus   to
increase  the  apparent importance  of  motor vehicles.   MVMA felt
that this  could not be  validated with the  current  knowledge of
emissions  of  stationary sources.   They also  disagreed with  the
resulting trends in the inventory.

     While  it  may be true that improvements  could  be  made to
the    estimation    of   stationary   source   emissions,   such
improvements would  not  substantively change the  conclusions of
this-  analysis.   This is  because the  evaluation  of  the cost
effectiveness  of  a  given  program is performed  using absolute
reductions,  and thus the  estimation of  stationary sources is
not  central  to this  analysis.   For  more  information   on  the
stationary  source inventory,  the  reader  is directed  to  the  EPA
report which documents the air quality analysis.[10]

     MVMA commented that the growth  rates  used in the  DRIA were
not  city-specific,   yet  should  have been,  since  much   of  the
other  air quality projection data  used  was city-specific.  They
also  suggested that  growth  rates should  also be city-specific
since  they vary widely  from  city to city.   Another  commenter,
J.G.  Bathe,  stated  that EPA's growth  rates   are  too  high,  and
lead to overestimated emissions.

     EPA   has   recently   developed   improved   growth   rate
assumptions.   This  work  includes  consideration of city-specific
aspects  and  this  analysis  employs the   city-specific   growth
rates  in projecting  future inventories.[10]

     C.    Emission  Inventory Results

     This   section   presents   the   results  of   the  emissions
inventory  projections.   Table  3-4 presents the  1987  base year
non-Northeast  nationwide nonattainment  area VOC  inventory used
in  this  analysis.    Table  3-5 shows the  total  VOC  inventory
reduction  and the percent  reduction  of total VOC, from the  1987

-------
                              3-29
                            Table 3-4

            Base Year (1987) Non-Northeast Nationwide
     Urban Ozone Nonattainment Area VOC Emissions Inventory
        Source Category
Light-Duty Gasoline Vehicles (LDGV)
Light-Duty Gasoline Trucks (LDGT)
Heavy-Duty Gasoline-Fueled Vehicles  (HDGV)
Diesel-Powered Vehicles (DSLV)
Area Sources
Point Sources

     Mobile Source Subtotal
     Stationary Source Subtotal

     Gasoline-related Subtotal**
     Non-gasoline-related Subtotal * * *

TOTAL EMISSIONS
VOC Emissions*
 (1000 tons)

   3743.3
    912.6
    215.1
     93. 7
   4427.7
   1183.4
   4964 . 7
   5611.1

   4871.0
   5704.8

  10575.8
*    Top 10 ozone day emissions multiplied by 365.
**   Gasoline-related = LDGV + LDGT + HDGV.
***  Non-gasoline-related = DSLV + Area + Point.

-------
                             3-30

                           Table 3-5

         Non-Northeast Urban Ozone Nonattainment Areas
         	Total VOC Emissions  Reductions	
                          (xlOOO tons)

Control Scenarios                        Year
                             1995    2000     2005    2010

Base to Phase I              446.9   462.9    488.1   520.6
                              (4.2)*     (4.4)    (4.6)    (4.9)

Phase I to Phase II**        712.5   713.1    759.6   816.7
                              (6.7)    (6.7)    (7.2)    (7.7)
                   Non-Northeast Nationwide
               Total VOC Emissions Reductions***
                          (xlOOO tons)


Control Scenario                         Year
                             1995    2000    2005    2010

Base to Phase I              826.0   855.5   902.1   962.2
                              (4.2)*    (4.4)   (4.6)   (4.9)

Phase I to Phase II         1316.9  1318.0  1403.9  1509.4
                              (6.7)   (6.7)    (7.2)   (7.7)
*    Numbers  in  parentheses   are  percent  reductions  of  1987
     non-Northeast base year VOC inventory.
**   Based  on  equivalent  emissions  map,   top  10  ozone  day
     reductions multiplied  by 365 for comparison  to  year round
     VOC control  programs which  include  control  of  non-summer
     emissions).
***  Non-Northeast  Nationwide  emissions  were  determined  from
     non-Northeast  nonattainment  area  emissions  by  assuming
     that   non-Northeast   nonattainment  area   emissions   are
     proportional  to  the  fraction  of non-Northeast  nationwide
     VMT  in the  non-Northeast nonattainment areas  (determined
     to be 0.541).

-------
                             3-31
base year,  for  the first  phase  of RVP controls as well  as  the
second  phase  of  RVP  controls   for  both   the  non-Northeast
nonattainment  areas  alone  and  for  all  non-Northeast  areas
nationwide.   (The Phase II  numbers are based, on the  equivalent
emissions map described  in Chapter  2.)   Table 3-6 breaks  down
the  VOC  inventories  for   the  years  1995  and' 2010  by  source
assuming the equivalent emissions map for Phase II.

     The  results  presented in  the tables mentioned  above  were
derived from the  daily emission rates (in  tons/day)  multiplied
by  365  days per  year to  obtain an equivalent  annual  emission
reduction.  This  was  done  for  comparison to other VOC control
programs  which   count emission  reductions  outside  the  summer
period.    These  non-summer  VOC  emission  reductions  are  not  as
valuable  in  reducing  ozone levels  which  occur  primarily during
the summer,  when RVP controls will be in effect.

     The  results  presented in these  tables  do  not  contain
emission  reductions   in   the   Northeastern   section   of   the
country.  As mentioned  previously,  eight  states  (Maine,  New
Hampshire,  Vermont,   Massachusetts,  Connecticut,  Rhode Island,
New York  and New Jersey)  have  begun controlling  summertime  RVP
to  9.0  psi  or  are affected by states which do.  Therefore these
states  and  the  nonattainment  areas  within  them  have  been
omitted   from   this   analysis.    In  order  to   estimate   the
non-Northeast   nationwide   emissions,   inventory   from   the
non-Northeast nonattainment area  emissions  inventory emissions
were  assumed to  be  proportional  to  vehicle  miles  travelled
(VMT).   Therefore,  the   non-Northeast nonattainment  emissions
inventory   divided   by  the  non-Northeast   VMT   fraction   of
non-Northeast  nationwide  VMT   (determined  to   0.541   based  on
Federal  Highway  Administration  estimates  of  VMT  by  state)
yields  the non-Northeast nationwide emissions inventory results.

IV.  Ozone Modeling

     A.    Air Quality Projections

      1.    Synopsis of NPRM

     The  ozone  air  quality  analysis,  which  predicted  future
ozone concentrations,  was  done  using the  EKMA  computer models.
The  VOC emission inventories were  used  as input to predict the
future  ozone concentrations for the  non-California  urban ozone
nonattainment  areas.   The  model  is  primarily  a  nationwide
model.   City-specific information  was used  only as  input  for
the  base  year  ozone concentration  and for the  ratios of NMHC to
NOx.  Meteorological  conditions  for  the  EKMA model are based on
data  from one of  three  cities:   1)  Los  Angeles - for modeling
California  coastal  cities, 2)  Denver  -  for  modeling cities in
Arizona,  Colorado, Nevada, New Mexico,   and  Utah,   and  3)  St.
Louis - for modeling  all other  areas.

-------
                             3-32

                           Table 3-6

         1995 Non-Northeast Urban Ozone Nonattainment
         	Area VOC Emissions Inventory	
                         (xlOOO tons)
Emission Source
Base
                                         Control Scenario
Phase I
Phase II
Exhaust
Evaporative
Refueling
Running Loss

Total Mobile Source*
Total Stationary Source
Total Inventory
1177.5
701 .0
202.3
1061 . 1
1119 .2
593 .8
191.9
789. 7
3216.8   2769.9
5412.1   5412.1
8628.9   8182.0
            1067.5
             365. 1
             161 .2
             390.0

            2057.4
            5412. 1
            7469.5
     The total of  evaporative,  exhaust,  refueling,  and running
     loss emisisons  do  not add up exactly to  the  mobile' source
     total due to rounding off during calculations.

-------
                             3-33
     2.     Summary and Analysis of Comments

     Both MVMA  and  General Motors  (GM)  commented on what  they
believe is an overly simplistic methodology used  in  EKMA.   MVMA
stated that their analysis  showed that  even if the ozone design
level for two areas  varied little, the per capita  data,  as  well
as the  total  VOC inventory emissions, could be  very different.
They  also stated  that  EPA's  EKMA  calculations  may show  too
large of  a  change in ozone design  levels with relatively small
reductions in  VOC  emissions  (as with  the  proposed  volatility
control  program).   Since EKMA  is actually  a  nationwide model,
GM feels that the air quality  projections for  individual cities
were  oversimplified.   They  did,  however,   request  that  EPA
present  the  results  of  each  city  separately.   They commented
that  by  using  such  a  simplistic  modeling approach,   EPA  has
unnecessarily introduced considerable uncertainty into  the  air
quality  predictions.    MVMA   felt   that  by  using  nationwide
averages  in the  model,  EKMA projections  should only  be  used in
a  relative  sense,  not.an absolute  sense.  They  stated  that the
EKMA  model  was  developed  in  order to  quantify the  current
understanding of  ozone chemistry.   No model on  ozone formation
has been universally  accepted  yet.   Therefore, MVMA  argued,  the
EKMA  model  should be used  only as  guide to the development of
control strategies in a relative manner and not an absolute way.

     The  fact  that  the  design  values  for   two  areas  could be
similar   while   VOC   emissions   are  very  different-   is   not
surprising.   Ozone  is a  complex pollutant,  and  is dependent on
many  other  variables such  as  NOx emissions.   Concerning  the
appropriate role of the model, it is  agreed  that because of . the
simplified nature of  this approach, it should not be used in. an
absolute,  or city-specific,  sense.   Rather,   its  role is  to
translate VOC reductions into  projected  ozone  impacts using the
limited   available  data.   For  this  reason,   it  is   emission
reductions and  not  ozone levels that EPA uses as the basis for
cost-effectiveness calculations.

     As  was noted,   no  model  has   been  universally accepted.
However,  it  has been  recognized   that  EKMA  is a  reasonably
accurate  method of  relating VOC  emissions  to  estimated ozone
impacts.  Thus,  both the  use  of EKMA and the role  it  plays in
EPA analyses are appropriate at  this time.

      3.    Final Analysis

      For  the   air   -quality   projections  contained   in   this
analysis,  a  slightly different  method  was   used to determine
nonattainment  status.  Based  on  an analysis  performed  by  E.H.
Pechan  & Associates for EPA, estimates of the percent reduction
in the  base  year (1987)  inventory which would  be required for
each  nonattainment   area to reach  attainment  were made.  Using
those estimates,  the reductions which would be  obtained by the
first  phase and  second  phase  of RVP controls  (along  with the

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                             3-34
reductions  due  to  the  current  Federal  motor vehicle  control
program)    were    compared   to    these   percent    reduction
requirements.   If  the reductions  from  the above programs  were
equal to  or greater than  the  reductions  required  to bring  an
area  into  attainment,  that  area   was  projected  to  be  in
attainment  of  the  ozone  standard.    Further   details   are
contained   in  the  EPA  report   documenting   the  air  quality
analysis.[10]

     The   projected  number   of  non-Northeast   urban   ozone
nonattainment  areas is  presented  in Table  3-7.  The  results
project   that   the   second  phase   of   RVP   controls   will
significantly  reduce  the  number  of  areas projected  to be  in
nonattainment in the future.

     B.    Butane and Oxygenate Reactivity and Oxygenated Blend
           Environmental Impacts

     1.    Synopsis of NPRM

     The photochemical reactivity  of  butane and some oxygenates
(i.e.,  ethanol  and  methanol)  was  discussed  in   the  NPRM.
However,  the  previously established  Agency policy was to treat
all  reactive  compounds  equally.    Since  the rationale  for  this
position  was  not  discussed  in detail in  the  NPRM,  it would be
useful  at  this point  to review some  of  the reasons  why EPA has
chosen  not  to  consider  differential  photochemical reactivity in-
its control programs in the past.

     First, there is the issue of  multi-day pollution episodes,
of  which  there  are two types:   one type  is where the pollution
remains in an area for  a  prolonged  period due  to  stagnation,
and  the other type is  where the  pollution  is transported from
one  area   to  a  different  area  without  being  substantially
diluted.   With  both types  of  multi-day pollution,  the  rate at
which a particular  species reacts becomes  less important since
it  has  a  longer  time to react.  For  example,  a slowly reacting
compound may not  react completely in a single city,  but could
be  transported  to  another city  where   it  would  continue  to
react.  Consequently, reaction rate data  showing  that attack by
OH  radical occurs  slowly,  or  even single-day modeling studies
showing a  compound  to be  less  reactive,  are  not sufficient to
quantify  the  effect of  a particular  compound during a multi-day
episode.

     Second,   the   modeling  capabilities  and  chemical  data
available   are  too  limited  in  many  respects  to  completely
address   this   issue.    The   available   models   are   only
approximations of what  happens  in a  real  airshed, and thus, the
results cannot be  considered  to  exactly  describe   the  actual
effect  of  any  particular  compound.   Photochemical  modeling
requires  a great  deal  of  meteorological  data  to   account  for
things  such as transport  and dispersion.   Often  these data are

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                        3-35
                      Table  3-7

          Projected Number of  Non-Northeast
           Urban Ozone Nonattainraent  Areas*
Projection Year
Control Scenario
Base to Phase I
Phase I to Phase II
1990
67
1995
54
44
2000
52
43
2005
58
46
2010
58
52
The   number   of   modeled   Non-Northest    urban   ozone
nonattainment areas based on the 1986 to 1988 data is 70.

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                             3-36
not completely available, and  assumptions  are  necessary.   Other
modeling  simplifications  are  generally   included   to   reduce
computational time  (and  thus costs).  With respect  to  chemical
data,  it is  noted  that for  complicated  molecules there  can  be
too many reaction  pathways  to  model completely.   Even  for  a
relatively simple molecule  like methanol,  there  has been some
question about its  reaction  mechanisms.[11]  This situation can
result  in the exclusion of  several  mechanisms that  are  deemed
to  be  insignificant.   Thus,  predicting  the   reactivity of  a
molecule  requires   simplifying  assumptions, all  of  which  add
some degree of uncertainty to any attempted analysis.

     Finally, attempts to regulate while considering reactivity
can easily result in  unworkable  regulations.   As noted  before,
future  changes  in  HC  to NOx ratios  could  change  the real-world
reactivity of a compound,  which combined with  the potential  for
changes  in modeling technology,  could make analyses continually
subject to change.   Also,  regulating  on  the basis of reactivity
could   require   careful   monitoring  and   controlling   of  the
chemical  composition  of  fuels.    This   would   be   much  more
difficult than  controlling  a  fairly  simple  parameter  such  as
RVP.  Moreover,  since  fuels  tend to  contain  a large number  of
components,   the  volume of data necessary  to  accurately  predict
the   reactivity   of   different   types   of   emissions    (e.g.,
evaporative   emissions)   could   become   overwhelming.    While
concerns  about  the   ease   of  regulating  are  not  adequate
justification  for   not  considering  photochemical reactivities,
these concerns do need to be weighed against  the potential  for
benefits from such consideration.

     In  the  NPRM,   the photochemical  reactivity  of  butane  was
classified using a  1984 EPA  report.[12]   This  report classifies
compounds   as   "unreactive,"    "borderline,"   or   "reactive";
reactive  compounds  being  those  which  are  significantly more
reactive than ethane  (based on smog chamber  and/or  rate data).
Using  this  system  butane  was  classified  as  reactive.   In
support  of this  conclusion,  it was noted that butane would also
be classified as reactive using the  GM  scale  that was developed
in the mid-1960s.[13]   The NPRM analysis went further to say:

     "Modeling   and   smog  chamber   data   also   verify  the
     contribution   of  butane   to   ozone   formation  in  the
     troposphere.   Based  on  available  information,  it  is EPA's
     position   that  butane   is   a   photochemically  reactive
     compound   which   contributes   to    ground   level   ozone
     formation.   Therefore,   reductions   in   butane  emissions
     through  in-use  fuel volatility control  are   expected  to
     lead to  subsequent reductions in ambient ozone  levels."

Thus, no numerical  consideration  of  the  specific reactivity  of
butane  relative  to  average VOC was attempted by EPA.

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                             3-37
     The  photochemical   reactivities  of  ethanol  and  methanol
also were  discussed  briefly in the  NPRM;  no other  oxygenates,
however,  were  discussed.    The   only   oxygenate  which   EPA
considered  in  its  air  quality   analyses   was  ethanol.    For
calculational purposes,  ethanol was  assumed to  be as  reactive
as  average  VOC on  a per  carbon  atom  basis,  which meant  that
ethanol was assumed to be only 62  percent as reactive  on  a  mass
basis.    This difference  is because  ethanol molecules  contain
oxygen  atoms,  and  thus,  ethanol  has  a much  higher  mass  to
carbon  atom ratio  than  most  VOC.   This  approach  was  chosen
since it  is  the  oxidation of  carbon  that contributes  to  ozone
formation  in the  troposphere.   It was also  noted  that the  rate
at which  ethanol  reacts with the OH  radical in  the  atmosphere
(the primary mechanism  for oxidizing VOC) is on  the  same order
as  hydrocarbons  such as  butane or  toluene.   The air  quality
impacts   of  ethanol  blends   were   estimated   based  on  these
assumptions.

     The  NPRM discussion  also  noted  that studies  had  indicated
that  methanol   is  less  reactive   than  typical  hydrocarbon
vapors.   The studies  showed  the reactivity  of  methanol to  be 2
to  43  percent as  reactive  as  average  VOC  on a  carbon  basis.
These numbers were used to estimate  the air quality  impacts of
methanol  blends.

     The   increase   in  emissions   of   formaldehyde  due  to
combustion  of  methanol  and  ethanol  blends  was  also  discussed.
Due  to  the very high reactivity of  formaldehyde,  which offsets
the  lower reactivity of methanol and  ethanol,  the reactivity of
exhaust  emissions  from methanol and  ethanol blends  was assumed
to be the same as from gasoline.

     2.    Summary and Analysis of Comments

     The  Agency received many  comments (from Sohio,  the  Ad Hoc
Ethanol  Committee,  OFA,  the   Ohio  Farm  Bureau,  NESCAUM,  Sun
Refining  Co. and GM) which suggested  that EPA  ought  to consider
the  photochemical  reactivity  of  evaporative emissions  in  this
rule.   Most of  the  comments  were  with  regard to  butane   (and
other   light:   paraffins)   and  oxygenated  compounds.    The
commenters  stated  that these  compounds  are less  reactive  than
average  VOC.  This conclusion  was based on rate  constants for
reaction  with  OH  radical, the results of smog  chamber studies,
and  the results  of single-day computer modeling studies.   Since
light paraffins  (and  oxygenated compounds for  oxygenate blends)
make up  a  large  part of evaporative  emissions,  the  commenters
felt that controlling  such  emissions will   not  be as  effective
in  reducing  ambient ozone as EPA has  suggested.

     One  of  the  modeling studies  submitted, which was performed
by  Systems Applications  Inc.  (SAI),  looked at  various control
strategies  involving ethanol  blends.[14]   The  model  predicted
that even  if ethanol  blends  had  higher   RVPs   than straight

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                             3-38
gasoline, they would still  result  in less ozone production  for
many  cities.   The report  explained that  this was  due to  the
combined effect  of  ethanol's reactivity  and  its  effect on  CO
emissions  (which contribute  to ozone  formation).   The  report
went further to say that there are two key aspects  of  ethanol's
chemistry that make it  less reactive.   First,  it noted that the
initial  reaction of ethanol  with  hydroxyl  radicals  generates
only  half  as  much  ozone as  the  initial  reactions of  typical
hydrocarbons.    Second,   it  stated   that  acetaldehyde,   the
principle intermediate  product,  is not highly  reactive  and can
inhibit  ozone  formation  by   reacting  with   NOx  to   form
peroxyacetylnitrate (PAN).

     Similarly, the report  stated  reasons  why  the reactivity of
butane  is  low.  It noted  that  the  low rate  constant  for  the
reaction  of  OH  radical  with  butane  is  much  lower  than  the
average  value  used  for VOC in  EKMA.  It  also stated that  the
main   products  of  the   reaction  of   OH  with   butane   are
acetaldehyde  and methylethyl ketone,  and that  these  products
are "not much  more  important  in further ozone  formation than is
butane itself."

     Other  commenters  also  addressed  the points  noted  above,
regarding  EPA's  rationale  for  not   considering  reactivity.
NESCAUM   noted   that   there   is   generally   an   incomplete
understanding  of  the  photochemical  formation  of   ozone.   Sun
noted  that  HC to NOx  ratios  can have  a  significant  effect  on
reactivities,  and  thus,  for  some  areas  HC  control  without  NOx
control  will not  result  in  attainment.   They  added  that  .the
mechanisms  of  transport and  dispersal are not well understood.
Sun also noted that because there are processes  which scavenge
ozone  in the  atmosphere, compounds  that  react to  produce ozone
more  slowly do not allow  concentrations  of ozone  to  reach  as
high  of  a  level  as  other compounds might.  They went further to
say that this  slow  reaction rate also would allow  the compound
to  be dispersed  before it  could produce  large amounts of ozone
in an urban  area.

     Much  of  the  evidence  presented  to  show  that butane  and
many  oxygenated  compounds  react slowly  in  the  atmosphere  was
smog  chamber data  and  rate constants  for the  reaction  with OH
radical.   This  information,  while  valid,  is  insufficient  to
allow  a  quantified  estimate  of  the  reactivities  of  these
compounds in real  situations,   However,  Sohio  in their comments
stated  that EPA  should not  rely  on  smog  chamber studies  to
determine the reactivity of  butane  since  smog chambers are not
representative of real world conditions.

      In   addition,   the    SAI   report   contained   qualitative
discussions  which  are  interesting;  however, some  of the points
raised   are   misleading.    First,   the   report   claims   that
acetaldehyde  is  not   highly reactive;  however,  at  least  one
modeling study has  shown acetaldehyde to be more  reactive  than

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                             3-39
formaldehyde,   which   is   accepted  as   a   highly   reactive
compound.[11]   Moreover,  the  report  notes  that  acetaldehyde
scavenges  NOx by reacting with  it  to form  PAN.   This would  in
fact be of some benefit  with  respect to ozone levels,  but there
are also negative  aspects of PAN formation.   PAN  itself  is  also
an  air  pollutant  which  causes  significant  health  effects,  and
it  can  be  transported long distances before it  decomposes  and
then  regenerates  the NOx.  EPA  regulates ambient  ozone  levels
as  a  surrogate for  all  oxidants,   assuming  that  satisfactory
levels  of  ozone  will  result  in  satisfactory  levels  of  all
oxidants.   Substitution   of PAN  for  ozone  would  clearly  be
unacceptable.   Another  misleading   aspect  is the  comparison  of
the rate constant  for the  reaction of  OH  with  butane to  the
rate  constants  for reactions  with  the  theoretical species  of
the Carbon Bond Mechanism (CBM)  which is used in  EKMA.   This  is
not   really   appropriate   since   the   butane   rate   constant
represents only  the  initial  reaction with  OH,   while the  CBM
rate constants represent  an average of  the  reactions of all the
carbon  atoms  initially  present  as  paraffins.    Thus,  the  CBM
rate  constants  also  account  for  the products  of  the  initial
reaction,  while the butane rate constant does not.

     The  corresponding  photochemical  modeling   study  is  more
useful, yet it still  does not resolve the concerns noted above,
especially the  concern  regarding  multi-day pollution.   Thus,
none  of  the  comments  are  sufficient  to  justify  reversing
established Agency policy.  Also, it should  be  noted that Sohio
was incorrect in stating that EPA  relies solely on smog chamber
studies when considering reactivity.

     EPA  does  not   deny  that   butane  and   many  oxygenated
additives  react  more  slowly  than  average  VOC,   or  that  such
slowly  reacting  compounds  can   result  in  somewhat less  ozone
than  other compounds.  Rather  EPA  holds that at this time it is
not possible to accurately  address reactivity  issues  such that
consideration would be workable and appropriate.

     This  precedent   was  reaffirmed   just   recently  in  the
rulemaking  that   established  standards   for   methanol-fueled
vehicles.   That  rule  regulated  organic  emissions on  a  carbon
basis,  and did not  give  any allowance  for lower  reactivity,
even  though there  is  some evidence that methanol has a very low
photochemical reactivity.

     The SAI report  submitted by the Ad  Hoc  Ethanol Committee,
while   it  does  not  resolve  the   concerns   noted  above,  does
suggest that the potential  reduction of  CO  from vehicles fueled
with  ethanol  blends could  impact  ozone  levels  also.  Since the
chemistry  of   CO  is   fairly   simple   and   well  understood,
quantifying  the  impact  of CO  reduction does  not  involve the
same  degree  of  uncertainty  which occurs  when  dealing  with
reactivity benefits  of  other  compounds.  For  this  reason, the
Agency  is open to considering the  effect  of  CO  on ozone levels,
when  dealing with alcohol blends.

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                             3-40
     EPA recently commissioned a study by SAI which  in addition
to other fuel scenarios,  attempted  to  quantify the ozone impact
of oxygenated blends,  taking into consideration both VOC and CO
impacts.   To  combine  all  of  the  exhaust,  evaporative,  and
running loss  emission effects into  a  net effect, EPA provided
SAI  with  MOBILES.9  based   emissions   for   the  scenarios  of
interest as  defined  by fuel  type,   calendar  year, and  ambient
temperature.   The  adjustment  factors  used  were  fuel  specific
and were based on  test  data acquired for several  oxygenate and
alcohol  fuel  blends  as   outlined  in  the   technical  report,
"Guidance on Estimating Motor  Vehicle  Emission  Reductions from
the Use  of  Alternative Fuels  and  Fuel Blends."[15]   Table 3-8
contains  the  emission  effects   for   vehicles  fueled   with
ethanol/gasoline  blends with  a  0.76 psi  margin and also a blend
which  meets  the  same  RVP  as  gasoline.   The  Ad  Hoc  Ethanol
Committee  submitted  technical  data  describing  the  average
volatility  increase   for  ethanol  blended  fuels.   Their  data
resulted in  a 0.76  psi RVP  increase  for a  10  percent  ethanol
blend in gasoline rather than the 1 psi increase  in RVP  used by
the EPA  for  its  analysis.  Further data submitted by API also
supports this 0.76 psi RVP increase at  11.5 gasoline RVP.[16]

     SAI's  study  is  presented  in  the  report,  "A  Low-Cost
Application  of  the  Urban   Airshed  Model   to  the  New  York
Metropolitan Area  and the City of  St.  Louis. "[17]  As  shown in
Table  3-9,  there  is  virtually no  change in peak  ozone levels
for any oxygenated blend  scenario  when the urban  airshed model
is used.  However, the  report points out that for  the New York
area,   the   airshed   modeling   boundary   conditions   cause
insensitivity  in  estimating  peak ozone   concentrations  and
complicates obtaining accurate results.

     The St.  Louis area  ozone  modeling  is  not  complicated by
boundary  conditions.    As  shown  in Table  3-9,   the   St.  Louis
results also predicted  no change in peak ozone  for  50  percent
use  of an ethanol/gasoline  blend  with  a 1  psi  RVP  allowance.
Results of  another study performed by  SAI  for  the  California
Renewable Fuels  Association  (CRFA)  indicate  an eight  to nine
percent reduction  of ozone with use of  ethanol  blends  in the
South  Coast  Air  Basin.  [18]   The difference  in  results  can, at
least  in  part,  be  attributed  to  different assumptions  used.
The  CRFA  study assumed  100 percent  use of the  ethanol blend in
gasoline vehicles  at  8.76 psi, compared to a base case gasoline
of 9  psi.   The  St.  Louis study assumed  50  percent use of the
ethanol blend at  8.8  psi, compared  to  a base case  gasoline of
7.8  psi.    The  CRFA  study  also used  a  1985   inventory  which
attributed  a higher  percentage  of VOC  and  CO emissions  to
mobile sources than the 1995 inventory used for St. Louis.

     Therefore,  it appears  that allowing a  1  psi RVP allowance
for  ethanol  blends would  not  contribute to  as significant of  a
change  in .ozone  levels as EPA  previously  thought.   Requiring
ethanol blends to meet the  same RVP  levels as  gasoline could

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                             3-41
                           Table 3-8

      Technology-Specific VOC Emission Effects of Blends
      	(Percent Change From Gasoline)	

     Total Organic From a Blend With a 0.76 psi RVP Margin
Evaporative Emission Effect

     100% Market Share
     (no commingling)

          Diurnal

               Garb
               FI

          Hot-Soak

               Garb
               FI

     50% Market Share
     (maximum commingling)

          Diurnal

               Garb
               FI

          Hot-Soak

               Garb
               FI

Exhaust Emission Effect:
  11. 5  psi  -Base
  RVP + 0.76  psi
      + 80.1
     +122.2
      +35.3
      +20.2
      +96.2
     +144.9
      +39.6
      +25.0
9.0 psi Base
RVP + 0.76 psi
    + 41. 1
    +42.7
    +25.5
    +34 . 0
    + 51 . 7
    + 55. 1
    +28.5
    + 42.4
     Technology          	

     Non-Catalyst        -22.8

     Open-Loop Catalyst  -33.4

     Closed Loop         -17.2
 3.7% Oxygen (10% Ethanol or
5% Methanol/Cosolvent Blends)
CO           NOx           VOC
             +3.8

             +4 .0

             +8. 1
    -4.2

   -14 .5

    -2.4

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                             3-42
                      Table 3-8 (Cont'd)

      Technology-Specific VOC Emission Effects of Blends
      	(Percent Change From Gasoline)	

   Total Organic from a  Blend that Meets  Gasoline RVP Limits
Evaporative Emission Effect:

     100% Market Share
     (no commingling)        11.5 psi Base        9.Q psi Base

          Diurnal

               Garb              -9.7                 -9.7
               FI                -9.7                 -9.7

          Hot-Soak

               Garb             +14.8                +14.8
               FI                -5.7                 -5.7

     50% Market Share
     (maximum commingling)

          Diurnal

               Garb             +21.0                 -2.4
               FI               +33.9                 -3.3

          Hot-Soak

               Garb             +18.2                +16.2
               FI                +1.6                 +0.3
Exhaust Emission Effect:

                            3.7% Oxygen (10% Ethanol or
                           5% Methanol/Cosolvent Blends)
     Technology            CO           NOx           VOC

     Non-Catalyst        -24.5          +3.8          -5.5

     Open-Loop Catalyst  -34.9          +4.0         -15.6

     Closed Loop         -21.4          +8.1          -5.1

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                             3-43



                           Table 3-9

               Airshed Peak Ozone Concentrations
       Scenario
New York

   Scenario 1 (11.5 RVP)

   Scenario 2 (9.0 RVP)

   Scenario 3 (100% gasohol
              at 10.0 RVP)

   Scenario 4 (11.5 RVP with
              no running losses)

St. Louis

   Scenario 1 (10.0 RVP)

   Scenario 2 (7.8 RVP)

   Scenario 5 (50% gasohol
              at 8.8 RVP)

   Scenario 7 (100% ETBE blend
              at 7.8 RVP)

   Scenario 8 (10.0 RVP with
              high running losses)

   SIP Scenario A
      (40% reduction of
      Scenario 1 VOC)

   SIP Scenario B
      (40% VOC reduction where
      the most: reactive VOC
      are reduced first
   Airshed (UAM)
                                    Peak
                                    Ozone
                                    (pphrn) *
17.4

17.4

17.5


17.4
       % Change from
         Scenarios
15.0

14.5

14.5


14.4


15.4


13.5
 -3.3
 +2.7
-10 .0
12.3   -18.0
         + 0 .6
         +3.3
         -0. 7
 *  Parts per hundred million.

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                             3-44
lead to  a decrease  in  ozone  levels,  based  on  the  emissions
expected from vehicles fueled with  such a blend as presented in
Table 3-8.   Policy issues related to ethanol blends  are further
discussed in Chapter 6.

     For  methanol  blends,  EPA  would  expect  similar  ozone
effects to those discussed  above  for ethanol  blends.   However,
since methanol  blends  have been  required to meet the  same RVP
levels as  gasolines  since fuel waivers were granted for  these
methanol  blends,   EPA  does not  believe that  any  change  is
necessary at this  time.

V.   Effects of  RVP Control  on  Benzene  Emissions  and  Health
     Effects

     A.    Synopsis of the NPRM

     1.    Benzene Emissions as a Function of Fuel Parameters

     Chapter 2  of  the Draft Regulatory Impact Analysis modeled
benzene emissions  from gasoline vehicles  as  a function  of the
emission   type,   the   vehicle   type,   and  the  relevant  fuel
parameters.  The   resulting  models   were  based  on  theoretical
analysis  of  the  different emission   scenarios  and  the  data
available  in the  literature.   Three models  were developed for
exhaust benzene  emissions  as  a  fraction of  total  hydrocarbon
emissions depending on whether  the vehicle was  equipped with an
oxidation  catalyst  (on pre-1980 vehicles), a 3-way catalyst, or
a  3-way plus  oxidation  catalyst.   Benzene  exhaust  emissions
were  assumed  to   be  a  function  of  the  aromatic  and  benzene
contents of the fuel.

     Two   sets   of  models  also  were   developed  for   benzene
evaporative  emissions   as  a   fraction  of   total  hydrocarbon
emissions,  one  for  carbureted  vehicles  and  the  other  for
fuel-injected  vehicles.    Since  few  data  were  available  on
evaporative benzene emissions with  which to verify  the models,
more than  one  model was  developed  for  each type  of  vehicle to
provide  a range  of  estimated evaporative  benzene  emissions.
Benzene evaporative emissions  were  assumed to be primarily  a
function of the fuel fraction which  is  benzene,  and  to  a lesser
extent the RVP of the fuel (which affects total HC).

     A  model  of  refueling  benzene  emissions  as a  fraction of
the  volume  of  fuel  dispensed  was  taken  from  earlier  EPA
work.[19]  The model  calculated  benzene emissions as a function
of the  fuel  fraction  benzene,  the temperature  of  the  dispensed
fuel,  and  the  temperature  difference between  the dispensed and
in-tank fuel.   The temperature of  the  dispensed  fuel  and the
temperature  difference   between  dispensed   and  in-tank  fuel
should  not vary with  RVP.  As a result,  the model was  scaled
back  such  that refueling benzene emissions  were assumed  to be
strictly a function of fuel benzene content.

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                             3-45
     2.     Effect of RVP Control on Fuel Composition

     Volatility   control   was    projected   to    result    in
approximately   a   two   percent   decrease   in   the   butane
concentration of  the  fuel per  psi  decrease in  RVP.   This  lost
fuel volume must be replaced with something else,  some of which
would  likely be  benzene  or  other  aromatics.   Projections  of
fuel  aromatic  content  increases  resulting from  reduced  fuel
volatility were  used  to estimate both  the  aromatic  and benzene
fuel fractions for various levels of volatility control.

     3.     Effect of RVP.Control on Benzene Emissions

     The models  developed for benzene  emissions as  a function
of  fuel parameters  were  combined  with the  estimates  of  fuel
fraction  benzene  and  aromatics  to  yield  estimates  for  the
benzene emissions  as • a  function  of RVP control.   On the basis
of these models, RVP control is expected to result  in a greater
fraction of hydrocarbon emissions being benzene.

     4.     Nationwide Benzene Emissions

     The   benzene  fractions   of   the  hydrocarbon  emissions
calculated  in  Chapter 2  of  the Draft  RIA  and  discussed above
were  weighted  by  vehicle registration  and catalyst technology
distributions from  MOBILES and  combined with emission factors
from  the   Draft  RIA  to yield  exhaust  benzene  and  evaporative
benzene emission  factors  (mg/mi)  as a function  of the level  of
volatility control  (Chapter  3  of the Draft RIA).  The refueling
benzene emission  rates were similarly  combined  with  the total
refueling  emission  factors  to  yield   estimates  of  refueling
benzene emission factors  (mg/mi).

     The sum of  these benzene emission  factors  were multiplied
by  the  nationwide  VMT estimates  for  the  different classes  of
vehicles  to yield  estimates  of  the total mass  of nationwide
benzene   emissions   expected   with   the   various   levels   of
volatility  control.   The  result  of   this  analysis  was  that
although   the   benzene   emissions   as  a  fraction  of  total
hydrocarbon  emissions  tended  to   increase  with  volatility
control,  the  decrease   in  total  hydrocarbon  emissions  also
resulting from volatility  control  tended to compensate for this
slightly   and   resulted   in   lower  total  nationwide  benzene
emissions.

      5.    Cancer Incidence Analysis

     Risk  analyses of both  ambient  exposures  and  individual
exposures  were   applied   to  the   nationwide  benzene  emission
estimates  to yield estimates  for  the  annual  number  of cancer
incidences  expected to result from benzene exposure  for varying
levels  of volatility  control.   The  impact of  fuel  volatility
control on the  number of nationwide cancer incidences was found

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                             3-46
to  be  within  the  accuracy  of  the modeling  techniques.   The
Draft  RIA  concluded  that volatility  control  should  have  no
significant effect on cancer  incidences from benzene.

     B.    Summary and Analysis of Comments

     Volkswagen   stated   that  volatility   control  will   not
necessarily  result  in an  increase  in  fuel   benzene  levels.
While this may be  true,  it  is still likely  that  an increase in
fuel benzene  levels will  result  from  volatility  control.   If
nothing more is done  than simply removing butane from gasoline,
the  fuel  benzene  and aromatic  concentrations  will  tend  to
increase since they are now  a greater proportion  of the fuel.
In  addition,   since  butane   is  a  high  octane  component  of
gasoline,  its  removal will  require a  substitute  also  high in
octane.  This requirement can be met  by  using benzene  and the
other  aromatics.    As  a  result,  fuel  benzene  and  aromatic
concentrations  very   likely   will  increase   with  volatility
control.   This  analysis  was   supported  by  Marathon,  Phillips,
the Renewable Fuels Association  (RFA)  and the Ad  Hoc Committee
on Ethanol (AHCE)  in their comments on the Draft RIA.

     The Ohio Farm  Bureau along  with the AHCE and RFA continued
this line  of  reasoning by stating that  if  gasoline  volatility
control  leads to  less   use  of  ethanol  in gasoline,  ethanol
currently being used to enhance fuel octane  will  also likely be
replaced  with  benzene   and   other  aromatics.    Although  the
resulting  increase  in benzene would  not be  large,  they  feel
that this  is  further  justification for  EPA to  allow a 1.0 psi
allowance  for  ethanol blends  over the RVP  control  limits set
for gasoline.

     Ethanol  is  not  usually  added  to  gasoline  to  enhance
octane,  and as a  result  there would not  be  a  great requirement
for  additional octane if ethanol  were not  used.   However, the
use of  ethanol does dilute  the gasoline  such that  less benzene
exists  in ethanol  blends.    But  since the  dilution  effect is
only  approximately  10 percent,  and  since  only   approximately
eight  percent  of  the gasoline sold  in the U.S.  is blended with
ethanol, EPA's treatment  of  alcohol blends  should  not  have any
significant   effect   on  nationwide   benzene-related   cancer
incidences.

     A  final  comment  involved whether  EPA  should  regulate the
concentration  of  benzene  or  aromatics  in  gasoline.    Of those
who  commented, VW and NRDC were  in  favor  of  EPA establishing
such  controls while  Marathon,  Phillips, and  Chrysler  do not
believe  such  regulations  are  required.    Pending  the  outcome of
the  Clean  Air Act  debates  currently underway  in  Congress, EPA
may  consider  to  regulate  the  concentration  of  benzene  or
aromatics  in  gasoline.   However,  if   this  is   found  to  be
necessary,  EPA  will  make   such   a  proposal   in  a  separate
rulemaking.

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                             3-47
     C.     Final Analysis

     The  comments  on  the  effect  of  volatility  control   on
benzene-related cancer incidences were not  specific  or detailed
enough to challenge the validity of the Draft RIA's  analysis  of
the  topic.   However,  we  have  expanded  one   aspect  of  the
analysis to incorporate the results of MOBILE4.0  based analyses
and  more  recent  ambient  benzene  level  information.[20 ]   The
composite  benzene  emission factors based on  MOBILE4.0  and  the
U.S. population  and VMT data used  to  calculate  benzene-related
cancer incidences are shown in  Table 3-10.  The  benzene-related
cancer  incidences  for  the varying  levels  of  RVP  control  are
shown in Table 3-11.   The upper -bound  values   in  Table  3-11
result  from  more  recent  work  by EPA on  the topic  of  benzene
carcinogenicity.   The revised  analysis  reinforces  the  earlier
conclusion that  RVP  control  should  not  have  any  significant
effect on cancer incidences from benzene.-

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                                  3-48

                               Table 3-10

                 MOBILE4.0 Ben?,ene Emission Factor Data


         MOBILE 4.0 Benzene Emission Factors     U.S.  *            VMT * *
Year   Exhaust     Evaporative    Running Loss   PopulationlQ^     xlO9

1986     .1021       .0120          .0107            240
1995     .0415       .0044          .0035            260           1936.59
2005     .0315       .0030          .0032            276           2326.33
*    Population estimates from U.S. Census Bureau Statistical Abstract.
**   From MOBILE4.0 Fuel Consumption Model.

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                                 3-49


                              Table  3-11

  Estimated Cancer Incidences Due to Mobile Source Benzene Exposure


Year     RVP     Exhaust   Evap   RL   Refueling   Total    Upper Bound

1986     11.5      75       9       8       8         100         155



1995      9.0      44       5       4       7          60         107



2005      9.0      46       45       12         67         114
*    Lower  bound  =  low  end evaporative  emissions,  with I/M  program
     in-use.

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                             3-50
                    References (Chapter 3)

     1.     "Ozone Nonattainment Area Analysis  -  A Comparison of
Bills,"  prepared by E. H.  Pechan  & Associates for  EPA,  January
1990.

     2.     "California Version of  the  MOBILE4.0  Model,"  EPA
memorandum from  Dave  J.  Brzezinski  to Phil  Lorang,  EPA,  OAR,
QMS, ECTD, TSS,  May 14,  1990.

     3.     "External  Fuel   Temperature Measurement,"  EPA  memo
from Daniel Stokes, CES,  to Tom Darlington,  TE3,  April 13, 1987.

     4.     "Summary of  Fuel Temp  Increases," Temperature  data
collected in support  of  the Side  Fan cooling Test Program,  EPA,
August and September 1988.

     5..     Schuler, Alan,   "Effects  of Gasoline Volatility  on
the  Hydrocarbon  Exhaust   Emissions   From   a  1984  Oldsmobile
Cutlass," U.S.  EPA, OAR,  QMS,  ECTD, SDSB,  August 1987.

     6.     Exhaust  Emissions  on  Repeated  LA-4s,   Running  Loss
Test Program, Data Extracted from MICRO Data  Base, January 18,
1989.

     7.     "Reference Material  for Phase II  Volatility  Control
FRM Docket," EPA memo from Celia  Shin, TEB, to Tad Wysor, SDSB,
March 26, 1990.

     8.     Bartus,   David B.,   "PT  Evaporative Emissions  Model,
Description  and  Users Guide," U.S.  EPA,  OAR, QMS,  ECTD, SDSB,
September 1988.

     9.     Running  Loss  Test  Program:   Interim Results,  U.S.
EPA, OAR, QMS,  ECTD, SDSB,. September 16, 1988.

     10.   "Volatility  Regulations  for  Gasoline  and  Alcohol
Blends Sold  in  Calendar  Years  1992 and Beyond,"  EPA memorandum
(with attached   report)   from  Mark Wolcott,  TEB, to  Chester J.
France,  EPA, OAR, OMS, ECTD, SDSB, June 1990.

     11.   Ito,   K.,   et.    al.,   "Photochemical   Reaction  of
Alcohol-Fueled   Engine   Exhaust   Gases,"    7th   International
Symposium on Alcohol Fuels, 1986.

     12.   Singh,   H.B.,   et.    al. ,   "Reactivity/Volatility
Classification  of  Selected Organic  Chemicals:   Existing Data,"
EPA-600/3-84-082, 1984.

     13.   Caplan,  J.D.,  "Smog  Chemistry   Points  the  Way  to
Rational  Vehicle Emission  Control," SAE  Transactions,  Vol. 74,
1966.

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                             3-51
     14.    Whitten,    Gary   Z,,   Systems   Application,   Inc.,
"Evaluation of  the  Impact of  Ethanol/Gasoline  Blends  on  Urban
Ozone Formation,"  revised final  report prepared  for  Renewable
Fuels Foundation,  February 10,  1988.

     15.    "Guidance  on   Estimating   Motor  Vehicle   Emission
Reductions from the Use  of Alternative Fuels and Fuel Blends."
EPA  Technical  Report,   EPA-AA-TSS-PA-87-4,  January  29,  1988
(NTIS tt PB 88 169594/REB).

     16.    Letter from Dr.  Terry F.  Yosie,  API,  to  Mr. Charles
L. Gray,  Jr., June 28, 1988.

     17.    "Interim Final Report. A Low-Cost Application of the
Urban Airshed  Model  to  the  New York Metropolitan Area and the
City  of   St.   Louis.   (Five   Cities   UAM  Study   Phase   I),"
SYSAPP-89/070. May 15, 1989.

     18.    Whitten,    Gary   Z.,   Systems    Application,   Inc.,
"Impacts  of  Ethanol  Fuel  Use  On Air  Quality  in  Los  Angeles,"
final  report   prepared   for  the  California  Renewable  Fuels
Association, March 8,  1990.

     19.    Laing,   Paul    M. ,    "Factors    Influencing   Benzene
Emissions from Passenger Car Refueling," SAE 861559,  1986.

     20.    "Air  Toxics  Emissions  and  Health  Risks  from  Motor
Vehicles," Jonathan M. Adler and Penny M.  Carey.   Presentation
to the Air & Waste Management Association, June, 1989.

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                           CHAPTER 4

                        ECONOMIC IMPACT

     The societal  cost  of RVP  control is  composed of  several
elements  which  will  be  discussed in  this  chapter.    First,
refiners directly  incur  a cost  for producing  gasoline with  a
lower RVP.   Indirectly,  two  specific  aspects of the  petroleum
industry,  butane  sales   and  purchases  and  oil  and  gasoline
imports,  will  also  be  affected  by  volatility  regulations.
Second,  consumers  realize  a  savings with  lower RVP fuel due  to
increased  fuel  energy  density  (which  leads  to  higher  fuel
economy) and  decreased evaporative  emissions  and  running  loss
emissions.   Third,  changes  in  the  driveability  and safety  of
vehicles if they occur,   also  might have  an  indirect  economic
impact  on  society.   Finally,  enforcement  of RVP  regulations
results in a slight cost to society.

     This  chapter  contains a summary  and  analysis of  economic
comments received  on  the August  1987  NPRM[l] which  relate  to
the  second phase of  RVP controls  finalized with  this  action.
This  chapter  also  contains  the  projected  cost  impacts  of  the
second phase of volatility controls as well  as the  costs  of  the
first phase of controls which have been calculated again using
the methodology presented in this chapter.

I.   Refining Costs

     A.     Synopsis of NPRM Analysis

     The  Draft  RIA which  accompanied the  August  1987  NPRM,
examined   the  leadtime  requirements  and  economic  impacts  of
proposed RVP  regulations.[2]   At  that  time, EPA proposed  that
the  second phase  of volatility  controls  take  affect  in 1992.
This  was based on  the  assumption  that three  to four  years  of
leadtime  was   necessary  to  meet  the  lower RVP  levels  in  an
economical manner>   (The feasibility of a shorter  leadtime  was
not  analyzed   in detail.)   The  costs  were  based on  refinery
modeling  performed  by  the   EPA   consultant  Bonner  and  Moore
Management Science,  which evaluated the cost of RVP controls at
1  and 2 psi  reductions.   Based on in-use  fuel  survey  data  and
the  Bonner  and  Moore  model,  an  average  nationwide cost  of
control was determined for several  RVP control scenarios.

     B.    Summary  and Analysis of  Comments

     EPA responded  to  a  number  of the economic-related comments
received  on the August  1987 NPRM  in the January 1989 Final  RIA
which  supported the  first  phase  of  RVP  regulations.[3]   The
majority  of  comments received  on  the  August  1987 NPRM  were
related to the  second  phase of  RVP  regulations  finalized  with
this  action and  are  dealt with below.

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                              4-2
     1.     Feasibility of and Leadtime  for  the Second  Phase  of
           RVP Controls

     Very few  comments were received on the  feasibility  of  and
the length of leadtime required to meet the second phase  of  RVP
reductions.   API  stated that  since refiners  do not  currently
produce 7.0  psi  or 8.0  psi  RVP fuel,  the  feasibility must  be
demonstrated.  One comment  received from  Texaco claimed  that
four  years   of  leadtime are  necessary  to  install  additional
refining capacity  to  replace  lost  volume  and  octane.   They also
added that four years may be  inadequate because  of  difficulties
in  obtaining permits  for  new  facilities.  On the other  hand,
both  the  Natural  Resources  Defense  Council   and the  National
Clean Air  Coalition  stated  that  EPA's  RVP   reduction can  be
achieved on a faster  timetable, citing  RVP  controls  implemented
by  the   Northeast   States  for  Coordinated Air  Use  Management
(NESCAUM) which  required 9.0 psi  fuel  beginning in  the  summer
of 1989 as opposed to 1992  for the EPA proposal.

     Based on  the  modeling performed by  Bonner   and  Moore,  EPA
believes that RVPs at least as  low as those being considered in
the  second  phase   of volatility  controls are   feasible.   The
refinery model  for California  showed that  RVP was  able to  be
reduced  to   nearly 6.8  psi,  slightly  lower   than  the 7.0  psi
limit being considered for  Class A areas by EPA  in Phase  II  RVP
controls.   It should also  be  noted  that some  refiners  have
already  begun  producing gasolines  with  RVP  around  8.0  psi
either  as  part of  a  reformulated gasoline program, or in order
to comply with Phase  I RVP requirements.

     EPA  believes  that   promulgating   the   second  . phase   of
controls  in  1992  would  still  allow refiners to meet the  RVP
requirements  contained in  today's rule.   At  the time  the  NPRM
was   published,    the   expected   generous    leadtime    made
distinguishing   technological   feasibility   from   the   most
economical means of  achieving RVP reductions  unnecessary.  Now,
with  some of that  time having  passed,  it  is   important to  look
at this  issue  in more detail.  This is because that when such  a
distinction  is  made,   it becomes  clear  that  a  shorter leadtime
is  possible  if the most economical  response  by  each  refiner is
not  seen  as  the deciding  factor.   That  is,  some refiners  may
need  to modify their  short-term operations in order to meet the.
RVP  specifications in  a slightly  less economical manner  than
longer-term  modifications.   However, this is  a  different issue
from  the technological feasibility of meeting the RVP  standards
within  a  given period of  time.  Due to the  different means of
achieving  such RVP  reductions, EPA  will  discuss  its leadtime
reasoning for Class C fuels separate from Classes A and 3 fuels.

      For   Class   C   fuels,   the   second   phase   of   volatility
regulations  would  require  refiners to  meet  a  9.0  psi  RVP
limit.   In  order to meet this  level  of RVP,  refiners would not
be  able to  add the   butane  which  they  currently  add  at  the

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                              4-3
refinery.   It is possible  that -some  refiners  would be  required
to debutanize gasoline  even further.  To do this,  two  possible
options for refiners might  be  to  add debutanizing  equipment  or
to  operate  their  current  fractionators  in  such  a  manner  to
improve the sharpness of  their  butane removal.   These  refinery
process changes  in  which  butane  is  not  added  or  additional
butane  is  removed will  require refiners  to  make  up both  the
lost octane and lost volume currently contributed by the butane.

     To  make  up  the   octane,  refiners  have  several  options
available.   In the short term they might shift some of  the high
octane  components  which currently are  used to  produce  premium
gasoline  into  the  regular unleaded  grade  of   gasoline.   In
addition,   they  might  modify  their  operations  to purchase  or
produce more MTBE  or other such high  octane,  low  RVP  gasoline
components  (e.g.,  toluene,  xylenes,  and  alkylate).   Refiners
could increase reformer severity or  move  to fluidized catalytic
cracking catalysts  which  produce higher  octane.   As  mentioned,
these are short-term modifications which  refiners could perform
to  replace  the  lost octane due  to butane removal.   For some
refiners,  these processes may not be as  economically attractive
as  other  longer-term  modifications,  but  they  should  allow
refiners to meet  the RVP  standards  within  about  two  years.   In
the  meantime,  they  could  continue  to implement  other  refinery
modifications,  such  as  building additional alkylation  capacity
or  MTBE production  capacity,  which might  take  a  year  or  two
longer  to  plan  and implement  but  would  ultimately result  in
more economically efficient production of RVP-controlled fuel.

     To make  up  the lost  volume due to butane removal,  refiners
should  be  able  to change  operating conditions within  about  two
years  in  order  to  decrease the amount  of butane  in  the final
gasoline  product.    One way  in which  refiners  could  do this
would   be  to  increase  their  refinery  capacity  utilization.
Current projections  show the  U.S.  refining  industry operating
at  about  85-90  percent  of capacity.[4]  This seems to show that
some  refiners  may choose  to  increase their  throughput  without
building  'additional refining  capacity.   Another  way  refiners
could  make up  lost volume  (if octane  needs  could  be  met  in
other  ways)  would  be  to  operate  their  reformers at  a lower
severity.   For  those  refiners not  able to  fully replace  the
lost- volume  in  the   short  term  through increased  capacity
utilization  or  refinery modifications,  they  should be  able  to
import  finished  gasoline.   A number  of new refineries currently
are  being  built  in  oil-producing  regions  overseas  that   appear
to  be  aimed  at  an export  market.   Thus,   imported  gasoline
should  be  available to  supply any  extra  gasoline  volume which
might   be  needed  until  domestic  refineries  can  modify their
operations  to make up the  lost volume,  preventing situations of
gasoline shortage.

     For  Class   B   and Class  A  fuels,  the second phase  of
volatility   regulations  would  require   refiners   to  meet  RVP

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                              4-4
limits  of  7.8 psi  and 7.0  psi,  respectively (see  Chapter  2).
To meet these levels, refiners would likely have  to  remove most
of the  butanes  and some pentanes from gasoline  and  replace  the
lost  volume  and octane.   In order  to remove  this  butane  and
pentane, refiners  have several  options.   In  the  short-term,  as
the Bonner and Moore modeling results  show,   refiners  should  be
capable of lowering  RVP to  approximately  8.0  psi without making
any capital  investment.   To do  this, refiners  could  operate
their  fractionators  to cut  deeper  and  remove more butane  and
pentane.  They  also  could  operate  their  reformers  with  lower
severity,  which would result  in  less butane.   In  addition,
within  two years refiners should  be able   to  install additional
debutanizers  and  depentanizers  to  remove  the  required  amounts
of these  components.  As  for Class  C fuel,  it  appears that  a
sufficient  supply  of  octane  components  exists  or  could  be
produced to meet the gasoline pool octane  demands.  Again,  EPA
believes that  any  production volume shortfall,  which  should be
minimized  as  refiners  reoptimize  their   operations,  would  be
made  up  by  refining  additional  crude   oil or  by  importing
increased amounts of finished gasoline.

     For  the  reasons  explained  above,  EPA  believes  that  the
second  phase  of RVP  controls is technologically feasible within
about  two  years and should  allow  most  refiners to  meet  the
standards in  the most economical  way.   It  is possible that some
refiners may  have  to choose less economical  means of  achieving
the  required volatility  reductions  in the  short  term before
being able to economically  optimize  their  operations.   However,
assuming  final  standards  are  issued  by  the  summer  of  1990,
meeting  the  required RVP  standards  for  the  summer   of  1992
appears   technologically    feasible.    In   addition,    EPA   is
considering provisions  for  states to  request more  relaxed  RVP
standards because of unusual localized economic impacts.

     Although   about  two  years   in   general   should  provide
sufficient  leadtime  for  refiners  to  meet   the  Phase  II  RVP
standards,  EPA  believes  that less  than  two years  of  leadtime
would be  insufficient and would not allow refiners  to  meet  the
Phase   II  RVP  standards  on  a  nationwide   basis.   Two  years
appears  to be  the  minimum  amount  of leadtime in  order  to
install new  equipment and change refinery  processes.  Less than
two years of  leadtime  likely would  lead to substantial negative
economic impacts.

      2.    Cost of RVP Control

      The  main area  to which economic comments  were  addressed
was the Bonner and Moore  refinery model itself.[5]   Most of the

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                              4-5
comments about the model  pointed  to  specific areas of the model
which commenters  believed needed to be  corrected or  made  more
realistic.    The   American Petroleum  Institute  (API)  adjusted
Bonner  and  Moore's  results  for  various  reasons  discussed  in
this  section  and   estimated   the   cost  of  EPA's  volatility
proposal (combined  first  and second  phases of  control)  to  be
$1.5 billion per  year.   (API  also hired a contractor to perform
an independent cost  analysis which will  be addressed separately
later in this  section.)   There  was  also a general comment about
the model which will be addressed first.

     A general comment brought  against  the model was  that  such
national and  regional  models oversimplify  refinery operations,
overoptimize results, and grossly understate costs.   EPA agrees
that  a  national   or regional  refinery  model  does  involve  a
simplification  of the  refining  industry  operations  and  that
costs  will ' vary  from  one  refinery  to  another.    However,  we
believe  that  the  Bonner  and Moore  model  contains  a  level  of
sophistication which allows the  model  to  predict  cost  results
which  are  representative  of  average  nationwide  costs   of  RVP
controls.   In fact,  in  comments from  API,  they  stated  that
Bonner  and Moore's  modeling  results  for PADDs I,  II,  III  and V
are similar to models  they have used and that the stock balance
changes and operating changes appear reasonable.

     In  contrast,  API  stated  that  the   model   of  PADD.  IV
(California)  is  invalid.  API  said  that  Bonner  and  Moore's
model  of California was  unnecessarily  limited  by  a  certain
volatility  parameter  (the  percent  evaporated at  160°F)  which
results in most of the pentanes being removed  before any of the
butanes are  removed.   Thus,  API claimed, the base case contains
the  cost  of  removing pentanes,  and  therefore,  the  RVP control
costs for California are  underestimated.  EPA agrees with API's
comments on  the  problems with  the  percent  evaporated at 160bF
contained  in  Bonner  and Moore's  California  model.  We  have
eliminated  a  separate   evaluation   of   California  from  our
analysis  and  based  our  costs   on  the  results  from  the other
regions which were modeled.

     API raised the  issue of how the summertime  nature  of the
volatility  control  proposal  is  accounted for   in  estimating
amortized capital costs.   API  pointed   out  that  in  the  Bonner
and  Moore  report, the amortized  capital costs for a given year
were  expressed in  dollars  per  day  and the  costs  were  spread
over  the  entire  year.    In  allocating costs  to  the  control
period  only,,  API  claimed that Bonner and  Moore  multiplied this
daily   cost  by   152  days  (five  month control  period),  and
therefore inadvertently recognized only  a fraction of the total
yearly  cost.   API's  comment  would be true  if  in  fact  the
capital  costs presented  in the  Bonner  and  Moore  report  were
actual   capital   costs.    However,   it   appears   that   API

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                              4-6


misunderstood that  the capital  costs presented  in the  Bonner
and  Moore  report  actually  were  the  costs  of  meeting  the
volatility control  requirements,  assuming refiners  had  to meet
the  RVP  standards  over  the  entire  year,   not  only  in  the
summertime.   In  other words,  the  costs  had been  artificially
raised by a factor of  2.4  to adjust from the  five month  control
period  to the  entire year.   Therefore,  EPA's  methodology  of
amortizing the inflated capital  costs over the entire year  and
then  multiplying  this cost  by 152 days  results in the  proper
amortized costs for summertime volatility control.

     API  also mentioned  that  EPA did  not  consider  that  in
states  with   dual   ASTM  volatility classifications   (states
designated A/B, B/C or C/D,  where ASTM recommends  either  class
of   fuel),   in-use   RVP   is   at   the    higher   of  the  two
classifications,  and  therefore, volatility reductions  will cost
more  than EPA projected.   EPA's  current  model  for  estimating
RVP  control  costs, in  which  costs  can  now  be calculated  by
volatility classification  as well as  on  a nationwide  basis,  no
longer  assumes  that  pre-control  RVP levels  are  at  the ASTM
limits  as was  the case  in NPRM.    Instead,  the model  is  now
based on  in-use RVPs  for 23  cities  sampled  in  1987. [6]   These
samples tended to be somewhat lower than  ASTM levels on average.

     Based on the  in-use  summer  RVP survey data,  the  average
in-use  RVP of  ASTM  class   A,  A/B,  B,  B/C,  and  C areas  was
determined.    Then,   based   -on   each  state's   current   ASTM
classification (which determined an initial  in-use  RVP  based on
in-use  survey data)  and  the new  EPA volatility classification
contained  in this  rule,   the  actual amount  of RVP  reduction
needed  to  meet the  RVP standards was determined, and costs were
based   on  that   reduction.    Therefore,   API's  concern  about
current RVPs  in  dual-designation  areas  should no longer  arise,
except  for possibly  in ASTM class  C/D areas.   Since  no  in-use
RVP  data  were  available  for  areas designated  C/D,  it  was
assumed that  these  areas  were  at  the average  of the  allowable
standards  (12.5   psi)   prior  to  RVP   controls.   . If    actual
volatility in these areas  is  higher, EPA's  cost estimates  for
the   first   phase   of    RVP   controls   would    be   slightly
underestimated.   However,  since  areas designated  C/D by ASTM
only    account   for   approximately  three   percent  of   fuel
consumption  over  the summer   control  period,   the  effect  on'
overall  costs and  cost-effectiveness of  Phase  I  RVP  controls
would be  negligible.   Also,  there should be  no  effect  on  Phase
II  costs   and  cost-effectiveness  since the  dual classification
system  does  not  now  exist  i-n the current   Phase  I volatility
classification system.

     API  commented  that  refiners  will have  to produce gasoline
which  has an RVP  lower  than  the  standards  to   assure that
gasoline   at  the   terminal   complies   with   the  volatility
regulations  due  to the  lower  volatility  fuel mixing with  the
higher  RVP fuel   already in  the storage  tanks.   Therefore, they

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                              4-7
said,  refinery costs will be  greater  than EPA estimated.   EPA's
analysis of the transition period  before  volatility  regulations
take effect  is presented  in  Chapter 2 of this Final  RIA.   That
analysis shows that  refiners do  not  need  to produce  gasoline
lower  than  the  standards  to  assure compliance at the  terminal
if  they start producing  regulated  gasoline  six  weeks  before
enforcement   begins   (which  our   cost  analysis  takes   into
account).  For example,  for an average  refinery  producing  Class
D fuel  (13.5 psi) which  will be required to meet Class C fuel
requirements  (9.0  psi)  on May 1,  if  they produce  9.0  psi  for
six weeks prior to  the  beginning of the control  period  (instead
of  the  11.5 psi   gasoline they would  normally produce  without
volatility  regulations),   then  the  RVP   of the  fuel  at  the
terminal would be at 9.0 psi by May 1.  For  this  reason  we feel
our analysis correctly estimates  the  effect of  the  transition
period on the cost of RVP control.

     API also commented that  because of RVP  testing  variability
refiners would  have to  include a  margin of compliance of  0.3
psi   to   assure   that   their   fuels   meet   the   volatility
requirements, and that  this  margin should be considered as part
of  the  industry  costs.    EPA  agrees   that  it   is  probably
necessary   for   gasoline   refiners  to   include   a   margin  of
compliance  in order to  assure  that  their  gasoline  meets  the
volatility  regulations.   Although  it  is  not  clear   to  EPA how
much of  a  margin  is required, it seems likely that  as  refiners
gain more  experience with producing  regulated RVP  gasoline and
the  RVP  test  methods,  they  will  be  increasingly  able  to
minimize  this margin  of  compliance.   Therefore,  EPA  has  not
included a margin of compliance in  its cost calculations.

     API  commented  that   Bonner   and  Moore  overestimated  the
blending value of  butane  at  65 psi, stating that based on their
confidential  survey  of  refiners,  a blending value of 61 psi is
more  realistic.   As API  pointed  out,  a  lower  butane  blending
value  would  result  in  a greater  amount  of projected  butane
rejection  to achieve a given RVP  reduction,  and therefore  lead
to  greater  costs.   However,  EPA  believes  Bonner  and  Moore's
analysis  is  reasonable  considering  that  the butane  blending
value  used  was  based  on  publicly available  information.   EPA
cannot  base its  analysis on  a summary  of information which has
not been provided to us because it is  considered confidential.
Therefore,  a butane blending value of  65 psi will  continue to
be  used.

     Related to  gasoline  demand,  API   pointed  out  in  their
comments  that  Bonner  and  Moore  used  1990  fuel   consumption
numbers  for  1992,  and  since projected fuel  consumption  will be
higher   in   1992   than   1990,    total   refinery   costs    were
underestimated.   One refiner  stated  that  EPA  should  increase

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                              4-8
its base  gasoline  demand by five  percent  to  agree with  API's
forecasts.   In  addition,  OMB  commented that  EPA's  MOBILES,0
fuel  consumption  model  underestimates   fuel   consumption  and
therefore costs.   For  this  analysis of the second  phase  of  RVP
controls, EPA  has  updated  its  estimate for  gasoline  demand.
Our current  economic  and environmental  impact  analyses  now  are
based  on the  MOBILE4.0  fuel  consumption  figures,  which  are
higher than  the MOBILES.0 fuel consumption figures used  in  the
earlier analyses.

     API  and  some  refiners  claimed that EPA  did not  recognize
any  investment  or  operating  costs  to  fractionate butanes  or
pentanes  from  gasoline  and  to  store  them,   and   therefore
understates  the actual  costs  to  refiners.   EPA  disagrees  with
this  comment.    Bonner  and  Moore  included  equipment  in  the
refinery  model  such   as units  to debutanize  and  depentanize
gasoline as well as pentane  splitters.    In addition, as  will  be
addressed in more  detail in  the  next  section,  EPA believes that
refiners  will  modify  their  operations to  purchase less  butane
from  outside sources   or find alternative  uses  for the  butane
and pentane  which  will  be  displaced   from  gasoline within  the
refinery.   Therefore,   additional   storage  facilities  are  not
likely to be  required  for butane  or  pentane,   and  EPA believes
that  the Bonner and  Moore  model  does account for the  impacts
which  RVP control  will  have  on  the handling  of  butane  and
pentane by the refining  industry.

     One  refiner  commented   that  EPA   should  add  back  the
motorist  fuel  savings  which occur  from the  more  energy  dense
fuel  and reduced evaporative  emissions, which  were credited to
refinery  costs  instead  of  to  consumers  and  society.    EPA
believes  that  this commenter misunderstood  the way in which the
improved  fuel   economy  and   reduced evaporative  emissions  are
handled.   In fact,  our  refinery cost  and cents per gallon cost
estimates  do not  include these  credits,  which  are  discussed
later  in this  chapter.  These  credits are  applied  only  when
determining the net societal cost  and  cost effectiveness  of  RVP
controls.

     Several   comments   were   received  which   related  to  the
additional  costs which  would be   incurred  for  increased  RVP
testing   of  fuels  throughout  the  distribution  system  (for
documentation  and  other related activities).   API referred  to
those  costs  as  "verification" costs,   and estimated the  cost to
be  in  the range of $100 to  $115 million per year,  assuming  all
work  is  contracted out  and  includes  the cost  for  travel time,
obtaining the  sample,   testing, and  producing  a certification of
analysis.  Unfortunately, API  did  not  provide  any documentation
for their cost  estimate.  One  commenter  claimed that  because of
the RVP  regulations, many distributors and retailers would find
themselves   with  unsold stocks   of   cold-weather,   high   RVP
gasoline.   This commenter said  that  these businesses would  be
forced   to   either  violate   the   regulations   or  shut   down
operations, which would  lead to bankruptcy.

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                              4-9
     EPA does  not foresee  the costs  or the  type of  problems
resulting from verifying or  complying  with the  RVP  regulations
to  be  as  severe  as  summarized  in  the  preceding  paragraph.
Refiners  currently  must  measure  the  RVP  of  gasoline  they
produce  even  without RVP  regulations.  EPA  would expect  that
the only  additional  RVP testing  due to this  program would  be
for  oversight programs  which  certain  parties may  institute.
This RVP testing would  not  likely be  batch by batch, but  more
periodic than existing  refinery  level  programs.  Therefore, EPA
believes that  there  probably will  be  some additional costs  of
verifying that  the  gasoline  being  distributed and  sold  meets
the RVP regulations which cannot  be  quantified.   However,  there
should  be  no  significant  increase  in  costs  over  Phase  I
verification  costs.    In   relation   to  the   refinery   costs
presented in  this  chapter,   it would not be  a significant  cost
and should have little,  if any, discernible effect  on the price
of gasoline.

     Regarding the impacts  on  distributors  and  retailers, EPA
believes  that if  these businesses  plan  ahead properly,  they
will  not  find  themselves  left  with  fuel  which  cannot  be
marketed because it  has  too  high of an  RVP if  they  plan  ahead
properly.  As the beginning  of  the control  period approaches,
these businesses  will have  to do additional  planning  in  order
to  make sure  that any  gasoline  they  purchase will  not   cause
them  to  be   in  exceedance  of  the  RVP  standards  -for   their
location.  For  retailers this should  not  be  a big problem if,
as  in the Phase  I  program,  refiners and terminals  are required
to  start  complying with the RVP  standards  one month in advance
of retail service stations.

     One comment received from OMB stated that EPA should use a
more reasonable  crude oil  cost.   For this analysis EPA is  using
a  cost  of $20  per  barrel  which  is slightly  below  the   price
projected by  the Department  of Energy for  crude oil  in  1.995 of
$20.60 per barrel and is also very  similar  to the costs  assumed
in  the  API analysis.[7]   Therefore,  EPA believes that a $20 per
barrel crude  oil cost is reasonable  to use  for projections into
the foreseeable future.

     Several  refiners  submitted  comments  which  stressed  that
RVP control will result  in reduced  gasoline production of up to
5,6  percent   and  will also  affect   their capability  to  produce
certain types of products such as premium  unleaded gasoline and
aviation  gasoline.    EPA  agrees  that volatility  control  to the
proposed  levels  would  have  a  significant  impact  on refinery
operations.    This  analysis  takes  into account  the  economic
impact  to  refiners of  RVP  control • on  reduced  gasoline  demand
and  thus production.   Regarding  the  impact  on  specific  fuel
production  effects,  EPA  acknowledges  that   RVP  control  will
inevitably lead  to moderate  changes in the  product  slates for
some  refineries.   However,  the   refining  industry is  a  highly
developed industry which is  capable of change  and can respond
to  market demands  in an efficient manner.   Therefore,  EPA does

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                              4-10
not expect a major  long-term effect on the ability  of  refiners
to supply the products which the market requires.

     In  addition  to  providing  the  comments  on  Bonner  and
Moore's  refinery  model  which have  been  discussed  above,  API
hired  a  consultant,   Turner,  Mason  &  Company,   to perform  a
similar  analysis  quantifying  the   impacts  of  RVP  controls  on
refiners.  The  findings  of  their  study,  in and  of  themselves,
are a comment on EPA's analysis and are addressed below.

     Turner and  Mason's  refinery  analysis  used a set of  'eight
linear programs and  four  simulator models to determine the cost
of compliance for meeting  the original EPA proposal as  well  as
an alternative API proposal  under  several scenarios.  The final
cost of compliance also  included costs  for butane fractionation
and  handling  which  were  estimated  based on  a  confidential
survey  of  refiners.    API's  nationwide  cost  for  meeting  EPA's
combined  first  phase  and  second  phase  proposals  (based  on
Turner  and  Mason's  model,  assuming b-ase gasoline  demand)  was
determined to  be $934 million per year,  substantially higher
than  EPA's  estimate.  However,  there  are several  major  areas
which  differ  between  API's  analysis  and EPA's  analysis  which
EPA believes caused an overestimation of costs by API.

     The  first  area  of  difference   is   the  length  of  the
compliance period.   API assumes  that  six  months  of volatility
control will be  necessary  to comply with  four  months  of actual
control  at  retail service stations.  As  presented in  Chapter 2
of this  Final  RIA,   EPA's  analysis shows  that 5-1/2  months  of
actual   production   of  controlled  fuel   would  occur.   This
shortened   period   of   compliance  would   lower   costs   by
approximately 8 percent.

     A   second   area   of   difference   which  leads   API   to
overestimate costs is that they project  in-use RVP will  have to
be  reduced 3.1  psi  to  comply  with  the EPA  regulations.  EPA
believes that  API's  estimate  of  the required  RVP reduction is
too high for  several  reasons.   First,  API  assumed  that in-use
gasoline  RVP  was  at  current ASTM limits,  which  is   not  the
case.   Based  on  1987  MVMA  summer fuel  survey  data,  average
in-use  RVPs  categorized by  ASTM  class ranged  from  0.2  psi  to
0.5 psi  below  the ASTM limit.  For  those cities  with  dual ASTM
classifications, the average RVP ranged  from  0.8  psi to  1.0 psi
below  the maximum RVP allowed.  Therefore API's estimate of the
required RVP reduction appears to  be too high.

     A  third area of difference previously  highlighted  is that
API has assumed that in-use RVPs  will  have to be lowered below
the proposed  limits to  assure compliance  at  the  terminal,  due
to mixing  with the more volatile  gasoline which remains in the
storage  tanks.   API  has  included  a margin  of  compliance of 0.3
psi  to  assure  that  in-use  RVP  meet  the volatility standards.
For reasons discussed above,  EPA  has  not  included  a  margin of
compliance  as  part  of  the  costs  of  complying  with  the  RVP
regulations.

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                             4-11
     A fourth area  of  difference is  that  API  included all  of
the nation  in their  cost  analysis.   For the EPA  cost  analysis,
the eight  Northeast  states  have been  eliminated because  they
have  begun  their  own programs of   summertime   gasoline  RVP
control  or  are  affected  by  such  programs.   To  put  the  API
results on  the  same  basis as  EPA's analysis, API's  nationwide
costs  should be  reduced by  about  16  percent (the  approximate
fuel consumption fraction  of  the eight Northeast  states).

     The overall  effect of  these  four  assumptions  has  caused
API to overestimate the  actual  amount  of in-use  RVP  control
required  to  comply  with  the  second   phase   of   volatility
regulations.  Assuming  1987  in-use  RVP levels,  EPA  estimates
that in-use RVP must be reduced from pre-control  levels by only
about  2.0  psi  to  comply  with  the  second  phase  of  regulatory
requirements.     This   large    difference   in   projected   RVP
reductions   causes  API   to  overestimate costs  by  a  significant
amount which cannot  be quantified  easily  without  rerunning the
API model,  but  which  accounts  for  a  substantial  part of  the
difference  between our  two analyses.

     Another major difference  between API's  and  EPA's refinery
model  is that it  appears  the API model does not  optimize  their
refinery operations  as  well  as  the  EPA model  does.   The effects
of  this  can  be  seen  in  the  amount  of  incremental  crude
purchased  in  order  to meet  product  demands after  volatility
controls are  in place   and also in  how  the model refines  this
incremental  crude  into  various products.   For  example,  to
obtain  a 2.5  psi  drop in  RVP, the  Bonner  and  Moore  model
purchased approximately 280,000 barrels per  day  of  extra crude
oil,  whereas,  to  lower RVP  by 2.7  psi  the  Turner   and  Mason
model  purchased  453,000 barrels  per  day of crude oil.   Closer
examination of  the Turner and  Mason  product  slate  shows  that
almost  55  percent of the incremental  crude ends  up  as residual
oil.   This  is   an  extremely   high  fraction  considering  that
roughly  only  five  percent  of   crude  oil   purchases  end  up as
residual oil  in the base  case  without RVP  controls.   Assuming
Turner  and  Mason's crude  oil  price  of around $19 per barrel and
residual oil  value  of  around  $15  per  barrel,  the  Turner  and
Mason  model is  incurring  a $4  per  barrel  loss  on a  significant
volume of crude oil purchases.

     In  order to  estimate the  impact  that the extra  crude oil
purchase  has  on  API's costs,  it   is necessary  to   make  some
assumptions.  As  stated previously,  EPA's analysis  shows  that
to  meet the second  phase  of RVP standards,  refiners will have
to  reduce   RVP  approximately 2.0 psi from pre-control levels.
Assuming that  incremental crude purchases are  proportional to
the  amount of  RVP  reduction,  Bonner and  Moore's model  would
project  that  refiners would   be  required  to purchase  around
224,000  barrels  per  day of incremental crude oil  to  reduce RVP
by  2.0  psi.  As previously  reported, API's  analysis projects
that refiners would  have to purchase  453,000  barrels  per day of

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                             4-12
crude oil  to meet  a 2.7  psi reduction.   However,  their  cost
estimate for  EPA's proposal  is  based  on  a 3.1 psi  reduction,
which means  they  are  projecting  that  refiners  will  purchase
about 520,000 barrels per day of  extra crude oil.

     Therefore,  if  API's  modeled refinery were as  efficient as
EPA's model, and used an  in-use  RVP  reduction  of  only  2.0  psi
(the reduction  which  EPA's analysis shows is necessary  to  meet
the standards)  the  resulting  crude  purchases  would be  lower by
approximately 296,000  barrels per  day.  At  a  loss  of  $4  per
barrel,  this results in  a  daily  loss of $1.18 million  per  day.
Subtracting this  amount  from API's projected daily cost of  RVP
controls,  eliminating  the  eight  Northeast   states   from  the
analysis and adjusting  for  a  5-1/2  month compliance  period,
results  in  a modified API  non-Northeast nationwide  projection
of  $546  million per  year.  This  is  actually lower than EPA's
total estimate  of  $670 million per  year for both the  first  and
second phases  of  volatility  control  (which  also  excludes  the
Northeast states).

     In  order  for  Turner  and Mason's  model to make  refineries
more efficient,  it will  probably be necessary for  the  model to
account  for   more  investment    in   new  refinery   equipment.
However, it  should be  noted that  in  addition  to the  Turner,
Mason modeling results,  API's cost  estimate  included  a sizeable
amount  of  investment for  butane storage  facilities  which  was
based on a confidential survey  of  refiners.   As  explained in
the  next  section,  EPA  does not   believe  that  extra  butane
storage  will  need  to be  added  at  most refineries.   We expect
that refiners will  reoptimize production to  produce less butane
and find other uses for the butanes which were  removed  to lower
RVP  (such  as  using them as feedstock  for MTBE  production or in
some cases  as   fuel for  other  units within  the refinery) .   In
addition,  current  storage  which  is used  for purchased butane
can be  used to  store  the  butane separated  out  of the  reduced
RVP  gasoline.   Therefore,   costs  included  in  the API  analysis
for  butane  storage  might  better  be  seen  as  offsetting  any
increased  costs   assumed   to  be   necessary   to   improve  the
efficiency of their refineries.

     In  addition to  API,  three  refiners also modeled  costs  for
their refineries.   Since these refiners modeled only  their own
operations,  it  is  not  possible  to compare total refinery costs
estimates  but  rather  only  the   cost  per  gallon  for  reducing
gasoline RVP.

     The first refiner, Chevron,  used  a  linear  program model
which  they  normally  use  in  making  projections  for   their  own
refineries.   The  cost   of meeting  the  second  phase  of  RVP
controls using uncontrolled  RVP  levels  as  the base,  was   3.14
0/gallon for Class A fuel, 2.04  ^/gallon for Class 3  fuel,  and
1.21  ^/gallon   for  Class  C  fuel.   Compared  to  the  costs
determined for  this analysis, the Class  A  fuel  cost  increase is

-------
                             4-13
higher than EPA's value of  1.8  ^/gallon,  very similar  to  EPA's
increase of  1.9  ^/gallon  for Class  B fuel,  and  slightly  lower
than EPA's cost increase of  1.4  ^/gallon  for Class C  fuel.   It
appears that  the main  disagreement   is the cost  of  compliance
for Class  A  areas.   Unfortunately Chevron did  not supply  any
detailed information  upon  which their  costs are  based,  making
it difficult to comment on  their  analysis.   However,  as  stated
previously,  EPA  believes  its  refinery  model  provides a  good
estimate  of  average  refinery  costs  although  costs  of  RVP
control will vary from  refiner  to  refiner.   Also, even with the
higher  cost  Chevron  determined for  Class  A  fuel,  EPA  would
still  consider  RVP  control  as  a   cost  effective  means  of
reducing VOC emissions.

     The second  refiner,  Sinclair,  using  a  less  sophisticated
model, determined the  cost of  RVP  control to  be 1.3  0/gallon.
This  is  actually slightly lower than EPA's  average  volatility
class- weighted estimate of 1.6 ^/gallon.

     The third  refiner  which submitted their  own cost analysis
was  Valero  Energy  Corporation,  a  company  which  owns  one
refinery  and ten natural  gas liquids extraction  plants.   They
modified  the  Bonner and  Moore  model  based  upon  their  own
operations arid estimated the  economic effects of both the first
phase   and  second   phase   of   volatility   controls.    Valero
projected  the  total  cost  of  volatility  control to  be  6,3
^/gallon  -from  current  operation   to   the   second   phase  of
controls,   substantially   higher   than   Bonner    and   Moore's
projections.  In predicting  their  impacts, Valero  assumed that
butane  would fall  to  fuel  value  and that ethane  and propane
would fall to halfway between the base price and fuel value.

     EPA believes that Valero's  projected impacts are different
for  two  reasons.   First,  Valero is  relatively heavily involved
in  the NGL  industry  for   a  small  refiner.    Second,  Valero's
assumptions  about  butane  prices appear unrealistic to EPA.  As
discussed  in the following section of this  chapter, an analysis
performed  by EPA's  contractor does not show that butane prices
will drop  to fuel value, but  rather that  the price will decline
by  only  about  11  percent.   In addition, EPA does not foresee an
impact  of  the  magnitude projected by Valero  (as  well  as  other
commenters)  on ethane  and propane  prices.   An  examination of
1989 monthly spot market prices for ethane  and propane, as well
as  butanes  and  pentane,  shows  no  identifiable  changes  in the
prevailing cost  trends  as a  result  of  the  implementation of
Phase   I   RVP   controls  (which  resulted  in  significant  RVP
decreases,  and,  therefore, presumably, increased summer butane
supplies).   Recent  changes  in the  refining industry also appear
to'bear out  EPA's beliefs.   MTBE plants are already being built
which  utilize field  butanes.  In addition,  ethylene producers
appear  to  be  using  increased  amounts  of  butane  as  well  as
ethane  and propane.[8]   These increases seem  to be occurring at
the expense  of naptha and residual (which,  in turn, can be  used
for gasoline  production).   Therefore,   EPA  believes  Valero's

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                             4-14
cost  estimates  would  come closer  to EPA's  estimates  if  more
realistic assumptions were made regarding, the price  and  uses of
butane and  other natural  gas  liquids,  although Valero's  costs
still may be  slightly  higher  due to  their deep involvement in
the NGL industry.

     Several comments were received expressing  concern over the
effect which volatility   control  will  have  on  the  refinery
industry   as  a whole,  or   on  various  sectors  of the  industry.
One  general  comment  was   that  the  net   industry  effect  would
probably   result   in  some  refinery closings,  reduced  gasoline
production and increased  gasoline prices.   EPA agrees that RVP
controls  will result in  reduced  summertime  gasoline production
(which our model  already  takes  into account) and that gasoline
prices will  increase  slightly.   However,  this is  due to the
fact that motorists  will  be  purchasing gasoline which provides
greater fuel  economy and   results in  fewer  evaporative emission
losses.  EPA does not  expect  there  to be any  refinery closings
because of RVP controls.   All  refiners  will have to incur costs
to reduce RVP, but they will  recover  their  investments  through
the higher prices at  the pump.

     EPA   believes   that   the   recent movements  made  by  the
refining  industry with  regard  to reformulated  gasoline  support
these conclusions.   The refining  industry as a whole is heavily
involved  in developing reformulated fuels which  are  intended to
produce significant  emission  reductions   from  current vehicles.
At  this   time  there  are  five  reformulated  gasolines  being
marketed,  each   of  which  has  a  lower  RVP  than  EPA's  Phase   I
requirements.  Thus,  it appears  refiners  know that  lowered RVP
is a  primary component to  reduced  emissions and they are  able
to produce the fuel  and find  markets for the butanes  which are
displaced.   In addition,  the impacts of  volatility  control are
much less than the expected impacts of reformulating the entire
gasoline    pool,   which   the   refining   industry   appears  to
anticipate.

     There were  also  comments  received  which  stated that RVP
controls    would   disproportionately   burden   small  refiners,
refiners   supplying  Class A  and  B  areas,  domestic  gasoline
producers, and convenience  store  suppliers.   However, there was
little evidence provided  to support these conclusions.  EPA, in
a  separate  analysis, has  looked at the effects  of  RVP controls
on small  refiners and concluded that  they would  not  be affected
disproportionately (see  54 FR  11883, Section X).  As explained
previously  in this  section,   EPA  also   does  not   expect   that
refiners   which   supply   Class   A   and   B   areas   to   be
disproportionately affected.

     Regarding    the    disadvantage   to    domestic    refiners,
commenters  pointed  out   that  since environmental controls are
less   stringent   in   foreign   countries  and   because  foreign
refiners  will  be  able  to spread the cost  of RVP  control  over
all of their gasoline production,  the cost of RV?  control for

-------
                             4-15


gasoline from foreign  refiners  will be  less  than the  cost  for
gasoline from domestic  refiners.   EPA does not  foresee such an
impact on gasoline imports due to volatility  controls.   The  RVP
regulations  will  not  affect  the  stringency of  environmental
control  and,  therefore,  should   not   increase  any  existing
difference.   Also,   it  seems  unlikely  that  foreign  refiners
would  spread  the  cost  of  RVP   control  over  their  entire
production  of  gasoline  since  it   would  tend  to  make  their
gasoline  less  competitive  with  other   refiners  in  their  own
country  and  other   countries   outside   of  the  United  States.
Likewise,  EPA  does  not   foresee   any  negative   impacts   on
convenience store suppliers.

     As already stated,  EPA  believes our average cost estimates
are  meant  to  incorporate  the  diversity  of  effects  expected
across  the  industry.   We realize that costs  will  vary from one
refiner to another;  however, we do  not expect this variation to
cause a significant  disruption within the refinery industry.

     In  another  related  comment,  one refiner   said  that  since
EPA  had exempted  Alaska  and Hawaii  from  RVP controls because
gasoline consumption  in those  states is relatively  small,  EPA
should  also  exempt  small  refiners  from  RVP  controls or  set
higher  RVP  levels   than  those  for larger  refineries.   This
commenter  appears  to   have misunderstood   EPA's  reason  for
exempting  Alaska  and   Hawaii   from  RVP  controls.   EPA  has
exempted Alaska  and  Hawaii from  the  RVP  regulations because
neither  state  contains  any  ozone nonattainment  areas  and also
because  each of  them has  an  independent supply of  fuel,  not
because of the  relatively small gasoline consumption in each of
these  areas.  A  similar  argument   cannot  be   made  for  small
refineries.   Small   refineries  exist  in all   regions of  the
country  and  most,  if  not  all,  supply gasoline  to  states with
nonattainment areas.   Therefore,  from an air  quality standpoint
i't would be  counterproductive to allow an exemption or set less
stringent  RVP  levels  for  gasoline  from  small  refiners.   For
this  reason, EPA  does  not believe it  is   wise  to  allow  an
exemption  or less stringent standards  for  gasoline produced by
small refiners.

     In  addition  to  all of  the  aforementioned comments  which
questioned  the  accuracy  of  EPA's  projection model  of refinery
costs,  there  were  also  many  comments  which  supported  our
results.   As   with  many   of   the  comments   challenging  our
analysis,  these comments were  not  supported  by  any  independent
analyses  and thus do not  reinforce any  specific aspects of the
analysis.  There is no reason to address them individually.

     Finally, one commenter  stated  that  the cost of RVP control
can  be considered reasonable  only  if RVP controls  result in  a
higher  quality  fuel.   While we do  not  agree  that fuel quality
should   be    the   only   deciding   factor    in    determining
reasonableness  (see Chapter  5),  lower  RVP   fuel  would benefit

-------
                             4-16
the  motorist  in  several ways  that already  have been  pointed
out.  First, lower RVP gasoline contains more  energy  per gallon
and  therefore results  in improved  fuel  economy.   Second,  there
is less evaporation of the gasoline once the  gasoline is pumped
into the vehicle, which  results  in a greater  use of  the fuel to
drive  the  car as  opposed  to  the  fuel evaporating  and  often
being emitted into the  atmosphere.   In addition, lower RVP fuel
will result in better high-temperature  driveability,  which will
be  discussed  later  in  this  chapter.    For  these reasons,  SPA
believes RVP  controls  will indeed  result  in  a  higher  quality
motor fuel.

     C.    Refinery Cost of RVP Control

     As  explained  in the  previous  section,  refiners  will need
to  make  capital   investments  in  a  variety  of  new  refining
equipment  to  meet  the  second  phase   of  volatility  controls
finalized  today.    The  refinery  modeling  work  performed  by
Bonner   and   Moore   Management   Science   included   several
improvements  made  since  the  original  refinery  modeling  was
performed for the  August 1987 NPRM.  First,  it  was  possible to
incorporate directly into  the  model   the  effects  of  reduced
gasoline demand under  a range of  RVP  control  scenarios.   (RVP
control  reduces the  demand for  gasoline because  less  gasoline
is  lost to evaporation,  and  lower  RVP gasoline  contains more
energy  per  unit  volume  which  leads to  improved  fuel economy.)
Second,  the  latest  modeling was able to estimate the impact of
a drop  in the price of butane on raw material  purchases  made by
refiners  and  on  the demand for products  from  the  natural gas
liquids  industry.   A final  improvement  was to extend  the  range
of  the modeling  from  a two  psi  drop  to a  three psi  drop in
RVP.   This  has helped  to  improve  the  accuracy of  EPA's cost
estimates at lower levels of RVP control.

     In  addition  to  these  modeling improvements,  EPA modified
the  model  results   in   two  ways  to  better  reflect  reality.
First,  we  excluded  the  results  for  California  (Region   4  in
Bonner  and  Moore's  model) because,  as  commenters pointed out,
the  base case  fuel  contained unrealistically  high  levels of
butane  and  low levels  of  pentane.   Second,   EPA adjusted  the
results  to   represent   a  more   reasonable   10  percent   real
after-tax rate  of return  on  investment rather  than  the higher
15 percent rate included in Bonner and Moore's model.

     EPA  also has applied  the results  of the model  in  a more
sophisticated manner than the analysis  contained in  the  NPRM.
Based   on   the  summer   1987   MVMA  fuel  survey  results,  EPA
estimated the pre-control  RVP level  of fuel  in each  state by
month  based on  its  ASTM classification and its post-control RVP
level  based on  the  classification  contained  in  the  first  phase
or   second  phase  of  volatility  controls.    States  were  then
grouped  by   volatility   classification  to   determine  average
in-use  RVPs,  and  EPA applied a  refinery  cost  to  each group.

-------
                             4-17
(Projections  of   costs  are  described  below.)    This  approach
allowed the  determination of  a separate  cost  for each  of  the
control  levels   (7.0,  7.8  and  9.0  psi  RVP)   as  well  as  a
nationwide cost,  excluding member  states of NESCAUM.   NESCAUM
states were eliminated from this analysis  because  EPA considers
all  of  them  to  be  Class   'C'   (9.0  psi  RVP)   areas  which
independently implemented RVP controls  to 9.0  psi  beginning in
the summer  of  1989;  therefore,  EPA's program should  not assume
any benefits or  costs for federal.RVP control in these areas.

     Table 4-1  contains   the  results of  the Bonner  and  Moore
modeling  for  Regions 1,   2  and 3  as described  in  their study.
The cost  estimates  represent  the  additional  cost incurred by
the refinery  in  producing low-RVP  fuel (i.e.,  the cost to the
refinery  of  producing the  control-case  volume  of  reduced-RVP
gasoline  less  the  cost   of  producing  the base-case volume of
base-RVP  gasoline).   It  should be noted that  the  volume of
gasoline  produced in the control  cases  is less than  the base
case because motorists are realizing higher  fuel  economy on the
reduced-RVP gasoline and  are  losing less  fuel  to evaporation as
well.

     For  the  purpose of  estimating RVP  control  costs,  it is
necessary  to determine   the  cost  of  producing  the  base-case
volume  of  reduced-RVP  gasoline. (Credits  for  the  fuel  economy
improvements  and emission reductions  will be taken  later when
determining societal costs.)  To determine the  base-case volume
costs,  the  cost  reduction to the  refinery resulting  from lower
gasoline volume  requirements  was  calculated by  multiplying the
gasoline   volume  reduction  in   each  control  case   by  the
pool-average  incremental  gasoline  cost,   By adding  this value
to  the costs shown  in  Table 4-1,  the cost of  controlling RVP
(excluding  volume  reduction  effects)   as  a  function  of  RVP
levels was determined.

     Further  adjustments  were  made to  these  values,   First,
costs  were  adjusted to  a crude oil price  of  $20 per  barrel.
Bonner  and  Moore had evaluated the sensitivity of  RVP control
costs to crude oil price with modeling  runs  in  Region 3.  Cases
were  run  under  $22,  $17, and  527 per  barrel  crude  scenarios.
By  interpolation, the cost of RVP  control  at $20  per  barrel was
determined  for  Region 3, and  costs for  Regions  1  and 2  were
adjusted proportionally.

     Next,  an adjustment  was made  to  show  the  effects which
will  occur  when  refiners  have  to  reduce volatility  without
investing  in new  equipment,  which  is  representative  of short
term  costs for  the first phase  of  RVP  controls.   Bonner and
Moore  ran  a  case for Region 3  which determined  the cost of RVP
control  assuming  no  investments  were   made.    Based   on  the
relative  cost of volatility  control  in  Region   3  under  the
"no-investment"   and  "investment"  scenarios,   a  proportional

-------
4-18
Table 4-1



Bonner and Moore Costs of RVP Control
(With Investment, $22/bbl Crude,
Excluding
California)

RVP Reduction Level
Region 1 Base
Pool Avg RVP (psi) 11.75
Gasoline Volume (MBPD) 648.94
Direct Refining Cost (M$/D)
Direct Refining Cost (S/bbl1)
Region 2
Pool Avg RVP (psi) 11.01
Gasoline Volume (MBPD) 2075.17
Direct Refining Cost (M$/D)
Direct Refining Cost ($/bbl)
Region 3
Pool Avg RVP (psi) 10.92
Gasoline Volume (MBPD) 3132.91
Direct Refining Cost (M$/D)
Direct Refining Cost ($/bbl)
National
Pool Avg RVP (psi) 11.04
Gasoline Volume (MBPD) 5857.02
Direct Refining Cost (M$/D)
Direct Refining Cost ($/bbl)
1st
10.73
645.52
11.0
0.017
10.05
2064.17
173.4
0.084
9.97
3116.30
370.8
0.118
10.08
5825.99
555.2
0.095
2nd
9.71
642.91
94.6
0.146
9.09
2055.87
654.7
0.320
9.02
3103.77
926.4
0.296
9.12
5802.55
1685.7
0.288
3rd
8.69
640.38
- 259.1
0.399
8.14
2047.78
1339.6
0.646
8.07
3091.55
1554.0
0.496
8.16
5779.71
3152.7
0.538
Denominator is barrels of gasoline produced in base case.

-------
                             4-19
adjustment was made  to "investment" control costs  in  Regions  1
and   2.     The   end   result   of   these   adjustments   were
"no-investment, $20 per barrel crude"  RVP  control  costs defined
for  three  different  levels  of  RVP  control.    The   national
average costs  of RVP  control  assuming no investment is made are
shown in Figure 4-1.

     For,  the projection of long-term costs of RVP  control  (for
1995  and  later years),  EPA  included  an  additional .adjustment
for  the   effect  of  lower  butane  prices  on  the  cost  of  RVP
control.   As  butane  prices drop because of RVP  controls,  other
uses  for  the  excess  butane  become  more economical  and  can
offset the  cost of  increased purchases  of crude.  Bonner and
Moore  examined the  effect  that  a  reduced butane  price  would
have  on crude purchases.   This effect has been  included by EPA
only  in  the  long-term  prices  because  refiners   may  require
several years  to  modify these operations  to  take  advantage of
the   increased butane  supply.    The   end   result   of   these
adjustments  were  "with investment, $20  per barrel  crude,  lower
butane price" RVP control costs.   The national  average costs of
RVP  control  assuming investments are  made are  shown  in Figure
4-2.  To  determine costs  below the lowest national  average RVP
examined  by  Bonner and Moore, EPA extrapolated the cost  curve
to 7.0 psi, as shown in the figure.

     Costs taken  from these  curves  were  used  to   estimate the
national  cost  of  RVP controls  for  the  first  phase of  RVP
controls  (from Figure 4-1) and the  second  phase  of  RVP controls
(from  Figure  4-2).   EPA  estimated the  current  RVP of  fuel in
each  state by month (based on  1987  summer  MVMA  fuel survey data
for   pre-control   RVP   levels,   or  on  the  volatility  levels
promulgated  in the first  phase of  controls).   The  post-control
RVP  level was then  determined for each state  according to the
standards promulgated  in  the final rule for the first phase of
controls,  or  recommended  in  Table  2-3   of  Chapter   2  for the
second  phase  of  controls.   The  gasoline sales  volumes  were
determined   for   each  state   based  on  Energy   Information
Administration   estimates   of  monthly   sales   of   petroleum
products.[9]   As   previously mentioned,  costs   were   aggregated
according to  the  volatility  class  designations  developed  in
Chapter   2   for   use  in   determining   class  specific   cost
effectiveness.   The   appropriate  RVP  control  cost  was  then
applied to  the volume  of  fuel which would have to be produced
in  order  to  meet  the volatility standards (about  5-1/2 months
as determined  in Chapter 2).

      Using  the methodology  described  above,  the  cost  of the
first phase  of volatility  controls  has  been calculated again in
order  to  update the  analysis without the NESCAUM  states.   The
costs  are based  on the volatility  classification  map  contained
in  the  first phase of RVP controls (which is different  from the
second  phase  map  contained   in  today's  rule).   As  with the
results  of  the  analysis performed  for  the Final  Rule  for the

-------
                    FIGURE 4-1
            RVP Control Costs
           ($20/bbl crude,w/o Investment, excl. CA)
$
    1.5
n
i
t
i
a
I

b
b
I
0.5
 0
-0.5
     12
            11
   10

RVP (psi)
                                               I
                                               r-o
                                               o
8

-------
                  FIGURE 4-2
            RVP Control Costs
           ($20/bbl crude, w/ Investment, excl. CA)
$
n
j
t
i
a
I

b
b
I
0.4
 0
     12
         11
10       9

 RVP (psi)
8
7

-------
                              4-22
first phase of RVP  controls,  no control costs would be incurred
in Class  'A'  areas  to  meet the  9.0  psi standard  because  those
areas designated  as Class  'A'  are  already below  9.0  psi.   For
fuel  sold  in  areas required  to meet  the  9.5 psi  Class  'B'
standard, an  average  compliance cost of  0,48 cents per  gallon
was  calculated.    Average  compliance  costs  for   those  areas
required to meet  the  10.5 psi Class  'C' standard  would  be  0.50
cents per gallon.   The total  average nationwide  refinery  cost
of  the  first  phase of volatility  controls  (excluding  NSSCAUM
areas)  was  calculated to be  0.47  cents  per  gallon,  or  $190
million  per  year.  Table 4-2  contains  further details of  the
Phase I cost calculations.

     As stated previously, the costs  of meeting  the first  phase
of volatility  controls have been based on the  assumption  that
no  capital  investment is made  in  the short  term  (see  Figure
4-1).   However,  as   time  proceeds  -and   a  second  phase  of
volatility controls becomes  effective,  refiners will  invest  in
capital  equipment   and   the  cost   to  meet   the  RVP   levels
promulgated  in  the  first  phase  of  controls  will   decrease
slightly (see  Figure 4-2).   However,  for  the Phase II  analysis,
the  costs  of  RVP reduction  were  based  on  the  RVP  reduction
required  from  Phase   I   RVP  levels,  not  uncontrolled  levels.
Therefore none of the Phase  I  cost  decrease  which happens  as
capital  investment  is  made has  been credited to the cost of the
second phase of volatility controls presented in this analysis.

     Table 4-3 presents   results for  the  analysis   to  lower  RVP
from  the first phase  control  levels to  those  contained  in  a
Phase  II program.   (As   noted  previously,  these  costs  do  not
include  NESCAUM  areas.)   For fuel  sold in areas  designated  as
Class  'A1 (7.0 psi),  the  additional cost to reduce RVP  further
will   be  1.8  cents  per  gallon.    The   average  additional
compliance cost for fuel  sold in areas classified  at  Class  '3'
(7.8 psi) will be 1.3  cents per gallon.  In areas  designated as
Class  'C'  (9.0 psi),  the  additional compliance  cost  averages
0.9  cents per gallon.   Nationwide,  the overall cost  to reduce
RVP from the first phase  RVP control  levels  to  the second phase
RVP control levels  is  1.1 cents per gallon, or $480 million per
year.

     The annual costs cited above for both  the  first and second
phases  of  RVP controls   include  increased operating  expenses
plus  any amortized  capital costs for  new  equipment.   The  total
capital  cost  of  the volatility control program (combined first
and second phases)  is estimated to be about $670 million.

-------
Phase I
4-23
Table 4-2
RVP Control Costs
1987
EPA Phase I ASTM
Classification Classification
A A
Subtotal A
B B
B B/C
B Cal. B
B A
B A/B
Subtotal B
C C
C Cal. C
C C/D
C B
C B/C
Subtotal C
Percent of
Fuel Sold
4
4
16
4
10
0
2
34
34
0
2
3
3
44
.02
.02
.38
.31
.59
.62
.28
.18
.49
.56
.90
.15
.86
.96
In-Use
RVP
8
8
9
10
8
8
9
9
11
8
12
9
10
11
.60
.60
.98
.68
.60
.60
.67
.50
.27
.60
.50
.98
.68
.18
Post-
Control
RVP
8.
8.
9.
9.
8.
a.
9.
9.
10.
8.
10.
9.
10.
10.
60
60
50
50
60
60
50
21
50
60
50
98
50
44
1990 Cost of Control*
(d/gal) (105$/yr)
0
0 0
0.60
1.42
0
0
0.26
0.48 79
0.55
0
1.09
0
0.15 •
0.50 110
Nationwide (ex. NESCAUM)
83.16
10.40
9.84
0.47
189
     Based  on  no investment,  a 5-1/2 month  summer  control  period
     and  a  1990  MOBILE4.0  fuel • consumption  of   9.8   x  1010
     gallons gasoline.

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                                         4-24

                                      Table 4-3
                              Phase II  RVP Control  Costs
 EPA Phase I
Classification

      A
      A
      A
Subtotal A
      B
      B
      B
      B
      B
      B

Subtotal B
      C
      C
      C
      C
      C
      C

Subtotal C
Nationwide (ex. NESCAUM)

ASTM
Classification
A
B
A/B
A
A/B
B
B/C
C
Calif
A/B
B
B/C
C
C/D
Calif


Percent of
Fuel Sold
1.90
0.28
0.92
3.10
2.74
0.96
14.86
4.35
7.16
10.14
40.21
0.41
4.40
3.82
27.34
2.90
1.01
39.88
Phase
I
RVP
8.60
9.50
9.00
8.80
8.60
9.50
9.50
9.50
10.50
8.60
9.39
9.50
9.73
10.45
10.50
10.50
8.60
10.35
Phase
II
RVP
7.00
7.00
7.00
7.00
7.80
7.80
7.80
7.80
7.80
7.80
7.80
9.00
9.00
9.00
9.00
9.00
8.50
8.99
                              1995  Cost  of  Control*
                               (izi/qal)
                                1.67
                                2.36
                                1.95
83.19
9.83
8.34
                                1.82
                                0.76
                                1.45
                                1.45
                                1.45
                                2.04
                                0.76

                                1.34
                                0.40
                                0.55
                                0.96
                                0.99
                                0.99
                                   0

                                0.91
1.15
                                28
                               270
                               182
480
*    Assuming  investment,  a  5-1/2  month summer  control  period
     and  a  1995  MOBILE4.0   Fuel  Consumption  of  1.0  x  1011
     gallons gasoline.

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                             4-25
II.   Effect  of  Volatility  Control  on  the  Butane and  Pentane
     Markets

     A.     Synopsis of NPRM Analysis

     A direct effect  of  RVP  control is  to displace butane  (and
at  low  enough RVPs,  some pentane)  from use  by  refiners  as  a
gasoline component.   At  the time  the Draft  RIA  was  prepared,
EPA  had  available somewhat  contradictory  assessments  of  the
quantity of  butane likely  to be  displaced  and  the  resulting
economic  effects  of   that  displacement  on  the  natural   gas
liquids  industry  and others.   EPA  used  an  average  of   two
extreme cases in  estimating  the  overall  cost of RVP control,   A
summary of  the  original  butane  analysis  follows,  The  effects
of  RVP  control  on the pentane market was not  considered in the
NPRM analysis.

     1.     Displacement of Butane

     EPA  reported  a   figure provided  by  the  Gas  Processors
Association  (GPA)  of  17  million  barrels  of butane displaced per
year.   A  more  detailed  analysis  based  on  Bonner and  Moore's
work  predicted  5.5 million  barrels  of  excess  butane  per  year
would result,  Finally, a Jack Faucett Associates  (JFA) report,
which  assessed  the  economic  effects  of  displacing  butane,
concluded  that  significant  RVP  control   would result  in  large
amounts of  excess butane and would  lower butane prices  to, but
not below, the petrochemical floor price.[10]

     2.    Economic Effects of Butane Displacement

     On the basis  of  the information  available at the time, EPA
decided  to  use  the   average  of  the  economic  impact  of  two
scenarios  in  the  overall assessment of  RV?  control  costs.   The
first scenario,  involving  "open"  butane  marketing, assumed that
refiners will buy only  the  butane which  they choose  and  that
any losses   to  the  NGL  industry  will  result  in  increased
revenues for  other sectors.   The second  scenario, characterized
by  "fixed"  butane marketing, assumed that refiners will buy all
excess  butane   at pre-RVP-control  prices,   regardless  of  its
value to  them,  thus resulting in  no transfers of  revenues.   EPA
used  a  simple average of these extremes while stating  that the
most  likely  situation would  be  close  to  the  "open"  scenario
with NGL  industry losses serving  to increase  revenues  to  users
of  butane  and  for  consumers  of  products   involving  butane   in
their manufacture.

     B.     Summary and Analysis of Comments

      1.     Displacement  of Butane

      a.     Amount .Displaced

      Several  commenters  presented estimates of  the  quantity  of
normal  butane that would be displaced from use  in gasoline as  a

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                             4-26
result of  the  proposed RVP  reductions.  Updating  their  earlier
estimates,   GPA estimated  that  117  thousand  barrels  per  day
(MBPD) would be displaced  in 1989 and 280 MBPD  in 1992 T  Based
on  GPA's  assumption of  153 days  of  effective  control,  these
figures translate  into annual  totals of  17.8 million  barrels
(MMB) of butane in 1989 and 42.8 MMB of butane in 1992.

     Enron  Liquid  Fuels  presented butane  displacements  of  120
MBPD  (1989)  and  300 MBPD  (1992);   Unocal  also  quoted 300 MBPD
for  1992.   Using  GPA's  153-day  assumption,  these figures  are
equivalent  to  18.4  and 45.9 MMB,  respectively.  ARCO's  estimate
of  24 MMB  per  psi  of RVP control translates  into  24  MMB (1989)
and   60   MMB   (1992).     Finally,   Amoco   stated  that   EPA
underestimated butane displacement by 56 percent in 1989 and 38
percent in  1992 because EPA's  estimate is  based on a  transition
period of less than 60 days, which Amoco claims  is necessary to
meet the RVP regulations.

     Bonner and Moore's most recent  analysis for EPA  projects a
nationwide  reduction  in  butane purchases  of  about 40   MMB  per
year for a  2.5 psi drop  in  RVP.  This is  based  on the  five and
one-half month period  of  control  which EPA has  determined is
necessary  to  result  in four  months  of  volatility  control at
retail  service  stations.    However,  this   is  not  necessarily
synonymous  with  excess  butane  supply  because,   as  discussed
below,  many  refiners  are  likely  to  begin  to  reduce  their
internal butane production wherever possible  and  develop other
internal refinery  uses (e.g.,  isobutane,  MTBE,  and  alkylate).
Thus, some  refiners which  currently act as  net  producers would
not be adding that butane to the "open market" pool.

     b.    Effects of Replacing Displaced Butane

     More  than one  hundred commenters  stated that  the butane
displaced from motor  fuel  would need to be made up by importing
additional  crude   oil.   GPA  pointed  out  that  two  barrels of
imported  crude  oil  would  be  required  for  each  barrel  of
displaced  butane;  using  their  numbers,  this would be 35.6 MMB
(1989)  and  85.6  MMB  (1992)  of  imported crude  oil  per  year.
Commenters  also  raised the issue  of  the  effect  on the  U.S.
trade- deficit  of  such  imports.   This issue of the effect of RVP
regulations  on oil  imports  will be  addressed  later   in  this
chapter.

     EPA  does  not believe  that all  of  the volume of butane
displaced   by  RVP   reductions  would   likely  be   replaced  by
refining  additional  imported  crude  oil.    We mentioned  above
EPA's   expectation  (discussed   in   more  detail   below)   that
refiners   would   expand   their   capacity   for  converting • and
upgrading normal butane  into other  gasoline  components  such as
MTBE,  alkylate,  and  isobutane.   Such expansion would have the
related  effects  of  reducing  the  potential  surplus  of  normal
butane  (as  discussed  in   the  previous  section)  while   also

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                             4-27
producing gasoline components within  the  refinery with which to
make up  all  or part  of  the  lost  butane volume.   All of  this
replacement  volume  would  then  directly  reduce  the- need  for
additional refining of imported crude oil.

     Offsetting any  additional  importation of  crude  oil  would
be  a  reduction in the  amount of  imported  butane.   As reported
by JFA, normal butane imports between 1982  and  1984  ranged from
17.4 MMB  to  21.5  MMB per year.   Not all of this imported butane
would necessarily be  displaced,  due  to  contractual arrangements
and  some cases  in  which  the  raw material  originated  in  the
U.S.   However,  much  butane which  is  currently  imported  would
clearly  lose its  market,  thus  easing  any negative  effects of
volatility   controls  on   the  balance   of  trade   and  energy
security.  From an overall energy standpoint,  in fact, refining
more imported  crude  oil  may be preferable  to  blending imported
butane  into  gasoline since so much butane  is  currently lost by
evaporation to the atmosphere and  thus  is not  available for use
as fuel for the vehicle.

     2.    Economic Effects of Butane Displacement

     Most of  the  comments on the  economic effects of displacing
the use of butane in  gasoline fall into two general categories,
as  follows:    a)  other  uses for  butane will  drive  the  price
down,  with   a  number of   resulting  negative  effects  including
broader  effects unrelated to the price depression; and b) other
uses  for butane  are  themselves  problematic,   apart  from  the
price depression.

     a.    Depression of Butane Prices

     Commenters  from the NGL  industry generally  assumed that
there  would  be a  severe and permanent  drop in  butane prices as
RVP  controls were implemented.   GPA  made  specific estimates of
the  degree  of price  depression,    In their  analysis  of the five
PADD  districts,  GPA  projected  normal  butane prices  would fall
by  1 to  10 cents per  gallon  (cpg)  in  1989 and by  2 to 14 cpg in
the  most  likely  1992  scenario.   The  impact  of   summer  RVP
control  was  found  to vary  among the  PADDs  based  on butane's
predicted  uses and  current  prices for petrochemical  feedstocks
and  fuels with which the  surplus  butane is assumed  to compete.
Several  other commenters  reinforced  the  conclusion that prices
would  reach  those  of  petrochemical  feedstocks   or   industrial
fuels, but they did  not offer any  quantitative  support.

     GPA and  other  commenters   attributed  a  range  of negative
effects  to  the projected drop in  butane prices.   Most of these
anticipated  effects  would  occur,  it  was  claimed,  because of
presumed shifts in butane  usage  or from reduced revenues to and
closings   of  gas   processing   facilities.    First,  if  large
quantities    of    normal    butane   become   attractive    as    a
petrochemical   feedstock,  several  commenters  concluded   that

-------
                              4-28
butane  would  compete  with  other  NGLs  (primarily  ethane  and
propane)  and depress  their value.   Another  displacement  GPA
mentions  is  the  effect on  terminals  which import butane  since
surplus  domestic  butane would  have  a  serious  effect  on  this
business.

     GPA  also  outlined  their  position  on the  effects of  the
loss of  revenue  to the NGL industry.  These  effects  would  be
compounded by the  fact  that nearly 40 percent of gas processing
plants   (representing  12   percent  of   1986  production)   are
operated  by  smaller,   independent  companies.   GPA predicted  an
overall  loss  in  revenues  of as  much as  50  percent  due to  the
drop  in  butane  prices.    Phillips added  that  there   would  be
reduced  profits   for   reinvestments   and/or  increased  consumer
costs  as profitability is  maintained.   Finally, more  than  one
hundred   commenters   stated  that  lower   revenues   for   gas
processors  means  reduced  income  for  thousands  of  upstream
interest holders; ARCO and Texaco  added that this  effect  on  gas
producers  may   result  in   less  incentive   for  domestic  gas
exploration and development.

     GPA  and other  commenters  said  that  given  the  presumed
butane  price depression  and the  vulnerability  of  independent
gas  processors,  many  gas   processors  would  shut down.   These
closings  would  then have  direct  .and indirect  effects.   Small
natural  gas  producers dependent  on these  processors  would,
according  to GPA, need  to .choose between  laying  new pipe  to
other facilities or shutting in  the gas.  Another  effect  of  gas
processing  plant closings  would be  on  the supply  and service
industry   supporting   the   gas   processors.    Finally,   lost
production  of  other NGLs  resulting from plant  closings  would,
GPA believes, be replaced by imports of ethane, propane, etc.

     GPA  and other commenters also stated that there would be a
rippling  of  effects   through  society  if many   gas processors
close.   Commenters  listed  loss  of jobs,  loss of  local,  state,
and  federal  revenues,   reduced   consumer  spending,  and  possible
increase  in bank  failures  could  eventually  result   from  the
presumed  drop  in  butane  prices  and  the closing  of processing
plants.

     EPA's   assessment  of   the    likelihood   of   severe   price
depression   differs   from   that  expressed   in  most   of  the
comments.  The primary difference  lies  in EPA's  assumption of a
dynamic  response  by the  refining  industry to the reduced demand
for   butane   as   a  gasoline    blendstock.     Specifically,   as
mentioned above,  EPA expects   that  the  current  growth  in
installation  of   MTBE  production  capacity  would  continue  and
increase,  absorbing  large   amounts  of otherwise  surplus butane.
For  example,  even at  today's  butane  prices U.S.  MT3E  capacity
has  grown from  11,6  to 35.6  million barrels per  year between
1984   and  1987.[11]    In  addition,  SPA   expects   alkylation
capacity  as  excess   butanes   become   available  due   to  RVP

-------
                             4-29
controls;  ETBE production  may also  increase.   Also,  conversion
of some butane into isobutane for use in gasoline  would further
utilize  surplus   normal  butane.   By' converting  or  upgrading
butane in these  ways for  use as gasoline  components,  refiners
would  likely   prevent  the  value   of   butane   from   falling
significantly below its current  value.

     An  examination  of  the  monthly  spot  market  prices  for
butanes in  1989   (after  the  Phase  I  RVP controls  took affect)
also  supports  EPA's  position on  butane price effects.   Even
though  refiners   reduced  RVP  levels  by  significant  amounts
during  the  summer  of  1989,  and,   therefore,  summer  butane
supplies  should   have increased  significantly,  butane  prices
showed no identifiable changes in prevailing trends  as  a result
of Phase I RVP controls.[12]

     EPA  believes  that  the trend to  use  butane  for  MTBE  and
ETBE production would likely  increase very  significantly if  RVP
controls  were to  make  surplus  butane  available  and  also  if
oxygenated fuels  programs  grow  in  the  future.  It  is  entirely
possible,  particularly during  the winter  months  when current
butane  demand should not  be affected,  that  the presence  of
expanded  MTBE,  ETBE,  and  alkylation capacity  may  require some
refiners  to   seek  butane  on the  open  market when  internally
produced  supplies  are  insufficient.    EPA believes   that  the
commenters have  overlooked these emerging  high-value  uses  for
butane  in their  scenarios  of  the  likely  consequences  of  RVP
control.

     The  consequences of.  the scenario  EPA  projects  are  much
less  severe  than  those  projected  by  most   commenters.   EPA
agrees  that  without  extensive  expansion   of   capacity  for
production of MTBE,  etc.,  there  likely will  be  some  loss  of
summer  butane   sales  for  many  gas   processing  facilities.
However,  we  do  not  expect  the  value  of   butane  will  drop
significantly  even under  such  a  scenario.   As  part  of  their
modeling, Bonner and  Moore concluded that butane  prices would
drop  by  no  more  than  11  percent  as   RVP  is lowered.   They
reached  this  conclusion  even without  allowing their  model  to
increase  the  production   of  MTBE  (which  uses  butane  as   a
feedstock) which has  been increasing over the  last few  years.

     EPA  believes  the impact  on butane  prices  would  be even
less  if  more areas  adopt  wintertime oxygenated  fuels  programs
on  their  own or  as required  by  the  CAA  amendments.   MTBE
already has become the primary choice for  refiners in the areas
currently  involved in oxygenated  fuels  programs.   Based on the
method presented  in an earlier EPA  analysis,  EPA estimates that
for  an oxygenated fuels program like the  one contained in the
Senate  version  of  the CAA amendments   (as  of February  1990),

-------
                              4-30
which would  require  a  3.1 percent  average oxygen  content  for
six months in all current  CO  nonattainraent  areas,  approximately
30  MMB  per  year of  butane  would  be  necessary  to  supply  60
percent  of  the  market  (the  remainder  supplied  by  ethanol
blends).[13]   This  amounts to  a  substantial  volume  of  butane
and  a  potentially  significant  market   for  excess  butanes.
Therefore,  EPA  does  not  expect  a  severe  impact  on the  NGL
industry.    The  following  paragraphs  expand  further  on  this
issue.

     Fully  and  partially  integrated  oil   and  gas  companies
should  have   the  ability   to   shift  production   priorities
sufficiently  to  suffer little  or  no  overall  impact  from  a
partial loss  of summertime butane demand.   However,  there  may
be  a  subset  of  gas  processors  which  under  their  current
business   arrangement  could  be   economically   marginal   and
vulnerable to  a summertime interruption  in the cash  flow  from
butane  sales.   Even here,  EPA  expects  that  the  -desire of  gas
well  owners  and interest  holders  to produce gas  would  lead to
shifts in those  arrangements.  Specifically,  most  gas producers
are  likely  to be willing  to  pay  for the service  of processing
NGLs  out  of  their gas stream if need  be,  rather  than  shut  the
gas  in.   Therefore, EPA believes  that  RVP control  should  have
little, if any, effect on imports of  ethane and propane.

      In .  conclusion,    EPA  does  not   anticipate   widespread
shutdowns  of  independent  gas  processors,  the -shutting in  of
gas,   nor   other   related   indirect    impacts    suggested   by
commenters.   We do  anticipate a  moderate  loss of revenues  for
many  independent  gas  processors   and,  in   some  cases,   gas
production interests  as well.  The  secondary  effects  of  such a
loss  of   revenue   will undoubtedly  include  some  of   those
suggested  by commenters;  again,  however,   we believe that  GPA
and others have seriously  overestimated the  magnitude  of  these
effects.

     b.    Alternative Uses for Butane

     GPA  and   most  other  commenters   on  this  issue  raised
problems  that  would  arise  from  the displacement  of  butane  in
addition  to  the depression  of  prices.   As  summarized  above,
most  commenters  said  that  'the only options for butane  would be
for  use  as  a  petrochemical   feedstock  (primarily  in ethylene
production)  or  as  industrial  fuel.    These  uses  were  called
economically  "inefficient" and problematic for several reasons.

      The  first problem  would be  that  in  many areas there  is
insufficient  installed  ethylene capacity to  absorb all  of  the
presumed   surplus  butane,   even   if   other   feedstocks   are
displaced.   In  addition,   ethylene plants  in many  locations  do
not   have  the   capacity  to  "crack"  and   thus  utilize  normal
butane.   Sufficient seasonal  storage  is  only available  in  the
Gulf  Coast  area  (PADD  III),  but  such  storage  has the drawback
of  interrupting  the   cash   flow,  a  particular  hardship  for

-------
                             4-31
smaller independent  gas  processors.   Commenters asserted  that
the use  of surplus  butane as  fuel has  its own  problems;  in
particular,   difficulties   in   seasonal   fuel   shifting   by
industrial customers  and  the  problem  of  obtaining  air  quality
permits  for   new  combustion   units  in  refineries.    Finally,
commenters stated  that  simple  flaring  of  excess  butane  is
wasteful and  also constitutes  a new source of emissions.

     Regarding the  conversion of  butane  into  lower-volatility
gasoline  components  by alkylation  or  conversion  to  MTBE,  GPA
and other  commenters  appear not  to expect expansion of capacity
for these processes.  Unocal  gave as  a  reason that  economic
justification for  such new facilities  would  be  difficult given
only four  to  five months  per  year of  usage.   GPA pointed  out
that if the price  must drop in order for  such  facilities to be
justified, gas processors  will still be hurt.

     As the   above  EPA response  to   the   issue  of  depressing
butane prices makes clear, EPA  believes  that internal refinery
upgrading of  butane to other gasoline  components would become a
chief  usage   for  butane   displaced  from  direct blending.   We
disagree,   therefore,  with comments  projecting  that  the  NGL
industry would experience  severe problems  in finding other uses
for butane.  As mentioned  previously,  EPA  believes  that current
trends  within the  refining  industry  show that excess  butanes
are finding a. market as feedstock  for  MTBE and  ethylene without
causing   any  appreciable  consequences   for   other   related
industries or markets.   Thus,   the  issues  of   availability of
petrochemical  and  fuel  markets appear much less relevant in
this context.

     EPA does not agree with Unocal that  capacity  for upgrading
butanes  would  be  operated  in  most  cases  only  during  the
summer.   We   made  the  point  earlier  that  this production is
likely to  be  year-round and in some cases may represent a "new"
market  for butane.   GPA  is  correct  that  to   whatever  extent
prices  needed  to  drop  to  justify   expanding  such  upgrading
capacity,   the   NGL  industry   would   experience   a   loss   of
revenues.   However,  as discussed  earlier,  much MTBE production
capacity   is  already  being   installed   with   no   RVP-related
reduction  in butane prices.   'Again,   we  expect  little impact
from RVP controls on butane prices.

     3 .    Displacement of Pentane

     Comments were  received  from  several  commenters regarding
the effects  of RVP control on the pentane market.   Both API and
Texaco  pointed  out that  to   reduce  RVP  below 9.0  psi,   both
butane  and pentane will have  to be removed.  EPA agrees that at
low enough RVPs  pentane  removal will become  necessary for  some
refiners;  pentane  removal was  included   as part  of  the  RVP
control  mechanism  in  the Bonner  and Moore   refinerv  model.

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                             4-32
Relatively  speaking,  the  effect  of  RVP controls  on  pentane
displacement  will  be  much  less  than  the   effect   on  butane
displacement.

     According to  API,  this  increased supply  of pentane  will
result  in negative  impacts  on  the  refinery  industry.   They
claim  that  there  is  no   process   for   converting  saturated
pentanes  into a  low RVP gasoline component.   Chevron  said  that
butane  has  more potential than  pentanes  for  isomerization and
alkylation,  implying that  pentane does have  some potential  to
be used as feedstock  for  other  refinery processes.   API  then
points out that  no market  exists for pentanes outside  the  Gulf
Coast  and that  pentanes  cannot  be  burned  as part  of  refinery
gas  since  they  would condense  out  and  cause safety  problems.
In addition,  API  says  that  pentanes  would  require  a  separate
fuel  system and  furnaces would need  to be modified  to  burn the
pentane.  " Chevron  claims   that   the   overall  effect  of  RVP
controls  will  probably result  in the  value  of  pentane  being
lowered to fuel value on the  West Coast.

     As with  our response  to the effect of RVP  controls on the
butane market, EPA believes  that there may be a  small  decrease
in the  price  of  pentane.   However,  we also believe the industry
response  to  the  increased pentane supply will be more dynamic
and  different  than the response suggested by  commenters.   The
Bonner and Moore refinery model  included  two  uses for displaced
pentanes.   First,  it  was  used as  feedstock  for  steam crackers
to. produce olefins.  Second,  it  was  used as boiler  fuel within
the  refinery.   EPA believes  that refiners will be able to find
economic  uses  for  any displaced  pentanes and no  major pentane
market effects should result  from RVP controls..

Ill.  Effect of Volatility Regulations on Imports

     One  issue .which  has received  extensive  comments  is the
effect  volatility  controls would have  on imports of  crude oil
and  gasoline.   Commenters  stated  that  since RVP  regulations
will  result  in  the  displacement   of   domestically  produced
discretionary butane from  the  gasoline pool,  purchases of  crude
oil will necessarily increase in order to meet a fixed gasoline
energy  demand,   as   will   foreign   gasoline  purchases   since
refineries  currently  are  running  at  near  capacity  levels.
Commenters  estimated that  imports  would rise  by  a  total  of
300,000  to 410,000  barrels  per  day  of crude  oil   in   1992.
Estimates  of  the effect on  the  U.S.  trade  deficit  ranged from
$1.5 to $2.0 billion per year.

     EPA  agrees  that  oil  and gasoline  imports may  rise in the
short  term  before investments can be  made to install equipment
necessary  to  convert  butane  to  MTBE,  ET3E,  alkylate,  etc.
However,  as  additional processing  equipment  is installed and as
a   price   decrease - establishes  butane  as    a   competitive
petrochemical  feedstock,  purchases  of additional crude should

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                             4-33
decrease.   In order  to assess this issue, the maximum  quantity
of normal butane (n-butane)  rejected  from the gasoline pool  in
order to achieve the given  RVP  reduction was  estimated  for each
of Bonner and Moore's  control scenarios  using a blending  value
of 65 psi for n-butane.   As described in the RIA  for the  first
phase  of  volatility  controls,   the   energy   content   of   this
rejected  butane,   less   the  energy   content    of   recovered
evaporative  emissions,  was  then   compared  against  incremental
crude purchases made in  each control  scenario.   Results of that
analysis showed that,  on average,  the energy  of  the  incremental
crude  purchased  exceeded  that   lost  by  the  displacement  of
butane by a factor  of approximately 1.8.

     Using this information,  an analysis  of  the  effect of both
the  first  phase  and  second phase of  volatility standards  on
imports was  made.   Based  on the  amount of  fuel undergoing  a
volatility reduction,  a  nationwide  (excluding NESCAUM)  estimate
was  made  of  the  maximum  quantity  of  discretionary  n-butane
which  would  have  to  be   rejected.   A  total   of 9.3  million
barrels of butane  per  year  was  calculated (assuming a  five and
one  half  month   refining   period)   for  the  first  phase  of
volatility controls.   However, as presented in Chapter  3,  about
272,000  tons  of  evaporative  emissions  should  be  recovered
during  the  control period,   with  the energy  equivalent of  2.7
million barrels  of butane.    Thus  the energy equivalent of 6.6
million barrels of butane  increased by a factor of  1.8 will  be
required in  incremental  crude oil  purchases  for  the first  phase
of RVP controls.  This totals approximately  7.7  million barrels
per  year  of  crude  oil  (47,000 barrels per day)  or $154 million
per year at $20 per barrel.

     For the  second  phase  of volatility  controls (incremental
to  the  first phase), -a  nationwide  (excluding NESCAUM)  total  of
25.4 million barrels of  rejected butane  per year was calculated
for  a five  and one half  month  refining period.   However,  as
presented  in 'Chapter   3,   about  402,000  tons  of  evaporative
emissions  should  be recovered  during the control  period  under
the  second  phase of RVP standards,  with the  energy equivalent
of  4.0  million barrels  of  butane.   Thus the  energy equivalent
of  21.4 million barrels  of  butane increased by  a  factor of 1.8
will  be  required  in  incremental  crude  oil  purchases for the
second  phase  of RVP controls.   This  totals  approximately 25.0
million barrels per  year of crude oil (152,000 barrels per day)
or  $500 million per year at  $20 per barrel.

     Therefore,  the  maximum  effect  on  oil   imports  of  the
combined first  and second phases  of volatility control would be
expected  to  be   slightly   under  200,000   barrels   per   day.
Compared  to  annual  crude  oil  imports  which have been between
6,000,000  and  8,000,000  barrels  per  day since  1987   and have
been  growing  at   an  annual  rate  of  about  500,000 to 700,000
barrels per  day,  the  impact  of  RVP controls on imports   should
not  be major. [14]   It should be  noted  that  this  is  a maximum

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                             4-34
expected impact and  is  based  on the assumption that  all  of  the
light-end  hydrocarbons   (butanes,   pentanes,   etc.)   which  are
removed  to  lower  the  vapor  pressure  to  the  promulgated  RVP
levels (minus  the recovered evaporative emissions)  are  replaced
by  imported  oil.   As  previously  stated  in  this chapter,  EPA
believes  that   refiners   will  use  some   of   the   displaced
hydrocarbons   as   feedstock  for   low-volatility,   high-octane
gasoline components  (such  as  MTBE)  and  therefore,  lower  the
expected impact on oil  imports.   In addition,  it  appears likely
that butane imports  would decrease  as  RVP  controls  lessen  the
demand for  butane as a gasoline additive.

     One additional   comment  on  imports  concerned  the  effect
that EPA's  regulatory approach  to  ethanol blends  could  have  on
the  quantity  of  fuel  imported.  The  commenter cited  the fact
that every gallon of  ethanol  produced domestically can  mean  up
to  two  fewer  gallons  of imported  oil.   If  the  approach taken
with respect to  ethanol blends  allows a 1.0  psi  exemption from
the  standards  promulgated  for  gasoline  fuels,  EPA would  not
expect  any  significant  impact  on  the  current  gasohol  market,
since  it  essentially  would   continue  to   allow  the  splash
blending of ethanol into gasoline at a maximum  of  10  percent  by
volume.   If ethanol  blends were  required to meet  the  same  RVP
levels  as  gasoline  fuels,  and as  a  result   ethanol  blending
completely came  to  a standstill  (which  EPA  would  not  expect),
then based on the current gasohol market  penetration  of around
seven  percent, [15]  approximately  90,000  barrels  per  day  of
extra  crude  oil  would  need   to  be imported  to  replace  the
ethanol  with gasoline,  assuming the  2:1  oil to  gasoline ratio
cited by the commenter above.  On a relative basis,   this  is
still much  less  than the  increase  in  crude oil  imports which
has occurred over the last few years.

IV.  Effect  of   Volatility   Regulations  on  Increased  Energy
     Density and Evaporative Emissions Recovery

     The  Draft  RIA  examined  both  the  fuel   economy  impact
associated with  volatility control resulting  from  changes  in
the  energy  density of the fuel, and  the fuel  savings resulting
from a decrease in evaporative  emissions.  Both of  these topics
were  reanalyzed  in  detail in  the  January   1989  FRIA  for  the
first phase of  the  volatility control program,  and as  a result
nothing more will be said here with two minor exceptions.

     First, as explained  in the January 1989 FRIA,  the estimate
of  the  relationship   between   fuel  volatility   and  heat   of
combustion  had  been   revised  slightly  from  the  DRIA.   The
updated   analysis   coupled   with   the   revised   volatility
classification  map as  explained in  Chapter  2,  results  in  the
following  percent increases  in fuel  energy density  with  the
second  phase  of  RVP  control.   The  increase  in  fuel  energy
density  is 0.65  percent for  Class  'A'  areas,  0.51  percent  for

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                             4-35
Class  'B'  areas,  and 0.38 percent  for  Class  'C'  areas.   These
results are used to calculate the magnitude of the  credit  which
is taken  for  improved fuel  economy  when determining the  cost
effectiveness  of RVP control.

     The  second area  requiring  a  short  discussion  is  API's
comment   concerning  the   possible  effect   of  poorer   cold
temperature driveability  with  lower volatility fuels  on  the
value of R  (percent  change  in fuel  economy for a percent change
in energy density  of the fuel).  The  response  to  this  comment
was that  especially for the  level  of  volatility  control  being
considered  in  the  first  phase of  RVP   controls,  there was  no
reason to  believe  that there  would  be   a  significant  impact  on
cold temperature  driveability,  and  if  there  was an  impact,  it
would not  significantly effect the  value  of R.   Although this
rulemaking calls for greater  reductions  in  fuel  volatility than
were contained  in  the  first phase  of  the  program, as  will  be
explained  in  Section V  of  this  chapter,   no  significant  cold
temperature  driveability  impacts are  expected  to occur.   In
addition, as explained  in  the January  1989 FRIA,  data  provided
by  API   on  fuels  representative  of  the   second   phase  of
volatility • controls  did  not  show  any  apparent  correlation
between  R  and  cold  temperature  driveability.   As  a  result,  no
impact  of  cold  temperature  driveability  is   incorporated  into
the model used to estimate R.

     In  conclusion,  the results  arrived at  in the January 1989
FRIA for the first phase of RVP controls appear  to  apply to the
second phase of  controls  as  well.  The  best value  to  use  for R
at this  point  in time appears to be 0.85.   Based on  discussion
in the  FRIA for the first phase of  RVP controls, the best value
to use  for  the  evaporative emission recovery  factor  appears  to
be  l.O.   These  values  are used  in  Chapter  5  to  determine
credits  to  apply  toward  the  overall  cost  effectiveness  of
volatility control.

V.   Effect of Volatility Regulations on Driveability and Safety

     A.    Synopsis  of Draft Regulatory  Impact Analysis

     1.    Volatility Increases and Driveability Problems

     In  the period  from 1974  to 1985, volatility of unleaded
regular  gasoline increased by 10  to  20  percent depending on the
area  of the  country.   In  1985,  the average  nationwide summer
volatility  actually surpassed   the  average  ASTM  recommended
limits.   The  result has been that  even though  vehicles during
the  same period have been designed to  operate better  on higher
volatility  fuels,   some   vehicles   have  begun  to  experience
varying  levels  of vapor  lock,  fuel foaming  and fuel spurting,
causing  unacceptable driveability (and  safety concerns).   This
statement  was  supported  by comments   on   the  1985  Volatility
Study,   information  provided by  automobile  manufacturers,  and

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                             4-36
also by  a  number of  studies  which looked into the  problems  of
hot  temperature  driveability.    These  studies  showed   that
volatility  levels  were  indeed  at  a  point  where  driveability
problems could be expected on some vehicles.   At the same  time,
other studies  demonstrated  that for the  period and  the  levels
of RVP  control proposed,  cold  temperature driveability  should
not  be   a   significant  concern.   This  last   statement  was
supported   by   in-use    information   from   California   where
volatility has already been controlled  for some time.

     2.     Driveability Cost Estimation

     The cost  associated  with  current  driveability problems (or
the  cost  savings  resulting  from  improved  driveability  with
volatility control)  was estimated  by assuming that people whose
vehicles are experiencing driveability problems were willing to
pay  an  extra  1$  to  30  per gallon for  fuel  which  would  avoid
those problems.   Temperature  and  population  data  for  the  10
largest ozone  nonattainment  cities were  used  to approximate the
nation as a  whole.   This information  was then used  along with
vehicle   age   distributions,    vehicle   usage   patterns   and
information  on  the  fraction  of  vehicles   with  unacceptable
driveability   (based  on  Coordinated   Research   Council   (CRC)
testing)  to determine  the  fraction   of  fuel  sold  nationwide
which is  burned under conditions  of unacceptable driveabilicy.
Multiplying  this  amount  of  fuel  by  the  1?  to  3<2   per  gallon
range  yielded  a   nationwide   cost   of   poor  hot-temperature
driveability of up to $78 million per  year,

     Although EPA did not rely  on  the  following  information for
the  final cost estimation,  GM and Chrysler provided  information
on  in-use  vehicles   which   also demonstrated  that  the  costs
associated  with  hot  temperature  driveability  problems  were
real.  On the  basis  of  their submittals, annual  warranty costs
due  to  hot temperature driveability problems  amount to .roughly
$8.1 million annually, and costs associated with  vehicle design
modifications  to avoid  hot  temperature driveability  problems
have amounted to roughly  $124.1  million  annually.   However, EPA
decided  that  not all of  these  design costs  could be recovered
if fuel  volatility were  reduced since  they are costs that have
already  been   incurred  to   fix  the  problems.    Still,  the
estimated  cost  savings  which  could  result  from   removal  of
certain  corrective  parts  from  the vehicle  if volatility were
reduced  was  estimated to be  $44  million annually.   Since the
accuracy  of  the  methods  used  to  extrapolate the   information
provided by  Chrysler  and  GM into nationwide  costs  was  unknown,
these costs  were not  incorporated  into  our  analysis.  However,
they do  serve  to support  the costs calculated above.

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                             4-37


     B.     Summary and Analysis  of  Comments

     1.     Hot Temperature  Driveability

     The January  1989  FRIA for  the  first  phase of  volatility
controls reanalyzed  the topic  of  hot temperature  driveability
based on comments received from  a  number  of organizations.   As
a result of that  analysis, it  was  concluded that although it is
still  apparent  that  hot  temperature   driveability  problems
exist, and represent  a  significant cost  to  society,  an accurate
means  of  quantifying  that   cost   could  not   be   found.    In
addition,  since  the  driveability  cost benefit  proved to  have
such  a  small   effect  on the  cost  effectiveness of  volatility
control  in  the  DRIA,  failure to  take a  cost  benefit  for
improved   hot:   temperature   driveability  should  have   little
overall  effect  on   the   regulation.    These   conclusions  are
considered to  be  applicable  to  the  second  phase of  volatility
controls as well.

     2.     Cold Temperature Driveability

     A  great  deal  of  comments  were  received on  the topic  of
potential  cold   temperature   driveability   problems   if  fuel
volatility  is  reduced significantly  below the ASTM  ratings.
Motor vehicle  manufacturers  as  well  as  a few other  commenters
did  not  believe that  cold temperature driveability would  be a
problem at EPA's proposed RVP levels  (although they  provided no
support  for  these  statements).   However,  many  of  the  oil
companies  stated that  if  in-use gasoline volatility  is  brought
down  to   the  levels  proposed,  there  will   be   significant'
driveability problems  (poor acceleration, hesitation,  stalling,
difficult  starting)   in   early spring   and  late  fall,  with
particular emphasis by some placed on ASTM  Class A  and  B areas
or  high-altitude  areas.   Amoco and  API provided  a  number  of
studies  on  the  topic  of  cold  temperature  driveability  at
reduced fuel volatilities to  support their claims.

     The  study provided by Amoco consisted of the  testing of 9
1980 to 1986 vehicles on fuels of 6.4, 8.2,  and  10.7  psi  RVP at
25°F  and  40°F   over  a  modified  CRC  test  procedure.   The
combination  of  the  fuel  volatility  of  6.4  psi,  the  test
temperature of 25°F,  and the test procedure was selected so as
to  test under worst  case  conditions.   This combination  is not
likely  ever   to  occur  under  the  EPA  program  being  finalized
today which is described in  detail in Chapter  2,  As  is shown
in  Tables  4-4  and 4-5, temperatures of 25°F are not common even
for  those  areas likely to receive 8.2 psi RV? fuel.

     The results of the CRC testing  showed  that  starting times,
idle stalls,   driving  stalls,   severe  hesitations   and   overall
driveability  demerits  all  increased  at lower  fuel  RVPs.   Amoco
arbitrarily  set the  level of unacceptable driveability  at  160
demerits,  a  level  that was not  met by all  of  the vehicles even

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                             4-38
at the  highest RVP  tested.   This  raised questions  as to  the
condition of  the vehicles  prior to  testing.   If  all  vehicles
which either stalled or exhibited a tendency to backfire  on the
highest RVP  fuel are  eliminated from  the data  set,   only  one
carbureted vehicle is  left of the  total of nine, and even  this
vehicle exhibited somewhat  poor driveability  regardless  of the
level  of  fuel  RVP.   As  a  result,  although  this  test  data
appears to  justify  that  cold-temperature driveability worsens
with  lower  volatility  fuels,  it cannot  be used  to show  that
properly  maintained   vehicles   will   experience   unacceptable
driveability  on  those  fuels even  under  the  most  severe  of
conditions.

     This conclusion is  supported,  at  least  for newer  vehicles,
by API comments which cited test data collected in  one  of  their
programs.   They tested  12  1984-87 vehicles on 6.5 and  9 psi RV?
fuels at  25°F and 40°F.   (Once again,  the testing of  6.5  psi
RVP  fuel  at 25°F represents the worst case  as  demonstrated by
the  data  in  Tables  4-4  and 4-5.)   Although  they noted  some
worsening of  driveability and  increasing  of  starting  times on
the lower RVP fuel,  they noted no pronounced effects.

     API also provided a Chevron Research  study which  tested 12
1981-3 vehicles  on  6.1  and  8.4 psi RVP fuels'at  55°F  and 75°F
over the FTP,  and also "similar" vehicles  on 8.1  and  11.4 psi
RVP  fuels   at  43°F.   The  results  of  the testing  demonstrated
statistically  significant  increases  in  vehicle  driveability
demerits  at  reduced fuel  volatility.   However, once again,  no
mention was  made of  the  condition of  the  vehicles   prior  to
testing, nor  was there any information on the types of  vehicles
tested  (except  for  age).   Also,   although  the  increase  in
vehicle  driveability  demerits   was said  to  be  statistically
significant, the magnitude of the  increase was small,indicating
that  even  at  fuel  volatility  levels  below  EPA's   proposed
volatility  limits,  the  driveability  of  the  vehicles  was  not
unacceptable.

     API also had  testing performed on  six  1983-86 closed loop
feedback vehicles,  three of  which were  carbureted,  two  throttle
body  injected,  and  one  port  fuel  injected.   The  testing was
performed over the FTP on 6.5,  8.0,  9.0, and  10.5  psi  RVP fuels
at 42°F,  55°F, and 80°F.   API  found the  vehicles  tested to be
relatively tolerant of RVP reductions  even at low temperatures,
without  showing  the  driveability  degradation  as  seen  with
earlier model year vehicles.   API also  submitted  a  report which
performed a  statistical  analysis of this test data.  Although  a
function was  found  which  correlated  the  driveability  demerits
raised  to  the  second power  (and  divided  by  10,000) with   a
function  of   fuel  RVP  and  test  temperature,   there  is  no
theoretical    reason    why   such   a    function   should   be
representative.  Rather  it was  probably just  an  anomaly  of the
data  which  allowed  for  the  correlation.   Even if  the  function
was  representative  of  in-use  driveability,  the  changes  in

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                                           Table 4-4

                            Driveability Comparison of Gasoline TVP
                     In January and April Under EPA's Proposed Regulations
City Altitude
Correction
Factor
Albuquerque
Atlanta
Billings
Boston
Chicago
Cleveland
Dallas
Denver
Detroit
Kansas City
Las Vegas
Los Angeles
Miami
Minn/St. Paul
New Orleans
New York City
Philadelphia
Phoenix
St. Louis
San Antonio
San Francisco
Seattle
Washington D.C.



1.159
1.032
1.096
1.001
1.017
1.017
1.015
1.171
1.018
1.024
1.062
1.008
1.002
1.025
1.000
1.001
1.001
1.032
1.013
1.020
1.002
1.002
1.013



Jan 1988
MVMA Reg
Unleaded
Min RVP
12.6
11.9
13.6
10.0
14.1
14.7
11.7
12.4
13.4
13.1
12.3
12.4
9.9
14.0
12.6
11.9
13.3
12.2
13.1
12.2
12.6
12.7
11.9



Jan Jan TVP April 1988 April April TVP
3%' min Controlled 3% min
Temp RVP (-0.5) Temp
7
14
-20
4
-9
-2
13
-12
-4
-2
20
38
40
-22
26
10
7
24
-2
20
32
13
11



2.5
2.5
1.4
1.5
1.7
2.2
2.3
1.6
1.8
1.9
3.1
4.3
3.4
1.3
3.4
2.3
2.4
3.3
1.9
3.0
3.8
2.6
2.3
Min =1.3
Mean = 2.46 '
Sx = 0.8
7,3 (6,5)
8.5
8.5 (7.3)
8.5
8.5
8.5
8.5
8.5 (7.3)
8.5
8.5
7.3 (6.5)
7.3
8.5
8.5
8.5
8.5
8.5
7.3 (6.5)
8.5
7.3 (6.5)
8.5
8.5
8.5



30
35
19
30
26
24
40
20
23
29
38
46
56
20
44
32
29
42
29
41
40
34
34
Min
Mean
Sx
2.3*
2.6
2.0
2.3
2.1
2.0*
2.9
2.1
2.0
2.3
2.5*
2.8*
4.0
1.9
3.1*
2.4
2.3*
2.6*
2.3
2.6*
2.9*
2.5*
2.5
= 1.9
= 2.48
= 0.46
(2.0)

(1.6)




(1.8)


(2.2)






(2.3)

(2.2)






                                                                                                          -P-
                                                                                                          I
*    Those cities with a TVP lower in April than  in  January,  but still well above  the minimum
     in January.

NOTE:      Numbers in parentheses are based on the RVP control program proposed in the NPRM

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                                           Table 4-5
                               Safety Comparison of Gasoline TVP

                     In January and April Under EPA's Proposed Regulations
City Altitude
Correction
Factor
Albuquerque
Atlanta
Billings
Boston
Chicago
Cleveland
1.015
Denve r
Detroit
Kansas City
Las Vegas
Los Angeles
Miami
Minn/St. Paul
New Orleans
New York City
Philadelphia
Phoenix
St. Louis
San Antonio
San Francisco
Seattle
Washington D.C.


1.159
1.032
1.096
1.001
1.017
1.017
11.7
1.171
1.018
1.024
1.062
1.008
1.002
1.025
1.000
1.001
1.001
1.032
1.013
1.020
1.002
1.002
1.013


Jan 1988
MVMA Reg
Unleaded
Min RVP
12.6
11.9
13.6
10.0
14.1
14.7
8
12.4
13.4
13.1
12.3
12.4
9.9
14.0
12.6
11.9
13.3
12.2
13.1
12.2
12.6
12.7
11.9


Jan
0% min
Temp
-7
-2
-30
-12
-18
-18
2.1
-26
-13
-9
10
33
34
-28
14
0
-2
18
-8
8
29
1
5
Min
Mean
Jan TVP
1.8
1.7
1.0
1.0
1.4
1.5
8.5
1.1
1.5
1.6
2.5
3.9
3.0
1.1
2.6
1.8
1.9
2.9
1.7
2.2
3.6
2.0
2.0
= 1.0
= 2.00
April 1988 April
Controlled 0% min
RVP (-0.5) Temp
7.3 (6.5)
8.5
8.5 (7.3)
8.5
8.5
8.5
31
8.5 (7.3)
8.5
8.5
7.3 (6.5)
7.3
8.5
8.5
8.5
8.5
8.5
7.3 (6.5)
8.5
7.3 (6.5)
8.5
8.5
.8.5


25
30
12
18
19
12
2.4
7
14
23
32
43
50
4
40
24
' 25
39
23
33
38
31
25
Min
Mean
April TVP
1.8 (1
2.4
1.6 (1
1.8
1.8
.7)

-4)


1.5 Dallas

1.6 (1
1.6
2.0
2.2*(1
2.6*
3.5
1.3
2.9
2.0
2.1
2.5*(2
2.0
2.1*(1
2.8*
2.4
2.1
= 1.3
= 2.13

.3)


.9)






.2)

.8)





                                                                                                           I
                                                                                                          -p-
                                                                                                          o
50
              Sx = 0.78
Sx =  0.51
     Those cities with a TVP lov/er in April than  in January,

     in January.
                                                  but still  well  above the minimum
NOTE:
Numbers in parentheses are based on the RVP control program proposed in the NPRM

-------
                             4-41


vehicle driveability with  fuel volatility were  not  substantial
enough to be of concern from a  vehicle operational perspective.

     API also presented test data collected by Chevron  on seven
1973-6  carbureted  vehicles  in  an effort  to  show that  even if
new vehicles  can  handle the lower  volatility fuels, the older
open loop vehicles still on the road may not be  able  to handle
it.  This testing was  performed in  1983 on 6.5  and  8.5  psi RVP
fuels  at  55°F  and  75°F  over  the   FTP cycle  (not worst  case
testing).   The results  of  the testing showed 4 and  5 times  more
engine  stalls  at  75°F  and  55°F respectively on  the  the  6.5 psi
RVP  fuel   as  compared to  the  8.5  psi  RVP  fuel.   Overall,
driveability  demerits   also  increased  by  large  percentages,
These apparently large  increases, however,  are  misleading.   The
overall magnitude  of  the  driveability  demerits  and number of
stalls  was  small  even  with  the   low  volatility  fuel.    In
addition,  the  vehicles were tested  in  their  original  condition
with the  exception  of   the  replacement  of  failed  ignition and
emission  parts,  and  setting   of  the  ignition  timing  to the
manufacturer's  specifications.   If  those vehicles not  operating
well on the  high  RVP fuel  are eliminated from the data set, the
remaining data  shows only minor changes in vehicle driveability
resulting from  the lower RVP fuel.

     The  last:   and most recent report  submitted by API  on the
topic of  cold  temperature  driveability consisted of  testing on
51  1972  to  1988 -vehicles by  Mobil   Research.    Testing was
performed  in -early March  in Maine  at  ambient  temperatures of
21°F to 30°F on 8.6  and 13.4 psi RVP  fuels  as  well as the  fuel
in  the  vehicles when  acquired  (averaging approximately  13 psi
RVP).   (Under  the regulations  contained in today's rule it is
highly  unlikely that  8.6 psi  RVP fuel  will  be  distributed in
Maine during the  month of  March.)  For the entire 51-car fleet,
there were  on.  average  nearly twice  as  many start stalls,  three
times   as   many  driving   stalls,  and  2.5  times  more   heavy
hesitations  and stumbles  on the  8.6 psi  RVP  fuel  than  on the
13.4 psi  fuel.   The  majority of this deterioration was due  to  a
"19-severe-car  subfleet"  which were  defined  as  those  vehicles
which  had two  or more heavy  hesitations and/or  stalls  on the
low  RVP   fuel   compared   to  the  13.4   psi   fuel.   Somewhat
expectedly,  however,   only  one  of  the  19  vehicles   in   this
subclass  was fuel injected.   The 15 fuel-injected  vehicles in
the   study  had   only  minor   increases   in   starting  times,
hesitations, and start  stalls,  and  in  fact  as  a group exhibited
better  performance  in   all  categories tested  on  the 8.6 psi RVP
fuel than the carbureted vehicles did on the 13.4 psi RVP fuel.

     The  same thing  can be  said for  the 30 closed loop vehicles
as  compared to the 21   open  loop vehicles.  Many  of  the vehicles
in  this  Mobil   study,  as  well  as  those  in   earlier   studies
discussed  above,  were   apparently severely out  of  tune  as  they
did    not   operate    acceptably   (without   stalling,    heavy
hesitations,  or  excessively  prolonged starting)  even-  on the

-------
                             4-42
13.4 psi  RVP  fuel.   The report  stated  that the  vehicles  were
indeed  tested  in  the  as  received  condition.    Lowering  the
volatility of  the  fuel in  this  study appeared  to increase the
occurrence of unacceptable driveability problems on  a  number of
vehicles.    However,   for   properly   maintained  vehicles,   and
especially closed-loop and  fuel-injected  vehicles,  reduced fuel
volatility  did  not   appear  to  have  a  major   effect on  cold
temperature driveability.

     The  studies  on  cold  temperature  driveability  discussed
above  appear  to  support  the  conclusion  that  any  detriment
associated with volatility control  to the  levels  proposed by
EPA  in  Chapter  2  of  this  RIA will  seldom be  unacceptable if
even noticeable  to the average consumer.   The  driveability of
new  vehicles,  the majority   of  which   are  fuel-injected  and
closed-loop controlled,  appears  to be  affected  very  little by
volatility  control of  the magnitude proposed  by  EPA.   Some,
older, properly maintained, carbureted vehicles  appear to  have
a  slight  driveability detriment  at  cold temperatures  and  very
low fuel volatilities.  Fortunately,  the  detriment is  typically
not  large,  and  such combinations  of temperature and RV? are
expected to occur  only  rarely,  if ever,   under EPA's volatility
control  program   (see  the  analysis  below).    Some  extremely
sensitive vehicles,  and  especially  poorly maintained vehicles
may encounter  noticeably  poorer driveability on  lower RVP fuels
at  cold temperatures.   However,   the preferable  solution  for
this problem  is to tune-up the  vehicle,  not to operate  it out
of  tune  on   a high  RVP  fuel.    Since   the  vast  majority  of
vehicles on  the road will  be  closed-loop and/or fuel-injected,
by the time the second stage of EPA's volatility regulations is
proposed  take   effect   in  1992,   volatility  control  is  not
expected   to   have   any   noticeable  fleet-wide   effect   on
cold-temperature performance.

     Statements by all  of the  major motor vehicle manufacturers
as well as  a  few 'others  in their  comments  on the  DRIA support
this  conclusion.   All  of  them  agree  that  the  level  of
volatility control proposed by EPA is  not  likely to  result in
any  significant  cold-temperature  driveability  detriment.   Since
it is the  motor vehicle  manufacturers  who  will likely have to
respond to customer complaints  if cold-temperature driveability
problems result from  EPA's  regulations, their  comments serve to
strengthen our conclusions.

     In  an  effort to  further  substantiate these conclusions,
the  true  vapor  pressure  (TVP)  of  fuels sold  in  January was
compared  with  the TVP  of  fuels during  the  summer .volatility
control season.  The TVP  of the fuel,  since it  incorporates the
operating temperature of  the vehicle, is  more accurate than RVP
alone   in   evaluating  the  cold-temperature   driveability  of
vehicles.    It was  assumed  that oil  companies  currently produce
winter  gasoline  with  a  volatility which  will  insure acceptable
driveability  during  the  month  of January.   MVMA's  winter  1988

-------
                             4-43
gasoline  survey  was  used to  determine  the minimum  RV?  fuel
currently being marketed  in  each .survey  city in  the  month  or
January.[16]    These   fuel   volatilities   were  combined   with
historical temperature data  and  altitude  data corresponding  to
those  cities  to  yield estimates  for  the  minimum  TVP of  the
fuels sold in those  cities on  some of  the  coldest'days of  the
year.[17]   (The  three  percentile  minimum  temperatures   were
chosen  for  this  analysis to  insure   evaluation  of  even  the
coldest days of the  year.)   The  TVP curves  shown  in Figure 4-3
were  derived from   an API  nomograph  and  used  for   the  TVP
determinations.[18]   A similar  analysis was  then  performed for
the volatility control season.

     Since questions existed as  to the  length of  the  period
needed  prior  to   the  regulations  effective  date  to  insure
compliance,   as  well  as  the  in-use  RVP  required  to  insure
compliance,  the analysis  was performed for  the month  of  April
on  fuel  0.5  psi below that  required in  May by EPA's  proposed
regulations.   The results -of this  analysis, as shown  in  Table
4-4, indicate that even if fuel with an RVP  below  EPA's control
limits  is distributed  throughout  the  month of April, the TVP of
this fuel for the majority  of  the cities surveyed  is  above the
TVP  for  current  fuels in January.  For those cities where this
is  not  true,  the  TVP in April  is  still well above  the minimum
for  all cities in January.

     As  a result of  this analysis,  it  can be  said that  if  a
vehicle  currently maintains  adequate  driveability during  the
month of  January, it should  also maintain adequate driveability
throughout the period  of  RVP control including  likely phase-in
periods.  Thus, this analysis  serves  to support the conclusions
expressed above  (based on  the  test  data);  that  is,   that  the
level  of  volatility control proposed  by  EPA should not result
in  any  unacceptable increase  in cold  temperature driveability
problems.   Even  if  a negative  driveabifity  impact   could  be
quantified such that a cost  to society  could be  associated with
it,  it  is likely that, as for  the hot-temperature driveability
improvements  discussed earlier,   the cost   would  not   be  large
enough  to be  of  significance to the cost effectiveness of EPA's
volatility control regulations.

     3.    Cold Temperature Low Volatility Fuel Safety

     In  addition  to  comments on  vehicle  driveability,  a number
of  comments  were  also  received  which  raised the  issue of fuel
tank -explosivity at  cold  temperatures  on   reduced volatility
fuels,   In  general, fuel volatilities  greater  than 9.0 psi RVP
were  said   to  provide  an   adequate  level  of   safety,   but
volatilities  lower  than  this were said to  result in  potential
problems.  Various  oil companies  provided comments  stating that
fuels  meeting the proposed" 1992  volatility  standard may form an
explosive vapor/air  mixture  during  cold  temperatures  early or
late in the  period  of control, and that  a phase-in  period of up

-------
                                FIGURE 4-3
                            GASOLINE TRUE VAPOR
                        PRESSURE vs. TEMPERATURE
                         (Extrapolated below  0°F)
-70  -60  -50   -40  -30  -20   -10
0    10   20    30   AO   50   60    70    80   90   100   110   120
  TEMPERATURE (°F)

-------
                             4-45
to 2  months  and a  compliance  margin of at  least  0.5  psi  serve
to compound the problem.   The most severe problems  were  said to
be with fuel delivery  trucks,  oil storage tanks,  and during the
event of refueling.

     API provided a study which determined  that  the restriction
in the  fill  pipe of current gasoline vehicles  is  not  typically
adequate to  prevent a flame  from an  external  ignition  source
from  propagating  down the  fill  pipe,  while  Phillips  commented
that  today's  in-tank  fuel  pumps  represent  another   possible
ignition  source.    Therefore,  if  a  flammable  fuel/air  mixture
does  exist  in  the  fuel  tank,   there  are  potential  ignition
sources.  On the other hand,  NESCAUM,  in their analysis of fuel
volatility  control  for  the  Northeast  states,  determined  the
safety   hazard   concerns   of   the   oil   industry   'to   be
unsubstantiated.   The  auto  manufacturers  apparently  do  not
consider cold,  temperature fuel safety  to  be  a  problem either,
as  they provided no  comments on the  topic,  despite  the fact
that  they  would likely  be  the parties facing  liability claims
if it were a problem.

     The potential of a fuel tank  explosion  on  low RVP fuels is
a   serious  matter,   and  therefore  needs   to   be  addressed
carefully.   Little  actual  data  was  presented   by   the  oil
companies  showing  for what  areas of  the country  and for what
times  of  the   year the potential  existed  for  an  explosive
fuel/air  mixture  to   exist  in  fuel tanks.   In  an  effort  to
analyze the situation, historical  temperature  data for a number
of  cities  across the United States  were  combined  with fuel RVP
information  (as in the previous analysis) to yield TVPs for the
situations  of  current fuels in January,  and controlled fuel in
summer.    For   this  analysis,  the  zero   percentile  minimum
temperatures  were   selected,   since  any chance  of a  fuel tank
explosion,  even  on   the  coldest  day  of  the  year,  may  be
considered  unacceptable.   The results  are  shown  in  Table 4-5.
As  can be  seen,  the  TVP of  the fuel  is   typically  higher in
April  with  controlled volatility  fuel than  it  is  in January
with  current fuels.  For  those  cities  for  which   it  is   lower,
the  TVP is  still well above  the  minimum  for  all  cities.   As  a
result  of this  analysis, it  can be  said  that  the  fuel tank
explosion  potential is  less  in April with controlled  RVP fuels
than  in January with  current  winter fuels.   Since the maximum
concentration  of gasoline  in air  which  is  still flammable is
approximately  7.6  volume percent,[19]  which translates  into  a
TVP  of approximately  1.1 psi,  it  can be  seen that  for  a  few
cities  in the  country in.January,  there  currently may  be  the
possibility  for  fuel   tanks  to  become  explosive.   However,
during  the period  of volatility  control  including  a phase-in
period, tanks are very unlikely to reach the flammable range,

      The  situation of  vehicle refueling  is slightly different
in  that  air  is mixed with the  fuel,  and  equilibrium  is   not
necessarily  achieved  above  the   fuel.   This  allows  explosive

-------
                             4-46
mixtures  to  form  at   higher   temperatures.    However,   since
vehicles are refueled with fuel  from underground  storage  tanks,
the fuel temperature of  concern  (20°F  to 30°F according to API)
should  never be  reached  and  flammability  should  not   be  a
problem.

     A  very  recent  report   by  NIPER  for  Phillips  Petroleum
Company quantified some of the effects  of low RV?  on tank vapor
flammability  at   low   temperatures.[20]    Phillips'   concern
centers on  having fuel tanks with  low-RVP fuel  in  the  cooler
transition  months before  and after  the  summer  ozone  season.
The NIPER  study  and  additional  comments   from  Phillips  claim
that  flammability with  low-RVP  fuel may  be reached  already at
temperatures in the  range of  10°-12°F,  which  is  slightly  higher
than  our  earlier analysis predicted.   General Motors  has also
responded to  the  Phillips/NIPER report,  questioning  the study
and its results.[21]

     Some deficiencies  in  the  NIPER  report are  worth noting.
First,  the  fuel chosen  was  not  representative of  in-use  fuels.
Relying  on   a  base   gasoline  with  3.5-4.7 psi  RV?  and  adding
butane  to reach final volatilities of  6.5-9.4  psi  deviates from
commercial   practice   and  could  distort   the   results.   The
composition  of  the  fuel  and  the unusual 40°F  fuel temperature
increase during driving  may  have together  contributed  to  the
degree  of   weathering   observed,  which  was  greate-r  than  the
amount  of   weathering   which  appears  to  be  predicted  from
existing data.  The  disproportionate quantity of  butane  in  the
fuel  would  also probably increase the  likelihood  of reaching a
flammable  condition,   since   the upper  flammability  limit  of
butane  is considerably  higher than  that for other components of
gasoline  (8.5  psi  vs.  approximately   7.6  psi  for   a  typical
gasoline vapor).  Also,  the  method  of sampling might bias  the
results toward more likely flammability.  The  vapors were drawn
from  the  very  top  of  the  tank where the mixture  is leanest.
Pulling 2 liters  of  vapor out of the  tank  may even  cause some
dilution of the  sample with  ambient  air.    Finally,  Phillips'
graph  of  the upper   flammability limit superimposed  on NIPER's
results  appears  arbitrary  and  does   not  closely  follow  the
plotted points;  a  curve  based  on  true  vapor  pressure would
predict somewhat  lower  temperatures  and would appear  to be more
consistent with NIPER's data.

     Phillips used their graph to derive  a  critical temperature
for  each volatility  class.   They  interpolated  the  weathering
data   to  find   weathered  RVP  and   found   the  corresponding
temperature  on  their graph,  which they expect  to  be the  lowest
temperature  that  assures  safe  vapor  mixtures.    To   facilitate
comparison  we  simply  took the  same  RVP  values  for weathered
fuel  and,  based  on the  TVP  graph  (Figure 4-3)  and  an upper
flammability  limit  of  1.1 psi  (7.6  volume  percent),  determined
critical temperatures for each class of fuel (Table 4-6).

     To investigate the possibility.of  in-use  fuel being   in the
flammable range,  EPA. expanded the  analysis of cold temperature

-------
                              4-47

                           Table 4-6

                     Critical Temperatures

           Fresh       Weathered      Phillips
Class       RVP          RVP            Temp.

  A         7.0           6.7            15          12
  B         7.8           7.1            13           8
  C         9.0           7.6            12           5
     Based on NIPER's weathering data.

-------
                              4-48
fuel safety  to  include historical minimum  temperature  data for
the  continental  U.S.   in  April  and  September  for  states  that
might  reach  the necessary  low  temperatures.   Before  April  we
would not expect vehicles to have fuel  that  already fully meets
the  May  volatility   requirements,   even   considering   early
deliveries  to  terminals  to  meet  volatility  requirements  of
certain  locations.[3]   Also,  by  the  beginning of  October  most
or all terminals  should have at  least  their first  shipment  of
higher  volatility  fuel,  which  would  sufficiently  raise  the
volatility   of   subsequent   terminal    sales   and   reduce   the
likelihood that  low-RVP  fuel  will still  be  in  use.  We  used
three-hour minimum  temperatures to determine  a range  of  daily
minimum   fuel   temperatures    across   each   state.[17]     The
three-hour minimum  temperatures were  chosen  to  represent  what
fuel tanks  actually experience,  although  absolute  minimums are
only 2-3°F  colder.   A  representative range of sites  from  each
state included the coldest site for which data was available.

     Applying  Phillips'  conclusions  to  September  conditions,
conservatively  basing  each  state's   fuel  volatility  on  the
summer's  minimum volatility  in July,   leads  to  the  conclusion
that no  state would be  expected to  experience temperatures  that
would  cause  a   flammability  condition  (Table 4-7).   Applying
Phillips' conclusions  to  April  conditions  shows  that  3 percent
of  the  days  at  selected   sites  in   Michigan,  Minnesota  and
Montana  may  reach a flammable  condition;  EPA's  lower  critical
temperatures    significantly    decrease   the   likelihood   of
flammability, although they  fall short  of  complete  assurance
(Table   4-8).    However,  this   analysis   was .performed  using
NIPER's  estimates  for  weathering and upper  flammability  limit.
Using   more   conventional   data   for   weathering   and   upper
flammability  limits leaves  a very small  probability  that any
site would reach flammable conditions  on any day  in April.

     The  NIPER  report  further  supports   EPA's  position  that
there  should  be  no flammability problem with summer volatility
control,  especially since true  vapor  pressures are not at their
lowest until  the uncontrolled winter  season.   Thus,  regardless
of summer volatility control  to the levels proposed by EPA, the
worst-case condition will remain  uncontrolled winter  fuels  in
the winter season.

     4 .    Hot Temperature Fuel Safety

     In  addition to comments on cold temperature,  low-RV? fuel
safety,   comments   were  also  received  on   hot  temperature,
high-RVP  fuel  safety.    These  comments,  however,  have already
been  addressed  in the  FRIA  for the first  phase of  volatility
controls  and will not  be reassessed  here.    The  conclusions  of
that analysis were that while  reducing  the  volatility of  in-use
gasoline  should serve   to reduce the  problems  of fuel  spurting
and  fuel system overpressurization, it is  not possible  on the
basis  of existing data  to  determine  to what extent historical

-------
                                      4-49
                                   Table 4-7

                           Historic  September  Minimum
                        Temperatures  for  Selected  States
3-Hour Minimum Temperatures
State
OR
NV
UT
CO
KS
MO
VA
MD
MI
MN
MT
ND
ME
0 percentile
- 21-37
15-57
29-39
21-38
33-42
38-41
37-52
37-47
20-33
24-29
17-29
20-26
28-29
3 percentile
29-43
26-57
35-44
27-42
37-48
44-47
43-56
43-52
34-39
27-38
27-33
29-33
30-37
50 percentile
41-54
38-69
52-58
41-57
52-63
59-62
60-69
59-64
47-53
43-52
42-47
40-48
45-52
Phillips*
Critical Temp.
13°F
13°F
15°F
13°F
13°F
13°F
13°F
13°F
12°F
12°F
12°F
12°F
12°F
                                                                      EPA**
                                                                  Critical Temo.
                                                                         8°F
                                                                        12°F
                                                                         3°F
                                                                         8°F
                                                                         3°F
                                                                         8°F
                                                                         8°F
                                                                         5°F
                                                                         5°F
                                                                         5°F
                                                                         5°F
                                                                         5°F
*    Uses  Phillips'  curve  through NIPER's  plot  of data/  July
     RVPs weathered according to NIPER data.
**   Uses  EPA  TV?  analysis,  July  RVPs  weathered  according  to
     NIPER data.

-------
                                     4-50
                                   Table  4-8

                            Historic April Minimum
                       Temoeratures for Selected States
3-Hour Minimum Temperatures
State
OR
NV
UT
CO
KS
MO
VA
MD
MI
MN
MT
ND
ME
0 percentile
15-34
12-35
17-28
-2-24
12-22
20-29
25-31
26-27
3-16
-3- 9
-10-16
-2- 2
3-14
3 percentile
16-36
19-41
23-32
15-30
22-30
28-32
30-39
32-35
10-25
11-21
12-30
15-19
16-24
50 percentile
31-44
32-54
35-45
28-42
36-46
44-43
47-51
45-48
30-38
28-35
30-34
31-34
30-35
Phillips*
Critical Temp.
12°F
13°F
12°F
12°F
12°F
12°F
12°F
12°F
12°F
12°F
12°F
12°F
12°F
                                                                       EPA**
                                                                  Critical  Temp,
                                                                        8°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
                                                                        5°F
*    Uses  Phillips'  curve  through NIPER's  plot  of  data,  May
     equivalent emissions RVP weathered according to NIPER data.
**   Uses  EPA  TVP  analysis,   May  equivalent  emissions  RVP
     weathered according to NIPER data.

-------
                             4-51


hot-temperature  safety  problems  would  have been  avoided,  or
substantially reduced  in severity,  if  fuel volatility. had  been
lower.  Neither  is  it possible to  project  safety  problems  into
the future.   As  a  result,  no evaluation  of possible  benefits
due to RVP control was attempted.

VI.   Enforcement Cost of Volatility Regulations

     The  costs  of  several different  enforcement options  were
presented in  the  Draft RIA,   Costs for the  enforcement options
evaluated were estimated to range  from $0.3 to  $2.3  million per
year.,  EPA does  not  expect that  actual enforcement  costs  will
differ  significantly  from these  levels for  either   Phase  I  or
Phase II.  Since  these enforcement costs are small  relative  to
the  other elements  of  RVP  control  (such  as  refinery  costs,
etc.),  the  cost  of enforcement was  not  included  in  the  cost
effectiveness calculations of  Chapter 5.

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                              4-52


                    References  (Chapter  4)


     1.    52 Federal Register, p.  31274, August 19, 1987.

     2,    "Draft   Regulatory  Impact   Analysis,   Control   of
Gasoline Volatility and Evaporative Hydrocarbon  Emissions  From
New Motor Vehicles," U.S. EPA, OAR, QMS,  July 1987.

     3.    "Final  Regulatory  Impact  Analysis  and Summary  and
Analysis of  Comments  on the  NPRM,  Interim Control  of Gasoline
Volatility," U.S. EPA, OAR, OMS, January 19, 1989.

     4.    "Petroleum  Supply  Monthly,"  various   issues,   May
through November 1989, DOE/EIA - 0109.

     5.    "Assessment  of  Impacts  on  the  Refining  and Natural
Gas  Liquids  Industries   of   Summer   Gasoline  Vapor  Pressure
Control,"  prepared by  Bonner  and  Moore Management  Science for
EPA, August 24,  1987.

     6.    "MVMA  National   Gasoline   Survey,   Summer  Season,"
Motor  Vehicle Manufacturers  Association,  Sairoling Date-July 15,
1987.

     7.    "Annual  Outlook for  Oil and  Gas  1989,."   DOE/EIA  -
0517(89).

     8.    "Octane Week," February 12, 1990.

     9.    "Petroleum Marketing  Annual,  1985,  Volume 2," Energy
Information  Administration,  Office  of Oil  and Gas,  U.S.  DOE,
DOE/EIA -  0487  (85)/2, December, 1986.

     10.   "The  Butane   Industry:   An  Overview  and  Analysis of
the  Effects  of  Gasoline  Volatility  Control  on  Prices  and
Demand," Jack  Faucett Associates  report  for U.S.  EPA,  May 30,
1985.

     11.   Letter   from  George  J,   Yogis,  Manager,  Refinery
Economics  and   Business  Development,  ARCO,  to  Joe Somers,  U.S.
EPA, March 23,  1987.

     12.   Letter  from  Kevin Hyatt,  ENRON  Gas  Liquids,  to  Phil
Carlson, U.S. EPA,  April 4,  1990.

     13.   "Calculation   of   Potential  Oxygenated   Use  Under
Several  Possible Conditions," EPA  memo  from Jonathan  Adler  to
Phil Lorang, OAR, OMS, ECTD, TSS, February  23,  1990.

     14.   "Monthly Energy Review"  U.S.  Department  of Energy,
August 1989, DOE/EIA-0035

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                             4-53
     15.   "Alcohol Outlook," December 1988.

     16.   "MVMA  National   Gasoline   Survey,   Winter   Season,"
Motor Vehicle  Manufacturers  Association,  Sampling  Date-January
15, 1988.

     17..   "A    Predictive    Study    for    Defining    Limiting
Temperatures   and   Their  Application  in  Petroleum   Product
Specifications," John P.  Doner,  Coating and Chemical  Laboratory
for the U.S. Army,  November,  1972, NTIS tt AD 756 420.

     18.   "Technical Data Book,  Petroleum  Refining,"  American
Petroleum Institute, Vol I,  1977.

     19.   "The  Transport   of  Methanol  by   Pipeline,"   U.S.
Department of Transportation, April 1985.

     20.   Letter  with  enclosures  from  Richard  I.   Robinson,
Phillips  Petroleum Company,  to  William Reilly,• EPA,  March 12,
1990, including  "Effect  of  Temperature and  Gasoline  Volatility
on  the  Flamraability  of Vapor  Spaces,"  William F.  Marshall,
National  Institute  for Petroleum  and Energy Research,  February,
1990.

     '21.   Letter  from  James  Pasek,  GM,  to Richard  D.  Wilson,
U.S. EPA, with attachment, May 18, 1990.

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                           CHAPTER 5

                   ANALYSIS OF ALTERNATIVES

I.    Background

     A.     Introduction

     Several  aspects  of  the  overall  proposed   RVP  control
program  make   it  a  very attractive  option  compared  to  other
approaches  to  ozone control.   The absolute  reductions  in  VOC
available   are   larger   than  any  other   single   program  now
available.   The   program   is   feasible,    and   costs,   while
sign-ificant, will  not  likely be  discernible  from  typical price
fluctuations by  most  consumers.    A  gasoline  RVP  program  is
further  attractive  because  the  costs  can  be  limited  to  the
summer months,  when ozone   is  a  problem.   Another  attractive
aspect  of  RVP  control  is  its  immediate,  total  effect  on
emissions  from all  gasoline-powered  vehicles of  all   ages, and
conditions, as well from gasoline-related stationary sources.

     In   addition   to    considering  these  factors,   SPA  has
performed  analysis of   the   cost  effectiveness  of  today's  RV?
control  program.   EPA  has   commonly  used  cost  effectiveness
(dollars  per  ton  of    emissions   reduced)   as  one   tool  for
assessing  how  alternative approaches to control compare to one
another  as well as  how  a   control  program  compares   to other
related  programs  (in  this  case,  VOC  control  programs).   EPA
presents    cost-effectiveness   results    merely   to    provide
additional  comparative  information; these  results  should not be
interpreted  as  establishing  a  baseline  for  cost  effective
standards  in any context.

     For  volatility  control, it  is most useful  to  evaluate the
incremental cost  effectiveness  (or the  cost  effectiveness  for
the  final  step   of  control)  rather  than  the  overall  cost
effectiveness.   This is  due to the  fact that  as  RV? is reduced,
costs  increase  and  emission  reductions   decrease.   Therefore,
the cost-effectiveness value for  the total  RVP reduction of the
program  could  theoretically  be   favorable  while the  value  for
the last  increment of control is  not.   To  avoid underestimating
this   value,   EPA   used  an   incremental   cost  effectiveness
calculation in the  NPRM and  in  the Phase I  final   rule;  the
Agency will continue to  use this  approach for this rulemaking.

     B.     Synopsis  of NPRM Methodology

     For  the  Volatility and Evaporative  Emissions   NPRM,  EPA
determined  the   cost    effectiveness  of   various   alternative
combinations   of   vehicle-based    and   fuel-based   evaporative
emission   control   programs.   The  various   options    included
lowering  in-use  fuel volatility  (for  the range of RVPs  from 8.0
to  11.5  psi in 0.5 psi  increments), matching  certification and

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                              5-2
in-use Class  C  fuel RVPs,  and  performing sensitivity  analyses
using two  crude oil  prices (per  barrel)  and with  and  without
onboard refueling  controls.   For  each  option,  a C/E range  was
calculated based on different assumed  values  for  improved fuel
economy resulting  from  increased fuel  energy  density  (R-values
from 0.82 to 0.95)  .

     The cost-effectiveness  (C/E)  model used  in the volatility
NPRM calculated incremental  C/E  values  for each level  (0.5  psi
increment) of volatility control.   The C/E value  of each level
could then be compared  to  that  of the preceding  level  and  to
that  of  other  control  programs.   Thus,  the  effect  of  each
degree of control  could be shown.

     In obtaining  the  C/E  value,  the  model  calculated  a  cost
and  an  emission reduction  for  each  increment.   The C/E value
was  then  the  ratio  of  these  two  in  dollars  per  ton  VOC
reduced.   The  cost values  included  both  refinery costs  and
costs due to  vehicle change,   Credits were included  to  account
for  control  in  attainment  areas  ($250  per ton  VOC  reduced,  as
discussed below),   improved  driveability,  improved  fuel  economy,
and  the  utilization  of captured evaporative  emissions  (see
Chapter 4).  Costs  were  calculated based  on  the  assumption that
controls  would  be   in  place  for the five-month period  of  May
through  September.  Emission reductions  were  calculated  for
nonattainment   areas   over   the   course  of   a   whole  year
(multiplying  the  five-month  reductions by  12/5),   thus  making
these  C/E values  comparable  to  the  C/E values  of other  VOC
control programs which count year-round reductions.

     Since   the  control   options  were  both   vehicle-   and
fuel-based,  analyses were performed for both  the  short  and the
long term.  Short-term analyses  looked  at  each of  six different
years from  1988 to 2000.   The  long-term  analysis was  done for
the  year  2010  and  assumed  that  all  fleet  turnover   due  to
vehicle changes would  be complete by then.  As  both the short-
and  long-term analyses  were steady-state  in  nature  (assuming
total   fleet   turnover  . had  already   occurred),   a   33-year
discounted analysis  was  also performed.   This analysis  was  an
attempt  at  properly  weighting  start-up   costs  of  the  control
options  (i.e.,  the cost  of  implementing vehicle  controls while
a portion of the fleet is still uncontrolled).

     C.    Summary and Analysis of Comments

     All  comments  received  in  response  to  the NPRM have been
addressed  in the  Final  Regulatory Impact Analysis  for  Phase  I
of  volatility control.   These  comments  are  briefly summarized
below.

     1.    Basic Model

     One  issue  of  comment  was  the method used  to  adjust  this
program's  cost  effectiveness  to  make  it  comparable to other

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                              5-3


yearround  VOC  control  programs.   Commenters  objected to  the
adjustment of  emission  reductions only,  not  making  costs  also
yearround.

     As was  explained in the Phase I FRIA, this  adjustment was
made to correct  the  discrepancy in what  the  cost effectiveness
is  measuring.   Because  the  aim  is  to reduce  summertime  ozone
(since that is when over 90 percent of  exceedances occur),  cost
effectiveness  should be  measured  for  the  ozone  season  only.
Since  other  control  programs  have historically   counted  ozone
reductions  outside  the  -ozone  season,  this  volatility control
program needed to expand its emission  reductions  to a yearround
value  in  order to be comparable to the other C/E values.   This
is equivalent to adjusting other  analyses to  credit only summer
reductions.  The correction used here, however, was more direct.

     A second  area  of comment  was the $250/ton credit given for
emission  reductions  in  attainment  areas.   As  stated in  the
Phase  I  FRIA,  although  some  commenters  believed  this  value to
be   unjustified,  others   said   an   even   higher  value   is
appropriate.   EPA  has  not  established  $250  per ton  over  any
other  value  as  appropriate  for such  reductions.    In fact,  the
total  benefits of reducing  ozone  levels   (e.g.,  less damage to
crops,  materials,  and  forests),   as  well as  additional direct
benefits  of  reducing VOC and particulate  matter  are  very likely
in  excess of  $250  per  ton.    As  a  conservative  valuation of
these  benefits,  the value  of $250/ton will be  retained  for this
analysis.

     NRDC  suggested an  alternative method of  giving credit to
benefits  in  attainment  areas.   Their   method was  to include
transport  regions  and borderline  nonattainment  areas  into the
fraction  of the country which is currently  in   nonattainment.
Emission  reductions  would then  be  credited in those areas  as in
nonattainment  areas.  Since  the  transport  work   being  done by
EPA was  not yet completed,  we felt  that the  method chosen by
EPA to give credit  to  attainment areas  was  the more  justified
of  the two methods.   Therefore, the approach  was  not  changed.

     Texaco  commented  that  a' factor  must  be   added  to  the
cost-effectiveness  value to  account for  fuel weathering between
the marketed fuel  and  that  fuel  actually used  in  the engine.
Since   this  factor  was   incorporated   into  the   evaporative
emission  factors used  in calculating  emission  reductions,  it
did not need to  be  corrected for  again.

     2.     Comparative C/E Value

     The   $2,000  per   ton   guideline   suggested  as   a   rough
indicator of  acceptable cost effectiveness of  VOC control  also
received  a number  of comments.   Some commenters claimed  that
there  was  no  support for  such  a guideline.  NESCAUM,  on the
other  hand,  pointed out that many other  control  measures in the

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                              5-4
Northeast  have costs  much  higher  than this  guideline.   In  a
study  done  by OPPE,  the  average  cost  of  emission  control
programs  to  achieve  additional  emission reductions  above what
could be  achieved with the  currently available  control  options
was in the range of $2,000 to $10,000 per ton.

     There continues  to be  no  benchmark for  "reasonable" cost
effectiveness  used  by  the  Agency;  it  is  often of  interest,
however, to  compare programs  among  one  another using C/E as one
indicator, and thus the analysis has been again performed.

     3.     Sensitivity of C/E to Various Factors

     All  comments  dealing with  the'  various inputs  to  the C/E
model,  and  not  the  model  itself,   were  dealt  with  elsewhere.
NRDC  commented that  sensitivity  runs  should  be  done  using
assumed ozone  standards  of  0.08  and 0.10 ppm.   However, since
the volatility program  is  cost  effective  even  at the  current
standard,   these  runs   would  not   add  significantly  to  the
rulemaking and so were not done.

     OMB  suggested  that  the C/E for  Class A and  B areas  be
provided  separately  from Class  C areas.   These class-specific
values were determined and provided in the Phase  I  Final RIA as
well as in Section II.D.  below for Phase II.

     4.     Alternative Programs

     Although  several  comments  were received  providing  various
modifications  or substitutions  for  the regulations  proposed by
EPA,  they lacked sufficient  analysis  to justify  any deviation
by EPA from  its proposals.  When partial  analyses  or  results of
analyses   were  presented,   it  did   not   appear   that  the
alternatives proposed would result in an  equal or greater  level
of VOC control at an equal or lower cost.

     D.     Synopsis of Phase  I Final Analysis

     The  Final Rule  for  Phase  I  of  volatility control  gave
limits  on the RVP of  gasoline  for  the  1989 through  1991 time
period.    It  required  volatility  levels  of   10.5 psi  in  Class C
areas, 9.5 psi  in  Class  B areas, and 9.0 psi  in Class A areas.
The  classification  of  states was similar  to  that of ASTM but
with  a  few  exceptions (mentioned elsewhere in  the  FRIA).   The
cost-effectiveness  analysis  was  similar  to  the  methodology
proposed  in  the  NPRM.    However,  since  it  was  a  short-term
analysis,    no   33-year    cost-effectiveness    analysis   was
performed.   Also, no  vehicle costs  were included as  these were
applicable   to  the  onboard  controls  and  excess  evaporative
emissions  portions  of   the  proposal  which  are  now  separate
rulemakings.   The  resulting cost-effectiveness values for Phase
I  of  volatility control  were $236/ton nationwide,  $165/ton for
Class C areas,  $576/ton  for Class B areas, and $0/ton for Class

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                              5-5
A  areas  since the  promulgated RVP  level for  these areas  was
greater than the RVP level which A areas previously had.

II.  Phase II Volatility Control

     A.    Summary of Methodology

     The cost-effectiveness analysis for  Phase  II  of volatility
control  is  very  similar  in  method  to  that  described  in  the
NPRM.  However, no  33-year analysis was  done.   This is  due to
the  fact  that a long-term analysis is  needed when dealing with
fleet  turnover (i.e.,  vehicle  changes).   However,  since  the
onboard and excess  evaporative  emission/running loss issues are
now separate rulemakings, no vehicle costs,  changes  or  turnover
are   involved.    Cost-effectiveness  values  were,   therefore,
calculated for  the  single year  of  1995  only.   The  methodology
of the C/E calculation is briefly described below.

     Emission   reductions    (incremental   and   total)    were
calculated (as described  in Chapter  3)  for high ozone  days  and
also for summer average temperatures.

     Costs  were calculated  based  on   the  roughly  5-1/2 month
period from mid-March to the first week in  September (since, on
average,  refiners must begin production  of  the controlled fuel
six  weeks early  and  can  end  production  one week  early  as
described in  Chapter 2).  Costs from Chapter 4 (in  dollars per
barrel)  were  used  in   the   calculation  of   refining  costs.
Credits were  then taken for  both increased fuel economy and for
the  fuel  "recovered" due to  less evaporation of the  fuel.   The
fuel   recovery  credit   is   equal   to   the   "summer   average"
evaporative   emission   reductions  converted   to   gallons   of
gasoline  (from gallons of butane  as  described  in Chapter 5 of
the  DRIA)  and then  converting  the  gallons  of  gasoline  to
dollars  based on a value of  $.82  per  gallon  (as described in
Chapter 5 of. the  DRIA).   The  fuel economy credit  is calculated
from  the  summer gas fuel  consumption,  increased by  the percent
increase in fuel economy due to  lower volatility fuel,  and then
converted to  dollars using the same $.82 per gallon value as in
the  fuel recovery credit.

     The  net  cost  was,  then,  the  refining cost  less the  two
credits for  fuel  economy and  fuel recovery.  A final adjustment
was  made to  credit  the  program  for   emission   reductions  in
attainment  areas.   A value of  $250  per  ton of VOC  reduced was
credited in attainment areas,  as discussed above.

     The  cost effectiveness  was, thus, the net  cost  less  the
attainment  area  credit,  divided  by  the yearround nationwide
high  ozone  day nonattainment  area  emission reductions  outside
the  Northeast.   Cost-effectiveness  values were calculated on a
nationwide and class-specific  basis  for both the  overall Phase
II  control  (RVP dropping  from Phase  I  to  Phase II  levels) and

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                              5-6
for  the  last  incremental  step  of  control  (9.5  to  9.0  in  C
areas, 8.2 to 7.8 in B, 7.4 to 7.0 in A).

     B.     Summary and Analysis of Comments

     None of  the comments  received  on  the  cost-effectiveness
analysis  dealt  solely   with  the   Phase   II  portion  of  the
volatility control  program.   Therefore,  all  the comments  were
addressed in the Phase I  final rule.  When considering Phase II
control,  all responses to these comments  remain unchanged.

     C.     Inputs for C/E Calculations

     As mentioned above, C/E values  were calculated  in a manner
similar  to   that of   Phase  I.   Some of  the  inputs  into  the
calculations,  however,   have  changed.    These  changes   are
described below.

     No   onboard   refueling   controls  or   improved   vehicle
evaporative emission  controls  are now assumed since  these  are
being  addressed  separately  from RVP control.  Also,  although
various  crude  oil  prices  and R-values  were  examined   in  the
NPRM, Phase  II used a $20/barrel  crude oil price and an R-value
of  0.85  (see Chapter  4).   Also,  when taking into  account  the
transition time  needed to get the  controlled  fuel  in place,  a
5-1/2  month period  was  used  in  calculating  the  costs  and
emission  reductions  of  this  control program  in  place  of  the
5-month period assumed earlier.

     Finally, because  several Northeast states have  already put
regulations  for  9.0 RVP  gasoline into effect (beginning in the
summer  of  1989),  these  states   and others  affected  by their
programs  have  been excluded  from   the  analyses  of  costs  and
emission reductions.  Their exclusion from  the analysis  is also
reflected in the  class-specific nonattainment area VMT (vehicle
miles traveled)  fraction  and  the  fuel consumption  fractions in
each  class,  both  of  which  are  used  in  calculating  class
specific cost-effectiveness results.

     D.    Cost-Effectiveness Results

           The results of this analysis  show that  this  second
level  of  volatility  control  continues  to  be  very  a  very
attractive  approach to  VOC control.  The  values obtained for
emission  reductions,  net cost, attainment  area credit,  and the
overall  cost-effectiveness  values   are  shown  in  Table  5-1.
These value  are  presented  both  for the entire  nation and on a
class-specific basis.   For  comparison,   the  nationwide  values
for Phase I are presented when using this same method.

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                                     5-7
                                  Table 5-1
                    Cost-Effectiveness Calculation Values
Phase II:
  Nationwide
  Class A
  Class B
  Class C
                     Year-Round
                    Non-Northeast
                   Nonattainment
                 Emission Reductions
                   (thousand tons)
713
 35
390
287
                           Attainment
                              Area
              Net Cost*      Credit
              (million $)    (millions)
229
  7
129
 89
99
18
55
32
                             Cost
                         Effectiveness
                            ($/ton)
 183
-302
 189
 197
Phase II
(Last Increment)
  Nationwide
  Class A
  Class B
  Class C
132
  5
 71
 56
112
  5
 61
 47
20
 2
 9
 9
 699
 607
 721
 673
Phase I:
  Nationwide
452
 63
69
 -14
     Includes refining cost, fuel economy credit, and fuel recovery credit.

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                           CHAPTER 6

        CONTROL OF VOLATILITY OF ALCOHOL-BLENDED FUELS
I.    Background

     In  the  volatility  proposal,   three  main  options for  the
treatment  of  gasohol  were  suggested:   1)   exempting  gasohol
from RVP control, 2)  granting  a permanent  1.0 psi RVP exemption
above that of gasoline  for gasohol, and 3)  requiring gasohol's
RVP to  equal  that of gasoline.  Three  suboptions  to  this third
option  were  also  proposed.   They  were:   1)   applying  this
requirement nationwide,  2) applying this  only in nonattainment
areas, granting a 1.0 psi  RVP  allowance in  attainment areas,  or
3)  delaying  this  requirement  until  1993,  providing  a temporary
1.0 psi  RVP  allowance in  the  interim.   EPA  also  suggested the
possibility of  providing  a permanent or temporary allowance to
methanol-blends if it is granted to gasohol.

     In  the  final   rule  for  the  first  phase  of  volatility
control,  a temporary 1.0  psi RVP  allowance was provided for
gasohol.   This  allowance  would continue  until  the  final  rule
for  Phase  II  was  promulagated,   at   which  time  a  permanent
decision  on  the  allowance would  be  made.   Methanol  blends
received no special treatment  for the Phase I program.

     For  the  second  phase of  volatility  control,  the comments
received in response  to the NPRM  have  been  summarized  and are
presented  below  along  with  EPA's response  to  the comments.
These  comments  are  divided  into  those  relating  to  air  quality
issues and those relating  to economic issues.

II.  Ethanol Blends

     A.    Air Quality Related Issues

     1.    Summary and Analysis of  Comments

     A  number  of  comments  dealt with the  potential  air quality
impacts  of  the  various options.  Some stated  that  no allowance
should  be given  unless vehicles  are  able  to pass  the  normal
exhaust   and   evaporative  emission  test  using   the   higher
volatility  fuel.   Also, although  gasohol  production fills only
a  small  portion of  the total  market,  it  is  responsible  for a
much  larger  portion of  the  market  in  some  states.   Several
commenters  on  this  topic  agreed that  an   RVP  exemption  or
allowance  should  only be  considered on the basis of health and
environmental  benefits.   To  accomplish  this,  they   believe  a
study   should   be  done  to   determine  the   total   effects  an
allowance  or  exemption  would  have on  the  environment.   A few
commenters  suggested that  an  allowance should only  be given if

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                              6-2


gasoline volatility were  lowered  even further to compensate for
the emissions from the gasohol.

     Since gasohol  is currently  used as  an  oxygenate to  help
attain  the   CO  standard  in  the   winter   months   (e.g.,   in
Colorado), there is some concern  as to how this  rulemaking will
affect the winter  use of  gasohol.   In  response  to  this,  Amoco
stated that  since  this rulemaking  is only for  the  summer,  it
will not  impact mandated  wintertime use  of oxygenates.  Another
commenter suggested that gasohol  use  be  targeted  for the  winter
months when the exceedances of the CO standard occur.

     Recent  studies  have  indicated that the  impact  on ozone of
a  1.0  psi RVP  allowance  for gasohol is  less  than  the  Agency
earlier  believed.   As  discussed  in  Chapter 3,  the  effect  of
gasohol on ozone  levels  is  affected  by factors  including  the
lower  relative  reactivity of ethanol  and  the effect of ethanol
on  CO  emissions  (which  also  contribute  to  ozone  formation).
The  most  recent modeling performed  by  SAI for  EPA shows that
for  50 percent  use  of  gasohol  in  St.  Louis   with  a  1  psi
allowance,   ozone   levels   increase   by  0  to   0.8  percent.
Therefore, EPA believes that allowing  a  1  psi RVP allowance for
ethanol blends  would likely  result  at most  in  a modest  effect
on ambient ozone levels.

     B.    Economic Issues

     1.    Summary and Analysis of Comments

     Comments   regarding   the  economic   implications  of  the
gasohol RVP  control  options  came from three main groups:   those
in  favor  of  a  permanent  allowance,  those  in   favor  of   a
temporary allowance,  and  those  opposed to any allowance.   There
were also some comments received  from parties who had  alternate
suggestions  on  how  to deal with  gasohol.  All of these comments
are summarized below.

     Those  in  favor  of   a  permanent   allowance  claimed  that
without  an  allowance,   ethanol  blending  would  cease,   since
special  lower-RVP  gasoline  for  blending  would  not  likely  be
produced  by  refiners.  Added costs  would include  distributing
(commingling  in pipelines would  be  a problem and  truck,  rail,
or  barge  would likely  need  to  be used,  as- the  batches are not
large  enough for  pipelines), storing  (many terminals  currently
do  not have  the  storage  capacity for  an additional  grade  of
product),  and  the   cost  of  lowering  the  RVP  of   the  base
gasoline.  The  end  of ethanol blending  would also be the end of
a  much-needed  market  for  surplus corn,  which is now  used  as   a
feedstock  in  ethanol  production.    Some  refiners  also  stated
that  they would  not  be   able  to  supply  sub-RVP   gasoline  as
blendstock   due  to   limitations  in  the  refinery  operations.
Finally,  many commenters  stated that not having  an  allowance
would  be  inequitable, since  ethanol  blenders  could bear  an
added  cost of testing the final fuel  for volatility.

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                              6-3
     Commenters  in  favor  of  a  temporary  allowance  advocated
extending the  allowance to  1993 when  the  federal  tax  credit
expires.   According  to  MVMA, this  would  give enough  lead  time
to  develop  sources  of  low-RVP  base  fuel.   Conservation  Law
Foundation stated that  there is no  need to  extend the allowance
past 1993,  since splash-blended  gasohol  is  not expected to  be
profitable without the tax credit.

     Some of  those  opposed  to  any allowance for gasohol  felt
that the consequences of  no  allowance would not  be  significant
enough to  hurt  the  ethanol industry.   SOHIO emphasized  that
there is no evidence to show that  corn  growers would  be  aided
by  the allowance or hurt by  its  absence.   AMOCO  commented  that
the  cost  of compliance is  only 5-10 percent  of the  existing
subsidy  (the   cost  being  less   than  one cent  per gallon  with
subsidies of 8-10  cents per  gallon) .  API  also argued  that  if
the  demand  for  a  lower  RVP fuel  was  there, the market  would
supply it.

     Suggestions for different  alternatives were  received  from
various  comrnenters.   A  common  request  was  to  regulate  the
volatility  of  the  base  fuel   only,  in  part   to   eliminate
inequitable extra  testing  of blends.   An additional requirement
could limit the  content of ethanol  in gasohol for  an assurance
that its volatility would not exceed the volatility of gasoline
by  more  than  1  psi.   Sinclair and the  National  Automobile
Dealers  Association  (NADA)  suggested having a  1-psi allowance
only in ozone  attainment  areas.  However,  the  National Petroleum
Refiners Association objected to the idea of requiring refiners
to  produce  fuel   that  must  meet  additional  specifications
particular to blended fuels.

     A  number  of   refiners  commented  that  they  would  have
difficulty and would likely  not  provide sub-RVP fuel  for use in
gasohol  production.    This  would  make  it  very  difficult  or
impossible  for distibutors  to  supply  gasohol  that  meets  RVP
regulations without  an  allowance.

     If  ethanol  did not continue in  use  as  a direct  blend with
gasoline, alternate  markets  might be  possible.   One  such future
ethanol  market  might  be  in the production  of  ethyl  tertiary
butyl  ether   (ETBE).   Because   of   its  high  octane  and  low
volatility,  its  potential  for   production  and  blending  at  the
refinery  arid  for  transport  by  pipeline,   and  the  recent
extension  to  ETBE  of  the  ethanol  blenders'  tax  credit,  ETBE
production   may   expand.    However,  such   expansion   would
presumably  be  in competition with production of methyl tertiary
butyl  ether   (MTBE),   since isobutylene  capacity   limits  the
production  of  any  butyl  ether.    The  outcome  of  emerging
competition between ethanol  and methanol marketers  for access
to  the  isobutylene  for  production  of  ETBE  and  MTBE  is  not
certain,  but  downward  pressure  in  alcohol   prices  can  be
expected.   In that  case  there is  a good  chance that methanol
would maintain its market,  since its prices  are  more flexible,

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                              6-4
whereas ethanol  producers  may have  to  leave the  market  rather
than  lower  their price.   An  additional  factor is  the current
substantial  dependence  of  methanol  producers   on  the  MTBE
market, which  raises  the stakes for that  market  and introduces
the possibility  of  an  anti-ethanol  strategy.   In  any  case  ETBE
is  by  no   means   certain   to  become  a  market  for  ethanol
substantial  enough  to  replace the  current market  for  directly
blended ethanol.

     The Brazilian  need for ethanol as an  auto  fuel would  also
be a  potential market,  especially  since sugar prices  in  Brazil
are  currently  inflated.    However,  this  alternative  probably
represents at best a limited and short-term market.

     The alternative  of regulating  the volatility of  the  base
fuel  only,  with  or without  a cap  on  the ethanol  content,  is
problematic.   Once   the  gasoline  is   blended,    it   becomes
impossible  to  test  the  volatility  of   the base  fuel.   The
alternative  of  granting an  allowance  only in  attainment areas
would  require  a  massive shift  in  the gasohol  market, largely
from  urban  to  rural areas,  and would be by no  means certain to
replace the entire lost  ethanol market in  ozone  nonattainment
areas.  In addition,   EPA  does not support  a requirement  to
produce special  fuels  for  blends,  preferring to  set  standards
and then allow the  market  to supply the resources for  products
to meet them.

     From the  comments  it  is clear that there is  at this time a
legitimate  risk  that  the   fuel   ethanol  industry  would  be
jeopardized  in  the absence  of  an  RVP  allowance  for ethanol
blends.   It appears  likely  both   that  the  refining  industry
would  not   supply   low-RVP  base   fuel  and  that  significant
alternative markets for fuel ethanol are not certain to develop.

Ill. Methanol Blends

     A.    Summary  and Analysis of Comments

      Several  comments  urged  that  methanol  blends  also  be
treated  differently   from  gasoline   regarding   RVP  control.
Specifically, commenters suggested  that an RVP allowance should
apply   to   methanol   blends,   particularly   if   such  special
treatment  is  afforded  to   ethanol  blends.   Other  commenters
opposed such an  allowance for  any blends,

      The  issues  relating to  methanol  blends  are different  from
those  relating to ethanol blends.  Because  of the  nature  of the
waivers granted  several methanol blends,  reduced  RVP base  fuel
has  always  been required  when such blends have  been  marketed
(i.e.,  splash  blending has  never  been permitted).  Introducing
an RVP allowance would  represent  a significant departure  from
current  regulatory practice,  one  which   has the  potential  to
harm  air  quality.   There  do  not  appear  to  be  any compelling
economic or  equity  reasons for taking such action.

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