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 ------- 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 ------- 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 ------- 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 ------- 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 ------- 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). ------- 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 ------- 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 ------- 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 ------- 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 ------- 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. ------- 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. ------- 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 ------- 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 ------- 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. ------- 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 ------- 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 ------- 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 ------- 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. ------- 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. ------- 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 ------- 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. ------- 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 ------- 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 ------- 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. ------- 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 ------- 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 ------- 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 ------- 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 ------- 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 ------- 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 ------- 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). ------- 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 ------- 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 ------- 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. ------- 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. ------- 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 ------- 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 ------- 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. ------- 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 ------- 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 ------- 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 ------- 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. ------- 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. ------- 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 ------- 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. ------- 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.- ------- 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. ------- 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. ------- 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. ------- 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. ------- 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. ------- 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 ------- 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 ------- 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 ------- 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 ------- 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 ------- 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 ------- 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. ------- 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 ------- 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. ------- 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 ------- 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 ------- 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. ------- 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. ------- 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 ------- 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 ------- 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. ------- 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 ------- 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 ------- 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 ------- 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 ------- 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. ------- 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 ------- 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 ------- 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 ------- 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. ------- 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 ------- 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. ------- 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 ------- 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 ------- 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 ------- 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 ------- 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 ------- 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. ------- 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. ------- 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 ------- 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. ------- 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, ------- 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. ------- |