United States Air and Radiation EPA420-F-01-033
Environmental Protection November 2001
Agency
Office of Transportation and Air Quality
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Today's Action
The Environmental Protection Agency (EPA) today proposed an action
that will make it easier for tank terminals to make the transition from
winter to summer grade reformulated gasoline (RFG). This action will
require tank terminals to accept only summer grade RFG beginning
April 15 of each year. The EPA is also proposing to simplify existing
regulations to improve refiners' flexibility to sell gasoline blendstocks.
Currently, there is no date by which terminals must begin receiving
summer grade RFG. However, tanks at terminals must contain only
summer grade RFG by May 1. As a result, terminal operators typically
draw down their levels of winter grade gasoline as May 1 approaches,
causing an abrupt reduction in inventories of gasoline and higher gas
prices. Today's proposal would essentially increase the amount of time
terminals have to make the changeover from winter to summer grade
RFG.
We are also proposing to eliminate the existing blendstock accounting
regulations and replace them with simpler regulations. This action will
allow refineries more flexibility to sell gasoline blendstocks and im-
prove refiners' overall ability to produce gasoline by eliminating signifi-
cant reporting required by the current blendstock account regulations.
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Background
In the Clean Air Act, Congress specified EPA develop emission perfor-
mance standards for RFG for the ozone season. EPA promulgated the
performance standards in a February 16, 1994 Federal Register notice.
With the exception of the air toxics standard which is in effect year-
round, all other emission performance standards are in effect for the
summertime (i.e., the ozone season). Such RFG is referred to as summer
RFG.
There are some important differences between winter and summer
gasoline. Most notably, winter grade gasoline has a higher Reid Vapor
Pressure (RVP) than summer grade gasoline. RVP is a measure of a
gasoline's volatility, or the tendency for a gasoline to evaporate.
Each spring, refiners must reduce gasoline RVP to comply with federal
summer emissions requirements. Refiners, gasoline terminal facilities
and retail stations must replace high RVP winter grade gasoline in
storage tanks with lower RVP summer grade gasoline. EPA regulations
stipulate that gasoline retailers must be selling only summer grade RFG
by June 1 of each year. In order to meet the June 1 compliance date,
EPA regulations stipulate that by May 1 terminals and all other facilities
upstream of the retailer must have only those gasolines that meet the
summertime requirements.
Currently, some terminals wait until very late in April to drain as much
winter grade RFG as possible from their tanks before refilling the tanks
with summer grade RFG. This practice can potentially cause low inven-
tories of RFG. Requiring all terminals to begin receiving summer grade
RFG by a fixed date will allow terminals to more gradually turn over
their tanks from winter to summer grade RFG, and help spread out the
turn over the last two weeks in April, instead of many terminals turning
over their tanks simultaneously at the end of April.
The blendstock accounting regulations were originally meant to restrict
emissions by preventing excessive transfers of high-emissions gasoline
blendstocks ("dirty" blendstocks) from refineries which produced rela-
tively low-emissions gasoline (refineries with "clean" baselines) to
refineries which produced relatively high-emissions gasoline (refineries
with "dirty" baselines). These regulations required significant additional
reporting by a refinery which transferred more than a certain percentage
of its gasoline production. However, individual refinery baselines apply
only to that volume of conventional gasoline (CG) production equivalent
to the individual refinery's 1990 CG production. Any volume of CG
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produced by a refinery greater than its 1990 CG production must meet
the average emissions of all gasoline produced in 1990 (the statutory
baseline).
Because nearly all refineries currently produce significantly more gaso-
line than they produced in 1990, a significant portion of every refinery's
CG today is produced to meet the statutory baseline. Given this situation,
the opportunities to benefit from the transfer of blendstocks based upon
differences in individual baselines is significantly decreased. That is,
shifting volumes from one refinery to another when both refineries
produce more gasoline than they did in 1990 has very little potential to
cause any adverse environmental impact. In addition, restrictions placed
on refiners by the recent Mobile Source Air Toxics rule makes refineries
much less likely to accept high toxics-emissions gasoline blendstocks
from other refineries. Thus, this action should make it easier for refiners
to transfer gasoline blendstocks without worsening emissions.
Health and Environmental Impacts
The clean air benefits of the RFG program will continue to be realized.
The goal of the RFG program is to reduce motor vehicle emissions of the
pollutants that contribute to ozone, or smog, and toxic pollutants, such as
benzene. Smog is formed when VOCs, NOx, and other pollutants such
as CO react in the presence of sunlight. The RFG program sets limits for
these pollutants that refiners must meet, regardless of the oxygenate they
choose.
The clean air benefits of the RFG program are significant. The reformu-
lated gasoline program reduces smog-forming pollutants by 105,000 tons
and toxic pollutants by 24,000 tons annually. This is equivalent to
eliminating the pollution from 16 million cars every year.
Gasoline Supply
This proposed rule should help increase the inventory of RFG at storage
terminals during the annual spring transition from winter grade to sum-
mer grade RFG. The April 15th date will reduce the market pressure that
causes terminals to delay accepting summer grade RFG for as long as
possible and encourage terminals to begin turning over their tanks from
winter grade RFG to summer grade RFG earlier than they do today. This
should lead to greater use of the blend down method to meet the date by
which terminals must be in compliance (currently May 1).
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The proposed rule should also facilitate the transfer of gasoline
blendstocks by eliminating the current blendstock accounting regula-
tions and replacing them with much simpler regulations. This should
allow refiners more flexibility to sell gasoline blendstocks and improve
refiners' overall ability to produce gasoline.
The RFG program is aimed at reducing pollution in the smoggiest cities
in the U.S. Smog threatens millions of Americans each year with
respiratory problems, and is particularly dangerous to children, who are
increasingly at risk to asthma attacks. In response to recommendations
in the President's recent National Energy Policy, EPA has undertaken a
study, in consultation with the Departments of Energy and Agriculture,
of so-called "boutique fuels", focusing on the various types of fuels, the
motivation and causes for states to implement boutique fuels, the impact
of these fuels on the fuel production and distribution system, and poten-
tial ways to mitigate the impact of disruptions (i.e., refinery fires, pipe-
line shutdowns) to allow for a more fungible gasoline fuel system.
During the course of this study, requirements concerning the "transition"
from winter to summer fuels were identified as a concern and EPA
listened to issues raised by various groups. As a result of these discus-
sions, EPA developed today's proposal which should provide more
flexibility during the transition season.
For Further information
The proposed rule may be downloaded from our web site at http://
www.epa.gov/otaq/rfg.htm
For further information about the proposed rule, contact Chris McKenna
at (202) 564-9037.
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