EPA420-F-95-019
                                  February 6, 1995
  RFG/Anti-Dumping
 Questions and Answers
    February 6,1995
    Fuels and Energy Division
     Office of Mobile Sources
U.S. Environmental Protection Agency

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              RFG/Anti-Dumping Questions and Answers, February 6,1995
       The following are responses to most of the questions received by the Environmental
Protection Agency (EPA) through January 23, 1995, concerning the manner in which the EPA
intends to implement and assure compliance with the reformulated gasoline and anti-dumping
regulations at 40 CFR Part 80. This document was prepared by EPA's Office of Air and
Radiation, Office of Mobile Sources, and Office of Enforcement and Compliance Assurance,
Office of Regulatory Enforcement, Air Enforcement Division.

       Regulated parties may use this  document to aid in achieving compliance with the
reformulated gasoline (RFG) and anti-dumping regulations. However, this document does not in
any way alter the requirements of these regulations.  While the answers provided in this
document represent the Agency's interpretation and general plans for implementation of the
regulations at this time, some of the responses may change as additional information becomes
available or as the Agency further considers certain issues.

       This guidance document does not establish or change legal  rights or obligations.  It does
not establish binding rules or requirements and is not fully  determinative of the issues addressed.
Agency decisions in any particular case will be made applying the law and regulations on the
basis of specific facts and actual action.

       While we have attempted to include answers to all questions received by January 23,
1995, the necessity for policy decisions and/or resource constraints may have prevented the
inclusion of certain questions.  Questions not answered in this document will be answered in a
subsequent document.  Questions that merely require justification of the regulations, or that have
previously been answered or discussed either in a previous  Question and Answer document or
the Preamble to the regulations have been omitted.
                                    Topics Covered
Standards
Product Transfer Documentation
Importer Issues
February 6, 1995

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                                    STANDARDS

[NOTE:  This is a revision of a question and answer posted on December 1,1994, regarding
the "blending allowance" for oxygenated gasoline.]

1.  Question:  EPA has previously offered guidance to refiners regarding a "blending allowance"
for MTBE in order to meet the requirements of the wintertime oxygenated fuels program. This
allowance permits the blending at refineries of MTBE up to 2.9 percent by weight oxygen
(instead of the maximum 2.7 percent by weight oxygen allowed under EPA's "substantially
similar" definition), in order to allow for dilution as the gasoline is distributed to terminal and
retail stations downstream of the refinery. In separate guidance, recognizing that for some
refiners the flexibility to utilize oxygenated fuels program reformulated gasoline (OPRG) in non-
OPRG RFG areas is extremely important, EPA has previously stated that OPRG can be utilized
in  non-OPRG RFG areas. (E.g., regarding minimum pipeline tender sizes, it is often highly
desirable  for a refiner to ship a single shipment of OPRG to an oxygenated fuels area but to
utilize some small portion of this shipment in a smaller RFG area which does not require OPRG.)
However, it is not clear that EPA's guidance on blending tolerance and on the use of OPRG in
non-OPRG RFG areas allows the use of OPRG blended using the 0.2 percent blending tolerance
in  non-OPRG RFG areas. Does the blending allowance apply to OPRG when it is used in
reformulated gasoline areas that are not part of the wintertime oxygenated fuels program?
Would this allowance also extend to situations where, for logistics reasons, OPRG is substituted
for RFG and is shipped out of the refinery as non-OPRG RFG?

       Answer: EPA's guidance allowing for the use of OPRG in non-OPRG RFG areas was
meant to accommodate the previously issued guidance regarding the 0.2 percent oxygen blending
allowance at the refinery. Thus,  the 0.2 blending allowance would apply to OPRG RFG
regardless of the area where the OPRG is ultimately used, and would also extend to OPRG that is
shipped out of the refinery as non-OPRG RFG.
                     PRODUCT TRANSFER DOCUMENTATION

[NOTE:  The following is a revision of Question 2 of the Product Transfer Documentation
section of the November 21,1994 and
January  17,1994 Question and Answer Documents.]

2.     Question: We expect RFG geographic areas to develop in which base gasoline
designated as "OPRG" with at least 2.0% oxygen but less than 2.7% oxygen will be sold. Will
the product transfer documentation requirements covering such a product be met if the PTD
shows the oxygen standards as 2.0% minimum and 2.7% maximum and also contains a message
that although the product is designated as OPRG, it does not fulfill the requirements for resale or
use in an  oxygenated control area during a control period without the addition of oxygenates?
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       Answer:  The RFG regulations require the transferor to include on the PTDs the federal
minimum and maximum standards with which the gasoline conforms, including oxygen content
(i.e., 1.5 wt% minimum and 2.7 wt% or 3.5 wt% maximum).  As a separate requirement, the
RFG regulations require the PTDs to state that the product is OPRG or is not OPRG. The RFG
regulations do not require the inclusion of a message identifying OPRG as gasoline that does not
fulfill the requirements for resale or use in an oxygenated control area during a control period
without the addition of oxygenate.

       In certain circumstances, the state standards or federal limits under  21 l(f) of the Clean
Air Act (substantially similar or waiver requirements) may be different from the federal RFG
min/max standards for oxygen. EPA would accept inclusion on the PTDs of the state standards
or federal  21 l(f) requirements for oxygen in lieu of the federal RFG min/max standards where
such standards or requirements are more stringent than the federal RFG standards.
                                 IMPORTER ISSUES

[Note: The following is an update from GTAB question from the August 29,1994, October
3,1994, and December 5,1994 Question and Answer Documents, to add an example of the
GTAB calculations.]

2. Question: What options are available to an importer who wishes to import product that meets
the definition of gasoline, but who wishes to further process this gasoline to meet the standards
for conventional gasoline or RFG after the gasoline arrives at the U.S. port of entry?

       Answer: Under the RFG final rule an importer must include all imported product that
meets the definition of gasoline in the importer's compliance calculations for either RFG or
conventional gasoline. If this imported gasoline is then processed by blending with additional
blendstock, the subsequent blending constitutes a refinery operation for which all refiner
requirements must be met, including refinery standards, refiner sampling and testing,
independent sampling and testing in the case of RFG, record keeping, reporting, and attest
engagements. Further, the RFG or anti-dumping standards for such an operation must be met
solely on the basis of the blendstocks used, and the previously imported (and previously
accounted-for) gasoline may not be included. This is true regardless of whether the subsequent
blending-refming is conducted by the original importer of the gasoline, or by another party.

       A company that is an importer may exclude gasoline imported by that company from the
company's importer compliance calculations, provided that the company uses the gasoline as a
blendstock in a refinery operated by the company, and includes the gasoline-treated-as-
blendstock (GTAB) in the company's refinery compliance calculations. This accounting of
GTAB must occur as follows:
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       1)     The GTAB must be included in the compliance calculations for gasoline produced
                    at a refinery operated by the same company that is the importer, for which
                    the company meets all refiner standards and requirements.

       2)     The importer-company may not transfer title to the GTAB to another party until
                    the GTAB has been used to produce gasoline and all refinery standards
                    and requirements have been met for the gasoline produced.

       3)     The refinery at which the GTAB is used to produce gasoline must be physically
                    located at the same terminal at which the GTAB first arrives in the U.S.
                    (the import facility), or at a facility to which the GTAB is directly
                    transported from the import facility.

       4)     The GTAB must be completely segregated from any other gasoline, whether
                    conventional or RFG, and including any gasoline tank bottoms, prior to
                    the point of blending, and sampling and testing, in the company's refinery
                    operation. The GTAB may, however, be placed into a storage tank that
                    contains other GTAB imported by that  importer.  The GTAB also may be
                    discharged into a tank containing finished gasoline of the same category as
                    the gasoline which will be  produced using the GTAB (i.e., conventional
                    gasoline or RFG, and if RFG the same category with regard to VOC
                    control and OPRG) provided the blending process is performed in that
                    same tank.

       5)     The company must account for the properties and volume of gasoline produced
                    using GTAB in a manner that excludes  the volume and properties of any
                    gasoline that previously has been included in any refiner's or importer's
                    compliance calculations. Thus, if GTAB and blendstock are combined in
                    a storage tank that also  contains a tank bottom of gasoline, the tank
                    bottom-gasoline must be the same category as the gasoline which will be
                    produced using the GTAB  i.e., conventional gasoline or RFG, and if RFG
                    the same category with regard to VOC control and OPRG.  The gasoline
                    tank bottom may not be included in the company's refinery compliance
                    calculations for that batch of gasoline.  This exclusion of previously-
                    accounted-for gasoline  should be accomplished using the following
                    approach.

             a)     Determine the volume and properties of any tank bottom that is gasoline
                          before any gasoline production begins.

             b)     Add the GTAB plus any blendstock to the storage tank, and completely
                          mix the tank.
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             c)     Determine the volume and properties of the gasoline contained in the
                          storage tank after blending is complete.  Mathematically subtract
                          the volume and properties of the tank bottom to determine the
                          volume and properties of the GTAB plus blendstock added, which
                          is reported to EPA as a batch of gasoline produced.

             d)     All sampling and testing, including the sampling and testing of tank
                          bottoms,  must be carried out using the independent sampling and
                          testing provisions at  80.65(f) if the gasoline being produced is
                          RFG.

             e)     In the alternative, a company that has a "blending" tank that is used only to
                          combine  GTAB and blending components (and no gasoline is
                          added to  the tank), may account for the gasoline produced in such a
                          blending  tank by sampling and testing for the properties of the
                          batch after GTAB and blendstock are added  and mixed, and
                          reporting the volume of gasoline shipped from that tank, at the
                          analyzed properties,  up to the point a new blend is produced by
                          adding new GTAB and blendstock.

       6)     The finished gasoline produced using the GTAB (including the imported product
                    and any blendstocks blended with the GTAB) must be evaluated for
                    compliance using the baseline that applies to the company in its importer
                    capacity, and not in its refiner capacity. In a case where the gasoline being
                    produced using GTAB is conventional gasoline, the company  should use
                    the importer baseline that would apply in the absence of  80.101(f)(3).

       7)     The company must meet all importer sampling and testing requirements that apply
                    to imported gasoline for the GTAB.

       8)     The company must include the volume and properties of each batch of GTAB in
                    the quarterly importer reports to EPA, but with  a notation that the batch is
                    not included in the importer compliance calculations because the product
                    is GTAB. Any GTAB that ultimately is not used in the company's
                    refinery operation (e.g., a tank bottom of GTAB at the conclusion of the
                    refinery operation), must be treated  as newly imported gasoline, for which
                    all required sampling and testing, and record keeping must be
                    accomplished, and included in the company's importer compliance
                    calculations for the averaging period when this  sampling and testing
                    occurs.

       9)     The company must retain records that reflect the importation,  sampling and
                    testing, and physical movement of any GTAB, and must make these
                    records available to the CPA or CIA attester, or to EPA, on request.
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       10)    The company must require the CPA or CIA who conducts the company's annual
                    attest engagement, pursuant to  80.65(h) and  80.125 through 130, to
                    specifically review the accounting for each batch of GTAB, to attest that
                    all GTAB was included in the company's refinery compliance calculations
                    in accordance with the procedures specified in this Answer, and to include
                    the details of this review in the attest report.
       The following is a hypothetical example to illustrate the calculations which would be
used to determine the baselines and compliance for both conventional and reformulated gasoline
(RFG) for a company (Company A) that operates two domestic refineries and imports gasoline,
and that imports product classified as GTAB. In this example, only the sulfur baseline and
compliance calculations are included, but the same methodology should be used for the other
regulated parameters.

       The following table lists Company A's 1990 individual refinery baseline volumes and
baseline sulfur levels for Refinery 1 and Refinery 2.  Company A also imported 8 units of
gasoline in  1990, and under  80.91(b)(4) Company A's 1990 importer sulfur baseline is the
statutory baseline, or 338 ppm.

       The following table also lists, for 1995, the volumes and sulfur levels for the
conventional gasoline and RFG produced at Refinery  1 and Refinery 2, the volume of GTAB
processed, and the volume of non-GTAB imported gasoline and its sulfur level. Each of these
volumes and sulfur levels represent a number of separate batches.  In this example Company A
transferred all of the imported product classified as conventional and RFG GTAB to Refinery 1
for further processing.  In addition, the product blended with the GTAB at Refinery 1 is included
in Refinery 1's 1995 conventional gasoline volume of 41 units and RFG volume of 15 units.
February 6, 1995

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DOMESTIC REFINERY
Refinery 1
Conventional
RFG
Refinery 2
Conventional
RFG
IMPORTED GASOLINE
Non-GTAB
Conventional
RFG
GTAB
Conventional
RFG
STATUTORY
1990 BASELINE
Volume
20


15


8





Sulfur
300 ppm


315 ppm


338 ppm




338 ppm
1995
Volume

411
152

18
7

10
4
16
3

Sulfur

3 10 ppm1
275 ppm2

335 ppm
300 ppm

315 ppm
290 ppm



       1 The Refinery 1 1995 conventional gasoline volume and sulfur content include the
non-GTAB volume (25 units) and the GTAB volume processed into conventional gasoline
(16 units).

       2 The Refinery 1 1995 RFG volume and sulfur content include the non-GTAB volume
(12 units) and the GTAB volume processed into RFG (3 units).
       The following set of calculations represents the methodology for determining the
compliance baseline, applicable standard, and compliance calculation that would apply to
Company A for its importer activity, and for Refinery 1 and Refinery 2. In addition, a separate
set of calculations represents the methodology for determining compliance if Refinery 1 and
Refinery 2 are aggregated under  80.101(h).
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Imported Gasoline:

      Conventional Gasoline 

      Calculate the volume-weighted average baseline for Refinery 1 and Refinery 2 in
accordance with  80.101(f)(3), which is necessary for the compliance baseline adjustment for
conventional gasoline under  80.101(f)(4).
                                  ,.     I   (20)  (300)  +  (15)  (315
      Importer  Compliance Baseline  =   	
                                                       20  +  15

                                         =  306.4 ppm
      Calculate the adjusted baseline that applies to conventional gasoline imported by
Company A under  80.101(f)(4) using the volume-weighted average baselines of Refinery 1 and
Refinery 2 (306.4 ppm) up to Company A's 1990 import volume (8 units) and a total import
volume (Va) of 14 units.
   Adjusted Importer Baseline =  306.4  *       +  338 *  1 - -
                                      \         (  14 ] j    I       I     14
                                    = 319.9 ppm
      Under  80.101(b)(l)(ii) the anti-dumping sulfur standard is 125% of Company A's
adjusted compliance baseline for its importer activity.

              1995 Importer Sulfur Standard = 1.25 * 319.9
                                                  =400 ppm
      The average sulfur content of Company A's imported conventional gasoline in 1995 was
315 ppm, which means Company A has met the anti-dumping sulfur standard of 400 ppm in its
importer capacity.

      Reformulated Gasoline 
February 6, 1995

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      The average sulfur content of Company A's 1995 imported RFG is 290 ppm, which
means Company A has met the statutory baseline sulfur standard of 338 ppm in its importer
capacity.
Refineries 1 and 2; Not Aggregated:

      The following refinery baseline and compliance calculations assume Company A did not
aggregate Refinery 1 and Refinery 2 under  80.101(h).

  Refinery 1 (including GTAB):

             Conventional Gasoline 

      Calculate the sulfur adjusted compliance baseline that applies for conventional gasoline
for Refinery 1 under  80.101(f)(4), using Refinery 1's compliance baseline for sulfur (300 ppm)
at the 1990 baseline volume (20 units) and a total volume (Va) of 56 units which includes 41
units of conventional gasoline and 15 units of RFG produced at Refinery 1.
           Adjusted Baseline =   300  *  	     +   338 *
      Under  80.101(b)(l)(ii) the sulfur standard is 125% of Refinery 1's adjusted compliance
baseline.

                    1995  Sulfur Standard =  1.25  * 324.4
                                               =  406 ppm
      The average sulfur content of Refinery 1's conventional gasoline in 1995 was 310 ppm,
which means Company A has met the anti-dumping sulfur standard of 406 ppm for Refinery 1.

             Reformulated Gasoline 

      Calculate the RFG sulfur baseline for Refinery 1 as the volume weighted average of
Refinery 1's 1990 baseline sulfur level (300 ppm) for the non-GTAB RFG volume (12 units) and
the GTAB volume (3 units) at the importer's RFG baseline (338 ppm).

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              1995 sulfur baseline=
                                       10

                                          (12)  (300) + (3)  (338;
                                                   12 +3
                                      =308 ppm
      The average sulfur content of Refinery 1's RFG in 1995 was 275 ppm, which means
Refinery 1 has met its RFG sulfur standard of 308 ppm.
      Refinery 2:

             Conventional Gasoline 

      Calculate the adjusted sulfur compliance baseline for Refinery 2 under  80.101(f)(4)
using the Refinery 2 1990 baseline sulfur level (315 ppm) for the 1990 baseline volume (15
units) and a total volume (Va) of 25 units which includes 18 units of conventional gasoline and 7
units of RFG produced at Refinery 2.


           Adjusted Baseline = I 315 * I   1  + I 338 *   1- 
                                   I       UsJJ    (       (    25
                                 = 324 .2 ppm
      Under  80.101(b)(l)(ii) the sulfur standard is 125% of Refinery 2's compliance baseline.

                    1995  Sulfur Standard = 1.25 * 324.2
                                             =405  ppm
      The average sulfur content of Refinery 2's conventional gasoline in 1995 was 335 ppm,
which means Company A has met the anti-dumping sulfur standard of 405 ppm for Refinery 2.

            Reformulated Gasoline 
February 6, 1995

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                                         11
      The average sulfur content of the RFG produced at Refinery 2 was 300 ppm, which
means Company A has met the RFG sulfur baseline of 315 ppm for Refinery 2.
Refineries 1 and 2 Aggregated (including the GTAB processed at Refinery 1):

      Conventional Gasoline 

      The following refinery baseline and compliance calculations assume Company A elected
to aggregate Refinery 1 and Refinery 2 under  80.101(h).

      Calculate the adjusted sulfur compliance baseline in the aggregate for Refinery 1 and
Refinery 2 under  80.101(f)(4) using the volume-weighted average of the Refinery 1 1990
baseline sulfur level (300 ppm) at Refinery 1's  1990 baseline volume of 20 units and Refinery 2
1990 baseline  sulfur level (315 ppm) at Refinery 2's 1990 baseline volume of 15 units for an
aggregate 1990 compliance baseline for sulfur (306.4 ppm) at a 1990 baseline volume of 35 units
and a total volume (Va) of 81 units which includes the total conventional gasoline and RFG
produced at both Refinery 1 and Refinery 2 for 1995.
            Adjusted Baseline =  306.4 *       +   338 *  1- 
                                 = 324 .4 ppm
      Under  80.101(b)(l)(ii), the sulfur standard is 125% of the aggregate compliance
baseline.

                    1995 Sulfur Standard = 1.25 *  324.4
                                              =405 ppm
      The 1995 average sulfur level for Refinery 1 and Refinery 2 aggregated is the volume
weighted average for the two refineries.


                    n if   ~   *.   *.   .   ^      (310)  +  (18)  (335
          Average Sulfur Content = '
                                                     41  + 18
                                      =318 ppm
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                                       12
      The average sulfur content for Refinery 1 and Refinery 2 aggregated is 318 ppm, which
means that Company A has met the conventional gasoline standard for sulfur of 405 ppm for
these refineries when aggregated for 1995.

      Reformulated Gasoline 

      Under  80.41(h)(2)(iii) Company A must achieve compliance for the average sulfur, T-
90, and olefins of the RFG produced using the same refinery aggregation as is used for
conventional gasoline.  Therefore, first calculate the volume-weighted average sulfur baseline for
Refinery 1 and Refinery 2.

                _   n ,f    0    ,.      (   (20)  (300)  + (15)  (315)
       Aggregate  Sulfur Baseline = '
                                                      20 + 15
                                       = 306 ppm
      Calculate the RFG sulfur standard as the volume-weighted sulfur baseline for Refinery 1
and Refinery 2 (306 ppm) at the 1995 non-GTAB RFG volume for Refinery 1(12 units) plus the
RFG volume for Refinery 2 (7 units), and the importer baseline (338 ppm) at the volume of
GTAB processed into RFG (3 units).


          RFG Sulfur Baseline  -  <  < "  + 7 )  (306)  +  (3)  (338
                                                12+7+3
                                  =  310 ppm
      Calculate the average sulfur content of the RFG produced at Refinery 1 and Refinery 2.


                    n  -if    ~   *.   *.   (  (275)  (15)  +  (300)  (7
          Average Sulfur  Content =   		-
                                        (           15+7
                                      =283 ppm
February 6, 1995

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                                         13

      The average sulfur content of the RFG produced at Refinery 1 and Refinery 2 is 283 ppm,
which means Company A has met the RFG sulfur standard of 310 ppm for Refinery 1 and
Refinery 2.
February 6, 1995

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