EPA420-F-95-024
                                   August 15, 1995
  RFC Anti-Dumping
 Questions and Answers
     August 15,1995
    Fuels and Energy Division
     Office of Mobile Sources
U.S. Environmental Protection Agency

-------
        RFG/ANTI-DUMPING QUESTIONS AND ANSWER, AUGUST 15,1995
       The following are responses to most of the questions received by the Environmental
Protection Agency (EPA) through July 18,  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 July 18, 1994,
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 a 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
RFG General Requirements
In-Line Blending
Downstream Oxygenate Blending
August 15, 1995

-------
                          RFC GENERAL REQUIREMENTS

1.  Question: Can EPA provide a range for total oxygen content for use under § 80.65(e)(2)(i)?

       Answer: Section 80.65(e)(2)(i) provides a table with ranges for fuel properties to be used
in comparing the refiner's or importer's test results to the test results obtained from the
independent laboratory. Although a range for total oxygen content is not included in this table, a
range of 0.1  wt% may be applied for total oxygen under § 80.65(e)(2)(i). This range for weight
% oxygen would be in addition to, and not instead of, the ranges listed in § 80.65(e)(2)(i). For
example, if an oxygen volume % was outside the range, the provisions of
§ 80.65(e)(2)(ii) would apply, even if the weight % was within the 0.1% range.  EPA will
address this in an appropriate rulemaking.


                                IN-LINE BLENDING

[NOTE: The following revises the In-Line Blending Question appearing in the May 23,
1995 Question  and Answer document to correct a typographical error.  The last sentence
made reference to §  80.125(a) and/or (b) instead of § 80.125(a) and/or (d).
1.  Question: For a refinery with an in-line gasoline blending exemption, can the annual in-line
blending audit be conducted by the same attestation auditor as outlined under Subpart F of the
RFG and Anti-dumping regulations? Must the auditor for an in-line blending operation meet the
requirements for Attest Engagements at § 80.125?

       Answer: An in-line blending exemption exempts a refiner from the independent
sampling and testing requirements of § 80.65(f).  As one of the conditions of the exemption, the
refiner must carry out an independent audit program of its in-line blending operation.

       Attestation engagements are different than, and do not take the place of, the in-line
blending audits. Attestation engagements cover a broad range of records required under the
reformulated gasoline and anti-dumping programs, as specified in Subpart F. They deal with
production volumes, fuel properties reported for those volumes, and shipment documentation.
The independent audits required for in-line blending operations, on the other hand, are narrowly
focused on individual in-line blending systems that are unique for each location. Basically, the
in-line blending audit must verify that for each batch, the reported batch properties are supported
by secondary sources of test data; that in-line blending control and recordkeeping systems are
being carried out as  represented to the Agency in  the petition for the exemption; and that the
testing, cross checks and quality control being exercised over the operation allow the refiners to
accurately predict the property values and volumes being reported for each batch.

       Auditors who conduct in-line blending audits must meet the criteria specified in §
80.125(a) and/or (d), which require the auditor to be an independent certified public accountant,

August 15, 1995                                                                       2

-------
or, alternatively, an employee of the refiner, provided that such employee is an internal auditor
certified by the Institute of Internal Auditors, Inc. ("CIA") and completes the internal audits in
accordance with the Codification of Standards for the Professional Practice of Internal Auditing.
However, because of the complexity of on-line measurements and estimates, many auditors who
qualify for the attestation engagements may not have the technical qualifications to conduct in-
line blending audits. The audit program for an in-line blending operation will require the refiner
to use an auditor who both fulfills the requirements under § 80.125(a) and/or (d), and has
expertise with in-line blending operations.
                    DOWNSTREAM OXYGENATE BLENDING

[NOTE: The following revises Question 2 of the Downstream Oxygenate Blending section
of the January 9,1995 Question and Answer document. This revision modifies two aspects
of the requirements outlined in the January 9,1995 answer on quality assurance sampling
and testing for downstream oxygenate blenders who elect to meet the RFG oxygenate
standard on average. First, in determining the level of testing required for quality
assurance, EPA believes that ethanol purity is a more practical, and, therefore, more
appropriate measure of ethanol quality than denaturant content. In the absence of
evidence to the contrary, EPA believes it is reasonable to rely on the ASTM allowances in
determining compliance with program requirements. Therefore, blenders will be required
to sample at a higher rate if the ethanol purity of a sample falls below 92.1%.*  Second, to
alleviate the burden on blenders due to the required frequency of sampling, EPA believes
that it is appropriate to eliminate the per barrel component of the sampling and testing
requirements.  Therefore, blenders are required to conduct at least one sample per month,
or one sample every two weeks if the minimum level of ethanol purity is not met.]

2. Question: In the case of RFG oxygenate blenders who splash blend oxygenate in trucks and
who wish to meet the oxygen standard on average, what options are available for establishing the
oxygen content of the RFG produced? Specifically, is there any option other than every-batch
sampling and testing, which would require sampling and testing every truck (or every truck
compartment) for a truck splash blending operation?

      Answer: Under § 80.69(b)(4), an RFG oxygenate blender who meets the oxygen
standard on average is required to sample and test each batch of RFG produced to determine the
batch's oxygen content, and assign a number to the batch for reporting purposes. This every-
batch sampling and testing requirement applies regardless of whether the oxygenate blending is
carried out in a large terminal tank or through splash blending in trucks.
             D 4806-94  allows  for up  to  5  volume  % denaturant,  1.25
mass %  water and  2.0%  volume  impurities  for  denatured fuel
ethanol.   Therefore,  the  minimum  level of  ethanol  purity would be
calculated as  (100  volume % fuel  ethanol  - 5  volume  % denaturant
-  0.99  volume  % water)  x  98%  purity,  or  92.1%.

August 15, 1995                                                                   3

-------
       EPA agrees that every-batch sampling and testing by an oxygenate splash blender would
be difficult.  As a result, an oxygenate blender may meet the oxygen standard on average without
conducting every-batch sampling and testing provided the oxygenate blender meets the following
requirements:

       1.      Computer-controlled oxygenate blending required. The oxygenate blending must
be carried out using computer-controlled in-line or sequential blending, that operates in such a
manner that the volumes of oxygenate and RBOB are automatically dispensed when a particular
grade of gasoline is selected for loading into a truck, and no operator instructions are required
regarding the oxygenate-RBOB proportions when an individual truck is loaded.  Thus, this
alternative averaging approach would not be available where the oxygenate and RBOB are
separately metered into a truck, regardless of whether the separate metering occurs at the same
terminal or at different terminals.

       2.      Oxygenate blender must operate blending equipment.  The oxygenate blender
must be the party who operates the computer-controlled in-line or sequential blending
equipment. Thus, this alternative averaging approach would not be available to a party who
receives delivery of splash blended RFG into trucks at a terminal if the terminal is not operated
by that party, regardless of whether the receiving party is a registered oxygenate blender.

       3.      Compliance calculations. The oxygenate blender may base its compliance
calculations on the volumes and properties of RBOB and oxygenate used during a period not
longer than one calendar month. In calculating the oxygen content of the RFG produced, the
oxygenate blender may use assumptions regarding the specific gravities of the oxygenate and
RBOB blended, or in the alternative the oxygenate blender may use the measured specific
gravities of all oxygenate and RBOB blended in the blending operation.  Similarly with regard to
the denaturant  content of the ethanol  (if used), an oxygenate blender may assume the denaturant
content is 5 vol% of the ethanol used provided the blender obtains documents from the ethanol
supplier which support this assumption and provided the quality  assurance sampling and testing
(described below) supports this assumption, or in the alternative the denaturant content of ethanol
may be measured.

       During each oxygen averaging period, however,  an oxygenate blender must use only the
assumed specific gravities or only the measured specific gravities for all  compliance calculations
for an oxygenate blending facility. Similarly, during each oxygen averaging period an oxygenate
blender must use only the assumed denaturant content of ethanol (if used) or only the measured
denaturant content for all compliance calculations for an oxygenate blending facility.
August 15, 1995

-------
       a.  The wt% oxygen which may be claimed is calculated using the following equation:
  W%
      oxygen
                  (V
                  v
                                   f         ,
                    oxygenate   oxygenate   oxygenate-'
               V ^RBOB X DREGS' + ( "oxygenate X a oxygenate' )
                                     X 100
Where
           oxygen
        oxygenate
        ' RBOB
       •^oxygenate
       -*RBOB
                    weight percent oxygen in final blend

                    volume of oxygenate used, exclusive of denaturant

                    volume of RBOB and denaturant used

                    specific gravity of denatured oxygenate used

                    specific gravity of RBOB used
        oxygenate
                    oxygen weight fraction for the oxygenate (0.3473 for
                    ethanol; 0.1815 forMTBE)
       b.      In the case of an oxygenate blender who is calculating oxygen content using the
assumptions for specific gravity, the following values must be used:
       RBOB specific gravity
       denatured ethanol specific gravity
       MTBE specific gravity
                                                      0.7420
                                                0.7939
                                                      0.7460
       c.      An oxygenate blender using the measured specific gravity option must determine,
through sampling and testing, the specific gravity for each batch of oxygenate and RBOB used to
produce RFG.

       d.      An oxygenate blender using the measured oxygenate purity option must
determine, through sampling and testing, the purity for each batch of oxygenate used to produce
RFG.
       4.
Quality assurance sampling and testing.
       a.      An oxygenate blender who meets the oxygen standard on average using the
procedures described in this answer must conduct a program of quality assurance sampling and

August 15, 1995

-------
testing the RFG produced, using the procedures and at the frequencies specified under
§ 80.69(e)(2).

       b.      An oxygenate blender who assumes ethanol has a denaturant content of 5% must
conduct a program of quality assurance sampling the ethanol used.  The frequency of this
sampling and testing must be at least one sample every month. In the event an ethanol sample
from this quality assurance program has an oxygenate purity level of less than 92.1%, the
oxygenate blender must: 1) use the greater denaturant content for all oxygen compliance
calculations for the ethanol that was tested, and; 2) increase the frequency of quality assurance
sampling and testing to one sample every two weeks, and must maintain this frequency until
four successive samples show an ethanol purity content that is equal to or greater than 92.1%.
The formula for calculating denaturant content based upon ethanol purity is 100 volume % fuel
ethanol - 0.99 volume % water - (oxygenate purity / 98% purity). For example, if a quality
assurance test yielded an oxygenate purity level of 90%, the denaturant content used in the
compliance calculations will be calclated as 99.01 vol % - (90/.98), or 7.17 volume % denaturant.

              5.     Attest procedures.

       An oxygenate blender who meets the oxygen standard on average using the procedures
described in this  answer must commission an independent review of the oxygenate blending
operation using persons with the qualifications specified in § 80.125.  The agreed upon
procedures for the independent review should follow the requirements specified in §§ 80.129(a)
through (c).  In addition, the attester should complete the following attest steps:

       a.      Obtain a listing of all oxygenate receipts for the previous year, test the
mathematical accuracy  of the volumetric calculations contained in the listing, and agree the
volumetric calculations of the oxygenate receipts to the calculations contained in the material
balance analysis.

       b.      Obtain a listing of the monthly (or lesser period if used by the oxygenate blender)
oxygen compliance calculations, test the mathematical accuracy of the listing, and agree the
volumetric calculations to the material balance analysis.  Select a representative sample of the
oxygen compliance calculations, and determine whether the oxygenate blender is basing its
calculations on the assumptions for specific gravity and the denaturant content (if ethanol is
used), or on the assumed values. If the oxygenate blender is using measured values, obtain the
oxygenate blender's test results for specific gravity and denaturant content for the RBOB and
oxygenate used, and agree these test results to the compliance calculations. If the oxygenate
blender is using the assumed values, agree the specific gravity and denaturant content used in the
compliance calculations with the values specified in this procedure.

       c.      Agree the sampling and testing frequency of the oxygenate blender's quality
assurance program with the sampling and testing rates required by this procedure.

       6.      Record retention.

August 15, 1995                                                                          6

-------
       The oxygenate blender must meet the record keeping requirements that are specified
under §§ 80.74(a), (c), and (d), and in addition must meet the record keeping requirements
specified under § 80.74(a) for any oxygenate sampling and testing that is performed.

       In addition to the alternative averaging approach described above, EPA would be willing
to consider other alternative approaches that ensure the integrity of the averaging program.
1.  Question: Please clarify how the batch properties and volume are determined for a batch of
RBOB.  Should the volume of oxygenate specified by the refiner to be blended with a batch of
RBOB downstream be included in the batch volume reported for the RBOB?

      Answer:  Yes.  Section 80.69(a)(2) requires the refiner to analyze an actual blend of a
representative sample of the RBOB and oxygenate using the regulatory methods to determine the
properties and characteristics of the resulting RFG. The RBOB is certified based on these
results.  The batch volume reported for the RBOB is the amount of RBOB  plus the amount of
oxygenate that the refiner designates must be blended downstream. This amount must be based
on the analysis of the representative sample of RBOB and oxygenate. Where § 80.69(a)(8) is
applicable (i.e., in lieu of the contractual and quality assurance requirements specified in §§
80.69(a)(6) and (7), and where the refiner designates RBOB as "any oxygenate" or "ether only"),
the refiner must assume that the volume of oxygenate added downstream will be such that the
resulting RFG will have an oxygen content of 2.0 weight percent.   Where § 80.69(9) is
applicable (i.e., in lieu of the contractual and quality assurance requirements specified in §§
80.69(a)(6) and (7), and where the refiner does not designate the RBOB as  "any oxygenate"  or
"ether only"), the refiner must assume that the volume of oxygenate added  to the RBOB
downstream is 4.0 volume percent ethanol.

      The batch volume, i.e., the volume of RFG that will result after oxygenate is blended with
RBOB downstream, can be calculated using the following formula:
       Where:
                    V,     =     Volume of RFG that will result after oxygenate is blended
                                 with RBOB.

                    R      =     Portion of RFG that is denatured oxygenate, expressed as a
                                 decimal.
                    Vg     =     Volume of RBOB.

August 15, 1995

-------
       For example, if a refiner has a 50,000 barrel batch of RBOB, and the refiner designates,
based on the analysis of the representative sample, that the resulting RFG must contain 10.0
vol% denatured ethanol, the refiner would mathematically determine the amount of ethanol
needed for the batch of resulting RFG to have 10.0 vol% ethanol, and add that amount to the
50,000 barrels of RBOB. In this example, the amount of RFG would be:
                             Vt  =  50,000
                                =  55,556
                            0.1 *  50,000
                               1 - 0.1
       Where § 80.69(a)(8) is applicable, the RBOB refiner will have to calculate how much
volume of oxygenate is required to result in the RFG batch having a 2.0 weight percent
oxygenate.  This volume of oxygenate can be calculated using the following formula:
       V
                       W%
                       " /0
                           oxygen  y RBOB  URBOB
         oxygenate
d
      ,
 oxygenate
                                       t)-w%     )
                                  oxygenate'     oxygen'
Where
           oxygen
       V,
        oxygenate
        'RBOB
        oxygenate
       ^RBOB
                 weight percent oxygen in final blend

                 volume of oxygenate used, exclusive of denaturant

                 volume of RBOB and denaturant used

                 specific gravity of denatured oxygenate used

                 specific gravity of RBOB used
        oxygenate
                 oxygen weight fraction for the oxygenate (0.3473 for
                 ethanol; 0.1815 forMTBE)
       For example, where a refiner has a 50,000 barrel batch of
"any oxygenate" RBOB (including denaturant), and assumes a specific gravity of 0.7420 for the
RBOB and a specific gravity of 0.7939 for the denatured ethanol, the amount of the batch would
be:
August 15, 1995

-------
                                =      2  *  50,000  * 0.7420
                        oxygenate    Q 79^ ^ ^QQ ^  Q.3473)-2)
                                =  2,856

                          Vtotal  =  50,000  + 2,856

                                =  52,856
                 REGISTRATION, REPORTING, RECORDKEEPING

1.  Question: The batch report requires reporting the volume percent for six oxygenates —
methanol, MTBE, ethanol, ETBE, TAME and t-butanol. If a refiner or oxygenate blender uses
MTBE or ethanol as an oxygenate, and does not include in its calculation of oxygen weight
percent any other oxygenates that may be present in the MTBE or ethanol, is it necessary to
include the volume percent of those other oxygenates on the batch report form?

       Answer:  Trace amounts of oxygenates that may be present in MTBE or ethanol do not
have to be reported. However, where a refiner reports total oxygen weight percent that includes
MTBE or ethanol plus other oxygenates in larger than trace amounts, the volume percent of each
of the other oxygenate should be included on the batch report.
2.  Question: Please clarify what the transaction set control number and report number on the
batch report and other EDI maps are. Please detail their specific uses, especially with respect to
resubmission of reports. Are these numbers unique on a company or facility basis?

       Answer:  The transaction set control  number (ST02) is a serial or sequential number
representing the transmission sequence to EPA.  The report number (BTR05) is the sender's own
tracking system number which refers the sender back to his own original record.

       A previous BTR05 should be inserted to BTR06 when the report is a resubmission; i.e.,
whenBTROl = 15.

       These numbers need not be unique on a company or facility basis.
3.  Question: On the batch report map, there is an extra asterisk on the end of line 140 of table
1.  Is this a mistake?
August 15, 1995

-------
       Answer:  The extra asterisk on the end of line 140 has been corrected in the revised
edition of the report.
August 15, 1995                                                                      10

-------