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ENFORCEMENT OF THE VOLATILITY REGULATIONS
QUESTIONS AND ANSWERS - 1990
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PREFACE
This 1990 edition of the Enforcement of Volatility Regulations — Questions and
An^cb responds to numerous questions we received both in 198s) and 1990 concerning
the manner in which the United Stated Environmental Protection Agency intends to
implement and enforce the gasoline volatility regulations at 40 CFR §§ 80.27 - 28. It
\va> prepared by the Field Operations and Support Division of the Office of Mobile
Sources. United States Environmental Protection Agency, and supersedes the 19tS9
edition of this document.
Regulated parties may use this document to aid in achieving compliance with the
volatility regulations, h does not alter the requirements of the volatility regulations,
however.
We will attempt to respond in writing to any additional questions on this subject.
Please send any such questions in writing to Director, Field Operations and Support
Division (EN-397F), United States Environmental Protection Agency, 401 M Street,
S.W.. Washington, D.C. 20460.
Mary T. Smith, Director
Field Operations and
Support Division
Washington, D.C.
April 16, 1990
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TABLE OF CONTENTS
A. LEAD TIME ISSUES 1
B. ESTABLISHING THE CLASSIFICATION OF PRODUCT AND
APPLICABLE RVP STANDARD 5
C. CLASSIFICATION OF REGULATED PARTIES 9
D. LIABILITY OF REGULATED PARTIES . 11
E. DEFENSES ..................................... 15
F. SAMPLING AND TESTING 27
G. REMEDIAL ACTION ............................... 37
H. INSPECTIONS 39
I. NOTIFICATION OF VIOLATIONS ...................... 41
J. STATE VOLATILITY PROGRAMS ...................... 43
ATTACHMENTS 47
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A. LEAD TIME ISSUES
1. Question: Can a refiner ship or a pipeline transport higher RVP fuel in the summer
in he used in the winter?
Answer: The regulations prohibit the sale, supply, offering for sale or supply,
dispensing or transport of gasoline whose volatility exceeds the applicable standard.
"Applicable standard" is defined in the regulations as the standard for the geographical
area and time period in which the gasoline is intended to be dispensed to motor
vehicles. Where the area and time period cannot be determined, the applicable
standard will be assumed to be the lowest standard for that year (i.e., 9,0 psi in 1990),
The issue of what is the applicable standard will only arise when gasoline is
moving through the distribution system. Once gasoline is delivered to a service station
or fleet dispensing facility, the applicable standard will be the RVP standard for the area
in which the facility is located and the time period in which the gasoline is being sold,
offered for sale or dispensed. For gasoline in other parts of the distribution network,
the Agency anticipates that refiners, importers, distributors, ethanol blenders, resellers,
and carriers: will clearly designate the volatility class of gasoline and the location and
time period in which it is intended to be dispensed to vehicles. Where this is not done
and this information cannot be determined, the Agency will assume that the lowest
standard is applicable.
Therefore, gasoline that is not intended to be dispensed to motor vehicles until
alter the close of the volatility control period on September 15 may be lawfully shipped
prior to that date. However, the burden will be on the parties involved in the sale and
distribution of such product to demonstrate that it will in fact be dispensed at a later
date and to assure that it is not dispensed during the control period. Particularly at a
facility directly supplying retail and fleet facilities (e.g., a terminal or bulk plant),
product intended for later use would have to be kept carefully segregated from low
volatility product being shipped to such facilities, until after September 15. Should such
high RVP fuel actually end up at a retail station or fleet facility prior to the close of the
control period, this will constitute a violation of the regulations for which responsible
parties will be liable. The Agency encourages additional oversight testing when "winter"
gasoline is in the system.
In order to determine if particular product is intended for dispensing after the
control period, the Agency will generally rely on certifications or disclaimers contained
in documents accompanying the product which clearly state the intended use of the
product, as well as arty other evidence showing the status or intended use of the product.
2. Question: When a volatility standard changes in the middle of the control period
(e.g., from 10.5 psi to 9,5 psi in Georgia on July 1), where does the new standard apply
on that date? When must the refiner stock lower volatility gasoline in its market tanks?
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Answer: When an applicable standard changes, gasoline being sold or dispensed
at service stations and fleets on that date must be in compliance with the new standard.
Upstream and midstream parties must also assure that gasoline moving through the
distribution network prior to (and after) that dale that will be dispensed to motor
vehicles on or after that date is also in compliance with the new standard.
The refiner must stock the lower volatility product in its market tanks as of the
first day that the lower applicable standard is effective.
Moreover, refiners are also potentially liable for high RVP gasoline remaining in
the distribution system after the first day of the lower applicable standard. Accordingly,
the prudent refiner should anticipate when its high RVP product placed in the
distribution system might be subject to a change of applicable standard in the middle of
a control period.
3. Question: What should a retailer do if, due to low turnover, he still has non-
complying gasoline in his tanks when he receives complying gasoline from the distributor
at the beginning of the compliance period? If he has a large tankful, does he have to
hold it all summer? May a terminal close and seal off tankage that does not meet
specifications?
Answer: The regulations provide a two-date system for the start of the volatility
control period. Retail stations should begin receiving lower RVP fuel from their
distributors even before the effective date of the distributor's compliance period (as the
distributor brings his facility into compliance) and by such date at the latc>t the retailer
should begin receiving product that fully meets the applicable RVP standard. Thus,
retail stations should receive at least a month's deliveries of complying fuel plus an
additional quantity of fuel with a lower volatility than was in its tanks initially. Should a
violation occur and a party is able to demonstrate a particular hardship, EPA will take
[his into account in determining whether (and in what amount) to mitigate the penalty.
In the case of a terminal which has product that exceeds the applicable RVP
standard, the regulations require that this product not be sold, supplied, offered for sale
or supply, dispensed, or transported. The alternatives available are: a) store and seal
the product until a time period when the product can be distributed, provided it is
clearly designated as product not intended to be sold, supplied, offered for sale or
supply, dispensed, or transported; b) transport the product to a geographic area where
the product can be used, provided that such transportation is only for the purpose of
correcting the high RVP; c) blend lower volatility product with the higher RVP product
to bring its volatility within the standard.
4. Question: Some vehicle and engine manufacturers blend test fuels for the purpose of
testing vehicles on a wide range of fuel volatility. If the volatility of the blended fuel
exceeds the standard, what provisions will EPA extend for such testing? Would the
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Agency relax these reporting requirements for the production, storage, shipping and use
of test fuels with high RVPs in amounts less than ten thousand gallons?
Answer: EPA may exercise its discretion to not enforce violations of the volatility
standards in the case of high RVP gasoline blended for the purpose of conducting tests
on vehicles, provided the party provides written notification to EPA in advance, which
includes information concerning the nature and purpose of the tests and the fuel (e.g.,
supplier, RVP ievel, amount), ff the gasoline is to be used in an ozone non-attainment
area, the party should justify why the test cannot be performed in an ozone attainment
area, if EPA determines that the test program has a valid purpose and will have no
significant adverse impact on the environment, EPA will, as a matter of enforcement
policy, take no action.
The Agency does not plan to rektx further its enforcement discretion nor the
above notification requirements for test fuels produced in small volumes.
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B. ESTABLISHING THE CLASSIFICATION OF PRODUCT AND
APPLICABLE RVP STANDARD
I. Question: The California Air Resources Board RVP rules allow a refinery to
designate a tank as "finished and ready for shipment" after the tank is certified by
laboratory tests. Only then is it considered finished gasoline and subject to RVP
regulations. Will EPA grant the same flexibility?
Answer: If, at a refinery or import facility, a tank blend is above the applicable
RVP limit and the refinery/import facility intends to re-blend it until it meets the
regulatory standard before introducing a into the distribution system, the product should
be clearly designated as product not intended for shipment, and documentation should
support this classification. The product then would not be considered finished gasoline
that is subject to the regulations.
2. Question: Mow will an upstream facility establish at the time of inspection that a
product is intended to be blendstock rather than finished product?
Answer: With regard to product being shipped out of the refinery, in the absence
of evidence to the contrary, if a product's characteristics are such that the product meets
the regulatory definition of gasoline ("any fuel sold in any State for use in motor vehicles
and motor vehicle engines, and commonly or commercially known or sold as gasoline")
EPA will treat it as finished gasoline subject to the volatility regulations. However, as a
matter of enforcement policy, EPA will not hold a party liable for product that arguably
meets the regulatory definition of gasoline if: a) the product is clearly labeled as
blendstock and documentation supports this classification; b) the label" clearly states that
the product may not comply with federal RVP standards; c) some aspect of the product's
quality other than RVP supports the party's claim that it intended the product to be
further blended before being sold, supplied, etc., as finished product (e.g., the octane is
higher or lower than product typically sold as regular or premium grade gasoline); d) the
party has obtained a written certification from the buyer/recipient of the product that he
understands that the product may be nonconforming and that, he will not sell or supply
the product as finished gasoline unless or until it is blended to meet federal RVP
standards, or he receives the equivalent certification from a subsequent buyer; and e)
the party has no knowledge or reason to believe that the product will not be further
blended to comply with the applicable RVP standard before being sold, supplied, or
transported as finished product.
3. Question; How will an upstream facility establish at the time of inspection that a
product is intended for storage or export rather than for sale?
Answer: EPA will assume that all gasoline found in the United States is intended
for domestic sale and thus is subject to the RVP standards unless the product is clearly
documented to be for export only and the evidence (e.g., normal commercial documents)
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supports this classification. The label should further clearly state that the product may
not comply with federal RVP standards. Similarly, regarding product in storage at a
refinery or importer facility, EPA will not hold a party liable for product that "does not
comply with the applicable standard if the evidence shows that the product is being
stored and is not being sold, oilered tor sale, supplied, offered for supply, transported or
dispensed. Hie Agency will generally rely on certifications or disclaimers contained in
documents accompanying the product which clearly state the intended use of the
product, as well as any other evidence showing the status or intended use of the product.
4. Question: How can a party establish the time and place the gasoline is to be sold
for purposes of determining the applicable RVP standard? How can it protect itself?
Where no indication exists regarding intended destination or time of delivery, how will
HP A determine the applicable RVP standard?
Answer: EPA will look at commercial documents, such as shipping documents
and contracts of sale, for evidence of destination and expected time of dispensing to
motor vehicles, If the intended destination and expected time of dispensing are
unknown, the party should provide documentation of the type of gasoline the product is
and where it is being shipped. In the absence of any indication concerning intended
destination or expected time of dispensing, the most stringent RVP standard will apply
(i.e., 9 psi applied in 1990).
5. Question: What type of labeling of products will be required? Must a party
physically label tankage, or will it be sufficient that records concerning blendstocks or
exports be clearly marked as such?
Answer. The regulations do not require that labels be physically affixed to tanks
of gasoline. Records concerning blendstocks or exports that are clearly marked as such
should be sufficient. However, a party may wish to label its tanks to further protect
itself.
6. Question; Will EPA move an RVP boundary to relieve a hardship or reduce costs to
consumers? (For example, an area with a lower RVP standard (e.g., Texas west of 99
degree longitude) is supplied from a point with a higher RVP standard, and no lower
RVP supply point is available.) If not, what does the Agency recommend? Will EPA
allow flexibility regarding volatility boundary lines? Would the Agency consider moving
boundaries away from the current ASTM classification scheme toward historical and
geographic distribution patterns?
Answer: The Agency intends to apply the volatility rule strictly with regard to the
geographic boundaries. Moreover, the RVP boundaries cannot be changed without
amending the regulations. It should be noted that intra-state RVP "boundaries" (e.g.,
the 99 degree longitude line in Texas) were modeled on the ASTM classification
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scheme. During the current Phase II rulemaking, the Agency is considering all
alternative schemes suggested,
7. Question: What flexibility will ASTM have in changing the boundaries of volatility
classes in the future? Will EPA approval be required?
Answer: ASTM boundaries and EPA regulations are two completely different
things. ASTM actions have no legal effect on EPA, Federal geographical boundaries
can only be changed by amending the volatility regulations.
8. Question: Should the volatility rule be changed to one having standards for the
different geographic areas which remain unchanged during the compliance period (i.e.,
eliminate the month-to-month changes within a particular area)?
Answer: Little if any comment was received on this issue. The Agency
understands the concern which the month-to-month changes create for compliance and
enforcement efforts. The suggested change will be considered as part of the Phase II
rulemaking,
9. Question: If product type at a retail facility is in the process of being changed to an
alcohol blend, the product coming from the pump nozzle may not initially satisfy the
alcohol content requirement at 40 CFR § 80.27(d)(2). Will the retail facility still be
eligible for the special provision for alcohol blends at 40 CFR § 80.27(d)(1) of the
regulations?
Answer: in order to be eligible for the special provision at 40 CFR § 80,27(d'Kl).
which provides for an additional one pound per square inch allowance, the product
coming from the pump nozzle must satisfy the alcohol content requirement. This would
apply when product type is being changed at a retail outlet.
10. Question: Must the label required at 40 CFR § 80.27(d)(3)(i) state the precise
percentage concentration of ethanol?
Answer: A label stating that the gasoline contains between 9 and 10 percent
ethanol would satisfy the requirement of 40 CFR § 80,27(d)(3)(i).
11. Question: Will Phase 11 of the volatility regulations, to be implemented in 1992,
continue to permit a one pound RVP allowance for ethanol blends?
Answer: Phase II regulations have not been promulgated. A finaJ decision
concerning continuation of the ethanol tolerance has not been made.
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12. Question: Are territories and possessions like Puerto Rico covered under the
regulations?
Answer: Only gasoline intended to be dispensed in the 48 states in the continental
U.S. is subject to the regulations. Product shipped to such states from places like Puerto
Rico (or Alaska or Hawaii) will be treated like imported gasoline.
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C. CLASSIFICATION OF REGULATED PARTIES
1. Question: What Is the classification of a party who receives and stores, but does not
own the gasoline? What if he blends the gasoline at the owner's discretion?
Answer; Under the regulations, "distributor" means any person who transports or
stores or causes the transportation or storage of gasoline at any point between any
gasoline refinery or importer's facility and any retail outlet or wholesale purchaser-
consumer's facility. Thus, ownership is not necessary to render a partv a distributor
under the regulations. A distributor who transports or stores or causes the
transportation or storage of gasoline without taking title to or otherwise having arty
ownership of the gasoline and without altering either the quality or quantity of the
gasoline is a "carrier" under the regulations. Any person who blends gasoline, however,
is classified a.s a refiner and is subject to refiner liability and defenses. A person who
adds ethanol to gasoline (and meets the other elements of the definition) is classified as
an ethanol biender and is subject to ethanol blender liability and defenses.
2. Question: Will a trader who buys and sells gasoline only in "back-to-back"
transactions, thereby taking legal title but not more than instantaneous physical custody
of such products, be considered a "distributor" under 40 CFR § 80.2?
Answer: Yes, the regulations provide for distributor liability on the part of any
person who transports or stores or causes the transportation or storage of gasoline at
"any point" between any gasoline refinery or importer's facility and any retail outlet or
wholesale purchaser-consumers facility. A party who takes legal title to the product
transports or stores or causes the transportation or storage of the gasoline during the
time it is in that party's custody and, thus, is covered as a distributor under the
regulations.
3. Question: Will a blender of gasoline be considered a "refiner" under 40 CFR § 80.2?
Answer: Yes. However, if the party meets the definition of an ethanol blender,
he will be subject to ethanol blender liability and defenses rather than refiner liability
and defenses.
4. Question: Assume that an ethanol blender uses raffinate as a fuel component. In
the event of an RVP violation detected downstream, must the blender to meet the
defense requirements of a refiner or of an ethanol blender as described in 40 CFR §
80.28(g)?
Answer: The Agency interprets the definition of "ethanol blender" strictly as any
person operating a refinery at which gasoline is produced solely through the addition of
ethanol to gasoline, and at which the quality or quantity of gasoline is not altered in any
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other manner. A blender that uses raffinate as a fuel component thus could not he
classified as an "ethanol blender," hut rather would he classified as a "refiner" and would
he required to meet the defense requirements of a refiner in the even! a violation is
detected downstream.
5. Question: Often, fuel terminals offering ethanol and gasoline for blending are
automated or otherwise unsupervised,
allowing a truck driver to create a load of blended fuel without direct supervision from
the component supplier. The fuel is either blended in line while feeding the truck or
actually splash blended in the truck. Accordingly, in the latter circumstance, are there
two ethanol blenders, one the terminal operator responsible for testing the RVP of the
component gasoline, and the second being the truck operator creating the newly
blended fuel and responsible for testing the RVP thereof?
Answer; This hypothetical describes three potentially responsible parties. Where
ethanol and gasoline are "splash" blended in a truck operated by a common carrier,
usually there are two "ethanol blenders" subject to the volatility regulations: the common
carrier company and the company that hired the common carrier. The regulations
define an "ethanol blender'' as any person who owns, leases, operates, controls, or
supervises an ethanol blending plant. In the situation described, EPA would consider
the truck as the ethanol blending plant. The company that owned and/or operated the
truck would thus meet the definition of "ethanol blender," and in the event of a violation
would be responsible for meeting the defense for an "ethanol blender" found at 40 CFR
§ 80.28(g)(6) of the regulations.
The company that hired the truck in most situations would meet the definitions
both of "ethanol blender*' and "distributor," 40 CFR § 80.2(1), for "caus[ingj the
transportation or storage of gasoline at any point between any gasoline refinery or
importer's facility and any retail outlet or wholesale purchaser-consumer's facility," and
in the event of a violation would be required to meet the defenses at 40 CFR §§
80.28(g)(3) and (g)(6).
Under the regulations, where a violation is detected at an ethanol blending plant,
the distributor, carrier, and refiner or importer of the gasoline which was blended with
ethanol are deemed to be in violation, in addition to the ethanol blender. 40 CFR §
80.28(d)(1). The company that operated the terminal and provided the component
gasoline would meet the definition of a gasoline distributor and in the event of a
violation would be liable unless it is able to establish the defense for distributors found
at 40 CFR § 80.28(g)(3).
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D. LIABILITY OF REGULATED PARTIES
1, Question: Where one refiner supplies gasoline to its branded retail outlet which was
obtained in exchange from a terminal operated by another refiner, and a violation is
detected at the retail outlet, who is liable?
Answer: 'Hie regulations provide for presumptive liability on the part of both
parties to the exchange, one party as the "branded" refiner and the other as a distributor,
2. Question: For violations found at branded or unbranded distributor facilities, will
EPA seek to hold liable only the distributor in custody of the product at the time of the
violation or will all distributors in the prior chain of title be considered vicariously
liable?
Answer: All distributors will be presumed liable.
3. Question: For violations found at branded or unbranded retail outlets or wholesale-
purchaser consumer facilities, will EPA hold liable all distributors in the prior chain of
title to that product?
Answer: Yes.
4. Question: As to mere storage of gasoline at refineries or import terminals, dues
FPA's enforcement policy exemption apply to only the actual importer or refiner of such
product, or to any person who owns or took title to such product while it remained in
storage at the import or refinery terminal?
Answer: The policy regarding gasoline in storage will apply to any person who
owns or takes title to the gasoline so long as the person can show that the product is in
tact being stored and is not being sold, offered for sale, supplied, offered for supply,
transported or dispensed. If the product is moved out of storage and put into the chain
of distribution, the owner of the product is subject to liability for nonconforming
gasoline as set forth in the regulations.
5. Question: If a refiner ships product to its own terminal via a fungible pipeline and
can show that only product with correct volatility was put into the pipeline by the
refiner, but that product having high volatility is discovered at the terminal, is the refiner
liable? ff the refiner removes the high volatility product from distribution, how can the
refiner show that it has done so?
Answer: In order to establish a defense in this situation, the refiner would have to
satisfy the elements of the refiner's defense at 40 CFR § 80.28(g)(4).
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The refiner can establish if. has removed the high volatility product from
distribution by placing disclaimers or certifications on the paperwork relating to this
product which clearly slate the product is not in distribution or that it is to be
distributed to an area where it will he in compliance. If the product is further
distributed as non-complying fuel, this will constitute a violation.
6, Question: in a situation where a violation is detected at a branded retail outlet
which is supplied from a branded distributor which, in turn, receives gasoline through a
pipeline which transports the commingled production of the refiner whose brand
appears, plus one or more other refiners, are all the refiners liable? How could the
refiners establish a defense?
Answer: The refiner whose brand name appears at the retail outlet would be
liable; in order to establish a defense, it would have to show each of the elements of the
refiner's branded facility defense in 40 CFR § 80.28(g)(4). The other refiner(s) whose
cum mingled product was delivered to the retail outlet may be liable it they meet the
definition of another regulated party (e.g.. distributor).
7, Question: If a violation is found at a terminal, where the terminal operator does not
own the gasoline, who would be liable?
Answer: The owner or operator of a terminal which stores gasoline without
taking title to or otherwise owning the gasoline and without altering either the quality sir
the quantity of the gasoline, is defined by the regulations as a "carrier" (see 40 CFR §
80.2(1}). As a carrier, this party would be presumed liable because the gasoline having
High volatility was found at that carrier's facility. In addition, the refiner, importer, or
ethanol blender who produced or imported the gasoline would be presumed liable.
8. Question: What should a carrier do if it would be in breach of a contract with the
company supplying the product by refusing to transport or store product having excessive
volatility?
Answer: Where gasoline having excessive volatility is found at a carrier facility
(including a terminal which does not take title to the product), the carrier is presumed
liable for violating the regulations. We believe carriers can, and should, negotiate
contracts which are drafted in such a way that the carrier is not obligated to transport or
store product in violation of the regulations.
9. Question: In a case where more than one party is presumed liable for a violation,
and more than one of the parties is unable to establish a defense, is each party liable for
a separate penalty0
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Answer: Each party who is liable for a violation, and who is unable to establish a
defense, is liable for a separate penalty.
10. Question; If a finished product tank at a refinery is analyzed by the refiner using a
regulatory-approved method and is found to be 0.2 psi below the applicable RVP
standard and is released for sale, and a day later the tank is retested by the refiner and
found to be 0.1 psi over the applicable RVP standard, is the refinery out of compliance?
Answer: In this scenario the second test would indicate that the product is out of
compliance, unless the refiner ha,s good reason to believe the .second test is anomalous.
At a minimum it would seem prudent to conduct additional testing on this product. If a
subsequent EPA test were to find the RVP of the product exceeds the applicable
standard, the refiner's testing described in this scenario would not prove the product was
in compliance.
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E, DEFENSES
I. Question: What kind of documentation or other evidence must a party provide to
establish that it (or his employees or agents) did not cause a violation?
Answer; All factors cannot be listed because factual circumstances differ and
because EPA cannot anticipate aii the types of evidence that may show non-causation.
For aii parties, however, in meeting the non-causation portion of their defense, the
regulations provide that the party must show, by reasonably specific showings, by direct
or circumstantial evidence, that the party (or the parly's employee or agent) did not
cause the violation. In many instances the cause of the violation will be evident from
the inspection results and related documentation.
In the cause of a refiner or importer, providing results of the sampling and testing
of the gasoline in question before it left the refiner)' or importer's facility would be a
strong factor in determining whether the refiner or importer caused the violation.
However, because the refiner or importer could have caused the violation despite
acceptable test results, additional evidence may be required. For example, a refiner
could ship to its own downstream terminal two products with different volatilities
intended for different geographical areas or different time periods. If these products
become commingled after leaving the refinery, the product intended for the lower
volatility area or time period could be in non-compliance. The refiner thus could have
"caused" this violation even though the product was in compliance when it left the
refinery.
For distributors, resellers, ethanol blenders and carriers, the best evidence to
show they did not cause the violation is evidence of who caused the violation and how.
Other strong evidence would be test results showing the particular gasoline in question
met the standards when it was delivered from these parties to the next person in the
distribution chain. Evidence consisting of the other defense elements (e.g., receipt of
product which was in compliance, an oversight program with periodic test results, and
evidence of blending no more than 10% ethanol in the case of ethanol blenders) would
assist in showing the violation must have been caused by another, but this is not
necessarily conclusive. Where no cause can be established for a violation, and no
person in the distribution chain will accept responsibility, the showing necessary for each
person in the chain to establish it did not cause the violation will be more difficult.
It is not sufficient for a distributor to show that it did not handle the gasoline,
because there axe ways to cause a violation without actually touching the gasoline (e.g.,
by misrouting high RVP gasoline to a low RVP area). Moreover, other elements of the
defense stil! must be met.
In the case of a retailer, the following types of evidence are examples of relevant
factors relating to whether the retailer caused a violation:
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1) records evidencing whether or not all gasoline purchased by the retailer after
she compliance date for upstream parties complied with the applicable standard;
2) any evidence regarding whether the retailer knew or had reason to believe that
the gasoline did not meet the standard;
3) any evidence regarding alteration of gasoline stored in his tanks by the retailer;
4) turnover rate; and
5) any evidence that the retailer may have received gasoline from an unidentified
supplier(s).
2. Question: What criteria will EPA use to evaluate oversight programs; is sampling
and testing required, and if so how much0 What type of service station monitoring is
considered acceptable? Is there a minimum percentage of shipments which must be
tested? A.s part of its oversight program, must a branded refiner perform periodic
sampling and testing at their non-owned terminals which supply the branded refiner s
dealers pursuant to an exchange agreement, where the non-owned terminals carry out
their own periodic sampling and testing program?
Answer: In order for a defense to be established by a distributor, reseller,
ethanol blender, or carrier (when the violation is found at the carrier facility), these
parties must show (in addition to other elements) an oversight program such as periodic
sampling and testing to monitor the product being sold, supplied, or transported by that
party. This program would thus monitor the quality of product in the possession or
ownership of the party, and not of product which has passed downstream. The volatility
regulations do not require that an oversight program consist of sampling and testing, but
EPA is not aware of an effective oversight program which would not include some
periodic sampling and testing.
The frequency of periodic testing which would satisfy this requirement will
depend upon several factors, including the following; a) the results of previous
sampling; b) the volume of product in a particular batch (the larger the volume, the
greater the justification for sampling and testing that batch); c) the degree of confidence
in the quality of the product which was received; d) the opportunity for increased
volatility while the product is in the possession of the party (e.g., higher volatility
product present which could be commingled); and e) the opportunity to deliver product
to a geographic region or in a time period requiring a lower volatility.
In the case of refiners, two types of sampling and testing are required (in addition
to other requirements) in order to establish a defense where a violation is found
downstream and they are presumed liable. The refiner is required to show through
sampling and testing that the gasoline determined to be in violation was in compliance
with the applicable standard when transported from the refinery. This generally would
require that all product be tested. In addition, when the violation is found at a branded
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facility downstream, the refiner also must show a quality assurance program at its
downstream branded facilities, such program to include periodic sampling and testing.
The frequency of periodic sampling and testing which would satisfy this requirement will
depend upon factors such as the following: a) the volume of product being handled at a
particular facility; b) the opportunity for violations to occur (e.g., the presence of higher
volatility product which could cause a violation through commingling); c) the results of
previous sampling at that facility and at facilities upstream and downstream from the
facility found in violation; d) if there is reason to believe relevant facilities do not
comply with the contractually imposed requirements designed to prevent violations; and
e) the results of sampling and testing in the market area where the violation occurred.
A branded refiner may use other parties to conduct periodic sampling and testing
downstream. However, if the branded refiner is to meet the oversight portion of its
defense, it cannot simply relv on another party's oversight; the refiner must have an
appropriate contract with the party and maintain oversight with regard to that party's
program. If the other parly's sampling or testing is inadequate the branded refiner will
not be able to meet its defense.
3. Question: What constitutes an acceptable RVP oversight program where ethano! is
blended into trucks? Since the fuel in the truck may be stratified immediately after
"blending" can the truck blender satisfy the oversight portion of its defense by hand-
blending samples of base products with ethanol, duplicating the truck ratios of gasoline
to ethanoi?
Answer: The basic requirements for ethanol blender oversight programs for RVP
are referred to in the answer to question E-2. In the case of truck blenders, sampling
and testing from locations in addition to the trucks may be useful or necessary. For
example, samples could be taken after the product is dropped, if it is dropped into a
relatively empty storage tank, or samples could be taken directly from truck
compartments. However, because of the possibility that product carried in the different
track compartments is not homogeneous (this is particularly true in the case of truck
splash blending), the oversight program needs to include periodic sampling and testing
of product carried in each of the truck's compartments separately, and not only of the
truck as a whole.
Hand-blending a small amount of gasoline product with ethanol and then testing
may be one facet of such an oversight program but we doubt whether it would be
reliable enough to substitute for taking representative samples of finished blended
product from storage tanks.
4, Question; What constitutes an acceptable oversight program for pipeline and motor
carriers; is testing required?
Answer: Both pipeline carriers and motor carriers are presumptively liable for
violations detected at their facilities. To rebut this presumption, both types of carriers
have to demonstrate (in addition to the other defense elements) an oversight program
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concerning the product which is carried. Such an oversight program does not necessitate
testing each load or hatch of gasoline hut envisions a program such as periodic .sampling
and testing. The frequency of testing would depend on factors such as the size of the
load? or batches, and larger loads or hatches would justify1 more frequent testing, The
oversight requirement applies to commingled product, as well as product received from, a
single source.
In particular, motor carriers could have a valid oversight program without actually
testing the product themselves. For example, they could arrange with the owner of the
product to do periodic testing of the gasoline immediately before or after delivery and
could use these test results as a basis for oversight. Such an alternative oversight
program may be particularly appropriate for a carrier who delivers product that does not
pass through a facility owned or operated by him.
Pipeline carriers, on the other hand, normally transport batches of gasoline
through their own facilities which are very large, so that testing of every batch by the
pipeline operator may be necessary. Factors relative to the appropriate frequency of
sampling for a pipeline include the following: a) the results of previous sampling (the
discovery of gasoline having excessive volatility would necessitate increased sampling
frequency); h) the volume of product being moved (the larger the volume of a batch, the
greater the justification for sampling and testing that batch); c) the degree of confidence
the pipeline has in the representations made by the company providing gasoline to the
pipeline; and d) the opportunity for increased volatility due to commingling with higher
volatility product in the pipeline.
5. Question: Did EPA anticipate that some pipelines would require RVP to be 0.5 psi
below the standard? Why can a common carrier set a lower standard than EPA?
Answer: HP A anticipated that regulated parties would take action to assure
product they sell, dispense or transport complies with the volatility standard. EPA has
not anticipated the particular levels which would be used. Pipelines and other
businesses are free to establish whatever criteria they choose as part of the operation of
their business as long as the criteria established does not require noncompliance with
the federal standard. EPA assumes that such lower standards have been set in order to
assure that product sampled by EPA is not found to be in violation, and are thus a
prudent effort by the pipelines to comply with the standards in light of EPA's statements
that regulated parties must take test variability into account in producing and marketing
their product.
6. Question: What must a refiner do to meet the "contract defense," as set forth in 40
CFR § 80.28(g)(4)?
Answer The defenses set forth in 40 CFR § 80.28(g)(4) relate to violations
discovered at branded distributor, reseller or ethanol blender facilities (40 CFR §
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80.28(c)) and at branded retail outlets and wholesale purchaser-consumer facilities (40
CFR § 80.28(e)),
In such cases the refiner must meet all the elements of the defense in 40 CFR §§
80.28(g)(4)(i) and (ii), and must meet one of the additional elements in 40 CFR §
80.28fg)(4)(iii), 40 CFR §§ 80.28(g)(4)(iii)(B), (C), (D) and (F) .set forth the "contract
defense."
First, the refiner must demonstrate the existence of a contract with the
appropriate entity. This contract must have been designed to prevent the specific
circumstances which caused the particular violation.
Second, there must be an adequate oversight program, such as periodic sampling
and testing, to ensure compliance with the contractual obligation. This oversight defense
element has been discussed in response to other questions in this section.
With regard to the contract itself, we feel it is inappropriate for EPA to set forth
specific requirements regarding the necessary provisions of such contracts. Rather, such
contracts will be evaluated on a case-bv-case ba.sis. However, the following is a partial
list of broad areas that a contract should address:
1) The amount of sampling and testing that must be done by the entity with
whom the contract is in place (e.g., distributor).
2) Specific procedures and other specific requirements to assure that gasoline or
blend stock is not commingled with gasoline that is to be marketed in geographical areas
or time periods having lower RVP requirements, and to assure that gasoline is not
shipped to such areas or time periods having lower RVP requirements. The specific
requirements must be aimed at the circumstances as they exist with each entity. They
must be more than mere recitals that the entity must avoid violating the volatility
regulation.
3) Required training regarding the regulations and the procedures and
requirements outlined in the contract to prevent violations.
4) Appropriate responses if gasoline having excessive volatility is identified by
periodic sampling and testing or by any other means, including (where appropriate)
reporting, corrective actions, steps to prevent future violations, steps to identify the cause
of the violation, resampling and testing, increased sampling and testing, retraining, etc.
5) Appropriate responses if it is discovered that a person with whom a contract
is in place is not in compliance with the contract provisions. Such responses should
include affirmative actions which are reasonably calculated to compel the person to
comply with the contract provisions.
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7. Question: When a violation is found ai a retail outlet, when is the carrier who
delivered the gasoline to the retail outlet liable, and how mav the earner establish a
defen.se?
Answer: When a violation is found downstream from a carrier (i.e., not at the
carrier's facility), the carrier is liable only if EPA is able to show that the carrier caused
the gasoline to violate the standard. The only defense available to the carrier in such a
case is to show that it did not cause the violation or that no violation occurred. The
carrier defense at 40 CFR § 80.28(g)( 1) applies only to violations found at carrier
facilities.
8. Question: What records are required for purposes of establishing a defense, and for
how long should these records he kept? What types of documents should be kept on
si te ?
Answer: The regulations do not require a party to keep test records, nor most
other records. "Hie exception is that there are specific minimum time period
requirements for keeping certain documents related to ethanol blend product. See 40
CFR § 80.27(d){2)(ii) (at least one year). However, in order to establish a defense,
certain records will normally be needed by parties. The types of records are generally
specified in the regulations (e.g., test results showing gasoline in compliance when
delivered to the next party downstream).
The statute of limitations for prosecuting violations under the Clean Air Act is
five years from the date of discovery of the violation. A party therefore may wish to
keep records related to establishing a defense for five years to protect itself.
The regulations do not require that records be kept on site. EPA inspections will
be facilitated, however, if documents relating to product classification are made available
to EPA inspectors on site. This would be of particular importance when a company
believes the product is not subject to the volatility regulations (e.g., the product is
blendstock, for export, or in storage), in addition, the applicable RVP standard for the
product will depend upon the intended time and place of dispensing the gasoline to
motor vehicles. In the absence of documents that provide this information (or other
satisfactory evidence), the most stringent RVP standard will be assumed. Having such
documentation readily available to EPA inspectors will facilitate this determination.
9. Question: Can a party rely on tests done by another party?
How long must regulated parties maintain physical gasoline samples taken in conjunction
with an oversight program?
Answer. The Agency will evaluate the adequacy of an oversight program on the
basis of records of sampling and testing, rather than by evaluation of samples of
gasoline. A retained sample could conceivably be useful in resolving a discrepancy
between a company's and EPA's test results. Of course, the volatility of a sample is
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reduced by opening the container for the first test and may be reduced by mere storage,
so that the ultimate usefulness of retained samples is questionable.
10. Question: Can a party rely on tests done by another party or by an independent
laboratory? Will a third party company assume any liability if their actions lead to
violations?
Answer: Under certain circumstances tests performed by another party or
laboratory may be acceptable, especially where the reliability of the tests is high (e.g..
where a carrier contracts to have a supplier sample and test product immediately after
delivery)- Liability is not transferred to the third party who conducts the tests, however;
the burden remains on the regulated party to demonstrate that any testing is performed
in accordance with the regulatory requirements, and that sampling methods and
frequency are adequate.
11. Question:. Where a single organization such as a co-op owns and operates a
refinery, pipeline, and bulk plants which receive no product from outside this system,
and where retail outlets and wholesale purchaser-consumers purchase all of their
product from the oreanization, can a single oversight program satisfy the requirements of
the RVP rule?
Answer. In order for a refiner, carrier, or distributor to establish a defense under
the regulations, these parties must demonstrate an oversight program which includes
periodic sampling and testing. An oversight program performed by someone other than
the regulated party would satisfy this requirement so long as the sampling and testing is
earned out in a manner which adequately monitors product quality at all appropriate
places along the distribution network. In the scenario described in the question, the
refiner must demonstrate testing of all product leaving the refinery, as well as periodic
sampling at the remaining places along the distribution network (pipeline, bulk plants,
retail outlets, etc.). The results of the downstream sampling program may justify a
program of less frequent sampling, but it is unlikely that downstream sampling could be
eliminated altogether. It is difficult or impossible for EPA to state a specific sampling
frequency that is necessary. The frequency of sampling at the bulk terminals would
depend in part on whether the system is truly closed. Moreover, the regulated parties
are familiar with their system, equipment, personnel, history of problems with quality
assurance, etc. Each of the separate regulated parties in the distribution network could
agree to use a sampling program conducted by the parent organization, but if a violation
is found by EPA and this oversight program is found to be deficient, the regulated
parties will not be able to establish the oversight element of the defense.
12. Question: If a party has adjacent facilities (different divisions of the same
company), or a company pipeline delivers gasoline to tankage owned by the same
company, do they have to test continuously at both?
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Answer: An appropriate sampling and testing program wilt depend upon the
specific factual situation involved. If product is shipped from both facilities, testing
should he done at both facilities. If product is transferred from one facility to the other
through a pipeline used by the company to transport product exclusively between the
facilities (i.e., a "tight system") before being shipped out, testing product just prior to its
leasing the second facility may be sufficient to assure that the product complies with the
applicable RVP standard when it leaves the party's facility.
13. Question: What type of evidence will EPA accept regarding the ethanol content of
gasoline?
Answer: In order for an ethanol blender to establish a defense for a violation
found at or downstream from the ethanol blender's facility, the ethanol blender must
demonstrate (in addition to other defense elements) that the gasoline determined to be
in violation contained between 9% and ethanol (by volume) when it was delivered
to the next party. The best evidence that the ethanol content of the gasoline contains at
least % ethanol but no more than 10% ethanol, is the result of an alcohol test
conducted in accordance with the procedures specified in Appendix F to the regulations.
In addition to test results on the gasoline in question, or in the absence of such
test results, the Agency will consider the following evidence in evaluating whether the
gasoline had the proper ethanol content when it left the blender's facility: a) the results
of a periodic testing program carried out by the ethanol blender; b) evidence of a
quality control program carried out by the blender; c) records reflecting the actual
blending of the gasoline in question, showing the amounts and types of products blended
together; d) records maintained for the purpose of the IRS tax exemptions for ethanol
use; e) records regarding the bulk volumes of alcohol and gasoline biendstock
purchased; and f) evidence that any party downstream from the blender added, or had
an opportunity to add, additional alcohol or gasoline to the product. Where a violation
is found at the ethanol blender's facility based upon insufficient or excessive ethanol
content, it will be very difficult for the blender to establish a defense. Where the
violation is found downstream from the blender's facility, the evidence described above
will be considered.
14. Question: Is it necessary for retailers and wholesale purchaser-consumers to receive
and keep certificates showing the gasoline they receive complies with the applicable
RVP standard?
Answer: In order for a retailer or wholesale purchaser-consumer to establish a
defense for a violation found at their facility, there is no requirement that these parties
have certificates showing receipt of in-compliance product. These parties must show,
however, that they did not cause the violation, and an in-compliance certificate would be
evidence for such a showing.
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15, Question: Is there any preferable terminology to he printed on bills of lading,
invoices, or certificates concerning RVP compliance with the applicable standard (e.g..
mu
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carried in each of the truck's compartments separately, and not only of the truck as a
whole.
17. If a facility blends finished gasoline with raffinate and ethanol either in-line just
prior to delivery to the purchaser's truck or splash Mends the components in the truck
itself, what will the RVP testing requirements be for this facility for purposes of meeting
its defenses?
Answer: A party that obtains finished gasoline or gasoline blending stock and
blends that product with any component other than ethanol (such as raffinate) will be
subject to the refiner liability and defense provisions. Thus, it must test each batch of
product that leaves its facility. If gasoline is blended in trucks, each truck compartment
would have to be sampled and tested separately. Branded refiners would need to
conduct additional oversight sampling and testing downstream.
Where both raffinate and ethanol are blended into the gasoline at the facility, with
the ethanol blended in-line or splash blended into trucks, the refiner would not be
relieved of its requirement to test each batch under the provisions of the current
regulations. Obviously, testing each batch of blended product would be much easier if
all components were blended and mixed prior to being released from the tanks, in the
alternative, each batch of fuel containing ail components other than ethanol could be
blended and the resultant fuel tested and ethanol could be added at a separate ethanol
blender's facility. The ethanol blender's facility would then be subject only to the
liability and defense provisions relative to ethanol blenders. Obviously, if the would-be
refiner facility in this scenario purchases finished gasoline and elects to add only ethanol,
then only the ethanol blender liability and defense provision would apply.
18. Question: Where a branded retail outlet is supplied directly by the branded refiner
and an appropriate contract is imposed by the refiner on such retailer, would a program
of reconciling deliveries to the retail outlet with pump meter readings (and the RVP of
delivered product is included on the delivery documents) be an acceptable alternative to
a sampling and testing program?
Answer; Since the refiner must test each batch of gasoline before it leaves the
refinery, and since, in the above scenario, the refiner maintains control of the product
until it reaches the retailer, an adequate oversight program might be developed which
would include minimaJ sampling at the retail level. Nevertheless, in determining the
sampling frequency at the retail outlets, a number of factors should be taken into
consideration. These would include such matters as the opportunity for RVP to change
between refinery and retail outlet, prior history of problems with individual retailers, and
other factors discussed in this chapter.
19. Question: May distributors and resellers without bulk facilities establish an
adequate oversight program that does not involve sampling and testing, but that does
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Involve careful monitoring of amounts of product ordered, picked up, and dropped, and
includes making oversight contracts with retailers and monitoring retailers' gasoline
delivery records?
Answer: Contracts with retailers (and contractual oversight), monitoring gasoline
delivery information, training, and other quality assurance measures may be useful
elements of an oversight program. However, we believe periodic sampling and testing is
necessary'. If the distributor or reseller obtains product directly from the refiner and no
commingling of product can take place, the distributor or reseller may be able to rely on
the sampling and testing of the refiner, especially if a branded refiner's oversight
program includes periodic downstream sampling and testing. If the product is received
from a terminal a trucker may be able to arrange for testing to be performed by the
terminal immediately before or after delivery.
In any event, a distributor's or reseller's sampling program only needs to include
periodic sampling, not sampling of all product delivered to it.
20, Question: May distributors or resellers with bulk facilities, but who do not
manufacture, blend or alter product, establish an adequate oversight program by
sampling and testing once at the beginning of the season? Must all retail outlets be
sampled over the course of the season?
Answer: Distributors and resellers with bulk facilities but who do not alter the
quality or quantity of gasoline, must conduct periodic sampling of the fuel in their
possession or ownership. Sampling once at the beginning of the season would be
inadequate. However, there is no regulatory requirement that such distributors conduct
sampling at the retail outlets which ultimately receive the fuel (although such sampling
may be required as pan of the branded refiner's oversight program).
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F. SAMPLING AND TESTING
1. Question: Which testing methods will EPA accept for purposes of testing compliance
with the applicable RVP standard by importers, refiners and all upstream parties9
Answer: The regulations prescribe two methods for purposes of testing
compliance with the applicable RVP standard: the manual tank and gauge method and
the Her/og method. The Herzog method includes both an analog and a digital version,
however. For purposes of this document, therefore, the regulatory1 approved methods
will be referred to as "the three approved methods" in order to allow proper distinction
between the two versions of the Her/og method. The three approved methods include:
(1) Dry RVP measurement method utilizing manual tank and gauges, (2) Herzog
semi-automatic analog method, and (3) Herzog semi-automatic digital method.
Importers and refiners are required to utilize one of the three approved methods
in order to establish that gasoline was in compliance with the applicable RVP standard
when it was delivered to the next party in the distribution system.
All upstream parties (i.e., importers, refiners, distributors, resellers, and carriers)
in order to establish a defense under the regulations, are required to conduct an
oversight program to monitor compliance with the applicable RVP standard of the
gasoline while it is in their possession or once it has been delivered to parties further
down the distribution system. The oversight program allows utilization of one of the
three approved methods, as well as any other method, provided the application of the
other method is supported by appropriate correlation data. The adequacy of such an
alternative method will be weighted based on the validity and results of such correlation
data. However, more weight will be given to the three approved methods.
2. Question: It appears that use of alternative test methods with proper correlation
with the EPA laboratory would be acceptable as part of an oversight program
downstream of refineries, but that refineries must use one of the two published methods.
Is this accurate? If so, why not have a consistent policy?
Answer. Yes, this is accurate, In drafting the regulations, EPA tried to impose
reasonable requirements on regulated parties. Requiring use of approved methods at
refineries is something EPA believes refiners can reasonably do and the means which
provides the most accurate results. On the other hand, EPA attempted to give parties
more flexibility in designing their oversight programs. These provisions affect a wider
group of regulated parties of different sizes and circumstances. EPA has tried to
balance its goal of assuring that product is in compliance at all points at which its
volatility could be altered (which could be achieved more effectively by requiring testing
each time product changes hands) with the resources and capabilities of such parties.
Allowing such parties to do oversight rather than "every batch" testing and to use other
test methods (with proper correlation) is consistent with this balancing. As indicated
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above, EPA may add additional test methods in future rulemakings it other methods are
found to be as accurate and effective as the promulgated methods.
3. Question: Has EPA approved any new methods for testing compliance with the
applicable RVP standard for the 1990 enforcement season?
Answer: At this time, EPA has not approved any additional testing methods
besides the three approved methods prescribed in the regulations. However, EPA is
preparing a Notice of Proposed Rulemaking fNPRM) which, among other things, will
address the test methods to be used during the 1991 enforcement season. The proposals
being considered include the ASTM Emergency Standard 14 and ASTM Emergency
Standard 15, and some of the new automated RVP test methods.
4. Question: What is EPA's position on the Grabner RVP analyzer, the Herzog Mini
Reid Vapor Pressure Apparatus, and ASTM D 323?
Answer: At this time, EPA has not approved the use of the Grabner RVP
analyzer, the Herzog Mini Method, nor ASTM D 323. However, test equipment which
is not prescribed in the regulations may be used for oversight programs (except for the
defense requirement for refiners at 40 CFR § 80.28(g)(2)(ii)) provided the method and
the application of the method by the party are supported by appropriate correlation
data.
5. Question: Is the ASTM D 323 method the same as the Dry RVP measurement
method utilizing tank and gauges that is described in the regulations?
.Answer: There appears to be much confusion in the industry as to whether
ASTM D 323 is the same as the Dry RVP measurement method utilizing tank and
gauges that is described in the regulations as an approved method. ASTM D 323 and
the Dry manual method are not interchangeable as approved methods, unless
modifications are made to the ASTM D 323 equipment and the respective procedures in
order to enable it to have the same specifications as the approved method. Such
modifications are described in ASTM D 4953.
6. Question: Which testing method does EPA utilize to determine compliance with the
applicable RVP standard?
Answer. EPA utilizes the Herzog Digital Method, as described in Appendix E of
the regulations, for testing of samples to determine compliance with the applicable RVP.
7. Question: Data presented by EPA in a slide presentation at the public meeting on
April 28, 1989, concerning chemical standards shows the EPA lab to have a consistent
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bias on the high side of the nominal value. Since "nominal values" are inherent to the
chemicals used, why does the EPA lab show this consistent bias'?
Answer: EPA presented a slide which showed some results that indicated a .small
offset from the published values. However, the term "bias'" is not appropriate. The
results were obtained using the Herzog method, while the nominal values shown in the
slide were "true" vapor pressure.
The table was intended to show the average values and standard deviation which
EPA obtained in its application of one of the official methods on a pure component of
known quality. This information can be useful to regulated parties as they evaluate their
own practices for the 1989 season. The important values from this table are:
Number of Mean Pressure Std Dev
NamfiJlf _Produci Sampjes (psQ (.psil
3-methylpentane 30 6.29 0.16
2.2-dimethylbutane* 48 9.92 0,12
3.3-dimethylbutene-l 30 13,0? 0.12
n-pentane 57 15,43 0.11
*a!so known as "neo-hexane"
The results on the cvclopentane which were presented at the public meeting have
been dropped because the batch analyzed was later found to contain impurities. The
results on 2-methylbutene-2 and iso-octane also are not shown because of the small
number of samples.
The remaining slides presented at the public meeting are included as an
attachment to this document.
8. Question: Does EPA have an enforcement tolerance for evaluating the compliance
of a given sample for the 1990 enforcement season?
Answer: As stated in the preamble to the volatility regulations,
EPA has determined that gasoline refiners and other regulated parties will
be expected to meet applicable RVP standards in use. In other words,
they must take test variability into account in producing (and marketing)
gasoline and cannot rely on the Agency to automatically provide an
enforcement tolerance in addition to the RVP standard.
54 Fed.Reg. 11877 (March 22, 1989).
9. Question: Does EPA plan to test true vapor pressure of gasoline, rather than RVP?
Is it true that true vapor pressure measurements are higher than RVP measurements?
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Answer: EPA is continuing to evaluate test devices which measure true vapor
pressure. However, no standard tests or standard conditions are available for true vapor
pressure measurement of petroleum products at this time. Therefore, EPA will continue
to measure vapor pressure by the RVP standard.
In theory true vapor pressure of gasoline should be higher than RVP due to the
dissolved gases and the lack of two-phase (liquid/vapor) equilibria for some of the
lighter petroleum fractions under the conditions of the RVP standard.
10. Question: Where can parties get RVP testing done? Will LP A accredit
independent laboratories for RVP testing?
Answer: ASTM publishes a directory of testing laboratories every year, which
mav be obtained from ASTM at 1916 Race Street. Philadelphia. Pennsylvania
19103-1187.
EPA has no plans to accredit independent laboratories for RVP testing.
However, EPA will establish a record, that will be available to the public, of correlation
with a laboratory.
11. Question: Can a company who owns aii stages of the refining and distribution chain
use their in-house lab if they work with EPA to ensure a quality assurance/quality
control program for their lab?
Answer: A company may use their in-house lab for sampling and testing for a
quality assurance/quality control program if they use the procedures outlined in the
regulations or, for purposes of oversight testing, another method that is supported by
appropriate correlation data,
12, Question: Assume a distributor/carrier is using a third party laboratory to perform
testing for an oversight program, and that this third party tab plans to use the Herzog
method as published in the EPA regulations. In order to protect the distributor/carrier,
must the third party lab prove correlation with the EPA lab? Will the third party lab be
liable if they do not follow the correct test method? Is correlation only required if the
third party lab intends to use other test methods?
Answer Correlation testing with the EPA lab is not required. However, for any
test method used, such correlation would serve to strengthen a parry's defense to a RVP
violation. Note, however, that appropriate correlation data must be provided when other
lest methods are used in an oversight program. A third party lab is not liable for RVP
violations under the regulations.
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13. Question: Can a dead weight tester be used in place of a mercury manometer for
calibrating the Bourdon pressure gauge?
Answer: Although the regulations only provide details regarding the use of the
mercury manometer for calibration of the pressure gauge, EPA does not intend to
preclude the use of other calibration methods, such a> the dead weight tester. As such,
a dead weight tester, with a suitable range (0-15 psi) and accuracy { + /- (U)5 psi), is an
acceptable calibration methodology if used in a manner consistent with good engineering
practice. EPA will use its enforcement discretion to allow use of other methods that
provide equal or better results than the mercury manometer.
14. Question: To what decimal place must test results be reported for the Herzog
digital method?
Answer: The regulations require that test results be reported to the nearest 0.05
psi for the Herzog analog method and the Dry manual method. For the Herzog digital
method, two decimal places must be reported.
15. Question: Is the acetone wash of she bomb in the dry manual method required?
Is this an environmentally unsound method for washing these instruments? Can a more
compatible wash solvent be used'?
Answer: At this time, EPA will be using the acetone wash as specified in the
regulations, for the cleaning of the test apparatus. However, EPA believes other
cleaning methods are acceptable, and is preparing a proposal to amend the regulations
to allow utilization of an n-pentane cleaning method. In the interim, EPA will allow
industry use of any appropriate cleaning method.
16. Question: What ASTM distillation specifications apply to the 10.5 RVP limit? The
9.5 RVP limit?
Answer; EPA does not have a requirement regarding what distillation
specification should be used for the RVP limits.
17. Question: Does EPA plan to use a field test for on-site RVP analysis during the
1990 compliance inspections? If so, what instrument will be used? Will it be considered
an approved method under the regulations?
Answer: The Grabner Instruments mode! CCA-VPS will be used for field
screening purposes only for inspections during the 1990 volatility control season. This
method has provided excellent correlation to the Herzog semi-automatic digital method,
which EPA uses for enforcement testing.
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The Grabner apparatus is a fully automatic, portable analyzer utilizing a 4 to 1
vapor to liquid ratio chamber with pressure measurement available at 100 F, ft is
similar to other RVP mini methods. The apparatus automatically draws ml of sample
to determine the vapor pressure of the liquid. The apparatus requires the chilling of a
100 ml sample to 40 F and introduction of the sample to the apparatus with an aspirator
tube.
Because EPA inspectors will be using the Grabner analyzers for field screening
purposes only, any samples taken for enforcement purposes will be collected and
analyzed according to the procedures outlined in the regulations.
18. Question: Will EPA utilize the November 1988 ASTM RVP correlation in
conjunction with the mobile field test instrument? The correlation was published June
1989 by ASTM D2, Subcommittee 8 on Volatility.
Answer: EPA will use a correlation equation developed using EPA's data
obtained from the same study. EPA performed those analyses using the digital version
nf the Herzog method, the Setavap, and the laboratory mode! of the Grabner vapor
pressure analyzer. The last two instruments can now be used under ASTM ES 15
Emergency Standard Test for Vapor Pressure of Petroleum Products (Mini Method).
EPA's dry vapor pressure equivalent (EPA DVPE) is:
EPA DVPE (psi) - (0.95o * X) - 0.347
X = pressure measured in psi using Grabner analyzer
19. Questions What sampling procedures are authorized by EPA?
Answer: Generally, EPA restricts sampling procedures to one of the procedures
prescribed in the regulations. However, the regulations provide that "alternative
sampling procedures may be used if a mutually satisfactory agreement has been reached
by the party[ies] involved and EPA and such agreement has been put in writing and
signed by authorized officials." 40 CFR Part 80, Appendix D, §11.1. If the volatility
sample collected by any of the prescribed procedures is found to exceed the standard,
then the sample will be considered in violation.
20. Question: Does EPA have a sampling method preference?
Answer There are a number of sampling methods specified in the regulations.
The ideal method that should be used for a given storage tank depends upon the
conditions presented by the tank configuration, level of product, and sampling
equipment.
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An all-levels sample is the preferred method of collecting u sample from a
storage tank. If an all-leveis sample cannot be obtained due to the storage taok
configuration or equipment problems, then the following types of samples (listed in
order of preference) are also appropriate: running, middle, or tap sample taken from a
height nearest to the middle of the tank contents. Due to difficulty in obtaining an
alt-levels sample for storage tank volumes of less than 8 feet of sampling height,
including tank trucks and tank cars, a middle sample is an appropriate substitute for an
all-levels sample. In circumstances where it is necessary to determine tank stratification,
spot samples should be taken at the upper, middle and lower levels of the tank conicms.
If lap sampling is used to determine tank stratification, a sample should be taken from
each tap which is below the level of the tank contents.
21. Question: What level does EPA prefer a sample be taken from a tank equipped
with operating mixers?
Answer: EPA's first preference is to use an all levels sample where feasible.
However, the regulations allow samples to be taken at a single level, i.e., upper, middle,
or lower, rather than at all three levels. EPA does not prefer this sample method,
although it is an acceptable method pursuant to the regulations. If a spot sample is
taken by company personnel from a tank with mixers, its validity will be evaluated in
light of supporting correlation data, evidence of mixer use, and other relevant factors.
22. Question: Although continuous sampling is required for pipelines, the regulations
are vague on what a continuous sample represents. One interpretation is that the
sample should be representative of the product flowing past the probe at the time the
sample is taken. Another interpretation is that the sample is representative of the entire
batch. Which interpretation is correct?
Answer; Generally, EPA would consider a sample collected continuously during
the entire time the batch moved past the sampling probe to be representative of the
entire batch, as we do with a running sample of a tank.
23. Question: What are the maximum number of samples a party can send to the EPA
lab for testing in order to assure the accuracy and repeatability of the respective test
results?
Answer EPA will accept up to three samples on a bi-weekly basis from any party
as long as the samples are accompanied by the following: lab test results, description of
the method of analysis, and name of a contact person that will receive the test results,
Other and more extensive correlation programs can be arranged by writing:
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34
Dr. Bruce Kolowich, Manager
US EPA
25f)5 Plymouth Road
Ann Arbor, VII 48105
24. Question: Can refineries participate in correlation programs with EPA if they are
using methods other than the prescribed methods?
Answer: Yes. However, this does not relieve parties of their obligation to use
approved test methods when required to do so by the regulations.
25. Question: Does EPA intend to verify industry compliance with proper sampling
procedures as part of the volatility enforcement program?
Answer: In general, EPA does not plan to verify sampling procedures used by
industry. However, in the context of an investigation as to the cause of an apparent
violation, it is likely that EPA will evaluate the sampling procedures used to determine
the validity of the test results presented by the alleged violator. Furthermore, during
on-site inspections, if EPA notes incorrect procedures used by industry personnel, then it
generally will inform industry personnel of such improper procedures.
26. Question: Will EPA issue a report or test results from a collected sample if no
violation is found?
Answer No, but EPA will accept requests for results of specific tests.
27. Question: Is EPA considering new sample size requirements?
Answer: For the 1990 volatility season, EPA will continue to use one quart glass
containers.
28, Question: If EPA collects a sample at a facility that has a lab. will they perform or
witness testing at that facility or will all samples be shipped elsewhere for testing?
Answer For the 1990 season, all samples for purposes of enforcement will be
shipped to Ann Arbor for testing.
29. Question: Is there an EPA approved video tape for sampling procedure training0
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35
Answer: EPA does not endorse training materials relating to the volatility
regulations, EPA is aware of one industry produced training
tape on volatility sampling procedures available from Caleb Brett U.S.A., Inc. in
Essington, PA.
30. Question: Will EPA take multiple samples for analysis, do duplicate analyses of
samples, or take joint samples with facility operators?
Answer: For the 1990 control season, EPA plans to take one sample of a
particular product for field screening and, when necessary, take one sample for
laboratory analysis. Field screening analysis will consist of performing one test of each
sample (additional analysis will be performed oil some samples during screening and in
ihe laboratory for quality control purposes). For larger volumes of gasoline EPA may
take additional samples. For quality control purposes, additional samples may be taken
at some fixed percentage of facilities. Facility operators may wish to take a duplicate
sample for their own purposes. If requested, the EPA inspectors will provide assistance
in obtaining such duplicate samples. '1'
31. Question: What happens if EPA test results of a particular sample of gasoline
reflect a higher RVP than the respective regulated party's test results of the same
gasoline? Is a party safe from liability if it conducts single or multiple tests or pcrforM
correlation testing with EPA?
Answer: In the contest of an enforcement proceeding, any party cosy challenge
the accuracy of EPA's test results, A party may present test results to EPA in order to
show that a violation did not occur or to satisfy a required element of a defense that
requires presentment of test results determined through the use of appendices D and E
of the volatility regulations.
Whether a party's test results will satisfy a required element erf a defense wili be
determined on a case by case basis. In evaluating such evidence, EPA will look at the
quality of the party's testing program to determine how much weight to give test remits
in a particular cm®. For example, EPA will pt»oe a higher value on test results ifc 1)
multiple sarapte (rather than a single sample) have been taken from a batch and tested;
2) the party's laboratory his run correlation tests with EPA's laboratory, aa insdepemkjBt
laboratory, or s national exchange program; and/or 3) a party's testing program mdude*
regular verification using a standard of knows RVP. Absent any indkatkm of an
irregularity in EPA's sampling and testing procedures with respect to the specific
violation, EPA's test results will be presumed to be correct in any enforcement
proceeding.
During the 1989 season, if a refiner or importer had a test result which wis at
least OS psi below the standard, the violation was not more than CL5 psa above the
standard, and if there was no reason to believe the party's result was invalid, then the
result was deemed to meet the element of the defense which relates to showing the
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6
gasoline in question was in compliance when it was transported from a refinery (40 CFR
§ 80.28(g)(4)(i)) or when it was delivered to the next party in the distribution system (40
CFR § 80.2S{gX2)(ii)), EPA believes that this policy has been helpful in encouraging
prudent industry compliance measures. Thus, EPA intends to continue this policy during
the 1990 volatility season.
32. Question: Has EPA's testing experience demonstrated any differences in RVP test
results using the different regulatory approved methods?
Answer: EPA test results, along with some industry data, indicate that the
Herzog semi-automatic digital method generally yields RVP results which are higher
than the manual tank and gauge method when testing the same product. This difference
is probably due to differences in the volume and location of the pressure measurement
devices. EPA will rely on the test results provided by the digital Herzog method for
enforcement purposes, however.
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Q. REMEDIAL ACTION
1. Question: What .should a party do if it discovers product having excess volatility
during the course of an oversight program? How may a party remedy such a violation?
Can The high volatility gasoline be transported or sold? Will EPA allow or require
reblending? Will EPA close the facility? Will EPA initiate an enforcement action
based upon the violation? Is the party required to notify EPA? What if the product is
already downstream?
Answer. The company should promptly take steps to remedy both the violation
arid the conditions which caused the violation. The violation can be remedied in one of
several ways, including the following: a) reduce the volatility by blending lower volatility
product with the high volatility gasoline; b) transport the gasoline to a geographic area
having a volatility standard with which the gasoline complies; c) store the gasoline until
a time period in which the gasoline complies, or until the compliance period ends; d)
transport the gasoline to a refinery or other facility. Transportation is appropriate only
for the purpose of correcting the high volatility; and storage is appropriate only when
high volatility gasoline was discovered through an oversight program, the stored gasoline
is sealed until a time when the product can be distributed, and the gasoline is clearly
designated as product that is not intended to be sold, supplied, dispensed, transported or
distributed.
EPA has no authority to require any of these remedial actions, or to close a
facility. EPA will, however, exercise its discretion and will not initiate an enforcement
action on the basis of high volatility gasoline discovered by a company, providing the
following conditions are met: a) the violation was the result of an accident or a mistake
(i.e., was not based on a decision to sell, dispense, supply or transport high volatility
gasoline, or an action in disregard of the regulations); b) the company completely
corrected the violation (e.g., upon discovery the company took all steps possible to
assure the high volatility gasoline which was on hand or which had already been
distributed downstream was immediately corrected); c) the company took appropriate
action to ensure future violations will not occur (e.g., where a refiner discovers high
volatility product caused by a reseller's failure to comply with product handling
procedures contractually imposed by the refiner on the reseller, the refiner took steps to
compel compliance with the contract); and d) the remedial actions are not the result of
an EPA inspection or investigation.
Any sale, supply, offering for sale or supply, dispensing, or transport (other than
transport oaiy to correct a violation) would constitute continued additional violations of
the regulations, EPA is unwilling to grant a waiver to allow use of high volatility
product.
2. Question; What should a company do if it is notified that EPA has discovered a
violation? Will any remedial action affect the penalty?
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38
Answer: The company should immediately take remedial actions to correct the
violation and the conditions which caused the violation (as described in the previous
question). Such actions will be considered by EPA in mitigating any penalty imposed
because of the violation.
3. Question: What will the Agency 's procedure be for allowing (or not allowing)
gasoline sales when high gasoline RVP is indicated by the field test instrument.
Answer: In the event EPA inspectors inform a company that a volatility field test
shows gasoline has excess volatility, the Agency views this as notice to the company of a
possible violation of the regulations. While the regulations do not give EPA the
authority to stop the sale of non-complying product, if the EPA laboratory confirms the
gasoline has excess volatility, the company will be entitled to penalty mitigation only if
appropriate remedial action was taken as soon as the company was told of the failed
field test.
4. Question: What is the procedure to verify that a tank is back in compliance once
corrective action has been taken?
Answer: A determination of the RVP of the tank following EPA sampling and
testing methodology is recommended.
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H. INSPECTIONS
1. Question: Where will EPA focus its enforcement efforts: how will EPA target
particular facilities for inspection; and who will conduct EPA sampling this summer?
Answer: EPA will be conducting inspections at all regulated party facilities,
including refineries, importer facilities, ethanol blending plants, bulk terminals and
plants, distributors, resellers, pipelines and other carriers, retail outlets, and wholesale
purchaser-consumers. Inspections will be conducted primarily by EPA staff and
authorized contractor personnel.
2. Question: Will EPA conduct audits of upstream facilities, including pipeline
terminals? Will refineries be audited first?
Answer: The Agency will initially concentrate on actual fuel sampling and testing
by EPA and its contractors as the primary means of determining whether violations have
occurred. EPA may later supplement the sampling and testing program with audits of
any regulated facilities or other information gathering techniques to identify the full
extent of violations.
3. Question: How will inspections be conducted at retail outlets? At distributor,
carrier, and pipeline facilities? At refiner and importer facilities?
Answer: At any of the regulated facilities, EPA may take as many samples as
necessary to determine compliance for any or ail of the gasoline products available at
that facility. The authorized EPA inspectors will clearly identify themselves, present
their appropriate credentials and state the purpose and nature of the inspection before
beginning their procedure. In addition, EPA may review records to determine
compliance of gasoline sold, dispensed, or transported during the compliance period, but
prior to the date of the inspection.
At retail outlets and fleet facilities, samples will be taken from pump nozzles
using the procedures set forth in the regulations. At refineries, import facilities, and
bulk terminals, inspections will be conducted by obtaining either "all-levels samples" or
"running samples" from bulk storage tanks containing finished gasoline (product shipping
tanks). Sampting will be from the gauge tube or roof hatch. If the gauge tube on a
fixed roof or internal floating roof tank is not perforated, EPA will tap the sample from
the side of the tank. At carrier facilities, samples will be taken from pipelines, tank
trucks, or tank cars only in accordance with the procedures described in the regulations.
Alternate sampling procedures may be used when agreed upon by the parties as
described in paragraph 11.1 of Appendix D to the volatility regulations. EPA inspectors
will adhere to any additional safety requirements for that facility, if requested.
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40
4, Qocstiowt What Information can. refiners and other regulated parties provide to
expedite inspections?
Answer: At the start of an inspection, a party can advise EPA concerning
applicable safety requirements for obtaining samples from the storage tanks. It can also
provide information concerning the type of storage tanks in which the finished product is
stored (e.g., floating roof tank or fixed roof tank) and the type of gauge tubes that are
used (perforated or solid). At the time of the inspection, a party should provide
documentation indicating whether product is blendstock or finished gasoline and the
destination and expected time of dispensing of the gasoline. This documentation should
be that which is generally accepted commercially within the industry to describe the
nature and status of such product
5. Question: How will EPA inspect unmanned terminals that are entered with "keys* by
various purchasers lifting products from common storage?
Answer: EPA will coordinate with the terminal owner/ operator to gain access to
the terminal and records relating to product stored at the terminal.
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I. NOTIFICATION OF VIOLATIONS
1. Question: What procedure will EPA follow to notify companies of violations; to
resoive violations?
Answer: EPA generally will inform ail identifiable parties who have potential
liability when a field test indicates gasoline has excess volatility. EPA subsequently will
issue a Notice of Violation to the liable party(s) identifying the violation arid setting
forth a proposed penalty amount. A parry then may present evidence to establish that
the violation did not occur or to support a defense as set forth in the regulations. If the
party is able to make such a showing, EPA generally will drop the action. If it is not,
EPA will attempt to negotiate a settlement with the party. If negotiations for settlement
fail, EPA will refer the case to the Department of Justice with a recommendation that a
complaint be filed in federal district court to recover the statutory forfeiture.
2. Question: How quickly will EPA notify parties of violations?
Answer EPA will contact parties as soon as possible after the field test results
indicate that a violation has occurred. The Notice of Violation is usually issued within a
month of the laboratory verification of the violation.
3. Question: What are the penalties for an RVP violation? Will the amount of a
penalty take into account the RVP level and volume of product in violation?
.Answer: The statutory penalty for violations of § 211 of the Clean Air Act, under
the authority of which the volatility regulations are promulgated, is forfeiture of $10,000
per day per violation. Under EPA's volatility penalty policy, proposed penalties are
based upon the gravity of the violation (RVP exccedance and volume of product in
violation), adjusted for prior violations and, Ln certain cases, business size. A copy of
the penalty policy is attached.
41
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42
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J, STATE VOLATILITY PROGRAMS
L Question: What is the effect of EPA's regulations 00 State volatility regulations?
Will FPA preempt state regulations?
Answer: EPA's regulations preempt state and local volatility regulations unless
one of the following exceptions apply;
a. The state control is identical to the federal control.
b. The state regulation has been approved by EPA as a State Implementation
Plan (SIP) amendment which is necessary to achieve a national ambient air quality
standard.
c. The control was prescribed by a state which received a section 209(b) waiver.
(Only California has received such a waiver.)
d. The state control is not done for the purpose of motor vehicle emission
control.
2. Question: What is the current starns of state SDPs and their approval by EPA? How
much lead time for compliance will EPA grant?
Answer: EPA has finalized approval of the Massachusetts, Connecticut, Rhode
Island, New York and New Jersey SIP revisions and has proposed to approve the Maine
SIP revision. EPA has received requests for SEP approval from Maryland, Delaware,
Illinois and the Dallas/Fort Worth area. It is impossible to estimate when reviews of
these requests will be completed. The issue of lead time will be handled on an
individual basis based upon the facts in each individual case.
3. Question: Will EPA modify the Texas SEP allowing 9,0 psi maximum RVP gasoline
in the requested areas surrounding the Dallas-Fort Worth metroplex? Will EPA modify
the RVP maximum for the entire state of Texas to 93 psi except for the El Paso area,
which would remain 9.0 psi, as was considered during 1989?
Ahjwwr EPA is currently analyzing the Dallas volatility SIP request, which
includes the nme county Dallas/Fort Worth area. EPA does not anticipate modifying
the SIP but instead will prepare a proposal based upon the SIP as submitted by Texas.
EPA sent a letter to the State of Texas requesting input as to the advisability of
proposing a single standard of 9.0 psi for Texas. In a letter dated March 28, 1990, the
Governor of Texas stated that he would support a single standard of 9.0 psi.
43
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A A
4. Question; Will EPA delegate enforcement authority to the states? Are states going
to do any testing?
Answer: EPA cannot delegate its enforcement authoriry to the states. In some
instances, states with their own approved volatility standards may iaspect for violations
of state RVP standards and enforce them themselves.
5. Question: In states in which EPA has approved a SIP that calls for more stringent
RVP specifications than the federal standard, will EPA relinquish enforcement of
volatility controls entirely to such states? If not, will EPA test facilities for compliance
with the federal RVP specification or the lower state RVP level? Will a facility tested
by EPA to be 10.0 RVP be in violation if found in a state that has a SIP approved 9.0
RVP level?
Answer: Both the federal and state standards are enforceable where there is an
overlap of jurisdiction, such as in any state or area that has had final approval of a SIP
revision and in states having standards that were promulgated for purposes other than
motor vehicle emission control. Therefore, where both state and federal standards are
in place, the regulated industry is required to comply with both standards. EPA will
test regulated facilities in such states and will enforce the federal standard.
6. Question: To the extent that any aspect of an approved state regulation is less
stringent or less comprehensive than the EPA rules, will the more stringent portion of
the federal rules continue to apply?
Answer: As discussed above, where a state volatility regulation has been
approved, the regulated industry is required to comply with both the state and federal
regulations. Generally, the approved state standards are more stringent than the federal
standard. However, there are several situations in which the state regulations are less
stringent or comprehensive than the federal regulations, For example, the NESCAUM
regulations: 1) do not apply to as many parties, such as retail outlets (except for Mew
Jersey), as the federal rules; 2) exempt gasoline containing 10% or more of any type of
alcohol; 3) allow waivers at the discretion of state officials to alleviate potential supply
disruptions. la til of these situations, although the state standard may not be enforced,
the federal staad&rd and associated requirements will be enforced. Similarly, where a
preexisting st»«e standard is less stringent than the federal standard, the federal standard
will be enforced.
7. Question: Several states have regulated gasoline to meet ASTM specifications for
several years for reasons not related to the environment In these states, will the EPA
rule preempt state ASTM specifications if the ASTM limit is more restrictive?
Answer As indicated in the answers to questions above, the federal standard
does not preempt the state standard in this situation. However, even where the state
standard is more stringent, EPA can enforce a violation of its less stringent standard.
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45
8. Question: Will states with unapproved SEPs, or pending SIP requests for approval,
be allowed to sample, test and enforce state RVP regulations?
Answer Those state regulations whi i were passed for the purpose of motor
vehicle emission control are preempted by me federal regulation unless EPA approves a
SIP amendment by finding that the control is "necessary to achieve" an ambient air
quality standard or the state standard is identical to the federal standard (or one of the
other preemption exceptions described in answer to Question J.l is satisfied).
Therefore, states whose regulations are for the purpose of emission control cannot
enforce their regulations unless they are approved by EPA.
9. Question: Will states with approved SIP revisions be enforcing their regulations
using testing procedures that differ from EPA's?
Answer: As pan of the SIP approval process, EPA requires states to use an EPA
approved method of testing. Currently two methods are approved by EPA the ASTM
Annex 2 Modification of Method D-323 and the Herzog Se mi-Automatic Method. EPA
will be reviewing other test methods to determine their acceptability. If any other
methods are found to be acceptable, EPA will publish a notice in the Federal Register
to include them on the list of EPA approved test methods. Until that time, the states
must use one of the two EPA approved test methods.
10. Question; Why does the EPA not develop a cooperative effort with the state
petroleum inspection programs. This would be an effective method of enforcement that
is already in place.
Answer. EPA would be willing to work with the state to develop state
enforcement programs and to train state inspectors,
11. Question: EPA has recognized that the first phase of the 2-phase control program
will probably not require capital investments, However, further reductions in RVP by
many individual states through the SEP process will require new capital investment and
substantially longer lead times to assure compliance. How will EPA advise states to
handle lead time issues as more and more states consider reduced RVP as part of their
SIPs.
Answer: The states have handled the lead time issue by considering that issue as
pan of their regulatory and public comment process. We would encourage states to
continue to do so.
12. Question: Will EPA's pump labeling requirement for ethanol blends preempt state
labeling requirements?
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46
Answrn EPA's pump labeling requirement for ethanol blends is not intended to
preempt state requirements. A regulated party must comply with EPA's requirement,
and we believe this would not interfere with compliance with state labeling
requirements.
13. Question: Is there a vehicle in the federal volatility regulations that would allow
EPA to control the state RVP regulations such that the patchwork of state and city
regulations could be eliminated resulting in a consistent set of regulations for contiguous
states in a logistical region?
Answer. EPA evaluates the state volatility SIP requests individually. The
Agency's determination is based upon whether the state regulation is "necessary to
achieve" a national ambient air quality standard. EPA is not able to use the SIP review
process to effect changes to the state regulations which do not impact the "necessary to
achieve*' determination.
14. Question: New Jersey allows for a testing tolerance while several other
northeastern states do not. Does EPA plan to require consistency in the testing
tolerance area in states that deviate from the federal levels through the SIP process?
Answer EPA will leave the issue of testing tolerance to each state.
IS. Question: Control dates for state in tie northeast vary considerably. Docs. EPA
plan to require consistency in this area?
Answer: The NESCAUM states control dates are identical. However, the issue
of control dates will be reviewed only in the context of the "necessary to achieve" test.
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47
ATTACHMENTS
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SLIDES PRESENTED AT THE PUBLIC MEETING HELD ON APRIL 28, 1989
£177- Correlation with EPA
EPA endorses good correlation
EPA will support producers in
this area
Producers must show a "good
faith" effort
What EPA will do
* We wiii share our data
* We will document our procedures
* We will provide guidance
* We will participate in programs
* We will analyze outside samples
We may send out "standards"
£B2» What is "Good Faith"
¦ Complete familiarity with req'ts
1 Strict adherence to procedures
- Uniformity among operators
Careful oversight by QA/'QC
Coordination In the organization
Participation in outside efforts
Relationships with the regulators
\
Application Format
• Facilities
- Equipment
* Personnel
• Procedures
~ miscellaneous factors, e.g., QA
practices, correlation experience
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UMTO STATUS ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D C. 204*0
QEC-in 2£"SZvoh
MEMORANDUM
SUBJECT: Volatility Civil Penalty Policy
FROM: Marc R. Hillson, Acting Director
Field Operations and Support Division
TO Fi«ld Operations and Support Division Personnel
I INTRODUCTION
This memorandum describes the Field Operations and Support
Division• s (FOSD) policy for determining penalties for violations
of the volatility regulations for gasoline and alcohol blends.
See 4 0 CFR sections 80.27 and 80.28 and Appendices D, E, and P
(promulgated at 54 PR 11868 (March 22, 1989) and modified at 54
FR 27016 (June 27, 1989) and 54 FR 33218 (August 14, 1989)) /
The policy follows the guidelines of the Agency's Policy on Civil
etnaltln and A Framework. for Statute'Specific Approaches to
Penalty Assessments (EPA General Enforcement Policies # GM - 21
and 22) (the "EPA Policy").
Parties covered by these regulation# include refiners,
importers, alcohol blenders, carriers, resellers, distributors,
retailers, and wholesale purchaser-consumers.
11, OVBHrcW
Ik. The PrajMwork of the EPA Policy
The SPA, Policy establishes deterrence as the primary goal of
penalty iiiiitiint. In addition, it recognises that penalty
aistnaaflMteuld ptovidt for fair and equitable trutaant of the
1 T%mm regulations establish phase X volatility standards
effective starting in 1989. The Agency has also proposed phase n
standards to be effective starting in 1992. see 5a PR 31274,
31315-6 (August 19, 198?). EPA expects to finalise these phase IX
standards soon, and reserves the right to modify this penalty
policy to account for any relevant differences between such
standards and the phase I standards (e.g., different economic
benefits of violations).
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2
r*gulat®
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III. CAI-CUIJvTING THE PROPOSED PENALTY
Th* proposed penalty for volatility violations is based upon
th® magnitude of th* violation {th® nuaber of gallons of gasoline
which art in violation) and the severity of the violation
-------
Xis tb««e caaas where the penalty is derived from a penalty
tabl« which does not reflect the gallons in violation (normally
for violation® found at retail outlets or wholesale purchaser-
consumer facilities), penalties are different for different-sized
businesses. These distinction* are appropriate because the busi-
ness size of potential violators may range from very small
businesses to major national corporations, and the appropriate
level of deterrence will differ. For the purposes of this polic-
y, the siza of a business entity is expressed in terras of the
violator's gross income (i.e., total business revenues from the
businass entity which gave risa to the violation) for the prior
fiscal year- Whan the violator is an individual, size is ex-
pressed in terms of tha individual's gross income frost the prior
fiscal year. Where the prior fiscal yaar Is not representative
of the violator's historical business size, revenues or income
from the prior three to five years should be evaluated.
D. Penalty Formula
Penalties ara calculated in a Banner which removes tha eco-
nomic benefit tha violator nay hava received from violating tha
volatility regulations, and in addition, includes a deterrent to
discourage other violations, This policy assigns tha amounts of
economic benefit which ara appropriate for different levels of
noncompliance (Table 1). The amount of thesa benefits are based
upon analyses which were carriad out as part of tha regulatory
impact analysis for tha volatility regulations.
Table 1. Economic bansfit resulting from tha
production of gasoline which ex-
ceeds the volatility standards.
Amount Standard
Exceeded
o to 0.5 pel
9.3 t@r 1.0 pel
1.0 to 2.0 pmi
over 2.0 pel
Assigned Economic Benefit Value
(per gallon of noncomplyinq gasoline)
$,01
$.02
$.03
$.04
The economic benefit component (EBC) of the proposed penalty
is calculated by multiplying the number of gallons of gasoline
which are in violation by the appropriate economic benefit value
from Table 1. Except as described toelov, the gravity component
(GC) is equal to the economic benefit component. The proposed
penalty (PP) is equal to the sum of the economic benefit and the
gravity component. Thus, the proposed penalty is calculated
using the following formula:
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jxxr
5
PP - 11C + GC
In order to reflect the history of violations, the gravity com-
ponent will be increased for cases where the violator has a his-
tory of prior violations. Thus, the formula for calculating the
proposed penalty for a violator who has a history of prior viola-
tions is as follows:
In certain case#, the number of gallons of gasoline in vio-
lation will b« so small that th« penalty calculated as described
above will not constitute a sufficient deterrent to achieve ths
goals of ths volatility regulations. For this reason, minimum
proposed penalties are provided in this policy (see Table 2}.
The penalties fro* Table 2 should b« used when the penalty calcu-
lated as described above is less than the penalty derived from
Table 2. In other words, the proposed penalty should be the
greater of the calculated penalty and the penalty frost Table 2.
Section 211(d) of the Clean Air Act provides for a mandator
forfeiture of $10,000 p«r day of violation. Thus, any penalty
calculated under this policy may not exceed $10,000 p«r day of
violation, Where th« calculated penalty amount exceeds 510,000,
there must be a reasonable basis that there were an appropriate
number of violations and/or that the violation occurred for the
appropriate number of days (e.g., at least three violations
and/or three days of violation for a $30,000 proposed penalty).
H30Bfeg.tr
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s
2. Minimum penalty amounts for vola-
tility violations, adjusted
for business size, gravity of the
violation, and number of prior
violations.
Numb«r of Business Size
Prior Violations I II in
Exceed Standard by 0 to 0.5 psi
0 $1,000 $1,500 $3 f000
1 1,300 1,900 4,000
2 1,750 3,000 5,500
3 2,000 4,000 7,000
Excscd Standard by 0.51 to 1.0 psi
0 1,500 2,350 4,500
X 2,000 3,000 5,000
2 2,500 4,000 6,000
3 3,000 5,500 8,000
SxcMd Standard by 1.1 to 2.0 psi
0 2,000 3,000 6,000
1 3,000 4,000 7,000
2 4,000 6,000 8,500
3 6,000 7,500 10,000
ExcMd Standard by aore than 2.0 psi
0 3,000 4,500 8,000
1 4,000 6,000 9,000
2 6,500 8,000 .* 10,000
3 8,500 9,250 10,000
Six* of hMiiwi eat*gori«« m d«fin«d Cor tills policy art
fit« I 0 to $1,000,000
lift 11 91,000,000 to 910,000,000
Sis® lit 910,000,000 and grsatsr.
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8. Violations Caused by Mislabeling
Th« regulations allow an additional l.o pal RVP for ethanol
blends under certain conditions. These conditions are: the gas-
oline must contain at least 9.0% ethanol (also, the concentration
J-n unleaded gasoline may not exceed 10.0%) ; the pump stand from
which the gasolin« is dispensed must be labeled as containing
ethanol and with the ethanol concentration; and each document
which accompanies the gasoline (e.g., invoices, loading tickets,
etc.) must contain a statement that the product contains ethanol.
Sea 40' CFR section 80.27(d).
If a pump stand or accompanying document is not labeled in
accordance with the regulations, the ethanol blend oust meet the
RVP standard applicable to gasoline (e.g., 3.0 psi in a Class h
area). If this standard is exceeded, there is a violation of the
volatility regulations.
EPA will treat as a special type of violation the situation
whtrt an ethanol blend would have been entitled to the additional
1.0 psi all owance (and would have met the applicable KVP standard
which included this allowance) if it had satisfied the ethanol
labeling requirements. In instances where such a violation caus-
ed by mislabeling does not lead to a subsequent violation, this
policy establishes a penalty of $300 for such violations. This
penalty will be applied for each retail outlet or wholesale
purchaser-consumer facility having one or lore pump stand not
properly labeled (and not separately for each pimp stand), or
each load of gasoline delivered without the proper document
statements. EPA will not adjust the penalty for violations
caused by mislabeling as discussed in the next section, except
under extraordinary circumstances. This policy will not apply to
upstream parties, retail outlets or wholesale purchaser-consumer
facilities which have had prior violations of this type.
IV. ADJUSTMENTS TO THE PROPOSED PENALTY
Thm £f& policy specifies that penalties should be evaluated
for adjuttamnt based upon decree of cooperation/noncooperation,
ability to pay and other unique factors specific to the case.
This poliey provides for thesa adjustments, Violators bear the
burden of justifying any adjustments in their favor. When the
penalty forvula is used for the NOV amount, thm adjustments only
should apply to the gravity component, and not; to thm economic
benefit component.
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8
*• Degree of Cooperation/Noncooperation and
Actions to Remedy the Violation
This policy allows mitigation of the proposed penalty of up
to forty percent as an incentive for the violator to cooperate in
the investigation and negotiations, and to correct the violation
promptly, The greatest mitigation should be given where the vio-
lator cooperates fully and corrects all violations immediately
upon discovery by the violator. In general, the earlier and more
complete the cooperation and corrective action, the larger the
penalty reduction which is appropriate.
For volatility violations, correction generally means
capturing the noncomplying gasoline and either storing it until
the end of the control period, rerouting it to an arts where it
would be in compliance, or reblending the gasolin* so that it
comes into compliance with the appropriate volatility standard.
This action should also include implementing a procedure to pre-
vent such violations from occurring in ths future, if such a pro-
cedure is not already in place. The degree of penalty mitigation
will he related to the extant to which the violation, and the
conditions which caused ths violation, art corrsctsd.
The violator's cooperation during the investigation,
negotiation and settlement phases of a ease may result in a pen-
ally adjustment. A violator is expected to provide access to
recordtt and premises and to not interfere with the investigation.
In addition, the violator should identify and provide information
about other parties who were involved in the volatility vio-
lation. Failure to cooperate in an investigation, attempting to
, hide records or evidence of violations, or not cooperating in any
continuing investigation should be reflected in the adjustment
for this factor.
B* Financial Hardship Adjustment
The Agency generally will not seek penalties which are
clearly beyond the means of the violator. However, it is
important tilt the regulated community not view the violation of
l requirements as a way of aiding a financially
troubled fetlineis. Furthermore, some violations are so out-
rageous so as to render any mitigation inappropriate. For ex-
ample, it is unlikely that F03D would reduce a penalty based upon
financial hardship where a violator refuses to correct its viola-
tion or take stepe to prevent future violations. The same would
be true for a violator with a long history of previous violations
of environmental lavs, or where there are indications that many
more violations exist than those alleged in the MOV. Therefore,
POSD reserves the option, in appropriate circumstances, of not
reducing the final penalty as a result of financial hardship even
though that penalty may put a company out of business.
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A financial hardship claim normally will require a
significant, amount of financial Information from the violator.
The burden of demonstrating inability to pay, like all mitigating
factors, rests on the-- violator. If the violator fails to provide
sufficient information in a timely manner, then the prosecution
team cannot give full consideration to this factor.
Where a financial hardship claim is adequately established,
FOSD may, at it* discretion and based upon its review of all the
equities of the case, including tha financial hardship, further
adjust the penalty. The preferred approach to such an adjustment
is allowing a delayed payment schedule, or granting an unusually
favorable alternative payments package. However, a* a last re-
sort, FOSD may agrse to an extraordinary penalty reduction for
this factor.
A case may arise in which equity cannot ba served by adjust-
ing the penalty within tha normal limits of this policy. In such
a case, FOSD may grant extraordinary mitigation. The burden of
establishing the need for extraordinary adjustment of the penalty
rests on tha violator. In order to maat this burdan, tha vio-
lator must present evidence of: (l) tha facts of tha case; (2)
why tha adjusted panalty is inaquitabla; (3) why tha criteria for
adjustment ara insufficient; and (4) how tha public interest is
protected or served by an extraordinary adjustment in tha penal-
ty.
V. ALTERNATIVE PAYMENTS
It is FOSD's policy to encourage violators to resolve a
portion of their penalties by making payments to support programs
which educate tha public regarding motor-vehicle-caused air pol-
lution and the lavs for its control. Such gredit projects en-
courage compliance with thesa lavs, and therefore advance program
goals beyond the Mr* deterrent affect of paying penalties into
the federal treasury.
h crodlt projset may take many forms. However, several
condition* most bei sat in order to prevant abusa of tha program.
First, no credits say be given for activities that are currant
legal requirement* or likely to be such in ths foresaaable future
(e.g., through upcoming rulemaking). Heart, the majority of tha
project's environmental banefit should accrue to ths general
public rather than to the violator or any particular governmental
unit, finally; the project may not be something which the vio-
lator could reasonably be expected to do as part of sound busi-
ness practices.
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10
1. PENALTY AfTElt INITIATION OF LITIGATION
When an NOV ia issuad and a violator fails to s«ttl« tha
casa, the Agancy ganerally will rafer tha mattar to tha Unitad
Stata Department of Justica (DOJ) for prosecution in federal
district court. Whan a case is referred to DOJ, the normal
recommendation is to prosecute for tha statutory penalty of
$10,000 par day par violation.
VII. MISCELLANEOUS
Tha policies and procedures sat out. in this document ar®
intandad solely for tha guidance of govarnjiantal personnel. Thay
ara not intandad and cannot be raliad upon to create any rights,
substantive or procadural, anforcaabla by any party in litigation
with tha Unitad States. Tha Agancy raaarv«s tha right to act at
variance with these policiaa and procedures and to changa tha® at
any tisa without public notica.
This policy appliee to civil enforcement of tha gasoline
volatility regulations and doaa not apply in any way to potential
criminal anforcaaant.
VIX. PENALTY EXAMPLE CALCULATIONS
Following ara exaaples of application of this policy to
hypothetical factual situation*.
EXAMPLE A.
EPA determines that a branded retail outlet dispensed 3,000
gallons of gasoline with an KVP of 10.2 pei in a geographical
area and during a regulatory control period having an applicable
standard of 9.5 P»i« The gasoline, therefore, exceeded the stan-
dard by .7 The retail outlet is a Size I business and it
has no histery of prior violations.
Vn&mt tlM penalty formula, the penalty calculations would be
as follouvt
Ft ¦ I1C ~ 6C
XBC • 3,000 gals m $0.02 - $60
gc - wm • $
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Under T«bl« 2, tlsa penalty amount for this retail outlet would toe
$1, "S00. B*eau«e the penalty amount fro® Table 2 la larger than
the calculated penalty amount, the penalty amount from Table 2
($1,500) Should be assessed against this retail outlet.
Various parties upstream from the retail outlet also may be
liable for the violation. If the retail outlet is one displaying
the corporate, trade, or brand name of a gasoline refiner or any
of its marketing subsidiaries, the refiner whose corporate,
trade, or brand nam* is displayed would be liable for the viola-
tion. In addition, th* distributor arid/or reseller, a carrier
who caused the violation, or the ethanol blender at whose ethanol
blending plant th® gasoline was produced would be liable for the
violation.
In this example, because th# retail outlet displayed the
brand name of a refiner, EPA may assess that refiner a penalty
under Tabla 2 according to its business siza and history of prior
violations. If, for example, th* rafinar is a Siza III business
and it has a history of ona prior violation, th* calculated pan-
alty would ba:
ISC - 3,000 X $0.02 - $60
GC - ($60 X 1.5) - $90
PP - $60 + $90 - $150
The penalty und*r TaJbl* 2 would b« $5,000, however, so that this
larger penalty would apply to th* rafin«r. Th* distributor, if
any, a carrier who caused th* violation, or an athanol blander
who produced th* gasoline similarly say b« assessed a penalty.
EXAMPLE 1.
EPA detects a violation at a unbrand*d distributor facility
involving 1,000,000 gallon* of gasolin* *xc**ding th* applicable
standard by 1.X pai. Th* distributor is a Sis* III business and
it has no bistory of prior violations, Urvd*r th* penalty for-
mula, tim ponalty calculations would b« as follows:
PP - EEC + GC
EBC * 1,000,000 qmlm X $.03 - $30,000
GC - EBC « $30,000
Ft • $30,000 4- $30,000 - $€0,000
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Tbe calculated penalty of $60,000 is applicable in this cas«
b«caua« it is larger than the penalty d«riv«d from Tabl® 2, as-
suming that thers are at laast six violations and/or six days of
viol at ion•
Parties upstream from the distributor also may be deemed in
violation. If the distributor is operating under the corporate,
trade, or brand naat of a gasoline refiner or any of its market-
ing subsidiaries, the refiner under whose corporate, trade, or
brand nam® the distributor is operating would be liable for the
violation. If the distributor is not operating under a refiner's
corporate, trade, or brand name, the refiner at whose refinery
the gasoline was produced, the importer at whose import facility
the gasoline was imported, or an ethanol blender at whose plant
the gasoline was produced would be liabl# for the violation. A
carrier who caused the violation is also deened in violation.
In this example, because the distributor was not operating
under a refiner's corporate, trade, or brand hum, the refiner
(importer and/or ethanol blender) who produced the gasoline would
b« liable for the penalty amount as calculated above according to
the penalty formula (because it is larger than the penalty de-
rived from Table 2). If EPA dataniinet that a carrier caused the
violation, it would be liable for the calculated penalty amount.
EXAMPLC C
EPA detects a violation at a carrier facility involving
100,000 gallons of gasoline exceeding the applicable standard by
.4 psi. The carrier is a Size II business and it has a history
of two prior violations. The calculated penalty is as follows:
Pf • EBC ~ (GC X a.®)
1* « 100,000 gals x f.oi - $1,000
GC - 1«C - u»000
f» • $1,000 * (91*000 1 2.0) - $3,000
Tim calculated penalty is $3,000, and the penalty under
Table 3 If $3,000 for a size II business having a history of
prior violations. The proposed penalty, therefore, would be
$3,000.
The refiner at whose refinery the gasoline was produced, the
importer at whose import facility the gasoline was imported,
and/or the ethanol blender at whose ethanol blending plant the
gasoline was produced also may be deemed in violation. For these
parties, the penalty amount in Table 2 would b# applied if it
exceeds the calculated penalty of $3,000,
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13
KXAMPZJt O.
SPA d«t«cfc® a violation at a r«fin«ry involving 3,000,000
gallon® of gasoline exceeding the applicable standard by 2,1 psi.
The r®fin#r is a Siza XXX business ^nd 1.t iias no history o£ ^iriotr
violations. The penalty calculations are as follows:
PP « EBC + GC
EBC ¦ 3,000,000 gals X $.04 » $120,000
GC - EBC - $120,000
PP - $120,000 ~ $120,000 - $240,000
This calculated penalty is larger than the penalty under Table 2
and would therefore apply, assuming that there are at least 24
violations and/or 24 days of violation.
#
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