[Federal Register Volume 61, Number 126 (Friday, June 28, 1996)]
[Proposed Rules]
[Pages 33703-33705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16541]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-5528-2]
World Trade Organization (WTO) Decision on Gasoline Rule
(Reformulated and Conventional Gasoline)
AGENCY: Environmental Protection Agency.
ACTION: Invitation for Public Comment.
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SUMMARY: EPA is initiating a process to identify and evaluate any and
all options available to meet U.S. international obligations, in
response to a recent decision by the World Trade Organization (WTO).
The WTO decision concerns one aspect of rules issued under the Clean
Air Act for conventional and reformulated gasoline. In particular it
relates to the baseline used in these programs to determine the
requirements for imported gasoline. EPA's goal is to identify any and
all feasible options consistent with EPA's commitment to fully protect
public health and the environment. Comments are invited from all
interested parties on these matters.
DATES: Comments must be received on or before September 26, 1996.
ADDRESSES: Interested parties may submit written comments (in
triplicate if possible) for EPA consideration. The comments are to be
addressed to: EPA Air and Radiation Docket, Attention: Docket No. A-96-
33, Room M-1500, Mailcode 6102, U.S. EPA, 401 M Street, S.W.,
Washington, D.C. 20460. The docket is open for public inspection from
8:00 a.m. until 5:30 p.m. Monday through Friday, except on governmental
holidays. As provided in 40 CFR Part 2, a reasonable fee may be charged
for copying docket materials. Should a commenter wish to provide
confidential business information to EPA, such information should not
be included with the information sent to the docket. Materials sent to
the docket should, however, indicate that confidential business
information was provided to EPA.
FOR FURTHER INFORMATION CONTACT: Karen Smith, U.S. EPA, 401 M Street,
S.W. (Mailcode 6406J), Washington, D.C. 20460, telephone (202) 233-
9674.
[[Page 33704]]
SUPPLEMENTARY INFORMATION: The World Trade Organization recently
adopted the report of its Appellate Body concerning one aspect of rules
issued under the Clean Air Act for conventional and reformulated
gasoline. The dispute initiated by Venezuela and Brazil involves the
baseline used to set the emissions requirements in these programs for
imported gasoline. The WTO concluded that EPA's rules in this matter
were inconsistent with U.S. obligations under the General Agreement on
Tariffs and Trade (GATT) because they unjustifiably discriminated
against imported gasoline. It is important to note that the Clean Air
Act was not at issue in this dispute.
The U.S Government is disappointed with the results of this
decision, but is gratified that it fully recognized a country's right
to adopt appropriate measures to protect public health and the
environment. In addition, the WTO decision clearly recognizes that
clean air is an exhaustible natural resource, and that conservation of
this resource is covered by the provisions of Article XX(g) of the
GATT.
EPA is initiating a process to identify and evaluate all options
available to the agency in responding to this decision. EPA's goal is
to identify any and all feasible options consistent with EPA's
commitment to fully protect public health and the environment, and at
the same time consistent with the obligations of the United States
under the WTO. Before deciding what course to take, EPA intends to
fully evaluate all options identified in this public process. This
invitation for public comment is designed to inform EPA's evaluation of
the options.
The following description of the relevant regulatory provisions and
related issues is provided to help the public in preparing comments. As
noted above, the conventional gasoline program contains emissions
requirements designed to ensure that gasoline does not degrade in
quality from 1990 levels in ways that would adversely affect the levels
of air pollution from motor vehicles. The Clean Air Act calls for
conventional gasoline produced or imported by a refiner or importer to
stay as clean as it was in 1990. See section 211(k)(8) of the Act. To
meet this requirement, EPA regulations require that domestic refiners
establish a baseline that reflects the quality of the gasoline they
produced in 1990. The emission requirements for conventional gasoline
are keyed to these individual baselines. For the conventional gasoline
program, see 40 CFR 80.90 -93, 80.101(b). Individual baselines play a
limited role in the reformulated gasoline program. From 1995 through
1997, certain of the emission requirements for reformulated gasoline
are expressed in terms of individual baselines. After that date,
individual baselines are not used in the RFG program. See 40 CFR
80.41(h), (j).
Based on the limited ability of importers and domestic blenders to
determine the quality of the gasoline they produced or imported in
1990, in almost all cases they are assigned the statutory baseline
instead of an individual baseline. The statutory baseline was designed
to approximate the national average for 1990 gasoline quality. There is
no provision in the regulations under which a foreign refiner may
establish an individual baseline, nor are they assigned the statutory
baseline. Imported gasoline is regulated through the importer, not the
foreign refiner, and foreign refinery modelling information/data may
not be used by an importer to establish an importer baseline.
The rulemaking record for the conventional and reformulated
gasoline program contains information regarding the environmental,
cost, verification and enforcement issues associated with setting the
baseline rules for domestic and imported gasoline. For further
discussion of these matters, see 59 FR 7716 (February 16, 1994); 59 FR
22800 (May 3, 1994).
One baseline issue considered during the rulemakings noted above
involves allowing foreign refiners to petition EPA for approval of an
individual baseline for a foreign refinery. This issue was also raised
during the WTO dispute settlement proceedings. In this respect, the
Appellate Body identified two omissions of the United States: (1) the
United States had not sufficiently explored ways of overcoming its
administrative concerns with respect to imported gasoline and (2) the
United States had considered the costs of compliance with the statutory
baseline for domestic refiners but had not adequately considered them
for foreign refiners. It is important to note that EPA is inviting
comment on all feasible options that the agency should consider.
Commenters should not limit themselves to consideration of individual
baselines for foreign refiners. EPA is interested in evaluating any
alternative approach that would achieve the environmental benefits
associated with these gasoline programs while treating domestic and
imported gasoline in a manner consistent with U.S. obligations under
the WTO.
Some of the issues that are relevant to individual baselines and
may also be relevant to other options include the following:
How would EPA be able to accurately establish a reliable and
verifiable individual baseline for a foreign refiner? This would
include consideration of the technical problems associated with
determining the quality and volume for gasoline imported into the U.S.
from a foreign refinery in 1990, determining the refinery of origin for
gasoline imported in 1990, and consideration of the role of independent
verification in establishing an accurate baseline.
How would EPA be able to adequately monitor compliance and enforce
any baseline requirements? This would include consideration of the
ability to audit and inspect both foreign and domestic facilities, and
the ability to enforce against foreign refiners and importers.
How would EPA be able to effectively determine the refinery of
origin of imported gasoline, so as to determine the appropriate
baseline to apply to the imported product? This would include
consideration of the kind of tracking and segregation needed to ensure
effective determination of refinery of origin.
Commenters should address these issues to the extent relevant to
the option(s) they are addressing.
Commenters should identify the potential environmental impacts from
implementation of any suggested option. For example, for those
commenters that might propose individual baselines, this would include
consideration of the number of foreign refiners that could seek and be
able to establish an individual baseline, the individual baseline
levels that could be established, the volume of imported gasoline that
could be subject to such a baseline, the areas of the country in which
this gasoline would be used, the length of time that a foreign refiner
could use an individual baseline, and the regulatory programs in which
such a baseline was allowed, e.g. conventional or reformulated
gasoline.1
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\1\ Commenters should be aware that EPA is currently prohibited
by law from taking any further action on its May 1994 proposed rule
that would have allowed the establishment of individual baselines
for foreign refiners for use in the federal reformulated gasoline
program. Omnibus Consolidated Recissions and Appropriations Act of
1996, Pub. L. No. 104-134, Sec. 101(e), 142 Cong. Rec. H3922 (daily
ed. April 25, 1996); 59 Fed. Reg. 22800 (May 3, 1994).
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In addition, EPA invites any other comments relevant to the two
issues raised by the appellate body in its report as omissions on the
part of the United States--exploring adequately the means of mitigating
the administrative problems identified in EPA's earlier
[[Page 33705]]
rulemaking, and considering the costs for foreign refiners that might
result from the use of the statutory baseline for imports.
A key criterion in evaluating any options presented in response to
this notice will be fully protecting the public health and the
environment. The reformulated and conventional gasoline programs are
important components in the strategy for achieving that goal. EPA
invites comment that would allow EPA to better quantify or characterize
potential environmental impacts of any options proposed by commenters,
as well as feasible options to address any such potential impacts.
As noted above, EPA's goal in inviting public comment is to obtain
information that will help the agency identify any and all feasible
options consistent with EPA's commitment to fully protect public health
and the environment, and at the same time consistent with the
obligations of the United States under the WTO. EPA requests that
commenters provide information and analysis on the public health and
environmental impact associated with any option presented for
consideration. Commenters should also identify the economic and other
impacts associated with any suggested option, and discuss the
relationship of the option to the United States' obligations under the
WTO.
Dated: June 20, 1996.
Mary D. Nichols,
Assistant Administrator for Air and Radiation.
[FR Doc. 96-16541 Filed 6-27-96; 8:45 am]
BILLING CODE 6560-50-P
