og96027.txt

Office of the General Counsel
B-272425.1
July 16, 1996
The Honorable John H. Chafee Chairman The Honorable Max Baucus
Ranking Minority Member Committee on Environment and Public Works
United States Senate
The Honorable Thomas J. Bliley, Jr. Chairman The Honorable John
D. Dingell Ranking Minority Member Committee on Commerce House of
Representatives
Subject: Regulation of Fuels and Fuel Additives: Certification
Standards for Deposit Control Gasoline Additives
Pursuant to section 801(a)(2)(A) of title 5, United States Code,
this is our report on a major rule promulgated by the Environmental
Protection Agency, entitled "Regulation of Fuels and Fuel
Additives: Certification Standards for Deposit Control Gasoline
Additives" (RIN: 2060-AG06; FRL# 5528-5). We received the rule on
June 28, 1996. It was published in the Federal Register as a final
rule on July 5, 1996. 61 Fed. Reg. 35309.
This rule establishes a certification program for detergent
additives used to control the formation of deposits in gasoline
engines. This certification program requires the use of detergents
in most gasolines used in the United States as mandated by the
Clean Air Act Amendments of 1990 and replaces an interim program
which began on January 1, 1995. The final rule contains
standardized test procedures and performance standards to ensure
that detergent gasolines provide an effective level of protection
against certain engine deposits.
Enclosed is our assessment of the Environmental Protection
Agency's compliance with the procedural steps required by sections
801(a)(1)(B)(i) through (iv) of title 5
GAO/OGC-96-27
with respect to the rule. Our review indicates that the
Environmental Protection Agency complied with the applicable
requirements.
If you have any questions about this report, please contact
James Vickers, Senior Attorney, at [phone]. The official
responsible for GAO evaluation work relating to the Environmental
Protection Agency is Peter Guerrero, Director, Environmental
Protection Issues. Mr. Guerrero can be reached at (202)
512-6111.
Robert P. Murphy General Counsel
Enclosure
cc: Thomas E. Kelly, Director Office of Regulatory Management
and Information Environmental Protection Agency
Page 2 GAO/OGC-96-27
ENCLOSURE
ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY ENTITLED "REGULATION
OF FUELS AND FUEL ADDITIVES: CERTIFICATION STANDARDS FOR DEPOSIT
CONTROL GASOLINE ADDITIVES" (RIN: 2060-AG06; FRL# 5528-5)
(i) Cost-benefit analysis
As discussed below, the Environmental Protection Agency (EPA)
determined that this final rule was a "significant regulatory
action" based on an annual economic impact of $100 million or more
under Executive Order 12866 and submitted to the Office of
Management and Budget the required regulatory impact analysis which
contains an analysis of the costs and benefits of the rule.
The total producer costs estimated by EPA including the costs of
certification, addization of the detergents, recordkeeping and
enforcement through the year 2000 is almost $704 million. The cost
to the average consumer, if all the cost of the detergent is passed
along to the consumer anew, even by those producers who already
sell fully additized gasoline, would be $6.00 per year.
The benefits to be gained in air quality were calculated by EPA
for the first six years (including the interim program) to be
reductions of 125,000 tons of hydrocarbons, 2,388,000 tons of
carbon monoxide and 450,000 tons of nitrogen oxide. Increased fuel
economy achieved by a reduction of engine deposits is estimated to
be over $295 million for the same time period. While EPA
anticipates there will also be vehicle maintenance benefits,
sufficient data was not available to quantify the benefits.
This analysis was revised when it was determined that the
interim program, which began on January 1, 1995, would last 30
months rather than 18 months and there were changes in the
estimated cost of deposit control testing and the addition, in the
final rule, of a required deposit demonstration test to qualify
test fuels for certification testing purposes.
(ii) Agency actions relevant to the Regulatory Flexibility Act,
5 U.S.C. §§ 603-605, 607 and 609
The impact of this rule on small entities was considered in a
regulatory flexibility analysis under section 603 that was
summarized in the preamble of the interim program (59 Fed. Reg.
54705) and the entire analysis, which was included in the
regulatory impact analysis, was available for review in EPA's
public docket. The
GAO/OGC-96-27
preamble to the final rule addresses changes made to the
regulatory impact analysis, as discussed under the cost-benefit
analysis section above, and the impact on small entities.
Following this analysis, EPA has concluded and certified that
the rule will not have a significant economic impact on a
substantial number of small entities. The analysis states that the
industry affected by the rule includes numerous business entities
in the chain of gasoline production and the business size
considered to be a small entity varies from 100 to 1500 employees
under the SIC Codes and size standards of the Small Business
Administration. Therefore, the impact of the rule varies based on
the type of business and its place in the chain of production and
distribution. However, the overall impact is expected to be modest,
even for those industries most heavily impacted, and for small
additive and additive injection equipment manufacturers, the rule
could result in additional economic opportunities through increased
sales. The analysis also discusses alternative approaches which
were considered by EPA but were found lacking because they did not
either significantly reduce the burden on small entities or would
have jeopardized the program's projected air quality benefits.
According to an official at EPA, publication of the
certifications in the Federal Register in connection with the
interim program and the final rule was treated as providing notice
under section 605(b) to the Small Business Administration's (SBA)
Chief Counsel for Advocacy. The SBA has confirmed that some
agencies follow this practice without objection from the SBA.
(iii) Agency actions relevant to sections 202-205 of the
Unfunded Mandates Reform Act of 1995, 2 U.S.C. §§ 1532-1535
According to the EPA, the final rule will not impose any Federal
mandates, as defined in Title II of the Act, on State, local or
tribal governments nor any enforceable duties on those governmental
entities. Therefore, sections 203 and 204 of the Act are not
applicable.
However, the rule does contain Federal mandates that will result
in the expenditure of $100 million or more in any one year for the
private sector. The EPA, in the preamble to the final rule, states
that the certification program represents the least costly, most
cost-effective approach to achieving the air quality goals by
relying on the cost-benefit analysis performed in connection with
Executive Order No. 12866, as permitted by section 202 (b) and (c)
of the Act. 61 Fed. Reg. 35355.
Page 2 GAO/OGC-96-27
(iv) Other relevant information or requirements under Acts and
Executive orders
Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.
The rule complied with the notice and comment rulemaking
procedures of the Act, 5 U.S.C. § 553. This is the fourth
rulemaking action which EPA has undertaken to implement the
requirement contained in Section 211(l) of the Clean Air Act
Amendments of 1990.
On December 6, 1993, a Notice of Proposed Rulemaking was
published. 58 Fed. Reg. 64213. Subsequently, on October 14, 1994,
the rule for the Interim Detergent Program was published. 59 Fed.
Reg. 54678. In order to obtain more comments regarding the possible
requirement for control of combustion chamber deposits in the final
rule and to seek more public input in other areas involving the
certification testing and various implementation and enforcement
provisions, a Notice of Reopening of the Comment Period was
published on December 28, 1994.
The EPA received 80 written comments and six oral presentations
were made at a public hearing held by EPA. The EPA's response to
the comments received are summarized in the preamble to the final
rule and a detailed presentation and evaluation of the comments
received are contained in a separate "Summary and Analysis of
Comments." EPA Docket Item V-B-02. Comments regarding enforcement
issues and questions raised by the regulated industry were
addressed by EPA in four "Detergent Rule Question and Answer
Documents." EPA Docket Nos. IV-C-08, IV-C-09, IV-C-10, IV-C-11.
Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520
The rule contains information collection requirements which will
allow EPA to determine that detergent additives which are effective
in controlling deposits are used and that emission control goals
are realized. The information to be submitted is of various types
and complexities depending upon the role of the submitter (additive
manufacturers, refiners, terminals, truckers or retailers) in the
manufacturing and distribution process. The preamble to the final
rule sets forth the reasons for collecting the information and the
burden estimates for the various parties.
The EPA has certified under section 3506(c)(3) of the Act and
submitted the information collection requirement to the Office of
Management and Budget (OMB) for approval as required by the
Paperwork Reduction Act and has solicited comments regarding the
proposed collection requirements to be submitted to both EPA and
OMB. The collection requirement will not be effective until OMB
approval is obtained. Therefore, the information collection
requirements contained in the
Page 3 GAO/OGC-96-27
interim program (already approved by OMB) will continue to be
effective until replaced by the requirements contained in the final
rule.
Statutory authorization for the rule
Section 211(l) of the Clean Air Act Amendments of 1990 (Pub. L.
101-549) provided that the Administrator of EPA shall promulgate a
rule establishing specifications for detergent additives to
implement the requirement, also contained in section 211(l), that,
effective January 1, 1995, no gasoline may be sold or dispensed
which does not contain additives to prevent the accumulation of
deposits in engines or fuel systems.
Executive Order No. 12866
Based on its economic impact, the rule was determined to be a
"significant regulatory action" within the meaning of Executive
Order No. 12866. Consistent with the Executive order, the rule was
initiated through an advance notice of proposed rulemaking and a
regulatory impact analysis was included in the Interim Program
notice in the Federal Register. The analysis was forwarded to the
Office of Management and Budget, Office of Information and
Regulatory Affairs (OIRA) for its consideration and comments as
contemplated by the Order. OIRA suggested no changes in the rule
but OIRA had EPA supply more elaboration in the preamble to the
final rule concerning the deposit control test standards and the
retention of a 5 percent flow loss performance standard rather than
the industry supported 10 percent flow loss.
EPA did not identify any other statutes or Executive orders
imposing requirements relevant to the rule.
Page 4 GAO/OGC-96-27