[Federal Register: November 9, 2006 (Volume 71, Number 217)]
[Proposed Rules]
[Page 66063-66092]
[DOCID:fr09no06-25]

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Part IV

Environmental Protection Agency

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40 CFR Part 63

 National Emission Standards for Hazardous Air Pollutants for Source
Categories: Gasoline Distribution Bulk Terminals, Bulk Plants, Pipeline
Facilities, and Gasoline Dispensing Facilities; Proposed Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 63

[EPA-HQ-OAR-2006-0406, FRL-8240-1]
RIN 2060-AM74

National Emission Standards for Hazardous Air Pollutants for
Source Categories: Gasoline Distribution Bulk Terminals, Bulk Plants,
Pipeline Facilities, and Gasoline Dispensing Facilities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: This action proposes national emission standards for hazardous
air pollutants for certain area source facilities. Specifically, this
proposal sets forth two regulatory alternatives. The first alternative
(Regulatory Alternative 1) proposes emission standards for bulk
gasoline terminals, pipeline facilities, and bulk gasoline plants. The
second alternative (Regulatory Alternative 2) is identical to the first
alternative, except that it also proposes emission standards for
gasoline dispensing facilities. We are proposing these emission
standards for hazardous air pollutants pursuant to Clean Air Act
section 112(c)(3) and 112(d)(5). This action also announces that we are
not regulating the above-noted facilities under Clean Air Act section
112(c)(6).
    We estimate that the proposed standards would result in an annual
reduction of about 3,300 and 3,400 tons of hazardous air pollutant
emissions (including about 120 and 125 tons of benzene), and about
45,000 and 46,200 tons of volatile organic compound emissions for the
proposed Regulatory Alternatives 1 and 2, respectively. This represents
about a 9 and 10 percent reduction of emissions from area sources in
the gasoline distribution source category for the proposed Regulatory
Alternatives 1 and 2, respectively.

DATES: Comments. Comments must be received on or before January 8,
2007. Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by the Office of Management and
Budget (OMB) on or before December 11, 2006.
    Public Hearing. If anyone contacts EPA requesting to speak at a
public hearing by November 29, 2006, a public hearing will be held on
December 7, 2006.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2006-0406, by one of the following methods:
     http://www.regulations.gov. Follow the on-line

instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>.
     Mail: By U.S. Postal Service send your comments to: Air
and Radiation Docket, EPA, Mailcode: 6102T, 1200 Pennsylvania Ave., NW,
Washington, DC 20460. Please include a total of two copies. In
addition, please mail a copy of your comments on the information
collection provisions to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attn: Desk Officer for EPA,
725 17th St. NW., Washington, DC 20503.
     Hand Delivery: In person or by courier, deliver your
comments to: Air and Radiation Docket, EPA, 1301 Constitution Ave., NW,
Room B-102, Washington, DC 20004. Such deliveries are only accepted
during the Docket's normal hours of operation, and special arrangements
should be made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2006-0406. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://www.regulations.gov

or e-mail. The http://www.regulations.gov Web site is an ``anonymous access''

system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment. If you
send an e-mail comment directly to EPA without going through
http://www.regulations.gov, your e-mail address will be automatically captured

and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit. If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses. For additional information about EPA's public docket, visit
the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm
.

    Docket: All documents in the docket are listed in the
http://www.regulations.gov index. Although listed in the index, some

information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the Air and Radiation

Docket, EPA/DC, EPA West Building, Room B-102, 1301 Constitution Ave.,
NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the Air and Radiation Docket is<PHONE_NUMBER>.

    Note: The EPA Docket Center suffered damage due to flooding
during the last week of June 2006. The Docket Center is continuing
to operate. However, during the cleanup, there will be temporary
changes to Docket Center telephone numbers, addresses, and hours of
operation for people who wish to make hand deliveries or visit the
Public Reading Room to view documents. Consult EPA's Federal
Register notice at 71 FR 38147 (July 5, 2006) or the EPA Web site at
http://www.epa.gov/epahome/dockets.htm for current information on

docket operations, locations, and telephone numbers. The Docket
Center's mailing address for U.S. mail and the procedure for
submitting comments to http://www.regulations.gov are not affected by the

flooding and will remain the same.

FOR FURTHER INFORMATION CONTACT: General and Technical Information: Mr.
Stephen Shedd, Office of Air Quality Planning and Standards, Sector
Policies and Programs Division, Coatings and Chemicals Group (E143-01),
EPA, Research Triangle Park, NC 27711, telephone<PHONE_NUMBER>,
facsimile number<PHONE_NUMBER>, electronic mail (e-mail) address:
<EMAIL_ADDRESS>
    Economic Analysis Information: Mr. Art Rios, Office of Air Quality
Planning and Standards, Health and Environmental Impacts Division, Air
Benefit and Cost Group (C339-01), EPA, Research Triangle Park, NC
27711, telephone<PHONE_NUMBER>, facsimile number<PHONE_NUMBER>,
electronic mail (e-mail) address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    Regulated Entities. The regulated categories and entities affected
by these proposed national emission standards include:

------------------------------------------------------------------------
                                                 Examples of regulated
             Category               NAICS \a\           entities
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Industry..........................     324110  Operations at area
                                       493190   sources that transfer
                                       486910   and store gasoline,
                                       424710   including bulk
                                       447110   terminals, bulk plants,
                                       447190   pipeline facilities, and
                                                gasoline dispensing
                                                facilities.
Federal/State/local/tribal
 governments.
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\a\ North American Industry Classification System.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be affected by the
national emission standards. To determine whether your facility would
be affected by the national emission standards, you should examine the
applicability criteria in this proposed rule. If you have any questions
regarding the applicability of the national emission standards to a
particular entity, consult either the air permit authority for the
entity or your EPA regional representative as listed in 40 CFR 63.13.
    Worldwide Web (WWW). In addition to being available in the docket,
an electronic copy of this proposed rule is also available on the WWW
through the Technology Transfer Network (TTN). Following signature, a
copy of this proposed rule will be posted on the TTN's policy and
guidance page for newly proposed or promulgated rules at the following
address: http://www.epa.gov/ttn/oarpg/. The TTN provides information

and technology exchange in various areas of air pollution control.
    Public Hearing. If a public hearing is held, it will begin at 10
a.m. and will be held at the EPA Facility Complex located at 109 T.W.
Alexander Drive, Research Triangle Park, NC, or at an alternate
facility nearby. Persons interested in presenting oral testimony or
inquiring as to whether a public hearing is to be held must contact Mr.
Stephen Shedd, listed in the FOR FURTHER INFORMATION CONTACT section,
at least 2 days in advance of the hearing. The public hearing will
provide interested parties the opportunity to present data, views, or
arguments concerning the proposed action.
    Outline. The information presented in this preamble is organized as
follows:

I. Background
II. Summary of Proposed Rule for Area Sources
    A. What source category would be affected by this proposed rule?
    B. What would be the affected sources and emission points?
    C. What would be the emission limits, equipment standards, and
work practice standards?
    D. What would be the testing and initial compliance
requirements?
    E. What would be the notification, recordkeeping, and reporting
requirements?
III. Not Regulating This Source Category Under CAA Section 112(c)(6)
IV. Rationale for This Proposed Rule
    A. How did we select the source category?
    B. How did we select the affected sources and emission points?
    C. How did we determine the level of this proposed rule?
    D. How did we select the format for this proposed rule?
    E. How did we select the proposed testing and monitoring
requirements?
    F. How did we select the proposed notification, recordkeeping,
and reporting requirements?
    G. How did we decide to exempt gasoline distribution area
sources from the CAA title V permit requirements?
    H. How did we determine the compliance date for existing
facilities?
V. Summary of Environmental, Energy, Cost, and Economic Impacts
    A. What are the air impacts?
    B. What are the cost impacts?
    C. What are the economic impacts?
    D. What are the non-air environmental and energy impacts?
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act

I. Background

    Section 112 of the Clean Air Act (CAA) generally regulates major
source facilities separately from area source facilities. On December
14, 1994 (59 FR 64303) we promulgated national emission standards for
hazardous air pollutants (NESHAP) for major source facilities within
the gasoline distribution source category (see 40 CFR part 63, subpart
R (Major Source NESHAP)). The Major Source NESHAP imposed control
requirements on sources within the source category that met the
definition of major sources, e.g., a source that emits 10 tons per year
or more of any individual hazardous air pollutant (HAP) or 25 tons per
year or more of any combination of HAP. Gasoline vapors normally
contain nine HAP: benzene, ethylbenzene, hexane, toluene, xylenes,
isooctane, naphthalene, cumene, and methyl tert-butyl ether. Some
gasoline distribution terminals and pipeline facilities were found to
be major sources by themselves or to be located at major sources.
Gasoline storage tanks at bulk terminals and pipeline breakout
stations, loading racks at bulk terminals, vapor leaks from gasoline
cargo tanks, and equipment components in gasoline service were emission
sources that were regulated under the Major Source NESHAP. Area sources
of HAP emissions within the source category (many bulk terminals and
pipeline breakout stations and all pipeline pumping stations, bulk
plants, and gasoline dispensing facilities) were not required to
implement controls under the Major Source NESHAP.
    CAA Section 112(k)(3)(B) requires EPA to identify not less than 30
HAP which, as the result of emissions from area sources, present the
greatest threat to public health in the largest number of urban areas,
and Section 112(c)(3) requires us to list sufficient area source
categories or subcategories to ensure that emissions representing 90
percent of the 30 listed HAP (area source HAP) are subject to
regulation under section 112(d) of the CAA. The Urban Air Toxics
Strategy (Strategy), issued on July 19, 1999 (64 FR 38706) included a
list of 30 area source HAP and a list of area source categories
emitting the listed HAP.
    CAA Section 112(d) standards include new and existing source
maximum achievable control technology (MACT) standards, health
threshold standards, and generally available control technology (GACT)/
management practices standards for area sources. The standards that are
the subject of this proposed rule are based on GACT pursuant to CAA
section 112(d)(5).

    Gasoline vapors contain 2 HAP (benzene and ethylene dichloride
(EDC)) included among the 33 HAP listed under the Strategy. Gasoline
distribution (Stage I) was listed in the Strategy because these
facilities contributed approximately 36 percent of the national urban
emissions of benzene and 2 percent of the EDC from stationary sources
at area sources. Today we are proposing to add a subpart to 40 CFR part
63 to address gasoline distribution area sources and to fulfill our
obligation under CAA section 112(c)(3) to regulate stationary sources
of benzene. EDC emissions have already been controlled under the lead
phase-down provisions of section 218 of the CAA.
    CAA Section 112(c)(6) requires us to list those source categories
emitting at least 90 percent of the aggregate emissions of each of 7
specific pollutants and to develop MACT or health threshold standards
to reduce the emissions of these pollutants. On November 8, 2002 (67 FR
68124), we revised the list of area sources under CAA section 112(c)(6)
and added gasoline distribution to control emissions of polycyclic
organic matter (POM), one of the CAA section 112(c)(6) pollutants. As
discussed later in this action, we have concluded that it is not
necessary to regulate the gasoline distribution source category under
CAA section 112(c)(6).

II. Summary of Proposed Rule for Area Sources

    We are proposing and taking public comment on two regulatory
alternatives. The first alternative (Regulatory Alternative 1) requires
controls at bulk gasoline distribution facilities, which include bulk
gasoline terminals, pipeline facilities, and bulk gasoline plants. The
second alternative (Regulatory Alternative 2) requires controls at both
bulk gasoline distribution facilities and gasoline dispensing
facilities.

A. What source category would be affected by this proposed rule?

    The source category that would be affected by this proposed rule is
gasoline distribution (Stage I) area source facilities. This source
category includes area source facilities that perform the operations
necessary to distribute gasoline, beginning at the point the gasoline
leaves the refinery production process and ending when the gasoline is
loaded into the storage tanks at gasoline dispensing facilities (these
operations are referred to as ``Stage I'' distribution). The five types
of facilities that make up this distribution chain are identified in
the following paragraphs. Vehicle refueling (Stage II distribution) is
not covered by this proposed rule because, as stated in the Strategy,
we believe this is consistent with Congress' intent to regulate these
emissions through CAA sections 182(b)(3) and 202(a)(6).
    Bulk gasoline terminals are large storage facilities that receive
gasoline directly from the refineries via pipelines, barges, or tankers
(or are co-located at refineries). Gasoline from the bulk terminal
storage tanks is loaded into cargo tanks (tank trucks or railcars) for
distribution to smaller, intermediate storage facilities (bulk plants)
or directly to gasoline dispensing facilities (retail public service
stations and private service stations).
    There are two types of pipeline facilities found at various
intervals along gasoline distribution pipelines. Pipeline breakout
stations receive gasoline via pipelines, store it in storage tanks, and
re-inject it into pipelines as needed to meet the demand from
downstream facilities. Pipeline pumping stations are located along the
entire length of a pipeline at about 40 mile intervals. Their purpose
is to provide the extra ``push'' needed to move the product through the
pipeline. They do not normally have gasoline storage capability.
    Bulk gasoline plants are intermediate storage and distribution
facilities that normally receive gasoline from bulk terminals via tank
trucks or railcars. Gasoline from bulk plants is subsequently loaded
into tank trucks for transport to local dispensing facilities.
    Gasoline dispensing facilities include both retail public outlets
and private dispensing operations such as rental car agencies, fleet
vehicle refueling centers, and various government motor pool
facilities. Gasoline dispensing facilities receive gasoline via tank
trucks from bulk terminals or bulk plants. As mentioned earlier, the
source category only includes the delivery of gasoline at gasoline
dispensing facilities and does not include the vehicle refueling
activities or equipment.

B. What would be the affected sources and emission points?

    Under Regulatory Alternative 1, the affected sources to which this
proposed rule would apply are each bulk gasoline terminal, pipeline
breakout station, pipeline pumping station, and bulk gasoline plant.
Under Regulatory Alternative 2, the affected sources are those listed
above plus each gasoline dispensing facility. You are subject to the
requirements in this subpart if you own or operate one or more of the
affected sources identified above and they are area sources.
    For each of the facility types, the emission points subject to
control under this proposed rule include the transfer and storage
equipment in gasoline service. The sources of emissions at bulk
terminals that would be subject to control under this proposed rule
include gasoline storage tanks, cargo tank loading racks, cargo tanks
being loaded, and equipment components in liquid or vapor gasoline
service. At pipeline breakout stations and pumping stations, gasoline
storage tanks and equipment components in liquid or vapor service would
be emission points subject to control under this proposed rule. At bulk
plants this proposed rule would control emissions from the loading of
gasoline into storage tanks and the emissions from the loading of
gasoline cargo tanks. If we decide to promulgate Regulatory Alternative
2, then controls would also be required at gasoline dispensing
facilities to control emissions from the loading of gasoline into
storage tanks.

C. What would be the emission limits, equipment standards, and work
practice standards?

    This proposed rule would require that emissions from storage tanks
that meet the applicability criteria at area source bulk gasoline
terminals and pipeline breakout stations be reduced by 95 percent,
either through the use of specified floating roofs and seals or through
an alternative technology such as a closed vent system and control
device. This proposed rule would also require that cargo tank loading
rack emissions at bulk gasoline terminals be reduced to a level of 80
milligrams, or less, per liter of gasoline loaded into cargo tanks.
    Bulk terminal owners and operators also must not allow the loading
of cargo tanks that do not have the appropriate vapor tightness testing
documentation. Before loading at an affected bulk terminal, the owner
or operator of a cargo tank must present documentation of passing the
vapor tightness test to demonstrate, using EPA Reference Method 27 or
equivalent, that they meet a maximum pressure or vacuum decay rate of 3
inches of water, or less, during a 5-minute test period. Some States
have other practices or requirements to ensure that vapor tight cargo
tanks are vapor tested and those alternative requirements will be
allowed, as specified, under this proposed rule as well.
    This proposed rule would require the implementation of a monthly
equipment leak inspection at bulk terminals, bulk

plants, pipeline breakout stations, and pipeline pumping stations. The
standards allow a sight, sound, and smell inspection of all equipment
components in gasoline liquid or vapor service. Any leaking equipment
components would have to be repaired within a specified time period.
    At bulk plants in all counties nationwide this proposed rule would
require the use of submerged filling of gasoline storage tanks and
cargo tanks. If we decide to promulgate Regulatory Alternative 2, then
gasoline dispensing facilities in Urban 1 and Urban 2 areas \1\ will be
required to use submerged filling of gasoline storage tanks. The
submerged filling requirement could be met by either bottom filling or
the use of a fill pipe that extends to within 6 inches of the bottom of
the tank being filled.
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    \1\ Urban 1 areas means counties are part of a metropolitan
statistical area with a population greater than 250,000, based on
the 1990 and the most current U.S. Census Bureau statistical
decennial census data. Urban 2 areas means counties where more than
50 percent of the population is classified by the U.S. Census Bureau
as urban, based on the 1990 and most current U.S. Census Bureau
statistical decennial census data.
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D. What would be the testing and initial compliance requirements?

    This proposed rule would require that control devices being used to
reduce emissions from loading racks at bulk terminals be tested to
demonstrate that they comply with the emission limit. Closed vent
systems and control devices used to reduce emissions from storage tanks
would also have to be tested to demonstrate that they comply with the
emission limit. There are, however, options that allow for the use of
recent performance tests or documentation that the devices are
complying with enforceable State, local, or tribal operating permits in
lieu of performing a new test.
    Affected facilities that utilize control devices (vapor processors)
to comply with the emission limits for storage tanks or loading racks
at bulk terminals would be required to monitor an operating parameter
to demonstrate continuous compliance with the emission limits. The
monitored operating parameter value would be determined during a
performance test or by engineering assessment. An operating parameter
monitoring approach approved by the permitting authority, and included
in an enforceable operating permit, would also be allowed as an
alternative.
    Annual inspections of storage tank roofs and seals would be
required for bulk terminals and pipeline breakout stations. Such
inspections would be conducted using the same procedures required in 40
CFR part 60, subpart Kb, Standards of Performance for Volatile Organic
Liquid Storage Vessels (Storage Vessels New Source Performance
Standards (NSPS)).
    In addition, each owner or operator of a bulk gasoline terminal
would be required to monitor the loading of gasoline into gasoline
cargo tanks to limit the loading to vapor-tight gasoline cargo tanks.
The owner or operator of each gasoline cargo tank loading at an
affected bulk terminal would, therefore, be required to perform vapor
tightness testing on each cargo tank to demonstrate compliance with the
maximum allowable pressure and vacuum change of 3 inches of water, or
less, in 5 minutes. Vapor tightness testing would be performed using
EPA Reference Method 27. Railcar cargo tanks can use the alternative
``Railcar Bubble Leak Test Procedures'' or an approved equivalent.

E. What would be the notification, recordkeeping, and reporting
requirements?

    Affected sources that are subject to the control requirements under
this proposed rule would be required to submit four types of
notifications or reports as set forth in the General Provisions: (1)
Initial Notification; (2) Notification of Compliance Status; (3)
periodic reports; and (4) other reports. The Initial Notification
apprises the regulatory authority of applicability for existing sources
or of construction for new sources. This notification also includes a
statement as to whether the facility can achieve compliance by the
required compliance date. The Notification of Compliance Status
demonstrates that compliance has been achieved. This notification
contains the results of initial performance tests and a list of
equipment subject to the standard. Periodic reports would be required
on a semiannual basis. The semiannual compliance report would inform
the regulatory authority of the results of required inspections or
additional testing results. An excess emissions report, if applicable,
would be submitted with the semiannual compliance report and would be
required if excess emission events occur. Excess emission events would
include events such as the loading of a cargo tank that does not have
documentation of vapor tightness testing, deviations from acceptable
operating parameter values, or equipment leaks that are not repaired
within the required time.
    Other reports are also required under the General Provisions,
generally on a one-time basis, for events such as a notification before
a performance test or a storage vessel inspection. Reporting these
events allows the regulatory authority the opportunity to have an
observer present.
    Reporting requirements for owners or operators of bulk plants and
gasoline dispensing facilities would be limited in most cases to the
Initial Notification and the Notification of Compliance Status. Those
bulk plants that are located in States that require the use of
submerged fill would not be required to submit these notifications. The
same would be true for gasoline dispensing facilities if we pursue
Regulatory Alternative 2 in the final rule. Because these facilities
are subject to only submerged fill requirements (plus equipment leak
inspections at bulk plants), we believe that additional reporting after
compliance is achieved is unnecessary.
    Records required under this proposed rule must be kept for 5 years.
These include records of cargo tank vapor tightness test
certifications, records of storage tank and equipment component
inspections, and records of monthly throughput.

III. Not Regulating This Source Category Under CAA Section 112(c)(6)

    Section 112(c)(6) of the CAA requires us to list those source
categories emitting at least 90 percent of the aggregate emissions of
each of seven specific pollutants and to develop MACT or health
threshold standards for the sources listed under this provision.
Alkylated lead compounds and POM are the only two of the seven CAA
section 112(c)(6) pollutants that were identified in gasoline.
    Historically, the use of lead as a gasoline additive in onroad
vehicles contributed significantly to the nationwide inventory of
alkylated lead emissions. However, section 211(n) of the CAA prohibited
the distribution or sale of leaded gasoline for use in motor vehicles
as of December 31, 1995. This prohibition has eliminated alkylated lead
emissions from the gasoline distribution (Stage I) source category.
Lead emissions presented in the 1990 inventory of the seven CAA section
112(c)(6) pollutants were based on Department of Energy gasoline
consumption data indicating that 1 percent of the onroad motor vehicle
fuel distributed was leaded fuel. The distribution of this leaded fuel
was estimated to result in 0.086 tons of alkylated lead emissions. The
data used in developing the 1990 inventory are, however, not applicable
since the ban

on the sale of leaded gasoline went into effect. Additionally, as we
explained when listing other source categories of alkylated lead (see
67 FR 17838, April 10, 1998), the ban on leaded gasoline in onroad
vehicles was recognized and the gasoline distribution (Stage I) source
category was not listed for alkylated lead emissions.
    On November 8, 2002 (67 FR 68124), the area source gasoline
distribution (Stage I) source category was added to the list of source
categories for development of standards under CAA section 112(c)(6)
toward the 90 percent requirement for POM. As explained in the November
8, 2002 Federal Register notice, one surrogate for POM is the sum of 16
polynuclear aromatic hydrocarbon compounds (16-PAH) measured in EPA
Test Method 610. Naphthalene is the only estimated and reported 16-PAH
in the 1990 inventory emitted from gasoline distribution (Stage I)
facilities. We estimated and reported the 1990 inventory for major
source and area source naphthalene emissions from this source category
to be 35.5 tons and 320 tons, respectively. The total 1990 inventory
for all source categories for 16-PAH was presented as 8,405 tons.
According to inventory support documentation, naphthalene emission
calculations were based on 0.05 weight percent naphthalene in gasoline
vapors.
    The American Petroleum Institute (API) submitted data in late 2005
to support their concern that we had over-estimated the naphthalene
emissions. We evaluated the API data along with the data from other
external sources, and from EPA, that were used for the original listing
inventory, and concluded that instead of using a naphthalene content in
gasoline vapor of 0.05 weight percent, we should use a value of 0.00027
weight percent.
    Using the corrected fraction in gasoline vapor, we now estimate
that the 1990 inventory for major source and area source naphthalene
emissions from this source category should be 0.19 tons and 1.73 tons,
respectively. In addition, the total 1990 inventory of 16-PAH is
reduced to 8,051 tons. Thus, gasoline distribution facilities (area
sources) contribute only 0.02 percent of the total 16-PAH (1.73 tons
out of 8,051 tons) and is not needed to meet the 90 percent requirement
for POM in CAA section 112(c)(6).
    As a result of this revision to the 1990 naphthalene inventory, we
do not intend to regulate this source category under CAA section
112(c)(6).

IV. Rationale for This Proposed Rule

A. How did we select the source category?

    We listed area source gasoline distribution (Stage I) facilities in
July 1999 pursuant to section 112(c)(3) of the CAA to ensure that area
sources representing 90 percent of the area source emissions of the 30
HAP that present the greatest threat to public health in the largest
number of urban areas are subject to regulation under CAA section 112.
This listing was based on information showing that emissions from the
gasoline distribution source category (Stage I) contribute at least 36
percent and 2 percent of the national urban emissions of benzene and
EDC, respectively, two of the 33 listed area source HAP.
    EDC was added to leaded gasoline to serve as a lead scavenger and
prevent the unwanted buildup of lead deposits in engines. With the
implementation of restrictions on the sale of leaded gasoline (as
discussed in Section III of this preamble) for use in passenger
vehicles, however, the use of EDC was also discontinued. Thus, while no
regulatory actions were implemented specifically to address EDC
emissions from gasoline distribution, its use has been eliminated. As a
result of these actions, the gasoline distribution source category is
no longer a significant contributor to nationwide EDC emissions and its
use will not be discussed further in this preamble.
    The gasoline distribution (Stage I) source category's contribution
to the total nationwide emissions of benzene is, therefore, the reason
this source category was selected for regulatory development.

B. How did we select the affected sources and emission points?

1. Affected Sources
    As summarized in this preamble at Section II.A, Regulatory
Alternative 1 proposes to regulate HAP emission points at bulk
terminals, pipeline breakout stations, pipeline pumping stations, and
bulk plants. Regulatory Alternative 2 proposes to regulate all of the
HAP emission points covered by Regulatory Alternative 1, and gasoline
dispensing facilities, which are not covered by Regulatory Alternative
1. Each of these five types of facilities that make up the Stage I
gasoline distribution chain were analyzed during the preparation of the
CAA section 112 listing inventory and each type of facility contributes
to the 36 percent of nationwide benzene emissions from this source
category.
2. Emission Points
    During the development of the proposed rule, we evaluated each
emission point at each of the five types of affected sources as
candidates for additional control requirements. We found that there are
available control techniques applicable to each of the emission points
within the source category. In addition, emission points at major
source bulk terminals and pipeline breakout stations are subject to
Federal regulation under the Major Source NESHAP, the 1983 New Source
Performance Standards for Bulk Gasoline Terminals (the Bulk Terminals
NSPS), and the Storage Vessels NSPS. The control techniques used to
comply with these Federal rules are also applicable to the
corresponding emission points at area sources. We also found that there
are numerous State standards that apply to these emission points at
many area source gasoline distribution facilities, including those
facilities located in ozone non-attainment areas and in States that
have implemented air toxics programs. The following paragraphs provide
a summary of our analysis of each emission point.
    Bulk Terminals. The four emission points at bulk terminals are: (1)
Emissions from loading racks when gasoline is loaded into cargo tanks,
(2) fugitive leakage of vapors from cargo tanks during loading of
gasoline, (3) evaporation of gasoline from storage tanks, and (4)
equipment leaks from pumps, valves, and other components.
    Emissions occur at loading racks when gasoline that is loaded into
cargo tanks displaces vapors inside these containers. These emissions
may occur either uncontrolled (when facilities are not using vapor
collection and processing equipment) from cargo tank compartments or
from the outlet vents of control systems used to process these
displaced vapors.
    Emissions from loading racks are typically controlled by venting
the displaced vapors to a control device, such as a thermal oxidizer or
a carbon adsorber. Loading racks at major sources are controlled under
the Bulk Terminals NSPS and the Major Source NESHAP, and many States
also require controls on these sources. Considering the current control
level that is applied to this emission point by State and local rules,
we estimate the baseline emissions from this emission point to be 2,353
tons of HAP per year, nationwide.
    Fugitive emissions from leaking cargo tanks may occur, even at
controlled loading racks (those equipped with vapor collection and
processing

systems), through the dome or hatch covers, pressure-vacuum relief
valves or vents, hose couplings, or even the cracks in the welds of the
cargo tank shell.
    Vapor tightness testing is used as a means of identifying and
controlling fugitive emissions from leaking cargo tanks. The Bulk
Terminals NSPS and the Major Source NESHAP require vapor tightness
testing for cargo tanks loading at major sources and many States in
ozone non-attainment areas require that affected source bulk terminals
limit the loading of gasoline into cargo tanks that have been tested
and certified to be vapor tight. Baseline emissions from leaking cargo
tanks, considering current control requirements, are estimated to be
about 2,323 tons of HAP per year, nationwide.
    Storage tanks at bulk terminals may be of either fixed roof,
external floating roof, or fixed roof with an internal floating roof
construction. Although the precise mechanisms involved vary between the
different types of storage tanks, emissions originate from storage
tanks when liquid gasoline in the tank is exposed to air, resulting in
the evaporation of the liquid. The vapors that are produced by this
evaporation are subsequently released to the atmosphere either directly
(in the case of an external floating roof tank), when it is displaced
by incoming gasoline, or when the pressure of the vapor buildup in the
tank is sufficient to open a pressure/vacuum vent in the tank.
    The primary means of controlling emissions from storage tanks is
the use of systems that reduce the exposed surface area of the liquid
in the tank. Floating roofs, with various types of rim seals and
gasketed fittings around penetrations in the roof, are typically
required at major sources by applicable Federal rules (the Major Source
NESHAP and the Storage Vessels NSPS). Many State standards have similar
requirements for storage tanks at area source facilities. We have
estimated that the baseline emissions from storage tanks at bulk
terminals, considering current control requirements, are about 4,000
tons of HAP per year, nationwide.
    Equipment leaks from pumps, valves, and other equipment components
occur when the seals found in these items become worn or damaged.
Emissions from pumps arise from liquid gasoline leaking from packed or
mechanical seals in the pumps used to move the product through the
pipeline. Leaks also occur from seals around stems of valves and other
equipment components that control or isolate gasoline from the
environment such as connections, drain lines, and pressure relief
devices.
    Periodic inspection of equipment components is the only control
technique that we have identified in the applicable Federal and State
rules. These inspections typically are required on a monthly or
quarterly basis, are performed using sight, sound, and smell
observations, and any leaking components are required to be repaired
within a specified period of time. We have estimated that the baseline
emissions from equipment leaks at bulk terminals, considering current
control requirements, are 37 tons of HAP per year, nationwide.
    Pipeline Breakout Stations. The two emission points typically found
at pipeline breakout stations are gasoline storage tanks and equipment
leaks. Storage tank and equipment component (pumps and valves) leak
emissions at pipeline breakout stations are identical in the manner of
their occurrence and the applicable control techniques to those
described above for bulk terminals. However, HAP emission rates are not
the same due to differences in turnover rates and storage tank sizes as
well as differences in the numbers of estimated equipment components in
the process line piping between the two facility types. We have
estimated that the nationwide baseline emissions from storage tanks and
equipment leaks at pipeline breakout stations, considering current
control requirements, are 1,100 and 160 tons of HAP per year,
respectively.
    Pipeline Pumping Stations. At pipeline pumping stations the only
type of HAP emission sources that are normally found are equipment
leaks from components such as pumps and valves. We found that fugitive
emissions from equipment leaks at pipeline pumping stations are
typically unregulated by States. However, this emission source and the
applicable control technique are the same as those found at bulk
terminals and pipeline breakout stations. We have estimated that the
baseline emissions from equipment leaks at pipeline breakout stations,
considering current control requirements, are 7 tons of HAP per year,
nationwide.
    Bulk Plants. The types of gasoline distribution activities and
emission sources found at bulk plants are similar to those found at
bulk terminals. Because of the size and throughput differences between
these two types of affected sources, however, there are differences in
the equipment configurations and the types of emission controls
normally found at bulk plants.
    Storage tanks at bulk plants are typically fixed roof tanks and
below the size cutoff criteria for floating roof requirements in
Federal and State rules. While there may be some storage tanks at bulk
plants that are large enough to be subject to the control requirements
typically applicable at bulk terminals, most are uncontrolled. Because
bulk plants typically receive gasoline from cargo tanks, the loading of
gasoline into the storage tanks at bulk plants can be a significant
source of emissions if the tanks are not equipped for submerged
filling. We found that some States do not regulate bulk plants, while
those States with applicable standards typically require that the
loading of storage tanks utilize submerged filling and the vapor
balancing of the storage tank with the delivery vehicle. By utilizing
vapor balancing, the gasoline vapors that would be released to the
atmosphere are instead routed into the cargo tank for return to the
bulk terminal for vapor processing. We have estimated the nationwide
baseline HAP emissions from the loading of storage tanks at bulk plants
to be about 4,350 tons of HAP per year.
    The loading of cargo tanks at some bulk plants is also done by top
loading (splash filling) gasoline into the cargo tank compartments.
This method results in increased emissions compared to bottom loading.
Those States that regulate this activity typically require the use of
submerged filling and a vapor balancing system to route the vapors
displaced from the cargo tank back into the bulk plant storage tank. We
have estimated the nationwide baseline HAP emissions from the loading
of cargo tanks at bulk plants to be about 2,170 tons of HAP per year.
    Fugitive emissions from bulk plants are similar to those at bulk
terminals in that they originate from liquid or vapor leaks in
equipment components. Because bulk plants are much smaller than bulk
terminals, however, both the number of fugitive emission sources and
the magnitude of the fugitive emissions are typically much less than
those found at bulk terminals. Periodic equipment leak inspections are
the only control technique identified that would be applicable to
reduce emissions from equipment leaks. We found that equipment leak
emissions at bulk plants are, however, typically unregulated. We have
estimated the nationwide baseline HAP emissions from equipment leaks at
bulk plants to be 15 tons of HAP per year.
    Gasoline Dispensing Facilities. The only Stage I activities that
occur at gasoline dispensing facilities are the loading of gasoline
into the storage tanks and the subsequent storage of the gasoline in
these tanks. There are, however, various configurations of

equipment used in these activities. Most gasoline dispensing facilities
utilize underground storage tanks and the emissions from these tanks
occur primarily as a result of the displacement of vapors during the
filling of the tanks. In addition, storage tanks at some gasoline
dispensing facilities are not equipped for submerged filling and
filling is accomplished by simply ``splash-filling.''
    We found that many States require that the filling of storage tanks
at gasoline dispensing facilities be controlled through the use of
submerged filling and by a vapor balance system where the displaced
vapor from the storage tank is collected and routed back to the cargo
tank during delivery. The vapor collected in the cargo tank is then
returned to the bulk terminal and routed to a vapor processor when the
cargo tank is loaded. We have estimated the nationwide baseline HAP
emissions from the filling of storage tanks at gasoline dispensing
facilities to be about 19,000 tons of HAP per year.

C. How did we determine the level of this proposed rule?

1. Approach
    Our approach to determining the level of this proposed rule was
based on the statutory requirements of CAA section 112(c)(3). Section
112(c)(3) requires standards that comply with CAA section 112(d), which
specifies that standards may be developed using either the MACT
approach, a health threshold approach, or the GACT and management
practices approach.
    As discussed earlier, this source category was listed for benzene
emissions. Many carcinogens, including benzene, do not have a health
threshold, thus the health threshold approach was not evaluated.
Therefore, our approach was to assess the regulatory options based on
the GACT, management practices, and MACT levels of control. Under this
approach we evaluated each emission point within the source category
and identified the control options that we found to be applicable to
each emission point within the source category. As we discuss later in
this section of the preamble, we developed three regulatory
alternatives based on our analysis of current levels of control and
progressively adding more stringent levels of control. In adding more
stringent levels of control, we did not reach, prior to making the
proposed decision, the MACT (average of the best performing 12 percent
of the sources) level of control for all emission sources. The three
regulatory alternatives that we discuss later and considered in this
proposal are GACT levels of control.
2. Control Options
    Our first step in developing the control options for each emission
point under this proposed rule was an evaluation of the existing
controls required by the various Federal, State, and local agencies
that regulate gasoline distribution facilities. We found that most
States regulate some or all of the emissions points at area sources in
the gasoline distribution source category. In addition, many of these
emission points are subject to control under the Bulk Terminals NSPS,
the Major Source NESHAP, and the Storage Vessels NSPS at the major
source bulk terminals and pipeline breakout stations.
    For each emission point, we identified and evaluated the various
levels of control that are currently required by Federal and State
standards. Each discrete level of control that we evaluated was
considered to be a control option for the emission point. For example,
three discrete levels of control were identified in State standards and
in the Bulk Terminals NSPS and the Major Source NESHAP for emissions
from loading racks at bulk terminals. These levels are expressed in
terms of milligrams of total organic compounds emitted per liter of
gasoline loaded into cargo tanks (mg/l) and are 80 (in several State
rules), 35 (in some State rules and in the Bulk Terminals NSPS), and 10
(in some State rules and in the Major Source NESHAP). Therefore, in
evaluating potential levels of control for this proposed rule, we
analyzed each of these three levels of control as a control option for
bulk terminal loading racks.
    The process of identifying and evaluating control options was
repeated for each of the gasoline distribution source category emission
points that were discussed in Section B.2 of this preamble.
3. Regulatory Alternatives
    After we identified and evaluated the control options for each
emission point within the source category we developed a series of
regulatory alternatives. Each regulatory alternative consisted of one
control option for each emission point at each facility type. We began
our regulatory alternatives development with the most cost effective
control options as Regulatory Alternative 1 and then added the more
stringent control options found in subsequent regulatory alternatives.
    We also included in our development of regulatory alternatives a
baseline or ``no additional control'' control option for the emission
points. Including this control option for certain emission points
provided us the flexibility to develop a regulatory alternative that
required, for example, additional controls for larger emitting
facilities, but not for smaller facilities.
    Another factor we considered when developing the regulatory
alternatives was whether to require the controls in all counties
nationwide or to make the standards applicable only in urban areas. We
presented our position on this issue in the Strategy. We stated that
while our expectations are to apply area source standards under CAA
section 112(k) in all counties nationwide, we would also determine for
each area source standard whether it is more appropriate to apply that
particular standard in all counties nationwide or only in urban areas.
For this proposal, we started with the Urban 1 and Urban 2 area
definitions we used in the Strategy.\2\ These definitions were used to
identify a list of counties based on the 1990 census data. We then
modified the list of counties to add new Urban 1 and Urban 2 counties
based on the 2000 census data. We are requesting comment on using this
Urban 1 and Urban 2 approach to defining urban areas, and on any other
approach or definition that would better define where people live in
urban areas, such as densely populated areas with 2,500, 50,000, or
250,000 people.
---------------------------------------------------------------------------

    \2\ Urban 1 areas means counties are part of a metropolitan
statistical area with a population greater than 250,000. Urban 2
areas means counties where more than 50 percent of the population is
classified by the U.S. Census Bureau as urban.
---------------------------------------------------------------------------

    Using the factors presented in the preceding paragraphs, we
developed numerous regulatory alternatives for consideration. We
evaluated the potential HAP reductions, capital and annualized costs,
and cost-effectiveness of each regulatory alternative. (Our analyses
can be found in Docket ID No. EPA-HQ-OAR-2006-0406.) We then ranked the
regulatory alternatives starting with the most cost-effective and
progressing to those that were less cost-effective and, in most cases,
required more stringent control. Based on our evaluation of the series
of regulatory alternatives, we determined that three regulatory
alternatives were viable candidates for evaluation and discussion.
    Regulatory Alternative 1. The first regulatory alternative that we
considered for the proposed rule was based on those control options
that were found to be the most cost effective controls for the larger
bulk facilities (bulk terminals, bulk plants, pipeline breakout
stations, and pipeline pumping stations). Under this regulatory

alternative, gasoline dispensing facilities would not be subject to
control requirements beyond those already implemented by State and
local standards, unless they have storage tanks with a capacity greater
than 20,000 gallons. We selected this regulatory alternative for
consideration because facilities in the bulk segment of the source
category are larger facilities.
    We chose to apply the controls required under Regulatory
Alternative 1 to all counties nationwide rather than only in urban
areas. As discussed earlier, we generally develop area source standards
that are applicable to all counties nationwide unless we believe it is
more appropriate to apply standards only in urban areas. The emission
controls required under this regulatory alternative would result in a
net credit to the affected facilities because they would prevent the
loss (through evaporation) of enough gasoline to more than pay for the
costs of the controls. Therefore, this is an appropriate alternative
for all facilities and locations.
    Under Regulatory Alternative 1, the level of control for large
(greater than 20,000 gallon capacity) storage tanks is the same as that
required under the Major Source NESHAP. Storage tanks of this size are
typically found at bulk terminals and pipeline facilities, although in
rare cases they may be at bulk plants or gasoline dispensing
facilities. These tanks would be controlled by installation of floating
roof technology with the best rim seals on all tanks and fitting
controls on external floating roof tanks. As discussed in the Major
Source NESHAP final rule notice, fitting controls on internal floating
roof tanks have a poor HAP cost-effectiveness. Therefore, they are not
included under this regulatory alternative. As an alternative to the
installation of floating roof technology, storage tanks may be equipped
with a closed vent system and control device designed and operated to
reduce emissions by 95 percent. This level of control has been found to
be the most cost-effective level available. Our analysis of current
control requirements indicated that about 1,000 of the estimated 6,300
storage tanks at area source bulk terminals currently comply with this
level of control for both rim and fitting seals. Approximately 1,560
additional storage tanks currently have the required rim seals and
would only need to be upgraded by adding fitting seals. We estimate
that the nationwide annual volatile organic compounds (VOC) and HAP
reductions under this level of control would be 43,000 and 3,100 tons,
the capital cost would be $57 million, and the annualized cost would be
a credit of about $6 million. The nationwide cost-effectiveness of this
level of control is, therefore, a savings of about $2,000 per ton of
HAP reduction. Because the potential for evaporative losses of gasoline
from these tanks is large, control options that are less stringent are
less cost-efficient, after the recovery credit is considered.
    The performance testing of control devices and the inspection of
seals and gaskets, as required under the Major Source NESHAP, would
also be required under Regulatory Alternative 1.
    Loading racks at bulk terminals would also be subject to control
under Regulatory Alternative 1. We found during our evaluation of State
rules that these loading racks are generally required to install and
operate vapor processors that are capable of controlling emissions to a
level of no more than 80 milligrams of total organic compounds emitted
per liter of gasoline loaded (mg/l). This level of control has been
found to be the most cost-effective level available for vapor
processing. Although we expect that a small number of uncontrolled
facilities exist, we did not identify any bulk terminals during our
analysis that are not meeting a control level of 80 mg/l. Since our
analysis was completed, industry has collected information on these
small terminals, as discussed in the next paragraph. While some State
rules require emissions to be limited to 35 mg/l, and the MACT standard
for major sources is 10 mg/l, the incremental cost-effectiveness of
requiring these more stringent control levels is poor, especially if
replacement of an existing vapor processor was necessary (about $40,000
per ton of HAP reduction). Therefore, since many terminals still have
vapor processors meeting the 80 mg/l limit and they are cost-effective
controls that are in widespread use, we are proposing a limit of 80 mg/
l for bulk terminal loading racks in Regulatory Alternative 1. As
mentioned above, we were unable to develop a reliable estimate of the
small number of facilities that are not currently meeting a level of 80
mg/l at their loading racks. Therefore, rather than attempt to estimate
nationwide emission reductions and costs, we estimated the potential
impacts on an average sized loading rack. We estimated that this
average facility would, through the installation of a carbon adsorber
to meet the 80 mg/l control level, reduce their VOC and HAP emissions
by about 620 and 45 tons. The capital expenditure for this control
would be almost $1 million. After considering the value of the
recovered product, however, the annualized cost would be a credit of
about $54,000. The cost-effectiveness of this level of control for this
average facility is, therefore, a credit of about $1,200 per ton of HAP
reduction.
    Recently, industry has gathered loading rack conversion and vapor
processor installation costs (as well as small storage tank secondary
seal costs) to demonstrate that these controls are not cost effective
at small bulk terminals. We are currently reviewing this information
and it is contained in the docket for public review and comment. Based
on our review of this data and comments and data received during the
comment period, we will consider requiring small terminals (based on a
yet to be determined daily throughput) to use submerged fill without
processing the vapors to 80 mg/l.
    To ensure that vapors in cargo tanks would be displaced into vapor
processors, bulk terminal owners and operators would also be required,
under Regulatory Alternative 1, to limit the loading of cargo tanks at
their facilities to those cargo tanks that have passed a vapor
tightness test. The requirement for an annual vapor tightness test of
cargo tanks is found in many State rules and is also in the Bulk
Terminals NSPS and the Major Source NESHAP. Vapor tightness is tested
by EPA Reference Method 27, and is measured in terms of the change in
pressure or vacuum observed, from an initial pressure of 18 inches of
water or an initial vacuum of -6 inches of water, over a 5-minute test
period. Many States have adopted a requirement specifying a maximum
allowable change in pressure of 3 inches of water. This is also the
level specified in the Bulk Terminals NSPS for new loading racks. Our
analysis of cargo tank tightness testing requirements indicated that
approximately 22,000 cargo tanks out of an estimated 23,800 vapor
collection-equipped cargo tanks already comply with this control level.
We estimate that the nationwide annual VOC and HAP reductions under
this level of control would be about 1,220 and 90 tons. Because
maintenance costs and testing costs are the only costs associated with
this option, there is no capital cost associated with this option, and
the annualized cost would be about $0.2 million. The nationwide cost-
effectiveness of this level of control is, therefore, about $2,250 per
ton of HAP reduction. However, because the vapor processor control
requirement and vapor tightness requirement for cargo tanks ensures
that vapors are controlled, the combined cost-effectiveness of these
controls is about $1,000 per ton of HAP controlled.

    Some other States, and the Major Source NESHAP, specify a maximum
change of 1 inch of water. Because our analysis showed that the
incremental cost-effectiveness of requiring the 1-inch maximum pressure
decay versus the 3-inch maximum pressure decay was high (about $30,000
per additional ton of HAP reduced), we chose to keep the 3-inch maximum
pressure decay level in Regulatory Alternative 1.
    Our analysis of the emission points and controls applicable to bulk
plants led us to conclude that the most cost-effective means of
reducing HAP emissions is the conversion from splash filling to
submerged filling of storage tanks and cargo tanks. Approximately 5,500
out of 5,900 bulk plants are estimated to utilize submerged fill. We
estimate that the nationwide annual VOC and HAP reductions under this
level of control would be about 860 and 108 tons, the capital cost
would be $2 million, and the annualized cost would be $30,000. The
nationwide cost-effectiveness of this level of control is, therefore,
about $300 per ton of HAP reduction when converting to submerged
filling of both the storage tanks and cargo tanks. Because bulk plants
are typically much smaller facilities than bulk terminals, and have
much lower storage capacity and gasoline throughput, the types of
controls that are normally cost-effective at bulk terminals are much
less cost-effective at bulk plants. For example, bulk plant storage
tanks are normally below the size in which internal floating roof
technology is typically installed. Also, while the use of vapor
balancing between storage tanks and cargo tanks is required by some
States, the cost-effectiveness of this requirement was estimated to be
about $10,000 per ton of HAP reduced. As a result of the difference in
cost-effectiveness, we have elected to include in Regulatory
Alternative 1 the requirement that bulk plants utilize submerged
filling of storage tanks and cargo tanks.
    Also included in Regulatory Alternative 1 is the requirement that
bulk terminals, bulk plants, pipeline breakout stations, and pipeline
pumping stations perform a monthly equipment leak inspection. During
the development of the Major Source NESHAP, we concluded that an
equipment leak inspection program utilizing sight, smell, and sound
techniques was an effective way to identify leaking components in
gasoline service. Although leaking equipment components are normally a
small source of HAP emissions compared to some of the other emission
points in the source category, the fact that owners or operators
generally perform inspections for safety reasons makes the inspection
program an attractive option. We did not attempt to quantify the
emissions reductions and costs for this level of control because the
percentage of owners or operators who are already doing similar
inspections, while believed to be a large percentage, is not known. If,
as believed, a large percentage of facilities are already being
inspected for equipment leaks, the added emission reductions and costs
associated with this proposed rule would be small.
    We also included in Regulatory Alternative 1 a work practice
standard that requires all affected sources to handle gasoline in a
manner that reduces vapor releases. This requirement includes steps
such as minimizing spills and not storing gasoline in open containers.
As with the equipment leak inspection program, these simple actions
have been included as a work practice standard in Regulatory
Alternative 1.
    The implementation of Regulatory Alternative 1 would result in an
estimated HAP reduction of about 3,300 tons per year, of which about
120 tons would be benzene. As discussed later in this preamble, we
estimate that this alternative will reduce incidences of cancer from
benzene exposure by 0.037 cases per year. These reductions would be
achieved with an initial capital investment estimated at $60 million
nationwide. Because of the value of the product that is prevented from
evaporating as a result of these control measures, however, the
annualized cost of Regulatory Alternative 1 is estimated to be a credit
of approximately $6 million per year. The cost-effectiveness of this
Alternative, therefore, would be a credit of about $1,800 per ton of
HAP reduced.
    As an option to regulatory Alternative 1, we are also considering
the adoption of a seals and floating roof technology for storage tanks
at bulk terminals and pipeline facilities and controlling emissions
from loading racks at bulk terminals. This option would reduce HAP
emissions by 3,100 tons per year and VOC emissions by 43,000 tons per
year. This option would achieve 94 and 90 percent of the emission
reductions of Alternative 1 and 2 (discussed below), respectively. This
option would reduce cancer incidence by roughly 0.035 cancers per year.
We estimate that this option would require capital expenditures of $57
million, but because of the reduced loss of gasoline, this option would
yield an annual cost savings of $6 million per year.
    Regulatory Alternative 2. As discussed earlier, our approach in
developing the regulatory alternatives was to first look at the most
cost-effective controls at the larger bulk facilities, then to look at
smaller (gasoline dispensing) facilities, typically located closer to
the population. Regulatory Alternative 2, therefore, would require that
storage tanks at gasoline dispensing facilities in Urban 1 and Urban 2
areas be filled using submerged fill and would also include all of the
requirements of Regulatory Alternative 1. This Alternative would lead
to additional HAP emission reductions in more populated areas compared
to Regulatory Alternative 1.
    As discussed in Section IV.B. of this preamble, the use of
submerged filling results in about a 60 percent reduction in emissions
compared to splash filling of storage tanks. We estimate that this
technology is already used for the delivery of about 99 percent of the
gasoline to gasoline dispensing facilities. However, because the
remaining 1 percent accounts for over 1.3 billion gallons of gasoline,
we estimated that an additional 100 tons of HAP emission reductions
(1,370 tons of VOC) would be achieved through the implementation of the
submerged fill requirement at gasoline dispensing facilities as
specified in Regulatory Alternative 2. As discussed later in this
preamble, we estimate that submerged fill will reduce incidences of
cancer from benzene exposure by 0.002 cases per year. These additional
reductions would be achieved at an additional $5 million in capital
cost and an increase in the annualized cost of approximately $47,000.
The cost-effectiveness of submerged fill at gasoline dispensing
facilities is, therefore, about $470 per ton of HAP emissions reduced.
    Our analysis showed that if the submerged fill requirement was
applied in all counties nationwide rather than only in Urban 1 and
Urban 2 areas (Regulatory Alternative 2), the additional HAP reductions
would be about 36 tons per year from the approximately 700 additional
facilities that would be required to add submerged fill. The total
capital cost would increase by about $2 million and the annualized cost
would increase by about $18,800. However, as stated earlier, our
approach when adding controls for smaller facilities, in this case
gasoline dispensing facilities, is to apply controls in the more
populated areas. This focuses the emission reductions from this
industry segment in urban areas, results in a larger percentage of the
population receiving the benefits of reduced emissions and

exposure to HAP, and reduces the overall cost of the rule. Therefore,
we chose to only include in Regulatory Alternative 2 those gasoline
dispensing facilities located in the more populated urban (Urban 1 and
Urban 2) areas.
    Regulatory Alternative 3. Continuing our approach of considering
increasingly more stringent control levels, the next level of control
that we considered for gasoline dispensing facilities was the
requirement to vapor balance the loading of storage tanks. Regulatory
Alternative 3 would include the requirement that all gasoline
dispensing facilities located in Urban 1 areas utilize vapor balancing
when loading gasoline into their storage tanks and would also include
all of the requirements of Regulatory Alternative 2. Our analysis
indicated that vapor balancing is already used for the delivery of
about 68 percent of the gasoline to gasoline dispensing facilities.
    For Regulatory Alternative 3, we evaluated a vapor balancing
requirement based on typical State standards for gasoline dispensing
facilities. We evaluated a control approach that included equipment and
work practice standards and also allowed an option of demonstrating
that alternative control techniques selected by owners or operators
were equally effective. Under this approach, the equipment and work
practice standards would specify the components and operation of an
acceptable vapor balance system. The owners or operators would be
allowed, however, to utilize other equipment configurations if they
successfully demonstrated through performance testing that their system
was capable of reducing emissions from the loading of their storage
tanks by 95 percent. This regulatory approach is utilized by many State
and local agencies because of the flexibility it allows.
    The use of vapor balanced loading of storage tanks achieves
significantly more HAP reductions compared to submerged filling. It is,
however, much more costly and is a much less cost-effective
requirement. Adding vapor balancing to gasoline dispensing facilities
in Urban 1 areas would achieve over twice the HAP emissions reduction
and incidences of cancer avoided of Regulatory Alternative 2 (7,000
tons per year compared to 3,400 tons per year, and 0.08 cases per year
compared to 0.039 cases per year). These greater reductions would
require the expenditure of an additional $99 million in capital cost
and $38 million in annualized control cost. We estimate an incremental
cost effectiveness of about $10,700 per ton of additional HAP reduced
and a cost-effectiveness of about $4,600 per ton of HAP controlled for
the combined alternative.
    As was the case for Regulatory Alternative 2, we examined the
impacts of applying standards in all counties nationwide versus
applying standards only in urban areas. We chose to minimize the
overall control cost of this Alternative by only requiring vapor
balancing in the most populated (Urban 1) areas. If Regulatory
Alternative 3 were applied in Urban 2 areas (as well as Urban 1 areas)
or in all counties nationwide, the cost-effectiveness would be the
same, but the HAP reductions would increase by about 100 tons per year
and 180 tons per year, respectively, and the annualized costs would
increase by about $30 million and $60 million, respectively.
4. Proposed Level of the Emission Limit and Work Practice Standards
    Based on our analysis of the three regulatory alternatives
presented here, we have decided to propose both Regulatory Alternatives
1 and 2 in this proposed rule. These Alternatives achieve significant
HAP emissions reduction (3,300 or 3,400 tons per year), and, because
most of the control measures included prevent the evaporation of
gasoline, accomplishes those reductions at a credit of about $1,800 or
$1,750 per ton of HAP reduction on a nationwide basis, respectively.
While Regulatory Alternative 2 achieves only an additional 100 tons of
HAP reduction, the incremental cost to achieve those reductions are
small ($47,000 annualized cost). More importantly, the reductions are
achieved at service stations located generally closer to the public and
not subject to control under Regulatory Alternative 1. As presented
later in this preamble, a rough approximation of incidences of cancer
from benzene exposure indicates that gasoline distribution area sources
contribute to a small number of annual incidences of cancer. Therefore,
the additional incidence reduction between Regulatory Alternatives 1
and 2 is small.
    The regulatory text included in this proposed rule implements
Regulatory Alternative 2. We have proposed regulatory text for
Regulatory Alternative 2 because that Alternative encompasses all of
the facilities that would be subject to standards under Regulatory
Alternative 1, plus gasoline dispensing facilities. If we finalize
Regulatory Alternative 1 we will modify the regulatory text
appropriately to remove the provisions applicable to gasoline
dispensing facilities. We solicit comment on the proposed regulatory
text.
    We also solicit comment on whether we should finalize Regulatory
Alternative 3 as described above which provides greater emission
reductions and cancer incidence reductions than Alternatives 1 and 2.
    Additionally, we solicit comment on whether we should select a
final rule that is based on installation of seals and floating roof
technology for storage tanks at bulk terminals and pipeline facilities
and controlling emissions from loading racks at bulk terminals. The
additional controls identified in Regulatory Alternatives 1 and 2
compared to this option for Alternative 1 would achieve additional
reductions of HAP of 200 and 300 tons per year. These additional
reductions represent a further reduction of only 6 to 10 percent of the
reduction achieved by this option to Alternative 1. These additional
reductions in HAP will yield a reduction in cancer incidence from
exposure to benzene by roughly 0.002 to 0.004 cases per year. Controls
in these alternatives would also reduce VOC emissions by an additional
2,100 to 3,500 tons per year. We estimate that these additional
controls will result in capital costs of roughly $2 to $7 million and
annual costs of roughly $230,000 to $280,000 per year. The rationale
for adopting this alternative reflects a relatively greater emphasis on
the limited additional reduction in HAP and VOC emissions and the
limited additional reduction in cancer incidence associated with
Alternatives 1 and 2.
    Lastly, we are asking for comment on whether Regulatory Alternative
1 and the above option to that alternative should be required in all
counties nationwide as proposed or just in urban areas. In addition, as
discussed earlier, we are requesting comment on the use of Urban 1 and
Urban 2 definitions or some other definitions to better define the
urban areas where people live.

D. How did we select the format for this proposed rule?

    Many owners or operators of affected sources under this proposed
rule also own or operate other sources that are subject to control
requirements under State rules or the Major Source NESHAP. The format
selected for the proposed standards was developed based on our review
of Federal and State rules affecting the same emission points at many
facilities within the source category. Our goal was to set a format for
each emission point that is compatible with the applicable test
methods, that reflects the performance

of the control technology, and is consistent with the formats used in
other applicable rules. The proposed standards consist of a combination
of several formats: numerical emission limits and operating limits,
equipment standards, and work practice standards.
    Numerical emission limits are feasible for storage tanks outfitted
with a closed vent system and a control device. Because these devices
must be tested to determine their performance level, a numerical
emission limit is both reasonable and practical. For this control
situation, we have proposed a percentage control efficiency (95 percent
reduction in total organic compound emissions), which is consistent
with the format used in the Major Source NESHAP as well as in the
Refinery NESHAP (40 CFR part 63, subpart CC).
    A numerical emission limit was also selected for loading racks
controlled by vapor processors. We have proposed that emissions from
loading racks must not exceed 80 mg of total organic compounds per
liter of gasoline loaded through the loading rack. This is the same
format that is used in the Bulk Terminals NSPS and the Major Source
NESHAP for loading rack control, although the actual numerical limit is
different.
    You would also have the option of installing floating roof
technology with specific types of rim and deck fitting seals for
affected storage tanks. The floating roof option has been included in
most Federal rules affecting petroleum storage tanks, including the
Major Source NESHAP and the Storage Vessels NSPS. In selecting this
equipment standard, we have maintained consistency with the control
approach that most affected gasoline distribution facilities have used
to comply with the Major Source NESHAP. Additionally, we are allowing
selected equipment, work practice, monitoring, and recordkeeping
standards in the more recent floating roof storage vessel standards (40
CFR 63, subpart WW, National Emission Standards for Storage Vessels
(Tanks)--Control Level 2), as an alternative to the rule text in the
Storage Vessels NSPS and Major Source NESHAP.
    The proposal provides that bulk plants and, under Regulatory
Alternative 2, gasoline dispensing facilities, must implement an
equipment standard to reduce emissions from the loading of storage
tanks and cargo tanks. This equipment standard requires the use of
submerged fill pipes for loading activities at these facilities.
Similar equipment standards are found in many State rules that affect
bulk plants and gasoline dispensing facilities.
    For equipment leak emission controls, we have selected a work
practice standard, a monthly equipment leak inspection that is
consistent with the format found in the Major Source NESHAP for major
sources and other industrial standards. This format was selected
because, during the development of the Major Source NESHAP, it was
found to be as effective as an instrument-based leak detection and
repair program for detecting gasoline leaks at bulk terminals. Under
this work practice standard, leaks that are discovered must be repaired
within 15 days.
    Another work practice standard applicable at affected sources
requires that gasoline be handled in a manner that reduces fugitive
emissions from spills and open containers. This work practice standard
is also found as a requirement of the major source NESHAP.
    An additional work practice standard in combination with an
emission limit has been selected for ensuring that only vapor tight
cargo tanks are loaded at bulk terminals so that the gasoline vapors
will be transferred to the vapor processor. The proposed standard
requires that owners or operators of bulk terminals take steps to
ensure that any cargo tank loaded has been tested for vapor tightness
as measured by EPA Reference Method 27, or an acceptable alternative.
This work practice standard is consistent with the format of the Bulk
Terminals NSPS and the Major Source NESHAP for vapor tight cargo tanks
and requires that a pressure or vacuum change of no more than 3 inches
be achieved during a 5-minute test period.

E. How did we select the proposed testing and monitoring requirements?

    In our evaluation of the potential testing and monitoring
requirements for this proposed rule, we considered the requirements
found in various Federal and State rules. While the Federal
requirements we evaluated apply only to major sources within the
gasoline distribution source category, the State and Federal new source
rules also apply to area sources. As a result of our evaluation, we
have elected to include certain testing and monitoring requirements
from existing Federal regulations as well as requirements found in some
State rules. The testing and monitoring requirements that we have
included in this proposed rule are intended to ensure that the
objective of achieving significant emission reductions on a continuous
basis is met without imposing an undue burden on the affected sources.
    The proposed standards require initial performance testing and
continuous operating parameter monitoring for vapor processor systems,
annual vapor tightness testing of cargo tanks, periodic visual
inspections and seal gap measurements of floating roofs, and monthly
inspections of equipment components in gasoline service.
    We are proposing continuous monitoring of operating parameters as a
measure to certify and document continuous compliance of the vapor
processing systems. The testing, continuous monitoring, and inspection
requirements in this proposed rule are based on those in the Major
Source NESHAP. In addition to these requirements, we are proposing the
monitoring of the presence of a pilot flame as an alternative to
temperature monitoring of thermal oxidation units. Industry has raised
concerns with temperature monitoring that leads us to propose this
alternative. Due to the cyclic nature of the emissions during loading
operations, some facilities have found the selection of an appropriate
target temperature problematic. Moreover, to compensate, some
facilities may burn excess amounts of supplemental fuel (natural gas)
to maintain temperature with no HAP or VOC emission reduction benefit
and an increase in nitrogen oxide emissions.
    We are requesting comment on the sufficiency of monitoring for the
presence of the pilot flame by itself or with additional parameters.
Industry has recommended automatic shutdown of the loading operations
when the pilot flame is absent, coupled with daily monitoring of the
assist blower operation, of the vapor line valve operation, and of the
automatic shutdown system. We are requesting additional information on
the specifics on how these additional items are monitored and why they
or others are appropriate to ensure continuous compliance with the
emission limit (80 mg/l). Further details on the industry
recommendations are in the docket and we request comments, along with
data that support the comments, on their recommendations. We are also
attempting to collect additional information and data to support that
these additional items are appropriate to monitor. We will evaluate the
data presented to us during the public comment period to determine the
final rule approach on continuous compliance monitoring.
    Industry representatives are also working on and have recommended
alternative parameters to monitor for

continuous compliance of carbon adsorption systems. Industry is
recommending daily monitoring of carbon adsorption system vacuum levels
and other system parameters, and monthly measurements of outlet
concentration, instead of continuous monitoring of outlet concentration
as required in the Major Source NESHAP and this proposed rule. We are
requesting additional information on the specifics on how these
parameters are monitored and why they or others are appropriate to
ensure continuous compliance with the emission limit (80 mg/l). Further
details on the industry recommendations are in the docket and we
request comments, along with data that support the comments, on their
recommendations. We will evaluate the data presented to us during the
public comment period and determine in the final rule whether this
alternative approach ensure continuous compliance with the emission
standards.
    Various alternative testing and monitoring procedures are also
included in the proposed rule. These alternatives were selected to
allow facilities to utilize ongoing testing and monitoring programs, or
to expand programs in use at other facilities, rather than having to
implement new programs. Facilities that would be required to conduct
performance testing of control devices may instead submit documentation
that their control devices are in compliance with the testing and
monitoring provisions of enforceable State or local standards that are
equivalent in stringency to the proposed rule. Performance tests that
have been approved by State or local permitting authorities may be
submitted in lieu of a new performance test if they were conducted
within the 3 years preceding the effective date of the proposed rule.
Operating parameter monitoring programs approved by permitting
authorities may also be used in lieu of the development of new
monitoring programs for control devices. The periodic bubble leak test
for vapor tightness testing of railcar cargo tanks (as allowed under
the Major Source NESHAP) will also be allowed as an alternative to EPA
Reference Method 27.

F. How did we select the proposed notification, recordkeeping, and
reporting requirements?

    The notification, recordkeeping, and reporting requirements of the
proposed standards were generally based on requirements found in other
Federal standards, including the General Provisions, as well as State
rules. These requirements were selected because they meet the needs of
EPA or the delegated permitting authority with respect to determining
initial and ongoing compliance with the proposed standards. We have not
made a general determination regarding how best to impose reporting
requirements on area sources and seek comment on ways to balance the
need for reporting with the burden imposed on sources. The proposed
standards would require an owner or operator of a bulk terminal or a
pipeline facility to submit the following four types of reports: (1)
Initial Notification; (2) Notification of Compliance Status; (3)
periodic reports (including excess emissions reports); and (4) other
reports.
    The purpose and contents of each of these reports are described in
this section. The proposed rule requires all reports to be submitted to
the ``Administrator.'' The term Administrator refers either to the
Administrator of the Agency, an Agency regional office, a State agency,
or other entity that has been delegated the authority to implement this
rule. In most cases, reports will be sent to State agencies. Addresses
are provided in the General Provisions of 40 CFR part 63, subpart A.
    Records of reported information and other information necessary to
document compliance with the regulations are generally required to be
kept for 5 years. Records pertaining to the design and operation of the
control and monitoring equipment must be kept for the life of the
equipment.
    Owners or operators of bulk gasoline plants and, under Regulatory
Alternative 2, gasoline dispensing facilities, would be subject to
reduced reporting requirements because their only requirement under the
proposed rule is submerged fill of storage tanks and cargo tanks and
equipment leak inspections at bulk plants. As discussed earlier, most
States already require submerged filling at bulk plants and gasoline
dispensing facilities, and as much as 99 percent of the gasoline is
delivered using this technology. Additionally, confirming compliance
with the submerged fill requirement is easily performed in the field.
We estimate that approximately 260,000 gasoline dispensing facilities
in Urban 1 and Urban 2 areas and 4,400 bulk plants in all counties
nationwide currently utilize submerged filling of their storage tanks
and cargo tanks due to State or local regulations. As a means of
reducing the burden on these smaller facilities, we are proposing that
bulk plants and gasoline dispensing facilities located in States that
require submerged filling of storage tanks and cargo tanks not be
required to submit an Initial Notification and a Notification of
Compliance Status. We estimate that the burden of filing these
notifications would be as much as $30 million for these facilities that
are already complying with the requirements of this proposed rule. We
are requesting comment on the elimination of the requirement to file
the Initial Notification and Notification of Compliance Status in areas
already required to install this equipment.
    The Initial Notification and the Notification of Compliance Status
would still be required, however, for bulk gasoline plants and, if we
select Regulatory Alternative 2, gasoline dispensing facilities in
other States (see listing in docket). We are nevertheless proposing to
simplify these notifications by providing examples of forms that
request only the minimum amount of information that would be necessary.
In addition, if an affected bulk plant or gasoline dispensing facility
is already in compliance with this proposed rule prior to the date that
the Initial Notification is due, the two notifications could be
combined. Bulk plant owners or operators would, however, be required to
report, in a semiannual compliance report, a failure to repair an
identified equipment leak within the specified number of days. There
would, however, be no other requirements for routine semiannual
compliance reporting for either bulk plants or gasoline dispensing
facilities.
1. Initial Notification
    The proposed standards would require owners or operators to submit
an Initial Notification. This report notifies the Agency of
applicability for existing facilities or of construction for new
facilities as outlined in 40 CFR 63.5 (the General Provisions),
whichever is applicable. A respondent must also report any facility
reconstructions as defined in 40 CFR 63.5. This report will establish
an early dialogue between the source and the regulatory agency,
allowing both to plan for compliance activities. The notice is due
within 120 days after the effective date of this proposed rule or
within 120 days after the source becomes subject to the relevant
standard.
    The Initial Notification must include a statement as to whether the
source can achieve compliance by the specified compliance date. If an
existing source anticipates a delay that is beyond its control, it is
important for the owner or operator to discuss the problem with the
regulatory authority as early as possible. This report will also
include a description of the parameter monitoring system intended to be
used in

conjunction with the vapor processing system. Pursuant to section
112(i)(3)(B) of the CAA, the proposed standards contain provisions for
a 1-year compliance extension to be granted by the Administrator on a
case-by-case basis.
2. Notification of Compliance Status
    The Notification of Compliance Status would be submitted no later
than 60 days after the facility's initial compliance demonstration. It
contains the information necessary to demonstrate that compliance has
been achieved, such as the results of the initial performance test on
vapor processing systems. The submission of the performance test report
will allow the regulatory authority to verify that the source has
followed the correct sampling and analytical procedures, and has
performed all calculations correctly. Included in the performance test
report would be the calculation of the operating parameter value for
the selected operating parameter to be monitored in the vapor
processing system. The notification must include the data and rationale
to support this parameter value as ensuring continuous compliance with
the emission limit.
3. Periodic Reports
    Periodic reports are required to ensure that the standards continue
to be met and that all equipment is operated and maintained properly.
Generally, periodic reports would be submitted semiannually. However,
the Administrator may request that the owner or operator submit more
frequent reports if more frequent reporting is necessary to accurately
assess the compliance status of the source.
    The semiannual compliance report would include a summary of the
results of the continuous parameter monitoring, storage tank
inspections, and equipment leak inspections. An excess emissions report
would also be submitted along with the semiannual report, if
applicable. Excess emissions events would include deviations from the
established reference values used for continuous parameter monitoring.
For loading racks, each loading of a gasoline cargo tank for which
vapor tightness documentation had not been previously obtained by the
facility would also be considered a reportable excess emissions event.
    Owners and operators are also required to keep records of monthly
equipment leak inspections, and to furnish reports on inspection
results, as specified in 40 CFR 63.11095(a)(3). Facilities must also
retain records and submit reports of annual inspections of storage
vessels in accordance with 40 CFR 63.11095(a).
4. Other Reports
    There are also a limited number of other, non-routine reports
required under the General Provisions. For example, notification before
a performance test or a storage vessel inspection is required to allow
the regulatory authority the opportunity to have an observer present
(as specified in the General Provisions). This type of reporting must
be done separately from the periodic reports because some situations
require a shorter term response from the reviewing authority.
    Reports of start of construction, anticipated and actual startup
dates, and modifications, as required under 40 CFR 63.5 and 63.9, are
entered into the Agency's Aerometric Information Retrieval System
(AIRS) and are used to determine whether emission limits are being met.
    Records required under the proposed standards are generally
required to be kept for 5 years. General recordkeeping requirements are
contained in 40 CFR 63.10(b). These requirements include records of
malfunctions and maintenance performed on the vapor processing system
and the parameter monitoring system. At bulk gasoline terminals, vapor
tightness (annual test) documentation for each gasoline cargo tank
loading at the terminal is required. Continuous monitoring data from
the parameter monitor on the vapor processor will provide a record of
continuous compliance with the emission standard. Records of storage
vessel inspections, operating plans, and other details of controlled
storage vessels at terminals and pipeline stations are to be kept as
specified under either 40 CFR 60.115b or 40 CFR 63.1065, depending on
the compliance option chosen.

G. How did we decide to exempt gasoline distribution area sources from
the CAA title V permit requirements?

    Section 502(a) of the CAA provides that EPA may exempt one or more
area sources from the requirements of title V if EPA finds that
compliance with such requirements is ``impracticable, infeasible, or
unnecessarily burdensome'' on such area sources. EPA must determine
whether to exempt an area source from title V at the time we issue the
relevant CAA section 112 standard (40 CFR 70.3(b)(2)). We are proposing
in today's action to exempt gasoline distribution area sources from the
requirements of title V. Gasoline distribution area sources would not
be required to obtain title V permits solely as a function of being the
subject of today's proposed NESHAP; however, if they were otherwise
required to obtain title V permits, such requirement(s) would not be
affected by today's proposed exemption.
    Consistent with the statute, EPA has found that compliance with
title V permitting is ``unnecessarily burdensome'' for gasoline
distribution area sources. EPA's inquiry into whether this criterion
was satisfied was based primarily upon consideration of the following
four factors: (1) Whether title V would result in significant
improvements to the compliance requirements that we are proposing for
this area source category; (2) whether title V permitting would impose
a significant burden on gasoline distribution area sources; (3) whether
the costs of title V permitting for gasoline distribution area sources
would be justified, taking into consideration any potential gains in
compliance likely to occur for such sources; and (4) whether there are
implementation and enforcement programs in place that are sufficient
for assuring compliance with this NESHAP without relying on title V
permits.
    Additionally, EPA also considered whether exempting gasoline
distribution area sources would adversely affect public health, welfare
or the environment. We first determined the extent to which these
factors were present for this area source category. We then determined
whether those factors collectively demonstrated that compliance with
title V requirements would be unnecessarily burdensome for gasoline
distribution area sources.
    In our consideration of these factors we believe the addition of
title V permitting would not result in significant improvements to the
compliance requirements that we are proposing for this area source
category. We believe we are proposing proper levels of testing,
monitoring, reporting, and recordkeeping, thus ensuring continuous
compliance. As discussed earlier in this section, the proposed levels
of testing and monitoring are based on the current levels of testing
and monitoring required by many years of rule implementation under
Federal, State, local, and tribal agencies for these emission sources.
We are unaware of any additional compliance procedures, in or outside
the title V program, which would improve the assurance of significantly
more gains in compliance and emission reductions.
    We also believe that title V permitting may impose a significant
burden on facilities within this source category, some of which are
small businesses. For

many facilities, the cost of obtaining a title V permit may far exceed
the cost of complying with this proposed rule without significant gains
in compliance. In addition, because most of the facilities that are
subject to this proposed rule are already subject to State or local
rules with the same or similar control requirements, the implementation
and enforcement programs in place are sufficient for assuring
compliance with this NESHAP without relying on title V permits.
    Based on the above analysis, we conclude that title V permitting
would be ``unnecessarily burdensome'' for gasoline distribution area
sources. We are therefore proposing that this area source category be
exempt from title V permitting requirements.

H. How did we determine the compliance date for existing facilities?

    Section 112(i)(3)(A) of the CAA directs EPA to establish compliance
dates for existing sources that provide for compliance as expeditiously
as practicable, but in no event later than 3 years after the effective
date of a standard. We are proposing in today's action a compliance
date for existing facilities of 3 years after promulgation of the final
rule. See 40 CFR 63.11083.
    Our selection of a 3-year compliance period was based on several
factors. First, for storage tanks and loading racks at bulk terminals
and for storage tanks at pipeline breakout stations, the 3-year period
is consistent with the requirements found in the Major Source NESHAP.
Because today's proposed rule would control the same types of emission
sources as the Major Source NESHAP, we concluded that it was reasonable
to allow the same compliance period. Some facilities affected by
today's proposed rule will be required to install control equipment to
comply with the rule. The amount of time necessary to plan, purchase,
and install storage tank rim seals or loading rack vapor collection and
control devices is expected to be significant. Also, because the area
source facilities covered by today's proposed rule are smaller than the
facilities covered by the Major Source NESHAP, requiring a shorter
compliance period did not appear reasonable.
    We are also proposing a 3-year compliance period for the submerged
fill requirements at bulk plants and at gasoline dispensing facilities
in urban areas. These are typically small facilities and many of them
meet the definition of a small business entity. These smaller
facilities do not typically have environmental or legal expertise on
staff and would, therefore, often need additional time to develop an
understanding of the requirements of the proposed rule and to develop
and implement a plan of action to comply. Although the estimated costs
for these facilities to comply with the requirements is considered
reasonable, it may take longer for them to plan for or arrange the
funding for purchasing and installing control equipment. For these
reasons, we concluded that a 3-year compliance period was reasonable
for these smaller facilities. We request comment on the appropriateness
of extending the proposed timeframe to the full 3-year period for an
existing source to comply with this area source rule.

V. Summary of Environmental, Energy, Cost, and Economic Impacts

    As discussed earlier, gasoline distribution activities are carried
out at several different types of facilities. These include bulk
terminals, pipeline breakout stations, pipeline pumping stations, bulk
plants, and gasoline dispensing facilities. Our analysis of the
gasoline distribution industry led us to estimate that there were
approximately the following numbers of potentially affected area
sources within each type of facility: 980 bulk terminals, 400 pipeline
breakout stations, 1,800 pipeline pumping stations, 390 bulk plants,
and 1,900 gasoline dispensing facilities. The following paragraphs
present our estimates of the impacts that this proposed rule would have
on these facilities.

A. What are the air impacts?

    Nationwide, gasoline distribution facilities emit annually an
estimated 475,000 tons of VOC and 35,500 tons of HAP (including 1,300
tons of benzene). As discussed earlier, emissions of EDC have already
been eliminated from this source category. If we select Regulatory
Alternative 1 as the final standard, we estimate that, after the
alternative is implemented, annual HAP emissions will be reduced by
3,300 tons, which includes 120 tons of benzene, from 3,300 facilities.
The alternative will also reduce VOC emissions by 45,000 tons per year.
This represents about a 9 percent reduction in emissions of these
pollutants, compared to the baseline. If we select Regulatory
Alternative 2 as the final standard, we estimate that, after the
alternative is implemented, annual HAP emissions will be reduced by
3,400 tons, which includes 125 tons of benzene, from 5,200 facilities.
The alternative will also reduce VOC emissions by 46,200 tons per year,
which represents about a 10 percent reduction in emissions of these
pollutants, compared to the baseline.
    On March 29, 2006, EPA proposed (71 FR 15804) additional controls
on gasoline, passenger vehicles, and portable gasoline containers under
the Mobile Source Air Toxics (MSAT) Program. The proposed MSAT rule
would require that the benzene content of gasoline be reduced by about
37 percent overall by January 1, 2011. Taking into account the lower
benzene content of gasoline that is estimated to result from the
implementation of the MSAT rule (if the rule is finalized as proposed),
baseline emissions of HAP and benzene from this source category in 2011
would be about 35,145 tons and 820 tons, respectively. Regulatory
Alternative 1 is estimated to achieve a HAP reduction of 3,260 tons per
year (rather than the 3,300 presented earlier) and a benzene reduction
of 77 tons per year (rather than 120 tons) if the MSAT rule is
finalized as proposed. Regulatory Alternative 2 is estimated to achieve
a HAP reduction of 3,360 tons per year (rather than the 3,400 presented
earlier) and a benzene reduction of 80 tons per year (rather than 125
tons) if the MSAT rule is finalized as proposed.
    We project that any adverse air impacts associated with this
proposed rule will be insignificant. The only control technology
utilized to meet the requirements in the proposed rule that would lead
to adverse air impacts is the use of thermal oxidizers to control
gasoline vapors. These devices typically use natural gas as a
supplemental fuel to achieve the required minimum temperatures in the
combustion chamber. Emissions from these devices include the products
of combustion created by the combustion of natural gas and gasoline
vapors. There are, however, alternative control technologies, such as
carbon adsorbers, that do not rely on combustion for control of the
gasoline vapors. Carbon adsorption devices recover gasoline vapors and
provide a cost benefit from the recovered product.
    The alternatives being proposed today would reduce benzene
emissions in this source category by 120 and 125 tons annually (about a
9 and 10 percent reduction from current total emissions), respectively,
from Regulatory Alternatives 1 and 2. Using national data from all
stationary benzene emission sources in the 1999 National Air Toxic
Assessment (NATA) and ratioing them to the national benzene emissions
from this source category, we approximate that this proposal will
reduce incidences of cancer from benzene exposure by 0.037 and 0.039
cases per year, respectively, from Regulatory Alternatives 1 and 2.
Regulatory Alternative 3 reduces about

20 percent of current benzene emissions from these sources, resulting
in a reduction of incidences of cancer from benzene exposure by 0.08
cases per year. These approximations are considered a very rough
estimate because no exposure analysis was performed for this source
category and the 1999 NATA data should be used cautiously, as the
overall quality and uncertainties of the NATA results will vary from
location to location as well as from pollutant to pollutant. In
addition, EPA's Scientific Advisory Board has cautioned the Agency
against using the results of the NATA assessment for regulatory
purposes. Further information on the limitations of NATA is discussed
at the following Web site: http://www.epa.gov/ttn/atw/nata1999/index.html
.

B. What are the cost impacts?

    The cost of implementing the proposed standards for gasoline
distribution area source facilities would include the capital and
annualized costs to control storage tanks, loading racks, and equipment
leaks, as well as the costs of complying with the testing, monitoring,
reporting, and recordkeeping requirements. The proposed standards are
estimated to result in capital expenditures of approximately $60
million for Regulatory Alternative 1 and $65 million for Regulatory
Alternative 2.
    The annualized cost \3\ of the capital expenditures is estimated to
be about $7.1 million for Regulatory Alternative 1 and $7.6 million for
Regulatory Alternative 2. Annual operating and maintenance costs are
estimated at about $3.6 million, for each of the alternatives. We have
estimated the annual costs of testing, monitoring, reporting, and
recordkeeping to be about $23 million for Regulatory Alternative 1 and
$24 million for Regulatory Alternative 2. Because of the value \4\ of
the product that is either recovered or prevented from evaporating,
however, we estimate that the annualized cost of the proposed standards
is a credit of about $6 million for both alternatives ($47,000
incremental annualized cost between Regulatory Alternatives 1 and 2).
---------------------------------------------------------------------------

    \3\ Capital is annualized over 10 years for loading rack
equipment, 15 years for submerged fill equipment, and 20 years for
storage tank equipment. We used a discount rate of 10 percent for
this analysis, and when evaluating public comments we will update
the final analysis by using the current economic practice discount
rate of 7 percent.
    \4\ The recovered product value we used in this analysis is
$1.70 per gallon for wholesale gasoline.
---------------------------------------------------------------------------

C. What are the economic impacts?

    This proposal affects area sources from pipeline transportation,
bulk stations and terminals, local and long-haul trucking, and gasoline
stations which make up the gasoline distribution industry. We performed
an economic impact analysis with methodology based on a single-market
partial-equilibrium analysis of the national gasoline market. The
analysis estimates changes in gas prices and outputs for affected
sources under the three regulatory alternatives discussed above.
    The results of our analysis are as follows. The compliance cost
results in an insignificant increase in gasoline prices for each
alternative: 0.01 percent increase in price for Regulatory Alternatives
1 and 2, 0.02 percent increase in price for Regulatory Alternative 3.
Given the small increase in prices, the corresponding reductions in
gasoline output are minor for each alternative: -0.002 percent for
Regulatory Alternatives 1 and 2, -0.003 percent for Regulatory
Alternative 3. The overall total annual social costs/gains, which
reflect changes in consumer and producer behavior in response to the
compliance costs, are $6 million in gains for Regulatory Alternatives 1
and 2, and a $32 million cost for Regulatory Alternative 3. The net
gains for Regulatory Alternatives 1 and 2 are the result of surplus
increases from fuel savings valued at $40 to $41 million.
    For more information, please refer to the Economic Impact Analysis
report that is in the public docket for this rule.

D. What are the non-air environmental and energy impacts?

    Water quality would not be affected by implementation of this
proposed rule. This proposed rule does not contain any requirements
related to water discharges, wastewater collection, or spill
containment, and no additional gasoline is expected to enter these
areas as a result of this proposed rule.
    We also project that there will be no significant solid waste
impact. Neither thermal oxidizers nor condensers generate any solid
waste as a by-product of their operation. When carbon adsorption
systems are used, the spent activated carbon that cannot be further
regenerated may be disposed of in a landfill, which would contribute a
small amount of solid waste.
    The control devices used to control emissions from loading racks
and some storage tanks use electric motor-driven blowers, dampers, or
pumps, depending on the type of system, in addition to electronic
control and monitoring systems. The installation of these devices would
have a small negative energy impact. We believe, however, that there
will be very few, if any, new installations of these control devices as
a result of this proposed rule. Also, because the liquid being
controlled by these systems is gasoline, and some of the applied
control measures would keep this fuel in the distribution system, they
would have a positive impact on this form of energy. We estimate that
this proposed rule would prevent a total of approximately 14.3, 14.7,
and 30 million gallons of gasoline from being lost to evaporation
annually for Regulatory Alternatives 1, 2, and 3, respectively.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is a ``significant regulatory action.'' The Executive Order
defines ``significant regulatory action'' as one that is likely to
result in a rule that may ``raise novel legal or policy issues arising
out of legal mandates, the President's priorities, or the principles
set forth in the Executive Order.'' Accordingly, EPA submitted this
action to OMB for review under Executive Order 12866 and any changes
made in response to OMB recommendations have been documented in the
docket for this action.

B. Paperwork Reduction Act

    The information collection requirements in this proposed rule have
been submitted for approval to OMB under the Paperwork Reduction Act,
44 U.S.C. 3501, et seq. An Information Collection Request (ICR)
document has been prepared by EPA has been assigned EPA ICR number
2237.01. A copy may be obtained from Susan Auby, Collection Strategies
Division (2822T), EPA, 1200 Pennsylvania Avenue, NW., Washington, DC
20460, or by calling<PHONE_NUMBER>. A copy may also be downloaded from
the public docket for this action (Docket ID number EPA-HQ-OAR-2006-
0406), which can be found in http://www.regulations.gov.

    The information to be collected for the area source rule proposed
today are based on notification, recordkeeping, and reporting
requirements in the NESHAP General Provisions in 40 CFR part 63,
subpart A, which are mandatory for all operators subject to national
emission standards. These recordkeeping and reporting requirements are
specifically authorized

by section 114 of the CAA (42 U.S.C. 7414). All information submitted
to the EPA pursuant to the recordkeeping and reporting requirements for
which a claim of confidentiality is made is safeguarded according to
EPA policies set forth in 40 CFR part 2, subpart B.
    The proposed rule would require performance testing of control
devices used to control emissions from loading racks at bulk terminals
and from some storage tanks at bulk terminals and pipeline breakout
stations; annual inspections of storage tanks at bulk terminals and
pipeline breakout stations; collection of cargo tank vapor tightness
documentation by bulk terminals; and monthly equipment leak inspections
at bulk terminals, pipeline breakout stations, pipeline pumping
stations, and bulk plants. The proposed rule would not require any
notifications or reports beyond those required by the General
Provisions. The recordkeeping requirements require only the specific
information needed to determine compliance. We have taken steps, as
described in section IV.F of this preamble, to minimize the reporting
and recordkeeping requirements for the smaller facilities (bulk plants
and gasoline dispensing facilities) that are affected by the proposed
rule.
    The annual monitoring, reporting, and recordkeeping burden to
affected sources for this collection (averaged over the first 3 years
after the effective date of the promulgated rule) is estimated to be
about 204,100 labor hours per year, with a total annual cost of $13.4
million per year. Most of this burden will be spread over approximately
11,160 facilities that will be required to keep records and file
reports. Of this total burden, however, about 84,240 labor hours (and
$5.7 million) will be incurred by 1,560 of the larger facilities (bulk
terminals and pipeline breakout stations). Depending on the facility
type, these estimates include two one-time notifications, a one-time
performance test and report for control devices, periodic equipment
inspections, and semiannual compliance reporting.
    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information, unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9 and 48 CFR chapter
15.
    To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, including through the use of automated
collection techniques, EPA has established a public docket for this
proposed rule, which includes this ICR, under Docket ID number EPA-HQ-
OAR-2006-0406, which can be found in http://www.regulations.gov. Submit any

comments related to the ICR for this proposed rule to EPA and OMB. See
ADDRESSES section at the beginning of this notice for where to submit
comments to EPA. Send comments to OMB at the Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th St., NW.,
Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after November 9, 2006, a comment to OMB is best assured of having its
full effect if OMB receives it by December 11, 2006. The final rule
will respond to any OMB or public comments on the information
collection requirements contained in this proposal.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For the purposes of assessing the impacts of this proposed rule on
small entities, small entity is defined as: (1) A small business whose
parent company has less than $25 million in revenue (NAICS 447110,
Gasoline Stations with Convenience Stores), less than $23.5 million in
revenue (NAICS 484220 and 484230, Hazardous Materials Trucking [except
waste], local and long-distance), and less than $8.0 million in revenue
(NAICS 447190, Other Gasoline Stations), and fewer than 100 employees
(NAICS 424710, Petroleum Bulk Stations and Terminals), and 1,500
employees (NAICS 486910, Pipeline Transportation of Refined Petroleum
Products) based on the Small Business Administration size standards;
(2) a small governmental jurisdiction that is a government of a city,
county, town, school district or special district with a population of
less than 50,000; and (3) a small organization that is any not-for-
profit enterprise which is independently owned and operated and is not
dominant in its field. Under these definitions, approximately 60,000
gasoline distribution firms are considered small entities. For more
information, refer to http://www.sba.gov/size/sizetable2002.html. The

economic impacts of the regulatory alternatives are analyzed based on
the consumption of gasoline. However, for the small business impact
analysis, these impacts are described in terms of comparing the
compliance costs to sales revenues for representative entities. For
more detail, see the current Economic Impact Analysis in the public
docket.
    After considering the economic impacts of this proposed rule on
small entities, I certify that the proposed rule will not have a
significant economic impact on a substantial number of small entities.
This certification is based on the economic impact of the proposed rule
to affected small entities in the entire gasoline distribution
industry. The small entities directly regulated by the proposed rule
are industries within the NAICS codes 424710, 447110, 447190, 484220,
and 484230. We have determined that Pipeline Transportation of Refined
Petroleum Products (NAICS 486910) does not contain any small business
entities and, therefore, is not included in the small business impact
analysis. For the regulatory alternatives analyzed, all gasoline
distribution industry categories that contain small business entities
are expected to have an average annual cost to sales ratio of less than
1 percent with cost impacts for all regulated small entities ranging
from a cost savings to less than 0.12 percent of sales. In addition, no
other adverse impacts are expected to occur to these affected small
businesses.
    Cost impacts associated with these proposed standards for area
sources are presented in Section V.B of this preamble. For more
information on the small entity economic impacts associated with the
proposed decisions for gasoline distribution industries affected by
today's action, please refer to

the Economic Impact and Small Business Analyses in the public docket.
    Although the proposed rule would not have a significant economic
impact on a substantial number of small entities, we nonetheless tried
to reduce the impact of the proposed rule on small entities. When
developing the regulatory alternatives, we took special steps to ensure
that the burdens imposed on small entities were minimal. We conducted
meetings with industry officials to discuss regulatory options and the
corresponding burden on industry, such as recordkeeping and reporting.
    Following publication of the proposed rule, copies of the Federal
Register notice and, in some cases, background documents, will be
publicly available (see Docket in the ADDRESSES section of this
preamble) to all industries, organizations, and trade associations that
have had input during the regulation development, as well as State and
local agencies. We continue to be interested in the potential impacts
of the proposed rule on small entities and welcome comments on issues
related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
1 year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires us to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective, or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows us to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before we established any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, we must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.
    We have determined that the options considered in this proposed
rule do not contain a Federal mandate that may result in expenditures
of $100 million or more to State, local, and tribal governments in the
aggregate, or to the private sector in any 1 year. Thus, this proposed
rule is not subject to the requirements of sections 202 and 205 of the
UMRA. Additionally, for the same reason as above for all governments,
we believe the options considered in this proposed rule do not contain
requirements that might significantly or uniquely affect small
governments.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
    This proposed rule does not have federalism implications. It will
not have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. Thus, the requirements of the
Executive Order do not apply to this proposed rule.
    In the spirit of Executive Order 13132 and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this proposed rule
from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on one or more Indian tribes, on
the relationship between the Federal government and the Indian tribes,
or on the distribution of power and responsibilities between the
Federal government and Indian tribes.''
    This proposed rule does not have tribal implications, as specified
in Executive Order 13175. It will not have substantial direct effects
on tribal governments, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.
Thus, Executive Order 13175 does not apply to this proposed rule.
    EPA specifically solicits additional comment on this proposed rule
from tribal officials.

G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks

    Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any
rule that: (1) Is determined to be ``economically significant'' as
defined under Executive Order 12866, and (2) concerns an environmental