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Chapter Eleven chapter eleven Regulation of Fuels and Fuel Additives Jonathan S. Martel, Jeremy D. Peterson, Sarah Greer, and Tom Glazer Introduction This chapter focuses on vehicle fuels as the counterpart to the vehicle in deter- mining air pollutant emissions. Common conventional fuels such as gasoline and diesel fuel contain hundreds of separate organic chemical compounds. These compounds may evaporate into the air, react in the atmosphere to create other pollutants (e.g., ozone and particulate matter), and interact to affect the fuel’s combustion properties and tailpipe emissions. In addition, gasoline and diesel fuel contain additives designed to enhance performance and to improve vehicle main- tenance. These additives introduce many more chemical compounds that also are combusted and emitted. Unlike gasoline and diesel fuel, alternative fuels such as compressed natural gas (CNG), liquefied petroleum gas (LPG), methanol, and ethanol generally consist of a single compound and, if liquid, may be blended with gasoline. Even the simpler alternative fuels, however, react with constituents of the air during combustion to generate pollutants. Measuring the emissions impacts of fuels presents special challenges. The motor vehicle emission standards discussed in chapter 10 are based on emissions testing using standardized test fuels. Vehicles in use actually encounter fuels with varying compositions. The fuel composition can affect the same pollutants that are addressed in the vehicle regulations: hydrocarbons and nitrogen oxides (NOx) that are the precursors to ozone and urban smog, toxic air pollutants, carbon monoxide (CO), and particulate matter. Furthermore, changes in fuel composition can have different effects depending on the characteristics of the vehicle in which the fuel is burned. Therefore, understanding the effects of fuel changes on real- world emissions can be complicated and depends on extensive testing of many different vehicles while varying isolated fuel properties. Finally, different fuels not 11. Regulation of Fuels and Fuel Additives 415 dom54397_11_c11_415-486.indd 415 4/5/16 11:14 AM only have varying carbon intensity affecting vehicle greenhouse gas emissions, but have differing “life cycle” carbon intensity taking into account production and transportation to the vehicle fuel tank. Despite the large potential health impact of fuel formulation, Environmen- tal Protection Agency (EPA) attention to controlling pollutants by regulating the ingredients of fuels was limited prior to the Clean Air Act Amendments of 1990. Since the advent of Clean Air Act (CAA) regulation of motor vehicle emissions, the focus has primarily been on limiting emissions through vehicle technology. Indeed, EPA based the elimination of lead additives, the first and most impor- tant regulation of gasoline, on the grounds that the lead would interfere with the effectiveness of catalytic converter technology. However, as vehicle technology has progressed and further improvement becomes more difficult in the face of persisting air quality problems, regulators have focused on the fuels that vehicles use. In particular, the dramatic expansion of fuels regulation programs in the 1990 CAA amendments reflects this increased focus as part of the effort to meet the National Ambient Air Quality Standards (NAAQS) for ozone and CO and to make concrete progress in controlling toxic air pollutants. Most recently, EPA has moved toward a “systems” approach, revising fuel and vehicle regulations simul- taneously to address interactions between the two. The fungibility of fuels and fuel additives and the existing distribution system for gasoline and diesel fuel in particular present unique challenges for EPA regula- tion and enforcement. In contrast to stationary sources and vehicles, it may not be possible for regulators to identify the manufacturer of fuels or additives in the dis- tribution system. As fuels such as gasoline and diesel fuel make their way through the distribution system, transported from a refinery by pipeline, barge, and truck through storage and terminal facilities and ultimately to retail stations, fuel com- ponents and additives may be blended into the fuel and products from various refineries may be blended together. Moreover, the regulated product ultimately disappears entirely, when it is combusted in consumers’ vehicles. Therefore, regu- lators may have extreme difficulty connecting the product with its manufacturer. With the introduction of renewable fuels mandates, tracking the origin and usage of renewable fuels has added to the complexity, and cases of fraud have prolifer- ated and drawn agency attention. As the fuels and fuel additive programs have developed, EPA has addressed these complexities in a variety of ways. For enforcement, EPA has developed an approach that relies on a system of record-keeping requirements together with presumptive and vicarious liability. In general, when EPA finds fuel that is not in compliance with regulatory requirements, it presumes that each party that handled the product upstream is responsible for the violations, unless a party can show that it did not cause the problem. In addition, EPA holds refiners vicariously liable for violations discovered at their branded distribution outlets, thus relying on branded refiners’ control over downstream parties that operate under their brand name. With respect to the renewable fuels mandate, EPA recently promulgated a 416 Jonathan S. Martel, Jeremy D. Peterson, Sarah Greer, and Tom Glazer dom54397_11_c11_415-486.indd 416 4/5/16 11:14 AM robust quality assurance program to curb fraudulent generation of renewable fuel credits, known as renewable identification numbers (RINs). Conceptual Overview of Programs The fuels provisions of the CAA are codified together at section 211.1 Section 211 establishes a few different approaches to regulation. First, EPA has general authority to obtain information from manufacturers about all fuels and fuel addi- tives and to take regulatory action when information warrants it. Subsections (a), (b), and (e) authorize EPA to require registration, submission of basic informa- tion, and testing by manufacturers regarding health effects of fuels and additives. Subsection (c) gives EPA general authority to regulate fuels and fuel additives if the EPA administrator believes that any emission product of the fuel or additive causes or contributes to air pollution or if any such product will impair the per- formance of a vehicle’s emissions control equipment. Under these provisions, EPA is equipped to gather information and has discretionary and general authority to take affirmative action to address identified problems. The second regulatory approach essentially shifts the burden of persuasion to the manufacturers, requiring them to show that their new fuels and additives will not harm emissions control equipment and will thus not increase emissions. Sec- tion 211(f) prohibits manufacturers from introducing new fuels or additives into commerce or increasing their concentration unless the fuel or additive is “sub- stantially similar” to any fuel or additive used in certification testing of vehicles. Presumptively, vehicles operating on fuels similar to those used in certification testing will meet the certification emissions standards when using those similar fuels. The EPA administrator is also authorized to waive the “substantially simi- lar” prohibitions upon application of a manufacturer of a new fuel or additive. To do so, the applicant must establish that the new fuel or additive, or an increased concentration of an additive, as well as the emission products of the fuel or addi- tive will not cause or contribute to a vehicle’s failure to comply over its useful life with the emissions standards to which the vehicle is certified. The third regulatory approach entails the implementation of very specific programs that Congress set out in detail in the statute to address problems in a particular manner. In section 211(h), Congress built on EPA regulations promul- gated under section 211(c) to control the volatility of gasoline; in section 211(k), Congress established by far the most specific fuels program for the reformulation of gasoline; and in section 211(l), Congress required that gasoline contain deter- gent additives, pursuant to EPA specifications, to prevent the accumulation of engine and fuel supply deposits. In addition, in section 211(i), Congress built on EPA regulations promulgated under section 211(c) to control sulfur and aromatic hydrocarbon levels in diesel fuel to reduce emissions of particulate matter from 1. CAA § 211; 42 U.S.C. § 7545. 11. Regulation of Fuels and Fuel Additives 417 dom54397_11_c11_415-486.indd 417 4/5/16 11:14 AM diesel engines and to prevent sulfur in the fuel from plugging “trap oxidizer” tech- nology needed to meet EPA’s new diesel engine particulate emission standards. Section 211(m) contains the one fuels program that EPA directed states to adopt. Congress specified that states require the addition of oxygenates to gaso- line to lower CO emissions in the winter months when CO pollution is a problem. Congress also enacted section 211(g) and (n) to support the EPA program previ- ously adopted under section 211(c) to phase down leaded gasoline. Section 211(g) prohibits misfueling unleaded gasoline engines with leaded gasoline, and section 211(n) flatly prohibits any person from selling leaded gasoline for use in motor vehicles. Finally, section 211(o) requires the volume of renewable fuel blended
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