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Release Date: 3/28/97
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EPA is proposing procedural changes to the reformulated fuels program (RFG) that would assure a smooth transition between the Phase I and Phase II program that begins in 2000. In a related action the Agency is also proposing a change that would offer states greater flexibility maintaining compliance with the federal ozone standard. The Agency's current Phase I procedures allow states to opt-out of RFG programs 90 days after their request is approved. For states relying on RFG ozone reduction credits in their air quality plans, opt-out approval is contingent on replacing RFG with a program that will make up the lost credits. EPA said continuing with the same process could potentially cause market uncertainty in the start-up of Phase II and reduce the cost effectiveness of the program by limiting industry's investment, resulting in higher gasoline prices due to reduced production of RFG. Refiners planning to produce Phase II RFG will have to start preparing for the tighter requirements later this year. Substantial investments will have to be made in new technology to meet additional reductions in nitrogen oxides, volatile organic chemicals and toxic emissions over the 1990 baseline levels. Under today's proposal, the petition process and the Agency's criteria for evaluating a request would remain the same as it is now, only the time period would change before the opt-out becomes effective. By December 1997, states must decide whether or not to continue participation in the RFG program. If a petition is not received by that date, the program would continue through 2003. If the choice is to opt-out before Phase II begins in 2000, the state can select an effective date anytime before Dec. 31, 1999, the end of the Phase I program. EPA said the proposed change would ensure a cost-effective and flexible program for consumers, states and fuel suppliers.

EPA also proposed a rule change that would permit areas previously not in compliance with the national ozone ambient air quality standard but are now attaining the standard to adopt the federal RFG program. The proposed option would apply to areas that exceeded the ozone standard at the time the Clean Air Act Amendments were signed in November 1990 or any later time. This change would expand the number of areas eligible to opt into the RFG program and provide states the ability to use it as an option for continued compliance with the ozone air quality standard. Currently, about 30 additional areas could adopt the clean-fuels program. Several states have indicated they would like to have the flexibility to use RFG as a control measure in attainment areas, (areas that comply with the standard), especially in areas with ozone levels relatively close to exceeding the standard. These areas are vulnerable to experiencing violations in the future. The states also recognize that RFG is a cost effective measure to employ. Reformulated fuel helps protect the public by reducing emissions of ozone and air toxicities by burning more completely and evaporating less than conventional fuel. Initially, RFG will reduce volatile organic compounds and toxic air pollutants by more than 15 percent. The Clean Air Act requires reformulated gasoline in 10 areas with the highest levels of ozone. Under a provision in the Act, other

areas exceeding the standard may opt into the program through a petition from the Governor. There are 17 states with areas participating in the program today. Both rule changes were published in the Federal Register today. Public comment will be accepted for 30 days following. The Agency also will hold a public hearing on the two proposals if requested.

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