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Part VI

Federal Trade Commission

16 CFR Part 306

Automotive Fuel Ratings, Certification and Posting; Rule

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Giese)

FEDERAL TRADE COMMISSION 16 CFR Part 306

Automotive Fuel Ratings, Certification and Posting

AGENCY: Federal Trade Commission. ACTION: Final rule.

SUMMARY: The Federal Trade Commission (“Commission’’) amends its Octane Certification and Posting Rule (“Octane Rule’’) to include alternative liquid automotive fuels, includin methanol, denatured ethanol, and other alcohols; blends of methanol, denatured ethanol and other alcohols with gasoline or other fuels; liquefied natural gas; and, liquefied petroleum gas. The amendments require that marketers of these fuels certify and post an automotive fuel rating that describes the fuel being marketed in terms of a minimum percentage, by volume, of its principal component. This action is being taken to comply with the Petroleum Marketing Practices Act (“PMPA”), as amended. The Commission has decided to defer a decision on whether to prescribe disclosure requirements for diesel fuel oil. The title of the rule is amended to be Automotive Fuel Ratings, Certification and Posting (‘‘Fuel Rating Rule”).

EFFECTIVE DATE: The amendments are effective October 25, 1993. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 25, 1993.

FOR FURTHER INFORMATION CONTACT:

Neil Blickman, Attorney, 202-326— 3038, or James Mills, Attorney, 202- 326-3035, Division of Enforcement, Federal Trade Commission, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Statement of Basis and Purpose

I. Introduction

Section 1501 of the Energy Policy Act of 1992 (“EPA 92”) 1 requires the Commission, within 270 days of enactment, to amend 2 the Commission's Octane Rule.3 Specifically, the Commission must issue automotive fuel 4 certification and posting

1Pub. L. 102—486, 106 Stat. 2776. Title XV of EPA 92, Pub. L. 102-486, 106 Stat. 2776, 2996-99, amends title If of PMPA, 15 U.S.C. 2821-25.

2 Section 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2823).

2 Final Rule Governing Certification and Posting of Octane Numbers Under Title If of PMPA, 44 FR 19160 (Mar. 30, 1979), codified at 16 CFR part 306.

4 Section 1501(a)(6) of EPA 92 defines the term “automotive fuel” to mean liquid fuel of a type

requirements, like those that exist now for gasoline, for all liquid alternative fuels 5 for vehicular-use. These alternative liquid automotive fuels include such existing automotive fuels as methanol, denatured ethanol, liquefied petroleum gas, and liquefied natural gas. The Commission has the authority to require certification and posting of octane or other ratings for alternative liquid automotive fuels after consultation with the American Society for Testing and Materials (“ASTM”).6 For diese] fuel oil, the Commission has the discretionary authority to require certification and posting of cetane (a rating similar to octane), if the Commission finds this would be appropriate after a rulemaking proceeding.”

The purpose of PMPA’s requirements for the certification and posting of octane ratings for gasoline sold at retail was to ensure that purchasers have the information they need to purchase gasolines with sufficient octane to prevent engine knocking while avoiding wasteful octane overbuying.* The purpose of the EPA 92 amendments to PMPA is to extend the Octane Rule’s certification and posting requirements to alternative liquid automotive fuels to allow purchasers to compare posted octane or other fuel ratings with their engines’ requirements. Thus, the amendments attempt to increase consumer confidence in and information about motor fuels. The amendments recognize “that motorists have a right to know what they pay for, and that dealers have a right to know that their competitors are not

distributed for use as a fuel in any motor vehicle. Section 1501(a)(6) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2621(6)).

8 Section 301(2) of EPA 92 defines the term “alternative fuel” as: Methanol, denatured ethanol, and other alcohols; mixtures containing 85 percent or more (or such other percentage, but not less than 70 percent, as determined by the Secretary [of the Department of Energy], by rule, to provide for requirements relating to cold start, safety, or vehicle functions) by volume of methanol, denatured ethanol, and other alcohols with gasoline or other fuels; natural gas; liquefied petroleum gas; hydrogen; coal-derived liquid fuels; fuels (other than alcohol) derived from biological materials; electricity (including electricity from solar energy); and any other fuel the Secretary determines, by rule, is substantially not petroleum and would yield substantial energy security benefits and substantial environmental benefits. Pub. L. 102-486, 106 Stat. 2776, 2866 (codified at 42 U.S.C. 13211).

6 Section 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821(17)(C)).

7 Section’ 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821(1)(B)).

8S. Rept. No: 731, 95th Cong., 1st Sess. 15-16, 19-21, reprinted 1978 U.S. Code Cong. and Adm. News 873-75, 877-79.

cheating.” ® Simply stated, the purpose is to give purchasers information they need to choose the correct type or grade of fuel for their vehicles.

In accordance with section 203(d)(1) of PMPA,?° this proceeding was conducted pursuant to section 553 of the Administrative Procedure Act (“APA”’),11 except that interested persons were afforded the opportunity to present oral, as well as written, data, views and arguments. On March 26, 1993, the Commission published a Notice of Proposed Rulemaking (“NPR”) in the Federal Register that sought comment on four proposed certification and posting options for certain alternative liquid automotive fuels and certification and posting requirements for diesel fuel oil for vehicular use.12 (A hearing was not requested, so one was not held.) The options and the comments received are discussed in Part Ill, below. The final amendments appear in Part VII.B., below. Additional technical amendments, e.g., new § 306.0—Definitions, are discussed in Part VIILA., below.

The Commission tentatively concluded in the NPR that the proposed amendments would not have a significant economic impact on a substantial number of small entities in the alternative liquid automotive fuel industry and the diesel fuel oil industry, as defined in the Regulatory Flexibility Act.13 The Commission, however, sought comments about these industries and the impact of the proposed amendments on small entities in them. Under the requirements of the Paperwork Reduction Act,14 the Commission also tentatively concluded that the recordkeeping burden associated with the proposed amendments would be minimal. To ensure the accuracy of its burden estimates, however, the Commission solicited comments on the paperwork burden that the proposed amendments would impose. Lastly, in accordance with the Commission’s modified tenyear regulatory schedule, the Commission sought comments about the

SH. Rept. No. 474 (I), 102nd Cong., 1st Sess. 151, reprinted in 1992 U.S. Code Cong. and Adm. News 1953, 1974.

1015 U.S.C. 2823(d)(1).

115 U.S.C. 553.

1258 FR 16464. The alternative liquid automotive fuels that the Commission identified in the NPR as currently being distributed in the marketplace are methanol; denatured ethanol; M-85 (a mixture of 85% methanol and 15% gasoline); E-85 (a mixture of 85% denatured ethanol and 15% gasoline); liquefied propane gas (LPG); and liquefied natural gas (LNG). See Part HI.A., infra.

135 U.S.C. 605.

1444 U.S.C. 3501-3520.

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costs and bene a Octane Rule

its regulato economic im: F and ita Teena rulemaking responsibilities regarding alternative fuels under section 406 of EPA 92.15 Although the Commission will address the requirements of section 406 in a subsequent proceeding, in the NPR the Commission invited suggestions on how to meet the requirements of both sections 406 and 1501 of EPA 92.18 The Commission received limited comments concerning the section 406 proceeding. Those comments have been considered and will be taken into.account when the Commission publishes its NPR in that proceeding.

II. Background A. Overview of the Octane Rule ,

In this notice, the Commission amends the Octane Rule to include for alternative liquid automotive fuels , certification and posting requirements like those now required by the Octane Rule for gasoline. On March 30, 1979, the Commission issued the Gctane Rule, under section 203(c)(1) of title I of PMPA.17 The Octane Rule, which took effect on June 1, 1979, establishes standard procedures for determining, certifying, and posting (by means ofa label on the fuel dispenser) the octane rating of automotive gasoline intended for sale to. consumers. The Octane Rule covers refiners, producers, importers, distributors, and retailers. 18

Refiners, producers, and importers must determine ‘the octane rating of the gasoline they distribute in accordance with the PMPA-prescribed formula.19 For purposes of cartification and posting, if distributors and retailers do not blend gasoline, they have the option

18 Specifically, section 406 of EPA 92 requires the Commission to propose labeling requirements for alternative fuels and alternative fuel vehicles, including requirements for information about their costs and benefits to enable consumers ‘to make choices and-comparisons. The-Commission ‘has authority to consolidate this required labeling with other labels. Sec, 406, Pub..L. 102-486, 106 Stat. 2776, 2880-81 (codified at-42 U.S.C. 13232).

1Under section 406 of EPA 92, the Commission must issue a Notice of Proposed Rulemaking by April 24, 1994. Jd. Section 408 requires the Commission to establish labeling requirements for alternative fuels suchas compressed natural gas (CNG), hydrogen and electricity, as well as the liquid alternative fuels.

715 U.S&, 2623.

16 CFR 306.1. This coverage parallels the

coverage in PMPA’s definitions of “refiner,” gasoline retailer” and “‘distributor.”

1°16 CFR 306.4, ..7{a), .9(c). The. formula is the sum, divided by two, of the Research Method and the Motor Method, two laboratory test methods for evaluating the antiknock performance of automotive gasoline. Tests using the (R+M)/2 formula must be conducted in accordance with ASTM procedurss, 16 CFR 306.4{b).

of using the octane rating certified to them or of determining the octane rating by testing in accordance with the (R+M}/2 method.29 If distributors or retailers blend different gasolines, they must either: (1) Test in accordance with the (R+M)/2 method; {2) use the weighted-average formula prescribed by

* section 202{f}{1) of PMPA; or (3) use the

lowest octane rating certified to them for any of the gasolines in a mixture.21

The Octane Rule requires that refiners, producers, importers, and distributors certify the octane rating of gasoline that they distribute in commerce for resale. Refiners, producers and importers must certify consistent with their determination of the gasoline’s octane rating. Distributors must certify consistent with the certification they received or, optionally, the octane rating determined by them. Certification can be accomplished in either of two ways: On a delivery ticket with each transfer of gasoline or by a letter of certification or other written statement. A letter or other written statement constituting certification is valid until gasoline with a lesser octane rating is shipped.22

Retailers must post the octane rating of all gasoline they sell to consumers. They must post a whole or half number, which must be equal to or less than the octane rating certified to them or determined by them. They must post at least one label on.each face of each gasoline dispenser and, if more than one kind of gasoline is sold from a single dispenser, saparate disclosures foreach kind of gasoline must be put on each face of the dispenser. The label must show the octane rating preceded by the words “MINIMUM OCTANE RATING” and (R+M)/2 METHOD.” 23

Refiners, producers, importers, distributors, and retailers must keep for one year records of any delivery tickets, letters of certification, or tests upon which they based the octane ratings that they certified or posted. These records must be open for inspection by Commission and Environmental Protection Agency (“EPA”’) staff

2016 CFR.306.7(a)(1),..9{c).

21 Id.

2216 CFR 306.5, :7.

2316 CFR 3089. The octane label must be put on the face of the dispenser as near as possible to the price per gallon of the gasoline and placed so it is in full view of consumers. Octane labels for gasoline must be printed in black ink ona yellow background and conform to ‘the Octane Rule’s size, type style, and dimensional requirements. No marks or information other than that called for’by the Rule may appear on the label. The Gommission has granted several conditional exemptions to the Octane Rule's specific posting requirements to allow use of other labels under certain conditions.

members or by ‘persons authorized by the Gommission or EPA.24

B. Amendments to the Octane Rule Required by EPA 92

Section 1501 of EPA 92 amends Title II of PMPA to extend automotive fuel certification and posting requirements to all liquid automotive fuels.25 Specifically, under this section, the term “Sasoline”’ is deleted from PMPA and replaced with the term “automotive fuel.” 26 The term “‘automotive fuel” means liquid fuel of a type distributed for use in any motor vehicle.27 For vehicular use, such fuels include the following fuels: Gasoline (including gasohol, and oxygenated and reformulated gasolines),2@ diesel fuel oil, and alternative fuels. “Alternative fuel” is defined in section 301(2) of EPA 92 as including: methanol, denatured ethanol .and other alcohols (including mixtures containing 70 percent to 85 percent or more by volume of methanol, denatured ethanol and other alcohols with gasoline or other fuels), liquefied petroleum gas and liquefied natural gas.20

This means that all liquid automotive fuels (with the exception of diesel fuel oil), including alternative liquid automotive fuels, must post either an octane rating or another rating specified by the Commission on fuel dispensers. As delineated in EPA 92, the alternative liquid automotive fuels identified during this proceeding as being currently distributed are methanol, denatured ethanol, blends of methanol or denatured ethanol with gasoline,

2416 CFR 306%, .8, .10.

25'Section 1501 (b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U/S:C. 2821(17}+(18)).

26 Section 1501(c) of Pub. L. 102-486, 106 Stat. 2776, 2996~7 {codified at 15 U.S.C. 2821).

27 Section 1501(b)-of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821(6)).

28“‘Gasohol” is generally recognized.as being a blend of approximately 90% unleaded gasoline.and 10% denatured ethanol. The Commission considers gasohol to be gasoline in the traditional sense,.and already covered by the Octane Rule. See Commission advisory opinion concerning gasohol dated January 8, 1993, issued to the Nebraska Gasohol Committes. Further, because gasohol is substantially gasoline, it does not fall within the definition of “‘alternative fuel” in EPA 92. Sec. 301(2), Pub. L. 102-486, 106 Stat. 2776, 2866 (codified at 42 U.S:C. 13211). See note 5, supra. Similarly, for“‘reformulated gasoline,” which will be required to be available by the Clean Air Act in 1995, 42 U.S.C. 7545(k), and for current “oxygenated gasoline,” the reformulations (to reduce emissions) will not otherwise change the inherent properties of the fuels. Because reformulated and oxygenated gasolines are not specified as alternative fuels and they are substantially gasoline, they are not alternative liquid fuels. Thus, as with other gasolines, octane ratings can and should be derived and posted for reformulated and oxygenated gasolines.

29Pub. L. 102-486, 106 Stat. 2776, 2866 {codified at 42 U.S.C. 13211). See note 5, supra.

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liquefied petroleum gas (“LPG”), and liquefied natural gas (“LNG”).30 These fuels are described briefly below. The Fuel Rating Rule, however, applies to all present and future alternative liquid automotive fuels. If new types of alternative liquid automotive fuels are developed inthe future, sellers can petition the Commission for further rulemaking if they believe that different or additional disclosures are necessary, or they can seek an exemption from specific certification and posting requirements if they believe those requirements are unnecessary for such new fuels.

Methanol, or wood alcohol, is commonly used in the U.S. as a raw material source (feedstock) for producing methyl tertiary butyl ether (“MTBE”), an octane-enhancing gasoline additive, and as a chemical feedstock, extractant, or solvent. It can be used in neat (100%) form as a gasoline substitute or in a blend with gasoline, most commonly as M-85 (85% methanol, 15% gasoline). The majority of methanol produced in the U.S. is from natural gas resources, but it also can be produced from coal, residual oil, and biomass.31

Ethanol, or grain alcohol, is also produced from biomass sources.32 Once denatured, it can be used as a pure fuel or as a blend with gasoline, such as E— 85 (85% denatured ethanol, 15% gasoline).33

LPG is composed primarily of propane and butanes, with smaller amounts of propylene and butylenes. About two-thirds of the LPG available today is a by-product of natural gas processing. It is supplied in four grades of different composition, with HD-5

30 Sec. 301(2), Pub. L. 102-486, 106 Stat. 2776, 2866 (codified at 42 U.S.C. 13211).

31Fact sheet on methanol, developed by Development and Communications Office, Technical Information Program, for the U.S. Department of Energy, NREL SP-220-4315, DE91002157, Rev. Feb. 1992. “Biomass” is a renewable, virtually inexhaustible domestic resource that can be used to produce methanol and ethanol. Corn is a major biomass feedstock being

used today. Other biomass sources currently being

used, or subject to research as potential feedstocks, include crop residues, forage (grass) crops, wood resources (forest residues and short-rotation wood energy crops), and the cellulosic components of municipal solid waste.

32 ‘Denatured ethanol," also known as “fuel ethanol,” is ethanol made non-potable by being blended with unleaded gasoline or other unleaded hydrocarbons according to specific regulations of the Bureau of Alcohol, Tobacco and Firearms, U.S. Department of the Treasury. 27 CFR 19.966, .1005. Because of denaturing, an E-100 fuel would contain less than 100% ethanol.

33 Fact sheet on ethanol, developed by the Development and Communications Office, Technical Information Program, for the U.S. Department of Energy, NREL SP-220-3587, DE91002129, Rev. Feb. 1992.

being the grade usually recommended for automotive use. HD-5 is approximately 95% propane. The terms “LPG” and “propane” are often used Jaiteachundeahiyse

Natural gas is a fossil fuel composed primarily of methane, along with other hydrocarbons such as ethane, propane, butane, and inert gases such as carbon dioxide, nitrogen, and helium. It is produced both in compressed (“CNG”) and liquefied (‘“LNG’’) forms.35 LNG is natural gas that has been liquefied at temperatures as low as —259°F. The amendment adopted by the Commission today covers only LNG. ;

C. Identification of Comments Received

Below is an alphabetical list of the comments submitted in response to the NPR. The list includes the document number assigned to the comment on the public record and a general description of the commenter and its interests relating to this proceeding (for those comments that included a description).3¢ The Commission received a total of 29 comments.37 In the remainder of this notice, each comment is referred to by its acronym or the abbreviation given in parentheses.

1. American Automobile Manufacturers Association (“AAMA”)— D-7. AAMA represents producers of approximately 81% of all U.S.-built motor vehicles.

2. Advanced Business Development, Inc. (“ABDI’’)}—E-6. ABDI is a private consulting firm. :

3. Atmos Energy Corp. (""AEC’)—D- 20. AEC is a natural gas distribution

34 Fact sheet on liquefied petroleum gas and propane, developed by the Development and Communications Office, Technical Information Program, for the U.S. Department of Energy, NREL SP-220-4066, DE 91002114, Rev. Feb. 1992.

38 Fact sheet on compressed and liquefied natural gas, developed by the Development and Communications Office, Technical Information Program, for the U.S. Department of Energy, NREL SP-220-4005, DE 90000388, Rev. Feb. 1992. The Commission cannot include CNG in this rulemaking, because PMPA, as amended, limits the Commission's jurisdiction in the proceeding to liquid fuels. Section 1501(b) of Pub. L, 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2621). However, CNG will be included in the rulemaking proceeding the Commission conducts under sec. 406 of EPA 92. See note 16, supra.

38 All public documents are filed in the Commission's Rulemaking Record No. R811005. Industry comments are filed in category “D. Industry comments.” Other comments are filed in category “E. Comments from other sources.” Documents are numbered sequentially in the order received, such as Document No. D—-1, Document No. D-2. In this notice, comments are cited by,an identification of the commenter, the comment number and the relevant page number(s), é.g:, “RFA, D-1, 1-3." i

37 The Commission originally set April 26, 1993, as the deadline for submitting written comments in response to the NPR. In response to a petition, the Commission extended the cominent period to May 10, 1993. 58 FR 25582 (April 27, 1993).

company with operations in Kentucky, Louisiana and Texas.

4. American Gas Association (“‘AGA") and Natural Gas Vehicle Coalition (“NGVC"}—D-11. AGA represents 250 natural gas distribution and transmission companies, which account for approximately 85% of the nation’s total annual natural gas utility sales, NGVC has over 200 members, including vehicle manufacturers, natural gas vehicle component manufacturers, natural gas distribution, transmission, and production companies, natural gas development organizations, environmental and non-profit advocacy organizations, state and local government agencies, and fleet operators. NGVC is dedicated to developing long-term markets for natural gas vehicles (NGVs) and

building an NGV infrastructure.

5. Association of International Automobile Manufacturers (“AIAM")}— D-17. AIAM is a non-profit trade association that represents U.S. importers, distributors and manufacturers of passenger cars and light trucks produced both here and abroad. -

6. American Methanol Institute (“AMI”)—D-23. AMI represents the majority of the methanol industry.

7. American Petroleum Institute (““API’’}—D-10. API represents approximately 300 companies involved in all aspects of the oil and gas industry.

8. American Trucking Associations, Inc. (“ATAI’’)—D-2. ATAI is a federation with associations in every state and the District of Columbia that represents every type and class of motor carrier in the country, for-hire and private. ATAI’s members collectively consume 24 billion gallons of diesel fue} oil annually.

9. Alternative Transportation Fuels Inc. (“ATFI")}—D-15. ATF is a whollyowned subsidiary of Skelgas Propane,

Inc., a propane marketer. 10. CENEX (‘““CENEX”’)}—D-21.

CENEX is a regional agricultural cooperative, serving 320,000 farmers and ranchers through more than 1,800 local cooperatives in 15 states from the Great Lakes across the Midwest to the Pacific Northwest. Through a joint venture, CENEX sells refined petroleum products, including gasoline and diesel fuel oil, and propane, with annual sales of up to 36 million gallons of petroleum products.

11. Clean Fuels Development Coalition (“CFDC’’}—D-14. CFDC promotes the use of fuels such as ethanol as a means of achieving clean air. It is a non-profit coalition comprised of ethanol producers, ethanol marketers, ETBE [ethy] tertiary butyl ether]

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manufacturers, agriculture organizations, automobile manufacturers, design and engineering firms, and other related industries and interest groups.

12. Chevron U.S.A. Products Company (“Chevron”)—D-5. Chevron is a multinational oil company participating in exploration, production, and refining of crude oil and marketing of petroleum products. Within the United States, Chevron’s activities in these functional areas are conducted by divisions of Chevron U.S.A. Inc., a wholly owned subsidiary of Chevron.

13. U.S, Department of Energy ("DOE”)—E-5. DOE coordinates and administers the energy functions of the Federal Government.

14, Engine Manufacturers Association (‘EMA”)}—D-6. EMA represents worldwide manufacturers of internal combustion engines for all applications except passenger cars and airplanes. EMA’s 31 members produce diesel engines for on-highway truck and bus applications, as well as off-highway construction and agricultural equipment.

15. Marathon Oil Company (“Marathon”)}—D-9. Marathon, an integrated petroleum company, represents that it is the seventh largest U.S. refiner. The company supplies over 3,800 Marathon and subsidiary-brand retail motor fuel outlets located throughout the Midwest and Southeast, and is one of the refining industry’s largest suppliers of petroleum products to independent, private-brand jobbers and wholesalers.

16. Mobil Oil Corporation (‘‘Mobil”’)— D-4. Mobil is a major, integrated, international petroleum company, with five domestic refiners, more than 50 marketing terminals that distribute gasoline and diesel fuel oil, and over 8,500 branded retail outlets in 29 states. Mobil currently is testing several alternative fuels at selected stations.

17. North Carolina Department of Agriculture (“NCDA”)}—E-1. NCDA tegulates the quality specifications for motor vehicle fuels offered for sale in North Carolina.

18: National Propane Gas Association (‘"NPGA”)}—D-19, NPGA represents the LP-gas (principally propane) industry with 3,400 to 3,500 members, including affiliated state and regional associations in 46 states, which represent members inall 50 states. The largest group of members are retail marketers of propane gs. The membership also includes Propane producers, transporters, and Wholesalers, and manufacturers and distributors of associated equipment, containers and appliances.

19. National Soydiesel Development Board (““NSDB”’}—D-—16. NSDB is a nonprofit organization established to develop a market for biodiesel fuels in the U.S. Its members are primarily soybean growers in the U.S. and their various organizations. NSDB seeks greater use of fuels derived from biological materials as an addition to conventional diesel fuels or as replacements for them in certain applications.

20. New York Department of Agriculture and Markets (“NYDAM”)— E—4. NYDAM enforces state requirements for certification and labeling of gasoline octane ratings and diesel fuel oil cetane ratings. Pending state legislation would expand NYDAM’s authority to other fuels, particularly those affected by the Clean Air Act.

21, Propane Consumers Coalition — (“PCC”}—E-3. PCC represents residential, agricultural, and industrial propane users,

22. Phillips 66 Company (“Phillips 66”)—D-3. Phillips 66 produces and markets gasoline, diesel fuel oil and alternative fuels. It has an active interest in alternative fuels and programs, including a propane evaluation and emissions test fleet of 12 vehicles operating since 1990; emission test data for a variety of vehicles and fuel combinations on LPG; full service bulk propane plants in three states; approximately 200 company vehicles operating on LPG; more than 600 customer vehicles operating on LPG; over 100 LPG vehicle refueling dispensers; and 2 CNG dispenser stations.

23. Petroleum Marketers Association of America (“PMAA”)—D-18. PMAA is a federation of 44 state and regional trade associations representing more than 11,000 independent petroleum marketers throughout the U.S. These marketers sell in excess of 40% of the gasoline, 75% of the home heating oil, and 60% of the diesel fuel oil consumed in this country.

24. Railroad Commission of Texas (“RCT”)—E-2. RCT regulates energy and transportation industries in Texas. It operates under statutory mandates to support technical and market research and to educate the public about propane and other alternative fuels.

25. Renewable Fuels Association (“RFA”}—D-1. RFA represents the domestic fuel industry in the U.S. Its membership includes ethanol producers that represent approximately 90% of operable U.S. ethanol capacity, as well as fuel blenders, providers of equipment, supplies, and services to the industry, and other interested parties.

26. Society of Independent Gasoline Marketers of America (‘‘SIGMA’”’)—D— 13. SIGMA represents approximately 285 private brand marketers and chain retailers who market motor fuels in all 50 states, the District of Columbia, and Puerto Rico. In 1991, SIGMA members marketed approximately 22.75 billion gallons of motor fuel, or about 17% of al] motor fuels sold in the U.S. that year. Diesel fuel oil sales accounted for 4.6 billion gallons.

27, Sun Company, Inc. (‘‘Sun’”’)—D-8. Sun produces diesel fuel oil at five U.S. refineries and sells automotive diesel fuel oil at some service stations. Sun is evaluating alternative fuels through inhouse research, through participation in alternative fuel industry programs, and through installation of alternative fuel refueling facilities in selected Sun service stations for LPG, M-85, and E- 85. It is planning a CNG facility.

28. Texaco Inc. (‘‘Texaco’”’)—D-22. Texaco Inc. is a vertically integrated enterprise, which is directly, or through ownership in affiliated operating companies, engaged in the worldwide exploration, production, transportation, and refining and marketing of crude oil and its products, including petrochemicals.

29. Wagner & Brown, Ltd. (‘““W&B”)— D-12. W&B produces oil and gas.

D. Comment Suggestions Beyond Commission’s Authority Under PMPA

Several comments suggested that the Commission amend the Octane Rule in ways that are beyond the Commission’s authority under PMPA, as amended by EPA 92. Specifically: (1) NCDA suggested the Commission address pump nozzle size and require a nozzle on all diesel fuel oil dispensers with a sufficient diameter to prevent fueling a gasoline powered vehicle with diesel fuel oil; 38 (2) AGA/NGVC 39 and PCC 40

urged the Commission to require

posting based on a unit pricing concept to compare the cost of alternative fuels to that of gasoline; (3) RCT suggested that the Commission require labeling that educates consumers about alternative and conventional fuels’ emissions of toxins and other pollutants; 41 (4) RCT also recommended that the Commission conduct consumer education (at least as to the advantages of HD-5 propane over other mixtures of propane) instead of requiring the posting of information; 42

38 NCDA, E-1, 1, 3.

9® AGA/NGVG, D-11, 3-4, 6-8. 40PCC, E-3, 1-3.

41 RCT, E-2, 3.

42]d. at 4.

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and (5) AAMA,43 AGA/NGVC,4« Chevron, Phillips 66,¢6 and Sun 47 urged the Commission to include CNG in any posting requirements at this time.48

PMPA, as amended by EPA 92, requires the Commission to amend the Octane Rule to require posting for liquid alternative fuels of each fuel’s octane rating, or of another form of rating that the Commission, after consultation with ASTM, determines to be more appropriate to carry out the purposes of PMPA's testing, certification and posting requirements.4® Because this is a statutorily mandated rulemaking proceeding, the Commission’s authority is limited to that granted by the mandating legislation.

First, PMPA does not authorize the Commission to specify nozzle sizes for pumps dispensing different types of automotive fuels. Second, although comparative unit pricing would give information to purchasers about different types of fuels, it does not constitute an alternative rating more appropriate than an octane rating. Third, labeling that educates consumers about alternative and conventional fuels’ emissions of toxins and other pollutants goes beyond assisting purchasers in identifying the specific type(s) of fuel required for their vehicles and therefore is not an alternative rating more appropriate to carry out PMPA’s requirements.59 Fourth, PMPA, as amended, also does not allow the Commission discretion to require consumer education in lieu of testing, certification, and posting of ratings. Lastly, the Commission is not free to include compressed natural gas (CNG) in this rulemaking, because PMPA, as amended, limits the Commission’s jurisdiction in this proceeding to liquid

43 AAMA, D-7, cover letter, 1, Att. A, 1.

44 AGA/NGYC, D-11, 4-5. AGA/NGVC stated more broadly that the current rulemaking proceeding should apply to al! fuels, not just to liquid fuels.

45 Chevron, D-5, 1.

4¢Phillips 66, D-3, 1.

47 Sun, D-8, 1. ;

4° W&B stated that it understands that PMPA limits the current proceeding to liquid fuels, but urged the Commission to include in the current

dment a stat t that the Commission did not overlook the significance of CNG as an alternative fuel and that CNG will be addressed in a later proceeding. W&B, D-12, 1-2.

4*Section 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821).

0 Although disclosures concerning fuel costs end emissions are not viewed as appropriate ratings for purposes of this proceeding, the Commission will consider labeling requirements about costs and benefits of alternative fuels, including gaseous, liquid and other alternative fuels, and alternative fueled vehicles in.the proceeding it conducts under section 406 of EPA 92. See notes 15-16, supra.

fuels.51 Accordingly, the Commission does not adopt any of these suggestions.

III. Ratings Proposed in the NPR A. Alternative Liquid Automotive Fuels

In the NPR, the Commission proposed that the Octane Rule be amended to require the certification and posting of the octane rating of alternative liquid automotive fuels. Because of information that became available to the Commission during the course of its investigation into the alternative liquid automotive fuels area, however, the Commission tentatively concluded that it may not be practical or workable to require the disclosure of octane ratings for these fuels. Consequently, after consultation with ASTM and others, the Commission also proposed three other “rating” options for alternative liquid automotive fuels in the NPR. The four options are summarized below.

Option One, as already mentioned, proposed requiring the octane rating to be certified and posted for the alternative liquid automotive fuels. Option Two proposed requiring fuel composition ratings, such as, the range of hydrocarbon content of the alcohol fuels (which relates to the cold start capability of alcohol fuels) or a minimum percentage of the principal component of the fuel. Option Three proposed requiring the posting of labels that would compare the alternative fuel to gasoline in terms of the approximate mileage one would obtain by using an equivalent volume of each fuel. The proposed labels for Option Three were besed on the heating values, or energy contents, of the alternative fuels and gasoline, Option Four proposed establishing fuel descriptors based on certain material specifications such as those developed by the California Air Resources Board. This option would require certification and posting of the identity of the fuels using these descriptors and minimum specifications for each fuel. In the NPR, the Commission sought comment on whether any of the four proposed ratings or combination of ratings, or ratings not yet proposed, would be appropriate. This section contains a review and analysis of the comments on each option and a detailed discussion of the automotive fuel rating that the Commission is prescribing today.

51 Section 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821). However, CNG and other alternative non-liquid automotive fuels will be included in the ru proceeding the: Commission conducts under sec. 406 of EPA 92. See note 50, supra.

1. Octane Rating Option

In the NPR, the Commission Proposed requiring octane ratings for alternative liquid automotive fuels, but noted that other options may better implement the purposes of section 1501 of EPA 92,52 The Commission explained that the octane rating currently required for gasoline is a measure of how well the gasoline resists engine knocking. The octane rating needed to prevent knocking varies with the engine’s compression ratio, and different engines may require grades of gasoline with different octane ratings. The Octane

_ Rule is designed to enable consumers to

buy gasoline with an octane rating high enough to prevent engine knock, and to help consumers avoid “octane overbuying” or buying gasoline with an octane tener than needed to prevent engine knock.53 requesting comments on its

proposal to require octane ratings for alternative liquid automotive fuels, the Commission noted that, unlike gasoline, the physical and chemical properties of each such fuel may not vary much.%« The Commission also observed that it expected that engines designed for alternative fueled vehicles would be designed to use fixed-octane alternative fuels without engine knock. The Commission further stated that there might be practical problems in implementing a reliable octane certification and posting program for alternative liquid automotive fuels, because of the lack of a standardized, such as an ASTM-approved, test method for determining octane ratings of such fuels.55 Finally, the Commission expressed concern that the posting of high octane ratings associated with alternative liquid automotive fuels may contribute to the misperception that high-octane gasoline always is best for vehicles, and thereby aggravate existing gasoline octane overbuying.56

To account for the lack of significant variations in octane levels within classes of alternative liquid automotive fuels, and the lack of a standardized test method, the Commission proposed an option of assigning specified octane ratings to alternative liquid automotive fuels and requiring that these assigned octane ratings be posted at the pump and certified by suppliers through the chain of distribution.57 The Commission proposed the following octane ratings for alternative liquid automotive fuels,

5258 FR 16464, 16465.

53 Id.

54 Id. at 16469.

58 Id.

56 Id. at 16470.

57 Id. at 16469.

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TS

which are based on tests conducted by DOE’s National Renewable Energy Laboratory in Golden, Colorado.

Methanol Bthanol....

M-B5.s000

Eighteen of the 24 comments that addressed the octane rating option for alternative liquid automotive fuels opposed it.88 Opponents included major industry trade associations representing refiners, distributors, and retailers of automotive fuels, and U.S. manufacturers of motor vehicles.5? The most common criticisms were that octane ratings for alternative liquid automotive fuels (1) do not provide useful information to consumers,6° and (2) may mislead consumers either by implying that fuels are interchangeable or that higher octane is always better.61

In particular, several commenters stated that the octane ratings of a given type of alternative liquid automotive fuel tend not to vary.62 Others said that posted ratings also have little value,

ss ATFI, D-15, 2; AAMA, D~-7, 1-2; API, D—-10, 3- 4; CENEX, D-21, 2-3; Chevron, D-5, 1-2; CFDC, D— 14, 2-3; Marathon, D—9, 2; Mobil, D—4, 1; NPGA, D-19, 2; NSDB, D-16, 5; NYDAM, E-4, 1; PMAA, D-18, 1-2; Phillips 66, D-3, 2-3; RCT, E-2, 2; RFA, D-1, 3; SIGMA, D-13, 1-2; Sun, D-8, 2, 4; Texaco, D-22, 1.

5°See comments of API, D-10, 3-4; SIGMA, D- 13, 1-2; AAMA, D-7, 1-2. But see discussion of other comments supporting interim or limited posting of the octane ratings of alternative liquid fuels, notes 70-72, infra.

60 See specific reasons cited, notes 62-67, infra.

61 API, D-10, 3—4 (octane ratings for liquid alternative fuels falsely will imply fuel interchangeability); Mobil, D-4, 1 (posting octane ratings for alternative fuels may lead consumers to believe higher octane alternative fuels obtain higher miles per gallon); RFA, D1, 3 (availability of higher octane ratings on alternative fuel labels may create consumer perception that higher octane fuels are more beneficial); Marathon, D-9, 2 (octane ratings for liquid alternative fuels will confuse consumers and diminish the potential value of information relating directly to performance); SIGMA, D-13, 1- 2 (octane ratings for liquid alternative fuels may deceive consumers into thinking that a particular fuel is superior because of its higher octane rating); CFDC, D-14, 2-3 (octane ratings for liquid alternative fuels may confuse consumers whose vehicles function only on one fuel); PMAA, D-18, 1-2 (consumers may be deceived into believing that higher octane for liquid alternative fuels indicate better fuel quality and performance); CENEX, D-21, 2-3 (octane ratings for liquid alternative fuels may — mislead consumers to believe the fuels are 'nterchangeable with gasoline; unduly emphasizes perhaps the least important factor in the Performance of such fuels; and will not help — consumers choose among fuels); Chevron, D-5, 2 {octane posting inherently implies that a higher rating is better, and may cause consumers to think that a liquid alternative fuel is interchangeable with §asoline),

; *AAMA, D-7, 1-2; RFA, D-1, 3; Phillips 66, D— 2-3; NYDAM, E-6, 1; Sun, D-8, 2; Marathon, D- 3, 2; ne D-14, 2-3; CENEX, D-21, 2-3; Texaco,

because dedicated alternative fueled vehicles, as well as alternative fueled vehicles capable of using both gasoline and a alternative liquid automotive fuel,63 use only one type of liquid alternative fuel.64 Moreover, four commenters stated all alternative liquid automotive fuels have high enough octane ratings to prevent engine knock in vehicles designed to use alternative fuels.65 Four commenters said that engines are not designed to take advantage of the high octane content of alternative liquid automotive fuels 66 One stated that there also is no correlation between octane ratings for alternative liquid automotive fuels and vehicle performance criteria such as mileage, cleanliness, and vehicle life.67

Additionaliy, four commenters opposed adopting the prepome octane ratings assigned to each alternative liquid automotive fuel without ASTM review of the test procedure and proof © that the test results could be duplicated.68 Four noted that there currently is no reliable, standard test method for determining the.octane ratings of alternative liquid automotive fuels,se

Six comments supported requiring octane ratings for alternative liquid automotive fuels.70 DOE recommended

63 Singie-fuel or dedicated fuel vehicles are those that can operate only on one type of fuel. Dual-fuel vehicles can operate on two different types of fuels, but most have separate fuel tanks for the different fuels. Flexible-fuel vehicles can operate on various blends of fuel from a single tank. For example, a flexible-fuel vehicle might operate on any percentage of methanol from zero to 85 percent or more, :

64 Marathon, D-9, 2; Chevron, D-5, 2; CFDC, D- 14, 2-3; PMAA, D-i8, 1-2. See also Texaco, D-22, 1 (consumers choose fuel when they purchase or retrofit a vehicle for that fusl).

68 ATFI, D-15, 2; Chevron, D-5, 1 (recommended that, if an octane label is adopted, it state that the octane rating of the fuel exceeds the octane ratings

~ recoramended by all motor vehicle manufacturers);

RCT, E-2, 1 (addressed propane only}; NPGA, D- 19, 2 (same); Sun, D-8, 2. :

66 Phillips 66, D-3, 2-3; NYDAM, E-4, 1; Mobile, D-4, 1; Sun, D-8, 2.

67 API, D-10, 3-4.

68 API, D-10, 3; Phillips 66, D-3, 2; Chevron, D— 5, 1-2; Mobil, D-4, 1.

60 API, D-10, 3; Phillips 66, D-3, 2; Chevron, D- 5, 1-2; ATFI, D-15, 2.

70Only three of these comments clearly supported requiring posting of octane ratings for all alternative liquid automotive fuels, as other than an interim measure. See ABDI, E-6, 1 (stated, without providing supporting information, that octane is a measure of performance for alternative liquid automotive fuels and thai significant differences in octane could occur); AMI, D-23, 1 (suggested that erroneous perceptions about octane could be addressed through education); PCC, E-3, 3 (recommended providing octane ratings with information on energy content, driving ranges, and unit pricing per BTU). One trade association supported posting of octane ratings for oxygenated fuels, but not for LPG or LNG. ALAM, D-17, 2. See text for discussion of comments filed by DOE, and

that the Commission require certification and posting of specific octane ratings for alternative liquid automotive fuels as a way of meeting the Commission’s statutory obligations under EPA 92 pending consideration of additional labeling requirements in the rulemaking to be concluded by April 23, 1995, under section 406 of the EPA 92.71 Two trade associations representing producers and sellers of natural gas and manufacturers of natural gas fueled vehicles also supported the use of octane ratings until a more satisfactory method of labeling could be developed.72

After considering all comments received in this proceeding, the Commission has determined not to require the posting of octane ratings for alternative liquid automotive fuels. Unlike disclosing octane ratings for gasoline, there appears to be little or no benefit to disclosing octane ratings for alternative liquid automotive fuels. Octane ratings for all alternative liquid automotive fuels are high enough to avoid engine knock problems, and such ratings do not provide information relevant to vehicle performance of alternative fueled vehicles. In addition, octane ratings for alternative liquid automotive fuels of a given composition would not vary significantly.

In contrast, there are significant disadvantages to requiring octane posting and certification for alternative liquid automotive fuels. In particular, the Commission is reluctant to require a disclosure that may mislead consumers about the significance of the high octane ratings of alternative liquid automotive fuels, all of which far exceed the minimum octane requirements of vehicles that can use such fuels. Such a disclosure may cause consumers to believe that gasoline and alternative liquid automotive fuels are interchangeable, or that different alternative liquid automotive fuels are interchangeable with one another. It also may foster consumer misperceptions that higher octane necessarily signifies higher quality and better performance. Accordingly, as authorized by EPA 92, the Commission determines that another form of rating is more appropriate, as discussed in detail below in Part III.A.5.

comments jointly filed by AGA and NGVC, recommending octane ratings as an interim measure.

71 DOE, E-5, 2-3. The Commission considers section 406 to require disclosures different than the certification and posting of a fuel rating.

72 AGA/NGVC, D-11, 3, 8.

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2. Fuel Composition: Hydrocarbon, Propane and Methane Content Option

As a second option, the Commission proposed requiring the disclosure of fuel composition.73 Specifically, for the liquefied gas fuels, the Commission proposed a requirement that the minimum propane content of LPG and the minimum methane content of LNG be certified and posted.74 The NPR estimated that the LPG most often used in automotive applications is 95% propane and 5% butane and that the LNG most often used in automotive applications is composed of several gases—methane, ethane, propane, and nitrogen, but with methane typically accounting for 88-99% of the fuel’s composition.75 Disclosure of the minimum propane content of LPG and the minimum methane content of LNG might, in conjunction with information from the vehicle manufacturer or converter, provide consumers with comparative quality information needed for fuel purchase decisions. Under this option, consumers would be able to compare like fuels. For example, for LNG, one station may post a methane content of 90. Another station may post 95. Depending on their vehicle’s requirements, consumers could then determine which fuel is better for their purposes.

For the alcohol fuels, the Commission proposed requiring certification and posting of the hydrocarbon content of each fuel.76 The alcohol fuels are either composed entirely of methanol cr fuel ethanol or are blends of methanol or fuel ethanol with up to 15% or more hydrocarbons, usually in the form of gascline. The NPR explained that hydrocarbon content relates to the cold start property of alcohol fuels, which differs significantly from that of gasoline. Alcohol is more difficult to vaporize than gasoline and therefore

more difficult to ignite in a cold engine. -

The addition of hydrocarbons to the alcohol fuels improves their cold start characteristics. For example, cold starts are significantly improved by using M— 85 and E-85 instead of M—100 and E-— 100. The NPR ted that, for each alcohol fuel, hydrocarben content disclosures might give consumers some information about the fuel’s cold starting ability. For example, consumers might want to select a fuel with a higher or lower hydrocarbon content, depending on climatic conditions or geographic region.

7358 FR 16464, 16470.

r4Id 78Id 76Id

The Commission proposed that the hydrocarbon content of these fuels be certified and posted in terms of a range, rather than a fixed number.77 Hydrocarbon content of alcohol fuels can vary, primarily because some varieties of these fuels can at different times of the year also contain hydrocarbon-containing oxygenates (basically, other alcohols and ethers) in varying amounts. The Commission reasoned that disclosure of a range could eliminate the need for changing labels at various times of the year to accommodate seasonal changes in the hydrocarbon contents of the alcohol fuels.

The Commission sought comment on the following labels, each of which is pertinent to a particular alternative fuel, and asked whether they would satisfy EPA 92's intent:

1. “Liquefied Propane Gas/Minimum

______% Propane”

2. “Liquefied Natural Gas/Minimum

% Methane”

3. “M—100 Fuel Methanol/X%-Y%

Hydrocarbons”

4. “E-100 Fuel Ethanol/K%-Y% drocarbons”’

Fuel Methanol/X%-Y% drocarbons”’

6.44 Fuel Ethanol/KX%-Y¥% Hydrocarbons”

The Commission sought comment on the advantages and disadvantages of requiring such disclosures. The Commission also it comment on whether the Commission should specify a methodology or methodologies for determining the propane, methane, and hydrocarbon contents and, if it did so, what methodology or methodologies should be specified.78 For alcoho! fuels, the Commission asked whether requiring the disclosure of any factor(s) other than the hydrocarbon content of the fuels would better assist consumers in avoiding cold-start problems.79

Twelve comments ussed the Commission's proposal to require composition disclosures for LPG and LNG.®° Two contended that the petroleum gas fuel that is now used in automobiles should be classified as a gas rather than a liquid and therefore should not be regulated in this proceeding.*: Two others urged the Commission to make clear that the P in LPG (and CPG) stands not for propane,

H 5. “ H

774d.

781d.

70 Id. at 16475.

*°Phillips 66, D-3, 3; AAMA, D-7, 2; Sun, D-8, 2; Marathon, D-9, 2-3; AGA/NGVC, D-11, 7; WaB, D-12, 2-3, 6; ATFI, D-15, 2-4; AIAM, D-17, 3-4; NPGA, D-19, 2-3; CENEX, D-21, 3; Texaco, D-22, 1-2; RCT, E-2, 3.

®1NPGA, D-19, 1-2; RCT, E-2, 1-2.

—

but for petroleum, because butane, another petroleum gas, is often also used along with propane as an ingredient in these fuels.62 RCT, however, asked the Commission to use the term ‘propane’ instead of ‘LPG’ because propane is always the principal component of the fuel and consumers are already familiar with that term.«s

Six of the twelve comments making recommendations on this option for LPG end LNG opposed the Commission’s proposed requirement for composition disclosures. Four contended that such information would not benefit consumers in any meaningful way,6 and two argued for alternative approaches.®5 Four comments approved of the proposal to require composition disclosures for liquefied gas fuels, contending such disclosures would help consumers in making fueling choices.s¢

comments made other _

suggestions. AGA/NGVC said they were not opposed to requiring fuels to be labeled according to their composition, but preferred a disclosure requirement that “will have the greatest ability to convey the most pertinent information,” which would be “the testing of energy content in the form of gasoline equivalent gallon.”"87 NPGA believed the proposed rulemaking will not achieve the Commission’s objectives in the most efficient and cost-effective manner possible and argued that al! consideration of comparison labeling far liquefied gas fuels should be deferred until the section 406 rulemaking.*s

Five comments addressed what items should be included when disclosing

*2Phillips 66, D-3, 3; W&B, D—-12, 2-3.

*3RCT, E-2, 4.

% AAMA, D-7, Att. A, 2 (does not provide meaningful information to the consumer); Sun, D- 8, 2 {would not provide useful information to the consumer and would be confusing to most consumers); Marathon, D-9, 3 (probably too complex for most consumers); CENEX, D-21, 3 (average consumer lacks the technical expertise needed to make an informed purchasing decision on the basis of posted fuel content.)

*8 Texaco, D-22, 1 (suggested requiring a statement that the fuel mosts commonly accepted industry standards); RCT, E-2, 3 (recommended that the Commission adopt a market approach by providing consumer education on the advantages that have been identified for LPG, rather than regulations).

86 Phillips 66, D-3, 3 (the minimum fuel composition option provides the most valuable public information for making a refueling chcice); W&B, D-12, 5 (supported the proposal to disclose fully the possible range of contents in alternative fuels); ATFI, D-15, 2 (fuel composition information supplier and th consuming ple Alsi D-7 suppliers, an consuming public); ‘ 2-3 (fully supported this proposal because such information would certainly be beneficial to the vehicle operator).

87 AGA/NGVC, D-11, 7.

8®NPGA, D-19, 2-3.

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propane gas content, i.e., whether the posting and certification requirement for LPG should specify that the propane component be disclosed as all “special duty grade” propane (i.e., suitable for all automobiles using petroleum gas) or only commercial grade propane (which may not be suitable for most automobiles) or as a mixture of the two.88 No comments addressed the issue of whether the Commission should require certain methods for determining the methane or propane/butane gas contents of the liquefied gas fuels,

With respect to the alcohol fuels, 20 comments discussed the proposal to require hydrocarbon range disclosures for methanol and fuel ethanol. Five approved of such 4 requirement.90 Fifteen opposed such a requirement.®1

Some opposing comments said that consumers lacked the technical competence to utilize the information,92 others said that factors other than hydrocarbon content are more relevant to predicting cold start performance,®3 and still others said they would prefer different approaches.°« NYDAM emphasized that the costs of testing and labeling necessitated by the seasonal variations in the hydrocarbon content of the alcohol fuels designed to forestall cold-starting problems would make a hydrocarbon content disclosure requirement too burdensome.®5 Two other comments said that, until there is

°° WaB, D-12, ATFI, D-15, 2~3, NPGA, D-19, 2; Texaco, D-22, 2; RCT, E~2, 3.

RFA, D~1, 4 (the suggested labeling format provides sufficient information for the consumer); W&B, D-12, 5 (supported fully disclosing the possible range of contents in alternative fuels); CFDC, D-14, 3-5 (a label with the type and percentage of the fuel composition has merit); ATFI, D-15, 2-3 (supported using fuel composition labeling to inform consumers about the quality of each alternative fuel); AIAM, D-17, 2-3 (fully supported this proposal because such information is beneficial to the vehicle operator).

* Mobil, D4, 2-3; Chevron, D-5, 2-3; AAMA, D-7, 3-4 and Att. A, 2~3; Sun, D-8, 2-3; Marathon, D-9, 2-3; API, D-10; 4; AGA/NGVC, D-11, 7-8; SIGMA, D-13, 2-3, NSDB, D~16, 6; CENEX, D-21, 3; Texaco, D-22, 1-2; AMI, D-23, 1-2; NYDAM, E- 4, 2; DOE, E-5, 3; ABDI, E-6, 1.

°2 Mobil, D-4, 2-3; Marathon, D-9, 2-3; API, D- 10, 4; CENEX, D-21, 3, NYDAM, E-4, 2.

°°Chevron, D-5, 2-3; Sun, D-8, 2-3; AMI, D-23,

“AAMA D-7, 3-4 (contended there are no agreed upon methods of measuring fuel compositions); AGA/NGVC, D-11, 7-8 (not opposed to this option, but would prefer listing of snergy content in the form of gasoline equivalent zallon); SIGMA, D-13, 2~3 (urged Commission to ‘equire only the posting of the type of alternative liquid fuel dispensed); NSDB, D-16, 6 Tecommended the fuel descriptor option); Texaco, D-22, 1-2 (suggested simply requiring a statement

hat the fuel meets commonly accepted ind ipecifications); DOE, E-5, 3 (recommended the 2ption of requiring posting of octane ratings for all ilternative fuels); ABDI, E-6, 1 (recommended the ctane posting option for alll fuels).

*SNYDAM, E-4, 2.

more empirical data on cold start eagoate and their solutions, it would

premature to require disclosure of any factors relating to cold-start performance.%* CENEX also urged having disclosures that simply advise consumers to follow the instructions from their vehicles’ manufacturers.97 Three comments preferred a disclosure that the fuels meet all relevant industry standards.®® Mobil argued that requiring disclosures of ranges of hydrocarbons might give incentives to manufacturers to aim for the lowest percentage of hydrocarbons because consumers might think that fuels with the highest alcohol fuel content are always best for their vehicles.°® Two comments approved of prepa ingredient disclosures, but not

ydrocarbon content disclosures.100

Only one comment addressed the issue of whether the Commission should prescribe certain methods for determining the composition of the alcohol fuels. ATFI supported the designation of an appropriate methodology to determine fuel composition, but did not recommend any specific methodology.102

ased on all the comments received in this proceeding, the Commission has determined to require a modified version of the fuel composition option proposed in the NPR. As discussed in detail in Part III.A.5, below, the Commission is requiring for each alternative liquid automotive fuel the disclosure of the principal fuel ingredient by percentage of volume. The Commission has determined not to require disclosures of ranges of hydrocarbon content for alcohol fuels because the record does not show sufficiently that knowledge of hydrocarbon content would provide consumers benefits in avoiding coldstart problems or even that most consumers would understand the reason for such disclosures. .

The Commission has included in the Fuel Rating Rule as an alternative liquid automotive fuel the petroleum gas fuel now used by automotive vehicles because the fuel is stored and dispensed to consumers at least substantially in a liquefied state.102 In the NPR, the

% SIGMA, D-13, 3; CENEX, D-21, 3.

®7 CENEX, D-21, 3.

98 AAMA, D-7, 1-2; Marathon, D-9, 2; Texaco, D-22, 1.

98 Mobil, D-4, 2.

100 Marathon, D-9, 2-3; SIGMA, D~13, 2-3.

101 ATFI, D-15, 2. .

102 Some comments urged the Commission to wait until the section 406 rulemaking to address the liquefied petroleum gas fuels at the same time the compressed natural gas fuels are considered. Others urged the Commission to treat the compressed natural gas fuels now along with the liquefied petroleum fuels. The Commission, however, lacks

Commission proposed describing this fuel with the term “Liquified Propane Gas.” 103 As explained above, several comments raised concerns about proposed disclosure requirements for LPG in light of this designation. The Commission now uses the term “Liquified Petroleum Gas” because that is the term used in the definition of “alternative fuel” in section 301 of EPA 92. The certification and posting prowstons of the Fuel Rating Rule,

owever, as explained in Part III.A.5., below, do not require choosing between the terms “Liquified Petroleum Gas” and “Liquefied Propane Gas.” Either of those designations or just the expression “LPG” or any other commonly accepted designation may be used to describe the fuel so long as the minimum percentage by volume of the propane content (i.e., the principal component of the fuel) is disclosed. Finally, because the Fuel Rating Rule does not require adherence to particular fuel specifications, it is unnecessary to require that marketers specify whether LPG contains special duty grade propane or commercial grade propane, as was suggested by some of the comments.204

3. Heating Value (Energy Content) Option

As another option, the Commission proposed requiring a label comparing each alternative liquid automotive fuel to gasoline in terms of the approximate mileage a car would get by using an equivalent volume of each fuel.105 The comparison would be based on the heating value, or energy content, of each fuel. The Commission proposed two alternative labels for this option: the first compared how many gallons of a given alternative liquid automotive fuel were needed to drive as far as one could drive on a gallon of gasoline, and the second compared how far one could drive on a gallon of a given alternative liquid automotive fuel as compared to how far one could drive on a gallon of gasoline. The Commission stated that the advantage of this type of label was that the disclosed information, coupled with the price of the fuel, would give consumers with flexible fuel vehicles the ability to make choices among different fuels.

the discretion to alter the provisions of EPA 92 in this regard. :

103 For LPG, The California Air Resources Board uses the term “Liquefied Petroleum Gas.” However, based on discussions the Commission's staff had with Department of Energy staff and staff at the National Propane Gas Association, in the NPR the Commission proposed using the term “Liquefied Propane Gas.”

104 See note 89, supra.

105 58 FR 16464, 16470-71.

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The Commission received 24 comments regarding this option,1©6 all of which opposed or criticized it.107 Some comments stated that the heating values in the Commission’s proposed Heating Values Chart (based on information obtained from the Interagency Commission on Alternative Motor Fuels and the Department of Energy) were incorrect.108 Chevron stated that the chart did not account for the fact that heating values vary with fuel composition. 19° Two comments contended that the Heating Values Chart should list a range of values for LPG (to reflect its composition),110 while three others contended that measuring Btu content was expensive and not appropriate for a particular batch of any of the fuels.111 AMI commented that “‘a simple means of clarifying the different energy densities of the fuels is needed,” 112

Some comments stated that the proposal would not provide consumers with useful information. PMAA stated that the purported benefits to consumers were speculative and not worth the costs to industry.113 RFA stated that posting a label declaring that ethanol has a lesser fuel economy than gasoline would incorrectly lead gasohol purchasers into believing they would suffer fuel economy penalties.114 Other comments stated that the information was useful to consumers only when choosing a new vehicle or deciding whether to convert an existing vehicle

106 RFA, D-1; Phillips 66, D-3; Mobil, D-4; Chevron, D-5; AAMA, D-7; Sun, D-8; Marathon, D-9; API, D-10; AGA/NGVC, D-11; W&B, D-12; SIGMA, D-13; CFDC, D-14; ATFI, D-15; ALAM, D- 17; PMAA, D-18; NPGA, D-19; AEC, D-20; CENEX, D-21; AMI, D-23; RCT, E-2; PPC, E-3; NYDAM, E- 4; DOE, E-5; ABDI, E-6.

107 Mobil opposed additional labeling generally but concluded that this option has ‘the most meaning to the public” and “has the most merit.” Mobil, D-4, 2.

108 AAMA, D-7, Att. A, 3, (heating values for LPG and LNG are incorrect; values in chart should be based on net, not gross, heating values); API, D—10, 6 (same); W&B, D-12, 4 (heating value for LPG is incorrect); AEC, D-20, 1 (same); CENEX, D-21, 3 (heating value of LNG may vary widely); ABDI, E- 6, 2 (chart should be based on lower, not higher, heating values).

109 Chevron also stated that reporting heating values to the nearest one Btu/gallon ‘‘far exceeds the accuracy of the-determinations.”” Chevron, D— 5;3.

110 W&B, D-12, 5; AEC, D-20, 1.

111 Chevron, D-3, 3; AAMA, D~7, Att. A, 3; API, D-10, 5.

112 AMI further stated that the average volume of fuel required to drive the same distance as gasoline is ‘commonly accepted,” and that the Commission should adopt “the same approach and values as California.” AMI, D-23, 1. AMI did not further explain its reasons for supporting for this option.

113 PMAA. D-18, 2.

114RFA, D-1, 5.

to an alternative fuel, and not when refueling.215 :

Numerous comments stated that labels based on heating values would be confusing or misleading to consumers, for various reasons. First, they argued that driving range and fuel economy (miles per gallon) are the function of many variables (¢.g., engine design, engine efficiency, driving habits) and not simply the volumetric energy content of a fuel. As a result, Btu ratings do not always accurately reflect actual fuel economy.116 Second, three comments stated that the volumetric comparisons ignored fuel cost, and that price comparisons were the most important factors driving which fuel a consumer would purchase.117 Finally, six comments concluded that labels based on heating values would encourage consumers to purchase gasoline (leading to engine damage if used in engines not designed for gasoline), because this labeling option makes the alternative liquid automotive fuels appear less efficient than gasoline,116

Some comments raised concerns with the proposed labeling formats. Mobil commented that the proposed labeling formats were flawed because they were long and cumbersome.11° AAMA noted that both labeling options incorrectly assume that vehicle efficiencies are the same for gasoline and alternative liquid automotive fuels.1220 AGA/NGVC stated that the fuels should be rated and compared in terms of price, either by Btu’s per gasoline equivalent gallon or fuel cost per fixed Btu.121 RFA and Phillips 66 favored posting the actual heat content of the fuels in Btu’s rather than comparing the fuels to gasoline.122 Two other comments proposed disclosing the reduction in toxins and

118 Phillips 66, D-3, 3-4; Sun, D—8, 2-4; Marathon, D-9, 3; API, D—-10, 5; SIGMA, D-13, 3; CFDC, D-14 4; CENEX D-21, 3; NYDAM, E-4, 2. See also AIAM, D~17, 3 (stating generally that the information would not be useful to consumers in comparing which fuel to purchase).

116 RFA, D-1, 5; Chevron, D-5, 3; Sun, D-8, 3- 4; Marathon, D-9, 3; API, D-10, 5; AGA/NGVC, D- 11, 7; CFDC, D-14, 4; NPGA, D-19, 2; CENEX, D- 21, 3; RCT, E-2, 3-4; NYDAM, E-4, 2; ABDI, E-6,

117 AGA/NGYC, D-11, 5-6 (labels should disclose the cost per set amount of Btu’s for all fuels); PCC, E-3, 1-2 (same); NYDAM, E-4, 2 (consumers will measure each fuel’s performance to make valid price comparisons).

118 Phillips 66, D-3, 4; API, D-10, 5; CFDC, D- 14, 4; ATFI, D-15, 3; NPGA, D-19, 2; RCT, E-2, 3.

219 Mobil, D-4, 2.

120 AAMA, D-7, 23.

121 AGA/NGVC, D-11, 4, 6.

122 RFA, D-1, 5 (opposed this option generally but favored posting minimum Btu content only “if the {C}ommission finds it necessary to post some sort of information relative to energy content’’); Phillips 66, D-3, 4 (same).

other pollutants expected by using a particular fuel.123

After considering the record, the Commission has decided not to require labels based on heating values. Instead

_ of helping consumers make informed

purchasing decisions, the comments indicate that this option would not benefit consumers and might instead be confusing or misleading. This is because the volumetric energy content of a fuel, as measured by its Btu rating, is an imprecise gauge of that fuel’s actual fuel economy. In light of this and the other concerns and objections noted, the . Commission has decided not to adopt this option.

4. Fuel Descriptor Option

As another option, the Commission roposed requiring that the alternative iquid automotive fuel pumps identify the fuels for consumers.124 The fuel descriptors the Commission proposed were based on the terms developed by and included in the California Air Resources Board’s proposed specifications for the alternative fuels. Those terms are:

“M-100 fuel methanol,”

“‘M-85 fuel methanol;”

“E-100 fuel ethanol,”’

“E-85 fuel ethanol;”

“Liquefied Propane Gas;’’325 and, “Liquefied Natural Gas.”’

The Commission proposed that the fuels would have to meet certain technical specifications, such as those proposed by the State of California, as a condition to the descriptor posting. The Commission noted that additional specifications are likely to be developed by alternative vehicle manufacturers and fuel suppliers in conjunction with ASTM (as has been done for gasoline). Noting that ASTM and DOE specifications for the alternative liquid automotive fuels may not be completed within the time allotted for this rulemaking, the Commission asked whether, as an alternative to the ASTM specifications, it should adopt specifications analogous to California's as interim specifications until ASTM or others develop and approve specifications.126

The Commission noted in the NPR that descriptor labeling in conjunction with fuel specifications could direct consumers to the correct fuel dispenser and assure consumers that they are purchasing a product that satisfies automobile engine minimum content

123 NPGA, D-19, 2; RCT, E-2, 4. See also discussion in Part Il. D., above.

12458 FR 16464, 16471.

128 See note 103 and accompanying text, supra. 128 58 FR 16464, 16471.

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uirements, which may be specified in thee owner's ss Thus, the descriptors and accompanying specifications could constitute a “rating” for the alternative liquid automotive fuels pursuant to section 1501(b) of EPA 92.127 Under this option, the Commission suggested that it could require certification and posting of the descriptors and develop and publish in the final rule minimum specifications for the alternative fuels. The Commission specifically asked for comments on what specifications would’ be appropriate for each fuel.

Fifteen comments discussed the fuel descriptor option.125 Three generally opposed the option, stating it provided little or no benefit to consumers.129 Nine generally supported the descriptor approach, but only if use of the descriptor were based on consensus fuel standards or specifications.130 Two comments supported the descriptor approach if the dispenser label also included a disclosure of the minimum percentage of the principal component of the fuel.131

Another commenter, SGMA, suggested requiring the disclosure only of a fuel descriptor, without accompanying specifications, SGMA stated that the most important information for consumers of an alternative fuel is that their vehicles will function properly using the fuel dispensed. SIGMA contended, therefore, that the pump need only be labeled to disclose that it dispenses the fuel identified by the automobile manufacturer as being appropriate for operating the consumer’s vehicle.132

Six comments suggested that, in selecting standards on which to base use of the descriptors, the Commission should adopt ASTM or other consensus standards,.133 Under this approach, disclosure of a particular fuel descriptor would indicate that the fuel meets technical specifications established by a recognized standards-setting organization. Standards established under this process would have the advantage of being developed with

127 Section 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821).

128RFA, D-1, 5; Phillips 66, D-3, 4; Mobil, D-4, 2; Chevron, D-5, 2; AAMA, D-7, 2, 4; Sun, D-8, 4; Marathon, D-9, 3; API, D-10, 1, 6; SIGMA, D-13, 2; CFDC, D-14, 4; ATFI, D-15, 3; NPGA, D-19, 3; CENEX, D-21, 3; RCT, E-2, 4; NYDAM, E-4, 1,

129 Mobile, D-4, 2; NPGA, D-19, 3, RCT, E-2, 1.

190RFA, D-1, 5; Chevron, D-5, 4; AAMA, D-7 4; Sun, D-8, 2; Marathon, D-9, 2; API, D-10, 6; ATFI, D-15, 3; CENEX, D-21, 3; NYDAM, E-4, 1.

131 Phillips 66, D-3, 3 CFDC, D-14, 5.

132 SIGMA, D-13,2.

133 Chevron, D-5, 4; AAMA, D7, 4; Marathon, Drg! API, D-10, 2; CENEX, D-21, 2-3; Texaco, D-

input from and approval of engine manufacturers, fuel suppliers, users, and regulators. Such an approach would benefit consumers, because they could determine easily whether alternative liquid automotive fuels marketed under these descriptors are compatible with the original vehicle equipment manufacturer’s requirements. In addition, this approach would allow an alternative liquid automotive fuel supplier to improve the fuel beyond the minimum specifications and promote the improved fuel over these of its competitors.134

As anticipated by the Commission, however, the primary objection to this option was that neither ASTM nor any other consensus standards-setting organization has developed and adopted specifications and standards for most of the alternative liquid automotive fuels.135 Commenters noted that ASTM has developed a standard for LPG (D 1835) and has proposed a standard for M-85 (ASTM proposed specification P232).136 ASTM’s LPPG specifications may change, however, as data are collected on LPG mixtures with higher butane contents.137 ASTM has not proposed or developed fus! specifications for E-100, M—100, E-85 or LNG. With respect to E-85, commenters noted that General Motors (“GM”) has developed a standard for use with its E-85/Flexible Fuel vehicles (GM standard GM 4729M).136 AAMA also indicated that GM has developed a standard for use with its M—85/Flexible Fuel vehicles. AAMA’s comment, which incorporates comments from GM, recommended that the Commission adopt GM’s E-85 and M-85 specifications on an interim basis until ASTM standards for E-85 and M-85 are accepted by the industry.139

Four comments also opposed Commission adoption of the alternative liquid automotive fuel specifications proposed by the California Air Resources Board, because they were not developed by a consensus process, are technically flawed, and were developed for California’s particular needs and therefore could be overly restrictive for other parts of the country.140 For example, AAMA commented that because California has a moderate

134 API, D-10, 6; RFA, D—1, 6.

138 Chevron, D-5, 2; AAMA, D~7, 4; CFDC, D—-14, 3.

136 Chevron, D-5, 4; AAMA, D-7, 4; Sun, D-8, 2;

API, D-10, 4-7; NPGA, D-19, 2.

137 Sun, D-8, 4.

136 RFA, D-1, 6; Chevron, D-5, 4; AAMA, D~7, 4; Sun, D-8, 4.

139 AAMA, D-7, 2.

140 Chevron, D-5, 4; AAMA, D-7, 4; Sun, D-8, 5; API, D-10, 6.

climate, its specifications do not fully address the low temperature starting requirements for M—85 and E-85 in the rest of the country.141 Also, AAMA stated that California's specifications fai] to control contaminants for these fuels at a sufficiently low level to ensure good vehicle fuel system durability. AAMA states that, for example, experience with M-85 in California shows that vehicle problems, such as filter plugging, were encountered due to contaminants introduced into the aliernative fuel by the dispensing system.142

Disclosure of a fuel descriptor based on accepted and approved fuel specifications and standards could provide meaningful information to consumers relating te the quality of the fuel they are purchasing. After considering the aforementioned comments, however, the Commission finds that adequate, generally accepted standards and specifications suitable for nationwide use do not presently exist for most alternative liquid automotive fuels. Further, the Commission has an insufficient record and basis on which to establish specifications for alternative liquid automotive fuels. Therefore, the Commission has determined not to require the certification and posting of uniform fuel descriptors, as originally proposed.

e Commission favors the development of specifications and standards that define alternative liquid automotive fuels by a consensus standards-setting organization, such as ASTM, or by 4 government agency with appropriate engineering and technical expertise to set such specifications and standards for nationwide use. This would permit participation by affected parties such as alternative fuel producers and providers, engine manufacturers, regulators, and consumers, among others. It would provide opportunities for review by individuals and organizations with acknowledged technical expertise, and would provide a mechanism for evaluation of any proposed test methods and procedures necessary to determine compliance with the standards. | Although the Commission is not adopting the fuel descriptor option as proposed, it is adopting a variation of the fuel description and composition proposals, as discussed in detail in Part I1l.A.5., below.

5. Final Rule After considering all the comments received in light of the purposes of EPA

141 AAMA, D-7, 2.

142 Id.

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92 and of PMPA, as amended, the Commission has determined that the automotive fuel rating for alternative liquid automotive fuels should be the commonly used name of the fuel with a disclosure of the amount, expressed as a minimum percentage by volume, of the principal component of the fuel. . Those covered by the Fuel Rating Rule also may include a disclosure of other components as a minimum percentage by volume, if desired. To simplify the labels, however, the Commission is not requiring that the words “by volume” appear on the label. Those who determine the automotive fuel rating for an alternative liquid automotive fuel must have a reasonable basis, consisting of competent and reliable evidence, for the claimed percentage by volume of the principal component and any other component, of the alternative liquid automotive fuel that they certify or post. This rating approach for the alternative liquid automotive fuels will provide consumers with information necessary to make informed fuel purchasing decisions. It also will provide fuel producers and marketers with the flexibility to develop and blend fuels appropriate for location and climate, consistent with U.S. Environmental Protection Agency and original equipment manufacturer requirements. The Commission’s action, therefore, will assist in-the development and use of alternative liquid automotive fuels and alternative fueled vehicles. The Commission recognizes that the selection process between competing __ alternative liquid automotive fuels essentially is concluded when the alternative fueled vehicle is acquired, because the vast majority of such vehicles will not have the capability to operate on more than one fuel. Thus, efforts to provide consumers with extensive information comparing various different types of alternative fuels is best done prior to the time the vehicle is acquired, not at the refueling station. Once the alternative fueled vehicle has been purchased, the vehicle owner primarily needs information indicating that the fuel available from a particular dispenser is suitable for that vehicle,143 The rating requirement adopted today is consistent with many comments the Commission received on the four options proposed in the NPR, in particular comments relating to the “fuel descriptor’ option. But, not all comments favor the automotive fuel rating approach the Commission is. taking. Three commenters generally opposed a fuel composition label, two

143 Marathon, D-9, 1.

stating that the average consumer lacks the technical expertise needed to make an informed fuel selection decision on the basis of posted fuel content,144 and the other stating that it does not provide meaningful information to consumers.145

Many of the comments, however, stressed that consumers of alternative fuels need information that directs them to the correct fuel dispenser by clearly identifying the type of fuel being dispensed, and providing information that can help them determine whether the fuel satisfies their automobile engine’s minimum requirements.146 These comments stated that such a disclosure approach, used in conjunction with the owner’s manual containing the vehicle manufacturer’s fuel recommendations, would provide consumers with the information necessary to select the fuel on which their vehicle has been designed to perform optimally. By allowing consumers to choose among different blends of fuels (e.g., LNG witha methane content of 90 versus 95), the Commission’s approach provides a “rating” measure consistent with the purpose of the statute.147

W&B, for example, in its discussion of a proposed label for LPG and LNG, stated that it generally supported a requirement to disclose fully the possible range of contents in alternative fuels.148 ATFI supported the use of fuel composition labeling to inform consumers about the quality of each alternative fuel they are purchasing. ATFI commented further that fuel composition is the most relevant information for vehicle manufacturers, fuel suppliers, and the consuming public.149 AIAM commented that it fully supported the Commission’s proposal to require a disclosure of the minimum percentage by volume of the principal component of LPG and LNG.150 CFDC stated that requiring that a label be posted by type and percentage of fuel composition has merit. It said that a label that simply discloses what the type of fuel is, accompanied by a disclosure of the minimum percentage of the main component of the fuel, would provide assurances to consumers that the fuel purchased meets certain requirements relating to vehicle

144 API, D-10, 4; CENEX, D-21, 3.

148 AAMA, D-7, 2.

146 Sun, D-8, 4; Marathon, D-9, 1-3; SIGMA, D- 13, 1; CFDC, D-14, 5; ALAM, D-17, 1.

147 Section 1501(b) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821(17)).

148 W&B, D-12, 5.

149 ATFI, D-15, 2.

180 AJAM, D-17, 2.

performance.151 Phillips 66 stated that consumers of alternative fuels will pay particular attention to the fueling recommendations of the owner's manual or the directions provided by the fuel conversion center. Phillips 66 concluded, therefore, that a minimum fuel composition disclosure requirement would provide the most valuable public information for making a refueling choice. Phillips 66 further concluded that since the alternative fuels being considered are principally compounds, in contrast to gasoline and diesel fuels, which ars blends, a consumer benefit could be gained by the Spe ofa minimum percentage of the principal compound,152

The fuel composition disclosure required by the Fuel Rating Rule has the further advantage of being easily applied to fuels that may be offered in the future (within the limits of the definition of “alternative fuel’’) that are not epecttically cies in this Notice. For prt ie el producers may market various biends of alcohols and gasoline, such as M-80 or M-90, or various combinations of liquefied petroleum gases, The Fuel Rating Rule will provide the framework for proper disclosure of the automotive fuel rating of such fuels, blends, or combinations, Because the disclosure requirements of the Fuel Rating Rule are generic and easil complied with, and because the labels are standardized for alternative liquid fuels, the Rule should assist in advising consumers about the availability of alternative liquid fuels and thus help promote development of these fuels. Further, the Fuel Rating Rule requirement that marketers disclose the principal component of each fuel should encourage the industry to develop uniform consensus specifications for all alternative liquid automotive fuels both to provide a standardized “reasonable basis”’ for required disclosures and to ensure the uniform quality of the fuels sold.

In addition, market forces should operate to keep any differences among sellers offering the same type of fuel, but using different test methods, within reasonable bounds. Cooperation bétween fuel producers and engine. manufacturers is necessary to ensure that new engine developments and new fuels can be accommodated. In this respect, fuel quality and engine design depend on each other.153 Engine

151 CFDC, D-14, 3-5.

182 Phillips 66, D-3, 3-4.

153 Ses AAMA, D-7, 1 (acceptance of alternative fueled vehicles depends on availability of high quality fuels). Those involved with the production and marketing of these fuels understand that fuel quality aspects can influence market share and

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designers must be aware of what fuels will be available in a particular market and the fuel producers must know the fuel requirements of vehicles on the road, In any event, the use of alternative fuels and their acceptance will depend on the development of and adherence to fuel quality standards. Such standards also would include standard test methods for determining all the necessary specified properties.

Two comments stated, however, that a required fuel composition label will increase testing costs and labeling problems for the industry. One comment stated that labels for the alcohol fuels will have to be changed on a seasonal basis as the fuels’ contents change to address cold-start problems.154 The other stated that seasonal LPG labels might be necessary due to varying butane/propane concentrations.155 The Commission’s requirement that the disclosure of the amount of the principal component of the fuel be expressed as. a minimum percentage by volume should obviate the need for frequent label changes, yet allow for seasonal label changes, if desired.

While some commenters preferred having fuel specifications set in the rule, the Commission has determined that there is not now a sufficient basis for imposing single, nationwide specifications for most of these fuels. Neither ASTM nor any other standardssetting entity has developed and adopted consensus specifications and test methods for most of the liquid alternative fuels. Nor do federal specifications currently exist. ASTM has developed a standard for LPG and has

’ proposed a standard for M-85, but has not developed or proposed fuel specifications for E-100, M-100, E-85, or LNG. GM has developed specifications for M—85 and E-85 156 and the State of California has issued final alternative liquid automotive fuel specifications. However, there are definitional inconsistencies among these standards with respect to the contents of the alternative liquid automotive fuels, For example, ASTM’s Proposed specification for M-85 fuel methanol requires a minimum 85% methanol by volume, California’s Proposed specification requires a minimum 84% methanol, and GM’s Proposed specification suggests a range of minimum methanol content from 74— 84%, depending on the average

eS affect the performance of the vehicles that are designed to use them:

14 NYDAM, E-4, 2.

188Sun, D-8, 2.

180 AAMA, D-7, 4,

temperature. Although the Commission could adopt one of these specifications, there is an insufficient basis on the record for determining which is preferable. Further, in the absence of more extensive information, which may not yet exist, mandating the use of any individual proposed alternative liquid automotive fuel specifications could have unforeseen adverse effects on competition, the environment, or vehicle performance.157

For the same reasons, the Commission is not requiring that sellers use specific standards as their “reasonable basis” for determining the percentage by volume of each component of the fuel that they certify or post.258 Consensus specifications that define alternative liquid automotive fuels, and that include the test methods used to determine whether fuel samples comply with the specifications, have not been developed, except for liquefied petroleum gas.15° Further, at least one cementer suggested that ASTM's specification for LP gases may change.160

Nevertheless, sellers may rely upon existing standards to determine and verify the ratings for alternative liquid automotive fuels, where such standards are appropriate. For example, ASTM’s proposed specification for M—-85 fuel methanol contains a proposed test method for determining methanol content in fuel methanol M-85 by gas chromatography.1¢1 ASTM’s standard specification for liquefied petroleum gases also contains a test method for analysis of liquefied petroleum gases and propane concentrates by gas chromatography. Other test methods or calculations also may constitute competent and reliable evidence to satisfy the reasonable basis requirement

187 An analysis of the proposed specifications also indicates that, to ensure fuel quality and proper automobile performance, disclosing fuel composition in terms of the minimum percentage by volume of the principal component of the fuel is important and helpful. For example, Annex A1.5 of ASTM’s Proposed Specification for Fuel Methanol (M-85) for Automotive Spark-Ignition Engines states that the production of fuel methanol (M-85) requires knowledge of the methanol content to ensure acceptable commercial fuel quality. The methanol content of M-85 affects the performance of an automobile designed to run on M-85.

188 In its comment, Chevron stated that proven standard test methods are not available for determining all of the properties necessary for alternative fuels to perform properly. Chevron commented further that this is one of the reasons that ASTM cannot develop specifications for the various fuels. Chevron, D-5, 2.

15° RFA, D-1, 6; Chevron, D-5, 2; API, D-10, 2; CFDC, D-14, 3.

160 Sun, D-8, 4.

161 The proposed specification states, however, that verification of the appropriateness of this test method is underway.

for determining the ratings for alternative fuels.

If test methods for determining ratings for alternative liquid automotive fuels or fuel specifications are developed in the future by consensus or are issued by an appropriate Federal agency, the Commission will consider whether they constitute a reasonable basis. The Commission expects that industry compliance with the Fuel Rating Rule, in conjunction with the need to avoid uncertainty about whether particular test methods or calculations constitute a reasonable basis, will encourage development of standardized test methods and specifications. The development of standardized test methods and standard specifications for alternative liquid automotive fuels should help facilitate widespread acceptance of these fuels.

The Fuel Rating Rule also gives sellers the discretion to disclose information about more than one component of the fuel, if this is deemed relevant. The comments suggested that liquefied petroleum gas fuels, in particular, could be developed with higher butane concentrations and that future LPG fuels may have different ranges of propane/ butant compositions than current LPG fuels.162 The Rule allows industry the flexibility necessary to develop such variations.

The specifications and layout for the automotive fuel rating label for alternative liquid automotive fuels appear in § 306.12 of the Fuel Rating Rule, The alternative liquid automotive fuels labels will be subject to many of the same specifications that are required for current octane labels. The automotive fuel ratings for the alternative fuels, however, must be lettered in black type on an orange background. The Commission chose the different color to help consumers distinguish the octane rating for gasoline (black type on a yellow background) from the ratings for the alternative liquid automotive fuels to assist consumers in making the proper fuel choice for their alternative fueled vehicles and to help them avoid misfueling.163 In designing the label requirements, the Commission decided that requiring a different color label for each different type of alternative fuel

162 Phillips 66, D-3, 3; Sun, D-8, 2-4.

163 Phillips 66, D-3, 5 (alternative fuel labels should be a distinctive color such as blue); API, D- 10, 7 (alternative fuel labels should use same style and background color and should use color other than yellow to distinguish from gasoline labels); CENEX, D-21, 4 (alternative fuel labels should use format that clearly differentiates them from gasoline). *

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would confuse consumers and make compliance unnecessarily burdensome.

To encourage standardization in alternative liquid automotive fuel labels, the Commission is specifying a width and length for the labels. There are two sets of specifications; one is for when only the principal component is disclosed, and the other is for the principal and one additional component. However, to accommodate those desiring to disclose more information than will fit on the specified labels, the Commission has included language in § 306.12(a) (ii) and (iii), explaining that those wishing to use labels with different dimensions may petition the Commission for a variance from the Fuel Rating Rule’s label specifications.164

B. Cetane Ratings of Diesel Fuel Oil

Section 1501 of EPA 92 amended PMPA to include a definition for “automotive fuel rating” that includes the ‘‘cetane rating” of diesel fuel oils ‘‘if provided for by the Federal Trade Commission.” 165 “Cetane rating”’ is defined as a measure, as indicated by a cetane index or a cetane number, of the ignition quality of diesel fuel oil and of the influence of the diesel fuel oil on combustion roughness.166 This amendment gives the Commission the discretionary authority under PMPA to add the disclosure of cetane ratings of diesel fuel oils to the requirements of the Octane Rule.

A significant quantity of diesel fuel oil is sold for vehicle use nationally, and preliminary information available to the Commission suggested that the posting of cetane ratings for the diesel fuel oil used for vehicle applications might be helpful. Further, because information suggested that higher cetane fuels can make engines start better in cold weather and run more quietly with reduced emissions, the Commission considered that there might be market incentives to produce higher cetane fuels and to make available a variety of fuels with different cetane levels. The Commission’s preliminary analysis also suggested, however, that accurate posting of cetane levels nationwide at retail outlets could be difficult to

184 See § 1.25 of the Commission’s rules of practice, 16 CFR 1.25.

165 Section 1501{b), Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821(17)).

166 A cetane number is a cetane rating derived by testing the fuel directly. Cetane index is a cetane rating derived through calculation. See ASTM Standard Specification for Diesel Fuel Oils, D975- 91, ASTM Standard Test Methods for Calculating Cetane Index of Distillate Fuels, D976~91 and D4737-90, and ASTM Stan Test Method of Ignition Quality of Diesel Fuels by the Cetane Method, D613-86.

achieve, and that the costs of posting might outweigh the benefits.

To obtain information about whether to amend the Octane Rule to require the certification and posting of minimum cetane ratings, the Commission in the NPR proposed amendments that would require cetane certification and posting for diesel fuel oil intended for vehicle use. The NPR asked whether the proposed regulation would have benefits and costs corresponding to those of the Octane Rule. The NPR also solicited information about the marketing, classifications, and characteristics of diesel fuel oil distributed in the United States. In addition, the NPR solicited information on the extent of the burden the proposed amendments would place on the industry if they were promulgated.

Seventeen comments addressed the cetane disclosure issue. Ten were from members of the petroleum industry,167 four were from members of the automobile manufacturing industry,166 two were from state agencies involved with the regulation of petroleum products marketing,169 and one was from an organization involved in the promotion of diese] fuel from biomass.170 Seven comments favored the proposed amendments.171 Ten opposed their adoption.172

The comments that favored the proposed amendments generally stated that because there is a range of diesel fuel oil with different cetane ratings, a posting requirement would enable consumers to determine which fuels have higher cetane ratings. EMA and AAMA both.commented that the higher cetane diesel fuels would start better in cold weather, run more quietly, and produce fewer emissions, although AAMA noted that consumers may have to be educated about these facts.173

167 Phillips 86, D-3; Mobil, D-4; Chevron, D-5; Sun, D-8; Marathon, D-9; API, D-10; SIGMA, D- 13, PMAA, D-18; CENEX, D-21; Texaco, D-22.

188 ATAI, D-2, EMA, D-6; AAMA, D~7; AIAM, D-17.

1e° NCDA, E-1; NYDAM, E-4.

170 NSDB, D-16. :

171EMA, D-6, 1-3; AAMA, D-7, 2-3; Sun, D-8, 3, 5-6; NSDB, D-16, 3-4, 5; AIAM, D-17, 3; NC, E-1, 1-3; NYDAM, E-4, 3.

172 ATAI, D-2, 2-3; Phillips 66, D-3, 6; Mobil, D- 4, 3; Chevron, D5, 1, 5-8; Marathon, D-9, 3-4; API,

D-10, 1, 7-8; SIGMA, D-13, 3-5; PMAA, D-18, 2- -

7; CENEX, D-21, 4; Texaco, D-22, 1-2.

173 EMA, D-€; 1; AAMA, D-~7, 3. These higher cetane level benefits were noted also by two other commenters who opposed the Commission's adoption of the proposed amendments. PMAA, D- 18, 2; SIGMA, D-13, 4. The potential benefits that diesel fuel with higher cetane ratings can contribute were articulated by EMA as including control of white smoke emissions, reduction of engine noise, improvement of cold-starting capabilities and assistance in the reduction of emissions of nitrogen

Several commenters stated that different engines may require different, higher cetane ratings, and noted that, for those engines, diesel fuel oil with higher cetane ratings will perform better,17« EMA and Sun said that engine manufacturers often recommend fuels with higher cetane levels because of the improvement in engine performance associated with those fuels.175 Sun also noted that there is a range of cetane ratings of between 40 and 50 available at retail stations.17¢ EMA commented that, to the extent consumers can identify the relative cetane number of diesel fuels, they will be in a better position to improve engine performance and to decide whether the more expensive high-cetane fuels are cost effective.177

On the other hand, four of the oil companies stated that cetane levels in excess of 40 are not necessary for diesel engines to run well.178 Marathon distinguished between the effect of cetane rating changes in diesel fuel on diesel engines and the effects of octane changes in gasoline on gasoline engines, noting that, in general, diesel engines are not nearly as sensitive to differences in cetane quality as gasoline engines are to differences in octane.179

Generally, the ten comments that opposed a requirement to certify and post cetane ratings stated that the posting at retail of cetane level information is not needed, that accurate disclosure of cetane ratings at retail outlets would be very difficult to achieve, and that the requirement would, therefore, be unduly burdensome. Eight comments contended that cetane posting will be unnecessary as of October 1, 1993, when U.S, Environmental Protection Agency regulations that restrict the sulfur content of diesel fuel and establish a mandatory minimum cetane level of 40

oxides, particulate matter, hydrocarbons and carbon monoxide. EMA, D-6, 1.

174 AAMA, D-7, 3; Sun, D-8, 5; EMA noted that its 31 member internal combustion engine manufacturers are concerned with the quality of fuel used in the engines they produce and with consumers’ ability to identify the differences in cetane ratings so they can improve engine performance. EMA, D-6, 1.

175 EMA, D-6, 2; Sun, D-8, 5.

176 Sun, D-8, 5.

177EMA, D-6, 1.

178 Phillips 66, D-3, 6; Mobil, D-4, 3 (‘‘cetane in excess of 40 is not commonly required by motor vehicles.”); Chevron, D-5, 1 (“Diesel engines are designed to run on 40 cetane number.”); Marathon, D-9, 3-4.

179 Marathon stated that while a minimum celané rating is necessary for cold starting and warm-up, most diesel fuels marketed today meet the ASTM D-975 minimum cetane of 40, which provides adequate cold-starting performance in modern diesel engines. Marathon, D-9, 3-4.

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become effective.1¢0 These comments indicated that the Environmental Protection Agency’s regulations will result in consumer benefits (reduced emissions and a minimum cetane standard) regardless of the Commission’s Fuel Rating Rule.181

Further, several commenters said that diesel fuel consumers (who were usually identified in the comments as truck drivers) are now and have been for years more familiar with diesel fuel than gasoline consumers are with gasoline. Because of this knowledge, diesel fuel oil consumers do not need cetane information.182 Three associates said that diesel fuel customers (whom they identify as primarily truck drivers)

enerally purchase their fuel at igs

facilities oughout contractua arrangements that specify such items as cetane. According to the comments, these customers are often not aware of the cetane level of the fuel, do not appear interested in knowing it, and would not be likely to go “‘cetane shopping.”183

According to four comments, cetane information alone could confuse or even mislead consumers as to the relative importance of cetane as a quality of diesel fuel oil.184 Most indicated that such qualities as detergency, cold flow properties, specific gravity, cloud point, viscosity, sulfur, and additives are of at least equal significance to cetane, Phillips 66 noted that two major diesel engine suppliers reference ASTM for the fuel recommendations, which encompasses many more aspects of the fuel than just cetane, and further suggested that either viscosity, sulfur, or

180 The regulations will require a reduction of the maximum permissible level of sulphur in Grade 1— D diesel and Grade 2—D diesel. This will result in lower cetane levels than would otherwise be obtained. To.compensate for this, the regulation will set a minimum cetane level of 40. 55 FR 34120, 34130-31 (Aug. 21, 1990). See comments of ATAI, D-2, 3; Phillips 66, D-3, 6; Mobil, D-4, 3;

Marathon, D-9, 4; API, D-10, 8; SIGMA, D-13, 4; PMAA, D-18, 2-3; CENEX, D-21, 4. Several commenters also noted that ASTM Standard D975 Tequires Grade 2-D diesel to have a minimum cetane number of 40. See ATAI, D-2, 2; Phillips 66, D-3, 6; Chevron, D-5, 1, 6; AAMA, D-7, 2; Marathon, D-9, 4.

161 See Phillips 66, D-3, 6.

162 Phillips 66, D-3, 6; API, D-10, 8; CENEX, D- 21, 4. None of these comments, however, discusses whether the EPA sulfur restriction regulations will change the characteristics of diesel fuel enough to have an effect on the familiarity these consumers have with the fuel. :

18 ATAI, D-2, 2 (ATAI's comment is based on “a Survey of the maintenance executives of 25 trucking fleets, including the 5 largest running pproximately 84,000 trucks and tractors"); SIGMA, D-13, 5; PMAA, D-18, 3.

' Phillips 66, D3, 6; API, D-10, 7-8; SIGMA, Dag. ee tanks D-18, 2, 5. See also AAMA, D-

FAIL A, MA supported the proposal, but hoted the possibility that a cetane Raine requirement could mislead customers).

additives may be important considerations for consumers.185

In addition, SIGMA pointed out that higher cetane ratings means lower energy content, which could result in lower mileage. SIGMA speculated that consumers unawere of this fact could mistakenly think that use of more expensive, higher cetane diesel fuel oil will result in greater engine efficiency.18° SIGMA also noted that, to the extent diesel fuel marketers sell fuel with higher cetane ratings, they are already informing their customers of this fact as a marketing tool.187 SIGMA concluded that the number of consumers that would find cetane ratings useful is very small, and that the Commission should weigh the benefits to this small group of consumers against the costs of a posting requirement.168

PMAA and Chevron commented that the way diesel fuel is distributed and subjected to cetane-enhancing additives will render it extremely burdensome for distributors to determine the cetane of diesel fuel from delivery to delivery.189 Sun noted that cetane levels at retail could change because of many factors, such as refiner capability, co-mingling of product, marketing decisions, and use of additives, and could change as frequently as each shipment, by as much as 10 points, but usually only by 2 to 4 points.190

As noted earlier, the authority Congress granted the Commission in section 1501(b) of EPA 92 to regulate diesel fuel oil is discretionary, and is not tied to the mandate to amend the Octane Rule to require automotive fuel ratings for alternative liquid automotive fuels.191 Further, the time limitations in section 1502(d)(2) of EPA 92 pertaining to the alternative liquid automotive fuels proceeding do not apply to the Commission’s discretionary authority to regulate diesel fuel oil.192

The Commission has considered whether the record supports the conclusion that the burdens on the diesel fuel oil marketing industry that

188 Phillips 66, D-3, 6.

188 SIGMA, D-13, 4.

187 “Some marketers currently market ‘premium’ grade diesel fuel that contains some additives and has a slightly higher cetane level. These marketers tend to inform consumers as a marketing tool about the higher cetane levels without a posting requirement. Therefore, it is unclear whether any benefits would result from a rule formulated to require them to post cetane ratings." SIGMA, D-13, 4-5.

188 SIGMA, D-13, 5.

180 PMAA, D-18, 4-6; Chevron, D-5, 6.

190 Sun, D-8, 5-6.

191 Section 1501(b), Pub. L. 102-486, 106 Stat. 2776, 2997 (codified at 15 U.S.C. 2821(17)).

192 Section 1501(d)(2), Pub. L. 102-486, 106 Stat. 2776, 2997 (codified at 15 U.S.C. 2821 {notes)).

would result from cetane rating certification and posting requirements for diesel fuel oil would outweigh the benefits that would accrue to diesel fuel oil consumers as a result of the requirements. The Commission has decided that it would be premature to make this cost-benefit decision at this time given current regulatory developments in the industry. In particular, the Commission is interested in how, if at all, the maximum sulfur/ minimum cetane regulations of the U.S. Environmental Protection Agency will affect the marketing, use, and cetane levels of diesel fuel oil after October 1, 1993. Consequently, the Commission has decided to postpone its decision on the cetane rating proposal contained in the NPR, and to solicit further information in a second Notice of Proposal Rulemaking to be published after the public has had significant experience with the Environmental Protection Agency regulations.

IV. Regulatory Flexibility Act

The Commission stated in the NPR that the provisions of the Regulatory Flexibility Act 193 requiring a regulatory analysis were not applicable to the proposed amendments because they did not appear to have a significant economic impact on a substantial number of small entities.19¢ Based on available information, the Commission stated that the amendments it proposed would have a minimal effect on all business entities within the affected industries, regardless of their size. It stated that very few companies produce and distribute these alternative liquid automotive fuels or diesel fuel oil, and that, of those that do, most are not “small entities” as that term is defined in section 601 of the Regulatory Flexibility Act and in the regulations of the Small Business Administration, found in 13 CFR part 121.

The Commission further explained that although there are some “small entities” in the retailer sectors of those industries, the proposed amendments would likely have only a minimal impact on these small entities. It also stated that any such impact would likely consist of some additional recordkeeping and of retailers placing labels on dispensers (to the extent this is not done by distributors for their retailer customers). Therefore, the Commission stated that the impact on small entities appeared to be de minimus and not, therefore, significant.

The Commission requested information about these industries,

193 5 U.S.C. 603, 604.

19458 FR 16464, 16473.

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including the number and size of companies that produce, import and/or market (including the retail level) alternative liquid automotive fuels or diesel fuel oil. It asked whether the proposed amendments, if promulgated, would have a significant economic impact on a substantial number of small entities in these industries.

Most of the comments that discussed cost or burden addressed rating options for alternative liquid automotive fuels (octane and heating value options) the Commission has decided not to adopt, or addressed cetane posting for diesel fuel oil, on which the Commission has deferred a decision. Only Marathon, API, CFDC, NPGA, and RCT commented about the costs or burdens on small businesses of the existing Octane Rule or of other amendments the Commission proposed in the NPR.

arathon and API addressed the costs and burden imposed by the existing Octane Rule. According to Marathon: “As it is currently implemented, we do not believe the Octane Rule places an undue economic burden on any segment of the petroleum industry, including operators of small businesses. Consequently, Marathon recommends the Octane Rule be continued in its current form.” 195 API concurred, stating: “While the Octane Rule has an impact on a significant number of entities, the impact on each of those individual entities is not unreasonable, particularly in light of the consumer benefits achieved.” 196 Neither Marathon nor API cited any specific figures.

CFDC, NPGA and RCT addressed the benefits and burdens of the proposed fuel composition or fuel descriptor options, which are similar to the option adopted today by the Commission. CFDC stated that posting a fuel descriptor “would provide assurances to consumers that the fuel purchased meets certain requirements, especially since the octane rating of the fuels indicated by type will not vary to any significant degree. Such a rating system would cost-effectively mest the requirements for alternative fuels of section 1501(b) of the Energy Policy Act of 1992,”’ 197

NPGA and RCT specifically addressed the impact on propane sellers of the four proposed amendment options, NPGA claimed: “Some 3,100 of our 3,400 member companies would classify as small businesses; these 3,100 members operate about 3,400 retail outlets for propane. Another 3,400 outlets are

198 Marathon, D-9, 4.

198 API, D~-10, 8.

197 D-14, 5.

operated by 12 multistate corporations who are also member companies of this association. The proposed regulations would have a direct and adverse (e)ffect upon the ability of all these member companies to sell propane at retail as an alternative engine fuel.’ 19 RCT stated that it is: “Deeply concerned about the proposed changes. In our judgment, they would impose heavy costs on a fledgling [propane] industry while providing little or no benefit to consumers,” 189 RCT further stated: “FTC’s proposed rules would adversely affect 1,100 retail propane dealers in Texas alone. The proposed amendments could also adversely affect propane suppliers and consumers without providing commensurate benefits.” 200 However, because the comments submitted by NPGA and RCT discussed primarily the octane and heating value posting options, and other issues not raised by the Commission, it appears that their general comments about the burdens of the options proposed in the NPR are not relevant to the amendments the Commission has adopted.

RCT also stated that a fuel

composition posting requirement would.

require separate storage tanks and separate delivery systems to keep automotive grade HD-5 propane segregated from propane destined for residential and commercial customers, thus imposing costs on small businesses because of unnecessary duplication that “could cause some of them to turn away from the motor fuel market.” 201 NPGA concurred with RCT’s position.202

The statements by NPGA and RCT do not persuade the Commission that the posting option it has adopted will impose a significant economic impact on a substantial number of small entities. First, neither NPGA nor RCT

‘cited specific cost or burden estimates

or submitted supporting data, Second, the conclusions about cost and burden expressed by NPGA and RCT apply primarily to options (octane and heating value posting) the Commission has now

-rejected. Further, their comments about

the burden of certification and posting fuel composition presume the Commission will require the posting of fuel composition of LPG based on tests to ensure the fuel meets test specifications for grade HD-5, For example, NPGA stated that the Commission should leave to other agencies the task of setting the specifications that fuels must meet, and

196 NPGA, D~19, 3.

19° RCT, E-2, 1.

200 Id, at 4.

201 RCT, E-2, 3.

202 NPGA, D-19, 3.

recommended that the Commission limit its involvement to requiring posting the grade of the fuel being sold, or the specification it mests.203

The amendment adopted by the Commission requires only the certification and posting of the type of fuel and the minimum composition of its ie dec component, based on a reasonable basis standard. Retail outlets merely have to post consistent with the certifications they receive, so their burden is minimal. Retailers need not make the actual! determinations unless they alter the fuel they receive before reselling it. Therefore, the Commission believes the certification and posting requirements it has adopted will minimize burdens on even smal! businesses.

On the basis of all the information now before it, including the written comments submitted in response to the NPR, the Commission has determined that the amendments will not have a significant impact on a substantial number of small entities. Consequently, the Commission concludes that a regulatory flexibility analysis is not required. In light of the above, the Commission certifies, under section 605 of the Regulatory Flexibility Act,20 that the amendments it has adopted will not have a significant impact on a substantial number of small entities.

V. Paperwork Reduction Act

The Commission noted in the NPR that the proposed amendments contain provisions that constitute information collection requirements under the Paperwork Reduction Act.205 The Commission explained that the proposed amendments would require refiners, producers, importers, distributors and retailers of alternative liquid automotive fuels to keep, for one year, records of any delivery tickets, letters of certification or tests upon which they based the automotive fuel ratings that they certify or post. It explained that these records would have to be open for inspection by Commission and Environmental Protection Agency staff members or by persons authorized by the Commission or the Environmental Protection

Agen On

figures, the Commission estimated that, under the amendments proposed in the NPR, a total of approximately 85,000 refiners, producers, importers, distributors and retailers could possibly be affected by the recordkeeping

‘the basis of available industry

203 NPGA, D-19, 2-3.

2045 U.S.C. 605(b).

208 44 U.S.C. 3501-3520.

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requirements described above. It stated that certifications are usually noted on documents (shipping receipts, etc.) already in use, or are accomplished with a one-time letter of certification. It further stated that, in the case of refiners and importers, test records are typically retained for a period of one year.

The Commission noted that, in the past, the Commission estimated that the information collection burden associated with the Octane Rule’s recordkeeping requirements was 20,000 hours per year (six minutes per year times 200,006 industry members).20e This estimate was small because the records at issue were likely to be retained by the industry during the normal course of business, and the “burden,” for OMB purposes, is defined to exclude effort that would be expended in any event.207

n the NPR the Commission stated that it believed that approximately 165,000 industry members currently were covered by the Octane Rule as it was in effect at that time (the drop in total industry members primarily being the result of closings by retail stations over the intervening years). The Commission estimated that approximately 85,000 industry members would be affected by the proposed amendments. Of these, the Commission concluded that approximately 60,000 currently sell gasoline (as well as diesel and some alternative fuels) and thus were already covered by the existing Octane Rule. For these 60,000 industry members, the Commission estimated that two additional burden minutes per member per year would cover the effort associated with coverage of the additional fuels (primarily diesel fuel oil). Further, approximately 25,000 additional industry members not currently covered by the Octane Rule would be covered by the proposed amendments because they sell only alternative liquid automotive fuels. These 25,000 would be affected by the Fuel Rating Rule’s recordkeeping requirements for the first time under the proposed amendments. The Commission stated that it believed that

206 See, 6.g., Request for OMB Review of January, 1984, and Accompanying Supporting Statement for Information Collection Provisions of the Octane Certification and Posting Rule.

207 Section 1320.7(b\{1) of the regulations implementing the Paperwork Reduction Act, 5 CFR 1320.7(b)(1), states:

The time and financial resources necessary to Comply with 4 collection of information that would ceienmatad by persons in the normal course of their

ctivities (e.g., in comp: and maintaini business records) will sipadee ia from ry

burden” if the agency demonstrates that the Teporting or recordkeeping activities nesded to comply are usual and customary.

the original estimate of six minutes per year each would be valid for these 25,000 additional industry members. Based on these figures, the Commission estimated that the revised current total yearly burden of the existing Octane Rule’s requirements would be 16,500 hours (six minutes per year times 165,000 industry members). The Commission estimated that the total additional yearly burden that would be imposed by the proposed amendments would be 4,500 se (two minutes per year times 60,000 industry members, plus six minutes per year times 25,000 industry members). Consequently, the Commission estimated that the total burden associated with complying with

- the Rule’s recordkeeping requirements,

if amended as proposed, would be a total of ait peroapearerg 21,000 hours per year for all affected industry members.

The Commission concluded that the recordkeeping burden associated with these proposed amendments is minimal. However, to ensure that no additional burden had been overlooked, the Commission requested public comment on the extent of the paperwork burden that the proposed requirements applying to alternative liquid automotive fuels and diesel fuel oil might impose, especially in terms of how many hours per year would be expended by industry members. None of the commenters challenged or specifically addressed the paperwork burden projections the Commission made in the NPR. Therefore, the Commission sees no reason to revise its projections of burden per year per covered industry member. However, because the Commission has deferred a decision about cetane posting for diesel fuel oil, the total yearly burden for all affected industry members due to the amendments adopted today will be less than the Commission estimated in the NPR.

Because the Commission is deferring a decision on certification and posting of cetane ratings for diesel fuel cil until further information has been obtained, the Commission revises its estimated total additional yearly burden imposed by today’s amendments to be 2,500 hours (six minutes per year times 25,000 newly covered industry members), rather than 4,500 hours, as initially estimated. The Commission estimates the total yearly burden on gasoline sellers who already were covered by the Octane Rule to be approximately 16,500 hours (six minutes per year times 165,000 industry members). Thus, the Commission estimates the total yearly burden imposed by the Fuel Rating Rule to be approximately 19,000 hours.

Because these requirements would involve the “collection of information” as defined by the regulations of the Office of Management and Budget

. (“OMB”), 5 CFR 1320.7(c)(1) (1992), the

Commission was required to submit the proposed requirements to OMB for clearance. 5 CFR 1320.13. The Commission did so as part of this proceeding. OMB approved the request, and assigned control number 3084-0068 to the information collection requirements.208 This approval will expire on February 28, 1996, unless it has been extended before that date. VI. Regulatory Review

As part of the Commission’s ten-year regulatory-review plan for existing rules and guides, the Commission also. specifically solicited comments in the NPR on the costs and benefits of the existing Octane Rule.209 Based on the discussion in Parts IV and V, above, the Commission concludes that the Fuel Rating Rule will not have a significant economic impact on covered parties, and that there is a need for the Fuel Rating Rule. As explained in Parts Ii- V, above, the Commission has designed the amendments to minimize burdens imposed on covered industry members, including small businesses.

VII. Metric Measurements

In accordance with the Omnibus Trade and Competitiveness Act (“OTCA”), 15 U.S.C. 205b, and Executive Order 12770 (“Metric Usage in Federal Government Programs’”’), 56 FR 35801 (July 25, 1991), the Commission must consider metric measurements in addition to inchpound measurements in measurement sensitive regulations. Only API addressed metric measurement issues. API recommended that the Commission specify label dimensions in both inches/ picas and appropriate soft-conversion (calculated) metric units.219 However, API stated that, because the average consumer’s awareness of metric is minimal at this time, providing alternative fuel information to the consumer in metric units would not significantly benefit consumers.211 Neither the original Octane Rule nor the amendments adopted today require disclosures to consumers of inch/pound measurement ratings. However, in accordance with OTCA and:Executive Order 12770, § 306.12 of ithe Fuel Rating Rule includes both inch-pound and

206 Notice of Office of Management and Budget Action to Carl Hevener, Federal Trade Commission, dated May 13, 1993.

209 58 FR 16464, 16477.

210 AP], D-10, 8.

211 Id.

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metric measurements in the specifications for label size.

VIII. Amendments to the Rule

A. Discussion of Amendments

The certification and posting requirements for alternative liquid automotive fuels have been discussed in Part IIJ.A5. As indicated in the NPR, many of the amendments to the Octane Rule involve substituting “automotive fuel” for “gasoline” and “‘automotive fuel rating” for ‘‘octane rating.” In this section, several additional amendments to the Rule are discussed. Pursuant to EPA 92, these amendments become effective at the end of the one-year period beginning on the date of the enactment of the Act, which was on October 24, 1992.212 However, October 24, 1993 falls on a Sunday. When an effective date falls on a weekend or holiday, the next Federal business day is used as the effective date.213 Therefore, these amendments are effective on Monday, October 25, 1993.

Section 306.0 Definitions

The Octane Rule currently does not have a section containing definitions. Because these amendments result in an expanded and more complex regulation, the Commission is including definitions in the Fuel Rating Rule. Most of the definitions that the Commission has adopted are definitions from PMPA that are pertinent to the Fuel Rating Rule. A few other definitions were adopted from other sources (principally, EPA 92), as explained below.

ection 306.0(2) contains references to the aie ASTM standards that contain the methodologies for determining the research octane number and motor octane number. These references to the ASTM standards are different from the references in the prior version of the Rule because they are to current versions of the standards. The ASTM references are from the “Conforming Amendments” section of section 1501 of EPA 92,214 with the addition of the suffix that ASTM uses to indicate the year of the standard’s promulgation. This suffix is part of the reference to the standard in the Fuel Rating Rule to conform with the procedures for incorporation by reference in 5 U.S.C. 552(a)(1) and 1 CFR part 51. :

In § 306.0, the definitions of refiner, distributor and retailer are based on the PMPA definitions of these terms. In

212 Section 1501(d)(1) of Pub. L. 102-486, 106 Stat. 2997 (codified at 15 U.S.C. 2621 (notes)).

2131 CFR 18.17.

214 Section 1501(c)(1)(B) of Pub. L. 102-486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2621).

§ 306.0(4), the Commission has added a definition for “producer” that the Commission developed from language in the PMPA definition of “refiner” and the Commission’s description of “producers” that was published with the announcement of the final Octane Rule.215

In § 306.0(9), the Commission uses the PMPA definition for ‘automotive fuel.” As amended by EPA 92, PMPA currently defines “automotive fuel” as “liquid fuel of a type distributed for use as a fuel in any motor vehicle.” To provide more guidance to industry,,the Commission has supplemented this definition by drawing on the definition for ‘alternative fuel” contained in section 301(2) of EPA 92216 and specifically listing (without limiting coverage) the liquid fuels that are presently covered. The Commission also has added in this section a definition for gasoline that lists (without limiting coverage) the fuels that are presently considered “gasoline,” including gasohol and reformulated and oxygenated gasolines.217

Section 306.4 Preemption

Section 1502(a) of EPA 92 amends section 204 of PMPA to authorize the states to use whatever investigative and enforcement action they find necessary to enforce state laws that require the certification and posting of automotive fuel ratings.218 The purpose of this amendment is to facilitate state enforcement of any state or local regulation pertaining to automotive fuel rating disclosure by permitting the use of any remedy or penalty authorized by law. The Commission has inserted new language in § 306.4 of the Fuel Rating Rule to conform with EPA 92’s amendment of section 204 of PMPA.

Section 306.5 Automotive Fuel Rating

The references to the ASTM standards have been changed in § 306.(0)(2)— Definitions to reflect the current

215 See 44 FR 19172 (March 30, 1979). The original proceeding to promulgate the Octane Rule revealed that there is a sector of the petroleum industry that combines component elements of gasoline into the finished product. Producers are a small group within the petroleum industry who are the originating sellers of automotive gasoline but who do not import or receive gasoline or refine it from crude oil. Rather, they purchase component parts and combine them to produce finished gasoline.

218 Sec. 301(2), Pub. L. 102-486, 106 Stat. 2776, 2866 (codified at 42 U.S.C. 13211).

217 Reformulated and oxygenated gasolines are produced to comply with the requirements of the Clean Air Act, 42 U.S.C. 7545 (k), (m). These fuels and gasohol were specifically discussed as gasoline in the NPR. 58 FR 16464, 16466.

218 Section 1502(a) of Pub. L. 102-486, 106 Stat. 2776, 2997-98 (codified at 15 U.S.C. 2824).

versions of the standards, as contained in section 1501(c)(1)(B) of EPA 92.219 The Octane Rule contained language

(§ 306.4(b)(2)) detailing a procedure for updating the Rule whenever ASTM modifies the octane determination standards referenced in this section. The amendments announced today delete this section. If there are subsequent amendments to the standards that are pertinent to the Rule, any person may petition the Commission to adopt the amended version or the Commission on its own motion may initiate a proceeding to adopt the revision.

List of Subjects in 16 CFR Part 306

Energy conservation, Gasoline, Incorporation by reference, Labeling, Reporting and recordkeeping requirements.

For the reasons set out in the preamble, title 16 of the Code of Federal Regulations will be amended as follows:

PART 306—AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING

1. The authority citation for part 306 of 16 CFR is revised to read as follows:

Authority: 15 U.S.C. 2801 et seq.

2. Part 306 of 16 CFR is amended by revising the heading to read as set forth above.

§§ 306.0 through 306.11 [Redesignated as §§ 306.1 through 306.12]

3. Sections 306.0 through 306.11 of 16 CFR are redesignated as §§ 306.1 through 306.12, respectively.

4. Part 306 of 16 CFR is amended by adding a new § 306.0, to read as follows:

§306.0 Definitions.

As used in this part:

(a) Octane rating means the rating of the anti-knock characteristics of a grade or type of gasoline as determined by dividing by 2 the sum of the research octane number plus the motor octane number.

(b) Research octane number and motor octane number have the meanings given such terms in the specifications of the American Society for Testing and Materials (“ASTM”) entitled “Standard Specification for Automotive Spark-Ignition Engine Fuel’ designated D4814—92c and, with respect to any grade or type of gasoline, are determined in accordance with test methods set forth in ASTM D2699-92, “Standard Test Method for Knock Characteristics of Motor Fuels by the Research Method” and ASTM D2700-

21° Section 1501(c)(1}(B) of Pub. L. 102-486, 106 Stat. 2778. 2996 (codified at 15 U.S.C. 2821).

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92, “Standard Test Method for Knock Characteristics of Motor and Aviation Fuels by the Motor Method.” These incorporations by reference were approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ASTM D4814—92c, ASTM D2699-92, and ASTM D2700-92 may be obtained from the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA, 19103, or may be inspected at the Federal Trade Commission, Public Reference Room, room 130, 600 Pennsylvania Avenue, NW., Washington, DC., or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.

(c} Refiner means any person engaged in the production or importation of automotive fuel.

(d) Producer means any person who purchases component elements and combines them to produce and market automotive fuel.

(e) Distributer means any person who receives automotive fuel and distributes such automotive fuel to another person other than the ultimate purchaser.

(f) Retailer means any person who markets automotive fuel to the general public for ultimate consumption.

(g) Ultimate purchaser means, with respect to any item, the first person who purchases such item for purposes other than resale.

(h) Person, for purposes of applying any provision of the Federal Trade Commission Act, 15 U.S.C. 41 et seq., with respect to any provision of this Part, includes a partnership and a corporation.

(i) Automotive fuel means liquid fuel of a type distributed for use as a fuel in any motor vehicle, and the term includes, but is not limited to:

(1) Gasoline, an automotive sparkignition engine fuel, which includes, but is not limited to, gasohol (generally a mixture of approximately 90% unleaded gasoline and 10% denatured ethanol) and fuels developed to comply with the Clean Air Act, 42 U.S.C. 7401 et seq., such as reformulated gasoline and oxygenated gasoline; and _ (2) alternative liquid automotive fuels, including, but not limited to:

(i) Methanol, denatured ethanol, and other alcohols;

(ii) Mixtures containing 85 percent or more by volume of methanol, denatured ethanol, and/or other alcohols (or such other percentage, but not less than 70 Percent, as determined by the Secretary of the United States Department of Energy, by rule, to provide for requirements relating to cold start,

safety, or vehicle functions), with gasoline or other fuels;

(iii) Liquefied natural gas;

{iv) Liquefied petroleum gas;

(v) Coal-derived liquid fuels.

(j) Automotive fuel rating means—

(1) For gasoline, the octane rating; or

(2) For an alternative liquid automotive fuel, the commonly used name of the fuel with a disclosure of the amount, expressed as a minimum percentage by volume, of the principal component of the fuel. A disclosure of other components, expressed as a minimum percentage by volume, may be included, if desired.

5. Section 306.1 of 16 CFR is revised to read as follows:

§306.1 What this rule does.

This rule deals with the certification and posting of automotive fuel ratings in or affecting commerce as “commerce” is defined in the Federal Trade Commission Act, 15 U.S.C. 41 et seq. It applies to persons, partnerships, and corporations. If you are covered by this regulation, breaking any of its rules is an unfair or deceptive act or practice under section 5 of that Act. You can be fined up to ten thousand dollars each time you break a rule.

6. Section 306.2 of 16 CFR is revised to read as follows:

§306.2 Whois covered.

You are covered by this rule if you are a refiner, importer, producer, distributor, or retailer of automotive fuel.

7. Section 306.4 of 16 CFR is revised to read as follows:

§306.4 Preemption.

The Petroleum Marketing Practices Act (“PMPA”"), 15 U.S.C. 2801 et seq., as amended, is the law that directs the FTC to enact this rule. Section 204 of PMPA, 15 U.S.C. 2824, provides:

(a) To the extent that any provision of this title applies to any act or omission, no State or any political subdivision thereof may adopt or continue in effect, except as provided in subsection (b), any provision of law or regulation with respect to such act or omission, unless such provision of such law or regulation is the same as the applicable provision of this title.

(b) A State or political subdivision thereof may provide for any investigative or enforcement action, remedy, or penalty (including procedural actions necessary to carry out such investigative or enforcement actions, remedies, or penalties) with respect to any provision of law or regulation permitted by subsection (a).

8. Section 306.5 of 16 CFR is revised to read as follows:

§306.5 Automotive fuel rating.

If you are a refiner, importer, or producer, you must determine the automotive fuel rating of all automotive fuel before you transfer it. You can do that yourself or through a testing lab.

(a) To determine the automotive fuel rating of gasoline, add the research octane number and the motor octane number and divide by two, as explained by the American Society for Testing and Materials (“ASTM”) in ASTM D4814— 92c, entitled “Standard Specifications for Automotive Spark-Ignition Engine Fuel.” To determine the research octane number, use ASTM standard test method D2699-—92, and to determine the motor octane number, use ASTM standard test method D2700-92.

(b) To determine automotive fuel ratings for alternative liquid automotive fuels, you must possess a reasonable basis, consisting of competent and reliable evidence, for the percentage by volume of the principal component of the alternative liquid automotive fuel that you must disclose. You also must have a reasonable basis, consisting of competent and reliable evidence, for the minimum percentages by volume of other components that you choose to disclose.

9. Section 306.6 of 16 CFR is revised to read as follows:

§306.6 Certification

In each transfer you make to anyone who is not a consumer, you must certify the automotive fuel rating of the automotive fuel consistent with your determination. You can do this in either of two ways:

(a) Include a delivery ticket or other paper with each transfer or automotive fuel. It may be an invoice, bill of lading, bill of sale, terminal ticket, delivery ticket, or any other written proof of transfer. It must contain at least these four items:

(1) Your name;

(2) The name of the person to whom the automotive fuel is transferred;

(3) The date of the transfer;

(4) The automotive fuel rating. Octane rating numbers may be rounded off to a whole or half number equal to or less than the number determined by you.

(b) Give the person a letter or written statement. This letter must include the date, your name, the other person’s name, and the automotive fuel rating of any automotive fuel you will transfer to that person from the date of the letter onwards. Octane rating numbers may be rounded to a whole or half number equal to or less than the number determined by you. This letter of certification will be good until you transfer automotive fuel with a lower

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automotive fuel rating. When this happens, you must certify the automotive fuel rating of the new automotive fuel either with a delivery ticket or by sending a new letter of certification.

(c) When you transfer automotive fuel to a common carrier, you must certify the automotive fuel rating of the automotive fuel to the common carrier, either by letter or on the delivery ticket or other paper.

10. Section 306.7 of 16 CFR is revised to read as follows:

§306.7 Recordkeeping.

You must keep records of how you determined automotive fuel ratings for one year. They must be available for inspection by Federal Trade Commission and Environmental _ Protection Agency staff members, or by people authorized by FTC or EPA.

11. Section 306.8 of 16 CFR is revised to read as follows:

§306.8 Certification.

If you are a distributor, you must certify the automotive fuel rating of the automotive fuel in each transfer you make to anyone who is not a consumer.

(a) In the case of gasoline, if you do not blend the gasoline with other gasoline, you must certify the gasoline’s octane rating consistent with the octane rating certified to your. If you blend the gasoline with other gasoline, you must certify consistent with your determination of the average, weighted by volume, of the octane ratings certified to you for each gasoline in the blend, or consistent with the lowest octane rating certified to you for any gasoline in the blend. Whether you blend gasoline or not, you may choose to certify the octane rating of the gasoline consistent with your determination of the octane rating according to the method in § 306.5. In cases involving gasoline, the octane rating may be rounded to a whole or half number equal to or less than the number certified to you or determined by you.

(b) If you do not blend alternative liquid automotive fuels, you must certify consistent with the automotive fuel rating certified to you. If you blend alternative liquid automotive fuels, you must possess a reasonable basis, consisting of competent and reliable evidence, for the automotive fuel rating that you certify for the blend. -

(c) You may certify either by using a delivery ticket with each transfer of automotive fuel, as outlined in § 306.6(a), or by using a letter of certification, as outlined in § 306.6(b).

(d) When you transfer automotive fuel to acommon carrier, you must certify the automotive fuel rating of the automotive fuel to the common carrier, either by letter or on the delivery ticket or other paper. When you receive automotive fuel from a common carrier, you also must receive from the common carrier a certification of the automotive fuel rating of the automotive fuel, either by letter or on the delivery ticket or other paper.

12. Section 306.9 of 16 CFR is revised to read as follows:

§306.9 Recordkeeping

You must keep for one year any delivery tickets or letters of certification on which you based your automotive fuel rating certifications. You must also keep for one year records of any automotive fuel rating determinations you made according to § 306.5. They must be available for inspection by Federal Trade Commission and Environmental Protection Agency staff members, or by persons authorized by FTC or EPA.

13. Section 306.10 of 16 CFR is revised to read as follows:

§306.10 Automotive fuel rating posting.

(a) If you are a retailer, you must post the automotive fuel rating of all automotive fuel you sell to consumers. You must do this by putting at least one label on each face of each dispenser through which you sell automotive fuel. If you are selling two or more kinds of automotive fuel with different automotive fuel ratings from a single dispenser, you must put separate labels for each kind of automotive fuel on each face of the dispenser.

(b) (1) The label, or labels, must be placed conspicuously on the dispenser so as to be in full view of consumers and as near as reasonably practical to the price per unit of the automotive fuel.

(2) You may petition for an exemption from the placement requirements by writing the Secretary of the Federal Trade Commission, Washington, DC 20480. You must state the reasons that you want the exemption.

(c) In the case of gasoline, if you do not blend the gasoline with other gasoline, you must post the octane rating of the gasoline consistent with the octane rating certified to you. If you blend the gasoline with other gasoline, you must post consistent with your determination of the average, weighted by volume, of the octane ratings certified to you for each gasoline in the blend, or consistent with the lowest octane rating certified to you for any gasoline in the blend. Whether you blend gasoline or not, you may choose

to post the octane rating of the gasoline consistent with your determination of the octane rating according to the method in § 306.5. In cases involving gasoline, the octane rating must be shown as a whole or half number equal to or less than the number certified to you or determined by you.

(d) If you do not blend alternative liquid automotive fuels, you must post consistent with the automotive fuel rating certified to you. If you blend alternative liquid automotive fuels, you must possess a reasonable basis, consisting of competent and reliable evidence, for the automotive fuel rating that you post for the blend.

(e)(1) You must maintain and replace labels as needed to make sure consumers can easily see and read them.

(2) If the labels you have are destroyed or are unusable or unreadable for some unexpected reason, you can satisfy the law by posting a temporary label as much like the required label as possible. You must still get and post the required label without delay.

(f) The following examples of automotive fuel rating disclosures for some presently available alternative liquid automotive fuels are meant to serve as illustrations of compliance with this part, but do not limit the Rule’s coverage to only the mentioned fuels:

(1) ‘‘Methanol/Minimum % Methanol” - (2) “Ethanol/Minimum % Ethanol” (3) “‘M-85/Minimum % Methanol” (4) “E-85/Minimum % Ethanol” (5) “LPG/Minimum % Propane” or “LPG/Minimum % Propane and % Butane”

- (6) “LNG/Minimum % Methane” (g) When you receive automotive fuel from a common carrier, you also must receive from the common carrier a certification of the automotive fuel rating of the automotive fuel, either by letter or on the delivery ticket or other paper.

14. Section 306.11 of 16 CFR is revised to read as follows:

§306.11 Recordkeeping.

You must keep for one year any delivery tickets or letters of certification on which you based your posting of automotive fuel ratings. You also must keep for one year records of any automotive fuel rating determinations you made according to § 306.5, These records may be kept at the retail outlet or at another, reasonably close location. They must be available for inspection by Federal Trade Commission and Environmental Protection Agency staff members or by persons authorized by FTC or EPA.

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15. Section 306.12 is revised to read as follows:

§306.12 Labels.

All labels must meet the following specifications:

(a) Layout.—(1) For gasoline labels. The label is 3” (7.62 cm) wide x 212” (6.35 cm) long. The illustrations appearing at the end of this rule are prototype labels that demonstrate the proper layout. “Helvetica Black” type is used throughout except for the octane rating number on octane labels, which is in Franklin gothic type. All type is centered. Spacing of the label is 1/4” (.64 cm) between the top border and the first line of text, %” (.32 cm) between the first and second line of text, 1/4” (.64 cm) between the octane rating and the line of text above it. All text and numerals are centered within the interior borders.

(2) For alternative liquid automotive fuel labels (one principal component). The label is 3” (7.62 cm) wide x 242” (6.35 cm) long. “Helvetica black’”’ type is used throughout. All type is centered. The band at the top of the label contains the name of the fuel. This band should measure 1” (2.54 cm) deep. Spacing of the fuel name is 14” (.64 cm) from the top of the label and 96” (.48 cm) from the bottom of the black band, centered horizontally within the black band. The first line of type beneath the black band is Ya” (.32 cm) from the bottom of the black band. All type below the black band is centered horizontally, with 1%” (.32 cm) between each line. The bottom line of type is 16” (.48 cm) from the bottom of the label. All type should fall no closer than 346” (.48 cm) from the side edges of the label. If you wish to change the dimensions of this single component label to accommodate a fuel descriptor that is longer than shown in the sample labels, you must petition the Federal Trade Commission. You can do this by writing to the Secretary of the Federal Trade Commission,

Washington, DC 20580. You must state the size and contents of the label that you wish to use, and the reasons that you want to use it,

(3) For alternative liquid automotive fuel labels (two components). The label 1s 3” (7.62 cm) wide x 27/2” (6.35 cm) long. “Helvetica black” type is used throughout. All type is. centered. The band at the top of the label contains the name of the fuel. This band should Measure 1” (2.54 cm) deep. Spacing of the fuel name is 14” (.64 cm) from the top of the label and 346” (.48 cm) from

the bottom of the black band, centered horizontally within the black band. The first line of type beneath the black band is 346” (.48 cm) from the bottom of the black band. All type below the black band is centered horizontally, with 1%” (.32 cm) between each line. The bottom line of type is 14” (.64 cm) from the bottom of the label. All type should fall no closer than 346” (.48 cm) from the side edges of the label. If you wish to change the dimensions of this two component label to accommodate additional fuel components, you must petition the Federal Trade Commission. You can do this by writing to the Secretary of the Federal Trade Commission, Washington, DC 20580. You must state the size and contents of the label that you wish to use, and the reasons that you want to use it.

(b) Type size and setting—(1) For gasoline labels. The Helvetica series is used for all numbers and letters with the exception of the octane rating number. Helvetica is available in a variety of phototype setting systems, by linotype, and in a variety of computer desk-top and phototype setting systems. Its name may vary, but the type must conform in style and thickness to the sample provided here. The line “Minimum Octane Rating”’ is set in 12 point Helvetica Bold, all capitals, with letterspace set at 12/2 points. The line “(R+M)/2 METHOD” is set in 10 point Helvetica Bold, all capitals, with letterspace set at 1072 points. The octane number is set in 96 point Franklin gothic condensed with 1%” (.32 cm) space between the numbers.

(2) For alternative liquid automotive fuel lables (one principal component). All type should be set in upper case (all caps) “Helvetica Black” throughout. Helvetica Black is available in a variety of computer desk-top and phototype setting systems. Its name may vary, but the type must conform in style and thickness to the sample provided here. The spacing between letters and words should be set as ‘“‘normal.” The type for the fuel name is 50 point (12” (1.27 cm) cap height) “Helvetica Black,’’ knocked out of a 1” (2.54 em) deep band. The type for the words “MINIMUM” and the principal component is 24 pt. (#4” (.64 cm) cap height.) The type for percentage is 36 pt. (%” (.96 cm) cap height).

(3) For alternative liquid automotive fuel labels (two components). All type should be set in upper case (all caps) “Helvetica Black” throughout. Helvetica Black is available in a variety of

computer desk-top and phototype setting systems. Its name may vary, but the type must conform in style and thickness to the sample provided here. The spacing between letters and words should be set as “normal.” The type for the fuel name is 50 point (12” 1.27 cm) cap height) “Helvetica Black,” knocked out of a 1” (2.54 cm) deep band. All other type is -24 pt. (1/4” (.64 cm) cap height.)

(c) Colors—{1) For gasoline labels. The basic color on all octane labels is process yellow. All type is process black. All borders are process black. All colors must be non-fade.

(2) For alternative liquid automotive

fuel labels. The background color on all

the labels is Orange: PMS 1495. The knock-out type within the black band is orange PMS 1495. All other type is process black. All borders are process black. All colors must be non-fade.

(d) Contents. Examples of the contents are shown in the sample labels. The proper octane rating for each gasoline must be shown, The proper automotive fuel rating for each alternative liquid automotive fuel must be shown. No marks or information other than that called for by this rule may appear on the labels.

(e) Special label protection. All labels must be capable of withstanding extremes of weather conditions for a period of at least one year. They must be resistant to automotive fuel, oil, grease, solvents, detergents, and water.

(f) IJustrations of labels, Labels should meet the specifications in this section, and should look like these examples, except the black print should be on the appropriately colored background.

BILLING CODE 6750-01-M

MINIMUM OCTANE RATING (R+M)/2 METHOD

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- MINIMUM 85% METHANOL

MINIMUM

90% PROPANE

2% BUTANE

LPG

MINIMUM

90% PROPANE

MINIMUM 95%

ETHANOL

BILLING CODE 6750-01-C

By direction of the Commission. Donald S. Clark, Secretary.

[FR Doc. 93-18339 Filed 8-2-93; 8:45 am]