Title of Regulation: 2VAC5-425. Vapor Pressure Requirements for Gasoline Ethanol Blends (adding 2VAC5-425-10, 2VAC5-425-20).

Statutory Authority: §§ 59.1-153 and 59.1-156 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: April 7, 2017.

Agency Contact: Joel Maddux, Program Manager, Office of Weights and Measures, Department of Agriculture and Consumer Services, P.O. Box 1163, Richmond, VA 23218, telephone (804) 786-1274, FAX (804) 786-1571, or email joel.maddux@vdacs.virginia.gov.

Basis: Section 3.2-109 of the Code of Virginia establishes the Board of Agriculture and Consumer Services as a policy board.

Section 59.1-153 of the Code of Virginia adopts ASTM International specifications, which are adopted by the National Conference of Weights and Measures (NCWM) and published by the National Institute of Standards and Technology (NIST) in Handbook 130, Uniform Laws and Regulations in the Areas of Legal Metrology and Engine Fuel Quality, as the specifications for the inspection and testing of motor fuel and for lubricating oil. Section 59.1-153 also allows the board to amend these specifications following an informational proceeding. Additionally, subsection A of § 59.1-156 of the Code of Virginia authorizes the board to adopt regulations necessary for the inspection and testing of motor fuel and lubricating oil.

Purpose: The proposed regulation addresses the vapor pressure of ethanol blended gasoline. Currently, vapor pressure limits are established in ASTM Standard D4814 and adopted by NIST into Handbook 130. Virginia's Motor Fuels and Lubricating Oils Law incorporates NIST Handbook 130 and ASTM standards into the law. Currently, NIST provides a 1.0 psi exception to ASTM's established vapor pressure for ethanol blended gasoline. The sunset date for the psi exception provided for in NIST Handbook 130 was May 1, 2016; however, at the NCWM meeting in July 2016, the sunset date for the psi exception was extended to May 1, 2017. In March 2016, the board adopted an emergency regulation in preparation for the May 1, 2016, sunset date. The emergency regulation became effective on April 19, 2016, and will expire on October 18, 2017. Concurrent to its adoption of an emergency regulation, the board approved a notice of intended regulatory action for the pending regulatory action.

The vapor pressure of ethanol blended gasoline is a measure of the fuel's volatility or evaporation characteristics. This pressure is regulated and manipulated by refineries to comply with federal and ASTM standards. The goal of this regulation is to continue to provide a 1.0 psi exception above the maximum vapor pressure set by ASTM to maintain the current regulatory framework for gasoline in Virginia beyond the expiration of Virginia's emergency regulation. Virginia utilizes the Colonial Pipeline, a gasoline pipeline that originates in Texas and ends in New Jersey. Without the existing emergency regulation and this proposed identical permanent regulation, Virginia would be the only state in the Colonial Pipeline that will not have a 1.0 psi exception past the sunset date prescribed in NIST Handbook 130, as the other states have either granted a waiver or adopted a regulation with the exception. This regulation protects the welfare of Virginia's citizens and businesses by ensuring that the gasoline in the Colonial Pipeline can continue to flow into and through Virginia after the expiration of Virginia's emergency regulation.

Substance: This regulation addresses the vapor pressure of ethanol blended gasoline. The vapor pressure of ethanol blended gasoline is a measure of the fuel's volatility or evaporation characteristics. Vapor pressure limits are established in ASTM Standard D4814 and adopted by NIST into Handbook 130. Vapor pressure is regulated and manipulated by refineries to comply with federal and ASTM standards. Virginia's Motor Fuels and Lubricating Oils Law incorporates NIST Handbook 130 and ASTM standards into the law. Currently, NIST provides a 1.0 psi exception to ASTM's established vapor pressure for ethanol blended gasoline. The 1.0 psi exception will expire on May 1, 2017. The proposed regulation will allow the Virginia Department of Agriculture and Consumer Services to continue to provide a 1.0 psi exception above the maximum vapor pressure set by ASTM to maintain the current regulatory framework for gasoline in Virginia.

Issues: This regulatory action is advantageous to the public and businesses. The 1.0 psi exception to the ASTM standard authorized by NIST Handbook 130 will expire on May 1, 2017, and Virginia's related emergency regulation will expire in October 2017. This regulatory action is necessary to maintain the current regulatory framework for gasoline that businesses are accustomed to operating under in Virginia. There are no disadvantages to the public or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The proposed regulation will permanently extend a one-pound per square inch exception to the ethanol blended gasoline vapor pressure standards currently in effect under an emergency regulation.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. The vapor pressure in ethanol blended gasoline must conform to certain standards for proper engine operation. It must be high enough to ensure ease of engine starting; but it must be low enough to avoid an engine vapor lock or excessive evaporative emissions. Ethanol in gasoline affects the vapor pressure. A 10% ethanol content in gasoline increases the vapor pressure by about one pound per square inch.¹ Beginning in 1992, the Environmental Protection Agency (EPA) started to permit a one-pound exception to the vapor pressure standards to encourage consumption of ethanol blended gasoline. Similarly the National Institute of Standards and Technology (NIST), whose standards determine Virginia's standards, adopted a one-pound exception in 1994.² However, that exception to the vapor pressure was originally set to be discontinued by NIST as of May 1, 2016, but later was kept until May 1, 2017. In anticipation of the May 1, 2016, sunset date, an emergency regulation³ was adopted continuing the exception in order to ensure that gasoline can legally continue to flow into and through Virginia in the Colonial Pipeline. As with many other states, Virginia relies on the Colonial Pipeline, which originates in Texas and ends in New Jersey for transportation of gasoline from the refineries. The proposed regulation will adopt the American Society for Testing and Materials (ASTM) standards (upon which NIST standards are based) directly and provide a permanent one-pound exception to the ASTM standards.

According to Virginia Department of Agriculture and Consumer Services (VDACS), all of the other states where the pipeline passes through have either granted a waiver or adopted a regulation with the exception. Without the one-pound exception, Virginia gasoline suppliers may not be able to use the Colonial Pipeline and may have to resort to other costlier modes of gasoline transportation. Any such additional costs would then likely be at least partially passed on to consumers. In addition, the one-pound exception had been allowed since 1994 without any known problems.⁴ The main impact of the proposed regulation is avoidance of costlier modes of gasoline transportation without a discernible impact on proper engine operation. Therefore, the proposed regulation should produce a net economic benefit. However, it should be noted that no significant economic change is expected upon promulgation of this regulation as it will continue the status quo.

Businesses and Entities Affected. VDACS estimates that there are approximately 155 motor fuel distributors or dealers in Virginia. About 40 to 60 percent of them are estimated to be small businesses. In addition, avoidance of higher transportation costs would benefit the ethanol blended gasoline consumers.

Localities Particularly Affected. The proposed changes apply statewide.

Projected Impact on Employment. No impact on employment is expected upon promulgation of the proposed regulation.

Effects on the Use and Value of Private Property. No impact on the use and value of private property is expected.

Real Estate Development Costs. No impact on real estate development costs is expected.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. About 40 to 60 percent of the motor fuel distributors or dealers are estimated to be small businesses.⁵ The proposed regulation does not impose costs on any entities, but it will benefit distributors or dealers by allowing them to legally use the Colonial Pipeline for transportation of gasoline.

Alternative Method that Minimizes Adverse Impact. No adverse impact on small businesses is expected.

Adverse Impacts:

Businesses. The proposed amendments do not have an adverse impact on non-small businesses.

Localities. The proposed amendments will not adversely affect localities.

Other Entities. The proposed amendments will not adversely affect other entities.

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¹ Source: EPA

² Virginia's vapor pressure tolerances for gasoline ethanol blends are set in § 59.1-153 of the Motor Fuels and Lubricating Oils Law, which incorporates the National Institute of Standards and Technology Handbook 130, which utilizes the ASTM standards. See http://law.lis.virginia.gov/vacode/title59.1/chapter12/section59.1-153/ for Virginia Code § 59.1-153.

³ http://townhall.virginia.gov/l/ViewStage.cfm?stageid=7500

⁴ Source: VDACS

⁵ Source: VDACS

Agency's Response to Economic Impact Analysis: The agency concurs with the analysis of the Department of Planning and Budget.

Summary:

The proposed regulatory action establishes a new chapter, 2VAC5-525, to address the vapor pressure requirements for ethanol blended gasoline in Virginia. Specifically, it provides a 1.0 pounds per square inch exception to the maximum vapor pressure set by ASTM International as currently outlined the National Institute of Standards and Technology Handbook 130, Section 2.1.2., which is incorporated into Virginia's motor fuels and lubricating oils law.

CHAPTER 425
VAPOR PRESSURE REQUIREMENTS FOR GASOLINE ETHANOL BLENDS

2VAC5-425-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"ASTM D4806-16a" means the Standard Specification for Denatured Fuel Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine Fuel published by ASTM International in February 2016.

"ASTM D4814-16a" means the Standard Specification for Automotive Spark-Ignition Engine Fuel published by ASTM International in February 2016.

"psi" means pounds per square inch.

"Volatility class A" means fuel with a vapor pressure and distillation designation of "A" set forth in Table 1 Vapor Pressure and Distillation Class Requirements of ASTM D4814-16a.

"Volatility class B" means fuel with a vapor pressure and distillation designation of "B" set forth in Table 1 Vapor Pressure and Distillation Class Requirements of ASTM D4814-16a.

"Volatility class C" means fuel with a vapor pressure and distillation designation of "C" set forth in Table 1 Vapor Pressure and Distillation Class Requirements of ASTM D4814-16a.

"Volatility class D" means fuel with a vapor pressure and distillation designation of "D" set forth in Table 1 Vapor Pressure and Distillation Class Requirements of ASTM D4814-16a.

"Volatility class E" means fuel with a vapor pressure and distillation designation of "E" set forth in Table 1 Vapor Pressure and Distillation Class Requirements of ASTM D4814-16a.

2VAC5-425-20. Vapor pressure requirements; exceptions.

When gasoline is blended with ethanol, the ethanol shall meet the requirements of ASTM D4806-16a and the blend shall meet the requirements of ASTM D4814-16a, with following permissible exceptions:

1. For blends containing nine to 10 volume percent ethanol, the maximum vapor pressure shall not exceed the ASTM D4814-16a limits by more than 1.0 psi during the period of June 1 through September 15.

2. For blends containing one or more volume percent ethanol for volatility class A, B, C, or D, the maximum vapor pressure shall not exceed ASTM D4814-16a limits by more than 1.0 psi during the period of September 16 through May 31.

3. For blends containing one or more volume percent ethanol for volatility class E, the maximum vapor pressure shall not exceed ASTM D4814-16a limits by more than 0.5 psi during the period of September 16 through May 31.

DOCUMENTS INCORPORATED BY REFERENCE (2VAC5-425)

Standard Specification for Automotive Spark-Ignition Engine Fuel, ASTM D4814-16a, February 2016, ASTM International, P.O. Box C700, West Conshohocken, PA 19428, www.astm.org

Standard Specification for Denatured Fuel Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine Fuel, ASTM D4806-16a, February 2016, ASTM International, P.O. Box C700, West Conshohocken, PA 19428, www.astm.org