Automotive Fuel Ratings, Certification and Posting, 2053-2065 [2015-32972]

Download as PDF Vol. 81 Thursday, No. 9 January 14, 2016 Part III Federal Trade Commission mstockstill on DSK4VPTVN1PROD with RULES2 16 CFR Part 306 Automotive Fuel Ratings, Certification and Posting; Final Rule VerDate Sep<11>2014 19:09 Jan 13, 2016 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\14JAR2.SGM 14JAR2 2054 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations FEDERAL TRADE COMMISSION 16 CFR Part 306 RIN 3084–AB39 Automotive Fuel Ratings, Certification and Posting Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’). ACTION: Final rule. AGENCY: The Commission issues final amendments to its Rule for Automotive Fuel Ratings, Certification and Posting (‘‘Fuel Rating Rule’’ or ‘‘Rule’’) by adopting rating, certification, and labeling requirements for certain ethanol-gasoline blends. The amendments further the Rule’s goal of helping purchasers identify the correct fuel for their vehicles. DATES: The amendments published in this document will become effective July 14, 2016. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of July 14, 2016. ADDRESSES: Relevant portions of the proceeding, including this document, are available at www.ftc.gov. FOR FURTHER INFORMATION CONTACT: R. Michael Waller, (202) 326–2902, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: SUMMARY: I. Introduction On April 4, 2014, the Commission published a Notice of Proposed Rulemaking (‘‘2014 NPRM’’) requesting comments on: (1) New rating, certification, and labeling requirements for gasoline blends with more than 10 percent ethanol (‘‘Ethanol Blends’’); and (2) an alternative method to determine the fuel rating of gasoline (‘‘octane rating’’).1 After considering the comments received in response as well as Environmental Protection Agency (‘‘EPA’’) decisions related to ethanol blends, the Commission now issues final ethanol fuel amendments.2 mstockstill on DSK4VPTVN1PROD with RULES2 1 Federal Trade Commission: Automotive Fuel Ratings, Certification and Posting: Notice of Proposed Rulemaking, 79 FR 18850 (Apr. 4, 2014). 2 EPA’s decisions permitted the use of ethanol blends between 10 to 15 percent concentration (‘‘E15’’) for 2001 and newer conventional vehicles. In 2010, the EPA approved E15 for 2007 and newer conventional vehicles. Environmental Protection Agency: Partial Grant and Partial Denial of Clean Air Act Waiver Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent; Decision of Administrator (‘‘EPA Waiver Decision I’’), 75 FR 68094 (Nov. 4, 2010). Then, it expanded its approval to 2001 and VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 As explained below, the final amendments require that entities rate and certify all ethanol fuels to provide useful information to consumers about ethanol concentration and suitability for their cars and engines. Responding to the comments, the final amendments provide greater flexibility for businesses to comply with the ethanol labeling requirements, and do not adopt the alternative octane rating method proposed in the 2014 NPRM. This document first provides background on the Fuel Rating Rule. It then summarizes comments in response to the 2014 NPRM regarding ethanol blend ratings and labeling as well as octane rating testing. Finally, it provides the Commission’s analysis and final rule. II. Background A. The Fuel Rating Rule The Commission first promulgated the Fuel Rating Rule, 16 CFR part 306 (then titled the ‘‘Octane Certification and Posting Rule’’), in 1979 pursuant to the Petroleum Marketing Practices Act (‘‘PMPA’’), 15 U.S.C. 2801 et seq.3 The Rule originally applied only to gasoline. The Energy Policy Act of 1992 amended Title II of the PMPA to extend the Commission’s authority, requiring it to determine automotive fuel certification and posting requirements for all liquid automotive fuels, including ethanolgasoline blends.4 Pursuant to these amendments, the Commission expanded the Rule to cover ‘‘alternative liquid fuels’’ in 1993, including ethanol blends below 70 percent concentration.5 newer vehicles based on additional test data. Environmental Protection Agency, Partial Grant of Clean Air Act Waiver Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the Administrator (‘‘EPA Waiver Decision II’’), 76 FR 4662 (Jan. 26, 2011). EPA soon thereafter promulgated complementary regulations providing ‘‘labeling requirements for fuel pumps that dispense E15 to alert consumers to the appropriate and lawful use of the fuel.’’ Environmental Protection Agency: Regulation to Mitigate the Misfueling of Vehicles and Engines with Gasoline Containing Greater than Ten Volume Percent Ethanol and Modifications to the Reformulated and Conventional Gasoline Programs; Final Rule (‘‘EPA Final Rule to Mitigate Misfueling’’), 76 FR 44406 (July 25, 2011). 3 Federal Trade Commission: Automotive Fuel Ratings, Certification and Posting: Final Rule, 44 FR 19160 (Mar. 30, 1979). 4 Section 1501(b) of Public Law 102–486, 106 Stat. 2776, 2996 (codified at 15 U.S.C. 2821(6), (17)– (18)). The statute defines the term ‘‘automotive fuel’’ to mean liquid fuel of a type distributed for use in any motor vehicle. Section 1501(b) of Public Law 102–486, 106 Stat. 2776, 2996–7 (codified at 15 U.S.C. 2821(6)). 5 Federal Trade Commission: Automotive Fuel Ratings, Certification and Posting: Final Rule (‘‘1993 Final Rule’’), 58 FR 41356, 41358 (Aug. 3, 1993). PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 However, the current Rule’s nonexhaustive list of alternative liquid fuels does not expressly include these ethanol blends.6 For covered fuels, the Rule mandates methods for rating and certifying, as well as posting the ratings at the point of sale. For most alternative fuels,7 the rating is ‘‘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’’ (e.g., ‘‘Methanol/Minimum 80% Methanol’’).8 Any covered entity, including a distributor, that transfers a fuel must certify the fuel’s rating to the transferee either by including it in papers accompanying the transfer or by letter.9 The Rule further requires retailers to post this fuel rating by adhering a label to the retail fuel pump and provides precise specifications (e.g., content, size, color, and font) for these labels.10 B. Procedural History In March 2009, as part of a systematic review of the FTC’s rules and guides, the Commission solicited general comments on the Fuel Rating Rule.11 After reviewing those comments, the Commission published a Notice of Proposed Rulemaking in March 2010 (‘‘2010 NPRM’’) proposing three amendments addressing ethanol fuels.12 First, the proposed amendments would have required ratings disclosing an ethanol blend’s ethanol concentration (e.g., 40 percent ethanol), rather than the ‘‘principal component’’ concentration. Second, the proposed amendments would have required retailers to post labels disclosing a blend’s ethanol content by displaying a broad range of 10 to 70 percent ethanol, a narrower range (e.g., 30–40 percent ethanol), or a specific percentage. Finally, the proposed amendments would have required all ethanol fuel labels to disclose ‘‘may harm some vehicles’’ and ‘‘check owner’s manual.’’ In the 2010 NPRM, the Commission explained that ‘‘[t]his additional information should assist consumers in identifying the proper fuel for their vehicles.’’ 13 In April 2011, the Commission published 6 16 CFR 306.0(i)(2). Rule requires rating biodiesel fuels by the percentage of biodiesel or biomass-based diesel in the fuel. 8 16 CFR 306.0(j)(2). 9 16 CFR 306.6. 10 16 CFR 306.10, 306.12. 11 Federal Trade Commission: Automotive Fuel Ratings, Certification and Posting: Request for Public Comments, 74 FR 9054 (Mar. 2, 2009). 12 Federal Trade Commission: Automotive Fuel Ratings, Certification and Posting: Notice of Proposed Rulemaking, 75 FR 12470 (Mar. 16, 2010). 13 2010 NPRM, 75 FR at 12474. 7 The E:\FR\FM\14JAR2.SGM 14JAR2 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations final amendments providing an alternative method of rating gasoline octane and making other minor changes to the Rule.14 At that time, the Commission declined to adopt final ethanol amendments, noting that it needed additional time to consider ethanol labeling in light of comments received in response to the 2010 NPRM and a recent EPA decision permitting the use of certain ethanol blends between 10 and 15 percent concentration (‘‘E15’’) in newer conventional vehicles.15 In April 2014, the Commission published a second NPRM proposing that ethanol blend labels disclose the exact percentage of ethanol, or a percentage rounded to the nearest multiple of ten.16 The proposal also required that the label state ‘‘Use Only in Flex-Fuel Vehicles/May Harm Other Engines.’’ 17 In addition, to prevent consumer confusion and avoid unnecessary burden on industry, the proposed rule exempted EPA-approved E15 (‘‘EPA E15’’) from the Rule’s labeling requirements. Finally, the 2014 NPRM proposed allowing octane ratings determined by infrared spectrophotometry.18 III. Comments in Response to the 2014 NPRM Many comments received in response to the 2014 NPRM supported the need for new labeling and testing methods.19 However, commenters suggested several modifications, including defining gasoline to include E15, an octane label for Ethanol Blends, an alternative label for Ethanol Blends of 51 to 83 percent, and referee testing methods for octane ratings determined through infrared spectrophotometry. A. Proposed Definition of ‘‘Ethanol Blend’’ and Exemption for EPA E15 mstockstill on DSK4VPTVN1PROD with RULES2 The 2014 NPRM proposed including E15 in the definition of ‘‘Ethanol Blend,’’ but not requiring retailers to post a separate FTC fuel rating label for EPA E15.20 The Commission intended its proposal to facilitate coverage of all concentrations of ethanol blends above 10 percent and to help consumers 14 Federal Trade Commission: Automotive Fuel Ratings Certification and Posting: Final Rule, 76 FR 19684 (Apr. 8, 2011). 15 Id. at 19689. 16 2014 NPRM, 79 FR 18850, 18859. 17 Id. at 18857. 18 Id. at 18861. 19 The Commission received 357 comments in response to the 2014 NPRM. These comments are located at: https://www.ftc.gov/policy/publiccomments/initiative-555. 20 See 40 CFR 80.1501; see also 2014 NPRM, 79 FR at 18865. VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 quickly identify ethanol blends at pumps.21 Several commenters, including fuel manufacturers, a state regulator, and an ethanol industry group, urged the FTC to exclude E15 from the definition of Ethanol Blends altogether.22 For example, Tesoro suggested that ‘‘Ethanol Blend’’ be defined as ‘‘a mixture of gasoline and ethanol containing more than 15 percent ethanol’’ and that the definition of ‘‘gasoline’’ include concentrations below 15 percent, i.e., E10 and E15.23 According to Tesoro, these changes would subject E15 to the Rule’s octane labeling and certification requirements for gasoline.24 Moreover, defining E15 as gasoline would exempt E15 from the ethanol blend labeling requirements and prevent an overlap with EPA’s E15 regulations.25 According to Tesoro, ‘‘all E15 is subject to the EPA Misfueling Mitigation rule.’’ 26 Phillips66 agreed and added that all Ethanol Blends below 16 percent are subject to EPA regulations on blendstock and finished gasoline, including ‘‘vapor pressure, sulfur, benzene, etc.’’ 27 It argued that defining gasoline to include E15 would avoid ‘‘confusion and conflict with EPA regulations and requirements.’’ 28 API worried that the 2014 NPRM exemption for EPA E15 ‘‘may allow a supplier to differentiate ‘EPA-approved E15’ from ‘non-EPA-approved E15’ and, for the latter, avoid’’ the EPA’s requirements.29 Thus, it concluded that the FTC Rule should exclude E15 from the definition of Ethanol Blends.30 Finally, the Tennessee Department of Agriculture (‘‘TN Dept. Ag.’’) and the National Conference of Weights and Measures (‘‘NCWM’’) urged the Commission to refer to Ethanol Blends as ‘‘Ethanol Flex Fuel Blends’’ or ‘‘Ethanol Flex Fuel.’’ 31 TN Dept. Ag. 21 79 FR at 18857. Phillips66 comment at 1; Renewable Fuels Association (‘‘RFA’’) comment at 1–2; Tesoro comment Att. 1 at 1–2; American Fuel & Petrochemical Manufacturers (‘‘AFPM’’) comment at 2–3; American Petroleum Institute (‘‘API’’) comment at 2; BP Products North America (‘‘BP Products’’) comment at 1; Chevron comment at 2; Marathon Petroleum Corporation (‘‘Marathon’’) comment at 1–2; Tennessee Department of Agriculture (‘‘TN Dept. Ag.’’) comment at 2–3. 23 Tesoro comment Att. 1 at 1–2; see AFPM comment at 2–3; API comment at 2; BP Products comment at 1; Chevron comment at 2; TN Dept. Ag. comment at 2–3. 24 Tesoro comment Att. 1 at 2. 25 Id. 26 Id. 27 Phillips66 comment at 1. 28 Id. 29 API comment at 2; see also Marathon comment at 2. 30 API comment at 2. 31 TN Dept. Ag. comment at 1–3; NCWM comment at 6. 22 See PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 2055 explained that the relevant ASTM International (‘‘ASTM’’) standard for ethanol fuel blends, ASTM D5798, recognizes ‘‘Ethanol Flex-Fuel’’ as the most standardized term for ‘‘higher level’’ ethanol blends (i.e., blends from 51 to 83 percent volume ethanol).32 Additionally, TN Dept. Ag. explained that the term ‘‘Ethanol Flex Fuel’’ is consistent with NCWM’s definition of ethanol blends.33 B. Octane Rating for Ethanol Blends Although the 2014 NPRM did not propose an octane rating for Ethanol Blends, eight commenters suggested that the Commission require one to prevent misfueling, ensure fuel quality, or bolster ethanol’s competitiveness.34 Two state regulators and ethanol industry groups asserted that, without such a rating, consumers could not choose the EPA E15 appropriate for their vehicle.35 The California Department of Food and Agriculture (‘‘CA Dept. Ag.’’) explained that ‘‘[v]ehicles manufactured after 2001 also have varying octane requirements, and requiring use of the US EPA label alone does not ensure that consumers will purchase a fuel that meets their vehicle’s needs.’’ 36 Automotive manufacturing groups argued for an octane rating for Ethanol Flex Fuels of less than 51 percent ethanol: ‘‘Consumers have come to expect and have a right to know the octane rating of the fuel offered for sale . . . . The correct octane rating for the vehicle is provided in the vehicle owner’s manual and therefore the correlating octane information should be available from the rating on the retail pump.’’ 37 These commenters added, however, that ‘‘at this point an octane AKI posting for Ethanol Flex Fuel (E51– 83%) as defined by ASTM International is not yet practically feasible given variable composition.’’ 38 The NADA, an automobile dealers group, suggested that retailers display octane ratings for 32 TN Dept. Ag. comment at 1–2 (referring to ASTM International D5798 Standard Specification for Ethanol Fuel Blends for Flexible-Fuel Automotive Spark-Ignition Engines). 33 Id. at 2. 34 Tesoro comment at 1, Att. 1 at 5–6; Alliance of Automobile Manufacturers and Association of Global Automakers (‘‘AAM/AGA’’) comment at 4– 5; National Automobile Dealers Association (‘‘NADA’’) comment at 3; American Coalition for Ethanol (‘‘ACE’’) comment at 2; TN Dept. Ag. comment at 1; California Department of Food and Agriculture (CA Dept. Ag.) comment; Growth Energy comment at 2; Davis comment. 35 ACE comment at 2; Growth Energy comment at 2; TN Dept. Ag. comment at 1; CA Dept. Ag. comment. 36 CA Dept. Ag. comment. 37 AAM/AGA comment at 4. 38 Id. at 4–5. E:\FR\FM\14JAR2.SGM 14JAR2 2056 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations all automotive fuels: ‘‘[c]onsumers often and wisely consider a fuel’s octane rating when making appropriate vehicle fueling decisions, whether or not an ethanol blend is involved.’’ 39 Other commenters argued that an octane rating is important for communicating ethanol’s benefits. Ethanol proponents Growth Energy and ACE noted that ethanol’s high octane rating represents an important advantage for ethanol.40 ACE explained that ‘‘[c]lean and high octane is one of ethanol’s greatest competitive advantages in the marketplace, and while nothing in the rule would preclude a marketer from posting the octane rating of E15, ACE believes this proposal gives oil companies the power to prevent their branded marketers from displaying the higher octane rating of E15.’’ 41 The TN Dept. Ag. added that ‘‘[r]equiring the [octane rating] as the legal Automotive Fuel Rating for E15 will benefit the consumer and both the ethanol and petroleum industries by maintaining a level playing field for marketing the various grades of gasoline and gasoline-ethanol blends.’’ 42 Tesoro and automaker groups argued for certification and display of octane rating to ensure the quality of the gasoline used for Ethanol Flex Fuels.43 AAM/AGA explained that, ‘‘[an] octane rating label will also support compliance/enforcement to be sure the correct octane tracks with the blend [Ethanol Flex Fuel], and is not inappropriately low due to lower octane BOB ([Gasoline] Blendstock for Oxygenate Blending) used’’ in the blending.44 C. Proposed Ethanol Blend Pump Labeling Commenters disagreed about the proposed fuel pump label for Ethanol Blends. Some supported the Commission’s proposal and others urged more detail and precision in the label disclosure, while still others sought less detail and precision. Finally, many commenters argued that there is no label that would be sufficient to prevent misfueling and, therefore, opposed the Commission’s proposal. mstockstill on DSK4VPTVN1PROD with RULES2 1. Required Label Statement Commenters, including petroleum retailers and industry groups, auto manufacturing groups, ethanol producer 39 NADA comment at 3. Energy comment at 2; ACE comment at 40 Growth 2. 41 ACE comment at 2. Dept. Ag. comment at 2. 43 Tesoro comment at 1, Att. 1 at 5–6; AAM/AGA comment at 4–5. 44 AAM/AGA comment at 4–5. 42 TN VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 groups, and a state regulator, all supported inclusion of ‘‘Use Only in Flex-Fuel Vehicles’’ on the label.45 Few commenters, however, supported the ‘‘May Harm Other Engines’’ language without change.46 Ethanol producer groups argued ‘‘May Harm Other Engines’’ is scientifically unsubstantiated and unduly harmful to the ethanol industry.47 For example, RFA stated that it is ‘‘not aware of any credible evidence showing that misfueling has been a problem at flex fuel dispensers that simply advise the consumer’’ that the fuel is for flex-fuel vehicles only.48 IRFA reported that there have been no reports of misfueling, and ACE stated ‘‘that there has been little, if any, harm or damage reported’’ from misfueling.49 According to RFA, ‘‘the proposed language . . . does not appear to be based on scientific evidence and would undoubtedly deter some [flex-fuel vehicle] drivers from purchasing the fuel[.]’’ 50 IRFA added, ‘‘[n]o scientific evidence exists to prove that any vehicles may be harmed [by flex-fuel blends].’’ 51 Ethanol groups also described the phrase as unfair because labels for other fuels (e.g., diesel) do not include this language.52 Growth Energy added that the phrase is vague, does nothing to prevent misfueling, and ‘‘further confuses the consumer.’’ 53 It suggested an alternative phrase: ‘‘Attention . . . Not Approved for Other Engines.’’ 54 Conversely, some commenters viewed ‘‘May Harm Other Engines’’ as too weak. Citing concerns such as misfueling, automobile performance, warranty 45 RFA comment at 5; AAM/AGA comment at 2; Iowa Renewable Fuels Association (‘‘IRFA’’) comment at 2; AAM/AGA comment at 2; ACE comment Att. (May 20, 2010 comment at 3); Petroleum Marketers and Convenience Stores of Iowa (‘‘PMCSI’’) comment; Outdoor Power and Equipment Institute/National Marine Manufacturers Association (‘‘OPEI/NMMA’’) comment at 14; CA Dept. Ag. comment; Growth Energy comment at 1; Marathon comment at 3; Davis comment. Phillips66, Tesoro, AFPM, API, and NCWM suggest ‘‘For Use in Flexible Fuel Vehicles (FFV) Only.’’ Phillips66 comment at 2; Tesoro comment Att. 1 at 3; AFPM comment at 4; API comment at 3; NCWM comment at 4; BP Products comment at 1; Chevron comment at 1. 46 See Center for Auto Safety (‘‘CAS’’) comment at 1; CA Dept. Ag. comment at ¶ 2. 47 RFA comment at 5; see also IRFA comment at 2; ACE comment at 1; Growth Energy comment at 1. These groups reiterated concerns raised in their comments to the March 16, 2010 NPRM, available at https://www.ftc.gov/policy/public-comments/ initiative-335. 48 RFA comment at 5. 49 IRFA comment at 1; ACE comment at 2. 50 RFA comment at 5. 51 IRFA comment at 2. 52 RFA comment at 5–6; IRFA comment at 2; ACE comment at 1. 53 Growth Energy comment at 1. 54 Id. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 coverage, damage to small engines, and consistency with NCWM’s label, the NCWM, gasoline manufacturers and retailers, automobile manufacturers, a regulator, and two individual commenters suggested adding ‘‘Check Owner’s Manual’’ or ‘‘Consult Vehicle Owner’s Manual for Fuel Recommendations.’’ 55 AFPM and other commenters explained that NCWM’s suggested label for ethanol blends includes the phrase ‘‘Check Owner’s Manual.’’ 56 Retailers expressed concern about liability under laws that prohibit misfueling and suggested that the label contain an ‘‘advisory word’’ such as ‘‘Attention.’’ 57 Similarly, other commenters proposed adding ‘‘Warning’’ or ‘‘Caution’’ to the label.58 Commenters also highlighted harm to engines from misfueling and advocated for: ‘‘Do Not Use in Other Engines May Cause Harm;’’ 59 and ‘‘Don’t Use in other Vehicles, Boats, or Gasoline Powered Engine. It May Cause Damages;’’ 60 among others.61 AAM/AGA added that ‘‘ ‘May Harm . . .’ does not convey the intended absolute prohibition on its use for nonflex-fuel equipment, whereas ‘Do Not Use . . .’ is a clear, simple instruction.’’ 62 AAM/AGA further expressed ‘‘strong concerns about the risks for consumers from misfueling vehicles with ethanol blends,’’ including mechanical damage on engine parts and the fuel pump as well as improper illumination of the malfunction indicator light (‘‘MIL’’) that will reduce consumer confidence in this 55 Phillips66 comment at 2; Tesoro comment Att. 1; AFPM comment at 3; Chevron comment at 1; BP Products at 1; API comment at 3; AAM/AGA comment at 3; PMCSI comment; NCWM comment at 6; OPEI/NMMA comment at 19; TN Dept. Ag. comment at 2; McComas comment; Lori Jacobson comment. 56 AFPM comment at 4; Tesoro comment Att. 1; Phillips66 comment at 2; NCWM comment at 4, 6. 57 National Association of Convenience Stores/ Society of Independent Gasoline Marketers of America (‘‘NACS/SIGMA’’) comment at 3–4. 58 AAM/AGA comment at 3; OPEI/NMMA comment at 19. 59 OPEI/NMMA comment at 14; AAM/AGA comment at 2–3; see NADA comment at 2 (suggests replacing ‘‘May Harm Other Engines’’ with ‘‘Do Not Use in Other Engines’’). 60 Mississippi State Chemical Laboratory (‘‘MSU Chem. Lab.’’) comment. 61 Pipkorn comment (‘‘I think the label should include a large print warning on the ethanol fuel pumps that ethanol fuels will cause harm, damage and possibly destroy your engine and fuel systems!’’); Scally comment (‘‘Since ethanol is known to damage engines, why don’t you just say that at the pumps? That would be much more understandable for the general public.’’); Seldon comment (‘‘Any labels for gasoline containing E–15 can only honestly say ‘POISON for gasoline engines’—DO NOT USE!’’); Haines comment (‘‘Do Not Use—May Cause Engine Damage.’’). 62 AAM/AGA comment at 3. E:\FR\FM\14JAR2.SGM 14JAR2 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations diagnostic tool.63 AAM/AGA included letters from 12 automakers about the potential for damage to automobiles from ethanol blends above 10 percent ethanol. In these letters, the automakers expressed concern about vehicle damage not covered by vehicle warranties and reduced fuel efficiency.64 Marathon argued for the word ‘‘damage’’ in lieu of ‘‘harm,’’ which it considers an insufficient warning to owners of small engines, motorcycles, and other non-flex fuel vehicles.65 Groups representing motorcycle, marine, and other small engine manufacturers and users also cited evidence of engine damage from ethanol blends.66 Finally, some commenters proposed changes to the color of the labels and size of the fonts. For example, AAM/ AGA recommended increasing the font sizes of the language on the labels to ‘‘ease reading them.’’ 67 API and supporting commenters recommended a larger label, matching the size of the EPA’s E15 label.68 NCWM proposed larger type than the 2014 NPRM and greater flexibility for retailers in the placement of particular components of the label on fuel pumps as well as colors and font styles.69 2. Ethanol Percentage Disclosure Three commenters supported the FTC’s proposed ethanol percentage label disclosures.70 Seven called for more precise disclosures.71 Thirteen urged the FTC to permit less precise disclosures, such as a single label for 51 to 83 percent ethanol blends.72 Commenters supporting more precise disclosures argued for 5 percent increments, instead of the 10 percent increments in the proposal. They claimed that the narrower range would allow retailers to use commercially 63 Id. at 5. at 6–7 and attachments. 65 Marathon comment at 3. 66 OPEI/NMMA comment at 3–7; American Motorcyclist Association (‘‘AMA’’) comment at 1– 2. Individual commenters also expressed support for AMA’s comment. 67 AAM/AGA comment at 3. 68 API comment at 4; see also Phillips66 comment at 1; Chevron comment at 1; BP Products comment at 1. 69 NCWM comment at 6. 70 CAS comment at 1; PMCSI comment; Davis comment. 71 AAM/AGA comment at 2; NADA comment at 2; OPEI/NMMA comment at 21; Berendts comment; Brink comment; Miller comment; Theisen comment. 72 Phillips66 comment at 2; RFA comment at 4; Tesoro comment Att. 1 at 3–4; API comment at 3; ACE comment at 2; NCWM comment at 3–4; TN Dept. Ag. comment at 3; CA Dept. Ag. comment; NACS/SIGMA comment at 1–3; BP Products comment at 1; Chevron comment at 2; Marathon comment at 2. mstockstill on DSK4VPTVN1PROD with RULES2 64 Id. VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 available ethanol blend dispensers without confusing or deceiving consumers.73 AAM/AGA added that ‘‘[u]sing units of 5 avoids the potential perception that FTC’s proposed units of 10 somehow inhibit the ability to market an E25 fuel [albeit the proposed regulatory language in the NPRM allows the option for labeling the exact % ethanol content in proposed Sec. 306(12)(a)(4)(A)].’’ 74 Most commenters who proposed less precise disclosures 75 generally supported the National Conference for Weights and Measures (‘‘NCWM’’) proposal to allow businesses to round the ethanol content to the nearest ten percent for ethanol blends below 51 percent ethanol (‘‘Mid-level Blends’’) and post a single label for blends from 51 to 83 percent (‘‘High-level Blends’’).76 These commenters explained that engines will not coldstart during winter months if the ethanol concentration is too high. As a result, High-level Blends contain a changing ratio of ethanol to gasoline during colder months to ensure performance and compliance with ASTM International (‘‘ASTM’’) specifications.77 Commenters worried that manufacturers and sellers of Highlevel Blends would, therefore, incur high costs resulting from constantly changing labels and that these changes would cause customer confusion. For example, the Renewable Fuels Association (‘‘RFA’’) stated that ‘‘[a] requirement to change the label every time the ethanol content fluctuates would be burdensome, costly, and confusing;’’ moreover, simultaneously posting ‘‘multiple labels for every possible variant of ethanol content in the ‘ethanol flex fuel’ offered at the pump . . . would only confuse 73 AAM/AGA comment at 2; OPEI/NMMA comment at 21. Other commenters argue that more precise disclosures would be ‘‘safer for consumer use’’ or provided no explanation. See Theissen comment; Berendts comment; Brink comment; Miller comment. 74 AAM/AGA comment at 2 (brackets included in original text). 75 Phillips66 comment at 2; RFA comment at 4; Tesoro comment Att. 1 at 3–4; API comment at 3; ACE comment at 2; NCWM comment at 3–4; TN Dept. Ag. comment at 3; CA Dept. Ag. comment; NACS/SIGMA comment at 1–3; BP Products comment at 1; Chevron comment at 2; Marathon comment at 2. 76 Citing the high cost of changing labels, NACS/ SIGMA argued for a single label for ethanol blends below 51 percent and another label for blends between 51 and 83 percent. NACS/SIGMA comment at 1–3. 77 According to Phillips66, ‘‘[t]he ASTM specification varies seasonally to ensure continued vehicle performance with changing ambient temperatures. In order to meet the seasonal specification changes, the ethanol volume is varied.’’ Phillips66 comment at 2. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 2057 consumers about the actual ethanol content of the fuel.’’ 78 TN Dept. Ag., which supported rounding ethanol content to the nearest 10 percent for Mid-level Blends, argued that some retailers will choose not to sell ethanol or blend lower amounts of ethanol to avoid the burden of re-labeling Highlevel Blends seasonally.79 They further explained that selling only lower blends would be counter to the intent of the Energy Independence and Security Act of 2007 80 to increase the availability of alternative fuels. Convenience store groups and fuel marketers also urged less precision, advocating for a single label for Midlevel Blends.81 According to them, many retailers cannot know the ethanol content within 10 percent because they do not blend their own fuels and mix fuel deliveries with preexisting fuel in their storage tanks. They explained, ‘‘[e]ven if retailers are in a position to make this determination, requiring them to constantly shift the labels on their blender pumps (E20 one day, E40 another day, etc.) would be exceedingly burdensome and have little offsetting benefit to the consumer.’’ 82 3. Opposition to Additional Labeling The American Motorcyclist Association (‘‘AMA’’) and 72 individual commenters argued that the proposed label would be ineffective. According to AMA, ‘‘another label on a blender pump that already has many labels will not be sufficient to avoid misfueling and could be easily overlooked.’’ 83 Instead, AMA recommends ‘‘physical barriers in the fueling nozzle/receptacle, as was provided when the nation went from leaded to unleaded fuel.’’ 84 D. Infrared Testing Method for Octane Rating Commenters generally supported allowing infrared spectrophotometry (‘‘IR Testing’’) to establish an octane rating, citing reduced production and enforcement costs.85 Specifically, the Commission’s proposal would have allowed octane ratings from infrared spectrophotometers that are correlated with ASTM D2699 and D2700 and 78 RFA comment at 4; see also AFPM comment at 3; Tesoro comment Att. 1 at 2–3. 79 TN Dept. Ag. comment at 3. 80 Pub. L. 110–140, 121 Stat. 1492 (2007). 81 NACS/SIGMA comment at 2–3. 82 Id. 83 AMA comment at 3. 84 Id. 85 Phillips66 comment at 1; Lima comment at 1; Tesoro comment Att. 1 at 4–5; CAS comment at 2; AFPM comment at 5; AAM/AGA comment at 9; API comment at 4–5; Chevron comment at 1; MSU Chem. Lab. comment; Marathon comment at 4; Davis comment. E:\FR\FM\14JAR2.SGM 14JAR2 2058 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES2 conform to ASTM D6122 (‘‘Standard Practice for the Validation of the Performance of Multivariate Infrared Spectrophotometers’’).86 In support, some commenters noted that gasoline producers and regulators already use such spectrophotometric testing.87 Others suggested that the Rule permit additional techniques, including Raman spectrophotometry.88 However, even these commenters argued that should the Rule provide for IR Testing, it must identify ASTM D2699 and D2700 as ‘‘referee’’ tests in case of a dispute over the reliability of testing results.89 Some of these commenters questioned the reliability of IR Testing and noted that, unlike D2699 and D2700, IR Testing identifies the components of fuel, not its actual performance. AFPM, a petrochemical manufacturers group, explained: ‘‘All correlative test methods such as infrared and others must relate the results obtained (i.e., spectra inferred octane) to the engine test methods as required in ASTM D4814 for gasoline certification.’’ 90 AFPM concludes that the purpose of correlative methods ‘‘is only to predict the standard method results [from ASTM D2699 and D2700],’’ which have been used to classify gasoline for ‘‘over 60 years.’’ 91 It adds that ‘‘[r]eplacing this combustion-based technology testing with a chemical make-up test technology [such as infrared spectrophotometry] may or may not be fully functional or directly applicable to today’s fuels or automobile needs.’’ 92 BP Products and an individual commenter urged the FTC not to include these methods until ASTM endorses correlative methods specifically for octane rating.93 86 2014 NPRM, 79 FR at 18865. The Commission received 22 comments on this issue. 87 TN Dept. Ag. comment at 2; see also Gibbs comment. 88 Lima comment at 2; Tesoro comment Att. 1 at 4–5; AFPM comment at 5; Chevron comment at 1; Travers comment; Botelho comment; Demsey comment; Parsley comment; McDaniel comment; Smith comment. 89 Phillips66 comment at 1; Tesoro comment Att. 1 at 4–5; AFPM comment at 5; AAM/AGA comment at 9; API comment at 4–5; Chevron comment at 1– 2; TN Dept. Ag. comment at 2; Marathon comment at 4; Davis comment. Many commenters pointed out that the 2014 NPRM cited outdated ASTM standards and urged the FTC to adopt the most recent standards. RFA comment at 1; API comment at 5; BP Products comment at 1; NCWM comment at 4; Chevron comment at 1; TN Dept. Ag. comment at 2; Gibbs comment. 90 AFPM comment at 6; see also Gibbs comment. 91 AFPM comment at 6. 92 Id.; see Tesoro comment Att.1 at 4–5; Gibbs comment. 93 BP Products comment at 1; Gibbs comment. VerDate Sep<11>2014 19:09 Jan 13, 2016 Jkt 238001 IV. Final Rule Amendments After considering the record, the Commission now issues final Rule amendments regarding the rating, certification, and labeling of ethanol fuels. These amendments include modifications in response to the comments. Specifically, the final amendments: (1) establish specific rating and certification requirements for Ethanol Blends with ethanol content above 10 percent to a maximum of 83 percent (‘‘Ethanol Flex Fuels’’); (2) modify the ethanol fuel labeling to permit a single pump label for Highlevel Blends; and (3) do not adopt infrared spectrophotometry as a method to determine octane rating for gasoline. A. Definitions and Exemption for EPA E15 To establish requirements for rating, certifying, and labeling gasoline-ethanol blends, the 2014 NPRM proposed defining ‘‘Ethanol Blends’’ as ‘‘a mixture of gasoline and ethanol containing more than 10 percent ethanol.’’ 94 The NPRM, however, exempted EPA E15 from the Rule’s labeling requirements, because it is subject to EPA labeling requirements. The final amendments retain this definition and exemption, but replace the proposed term ‘‘Ethanol Blends’’ with ‘‘Ethanol Flex Fuels.’’ Though some commenters agreed that E15 should be exempt from the Rule’s ethanol labeling, they urged the Commission to require an octane rating label for E15. Specifically, they suggested that the Commission include E15 in the Rule’s definition of gasoline, which currently includes gasolineethanol blends of up to 10 percent ethanol. Doing so would require E15 pumps to have octane rating labels. These ratings, according to automotive manufacturer and dealer groups, state regulators, and ethanol industry groups, would help consumers choose fuels appropriate for their vehicles, bolster ethanol’s competitiveness as a highoctane fuel, and ensure that Ethanol Flex Fuels are composed of appropriate quality gasoline. The Commission has not adopted these suggestions. First, as discussed in the 2010 NPRM and the Commission’s 1993 rulemaking, an octane rating likely would not provide useful information to consumers and may deceive them about the suitability of Ethanol Flex Fuels for their vehicles.95 Ethanol naturally boosts the octane rating in Ethanol Flex Fuels, and consumers may mistakenly 94 2014 NPRM, 79 FR at 18865. NPRM, 79 FR at 18857; 1993 Final Rule, 58 FR at 41361. 95 2010 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 equate octane with fuel quality.96 Thus, this higher octane rating may mislead consumers to believe that such fuels are better for conventional gasoline engines. Second, according to automakers, using E15 may void vehicle warranties regardless of model year, except for certain vehicles manufactured since MY2012 as ‘‘E15 capable.’’ 97 Third, by exempting EPA E15 from the labeling requirements, but not from the other Rule requirements, e.g., the certification provisions, the Rule ensures distributors and retailers have accurate ethanol concentration information, but does not burden retailers or confuse consumers with two separate E15 pump labels. Finally, using the term ‘‘Ethanol Flex Fuels’’ is consistent with NCWM’s and ASTM’s use of ‘‘Ethanol Flex Fuels’’ for ethanol blends up to 83 percent.98 Harmonizing these terms should alleviate consumer confusion. Including concentrations above 83 percent, however, would be inappropriate because automakers have not certified such blends for flex fuel vehicles or conventional automobiles, and Section 211(f) of the Clean Air Act prohibits their use as an automotive fuel.99 If this changes, the Commission will consider appropriate amendments. B. Rating and Certification The final rule contains amendments related to rating and certification. First, consistent with the 2014 NPRM, the final amendments require an ethanol content rating for all Ethanol Flex Fuels. Previously, the Rule rated ethanol blends with the common name of the fuel and the percentage of the principal component of the fuel (e.g., E85/ ‘‘Minimum 70% Ethanol’’). As a result, the Rule required rating ethanol blends below 50 percent ethanol concentration with the fuel’s gasoline concentration, not its ethanol concentration (e.g., E45/ ‘‘Minimum 55% Gasoline’’). Generally, ethanol contains less energy per gallon than petroleum-derived gasoline.100 Consequently, the higher the ethanol concentration, the lower the fuel 96 1993 Final Rule, 58 FR at 41361. AAM/AGA comment at 5, 7. If EPA E15 and E15 capable vehicles become prevalent, the Commission may consider whether retailers must post an octane label for EPA E15. 98 TN Dept. Ag. comment at 2–3; NCWM comment at 5; see also ASTM D5798. 99 42 U.S.C. 7545(f). 100 See Hyde comment to 2010 NPRM; AMA comment at 7 & atts. Honda Letter at 2, Chrysler Letter at 2, BMW Letter at 2, & GM Letter at 2; Department of Energy, National Renewable Energy Laboratory, Effects of Intermediate Ethanol Blends on Legacy Vehicles and Small Non-Road Engines, Report 1—Updated study, at xvii. Golden, Colorado. February 2009. Available at https://energy.gov/eere/ bioenergy/downloads/effects-intermediate-ethanolblends-legacy-vehicles-and-small-non-road. 97 See E:\FR\FM\14JAR2.SGM 14JAR2 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations economy. Therefore, by disclosing the ethanol concentration, the label does not incorrectly convey that the fuel has the same fuel economy as gasoline. No commenter opposed this change. Second, the Commission adopts the 2014 NPRM proposal to allow transferors to certify fuel content through a letter to the transferee. For most other alternative fuels, a certification letter remains valid if a transferred fuel has the same or a higher concentration of the principal fuel component because an increase in concentration will not trigger label changes. In contrast, an increase or decrease in the concentration for Ethanol Flex Fuels may trigger new disclosures by changing the ethanol concentration of the fuel. For example, if a fuel’s ethanol concentration increased from 26 percent to 38 percent, the label, as discussed below, must disclose a higher concentration level. Therefore, a certification letter will only remain valid as long as the transferred fuel contains the same percentage of ethanol as previous fuel transfers covered by the letter. No commenter objected to this proposal.101 C. Labeling As explained below, the final amendments adopt the proposed ‘‘Use Only in Flex-Fuel Vehicles/May Harm Other Engines’’ language, but modify the ethanol percentage disclosures proposed in the 2014 NPRM. Specifically, retailers must post labels with exact ethanol concentrations or round to the nearest multiple of 10 for Mid-level Blends. For High-level Blends, however, they may post the exact concentration, round to the nearest multiple of 10, or label the fuel as ‘‘51% to 83% Ethanol.’’ mstockstill on DSK4VPTVN1PROD with RULES2 1. Required Label Statement As proposed in the 2014 NPRM, the final rule requires that ethanol labels disclose ‘‘Use Only in Flex-Fuel Vehicles/May Harm Other Engines,’’ despite objections both that ‘‘May Harm Other Engines’’ is too narrow and that it is overbroad. No commenters opposed the proposed ‘‘Use Only in Flex-Fuel Vehicles.’’ 102 101 Tesoro suggested that the FTC consider requiring certification of the octane rating for gasoline blendstock intended for blending with oxygenates, such as ethanol. Tesoro comment Att. 1 at 5–6. The Rule, however, does not require an octane rating for ethanol blends above 10 percent, and therefore will not require a certification for the gasoline used in Ethanol Flex Fuels. 102 As discussed in Section III.C.3. supra, some commenters recommended physical barriers between gasoline and Ethanol Flex Fuel nozzles or pumps to prevent misfueling. However, the PMPA does not authorize the FTC to mandate such VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 The Commission reaches the same conclusion as in the 2014 NPRM— objections to the proposed text are unconvincing and not supported by the record.103 First, there are significant risks, including engine damage and legal liability, associated with misfueling. The record demonstrates that Ethanol Flex Fuels may cause engine malfunction, engine damage, damage to the vehicle’s emissions system, or other problems in conventional automobiles Model Year (‘‘MY’’) 2000 or older, motorcycles, small engines, and non-road engines, including marine engines.104 The EPA permits E15 use only in MY2001 or newer automobiles 105 because it determined that Ethanol Flex Fuels may damage emissions systems and engine components of other engines.106 Moreover, AAM/AGA submitted letters from 12 automakers stating that E15 may also harm MY2001 or newer automobiles.107 These automakers also expressed concern that damage from ethanol may not be covered by warranty.108 Second, ‘‘May Harm Other Engines’’ is not confusing. By stating ‘‘Use Only In Flex-Fuel Vehicles’’ and ‘‘May Harm Other Engines,’’ the label clearly and accurately explains: (1) The fuel’s suitability for consumers’ cars and (2) that misfueling risks harm to non-flexfuel engines, but not that it will necessarily harm all such engines. Moreover, because the disclosure clearly distinguishes between flex-fuel vehicles and ‘‘other’’ (i.e., non-flex fuel) engines, it should not cause flex-fuel vehicle owners to fear that use of ethanol blends would harm their engines. Third, the Commission disagrees that the disclosures are unfair because they apply only to ethanol blends. Ethanol blends present a different challenge than other automotive fuels. Specifically, most fuels present consumers with a binary choice (e.g., engines either operate on diesel fuel or not). In contrast, when choosing a gasoline-ethanol blend, consumers must barriers. Thus, the Commission does not analyze this recommendation further. 103 2014 NPRM, 79 FR at 18858–59. 104 Id.; see discussion of comments from gasoline manufacturers and retailers, automobile manufacturers, and other similar comments in Section III.C.1. supra. 105 EPA Waiver Decision II, 76 FR at 4662. 106 EPA Waiver Decision I, 75 FR at 68097–98, 68103; see also EPA Final Rule to Mitigate Misfueling, 76 FR at 44414–15, 44439. 107 AAM/AGA comment at 7 and Atts. The automakers included Chrysler, Ford, GM, Mercedes-Benz, Honda, Mazda, Toyota, Nissan, Volkswagen, Volvo, BMW, Hyundai, and Kia Motors. 108 Id. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 2059 determine the appropriate ethanol concentration because different makes and models of gasoline-powered engines operate on differing ranges of ethanol concentration. For example, ethanol blends up to 10% ethanol concentration (i.e., E10) are appropriate for almost all gasoline-powered automotive engines, but E15 may only be appropriate for MY2001 or newer automobiles and Flex-Fuel Vehicles. Furthermore, higher blends (e.g., E20, E30, or E85) are only appropriate for Flex-Fuel Vehicles. Accordingly, the challenge of choosing the appropriate ethanol concentration is more likely to lead to misfueling than the binary choice between a gasolineethanol blend and another automotive fuel, such as diesel. A label, therefore, that delineates between different blends (e.g., E20, E30, or E85) is appropriate for ethanol, but unnecessary for other fuels. As courts have repeatedly held, agencies may limit rules to those areas where they have observed a problem.109 Similarly, agencies need not take an allor-nothing approach to regulation but may proceed incrementally.110 Fourth, the Commission disagrees with the argument that the disclosures need additional or different language, such as ‘‘Warning,’’ ‘‘Check Owner’s Manual,’’ or more information about potential harm from misfueling. The label’s orange color and placement on the fuel pump should sufficiently attract consumer’s attention, making ‘‘Warning’’ or similar language unnecessary. Moreover, when displayed together, the phrases ‘‘Use Only in FlexFuel Vehicles’’ and ‘‘May Harm Other Engines’’ simply and unambiguously inform consumers that they can use ethanol blends in their flex-fuel vehicles and does not require the extra step of consulting an owner’s manual. Finally, as explained in the 2014 NPRM, the disclosures fall squarely within the Commission’s statutory authority under the PMPA to prescribe labels disclosing fuel ratings.111 2. Ethanol Disclosure The final rule adopts tiered labeling for Ethanol Flex Fuels because this 109 See, e.g., Pharm. Research and Mfrs. of Am. v. FTC, 790 F.3d 198, 206 (D.C. Cir. 2015); Illinois Commercial Fishing Ass’n v. Salazar, 867 F.Supp.2d 108, 118–19 (D.D.C. 2012) (upholding rule banning commercial fishing but allowing recreational fishing, where commercial fishing posed the greater risk to endangered fish.). 110 Investment Co. Inst. v. CFTC, 891 F. Supp. 2d 162, 187 (D.D.C. 2012) (‘‘[A]gencies, like legislatures, do not generally resolve massive problems in one fell regulatory swoop.’’) (quotation omitted); City of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989) (‘‘[A]gencies have great discretion to treat a problem partially.’’). 111 2014 NPRM, 79 FR at 18860–61. E:\FR\FM\14JAR2.SGM 14JAR2 2060 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES2 approach provides consumers with the information needed to choose appropriate fuels without placing an undue burden on retailers. First, for Mid-level Blends (ethanol concentrations above 10 percent, but no greater than 50 percent), retailers may post the exact percentage or round to the nearest multiple of 10 (e.g., ‘‘40% Ethanol’’).112 Second, for High-level Blends (concentrations above 50 percent, but no greater than 83 percent), retailers may post the exact percentage of ethanol concentration, round to the nearest multiple of 10, or indicate that the fuel contains ‘‘51% to 83% Ethanol.’’ 113 For Mid-level Blends, the consumer benefits from more precise labels outweigh the burden on retailers. Requiring more precise disclosures provides flexible-fuel vehicle owners with meaningful information about the fuel’s suitability for their vehicles without the risk of incorrectly conveying that the fuel has the same fuel economy as gasoline.114 Thus, the precision helps them make informed choices about Ethanol Flex Fuels. The Rule, furthermore, mitigates the burden of labeling by permitting rounding of ethanol concentration, which allows retailers to alter their blends by small percentages without changing labels. In contrast, the consumer benefits from more precise labeling of High-level Blends do not outweigh the increased burden to retailers. Unlike Mid-level Blends, High-level Blends’ performance depends on weather conditions. As a result, retailers and producers must change the ethanol concentration in High-level Blends to maintain performance in changing weather conditions and comply with ASTM D5798’s standards for vapor pressure.115 To do so, producers may frequently change blends with varying ethanol concentrations.116 When retailers place a newer blend in their tanks, it mixes with fuel of different ethanol concentration from prior deliveries. As a result, retailers may be unable to determine a concentration range more precise than 51 to 83 percent.117 More precise labeling, therefore, would 112 For example, retailers can label fuels at 25 and 34 percent concentrations as 30% Ethanol. 113 The label states ‘‘51% to 83% Ethanol,’’ even though High-level Blends include concentrations about 50 percent. An ‘‘Over 50% to 83% Ethanol’’ label or similar alternative might be more specific, but would present consumers with a more complicated message in a smaller font, impeding comprehension. 114 See supra Section IV.B. 115 See supra notes 75–79; see also ASTM D5798 X1.3. 116 NCWM comment at 2. 117 NACS/SIGMA comment at 3. VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 require retailers to acquire testing technology, regularly test for ethanol concentration, and re-label when necessary. More precise labeling for High-level Blends, moreover, would have less benefit for consumers because it is unlikely that retailers could market High-Level Blends differentiated by ethanol concentration. According to the TN Dept. of Ag., retailers and producers will market ‘‘comparable concentrations of [High-Level Blends] at [their] competing fuel sites in a given market,’’ in order to comply with ASTM D5798 and their obligations under the Energy Independence and Security Act of 2007 to blend increasing amounts of renewable fuels.118 Thus, these reduced benefits do not outweigh the retailers’ increased burden from precise labels. 3. Label Specifications The final amendments generally adopt the size, font, format, and color requirements proposed in the 2014 NPRM, with minor alterations to accommodate the additional characters needed for High-level Blend labels.119 To help effectuate these amendments, 306.12(f) now provides sample illustrations of labels for Mid-level Blends and High-level Blends. Some commenters argued for changes to the proposed label’s size, font size, placement on the pump, or color. The proposed label formatting and placement specifications, however, are consistent with those in place for most of the alternative liquid fuels covered by the Rule, and the record does not support inconsistent treatment for ethanol labels. For example, the ethanol industry commented that orange is ‘‘associated with danger’’ and would put the industry at a competitive disadvantage.120 However, as explained in the 2014 NPRM, orange is the color for all alternative fuels except biodiesel and will enable retail consumers to distinguish Ethanol Flex Fuels from gasoline. Furthermore, orange’s brightness will help ensure that consumers notice the label and, therefore, avoid misfueling. Finally, EPA’s E15 label uses the same orange background. Thus, using orange creates a uniform color scheme for all Ethanol Flex Fuels, making the label easier for consumers to identify. 118 TN Dept. Ag. comment at 3. final amendments also delete the Rule’s sample label for ‘‘E–100’’ (i.e., ethanol not mixed with gasoline) because the record does not show any retail sales of such fuels. 120 ACE comment Att. (May 20, 2010 comment at 2). D. Octane Rating by Infrared Spectrophotometry Contrary to the 2014 proposal, the Commission does not adopt infrared spectrophotometry as an approved method to test octane rating.121 According to the record, infrared testing is an indirect method of determining octane rating that is not endorsed by ASTM, nor is it as reliable as the methods currently specified by the Rule, namely ASTM D2699 and D2700. Furthermore, in the case of a dispute involving infrared testing, ASTM D2699 and D2700 must verify the results. Therefore, to avoid potential conflict and uncertainty from such indirect testing methods, the Commission does not amend its list of octane rating testing methods. V. Paperwork Reduction Act The certification and labeling requirements announced in the final amendments for Ethanol Flex Fuels constitute a ‘‘collection of information’’ under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501–3521 (‘‘PRA’’). Consistent with the Rule’s requirements for other alternative fuels, under the final amendments, refiners, producers, importers, distributors, and retailers of Ethanol Flex Fuels must retain, 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.122 The covered entities also must make these records available for inspection by staff of the Commission and EPA or by persons authorized by those agencies. Finally, retailers must produce, distribute, and post fuel rating labels on fuel pumps. In 2014, the Commission discussed the estimated recordkeeping and disclosure burdens for entities covered under the Rule and sought comment on the accuracy of those estimates. Commenters have not disputed those estimates. The Commission has updated those estimates to incorporate more recent data for the number of retailers nationwide and labor costs. Below, the Commission discusses those estimates. The Commission has previously estimated the burden associated with the Rule’s recordkeeping requirements for the sale of automotive fuels to be no more than 5 minutes per year (or 1/12th of an hour) per industry member, and no more than 1/8th of an hour per year per industry member for the Rule’s 119 The PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 121 The amendments do adopt, however, the most current versions of the ASTM D4814, D2699, D2700, and D2885. 122 See the Rule’s recordkeeping requirements, 16 CFR 306.7; 306.9; and 306.11. E:\FR\FM\14JAR2.SGM 14JAR2 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES2 disclosure requirements.123 Consistent with OMB regulations that implement the PRA, these estimates reflect solely the burden incremental to the usual and customary recordkeeping and disclosure activities performed by affected entities in the ordinary course of business.124 Because the procedures for distributing and selling Mid-Level Ethanol blends are no different from those for other automotive fuels, the Commission expects that, consistent with practices in the fuel industry generally, the covered parties will record the fuel rating certification on documents (e.g., shipping receipts) already in use, or will use a letter of certification. Furthermore, the Commission expects that labeling of Ethanol Flex Fuel pumps will be consistent, generally, with practices in the fuel industry. Accordingly, the PRA burden will be the same as that for other automotive fuels: 1/12th of an hour per year for recordkeeping and 1/8th of an hour per year for disclosure. The U.S. Department of Energy (‘‘DOE’’) indicates 2,674 ethanol retailers nationwide, and the U.S. Energy Information Administration indicates 195 ethanol fuel production plants.125 Assuming that each ethanol retailer and producer will spend 1/12th of an hour per year complying with the recordkeeping requirements, the cumulative recordkeeping burden for retailers and producers is 223 hours and 16 hours, respectively. Assuming each ethanol retailer will spend 1/8th of an hour per year complying with the disclosure requirements, the cumulative disclosure burden for retailers is 334 hours. Estimated labor costs are derived by applying appropriate hourly cost figures to the estimated burden hours described above. Applying an average hourly wage of $11.08 for ethanol retailers,126 the aggregate recordkeeping and disclosure labor cost for all ethanol retailers 123 See, e.g., Federal Trade Commission: Automotive Fuel Ratings, Certification and Posting: Final Rule on Biodiesel Labeling, 73 FR 40154, 40161 (July 11, 2008). Staff has previously estimated that retailers of automotive fuels incur an average burden of approximately one hour to produce, distribute, and post fuel rating labels. Because the labels are durable, staff has concluded that only about one of every eight retailers incurs this burden each year, hence, 1/8th of an hour, on average, per retailer. 124 See 5 CFR 1320.3(b)(2). 125 See https://www.afdc.energy.gov/fuels/ethanol_ locations.html (last visited Oct. 28, 2015); https:// www.eia.gov/petroleum/ethanolcapacity/ (last visited Oct. 28, 2015). 126 See https://www.bls.gov/iag/tgs/iag447.htm (Bureau of Labor Statistics, July 2015 Current Employment Statistics, Average Hourly Earnings for Gasoline Station Production and Nonsupervisory Employees). VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 combined would be $6,172 ((223 hours + 334 hours) × $11.08). Applying an average hourly wage of $29.67 for ethanol producers,127 their cumulative labor costs (recordkeeping) would be $475 (16 hours × $29.67). Thus, cumulative labor costs for ethanol retailers and producers, combined, would be $6,647 ($6,172 + $475). The Rule does not impose any capital costs for producers, importers, or distributors of ethanol blends. Retailers, however, do incur the cost of procuring and replacing fuel dispenser labels to comply with the Rule. Staff has previously estimated that the price per automotive fuel label is fifty cents and that the average automotive fuel retailer has six dispensers. The Petroleum Marketers Association of American (‘‘PMAA’’), however, stated in its comment to the 2010 NPRM that the cost of labels ranges from one to two dollars. Conservatively applying the upper end from PMAA’s estimate results in an initial cost to retailers of $12 (6 pumps × $2). Regarding label replacement, staff has previously estimated a dispenser useful life range of 6 to 10 years. Assuming a useful life of 8 years, the mean of that range, replacement labeling will not be necessary for well beyond the relevant time frame, i.e., the immediate 3-year PRA clearance sought. Averaging solely the $12 labeling cost at inception per retailer over that shorter period, however, annualized labeling cost per retailer will be $4. Cumulative labeling cost would thus be $10,696 (2,674 retailers × $4 each, annualized). VI. Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601–612, requires an agency to provide a Final Regulatory Flexibility Analysis with the final rule unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.128 The FTC reaffirms its conclusion that the final amendments will not have a significant economic impact on a substantial number of small entities. As explained in Section V above, the Commission expects Ethanol Flex Fuel retailers to spend, at most, 5 minutes per year complying with the recordkeeping requirements and 1/8th of an hour per year complying with the disclosure requirements. As also explained in Section V, staff estimates 127 See https://www.bls.gov/iag/tgs/ iag211.htm#earnings (Bureau of Labor Statistics, July 2015 Current Employment Statistics, Average Hourly Earnings for Oil and Gas Extraction Production and Nonsupervisory Employees). 128 See 5 U.S.C. 603–605. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 2061 the mean hourly wage for producers of $29.67, and for retailers of $11.08. Even assuming that all ethanol retailers are small entities, compliance with the recordkeeping requirements will cost producers, individually, an estimated $2.47 ($29.67 × 1/12th of an hour) and cost retailers, individually, an estimated $.92 ($11.08 × 1/12th of an hour). In addition, under the same assumptions, compliance with the disclosure requirements will cost individual retailers an estimated $1.39 ($11.08 × 1/ 8th of an hour). Finally, as discussed in Section V, the Commission estimates annualized capital costs of $4 per retailer. This document serves as notice to the Small Business Administration of the agency’s certification of no effect. Nonetheless, the Commission has prepared the following analysis. A. Statement of the Need for, and Objectives of, the Final Amendments The Commission adopts these amendments to further the PMPA’s objective of giving consumers information necessary to choose the correct fuel for their vehicles. The emergence of Ethanol Flex Fuels as a retail fuel and its likely increased availability necessitate the amendments. These amendments provide requirements for rating, certifying, and labeling Ethanol Flex Fuels (blends of gasoline and more than 10 percent but no greater than 83 percent ethanol) pursuant to PMPA, 15 U.S.C. 2801 et seq. B. Issues Raised by Comments in Response to the Initial Regulatory Flexibility Analysis Commenters did not raise any specific issues with respect to the regulatory flexibility analysis in the NPRM. C. Estimate of the Number of Small Entities to Which the Final Amendments Will Apply Retailers of ethanol blends will be classified as small businesses if they satisfy the Small Business Administration’s relevant size standards, as determined by the Small Business Size Standards component of the North American Industry Classification System (‘‘NAICS’’). The closest NAICS size standard relevant to this rulemaking is for ‘‘Gasoline Stations with Convenience Stores.’’ That standard classifies retailers with a maximum $29.5 million in annual receipts as small businesses.129 As discussed above, DOE reports 2,674 129 See https://www.sba.gov/content/smallbusiness-size-standards (last visited Jan. 15, 2015). E:\FR\FM\14JAR2.SGM 14JAR2 2062 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations ethanol fueling stations.130 DOE does not provide information on those retailers’ revenue and no commenters submitted information about this issue. Therefore, the Commission is unable to determine how many of these retailers qualify as small businesses. D. Projected Reporting, Recordkeeping, and Other Compliance Requirements The final amendments make clear that the Fuel Rating Rule’s recordkeeping, certification, and labeling requirements apply to Ethanol Flex Fuels. Small entities potentially affected are producers, distributors, and retailers of those fuels. The Commission expects that the recordkeeping, certification, and labeling tasks are done by industry members in the normal course of their business. Accordingly, we do not expect the amendments to require any professional skills beyond those already employed by industry members, namely, administrative. mstockstill on DSK4VPTVN1PROD with RULES2 E. Alternatives Considered As explained above, PMPA requires retailers of liquid automotive fuels to post labels at the point of sale displaying those fuels’ ratings. The posting requirements in the final amendments are minimal and, as noted above, do not require creating any separate documents because covered parties may use documents already in use to certify a fuel’s rating. Moreover, the Commission cannot exempt small businesses from the Rule and still communicate fuel rating information to consumers. Furthermore, the amendments minimize what, if any, economic impact there is from the labeling requirements. Finally, because PMPA requires point-of-sale labels, the Rule must require retailers to incur the costs of posting those labels. Therefore, the Commission concludes that there are no alternative measures that would accomplish the purposes of PMPA and further minimize the burden on small entities. VII. Incorporation by Reference Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Commission is incorporating the specifications of the following standards issued by ASTM International: D4814–15a ‘‘Standard Specification for Automotive SparkIgnition Engine Fuel (published August 2015)’’ (‘‘ASTM D4814–15a’’); ASTM D2699–15a, ‘‘Standard Test Method for Research Octane Number of SparkIgnition Engine Fuel (published November 2015)’’; ASTM D2700–14, 130 See www.afdc.energy.gov/afdc/fuels/stations_ counts.html (last visited Oct. 28, 2015). VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 ‘‘Standard Test Method for Motor Octane Number of Spark-Ignition Engine Fuel (published November 2014)’’; and ASTM D2885–13, ‘‘Standard Test Method for Determination of Octane Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison Technique (published July 2013).’’ The terms research octane number and motor octane number have the meanings provided in ASTM Standard D4814–15a. Standards ASTM D2699– 15a, ASTM D2700–14, and ASTM D2855–13 provide test methods or protocols for determining research octane number or motor octane number of specified grades or types of gasoline. These ASTM standards are reasonably available to interested parties. Members of the public can obtain copies of ASTM D4814–15a, ASTM D2699–15a, ASTM D2700–14, and ASTM D2885–13 from ASTM International, 100 Barr Harbor Drive, West Conshohocken, PA 19428; telephone: 1–877–909–2786; internet address: https://www.astm.org. These ASTM standards are also available for inspection at the FTC Library, (202) 326–2395, Federal Trade Commission, Room H–630, 600 Pennsylvania Avenue NW., Washington, DC 20580. List of Subjects in 16 CFR Part 306 Trade practices, Fuel ratings, Fuel, Gasoline, Incorporation by reference. For the reasons discussed in the preamble, the Federal Trade Commission amends title 16, Chapter I, Subchapter C, of the Code of Federal Regulations, part 306, as follows: PART 306—AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING 1. The authority citation for part 306 continues to read as follows: ■ Authority: 15 U.S.C. 2801 et seq.; 42 U.S.C. 17021. 2. Amend § 306.0 by revising paragraphs (b), (i), (j), and (l) and adding paragraph (o) to read as follows: ■ § 306.0 Definitions. * * * * * (b) Research octane number and motor octane number. These terms have the meanings given such terms in the specifications of ASTM D4814–15a, Standard Specification for Automotive Spark-Ignition Engine Fuel, (incorporated by reference, see § 306.13) and, with respect to any grade or type of gasoline, are determined in accordance with one of the following test methods or protocols: (1) ASTM D2699–15a, Standard Test Method for Research Octane Number of PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 Spark-Ignition Engine Fuel, and ASTM D2700–14, Standard Test Method for Motor Octane Number of Spark-Ignition Engine Fuel, (both incorporated by reference, see § 306.13) or (2) ASTM D2885–13, Standard Test Method for Determination of Octane Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison Technique, (incorporated by reference, see § 306.13). * * * * * (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 percent unleaded gasoline and 10 percent 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 and/or other alcohols (or such other percentage, as provided by the Secretary of the United States Department of Energy, by rule), with gasoline or other fuels; (iii) Ethanol flex fuels; (iv) Liquefied natural gas; (v) Liquefied petroleum gas; (vi) Coal-derived liquid fuels; (vii) Biodiesel; (viii) Biomass-based diesel; (ix) Biodiesel blends containing more than 5 percent biodiesel by volume; and (x) Biomass-based diesel blends containing more than 5 percent biomass-based diesel by volume. (3) Biodiesel blends and biomassbased diesel blends that contain less than or equal to 5 percent biodiesel by volume and less than or equal to 5 percent biomass-based diesel by volume, and that meet ASTM D975– 07b, Standard Specification for Diesel Fuel Oils (incorporated by reference, see § 306.13), are not automotive fuels covered by the requirements of this part. Note to paragraph (i): Provided, however, that biodiesel blends and biomass-based diesel blends that contain less than or equal to 5 percent biodiesel by volume and less than or equal to 5 percent biomass-based diesel by volume, and that meet ASTM D975– 09b, Standard Specification for Diesel Fuel Oils (incorporated by reference, see § 306.13), are not automotive fuels covered by the requirements of this Part. (j) Automotive fuel rating means— E:\FR\FM\14JAR2.SGM 14JAR2 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations Number of Spark-Ignition Engine Fuel (incorporated by reference, see § 306.13), to determine the motor octane number; or (2) Use the test method set forth in ASTM D2885–13, Standard Test Method for Determination of Octane Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison Technique (incorporated by reference, see § 306.13). (b) To determine automotive fuel ratings for alternative liquid automotive fuels other than ethanol flex fuels, biodiesel blends, and biomass-based diesel blends, 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. In the case of biodiesel blends, you must possess a reasonable basis, consisting of competent and reliable evidence, for the percentage of biodiesel contained in the fuel. In the case of biomass-based diesel blends, you must possess a reasonable basis, consisting of competent and reliable evidence, for the percentage of biomass-based diesel contained in the fuel. In the case of ethanol flex fuels, you must possess a reasonable basis, consisting of competent and reliable evidence, for the percentage of ethanol contained in the fuel. 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. ■ 4. Amend § 306.6 by revising paragraph (b) to read as follows: § 306.5 mstockstill on DSK4VPTVN1PROD with RULES2 (1) For gasoline, the octane rating. (2) For an alternative liquid automotive fuel other than biodiesel, biomass-based diesel, biodiesel blends, biomass-based diesel blends, and ethanol flex fuels, the commonly used name of the fuel with a disclosure of the amount, expressed as the minimum percentage by volume, of the principal component of the fuel. A disclosure of other components, expressed as the minimum percentage by volume, may be included, if desired. (3) For biomass-based diesel, biodiesel, biomass-based diesel blends with more than 5 percent biomass-based diesel, and biodiesel blends with more than 5 percent biodiesel, a disclosure of the biomass-based diesel or biodiesel component, expressed as the percentage by volume. (4) For ethanol flex fuels, a disclosure of the ethanol component, expressed as the percentage by volume and the text ‘‘Use Only in Flex-Fuel Vehicles/May Harm Other Engines.’’ * * * * * (l) Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet: The registration requirements for fuels and fuel additives under 40 CFR part 79; and the requirements of ASTM D6751– 10, Standard Specification for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels, (incorporated by reference, see § 306.13). * * * * * (o) Ethanol flex fuels means a mixture of gasoline and ethanol containing more than 10 percent but not greater than 83 percent ethanol by volume. ■ 3. Revise § 306.5 to read as follows: * 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 ASTM D4814–15a, Standard Specifications for Automotive SparkIgnition Engine Fuel, (incorporated by reference, see § 306.13). To determine the research octane and motor octane numbers, you may do one of the following: (1) Use ASTM D2699–15a, Standard Test Method for Research Octane Number of Spark-Ignition Engine Fuel (incorporated by reference, see § 306.13), to determine the research octane number, and ASTM D2700–14, Standard Test Method for Motor Octane VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 § 306.6 Certification. * * * * (b) Give the person a letter or other 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 automotive fuel rating, except that a letter certifying the fuel rating of biomass-based diesel, biodiesel, a biomass-based diesel blend, a biodiesel blend, or an ethanol flex fuel will be good only until you transfer those fuels with a different automotive fuel rating, whether the rating is higher or lower. When this happens, you must certify the automotive fuel rating of the new automotive fuel either with a delivery PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 2063 ticket or by sending a new letter of certification. * * * * * ■ 5. Amend § 306.10 by revising paragraphs (a) and (f) 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. Provided, however, that you do not need to post the automotive fuel rating of a mixture of gasoline and ethanol containing more than 10 but not more than 15 percent ethanol if the face of the dispenser is labeled in accordance with 40 CFR 80.1501. * * * * * (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 ll% Methanol’’ (2) ‘‘ll% Ethanol/Use Only in FlexFuel Vehicles/May Harm Other engines’’ (3) ‘‘M85/Minimum ll% Methanol’’ (4) ‘‘LPG/Minimum ll% Propane’’ or ‘‘LPG/Minimum ll% Propane and ll% Butane’’ (5) ‘‘LNG/Minimum ll% Methane’’ (6) ‘‘B20 Biodiesel Blend/contains biomass-based diesel or biodiesel in quantities between 5 percent and 20 percent’’ (7) ‘‘20% Biomass-Based Diesel Blend/ contains biomass-based diesel or biodiesel in quantities between 5 percent and 20 percent’’ (8) ‘‘B100 Biodiesel/contains 100 percent biodiesel’’ (9) ‘‘100% Biomass-Based Diesel/ contains 100 percent biomass-based diesel’’ * * * * * ■ 6. Amend § 306.12: ■ a. By redesignating paragraphs (a)(4) through (9) as paragraphs (a)(5) through (10), respectively; ■ b. By adding new paragraph (a)(4); ■ c. By removing the illustration of the ‘‘E–100’’ label in paragraph (f); and ■ d. By adding two illustrations after the existing illustrations in paragraph (f). The additions read as follows: E:\FR\FM\14JAR2.SGM 14JAR2 2064 Labels. * * * * (a) * * * (4) For ethanol flex fuels. (i) The label is 3 inches (7.62 cm) wide x 21⁄2 inches (6.35 cm) long. ‘‘Helvetica Black’’ or equivalent type is used throughout. The band at the top of the label contains one of the following: (A) For all ethanol flex fuels. The numerical value representing the volume percentage of ethanol in the fuel followed by the percentage sign and then by the term ‘‘ETHANOL’’; or (B) For ethanol flex fuels containing more than 10 percent and no greater than 50 percent ethanol by volume. The numerical value representing the volume percentage of ethanol in the fuel, rounded to the nearest multiple of mstockstill on DSK4VPTVN1PROD with RULES2 * ■ 7. Add § 306.13 to read as follows: § 306.13 Incorporation by reference. (a) Certain material is incorporated by reference into this part with the approval of the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. You may inspect all VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 10, followed by the percentage sign and then the term ‘‘ETHANOL’’; or (C) For ethanol flex fuels containing more than 50 percent and no greater than 83 percent ethanol by volume. The numerical value representing the volume percentage of ethanol in the fuel, rounded to the nearest multiple of 10, followed by the percentage sign and then the term ‘‘ETHANOL’’ or the phrase, ‘‘51%–83% ETHANOL.’’ (ii) The band should measure 1 inch (2.54 cm) deep. The type in the band is centered both horizontally and vertically. The percentage disclosure and the word ‘‘ETHANOL’’ are in 24 point font. In the case of labels including the phrase, ‘‘51%–83% ETHANOL,’’ the percentage disclosure is in 18 point font, and the word ‘‘ETHANOL’’ is in 24 point font and at least 1⁄8 inch (.32 cm) below the percentage disclosure. The type below the black band is centered vertically and horizontally. The first line is the text: ‘‘USE ONLY IN.’’ It is in 16 point font, except for the word ‘‘ONLY,’’ which is in 26 point font. The word ‘‘ONLY’’ is underlined with a 2 point (or thicker) underline. The second line is in 16 point font, at least 1⁄8 inch (.32 cm) below the first line, and is the text: ‘‘FLEX-FUEL VEHICLES.’’ The third line is in 10 point font, at least 1⁄8 inch (.32 cm) below the first line, and is the text ‘‘MAY HARM OTHER ENGINES.’’ * * * * * (f) * * * approved material at the FTC Library, (202) 326–2395, Federal Trade Commission, Room H–630, 600 Pennsylvania Avenue NW., Washington, DC 20580, and at the National Archives and Records Administration (‘‘NARA’’). For information on the availability of this material at NARA, call 202–741– 6030, or go to: https://www.archives.gov/ federal-register/cfr/ibr-locations.html. (b) ASTM International (ASTM), 100 Barr Harbor Drive, West Conshohocken, PA 19428 telephone: 1–877–909–2786; Internet address: https://www.astm.org. (1) ASTM D975–07b, Standard Specification for Diesel Fuel Oils, PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\14JAR2.SGM 14JAR2 ER14JA16.000</GPH> § 306.12 Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations Federal Register / Vol. 81, No. 9 / Thursday, January 14, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES2 published July 2007; IBR approved for § 306.0(i). (2) ASTM D975–09b, Standard Specification for Diesel Fuel Oils, published August 2009; IBR approved for § 306.0(i). (3) ASTM D2699–15a, Standard Test Method for Research Octane Number of Spark-Ignition Engine Fuel, published November 2015; IBR approved for §§ 306.0(b) and 306.5(a). (4) ASTM D2700–14, Standard Test Method for Motor Octane Number of VerDate Sep<11>2014 18:16 Jan 13, 2016 Jkt 238001 Spark-Ignition Engine Fuel, published November 2014; IBR approved for §§ 306.0(b) and 306.5(a). (5) ASTM D2885–13, Standard Test Method for Determination of Octane Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison Technique, published July 2013; IBR approved for §§ 306.0(b) and 306.5(a). (6) ASTM D4814–15a, Standard Specification for Automotive SparkIgnition Engine Fuel, published August PO 00000 Frm 00013 Fmt 4701 Sfmt 9990 2065 2015; IBR approved for §§ 306.0(b) and 306.5(a). (7) ASTM D6751–10, Standard Specification for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels, published October 2010; IBR approved for § 306.0(l). By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2015–32972 Filed 1–13–16; 8:45 am] BILLING CODE 6750–01–P E:\FR\FM\14JAR2.SGM 14JAR2

Agencies

FEDERAL TRADE COMMISSION

[Federal Register Volume 81, Number 9 (Thursday, January 14, 2016)]
[Rules and Regulations]
[Pages 2053-2065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32972]

[[Page 2053]]

Vol. 81

Thursday,

No. 9

January 14, 2016

Part III

Federal Trade Commission

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16 CFR Part 306

Automotive Fuel Ratings, Certification and Posting; Final Rule

Federal Register / Vol. 81 , No. 9 / Thursday, January 14, 2016 /
Rules and Regulations

[[Page 2054]]

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FEDERAL TRADE COMMISSION

16 CFR Part 306

RIN 3084-AB39

Automotive Fuel Ratings, Certification and Posting

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Final rule.

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SUMMARY: The Commission issues final amendments to its Rule for
Automotive Fuel Ratings, Certification and Posting (``Fuel Rating
Rule'' or ``Rule'') by adopting rating, certification, and labeling
requirements for certain ethanol-gasoline blends. The amendments
further the Rule's goal of helping purchasers identify the correct fuel
for their vehicles.

DATES: The amendments published in this document will become effective
July 14, 2016. The incorporation by reference of certain publications
listed in the regulations is approved by the Director of the Federal
Register as of July 14, 2016.

ADDRESSES: Relevant portions of the proceeding, including this
document, are available at www.ftc.gov.

FOR FURTHER INFORMATION CONTACT: R. Michael Waller, (202) 326-2902,
Attorney, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC
20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

On April 4, 2014, the Commission published a Notice of Proposed
Rulemaking (``2014 NPRM'') requesting comments on: (1) New rating,
certification, and labeling requirements for gasoline blends with more
than 10 percent ethanol (``Ethanol Blends''); and (2) an alternative
method to determine the fuel rating of gasoline (``octane rating'').\1\
After considering the comments received in response as well as
Environmental Protection Agency (``EPA'') decisions related to ethanol
blends, the Commission now issues final ethanol fuel amendments.\2\
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\1\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Notice of Proposed Rulemaking, 79 FR
18850 (Apr. 4, 2014).
\2\ EPA's decisions permitted the use of ethanol blends between
10 to 15 percent concentration (``E15'') for 2001 and newer
conventional vehicles. In 2010, the EPA approved E15 for 2007 and
newer conventional vehicles. Environmental Protection Agency:
Partial Grant and Partial Denial of Clean Air Act Waiver Application
Submitted by Growth Energy to Increase the Allowable Ethanol Content
of Gasoline to 15 Percent; Decision of Administrator (``EPA Waiver
Decision I''), 75 FR 68094 (Nov. 4, 2010). Then, it expanded its
approval to 2001 and newer vehicles based on additional test data.
Environmental Protection Agency, Partial Grant of Clean Air Act
Waiver Application Submitted by Growth Energy to Increase the
Allowable Ethanol Content of Gasoline to 15 Percent; Decision of the
Administrator (``EPA Waiver Decision II''), 76 FR 4662 (Jan. 26,
2011). EPA soon thereafter promulgated complementary regulations
providing ``labeling requirements for fuel pumps that dispense E15
to alert consumers to the appropriate and lawful use of the fuel.''
Environmental Protection Agency: Regulation to Mitigate the
Misfueling of Vehicles and Engines with Gasoline Containing Greater
than Ten Volume Percent Ethanol and Modifications to the
Reformulated and Conventional Gasoline Programs; Final Rule (``EPA
Final Rule to Mitigate Misfueling''), 76 FR 44406 (July 25, 2011).
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As explained below, the final amendments require that entities rate
and certify all ethanol fuels to provide useful information to
consumers about ethanol concentration and suitability for their cars
and engines. Responding to the comments, the final amendments provide
greater flexibility for businesses to comply with the ethanol labeling
requirements, and do not adopt the alternative octane rating method
proposed in the 2014 NPRM.
This document first provides background on the Fuel Rating Rule. It
then summarizes comments in response to the 2014 NPRM regarding ethanol
blend ratings and labeling as well as octane rating testing. Finally,
it provides the Commission's analysis and final rule.

II. Background

A. The Fuel Rating Rule

The Commission first promulgated the Fuel Rating Rule, 16 CFR part
306 (then titled the ``Octane Certification and Posting Rule''), in
1979 pursuant to the Petroleum Marketing Practices Act (``PMPA''), 15
U.S.C. 2801 et seq.\3\ The Rule originally applied only to gasoline.
The Energy Policy Act of 1992 amended Title II of the PMPA to extend
the Commission's authority, requiring it to determine automotive fuel
certification and posting requirements for all liquid automotive fuels,
including ethanol-gasoline blends.\4\ Pursuant to these amendments, the
Commission expanded the Rule to cover ``alternative liquid fuels'' in
1993, including ethanol blends below 70 percent concentration.\5\
However, the current Rule's non-exhaustive list of alternative liquid
fuels does not expressly include these ethanol blends.\6\
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\3\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Final Rule, 44 FR 19160 (Mar. 30, 1979).
\4\ Section 1501(b) of Public Law 102-486, 106 Stat. 2776, 2996
(codified at 15 U.S.C. 2821(6), (17)-(18)). The statute defines the
term ``automotive fuel'' to mean liquid fuel of a type distributed
for use in any motor vehicle. Section 1501(b) of Public Law 102-486,
106 Stat. 2776, 2996-7 (codified at 15 U.S.C. 2821(6)).
\5\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Final Rule (``1993 Final Rule''), 58 FR
41356, 41358 (Aug. 3, 1993).
\6\ 16 CFR 306.0(i)(2).
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For covered fuels, the Rule mandates methods for rating and
certifying, as well as posting the ratings at the point of sale. For
most alternative fuels,\7\ the rating is ``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'' (e.g.,
``Methanol/Minimum 80% Methanol'').\8\ Any covered entity, including a
distributor, that transfers a fuel must certify the fuel's rating to
the transferee either by including it in papers accompanying the
transfer or by letter.\9\ The Rule further requires retailers to post
this fuel rating by adhering a label to the retail fuel pump and
provides precise specifications (e.g., content, size, color, and font)
for these labels.\10\
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\7\ The Rule requires rating biodiesel fuels by the percentage
of biodiesel or biomass-based diesel in the fuel.
\8\ 16 CFR 306.0(j)(2).
\9\ 16 CFR 306.6.
\10\ 16 CFR 306.10, 306.12.
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B. Procedural History

In March 2009, as part of a systematic review of the FTC's rules
and guides, the Commission solicited general comments on the Fuel
Rating Rule.\11\ After reviewing those comments, the Commission
published a Notice of Proposed Rulemaking in March 2010 (``2010 NPRM'')
proposing three amendments addressing ethanol fuels.\12\ First, the
proposed amendments would have required ratings disclosing an ethanol
blend's ethanol concentration (e.g., 40 percent ethanol), rather than
the ``principal component'' concentration. Second, the proposed
amendments would have required retailers to post labels disclosing a
blend's ethanol content by displaying a broad range of 10 to 70 percent
ethanol, a narrower range (e.g., 30-40 percent ethanol), or a specific
percentage. Finally, the proposed amendments would have required all
ethanol fuel labels to disclose ``may harm some vehicles'' and ``check
owner's manual.'' In the 2010 NPRM, the Commission explained that
``[t]his additional information should assist consumers in identifying
the proper fuel for their vehicles.'' \13\ In April 2011, the
Commission published

[[Page 2055]]

final amendments providing an alternative method of rating gasoline
octane and making other minor changes to the Rule.\14\ At that time,
the Commission declined to adopt final ethanol amendments, noting that
it needed additional time to consider ethanol labeling in light of
comments received in response to the 2010 NPRM and a recent EPA
decision permitting the use of certain ethanol blends between 10 and 15
percent concentration (``E15'') in newer conventional vehicles.\15\
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\11\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Request for Public Comments, 74 FR 9054
(Mar. 2, 2009).
\12\ Federal Trade Commission: Automotive Fuel Ratings,
Certification and Posting: Notice of Proposed Rulemaking, 75 FR
12470 (Mar. 16, 2010).
\13\ 2010 NPRM, 75 FR at 12474.
\14\ Federal Trade Commission: Automotive Fuel Ratings
Certification and Posting: Final Rule, 76 FR 19684 (Apr. 8, 2011).
\15\ Id. at 19689.
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In April 2014, the Commission published a second NPRM proposing
that ethanol blend labels disclose the exact percentage of ethanol, or
a percentage rounded to the nearest multiple of ten.\16\ The proposal
also required that the label state ``Use Only in Flex-Fuel Vehicles/May
Harm Other Engines.'' \17\ In addition, to prevent consumer confusion
and avoid unnecessary burden on industry, the proposed rule exempted
EPA-approved E15 (``EPA E15'') from the Rule's labeling requirements.
Finally, the 2014 NPRM proposed allowing octane ratings determined by
infrared spectrophotometry.\18\
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\16\ 2014 NPRM, 79 FR 18850, 18859.
\17\ Id. at 18857.
\18\ Id. at 18861.
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III. Comments in Response to the 2014 NPRM

Many comments received in response to the 2014 NPRM supported the
need for new labeling and testing methods.\19\ However, commenters
suggested several modifications, including defining gasoline to include
E15, an octane label for Ethanol Blends, an alternative label for
Ethanol Blends of 51 to 83 percent, and referee testing methods for
octane ratings determined through infrared spectrophotometry.
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\19\ The Commission received 357 comments in response to the
2014 NPRM. These comments are located at: https://www.ftc.gov/policy/public-comments/initiative-555.
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A. Proposed Definition of ``Ethanol Blend'' and Exemption for EPA E15

The 2014 NPRM proposed including E15 in the definition of ``Ethanol
Blend,'' but not requiring retailers to post a separate FTC fuel rating
label for EPA E15.\20\ The Commission intended its proposal to
facilitate coverage of all concentrations of ethanol blends above 10
percent and to help consumers quickly identify ethanol blends at
pumps.\21\
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\20\ See 40 CFR 80.1501; see also 2014 NPRM, 79 FR at 18865.
\21\ 79 FR at 18857.
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Several commenters, including fuel manufacturers, a state
regulator, and an ethanol industry group, urged the FTC to exclude E15
from the definition of Ethanol Blends altogether.\22\ For example,
Tesoro suggested that ``Ethanol Blend'' be defined as ``a mixture of
gasoline and ethanol containing more than 15 percent ethanol'' and that
the definition of ``gasoline'' include concentrations below 15 percent,
i.e., E10 and E15.\23\ According to Tesoro, these changes would subject
E15 to the Rule's octane labeling and certification requirements for
gasoline.\24\ Moreover, defining E15 as gasoline would exempt E15 from
the ethanol blend labeling requirements and prevent an overlap with
EPA's E15 regulations.\25\ According to Tesoro, ``all E15 is subject to
the EPA Misfueling Mitigation rule.'' \26\ Phillips66 agreed and added
that all Ethanol Blends below 16 percent are subject to EPA regulations
on blendstock and finished gasoline, including ``vapor pressure,
sulfur, benzene, etc.'' \27\ It argued that defining gasoline to
include E15 would avoid ``confusion and conflict with EPA regulations
and requirements.'' \28\ API worried that the 2014 NPRM exemption for
EPA E15 ``may allow a supplier to differentiate `EPA-approved E15' from
`non-EPA-approved E15' and, for the latter, avoid'' the EPA's
requirements.\29\ Thus, it concluded that the FTC Rule should exclude
E15 from the definition of Ethanol Blends.\30\
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\22\ See Phillips66 comment at 1; Renewable Fuels Association
(``RFA'') comment at 1-2; Tesoro comment Att. 1 at 1-2; American
Fuel & Petrochemical Manufacturers (``AFPM'') comment at 2-3;
American Petroleum Institute (``API'') comment at 2; BP Products
North America (``BP Products'') comment at 1; Chevron comment at 2;
Marathon Petroleum Corporation (``Marathon'') comment at 1-2;
Tennessee Department of Agriculture (``TN Dept. Ag.'') comment at 2-
3.
\23\ Tesoro comment Att. 1 at 1-2; see AFPM comment at 2-3; API
comment at 2; BP Products comment at 1; Chevron comment at 2; TN
Dept. Ag. comment at 2-3.
\24\ Tesoro comment Att. 1 at 2.
\25\ Id.
\26\ Id.
\27\ Phillips66 comment at 1.
\28\ Id.
\29\ API comment at 2; see also Marathon comment at 2.
\30\ API comment at 2.
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Finally, the Tennessee Department of Agriculture (``TN Dept. Ag.'')
and the National Conference of Weights and Measures (``NCWM'') urged
the Commission to refer to Ethanol Blends as ``Ethanol Flex Fuel
Blends'' or ``Ethanol Flex Fuel.'' \31\ TN Dept. Ag. explained that the
relevant ASTM International (``ASTM'') standard for ethanol fuel
blends, ASTM D5798, recognizes ``Ethanol Flex-Fuel'' as the most
standardized term for ``higher level'' ethanol blends (i.e., blends
from 51 to 83 percent volume ethanol).\32\ Additionally, TN Dept. Ag.
explained that the term ``Ethanol Flex Fuel'' is consistent with NCWM's
definition of ethanol blends.\33\
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\31\ TN Dept. Ag. comment at 1-3; NCWM comment at 6.
\32\ TN Dept. Ag. comment at 1-2 (referring to ASTM
International D5798 Standard Specification for Ethanol Fuel Blends
for Flexible-Fuel Automotive Spark-Ignition Engines).
\33\ Id. at 2.
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B. Octane Rating for Ethanol Blends

Although the 2014 NPRM did not propose an octane rating for Ethanol
Blends, eight commenters suggested that the Commission require one to
prevent misfueling, ensure fuel quality, or bolster ethanol's
competitiveness.\34\ Two state regulators and ethanol industry groups
asserted that, without such a rating, consumers could not choose the
EPA E15 appropriate for their vehicle.\35\ The California Department of
Food and Agriculture (``CA Dept. Ag.'') explained that ``[v]ehicles
manufactured after 2001 also have varying octane requirements, and
requiring use of the US EPA label alone does not ensure that consumers
will purchase a fuel that meets their vehicle's needs.'' \36\
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\34\ Tesoro comment at 1, Att. 1 at 5-6; Alliance of Automobile
Manufacturers and Association of Global Automakers (``AAM/AGA'')
comment at 4-5; National Automobile Dealers Association (``NADA'')
comment at 3; American Coalition for Ethanol (``ACE'') comment at 2;
TN Dept. Ag. comment at 1; California Department of Food and
Agriculture (CA Dept. Ag.) comment; Growth Energy comment at 2;
Davis comment.
\35\ ACE comment at 2; Growth Energy comment at 2; TN Dept. Ag.
comment at 1; CA Dept. Ag. comment.
\36\ CA Dept. Ag. comment.
---------------------------------------------------------------------------

Automotive manufacturing groups argued for an octane rating for
Ethanol Flex Fuels of less than 51 percent ethanol: ``Consumers have
come to expect and have a right to know the octane rating of the fuel
offered for sale . . . . The correct octane rating for the vehicle is
provided in the vehicle owner's manual and therefore the correlating
octane information should be available from the rating on the retail
pump.'' \37\ These commenters added, however, that ``at this point an
octane AKI posting for Ethanol Flex Fuel (E51-83%) as defined by ASTM
International is not yet practically feasible given variable
composition.'' \38\ The NADA, an automobile dealers group, suggested
that retailers display octane ratings for

[[Page 2056]]

all automotive fuels: ``[c]onsumers often and wisely consider a fuel's
octane rating when making appropriate vehicle fueling decisions,
whether or not an ethanol blend is involved.'' \39\
---------------------------------------------------------------------------

\37\ AAM/AGA comment at 4.
\38\ Id. at 4-5.
\39\ NADA comment at 3.
---------------------------------------------------------------------------

Other commenters argued that an octane rating is important for
communicating ethanol's benefits. Ethanol proponents Growth Energy and
ACE noted that ethanol's high octane rating represents an important
advantage for ethanol.\40\ ACE explained that ``[c]lean and high octane
is one of ethanol's greatest competitive advantages in the marketplace,
and while nothing in the rule would preclude a marketer from posting
the octane rating of E15, ACE believes this proposal gives oil
companies the power to prevent their branded marketers from displaying
the higher octane rating of E15.'' \41\ The TN Dept. Ag. added that
``[r]equiring the [octane rating] as the legal Automotive Fuel Rating
for E15 will benefit the consumer and both the ethanol and petroleum
industries by maintaining a level playing field for marketing the
various grades of gasoline and gasoline-ethanol blends.'' \42\
---------------------------------------------------------------------------

\40\ Growth Energy comment at 2; ACE comment at 2.
\41\ ACE comment at 2.
\42\ TN Dept. Ag. comment at 2.
---------------------------------------------------------------------------

Tesoro and automaker groups argued for certification and display of
octane rating to ensure the quality of the gasoline used for Ethanol
Flex Fuels.\43\ AAM/AGA explained that, ``[an] octane rating label will
also support compliance/enforcement to be sure the correct octane
tracks with the blend [Ethanol Flex Fuel], and is not inappropriately
low due to lower octane BOB ([Gasoline] Blendstock for Oxygenate
Blending) used'' in the blending.\44\
---------------------------------------------------------------------------

\43\ Tesoro comment at 1, Att. 1 at 5-6; AAM/AGA comment at 4-5.
\44\ AAM/AGA comment at 4-5.
---------------------------------------------------------------------------

C. Proposed Ethanol Blend Pump Labeling

Commenters disagreed about the proposed fuel pump label for Ethanol
Blends. Some supported the Commission's proposal and others urged more
detail and precision in the label disclosure, while still others sought
less detail and precision. Finally, many commenters argued that there
is no label that would be sufficient to prevent misfueling and,
therefore, opposed the Commission's proposal.
1. Required Label Statement
Commenters, including petroleum retailers and industry groups, auto
manufacturing groups, ethanol producer groups, and a state regulator,
all supported inclusion of ``Use Only in Flex-Fuel Vehicles'' on the
label.\45\ Few commenters, however, supported the ``May Harm Other
Engines'' language without change.\46\
---------------------------------------------------------------------------

\45\ RFA comment at 5; AAM/AGA comment at 2; Iowa Renewable
Fuels Association (``IRFA'') comment at 2; AAM/AGA comment at 2; ACE
comment Att. (May 20, 2010 comment at 3); Petroleum Marketers and
Convenience Stores of Iowa (``PMCSI'') comment; Outdoor Power and
Equipment Institute/National Marine Manufacturers Association
(``OPEI/NMMA'') comment at 14; CA Dept. Ag. comment; Growth Energy
comment at 1; Marathon comment at 3; Davis comment. Phillips66,
Tesoro, AFPM, API, and NCWM suggest ``For Use in Flexible Fuel
Vehicles (FFV) Only.'' Phillips66 comment at 2; Tesoro comment Att.
1 at 3; AFPM comment at 4; API comment at 3; NCWM comment at 4; BP
Products comment at 1; Chevron comment at 1.
\46\ See Center for Auto Safety (``CAS'') comment at 1; CA Dept.
Ag. comment at ] 2.
---------------------------------------------------------------------------

Ethanol producer groups argued ``May Harm Other Engines'' is
scientifically unsubstantiated and unduly harmful to the ethanol
industry.\47\ For example, RFA stated that it is ``not aware of any
credible evidence showing that misfueling has been a problem at flex
fuel dispensers that simply advise the consumer'' that the fuel is for
flex-fuel vehicles only.\48\ IRFA reported that there have been no
reports of misfueling, and ACE stated ``that there has been little, if
any, harm or damage reported'' from misfueling.\49\ According to RFA,
``the proposed language . . . does not appear to be based on scientific
evidence and would undoubtedly deter some [flex-fuel vehicle] drivers
from purchasing the fuel[.]'' \50\ IRFA added, ``[n]o scientific
evidence exists to prove that any vehicles may be harmed [by flex-fuel
blends].'' \51\ Ethanol groups also described the phrase as unfair
because labels for other fuels (e.g., diesel) do not include this
language.\52\ Growth Energy added that the phrase is vague, does
nothing to prevent misfueling, and ``further confuses the consumer.''
\53\ It suggested an alternative phrase: ``Attention . . . Not Approved
for Other Engines.'' \54\
---------------------------------------------------------------------------

\47\ RFA comment at 5; see also IRFA comment at 2; ACE comment
at 1; Growth Energy comment at 1. These groups reiterated concerns
raised in their comments to the March 16, 2010 NPRM, available at
https://www.ftc.gov/policy/public-comments/initiative-335.
\48\ RFA comment at 5.
\49\ IRFA comment at 1; ACE comment at 2.
\50\ RFA comment at 5.
\51\ IRFA comment at 2.
\52\ RFA comment at 5-6; IRFA comment at 2; ACE comment at 1.
\53\ Growth Energy comment at 1.
\54\ Id.
---------------------------------------------------------------------------

Conversely, some commenters viewed ``May Harm Other Engines'' as
too weak. Citing concerns such as misfueling, automobile performance,
warranty coverage, damage to small engines, and consistency with NCWM's
label, the NCWM, gasoline manufacturers and retailers, automobile
manufacturers, a regulator, and two individual commenters suggested
adding ``Check Owner's Manual'' or ``Consult Vehicle Owner's Manual for
Fuel Recommendations.'' \55\ AFPM and other commenters explained that
NCWM's suggested label for ethanol blends includes the phrase ``Check
Owner's Manual.'' \56\ Retailers expressed concern about liability
under laws that prohibit misfueling and suggested that the label
contain an ``advisory word'' such as ``Attention.'' \57\ Similarly,
other commenters proposed adding ``Warning'' or ``Caution'' to the
label.\58\ Commenters also highlighted harm to engines from misfueling
and advocated for: ``Do Not Use in Other Engines May Cause Harm;'' \59\
and ``Don't Use in other Vehicles, Boats, or Gasoline Powered Engine.
It May Cause Damages;'' \60\ among others.\61\
---------------------------------------------------------------------------

\55\ Phillips66 comment at 2; Tesoro comment Att. 1; AFPM
comment at 3; Chevron comment at 1; BP Products at 1; API comment at
3; AAM/AGA comment at 3; PMCSI comment; NCWM comment at 6; OPEI/NMMA
comment at 19; TN Dept. Ag. comment at 2; McComas comment; Lori
Jacobson comment.
\56\ AFPM comment at 4; Tesoro comment Att. 1; Phillips66
comment at 2; NCWM comment at 4, 6.
\57\ National Association of Convenience Stores/Society of
Independent Gasoline Marketers of America (``NACS/SIGMA'') comment
at 3-4.
\58\ AAM/AGA comment at 3; OPEI/NMMA comment at 19.
\59\ OPEI/NMMA comment at 14; AAM/AGA comment at 2-3; see NADA
comment at 2 (suggests replacing ``May Harm Other Engines'' with
``Do Not Use in Other Engines'').
\60\ Mississippi State Chemical Laboratory (``MSU Chem. Lab.'')
comment.
\61\ Pipkorn comment (``I think the label should include a large
print warning on the ethanol fuel pumps that ethanol fuels will
cause harm, damage and possibly destroy your engine and fuel
systems!''); Scally comment (``Since ethanol is known to damage
engines, why don't you just say that at the pumps? That would be
much more understandable for the general public.''); Seldon comment
(``Any labels for gasoline containing E-15 can only honestly say
`POISON for gasoline engines'--DO NOT USE!''); Haines comment (``Do
Not Use--May Cause Engine Damage.'').
---------------------------------------------------------------------------

AAM/AGA added that `` `May Harm . . .' does not convey the intended
absolute prohibition on its use for non-flex-fuel equipment, whereas
`Do Not Use . . .' is a clear, simple instruction.'' \62\ AAM/AGA
further expressed ``strong concerns about the risks for consumers from
misfueling vehicles with ethanol blends,'' including mechanical damage
on engine parts and the fuel pump as well as improper illumination of
the malfunction indicator light (``MIL'') that will reduce consumer
confidence in this

[[Page 2057]]

diagnostic tool.\63\ AAM/AGA included letters from 12 automakers about
the potential for damage to automobiles from ethanol blends above 10
percent ethanol. In these letters, the automakers expressed concern
about vehicle damage not covered by vehicle warranties and reduced fuel
efficiency.\64\ Marathon argued for the word ``damage'' in lieu of
``harm,'' which it considers an insufficient warning to owners of small
engines, motorcycles, and other non-flex fuel vehicles.\65\ Groups
representing motorcycle, marine, and other small engine manufacturers
and users also cited evidence of engine damage from ethanol blends.\66\
---------------------------------------------------------------------------

\62\ AAM/AGA comment at 3.
\63\ Id. at 5.
\64\ Id. at 6-7 and attachments.
\65\ Marathon comment at 3.
\66\ OPEI/NMMA comment at 3-7; American Motorcyclist Association
(``AMA'') comment at 1-2. Individual commenters also expressed
support for AMA's comment.
---------------------------------------------------------------------------

Finally, some commenters proposed changes to the color of the
labels and size of the fonts. For example, AAM/AGA recommended
increasing the font sizes of the language on the labels to ``ease
reading them.'' \67\ API and supporting commenters recommended a larger
label, matching the size of the EPA's E15 label.\68\ NCWM proposed
larger type than the 2014 NPRM and greater flexibility for retailers in
the placement of particular components of the label on fuel pumps as
well as colors and font styles.\69\
---------------------------------------------------------------------------

\67\ AAM/AGA comment at 3.
\68\ API comment at 4; see also Phillips66 comment at 1; Chevron
comment at 1; BP Products comment at 1.
\69\ NCWM comment at 6.
---------------------------------------------------------------------------

2. Ethanol Percentage Disclosure
Three commenters supported the FTC's proposed ethanol percentage
label disclosures.\70\ Seven called for more precise disclosures.\71\
Thirteen urged the FTC to permit less precise disclosures, such as a
single label for 51 to 83 percent ethanol blends.\72\
---------------------------------------------------------------------------

\70\ CAS comment at 1; PMCSI comment; Davis comment.
\71\ AAM/AGA comment at 2; NADA comment at 2; OPEI/NMMA comment
at 21; Berendts comment; Brink comment; Miller comment; Theisen
comment.
\72\ Phillips66 comment at 2; RFA comment at 4; Tesoro comment
Att. 1 at 3-4; API comment at 3; ACE comment at 2; NCWM comment at
3-4; TN Dept. Ag. comment at 3; CA Dept. Ag. comment; NACS/SIGMA
comment at 1-3; BP Products comment at 1; Chevron comment at 2;
Marathon comment at 2.
---------------------------------------------------------------------------

Commenters supporting more precise disclosures argued for 5 percent
increments, instead of the 10 percent increments in the proposal. They
claimed that the narrower range would allow retailers to use
commercially available ethanol blend dispensers without confusing or
deceiving consumers.\73\ AAM/AGA added that ``[u]sing units of 5 avoids
the potential perception that FTC's proposed units of 10 somehow
inhibit the ability to market an E25 fuel [albeit the proposed
regulatory language in the NPRM allows the option for labeling the
exact % ethanol content in proposed Sec. 306(12)(a)(4)(A)].'' \74\
---------------------------------------------------------------------------

\73\ AAM/AGA comment at 2; OPEI/NMMA comment at 21. Other
commenters argue that more precise disclosures would be ``safer for
consumer use'' or provided no explanation. See Theissen comment;
Berendts comment; Brink comment; Miller comment.
\74\ AAM/AGA comment at 2 (brackets included in original text).
---------------------------------------------------------------------------

Most commenters who proposed less precise disclosures \75\
generally supported the National Conference for Weights and Measures
(``NCWM'') proposal to allow businesses to round the ethanol content to
the nearest ten percent for ethanol blends below 51 percent ethanol
(``Mid-level Blends'') and post a single label for blends from 51 to 83
percent (``High-level Blends'').\76\ These commenters explained that
engines will not cold-start during winter months if the ethanol
concentration is too high. As a result, High-level Blends contain a
changing ratio of ethanol to gasoline during colder months to ensure
performance and compliance with ASTM International (``ASTM'')
specifications.\77\ Commenters worried that manufacturers and sellers
of High-level Blends would, therefore, incur high costs resulting from
constantly changing labels and that these changes would cause customer
confusion. For example, the Renewable Fuels Association (``RFA'')
stated that ``[a] requirement to change the label every time the
ethanol content fluctuates would be burdensome, costly, and
confusing;'' moreover, simultaneously posting ``multiple labels for
every possible variant of ethanol content in the `ethanol flex fuel'
offered at the pump . . . would only confuse consumers about the actual
ethanol content of the fuel.'' \78\ TN Dept. Ag., which supported
rounding ethanol content to the nearest 10 percent for Mid-level
Blends, argued that some retailers will choose not to sell ethanol or
blend lower amounts of ethanol to avoid the burden of re-labeling High-
level Blends seasonally.\79\ They further explained that selling only
lower blends would be counter to the intent of the Energy Independence
and Security Act of 2007 \80\ to increase the availability of
alternative fuels.
---------------------------------------------------------------------------

\75\ Phillips66 comment at 2; RFA comment at 4; Tesoro comment
Att. 1 at 3-4; API comment at 3; ACE comment at 2; NCWM comment at
3-4; TN Dept. Ag. comment at 3; CA Dept. Ag. comment; NACS/SIGMA
comment at 1-3; BP Products comment at 1; Chevron comment at 2;
Marathon comment at 2.
\76\ Citing the high cost of changing labels, NACS/SIGMA argued
for a single label for ethanol blends below 51 percent and another
label for blends between 51 and 83 percent. NACS/SIGMA comment at 1-
3.
\77\ According to Phillips66, ``[t]he ASTM specification varies
seasonally to ensure continued vehicle performance with changing
ambient temperatures. In order to meet the seasonal specification
changes, the ethanol volume is varied.'' Phillips66 comment at 2.
\78\ RFA comment at 4; see also AFPM comment at 3; Tesoro
comment Att. 1 at 2-3.
\79\ TN Dept. Ag. comment at 3.
\80\ Pub. L. 110-140, 121 Stat. 1492 (2007).
---------------------------------------------------------------------------

Convenience store groups and fuel marketers also urged less
precision, advocating for a single label for Mid-level Blends.\81\
According to them, many retailers cannot know the ethanol content
within 10 percent because they do not blend their own fuels and mix
fuel deliveries with preexisting fuel in their storage tanks. They
explained, ``[e]ven if retailers are in a position to make this
determination, requiring them to constantly shift the labels on their
blender pumps (E20 one day, E40 another day, etc.) would be exceedingly
burdensome and have little offsetting benefit to the consumer.'' \82\
---------------------------------------------------------------------------

\81\ NACS/SIGMA comment at 2-3.
\82\ Id.
---------------------------------------------------------------------------

3. Opposition to Additional Labeling
The American Motorcyclist Association (``AMA'') and 72 individual
commenters argued that the proposed label would be ineffective.
According to AMA, ``another label on a blender pump that already has
many labels will not be sufficient to avoid misfueling and could be
easily overlooked.'' \83\ Instead, AMA recommends ``physical barriers
in the fueling nozzle/receptacle, as was provided when the nation went
from leaded to unleaded fuel.'' \84\
---------------------------------------------------------------------------

\83\ AMA comment at 3.
\84\ Id.
---------------------------------------------------------------------------

D. Infrared Testing Method for Octane Rating

Commenters generally supported allowing infrared spectrophotometry
(``IR Testing'') to establish an octane rating, citing reduced
production and enforcement costs.\85\ Specifically, the Commission's
proposal would have allowed octane ratings from infrared
spectrophotometers that are correlated with ASTM D2699 and D2700 and

[[Page 2058]]

conform to ASTM D6122 (``Standard Practice for the Validation of the
Performance of Multivariate Infrared Spectrophotometers'').\86\ In
support, some commenters noted that gasoline producers and regulators
already use such spectrophotometric testing.\87\ Others suggested that
the Rule permit additional techniques, including Raman
spectrophotometry.\88\
---------------------------------------------------------------------------

\85\ Phillips66 comment at 1; Lima comment at 1; Tesoro comment
Att. 1 at 4-5; CAS comment at 2; AFPM comment at 5; AAM/AGA comment
at 9; API comment at 4-5; Chevron comment at 1; MSU Chem. Lab.
comment; Marathon comment at 4; Davis comment.
\86\ 2014 NPRM, 79 FR at 18865. The Commission received 22
comments on this issue.
\87\ TN Dept. Ag. comment at 2; see also Gibbs comment.
\88\ Lima comment at 2; Tesoro comment Att. 1 at 4-5; AFPM
comment at 5; Chevron comment at 1; Travers comment; Botelho
comment; Demsey comment; Parsley comment; McDaniel comment; Smith
comment.
---------------------------------------------------------------------------

However, even these commenters argued that should the Rule provide
for IR Testing, it must identify ASTM D2699 and D2700 as ``referee''
tests in case of a dispute over the reliability of testing results.\89\
Some of these commenters questioned the reliability of IR Testing and
noted that, unlike D2699 and D2700, IR Testing identifies the
components of fuel, not its actual performance. AFPM, a petrochemical
manufacturers group, explained: ``All correlative test methods such as
infrared and others must relate the results obtained (i.e., spectra
inferred octane) to the engine test methods as required in ASTM D4814
for gasoline certification.'' \90\ AFPM concludes that the purpose of
correlative methods ``is only to predict the standard method results
[from ASTM D2699 and D2700],'' which have been used to classify
gasoline for ``over 60 years.'' \91\ It adds that ``[r]eplacing this
combustion-based technology testing with a chemical make-up test
technology [such as infrared spectrophotometry] may or may not be fully
functional or directly applicable to today's fuels or automobile
needs.'' \92\ BP Products and an individual commenter urged the FTC not
to include these methods until ASTM endorses correlative methods
specifically for octane rating.\93\
---------------------------------------------------------------------------

\89\ Phillips66 comment at 1; Tesoro comment Att. 1 at 4-5; AFPM
comment at 5; AAM/AGA comment at 9; API comment at 4-5; Chevron
comment at 1-2; TN Dept. Ag. comment at 2; Marathon comment at 4;
Davis comment. Many commenters pointed out that the 2014 NPRM cited
outdated ASTM standards and urged the FTC to adopt the most recent
standards. RFA comment at 1; API comment at 5; BP Products comment
at 1; NCWM comment at 4; Chevron comment at 1; TN Dept. Ag. comment
at 2; Gibbs comment.
\90\ AFPM comment at 6; see also Gibbs comment.
\91\ AFPM comment at 6.
\92\ Id.; see Tesoro comment Att.1 at 4-5; Gibbs comment.
\93\ BP Products comment at 1; Gibbs comment.
---------------------------------------------------------------------------

IV. Final Rule Amendments

After considering the record, the Commission now issues final Rule
amendments regarding the rating, certification, and labeling of ethanol
fuels. These amendments include modifications in response to the
comments. Specifically, the final amendments: (1) establish specific
rating and certification requirements for Ethanol Blends with ethanol
content above 10 percent to a maximum of 83 percent (``Ethanol Flex
Fuels''); (2) modify the ethanol fuel labeling to permit a single pump
label for High-level Blends; and (3) do not adopt infrared
spectrophotometry as a method to determine octane rating for gasoline.

A. Definitions and Exemption for EPA E15

To establish requirements for rating, certifying, and labeling
gasoline-ethanol blends, the 2014 NPRM proposed defining ``Ethanol
Blends'' as ``a mixture of gasoline and ethanol containing more than 10
percent ethanol.'' \94\ The NPRM, however, exempted EPA E15 from the
Rule's labeling requirements, because it is subject to EPA labeling
requirements. The final amendments retain this definition and
exemption, but replace the proposed term ``Ethanol Blends'' with
``Ethanol Flex Fuels.''
---------------------------------------------------------------------------

\94\ 2014 NPRM, 79 FR at 18865.
---------------------------------------------------------------------------

Though some commenters agreed that E15 should be exempt from the
Rule's ethanol labeling, they urged the Commission to require an octane
rating label for E15. Specifically, they suggested that the Commission
include E15 in the Rule's definition of gasoline, which currently
includes gasoline-ethanol blends of up to 10 percent ethanol. Doing so
would require E15 pumps to have octane rating labels. These ratings,
according to automotive manufacturer and dealer groups, state
regulators, and ethanol industry groups, would help consumers choose
fuels appropriate for their vehicles, bolster ethanol's competitiveness
as a high-octane fuel, and ensure that Ethanol Flex Fuels are composed
of appropriate quality gasoline.
The Commission has not adopted these suggestions. First, as
discussed in the 2010 NPRM and the Commission's 1993 rulemaking, an
octane rating likely would not provide useful information to consumers
and may deceive them about the suitability of Ethanol Flex Fuels for
their vehicles.\95\ Ethanol naturally boosts the octane rating in
Ethanol Flex Fuels, and consumers may mistakenly equate octane with
fuel quality.\96\ Thus, this higher octane rating may mislead consumers
to believe that such fuels are better for conventional gasoline
engines. Second, according to automakers, using E15 may void vehicle
warranties regardless of model year, except for certain vehicles
manufactured since MY2012 as ``E15 capable.'' \97\ Third, by exempting
EPA E15 from the labeling requirements, but not from the other Rule
requirements, e.g., the certification provisions, the Rule ensures
distributors and retailers have accurate ethanol concentration
information, but does not burden retailers or confuse consumers with
two separate E15 pump labels.
---------------------------------------------------------------------------

\95\ 2010 NPRM, 79 FR at 18857; 1993 Final Rule, 58 FR at 41361.
\96\ 1993 Final Rule, 58 FR at 41361.
\97\ See AAM/AGA comment at 5, 7. If EPA E15 and E15 capable
vehicles become prevalent, the Commission may consider whether
retailers must post an octane label for EPA E15.
---------------------------------------------------------------------------

Finally, using the term ``Ethanol Flex Fuels'' is consistent with
NCWM's and ASTM's use of ``Ethanol Flex Fuels'' for ethanol blends up
to 83 percent.\98\ Harmonizing these terms should alleviate consumer
confusion. Including concentrations above 83 percent, however, would be
inappropriate because automakers have not certified such blends for
flex fuel vehicles or conventional automobiles, and Section 211(f) of
the Clean Air Act prohibits their use as an automotive fuel.\99\ If
this changes, the Commission will consider appropriate amendments.
---------------------------------------------------------------------------

\98\ TN Dept. Ag. comment at 2-3; NCWM comment at 5; see also
ASTM D5798.
\99\ 42 U.S.C. 7545(f).
---------------------------------------------------------------------------

B. Rating and Certification

The final rule contains amendments related to rating and
certification. First, consistent with the 2014 NPRM, the final
amendments require an ethanol content rating for all Ethanol Flex
Fuels. Previously, the Rule rated ethanol blends with the common name
of the fuel and the percentage of the principal component of the fuel
(e.g., E85/``Minimum 70% Ethanol''). As a result, the Rule required
rating ethanol blends below 50 percent ethanol concentration with the
fuel's gasoline concentration, not its ethanol concentration (e.g.,
E45/``Minimum 55% Gasoline''). Generally, ethanol contains less energy
per gallon than petroleum-derived gasoline.\100\ Consequently, the
higher the ethanol concentration, the lower the fuel

[[Page 2059]]

economy. Therefore, by disclosing the ethanol concentration, the label
does not incorrectly convey that the fuel has the same fuel economy as
gasoline. No commenter opposed this change.
---------------------------------------------------------------------------

\100\ See Hyde comment to 2010 NPRM; AMA comment at 7 & atts.
Honda Letter at 2, Chrysler Letter at 2, BMW Letter at 2, & GM
Letter at 2; Department of Energy, National Renewable Energy
Laboratory, Effects of Intermediate Ethanol Blends on Legacy
Vehicles and Small Non-Road Engines, Report 1--Updated study, at
xvii. Golden, Colorado. February 2009. Available at https://energy.gov/eere/bioenergy/downloads/effects-intermediate-ethanol-blends-legacy-vehicles-and-small-non-road.
---------------------------------------------------------------------------

Second, the Commission adopts the 2014 NPRM proposal to allow
transferors to certify fuel content through a letter to the transferee.
For most other alternative fuels, a certification letter remains valid
if a transferred fuel has the same or a higher concentration of the
principal fuel component because an increase in concentration will not
trigger label changes. In contrast, an increase or decrease in the
concentration for Ethanol Flex Fuels may trigger new disclosures by
changing the ethanol concentration of the fuel. For example, if a
fuel's ethanol concentration increased from 26 percent to 38 percent,
the label, as discussed below, must disclose a higher concentration
level. Therefore, a certification letter will only remain valid as long
as the transferred fuel contains the same percentage of ethanol as
previous fuel transfers covered by the letter. No commenter objected to
this proposal.\101\
---------------------------------------------------------------------------

\101\ Tesoro suggested that the FTC consider requiring
certification of the octane rating for gasoline blendstock intended
for blending with oxygenates, such as ethanol. Tesoro comment Att. 1
at 5-6. The Rule, however, does not require an octane rating for
ethanol blends above 10 percent, and therefore will not require a
certification for the gasoline used in Ethanol Flex Fuels.
---------------------------------------------------------------------------

C. Labeling

As explained below, the final amendments adopt the proposed ``Use
Only in Flex-Fuel Vehicles/May Harm Other Engines'' language, but
modify the ethanol percentage disclosures proposed in the 2014 NPRM.
Specifically, retailers must post labels with exact ethanol
concentrations or round to the nearest multiple of 10 for Mid-level
Blends. For High-level Blends, however, they may post the exact
concentration, round to the nearest multiple of 10, or label the fuel
as ``51% to 83% Ethanol.''
1. Required Label Statement
As proposed in the 2014 NPRM, the final rule requires that ethanol
labels disclose ``Use Only in Flex-Fuel Vehicles/May Harm Other
Engines,'' despite objections both that ``May Harm Other Engines'' is
too narrow and that it is overbroad. No commenters opposed the proposed
``Use Only in Flex-Fuel Vehicles.'' \102\
---------------------------------------------------------------------------

\102\ As discussed in Section III.C.3. supra, some commenters
recommended physical barriers between gasoline and Ethanol Flex Fuel
nozzles or pumps to prevent misfueling. However, the PMPA does not
authorize the FTC to mandate such barriers. Thus, the Commission
does not analyze this recommendation further.
---------------------------------------------------------------------------

The Commission reaches the same conclusion as in the 2014 NPRM--
objections to the proposed text are unconvincing and not supported by
the record.\103\ First, there are significant risks, including engine
damage and legal liability, associated with misfueling. The record
demonstrates that Ethanol Flex Fuels may cause engine malfunction,
engine damage, damage to the vehicle's emissions system, or other
problems in conventional automobiles Model Year (``MY'') 2000 or older,
motorcycles, small engines, and non-road engines, including marine
engines.\104\ The EPA permits E15 use only in MY2001 or newer
automobiles \105\ because it determined that Ethanol Flex Fuels may
damage emissions systems and engine components of other engines.\106\
Moreover, AAM/AGA submitted letters from 12 automakers stating that E15
may also harm MY2001 or newer automobiles.\107\ These automakers also
expressed concern that damage from ethanol may not be covered by
warranty.\108\
---------------------------------------------------------------------------

\103\ 2014 NPRM, 79 FR at 18858-59.
\104\ Id.; see discussion of comments from gasoline
manufacturers and retailers, automobile manufacturers, and other
similar comments in Section III.C.1. supra.
\105\ EPA Waiver Decision II, 76 FR at 4662.
\106\ EPA Waiver Decision I, 75 FR at 68097-98, 68103; see also
EPA Final Rule to Mitigate Misfueling, 76 FR at 44414-15, 44439.
\107\ AAM/AGA comment at 7 and Atts. The automakers included
Chrysler, Ford, GM, Mercedes-Benz, Honda, Mazda, Toyota, Nissan,
Volkswagen, Volvo, BMW, Hyundai, and Kia Motors.
\108\ Id.
---------------------------------------------------------------------------

Second, ``May Harm Other Engines'' is not confusing. By stating
``Use Only In Flex-Fuel Vehicles'' and ``May Harm Other Engines,'' the
label clearly and accurately explains: (1) The fuel's suitability for
consumers' cars and (2) that misfueling risks harm to non-flex-fuel
engines, but not that it will necessarily harm all such engines.
Moreover, because the disclosure clearly distinguishes between flex-
fuel vehicles and ``other'' (i.e., non-flex fuel) engines, it should
not cause flex-fuel vehicle owners to fear that use of ethanol blends
would harm their engines.
Third, the Commission disagrees that the disclosures are unfair
because they apply only to ethanol blends. Ethanol blends present a
different challenge than other automotive fuels. Specifically, most
fuels present consumers with a binary choice (e.g., engines either
operate on diesel fuel or not). In contrast, when choosing a gasoline-
ethanol blend, consumers must determine the appropriate ethanol
concentration because different makes and models of gasoline-powered
engines operate on differing ranges of ethanol concentration. For
example, ethanol blends up to 10% ethanol concentration (i.e., E10) are
appropriate for almost all gasoline-powered automotive engines, but E15
may only be appropriate for MY2001 or newer automobiles and Flex-Fuel
Vehicles. Furthermore, higher blends (e.g., E20, E30, or E85) are only
appropriate for Flex-Fuel Vehicles. Accordingly, the challenge of
choosing the appropriate ethanol concentration is more likely to lead
to misfueling than the binary choice between a gasoline-ethanol blend
and another automotive fuel, such as diesel. A label, therefore, that
delineates between different blends (e.g., E20, E30, or E85) is
appropriate for ethanol, but unnecessary for other fuels.
As courts have repeatedly held, agencies may limit rules to those
areas where they have observed a problem.\109\ Similarly, agencies need
not take an all-or-nothing approach to regulation but may proceed
incrementally.\110\
---------------------------------------------------------------------------

\109\ See, e.g., Pharm. Research and Mfrs. of Am. v. FTC, 790
F.3d 198, 206 (D.C. Cir. 2015); Illinois Commercial Fishing Ass'n v.
Salazar, 867 F.Supp.2d 108, 118-19 (D.D.C. 2012) (upholding rule
banning commercial fishing but allowing recreational fishing, where
commercial fishing posed the greater risk to endangered fish.).
\110\ Investment Co. Inst. v. CFTC, 891 F. Supp. 2d 162, 187
(D.D.C. 2012) (``[A]gencies, like legislatures, do not generally
resolve massive problems in one fell regulatory swoop.'') (quotation
omitted); City of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989)
(``[A]gencies have great discretion to treat a problem
partially.'').
---------------------------------------------------------------------------

Fourth, the Commission disagrees with the argument that the
disclosures need additional or different language, such as ``Warning,''
``Check Owner's Manual,'' or more information about potential harm from
misfueling. The label's orange color and placement on the fuel pump
should sufficiently attract consumer's attention, making ``Warning'' or
similar language unnecessary. Moreover, when displayed together, the
phrases ``Use Only in Flex-Fuel Vehicles'' and ``May Harm Other
Engines'' simply and unambiguously inform consumers that they can use
ethanol blends in their flex-fuel vehicles and does not require the
extra step of consulting an owner's manual.
Finally, as explained in the 2014 NPRM, the disclosures fall
squarely within the Commission's statutory authority under the PMPA to
prescribe labels disclosing fuel ratings.\111\
---------------------------------------------------------------------------

\111\ 2014 NPRM, 79 FR at 18860-61.
---------------------------------------------------------------------------

2. Ethanol Disclosure
The final rule adopts tiered labeling for Ethanol Flex Fuels
because this

[[Page 2060]]

approach provides consumers with the information needed to choose
appropriate fuels without placing an undue burden on retailers. First,
for Mid-level Blends (ethanol concentrations above 10 percent, but no
greater than 50 percent), retailers may post the exact percentage or
round to the nearest multiple of 10 (e.g., ``40% Ethanol'').\112\
Second, for High-level Blends (concentrations above 50 percent, but no
greater than 83 percent), retailers may post the exact percentage of
ethanol concentration, round to the nearest multiple of 10, or indicate
that the fuel contains ``51% to 83% Ethanol.'' \113\
---------------------------------------------------------------------------

\112\ For example, retailers can label fuels at 25 and 34
percent concentrations as 30% Ethanol.
\113\ The label states ``51% to 83% Ethanol,'' even though High-
level Blends include concentrations about 50 percent. An ``Over 50%
to 83% Ethanol'' label or similar alternative might be more
specific, but would present consumers with a more complicated
message in a smaller font, impeding comprehension.
---------------------------------------------------------------------------

For Mid-level Blends, the consumer benefits from more precise
labels outweigh the burden on retailers. Requiring more precise
disclosures provides flexible-fuel vehicle owners with meaningful
information about the fuel's suitability for their vehicles without the
risk of incorrectly conveying that the fuel has the same fuel economy
as gasoline.\114\ Thus, the precision helps them make informed choices
about Ethanol Flex Fuels. The Rule, furthermore, mitigates the burden
of labeling by permitting rounding of ethanol concentration, which
allows retailers to alter their blends by small percentages without
changing labels.
---------------------------------------------------------------------------

\114\ See supra Section IV.B.
---------------------------------------------------------------------------

In contrast, the consumer benefits from more precise labeling of
High-level Blends do not outweigh the increased burden to retailers.
Unlike Mid-level Blends, High-level Blends' performance depends on
weather conditions. As a result, retailers and producers must change
the ethanol concentration in High-level Blends to maintain performance
in changing weather conditions and comply with ASTM D5798's standards
for vapor pressure.\115\ To do so, producers may frequently change
blends with varying ethanol concentrations.\116\ When retailers place a
newer blend in their tanks, it mixes with fuel of different ethanol
concentration from prior deliveries. As a result, retailers may be
unable to determine a concentration range more precise than 51 to 83
percent.\117\ More precise labeling, therefore, would require retailers
to acquire testing technology, regularly test for ethanol
concentration, and re-label when necessary.
---------------------------------------------------------------------------

\115\ See supra notes 75-79; see also ASTM D5798 X1.3.
\116\ NCWM comment at 2.
\117\ NACS/SIGMA comment at 3.
---------------------------------------------------------------------------

More precise labeling for High-level Blends, moreover, would have
less benefit for consumers because it is unlikely that retailers could
market High-Level Blends differentiated by ethanol concentration.
According to the TN Dept. of Ag., retailers and producers will market
``comparable concentrations of [High-Level Blends] at [their] competing
fuel sites in a given market,'' in order to comply with ASTM D5798 and
their obligations under the Energy Independence and Security Act of
2007 to blend increasing amounts of renewable fuels.\118\ Thus, these
reduced benefits do not outweigh the retailers' increased burden from
precise labels.
---------------------------------------------------------------------------

\118\ TN Dept. Ag. comment at 3.
---------------------------------------------------------------------------

3. Label Specifications
The final amendments generally adopt the size, font, format, and
color requirements proposed in the 2014 NPRM, with minor alterations to
accommodate the additional characters needed for High-level Blend
labels.\119\ To help effectuate these amendments, 306.12(f) now
provides sample illustrations of labels for Mid-level Blends and High-
level Blends.
---------------------------------------------------------------------------

\119\ The final amendments also delete the Rule's sample label
for ``E-100'' (i.e., ethanol not mixed with gasoline) because the
record does not show any retail sales of such fuels.
---------------------------------------------------------------------------

Some commenters argued for changes to the proposed label's size,
font size, placement on the pump, or color. The proposed label
formatting and placement specifications, however, are consistent with
those in place for most of the alternative liquid fuels covered by the
Rule, and the record does not support inconsistent treatment for
ethanol labels. For example, the ethanol industry commented that orange
is ``associated with danger'' and would put the industry at a
competitive disadvantage.\120\ However, as explained in the 2014 NPRM,
orange is the color for all alternative fuels except biodiesel and will
enable retail consumers to distinguish Ethanol Flex Fuels from
gasoline. Furthermore, orange's brightness will help ensure that
consumers notice the label and, therefore, avoid misfueling. Finally,
EPA's E15 label uses the same orange background. Thus, using orange
creates a uniform color scheme for all Ethanol Flex Fuels, making the
label easier for consumers to identify.
---------------------------------------------------------------------------

\120\ ACE comment Att. (May 20, 2010 comment at 2).
---------------------------------------------------------------------------

D. Octane Rating by Infrared Spectrophotometry

Contrary to the 2014 proposal, the Commission does not adopt
infrared spectrophotometry as an approved method to test octane
rating.\121\ According to the record, infrared testing is an indirect
method of determining octane rating that is not endorsed by ASTM, nor
is it as reliable as the methods currently specified by the Rule,
namely ASTM D2699 and D2700. Furthermore, in the case of a dispute
involving infrared testing, ASTM D2699 and D2700 must verify the
results. Therefore, to avoid potential conflict and uncertainty from
such indirect testing methods, the Commission does not amend its list
of octane rating testing methods.
---------------------------------------------------------------------------

\121\ The amendments do adopt, however, the most current
versions of the ASTM D4814, D2699, D2700, and D2885.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

The certification and labeling requirements announced in the final
amendments for Ethanol Flex Fuels constitute a ``collection of
information'' under the Paperwork Reduction Act of 1995, 44 U.S.C.
3501-3521 (``PRA'').
Consistent with the Rule's requirements for other alternative
fuels, under the final amendments, refiners, producers, importers,
distributors, and retailers of Ethanol Flex Fuels must retain, 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.\122\ The covered entities also must make these records
available for inspection by staff of the Commission and EPA or by
persons authorized by those agencies. Finally, retailers must produce,
distribute, and post fuel rating labels on fuel pumps.
---------------------------------------------------------------------------

\122\ See the Rule's recordkeeping requirements, 16 CFR 306.7;
306.9; and 306.11.
---------------------------------------------------------------------------

In 2014, the Commission discussed the estimated recordkeeping and
disclosure burdens for entities covered under the Rule and sought
comment on the accuracy of those estimates. Commenters have not
disputed those estimates. The Commission has updated those estimates to
incorporate more recent data for the number of retailers nationwide and
labor costs. Below, the Commission discusses those estimates.
The Commission has previously estimated the burden associated with
the Rule's recordkeeping requirements for the sale of automotive fuels
to be no more than 5 minutes per year (or 1/12th of an hour) per
industry member, and no more than 1/8th of an hour per year per
industry member for the Rule's

[[Page 2061]]

disclosure requirements.\123\ Consistent with OMB regulations that
implement the PRA, these estimates reflect solely the burden
incremental to the usual and customary recordkeeping and disclosure
activities performed by affected entities in the ordinary course of
business.\124\
---------------------------------------------------------------------------

\123\ See, e.g., Federal Trade Commission: Automotive Fuel
Ratings, Certification and Posting: Final Rule on Biodiesel
Labeling, 73 FR 40154, 40161 (July 11, 2008). Staff has previously
estimated that retailers of automotive fuels incur an average burden
of approximately one hour to produce, distribute, and post fuel
rating labels. Because the labels are durable, staff has concluded
that only about one of every eight retailers incurs this burden each
year, hence, 1/8th of an hour, on average, per retailer.
\124\ See 5 CFR 1320.3(b)(2).
---------------------------------------------------------------------------

Because the procedures for distributing and selling Mid-Level
Ethanol blends are no different from those for other automotive fuels,
the Commission expects that, consistent with practices in the fuel
industry generally, the covered parties will record the fuel rating
certification on documents (e.g., shipping receipts) already in use, or
will use a letter of certification. Furthermore, the Commission expects
that labeling of Ethanol Flex Fuel pumps will be consistent, generally,
with practices in the fuel industry. Accordingly, the PRA burden will
be the same as that for other automotive fuels: 1/12th of an hour per
year for recordkeeping and 1/8th of an hour per year for disclosure.
The U.S. Department of Energy (``DOE'') indicates 2,674 ethanol
retailers nationwide, and the U.S. Energy Information Administration
indicates 195 ethanol fuel production plants.\125\ Assuming that each
ethanol retailer and producer will spend 1/12th of an hour per year
complying with the recordkeeping requirements, the cumulative
recordkeeping burden for retailers and producers is 223 hours and 16
hours, respectively. Assuming each ethanol retailer will spend 1/8th of
an hour per year complying with the disclosure requirements, the
cumulative disclosure burden for retailers is 334 hours.
---------------------------------------------------------------------------

\125\ See https://www.afdc.energy.gov/fuels/ethanol_locations.html (last visited Oct. 28, 2015); https://www.eia.gov/petroleum/ethanolcapacity/ (last visited Oct. 28, 2015).
---------------------------------------------------------------------------

Estimated labor costs are derived by applying appropriate hourly
cost figures to the estimated burden hours described above. Applying an
average hourly wage of $11.08 for ethanol retailers,\126\ the aggregate
recordkeeping and disclosure labor cost for all ethanol retailers
combined would be $6,172 ((223 hours + 334 hours) x $11.08). Applying
an average hourly wage of $29.67 for ethanol producers,\127\ their
cumulative labor costs (recordkeeping) would be $475 (16 hours x
$29.67). Thus, cumulative labor costs for ethanol retailers and
producers, combined, would be $6,647 ($6,172 + $475).
---------------------------------------------------------------------------

\126\ See https://www.bls.gov/iag/tgs/iag447.htm (Bureau of Labor
Statistics, July 2015 Current Employment Statistics, Average Hourly
Earnings for Gasoline Station Production and Nonsupervisory
Employees).
\127\ See https://www.bls.gov/iag/tgs/iag211.htm#earnings (Bureau
of Labor Statistics, July 2015 Current Employment Statistics,
Average Hourly Earnings for Oil and Gas Extraction Production and
Nonsupervisory Employees).
---------------------------------------------------------------------------

The Rule does not impose any capital costs for producers,
importers, or distributors of ethanol blends. Retailers, however, do
incur the cost of procuring and replacing fuel dispenser labels to
comply with the Rule. Staff has previously estimated that the price per
automotive fuel label is fifty cents and that the average automotive
fuel retailer has six dispensers. The Petroleum Marketers Association
of American (``PMAA''), however, stated in its comment to the 2010 NPRM
that the cost of labels ranges from one to two dollars. Conservatively
applying the upper end from PMAA's estimate results in an initial cost
to retailers of $12 (6 pumps x $2).
Regarding label replacement, staff has previously estimated a
dispenser useful life range of 6 to 10 years. Assuming a useful life of
8 years, the mean of that range, replacement labeling will not be
necessary for well beyond the relevant time frame, i.e., the immediate
3-year PRA clearance sought. Averaging solely the $12 labeling cost at
inception per retailer over that shorter period, however, annualized
labeling cost per retailer will be $4. Cumulative labeling cost would
thus be $10,696 (2,674 retailers x $4 each, annualized).

VI. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires an
agency to provide a Final Regulatory Flexibility Analysis with the
final rule unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small
entities.\128\
---------------------------------------------------------------------------

\128\ See 5 U.S.C. 603-605.
---------------------------------------------------------------------------

The FTC reaffirms its conclusion that the final amendments will not
have a significant economic impact on a substantial number of small
entities. As explained in Section V above, the Commission expects
Ethanol Flex Fuel retailers to spend, at most, 5 minutes per year
complying with the recordkeeping requirements and 1/8th of an hour per
year complying with the disclosure requirements. As also explained in
Section V, staff estimates the mean hourly wage for producers of
$29.67, and for retailers of $11.08. Even assuming that all ethanol
retailers are small entities, compliance with the recordkeeping
requirements will cost producers, individually, an estimated $2.47
($29.67 x 1/12th of an hour) and cost retailers, individually, an
estimated $.92 ($11.08 x 1/12th of an hour). In addition, under the
same assumptions, compliance with the disclosure requirements will cost
individual retailers an estimated $1.39 ($11.08 x 1/8th of an hour).
Finally, as discussed in Section V, the Commission estimates annualized
capital costs of $4 per retailer.
This document serves as notice to the Small Business Administration
of the agency's certification of no effect. Nonetheless, the Commission
has prepared the following analysis.

A. Statement of the Need for, and Objectives of, the Final Amendments

The Commission adopts these amendments to further the PMPA's
objective of giving consumers information necessary to choose the
correct fuel for their vehicles. The emergence of Ethanol Flex Fuels as
a retail fuel and its likely increased availability necessitate the
amendments. These amendments provide requirements for rating,
certifying, and labeling Ethanol Flex Fuels (blends of gasoline and
more than 10 percent but no greater than 83 percent ethanol) pursuant
to PMPA, 15 U.S.C. 2801 et seq.

B. Issues Raised by Comments in Response to the Initial Regulatory
Flexibility Analysis

Commenters did not raise any specific issues with respect to the
regulatory flexibility analysis in the NPRM.

C. Estimate of the Number of Small Entities to Which the Final
Amendments Will Apply

Retailers of ethanol blends will be classified as small businesses
if they satisfy the Small Business Administration's relevant size
standards, as determined by the Small Business Size Standards component
of the North American Industry Classification System (``NAICS''). The
closest NAICS size standard relevant to this rulemaking is for
``Gasoline Stations with Convenience Stores.'' That standard classifies
retailers with a maximum $29.5 million in annual receipts as small
businesses.\129\ As discussed above, DOE reports 2,674

[[Page 2062]]

ethanol fueling stations.\130\ DOE does not provide information on
those retailers' revenue and no commenters submitted information about
this issue. Therefore, the Commission is unable to determine how many
of these retailers qualify as small businesses.
---------------------------------------------------------------------------

\129\ See https://www.sba.gov/content/small-business-size-standards (last visited Jan. 15, 2015).
\130\ See www.afdc.energy.gov/afdc/fuels/stations_counts.html
(last visited Oct. 28, 2015).
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements

The final amendments make clear that the Fuel Rating Rule's
recordkeeping, certification, and labeling requirements apply to
Ethanol Flex Fuels. Small entities potentially affected are producers,
distributors, and retailers of those fuels. The Commission expects that
the recordkeeping, certification, and labeling tasks are done by
industry members in the normal course of their business. Accordingly,
we do not expect the amendments to require any professional skills
beyond those already employed by industry members, namely,
administrative.

E. Alternatives Considered

As explained above, PMPA requires retailers of liquid automotive
fuels to post labels at the point of sale displaying those fuels'
ratings. The posting requirements in the final amendments are minimal
and, as noted above, do not require creating any separate documents
because covered parties may use documents already in use to certify a
fuel's rating. Moreover, the Commission cannot exempt small businesses
from the Rule and still communicate fuel rating information to
consumers. Furthermore, the amendments minimize what, if any, economic
impact there is from the labeling requirements. Finally, because PMPA
requires point-of-sale labels, the Rule must require retailers to incur
the costs of posting those labels. Therefore, the Commission concludes
that there are no alternative measures that would accomplish the
purposes of PMPA and further minimize the burden on small entities.

VII. Incorporation by Reference

Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Commission
is incorporating the specifications of the following standards issued
by ASTM International: D4814-15a ``Standard Specification for
Automotive Spark-Ignition Engine Fuel (published August 2015)'' (``ASTM
D4814-15a''); ASTM D2699-15a, ``Standard Test Method for Research
Octane Number of Spark-Ignition Engine Fuel (published November
2015)''; ASTM D2700-14, ``Standard Test Method for Motor Octane Number
of Spark-Ignition Engine Fuel (published November 2014)''; and ASTM
D2885-13, ``Standard Test Method for Determination of Octane Number of
Spark-Ignition Engine Fuels by On-Line Direct Comparison Technique
(published July 2013).''
The terms research octane number and motor octane number have the
meanings provided in ASTM Standard D4814-15a. Standards ASTM D2699-15a,
ASTM D2700-14, and ASTM D2855-13 provide test methods or protocols for
determining research octane number or motor octane number of specified
grades or types of gasoline.
These ASTM standards are reasonably available to interested
parties. Members of the public can obtain copies of ASTM D4814-15a,
ASTM D2699-15a, ASTM D2700-14, and ASTM D2885-13 from ASTM
International, 100 Barr Harbor Drive, West Conshohocken, PA 19428;
telephone: 1-877-909-2786; internet address: https://www.astm.org. These
ASTM standards are also available for inspection at the FTC Library,
(202) 326-2395, Federal Trade Commission, Room H-630, 600 Pennsylvania
Avenue NW., Washington, DC 20580.

List of Subjects in 16 CFR Part 306

Trade practices, Fuel ratings, Fuel, Gasoline, Incorporation by
reference.

For the reasons discussed in the preamble, the Federal Trade
Commission amends title 16, Chapter I, Subchapter C, of the Code of
Federal Regulations, part 306, as follows:

PART 306--AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING

0
1. The authority citation for part 306 continues to read as follows:

Authority: 15 U.S.C. 2801 et seq.; 42 U.S.C. 17021.

0
2. Amend Sec. 306.0 by revising paragraphs (b), (i), (j), and (l) and
adding paragraph (o) to read as follows:

Sec. 306.0 Definitions.

* * * * *
(b) Research octane number and motor octane number. These terms
have the meanings given such terms in the specifications of ASTM D4814-
15a, Standard Specification for Automotive Spark-Ignition Engine Fuel,
(incorporated by reference, see Sec. 306.13) and, with respect to any
grade or type of gasoline, are determined in accordance with one of the
following test methods or protocols:
(1) ASTM D2699-15a, Standard Test Method for Research Octane Number
of Spark-Ignition Engine Fuel, and ASTM D2700-14, Standard Test Method
for Motor Octane Number of Spark-Ignition Engine Fuel, (both
incorporated by reference, see Sec. 306.13) or
(2) ASTM D2885-13, Standard Test Method for Determination of Octane
Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison
Technique, (incorporated by reference, see Sec. 306.13).
* * * * *
(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 spark-ignition engine fuel, which
includes, but is not limited to, gasohol (generally a mixture of
approximately 90 percent unleaded gasoline and 10 percent 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
and/or other alcohols (or such other percentage, as provided by the
Secretary of the United States Department of Energy, by rule), with
gasoline or other fuels;
(iii) Ethanol flex fuels;
(iv) Liquefied natural gas;
(v) Liquefied petroleum gas;
(vi) Coal-derived liquid fuels;
(vii) Biodiesel;
(viii) Biomass-based diesel;
(ix) Biodiesel blends containing more than 5 percent biodiesel by
volume; and
(x) Biomass-based diesel blends containing more than 5 percent
biomass-based diesel by volume.
(3) Biodiesel blends and biomass-based diesel blends that contain
less than or equal to 5 percent biodiesel by volume and less than or
equal to 5 percent biomass-based diesel by volume, and that meet ASTM
D975-07b, Standard Specification for Diesel Fuel Oils (incorporated by
reference, see Sec. 306.13), are not automotive fuels covered by the
requirements of this part.
Note to paragraph (i): Provided, however, that biodiesel blends and
biomass-based diesel blends that contain less than or equal to 5
percent biodiesel by volume and less than or equal to 5 percent
biomass-based diesel by volume, and that meet ASTM D975-09b, Standard
Specification for Diesel Fuel Oils (incorporated by reference, see
Sec. 306.13), are not automotive fuels covered by the requirements of
this Part.
(j) Automotive fuel rating means--

[[Page 2063]]

(1) For gasoline, the octane rating.
(2) For an alternative liquid automotive fuel other than biodiesel,
biomass-based diesel, biodiesel blends, biomass-based diesel blends,
and ethanol flex fuels, the commonly used name of the fuel with a
disclosure of the amount, expressed as the minimum percentage by
volume, of the principal component of the fuel. A disclosure of other
components, expressed as the minimum percentage by volume, may be
included, if desired.
(3) For biomass-based diesel, biodiesel, biomass-based diesel
blends with more than 5 percent biomass-based diesel, and biodiesel
blends with more than 5 percent biodiesel, a disclosure of the biomass-
based diesel or biodiesel component, expressed as the percentage by
volume.
(4) For ethanol flex fuels, a disclosure of the ethanol component,
expressed as the percentage by volume and the text ``Use Only in Flex-
Fuel Vehicles/May Harm Other Engines.''
* * * * *
(l) Biodiesel means the monoalkyl esters of long chain fatty acids
derived from plant or animal matter that meet: The registration
requirements for fuels and fuel additives under 40 CFR part 79; and the
requirements of ASTM D6751-10, Standard Specification for Biodiesel
Fuel Blend Stock (B100) for Middle Distillate Fuels, (incorporated by
reference, see Sec. 306.13).
* * * * *
(o) Ethanol flex fuels means a mixture of gasoline and ethanol
containing more than 10 percent but not greater than 83 percent ethanol
by volume.

0
3. Revise Sec. 306.5 to read as follows:

Sec. 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 ASTM D4814-15a, Standard Specifications for Automotive
Spark-Ignition Engine Fuel, (incorporated by reference, see Sec.
306.13). To determine the research octane and motor octane numbers, you
may do one of the following:
(1) Use ASTM D2699-15a, Standard Test Method for Research Octane
Number of Spark-Ignition Engine Fuel (incorporated by reference, see
Sec. 306.13), to determine the research octane number, and ASTM D2700-
14, Standard Test Method for Motor Octane Number of Spark-Ignition
Engine Fuel (incorporated by reference, see Sec. 306.13), to determine
the motor octane number; or
(2) Use the test method set forth in ASTM D2885-13, Standard Test
Method for Determination of Octane Number of Spark-Ignition Engine
Fuels by On-Line Direct Comparison Technique (incorporated by
reference, see Sec. 306.13).
(b) To determine automotive fuel ratings for alternative liquid
automotive fuels other than ethanol flex fuels, biodiesel blends, and
biomass-based diesel blends, 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. In the case of biodiesel blends, you must
possess a reasonable basis, consisting of competent and reliable
evidence, for the percentage of biodiesel contained in the fuel. In the
case of biomass-based diesel blends, you must possess a reasonable
basis, consisting of competent and reliable evidence, for the
percentage of biomass-based diesel contained in the fuel. In the case
of ethanol flex fuels, you must possess a reasonable basis, consisting
of competent and reliable evidence, for the percentage of ethanol
contained in the fuel. 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.

0
4. Amend Sec. 306.6 by revising paragraph (b) to read as follows:

Sec. 306.6 Certification.

* * * * *
(b) Give the person a letter or other 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 automotive fuel rating,
except that a letter certifying the fuel rating of biomass-based
diesel, biodiesel, a biomass-based diesel blend, a biodiesel blend, or
an ethanol flex fuel will be good only until you transfer those fuels
with a different automotive fuel rating, whether the rating is higher
or lower. 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.
* * * * *

0
5. Amend Sec. 306.10 by revising paragraphs (a) and (f) to read as
follows:

Sec. 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. Provided, however, that you do not
need to post the automotive fuel rating of a mixture of gasoline and
ethanol containing more than 10 but not more than 15 percent ethanol if
the face of the dispenser is labeled in accordance with 40 CFR 80.1501.
* * * * *
(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/Use Only in Flex-Fuel Vehicles/May Harm Other
engines''
(3) ``M85/Minimum __% Methanol''
(4) ``LPG/Minimum __% Propane'' or ``LPG/Minimum __% Propane and __%
Butane''
(5) ``LNG/Minimum __% Methane''
(6) ``B20 Biodiesel Blend/contains biomass-based diesel or biodiesel in
quantities between 5 percent and 20 percent''
(7) ``20% Biomass-Based Diesel Blend/contains biomass-based diesel or
biodiesel in quantities between 5 percent and 20 percent''
(8) ``B100 Biodiesel/contains 100 percent biodiesel''
(9) ``100% Biomass-Based Diesel/contains 100 percent biomass-based
diesel''
* * * * *

0
6. Amend Sec. 306.12:
0
a. By redesignating paragraphs (a)(4) through (9) as paragraphs (a)(5)
through (10), respectively;
0
b. By adding new paragraph (a)(4);
0
c. By removing the illustration of the ``E-100'' label in paragraph
(f); and
0
d. By adding two illustrations after the existing illustrations in
paragraph (f).
The additions read as follows:

[[Page 2064]]

Sec. 306.12 Labels.

* * * * *
(a) * * *
(4) For ethanol flex fuels. (i) The label is 3 inches (7.62 cm)
wide x 2\1/2\ inches (6.35 cm) long. ``Helvetica Black'' or equivalent
type is used throughout. The band at the top of the label contains one
of the following:
(A) For all ethanol flex fuels. The numerical value representing
the volume percentage of ethanol in the fuel followed by the percentage
sign and then by the term ``ETHANOL''; or
(B) For ethanol flex fuels containing more than 10 percent and no
greater than 50 percent ethanol by volume. The numerical value
representing the volume percentage of ethanol in the fuel, rounded to
the nearest multiple of 10, followed by the percentage sign and then
the term ``ETHANOL''; or
(C) For ethanol flex fuels containing more than 50 percent and no
greater than 83 percent ethanol by volume. The numerical value
representing the volume percentage of ethanol in the fuel, rounded to
the nearest multiple of 10, followed by the percentage sign and then
the term ``ETHANOL'' or the phrase, ``51%-83% ETHANOL.''
(ii) The band should measure 1 inch (2.54 cm) deep. The type in the
band is centered both horizontally and vertically. The percentage
disclosure and the word ``ETHANOL'' are in 24 point font. In the case
of labels including the phrase, ``51%-83% ETHANOL,'' the percentage
disclosure is in 18 point font, and the word ``ETHANOL'' is in 24 point
font and at least \1/8\ inch (.32 cm) below the percentage disclosure.
The type below the black band is centered vertically and horizontally.
The first line is the text: ``USE ONLY IN.'' It is in 16 point font,
except for the word ``ONLY,'' which is in 26 point font. The word
``ONLY'' is underlined with a 2 point (or thicker) underline. The
second line is in 16 point font, at least \1/8\ inch (.32 cm) below the
first line, and is the text: ``FLEX-FUEL VEHICLES.'' The third line is
in 10 point font, at least \1/8\ inch (.32 cm) below the first line,
and is the text ``MAY HARM OTHER ENGINES.''
* * * * *
(f) * * *
[GRAPHIC] [TIFF OMITTED] TR14JA16.000

0
7. Add Sec. 306.13 to read as follows:

Sec. 306.13 Incorporation by reference.

(a) Certain material is incorporated by reference into this part
with the approval of the Director of the Federal Register under 5
U.S.C. 552(a) and 1 CFR part 51. You may inspect all approved material
at the FTC Library, (202) 326-2395, Federal Trade Commission, Room H-
630, 600 Pennsylvania Avenue NW., Washington, DC 20580, and at the
National Archives and Records Administration (``NARA''). For
information on the availability of this material at NARA, call 202-741-
6030, or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.
(b) ASTM International (ASTM), 100 Barr Harbor Drive, West
Conshohocken, PA 19428 telephone: 1-877-909-2786; Internet address:
https://www.astm.org.
(1) ASTM D975-07b, Standard Specification for Diesel Fuel Oils,

[[Page 2065]]

published July 2007; IBR approved for Sec. 306.0(i).
(2) ASTM D975-09b, Standard Specification for Diesel Fuel Oils,
published August 2009; IBR approved for Sec. 306.0(i).
(3) ASTM D2699-15a, Standard Test Method for Research Octane Number
of Spark-Ignition Engine Fuel, published November 2015; IBR approved
for Sec. Sec. 306.0(b) and 306.5(a).
(4) ASTM D2700-14, Standard Test Method for Motor Octane Number of
Spark-Ignition Engine Fuel, published November 2014; IBR approved for
Sec. Sec. 306.0(b) and 306.5(a).
(5) ASTM D2885-13, Standard Test Method for Determination of Octane
Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison
Technique, published July 2013; IBR approved for Sec. Sec. 306.0(b)
and 306.5(a).
(6) ASTM D4814-15a, Standard Specification for Automotive Spark-
Ignition Engine Fuel, published August 2015; IBR approved for
Sec. Sec. 306.0(b) and 306.5(a).
(7) ASTM D6751-10, Standard Specification for Biodiesel Fuel Blend
Stock (B100) for Middle Distillate Fuels, published October 2010; IBR
approved for Sec. 306.0(l).

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-32972 Filed 1-13-16; 8:45 am]
BILLING CODE 6750-01-P

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