1. Section 224.1 will be amended to add definitions of terms used in amendments to the substantive provisions of Part 224, promulgated pursuant to the proposed rule.

2. Section 224.3 will be amended to require automotive fuel, diesel fuel, and kerosene to comply with current standards developed by the American Society for Testing and Materials (“ASTM”). That section will also be amended to allow for the sale and distribution of gasoline-ethanol blends that have not more than 15%, and not less than 51%, by volume, of ethanol. Furthermore, that section will be amended to set forth standards for certain fuels; i.e., denatured fuel ethanol, ethanol flex fuels, butanol, butanol blends, biodiesel, and biodiesel blends, for which standards are not presently set forth.

3. Sections 224.4 and 224.7 will be amended to lower the amount of water that may be in the bottom of a retail fuel storage tank from two inches to one inch.

4. Section 224.5 will be repealed and a new section 224.5 added that will set forth disclosure requirements that refiners and distributors of automotive fuels and other petroleum products must furnish to purchasers of bulk shipments of those commodities.

5. Section 224.6 will be amended to, in effect, delete the authority of the Commissioner of Agriculture and Markets to temporarily allow a retailer of petroleum products to sell such products from dispensers that do not set forth the total selling price.

6. Section 224.8 will be amended to require a seller of gasoline that contains more than one percent butanol, by volume, to make certain disclosures.

7. Section 224.9 will be amended to require refiners, producers, distributors, and retailers of gasoline and diesel motor fuel to comply with otherwise-applicable federal regulations relating to octane.

8. Section 224.14 will be amended to conform to presently existing regulations promulgated by the Department of Environmental Conservation, in 6 NYCRR section 613-22, that require retailers to permanently mark “fill ports”, in a specified manner, designed to identify the petroleum products therein.

1. Statutory authority:

The proposed rule is authorized by Agriculture and Markets Law (“AML”) sections 16(1), 18(6), 179(3)(b), 192-a(1), 192-b(12), and 192-c(13).

The proposed rule will, generally, permit a wider range of “alternative” fuels and require those fuels to meet specified standards. Additionally, the proposed rule will require that a person who sells and distributes automotive fuels, including “alternative” fuels, to make certain disclosures, and that retailers of automotive fuels, including “alternative” fuels, must post certain information, in connection with the sale thereof.

2. Legislative objectives:

In the statutes referred to above, the legislature sought to ensure that fuels used in motor vehicles and equipment meet applicable standards and that all persons in the chain of distribution of such fuels are adequately and fully made aware of the most important properties of each such fuel.

3. Needs and benefits:

The proposed rule contains a number of substantive amendments and additions to 1 NYCRR Part 224, as well as certain “house-keeping” changes. The proposed substantive changes and their benefits associated are as follows:

– Subdivisions (a), (b) and (c) of section 224.3 will be amended, and subdivisions (d), (e), (f), (g), (h) and (i) will be added thereto, to incorporate by reference recently-published American Society for Testing and Materials (“ASTM”) standards applicable to gasoline with up to 15% ethanol, gasoline-butanol blends, diesel fuel, kerosene, denatured fuel ethanol, ethanol flex fuels containing 51% – 83% ethanol, butanol, butanol blends, and biodiesel blends.

These amendments are needed because they will establish standards that such fuels will be required to meet. Distributors of such fuels will benefit in that they will have a “level playing field” to compete on and retail purchasers of such fuels will benefit in that they will be better assured that they have indeed obtained the fuel that they have bargained for.

– Subparagraph (i) of paragraph (2) of subdivision (a) of section 224.3 will be amended to prohibit the sale and distribution of gasoline-ethanol blends greater than 15%, and less than 51% ethanol, by volume, and to permit the sale and distribution of gasoline-butanol blends up to 16%, by volume.

This amendment is needed to accommodate consumer demand for gasoline-ethanol blends of up to and including 15% ethanol by volume (“such flex fuels”). Consumers who own vehicles that were designed to operate with such flex fuels deserve the opportunity to purchase such fuels which, presently, sell for a discount of between four to ten cents/gallon, as compared to flex fuels with a lesser amount of ethanol by volume.

This amendment is also needed to accommodate consumer demand for gasoline-butanol blends of up to and including 16% butanol by volume. Some consumers feel butanol is a superior additive over ethanol because they believe butanol performs better when water is accidentally blended in.

Refiners, producers and distributors of motor fuels will benefit by adoption of the proposed amendment in that they will be allowed to offer new fuels, some or all of which may prove popular with consumers.

In addition, the State’s corn farmers will benefit by adoption of the proposed amendment. Presently, there are two ethanol plants in the State that manufacture, in total, approximately 135,000,000 gallons of ethanol from, approximately, 47,000,000 bushels of corn. While these plants do not use only corn grown in New York, they, nevertheless, will most certainly purchase and use more corn grown in the State than they do presently, if the proposed amendment were adopted.

Finally, the proposed amendment will benefit retailers who offer such flex fuels for sale in that they will be able to attract consumers who want to purchase and use what they believe to be more “environmentally-friendly” fuels.

– Subdivision (f) of section 224.4 and subdivision (c) of section 224.7 will be amended to require that transporters may not deliver motor fuel to a storage tank if the water level in that tank (i.e., the amount of water in the bottom of the tank) is in excess of one inch and that retailers must remove water from a tank when its level exceeds that amount.

This amendment is needed because many retail stations offer gasoline-ethanol blends (e.g. E10) and the ethanol in that fuel readily absorbs water; if a gasoline-ethanol blend has absorbed an excessive amount of water, such fuel can, if pumped into a vehicle, cause that vehicle to perform poorly or can damage its engine.

Retailers and consumers will benefit by the proposed amendment because the motor fuel that is sold and used will better meet consumer acceptance and will likely not cause vehicles or equipment to perform poorly or damage their engines.

– Section 224.5 of 1 NYCRR will be repealed and a new section 224.5 will be added thereto. Many of the provisions of current section 224.5 will be retained in the new section but new provisions will be promulgated, setting disclosure requirements for alternative fuels such as ethanol flex fuels, gasoline-butanol blends, biodiesel, and biodiesel blends.

The proposed new section 224.5 is needed to ensure that retailers are adequately and fully informed of the most important properties of the fuels that they purchase so that they can, in turn, adequately inform retail purchasers of such properties so that they will have more complete information when deciding upon which motor fuel to purchase.

– Subdivision (c) of section 224.8 will be amended to require retailers to post on the dispenser, the maximum amount of butanol in a gasoline-butanol blend if the amount of butanol exceeds 1.0%.

This amendment is needed to provide fuel purchasers important information about the fuel they intend to purchase so they can make informed decisions.

– Subdivisions (a), (b), and (c) of section 224.9 will be repealed and new subdivisions (a), (b), and (c) added to that section, to require refiners, producers, and distributors of automotive fuel to comply with applicable federal requirements, and to require grades of gasoline and gasoline-ethanol blends, such as “regular”, “mid-grade”, and “premium”, to contain a specified octane level.

These amendments are needed to allow the Department to enforce certain federal regulations that refiners, producers, and distributors of automotive fuel are already required to adhere to. Furthermore, these amendments are needed to ensure that consumers, when purchasing a particular grade of gasoline or gasoline-ethanol blend, will receive a product that contains the expected level of octane.

4. Costs:

(a) Costs to regulated parties:

The most significant proposed amendments to 1 NYCRR merely allow the distribution and sale of “new” motor fuels; they do not require a refiner, distributor, wholesaler, or retailer (“sellers”) to provide such products. As such, sellers who choose not to handle such products will incur no costs.

The proposed rule also requires sellers to provide information regarding such new motor fuels, to their customers. Sellers of fuels that are presently regulated are required to make such disclosures and those sellers who choose to provide new motor fuels will not be required to engage in any practice that is more burdensome or costly than they are presently required to engage in, when providing fuels that are presently regulated.

The proposed rule will amend 1 NYCRR sections 224.4 and 224.7 to lower the maximum allowable water level in motor fuel storage tanks, from two inches to one inch. The majority of retailers of motor fuel have automated indicating systems that monitor the water level in their tanks so this amendment should not impose a cost upon them. Those retailers who do not have such a system will need to monitor the water level in their tanks which could cause them to incur an insignificant increase in labor costs.

(b) Costs to the department, the State, and local governments for implementation and continuation of the rule:

There are no anticipated costs to these entities as a result of the proposed regulations.

5. Local government mandates:

The proposed regulations do not impose any new programs, services, duties or responsibilities upon any county, city, town, village, school district, fire district or other special district.

6. Paperwork:

The proposed rule will provide for a new subdivision (c) of section 224.9 to require refiners, producers, distributors, and retailers of automotive fuel to comply with applicable provisions of Title 16 of the Code of Federal Regulations (“16 CFR”) Part 306; that Part contains provisions requiring each refiner, producer, and distributor to prepare and maintain records regarding how automotive fuel ratings were determined and requires each retailer to prepare and maintain such records, if he/she made such determination, as well as delivery tickets or letters of certifications on which an automotive fuel rating was based.

7. Duplication:

The proposed rule will repeal section 224.14 and add a new section 224.14 providing for new requirements applicable to the identification of fill ports of fuel tanks; such new requirements will conform to comparable requirements presently required by and set forth in 6 NYCRR section 613-2.2(a)(4).

The proposed rule will also incorporate by reference provisions of 16 CFR Part 306 which, inter alia, require refiners, importers, producers, distributors, and retailers of automotive fuel to make certain disclosures to purchasers, including the automotive fuel rating of all fuels provided, and will incorporate by reference Title 40 of the Code of Federal Regulations section 80.1501 to require retailers and wholesale purchaser-consumers of permitted gasoline-ethanol blends to affix a label, to each dispenser, that contains certain information, set forth in a specified format.

8. Alternatives:

The Department considered not amending 1 NYCRR Part 224 to allow for and provide standards for “alternative” fuels and also considered allowing and regulating only certain “alternative” fuels. The Department decided, however, to reject each such alternative because it was felt that such “alternative” fuels have met with consumer acceptance in other jurisdictions and have been found to be suitable for use; as such, it was felt that such fuels should be allowed and properly regulated so that the consumers could decide for themselves what fuels best meet their needs.

The Department also considered not amending sections 224.4 and 224.7 to lower the allowable water level in motor fuel storage tanks from two inches to one inch. The Department decided that it would not be advisable to maintain the presently-existing water level requirement because, presently, most motor fuel contains a certain amount of ethanol which readily absorbs water and, where excessive water is present, may lessen the quality of the fuel and potentially cause damage to engines.

The Department also considered repealing most of Part 224 and adopting the requirements in the National Institute of Standards and Technology (NIST) Handbook 130, section G “Uniform Engine Fuels and Automotive Lubricants Regulation”. Although this document is well written and vetted through the National Conference on Weights and Measures (NCWM) it does not completely mirror AML section 192-c and has multiple requirements which are currently not addressed and would put an additional burden on industry.

9. Federal standards:

Section 224.3(a)(2)(i) will be amended to prohibit gasoline-ethanol blends greater than 15% and less than 51% alcohol by volume; 16 CFR Part 306 does not contain that prohibition. The Department decided to allow only certain gasoline-ethanol blends to be sold because allowing retailers to sell multiple fuels could result in consumer confusion, inhibiting accurate and rapid comparison of fuels, and perhaps resulting in consumers purchasing the wrong fuel for their vehicles and/or equipment, thereby resulting in poor performance and possible engine damage. The Department has, since at least 1992, limited the amount of ethanol that is allowed in gasoline-ethanol blends, as have other states, and the Department has not received any notification that it is exceeding its authority in this regard.

10. Compliance schedule:

The proposed amendments will become effective upon publication of the Notice of Adoption in the New York State Register.

1. Effect of rule:

The proposed rule will not regulate or affect local governments and this Regulatory Flexibility Analysis for Small Businesses and Local Governments will, therefore, not address any impact upon them.

The proposed rule will regulate refiners, distributors, and retailers of automotive gasoline; no refiner meets the definition of “small business”, set forth in State Administrative Procedure Act section 102(8), and approximately 2,000 retailers and 25 distributors meet that definition.

2. Compliance requirements:

Retailers who choose to offer for sale gasoline-butanol blends will be required to ensure such blends comply with certain standards; to post the octane rating of such blends; to maintain daily inventory records; to remove excessive water (greater than 1-inch) from storage tanks; to properly post a sign, informing the customer of the maximum butanol content, on the dispenser; and to properly “color-code” fill ports.

Retailers who choose to offer for sale gasoline-ethanol blends up to 15% ethanol by volume (E15) will be required to ensure that such fuel complies with certain standards; to maintain daily inventory records; to remove excessive water (greater than one inch) from storage tanks; to properly post a sign, warning the customer about appropriate use, on the dispenser; and to properly “color-code” fill ports.

All retailers will be required to monitor the water levels in their storage tanks and remove excess water when the level goes above one inch.

3. Professional services:

Retailers who choose to offer for sale gasoline-butanol blends for the first time may need to hire a service to ensure the dispensers, piping and storage tanks are appropriate for butanol. The color coding of fill ports may need to be changed.

Retailers who choose to offer for sale (E15) for the first time may need to hire a service to ensure the dispensers, piping and storage tanks are appropriate for (E15). The color coding of fill ports will need to be changed.

A retailer who owns a retail station, the storage tanks of which are prone to water contamination (rare), may need to hire a service to perform preventive action(s) such as replacing fill port covers or improving the grade so water runoff does not accumulate. In instances where water contamination occurs (greater than one inch), the retailer will need to hire a service to remove excess water from storage tanks.

4. Compliance costs:

a) Initial capital costs to comply with the proposed rule:

The proposed rule imposes no requirement that would require the expenditure of initial capital costs.

b) Annual cost for continuing compliance:

The compliance requirements set forth in paragraph (2) of this Analysis will not require the expenditure of more than a nominal amount.

5. Economic and technological feasibility:

Compliance with the proposed rule is both economically and technologically feasible.

6. Minimizing adverse impact:

The proposed rule does not require the sale and distribution of any particular automotive fuel; as such, a retailer that is a “small business” will not need to comply with any requirement regarding a particular fuel if it chooses not to sell it.

The proposed rule requires retailers to ensure that the water level in a storage tank does not exceed one-inch; the Department considered proposing a lower level but concluded that the one-inch requirement would facilitate compliance while also adequately promoting the objective of compliant fuel.

The proposed rule incorporates by reference certain requirements, set forth in 16 CFR sections 306.8 – 306.9 and sections 306.10 – 306.12, applicable to distributors and retailers, respectively; regarding the requirements set forth in those sections, the proposed rule does not require small businesses covered by those sections to comply with any requirements that they are not already required to comply with.

The proposed rule also incorporates by reference the requirements set forth in 40 CFR section 80.1501, applicable to retailers and wholesale purchaser-consumers of permitted gasoline-ethanol blends; this requirement, also, does not require small businesses to comply with a requirement that they are not already required to comply with.

7. Small business and local government participation:

On or on about December 2017 approximately twelve (12) organizations were furnished a list of key points concerning the proposed rule and given the opportunity to comment. In 2018 approximately six (6) additional organizations were furnished the list of key points and given the opportunity to comment. In February/March of 2019 three (3) workshops were held in different parts of the state where the proposal was distributed, discussed and approximately fifty (50) people participated. Also, in February/March of 2019 the proposal was posted on the Department website and approximately fifteen (15) comments were received as a result. The proposed rule was amended in response to several of those comments.

The organizations referred to above include:

New York State Association of Service Stations and Repair Shops Inc.

Gasoline and Automotive Service Dealers Association, Ltd.

Sunoco, LLC / Sunoco LP

Sprague Operating Resources LLC

Ostroff Associates, Inc.

Northville Industries

Trucking Association of New York

New York Farm Bureau

New York State Energy Research and Development Authority (NYSERDA)

New York State Department of Environmental Conservation

New York State Department of Transportation

New York Association of Convenience Stores

Stewarts Shops Corp.

Cumberland Farms

Arnold & Porter

Buckeye Partners, LP

Renewable Fuels Associations

Western New York Energy

Fastrac Markets

Reid Petroleum

Growth Energy

NY Fuel Distributors, LLC

NY Corn & Soybean Growers Association

Citgo Petroleum Corp.

Bolla Group

1. Types and estimated numbers of rural areas:

The proposed rule will, to a lesser or greater extent, regulate refiners, distributors, and retailers of automotive fuel. There are forty-three counties in the State that have a population of less than 200,000; all such counties have retail gasoline stations within their borders. Furthermore, it is believed that there are a number of towns with a population density of less than 150 people/square mile, in “large” counties, that also have retail gasoline stations within their borders.

2. Reporting, recordkeeping, and other compliance requirements; and professional services:

Retailers located in rural areas (“rural area retailers”) who choose to offer for sale gasoline-butanol blends will be required to ensure such blends comply with certain standards; to post the octane rating of such blends; to maintain daily inventory records; to remove excessive water (greater than one inch) from storage tanks; to properly post a sign, informing the customer of the maximum butanol content, on the dispenser; and to properly “color-code” fill ports. Those retailers may need to hire a service to ensure the dispensers, piping and storage tanks are appropriate for butanol.

Rural area retailers who choose to offer for sale gasoline-ethanol blends up to 15% ethanol by volume (E15) will be required to ensure such fuel complies with certain standards; to maintain daily inventory records; to remove excessive water (greater than one inch) from storage tanks; to properly post a sign, warning the customer about appropriate use, on the dispenser; and to properly “color-code” fill ports. Those retailers may need to hire a service to ensure the dispensers, piping and storage tanks are appropriate for E15.

All rural area retailers will be required to monitor the water levels in their storage tanks and remove excess water when the level goes above one inch; such retailers may need to hire a service to perform preventive action(s) such as replacing fill port covers or improving the grade so water runoff does not accumulate. In instances where water contamination occurs (greater than one inch) such a retailer will need to hire a service to remove excess water from storage tanks.

3. Costs:

a) Initial capital costs to comply with the proposed rule:

The proposed rule imposes no requirement that would require refiners, distributors or retailers located in rural areas to expend funds for capital projects.

b) Annual cost for continuing compliance:

The compliance requirements set forth in paragraph (2) of this Analysis will not require the refiners, distributors, or retailers located in rural areas to expend more than a nominal amount.

4. Minimizing adverse impact:

The proposed rule does not require the sale and distribution of any particular automotive fuel; as such, a retailer located in a rural area will not need to comply with any requirement regarding a particular fuel if it chooses not to sell it.

The proposed rule requires retailers, including those located in rural areas, to ensure that the water level in a storage tank does not exceed one-inch; the Department considered proposing a lower level but concluded that the one-inch requirement would facilitate compliance while also adequately promoting the objective of compliant fuel.

The proposed rule incorporates by reference certain requirements, set forth in 16 CFR sections 306.8 – 306.9 and sections 306.10 – 306.12, applicable to, inter alia, distributors and retailers, located in rural areas; regarding the requirements set forth in those sections, the proposed rule does not require such distributors and retailers covered by those sections to comply with any requirements that they are not already required to comply with. The proposed rule also incorporates by reference 40 CFR section 80.1501, applicable to, inter alia, retailers and wholesaler purchaser-consumers of permitted gasoline-ethanol blends, located in rural areas; this requirement, also, does not require such retailers and wholesaler purchaser-consumers to comply with a requirement that they are not already required to comply with.

5. Rural area participation:

On or about December 20, 2017, the Department contacted the New York State Association of Service Stations and Repair Shops, Inc., and the New York Association of Convenience Stores, each of which has members located in rural areas, and furnished each organization with a list of key points concerning the proposed rule and given the opportunity to comment. A number of comments were received and the proposed rule was amended in response to several of those comments.

The Department also conducted, on February 19, February 21, and February 26, 2019, meetings with various organizations interested in the proposed rule; it is believed that some of the organizations have members located in rural areas. At such meetings, comments were received and the proposed rule was further amended, in response thereto.

The proposed rule will not have an adverse impact upon employment opportunities.

The proposed rule will, among other provisions, amend 1 NYCRR Part 224 to allow gasoline-alcohol blends to contain up to fifteen percent ethanol, an increase from the current regulations that permit gasoline-ethanol blends to contain up to ten percent ethanol. As this provision of the proposed rule is permissive and adds no additional requirements on industry participants than found in the current regulations, employment opportunities in businesses that handle automotive fuel, and particularly gasoline-ethanol blends, should not be affected by the proposed rule. Indeed, this provision of the proposed rule may have a positive indirect impact upon employment opportunities. Currently, there are at least two manufacturing plants in the State that manufacture ethanol from, at least in part, plant matter grown or harvested in the State. To the extent that gasoline-ethanol blends “use” more ethanol in such blends than is currently used, employment opportunities on farms and in ethanol manufacturing plants in the State that presently exist or that may be built could very well increase.

The proposed rule will, also, amend 1 NYCRR Part 224 to update requirements applicable to certain automotive fuels and octane testing thereof; to require that certain alternative fuels (i.e., denatured fuel ethanol, ethanol flex fuels, butanol, gasoline-butanol blends, and E-85) must meet generally accepted standards; to require that all those in the chain of distribution of certain automotive fuels must make certain disclosures to purchasers and consumers; and to require that fuel storage tanks not contain an excessive amount of water – none of these requirements will negatively affect employment opportunities in businesses that handle or use automotive fuel.