Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards, 38844-38890 [2011-16018]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Proposed Rules]
[Pages 38844-38890]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16018]



[[Page 38843]]

Vol. 76

Friday,

No. 127

July 1, 2011

Part IV





Environmental Protection Agency





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40 CFR Part 80





Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards; 
Proposed Rule

Federal Register / Vol. 76 , No. 127 / Friday, July 1, 2011 / 
Proposed Rules

[[Page 38844]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2010-0133; FRL-9324-3]
RIN 2060-AQ76


Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel 
Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Under the Clean Air Act Section 211(o), the Environmental 
Protection Agency is required to set the renewable fuel standards each 
November for the following year. In general the standards are designed 
to ensure that the applicable volumes of renewable fuel specified in 
the statute are used. However, the statue specifies that EPA is to 
project the volume of cellulosic biofuel production for the upcoming 
year and must base the cellulosic biofuel standard on that projected 
volume if it is less than the applicable volume set forth in the Act. 
EPA is today proposing a projected cellulosic biofuel volume for 2012 
and annual standards for cellulosic biofuel, biomass-based diesel, 
advanced biofuel, and renewable fuels that would apply to all gasoline 
and diesel produced or imported in year 2012. In addition, today's 
action proposes an applicable volume of biomass-based diesel that would 
apply in 2013. This action also presents a number of proposed changes 
to the RFS2 regulations that are designed to clarify existing 
provisions and to address several unique circumstances that have come 
to light since the RFS2 program became effective on July 1, 2010. 
Finally, today's rule also proposes to make a minor amendment to the 
gasoline benzene regulations regarding inclusion of transferred 
blendstocks in a refinery's early benzene credit generation 
calculations.

DATES: Comments must be received on or before August 11, 2011.
    Hearing: We intend to hold a public hearing on July 12, 2011 in the 
Washington, DC area, Details of the time and location of the hearing be 
announced in a separate notice.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2010-0133, by one of the following methods:
     https://www.regulations.gov: Follow the on-line 
instructions for submitting comments.
     E-mail: asdinfo@epa.gov.
     Mail: Air and Radiation Docket and Information Center, 
Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center, EPA West Building, Room 
3334, 1301 Constitution Ave., NW., Washington, DC 20460. Such 
deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2010-0133. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
https://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through https://www.regulations.gov or e-mail. The https://www.regulations.gov Web site 
is an ``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through https://www.regulations.gov your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit the EPA Docket Center homepage at https://www.epa.gov/epahome/dockets.htm. For additional instructions on submitting 
comments, go to Section I.B of the SUPPLEMENTARY INFORMATION section of 
this document.
    Docket: All documents in the docket are listed in the https://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in https://www.regulations.gov or in hard copy at the Air and Radiation 
Docket and Information Center, EPA/DC, EPA West, Room 3334, 1301 
Constitution Ave., NW., Washington, DC. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Public Reading Room is (202) 
566-1744, and the telephone number for the Air Docket is (202) 566-
1742.

FOR FURTHER INFORMATION CONTACT: Julia MacAllister, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor MI 
48105; Telephone number: 734-214-4131; Fax number: 734-214-4816; E-mail 
address: macallister.julia@epa.gov, or Assessment and Standards 
Division Hotline; telephone number 734 214-4636; E-mail address 
asdinfo@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this proposed rule are those 
involved with the production, distribution, and sale of transportation 
fuels, including gasoline and diesel fuel or renewable fuels such as 
ethanol and biodiesel. Potentially regulated categories include:

------------------------------------------------------------------------
                                                         Examples of
          Category            NAICS \1\   SIC \2\        potentially
                                codes      codes     regulated entities
------------------------------------------------------------------------
Industry....................     324110       2911  Petroleum
                                                     Refineries.
Industry....................     325193       2869  Ethyl alcohol
                                                     manufacturing.
Industry....................     325199       2869  Other basic organic
                                                     chemical
                                                     manufacturing.
Industry....................     424690       5169  Chemical and allied
                                                     products merchant
                                                     wholesalers.
Industry....................     424710       5171  Petroleum bulk
                                                     stations and
                                                     terminals.
Industry....................     424720       5172  Petroleum and
                                                     petroleum products
                                                     merchant
                                                     wholesalers.

[[Page 38845]]

 
Industry....................     454319       5989  Other fuel dealers.
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\1\ North American Industry Classification System (NAICS).
\2\ Standard Industrial Classification (SIC) system code.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
proposed action. This table lists the types of entities that EPA is now 
aware could potentially be regulated by this proposed action. Other 
types of entities not listed in the table could also be regulated. To 
determine whether your activities would be regulated by this proposed 
action, you should carefully examine the applicability criteria in 40 
CFR part 80. If you have any questions regarding the applicability of 
this proposed action to a particular entity, consult the person listed 
in the preceding section.

B. What should I consider as I prepare my comments for EPA?

1. Submitting CBI
    Do not submit confidential business information (CBI) to EPA 
through https://www.regulations.gov or e-mail. Clearly mark the part or 
all of the information that you claim to be CBI. For CBI information in 
a disk or CD ROM that you mail to EPA, mark the outside of the disk or 
CD ROM as CBI and then identify electronically within the disk or CD 
ROM the specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
2. Tips for Preparing Your Comments
    When submitting comments, remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree, suggest alternatives, 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

Outline of This Preamble

I. Executive Summary
    A. Standards For 2012
    1. Assessment Of 2012 Cellulosic Biofuel Volume
    2. Advanced Biofuel And Total Renewable Fuel In 2012
    3. Proposed Percentage Standards For 2012
    B. Proposed 2013 Biomass-Based Diesel Volume
    C. Proposed Regulatory Changes
    D. Petition For Reconsideration
II. Projection Of Cellulosic Volume Production And Imports For 2012
    A. Statutory Requirements
    B. Cellulosic Biofuel Volume Assessment
    1. Existing Cellulosic Biofuel Facilities
    2. Potential New Facilities In 2012
    3. Imports Of Cellulosic Biofuel
    4. Summary Of Volume Projections
    C. Potential Limitations In 2012
    D. Advanced Biofuel And Total Renewable Fuel In 2012
    E. Biomass-Based Diesel In 2012
III. Proposed Percentage Standards For 2012
    A. Background
    B. Calculation Of Standards
    1. How Are The Standards Calculated?
    2. Small Refineries And Small Refiners
    3. Proposed Standards
IV. Biomass-Based Diesel Volume For 2013
    A. Statutory Requirements
    B. Factors Considered In Assessing 2013 Biomass-Based Diesel 
Volumes
    1. Demand For Biomass-Based Diesel
    2. Availability Of Feedstocks To Produce 1.28 Billion Gallons Of 
Biodiesel
    3. Production Capacity
    4. Consumption Capacity
    5. Biomass-Based Diesel Distribution Infrastructure
    C. Impacts Of 1.28 Billion Gallons Of Biomass-Based Diesel
    1. Climate Change
    2. Energy Security 4
    3. Agricultural Commodities And Food Prices
    4. Air Quality
    5. Transportation Fuel Cost
    6. Deliverability And Transport Costs Of Materials, Goods, And 
Products Other Than Renewable Fuel
    7. Wetlands, Ecosystems, And Wildlife Habitats
    8. Water Quality And Quantity
    a. Impacts On Water Quality And Water Quantity Associated With 
Soybean Production
    b. Impacts On Water Quality And Water Quantity Associated With 
Biodiesel Production
    9. Job Creation And Rural Economic Development
    D. Proposed 2013 Volume For Biomass-Based Diesel
    E. 2014 And Beyond
V. Proposed Changes To Rfs2 Regulations
    A. Summary Of Amendments
    B. Technical Justification For Equivalence Value Application
    C. Changes To Definitions Of Terms
    1. Definition Of Annual Cover Crop
    2. Definition Of ``Naphtha''
    D. Technical Amendments Related To Rin Generation And Separation
    1. Rin Separation Limit For Obligated Parties
    2. Rin Retirement Provision For Error Correction
    3. Production Outlook Reports Submission Deadline
    4. Attest Procedures
    5. Treatment Of Canola And Rapeseed
    E. Technical Amendments Related To Registration
    1. Construction Discontinuance & Completion Documentation
    2. Third-Party Engineering Reviews
    3. Foreign Ethanol Producers
    F. Additional Amendments And Clarifications
    1. Third-Party Engineering Review Addendum
    2. Rin Generation For Fuel Imported From A Registered Foreign 
Producer
    3. Bond Posting
    4. Acceptance Of Separated Yard Waste And Food Waste Plans
    5. Transferred Blendstocks In Early Benzene Credit Generation 
Calculations
VI. Petition For Reconsideration
    A. Legal Considerations Of Petition
    B. Advanced Biofuel Standard And Delayed Rins
    C. 2011 Cellulosic Biofuel Requirement
VII. Public Participation
    A. How Do I Submit Comments?
    B. How Should I Submit Cbi To The Agency?
VIII. Statutory And Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning And Review And 
Executive Order 13563: Improving Regulation And Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism

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    F. Executive Order 13175: Consultation And Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection Of Children From 
Environmental Health Risks And Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, Or Use
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice In Minority Populations And Low-Income 
Populations
IX. Statutory Authority

I. Executive Summary

    The Renewable Fuel Standard (RFS) program began in 2006 pursuant to 
the requirements in Clean Air Act (CAA) section 211(o) which were added 
through the Energy Policy Act of 2005 (EPAct). The statutory 
requirements for the RFS program were subsequently modified through the 
Energy Independence and Security Act of 2007 (EISA), resulting in the 
promulgation of revised regulatory requirements on March 26, 2010.\1\ 
The transition from the RFS1 requirements of EPAct to the RFS2 
requirements of EISA generally occurred on July 1, 2010.
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    \1\ 75 FR 14670.
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    Under RFS2, EPA is required to determine and publish the applicable 
annual percentage standards for each compliance year by November 30 of 
the previous year. As part of this effort, EPA must determine the 
projected volume of cellulosic biofuel production for the following 
year. If the projected volume of cellulosic biofuel production is less 
than the applicable volume specified in section 211(o)(2)(B)(i)(III) of 
the statute, EPA must lower the applicable volume used to set the 
annual cellulosic biofuel percentage standard to the projected volume 
of production. When we lower the applicable volume of cellulosic 
biofuel in this manner, we are also authorized to lower the applicable 
volumes of advanced biofuel and/or total renewable fuel by the same or 
a lesser amount. Since these evaluations will be based on evolving 
information about emerging segments of the biofuels industry, and may 
result in the applicable volumes differing from those in the statute, 
we believe that it is appropriate to establish the applicable volumes 
through a notice-and-comment rulemaking process. Today's notice 
provides our proposed evaluation of the projected production of 
cellulosic biofuel for 2012, our proposed evaluation of whether to 
lower the applicable volumes of advanced biofuel and total renewable 
fuel, and the proposed percentage standards for compliance year 2012. 
We will complete our evaluation based on comments received in response 
to this proposal, the estimate of projected biofuel volumes that the 
EIA is required to provide to EPA by October 31, and other information 
that becomes available, and will make final determinations of 
applicable volumes and percentage standards for 2012 by November 30, 
2011.
    The statute also requires EPA to determine and promulgate the 
applicable volume of biomass-based diesel that will be required in 2013 
and beyond, as the statute does not specify the applicable volumes for 
years after 2012. This determination must be made at least 14 months 
prior to the year in which the volume will be required. Thus, for the 
2013 compliance year, we must specify the applicable volume of biomass-
based diesel by November 1, 2011. The statute identifies a number of 
factors that EPA must take into consideration in establishing the 
applicable volume of biomass-based diesel for years after 2012. Today's 
notice includes our proposed assessment of these factors and proposed 
applicable volume of biomass-based diesel for 2013.
    Today's proposed rule does not include an assessment of the 
environmental impacts of the percentage standards we are proposing for 
2012. All of the impacts of the RFS2 program were addressed in the RFS2 
final rule published on March 26, 2010, including impacts of the 
biofuel standards specified in the statute. Today's rulemaking simply 
proposes the standards for 2012 whose impacts were already analyzed 
previously. However, as described more fully in Section IV.A, we are 
required to analyze a specified set of environmental and economic 
impacts for the biomass-based diesel volume we are proposing for 2013.
    Today's notice also proposes a number of changes to the RFS2 
regulations. These changes are designed to reduce confusion among 
regulated parties and streamline implementation by clarifying certain 
terms and phrases and addressing unique circumstances that came to 
light after the RFS2 program went into effect on July 1, 2010. 
Additionally, this notice also proposes to make a minor amendment to 
the gasoline benzene regulations regarding inclusion of transferred 
blendstocks in a refinery's early benzene credit generation 
calculations. Further discussion of all of these proposed changes can 
be found in Section V.
    Finally, we note that in the RFS2 final rule we also stated our 
intent to make two announcements each year:
     Set the price for cellulosic biofuel waiver credits that 
will be made available to obligated parties in the event that we reduce 
the volume of cellulosic biofuel below the volume required by EISA.
     Announce the results of our assessment of the aggregate 
compliance approach for verifying renewable biomass requirements for 
U.S. crops and crop residue, and our conclusion regarding whether the 
aggregate compliance provision will continue to apply.

For both of these determinations, EPA will use specific sources of data 
and a methodology laid out in the RFS2 final rule. Since the necessary 
data for these determinations are not yet available, and the 
methodology for making them is specified by rule or statute, we are not 
including proposed determinations in this Notice. We will present the 
results of both of these determinations in the final rule without a 
prior proposal.

A. Standards for 2012

1. Assessment of 2012 Cellulosic Biofuel Volume
    To estimate the volume of cellulosic biofuel that could be made 
available in the U.S. in 2012, we researched all potential production 
sources by company and facility. This included sources that were still 
in the planning stages, those that were under construction, and those 
that are already producing some volume of cellulosic ethanol, 
cellulosic diesel, or some other type of cellulosic biofuel. Facilities 
primarily focused on research and development work with no intention of 
marketing any fuel produced were not considered for this assessment. 
From this universe of potential cellulosic biofuel sources we 
identified the subset that had a possibility of producing some volume 
of qualifying cellulosic biofuel for use as transportation fuel in 
2012. For the final rule, we will specify the projected available 
volume for 2012 that will be the basis for the percentage standard for 
cellulosic biofuel. To determine this final projected available volume, 
we will consider additional factors such as the current and expected 
state of funding, the status of the technology, and progress towards 
construction and production goals along with any other significant 
factors that could potentially impact fuel production or the ability of 
the produced fuel to generate cellulosic RINs. This information, to the 
extent that it is publically available, is

[[Page 38847]]

discussed in further detail in Section II.B.
    In our assessment we focused on domestic sources of cellulosic 
biofuel. While imports of cellulosic biofuels are possible and would be 
eligible to generate RINs, we believe this is unlikely due to local 
demand for cellulosic biofuels in the countries in which they are 
produced as well as the cost associated with transporting these fuels 
to the U.S. Of the domestic sources, we estimated that nine facilities 
have the potential to make volumes of cellulosic biofuel available for 
transportation use in the U.S. in 2012. These facilities are listed in 
Table I.A.1-1 along with our estimate of the potentially available 
volume.

                 Table I.A.1-1--Potentially Available Cellulosic Biofuel Plant Volumes for 2012
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                                                                                                     Potentially
                                                                                                      available
                                                                                                        volume
                 Company                             Location                    Fuel type             (million
                                                                                                       ethanol-
                                                                                                      equivalent
                                                                                                       gallons)
----------------------------------------------------------------------------------------------------------------
DuPont Danisco Cellulosic Ethanol........  Vonore, TN.................  Ethanol....................         0.25
Fiberight................................  Blairstown, IA.............  Ethanol....................         3.0
Fulcrum Bioenergy........................  McCarran, NV...............  Ethanol....................         0.5
INEOS Bio................................  Vero Beach, FL.............  Ethanol....................         3.0
KiOR.....................................  Houston, TX................  Gasoline, Diesel...........         0.3
KiOR.....................................  Columbus, MS...............  Gasoline, Diesel...........         6.4
KL Energy Corp...........................  Upton, WY..................  Ethanol....................         1.0
Terrabon.................................  Port Arthur, TX............  Gasoline...................         1.0
ZeaChem..................................  Boardman, OR...............  Ethanol....................         0.25
                                          ----------------------------------------------------------------------
    Total................................  ...........................  ...........................        15.7
----------------------------------------------------------------------------------------------------------------

    The volumes in Table I.A.1-1 for each facility represent the volume 
that would be produced in 2012 based upon the owner's expected month of 
startup and an assumed period of production rampup to full capacity for 
testing and process validation purposes. However, none of the 
facilities we evaluated are currently producing cellulosic biofuel at 
the rates they project for 2012. Moreover, there are other 
uncertainties associated with each facility's projected volume that 
could result in less production volume in 2012 than the potentially 
available values shown in Table I.A.1-1. Therefore, we are proposing a 
range of volumes for cellulosic biofuel for 2012, with 15.7 million 
ethanol-equivalent gallons as the upper end of the range. For the lower 
end of the range, we believe that a volume of 3.55 million ethanol-
equivalent gallons could be justified based on currently available 
information. This volume is based on consideration of only those 
facilities that are structurally complete at the time of this proposal 
and that anticipate commercial production of cellulosic biofuels by the 
end of 2011. More complete information on the progress of the industry 
in 2011 will be available for the final rule, and will allow us to make 
a more accurate projection of cellulosic biofuel volume for 2012. A 
more detailed discussion of these uncertainties is presented in Section 
II.B.
2. Advanced Biofuel and Total Renewable Fuel in 2012
    The statute indicates that we may reduce the applicable volume of 
advanced biofuel and total renewable fuel if we determine that the 
projected volume of cellulosic biofuel production for 2012 falls short 
of the statutory volume of 500 million gallons. As shown in Table 
I.A.1-1, we are proposing a determination that this is the case. 
Therefore, we also must evaluate the need to lower the applicable 
volumes for the advanced biofuel and total renewable fuel.
    To address the need to lower the advanced biofuel standard, we 
first consider whether it appears likely that the biomass-based diesel 
volume of 1.0 billion gallons specified in the statute can be met in 
2012. As discussed in Section II.E, we believe that the 1.0 billion 
gallon standard can indeed be met. Since biodiesel has an Equivalence 
Value of 1.5, 1.0 billion physical gallons of biodiesel would provide 
1.5 billion ethanol-equivalent gallons that can be counted towards the 
advanced biofuel standard of 2.0 billion gallons. Of the remaining 0.5 
bill gallons, up to 0.016 bill gallons would be met with the proposed 
volume of cellulosic biofuel. Based on our analysis as described in 
Section II.D, it appears likely that there will be sufficient volumes 
of other advanced biofuels, such as imported sugarcane ethanol, 
additional biodiesel, or renewable diesel, such that the standard for 
advanced biofuel could remain at the statutory level of 2.0 billion 
gallons. However, uncertainty in the potential volumes of these other 
advanced biofuels coupled with the range of potential production 
volumes of cellulosic biofuel could provide a rationale for lowering 
the advanced biofuel standard. If we lowered the applicable volume of 
advanced biofuel without simultaneously lowering the applicable volume 
for total renewable fuel, the result would be that additional volumes 
of conventional renewable fuel, such as corn-starch ethanol, would be 
produced, effectively replacing some advanced biofuels. In today's NPRM 
we are proposing that neither the required 2012 volumes for advanced 
biofuel nor total renewable fuel be lowered below the statutory 
volumes. However, we request comment on whether the advanced biofuel 
and/or total renewable fuel volume requirements should be lowered if, 
as we propose, EPA lowers the required cellulosic biofuel volume from 
that specified in the Act.
3. Proposed Percentage Standards for 2012
    The renewable fuel standards are expressed as a volume percentage, 
and are used by each refiner, blender or importer to determine their 
renewable fuel volume obligations. The applicable percentages are set 
so that if each regulated party meets the percentages, and if EIA 
projections of gasoline and diesel use are accurate, then the amount of 
renewable fuel, cellulosic biofuel, biomass-based diesel, and advanced

[[Page 38848]]

biofuel used will meet the volumes required on a nationwide basis.
    To calculate the percentage standard for cellulosic biofuel for 
2012, we have used a potential volume range of 3.55-15.7 million 
ethanol-equivalent gallons (representing 3.45-12.9 million physical 
gallons). For the final rule, EPA intends to pick a single value from 
within this range to represent the projected available volume on which 
the 2012 percentage standard for cellulosic biofuel will be based. We 
are also proposing that the applicable volumes for biomass-based 
diesel, advanced biofuel, and total renewable fuel for 2012 will be 
those specified in the statute. These volumes are shown in Table I.A.3-
1.

                Table I.A.3-1--Proposed Volumes for 2012
------------------------------------------------------------------------
                                                      Ethanol equivalent
                                     Actual volume        volume \a\
------------------------------------------------------------------------
Cellulosic biofuel..............  3.45-12.9 mill gal  3.55-15.7 mill
                                                       gal.
Biomass-based diesel............  1.0 bill gal......  1.5 bill gal.
Advanced biofuel................  2.0 bill gal......  2.0 bill gal.
Renewable fuel..................  15.2 bill gal.....  15.2 bill gal.
------------------------------------------------------------------------
\a\ Biodiesel and cellulosic diesel have equivalence values of 1.5 and
  1.7 ethanol equivalent gallons respectively. As a result, ethanol-
  equivalent volumes are larger than actual volumes for cellulosic
  biofuel and biomass-based diesel.

    Four separate standards are required under the RFS2 program, 
corresponding to the four separate volume requirements shown in Table 
I.A.3-1. The specific formulas we use to calculate the renewable fuel 
percentage standards are contained in the regulations at Sec.  80.1405 
and repeated in Section III.B.1. The percentage standards represent the 
ratio of renewable fuel volume to projected non-renewable gasoline and 
diesel volume. The projected volume of gasoline used to calculate the 
standards in today's proposal is provided by EIA's Short-Term Energy 
Outlook (STEO).\2\ The projected volume of transportation diesel used 
to calculate the standards in today's proposal is provided by EIA's 
2011 Annual Energy Outlook (early release version). For the final rule, 
we will use updated projections of gasoline and diesel provided by EIA.
---------------------------------------------------------------------------

    \2\ The April 2011 issue of STEO was used for today's proposal.
---------------------------------------------------------------------------

    Because DOE's 2009 analysis \3\ concluded that small refineries 
would not be disproportionately harmed by inclusion in the RFS program, 
beginning in 2011, small refiners and small refineries participated in 
the RFS program as full regulated parties, and there was no small 
refiner/refinery volume adjustment to the 2011 standard as there was 
for the 2010 standard. However, DOE recently re-evaluated the impacts 
of the RFS program on small entities and concluded that some small 
refineries would suffer a disproportionate hardship if required to 
participate in the program.\4\ As a result, we are required to exempt 
these few refineries from being obligated parties for a minimum of two 
years, and must also exempt their gasoline and diesel volumes from the 
calculation of the annual percentage standards. The proposed standards 
for 2012 are shown in Table I.A.3-2 and include the adjustment for 
exempt small refineries (which constitute about 2.5% of both gasoline 
and diesel pools). Detailed calculations can be found in Section III.
---------------------------------------------------------------------------

    \3\ DOE report ``EPACT 2005 Section 1501 Small Refineries 
Exemption Study'', (January, 2009).
    \4\ ``Small Refinery Exemption Study: An Investigation into 
Disproportionate Economic Hardship,'' U.S. Department of Energy, 
March 2011.

          Table I.A.3-2--Proposed Percentage Standards for 2012
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Cellulosic biofuel........................  0.002 to 0.010%.
Biomass-based diesel......................  0.91%.
Advanced biofuel..........................  1.21%.
Renewable fuel............................  9.21%.
------------------------------------------------------------------------

B. Proposed 2013 Biomass-Based Diesel Volume

    While section 211(o)(2)(B) specifies the volumes of biomass-based 
diesel (BBD) through year 2012, it directs the EPA to establish the 
applicable volume of BBD for years after 2012 no later than 14 months 
before the first year for which the applicable volume will apply. In 
today's action we are proposing an applicable volume of 1.28 bill 
gallons for biomass-based diesel (BBD) for 2013. This is the volume 
that was projected for 2013 in the RFS2 final rulemaking, and we are 
proposing it for 2013 based on consideration of the factors specified 
in the statute, including a consideration of biodiesel production, 
consumption, and infrastructure issues. As required under the statute, 
we also assessed the likely impact of BBD production and use in a 
variety of areas, including climate change, energy security, the 
agricultural sector, air quality, and others. Section IV provides 
additional discussion of our assessment of the proposed volume of 1.28 
bill gallons of BBD.

C. Proposed Regulatory Changes

    In today's action we are also proposing a number of changes to the 
RFS2 regulations. These proposed changes are intended to:
     Clarify certain provisions because we have learned that 
there is some confusion among some regulated parties
     Clarify the application of certain provisions to unique 
circumstances
     Provide greater specificity in the definition of certain 
terms
     Correct regulatory language that inadvertently 
misrepresented our intent

Today's rule also proposes to make a minor amendment to the gasoline 
benzene regulations regarding inclusion of transferred blendstocks in a 
refinery's early benzene credit generation calculations. A detailed 
discussion of these proposed regulatory changes is provided in Section 
V.

D. Petition for Reconsideration

    The American Petroleum Institute (API) and the National 
Petrochemical and Refiners Association (NPRA) jointly submitted a 
Petition for Reconsideration of EPA's final rule establishing the RFS 
standards for 2011. The petition requests that we lower the 2011 
cellulosic biofuel standard to no more than 3.94 mill gallons, lower 
the 2011 advanced biofuel standard in concert with the reduction in the 
cellulosic biofuel standard from 250 mill gallons, and reconsider the 
regulatory provision for delayed RINs. We are proposing to deny this 
petition. See Section VI for further discussion.

II. Projection of Cellulosic Volume Production and Imports for 2012

    In order to project production volume of cellulosic biofuel in 2012 
for use in setting the percentage standard, we collected information on 
individual facilities that have the potential to produce qualifying 
volumes for

[[Page 38849]]

consumption as transportation fuel, heating oil, or jet fuel in the 
U.S. in 2012. This section describes the range of volumes that could be 
produced and imported in 2012 as well as some of the uncertainties 
associated with those volumes. For today's NPRM we have assessed the 
range of potentially available volumes for 2012. Despite significant 
advances in cellulosic biofuel production technology in recent years 
the production of cellulosic biofuel remains highly uncertain. While we 
expect that the volume we select in the final rule for use in setting 
the 2012 cellulosic biofuel percentage standard will be within our 
proposed range of volumes, we recognize the possibility that updated 
information at the time of the final rule could result in the final 
volume falling outside of the proposed range. Section III describes the 
conversion of our proposed range of volumes for cellulosic biofuel into 
a range of possible percentage standards.
    While the proposed 2012 volume projections in today's NPRM were 
based on our own assessment of the cellulosic biofuel industry, by the 
time we announce the final 2012 volumes and percentage standards we 
will have additional information. First, in addition to comments in 
response to today's proposal, we will have updated and more detailed 
information about how the industry is progressing in 2011. Second, all 
registered producers and importers of renewable fuel must submit 
Production Outlook Reports describing their expectations for new or 
expanded biofuel supply for the next five years, according to Sec.  
80.1449. Finally, by October 31, 2011, the Energy Information 
Administration (EIA) is required by statute to provide EPA with an 
estimate of the volumes of transportation fuel, biomass-based diesel, 
and cellulosic biofuel that they project will be sold or introduced 
into commerce in the U.S. in 2012.

A. Statutory Requirements

    The volumes of renewable fuel to be used under the RFS2 program 
each year (absent an adjustment or waiver by EPA) are specified in CAA 
211(o)(2). These volumes for 2012 are shown in Table II.A-1.

 Table II.A-1--Required Volumes in the Clean Air Act for 2012 (bill gal)
------------------------------------------------------------------------
                                                               Ethanol
                                                   Actual     equivalent
                                                   volume       volume
------------------------------------------------------------------------
Cellulosic biofuel............................       0.5\a\          0.5
Biomass-based diesel..........................          1.0          1.5
Advanced biofuel..............................       2.0\a\          2.0
Renewable fuel................................      15.2\a\         15.2
------------------------------------------------------------------------
\a\ These values assume that the biofuels would be ethanol. If any
  portion of the biofuels used to meet these applicable volumes has a
  volumetric energy content greater than that for ethanol, these values
  will be lower.

    By November 30 of each year, the EPA is required under CAA 211(o) 
to determine and publish in the Federal Register the renewable fuel 
percentage standards for the following year. These standards are to be 
based in part on transportation fuel volumes estimated by the Energy 
Information Administration (EIA) for the following year. The 
calculation of the percentage standards is based on the formulas in 
Sec.  80.1405(c) which express the required volumes of renewable fuel 
as a volume percentage of gasoline and diesel sold or introduced into 
commerce in the 48 contiguous states plus Hawaii.
    The statute requires that if EPA determines that the projected 
volume of cellulosic biofuel production for the following year is less 
than the applicable volume shown in Table II.A-1, then EPA is to reduce 
the applicable volume of cellulosic biofuel to the projected volume 
available during that calendar year. In addition, if EPA reduces the 
required volume of cellulosic biofuel below the level specified in the 
statute, the Act also indicates that we may reduce the applicable 
volume of advanced biofuels and total renewable fuel by the same or a 
lesser volume.
    As described in the final rule for the RFS2 program, we intend to 
examine EIA's projected volumes, comments on this proposal, production 
outlook reports, and other available data in making a final 
determination of the appropriate cellulosic biofuel volumes to require 
for 2012.

B. Cellulosic Biofuel Volume Assessment

    The task of projecting the volume of cellulosic biofuel production 
for 2012 remains a difficult one. Currently there are very few, if any, 
facilities consistently producing cellulosic biofuel for commercial 
sale. Announcements of new projects and project funding, changes in 
project plans, project delays, and cancellations occur frequently. 
Biofuel producers face not only the challenge of the scale up of 
innovative, first-of-a-kind technology, but also the challenge of 
securing funding in a difficult economy. The cellulosic biofuel 
industry also is influenced by various tax credits and subsidies, and 
changes to these programs could have an impact on cellulosic biofuel 
production.
    In order to project cellulosic biofuel production for 2012, EPA has 
tracked the progress of over 100 biofuel production facilities. From 
this list of facilities we used publically available information, as 
well as information provided by DOE and USDA, to make a preliminary 
determination of which facilities are the most likely candidates to 
produce cellulosic biofuel and make it commercially available in 2012. 
Each of these companies was investigated further in order to determine 
the current status of their facilities and their likely cellulosic 
biofuel production volumes for the coming years. Information such as 
the funding status of these facilities, announced construction and 
production ramp up periods, and annual fuel production targets were 
taken into account. Our projection of the range of cellulosic biofuel 
production in 2012 is based on this information as well as our own 
assessment of the likelihood of these facilities successfully producing 
cellulosic biofuel in the volumes indicated. A brief description of 
each of the companies we believe may produce cellulosic biofuel and 
make it commercially available in 2012 can be found below. We will 
continue to gather more information to help inform our decision on the 
final cellulosic biofuel standard for 2012, and we will specify a 
single volume in the final rule that will be the basis for the 
cellulosic biofuel percentage standard for 2012.
1. Existing Cellulosic Biofuel Facilities
    The rule that established the required 2011 cellulosic biofuel 
volume identified five production facilities that we projected would 
produce cellulosic biofuel and make the fuel commercially available in 
2011. Each of these production facilities are now structurally 
complete, however they are in various stages of biofuel production. All 
of these facilities have either produced some volume of cellulosic 
biofuel in 2011, or are on schedule to do so later in the year. Only 
Range Fuels, however, has completed its registration as a cellulosic 
biofuel production facility under the RFS2 program and as such they are 
currently the only facility of the five listed here currently eligible 
to generate cellulosic biofuel RINs. For

[[Page 38850]]

more background information on each of these facilities see the 2011 
standards rule.\5\
---------------------------------------------------------------------------

    \5\ 75 FR 76790, December 9, 2010.
---------------------------------------------------------------------------

    DuPont Danisco Cellulosic Ethanol (DDCE) successfully started up 
their small demonstration facility in Vonore, Tennessee in late 2010. 
This facility has a maximum production capacity of 250,000 gallons of 
ethanol per year and uses an enzymatic hydrolysis process to convert 
corn cobs into ethanol. In conversations with EPA in early 2011 DDCE 
indicated that they had not encountered any unexpected difficulties in 
their production of cellulosic ethanol and were on target to meet their 
2011 production goal of 150,000 gallons of cellulosic ethanol. It is 
likely that in 2012 cellulosic biofuel production at this facility will 
approach the production capacity of 250,000 gallons of cellulosic 
ethanol.
    Fiberight uses an enzymatic hydrolysis process to convert the 
biogenic portion of separated municipal solid waste (MSW) into ethanol. 
Construction on the first stage of Fiberight's Blairstown, Iowa 
facility was completed in the summer of 2010. The production capacity 
of the first stage of this project is 2 million gallons of ethanol per 
year. Fiberight had planned to begin production of cellulosic biofuel 
from this facility in late 2010 but poor economic conditions, due in 
part to low cellulosic RIN values in 2010, caused them to postpone fuel 
production. Fiberight had also planned to begin construction on an 
expansion of this facility in late 2010 that would increase the 
production potential to 6 million gallons of ethanol per year, but were 
unable to secure funding to carry out the construction as planned. They 
have since secured funding and began construction on the expansion of 
their Blairstown facility in April 2011. Fiberight anticipates that 
they will begin fuel production in the late summer of 2012 and will 
ramp up production at this facility throughout 2012, producing 
approximately 3 million gallons of cellulosic ethanol in 2012.
    KiOR continues to produce a small volume of renewable crude from 
agricultural residue at their demonstration facility in Houston, Texas 
using a technology they call Biomass Catalytic Cracking (BCC). This 
technology uses heat and a proprietary catalyst to convert biomass to a 
renewable crude with a relatively low oxygen content. This facility 
currently lacks the infrastructure to upgrade this renewable crude to 
finished transportation fuel, however KiOR plans to add this capability 
at this facility in late 2011. While KiOR has not yet registered under 
the RFS2 program, their fuel, if refined to gasoline or diesel fuel 
would be eligible to generate RINs. EPA currently projects a production 
volume of 200,000 gallons of cellulosic fuel from KiOR, which could 
potentially generate 300,000 RINs.
    KL Energy has developed a process to convert cellulose and 
hemicelluloses into cellulosic sugars using a thermal-mechanical 
pretreatment process followed by an enzymatic hydrolysis. They had 
initially planned to used woody biomass as their feedstock for 
cellulosic biofuel production; however their production process is 
versatile enough to allow for a wide variety of cellulosic feedstocks 
to be used. In August 2010 KL Energy announced a joint development 
agreement with Petrobras America Inc. As part of the agreement 
Petrobras will invest $11 million to modify KL Energy's facility in 
Upton, Wyoming to allow it to process bagasse and other waste products. 
These modifications are expected to be completed in 2011, and fuel 
production is likely to begin soon after. If successful, Petrobras and 
KL Energy plan to work together to integrate the technology into 
currently existing ethanol production facilities in Brazil. KL Energy 
has also indentified several sites in the United States for possible 
future expansion. EPA currently projects that KL Energy could produce 
up to 1 million gallons of cellulosic ethanol in 2012 in the United 
States.
    Range Fuels began production of methanol at their Soperton, Georgia 
facility in the third quarter of 2010. This facility uses a 
thermochemical technology to produce syngas (consisting of mostly 
hydrogen and carbon monoxide) from a woody biomass feedstock. The 
syngas is then converted into fuel with the aid of a chemical catalyst 
developed by Range. Range has developed the capability to produce both 
methanol and ethanol, depending on the catalyst used. In January 2011, 
after producing a small volume of ethanol from this facility and 
proving this capability, Range Fuels shut down the Soperton facility in 
order to work through technical difficulties they had been 
experiencing. No timeline has been given for the restart of this 
facility. EPA will continue to gather information and monitor progress 
at the Soperton facility. At this time, however, since no timeline has 
been provided for production from this facility, we are not projecting 
any volume from this facility in 2012.
2. Potential New Facilities in 2012
    EPA is also aware of five new cellulosic biofuel production 
facilities that are currently planning to begin commercial production 
at some point in 2012. These facilities are at various stages in the 
construction process, and as such have various degrees of uncertainty 
associated with any projected 2012 commercial production. While it is 
possible that several of these facilities will not begin production of 
cellulosic biofuels until 2013, they are nevertheless considered here 
since some commercial volumes can potentially be produced in 2012.
    Fulcrum Bioenergy is planning to build a facility capable of 
producing 10.5 million gallons of cellulosic ethanol and 16 megawatts 
of renewable electricity per year. They have developed a thermochemical 
technology to produce ethanol from separated MSW via syngas using a 
chemical catalyst. In November 2010 Fulcrum announced that they had 
received a term sheet for a $80 million loan guarantee from DOE and 
were entering into the final phase of the loan guarantee program. Prior 
to that Fulcrum had announced that they had signed long term feedstock 
supply contracts for this facility as well as engineering, procurement, 
and construction contracts. In January 2011 Fulcrum announced they had 
closed on a $75 million Series C financing that would provide the 
remaining necessary capital for the construction of their first 
commercial production facility pending the closing of their DOE loan 
guarantee. They announced that they are now planning to begin 
construction in the second quarter of 2011 and complete the facility by 
late 2012. EPA currently projects a potential production volume of up 
to 0.5 million gallons of cellulosic ethanol from this facility in 
2012.
    INEOS Bio has developed a process for producing cellulosic ethanol 
by first gasifying feedstock material into a syngas and then using 
naturally occurring bacteria to ferment the syngas into ethanol. In 
January 2011 USDA announced a $75 million loan guarantee for the 
construction of INEOS Bio's first commercial facility to be built in 
Vero Beach, Florida. This facility will be capable of producing 8 
million gallons of cellulosic biofuel as well as 6 megawatts of 
renewable electricity from a variety of feedstocks including yard, 
agricultural, and wood waste, as well as separated MSW. On February 9, 
2011 INEOS Bio broke ground on this facility. INEOS Bio expects to 
complete construction on this facility in April 2012 and plans to begin 
commercial production of cellulosic ethanol soon

[[Page 38851]]

after construction is complete. EPA currently projects a potential 
production volume of up to 3 million gallons of cellulosic ethanol from 
this facility in 2012.
    After successful operation of their demonstration plant in Houston, 
Texas KiOR is planning to begin construction on their first commercial 
scale facility in early 2011. This facility, located in Columbus, 
Mississippi, will convert biomass to a low oxygen biocrude using a 
process KiOR calls Biomass Catalytic Cracking (BCC). BCC uses a 
catalyst developed by KiOR in a process similar to Fluid Catalytic 
Cracking currently used in the petroleum industry. KiOR's Columbus 
facility will also be capable of upgrading this biocrude into finished 
gasoline and diesel as well as a small quantity of fuel oil. KiOR plans 
to begin production from this facility sometime in the first half of 
2012. KiOR has also announced plans to construct several more 
commercial scale biofuel production facilities in Mississippi and 
across the southeastern United States. However, it is unlikely any of 
these facilities will begin production of biofuel in 2012. Given this 
timeline EPA currently projects a potential production of up to 4.0 
million gallons of gasoline and diesel (6.4 million ethanol equivalent 
gallons) from the Columbus facility in 2012.
    Terrabon completed construction of a small demonstration scale 
facility for the conversion of MSW and other waste materials into 
gasoline in 2010 and is planning to begin production at their first 
commercial scale facility in 2012. Terrabon utilizes a unique 
production process that can be used to produce gasoline, diesel, or jet 
fuel. Feedstock is first fermented into carboxylic acids by a variety 
of micro organisms. These carboxylic acids are then neutralized to form 
carboxylate salts that are dewatered, dried, and thermally converted to 
ketones. Finally, the ketones are hydrogenated to form alcohols which 
can then be refined into gasoline, diesel, or jet fuel. While currently 
no pathway exists for the generation of RINs representing cellulosic 
gasoline in the RFS2 regulations, EPA is planning to initiate a 
rulemaking to create such a pathway in our regulations. This would 
allow for facilities such as Terrabon and others who may produce 
cellulosic gasoline in the future to register and generate RINs under 
the RFS2 program (provided they meet the fuel registration, renewable 
biomass, and other requirements of the program as well). EPA currently 
projects the production of up to 0.7 million gallons (1.0 million 
ethanol equivalent gallons) of cellulosic gasoline in 2012 from 
Terrabon's first commercial facility.
    ZeaChem has begun construction on a small demonstration scale 
facility in Boardman, Oregon capable of producing 250,000 gallons of 
cellulosic ethanol per year. Their production process uses a 
combination of biochemical and thermochemical technologies to produce 
ethanol and other renewable chemicals from cellulosic materials. The 
feedstock is first fractionated into two separate streams containing 
cellulosic sugars and lignin. The cellulosic sugars are fermented into 
ethyl acetate using a naturally occurring acetogen, which can then be 
hydrogenated into ethanol. The hydrogen necessary for this process is 
produced by gasifying the lignin stream from the cellulosic biomass. 
ZeaChem's process is flexible and is capable of producing a wide range 
of renewable chemical and fuel molecules in addition to ethanol. 
ZeaChem plans to begin production of cellulosic ethanol from their 
facility in Boardman, Oregon in late 2011, and EPA currently projects a 
potential production volume of up to 0.25 million gallons of ethanol 
from this facility in 2012.
    Another potential source of cellulosic biofuel in 2012 is a 
technology being developed by EdeniQ. EdeniQ is developing a suite of 
enzymes capable of breaking down cellulose into simple sugars that can 
then be fermented into ethanol. Rather than build their own production 
facilities EdeniQ plans to license their enzymes to existing corn 
ethanol facilities. Such licensing would be accompanied by the 
Cellunator, an advanced milling device they have developed to reduce 
the particle size of corn kernels to enable greater conversion of 
starch to ethanol as well as the conversion of cellulose to simple 
sugars. EdeniQ claims that their technology would allow corn ethanol 
facilities to increase ethanol production by 1-2% by converting the 
cellulosic portion of the corn kernel into ethanol. They are also 
working to increase the effectiveness of their enzymes in order to 
enable ethanol production increases of 3-4% from the cellulose in the 
corn kernel in the future. EdeniQ plans to begin commercial trials of 
their technology in the second half of 2011. This technology has the 
potential to be implemented rapidly and produce significant amounts of 
cellulosic ethanol in 2012 as it requires relatively small capital 
additions to already existing corn ethanol facilities. While this 
technology is promising, there is currently no pathway in the RFS2 
regulations for the generation of cellulosic biofuel RINs using the 
cellulosic portion of the corn kernel as a feedstock. Moreover, EdeniQ 
has not announced any agreements with corn ethanol producers to install 
this technology to enable the production of cellulosic ethanol. For 
these reasons, EPA has not included any cellulosic ethanol production 
from EdeniQ's technology in our 2012 projections. We will continue to 
monitor their process in the coming months for signs of progress 
towards commercialization of their technology and will consider adding 
production volumes from EdeniQ into our final projections if 
appropriate.
    In addition to the facilities mentioned above, EPA is also aware of 
three companies planning to begin the production of cellulosic biofuels 
in early 2013. Coskata, Enerkem, and Poet are planning on completing 
construction on their first commercial scale cellulosic biofuel 
facilities in late 2012 or early 2013 and producing commercial volumes 
of biofuels in 2013. While it is possible that construction of any of 
these facilities could be completed ahead of schedule and a small 
volume of fuel could be produced in 2012, history in this industry 
suggests that this is unlikely. EPA has therefore not projected that 
any volume of cellulosic biofuel will be produced from these facilities 
in 2012. These facilities, along with several other commercial 
cellulosic biofuel facilities planning to begin production in 2013, 
notably the first commercial scale facilities from Abengoa and Mascoma, 
indicate that the potential exists for the rapid expansion of 
production volumes in future years.
3. Imports of Cellulosic Biofuel
    While domestically produced cellulosic biofuels are the most likely 
source of cellulosic biofuel available in the United States, producers 
and/or importers of cellulosic biofuel produced in other countries may 
also generate RINs and participate in the RFS2 program. While the RFS2 
program does provide a financial incentive for companies to import 
cellulosic biofuels into the United States, the combination of local 
demand, financial incentives from other governments, and transportation 
costs for the cellulosic biofuel has resulted in no cellulosic biofuel 
being imported to the United States thus far. EPA believes this 
situation is likely to continue in the near future. Additionally, the 
majority of internationally based cellulosic biofuel facilities that 
currently exist or plan to complete construction by the end of 2012 are 
small research and development or pilot facilities not designed for the 
commercial production of fuel.

[[Page 38852]]

    Two notable exceptions, both located in Canada, are Enerkem and 
Iogen. Enerkem has a currently existing commercial production facility 
in Westbury, Quebec and is expecting to complete construction on a 
second facility in Edmonton, Alberta in late 2011. Iogen has a small 
demonstration facility in Ottawa and is currently exploring the 
possibility of building their first commercial facility near Prince 
Albert, Saskatchewan. The large expected production volumes and 
relatively small distance this fuel would have to be transported to 
reach the United States make these facilities the most likely 
candidates to import cellulosic biofuel into the United States. In 
conversations with EPA, however, both companies indicated that they had 
no current intentions of importing fuel from their Canadian production 
facilities into the United States. On September 1, 2010 the government 
of Canada finalized regulations requiring all gasoline sold in Canada 
to have a renewable content of 5% and all diesel fuel and heating oil 
to have a renewable content of 2%. These regulations will further 
increase local demand for any cellulosic biofuel produced from these 
two facilities and decrease the likelihood of any of this fuel being 
exported to the United States. For these reasons we have not included 
any cellulosic biofuel production from foreign facilities in our 
projections of cellulosic biofuel availability in 2012.
4. Summary of Volume Projections
    The information EPA has gathered on the potential cellulosic 
biofuel producers in 2012, described above, allows us to identify 
potential volumes that could be achieved by each facility in 2012. This 
information is summarized in Table II.B.4-1 below.

                                          Table II.B.4-1--Cellulosic Biofuel 2012 Potentially Available Volume
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  2012
                                                                                                      Capacity    Earliest     Potentially     Ethanol
          Company name                  Location              Feedstock                Fuel            (MGY)     production     available    equivalent
                                                                                                                               volume (MG)  gallons (MG)
--------------------------------------------------------------------------------------------------------------------------------------------------------
DuPont Danisco Cellulosic        Vonore, TN...........  Corn Stover..........  Ethanol.............       0.25     Online             0.25          0.25
 Ethanol.
Fiberight \a\..................  Blairstown, IA.......  MSW..................  Ethanol.............          6     Online             3.0           3.0
Fulcrum Bioenergy..............  McCarran, NV.........  MSW..................  Ethanol.............       10.5  Late 2012             0.5           0.5
INEOS Bio......................  Vero Beach, FL.......  Ag Residue, MSW......  Ethanol.............          8   May 2012             3.0           3.0
KiOR...........................  Houston, TX..........  Ag Residue...........  Gasoline, Diesel....        0.2     Online             0.2           0.3
KiOR...........................  Columbus, MS.........  Pulp Wood............  Gasoline, Diesel....         10   Mid 2012             4.0           6.4
KL Energy......................  Upton, WY............  Wood Waste...........  Ethanol.............        1.5     Online             1.0           1.0
Terrabon.......................  Port Arthur, TX......  MSW..................  Gasoline............        1.3       2012             0.7           1.0
ZeaChem........................  Boardman, OR.........  Planted Trees........  Ethanol.............       0.25       2011             0.25          0.25
                                                                                                    ----------------------------------------------------
    Total......................  .....................  .....................  ....................  .........  ............         12.9          15.7
-----------------------------------------------------------------------------------------------------------