Renewable Fuel Standard (RFS) Program: RFS Annual Rules, 72436-72501 [2021-26839]
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Federal Register / Vol. 86, No. 242 / Tuesday, December 21, 2021 / Proposed Rules
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Parts 80 and 1090
[EPA–HQ–OAR–2021–0324; FRL–8521–02–
OAR]
RIN 2060–AV11
Renewable Fuel Standard (RFS)
Program: RFS Annual Rules
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
Under section 211 of the
Clean Air Act, the Environmental
Protection Agency (EPA) is required to
set standards every year to implement
nationally applicable renewable fuel
volume targets. This action proposes to
modify the 2021 and 2022 statutory
volume targets for cellulosic biofuel,
advanced biofuel, and total renewable
fuel, as well as to establish the 2022
volume target for biomass-based diesel.
This action also proposes to modify the
previously established cellulosic
biofuel, advanced biofuel, and total
renewable fuel volume requirements for
2020. In addition, this action proposes
the 2020, 2021, and 2022 renewable fuel
standards for all four of the above
biofuel categories. Finally, this action
also proposes to address the remand of
the 2016 standard-setting rulemaking, as
well as several regulatory changes to the
Renewable Fuel Standard (RFS)
program including regulations for the
use of biointermediates to produce
qualifying renewable fuel, flexibilities
for regulated parties, and clarifications
of existing regulations.
DATES: Comments. Comments must be
received on or before February 4, 2022.
SUMMARY:
Public hearing. EPA announced
information regarding the public
hearing for this proposal in a Federal
Register document published on
December 10, 2021, at 86 FR 70426.
ADDRESSES: Comments. You may send
your comments, identified by Docket ID
No. EPA–HQ–OAR–2021–0324, by any
of the following methods:
• Federal eRulemaking Portal:
https://www.regulations.gov (our
preferred method). Follow the online
instructions for submitting comments.
• Email: a-and-r-Docket@epa.gov.
Include Docket ID No. EPA–HQ–OAR–
2021–0324 in the subject line of the
message.
• Mail: U.S. Environmental
Protection Agency, EPA Docket Center,
Air Docket, Mail Code 28221T, 1200
Pennsylvania Avenue NW, Washington,
DC 20460.
• Hand Delivery or Courier (by
scheduled appointment only): EPA
Docket Center, WJC West Building,
Room 3334, 1301 Constitution Avenue
NW, Washington, DC 20004. The Docket
Center’s hours of operations are 8:30
a.m.–4:30 p.m., Monday–Friday (except
Federal Holidays).
Instructions: All submissions received
must include the Docket ID No. for this
rulemaking. Comments received may be
posted without change to https://
www.regulations.gov, including any
personal information provided. For the
full EPA public comment policy,
information about confidential business
information (CBI) or multimedia
submissions, and general guidance on
making effective comments, please visit
https://www.epa.gov/dockets/
commenting-epa-dockets.
Out of an abundance of caution for
members of the public and our staff, the
EPA Docket Center and Reading Room
Category
Industry
Industry
Industry
Industry
Industry
Industry
Industry
Industry
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FOR FURTHER INFORMATION CONTACT:
Dallas Burkholder, Office of
Transportation and Air Quality,
Assessment and Standards Division,
Environmental Protection Agency, 2000
Traverwood Drive, Ann Arbor, MI
48105; telephone number: 734–214–
4766; email address: RFS-Rulemakings@
epa.gov. Comments on this proposal
should not be submitted to this email
address, but rather through https://
www.regulations.gov as discussed in the
ADDRESSES section.
Entities
potentially affected by this proposed
rule are those involved with the
production, distribution, and sale of
transportation fuels, including gasoline
and diesel fuel, as well as renewable
fuels such as ethanol, biodiesel,
renewable diesel, and biogas.
Potentially affected categories include:
SUPPLEMENTARY INFORMATION:
NAICS 1 codes
Examples of potentially affected entities
324110
325193
325199
424690
424710
424720
221210
454319
Petroleum refineries.
Ethyl alcohol manufacturing.
Other basic organic chemical manufacturing.
Chemical and allied products merchant wholesalers.
Petroleum bulk stations and terminals.
Petroleum and petroleum products merchant wholesalers.
Manufactured gas production and distribution.
Other fuel dealers.
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1 North
are closed to the public, with limited
exceptions, to reduce the risk of
transmitting COVID–19. Our Docket
Center staff will continue to provide
remote customer service via email,
phone, and webform. We encourage the
public to submit comments via https://
www.regulations.gov or email, as there
may be a delay in processing mail and
faxes. Hand deliveries and couriers may
be received by scheduled appointment
only. For further information on EPA
Docket Center services and the current
status, please visit us online at https://
www.epa.gov/dockets.
EPA continues to carefully and
continuously monitor information from
the Centers for Disease Control and
Prevention (CDC), local area health
departments, and our Federal partners
so that we can respond rapidly as
conditions change regarding COVID–19.
American Industry Classification System (NAICS).
This table is not intended to be
exhaustive, but rather provides a guide
for readers regarding entities likely to be
affected by this proposed action. This
table lists the types of entities that EPA
is now aware could potentially be
affected by this proposed action. Other
types of entities not listed in the table
could also be affected. To determine
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whether your entity would be affected
by this proposed action, you should
carefully examine the applicability
criteria in 40 CFR parts 80 and 1090. If
you have any questions regarding the
applicability of this proposed action to
a particular entity, consult the person
listed in the FOR FURTHER INFORMATION
CONTACT section.
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Outline of This Preamble
I. Executive Summary
A. Legal Authorities To Modify and
Establish Renewable Fuel Volumes
B. 2020 Volumes
C. 2021 Volumes
D. 2022 Volumes
E. Response to the ACE Remand
F. Annual Percentage Standards
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Federal Register / Vol. 86, No. 242 / Tuesday, December 21, 2021 / Proposed Rules
G. Biointermediates
H. Other Changes
I. Environmental Justice
J. Endangered Species Act
II. Legal Authorities To Reduce and
Establish Volumes
A. Authorities To Modify Statutory
Volumes Targets
B. Authority To Establish BBD
Volumes
C. Considerations for Retroactive and
Late Rulemaking
D. Considerations in Revisiting an
Established RFS Standard
E. Applicability of Legal Authorities
To Establish the Volume
Requirements
F. Severability
III. Proposed Volumes
A. EPA’s Assessment of the Statutory
Factors for Each Component
Category of Biofuel
B. Proposed Volumes for 2020
C. Proposed Volumes for 2021
D. Proposed Volumes for 2022
E. Proposed Biomass-Based Diesel
Volume for 2022
F. Summary of the Proposed Volumes
G. Impacts of the Proposed Volumes
IV. Interactions Between the RFS
Annual Volumes
A. Treatment of Carryover RINs
B. Ability for the RFS Volumes To
Impact Renewable Fuel Supply
V. Response to ACE Remand
A. Reevaluating the 2014–2016
Annual Rule
B. Consideration of Approaches for
Responding to the ACE Remand
C. Demonstrating Compliance With
the 2022 Supplemental Standard
D. Authority and Consideration of the
Benefits and Burdens
E. Calculating a Supplemental
Percentage Standard for 2022
VI. Percentage Standards
A. Calculation of Percentage
Standards
B. Small Refineries and Small
Refiners
C. Modification of the 2020 BiomassBased Diesel Percentage Standard
D. Proposed Standards
VII. Biointermediates
A. Background
B. Re-Proposal of Biointermediates
Provisions Previously Proposed in
REGS
C. Changes to the Biointermediates
Provisions Previously Proposed in
the REGS Rule
D. Other Considerations Related to
Biointermediates
VIII. Amendments to Fuel Quality and
RFS Regulations
A. BBD Conversion Factor for
Percentage Standard
B. Changes to Registration for
Baseline Volume
C. Changes to Attest Engagements for
Parties Owning RINs (‘‘RIN Owner
Only’’)
D. Public Access to Information
E. Clarifying the Definition of
‘‘Agricultural Digester’’
F. Definition of ‘‘Produced from
Renewable Biomass’’
G. Estimating Landfill Emissions for
Lifecycle GHG Analysis of Fuels
Produced From Separated
Municipal Solid Waste
H. Technical Corrections and
Clarifications
IX. 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 (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act
(UMRA)
E. Executive Order 13132: Federalism
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 and
Advancement Act (NTTAA) and 1
CFR part 51
J. Executive Order 12898: Federal
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Actions To Address Environmental
Justice in Minority Populations and
Low-Income Populations
X. Statutory Authority
A red-line version of the regulatory
language that incorporates the proposed
changes in this action is available in the
docket for this action.
I. Executive Summary
The Renewable Fuel Standard (RFS)
program began in 2006 pursuant to the
requirements of the Energy Policy Act of
2005 (EPAct), which were codified in
Clean Air Act (CAA) section 211(o). The
statutory requirements were
subsequently amended by the Energy
Independence and Security Act of 2007
(EISA). The statute sets forth annual,
nationally applicable volume targets for
each of the four categories of renewable
fuel. It also directs EPA to modify or
establish volume targets in certain
circumstances. EPA must then translate
the volume targets into compliance
obligations that obligated parties must
meet every year.
In this action we are proposing the
applicable volumes for cellulosic
biofuel, advanced biofuel, and total
renewable fuel for 2021 and 2022, and
the biomass-based diesel (BBD)
applicable volume for 2022,1 as well as
to modify the applicable volumes that
EPA previously established for
cellulosic biofuel, advanced biofuel, and
total renewable fuel for 2020.2 3 We are
also proposing the annual percentage
standards (also known as ‘‘percent
standards’’) for cellulosic biofuel, BBD,
advanced biofuel, and total renewable
fuel that would apply to gasoline and
diesel produced or imported by
obligated parties in 2020, 2021, and
2022. In addition, we are also proposing
to address the remand of the 2014–2016
annual rule by the D.C. Circuit Court of
Appeals, in Americans for Clean Energy
v. EPA, 864 F.3d 691 (2017) (hereafter
‘‘ACE’’) by proposing a supplemental
volume of 250 million gallons in 2022,
and we intend to propose an additional
supplemental volume of 250 million
gallons for 2023 in a subsequent action.
TABLE I–1—PROPOSED VOLUME REQUIREMENTS
[Billion RINs] a
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Category
2020
Cellulosic Biofuel .........................................................................................................................
Biomass-Based Diesel b ..............................................................................................................
Advanced Biofuel .........................................................................................................................
1 The 2021 BBD volume requirement was
established in the 2020 final rule. 85 FR 7016
(February 6, 2020).
2 85 FR 7016 (February 6, 2020).
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3 As explained in Section II, we did not trigger the
reset authority for BBD. Thus, we are not proposing
to reset the previously finalized 2020 and 2021 BBD
volumes. In addition, actual BBD use in both 2020
and 2021 is projected to exceed the previously
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2021
2022
0.51
0.62
c 2.43
d 2.43
4.63
5.20
0.77
2.76
5.77
finalized volumes, so we see no need to
retroactively reconsider the BBD volumes in any
event. As discussed in Section III.E, we are
proposing to set the 2022 BBD volume pursuant our
‘‘set’’ authority under CAA section 211(o)(2)(B)(ii)).
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TABLE I–1—PROPOSED VOLUME REQUIREMENTS—Continued
[Billion RINs] a
Category
2020
Total Renewable Fuel ..................................................................................................................
Supplemental Standard ...............................................................................................................
2021
17.13
n/a
18.52
n/a
2022
20.77
0.25
a One Renewable Identification Number (RIN) is equivalent to one ethanol-equivalent gallon of renewable fuel. Throughout this preamble, RINs
are generally used to describe total volumes in each of the four categories shown above, while gallons are generally used to describe volumes
for individual types of biofuel such as ethanol, biodiesel, renewable diesel, etc. Exceptions include BBD, which is always given in physical volumes, and biogas and electricity, which are always given in RINs.
b The BBD volumes are in physical gallons (rather than RINs).
c Established in the 2019 RFS annual rule (83 FR 63704, December 11, 2018).
d Established in the 2020 RFS annual rule (85 FR 7016, February 6, 2020).
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Finally, we are proposing several
regulatory changes to the RFS program,
including regulations for the use of
biointermediates to produce qualifying
renewable fuel, flexibilities for regulated
parties, and clarifications of existing
regulations.
A. Legal Authorities To Modify and
Establish Renewable Fuel Volumes
For the 2020, 2021, and 2022
cellulosic biofuel, advanced biofuel, and
total renewable fuel volumes, EPA is
fulfilling our statutory obligation to
‘‘reset’’ the statutory volumes in
accordance with CAA section
211(o)(7)(F). This provision, entitled
‘‘Modification of Applicable Volumes,’’
provides that, if a waiver of any
statutory volume target exceeds
specified thresholds, EPA shall modify
or ‘‘reset’’ the statutory volume targets
for all years following the year that the
threshold was exceeded. This obligation
has been triggered by EPA actions
waiving volumes in previous annual
standard-setting rulemakings. Under
this statutory provision, we are
proposing new volume targets for
cellulosic biofuel, advanced biofuel, and
total renewable fuel for 2020, 2021, and
2022.4
When resetting the statutory targets,
EPA must comply with the processes,
criteria, and standards set forth in CAA
section 211(o)(2)(B)(ii). In addition to
reviewing the implementation of the
program during previous years and
coordinating with the Secretary of
Energy and the Secretary of Agriculture,
EPA must also analyze several factors:
• The impact of the production and
use of renewable fuels on the
environment, including on air quality,
climate change, conversion of wetlands,
ecosystems, wildlife habitat, water
quality, and water supply;
• The impact of renewable fuels on
the energy security of the U.S.;
• The expected annual rate of future
commercial production of renewable
fuels, including advanced biofuels in
each category (cellulosic biofuel and
BBD);
• The impact of renewable fuels on
the infrastructure of the U.S., including
deliverability of materials, goods, and
products other than renewable fuel, and
the sufficiency of infrastructure to
deliver and use renewable fuel;
• The impact of the use of renewable
fuels on the cost to consumers of
transportation fuel and on the cost to
transport goods; and
• The impact of the use of renewable
fuels on other factors, including job
creation, the price and supply of
agricultural commodities, rural
economic development, and food prices.
With respect to the 2022 BBD volume,
we are setting this volume under CAA
section 211(o)(2)(B)(ii). The requirement
to reset the statutory volume targets
does not apply to BBD. However, CAA
section 211(o)(2)(B)(ii) separately
requires that EPA set the BBD volume
for years including 2022 based on an
analysis of the same statutory factors as
the reset authority.
In addition to these statutory
provisions, the D.C. Circuit has also
established principles that EPA must
follow when promulgating RFS
rulemakings after the statutory deadline
as well as retroactive RFS rulemakings.5
Namely, EPA has authority to
promulgate such RFS rules, but EPA
must reasonably consider and mitigate
the burdens on obligated parties.
Several aspects of this rulemaking are
either retroactive or will be finalized
after the statutory deadline, or both.
Therefore we consider this caselaw as
required by the court. We further
discuss all our legal authorities to
modify or establish volumes in Section
II.
B. 2020 Volumes
EPA established the applicable 2020
volume requirements and percentage
standards in late 2019.6 Since we
promulgated those standards, several
significant and unanticipated events
occurred that affected the fuels markets
in 2020. The two most prominent of
these events were:
• The COVID–19 pandemic and the
ensuing fall in transportation fuel
demand, especially the disproportionate
fall in gasoline demand relative to diesel
demand, which significantly reduced
the production and use of biofuels in
2020 below the volumes we anticipated
could be achieved, and
• The potential that the volume of
gasoline and diesel exempted from 2020
RFS obligations through small refinery
exemption (SREs) will be far lower than
projected in the 2020 final rule.
These events are expected to
adversely affect the ability of obligated
parties to comply with the applicable
standards and to achieve the intended
volumes in the 2020 final rule.7 As a
result, we are proposing to retroactively
adjust the 2020 volumes and standards
to reflect the actual volumes of
renewable fuels and transportation fuel
consumed in the U.S. As we discuss
further in Sections III and IV, these
revised volumes are supported by our
analysis of the statutory factors that we
must consider when resetting RFS
volumes.
C. 2021 Volumes
We are proposing volumes for 2021
that are equal to our projection of the
volume of cellulosic biofuel, advanced
biofuel, and total renewable fuel that
will be used in the U.S. in 2021. Much
like our proposed volumes for 2015,8
which were similarly retroactive and
promulgated after the statutory
6 85
FR 7016 (February 6, 2020).
extended the 2020 compliance deadline for
obligated parties to January 31, 2022 (86 FR 17073,
April 1, 2021). We have proposed to further extend
that deadline in a separate action (86 FR 67419,
November 26, 2021).
8 80 FR 33100 (June 10, 2015).
7 EPA
4 As we explain further in Section II, we are also
independently justifying the 2020, 2021, and 2022
cellulosic biofuel volumes and the 2022 advanced
biofuel and total renewable fuel volumes under the
cellulosic waiver authority.
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5 See, e.g., Americans for Clean Energy v. EPA,
864 F.3d 691 (D.C. Cir. 2017); Monroe Energy, LLC
v. EPA, 750 F.3d 909 (D.C. Cir. 2014); Nat’l
Petrochemical & Refiners Ass’n v. EPA, 630 F.3d
145, 154–58 (D.C. Cir. 2010).
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deadline, these volume projections are
based on actual renewable fuel use for
months in 2021 where data are available
and projections of renewable fuel use
for the remainder of the year. These
volumes include both renewable fuel
that is produced domestically as well as
imported renewable fuel that is used in
the U.S. As discussed in further detail
in Sections III and IV of this proposal,
we believe this approach for 2021 is
appropriate based on our analysis of the
statutory factors EPA must analyze
when resetting the RFS volumes,
including our finding that this
retroactive rulemaking has limited
ability to incentivize increased
production and use of renewable fuel in
2021.
D. 2022 Volumes
The proposed volumes for 2022 are
significantly higher than the proposed
volumes for 2020 and 2021. As we
discuss further in Sections III and IV,
these volumes are based on our analysis
of the statutory factors, including our
assessment of the ability for the RFS
program to incentivize increased
production and use of renewable fuel in
2022, the statutory intent to support
increasing production and use of
renewable fuels, and the potential
positive impacts of renewable fuels on
several of the statutory factors such as
climate change and energy security. The
proposed volumes for 2022 also reflect
the adverse impacts of biofuels on some
statutory factors, including market and
infrastructure constraints to the ability
of RFS annual volume requirements to
incentivize increased production and
use of renewable fuel in the near term.
These constraints include the
commercial availability of cellulosic
biofuel, the price and availability of
feedstocks, and the availability of
infrastructure to distribute higher level
blends of ethanol.
E. Response to the ACE Remand
In 2015, EPA established the total
renewable fuel standard for 2016. As
part of that rule, we relied upon the
general waiver authority under a finding
of inadequate domestic supply to reduce
the total renewable fuel volume target
by 500 million gallons.9 Several parties
challenged that action, and in ACE the
U.S. Court of Appeals for the D.C.
Circuit vacated EPA’s use of the general
waiver authority, finding that such use
exceeded EPA’s authority under the
CAA. Specifically, EPA had
impermissibly considered demand-side
factors in its assessment of inadequate
domestic supply, rather than limiting
that assessment to supply-side factors.
The court remanded the rule back to
EPA for further consideration.
We now intend to restore the full 500
million gallons that we improperly
waived in the 2016 rule but to do so
over two years. Specifically, as we
discuss further in Section V, we are
proposing to add a supplemental
volume obligation of 250 million gallons
to the proposed 2022 standards. We also
intend to propose an additional
supplemental volume of 250 million
gallons for 2023 in a subsequent action.
F. Annual Percentage Standards
The statute directs EPA to establish
annual standards that translate the
nationally applicable volume targets
into compliance obligations on
obligated parties. In this action, EPA is
proposing annual standards for 2020,
2021, and 2022 for all four categories of
renewable fuel. We are also proposing a
supplemental standard to address the
ACE remand, which will apply in the
2022 compliance year.
The renewable fuel standards are
expressed as a volume percentage and
are used by each refiner and importer of
fossil-based gasoline or diesel to
determine their renewable fuel volume
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obligations. The specific formulas we
use in calculating the renewable fuel
percentage standards are found in 40
CFR 80.1405. Four separate percentage
standards are required under the RFS
program, corresponding to the four
separate renewable fuel categories
shown in Table I–1. The proposed
standards are shown in Table I.E–1.
Details, including the projected gasoline
and diesel volumes used, can be found
in Section VI.
In the 2020 standards final rule, we
modified the formulas used to calculate
the percentage standards to account for
a projection of exempt gasoline and
diesel volumes produced by small
refineries.10 Subsequent to the
promulgation of that rule, the Tenth
Circuit Court of Appeals vacated three
EPA SRE decisions as exceeding our
statutory authority in Renewable Fuels
Association v. EPA (hereinafter RFA).11
Most recently, the Supreme Court, in
HollyFrontier v. Renewable Fuels
Association (hereinafter HollyFrontier),
vacated one of the bases for the RFA
decision, holding that small refineries
need not have had continuous
exemptions since the original statutory
exemption, but did not opine on the
other two holdings in RFA because
those issues were not appealed to the
Court. We continue to consider the
impact of these decisions on our SRE
policy, and it is still unclear at this time
whether we will be granting SREs for
2020, 2021, or 2022, and if so, to what
degree. Thus, we are proposing a range
of exempted volumes of gasoline and
diesel as a result of SREs in the
calculation of the applicable percentage
standards, ranging from zero to 8.19
billion gallons.
The resulting range in the proposed
percentage standards is shown in Table
I.F–1.
TABLE I.F–1—PROPOSED PERCENTAGE STANDARDS a
2020
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Category
Low
(%)
Cellulosic Biofuel ......................................
Biomass-Based Diesel .............................
Advanced Biofuel .....................................
Renewable Fuel .......................................
Supplemental Standard ...........................
2021
High
(%)
0.32
2.37
2.91
10.78
n/a
Low
(%)
0.34
2.50
3.07
11.36
n/a
2022
High
(%)
0.36
2.19
3.03
10.79
n/a
Low
(%)
0.38
2.30
3.18
11.33
n/a
0.44
2.42
3.27
11.76
0.14
High
(%)
0.46
2.54
3.42
12.33
0.15
a Low values do not include any projected exempted gasoline and diesel volumes from SREs. High values include 8.19 billion gallons of projected exempted gasoline and diesel from SREs.
9 See 80 FR 77420 (December 14, 2015); CAA
section 211(o)(7)(A)(ii).
10 85 FR 7016 (February 6, 2020).
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11 Renewable Fuels Ass’n v. EPA, 948 F.3d 1206
(10th Cir. 2020), rev’d in part sub nom.,
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HollyFrontier Cheyenne Refining, LLC, v.
Renewable Fuels Ass’n, 114 S. Ct. 2172 (2021).
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G. Biointermediates
Since the RFS2 program was finalized
in 2010, we have been made
increasingly aware of renewable fuel
producers that would like to process
fuel at more than one facility.
Specifically, renewable fuel producers
would like to first have a facility process
renewable biomass into a protorenewable fuel (or ‘‘biointermediate’’)
and then have a second, separate facility
process that biointermediate into
renewable fuel. In some cases, it may be
preferable for economic or practical
reasons for renewable biomass to be
subjected to substantial pre-processing
at one facility before being sent to a
different facility where it is converted
into renewable fuel. For example,
renewable biomass may be converted
into a biointermediate (such as a
biocrude) at one facility that requires
some additional processing at a different
facility before it can be used as
transportation fuel. These production
methodologies have the potential to
lower the cost of using cellulosic and
other feedstocks for the production of
renewable fuels by reducing capital
costs for new facilities and/or the
storage and transportation costs
associated with feedstock handling—
especially for cellulosic biomass. Thus,
we believe that such technologies
provide an opportunity for the future
growth in production of the cellulosic
biofuels required under the RFS
program. Based on this potential for
future growth, in 2016 we included in
the proposed the Renewables
Enhancement and Growth Support
(REGS) rule provisions to allow for the
production, transfer, and use of
biointermediates to generate qualifying
renewable fuel under the RFS
program.12
Due to the elapsed time since the
proposed REGS rule and our continued
consideration of how to most effectively
allow biointermediates into the
program, we are proposing anew
provisions to allow for the use of
biointermediates to produce qualifying
renewable fuels. Consistent with what
we previously proposed in the REGS
rule, these provisions specify
requirements that apply when
renewable fuel is produced through
sequential operations at more than one
facility. These provisions center around
the production, transfer, and use of
biointermediates and the creation of
new regulatory requirements related to
registration, recordkeeping, and
reporting for facilities producing or
using a biointermediate for renewable
12 See
81 FR 80828 (November 16, 2016).
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fuel production. We are reproposing
many of the proposed biointermediate
provisions from the REGS rule without
significant changes, making significant
changes to some of the previously
proposed provisions, and proposing
some provisions for the first time here.
We further discuss biointermediates in
Section VII.
H. Other Changes
We have identified several areas
where regulatory changes would assist
EPA in implementing our fuel quality
and RFS programs. These proposed
regulatory changes include:
• Changing the BBD weighting factor
from 1.50 to 1.55
• Changes to registration for baseline
volumes
• Changes to attest engagements for
parties owning Renewable
Identification Numbers (RINs)
• Treatment of confidential business
information
• Clarifying the definition of
‘‘agricultural digesters’’
• Adding a definition of ‘‘produced
from renewable biomass’’
• Other minor changes and technical
corrections
Each of these regulatory changes is
discussed in greater detail in Section
VIII. In Section VIII, we also seek
comment on potential changes to our
treatment of landfill emissions in our
lifecycle greenhouse gas (GHG) analysis
for fuels produced from separated
municipal solid waste.
I. Environmental Justice
Executive Order 12898 (59 FR 7629,
February 16, 1994) establishes Federal
executive policy on environmental
justice (‘‘EJ’’). It directs Federal
agencies, to the greatest extent
practicable and permitted by law, to
make achieving EJ part of their mission
by identifying and addressing, as
appropriate, disproportionately high
and adverse human health or
environmental effects of their programs,
policies, and activities on minority
populations and low-income
populations in the United States. EPA
defines EJ as the fair treatment and
meaningful involvement of all people
regardless of race, color, national origin,
or income with respect to the
development, implementation, and
enforcement of environmental laws,
regulations, and policies.13 Executive
Order 14008 (86 FR 7619, February 1,
2021) also calls on Federal agencies to
make achieving EJ part of their missions
13 See, e.g., ‘‘Environmental Justice.’’ Epa.gov,
Environmental Protection Agency, 4 Mar. 2021,
https://www.epa.gov/environmentaljustice.
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‘‘by developing programs, policies, and
activities to address the
disproportionately high and adverse
human health, environmental, climaterelated and other cumulative impacts on
disadvantaged communities, as well as
the accompanying economic challenges
of such impacts.’’ It also declares a
policy ‘‘to secure environmental justice
and spur economic opportunity for
disadvantaged communities that have
been historically marginalized and
overburdened by pollution and underinvestment in housing, transportation,
water and wastewater infrastructure and
health care.’’ EPA also released its
‘‘Technical Guidance for Assessing
Environmental Justice in Regulatory
Analysis’’ providing recommendations
on conducting the highest quality
analysis feasible, recognizing that data
limitations, time and resource
constraints, and analytic challenges will
vary by media and regulatory context.14
When assessing the potential for
disproportionately high and adverse
health or environmental impacts of
regulatory actions on minority
populations, low-income populations,
tribes, and/or indigenous peoples, EPA
strives to answer three broad questions:
(1) Is there evidence of potential EJ
concerns in the baseline (the state of the
world absent the regulatory action)?
Assessing the baseline will allow EPA to
determine whether pre-existing
disparities are associated with the
pollutant(s) under consideration (e.g., if
the effects of the pollutant(s) are more
concentrated in some population
groups). (2) Is there evidence of
potential EJ concerns for the regulatory
option(s) under consideration?
Specifically, how are the pollutant(s)
and their effects distributed for the
regulatory options under consideration?
And, (3) do the regulatory option(s)
under consideration exacerbate or
mitigate EJ concerns relative to the
baseline? It is not always possible to
assess these questions in ways that
produce quantitative results, though it
may still be possible to describe them
qualitatively.
EPA’s 2016 Technical Guidance does
not prescribe or recommend a specific
approach or methodology for
conducting an EJ analysis, though a key
consideration is consistency with the
assumptions underlying other parts of
the regulatory analysis when evaluating
14 The definitions and criteria for
‘‘disproportionate impacts,’’ ‘‘difference,’’ and
‘‘differential’’ are contained in EPA’s June 2016
guidance document ‘‘Technical Guidance for
Assessing Environmental Justice in Regulatory
Analysis.’’ Epa.gov, Environmental Protection
Agency, https://www.epa.gov/sites/production/
files/2016-06/documents/ejtg_5_6_16_v5.1.pdf.
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the baseline and regulatory options.
Where applicable and practicable, the
Agency endeavors to conduct such an
analysis. Going forward, EPA is
committed to conducting EJ analysis for
rulemakings based on a framework
similar to what is outlined in EPA’s
Technical Guidance, in addition to
investigating ways to further weave EJ
into the fabric of the rulemaking
process.
In 2009, under the Endangerment and
Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a)
of the Clean Air Act (‘‘Endangerment
Finding’’), the Administrator considered
how climate change threatens the health
and welfare of the U.S. population. As
part of that consideration, he also
considered risks to minority and lowincome individuals and communities,
finding that certain parts of the U.S.
population may be especially vulnerable
based on their characteristics or
circumstances. These groups include
economically and socially
disadvantaged communities;
individuals at vulnerable lifestages,
such as the elderly, the very young, and
pregnant or nursing women; those
already in poor health or with
comorbidities; the disabled; those
experiencing homelessness, mental
illness, or substance abuse; and/or
Indigenous or minority populations
dependent on one or limited resources
for subsistence due to factors including
but not limited to geography, access,
and mobility.
Scientific assessment reports
produced over the past decade by the
U.S. Global Change Research Program
(USGCRP),15 16 the Intergovernmental
Panel on Climate Change (IPCC),17 18 19 20
15 USGCRP, 2018: Impacts, Risks, and Adaptation
in the United States: Fourth National Climate
Assessment, Volume II [Reidmiller, D.R., C.W.
Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis,
T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global
Change Research Program, Washington, DC, USA,
1515 pp. doi: 10.7930/NCA4.2018.
16 USGCRP, 2016: The Impacts of Climate Change
on Human Health in the United States: A Scientific
Assessment. Crimmins, A., J. Balbus, J.L. Gamble,
C.B. Beard, J.E. Bell, D. Dodgen, R.J. Eisen, N. Fann,
M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M.
Mills, S. Saha, M.C. Sarofim, J. Trtanj, and L. Ziska,
Eds. U.S. Global Change Research Program,
Washington, DC, 312 pp. https://dx.doi.org/10.7930/
J0R49NQX.
17 Oppenheimer, M., M. Campos, R.Warren, J.
Birkmann, G. Luber, B. O’Neill, and K. Takahashi,
2014: Emergent risks and key vulnerabilities. In:
Climate Change 2014: Impacts, Adaptation, and
Vulnerability. Part A: Global and Sectoral Aspects.
Contribution of Working Group II to the Fifth
Assessment Report of the Intergovernmental Panel
on Climate Change [Field, C.B., V.R. Barros, D.J.
Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M.
Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B.
Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R.
Mastrandrea, and L.L.White (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA, pp. 1039–1099.
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and the National Academies of Science,
Engineering, and Medicine 21 22 add
more evidence that the impacts of
climate change raise potential EJ
concerns. These reports conclude that
poorer or predominantly non-White
communities can be especially
vulnerable to climate change impacts
because they tend to have limited
adaptive capacities and are more
dependent on climate-sensitive
resources such as local water and food
supplies, or have less access to social
and information resources. Some
communities of color, specifically
populations defined jointly by ethnic/
racial characteristics and geographic
location, may be uniquely vulnerable to
climate change health impacts in the
United States. In particular, the 2016
scientific assessment on the Impacts of
Climate Change on Human Health
found with high confidence that
vulnerabilities are place- and timespecific, lifestages and ages are linked to
immediate and future health impacts,
and social determinants of health are
18 Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane,
S.M. Howden, M.M. Iqbal, D.B. Lobell, and M.I.
Travasso, 2014: Food security and food production
systems. In: Climate Change 2014: Impacts,
Adaptation, and Vulnerability. Part A: Global and
Sectoral Aspects. Contribution of Working Group II
to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change [Field,
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D.
Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O.
Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N.
Levy, S. MacCracken, P.R. Mastrandrea, and L.L.
White (eds.)]. Cambridge University Press,
Cambridge, United Kingdom and New York, NY,
USA, pp. 485–533.
19 Smith, K.R., A. Woodward, D. CampbellLendrum, D.D. Chadee, Y. Honda, Q. Liu, J.M.
Olwoch, B. Revich, and R. Sauerborn, 2014: Human
health: Impacts, adaptation, and co-benefits. In:
Climate Change 2014: Impacts, Adaptation, and
Vulnerability. Part A: Global and Sectoral Aspects.
Contribution of Working Group II to the Fifth
Assessment Report of the Intergovernmental Panel
on Climate Change [Field, C.B., V.R. Barros, D.J.
Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M.
Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B.
Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R.
Mastrandrea, and L.L. White (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and
New York, NY, USA, pp. 709–754.
20 IPCC, 2018: Global Warming of 1.5 °C. An IPCC
Special Report on the impacts of global warming of
1.5 °C above pre-industrial levels and related global
greenhouse gas emission pathways, in the context
of strengthening the global response to the threat of
climate change, sustainable development, and
efforts to eradicate poverty [Masson-Delmotte, V., P.
Zhai, H.-O. Po¨rtner, D. Roberts, J. Skea, P.R. Shukla,
A. Pirani, W. Moufouma-Okia, C. Pe´an, R. Pidcock,
S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I.
Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press.
21 National Research Council. 2011. America’s
Climate Choices. Washington, DC: The National
Academies Press. https://doi.org/10.17226/12781.
22 National Academies of Sciences, Engineering,
and Medicine. 2017. Communities in Action:
Pathways to Health Equity. Washington, DC: The
National Academies Press. https://doi.org/
10.17226/24624.
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linked to greater extent and severity of
climate change-related health impacts.
This proposed rule has the potential
to reduce GHG emissions which would
benefit all populations including
minority populations, low-income
populations, and indigenous
populations. The manner in which the
market responds to the provisions in
this proposed rule could also have nonGHG impacts. For instance, replacing
petroleum fuels with renewable fuels
could have impacts on water, air, and
hazardous waste exposure for
communities living near either existing
or new facilities that produce these
fuels. Replacing petroleum fuels with
renewable fuels could also impact
feedstock supplies and land-use, which
could impact a range of communities
through their impacts on air, water, and
soil quality, as well as water quantity.
Impacts on water quality in particular
could impact communities that rely on
aquatic ecosystems for income or
sustenance, including indigenous
peoples. While replacing petroleum
fuels with renewable fuels is projected
to cause small increases in food and fuel
prices, these price impacts also may
disproportionately affect low-income
populations who spend a larger portion
of their income on food and fuel.
The extent to which such changes
may be unevenly distributed spatially in
ways that coincide with patterns of preexisting exposure and vulnerabilities for
minority populations, low income
populations, and/or indigenous peoples
is uncertain and would require
predicting where these changes in
production and land use change would
occur at a fine spatial scale. EPA is
taking comment on ways in which such
effects could be better evaluated for
future rulemakings. A more detailed
discussion of potential EJ concerns as a
result of this action can be found in
Chapter 8 of the Draft Regulatory
Impacts Analysis (DRIA), available in
the docket for this action.
J. Endangered Species Act
Section 7(a)(2) of the Endangered
Species Act (ESA), 16 U.S.C. 1536(a)(2),
requires that Federal agencies such as
EPA, along with the U.S. Fish and
Wildlife Service (USFWS) and/or the
National Marine Fisheries Service
(NMFS) (collectively ‘‘the Services’’),
ensure that any action authorized,
funded, or carried out by the agency is
not likely to jeopardize the continued
existence of any endangered or
threatened species or result in the
destruction or adverse modification of
designated critical habitat for such
species. Under relevant implementing
regulations, consultation is required
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only for actions that ‘‘may affect’’ listed
species or designated critical habitat. 50
CFR 402.14. Consultation is not
required where the action has no effect
on such species or habitat. For several
prior RFS annual standard-setting rules,
EPA did not consult with the Services
under section 7(a)(2).
On September 6, 2019, the United
States Court of Appeals for the D.C.
Circuit decided American Fuel &
Petrochemical Manufacturers v. EPA,
937 F.3d 559 (2019), finding that EPA
had failed to make an effects
determination for ESA purposes with
regard to the 2018 RFS rule and
remanding the rule without vacatur to
the Agency to make an appropriate
effects determination. See id. at 598.
On July 16, 2021, the same court
decided Growth Energy v. EPA, 5 F.4th
1 (2021), finding that EPA’s
determination that the 2019 RFS rule
would have no effect on listed species
or the designated critical habitat of such
species was arbitrary and capricious and
remanding the rule to the Agency
without vacatur to comply with the
ruling. See id. at 32.
In light of this case law pertaining to
EPA’s action in prior years and
consistent with section 7(a)(2) of the
ESA and relevant ESA implementing
regulations at 50 CFR part 402, EPA
intends to initiate consultation, as
appropriate, with the Services regarding
this proposed rule.23 At this time, EPA
is evaluating whether any federally
listed threatened or endangered species
or their critical habitat are likely to be
adversely affected by the finalization of
this rulemaking.
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II. Legal Authorities To Reduce and
Establish Volumes
The CAA provides EPA with several
authorities to reduce or establish the
applicable renewable fuel volumes. This
section discusses the statutory
authorities, additional factors we are
considering due to the retroactivity or
lateness of parts of this rulemaking,
additional factors related to our
reconsideration of the previously
finalized standards for 2020, how we are
applying our authorities to propose
these volumes, as well as the
severability of the various portions of
this proposed rule.
23 EPA also intends to respond to the court’s
remand of the 2018 and 2019 RFS rules in a
separate proceeding. We are not revisiting our ESA
obligations related to the 2018 or 2019 rules in this
rulemaking; any comments received on those topics
will be deemed beyond the scope of this
rulemaking.
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A. Authorities To Modify Statutory
Volumes Targets
In CAA section 211(o)(2), Congress
specified increasing annual volume
targets for total renewable fuel,
advanced biofuel, and cellulosic biofuel
for each year through 2022. However,
Congress also recognized that under
certain circumstances it would be
appropriate for EPA to set different
volume requirements than the statutory
volume targets and thus provided
waiver provisions in CAA section
211(o)(7). In this proposal, we are
utilizing the cellulosic waiver authority
under CAA section 211(o)(7)(D), and the
reset authority under CAA section
211(o)(7)(F) to reduce volumes for 2020,
2021, and 2022. As discussed below,
while we have previously sought
comment on the use of general waiver
authority to reduce volumes for 2020,
the reductions proposed in this action
are based on the use of our other
authorities.
1. Cellulosic Waiver Authority.
Section 211(o)(7)(D)(i) of the CAA
provides that if EPA determines that the
projected volume of cellulosic biofuel
production for a given year is less than
the applicable volume specified in the
statute, then EPA must reduce the
applicable volume of cellulosic biofuel
required to the projected volume
available for that calendar year. In
making this projection, EPA must take
a ‘‘neutral aim at accuracy.’’ API v. EPA,
706 F.3d 474, 479 (D.C. Cir. 2013).
Pursuant to this provision, EPA has set
the cellulosic biofuel requirement lower
than the statutory volume for each year
since 2010.
CAA section 211(o)(7)(D)(i) also
provides EPA with the authority to
reduce the applicable volume of total
renewable fuel and advanced biofuel in
years when it reduces the applicable
volume of cellulosic biofuel under that
provision. The reduction must be less
than or equal to the reduction in
cellulosic biofuel. EPA has used this
aspect of the cellulosic waiver authority
to lower the advanced biofuel and total
renewable fuel volumes every year since
2014. Further discussion of the
cellulosic waiver authority, and EPA’s
interpretation of it, can be found in the
preamble to the 2017 final rule.24
24 See 81 FR 89752–89753 (December 12, 2016);
see also API v. EPA, 706 F.3d 474 (D.C. Cir. 2013)
(requiring that EPA’s cellulosic biofuel projections
reflect a neutral aim at accuracy); Monroe Energy v.
EPA, 750 F.3d 909, 915–16 (D.C. Cir. 2014)
(affirming EPA’s broad discretion under the
cellulosic waiver authority to reduce volumes of
advanced biofuel and total renewable fuel);
Americans for Clean Energy v. EPA (‘‘ACE’’), 864
F.3d 691, 730–735 (D.C. Cir. 2017) (same); Alon
Refining Krotz Spring, Inc. v. EPA, 936 F.3d 628,
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2. Reset Authority.
The CAA provides that EPA shall
modify the statutorily prescribed RFS
volumes once certain triggers are met.
This section discusses the statutory
requirements that trigger the use of this
reset authority, describes the process
and criteria for such use, and explains
the impact of this modification on our
other waiver authorities.
a. Conditions for Resetting Volume
Targets
CAA section 211(o)(7)(F) sets forth
EPA’s authority to modify (or reset) the
applicable volumes once certain triggers
have been met. Specifically, EPA must
reset the applicable volumes for a
particular category of biofuel when,
under CAA section 211(o)(7)(F)(i), we
waive at least 20 percent of the
applicable volume requirement for such
category for two consecutive years, or,
under CAA section 211(o)(7)(F)(ii), we
waive at least 50 percent of such
applicable volume requirement for a
single year. With the promulgation of
the 2019 annual standards, these
conditions have been met for three
categories of biofuel: Cellulosic biofuel,
advanced biofuel, and total renewable
fuel.25 We describe below, for each
category of biofuel, the specific annual
rules that satisfied these conditions.
The conditions for resetting cellulosic
biofuel volumes were met by the 2010
annual standard, which reduced the
applicable cellulosic biofuel volume by
at least 50 percent triggering application
of the reset authority under CAA section
211(o)(7)(F). In that rule, we waived the
cellulosic applicable volume for the first
time using the cellulosic waiver
authority.26 We set the cellulosic biofuel
applicable volume at 6.5 million gallons
for 2010.27 This waiver resulted in an
applicable volume that was 93.5 percent
lower than the applicable volume
requirement provided in the statute, 100
million, thus triggering the reset
requirement under CAA section
211(o)(7)(F)(ii). However, the statute
also provides that ‘‘no such
modification in applicable volumes
shall be made for any year before 2016.’’
CAA section 211(o)(7)(F). Therefore,
although the trigger to modify the
cellulosic biofuel volume target under
the reset provision was met in 2010, the
662–663 (D.C. Cir. 2019) (same); American Fuel &
Petrochemical Manufacturers v. EPA, 937 F.3d 559,
577–78 (D.C. Cir. 2019) (same).
25 Because the statutory volumes for biomassbased diesel lapsed after 2012, the reset provision,
which only applies to 2016 and subsequent years,
does not apply to BBD.
26 75 FR 14670 (March 26, 2010).
27 75 FR 14675.
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statute did not require a change to the
applicable volumes until 2016.
The conditions for resetting advanced
biofuel volumes were met by the 2014
and 2015 annual standards, which
reduced the applicable advanced biofuel
volume by at least 20 percent for two
consecutive years. For the 2014 annual
standard, we waived the advanced
biofuel volume for the first time.28 We
set the advanced biofuel volume at 2.67
billion gallons.29 This represented a
reduction of 28.8 percent from the
applicable volume requirement
provided in the statute (3.75 billion).
This reduction therefore triggered the
first year of reductions of at least 20
percent under CAA section
211(o)(7)(F)(i). For the 2015 annual
standard, we reduced the advanced
biofuel applicable volume to 2.88
billion gallons.30 This represented a
reduction of 47.6 percent from the
applicable volume requirement
provided in the statute (5.5 billion).
This represented the second consecutive
year for which the Administrator
waived volumes by at least 20 percent,
thus triggering the modification of the
advanced biofuel volume under CAA
section 211(o)(7)(F)(i).
The conditions for resetting total
renewable fuel volumes were met by the
2018 and 2019 annual standards, which
reduced the applicable total renewable
fuel volume by at least 20 percent for
two consecutive years. For the 2018
annual standard, we reduced the total
renewable fuel volume to 19.29 billion
gallons.31 This represented a reduction
of 25.8 percent from the applicable
volume requirement provided in the
statute (26 billion). This reduction
therefore triggered the first year of
reductions of at least 20 percent under
CAA section 211(o)(7)(F)(i). For the
2019 annual standard, we reduced the
total renewable fuel applicable volume
to 19.92 billion gallons.32 This
represented a reduction of 29 percent
from the applicable volume requirement
provided in the statute (28 billion). This
represented the second consecutive year
for which the Administrator waived
volumes by at least 20 percent, thus
triggering the modification of the total
renewable fuel volume under CAA
section 211(o)(7)(F)(i).33
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28 80
FR 77420 (December 14, 2015).
29 Id.
30 Id.
31 82
FR 58486 (December 12, 2017).
FR 63704 (December 11, 2018).
33 Although we are exercising the reset authority
in this action for 2020–2022 volumes, we could
have exercised the reset authority for the 2016–2019
cellulosic and advanced biofuel volumes as well.
We do not, however, have authority to reset total
renewable fuel volumes for those years. In any
32 83
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b. Factors That Must Be Analyzed
In resetting the statutory volumes,
EPA must comply with the processes,
criteria, and standards set forth in CAA
section 211(o)(2)(B)(ii). That provision
provides that the Administrator shall, in
coordination with the Secretary of
Energy and the Secretary of Agriculture,
determine the applicable volumes of
each biofuel category specified based on
a review of implementation of the
program during the calendar years
specified in the table, and an analysis of
the impact of:
• The production and use of
renewable fuels on the environment;
• The impact of renewable fuels on
the energy security of the U.S.;
• The expected annual rate of future
commercial production of renewable
fuels;
• The impact of renewable fuels on
the infrastructure of the U.S.;
• The impact of the use of renewable
fuels on the cost to consumers of
transportation fuel and on the cost to
transport goods; and
• The impact of the use of renewable
fuels on other factors, including job
creation, the price and supply of
agricultural commodities, rural
economic development, and food prices.
While the statute requires that EPA
base its determination on an analysis of
these factors, it does not establish any
numeric criteria, require a specific type
of analysis (such as quantitative
analysis), or provide guidance on how
EPA should weigh the various factors.
Additionally, we are not aware of
anything in the legislative history of
EISA that addresses these issues. Thus,
as the Act ‘‘does not state what weight
should be accorded to the relevant
factors,’’ it ‘‘give[s] EPA considerable
discretion to weigh and balance the
various factors required by statute.’’ 34
Additionally, we also have authority
to consider other factors, including
implied authority to consider factors
that inform our analysis of the statutory
factors, as well as explicit authority to
consider ‘‘the impact of the use of
renewable fuels on other
factors. . . .’’ 35 Accordingly, we have
considered several other factors,
event, we are not proposing to revisit the 2016–
2019 volumes in this rulemaking.
34 Nat’l Wildlife Fed’n v. EPA, 286 F.3d 554, 570
(D.C. Cir. 2002); accord Riverkeeper, Inc. v. United
States EPA, 358 F.3d 174, 195 (2d Cir. 2004); BP
Exploration & Oil, Inc. v. EPA, 66 F.3d 784, 802 (6th
Cir. 1995); see also Cal. by Brown v. Watt, 668 F.2d
1290, 1317 (D.C. Cir. 1981) (‘‘A balancing of factors
is not the same as treating all factors equally. The
obligation instead is to look at all factors and then
balance the results. The Act does not mandate any
particular balance, but vests the Secretary with
discretion to weigh the elements. . . .’’).
35 CAA section 211(o)(2)(B)(ii)(VI).
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including the intertwined nature of
compliance with the 2020–2022
standards, the size of the carryover RIN
bank,36 how the retroactive nature of the
2020 and 2021 standards as compared to
the prospective nature of the 2022
annual and supplemental standards
affects the feasibility of compliance
(Section IV),37 the supply of qualifying
renewable fuels to U.S. consumers
(Section III),38 soil quality (Chapter 3 of
the DRIA),39 and environmental justice
(Section I of this preamble and Chapter
8 of the DRIA).40
c. Impact on other Statutory Authorities
To Waive Volumes
Our proposed use of the reset
authority in this action does not
preclude our legal authority to waive
volumes under the other waiver
authorities. Nothing in the CAA
suggests that once the volumes are reset
they cannot be modified further, or that
the reset authority cannot be used in
conjunction with other waiver
authorities such as the cellulosic waiver
authority.41
3. General Waiver Authority
Section 211(o)(7)(A) of the CAA
provides that EPA, in consultation with
the Secretary of Agriculture and the
Secretary of Energy, may waive the
applicable volumes specified in the Act
in whole or in part based on a petition
by one or more States, by any person
subject to the requirements of the Act,
or by the EPA Administrator by his own
initiative. Such a waiver must be based
on a determination by the
Administrator, after public notice and
opportunity for comment that: (1)
36 The first two factors inform our analysis of the
statutory factor ‘‘review of the implementation of
the program.’’ CAA section 211(o)(2)(B)(ii).
37 The third factor (how the standards affect the
feasibility of compliance) also informs our analysis
of the statutory factor ‘‘the expected annual rate of
future commercial production of renewable fuels.’’
CAA section 211(o)(2)(B)(ii)(III).
38 The fourth factor (supply of renewable fuels) is
based on our analysis of this same statutory factor
as well as of downstream constraints on biofuel use,
including the statutory factors relating to
infrastructure and costs. CAA section
211(o)(2)(B)(ii)(IV)–(V).
39 Soil quality is closely tied to water quality and
is also relevant to the impact of renewable fuels on
the environment more generally.
40 Environmental justice involves consideration
of the impact of renewable fuels on several factors,
including environmental and cost factors. This and
the other non-enumerated factors are also relevant
under the statutory factor ‘‘the impact of the use of
renewable fuels on other factors. . . .’’ CAA
section 211(o)(2)(B)(ii)(VI).
41 See J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred
Intern., Inc., 534 U.S. 124, 143–44 (2001) (holding
that when two statutes are capable of coexistence
and there is not clearly expressed legislative intent
to the contrary, each should be regarded as
effective).
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Implementation of the requirement
would severely harm the economy or
the environment of a State, a region, or
the United States; or (2) there is an
inadequate domestic supply.
EPA received several requests for use
of the general waiver authority for the
2020 standards from stakeholders
concerned about the impacts on the
fuels markets resulting from the COVID–
19 pandemic. These included requests
from the governors of multiple states
based on their belief that the criteria for
application of the general waiver
authority were satisfied and that
lowering the required volumes for 2020
was appropriate. We published a notice
in the Federal Register seeking
comment on these requests.42 We are
not proposing modifications to the 2020
volumes utilizing the general waiver
authority in this action. In lieu of doing
so, we are proposing to revise the 2020
volumes under our reset authority as
discussed in Section III.B. Our proposal
addresses many of the concerns raised
in the general waiver petitions,
including the shortfall in RIN generation
in 2020, uncertainty regarding SREs
following the Tenth Circuit’s decision in
RFA, and the hurdles those may present
to obligated parties’ compliance.
B. Authority To Establish BBD Volumes
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EPA has established the biomassbased diesel requirement under CAA
section 211(o)(2)(B)(ii) since 2013
because the statute only provided BBD
volumes through 2012. Thus, EPA is
proposing an applicable volume for BBD
for 2022 under this authority, which we
term the ‘‘set’’ authority.43 As discussed
in prior annual rulemakings, EPA is to
determine the applicable volume of
BBD, in coordination with the Secretary
of Energy and the Secretary of
Agriculture, based on an analysis of the
same statutory factors enumerated above
for ‘‘resetting’’ volumes for the other
fuel categories.44 The statute also
requires that the BBD volume be set at
or greater than the 1.0 billion gallon
volume requirement for 2012 in the
statute, but does not provide any other
numerical criteria that EPA is to
consider.
42 86 FR 5182 (January 19, 2021). Comments on
these requests are available in the docket for that
notice, EPA–HQ–OAR–2020–0322. We have
recently received an additional request to waive
volumes using the general waiver authority from
the Governor of Montana, available in the docket for
this action.
43 The applicable volume for BBD for 2021 was
established in the 2020 annual rulemaking. 85 FR
7016 (February 6, 2020).
44 85 FR 7016, 7047–7048 (February 6, 2020).
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C. Considerations for Retroactive and
Late Rulemaking
In this rulemaking, we are proposing
several late or retroactive standards.
EPA has in the past also missed
statutory deadlines for promulgating
RFS annual standards. In those cases,
the D.C. Circuit found that EPA retains
authority to promulgate annual
standards for the years in question, so
long as EPA exercises this authority
reasonably.45 In doing so, EPA must
balance the burden on obligated parties
of a retroactive standard with the
broader goal of the RFS program to
increase renewable fuel use.46 Even if
the rule does not operate retroactively,
but is promulgated after the statutory
deadline, EPA must consider and
mitigate the burdens on obligated
parties associated with a delayed
rulemaking.47 In upholding EPA’s
retroactive standards for 2014 and 2015
in ACE, the court considered several
specific factors, including the
availability of RINs for compliance, the
amount of lead time and adequate
notice for obligated parties, and the
availability of compliance flexibilities.
Additionally, the court separately
addressed rulemakings that were late
(i.e., those issued after the statutory
deadline) but were nonetheless not
retroactive, emphasizing in that context
the amount of lead time and adequate
notice for obligated parties.48
In this rulemaking, we are proposing
to exercise our reset authority after the
statutory deadline of December 11, 2019
(which is one year after the
promulgation of the 2019 final rule,
which triggered the reset obligation for
total renewable fuel).49 We are also
proposing to exercise our set authority
for the 2022 BBD volume after the
statutory deadline of October 31, 2020.
We are also promulgating the 2020 and
2021 standards after their statutory
deadlines of November 30, 2019 and
2020 respectively.50 These standards are
retroactive and apply to gasoline and
diesel produced or imported in 2020
and 2021. We discuss in detail the
considerations for late or retroactive
45 Americans for Clean Energy v. EPA, 864 F.3d
691, 720 (D.C. Cir. 2017) (ACE); Monroe Energy, LLC
v. EPA, 750 F.3d 909 (D.C. Cir. 2014); Nat’l
Petrochemical & Refiners Ass’n v. EPA, 630 F.3d
145, 154–58 (D.C. Cir. 2010) (NPRA).
46 NPRA, at 154–58 (D.C. Cir. 2010).
47 ACE, 864 F.3d 691, 718 (D.C. Cir. 2017).
48 Id. at 721.
49 This was the deadline for resetting total
renewable fuel volumes. The deadline for resetting
advanced and cellulosic volumes passed earlier.
50 These are also the deadlines for exercising the
cellulosic waiver authority for those years, which
we will also miss.
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rulemaking for each of these
requirements further in Section III.
In addition, in responding to the ACE
remand of the 2016 annual rule, EPA is
proposing a supplemental standard for
2022.51 We are proposing this
supplemental standard after the
statutory deadline for the 2016
standards (November 30, 2015).
However, the proposed supplemental
standard would prospectively apply to
gasoline and diesel produced or
imported in 2022. We further discuss
our response to the ACE remand in
Section V.
We acknowledge that the final rule
will issued after November 30, 2021,
thus rendering the 2022 and
supplemental standards late and
retroactive.52 Nonetheless, we are
issuing this proposal in advance of
2022, and we anticipate that the final
rule will apply mostly, if not entirely,
prospectively to 2022. Thus, we believe
the rule will be able to incent increased
renewable fuel demand in that year
consistent with the analysis in this
proposal.
D. Considerations in Revisiting an
Established RFS Standard
We are proposing to revise the
previously finalized 2020 standards in
this rulemaking. We generally have
authority to reconsider and revise
previously finalized RFS standards.53 In
addition, the D.C. Circuit has held that
EPA has authority to promulgate RFS
standards retroactively. CAA section
211(o)(7) generally authorizes EPA to
adjust the volume requirements based
on appropriate considerations as well.
In this action we are proposing to revise
the 2020 standards in response to
several unanticipated and exceptional
events that have occurred since the
promulgation of the standards and that
have had direct and significant impacts
on the fuels market and the ability of
obligated parties to comply. We discuss
these events and our rationale for
revising the 2020 standards further in
Section III.B.54
51 We also intend to propose a supplemental
standard for 2023 in a subsequent action.
52 As discussed in Section V, the supplemental
standard in response to the ACE remand is already
late.
53 Nonetheless, we believe that we generally
should not revisit past RFS standards. Doing so
carries inherent costs for regulatory certainty and
may unduly disrupt market expectations created by
previously promulgated standards. Moreover, in the
2020 final rule itself, we expressly stated that we
did not intend to revisit that rulemaking and
subsequently adjust the standards. See Response to
Comments at 173, EPA–HQ–OAR–2019–0136.
54 EPA also received two petitions from AFPM
and API in early 2020 seeking reconsideration of
the 2020 annual rule under CAA section
307(d)(7)(B) in light of the RFA decision and its
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E. Applicability of Legal Authorities To
Establish the Volume Requirements
EPA is proposing to reduce the
applicable statutory volumes for 2020,
2021 and 2022 utilizing both the
cellulosic waiver and reset authorities.
As described in Chapter 4 of the DRIA,
the projected volumes of cellulosic
biofuel production for 2020, 2021, and
2022 are all significantly less than the
volume targets in the statute. Therefore,
the cellulosic waiver authority requires
EPA to lower the cellulosic biofuel
volume for each year to the projected
volumes available in each year. We are
proposing to do so in this action.
Additionally, we propose to find that
these volumes are also appropriate
under our reset authority.
For advanced biofuel and total
renewable fuel, we are proposing, under
the reset authority alone, volumes equal
to the projected actual volumes of such
fuels available in 2020 and 2021. We
recognize that this exceeds our
maximum discretion under the
cellulosic waiver authority; however, as
we explain further in Section III, we do
not believe that the lowest volumes
permissible under the cellulosic waiver
authority are appropriate based upon
our consideration of the reset factors.55
For 2022, we are proposing, under both
the cellulosic waiver authority and the
reset authority, advanced biofuel and
total renewable fuel volumes equal to
the implied statutory volumes. This
represents the maximum permitted
reduction under the cellulosic waiver
authority.56 We also believe these
volumes are appropriate under the reset
authority.
In Sections III and IV and Chapter 2
of the DRIA, we set forth our policy and
technical rationale for the proposed
impact on EPA’s projections of SREs in calculating
the percentage standards. These petitions are
available in the docket. See AFPM, Petition for
Administrative Reconsideration of Renewable Fuel
Standard Program: Standards for 2020 and
Biomass-Based Diesel Volume for 2021 and Other
Changes, 85 FR 7016 (Feb. 6, 2020) (Mar. 24, 2020);
API, Petition for Reconsideration of the RFS 2020
Rule, EPA–HQ–OAR–2019–0136 (April 6, 2020). We
are not at this time determining whether these
petitions met the standards for reconsideration
under CAA section 307(d)(7)(B). Nonetheless, for
the reasons described in this document, we believe
it is appropriate to reconsider the 2020 RFS
standards, and we are providing the procedural
process (i.e., a CAA section 307(d) rulemaking to
reconsider the 2020 RFS standards) requested in the
petitions.
55 Under the cellulosic waiver authority, when
EPA reduces the volume of cellulosic biofuel, EPA
may reduce the advanced biofuel and total
renewable fuel volumes by the same or a lesser
amount.
56 This is also consistent with our authority to
apply equal reductions to the volumes of advanced
biofuel and total renewable fuel under the
cellulosic waiver. CAA(o)(7)(D)(i), see also 85 FR
7016, 7047–7048 (February 6, 2020).
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2020, 2021, and 2022 volumes for
cellulosic biofuel, advanced biofuel, and
total renewable fuel. Our analysis is
framed in terms of the statutory factors
that the reset authority requires us to
consider, along with the considerations
for retroactive and late rules identified
by the D.C. Circuit.57 Since this analysis
subsumes our policy and technical
rationale for exercising the cellulosic
waiver authority as well, we are not
providing a separate analysis for the
application of the cellulosic waiver
authority.
We believe that subsuming the
analysis for the application of the
cellulosic waiver authority into the
analysis for the application of the reset
authority is appropriate for three
reasons. First, with respect to the
cellulosic biofuel volume for each year,
the cellulosic waiver authority requires
EPA to lower that volume to the
projected volume available. This
quantity is also a relevant consideration
under the reset authority, and,
accordingly, we have considered it in
that context. See, e.g., CAA section
211(o)(2)(B)(ii)(III) (‘‘the expected
annual rate of future commercial
production of renewable fuels’’).
Second, with respect to advanced
biofuel and total renewable fuel, the
cellulosic waiver authority does not
specify any factors for EPA to consider
(besides limiting the maximum quantity
of reductions to the reduction in the
cellulosic biofuel volume), and thus
provides EPA broad discretion to
consider relevant factors, including the
factors we are considering in this
proposal under the reset authority.58
57 Further detail on our analysis of the statutory
factors is found in the DRIA.
58 In past annual rules, we considered many of
the same factors as we do in this proposal, albeit
under the guise of different terminology, such as
‘‘reasonably attainable’’ and ‘‘attainable’’ volumes.
See Section IV of the 2020 final rule at 85 FR 7016.
For instance, in that rule, just as in this rule, we
considered feedstock availability, advanced biofuel
production and distribution capacity,
environmental impacts, and costs. We acknowledge
that the analytical framework has shifted somewhat
given the focus on the statutory reset factors. For
instance, in the 2020 final rule, unlike in this
proposed rule, we did not explicitly consider the
impacts of renewable fuels on job creation or rural
economic development. Nonetheless, we believe
those statutory factors (along with all the other
factors we are considering under the reset authority)
are ones that EPA may consider under the
discretion we have under the cellulosic waiver
authority. Congress’s specification of those factors
in the reset authority further suggests that they are
permissible considerations for determining volumes
generally, including in exercising the cellulosic
waiver. This approach presents a shift in EPA’s
policy for the cellulosic waiver that we explicitly
recognize and adopt as reasonable for the reasons
described in this proposal. See FCC v. Fox
Television Stations, Inc., 556 U.S. 502, 515 (2009).
Ultimately, we note that the 2020, 2021, and 2022
total renewable fuel, advanced biofuel, and
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Third, given the significant overlap
between the analyses used for the
cellulosic waiver and reset authorities,
we do not believe that two sets of
analyses would provide significant
additional value, but would be
redundant for both EPA and the public.
We are also proposing a BBD volume
for 2022 of 2.76 billion gallons under
CAA section 211(o)(2)(B)(ii). Our policy
and technical rationale for this volume
is also set forth in Section III and
Chapter 10 of the DRIA.
F. Severability
The following portions of this
rulemaking are mutually severable from
each other: (1) The volumes and
percentage standards for 2020, 2021,
and 2022; (2) The 2022 supplemental
volume and standard; (3) The proposed
provisions for biointermediates
(discussed in Section VII); and (4) The
regulatory amendments discussed in
Section VIII. Each of the regulatory
amendments in Section VIII is also
severable from all the other regulatory
amendments.
If any of the above portions is set
aside by a reviewing court, we intend
the remainder of this action to remain
effective. For instance, if a reviewing
court sets aside the 2022 supplemental
volume and standard, we intend the
remaining 2020–2022 volumes and
percentage standards, biointermediates
provisions, and other regulatory
amendments, to remain effective.
III. Proposed Volumes
We are proposing 2020, 2021, and
2022 cellulosic biofuel, advanced
biofuel, and total renewable fuel
volumes under our reset authority.59 We
are proposing the 2022 biomass-based
diesel (BBD) volume under our set
authority. As required by both the reset
and set authorities, we have analyzed
the statutory factors under CAA section
211(o)(2)(B)(ii). We have also
coordinated with the Secretary of
Energy and the Secretary of Agriculture,
including through the interagency
review process, and their input is
reflected in this proposal.
In Section III.A, we summarize our
analyses as they apply to each of three
component categories of biofuel:
Cellulosic biofuel, non-cellulosic
cellulosic biofuel volumes are all independently
justified by the reset authority. Thus, any defect in
our exercise of the cellulosic waiver authority is
harmless so long as we have properly exercised the
reset authority.
59 As we explained in Section II.D, some of the
volumes we are proposing in this action are also
independently justified under the cellulosic waiver
authority, but the policy and technical analysis for
our exercise of the cellulosic waiver is subsumed
under our analysis of the reset factors.
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advanced biofuel, and conventional
renewable fuel.60 In Sections III.B
through F, we describe our proposed
volumes for 2020, 2021, and 2022, along
with our supporting assessment of the
statutory factors. In Section III.G, we
summarize the fuel costs and energy
security benefits of the proposed
volumes. In Section IV, we further
discuss the relationship between the
volume requirements for all three years
as part of our review of the
implementation of the program. Our
preamble discussion provides a highlevel, narrative summary of the statutory
factors, focusing on the factors that we
deem most appropriate. A more detailed
discussion of all the statutory factors is
set forth in the DRIA.
A. EPA’s Assessment of the Statutory
Factors for Each Component Category of
Biofuel
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1. Cellulosic Biofuel
In EISA, Congress established
escalating targets for cellulosic biofuel,
reaching 16 billion gallons in 2022.
After 2015, 84 percent of the growth in
statutory volume of total renewable fuel
was intended to come from cellulosic
biofuel.61 This indicates that Congress
intended the RFS program to provide a
significant incentive for cellulosic
biofuels and that the focus for years
after 2015 was to be on cellulosic.
Consistent with this intent, our
assessment of the statutory factors
suggests that cellulosic biofuels have
multiple benefits, including the
potential for very low lifecycle GHG
emissions that meet or exceed the 60
percent GHG reduction threshold for
cellulosic biofuel. Many of these
benefits stem from the fact that nearly
all of the feedstocks projected to be used
to produce cellulosic biofuel through
2022 are either waste materials (as in
the case of compressed natural gas and
liquified natural gas (CNG/LNG) derived
from biogas) or residues (in the cases of
cellulosic ethanol from corn kernel fiber
and corn stover, as well as cellulosic
diesel and heating oil from mill
residue). The use of many of the
60 Cellulosic biofuel corresponds directly to the
statutory biofuel category. Cellulosic biofuel plus
non-cellulosic advanced biofuel constitute the
statutory advanced biofuel category. Finally,
advanced biofuel plus conventional renewable fuel
constitute the statutory total renewable fuel
category. See CAA section 211(o)(2)(B)(i)(I)–(IV).
61 From 2015 through 2022 the statutory target for
cellulosic biofuel increases by 13.0 billion gallons,
from 3.0 billion gallons to 16.0 billion gallons.
During this same time period the statutory target for
total renewable fuel increases by 15.5 billion
gallons, from 20.5 billion gallons to 36.0 billion
gallons. Thus, cellulosic biofuel was expected to
account for 84% (13.0 billion gallons/15.5 billion
gallons) of the total renewable fuel increase.
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feedstocks currently being used to
produce cellulosic biofuel are not
expected to cause significant land use
changes that might lead to adverse
environmental impacts.
Despite these similarities, there are
also significant differences between
liquid cellulosic biofuels and CNG/LNG
derived from biogas. None of the
cellulosic biofuel feedstocks expected to
be used to produce liquid cellulosic
biofuels through 2022 are specifically
produced to be used as feedstocks for
cellulosic biofuel production. Many of
these feedstocks (including agricultural
residues, mill residue, and separated
municipal solid waste (MSW)) have
limited uses in other markets.62 Because
of this, using these feedstocks to
produce liquid cellulosic biofuel is not
expected to have significant adverse
impacts related to several of the
statutory factors, including the
conversion of wetlands, ecosystems and
wildlife habitat, soil and water quality,
the price and supply of agricultural
commodities, and food prices.
Notwithstanding these benefits, the cost
of producing liquid cellulosic biofuel is
high. These high costs are generally the
result of low yields (e.g., gallons of fuel
per ton of feedstocks) and the high
capital costs of liquid cellulosic biofuel
production facilities. In the near term
(through 2022), the production of these
fuels is likely to be dependent on
relatively high cellulosic RIN prices (in
addition to state level programs such as
California’s low carbon fuel standard
(LCFS)) to be economically competitive
with petroleum-based fuels.
CNG/LNG derived from biogas, like
liquid cellulosic biofuel, is generally
produced from waste materials or
residues (e.g., through biogas collection
from landfills, municipal wastewater
treatment facility digesters, agricultural
digesters, and separated MSW digesters)
and thus is not expected to affect the
conversion of wetlands, ecosystems and
wildlife habitat, soil and water quality,
the price and supply of agricultural
commodities, and food prices. However,
in contrast to the feedstocks generally
used to produce liquid cellulosic
biofuels, significant quantities of biogas
from these sources are currently used to
produce electricity, while smaller
quantities are injected into natural gas
pipelines. In some situations, such as at
larger landfills, CNG/LNG derived from
biogas may also be able to be produced
62 One potential exception is corn kernel fiber.
Corn kernel fiber is a component of distillers grains,
which is currently sold as animal feed. Depending
on the type of animal to which the distillers grain
is fed, corn kernel fiber removed from the distillers
grain through conversion to cellulosic biofuel may
need to be replaced with additional feed.
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at a price comparable to fossil natural
gas. Despite this relatively low cost of
production, the combination of the high
cellulosic biofuel RIN price and the
significant volume potential for CNG/
LNG derived from biogas used as
transportation fuel could have a
relatively significant impact (about
$0.01 per gallon) on the price of
gasoline and diesel.63
2. Non-Cellulosic Advanced Biofuel
The volume targets established by
Congress also anticipated significant
growth in advanced biofuel beyond
what is needed to satisfy the cellulosic
standard. The statutory target for
advanced biofuel in 2022 (21 billion
gallons) allowed for up to 5 billion
gallons of non-cellulosic advanced
biofuel to be used towards the advanced
biofuel volume target. In practice the
vast majority of non-cellulosic advanced
biofuel in the RFS program has been
biomass-based diesel, with relatively
small volumes of sugarcane ethanol and
other advanced biofuels. Some of the
statutory factors assessed by EPA
suggest that the targets for noncellulosic advanced biofuel established
by Congress, or even higher volumes,
are still appropriate. Notably, all
advanced biofuels have the potential to
provide significant GHG reductions as
they are required to achieve at least 50
percent GHG reductions relative to the
petroleum fuels they displace. Some
types of advanced fuels, such as
biodiesel and renewable diesel
produced from fats, oils, and greases,
provide even greater reductions than the
50 percent threshold. This summary
focuses on the impacts of advanced
biodiesel and renewable diesel.
Advanced biodiesel and renewable
diesel together comprise 95 percent or
more of the total supply of noncellulosic advanced biofuel over the last
several years, and is expected to supply
all of increase in advanced biofuel
through 2022. High domestic
production capacity and availability of
imports indicate that volumes of noncellulosic advanced biofuel in 2021 and
2022 may meet or even exceed the
implied statutory targets. Similarly, the
feedstocks used to make advanced
biodiesel and renewable diesel (such as
soy oil, canola oil, and corn oil, as well
as waste oils such as white grease,
yellow grease, trap grease, poultry fat,
and tallow) currently exist in sufficient
quantities globally to supply these
increasing volumes. These feedstocks
63 See Chapter 5.1.2.2 of the DRIA for a further
discussion of the expected impact of RINs generated
for CNG/LNG derived from biogas on the
transportation fuel market.
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have many existing uses that may
require replacement with other suitable
substitutes, but there is also potential
for ongoing growth in the production of
many of these feedstocks. Higher
volume requirements for non-cellulosic
advanced biofuel may also have energy
security benefits, increase domestic
employment in the biofuels industry,
and increase income for biofuel
feedstock producers.
However, some of the factors assessed
would support lower volumes of
advanced biofuel. For instance, as
described in Chapter 9 of the DRIA, the
cost of biodiesel and renewable diesel is
significantly higher than petroleumbased diesel fuel and is expected to
remain so over the next several years.
Even if biodiesel and renewable diesel
blends are priced similarly to petroleum
diesel at the pump after accounting for
the relevant Federal and state incentives
(including the RIN value), society as a
whole nevertheless bears their full costs.
Moreover, the fact that sufficient
feedstocks exist to produce increasing
quantities of advanced biodiesel and
renewable diesel does not mean that
those feedstocks are readily available or
could be diverted to biofuel production
without adverse consequences. As
described in Chapter 5 of the DRIA, we
expect only limited quantities of fats,
oils, and greases and distillers corn oil
to be available for increased biodiesel
and renewable diesel production in
future years. We expect that the primary
feedstock available to biodiesel and
renewable diesel producers in
significant quantities through 2022 will
be soybean oil and other vegetable oils
whose primary markets are for food.
Increased demand for soybean oil could
lead to diversion of feedstocks from
food and other current uses in addition
to further incentivizing increased
soybean crushing and soybean
production. Increased soybean
production in the U.S. and abroad in
turn could result in greater conversion
of wetlands, adverse impacts on
ecosystems and wildlife habitat, adverse
impacts negative impacts on water
quality and supply, and increased prices
for agricultural commodities and food
prices. We request comment on the
impacts of advanced biofuel production
on the statutory factors, including
impacts on wetlands, ecosystems, and
wildlife habitat.
3. Conventional Renewable Fuel
As with non-cellulosic advanced
biofuel, some of the statutory factors
assessed for conventional renewable
fuel favor the implied statutory volume
(15 billion gallons) or higher volumes,
while other factors favor lower volumes.
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While conventional renewable fuels are
generally required by EISA to achieve
20 percent GHG reductions relative to
the petroleum fuels they displace, some
conventional biofuel facilities exceed
this threshold. Notably, EPA has
developed an expedited petition process
for ethanol production facilities using
more efficient process technologies.64
The statute, however, also contains
grandfathering provisions exempting
any facility that had begun construction
on or before December 19, 2007, from
this requirement, so not all producers of
conventional renewable fuels meet or
are required to meet the 20 percent GHG
reduction threshold.65
The vast majority of conventional
renewable fuel that has been supplied to
the U.S. is corn ethanol. Domestic
production capacity for corn ethanol
exceeds 16 billion gallons. Production
of corn-ethanol in the U.S. reached a
peak of 16.1 billion gallons in 2018.66
Higher volumes of conventional
renewable fuel could result in more
domestic jobs in the biofuels industry.
At the same time, there are also
significant volumes of palm biodiesel
and renewable diesel that are produced
internationally that could qualify as
conventional renewable fuel under the
grandfathering provisions of the RFS
program. In the past, small volumes of
grandfathered biodiesel and renewable
diesel have been supplied to the U.S.67
However, some of the analyses we
conducted support lower volumes of
conventional renewable fuel. As with
soy biodiesel, increased corn production
in the U.S. could result in greater
conversion of wetlands, adverse impacts
on ecosystems and wildlife habitat,
adverse impacts negative impacts on
water quality and supply, and increased
prices for agricultural commodities and
food prices. Furthermore, constraints on
ethanol use may also support lower
implied volume requirements for
conventional biofuel. The market has
not achieved 15 billion gallons of actual
use of conventional renewable fuel in
64 EPA has developed an ‘‘Efficient Producer
Petition Process,’’ which encourages adoption of
efficiency improvements in new ethanol facilities
by expediting petition review and approval.
Existing EPA estimates for corn starch ethanol
produced in 2022 using a dry mill process and
natural gas fired process heat range from a 42
percent to a 17 percent reduction over baseline
gasoline, depending on the technologies used at the
production facility.
65 See CAA section 211(o)(2)(A)(i).
66 Energy Information Administration (EIA)
Monthly Energy Review.
67 Use of grandfathered biodiesel and renewable
diesel reached a maximum of 157 million gallons
in 2016. Since 2018 use of grandfathered biodiesel
and renewable diesel has been very small (less than
1 million gallons each year). See Chapter 1.6 of the
DRIA.
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any year in which the RFS standards
were based on it. This was due to
various factors, including limitations on
ethanol use above the E10 blendwall,
strong export markets for domestically
produced ethanol, the effect of
exempted small refinery volumes in
depressing the effective RFS standards,
and use of advanced biodiesel and
renewable diesel, buoyed by its tax
subsidy and other incentive programs,
to meet the implied conventional
portion of the total renewable fuel
requirement.
While the use of ethanol as E10 has
been, and continues to be, economical
for refiners and blenders, the use of E10
alone has not been sufficient to achieve
the 15 billion gallons of ethanol use due
to declining gasoline demand. The RFS
program has had limited success in
helping to increase the use of higher
ethanol blends, and growth in the
nationwide average gasoline ethanol
concentration has virtually stagnated as
the market reached the E10 blendwall.
While the use of higher ethanol blends
has increased since 2011, that growth
has been small compared to prior
growth in the use of E10 and in the use
of non-ethanol biofuels. We do not
anticipate that growth in the use of
higher ethanol blends through 2022 will
increase rapidly enough to result in
significantly greater volumes of ethanol
consumption in the U.S., even with the
incentives created by the RFS program
standards and other governmental
efforts such as Department of
Agriculture’s (USDA’s) Blender
Infrastructure Program and Higher
Blends Infrastructure Incentive Program.
Moreover, exporting ethanol to be
blended with gasoline abroad has been
more profitable in recent years than
selling greater volumes of E15 or E85
domestically. We expect these trends in
exports to continue given international
demand for ethanol.
In addition, total demand for gasoline
was lower in 2020 and is expected to
remain lower in 2021 and 2022 relative
to the volume of gasoline consumed in
2017–2019 according to EIA’s May 2021
Short Term Energy Outlook (STEO),
which will limit the volume of ethanol
used as E10.68 Most notably, the
COVID–19 pandemic caused a
significant fall in gasoline demand and
sales of E10 starting in 2020. We would
68 The May 2021 STEO estimates gasoline
consumption of 8.03 million barrels per day (123.5
billion gallons) in 2020, projects 8.70 million
barrels per day (133.3 billion gallons) in 2021, and
projects 8.92 million barrels per day (136.8 billion
gallons) in 2022. The STEO reported gasoline
consumption in 2017–2019 at 9.31–9.33 million
barrels per day (142.7–143.0 billion gallons)
annually.
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expect, therefore, that even maintaining
the implied 15 billion gallon statutory
volume target for conventional
renewable fuel going forward would
require that volumes of biodiesel and
renewable diesel, the least costly
alternative source, increase to
compensate for the reduction in ethanol
use.
If biodiesel and/or renewable diesel
were able to be supplied in sufficient
quantities to enable a conventional
renewable fuel requirement at 15 billion
gallons to be met despite lower ethanol
consumption, there could still be other
potentially adverse impacts. We project
that much of this biodiesel and
renewable diesel would be imported.
Further, these fuels could be sourced
from grandfathered facilities that may
not achieve the desired GHG reductions.
If imported biodiesel and renewable
diesel were to increase, we would
expect either an increase in the use of
petroleum fuels from countries that
previously used these fuels, or,
alternatively, an expansion of palm oil
production to produce biodiesel and
renewable diesel, likely resulting in
additional foreign land being converted
to cropland for the production of palm
oil. There would likely be both adverse
wildlife impacts and higher GHG
emissions of such international land use
changes that would be associated with
a higher implied conventional volume
mandate satisfied by grandfathered
biodiesel and renewable diesel.
At the same time, we do not believe
that setting volumes such that the
implied conventional renewable fuel
volume is below the E10 blendwall
would be appropriate either. Under
such a scenario, imports of biodiesel
and renewable diesel to meet the
demand provided by the implied
conventional renewable fuel volume
would cease altogether which would
have some benefits for domestic energy
independence and may have some
environmental benefits as well insofar
as those imports are produced from
palm oil. However, impacts on domestic
ethanol production would be small as
E10 would continue to be used
regardless. There would most likely be
some decrease in the small amounts of
higher ethanol blends used, but the use
of E10 would be essentially unchanged,
and since ethanol blended as E10
dominates the total volume of ethanol
consumed, the overall ethanol volume
would be minimally affected. Thus, we
expect that setting the implied volume
for conventional renewable fuel below
the E10 blendwall would have little
impact on domestic biofuel production
or use.
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B. Proposed Volumes for 2020
We are proposing to revise previously
finalized 2020 total renewable fuel,
advanced biofuel, and cellulosic biofuel
volumes to equal the volume of such
fuels actually used in the U.S. in 2020.69
As we discuss in Section VI, we are also
proposing to make corresponding
adjustments to the percent standards
applicable to obligated parties.70
Since 2020 has already passed, this
rulemaking has no ability to affect
actual production, imports, and use of
renewable fuel in 2020. The impact of
the rule on each of the statutory factors
is similarly limited. In contrast, were we
to revise the 2020 volumes to be greater
than the volume of renewable fuel that
was supplied or were we to simply
leave the original volumes from the
2020 final rule in place, we would
expect some combination of potentially
disruptive outcomes: (1) A reduction in
the quantity of carryover RINs; (2)
obligated parties carrying deficits into
2021; and/or (3) obligated parties being
out of compliance with their RFS
obligations.71 While this approach
could have the effect of prospectively
increasing demand for renewable fuels
in 2022, simply establishing higher
volumes for 2022 is expected to have
the same effect on renewable fuel
producers with a much lower risk of
market disruptions that could result
from maintaining volume obligations for
2020. As we explain in Section IV.B, we
are proposing to revise the 2020 volume
obligations to forestall potential
disruptions in the fuels market that
would impair the ongoing
implementation of the RFS program.
We acknowledge that this proposal to
reconsider and revise the already
finalized 2020 standards will be
finalized after the November 30, 2019,
statutory deadline for the 2020
standards and can operate only
retroactively.72 We generally do not
think it is appropriate to reconsider and
revise previously finalized RFS
standards. Nonetheless, we are
proposing to do so because critical and
unanticipated events have occurred
affecting fuels markets and RFS
compliance. First, we anticipate a
69 We also call such volumes the volumes that are
actually consumed or actually supplied. In this
context, we are using the term ‘‘supply’’ distinct
from the statutory term ‘‘inadequate domestic
supply’’ in CAA section 211(o)(7)(A)(ii).
70 As discussed in Section VI, the adjustments to
the percentage standards would also include
changes to the non-renewable gasoline and diesel
volumes to reflect actual 2020 consumption.
71 See Section IV.A for a discussion of carryover
RINs.
72 85 FR 7016 (February 6, 2020). In addition, the
2020 BBD volume was established in the 2019 final
rule. 83 FR 63704.
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significant and unprecedented shortfall
in renewable fuel use in 2020 relative to
the volumes that we required in the
2020 final rule. This is largely due to the
COVID–19 pandemic, which caused an
unforeseen and drastic fall in
transportation fuel demand generally
and in biofuel demand more
specifically.
In general, under the RFS program, a
shortfall in gasoline and diesel fuel
consumption relative to the projected
volumes results in a corresponding
decrease in the volume of renewable
fuel required. This self-adjusting nature
of the program is a function of the fact
that the RFS standards are applied as a
percentage to an obligated party’s
gasoline and diesel fuel production; the
obligation to acquire RINs for
compliance rises and falls along with
gasoline and diesel fuel production
volume. Further, historical deviations
between the volumes of gasoline and
diesel actually used relative to their
projected volumes have been relatively
small. As a result, we have historically
not adjusted the RFS standards after
they have been established to account
for updated gasoline and diesel
consumption levels. This is consistent
with our general policy of not
reconsidering and revising previously
finalized RFS standards.
However, the situation in 2020 was
different. As explained further in
Section IV.B, the shortfalls in 2020 were
both significantly larger than in any
previous year and disproportionately
affected gasoline more than diesel fuel.
This is important because on average
finished gasoline contains more
renewable content than finished diesel.
The vast majority of gasoline contains at
least 10% ethanol, mostly in the form of
E10, whereas the average concentration
of renewables in diesel falls far short of
that. Thus, while the decrease in
transportation fuel demand in 2020
proportionally decreased the required
renewable fuel volume, the decrease in
the demand for renewable fuel was
greater given the greater drop in
gasoline versus diesel demand.
Further, even with the lesser impact
on diesel fuel consumption, we still
observed a shortfall in the use of
biodiesel and renewable diesel relative
to our projections in the 2020 final rule.
That is to say, the projections in the
2020 final rule overestimated the use of
biodiesel and renewable diesel, even if
we adjust those projections by the
shortfall in diesel demand.
Second, when we promulgated the
2020 volume requirements, we did so
while projecting for the first time that
we would be granting a large number of
SREs for 2020. The 2020 final rule
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reallocated the projected exempted
volumes onto the remaining obligated
parties, thereby significantly increasing
the obligations on those parties. As we
explain in Section VI.B, there continues
to be substantial uncertainty regarding
whether we will grant or deny the many
SRE petitions for 2020 in the wake of
the Tenth Circuit’s decision in RFA and
the Supreme Court’s reversal of one of
the bases for the Tenth Circuit’s
decision in HollyFrontier.73 Among the
uncertainties are the impacts of the
additional holdings in RFA that were
not addressed on appeal to the Supreme
Court. The significant impact of our
earlier projection on the standards and
the consequent impact on our SRE
policy by the litigation in RFA and
HollyFrontier suggest that
reconsideration is warranted.74
The decrease in biofuel use, together
with the potential impacts of SRE
decisions, means that compliance with
the original 2020 standards would likely
result in a significant drawdown of the
number of carryover RINs available for
use in 2021, which could negatively
impact the functionality of the RIN
market that enables the successful
implementation of the RFS program. A
well-functioning RIN market is
foundational for allowing obligated
parties to comply with their RFS
mandates, particularly for obligated
parties that do not themselves produce
or blend renewable fuels. As discussed
in Section IV.A, the carryover RIN bank
is already projected to drop from 3.48
billion RINs in 2019 to 1.85 billion RINs
in 2020, following 2019 compliance. We
project that the 2020 standards, if
unmodified and SREs are not granted,
would result in a significant drawdown
of the total number of carryover RINs, to
a volume (630 million RINs) that would
represent less than 4 percent of the
proposed 2021 and 2022 total renewable
fuel standards.75 The number of
carryover cellulosic biofuel RINs would
also be projected to decrease
significantly, as we project that the
number of cellulosic carryover RINs
73 Renewable Fuels Ass’n v. EPA, 948 F.3d 1206
(10th Cir. 2020), rev’d in part sub nom.,
HollyFrontier Cheyenne Refining, LLC, v.
Renewable Fuels Ass’n, 114 S. Ct. 2172 (2021).
74 As noted in Section II.D, we have received
petitions seeking reconsideration of the 2020
annual rule under CAA section 307(d)(7)(B).
75 See Section VI of ‘‘Carryover RIN Bank
Calculations for 2020–2022 Proposed Rule,’’
available in the docket for this action.
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would be reduced to just 2.2 million
RINs, which is less than 0.5 percent of
the proposed 2021 and 2022 cellulosic
biofuel volumes. Such a drastic
reduction in the carryover RIN bank has
the potential to reduce the liquidity of
RINs and could negatively impact
parties that do not currently have
sufficient RINs to meet their 2020
obligation. This could make it difficult
for some parties to acquire enough RINs
to comply with their 2020 RFS
obligations, as well as the 2021 and
2022 standards being proposed, and
could cause those parties to carry
forward deficits or to become noncompliant. This could lead to significant
negative impacts on the fuels market
and the ongoing implementation of the
RFS program, as discussed in Section
IV.B.
These considerations also support our
decision to retroactively reduce the
2020 volumes to those actually used. In
doing so, we are relieving burdens on
obligated parties, and in some cases, the
potentially onerous burden of noncompliance with the RFS program and
the possibility of penalty payments.
This approach also ensures sufficient
RINs for compliance. It also ensures the
continued functioning of the carryover
RIN bank, a necessary compliance
flexibility for obligated parties. It also
protects the ongoing implementation of
the RFS program and facilitates the
higher volumes proposed for 2022, as
we discuss further in Section IV.B.
With regard to lead time, less lead
time is needed for obligated parties
given that we are reducing the
stringency of their obligations, as
opposed to increasing the stringency of
their obligations. Nonetheless, we are
providing significant lead time. We
extended the 2020 compliance deadline
for obligated parties to January 31, 2022,
providing these parties with additional
time to acquire RINs,76 and have
proposed to further extend that deadline
in a separate action.77 Had we not
adjusted the compliance deadline,
obligated parties would have needed to
demonstrate compliance by March 31,
2021.
We recognize that retroactively
adjusting the 2020 standards will
disrupt market expectations created by
the prior final rule, for instance on the
part of biofuel producers who made
76 86
77 86
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investments or other parties who
transacted biofuels or RINs, based on
the higher standards originally
finalized. As a general matter, these
expectations may not rise to the level of
reliance interests recognized by the
courts.78 Even if they do, however, we
believe that revising the standards is
nonetheless warranted based on the
events and factors described above,
which likely confounded market
expectations in any event.
As explained in Section II.A.2, the
statutory deadline for resetting the total
renewable fuel volume was in December
2019, or one year after the promulgation
of the 2019 final rule. The statutory
deadlines for resetting the advanced
biofuel and cellulosic biofuel volumes
occurred even earlier. Despite being late
to meet our statutory obligations, we are
proposing to exercise the reset authority
for several reasons. First, doing so
satisfies our statutory obligation to reset
the statutory volumes. Second, we have
already notified the public that we
intended to exercise the reset
authority.79 This proposal is a key step
in making good on that intent and
meeting our statutory obligation. Third,
the reset authority also provides EPA
broad discretion to modify the
renewable fuel volumes and to establish
biofuel volume requirements at the
volumes actually consumed. Such
volumes for advanced biofuel and total
renewable fuel could not be established
under the cellulosic waiver authority,
which was the legal basis for the
original 2020 final rule.80 Nonetheless,
we believe that these are the appropriate
volumes for the reasons explained
above.
The proposed revised 2020 volumes,
along with the original volumes, are
shown in Table III.B–1. The proposed
revised 2020 percentage standards,
along with the original percentage
standards, are provided in Section VI.C.
78 Monroe Energy, LLC v. EPA, 750 F.3d 909, 919–
20 (D.C. Cir. 2014).
79 See 84 FR 36766 (July 29, 2019).
80 The cellulosic waiver authority limits
reductions in the statutory total renewable fuel and
advanced biofuel volumes to no more than the
reduction in the cellulosic biofuel volume. In the
2020 final rule, we exercised the cellulosic waiver
to the maximum extent, resulting in an implied
conventional renewable fuel volume of 15 billion
gallons and an implied non-cellulosic advanced
biofuel volume of 4.5 billion gallons. However, the
volumes of advanced biofuel and total renewable
fuel actually supplied in 2020 fell short of these
numbers.
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TABLE III.B–1—PROPOSED REVISED VOLUME REQUIREMENTS FOR 2020
[Billion RINs]
Standard
Original
Cellulosic Biofuel .....................................................................................................................................................
Biomass-Based Diesel .............................................................................................................................................
Advanced Biofuel .....................................................................................................................................................
Total Renewable Fuel ..............................................................................................................................................
Revised
0.59
0.51
a 2.43
a 2.43
5.09
20.09
4.63
17.13
Source: EMTS (EPA Moderated Transaction System). See ‘‘RIN supply as of 3–22–21’’.
a The BBD volume for 2020 is in physical gallons (rather than RINs) and was established in the 2019 final rule (83 FR 63704, December 11,
2018). We are not proposing to revise the 2020 BBD volume in this action.
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We request comment on our proposed
approach of reconsidering and revising
the 2020 RFS volumes from those
promulgated in the prior final rule. We
also request comment on modifying
2020 volumes to the volumes of
renewable fuel actually supplied in
2020. We further request comment on
whether we should include the
approximately 40 million cellulosic
biofuel carryover RINs in the 2020
cellulosic biofuel volume requirement.
We discuss this issue in detail in
Section IV.A.3.
C. Proposed Volumes for 2021
We are proposing 2021 total
renewable fuel, advanced biofuel, and
cellulosic biofuel volumes at our
projections of the volume of such fuels
used in the U.S. this year. This is the
same general approach as for 2020, with
the difference that we do not yet have
complete data for biofuel use in 2021,
and therefore we are projecting biofuel
use throughout the remainder of 2021.
Given that we are using the same
basic approach as for 2020, the rationale
for our 2021 volumes is similar to the
rationale for our 2020 volumes. Below
we present some of the key similarities
and also note differences where they
exist. As with 2020, due to the expected
timing of the finalization of this rule,
the ability for the rule to affect
renewable fuel production, imports, and
use in the U.S. in 2021 is limited. As
such, the impact of the rule on each of
the statutory factors is similarly limited.
Also, as for 2020, we could also set
volumes for 2021 that are greater or
lesser than the volume of renewable fuel
that is actually supplied in 2021, but we
do not believe that doing so would be
appropriate for similar reasons. EPA
does, however, believe that the RFS
program should drive increases in
renewable fuel volumes over time.
Given that we are setting volumes for
2020–2022 in this rule and the fact that
retrospective volumes have limited
ability to affect biofuel use, we believe
that increases in volume requirements
are more appropriate in 2022. That is
when this rule applies prospectively
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and has the potential to affect actual
biofuel use. We discuss this relationship
between the three years further in
Section IV.B.
As with 2020, the 2021 volumes both
are late and would operate retroactively.
Unlike for 2020, however, we are not
modifying previously finalized
standards for 2021. The lateness and
retroactivity of the 2021 volumes are
appropriate for similar reasons as for
2020. We believe that establishing the
2021 volumes at the volumes projected
to be used properly balances the
statutory goal of increasing renewable
fuel use with mitigating burdens on
obligated parties. It ensures that the
obligated parties should have sufficient
RINs to comply. In a separate action, we
have proposed to extend the compliance
and attest engagement dates for 2021,
providing additional lead time, as well
as compliance flexibilities for obligated
parties including access to carryover
RINs and carryforward deficits.81 In
addition, we note that this approach, of
setting volumes at those actually used,
is consistent with our approach in the
2014 and 2015 standards, which the
D.C. Circuit upheld in ACE.
As with the 2020 volumes, the 2021
volumes also depend upon a belated
exercise of the reset authority. We
believe using the reset authority is
appropriate for similar reasons as 2020:
We are statutorily obligated to reset
2021 volumes, we have previously
informed the public that we intended to
reset the volumes, and the reset
authority gives us discretion to reduce
the total renewable fuel volume beyond
what we could establish under the
cellulosic waiver. There is also an
additional reason, which is that the
statute indicates that when we reset the
volumes, we must do so for all
remaining years in the statutory volume
tables, which extend through 2022.
Thus, in resetting the 2020 volumes, we
are obligated to reset the 2021 and 2022
volumes.82
81 86
FR 67419 (November 26, 2021).
CAA section 211(o)(7)(F) (‘‘the
Administrator shall promulgate a rule . . . that
modifies the applicable volumes set forth in the
The volumes of cellulosic biofuel,
advanced biofuel, and total renewable
fuel we are proposing for 2021 are
shown in Table III.C–1. The biomassbased diesel volume for 2021 was
previously established in the 2020 final
rule and is included in Table III.C–1 for
context. These volumes are based on the
projected use of renewable fuels in the
U.S., as discussed in greater detail in
Chapter 5 of the DRIA.
TABLE III.C–1—PROPOSED RFS
VOLUMES FOR 2021
[Billion RINs]
Category
Cellulosic Biofuel ..................
Biomass-Based Diesel .........
Advanced Biofuel ..................
Total Renewable Fuel ..........
Proposed
volume
0.62
a 2.43
5.20
18.52
a The BBD volume for 2021 is in physical
gallons (rather than RINs) and was established in the 2020 final rule (85 FR 7016, February 6, 2020). We are not proposing to revise
the 2021 BBD volume in this action.
In the final rule, we intend to
consider additional data, including
more recent data on renewable fuel
production and use, and public
comments, and update our projections
accordingly. We request comment on
both our proposed approach of
establishing the RFS volumes for 2021
at the volume of renewable fuel
projected to be supplied in 2021, as well
as our projections of these volumes. We
also request comment on whether or not
to include volumes of cellulosic ethanol
produced from corn kernel fiber in our
projection of cellulosic biofuel
production in 2021, as discussed in
Chapter 5 of the DRIA.
D. Proposed Volumes for 2022
We are proposing 2022 total
renewable fuel, advanced biofuel, and
cellulosic biofuel volumes that
represent growth compared to historical
volumes and compared to the volumes
proposed for 2020 and 2021. We are
82 See
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table concerned for all years following the final year
to which the waiver applies’’).
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proposing a 150 million gallon increase
in the 2022 cellulosic biofuel volume
over the proposed 2021 volume based
on the expected continued growth in
biogas use. We are also proposing the
full implied statutory volumes for noncellulosic advanced biofuel (i.e., 5
billion gallons, or 500 million gallons
more than the proposed 2021 volume)
and conventional renewable fuel (15
billion gallons).83 We anticipate
significant growth in the use of noncellulosic advanced biofuels, especially
in advanced renewable diesel.84 While
we expect that conventional ethanol use
will fall short of the implied 15 billion
gallon volume in 2022 by roughly 1.2
billion gallons, we project that greater
volumes of biodiesel and renewable
diesel could be produced and imported
to offset this shortfall. We discuss the
2022 BBD volume separately in Section
III.D.
The proposed cellulosic biofuel
volume for 2022 is equal to the
projected available volume of cellulosic
biofuel (see Chapter 5.1 of the DRIA).
This volume represents the highest
volume of cellulosic biofuel we can
establish for 2022 given the cellulosic
waiver provision, which requires EPA to
reduce the statutory cellulosic volume
to the projected volume available. While
EPA does have the authority to establish
a lower cellulosic volume under the
reset authority, we do not believe this
would be appropriate for 2022, as
discussed below.
EPA’s approach to the proposed
cellulosic biofuel volume for 2022 seeks
to realize the potential for GHG benefits
associated with increased cellulosic
biofuel production despite the relatively
high costs (or in the case of CNG/LNG
derived from biogas, the relatively high
impact on the price of transportation
fuel). Thus, while some of the statutory
factors (such as the cost to consumers of
transportation fuel) may suggest that a
volume of cellulosic biofuel lower than
the volume projected to be produced in
2022 would be appropriate, we have
determined that these factors are
outweighed by other factors (such as
climate change).
The proposed advanced biofuel and
total renewable fuel volumes strike a
balance between numerous competing
statutory factors. They reflect the
83 The implied statutory volume for noncellulosic advanced biofuel in 2022 (5 billion
gallons) is the difference between the statutory
volumes for advanced biofuel (21 billion gallons)
and cellulosic biofuel (16 billion gallons) in 2022.
Similarly, the implied statutory volume for
conventional renewable fuel in 2022 (15 billion
gallons) is the difference between the statutory
volumes for total renewable fuel (36 billion gallons)
and advanced biofuel (21 billion gallons) in 2022.
84 See Chapter 2 of the DRIA.
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potential for growth in the volume of
renewable fuel produced and consumed
in the U.S., and the energy security and
potential climate change benefits that
producing and consuming increasing
volumes of qualifying renewable fuels
provide. They also take into
consideration the potential negative
impacts of renewable fuels produced
from crops such as corn or soybeans on
environmental factors such as the
conversion of wetlands, ecosystems, and
wildlife habitat, water quality, and
water supply.
We acknowledge that the implied
conventional renewable fuel volume is
higher than the volume of these fuels
projected to be consumed in the U.S. in
2022. We believe this may incentivize
the continued expansion of the
infrastructure necessary to use higher
level blends of ethanol, which remains
the dominant form of conventional
renewable fuel. In recent years, ethanol
consumption beyond the E10 blendwall
in the U.S. has been limited by
infrastructure constraints (as well as
other factors) to a volume significantly
lower than the volume of ethanol
produced in the U.S. and the total
production capacity of the U.S. ethanol
industry. If these infrastructure
constraints are addressed, domestic
ethanol consumption and ultimately
domestic ethanol production could
increase, and this could result in job
creation, rural economic development,
higher corn prices for farmers, and a
greater supply of agricultural
commodities. Alternatively, additional
volumes of conventional biodiesel and
renewable diesel could be supplied in
2022, including renewable fuels that are
grandfathered under 40 CFR 80.1403
and are thus not required to meet the
minimum 20 percent GHG reduction
required for all qualifying renewable
fuel. These fuels would most likely be
produced in foreign facilities, which
may cause additional environmental
impacts and would not provide the
same benefits to domestic job creation
and rural economic development, but
they could still provide energy security
benefits.85
At the same time, this higher volume
requirement means that obligated
parties will likely need to look to other
sources of renewable fuel beyond corn
ethanol to meet their compliance
obligations for 2022. While we are
proposing the non-cellulosic portion of
the advanced biofuel standard at the full
85 Registered capacity to produce conventional
biodiesel and renewable diesel exists at
grandfathered facilities. Because grandfathered
renewable fuels are not required to meet the GHG
reduction thresholds, the GHG impacts of these
fuels are highly uncertain.
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implied statutory volume of 5 billion
gallons, our assessment of potential
supply indicates that some additional
volume will likely be used in 2022. This
means that if, as expected, the market
falls short of the implied volume of
conventional renewable fuel in 2022, as
has happened in several years in the
past, excess volumes of advanced
biofuel beyond what is needed to meet
the advanced biofuel volume could be
available to fulfill some portion of the
shortfall. Finally, as discussed for in the
context of the proposed volume
requirements for 2020 and 2021, there
may also be implications of the
proposed 2022 volume requirements on
the carryover RIN bank. While we are
projecting that sufficient renewable
diesel, both advanced and conventional,
will be available to meet the proposed
2022 volume requirements, there is the
potential that the market may fall short,
in which case the existence of sufficient
carryover RINs in the carryover RIN
bank can still enable compliance.
Specifically, obligated parties may use
carryover RINs to help them comply
with the proposed 2022 standards. See
Section IV.A for a more detailed
discussion of carryover RINs.
We acknowledge that in lieu of
maintaining the implied statutory
volumes of non-cellulosic advanced
biofuel and conventional renewable fuel
and relying on higher volumes of
advanced biofuel to fulfill an expected
shortfall in conventional biofuel, we
could instead raise the advanced biofuel
requirement and lower the conventional
biofuel volume. However, we have
chosen not to propose this. We expect
that the impact on GHG emissions of the
decision not to propose a higher
advanced biofuel volume with a
corresponding lower implied
conventional biofuel volume will be
minimal, given that additional volumes
of advanced biofuels will likely be used
to satisfy the conventional portion of the
total renewable fuel requirement.
Moreover, we believe that providing
incentives for increased ethanol
distribution and blending infrastructure
through the higher implied volumes of
conventional renewable fuel may result
in the potential for greater renewable
fuel consumption in future years.
We note that this approach of
maintaining the statutory implied
conventional and non-cellulosic
advanced biofuel volumes is inherently
consistent with the volumes Congress
itself established in EISA. It is also
consistent with EPA’s policy in prior
years, during which we have never
established prospective volume
requirements lower than the implied
statutory volume targets, with a single
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exception.86 While we have discretion
to deviate from this policy, we continue
to believe that maintaining the implied
statutory volumes strikes the proper
balance based upon our consideration of
the reset factors.
We also acknowledge that we are
already late in resetting the 2022
volumes. We nonetheless believe that
this late exercise of our reset authority
is appropriate for similar reasons as for
2020 and for 2021. Moreover, the
proposed 2022 volumes are also
independently justified under our
cellulosic waiver authority.
The volumes of cellulosic biofuel,
biomass-based diesel, advanced biofuel,
and total renewable fuel we are
proposing for 2022 are shown in Table
III.D–1. We request comment on these
proposed volumes. (The proposed BBD
volume for 2022 is also included in
Table III.D–1 for context, although we
discuss it in Section III.E)
additional cellulosic biofuel production
from corn kernel fiber or
biointermediates in 2022, and, if so, the
volume we should project.
E. Proposed Biomass-Based Diesel
Volume for 2022
As described above, we are proposing
an increase of 500 million gallons in the
non-cellulosic advanced biofuel volume
for 2022. Consistent with this, we are
also proposing to increase the BBD
volume requirement by the same
energy-equivalent amount (330 million
physical gallons) to 2.76 billion gallons.
As in recent years, we believe that
excess volumes of BBD (above 2.76
billion gallons) will be used in 2022 to
satisfy the advanced standard.
Historically, the BBD standard has not
independently driven the use of BBD in
the market. This is due to the nested
nature of the standards and the
competitiveness of BBD relative to other
advanced biofuels. Instead, the
advanced biofuel standard, and
TABLE III.D–1—PROPOSED RFS
occasionally the total renewable fuel
VOLUMES FOR 2022
standard, have driven the use of BBD in
[Billion RINs]
the market. We believe this trend will
continue in 2022, and that the 2022
Proposed
advanced standard, and potentially the
Category
volume
total renewable fuel standard, will drive
Cellulosic Biofuel ..................
0.77 the use of BBD in the market in 2022.
a 2.76
At the same time, we think it is
Biomass-Based Diesel .........
Advanced Biofuel ..................
5.77 important to maintain space for other
Total Renewable Fuel ..........
20.77 advanced biofuels to participate in the
RFS program. Although the BBD
a The BBD volume for 2022 is in physical
industry has matured over the past
gallons (rather than RINs).
decade, the production of other
In particular, we request comment on advanced biofuels continues to be
our projection of cellulosic biofuel for
relatively low and uncertain.
2022. As discussed in greater detail in
Maintaining this space for other
Chapter 4 of the DRIA, our cellulosic
advanced biofuels can facilitate in the
biofuel projections for 2022 do not
long-term increased commercialization
include any volume of cellulosic
and use of other advanced biofuels,
ethanol produced from corn kernel fiber which may have superior environmental
from facilities that are not currently
benefits and lower costs relative to BBD.
registered to generate cellulosic RINs
Conversely, we do not think increasing
due to outstanding issues. If these
the size of this space is necessary for
technical and regulatory issues are
2022 given that only small quantities of
resolved, we project that as much as 210 these other advanced biofuels have been
million additional gallons of cellulosic
used in recent years relative to the space
biofuel could be produced from corn
we have already provided.
kernel fiber in 2022. Our projections
The proposed BBD volume for 2022 is
also do not include any volumes that
consistent with our policy in previous
might result from our proposed
annual rules, where we also set the BBD
biointermediate regulations, as we
volume consistent with the change, if
believe the impacts of that proposal will any, in the advanced volume. In the
not occur until after 2022. We request
2019 final rule, we set the 2020 BBD
comment on whether we should project volume at 2.43 billion gallons. This was
an increase from the prior year’s BBD
86 We prospectively established a volume for
volume by the same energy-equivalent
conventional renewable fuel for 2016 (14.5 billion
amount (330 million physical gallons)
gallons) that was lower than the statutory implied
as the increase in the 2019 nonvolume (15 billion gallons). In doing so, we
exercised our ‘‘inadequate domestic supply’’ waiver cellulosic advanced biofuel volume (500
authority based largely on the limited demand for
million ethanol-equivalent gallons). By
ethanol in the United States. That decision that was
contrast, in the 2020 final rule, when
subsequently set aside by the U.S. Court of Appeals
the 2020 non-cellulosic advanced
for the District of Columbia Circuit in ACE, as
exceeding our waiver authority.
biofuel volume did not change, we also
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maintained the 2021 BBD volume at
2.43 billion gallons. In both rules, we
preserved a significant space for other
advanced biofuels to compete,
approximately equal to 850 million
RINs (approximately equal to 566
million physical gallons). In reality,
only 334 million ethanol-equivalent
gallons of other advanced biofuel was
consumed in 2020.
We acknowledge that in proposing the
2022 BBD volume in this action, we are
proposing a late BBD volume. CAA
section 211(o)(2)(B)(ii) provides that
EPA shall determine the applicable
volume 14 months prior to the year for
which the standard will apply. That
deadline has already passed. However,
we do anticipate establishing the 2022
BBD standard ahead of the 2022
compliance year. The D.C. Circuit in
ACE has affirmed EPA’s ability to
promulgate late BBD standards as long
as those standards are reasonable.87 In
evaluating the reasonableness of EPA’s
standards, the Court suggested that EPA
must ‘‘consider[ ] various ways to
minimize the hardship caused to
obligated parties.’’ 88 In this action, we
are providing obligated parties with
notice of the potential 2022 BBD volume
requirement well in advance of the 2022
compliance deadline. Additionally, we
are proposing a volume requirement
that is consistent with our treatment of
the BBD volume requirement in the
past, i.e., increasing the BBD volume
requirement in accordance with
increases in the implied statutory noncellulosic advanced volume. Further, as
in this case of previous annual rules, we
continue to believe that it will be the
advanced biofuel standard for 2022 that
will drive the use of BBD in the market,
and thus, the BBD standard we propose
to establish is unlikely to result in
additional burdens on obligated parties.
Finally, we solicit comment on whether
we should instead maintain the BBD
standard for 2022 at 2.43 billion gallons.
This would increase the space allowed
for other advanced biofuels, as we are
proposing to increase the advanced
biofuel volume for 2022 by 500 million
gallons over the proposed 2021 volume.
F. Summary of the Proposed Volumes
The proposed volumes for 2020, 2021,
and 2022 are summarized in Table III.F–
1. We request comment on these
volumes (excepting the 2020 and 2021
BBD volumes, which were set in the
2019 and 2020 final rules, respectively),
as well as any data or analysis that
87 ACE
at 721.
(quoting Monroe Energy, LLC v. EPA, 750
F.3d 909, 920 (D.C. Cir. 2014)).
88 Id.
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would support alternative volumes for
these years.
TABLE III.F–1—PROPOSED RFS VOLUMES FOR 2020, 2021, AND 2022
[Billion RINs]
Category
2020
Cellulosic Biofuel .........................................................................................................................
Biomass-Based Diesel a ..............................................................................................................
Advanced Biofuel .........................................................................................................................
Total Renewable Fuel ..................................................................................................................
a The
b The
c The
2021
2022
0.51
0.62
b 2.43
c 2.43
4.63
17.13
5.20
18.52
0.77
2.76
5.77
20.77
BBD volumes are in physical gallons (rather than RINs).
BBD volume for 2020 was established in the 2019 final rule (83 FR 63704, December 11, 2018).
BBD volume for 2021 was established in the 2020 final rule (85 FR 7016, February 6, 2020).
G. Impacts of the Proposed Volumes
As explained in Chapter 2.2 of the
DRIA, we have used a baseline of the
volumes actually supplied in 2020 to
assess the impacts of this proposed rule,
and thus the proposed 2020 volumes
have no costs or benefits. We therefore
focus on the projected impacts of the
2021 and 2022 volumes.89 We recognize
that there are other possible baselines
that could be used as a point of
comparison, and that the choice of
baseline significantly influences our
impact analyses. A potential alternative
baseline that might be informative
would be the volumes of renewable
fuels that would be used each year from
2020–2022 in the absence of RFS
obligations. While we have not used this
alternative baseline in this rule, Chapter
2.2 of the DRIA contains a brief
description of what such a baseline
might look like. We request comment on
the volumes of renewable fuel and
feedstock use that would occur in these
years in the absence of the RFS
obligations.
For two of the statutory factors (fuel
costs and energy security benefits) we
were able to quantify and monetize the
expected impacts of this proposed
rule.90 Information and specifics on how
fuel costs are calculated are presented in
Chapter 9 of the DRIA, while energy
security benefits are discussed in
Chapter 4 of the DRIA. A summary of
the fuel costs and energy security
benefits are shown in Table III.G–1 and
Table III.G–2. Other factors, such as job
creation and the price and supply of
agricultural commodities, are quantified
but have not been monetized. Further
information and the quantified impacts
of this proposed rule on these factors
can be found in the DRIA. We were not
able to quantify many of the impacts of
this rulemaking, including impacts on
many of the statutory factors such as the
environmental impacts and rural
economic development.
TABLE III.G–1—FUEL COSTS OF THE PROPOSED VOLUMES
[2020 and nominal year dollars, millions] a
Discounted
Year
Undiscounted
Rate: 7%
2021 .............................................................................................................................................
2022
Excluding Supplemental Volumes ........................................................................................
Including Supplemental Volumes .........................................................................................
Rate: 3%
278
278
278
2,158
2,302
2,017
2,151
2,095
2,235
a These costs represent the costs of producing and using biofuels relative to the petroleum fuels they displace. They do not include other factors, such as the potential impacts on soil and water quality or potential GHG reduction benefits.
TABLE III.G–2—ENERGY SECURITY BENEFITS OF THE PROPOSED VOLUMES
[2020 dollars, millions]
Discounted
Year
Undiscounted
Rate: 7%
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2021 .............................................................................................................................................
2022
Excluding Supplemental Volumes ........................................................................................
Including Supplemental Volumes .........................................................................................
Rate: 3%
64
64
64
151
162
141
151
147
157
Regardless of whether or not we were
able to quantify or monetize the impact
of this proposed rule on each of the
statutory factors, consideration of these
factors is still required by the statute.
We believe that the proposed standards
89 The values for both 2021 and 2022 are
calculated relative to the actual volumes of
renewable fuel used in 2020. The 2022 values
therefore reflect the incremental volumes for both
2021 and 2022.
90 Due to the uncertainty related to the GHG
emission impacts of this proposed rule (discussed
in further detail in Chapter 3.2 of the RIA) we have
not included a quantified projection of the GHG
emission impacts of this proposal. However, to
provide perspective regarding the scope of the
potential benefits, Chapter 3.2.2 of the RIA
illustrates the potential GHG benefits associated
with the proposed volumes in this rule using the
lifecycle GHG values calculated in the 2010 RFS
final rule and other prior actions.
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in this rulemaking are appropriate
under our reset authority when we
balance all of the relevant factors
described throughout this preamble and
the DRIA. We request comment
generally on how costs and benefits
quantified in this proposed rule are
calculated and accounted for, as well as
methods to quantify and monetize
additional statutory factors.
IV. Interactions Between the RFS
Annual Volumes
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In resetting the volumes, EPA must
review the implementation of the
program. In conducting this review, we
have assessed the carryover RIN bank 91
and carryforward deficits, which are
two important compliance mechanisms.
Specifically, the RFS regulations
contain provisions that allow an
obligated party to satisfy their RFS
obligations for a given year by using up
to 20 percent of RINs generated in the
previous year.92 Similarly, the RFS
regulations also allow an obligated party
to carry forward a compliance deficit
from one year to the next, provided the
party meets their full RFS obligations in
the following year.93 These provisions
operate such that any excess RINs
generated in one year, or any RIN
deficits, can impact the market for RINs
and renewable fuels in the next year. As
such, compliance with the RFS
standards for one year is inherently
intertwined with compliance for the
prior year. This section discusses the
projected volume of carryover RINs (net
91 CAA section 211(o)(5) requires that EPA
establish a credit program as part of its RFS
regulations, and that the credits be valid for
obligated parties to show compliance for 12 months
as of the date of generation. EPA implemented this
requirement through the use of RINs, which are
generated for the production of qualifying
renewable fuels. Obligated parties can comply by
blending renewable fuels themselves, or by
purchasing the RINs that represent the renewable
fuels from other parties that perform the blending.
There are different ‘‘D’’ codes representing the
different RFS standards that the various renewable
fuels can be used to comply with. (e.g., D3
represents cellulosic biofuel that can be used to
comply with the cellulosic biofuel standard.) RINs
can be used to demonstrate compliance for the year
in which they are generated or the subsequent
compliance year. Obligated parties can obtain more
RINs than they need in a given compliance year,
allowing them to ‘‘carry over’’ these excess RINs for
use in the subsequent compliance year, although
our regulations limit the use of these carryover RINs
to 20 percent of the obligated party’s RVO. For the
bank of carryover RINs to be preserved from one
year to the next, individual carryover RINs are used
for compliance before they expire and are
essentially replaced with newer vintage RINs that
are then held for use in the next year. For example,
vintage 2020 carryover RINs must be used for
compliance in 2021, or they will expire. However,
vintage 2021 RINs can then be ‘‘banked’’ for use in
2022.
92 40 CFR 80.1427(a)(5).
93 40 CFR 80.1427(b).
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of carryforward deficits) that will be
available for use towards compliance
with the 2020, 2021, and 2022 RFS
obligations. We also evaluate whether
we should intentionally set the 2020,
2021, and 2022 volumes at levels that
would intentionally reduce the size of
the carryover RIN bank, and we propose
that this would not be appropriate.
In addition, in reviewing the
implementation of the program, we
recognize the difference between the
ability of retroactive versus prospective
volume requirements to affect
renewable fuel use. As we explained in
Section II, we anticipate that the 2020
and 2021 standards will be largely
retrospective, while the 2022 standards
will be prospective. In this section, we
explain that we do not expect the
retroactive 2020 and 2021 standards to
significantly affect renewable fuel use in
2020 and 2021, respectively, but we do
expect the prospective 2022 standards
to significantly affect renewable fuel use
in 2022. Given this dynamic, we
generally believe that higher renewable
fuel volumes should occur in 2022 as
opposed to 2020 or 2021.94
A. Treatment of Carryover RINs
Consistent with our approach in
recent annual rules, we have also
considered the availability and role of
carryover RINs in setting the volume
requirements for 2020, 2021, and 2022.
In general, we have authority to
consider the size of the carryover RIN
bank in deciding whether and to what
extent to exercise any of our
discretionary waiver authorities.95
EPA’s approach to the consideration of
carryover RINs in exercising our
cellulosic waiver authority was affirmed
in Monroe Energy and ACE.96
As noted in past RFS annual rules,
carryover RINs are a foundational
element of the design and
94 We further discuss our review of the
implementation of the program throughout the
preamble and DRIA, especially in Chapter 1 of the
DRIA.
95 These discretionary waiver authorities include
the reset and set authorities, CAA section
211(o)(7)(F) and 211(o)(2)(B)(ii) (both of which
allow EPA to establish RFS volumes based upon a
‘‘review of the implementation of the program’’),
discretionary portion of the cellulosic waiver
authority, CAA section 211(o)(7)(D)(i) (‘‘the
Administrator may also reduce the applicable
volume of renewable fuel and advanced biofuels
requirement’’), the general waiver authority, CAA
section 211(o)(7)(A) (‘‘The Administrator . . . may
waive the requirements’’), and the BBD waiver
authority with regard to the extent of the reduction
in the BBD volume, CAA section 211(o)(7)(E)(ii)
(‘‘the Administrator . . . shall issue an order to
reduce . . . the quantity of biomass-based diesel
. . . by an appropriate quantity’’).
96 Monroe Energy v. EPA, 750 F.3d 909 (D.C. Cir.
2014); ACE, 864 F.3d at 713.
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implementation of the RFS program.97
A bank of carryover RINs is extremely
important in providing a liquid and
well-functioning RIN market upon
which success of the entire program
depends, and in providing obligated
parties compliance flexibility in the face
of substantial uncertainties in the
transportation fuel marketplace.98
Carryover RINs enable parties ‘‘long’’ on
RINs to trade them to those ‘‘short’’ on
RINs instead of forcing all obligated
parties to comply through physical
blending. Carryover RINs also provide
flexibility in the face of a variety of
unforeseeable circumstances that could
limit the availability of RINs and reduce
spikes in compliance costs, including
weather-related damage to renewable
fuel feedstocks and other circumstances
potentially affecting the production and
distribution of renewable fuel.
Just as the economy as a whole is able
to function efficiently when individuals
and businesses prudently plan for
unforeseen events by maintaining
inventories and reserve money
accounts, we believe that the RFS
program is able to function when
sufficient carryover RINs are held in
reserve for potential use by the RIN
holders themselves, or for possible sale
to others that may not have established
their own carryover RIN reserves. Were
there to be too few RINs in reserve, then
even minor disruptions causing
shortfalls in renewable fuel production
or distribution, or higher than expected
transportation fuel demand (requiring
greater volumes of renewable fuel to
comply with the percentage standards
that apply to all volumes of
transportation fuel, including the
unexpected volumes) could result in
deficits and/or noncompliance by
parties without RIN reserves. Because
carryover RINs are individually and
unequally held by market participants,
a small RIN bank may negatively impact
the RIN market, even where the market
overall could satisfy the standards.
Consequently, were market disruptions
to occur with an insufficient carryover
RIN bank, it could force the need for a
new waiver of the standards,
undermining the market certainty so
critical to the RFS program. For all of
these reasons, the collective carryover
RIN bank provides a necessary
programmatic buffer that both facilitates
individual compliance, provides for
smooth overall functioning of the
program to the benefit of all market
97 See,
e.g., 72 FR 23904 (May 1, 2007).
80 FR 77482–87 (December 14, 2015), 81
FR 89754–55 (December 12, 2016), 82 FR 58493–
95 (December 12, 2017), 83 FR 63708–10 (December
11, 2018), 85 FR 7016 (February 6, 2020).
98 See
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participants, and is consistent with the
statutory provision allowing for the
generation and use of credits. We
anticipate that the carryover RIN bank
will serve this very purpose for
compliance with the 2019 standards,
when actual biofuel use in that year is
expected to have fallen short of the RFS
standards.99
EPA can also rely on the availability
of carryover RINs to support ambitious
volumes that may not be able to be met
with renewable fuel production and use
in that year, and in the context of the
2013 RFS rulemaking we noted that an
abundance of carryover RINs available
in that year, together with possible
increases in renewable fuel production
and import, justified maintaining the
advanced and total renewable fuel
volume requirements for that year at the
levels specified in the statute.100
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1. Carryover RIN Bank Size
We project a significant drawdown in
the number of carryover RINs as a result
of compliance with the 2019 standards.
After compliance with the 2019 RFS
standards, we project that there will be
approximately 1.85 billion total
carryover RINs available, a decrease of
1.62 billion RINs from the previous
estimate of 3.48 billion total carryover
RINs in the 2020 final rule.101 Since we
are proposing to set both the 2020 and
2021 volume requirements at the actual
volume of renewable fuel produced in
those years, we project that 1.85 billion
total carryover RINs would be available
for compliance with the 2022 standards
as well.
However, there remains considerable
uncertainty surrounding the ultimate
number of carryover RINs that will be
available for compliance with the 2020,
2021, and 2022 standards for several
reasons, including the possibility of
SREs and the fact that compliance with
the 2019 standards has not yet occurred
for all parties. Furthermore, as
discussed in Section V, our proposed
response to the remand of the 2016
rulemaking may reduce the total
number of carryover RINs by up to 250
million RINs in 2022 (and up to another
250 million RINs in 2023). Finally, we
note that there have been enforcement
actions in past years that have resulted
in the retirement of carryover RINs to
99 EPA extended the 2019 compliance deadline
for small refineries to November 30, 2021. See 86
FR 17073 (April 1, 2021). We have proposed to
further extend that deadline in a separate action (86
FR 67419, November 26, 2021).
100 79 FR 49793–95 (August 15, 2013).
101 The calculations performed to estimate the
size of the carryover RIN bank can be found in the
memorandum, ‘‘Carryover RIN Bank Calculations
for 2020–2022 Proposed Rule,’’ available in the
docket for this action.
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make up for the generation and use of
invalid RINs and/or the failure to retire
RINs for exported renewable fuel.
Future enforcement actions could have
similar results and require that obligated
parties or renewable fuel exporters settle
past enforcement-related obligations in
addition to complying with the annual
standards. In light of these
uncertainties, the net result could be a
total carryover RIN bank larger or
smaller than 1.85 billion RINs.
2. EPA’s Decision Regarding the
Treatment of Carryover RINs
We evaluated the volume of carryover
RINs projected to be available and
considered whether we should
intentionally draw down the carryover
RIN bank in setting the 2020, 2021, and
2022 volume requirements. We do not
believe that would be appropriate. As
described above, the current bank of
carryover RINs provides an important
and necessary programmatic and cost
spike buffer that will both facilitate
individual compliance and provide for
smooth overall functioning of the
program. We believe that a balanced
consideration of the possible role of
carryover RINs in achieving the
statutory volumes for cellulosic biofuel,
advanced biofuel, and total renewable
fuel, versus maintaining an adequate
bank of carryover RINs for important
programmatic functions, is appropriate
when EPA exercises its discretion under
its statutory authorities. Furthermore, as
noted earlier, after compliance with the
2019 standards, we project that there
will be a significant drawdown in the
number of carryover RINs. The
advanced biofuel and total renewable
fuel standards we are proposing for
2022, moreover, are significantly higher
than the volume of renewable fuel used
in previous years, as well as the volume
of renewable fuel expected to be used in
2020 and 2021. As we explain further in
Sections III and V, it may be challenging
for the market to satisfy the 2022 annual
standards and the 2022 supplemental
standard entirely with renewable fuel
use in 2022. Given this, the projected
shortfall in RIN generation in 2019, and
the uneven holding of carryover RINs
among obligated parties, we expect that
further increasing the standards with
the intent to draw down the carryover
RIN bank would lead to significant
deficit carryovers and potential noncompliance by some obligated parties
that own relatively few or no carryover
RINs. We do not believe this is an
appropriate outcome. Therefore,
consistent with the approach we have
taken in previous annual rules, we are
not proposing to set the 2020, 2021, and
2022 volume requirements at levels that
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would intentionally draw down in the
bank of carryover RINs.
As noted above, it is possible the size
of the RIN bank may be different than
our projection. Regardless, however, we
do not believe an intentional drawdown
of the carryover RIN bank would be
appropriate for many of the reasons
stated above. The carryover RIN bank
would continue to be an important
compliance flexibility for obligated
parties. Moreover, the standards we are
proposing for 2022, along with the 2022
supplemental standard, are forward
leaning and if the projected growth in
renewable fuel volumes do not
materialize would lead to a drawdown
of the carryover RIN bank.
3. Consideration of Cellulosic Carryover
RINs
In comments on the 2020 proposed
rule and supplemental proposal, several
parties suggested that EPA prospectively
establish the cellulosic biofuel volume
at the volume projected to be supplied
plus the volume of available carryover
RINs from the prior year.102 That is,
these parties argued that EPA should set
the cellulosic biofuel volume at a level
that would intentionally eliminate the
entire cellulosic carryover RIN bank.
Because EPA established volumes solely
under the cellulosic waiver authority
that year, those parties focused their
arguments on a legal interpretation of
that provision, asserting that it required
or allowed EPA to include, in its
projection of the available volume,
cellulosic carryover RINs that are
projected to be available for compliance.
Section 211(o)(7)(D)(i) of the CAA
requires EPA to set the applicable
volume of cellulosic biofuel at the
‘‘projected volume available during [the]
calendar year.’’ EPA has consistently
interpreted the statutory phrase
‘‘projected volume available’’ to refer to
the volume of qualifying cellulosic
biofuel projected to be produced or
imported and available for use as
transportation fuel in the U.S. in that
year. This is equivalent to the projected
number of cellulosic RINs generated in
the year that are available for obligated
parties to use for compliance. Since we
first exercised the cellulosic waiver
authority in the 2010 annual rule, we
have never included carryover
cellulosic RINs in this projection.
Parties that requested that EPA
include carryover RINs in our projection
of the available volume of cellulosic
biofuel generally argued that despite the
102 For example, see comments from the Coalition
for Renewable Natural Gas (EPA–HQ–OAR–2019–
0136–0723) and AJW and Iogen (EPA–HQ–OAR–
2019–0136–0467).
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continued rapid growth in cellulosic
biofuel volumes, excess carryover
cellulosic RINs in 2018 and 2019
resulted in low cellulosic RIN prices,
which in turn may have negatively
affected investment in cellulosic biofuel
production. They further claimed that
by including carryover RINs in the
projected volume available, EPA would
ensure that there was a strong market for
cellulosic biofuel and cellulosic biofuel
RINs in years when cellulosic biofuel
production exceeded the number of
cellulosic biofuel RINs needed by
obligated parties for compliance.
Commenters stated that this increased
market certainty would result in
increased investment in cellulosic
biofuel production and ultimately
increased cellulosic biofuel production.
One commenter suggested that in
conjunction with adding projected
carryover RINs to the projected
production volume of cellulosic biofuel
when establishing the cellulosic biofuel
volume, EPA could also subtract any
projected deficits to account for years
when cellulosic biofuel production falls
short of EPA’s projected production
volume.103
In our response to these comments in
the 2020 final rule,104 we disagreed with
parties who claimed that the statutory
language of the cellulosic waiver
authority requires EPA to include
carryover RINs in establishing the
required volume of cellulosic biofuel.
The statutory term ‘‘projected volume
available’’ does not directly address the
topic of carryover RINs. Indeed, the
cellulosic waiver provision, CAA
section 211(o)(7)(D)(i), does not mention
carryover RINs at all, or otherwise refer
to the statutory basis for such RINs,
CAA section 211(o)(5). Thus, we believe
there are multiple reasonable
interpretations of this ambiguous
statutory provision, including both the
interpretation put forward by the
stakeholders as well as the
interpretation adopted by EPA in
previous years.
We further stated that the
interpretation EPA adopted in previous
years struck an appropriate balance
between the interests of the cellulosic
producers, those obligated to purchase
and use cellulosic biofuels and
cellulosic biofuel RINs, and consumers;
and best ensured the ongoing smooth
implementation of the RFS program.105
Finally, since the 2020 proposed rule
103 See comment from AJW and Iogen (Docket
Item No. EPA–HQ–OAR–2019–0136–0467).
104 See Section 3.3 of the Response to Comments
document for the 2020 final rule (EPA–420–R–19–
018, December 2019).
105 See Chevron USA, Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984).
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did not raise the possibility of including
cellulosic carryover RINs in the
projected volume available, we did not
think it would be appropriate to make
such a change without first giving all
stakeholders an opportunity to
comment.
We are now providing stakeholders
notice and opportunity for comment in
this proposal on whether to include
cellulosic carryover RINs as part of the
projected volume available. With
respect to the volumes in this rule, were
we to include cellulosic carryover RINs,
it would increase the 2020 cellulosic
biofuel volume by 40 million gallons
over the currently proposed volume.106
It would not affect the 2021 and 2022
cellulosic biofuel volumes, since we are
establishing the cellulosic biofuel
volumes based on actual supply for
2020 and 2021, and therefore at this
time we do not project that excess RINs
will be generated for carryover into 2021
or 2022.107
While we acknowledge that some
aspects of the cellulosic category (such
as the cellulosic waiver authority and
the cellulosic waiver credits) 108 are
unique, at this time we believe the
benefits of carryover RINs, discussed in
Section IV.A, also apply to cellulosic
carryover RINs. Adding carryover RINs
to the volume projected to be produced
would effectively guarantee that the
demand for these RINs was always
equal to the overall market supply and
would likely result in cellulosic RIN
prices at or near the price of an
advanced biofuel RIN plus the price of
a cellulosic waiver credit in future
years. While raising prices would
increase revenue for cellulosic biofuel
producers, it may also increase the price
of cellulosic biofuel. These higher prices
would be passed on to consumers, who
ultimately bear these costs.
We also note that the legal arguments
made by the previous commenters,
while still relevant, are less so in the
context of this rulemaking. The prior
comments focused on an interpretation
of the cellulosic waiver authority. In
106 The calculations performed to estimate the
number of cellulosic carryover RINs can be found
in the memorandum, ‘‘Carryover RIN Bank
Calculations for 2020–2022 Proposed Rule,’’
available in the docket for this action.
107 We acknowledge of course that our projections
of the available volume of cellulosic biofuel are
inherently uncertain, and that there may be more
or fewer cellulosic RINs generated in 2020 and 2021
than what we project. However, at the time of this
rule, we have done our best to take neutral aim at
accuracy of the projected volume available.
108 Cellulosic waiver credits may be purchased
from EPA by obligated parties in years when EPA
uses the cellulosic waiver authority to reduce the
statutory volumes of cellulosic biofuel. Regulations
related to cellulosic waiver credits can be found in
40 CFR 80.1456.
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this rulemaking, however, we are
concurrently exercising both our
cellulosic waiver and reset authorities.
Under the reset authority, we have
broad discretion to establish volumes,
including cellulosic biofuel volumes
lower than the volume required under
the cellulosic waiver. Thus, regardless
of whether the prior commenters are
correct about EPA’s legal authority
under the cellulosic waiver, we have
legal authority under reset to establish
volumes at actual supply, excluding any
carryover RINs. At the same time,
however, the cellulosic waiver authority
establishes the ceiling for cellulosic
biofuel volumes. If we agree with the
commenters that the cellulosic waiver
mandates or allows volumes at supply
plus carryover RINs, then we may
establish cellulosic biofuel volumes up
to that level. Thus, although the legal
framework has changed somewhat since
the comments were submitted, their
arguments remain relevant, and EPA is
soliciting comment on this issue.
B. Ability for the RFS Volumes To
Impact Renewable Fuel Supply
In developing the proposed volume
requirements, we considered the timing
of this action and its ability to impact
renewable fuel production, imports, and
use. Since only prospective
requirements have a significant chance
of affecting actual renewable fuel use,
we are proposing to require higher
volumes for 2022. Imposing higher
volumes for 2020 or 2021, in contrast,
would have no effect on demand for
fuels in those years. By contrast,
retroactively requiring volumes higher
than what the market has actually
supplied could create market disruption
and thus interfere with program
implementation without advancing
program goals. Setting 2020 and 2021
volumes at those actually supplied
reflects the fact that we are acting
retroactively, while in requiring higher
volumes for 2022 we are setting
prospective obligations.
With respect to 2020, that year has
already passed, so our retroactive
revision of the RFS volumes cannot
affect the production or use of
renewable fuels in 2020 or consequently
the statutory reset factors (e.g., the
impacts of the use of renewable fuels on
cost, the environment, and so forth).
Any actual market effects will be felt
after the rule is promulgated and
mediated through the carryover RIN
bank.
With respect to 2021, there will not be
sufficient time for the market to respond
to the volumes that we finalize for 2021.
The market may also respond in a more
limited fashion to this proposed rule.
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Regardless, any impact on the
production, import, and use of
renewable fuel in 2021 is likely to be
limited, and therefore the ability for this
rule to affect the statutory factors is
likewise limited.
The situation for 2022, however, is
different. The RFS standards for 2022
will be in place throughout 2022 and
should be able to affect market decisions
for renewable fuel production, import,
and use in 2022, albeit still within the
bounds of the lead time available.
Similarly, the ability for this action to
affect the statutory factors in 2022 will
be significantly greater than in 2021 or
2020. Thus, we believe that increased
renewable fuel requirements should be
imposed in 2022, when this rule has a
much greater chance of actually
increasing renewable fuel use and
production, as opposed to 2020 or 2021.
Conversely, there are also
disadvantages to requiring higher
volumes for 2020 and 2021
retroactively, or similarly, to
maintaining the 2020 standards in the
original final rule. Notably, such higher
volumes would cause some combination
of a drawdown of the carryover RIN
bank, carryforward deficits, or noncompliance by obligated parties. While
we have previously found an intentional
drawdown of the carryover RIN bank to
be appropriate in one case, we do not
think that this is appropriate in this
situation for reasons we describe below.
We also do not think that intentionally
relying on or effectively compelling
carryforward deficits or intentionally
causing non-compliance is generally
appropriate.
Given the drastic shortfall in
renewable fuel use relative to what we
projected in the 2020 final rule as
discussed in Section III.B, compliance
with the original 2020 standards would
likely result in a significant drawdown
in the number of carryover RINs
available for use in 2021 and 2022. As
discussed in Section IV.A.1, we
currently project that as a result of
compliance with the 2019 RFS
standards, the number of carryover RINs
available for compliance with the 2020
standards will be approximately 1.85
billion RINs, a considerable drop from
the 3.48 billion total carryover RINs we
projected in the 2020 final rule. We
expect that as a result of revising the
2020 standards to equal the actual
volume of renewable fuels consumed,
the number of carryover RINs available
for compliance with the 2021 and 2022
standards will remain at 1.85 billion
RINs. Were we not to modify the 2020
standards, we anticipate that the total
number of carryover RINs available for
compliance with the 2021 and 2022
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standards would decrease dramatically
to 630 million RINs, or less than 4
percent of the proposed 2021 and 2022
total renewable fuel standards.109 This
would be the lowest quantity of
carryover RINs available since EPA
began projecting the size of the
carryover RIN bank in 2013, and the
relatively small carryover RIN bank
could increase the risk of disruptions in
the RIN trading market. A number of
obligated parties would also likely have
to carry deficits into 2022, fail to
comply with the 2021 total renewable
fuel standard if they had already carried
a deficit forward from 2020, or similarly
fail to comply with the 2022 total
renewable fuel standard.110
If these compliance difficulties occur,
we believe that the harms would not
just be felt by directly affected obligated
parties but also extend to the entire
fuels market and the RFS program.
Notably, if insufficient RINs are
available to obligated parties to meet
their compliance obligations, that could
negatively impact the regulatory and
market certainty critical to the
investments needed to increase
renewable fuel volumes in 2022 and
into the future. This could in turn
diminish the expected future rate of
production of renewable fuels, impair
the development of infrastructure to
distribute and use increased volumes of
such fuels, and reduce the expected
energy security, job creation, and rural
economic benefits associated with
higher renewable fuel use and
production. Reduced business certainty
could also deter the commercialization
of novel advanced biofuels, which have
the potential for lower costs and
superior environmental benefits.
Retroactively reducing the 2020
volumes mitigates these concerns.
Specifically, our proposal to reduce the
2020 volumes to those actually supplied
preserves an estimated carryover RIN
bank of 1.85 billion RINs for use in 2021
and establishing the 2021 volumes at
those actually supplied preserves the
same estimated carryover RIN bank for
compliance with the relatively
aggressive 2022 standards.
We note lesser reductions to 2020 or
2021 would give rise to the same
concerns. The magnitude of those
109 The calculations performed to project the
number of carryover RINs that would be available
if we did not revise the 2020 standards can be
found in the memorandum, ‘‘Carryover RIN Bank
Calculations for 2020–2022 Proposed Rule,’’
available in the docket for this action.
110 The regulations at 40 CFR 80.1427(b) allows
obligated parties to only carry forward a deficit if
they did not carry forward a deficit from the
previous calendar year; thus, an obligated party that
carries forward a deficit from 2020 into 2021 may
not carry forward a deficit from 2021 into 2022.
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concerns would depend on how high
the resulting volumes are. We think that
some of these concerns, moreover,
would remain even were we to make
offsetting reductions to the 2022
volumes (e.g., were we to increase the
proposed 2021 volumes by 500 million
gallons and decrease the proposed 2022
volumes by the same amount). In that
case, even though the aggregate
incentive for renewable fuels across all
three years might remain the same,
retroactively requiring compliance for
past years would be more likely to lead
more RIN bank drawdowns,
carryforward deficits, and noncompliance, and less likely to lead to
actual increases in renewable fuel use
and production.
In sum, in proposing the 2020, 2021,
and 2022 volumes, we recognize the
interconnected nature of the RFS annual
volume requirements. We believe that
the volume should reflect both a desire
to provide the necessary incentives for
significant growth in renewable fuel
production and use and our obligation
to consider and mitigate the burdens on
obligated parties associated with a
retroactive rulemaking. In general, this
indicates that required growth in
renewable fuel use should occur
prospectively in 2022, as opposed to
retroactively in 2020 and 2021. We
request comment on how EPA should
consider the carryover RIN bank in
establishing RFS volume obligations.
V. Response to ACE Remand
In addition to proposing the
applicable volume requirements and
percentage standards for 2020, 2021,
and 2022, in this rulemaking we are also
proposing to address the remand of the
2014–2016 annual rule 111 by the U.S.
Court of Appeals for the D.C. Circuit in
ACE.112 In the 2020 proposal, we
proposed to address the D.C. Circuit’s
remand by retaining the original 2016
total renewable fuel standard.113 We
received many comments both in
support of and against this approach.114
In the 2020 final rule, we deferred
taking action in response to the
remand.115 We now believe that we
should address the remand through
supplemental renewable fuel volume
requirements totaling 500 million
gallons spread over two years. We are
proposing a supplemental renewable
fuel obligation of 250 million gallons to
be applied in 2022 coupled with the
intention of proposing an additional 250
111 80
FR 77420 (December 14, 2015).
F.3d 691 (2017).
113 84 FR 36762 (July 29, 2019).
114 See Docket No. EPA–HQ–OAR–2019–0136.
115 85 FR 7016 (February 6, 2020).
112 864
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million gallon supplemental standard in
a subsequent action for 2023. We
propose to establish the supplemental
total renewable fuel volume
requirement and the corresponding
percentage standard for 2022 in this
rulemaking. This section describes the
relevant aspects of the 2014–2016
annual rule, the court’s decision, EPA’s
responsibilities following the court’s
remand, and our proposed approach.
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A. Reevaluating the 2014–2016 Annual
Rule
1. The 2016 Renewable Fuel Standard
On December 14, 2015, we
promulgated a rulemaking establishing
the volume requirements and
percentage standards for 2014, 2015,
and 2016.116 In establishing those
standards for 2016, we utilized the
cellulosic waiver authority under CAA
section 211(o)(7)(D) to lower the
cellulosic biofuel, advanced biofuel, and
total renewable fuel volume
requirements, and the general waiver
authority under CAA section
211(o)(7)(A) to lower total renewable
fuel by an additional increment.117
As an initial step, under CAA section
211(o)(7)(D), we lowered the cellulosic
biofuel volume requirement by 4.02
billion gallons, to the projected
production of cellulosic biofuel for
2016, as required by the statute.118
Using that same authority, we then
elected to reduce the advanced biofuel
and total renewable fuel volumes. We
did not reduce the advanced biofuel
volume requirement by the full 4.02
billion gallons that was permitted under
this authority, but rather by a lesser 3.64
billion gallons that resulted in an
advanced biofuel volume requirement
that was ‘‘reasonably attainable.’’ 119
This allowed some advanced biofuel to
‘‘backfill’’ for the shortfall in cellulosic
biofuel. We then reduced the total
renewable fuel volume by an amount
equivalent to the reduction in advanced
biofuel in accordance with our
longstanding interpretation that when
making reductions to advanced biofuel
and total renewable fuel under CAA
section 211(o)(7)(D), the best reading of
the statute is to reduce them both by the
same amount.120
As a second step, under CAA section
211(o)(7)(A), under a finding of
inadequate domestic supply, we further
lowered the total renewable fuel
standard by 500 million gallons for
116 80 FR 77420. The rule also established BBD
volumes for 2017.
117 80 FR 77439.
118 See 80 FR 77499.
119 80 FR 77427.
120 Id.
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2016.121 In assessing ‘‘inadequate
domestic supply,’’ we considered the
availability of renewable fuel to
consumers. Based on such demand-side
considerations, we made the additional
500 million gallon reduction in the total
renewable fuel requirement.
The 2016 total renewable fuel
standard was challenged in court. In an
opinion issued on July 28, 2017, the
D.C. Circuit vacated our use of the
general waiver authority under a finding
of inadequate domestic supply to reduce
the 2016 total renewable fuel standard,
the second step of setting the 2016 total
renewable fuel standard.122 The court in
ACE held that we had improperly
focused on supply of renewable fuel to
consumers, and that the statute instead
requires a ‘‘supply-side’’ assessment of
the volumes of renewable fuel that can
be supplied to refiners, blenders, and
importers.123 Other components of our
interpretation of ‘‘inadequate domestic
supply’’ were either upheld by the court
in ACE (e.g., EPA need not consider
carryover RINs as a ‘‘supply source of
renewable fuel for purposes of
determining the supply of renewable
fuel in a given year’’) or were not
challenged (e.g., our consideration of
biofuel imports as part of the domestic
supply). Our use of the cellulosic waiver
authority to provide the initial
reduction in total renewable fuel was
also upheld by the court. In establishing
volume requirements for subsequent
years, EPA has applied the court’s
holding and not proposed to reduce
volumes under a finding of inadequate
domestic supply.124
2. Agency Responsibility
The court in ACE upheld our volume
requirements for advanced biofuel, BBD,
and cellulosic biofuel; there is,
therefore, no need for the agency to
adjust those 2016 final volume
requirements, or to take further action
with regard to these standards in light
of the court’s decision. The court also
upheld EPA’s use of the cellulosic
waiver authority to reduce the 2016
121 80
FR 77444.
864 F.3d 691.
123 Id. at 696.
124 We note that the precedential effect of the ACE
decision has governed subsequent RFS annual
rules. Compare, e.g., 82 FR 34229 & n.82 (July 21,
2017) (2018 annual rule proposal, issued prior to
ACE) (soliciting comment on whether it would be
appropriate to exercise the inadequate domestic
supply waiver authority based on the maximum
reasonably achievable volume’’ of renewable fuel,
which incorporates demand-side considerations),
with 82 FR 46177 (Oct. 4, 2017) (2018 annual rule
availability of supplemental information and
request for comment, issued after ACE)
(recognizing, under ACE, that EPA may not
consider demand-side constraints in determining
inadequate domestic supply).
122 ACE,
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total renewable fuel volume
requirement. The court only vacated our
decision to further reduce that
requirement under the ‘‘inadequate
domestic supply’’ waiver authority,
remanding this issue to the Agency for
further consideration consistent with
the court’s opinion.125 Our obligation is
thus to reevaluate the 2016 total
renewable fuel volume requirement in
accordance with the court’s decision.
B. Consideration of Approaches for
Responding to the ACE Remand
As discussed in the previous section,
we waived 500 million gallons of total
renewable fuel volume associated with
the 2016 volume requirements. In 2017,
after the compliance year had passed,
and after obligated parties had complied
with those requirements, we received
the ACE court’s decision rejecting our
use of the general waiver authority
under a finding of inadequate domestic
supply to reduce volumes as being
beyond our statutory authority, and
remanded the rulemaking action back to
EPA. In this action, we propose to
address the court’s remand through a
supplemental standard of 250 million
gallons of total renewable fuel in 2022,
with the intent of proposing an
additional supplemental volume of 250
million gallons of renewable fuel to be
required in 2023 in a subsequent action.
As the court invalidated only the 500
million gallon total renewable fuel
reduction, we therefore would limit our
response to the remand to only the 2016
total renewable fuel standard and the
corresponding 500 million gallon
reduction stemming from our use of the
general waiver authority. As the total
renewable fuel volume is the outermost
standard in the nested renewable fuel
standards, this approach would not
affect the other standards.
1. Proposed Response to the ACE
Remand
We are proposing to address the ACE
decision by applying a supplemental
standard of 250 million gallons in 2022
with the intention of proposing an
additional 250-million-gallon
supplemental standard in a subsequent
action for 2023. Under this approach,
the original 2016 standard for total
renewable fuel would remain
unchanged and the compliance
demonstrations that obligated parties
made for it would likewise remain in
place. A supplemental standard would
thus avoid the difficulties associated
with reopening 2016 compliance, as
discussed below. This proposed
supplemental standard would have the
125 Id.
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same practical effect as increasing the
2022 total renewable fuel volume
requirement by 250 million gallons, as
compliance would be demonstrated
using the same RINs as used for the
2022 standard. The percentage standard
for the supplemental standard would be
calculated the same way as the 2022
percentage standards (i.e., using the
same gasoline and diesel projections),
such that the supplemental standard
would be additive to the 2022 total
renewable fuel percentage standard. The
proposed approach would provide a
meaningful remedy in response to the
court’s vacatur and remand in ACE and
would effectuate the Congressionally
determined renewable fuel volume for
2016, modified only by the proper
exercise of EPA’s waiver authorities, as
upheld by the court in ACE. It is with
emphasis on these considerations that
we are proposing a different approach
from the one proposed in the 2020
proposal.126
We propose to treat such a
supplemental standard as a supplement
to the 2022 standards, rather than as a
supplement to standards for 2016,
which has passed. In order to comply
with any supplemental standard,
obligated parties would need to retire
available RINs; it is thus logical to
require the retirement of available RINs
in the marketplace at the time of
compliance with this supplemental
standard. As discussed below, there are
insufficient 2015 and 2016 RINs
currently available to meet a
supplemental 2016 standard, and
additional 2015 or 2016 RINs cannot be
generated. By applying the
supplemental standard to 2022 instead
of 2016, RINs generated in 2021 and
2022 could be used to comply with the
2022 supplemental standard.
In applying the supplemental
standard to 2022, we would treat the
supplemental standards like a 2022
standard in all respects. That is,
producers and importers of gasoline and
diesel that are subject to the 2022
standards would also be subject to the
supplemental standard. The applicable
deadlines for attest engagements and
compliance demonstrations that apply
to the 2022 standards would also apply
to the supplemental standard. The
gasoline and diesel volumes used by
obligated parties to calculate their
obligation would be their 2022 gasoline
and diesel production or importation.
Additionally, obligated parties could
use 2021 RINs for up to 20 percent of
their 2022 supplemental standard.
126 See FCC v. Fox, 556 U.S. 502 (2009),
acknowledging an agency’s ability to change policy
direction.
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As described more fully in Section III,
the proposed volume requirements for
2022 are forward leaning, requiring a
growth in renewable fuel volumes that
we believe is achievable. We also
believe that compliance with the 2022
supplemental standard in addition to
the proposed standards for 2022 is
feasible. If it cannot be fully met
through the supply of additional
renewable fuel volumes in 2022, it
could be met through a drawdown of
the carryover RIN bank.127 After
compliance with the 2019 standards, the
carryover RIN bank is expected to
consist of approximately 1.85 billion
total carryover RINs for compliance in
2022 as discussed in Section IV.A.128
We acknowledge that the size of the
carryover RIN bank may change by the
time this action is finalized. However,
given the projected size of the carryover
RIN bank, we think it is very likely that
more than 250 million total carryover
RINs will be available in 2022 for
compliance with the supplemental
standard, enabling the market to meet
the supplemental standard entirely with
carryover RINs, if necessary.
We believe that the potential
drawdown of the carryover RIN bank by
250 million RINs is appropriate. As we
stated in the 2020 final rule, ‘‘[t]he
current bank of carryover RINs provides
an important and necessary
programmatic and cost spike buffer that
will both facilitate individual
compliance and provide for smooth
overall functioning of the program.’’ 129
As discussed in Section IV.A, we
continue to believe that a significant
carryover RIN bank is fundamental to
the functionality and success of the RFS
program. Therefore, we are reluctant to
take potentially counterproductive
actions which would force any
significant drawdown of its volume.
However, we believe that the important
programmatic benefits of the carryover
RIN bank would be preserved even if
the market were to satisfy the
supplemental standard purely by
drawing down the carryover RIN bank.
It is important to note that we would
only be reducing the carryover RIN bank
by up to 250 million RINs per year due
to the phased-in nature of our response.
By phasing in the 500 million gallons
of total renewable fuel associated with
the ACE remand through the
implementation of two supplemental
127 See Section IV.A for a discussion of carryover
RINs.
128 The calculations performed to estimate the
number of carryover RINs currently available can be
found in the memorandum, ‘‘Carryover RIN Bank
Calculations for 2020–2022 Proposed Rule,’’
available in the docket for this action.
129 85 FR 7020–22 (February 6, 2020).
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standards over two compliance years we
believe we can maintain the
functionality of the carryover RIN bank
and lessen both the disruption to the
market and the burden on obligated
parties. Imposing two 250 million gallon
standards in two compliance years, as
opposed to one 500 million gallon
supplemental standard in a single
compliance year, provides additional
notice for both obligated parties and the
renewable fuel industry about the
additional volume requirements and
lessens the additional requirements for
each compliance year. This could
increase the likelihood that the volumes
are met with additional renewable fuel
use and, in turn, lessen the likelihood
that the carryover RIN bank be drawn
down.
In summary, we are proposing to
implement a 250 million gallon
supplemental volume requirement in
2022 and intend to propose an
additional 250 million gallon
supplemental volume requirement in
2023, totaling 500 million gallons, that
represent the reduction in the 2016 total
renewable fuel volume improperly
waived under the general waiver
authority. This approach would address
our obligation to respond to the ACE
remand while accounting for the unique
timing of imposing a 2016 requirement
in 2022. Importantly, because there are
insufficient 2015 and 2016 RINs to
satisfy a supplemental standard, this
approach would allow obligated parties
to comply with the 2022 supplemental
standard using 2021 and 2022 RINs. We
seek comment on this approach of
applying a supplemental standard for
2022 associated with the ACE remand
on top of the proposed standards for
2022.
2. Reopening 2016 Compliance
In the alternative, we considered an
approach where EPA could have
obligated parties comply with a
modified 2016 total renewable fuel
standard that requires an additional 500
million gallons of renewable fuel
relative to the 2016 standard
promulgated in 2015. However, we have
determined that such an approach
would be impractical if not infeasible to
implement. Under our current
regulations, only 2015 and 2016 RINs
can be used to demonstrate compliance
with the 2016 standard.130 There are far
fewer 2015 and 2016 RINs available
today (i.e., RINs that are valid but have
not already been retired to comply with
the 2015, 2016, or 2017 standards) than
would be needed to comply with a
supplemental standard commensurate
130 40
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with our exercise of the general waiver
authority for 2016 (i.e., 500 million
gallons).131 Additionally, the few 2015
and 2016 RINs available are unevenly
held among obligated parties; because of
the small number of RINs, any parties
that held excess 2015 and 2016 RINs
could attempt to sell them at a high
price, creating dysfunction within the
RIN market. These high prices would
create a burden on obligated parties
without providing any incentive for
additional renewable fuel use in 2016
since that year has already passed.
Because this approach would result in
some parties being in noncompliance,
we do not consider this a viable option
to respond to the court’s remand.
As we have stated in the past, we
believe the burdens associated with
altering the 2016 standard are high.132
To illustrate the burdens associated
with such an approach, we considered
the steps that would be required to
implement a revised 2016 standard.
First, we would need to rescind the
2016 standard and promulgate a new
2016 standard. Next, we would need to
return all of the RINs used for
compliance to the original owners. Once
those RINs were unretired (a process
that could take several months), trading
of those RINs could resume for a
designated amount of time before
retirements would again be required to
demonstrate compliance. Obligated
parties could then attempt to comply
with a new, higher standard that
includes an adjustment to the required
total renewable fuel volume to address
the ACE decision. However, simply
unretiring 2016 RINs would not result
in sufficient RINs for compliance with
the higher standard. Furthermore,
because the suite of obligated parties is
no longer the same as it was in 2016,
with some companies no longer in
business, the distribution of unretired
RINs could be perceived as unfair as
well as uneven, highlighting the
complexity of attempting to go back in
time.
To remedy the insufficient 2016 RINs
used for compliance with the 2016
standard, we also considered an
approach where 2016 RINs used for
compliance with the 2017 standards
could be unretired and used for
compliance with the increased 2016
standard, but this would essentially also
131 RINs have a 2-year lifespan. Based on EMTS
data, 29 million 2016 RINs are still being held in
obligated party accounts. Although these RINs still
show up in the database as ‘‘available,’’ it is likely
that many of these RINs are not actually valid. This
simply means that these RINs have not been retired
by obligated parties as the compliance year has
passed and they are expired.
132 84 FR 36762, 36788 (July 29, 2019).
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reopen 2017 compliance, with
cascading impacts on each subsequent
year’s compliance. Reopening
compliance would impose a significant
burden on both obligated parties and
EPA as described above. Moreover,
stakeholders have expressed strong
desires for consistent compliance
requirements on an annual basis.
Having compliance demonstrations for
the prior year complete before requiring
compliance with the subsequent year is
considered essential to allow obligated
parties to properly account for the
vintage of the various RINs in their
holdings as they develop their
compliance strategies and avoid having
RINs expire. Therefore, we do not find
that it would be appropriate or
reasonable to reopen compliance with
the 2016 total renewable fuel standard.
Aside from the paucity of available
2015 and 2016 RINs, applying a
supplemental standard to the 2016
compliance year would require us to
consider whether the obligated gasoline
and diesel volumes used in the
calculation of the percentage standards
would be derived from the projected
volumes used in the rulemaking that
established the 2016 standards, or
instead the actual obligated gasoline and
diesel volumes in 2016. Of these two
choices, using the actual obligated
gasoline and diesel volumes would
more accurately result in the full
volume of the adjustment being realized
through the retirement of RINs.133
However, using the actual obligated
gasoline and diesel volumes for the
supplemental standard would make it
inconsistent with the other 2016
standards, and call into question
whether the other percentage standards
should also be revised to account for
actual obligated 2016 gasoline and
diesel volumes and compliance revised
for all obligated parties. We do not
believe that it would be appropriate to
revise the other 2016 percentage
standards when only the total renewable
fuel standard is at issue under the ACE
remand. Applying the supplemental
standard to 2022 and 2023 would avoid
this issue.
C. Demonstrating Compliance With the
2022 Supplemental Standard
We intend to prescribe formats and
procedures as specified in 40 CFR
80.1451(j) for how obligated parties
would demonstrate compliance with the
133 The projected 2016 non-renewable gasoline
volume and diesel volume used in the rulemaking
that set the 2016 standards was 179.33 billion
gallons. According to EIA’s May 2021 STEO, the
actual non-renewable gasoline and diesel
consumption volume in 2016 was 179.16 billion
gallons.
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2022 supplemental standard that
simplifies the process in this unique
circumstance.134 Although the proposed
2022 supplemental standard would be a
regulatory requirement separate from
and in addition to the 2022 total
renewable fuel standard, we intend that
obligated parties would submit a single
annual compliance report for both the
2022 annual standards and the
supplemental standard. Under this
intended approach, obligated parties
would only report a single number for
their total renewable fuel obligation in
the 2022 annual compliance report.135
Obligated parties would also only need
to submit a single annual attest
engagement report for the 2022
compliance period that covers both the
2022 annual standards and 2022
supplemental standard.136 If we set a
2023 supplemental standard as
intended, we would intend to use the
same approach for annual compliance
demonstrations for both the 2022 and
2023 compliance periods.
To assist obligated parties with this
unique compliance situation, we intend
to issue guidance with instructions on
how to calculate and report the values
to be submitted in the 2022 compliance
reports.
D. Authority and Consideration of the
Benefits and Burdens
In establishing the 2016 total
renewable fuel standard, EPA waived
the required volume of total renewable
fuel by 500 million gallons using the
inadequate domestic supply general
waiver authority. The use of that waiver
authority was vacated by the court in
ACE and the rule was remanded to the
EPA. In order to remedy our improper
use of the inadequate domestic supply
general waiver authority, we find that it
is appropriate to treat our authority to
134 We note that we are not proposing to change
the reporting regulations at 40 CFR 80.1451(a) as we
do not believe that regulatory changes are needed
to accommodate annual compliance demonstration
for the proposed 2022 supplemental standard. Any
comments suggesting changes to such reporting
regulations will be considered outside the scope of
this rulemaking.
135 Obligated parties demonstrate annual
compliance by following the reporting instructions
entitled, ‘‘Instructions for RFS0304: RFS Annual
Compliance Report’’ (RFS0304 report). A copy of
these reporting instructions is available in the
docket of this action. Under our intended approach,
obligated parties would combine the 2022 total
renewable fuel standard with the 2022
supplemental standard in ‘‘Field 18’’ of the
RFS0304 report. This combined value would then
be multiplied by the obligated gasoline and diesel
fuel volume reported as specified in reporting
instructions for ‘‘Field 20’’ of the RFS0304 report.
136 The deadline for the attest engagement reports
for the 2022 compliance period is June 1, 2023, and
we are not proposing to modify that deadline in this
action.
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propose a supplemental volume
requirement at this time as the same
authority used to establish the 2016
total renewable fuel volume
requirement—CAA section
211(o)(3)(B)(i), which requires EPA to
establish percentage standard
requirements by November 30 of the
year prior to which the standards will
apply and to ‘‘ensure’’ that the volume
requirements ‘‘are met.’’ EPA exercised
this authority for the 2016 standards
once already. However, the effect of the
ACE vacatur is that there remain 500
million gallons of total renewable fuel
from the 2016 statutory volumes that
were not included under the original
exercise of EPA’s authority under CAA
section 211(o)(3)(B)(i). Therefore, EPA
has retained authority for the remaining
500 million gallons. EPA also has
authority under CAA section
211(o)(2)(A)(i). The D.C. Circuit in
NPRA noted Congress granted EPA
authority to ‘‘ ‘ensure’ that ‘at least’ the
set volumes were used each year.’’ 137
We have sought to mitigate the
burdens of a late or retroactive standard
in part by proposing a supplemental
standard that applies for the 2022
compliance year. Although we
established a total renewable fuel
standard in 2016, we did so while
erroneously waiving 500 million gallons
of total renewable fuel through the use
of our general waiver authority. In this
action, we are proposing to begin to
remedy that error by requiring an
additional 250 million gallon total
renewable fuel volume requirement in
the 2022 compliance year.138
As noted in Section II.C, in ACE and
two prior cases, the court upheld EPA’s
authority to issue late renewable fuel
standards, even those applied
retroactively, so long as EPA’s approach
is reasonable.139 EPA must consider and
mitigate the burdens on obligated
parties associated with a delayed
rulemaking.140 When imposing a late or
retroactive standard, we must balance
the burden on obligated parties of a
retroactive standard with the broader
goal of the RFS program to increase
renewable fuel use.141 The approach we
are proposing in this action would
implement a late standard as described
in these cases. Obligated parties made
their RIN acquisition decisions in 2016
based on the standards as established in
137 NPRA,
630 F.3d at 157.
noted earlier, we intend to propose an
additional supplemental volume of 250 million
gallon for 2023 in a subsequent action.
139 See ACE, 864 F.3d at 718; Monroe Energy, LLC
v. EPA, 750 F.3d at 920; NPRA, 630 F.3d at 154–
58.
140 ACE, 864 F.3d at 718.
141 NPRA, 630 F.3d at 154–58.
138 As
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2016 and they may have made different
decisions had we not reduced the 2016
total renewable fuel standard by 500
million gallons using the general waiver
authority. Were EPA to create a
supplemental standard for 2016
designed to address the use of the
general waiver authority in 2016, we
would be imposing a wholly retroactive
standard on obligated parties, but
because the proposed supplemental
standard will be complied with in the
2022 compliance year, it will instead be
a late standard. Pursuant to the court’s
direction, we have carefully considered
the benefits and burdens of our
approach and considered and mitigated
the burdens to obligated parties caused
by the lateness.
We acknowledge that in the 2020
proposal, we stated that a supplemental
standard would ‘‘impose a significant
burden on obligated parties’’ that would
‘‘be unduly burdensome and
inappropriate’’ and lack ‘‘any
corresponding benefit as any additional
standard cannot result in additional
renewable fuel use in 2016.’’ 142 We seek
comment on whether the approach
described in this document mitigates
the associated burdens or even entirely
avoids most of the burdens we
described in the 2020 proposal (such as
those associated with allowing only
2015 and 2016 RINs to be used for
compliance). We seek comment on
whether the current size of the carryover
RIN bank is sufficient to mitigate the
burden on obligated parties from a
supplemental standard as well as
whether the proposal to spread the 500
million gallon volume over two
compliance years also mitigates the
burdens on the carryover RIN bank. In
short, we seek comment on whether this
approach would reasonably balance the
benefits and burdens and whether it
would provide appropriate and
meaningful relief in response to the ACE
remand.
We believe that the approach
proposed in this action, if finalized,
could provide benefits that outweigh
potential burdens. Consistent with the
2016 renewable fuel volume established
by Congress, our proposed and intended
supplemental standards for 2022 and
2023, respectively, are in total
equivalent to the volume of total
renewable fuel that we inappropriately
waived for the 2016 total renewable fuel
standard. The use of these supplemental
standards phased across two
compliance years would provide a
meaningful remedy to the D.C. Circuit’s
vacatur of EPA’s use of the general
142 84
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waiver authority and remand of the
2016 rule in ACE.
We have carefully considered and
designed this approach to mitigate any
burdens on obligated parties. We have
considered the availability of RINs to
satisfy this additional requirement. We
are soliciting comment on the feasibility
of the proposed 250-million-gallon
supplemental standard in 2022. As
explained earlier, there are insufficient
2015 and 2016 RINs available to satisfy
the proposed 250-million-gallon
standard.143 Instead, we are proposing a
supplemental volume requirement to
the 2022 standards that will apply in the
2022 compliance year. Doing so would
allow 2021 and 2022 RINs to be used for
compliance with the 2022 supplemental
standard, in keeping with existing RFS
regulations. We believe there would be
a sufficient number of 2021 and 2022
RINs to satisfy the 2022 supplemental
standard. Although it is possible that
the supplemental standard could be met
through additional renewable fuel
production, we generally believe that
requiring volumes for the 2022 annual
standards beyond those we are
proposing in this action results in
increasing difficulty in the standards
being met through additional renewable
fuel production. We believe that
potential drawdown of the carryover
RIN bank as a result of compliance with
the proposed supplemental standard
would be appropriate in light of the
projected size of the carryover RIN bank
in 2022 and the desire to provide a
meaningful remedy to the court’s
remand and the Congressional intent
evidenced by the statutory 2016 total
renewable fuel standard.
Second, we provide significant leadtime for obligated parties by proposing
this standard as supplemental to the
2022 standard: More than one year prior
to the 2022 compliance deadline.
Third, we are proposing multiple
mechanisms to mitigate the potential
compliance burden. One step is to
designate that the response to the ACE
remand will be a supplement to the
2022 standards. This approach would
not only allow the use of 2021 and 2022
RINs for compliance with the 2022
standard, as described earlier, but it
would also avoid the need for obligated
parties to revise their 2016 (and
potentially 2017, 2018, 2019, etc.)
compliance demonstrations, which
would be a burdensome and timeconsuming process. In addition, our
proposal allows obligated parties to
143 As also described above, it is likely that some
amount of the existing carryover RIN bank
represents RINs generated but not used for
compliance in 2016, as the market over complied
with the total renewable fuel standard that year.
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satisfy both the 2022 standards and the
supplement in a single set of
compliance and attest engagement
demonstrations. We are also proposing
to extend the same compliance
flexibility options already available for
the 2022 standards to the 2022
supplemental standard, including
allowing the use of carryover RINs and
deficit carry forward subject to the
conditions of 40 CFR 80.1427(b)(1). We
also intend to spread out the 500million-gallon obligation over two
compliance years as described above.
This will allow obligated parties and
renewable fuel producers additional
lead time to meet the standard because
the RFS program will phase in the
requirement, thus providing about a
year of lead time for the second 250
million gallon requirement.
Lastly, we have carefully considered
alternatives, including retaining the
2016 total renewable fuel volume as
described in the 2020 proposal. We seek
comment on this alternative, as well as
on any other alternative approaches for
addressing the ACE remand.
On balance, we find that requiring an
additional 500 million gallons of total
renewable fuel to be complied with
through two supplemental standards
spread over two years would be an
appropriate response to the court’s
vacatur and remand of our use of the
general waiver authority to waive the
2016 total renewable fuel standard by
500 million gallons. We seek comment
on this approach.
E. Calculating a Supplemental
Percentage Standard for 2022
The formulas in 40 CFR 80.1405(c) for
calculating the applicable percentage
standards were designed explicitly to
associate a percentage standard for a
particular year with the volume
requirement for that same year. The
formulas are not designed to address the
approach that we are proposing in this
action, namely the use of a 2016 volume
requirement to calculate a 2022
percentage standard. Nonetheless, we
can apply the same general approach to
calculating a supplemental percentage
standard for 2022.
If this proposed approach to the ACE
remand in finalized, the numerator in
the formula in 40 CFR 80.1405(c) would
be the supplemental volume of 250
million gallons of total renewable fuel.
The values in the denominator would
remain the same as those used to
calculate the proposed 2022 percentage
standards in Section VI.C, which can be
found in Table VI.C–1.144 As described
in Section VI.C, the resulting
supplemental renewable fuel standard
percentage standard for a 250 million
gallon volume requirement in 2022
would be 0.14–0.15 percent, depending
on the projection of exempt volume of
gasoline and diesel.
The proposed supplemental standard
for 2022 would be a requirement for
obligated parties separate from and in
addition to the 2022 standard for total
renewable fuel. The two percentage
standards would be listed separately in
the regulations at 40 CFR 80.1405(a), but
in practice obligated parties would
demonstrate compliance with both at
the same time. Thus, the two percentage
standards would effectively be additive
(e.g., 11.76% + 0.14% = 11.90%, using
the low end of the proposed percentage
standards in Section VI.C).
VI. Percentage Standards
EPA implements the nationally
applicable volume requirements by
establishing percent standards that
apply to obligated parties. The obligated
parties are producers and importers of
gasoline and diesel, as defined by 40
CFR 80.1406(a). The standards are
expressed as volume percentages. Each
obligated party multiplies the
percentage standards by sum of all nonrenewable gasoline and diesel they
produce or import to determine their
Renewable Volume Obligations
(RVOs).145 The RVOs are the number of
RINs that the obligated party is
responsible for procuring to
demonstrate compliance with the RFS
rule for that year. Since there are four
separate standards under the RFS
program, there are likewise four
separate RVOs applicable to each
obligated party for each year.
The volumes used to determine the
proposed 2020, 2021, and 2022
percentage standards are described in
Section III and are shown in Table VI–
1.
TABLE VI–1—VOLUMES FOR USE IN DETERMINING THE PROPOSED APPLICABLE PERCENTAGE STANDARDS
(billion RINs)
Standard
2020
Cellulosic Biofuel .........................................................................................................................
Biomass-Based Diesel a ..............................................................................................................
Advanced Biofuel .........................................................................................................................
Total Renewable Fuel ..................................................................................................................
Supplemental Standard ...............................................................................................................
a The
b The
c The
2022
0.51
0.62
b 2.43
c 2.43
4.63
17.13
n/a
5.20
18.52
n/a
0.77
2.76
5.77
20.77
0.25
BBD volumes are in physical gallons (rather than RINs).
BBD volume requirement for 2020 was established in the 2019 standards rulemaking (83 FR 63704, December 11, 2018).
BBD volume requirement for 2021 was established in the 2020 standards rulemaking (85 FR 7016, February 6, 2020).
The formulas used to calculate the
percentage standards applicable to
obligated parties are provided in 40 CFR
80.1405(c). The formulas apply to the
estimates of the volumes of nonrenewable gasoline and diesel fuel, for
both highway and nonroad uses, which
are projected to be used in the year in
which the standards will apply. EIA
provides projected gasoline and diesel
volumes, but these include projections
of ethanol and biomass-based diesel
used in transportation fuel. Since the
percentage standards apply only to the
non-renewable gasoline and diesel, the
volumes of renewable fuel are
subtracted out of the EIA projections of
gasoline and diesel. In addition,
transportation fuels other than gasoline
or diesel, such as natural gas, propane,
and electricity from fossil fuels, are not
144 We intend to update the values in the
denominator, such as the projected gasoline and
diesel volumes, based on updated information
available at the time of the final rule.
A. Calculation of Percentage Standards
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currently subject to the standards, and
volumes of such fuels are not used in
calculating the annual percentage
standards or obligated parties’ RVOs.
As specified in the 2010 RFS2 final
rule,146 the percentage standards are
based on energy-equivalent gallons of
renewable fuel, with the cellulosic
biofuel, advanced biofuel, and total
renewable fuel standards based on
ethanol equivalence and the BBD
145 40
CFR 80.1407.
75 FR 14670 (March 26, 2010).
146 See
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standard based on biodiesel
equivalence. However, all RIN
generation is based on ethanolequivalence. To effectuate this
difference between BBD and the other
three standards, the formula used to
calculate the percent standard for BBD
in 40 CFR 80.1405 includes a factor of
1.5 to convert physical volumes of BBD
into ethanol-equivalent volumes.
However, as discussed more fully in
Section VII.A, based on updated data
regarding BBD use, we are proposing to
change this factor from 1.5 to 1.55.
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B. Small Refineries and Small Refiners
In CAA section 211(o)(9), Congress
exempted small refineries from RFS
compliance temporarily through
December 31, 2010. Congress also
provided that small refineries could
receive an extension of the exemption
beyond 2010 based either on the results
of a required Department of Energy
(DOE) study or in response to individual
small refinery petitions demonstrating
‘‘disproportionate economic hardship.’’
CAA section 211(o)(9)(B)(i).
In the 2020 final rule, EPA revised
certain definitions in the percentage
standards formulae at 40 CFR 80.1405(c)
to account for a projection of the total
exempted volume of gasoline and diesel
produced at small refineries, including
for those exemptions granted after the
final rule. In this proposed action, we
are applying these revised definitions to
calculate the projected exemptions for
2020, 2021, and 2022 and proposing a
range of values. On the low end, we are
proposing that the exempted volume is
zero; on the high end, we are proposing
to project the volume using the same
methodology used in the 2020 final rule
and updating values with more recent
data.
The low end of the range of applicable
percentage standards would be based on
the fact that on January 24, 2020, the
United States Court of Appeals for the
Tenth Circuit ruled in RFA that EPA’s
grant of three individual SREs exceeded
our statutory authority.147 The court
vacated EPA’s actions under multiple
bases. First, under the Tenth Circuit’s
reading of the CAA, a small refinery is
eligible for relief only if it has received
a continuous exemption from the RFS
program since the initial blanket
exemption through 2010.148 The
Supreme Court subsequently reversed
the Tenth Circuit’s decision in part on
this basis.
147 Renewable Fuels Ass’n v. EPA, 948 F.3d 1206
(10th Cir. 2020), rev’d in part sub nom.,
HollyFrontier Cheyenne Refining, LLC, v.
Renewable Fuels Ass’n, 114 S. Ct. 2172 (2021).
148 RFA at 1244–49.
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However, the Tenth Circuit also
vacated EPA’s actions for two other
reasons: EPA may grant relief only when
it finds that the small refinery would
suffer disproportionate economic
hardship due to compliance with the
RFS program, not due to other factors,
and EPA had failed to discuss how
granting the exemptions was consistent
with our findings on RIN cost passthrough.149 Were EPA to follow these
aspects of the RFA decision nationwide,
we would not anticipate granting any
SREs for 2020, 2021, or 2022.
As described in previous actions, our
assessment indicates that small
refineries fully recover the costs of RFS
compliance through higher prices on
sales of gasoline and diesel, and that as
a result they do not suffer economic
hardship due to the RFS.150 EPA has
stated that refineries, including small
refineries, are generally able to recover
the costs of the RIN in the revenues
received for their petroleum products,
and that the cost of the RIN is passed
through to consumers in the
marketplace and does not represent a
net cost to obligated parties.151 While
some small refineries have contested
RIN cost pass-through in their
exemption petitions, we have not
credited such arguments in the past.
Even when we granted relief in past
years, we did so for other reasons.
In addition, because the applicable
standards are expressed as a percentage
of production basis, the cost of RFS
compliance (prior to being recovered in
the marketplace through higher sales
prices on gasoline and diesel) is
proportional to the amount of gasoline
and diesel the obligated party produces.
In other words, the cost of RFS
compliance, per gallon of gasoline and
diesel production, is the same for all
obligated parties. This same cost applies
to all obligated parties and is not
disproportionate.
The high end of the proposed range of
applicable percentage standards is based
on the fact that small refineries
subsequently sought review of RFA from
the U.S. Supreme Court in HollyFrontier
and received a favorable ruling.152 At
this time we do not yet know how the
court’s ruling will affect SRE decisions
currently before EPA or in the future.
The high end of the proposed range
149 RFA
at 1253–54.
Preliminary Assessment of RIN Market
Dynamics, RIN Prices, and Their Effects,’’ Dallas
Burkholder, Office of Transportation and Air
Quality, US EPA. May 14, 2015.
151 ‘‘Denial of Petitions for Rulemaking to Change
the RFS Point of Obligation,’’ EPA–420–R–17–008,
EPA–HQ–OAR–2016–0544–0525, (November 22,
2017).
152 114 S. Ct. 2172 (2021).
150 ‘‘A
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therefore reflects a continuation of the
intent described in the 2020 final rule
to project the volumes of gasoline and
diesel associated with future SREs.153
Specifically, we are proposing to project
the SRE volume for 2020, 2021, and
2022 using the same methodology used
in the 2020 final rule, but updating the
values using more recent data for 2016–
2018 SRE petitions.154
EPA is also soliciting comment on the
revisions we made in the 2020 final rule
to the definitions in the percentage
standards formulae at 40 CFR 80.1405(c)
to account for a projection of the
exempted small refinery volume,
including for exemptions granted after
the final rule. In the 2020 final rule, we
justified the revised formulae based in
part on our then-prospective SRE policy
of following DOE’s recommendations.
As noted above, EPA does not know at
this time how RFA and Holly Frontier
will affect our SRE policy going
forward, so we are co-proposing a range
of exempted small refinery volumes.
Since the revisions to the formulae were
based in part on our SRE policy, we are
also soliciting comment on the
revisions, specifically with regard to our
decision to account for a projection of
exemptions granted after the final rule.
C. Modification of the 2020 BiomassBased Diesel Percentage Standard
As noted above, the percentage
standards implement the nationally
applicable volume requirements. Since
EPA is proposing to revise the
nationally applicable volume
requirements for 2020 in this action
under our reset authorities, we are
proposing to also establish revised
percentage standards corresponding to
those volumes. With regard to the 2020
and 2021 BBD volumes, EPA is not
proposing to revise such volumes,
which were established in the 2019 and
2020 final rules, respectively.155
Nonetheless, EPA is proposing to revise
the percent standards for the 2020
volume. We are also proposing to
establish the volume requirement and
associated percentage standard for 2022
for the nationally applicable volume
requirement for BBD using our set
authority as described in Section III.E.
With regard to 2021 BBD, EPA did not
previously promulgate percentage
153 85
FR 7049 (February 6, 2020).
are not adjudicating any SREs in this
action, and this action does not prejudge any SRE
petition. Rather, this proposal simply reflects our
best estimate at this time of the potential range of
exempt volumes in 2020, 2021, and 2022.
155 83 FR 63704 (December 11, 2018); 85 FR 7016
(February 6, 2020). In this action, we are not
reopening nor seeking comment on the 2020 or
2021 BBD volume requirements.
154 We
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standards, and thus we do so now for
the first time.156 With regard to 2020
BBD, EPA previously promulgated
percentage standards in the 2020 final
rule.157 In this action, EPA is proposing
to modify the 2020 BBD percentage
standard, even though we are not
modifying the 2020 BBD volume
requirement that we previously
established. Specifically, we are
proposing to use the same volume
requirement previously promulgated
(2.43 billion gallons) but to update the
other inputs for calculating the standard
(such as the projections of gasoline and
diesel consumption and exempted small
refinery volumes in 2020), which we
term ‘‘inputs’’ in the remainder of this
section. We are also proposing to apply
the new BBD multiplier of 1.55, which
we discuss further in Section VIII.A.
We are proposing to update the inputs
because it is logical for all of the 2020
percentage standards to be calculated
using the same inputs. This is consistent
with EPA’s policy since the beginning of
the RFS program, where we have
generally calculated all the percentage
standards for a given year based on the
same inputs. Here, because we are
updating the inputs for the other 2020
percentage standards, we also propose
to modify the inputs for the 2020 BBD
percentage standard. This approach is
supported by the nested nature of the
standards, where BBD is a subset of the
advanced biofuel and total renewable
fuel standards, and compliance with all
three is accomplished in part by using
the same RIN credits. We think it would
not be appropriate to use updated
inputs for the other standards, while
simultaneously using what is now
outdated data for the BBD standard
alone.
Additionally, the inputs we are
proposing to use in this action are quite
different from the inputs used in the
2020 final rule. As discussed in Section
II.D. and III.B., the projections for
gasoline and diesel consumption in
2020 final rule, which were used to
establish the BBD standard, are
significantly different than the actual
gasoline and diesel consumed in 2020.
Relative to the 2020 final rule, we are
also co-proposing different projections
of SREs, as discussed in the prior
section.
Finally, we note that our proposed
modification to the 2020 BBD
percentage standard is not anticipated to
have any significant real-world impacts.
As set forth in the next section, the
proposed modification results in an
increase in the BBD percentage
standard, which will increase the
number of RINs required for compliance
with this standard. However, even were
we to retain the original, lower
standard, we would nonetheless expect
the same number of BBD RINs to be
used for 2020 compliance given that
BBD is nested within the advanced
biofuel category and we are proposing to
set the advanced biofuel percentage
standard based on actual use of
renewable fuels.
D. Proposed Standards
The formulas in 40 CFR 80.1405 for
the calculation of the percentage
standards require the specification of a
total of 14 variables comprising the
renewable fuel volume requirements,
projected gasoline and diesel demand
for all states and territories where the
RFS program applies, renewable fuels
projected by EIA to be included in the
gasoline and diesel demand, and
projected gasoline and diesel volumes
from exempt small refineries. The
values of all the variables used for this
proposed rule are shown in Table VI.C–
1 for the applicable 2020, 2021, and
2022 standards.158
TABLE VI.C–1—VOLUMES FOR TERMS IN CALCULATION OF THE PROPOSED PERCENTAGE STANDARDS
[Billion RINs]
Term
Description
RFVCB ............
RFVBBD ..........
RFVAB ............
RFVRF ............
G ....................
D ....................
RG .................
RD .................
GS .................
RGS ...............
Required volume of cellulosic biofuel ..................................
Required volume of biomass-based diesel a .......................
Required volume of advanced biofuel .................................
Required volume of renewable fuel .....................................
Projected volume of gasoline ..............................................
Projected volume of diesel ..................................................
Projected volume of renewables in gasoline .......................
Projected volume of renewables in diesel ...........................
Projected volume of gasoline for opt-in areas ....................
Projected volume of renewables in gasoline for opt-in
areas.
Projected volume of diesel for opt-in areas ........................
Projected volume of renewables in diesel for opt-in areas
Projected volume of gasoline for exempt small refineries
(low).
Projected volume of gasoline for exempt small refineries
(high).
Projected volume of diesel for exempt small refineries
(low).
Projected volume of diesel for exempt small refineries
(high).
DS ..................
RDS ...............
GE .................
DE ..................
2020
2021
2022
supplemental
2022
0.51
2.43
4.63
17.13
123.25
50.49
12.63
2.15
0
0
0.62
2.43
5.20
18.52
133.06
54.52
13.64
2.23
0
0
0.77
2.76
5.77
20.77
136.49
56.81
13.98
2.66
0
0
0
0
0
0.25
136.49
56.81
13.98
2.66
0
0
0
0
0.00
0
0
0.00
0
0
0.00
0
0
0.00
4.80
4.80
4.80
4.80
0.00
0.00
0.00
0.00
3.39
3.39
3.39
3.39
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a The BBD volume used in the formula represents physical gallons. The formula contains a proposed 1.55 multiplier to convert this physical
volume to ethanol-equivalent volume.
156 This action is consistent with past annual
rules, which have generally promulgated the BBD
percentage standard for the BBD volume set in the
prior year’s annual rule. This is due to the unique
statutory timing applicable to BBD, where EPA
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must set the volume 14 months in advance but
promulgate percentage standards by November 30
of the immediately preceding year. See CAA section
211(o)(2)(B)(ii), (o)(3)(B)(i).
157 85 FR 7049 (February 6, 2020).
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158 See the technical memoranda, ‘‘Calculation of
proposed % standards for 2020,’’ ‘‘Calculation of
proposed % standards for 2021,’’ and ‘‘Calculation
of proposed % standards for 2022,’’ available in the
docket for this action.
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a letter to EPA that is required under the
statute, while the projections for 2020
and 2021 will be derived from the latest
version of the STEO, which we
anticipate being the October 2021
STEO.159
Projected volumes of gasoline and
diesel, and the renewable fuels
contained within them, were derived
from EIA’s May 2021 STEO. For the
final rule, the 2022 gasoline and diesel
projections will be provided by EIA in
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Using the volumes shown in Table
VI.C–1, we have calculated the
proposed percentage standards for 2020,
2021, and 2022 as shown in Table VI.C–
2.
TABLE VI.C–2—PROPOSED PERCENTAGE STANDARDS
2020
2021
2022
Standard
Original
Cellulosic Biofuel ..........
Biomass-Based Diesel
Advanced Biofuel .........
Renewable Fuel ...........
Supplemental Standard
Revised low
0.34%
2.10
2.93
11.56
n/a
0.32%
2.37
2.91
10.78
n/a
The proposed regulations at 40 CFR
80.1405 can only contain one set of
percentage standards. Given this
constraint, the proposed regulations
contain only the percentage standards
representing the low end of the range
shown in the table above. However, we
do not intend this approach to indicate
a preference for the low end of the range
of proposed percentage standards.
VII. Biointermediates
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A. Background
The RFS regulations were designed
with the general expectation that
renewable biomass would be converted
into renewable fuel at a single facility
(e.g., a renewable fuel producer
purchases corn directly from several
farmers in a region, crushes the corn in
a mill, and then ferments the corn into
ethanol, all at the same facility). The
regulations therefore impose
requirements on renewable fuel
producers to provide EPA with
information necessary to verify that
their fuel was made with qualifying
renewable biomass, through production
processes corresponding with approved
pathways, and in volumes
corresponding to feedstocks used. Such
information submissions are necessary
for oversight and enforcement, leading
to increased integrity and confidence in
the program.
Since the RFS2 regulatory program
was promulgated in 2010, however, EPA
has received a number of inquiries from
companies regarding the possible use of
renewable biomass that has been
substantially pre-processed at one
facility to produce a proto-renewable
159 To determine the 49-state values for gasoline
and diesel, the amount of these fuels used in Alaska
is subtracted from the totals provided by EIA
because petroleum-based fuels used in Alaska do
not incur RFS obligations. The Alaska fractions are
determined from the June 26, 2020 EIA State Energy
Data System (SEDS), Energy Consumption
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Revised high
0.34%
2.50
3.07
11.36
n/a
Low
High
0.36%
2.19
3.03
10.79
n/a
Low
0.38%
2.30
3.18
11.33
n/a
0.44%
2.42
3.27
11.76
0.14
High
0.46%
2.54
3.42
12.33
0.15
fuel (referred to as a biointermediate)
that is subsequently used at a different
facility to produce renewable fuel for
which RINs would be generated. For
example, a number of companies have
approached us with the proposed use of
woody biomass or separated MSW to
produce a biocrude (a pre-processed
feedstock that could then be processed
into renewable fuel at a crude oil
refinery). In response to these requests,
EPA has stated that the existing RFS
regulations are insufficient to generally
allow RINs to be generated in situations
wherein multiple facilities are involved
in the conversion of renewable biomass
feedstocks into renewable fuel.
On November 16, 2016, EPA issued
the proposed Renewables Enhancement
and Growth Support (REGS) rule that
outlined proposed provisions to allow
the use of biointermediates to produce
qualifying renewable fuels under the
RFS program.160 The proposed REGS
rule outlined a comprehensive set of
compliance provisions, enforcement
provisions, and oversight mechanisms
for biointermediates that would have
allowed biointermediates into the RFS
program while maintaining effective
oversight of the production, transfer,
and use of biointermediates to make
renewable fuels. A public hearing was
held in Chicago, IL, on December 16,
2016, and the public comment period
ended on January 17, 2017.
Since the proposed REGS rule was
issued, EPA has continued to review
public comments and other information
and to carefully consider how best to
develop and implement a program that
would allow for the production,
transfer, and use of biointermediates to
produce renewable fuel under RFS. We
continue to believe that the use of
biointermediates to produce renewable
fuels would be a reasonable and positive
development for the future growth in
production particularly of cellulosic and
advanced biofuels. However, we also
continue to believe that the existing
regulations are insufficient to allow the
use of biointermediates because we are
unable to verify the validity of RINs
generated in situations where feedstocks
are allowed to be processed at multiple
facilities, and where partially processed
feedstocks, which may appear very
similar to renewable fuels themselves,
are transferred between parties. The
value of these RINs provides
considerable incentive for fraudulent
activity, and therefore it is important for
the integrity of the program that
mechanisms be in place to verify their
validity.161
After careful consideration of public
comments received in response to the
proposed biointermediates provisions in
the proposed REGS rule and further
thought on how best to design and
implement a potential biointermediates
program, we are proposing
biointermediates provisions anew. This
proposal re-proposes many aspects of
the biointermediate provisions in the
proposed REGS rule but also updates
several key aspects of that proposal
reflecting what we have learned since
the original proposal. We discuss what
biointermediate provisions we are reproposing without significant changes
from the proposed REGS rule in Section
VII.B and the updated revisions in
Section VII.C. We also specifically seek
comment on a number of issues related
Estimates. In addition, fuel used in ocean-going
vessels is also subtracted from the total because it
is excluded from the definition of transportation
fuel by the statute. This volume is provided directly
by EIA.
160 See 81 FR 80828 (November 16, 2016).
161 We note that there has been a long history of
RIN fraud in the RFS program. We detail several of
the major RIN fraud civil enforcement cases on our
website, available at https://www.epa.gov/
enforcement/civil-enforcement-renewable-fuelstandard-program.
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to including biointermediates in the
RFS program in Section VII.D.
We are reproposing (i.e., proposing
anew) the biointermediates provisions
here for two main reasons. First, since
the publication of the proposed REGS
rule, we have reviewed comments
received on that proposed rulemaking
and have engaged in numerous
discussions with parties interested in
bringing biointermediates into the RFS
program. After almost five years of
further consideration, we have
identified several areas that we would
like to modify or enhance. These
changes impact what biointermediates
would be allowed under the program
and what parties that produce, transfer,
and use biointermediates would need to
do to demonstrate compliance.
Second, we believe it would be useful
to provide an additional opportunity for
stakeholders interested in
biointermediates to comment on the
proposed biointermediates provisions
more generally. Due to the amount of
time that has passed since we proposed
the REGS rule, the nature and number
of the parties interested in bringing
biointermediates into the program has
changed. We believe that by providing
an additional opportunity for public
comment on all aspects of the proposed
biointermediates provisions, we would
receive additional comments with
reasonable suggestions to modify and
enhance the proposed biointermediates
provision in addition to those we
received during the proposed REGS rule
comment period. Furthermore, we
believe there are specific provisions that
we proposed in the REGS rule that
would benefit from additional public
comment (these are discussed in Section
VII.D).
For these reasons, we are proposing
all the biointermediates provisions
anew and broadly seek comment on
these reproposed biointermediate
provisions. Commenters that submitted
comments on the proposed
biointermediates provisions in the REGS
rule must resubmit any relevant
comments in order for those comments
to be considered. As this is a new
proposal, we do not intend to respond
to comments that were submitted only
on the previously proposed
biointermediates provisions in the REGS
rule. Such comments are outside the
scope of this action.
We also seek comment from potential
producers of biointermediates on the
current status of operations, potential
production volumes, timelines for
production, and any other information
that may help inform EPA as to the
expected use of biointermediates to
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produce renewable fuel both during
2022 and out into the future.
B. Re-Proposal of Biointermediates
Provisions Previously Proposed in REGS
In this action, we are reproposing
certain biointermediate provisions that
we previously proposed in the REGS
rule. Many of the program design
elements for proposed biointermediate
provisions remain unchanged from the
REGS proposal and are being
reproposed here with no modifications
other than ministerial changes. The
provisions we are reproposing without
substantive changes are the following:
• The calculation of lifecycle GHG
emissions where biointermediates are
used to make renewable fuels and the
treatment of pathways for RIN
generation where biointermediates are
converted into renewable fuels;
• Limiting the production of
biointermediates to a single facility;
• The potential liability of
biointermediate and renewable fuel
producers for violations of the proposed
biointermediate provisions;
• Registration, reporting, and
recordkeeping requirements for
biointermediate producers as well as
additional registration, reporting, and
recordkeeping requirements for
renewable fuel producers that use
biointermediates;
• Annual attest engagements for
biointermediate producers;
• RFS quality assurance program
(QAP) provisions for biointermediate
producers and renewable fuel producers
that use biointermediates; and
• The treatment of biointermediates
produced at foreign facilities.
This preamble incorporates the
discussions of each of these elements
that are contained in the referenced
memo to the docket.162 We note that
because the RFS regulations have
undergone several revisions since these
elements were previously proposed, we
have updated the proposed regulatory
language to accommodate these
revisions to help ensure consistency
between the proposed biointermediate
provisions and the rest of the RFS
regulations. Additionally, while each of
these individual provisions is
substantively unchanged from the REGS
proposal, how they fit into and function
within the larger biointermediates
program may be different under our
proposed revised program. We discuss
broader, substantive changes to the
162 Each
of these elements are described in greater
detail in the memorandum to the docket, ‘‘Proposed
Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,’’
available in the docket for this action.
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proposed biointermediate provisions in
Section VII.C.
As explained above, we are requesting
comment on these re-proposed
provisions. Comments on these
provisions previously submitted to the
REGS rulemaking docket will not be
considered unless they are resubmitted
to the docket for this action (i.e., EPA–
HQ–OAR–2021–0324).
C. Changes to the Biointermediates
Provisions Previously Proposed in the
REGS Rule
In this action, we are also proposing
some additions and updates to the
biointermediate provisions previously
proposed in the REGS rule. Specifically,
we are proposing changes to the
definition of biointermediate, limits on
biointermediate transfers, and
mandatory participation in the RFS
QAP. We are also proposing changes to
the compliance and enforcement
provisions, including: New product
transfer document requirements for
RINs generated from renewable fuels
produced from biointermediates;
changes to the registration, reporting,
recordkeeping, and attest engagement
requirements; and provisions for the
treatment of invalid RINs generated
from biointermediates. These changes
are discussed in more detail below.
1. Implementation Dates
We are proposing that the
biointermediates provisions will be
implemented starting 60 days after the
publication of the final rule in the
Federal Register. In recognition of the
time that has passed since EPA first
identified the need to revise the
regulations to allow the use of
biointermediates, we now intend to put
a biointermediates program in place as
soon as possible. We believe this
proposed implementation date is
achievable based on the scope of
biointermediates provisions as proposed
here. However, we note that depending
on the complexity of the final
biointermediate provisions, we may
need to finalize a later implementation
date to provide us enough time to put
in place the compliance and oversight
mechanisms necessary to effectively
oversee the program.
We are seeking specific comments on
when biointermediate producers expect
to be able to begin production so we can
consider the potential impacts of a later
implementation date.
2. Definition of Biointermediate
We are proposing a definition of
biointermediate that differs from what
we proposed in the REGS rule.
Previously, we proposed to define a
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biointermediate as any renewable fuel
feedstock material that meets all of the
following criteria:
• It was derived from renewable
biomass.
• It did not meet the definition of
renewable fuel and RINs were not
generated for it.
• It was produced at a facility that is
registered with EPA, but which is
different than the facility at which it is
used to produce renewable fuel.
• It was made from the feedstock and
would be used to produce the renewable
fuel in accordance with the process(es)
listed in the approved pathway.
• It was processed in such a way that
it is substantially altered from the
feedstock listed in the approved
pathway.
We pointed out in the proposed REGS
rule that our intent was that feedstocks
currently listed in an approved pathway
or that underwent form changes would
not be considered biointermediates 163
and excluded form changes from the
definition included in the proposed
REGS rule. Such form changes included,
but were not limited to the following:
• Chopping biomass into small
pieces, pressing it, or grinding it into
powder.
• Filtering out suspended solids from
recycled cooking and trap grease.
• Degumming vegetable oils.
• Drying wet biomass.
• Adding water to biomass to produce
a slurry.
We received several public comments
suggesting that the proposed definition
was too broad and would include
existing feedstocks that are currently
used in approved pathways. These
commenters argued that the additional
registration, reporting, and
recordkeeping requirements would be
unnecessarily burdensome on the
production of renewable fuels that
already can generate RINs under the
current RFS program. Commenters
pointed to EPA’s stated intent in the
proposed REGS rule to avoid inclusion
of almost all feedstocks covered by
existing pathways either in Table 1 to 40
CFR 80.1426 or an EPA-approved
pathway under 40 CFR 80.1416.
Additionally, since the proposed
REGS rule, we have developed a better
understanding of the potential
implementation oversight challenges
surrounding the inclusion of certain
types of biointermediates. We now
believe that the general, one-size-fits-all
regulatory framework proposed in the
REGS rule would not work in many of
the biointermediates situations
anticipated now and in the future and
163 See
81 FR 80834 (November 16, 2016).
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that it would be difficult for us to
implement appropriately. In some cases
it would treat situations as
biointermediates when it was not
necessary to do so, in other cases it
would not treat situations as
biointermediates that should be in order
to provide proper oversight, and in still
other cases it might treat situations as
biointermediates but not in the way that
our regulations were intended to
address. Our additional consideration of
biointermediates since REGS has
emphasized that some potential
biointermediates require unique
provisions for ensuring that qualifying
renewable biomass was used to make
the biointermediate, ensuring that the
biointermediate and the resultant
renewable fuel processed at separate
facilities continues to fall under an
approved pathway, and ensuring that
the renewable fuel gets used as
transportation fuel, heating oil, or jet
fuel. In other cases, we have concerns
with the potential generation of invalid
or fraudulent RINs especially when a
biointermediate either is itself or is
similar to a renewable fuel. Historically,
when we have brought renewable fuels
into the program that required unique
considerations or had concerns over the
generation of valid RINs, we have either
promulgated specific regulatory
requirements to address any concerns
(e.g., renewable fuel oil) or imposed
certain terms and conditions on
approved pathways as described at 40
CFR 80.1460(a)(7).
Based on the concerns highlighted in
comments and what we have learned
about individual biointermediates over
the last several years, we no longer
believe a broad approach to defining
biointermediates would allow us to
have sufficient oversight of the program
(i.e., to ensure that renewable fuels that
generate RINs meet the applicable
statutory and regulatory requirements).
Each biointermediate has particular
compliance and enforcement
considerations, including how to track
the biointermediate back to renewable
biomass, how a biointermediate may be
processed with other feedstocks to
produce renewable fuel, how a
biointermediate fits within existing
pathways, and how to demonstrate the
cellulosic content of the
biointermediate. As such, we now
believe it is necessary to design a
program that allows us to consider and,
if necessary, address these challenges on
a biointermediate-by-biointermediate
basis. We are thus proposing to
specifically define the scope of which
biointermediates would be covered by a
biointermediates program. In other
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words, under this proposal we are
defining the specific situations in which
it would be permitted to process
feedstocks into renewable fuels at
multiple facilities. Under this proposal,
if we do not list a ‘‘biointermediate’’
explicitly in the definition of
biointermediate, the ‘‘biointermediate’’
would not be lawful for use in making
renewable fuels under the RFS program.
In order for a new biointermediate to be
brought into the program, under this
proposal, we would amend the
regulations again in the future to add
the new biointermediate to the list and
make any other necessary regulatory
changes needed to provide proper
oversight for its potentially unique
circumstances.
In this action, we are proposing to
initially include the following
biointermediates: Biocrude, free fatty
acid (FFA) feedstock, and undenatured
ethanol (including ethanol solutions
containing less than 95% ethanol). We
are also seeking comment on a longer
list of additional potential
biointermediates that we may choose to
include in the final rulemaking
depending upon the comments we
receive on this proposal. We believe that
the three proposed types of
biointermediates we are proposing
could effectively be accommodated by
the updated provisions described in this
action. We believe these
biointermediates are likely to be
available in measurable quantities in the
near future and that our proposed
biointermediate regulations can ensure
proper compliance oversight and
enforcement. We have had discussions
with a variety of parties interested in
producing and using biointermediates
since the proposed REGS rule. Some
parties making fuels from biocrude, FFA
feedstocks, and undenatured ethanol
could begin producing volumes as early
as 2022. Since these parties are
relatively close or already capable of
producing renewable fuels from
biocrude, FFA feedstock, and
undenatured ethanol, and it is relatively
clear to us how they will do so and what
the compliance oversight issues might
be with these biointermediates, we
believe that it would be appropriate to
allow the use of these biointermediates
to produce renewable fuel after we
finalize a biointermediates program.
To clearly establish what would be
allowed under this proposed
biointermediates program, we are also
proposing definitions for the specific
biointermediates that would initially be
included in the program. We are
proposing to define undenatured
ethanol as ethanol that has not been
denatured per Department of Treasury
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requirements.164 We are also proposing
specific definitions for biocrude and
FFA feedstock. In the future as we
revise the regulations to allow new
biointermediate into the program, we
would then also define those
biointermediates. We also note that if
we finalize additional biointermediates
as part of the biointermediate definition
in the final rule, we will also include
specific definitions for those additional
biointermediates.
The inclusion of FFA feedstock in the
proposed definition of biointermediates
implies that the existing pathways in
Table 1 to 40 CFR 80.1426 satisfy the
applicable GHG reduction thresholds in
cases where FFA is produced from a
feedstock and used to produce a
renewable fuel in accordance with a
process(es) listed in an approved
pathway. We believe this conclusion is
supported for the feedstocks listed in
Table 1 that FFA biointermediates may
be produced from, including biogenic
waste fats, oils, and greases (FOG),
distillers corn oil and sorghum oil, food
wastes, oil crops, and algal oil. As
discussed in the 2020 proposed rule,
our original approval of pathways that
use these feedstocks was based on
lifecycle GHG assessments; our basis for
potentially allowing FFAs produced
from those feedstocks as
biointermediates is that we believe the
potential additional processing and
transport associated with the additional
FFA production step would add a
limited amount of GHG emissions to the
fuel’s lifecycle.165 However, where EPA
has not conducted a lifecycle GHG
assessment and determined that the
original renewable biomass feedstock
meets the GHG emission reduction
requirements of the CAA, we cannot say
that FFAs produced from that feedstock
fit within existing pathways. Therefore,
as explained further below, the
proposed definition of FFA feedstock
includes the following restriction: ‘‘FFA
feedstock must not include any free
fatty acids from the refining of crude
palm oil.’’
The existing pathways using waste
FOG feedstocks were approved based on
our lifecycle GHG analysis of yellow
grease (also known as used cooking oil
or ‘‘UCO’’) for the RFS2 rule, which
found, for example, that biodiesel
produced from UCO results in a greater
than 80% GHG reduction compared to
baseline conventional diesel. In
164 See 27 CFR parts 19 through 21. Ethanol does
not become a ‘‘renewable fuel’’ under the RFS
regulations until it is denatured. The preamble to
the RFS2 regulations explains that ‘‘ethanol that is
valid under RFS2 must be denatured.’’ See 75 FR
14670, 14713 (March 26, 2010).
165 84 FR 36801–36803 (July 29, 2019).
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addition to UCO, the waste FOG
feedstock category includes inedible
animal tallow, the FOG components of
food wastes and other similar materials
that ‘‘would otherwise normally be
discarded or used for another secondary
purpose because they are no longer
suitable for their original intended
use.’’ 166 EPA has not determined
whether FFA from the refining of crude
palm oil (hereafter referred to as palm
fatty-acid distillate or ‘‘PFAD’’) is
consistent with and covered by our
existing analyses and pathways. In
particular, we have not investigated
potential existing markets for PFAD and
the potential market effects associated
with using it as a biofuel feedstock.
Although PFAD is a secondary product
from crude palm oil refining, we believe
that additional analysis is needed to
determine whether fuel produced from
PFAD would qualify for the applicable
GHG reduction thresholds. Our lifecycle
analysis of palm oil biodiesel, which
has not been finalized through
rulemaking, estimated that palm oilbased biodiesel and renewable diesel do
not satisfy the 20% GHG reduction for
renewable fuel.167 Those estimates
underscore the need to further evaluate
the GHG emissions associated with
using PFAD as a biofuel feedstock. For
these reasons, we are specifying at this
time that FFA feedstock does not
include FFA from the refining of crude
palm oil.
Our proposed approach to defining
biointermediates is not intended to
affect pre-processing steps for
feedstocks in Table 1 that are limited to
form changes. We recognize that it has
been common practice for some
feedstocks listed in Table 1 to 40 CFR
80.1426 or in an approved pathway
pursuant to 40 CFR 80.1416 to be
physically pre-processed at separate
facilities before they are delivered to a
renewable fuel production facility and
used to produce renewable fuel. We do
not intend to disrupt this practice.
However, in order to assure that EPA
can verify that renewable fuel was made
with qualifying renewable biomass,
through production processes
corresponding with approved pathways,
we need to impose limits on the type of
pre-processing of qualifying feedstocks
that will be allowed without complying
with the biointermediate requirements.
We intend to balance these interests by
allowing the pre-processing of
feedstocks listed in approved pathways
at facilities other than the renewable
fuel production facility, but only if the
pre-processing results only in a form
166 75
167 77
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change such as chopping, crushing,
grinding, pelletizing, filtering,
compacting/compression, centrifuging,
degumming, dewatering/drying,
melting, or the addition of water to
produce a slurry.
To implement this approach, we are
proposing to prohibit any person from
producing a renewable fuel at more than
one facility unless the person uses a
biointermediate as defined in 40 CFR
80.1401 or uses feedstocks identified in
Table 1 to 40 CFR 80.1426 or in an
approved pathway pursuant to 40 CFR
80.1416, which were pre-processed at a
different facility, and the pre-processing
results only in a form change such as
chopping, crushing, grinding,
pelletizing, filtering, compacting,
compression, centrifuging, degumming,
dewatering/drying, melting, or the
addition of water to produce a slurry.
We seek comment on whether we
should expand or narrow the types of
pre-processing that should be allowed
for feedstocks that are not
biointermediates at facilities other than
the renewable fuel production facilities.
Our intent with this proposed addition
is to make clear the specific situations
where feedstocks will be allowed to be
processed at multiple facilities without
being subject to the proposed
biointermediates provisions. We believe
this change would address comments
received in the proposed REGS rule that
we were overly inclusive of feedstocks
already in use in current pathways.
We recognize that the proposed
definition of biointermediates does not
reflect the full range of potential
biointermediates identified to the
Agency over the years. As such, we seek
comment on whether we should include
other potential biointermediates in the
proposed definition for the final
rulemaking. We will consider adding
these additional biointermediates in the
definition in the final rulemaking if the
potential biointermediate could
appropriately be produced, transferred,
and used to make renewable fuel within
the proposed provisions for
biointermediates in this action.
Specifically, we intend to base our
consideration of including a potential
biointermediate on whether there are
adequate controls to limit opportunities
to generate fraudulent RINs, whether
feedstocks used to produce the
biointermediate qualify as renewable
biomass, and whether there are any
unique considerations for the potential
biointermediate that would require
further regulatory requirements to
ensure that generated RINs are valid.
Commenters suggesting that we include
a potential biointermediate in the final
rulemaking should specifically address
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these issues in their comments.
Furthermore, commenters should
provide information describing the type
of potential biointermediate, the
potential volume of renewable fuel(s)
that could be produced from it, and the
timeline for its development and
ultimate production. Based on
consideration of information submitted
from commenters on potential
biointermediates, we would only intend
to finalize those potential
biointermediates for which we believe
that proposed compliance and oversight
provisions can be effectively overseen,
have a low likelihood of being
susceptible to generation of fraudulent
RINs, can be verified as being renewable
biomass, and would not require further
regulatory provisions.
To aid commenters as to some of the
potential biointermediates we will
consider including in the final
rulemaking, we are providing a
memorandum to the docket that lists
potential biointermediates that have
come to our attention over the past 5
years.168 The list of potential
biointermediates described in the
memorandum to the docket is not
intended to be exhaustive, and we will
consider potential biointermediates not
included in the memorandum in the
final rule.
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3. Limits on Biointermediate Transfers
We are proposing that renewable fuel
production facilities would be able to
receive biointermediates from multiple
biointermediate production facilities.
However, unlike under the proposed
REGS rule provisions, under this new
proposal biointermediate production
facilities would not be able to send
biointermediates to multiple renewable
fuel production facilities.169 We believe
this limitation will significantly
simplify and improve oversight of RIN
generation for renewable fuels produced
from biointermediates without
168 See memorandum to the docket entitled,
‘‘Potential Biointermediates,’’ available in the
docket for this action.
169 Informally, this type of relationship is called
a ‘‘many-to-one’’ relationship in that under this
approach many biointermediate production
facilities could only transfer biointermediates to a
single renewable fuel production facility. In
contrast, the proposed REGS rule would have
allowed biointermediate production facilities to
transfer a biointermediate to more than one
renewable fuel production facility and for
renewable fuel production facilities to receive
biointermediates from multiple biointermediate
production facilities. Informally, this type of
relationship is called a ‘‘many-to-many’’
relationship in that biointermediate production
facilities could transfer biointermediates to many
renewable fuel production facilities, and renewable
fuel production facilities could receive
biointermediates from many biointermediate
production facilities.
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unreasonably limiting the production
and use of biointermediates. Since the
proposed REGS rule, we have become
increasingly concerned that, were we to
allow biointermediate production
facilities to transfer product to multiple
renewable fuel production facilities and
renewable fuel production facilities to
also receive product from multiple
biointermediate producers, some parties
could take advantage of the increased
complexity in tracking relationships and
batches to use non-qualifying feedstocks
to make renewable fuel or generate
fraudulent RINs through doublecounting. We believe that without this
restriction on biointermediates transfers
the use of non-qualifying feedstocks
would be more likely to occur and more
difficult to detect. In order to effectively
audit whether the correct type(s) and
volumes of biointermediates were used,
all facilities that produced and used
biointermediates would need to be
audited, which could be a large number
of facilities if there were no limits on
biointermediate transfers. Such
oversight would be unrealistic for EPA
or independent third parties to oversee,
which would increase opportunities for
the generation of invalid or fraudulent
RINs and undermine the intent of the
program. Since we expect most
biointermediate situations will involve
relatively small biointermediate
production facilities and relatively large
renewable fuel production facilities, we
have structured the program to provide
flexibility where it is most needed and
most beneficial for enabling increased
renewable fuel production. Namely this
new proposal continues to allow
multiple biointermediate producers to
provide their product to a single
renewable fuel production facility to be
converted into renewable fuel. We seek
comment on our proposal to limit
biointermediate transfers such that
renewable fuel production facilities can
receive biointermediates from multiple
biointermediate producers but each
biointermediate producer can transfer
its product to only one renewable fuel
producer.
Under this proposal, the
biointermediate and renewable fuel
producer would need to designate
through registration the receiving
renewable fuel production facility to
which biointermediate would be
transferred. As explained in Section
VII.B and docket memo, we are
proposing anew the REGS provisions
that require tracking of the volumes of
biointermediate, and associated
properties of the biointermediate,
through periodic reporting
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requirements.170 Recognizing that
biointermediate producers may need to
periodically change the receiving
renewable fuel production facility, we
are proposing that biointermediate
producers would be allowed to change
their designated renewable fuel
production facility no more than one
time per calendar year unless, in its sole
discretion, EPA determined that it was
appropriate to allow the biointermediate
producer to change its designated
renewable fuel production facility more
than once in a year. An example of a
situation where EPA would consider it
appropriate is the closure of the
receiving renewable fuel production
facility.
We do not believe this restriction
would impose much practical burden
on transfers of biointermediate
producers. We note that under the
proposed biointermediates program, the
newly designated receiving renewable
fuel production facility would need to
be registered to use the biointermediate,
which would in turn require an
engineering review by a professional
engineer. This process can take several
months to arrange for a PE to conduct
the engineering review, submit the
registration update to EPA, and have it
ultimately accepted by EPA. Also, as
discussed in Section VII.C.4, under this
proposal both the biointermediate and
renewable fuel producers would need
their respective facilities audited under
the QAP program, which would also
increase the amount of time needed to
change the designated receiving
renewable fuel production facility.
Consequently, because of the time to
conduct new engineering reviews and
have new quality assurance plans
approved by EPA, we believe that
biointermediate producers would be
practically limited to only being able to
change their receiving renewable fuel
production facility once per calendar
year. Despite these practical limitations,
we seek comment on whether and in
which narrow circumstances we should
allow biointermediate producers to
change their designated receiving
renewable fuel production facility more
than once a calendar year.
We believe that the proposed
biointermediate transfer provisions will
enable both the production and use of
biointermediates and enhance our
ability to provide compliance and
enforcement oversight. In most cases,
we believe that a single renewable fuel
production facility would receive all
170 These provisions are described in greater
detail in the memorandum to the docket, ‘‘Proposed
Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,’’
available in the docket for this action.
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biointermediate produced from a
biointermediate production facility.
This approach is primarily based on
discussions with parties interested in
the production and use of
biointermediates, and on our
understanding of how we believe that
biointermediate transfers would be
contracted by biointermediate and
renewable fuel productions and how
renewable fuel production facilities
would be designed to accommodate the
use of biointermediates.
We seek comment on the proposed
provisions for biointermediate transfers.
We specifically seek comment on
specific examples of where the
proposed provisions may encourage or
restrict the use of biointermediates to
generate renewable fuel volumes and
the likely volumes that may be affected,
as well as on any examples of how the
proposed provisions may or may not
provide for sufficient oversight or RIN
fraud prevention. We also ask that
commenters describe any additional or
alternative provisions that might allow
the use of biointermediates from
multiple facilities to be used to produce
fuel at multiple renewable fuel
producers while still allowing effective
oversight.
4. Mandatory QAP
We are proposing anew the revisions
to the RFS QAP to cover
biointermediate production and use.171
The RFS QAP provides for auditing of
renewable fuel production facilities by
independent third-party auditors who
review feedstock elements, process
elements, and RIN generation elements
to determine if renewable fuel
production is consistent with EPA
requirements. These independent thirdparty auditors verify the RINs generated
from these renewable fuel production
facilities. Under this proposal,
independent third-party auditors would
review feedstock and process elements
for biointermediate production facilities
like those currently reviewed for
renewable fuel production facilities. In
turn, these independent third-party
auditors would verify that the
biointermediate was properly produced.
We are also proposing to require QAP
participation for biointermediate
producers and renewable fuel producers
that use biointermediates. Due to the
need to balance the competing priorities
171 As explained in Section VII.B, we are
reproposing the biointermediates provisions of the
REGS rule. We discuss the proposed QAP
requirements in more detail in the memorandum to
the docket, ‘‘Proposed Biointermediate Provisions
in the proposed Renewables Enhancement Growth
Support Rule,’’ available in the docket for this
action.
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of allowing the timely use of
biointermediates for the production of
renewable fuel in the near term and
establishing a program that EPA can
effectively oversee for the long term, we
are proposing that biointermediate
producers and renewable fuel producers
that use biointermediates must
participate in the RFS QAP. Mandating
QAP participation for biointermediate
producers and renewable fuel producers
that use biointermediates will help
ensure that RINs generated from
biointermediates are valid.
Under the REGS proposal, we had
proposed that participation in the QAP
could have become voluntary after the
end of the proposed interim period.172
However, since the time of the proposed
REGS rule, we have developed a better
understanding of the potential
complexity of overseeing the transfers of
biointermediates and renewable fuels
under the RFS program. Based on this
understanding, we believe that allowing
the production and use of
biointermediates to go unverified would
provide increased opportunity for the
use of unapproved feedstocks and the
generation of fraudulent RINs through
double-counting. We believe having an
independent third-party auditor verify
the production of both the
biointermediate and the renewable fuel
is necessary to help oversee the added
complexity that results from having
renewable fuel processing occur at two
different facilities. Further, we are
proposing that the biointermediate
producer and renewable fuel producer
must use the same QAP vendor to
ensure consistent oversight of the two
facilities.
We do not believe that mandatory
QAP participation would be overly
burdensome. Many of the parties that
have encouraged EPA to adopt
biointermediate regulations have
indicated they intend to participate in
the QAP program. We also expect that
obligated parties that obtain and use
RINs generated for renewable fuels
made from biointermediates for
compliance would request that
biointermediate and renewable fuel
producers participate in the QAP as
obligated parties would continue to be
liable for the replacement of any invalid
RINs generated on such renewable fuels.
We seek comment on making QAP
participation mandatory for both the
biointermediate producer and the
renewable fuel producer where
172 In the proposed REGS rule, the interim period
was a period of approximately 12 months where a
more limited set of regulatory provisions would
have applied to parties that produced, transferred,
and used biointermediates. This action does not
include a proposed interim period.
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renewable fuel is produced from
biointermediates.
5. Product Transfer Documents (PTD)
Consistent with the REGS proposal,
we are proposing anew PTD
requirements for the transfers of
biointermediates from biointermediate
producers to renewable fuel
producers.173 These PTD requirements
include information about the
biointermediates type, volume,
renewable content, cellulosic content (if
applicable), and the transfer of records
needed for the renewable fuel producer
to demonstrate that the biointermediate
was produced using qualifying
renewable biomass and that other
aspects needed to ensure that the RFS
regulations were met.
In addition to reproposing the PTD
requirements for transfers of
biointermediates, we are also proposing
for the first time PTD requirements for
RINs generated from renewable fuel
produced from biointermediates. In the
REGS proposal, we did not propose any
changes to the PTD requirements for
RINs generated from renewable fuels
produced from biointermediates. Since
the REGS proposal, due to the way that
RINs are transacted in EMTS,174 we
have realized that parties that transfer
and use RINs generated from renewable
fuels made from biointermediates may
not be aware that the RINs came from
biointermediates. Such parties may
wish to have identified such RINs
because 40 CFR 80.1460 prohibits any
party from transferring invalid RINs.
These parties may wish to have
information related to whether the RIN
was produced from a renewable fuel
made from a biointermediate prior to
transacting the RINs. Therefore, we are
also proposing additional elements for
PTDs related to RINs under 40 CFR
80.1453(a). Under this proposal, RINs
PTDs would need to identify that the
RINs were generated from renewable
fuels produced from biointermediates as
well as the EPA-issued company and
173 As explained in Section VII.B, we are
reproposing the biointermediates provisions of the
REGS rule. We discuss the proposed PTD
requirements in more detail in the memorandum to
the docket, ‘‘Proposed Biointermediate Provisions
in the proposed Renewables Enhancement Growth
Support Rule,’’ available in the docket for this
action.
174 In EMTS, parties can specify to transact RINs
from specific renewable fuel producers by facility
and D-code. Current EMTS functionality would not
allow parties to transact RINs based on a whether
the RINs were generated from renewable fuel made
from a specific feedstock (or biointermediate if the
proposed biointermediate provisions are finalized).
Furthermore, EMTS would not indicate to parties
transacting the RINs in any way whether such RINs
came from a renewable fuel made from a
biointermediate.
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facility numbers of the biointermediate
producer. We believe that by requiring
such information on the RIN PTDs,
parties that transfer or use such RINs
would better understand whether they
were transferring and using RINs
generated from renewable fuels
produced from biointermediates. This
would allow parties that transact RINs
generated from renewable fuels made
with biointermediates to make decisions
on whether to transact the RIN. We seek
comment on both the proposed PTD
requirements for transfers of
biointermediates and on the newly
proposed RIN PTD requirements.
the volume, identifying information for
the entity receiving title to the batch and
other characteristics of the batch and
associated production processes and
characteristics of the batch.
We seek comment on the proposed
registration, reporting, and EMTS
requirements for biointermediates. We
are also seeking comment on potential
improvements regarding the
functionality of EMTS or other
information systems related to the
production, transfer, and use of
biointermediates. While not part of the
proposed regulations themselves, we
believe it is important to identify areas
where functional improvement is
desired by the users of our information
systems. Such feedback as part of this
proposal would help us identify areas
for improvement and prioritize
development. For example, as discussed
in Section VII.C.5, we believe parties
that transfer and use RINs generated
from renewable fuel produced from
biointermediates may want the ability to
tie the RINs back to specific
biointermediates or biointermediate
producers. We believe some parties may
want to track whether RINs were
generated from a specific
biointermediate producer in EMTS.
However, such a change would involve
significant modification to EMTS, and
therefore is not something that EPA
would undertake unless desired and
resources permitted. However, knowing
what additional functionality is desired
may allow us to include such features
into our upcoming development plans.
6. Registration, EMTS and Reporting
Requirements
As in the REGS proposal, we are
proposing here the registration,
reporting, and EMTS requirements for
biointermediates that are needed in
order to implement the program.175
Some of these proposed elements have
already been discussed in conjunction
with the proposed biointermediates
provisions addressed in this section.
Others are additional elements
reflecting our current implementation of
related provisions under the RFS
program that have changed since we
proposed the REGS rule. Registration
elements include proposed
requirements for renewable fuel
producers that intend to produce or
utilize biointermediates as part of their
production process to register these
processes and related information
similar to other feedstock registration
requirements. Biointermediate
producers must also register production
capacities, information on the
feedstocks intended for processing, coproducts produced and, similar to
renewable fuel producers, complete an
initial engineering review followed by
an update every three years. For EMTS,
the renewable fuel producer utilizing
biointermediates in the production of
renewable fuel would report the type
and quantity of biointermediates used
for the batch and the EPA facility
registration number for each production
facility. Renewable fuel producers
utilizing biointermediates would report
total co-products and the process(es),
feedstock(s), and biointermediate(s)
used and proportion of renewable
volume attributable to each process and
feedstock. Biointermediate producers or
importers would report for each batch
We are proposing anew the attest
engagement and recordkeeping
requirements for biointermediates
discussed in the proposed REGS rule, as
well as some updating some of these
requirements for biointermediates since
that proposal.176 Updated proposed
requirements for attest engagement
audits include validating the list of
renewable fuel producers receiving any
transfer of biointermediate batches and
calculating the total volume received.
We believe these updated requirements
for attest engagement audit are
appropriate to help ensure that the
limits on biointermediate transfers
discussed in Section VII.C.3 are
followed.
175 We discuss the proposed registration, EMTS,
and reporting requirements for biointermediates in
more detail in the memorandum to the docket,
‘‘Proposed Biointermediate Provisions in the
proposed Renewables Enhancement Growth
Support Rule,’’ available in the docket for this
action.
176 We discuss the proposed attest engagement
and recordkeeping requirements for
biointermediates in more detail in the
memorandum to the docket, ‘‘Proposed
Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,’’
available in the docket for this action.
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7. Attest Engagement and
Recordkeeping Requirements
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We are proposing updated
recordkeeping requirements to reflect
the other changes discussed in this
section. These updates are needed to
help independent third parties and EPA
conduct audits.
We seek comment on the proposed
attest engagement and recordkeeping
requirements for biointermediates.
Specifically, we request comment on
whether the attest engagement and
recordkeeping requirements are
adequate and whether any additional
requirements are needed to enable
implementation of the program.
8. Invalid RINs From Biointermediates
We are proposing anew the provisions
that address the treatment of invalid
RINs generated on renewable fuels
produced from biointermediates.177 Due
to the potential complexity involved in
determining the validity of RINs
generated for renewable fuel produced
from a biointermediate, we proposed in
the REGS rule and are proposing anew
that if any of the RINs in any batch of
renewable fuel produced from a
biointermediate are deemed invalid,
then all RINs generated for that batch of
renewable fuel would be considered
invalid except to the extent that EPA, in
its sole discretion, determines that some
portions of these RINs would be valid.
Since the proposed REGS rule, we have
further considered how invalid RINs
generated on renewable fuels produced
from biointermediates could potentially
be treated in complicated
circumstances: Where multiple
biointermediate and/or nonbiointermediates are simultaneously
processed to make renewable fuel with
the same D-code, where biointermediate
and/or non-biointermediates are
simultaneously processed that result in
multiple D-codes, and where
biointermediates are co-processed with
non-renewable biomass (e.g., crude oil).
Given the range of biointermediates that
would be permitted under this proposal
and based on discussions with parties
that have expressed interest in using
various types of biointermediates in the
future, we believe it is important to
address this situation clearly in the
regulations as apportioning which RINs
were tied to which gallons of renewable
fuel made in these situations is
complicated.
In all cases, where a biointermediate
is processed simultaneously with other
feedstocks or co-processed with non177 We discuss the proposed liability provisions
for biointermediates in more detail in the
memorandum to the docket, ‘‘Proposed
Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,’’
available in the docket for this action.
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renewable biomass, we are proposing
that all RINs generated from the
renewable fuel would be invalid. This
means that even if multiple different
RIN batches would be generated in
EMTS for apportioned volumes of the
batch of renewable fuel, all RIN batches
in their entirety would be invalid if any
amount of non-qualifying
biointermediate was used to generate
any RIN on any volume of the
renewable fuel. This would also include
situations where the multiple RIN
batches were for different D-codes or
where multiple different
biointermediates were used. We
proposed this approach in the REGS
rule, and we are now proposing
additional regulatory provisions to
better effectuate the intended outcome.
We believe this provision is appropriate
to avoid having to determine
specifically which RINs are invalid in
situations where biointermediates are
processed simultaneously with other
feedstocks or co-processed with nonrenewable biomass, which may be
difficult to ascertain. We also believe
that this proposed provision would
provide a strong incentive for renewable
fuel producers to conduct due diligence
oversight procedures on the
biointermediate producer to avoid the
invalidation of an entire batch of RINs.
We are also proposing that in cases
where the renewable fuel is a renewable
diesel, renewable gasoline, renewable
diesel blendstock, or renewable gasoline
blendstock, if a RIN is invalid under 40
CFR 80.1431(a)(1), the gallon of gasoline
or diesel fuel for which the RIN was
generated would incur an RVO. The
regulations at 40 CFR 80.1407(f)(1)
already exclude ‘‘[a]ny renewable fuel
as defined in § 80.1401’’ from the
volume of gasoline or diesel fuel
produced or imported used to calculate
an obligated party’s annual RVO. In
many cases, RINs are determined to be
invalid because the renewable fuel was
not made from renewable biomass, the
RINs were double-counted, or were
otherwise invalidly generated. In such
cases, any volume of renewable gasoline
or renewable diesel fuel would no
longer be considered renewable fuel and
therefore could not be excluded from an
obligated party’s RVO. We believe the
situation in which a volume of
renewable fuel (e.g., a renewable diesel
or gasoline) that was excluded from an
obligated party’s RVO but is no longer
considered a renewable fuel will
become more common if we allow the
use of biocrude processed through crude
refineries as a way to produce more
advanced and cellulosic biofuels. We
are proposing changes to the regulations
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at 40 CFR 80.1407(f)(1) to reiterate the
requirement that renewable fuel for
which a RIN is determined to be
invalidly generated may not be
excluded from a party’s RVOs.
Finally, as a result of the proposed
changes described above, we are
proposing corresponding prohibited
activities to address situations where
biointermediates are produced,
transferred, and used.178 Specifically,
we are proposing the following
prohibited activities:
• Use of a feedstock to produce a
biointermediate not covered by an
existing pathway or in the proposed
definition of a biointermediate
discussed in Section VII.C.1;
• Illegal transfers of biointermediates
consistent with the newly proposed
provisions described in Section VII.C.2;
and
• Generation of RINs from renewable
fuels produced from biointermediates
that have not been verified under the
QAP as described in Section VII.C.3.
We believe these additional proposed
prohibited activities are needed to help
us enforce violations and ensure
compliance of the proposed
biointermediate provisions. We seek
comments on these proposed prohibited
activities and whether any additional
prohibited activities related to the
production, transfer, and use of
biointermediates are necessary to ensure
the integrity of RINs generated from
biointermediates.
We believe that these additional
elements coupled with the reproposed
REGS rule provisions concerning
liability and the treatment of invalid
biointermediates would provide strong
incentives on the part of renewable fuel
producers to diligently be involved in
overseeing the production, transfer, and
use of biointermediates. We believe
these provisions are necessary to
address the increased complexity of
allowing renewable fuels to be
processed at more than one production
facility. We seek comment on our
proposed liability provisions for the
production, transfer, and use of
biointermediates and the treatment of
invalid RINs generated from renewable
fuels produced from biointermediates.
D. Other Considerations Related to
Biointermediates
1. C–14 Testing and Mass Balance for
RIN Generation
We are reproposing the requirement
that C–14 testing, specifically Method B
(accelerator mass spectrometry) of
178 For a discussion of the proposed REGS rule
liability and prohibited act provisions that we are
reproposing see 81 FR 80839 (November 16, 2016).
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ASTM International (ASTM) D6866, be
used in cases where biointermediates
are co-processed with petroleum
feedstocks at a renewable fuel
production facility.179 We are also
seeking comment on potential
alternatives to direct C–14 measurement
of renewable content of co-processed
fuels. In the proposed REGS rule, we
proposed to require C–14 testing for coprocessed fuels because we believe that
the volume of biointermediate coprocessed with petroleum at a crude
refinery would likely be a small fraction
of the refinery’s throughput and would
make it difficult to rely on a mass
balance approach for RIN generation.
Our primary concern was, and is, that
the co-processed fuel would contain
little or no renewable content from the
biointermediate and that using the mass
balance approach could result in the
generation of RINs for the nonrenewable
portion of the co-processed fuel.
Additionally, as noted in the REGS
proposal Method B of ASTM D6866 has
greater precision compared with
Method C.180
In the proposed REGS rule we sought
comment on whether our proposed
approach was appropriate, whether
there are other methods that could
produce similarly accurate and precise
renewable content measurement to
Method B of ASTM D6866 in coprocessed fuels, and whether EPA
should allow parties to petition for the
use of a company-specific method to
determine the renewable content of coprocessed, partially renewable fuel
produced from a biointermediate. We
received a number of comments
suggesting that EPA allow for the use of
mass balance instead of requiring direct
testing of renewable content using C–14
analysis in co-processed fuels. While
many commenters highlighted the
practical and financial benefits of using
mass balance instead of direct C–14
measurements, commenters on the
REGS proposal did not substantially
address the concerns we raised
regarding the accuracy and precision of
a mass balance approach especially
179 In the 2010 RFS2 final rule (see 75 FR 14876,
March 26, 2010), EPA promulgated requirements for
the generation of RINs for renewable fuel coprocessed with petroleum-based fuels, and
provided two methods for determining the
renewable content of co-processed fuels: (1) Mass
balance; or (2) Using Methods B or C of ASTM
D6866 C–14 testing. See 40 CFR 80.1426(f)(4).
These provisions from the proposed REGS rule are
described in greater detail in the memorandum to
the docket, ‘‘Proposed Biointermediate Provisions
in the proposed Renewables Enhancement Growth
Support Rule,’’ available in the docket for this
action.
180 See Martin R. Haverly et al., Biobased Carbon
Content Quantification through AMS Radiocarbon
Analysis of Liquid Fuels, 237 Fuel, 1108, (2019).
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where the biointermediate constitutes a
relatively small portion of the coprocessed feedstock. Specifically,
commenters noted how difficult it is to
collect samples for direct C–14
measurement from a crude refinery, the
added expense and time to conduct the
testing, and issues related to the validity
of C–14 testing when there is only a
small amount of renewable content in
the co-processed fuel. We also received
comments in support of a facility
specific approach, but commenters did
not provide information on how such a
process would work or how such a
process could result in sufficiently
accurate and precise measurements of
renewable content in co-processed fuels.
We continue to believe that direct C–
14 measurement is the most accurate
and precise way to determine the
renewable content of co-processed fuels
and that it is necessary to ensure
whether a co-processed fuel actually
contains renewable content. We also
note that in Section VIII.F, we are
proposing to define what it means for a
renewable fuel to be ‘‘produced from
renewable biomass.’’ Under this
proposed definition, only energy in the
renewable content of the finished fuel
that was produced from renewable
biomass would qualify as renewable
fuel for RIN generation. As discussed in
Section VIII.F, this proposed regulatory
definition of ‘‘produced from renewable
biomass’’ is consistent with the
statutory requirements that renewable
fuels be transportation fuel, heating oil,
or jet fuel. Our proposal for direct
measurement of renewable content in
co-processed fuels is consistent with
and necessary to effectuate this
proposed definition of ‘‘produced from
renewable biomass.’’ That is, because
we do not believe a mass balance
approach is capable of accurately
determining the renewable content of
fuels produced through co-processing of
biointermediates, allowing renewable
fuel production facilities to rely on this
approach for RIN generation would be
inconsistent with the definition of
‘‘produced from renewable biomass.’’
We seek comment on whether we
should provide alternatives to requiring
direct C–14 measurement of renewable
content in co-processed fuels where
biointermediates are used. While we are
proposing to remove the allowance for
use of mass balance for renewable fuel
production facilities that co-process
biointermediates with petroleum
feedstocks, we also seek comment on
whether and under what conditions it
might be appropriate to allow for the
use of mass balance when there is a
sufficient amount of co-processed
biointermediate to ensure that mass
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balance calculations actually represent
renewable content in the co-processed
fuel. For example, we could allow the
use of mass balance if the
biointermediate represented at least 10
percent of the total feedstock processed
to produce the batch. If a sufficient
amount of a biointermediate was used to
make the co-processed fuel, we might
have assurance that some of the
biointermediate was converted into
renewable fuel.
We also seek comment on whether we
could allow the parties that co-process
renewable fuels to develop a facility
specific statistical model for use in
estimating low levels of renewable
content in co-processed fuel. Through
such a process, renewable fuel
producers could conduct a rigorous test
program on a range of biointermediate
levels processed through a specific
facility to develop a statistical model to
estimate renewable content of coprocessed fuels at that specific facility
for RIN generation. Similar to a mass
balance approach, we acknowledge that
a poorly-designed statistical model may
inaccurately estimate the amount of
renewable content in a co-processed
fuel or indicate that renewable content
was present in a co-processed fuel when
there was none, especially at low levels.
Finally, we seek comment on whether
there are any circumstances where we
could rely upon results from Method C
of ASTM D6866 (‘‘Method C’’) to
measure renewable content of coprocessed fuels made from
biointermediates. As mentioned above,
we continue to have concerns with
Method C when measuring relatively
small amounts of renewable content in
co-processed fuels due to Method C’s
lower precision. However, we would
consider the use of Method C if its
accuracy and precision were improved
and codified in an updated ASTM
method or if Method C was restricted to
measuring higher levels of renewable
content (e.g., above 10 percent) where
we could be assured that measurement
represented valid renewable content in
co-processed fuels.
When commenting on the proposed
requirement for direct C–14 testing, we
specifically ask that commenters
provide any relevant information or data
on any demonstrating that an alternative
is as accurate or precise in measuring
the renewable content of co-processed
fuels as the proposed C–14 method.
2. Standalone Esterification Pathway
In the proposed 2020 RVO rule, we
proposed to add a standalone
esterification pathway to rows F and H
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of Table 1 of 40 CFR 80.1426.181 This
would have allowed parties who have
processing units that can take feedstocks
listed in rows F and H of Table 1 of 40
CFR 80.1426 that have high-FFA
content to separate the FFAs and
triglycerides for chemical processing in
separate standalone esterification and
transesterification units, and generate
RINs for the biodiesel produced.182 We
also noted in the proposed 2020 RVO
rule that while this proposal would
allow the separation of FFAs and
triglycerides in qualified high-FFA
feedstocks at the facility producing the
biodiesel through these processes,
regulatory amendments were needed to
address situations where this separation
took place at a facility other than the
ultimate renewable fuel production
facility.183 We stated that the
biointermediates provisions of the REGS
rule would need to be finalized for
parties to use FFAs separated from
triglycerides in a feedstock at a location
other than the biodiesel production
facility.184
In the final 2020 RVO rule, we did not
finalize the standalone esterification
pathway, but noted that we may finalize
the standalone esterification pathway in
a future action.185 We are proposing to
include FFA feedstocks as one of the
biointermediates specifically included
in the proposed definition of
biointermediate. We note that we would
also need to finalize the previously
proposed standalone esterification
pathway for parties to process FFA
feedstocks to biodiesel through direct
esterification, which is one of the
primary methods for producing
renewable fuel from FFA feedstocks. If
the proposed biointermediates
provisions in this action are finalized
and FFA feedstocks are included in the
definition of biointermediates, we
intend to also finalize the previously
proposed standalone esterification
pathway. In this case, we would
respond to the public comments
received previously on the proposed
standalone esterification pathway in the
2020 RVO rule proposal and any
additional public comments related to
the standalone esterification pathway
received on this proposal in such a final
action. Unlike the biointermediates
provisions from the REGS rule that are
being re-proposed in this action, we are
not re-proposing the standalone
esterification pathway here and
commenters do not have to resubmit
181 See
84 FR 36801–36802 (July 29, 2019).
84 FR 36801–36803 (July 29, 2019).
183 See 84 FR 36802 (July 29, 2019).
184 Id.
185 See 85 FR 7058 (February 6, 2019).
182 See
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previously submitted comments to this
docket in order for them to be
considered.
3. Intracompany Transfers of
Biointermediates
We are seeking comment on whether
we should provide flexibility for
intracompany transfers of
biointermediates (i.e., cases where the
same company owns both the
biointermediate production facility and
the renewable fuel production facility).
In the proposed REGS rule, we did not
propose any flexibilities for companies
that transferred biointermediates
between their biointermediate
production facility and renewable fuel
production facility. Under the proposed
REGS rule, such companies would have
to comply with all of the requirements
regardless of whether they owned both
the biointermediate production facility
and the renewable fuel production
facility.
During the public comment period for
the REGS proposal, we received
comments suggesting that we should not
impose the new requirements for
biointermediates when the party
produces both the biointermediate and
the renewable fuel. These commenters
argued that they would be able to
effectively track the production and use
of biointermediates so additional
compliance and enforcement provisions
would not be needed. However, we
believe that all parties should have
consistent requirements on
biointermediates. We believe that there
could still be concerns with
intracompany transfers of
biointermediates as this lack of
transparency could incent the
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Where:
StdBBD,i = The biomass-based diesel
standard for year i, in percent.
RFVBBD,i = Annual volume of biomassbased diesel required by 42 U.S.C.
7545(o)(2)(B) for year i, in gallons.
Gi = Amount of gasoline projected to be
used in the 48 contiguous states and Hawaii,
in year i, in gallons.
Di = Amount of diesel projected to be used
in the 48 contiguous states and Hawaii, in
year i, in gallons.
RGi = Amount of renewable fuel blended
into gasoline that is projected to be
consumed in the 48 contiguous states and
Hawaii, in year i, in gallons.
186 See
75 FR 14670, 14682 (March 26, 2010).
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generation of fraudulent RINs. In fact,
we believe that the issues could be
worse because if we exempted
intracompany transfers from the
proposed biointermediates provisions,
there would be no required records,
reports, or oversight on whether that
company appropriately produced,
transferred, or used the biointermediate.
This would allow ample opportunities
for parties to use non-qualifying
feedstocks or generate fraudulent RINs
and provide EPA no oversight
mechanisms. The main purpose of the
proposed biointermediate provisions is
to ensure that EPA and third parties
such as QAP and attest auditors have
records and reports to verify the
production, transfer, and use of
biointermediates. These provisions help
ensure that RINs generated from
renewable fuels produced from
biointermediates are valid.
We continue to believe that the
proposed regulatory requirements are
needed in this case, and, as such, we are
not proposing to provide any
flexibilities for intracompany transfers
of biointermediates at this time.
Nevertheless, we seek comment on
whether such flexibilities are
appropriate. Commenters should
articulate in their public comments
specifically what provisions they
believe EPA could provide flexibility
and how effective oversight of the
program would be maintained.
VIII. Amendments to Fuel Quality and
RFS Regulations
This section describes the regulatory
changes we are proposing for fuel
quality and RFS regulations.
RDi = Amount of renewable fuel blended
into diesel that is projected to be consumed
in the 48 contiguous states and Hawaii, in
year i, in gallons.
GSi = Amount of gasoline projected to be
used in Alaska or a U.S. territory, in year i,
if the state or territory has opted-in or optsin, in gallons.
RGSi = Amount of renewable fuel blended
into gasoline that is projected to be
consumed in Alaska or a U.S. territory, in
year i, if the state or territory opts-in, in
gallons.
DSi = Amount of diesel projected to be
used in Alaska or a U.S. territory, in year i,
if the state or territory has opted-in or optsin, in gallons.
187 See 72 FR 23900, 23921 at Table III.B.4–1
(May 1, 2007).
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A. BBD Conversion Factor for
Percentage Standard
In the 2010 RFS2 rule, we determined
that because the BBD standard was a
‘‘diesel’’ standard, its volume must be
met on a biodiesel-equivalent energy
basis.186 In contrast, the other three
standards (cellulosic biofuel, advanced
biofuel, and total renewable fuel) must
be met on an ethanol-equivalent energy
basis. At that time, biodiesel was the
only advanced renewable fuel that
could be blended into diesel fuel,
qualified as an advanced biofuel, and
was available at greater than de minimis
quantities.
The formula for calculating the
applicable percentage standards for BBD
needed to accommodate the fact that the
volume requirement for BBD would be
based on biodiesel equivalence while
the other three volume requirements
would be based on ethanol equivalence.
Given the nested nature of the
standards, however, RINs representing
BBD would also need to be valid for
complying with the advanced biofuel
and total renewable fuel standards. To
this end, we designed the formula for
calculating the percentage standard for
BBD to include a factor that would
convert biodiesel volumes into their
ethanol equivalent. This factor was the
same as the Equivalence Value for
biodiesel, 1.5, as discussed in the 2007
RFS1 final rule.187 The resulting
formula 188 (incorporating the recent
modification to the definitions of GEi
and DEi) 189 is shown below:
RDSi = Amount of renewable fuel blended
into diesel that is projected to be consumed
in Alaska or a U.S. territory, in year i, if the
state or territory opts-in, in gallons.
GEi = The total amount of gasoline
projected to be exempt in year i, in gallons,
per §§ 80.1441 and 80.1442.
DEi = The total amount of diesel projected
to be exempt in year i, in gallons, per
§§ 80.1441 and 80.1442.
In the years following 2010 when the
percent standard formula for BBD was first
promulgated, advanced renewable diesel
production has grown. Most renewable diesel
has an Equivalence Value of 1.7, and its
growing presence in the BBD pool means that
188 See
189 See
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Because the formula currently
specified in the regulations for
calculation of the BBD percentage
standard assumes that all BBD used to
satisfy the BBD standard is biodiesel, it
biases the resulting percentage standard
low, given that in reality there is some
renewable diesel in BBD. The bias is
small, on the order of 2 percent, and has
not impacted the supply of BBD since
it is the higher advanced biofuel
standard rather than the BBD standard
that has driven the demand for BBD.
Nevertheless, we believe that it would
be appropriate to modify the factor used
in the formula to more accurately reflect
the amount of renewable diesel in the
BBD pool. The average Equivalence
Value of BBD appears to have grown
over time without stabilizing. Given the
growth in facilities producing renewable
diesel as discussed in Chapter 5.2 of the
DRIA, it is possible that the average
Equivalence Value for BBD could
continue to grow after 2020. As a result,
we believe that the average Equivalence
Value for BBD is likely to be at least
1.55. We therefore propose and seek
comment on replacing the factor of 1.5
in the percentage standard formula for
BBD with a factor of 1.55.191 We are not
proposing to change any other aspect of
the percentage standard formula for
BBD.
The proposed change would have a
small impact on the calculation of the
applicable percentage standard for BBD.
For instance, for the 2021 BBD volume
of 2.43 billion gallons finalized in the
2020 final rule, the applicable
percentage standard would be 2.20
percent using the factor of 1.55, as
compared to 2.13 percent using the
factor of 1.5. However, this proposed
change would have no impact on the
generation of RINs. All biodiesel has
generated and would continue to
generate 1.5 RINs per gallon, and most
renewable diesel has generated and
would continue to generate 1.7 RINs per
gallon. Similarly, compliance with the
applicable percentage standards would
not change, in that all D4 RINs would
continue to count toward meeting the
RVO for BBD.
190 Under 40 CFR 80.1415(b)(4), renewable diesel
with a lower heating value of at least 123,500 Btu/
gallon is assigned an Equivalence Value of 1.7. A
minority of renewable diesel has a lower heating
value below 123,500 BTU/gallon and is therefore
assigned an Equivalence Value of 1.5 or 1.6 based
on applications submitted under 40 CFR
80.1415(c)(2).
191 While we are proposing to only revise the
factor of 1.5 in the percentage standard formula for
BBD, we are including all four of the percentage
standard formulas in our proposed amendatory text
for 40 CFR 80.1405(c). This is due to the manner
in which the original formulas were published in
the CFR, which does not allow for revisions to a
single formula without republishing all of the
formulas. We are not reexamining any aspect of
these formulas beyond the change to the factor of
1.5 in the BBD formula, and any comments on other
aspects of the formulas are beyond the scope of this
rulemaking.
192 For purposes of this preamble, a
‘‘grandfathered facility’’ is a renewable fuel
production facility that has volumes that are
exempt from the renewable fuel lifecycle GHG
reduction threshold under 40 CFR 80.1403(c). This
provision exempts (i.e., ‘‘grandfathers’’) facilities
that commenced construction on or before
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Finally, the volume requirement for
BBD (RFVBBD,i in the formula above)
would be unaffected by the change to
the formula for calculating the
percentage standard.
B. Changes To Registration for Baseline
Volume
We are proposing to revise the
registration requirements at 40 CFR
80.1450(b)(1)(v) as well as the definition
of ‘‘baseline volume’’ at 40 CFR 80.1401
to allow non-exempt (i.e., nongrandfathered) renewable fuel producers
to use either nameplate capacity or
actual peak capacity for their facility’s
baseline volume if permitted capacity
cannot be determined. We are not
proposing to change the requirements
for establishing the baseline volume of
grandfathered facilities.192 193 All nongrandfathered facilities with an
applicable permitted capacity would
continue to be required to register using
the permitted capacity pursuant to 40
CFR 80.1450(b)(1)(v)(A). Under the
existing requirement, these facilities
December 19, 2007, did not discontinue
construction for a period of 18 months after
commencement of construction, and completed
construction by December 19, 2010.
193 For grandfathered facilities, baseline volume is
the maximum volume of grandfathered fuel for
which the facility is allowed to generate RINs. For
non-grandfathered facilities, baseline volume is
intended to indicate the maximum amount of
renewable fuel that the facility is capable of
producing. Actual peak capacity, however, may not
be a good indicator of maximum capacity.
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the average Equivalence Value of BBD has
also grown.190
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must use their actual peak capacity 194
as their baseline volume if the air
permits do not specify the maximum
rated annual output of renewable fuel
and can only use nameplate capacity 195
to establish baseline volume if
insufficient production records existed
to establish actual peak capacity. The
proposed regulatory revision would give
non-grandfathered facilities that do not
have an applicable permitted capacity
the flexibility to establish baseline
volume using either actual peak
capacity or nameplate capacity.
We are proposing this revision in
order to allow for more up-to-date
information to be used in establishing
the baseline volumes of nongrandfathered facilities. Actual peak
capacity is based on actual production
tied to when EISA was enacted (i.e.,
December 2007), which is now more
than a decade in the past. This historical
peak capacity is not necessarily an
accurate reflection of the facility’s
current production capacity. Since the
passage of EISA, facilities may have
improved efficiency, expanded the
facility, or experienced an increase in
production due to increased demand,
resulting in larger production than the
year used to calculate actual peak
capacity. Having accurate capacity
information for registered renewable
fuel facilities is important for EPA in
helping to identify whether facilities are
generating an appropriate number of
RINs.196 This proposed change would
allow a non-exempt facility to choose
whether to use actual peak capacity or
nameplate capacity if permitted
capacity cannot be determined. Nonexempt facilities already registered
using actual peak capacity would have
the option to switch to nameplate
capacity at any time.197 This change
would have no impact on facilities who
choose not to use this option. We seek
comment on this proposed change.
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C. Changes To Attest Engagements for
Parties Owning RINs (‘‘RIN Owner
Only’’)
We are proposing to exempt parties
that transact a relatively small number
of RINs from the annual attest
194 Actual peak capacity is based on either the
five years prior to registration or, if there was no
production prior to registration, the first three years
after start-up.
195 Nameplate capacity is the peak designed
capacity of the facility.
196 Because the baseline volume of an exempt
(i.e., grandfathered) facility is by definition tied to
either December 19, 2007, or December 31, 2009
(see 40 CFR 80.1403(c) and (d) and
80.1450(b)(1)(v)(B)), current production capacity is
not relevant for such a facility.
197 Facilities could also choose to keep their
baseline volume as actual peak capacity.
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engagement requirements. In order to
qualify for the proposed exemption,
parties would need to be registered as a
‘‘RIN Owner Only’’ and not registered or
engaged in any other role (e.g., obligated
party, exporter of renewable fuel,
renewable fuel producer, renewable fuel
importer, etc.). Such parties are
currently required to submit an annual
attest engagement under 40 CFR
80.1464(c), regardless of the number of
RINs they transact or hold in a
compliance year. Under the existing
regulations, for example, a party whose
only activity was to buy and sell a single
RIN in any given compliance year
would be required to complete an attest
engagement for that year. Additionally,
some parties that own a small number
of RINs have difficulty selling such
small denominations of RINs (e.g.,
hundreds of separated D6 RINs) and can
hold such RINs until they expire. These
parties must then arrange for an annual
attest engagement performed by a
certified professional accountant (CPA)
for those RINs, which can be quite
costly especially when compared to the
relatively low value of the small number
of RINs owned.
We believe that parties who, in a
given compliance year, are registered as
a ‘‘RIN Owner Only,’’ who transact
10,000 or fewer RINs, and who do not
exceed a RIN holding threshold under
40 CFR 80.1435, should not be required
to complete an attest engagement for
that compliance year. A party who is
registered as a ‘‘RIN Owner Only’’ does
not generate RINs and does not have an
RVO. We believe that the information
contained in EMTS and RIN activity
reports for a RIN Owner Only who
transacts a relatively small number of
RINs and who does not exceed a RIN
holding threshold conveys the necessary
compliance information, and that the
attest engagements for these parties do
not add much value relative to their
expense. Many of the affected parties
are smaller businesses that are required
to arrange the services of a CPA to
perform their annual attest engagement.
Making this change to the attest
engagement requirements may result in
a cost savings to these typically smaller
businesses, without adversely affecting
RFS program oversight.
We intend that the total number of
RINs transacted in the year be counted
toward the 10,000 RIN limit. RINs
‘‘transacted’’ includes RINs retired for
reasons other than compliance
retirements, such as the reason code
‘‘voluntary RIN retirement.’’ This means
that if a party buys 5,000 RINs and sells
6,000 RINs in a year, the party will have
transacted 11,000 RINs and would be
required to complete the attest
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engagement for that year. We are
proposing the 10,000 RIN limit based
upon programmatic experience—
specifically, we believe it reflects a
reasonable level of activity below which
the utility of the attest engagement is
reduced. We seek comment on
establishing this proposed attest
engagement exemption for parties that
transact fewer than 10,000 RINs in a
compliance year and what the
appropriate level of RIN transactions for
this exemption should be.
D. Public Access to Information
Exemption 4 of the Freedom of
Information Act (FOIA) exempts from
disclosure ‘‘trade secrets and
commercial or financial information
obtained from a person [that is]
privileged or confidential.’’ 198 In order
for information to meet the
requirements of Exemption 4, EPA must
find that the information is either: (1) A
trade secret, or (2) commercial or
financial information that is: (a)
Obtained from a person, and (b)
privileged or confidential. Information
meeting these criteria is commonly
referred to as ‘‘confidential business
information’’ or ‘‘CBI.’’ 199
In June 2019, the U.S. Supreme Court
issued its decision in Food Marketing
Institute v. Argus Leader Media, 139 S.
Ct. 2356 (2019) (Argus Leader). Argus
Leader addressed the meaning of
‘‘confidential’’ within the context of
FOIA Exemption 4. The Court held that
‘‘[a]t least where commercial or
financial information is both
customarily and actually treated as
private by its owner and provided to the
government under an assurance of
privacy, the information is ‘confidential’
within the meaning of Exemption 4.’’ 200
The Court identified two conditions
‘‘that might be required for information
communicated to another to be
considered confidential.’’ 201 Under the
first condition, ‘‘information
communicated to another remains
confidential whenever it is customarily
kept private, or at least closely held, by
the person imparting it.’’ 202 The second
condition provides that ‘‘information
might be considered confidential only if
the party receiving it provides some
assurance that it will remain secret.’’ 203
The Court found the first condition
necessary for information to be
considered confidential within the
198 5
U.S.C. 552(b)(4).
note that CAA section 114(c) explicitly
excludes emissions data from treatment as
confidential information.
200 Argus Leader, 139 S. Ct. at 2366.
201 Id. at 2363.
202 Id. (internal citations omitted).
203 Id. (internal citations omitted).
199 We
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meaning of Exemption 4, but did not
address whether the second condition
must also be met.
Following the issuance of the Court’s
opinion, the U.S. Department of Justice
(DOJ) issued guidance concerning the
confidentiality prong of Exemption 4,
articulating ‘‘the newly defined
contours of Exemption 4’’ post-Argus
Leader.204 Where the Government
provides an express or implied
indication to the submitter prior to or at
the time the information is submitted to
the Government that the Government
would publicly disclose the
information, then the submitter
generally cannot reasonably expect
confidentiality of the information upon
submission, and the information is not
entitled to confidential treatment under
Exemption 4.205
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1. Treatment of Information Contained
in Enforcement Actions and Invalid RIN
Determinations
EPA has a longstanding practice of
posting on its website or otherwise
publicly releasing information
describing fuels violations and invalid
RIN determinations.206 Accordingly, we
are proposing regulations to codify the
types of information contained in fuelsrelated enforcement actions and invalid
RIN determinations that are not entitled
to confidential treatment pursuant to
Exemption 4 of FOIA. This proposal
covers notices of violation, settlement
agreements, administrative complaints,
civil complaints, criminal information,
and criminal indictments related to
EPA’s fuel quality and RFS regulations
in 40 CFR parts 80 and 1090 and invalid
RIN determinations related to EPA’s
RFS regulations in 40 CFR part 80.
Since at least 2013,207 EPA has posted
on its website or otherwise publicly
204 ‘‘Exemption 4 After the Supreme Court’s
Ruling in Food Marketing Institute v. Argus Leader
Media and Accompanying Step-by-Step Guide,’’
Office of Information Policy, U.S. DOJ, (October 4,
2019), available at https://www.justice.gov/oip/
exemption-4-after-supreme-courts-ruling-foodmarketing-institute-v-argus-leader-media.
205 See id.; see also ‘‘Step-by-Step Guide for
Determining if Commercial or Financial
Information Obtained from a Person is Confidential
under Exemption 4 of the FOIA,’’ Office of
Information Policy, U.S. DOJ, (updated October 7,
2019), available at https://www.justice.gov/oip/stepstep-guide-determining-if-commercial-or-financialinformation-obtained-person-confidential.
206 See, e.g., ‘‘Clean Air Act Fuels Settlement
Information,’’ U.S. EPA, available at https://
www.epa.gov/enforcement/clean-air-act-fuelssettlement-information; ‘‘Civil Enforcement of the
Renewable Fuel Standard Program,’’ U.S. EPA,
available at https://www.epa.gov/enforcement/civilenforcement-renewable-fuel-standard-program.
207 EPA began posting RFS enforcement-related
determinations and actions in 2013. See ‘‘Civil
Enforcement of the Renewable Fuel Standard
Program,’’ U.S. EPA, available at https://
www.epa.gov/enforcement/civil-enforcement-
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released information relating to
violations of the fuel quality and RFS
regulations. This information includes
the company name and identification
number, the total quantity of fuel and
parameter, information relating to the
generation, transfer, or use of credits or
RINs, and the total quantity of RINs in
question. Therefore, EPA has already
provided an implied indication to any
submitters of such information after at
least 2013 that EPA may publicly
disclose such information. Accordingly,
the information is not entitled to
confidential treatment, and EPA intends
to continue to release such information
without further notice.
Through this proposal, we are also
providing an express indication that
such information is not entitled to
confidential treatment and will be
affirmatively disclosed to the public
without providing further notice or
process to the affected businesses. Once
finalized, this rule will effectively serve
as an advance confidentiality
determination through rulemaking and
will cover the information identified
below. Except as otherwise provided, 40
CFR 2.201 through 2.215 and 2.301 do
not apply to the specified information
submitted under this part and 40 CFR
part 1090 that is determined through
this rulemaking to not qualify for
confidential treatment. In particular,
this proposal will impact certain
information contained in EPA
determinations that RINs are invalid
under 40 CFR 80.1474(b)(4)(i)(C)(2) and
(b)(4)(ii)(C)(2), notices of violation,
settlement agreements, administrative
complaints, civil complaints, criminal
information, and criminal indictments.
The information that EPA intends to
continue release in the context of these
determinations and actions includes the
company name and company
identification number, the facility name
and facility identification number, the
total quantity of fuel and parameter,
information relating to the generation,
transfer, or use of credits or RINs, the
total quantity of RINs in question, the
batch number(s) and the D codes of the
RINs in question, the time period when
the RINs in question were generated or
when the violation occurred, and any
other information relevant to describing
the violation at issue. We are proposing
to codify this determination at 40 CFR
80.11 and 80.1402(b) as well as 40 CFR
1090.15.
renewable-fuel-standard-program. EPA has been
posting gasoline and diesel enforcement actions for
much longer. See ‘‘Clean Air Act Fuels Settlement
Information,’’ U.S. EPA, available at https://
www.epa.gov/enforcement/clean-air-act-fuelssettlement-information.
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Publicly disclosing this information is
important in providing transparency to
stakeholders and the public with respect
to violations of EPA’s fuel quality and
RFS programs and the relief EPA is
seeking to remedy those violations
through its enforcement actions. Public
disclosure is also important to the
successful operation and integrity of the
RFS program as it may prevent parties
from unwittingly transferring or
attempting to use invalid RINs for
compliance, in contravention of the RFS
regulations, or from buying invalid RINs
that they will be unable to use for
compliance. We seek comment on
whether any additional EPA
enforcement-related determinations and
actions, or additional factual
information relating to such
determinations and actions described
above should be identified as not
entitled to confidential treatment.
Therefore, although the public release of
such information since at least 2013
constitutes an implied indication that
such information is not entitled to
confidential treatment, EPA is also
providing an express indication that
such information is not entitled to
confidential treatment through this
proposal.
2. Treatment of Information Contained
in Requests Submitted Under the RFS
Program
We are proposing regulations that
would help facilitate our processing of
claims that RFS-related information
should be withheld from public
disclosure under FOIA, 5 U.S.C.
552(b)(4), as CBI. If finalized, the
proposed regulations would identify
certain types of RFS information
collected by EPA under 40 CFR part 80,
subpart M, that EPA would consider as
not entitled to confidential treatment
pursuant to Exemption 4 of the FOIA
and that EPA will release without
further notice.
We are proposing regulations that
would facilitate our processing of claims
that requests for information submitted
under 40 CFR part 80, subpart M,
should be withheld from the public
under Exemption (b)(4) of the FOIA, 5
U.S.C. 552(b)(4), as CBI. If finalized, this
rule would provide an express
indication that we would not consider
certain basic information incorporated
into EPA actions on petitions and
submissions, as well as that same
information as it appears in the
submissions to EPA under 40 CFR part
80, subpart M, to be entitled to
treatment as CBI under Exemption 4 of
the FOIA. In particular, this proposal
would apply to all submissions to EPA
under 40 CFR part 80, subpart M,
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including, but not limited to: SREs
submitted under 40 CFR 80.1441, small
refiner exemptions under 40 CFR
80.1442, pathway petitions under 40
CFR 80.1416, and compliance
demonstration reports. Accordingly, if
finalized, such information will be
released without further notice to the
submitter and without following EPA’s
procedures set forth in 40 CFR part 2,
subpart B. We are proposing to codify
this determination at 40 CFR 80.1402(c)
and (d).
Through this proposal, we are
providing an express indication that,
after finalization of this rule, such
information is not entitled to
confidential treatment and will be
affirmatively disclosed to the public
without providing further notice to
affected businesses. Once finalized, this
rule will effectively serve as an advance
confidentiality determination through
rulemaking covering the information
identified below. Except as otherwise
provided, 40 CFR 2.201 through 2.215
and 2.301 do not apply to the specified
information submitted under this part
that is determined through this
rulemaking not to qualify for
confidential treatment. In particular, the
information affected by this proposal is
the submitter’s name, the name and
location of the facility, the date the
submission was transmitted to EPA, any
EPA-issued company or facility
identification numbers associated with
the submission, the general nature or
purpose of the submission, and the
relevant time period for the request.
Additionally, for submissions making
requests that EPA must adjudicate,
under this proposal, once we have
adjudicated the request, we will release
the following information: The
submitter’s name; the name and location
of the facility; the date the request was
transmitted to EPA; any EPA-issued
company or facility identification
numbers associated with the request,
the general nature or purpose of the
request, the relevant time period for the
request, the extent to which EPA either
granted or denied the request, and any
relevant terms and conditions. For
information submitted under 40 CFR
part 80, subpart M, and not specified in
the proposed regulations at 40 CFR
80.1402, EPA would continue to
evaluate such CBI claims in accordance
with 40 CFR part 2, subpart B.
It is appropriate to release the
information described above in the
interest of transparency and to provide
the public with information about
entities seeking exemptions or requests
under part 80, subpart M. If finalized,
this proposed approach would also
provide certainty to submitters
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regarding the release of information
under 40 CFR part 80, subpart M. With
this advance notice, each submitter
would have certainty regarding how
EPA would treat the information
specified above, and, as applicable, have
the discretion to decide whether to
make such a request with the
understanding that EPA may release
certain information about the request
without further notice.
We seek comment on our proposal to
release the aforementioned basic
information about submissions and
EPA’s adjudication of those submissions
under the RFS program.
E. Clarifying the Definition of
‘‘Agricultural Digester’’
Row Q in Table 1 to 40 CFR 80.1426
makes renewable compressed natural
gas, renewable liquefied natural gas, and
renewable electricity eligible to generate
cellulosic biofuel (D–code 3) RINs if the
fuel is produced from, among other
feedstocks, biogas from agricultural
digesters and if the producer meets all
of the other regulatory requirements
under the RFS program. An agricultural
digester is currently defined at 40 CFR
80.1401 as ‘‘an anaerobic digester that
processes predominantly cellulosic
materials, including animal manure,
crop residues, and/or separated yard
waste.’’ In the preamble to the Pathways
II final rule, we explained that
predominantly cellulosic materials are
materials that are at least 75 percent
cellulose, hemi-cellulose or lignin by
mass.208 We received multiple questions
from stakeholders asking if they could
generate D3 RINs for biogas produced in
a digester if materials that are not
predominantly cellulosic are used in the
digester. We are proposing revisions to
the definition of agricultural digester to
clarify that each and every material
processed must be predominantly
cellulosic in order for the digester to
qualify as an agricultural digester under
the RFS regulations. This revision does
not change the existing requirements
but will make it easier for the regulated
community to understand the
208 The Pathways II final rule contained a list of
feedstocks EPA determined are ‘‘predominately
cellulosic feedstocks’’: ‘‘Crop residue, slash, precommercial thinnings and tree residue, switchgrass,
miscanthus, Arundo donax, Pennisetum
purpureum, and biogas from landfills, municipal
wastewater treatment facility digesters, agricultural
digesters, and separated MSW digesters’’ (79 FR
42130–31, July 18, 2014). EPA further determined
that feedstocks with minimum average adjusted
cellulosic content of 75 percent, measured on a dry
mass basis, were ‘‘predominantly cellulosic,’’
meaning fuel produced from these feedstocks
would be eligible to generate 100 percent cellulosic
RINs.
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limitations on generating D3 RINs for
biogas produced in anerobic digesters.
The existing definition of agricultural
digester states that the digester must
processes ‘‘predominantly cellulosic
materials,’’ including animal manure,
crop residues, and/or separated yard
waste. The preamble to the Pathways II
rule makes it clear that the term
‘‘predominantly cellulosic’’ means that
eligible feedstocks must contain a
cellulosic content of at least 75%, and
that this term does not authorize
renewable fuel producers to introduce
non-cellulosic materials into an
agricultural digester. Allowing other
materials into the digester or any
materials that are not at least 75 percent
cellulosic would be inconsistent with
the analysis underlying the rule and the
definition of agricultural digester. The
Pathways II rule identified agricultural
digesters as a type of digester that will
process wastes that are predominantly
cellulosic. For the Pathways II rule we
defined agricultural digesters narrowly
based on the feedstocks we understood
to be the most common inputs and
assessed in that rulemaking, all of
which we determined to be
predominantly cellulosic. Thus, the
ability to generate cellulosic RINs for
100 percent of the fuel produced under
the pathway in row Q is predicated on
the assumption and associated
requirement that all the inputs to an
agricultural digester are predominantly
cellulosic. However, EPA does allow
renewable fuel to be produced by ‘‘other
waste digesters’’ and in some cases this
fuel may qualify as cellulosic or partly
cellulosic. A digester processing at least
one type of material that is not at least
75 percent cellulosic content cannot be
an agricultural digester and is instead an
‘‘other waste digester’’ under row T of
Table 1 to 40 CFR 80.1426. If cellulosic
material is used in an ‘‘other waste
digester,’’ the renewable compressed
natural gas would either be eligible for
100 percent D5 RINs or may be eligible
to generate D3 RINs for the portion of
the fuel that was demonstrated to be
produced from cellulosic biomass
through proper testing and D5 RINs for
the rest of the fuel produced as specified
at 40 CFR 80.1426(f)(15)(i)(B).
In order to clarify the materials that
may be processed in an agricultural
digester, we are proposing to revise the
definition of agricultural digester to
specify that such digesters may process
‘‘only’’ predominantly cellulosic
materials and that ‘‘each and every
material processed in an agricultural
digester must be predominantly
cellulosic.’’ These revisions are
consistent with the current regulations,
and the analyses undertaken for the
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F. Definition of ‘‘Produced From
Renewable Biomass’’
CAA section 211(o)(1)(J) defines
renewable fuel as ‘‘fuel that is produced
from renewable biomass and that is
used to replace or reduce the quantity
of fossil fuel present in a transportation
fuel.’’ In order to satisfy the definition
of renewable fuel under the RFS
regulations, the fuel must: (1) Be
‘‘produced from renewable biomass’’;
(2) be ‘‘used to replace or reduce the
quantity of fossil fuel present in a
transportation fuel, heating oil, or jet
fuel’’; and (3) have ‘‘lifecycle [GHG]
emissions that are at least 20 percent
less than baseline lifecycle [GHG]
emissions’’ (unless exempted under 40
CFR 80.1403). We are proposing to
define in 40 CFR 80.1401 that
‘‘produced from renewable biomass’’
means the energy in the finished fuel
comes from renewable biomass. This
definition would align the regulatory
definition with our existing
interpretation of the statute and
regulations. We believe this definition is
needed because we have received
multiple questions from stakeholders on
this aspect of the renewable fuel
definition.
The statutory requirement that
renewable fuel be produced from
renewable biomass is fairly
straightforward for the vast majority of
renewable fuel produced under the RFS
program. For example, corn starch
ethanol is clearly produced from
renewable biomass 209 because
essentially all of the mass, volume, and
energy contained in the undenatured
fuel ethanol comes from fermented corn
starch. However, the application of this
requirement is less clear for some fuels
that are produced by co-processing
multiple feedstocks. For example, some
relatively new process technologies seek
to produce transportation fuel by
bonding carbon atoms obtained from
biogenic carbon dioxide with hydrogen
atoms obtained from fossil fuels. In this
case, some of the mass and volume in
the finished fuel may come from
renewable biomass,210 but, since carbon
dioxide is not an energy carrier, all of
the energy in the finished fuel would
come from the fossil-based hydrogen. In
these cases, we look at the existing RFS
regulations to determine whether or
how much of this fuel qualifies as
renewable fuel.
The RFS regulations at 40 CFR
80.1426(f)(4) determine the number of
gallon-RINs generated for fuel that is
produced by co-processing renewable
biomass and non-renewable feedstocks
simultaneously to produce a fuel. The
formula in the regulations states that the
share of the fuel that is renewable is
calculated as the feedstock energy from
renewable biomass divided by the total
feedstock energy. In the example given
above, the carbon dioxide provides zero
feedstock energy, so the regulations
stipulate that zero RINs would be
generated for the fuel. In other words,
no portion of the fuel would qualify as
renewable fuel. We believe this outcome
is appropriate given that the
fundamental purpose of transportation
fuel is to provide energy, thus the
source of the energy in the finished fuel
should be the criterion for determining
from what the fuel was produced, as
opposed to the source of the mass or
volume of the fuel. It is also consistent
with statutory definition that renewable
fuel must ‘‘be used to replace or reduce
the quantity of fossil fuel present in a
transportation fuel.’’ Fuel that derives
its energy from fossil fuel (a subset of
non-renewable feedstocks) is replacing
one form of fossil fuel for another, not
reducing the quantity of fossil fuel
present in a transportation fuel.
As stated above, we have received
multiple questions related to fuels that
derive their energy from non-renewable
feedstocks, and whether such fuels
qualify as renewable fuel under the RFS
program. We believe that adding this
definition would reduce future
confusion on this issue. In particular,
we want to avoid a situation where
resources may be allocated to
researching or developing a new fuel
technology with the hopes of generating
RINs only to later find out that the fuel
does not qualify because its energy does
not come from renewable biomass.
Thus, we propose to add a definition of
‘‘produced from renewable biomass’’ at
40 CFR 80.1401 that defines it as the
energy in the finished fuel comes from
renewable biomass. As explained above,
209 Provided the corn starch qualifies as
renewable biomass (e.g., it must come from
qualifying land).
210 Provided the biogenic carbon dioxide was
produced from renewable biomass (e.g., carbon
dioxide from fermented corn starch).
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Pathway II rule that formed the basis for
the agricultural digester pathways. They
are a clarification of the regulatory text,
but not a change in our interpretation of
our existing regulations or practice in
implementing them. The revisions are
meant to clarify that a digester that
processes multiple feedstocks, including
a material that is less than 75 percent
cellulosic content is not an agricultural
digester, even if the total cellulosic
content of all the processed materials
taken together exceeds the 75 percent
threshold.
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this proposed definition is consistent
with our existing interpretation of the
statute and implementing regulations.
We seek comment on this proposed
regulatory definition.
G. Estimating Landfill Emissions for
Lifecycle GHG Analysis of Fuels
Produced From Separated Municipal
Solid Waste
EPA has previously approved fuel
pathways that use the biogenic
components of separated municipal
solid waste (MSW), as defined at 40 CFR
80.1426(f)(5)(i)(C), as satisfying the 60
percent lifecycle GHG reduction for
qualification as cellulosic biofuel under
the RFS program (see Table 1 to 40 CFR
80.1426). Through the petition process
at 40 CFR 80.1416 and engagement with
stakeholders, we are aware of growing
interest in the use of biogenic
components of separated MSW to
produce diesel, gasoline, and jet fuel.
The existing separated MSW pathways
were based on engineering assessments
and other projections about the
processes, process efficiencies and types
of process energy that would be used to
convert separated MSW to fuels. In
some cases, there are separated MSW-tofuel projects under consideration that
likely do not fit the assumptions
underlying our previous assessments.
For example, our previous
assessments 211 were based on
engineering and cost projections that
separated MSW would be used as both
the feedstock and the predominant
source of fuel to heat the conversion
process.212 However, some of the
projects being developed intend to use
natural gas for process heat fuel instead
of the separated MSW itself. In such
cases, the fuels produced would be
unlikely to meet the 60 percent GHG
reduction threshold using our existing
assessment methodology. However,
stakeholders have suggested that our
past assessment methodology does not
fully capture the full lifecycle GHG
impacts of using the biogenic
components of separated MSW as
biofuel feedstock because it does not
account for the future reductions in
methane emissions from the landfills
and improved recycling that may occur
by diverting separated MSW from the
landfill. Inclusion of change in landfill
emissions could allow fuels produced
from separated MSW to satisfy the 60
percent GHG reduction threshold even
if the process heat comes from fossil
211 78
FR 14190 (March 5, 2013).
Christopher. Catalytic Fast Pyrolysis
with Upgrading to Gasoline and Diesel Blendstocks.
National Renewable Energy Laboratory (NREL).
2011. Docket Item No. EPA–HQ–OAR–2011–0542–
0007.
212 Kinchin,
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sources. We have not estimated the GHG
emissions effects of using the biogenic
components of separated MSW as
feedstock instead of its current fate (e.g.,
landfill, landfill with flaring, landfill
with power generation, composting,
waste to energy). Thus, we are seeking
comment on the appropriateness of
doing so and on the appropriate
methodologies, models, and data to
estimate the potential effects of
diverting separated MSW from landfills.
Seeking comment on this topic is
particularly relevant in this rulemaking
because some of the projects under
consideration intend to use separated
MSW to produce a biocrude, which we
are proposing to consider a
biointermediate (see Section VII).
The concept of avoided landfill
emissions is that diverting separated
MSW from a landfill would reduce the
subsequent GHG emissions associated
with landfilling that material. When
landfilled, biogenic materials
decompose under anaerobic conditions
and produce landfill gas composed of
methane, carbon dioxide, and other
gases. Landfills in the United States
typically capture the landfill gas and
flare it or use it to produce electricity or
CNG or for other purposes. However, a
share of the landfill gas evades capture
or is not fully combusted by the flares
and is emitted from the landfill. Since
landfill gas generation is a function of
the amount and biogenic content of
MSW landfilled, diverting separated
MSW from a landfill can reduce the
overall amount of landfill GHG
emissions. On the other hand, some of
the biogenic MSW decomposes slowly
and remains in the landfill when the
landfill cell is capped, resulting in longterm carbon storage at the landfill.
Combusting carbon that would
otherwise be stored, in the form of
transportation fuel, increases GHG
emissions. The net result of all of these
processes in a landfill requires
modelling to estimate the effect of
diverting the separated MSW on landfill
emissions.
In addition to avoided methane
emissions, there may be emissions
reductions from enhanced recycling
associated with the use of MSW as a
biofuel feedstock. Using MSW as a
biofuel feedstock may entail additional
separation and recycling than would
otherwise occur, enhancing the
effectiveness of recycling efforts for
metals, plastics, and potentially other
materials. The reduced GHG emissions
associated with recycling these
additional materials as opposed to
producing new metals, plastics and
other materials could then provide
additional GHG reduction that could be
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estimated and allocated to the finished
fuel for purposes of lifecycle GHG
analysis.
A number of models and data sources
are available to estimate landfill
emissions—we briefly describe a few
here but this is not intended as a
comprehensive list. The GREET–2020
fuel cycle model includes data and
formulas to estimate the lifecycle GHG
emissions associated with ethanol and
CNG produced from MSW feedstock,
and these data and formulas could be
adapted for analysis of other MSW to
fuel pathways.213 The EPA Waste
Reduction Model (WARM) is a tool to
help solid waste planners estimate GHG
emissions reductions, energy savings,
and economic impacts from several
different waste management
practices.214 WARM estimates avoided
landfill emissions based on user inputs
on MSW composition and landfill
characteristics. WARM does not model
pathways for manufacturing fuel from
MSW. Municipal solid waste landfills
report annually under EPA’s GHG
reporting program based on protocols
and formulas specified at 40 CFR part
98, subpart HH. Subpart HH includes
formulas to estimate landfill emissions
each year but does not address carbon
storage at landfills or metal and plastic
recycling. In 2019, the International
Civil Aviation Organization (ICAO)
published a methodology for calculating
landfill emissions for aviation fuels
produced from MSW.215 These models
and methodologies have many
similarities but they differ in their
intended purposes and the default
assumptions they recommend for
certain key inputs, such as the decay
rates for certain types of biogenic MSW
components and the oxidation rates for
uncaptured landfill methane. Based on
our review of these models, formulas
and estimates we observe that the
landfill emissions estimates are
sensitive to inputs for key assumptions.
We seek comment on the
appropriateness of accounting for
changes in landfill emissions and, if
appropriate, on the best available
213 The Greenhouse gases, Regulated Emissions,
and Energy use in Technologies (GREET) Model is
developed and maintained by Argonne National
Laboratory. https://greet.es.anl.gov.
214 EPA. (2019). Waste Reduction Model (WARM)
Tool User’s Guide. May 2019. EPA530–R–19–002.
https://www.epa.gov/sites/production/files/202012/documents/warm-users-guide_v15_10-292020.pdf.
215 ICAO. (2019). Carbon Offsetting and
Reduction Scheme for International Aviation
(CORSIA) Methodology for Calculating Actual Life
Cycle Emissions Values. November 2019. 19 pages.
https://www.icao.int/environmental-protection/
CORSIA/Documents/ICAO%20document
%2007%20-%20Methodology%20for%20Actual%
20Life%20Cycle%20Emissions.pdf.
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models, data, and methodologies to
estimate changes in landfill emissions
associated with the use of biogenic
components of separated MSW as a
feedstock for the production of biofuel
for purposes of lifecycle GHG analysis
for the RFS program. Specifically, we
seek comment on the extent to which
we should account for net emissions
associated with changes in landfill
methane emissions, landfill carbon
storage, metal and plastic recycling, or
other activities. In our previous
assessments of landfill biogas, we used
landfill gas flaring as the alternative
baseline scenario (Pathways II rule, 79
FR 42141–2); in this rulemaking, we
seek comment on whether there are any
new data that would support using a
different baseline for evaluation of using
biogenic components of separate MSW
as feedstock for biofuel production.
Given the fact that landfill emissions
can occur for decades after material is
disposed, we also seek comment on the
most appropriate methodology for
addressing the temporal aspects of
landfill emissions. In other parts of
EPA’s lifecycle analysis, we consider
emissions over a 30-year period. We
seek comment on whether a 30-year
period is also appropriate for the
purposes of quantifying changes in
landfill emissions.
The composition of separated MSW
used as biofuel feedstock has a
significant impact on the potential
emissions from the landfill. We seek
comment on whether and how EPA
should track and verify the feedstock
composition if accounting for net
avoided landfill emissions under the
RFS program as well as changes in
stored carbon. In addition, landfill
emissions can differ significantly from
one landfill to another based on
differences in climate, management
practices and other characteristics;
however, evaluating individual landfills
requires additional collection, tracking,
and verification of data. We seek
comment on whether to consider
landfill emissions from individual
landfills or take a more aggregated
approach whereby landfills are
evaluated nationally, regionally or based
on a limited set of other characteristics
(e.g., temperature, moisture, gas
collection technology). We intend to
consider the comments received on this
topic as we evaluate new fuel pathway
petitions, submitted pursuant to 40 CFR
80.1416, that include the use of
separated MSW feedstock.
H. Technical Corrections and
Clarifications
We are proposing to make numerous
technical corrections to the RFS
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regulations. These amendments are
being made to correct minor
inaccuracies and updates in the current
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regulations. These changes are
described in Table VIII.H–1 below.
TABLE VIII.H–1—MISCELLANEOUS TECHNICAL CORRECTIONS AND CLARIFICATIONS TO RFS REGULATIONS
Part and section of title 40
Description of revision
80.1401 ...............................................................
80.1401, 80.1426(f)(5)(i)–(iii), (f)(5)(iv)(A) and
(B), and (f)(5)(v), 80.1450(b)(1)(vii)(A) and (B)
and (b)(1)(viii), 80.1451(b)(1)(ii)(R), and
80.1454(j).
80.1401, 80.1426(f)(17)(i), 80.1450(b)(1)(xii),
80.1451(b)(1)(ii)(T), 80.1454(l), and
80.1468(b).
80.1401 and 80.1468(b) .....................................
80.1426(f)(7)(v)(A) and 80.1468(b) ....................
80.1426(f)(7)(v)(B) and 80.1468(b) ....................
80.1426(f)(7)(v)(B) and 80.1468(b) ....................
80.1426(f)(8)(ii)(B) and 80.1468(b) .....................
80.1426(f)(9)(ii), 80.1430(e)(2), and 80.1468(b)
80.1426(f)(17)(i) ..................................................
80.1426(f)(17)(i)(B)(1) and (2),
80.1450(b)(1)(xii)(B) and (C),
80.1451(b)(1)(ii)(T)(1), and 80.1454(1)(1).
80.1428(b)(2) ......................................................
80.1429(b)(9) ......................................................
80.1450(g)(11)(ii), 80.1473(f), 80.1474(b)(2),
(b)(3), (b)(4)(i)(C), and (b)(4)(ii)(C).
80.1450(h)(2)(i) ...................................................
80.1451(b)(1)(ii)(T)(2) and 80.1454(l)(3) ............
80.1460(b)(6) ......................................................
80.1464(a)(3)(ii), (b)(3)(ii), and (c)(2)(ii) .............
80.1464(a)(4)(ii), (b)(5)(ii), and (c)(3)(ii) and
80.1475(a)(2) and (d)(4).
80.1464(a)(7), (b)(8), (c)(7), (i)(1)(i), and (i)(2)(i)
80.1464(b)(4)(i) and (iii) ......................................
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80.1469(c)(1)(vii) .................................................
80.1471(c) ...........................................................
80.1475(d)(1) and (3) .........................................
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Amended by revising the definition of ‘‘Renewable fuel’’ to reiterate that undenatured ethanol
is not renewable fuel.
Amended by moving the definitions of ‘‘Separated yard waste,’’ ‘‘Separated food waste,’’ and
‘‘Separated municipal solid waste’’ from § 80.1426(f)(5) to the RFS definitions section
(§ 80.1401) and updating associated cross-references.
Amended by updating the incorporation by reference (IBR) for ‘‘Standard Specification for Diesel Fuel,’’ ASTM D975–13a, to now be ASTM D975–21, which is the most recent ASTM
version.
Amended by updating the IBR for ‘‘Standard Specification for Biodiesel Fuel Blend Stock
(B100) for Middle Distillate Fuels,’’ ASTM D6751–09, to now be ASTM D6751–20a, which is
the most recent ASTM version.
Amended by updating the IBR for ‘‘Standard Test Methods for Analysis of Wood Fuels,’’
ASTM E870–82(2006), to now be ASTM E870–82(2019), which is the most recent ASTM
version.
Amended by updating the IBR for ‘‘Standard Test Methods for Direct Moisture Content Measurement of Wood and Wood-Based Materials,’’ ASTM D4442–07, to now be ASTM D4442–
20, which is the most recent ASTM version.
Amended by updating the IBR for ‘‘Standard Test Method for Laboratory Standardization and
Calibration of Hand-Held Moisture Meters,’’ ASTM D4444–08, to now be ASTM D4444–13
(2018), which is the most recent ASTM version.
Amended by updating the IBR for ‘‘Standard Guide for the Use of the Joint American Petroleum Institute (API) and ASTM Adjunct for Temperature and Pressure Volume Correction
Factors for Generalized Crude Oils, Refined Products, and Lubricating Oils: API Manual of
Petroleum Measurement Standards (MPMS) Chapter 11.1,’’ ASTM D1250–08, to now be
ASTM D1250–19e1, which is the most recent ASTM version.
Amended by updating the IBR for ‘‘Standard Test Methods for Determining the Biobased Content of Solid, Liquid, and Gaseous Samples Using Radiocarbon Analysis,’’ ASTM D6866–08,
to now be ASTM D6866–21, which is the most recent ASTM version.
Amended by adding ‘‘renewable gasoline,’’ consistent with other related sections.
Amended by replacing ‘‘diesel’’ with ‘‘distillate’’ to clarify that parties that blend renewable jet
fuel with conventional jet fuel must currently comply with these requirements. This would remove perceived ambiguity over whether these provisions apply to producers of blended renewable jet fuel (jet fuel is not diesel fuel per the definition of ‘‘diesel fuel’’ at 40 CFR 80.2
but rather distillate fuel).
Amended to be consistent with the restriction that independent third-party auditors may not
own RINs under § 80.1471(a)(3).
Amended to limit the number of RINs that a party can separate when they incur an RVO due
to redesignating certified-NTDF under § 80.1408. This is consistent with similar situations involving exporters of renewable fuel or importers of gasoline and diesel fuel.
Amended by updating the email address for EPA’s EMTS help desk to fuelsprogramsupport@
epa.gov.
Amended by changing the time for responding to EPA’s notice of intent to deactivate a company’s registration from 14 to 30 calendar days to allow additional time for company action.
Amended to clarify reporting instructions and move the affidavit requirement from the reporting
section (§ 80.1451) to the recordkeeping section (§ 80.1454).
Amended to clarify that generating a RIN for fuel for which RINs have previously been generated is not a prohibited act if those RINs were generated pursuant to § 80.1426(c)(6).
Amended to modify the attest engagements requirements to be consistent with the RIN activity
report requirements in § 80.1451(c)(2).
Amended by updating outdated references to expired provisions of part 80 to part 1090.
Amended to add the requirement that the attest auditor verifies the submission of required
compliance reports and states as a finding any compliance reports missing.
Amended to modify the requirements to include verification of last date of independent thirdparty engineering review as occurring within the three-year cycle under § 80.1450(d)(3).
Amended to modify the requirements for Quality Assurance Plans to allow for a renewable fuel
for which RINs were previously generated to be used as a feedstock if done in accordance
with § 80.1426(c)(6).
Amended to correct an erroneous reference to 31 CFR 50.5(q) to now be 31 CFR 50.4(t), and
to allow comparable financial strength ratings if acceptable to EPA.
Amended by correcting erroneous references to paragraph (b) to now be to paragraph (c).
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IX. Statutory and Executive Order
Reviews
Additional information about these
statutes and Executive orders can be
found at https://www.epa.gov/lawsregulations/laws-and-executive-orders.
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A. Executive Order 12866: Regulatory
Planning and Review and Executive
Order 13563: Improving Regulation and
Regulatory Review
This action is an economically
significant regulatory action that was
submitted to the Office of Management
and Budget (OMB) for review. Any
changes made in response to OMB
recommendations have been
documented in the docket. EPA
prepared an analysis of potential costs
and benefits associated with this action.
This analysis is presented in the DRIA,
available in the docket for this action.
B. Paperwork Reduction Act (PRA)
The information collection activities
in this proposed rule have been
submitted for approval to the Office of
Management and Budget (OMB) under
the PRA. The Information Collection
Request (ICR) document that EPA
prepared has been assigned EPA ICR
number 2691.01. You can find a copy of
the ICR in the docket for this rule, and
it is briefly summarized here.
The information to be collected is
necessary to implement the proposed
inclusion of biointermediates to the RFS
program. As part of this proposal,
biointermediate producers and
importers would be added as
respondents and certain existing
respondents (e.g., renewable fuel
producers) may have additional
reporting and recordkeeping
requirements related to their use of
biointermediates. Recordkeeping and
reporting requirements include the
registration of biointermediate
producers and their facilities; product
transfer documentation; records
retention related to the production,
transfer, and use of biointermediates;
annual attest engagements; quality
assurance plans for biointermediates;
and the submission of information
related to renewable fuels produced
using biointermediates. These items are
discussed in detail in the supporting
statement in the docket.
Respondents/affected entities:
Biointermediate producers, renewable
fuel producers, biointermediate
importers, and third parties who submit
reports for these parties.
Respondent’s obligation to respond:
Mandatory, under 40 CFR parts 80 and
1090.
Estimated number of respondents:
1,670.
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Frequency of response: On occasion,
daily, quarterly, or annually.
Total estimated burden: 47,988 hours
(per year). Burden is defined at 5 CFR
1320.3(b).
Total estimated cost: $2,828,180 (per
year), all of which is purchased services,
and which includes $0 annualized
capital or operation & maintenance
costs.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number. The OMB control
numbers for EPA’s regulations in 40
CFR are listed in 40 CFR part 9.
Submit your comments on the
Agency’s need for this information, the
accuracy of the provided burden
estimates and any suggested methods
for minimizing respondent burden to
EPA using the docket identified at the
beginning of this rule. You may also
send your ICR-related comments to
OMB’s Office of Information and
Regulatory Affairs via email to OIRA_
submission@omb.eop.gov, Attention:
Desk Officer for EPA. Since OMB is
required to make a decision concerning
the ICR between 30 and 60 days after
receipt, OMB must receive comments no
later than January 20, 2022. EPA will
respond to any ICR-related comments in
the final rule.
C. Regulatory Flexibility Act (RFA)
I certify that this action will not have
a significant economic impact on a
substantial number of small entities
under the RFA. In making this
determination, the impact of concern is
any significant adverse economic
impact on small entities. An agency may
certify that a rule will not have a
significant economic impact on a
substantial number of small entities if
the rule relieves regulatory burden, has
no net burden, or otherwise has a
positive economic effect on the small
entities subject to the rule.
With respect to the proposed
biointermediates provisions, we do not
believe that a small biointermediate
producer or renewable fuel producer
would choose to take advantage of the
proposed program for biointermediates
unless there was sufficient economic
incentive for them to do so. Current
small renewable fuel producers would
not be compelled to use
biointermediates, and as such, any costs
associated with these provisions are
purely voluntary. With respect to the
other proposed amendments to the RFS
regulations, this action makes relatively
minor corrections and modifications to
those regulations. As such, we do not
anticipate that there will be any
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significant adverse economic impact on
directly regulated small entities as a
result of these provisions.
The small entities directly regulated
by the annual percentage standards
associated with the RFS volumes are
small refiners, which are defined at 13
CFR 121.201. With respect to the 2020,
2021, and 2022 percentage standards
and 2022 supplemental standard, we
have evaluated the impacts on small
entities from two perspectives: As if the
standards were a standalone action or if
they are a part of the overall impacts of
the RFS program as a whole.
To evaluate the impacts of the volume
requirements on small entities, we have
conducted a screening analysis 216 to
assess whether we should make a
finding that this action will not have a
significant economic impact on a
substantial number of small entities.
Currently available information shows
that the impact on small entities from
implementation of this rule will not be
significant. We have reviewed and
assessed the available information,
which shows that obligated parties,
including small entities, are generally
able to recover the cost of acquiring the
RINs necessary for compliance with the
RFS standards through higher sales
prices of the petroleum products they
sell than would be expected in the
absence of the RFS program.217 This is
true whether they acquire RINs by
purchasing renewable fuels with
attached RINs or purchase separated
RINs. The costs of the RFS program are
thus generally being passed on to
consumers in the highly competitive
marketplace. Even if we were to assume
that the cost of acquiring RINs was not
recovered by obligated parties, a cost-tosales ratio test shows that the costs to
small entities of the proposed RFS
standards are far less than 1 percent of
the value of their sales.
While the screening analysis
described above supports a certification
that this rule will not have a significant
economic impact on small refiners, we
continue to believe that it is more
appropriate to consider the standards as
a part of our ongoing implementation of
the overall RFS program. When
considered this way, the impacts of the
RFS program as a whole on small
entities were addressed in the RFS2
final rule, which was the rule that
implemented the entire program as
required by EISA 2007.218 As such, the
216 See
Chapter 11 of the DRIA.
a further discussion of the ability of
obligated parties to recover the cost of RINs see
‘‘Denial of Petitions for Rulemaking to Change the
RFS Point of Obligation,’’ EPA–420–R–17–008,
November 2017.
218 75 FR 14670 (March 26, 2010).
217 For
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Small Business Regulatory Enforcement
Fairness Act (SBREFA) panel process
that took place prior to the 2010 rule
was also for the entire RFS program and
looked at impacts on small refiners
through 2022.
For the SBREFA process for the RFS2
final rule, we conducted outreach, factfinding, and analysis of the potential
impacts of the program on small
refiners, which are all described in the
Final Regulatory Flexibility Analysis,
located in the rulemaking docket (EPA–
HQ–OAR–2005–0161). This analysis
looked at impacts to all refiners,
including small refiners, through the
year 2022 and found that the program
would not have a significant economic
impact on a substantial number of small
entities, and that this impact was
expected to decrease over time, even as
the standards increased. For gasoline
and/or diesel small refiners subject to
the standards, the analysis included a
cost-to-sales ratio test, a ratio of the
estimated annualized compliance costs
to the value of sales per company. From
this test, we estimated that all directly
regulated small entities would have
compliance costs that are less than one
percent of their sales over the life of the
program (75 FR 14862, March 26, 2010).
We have determined that this
proposed rule will not impose any
additional requirements on small
entities beyond those already analyzed,
since the impacts of this rule are not
greater or fundamentally different than
those already considered in the analysis
for the RFS2 final rule assuming full
implementation of the RFS program.
The proposed cellulosic biofuel,
advanced biofuel, and total renewable
fuel volumes remain significantly below
the statutory volume targets analyzed in
the RFS2 final rule. Compared to the
burden that would be imposed under
the volumes that we assessed in the
screening analysis for the RFS2 final
rule (i.e., the volumes specified in the
Clean Air Act), the proposed volume
requirements in this rule reduce burden
on small entities. Regarding the BBD
standard, it is a nested standard within
the advanced biofuel category, and as
discussed in Section III.D, the proposed
2022 BBD volume requirement is below
the volume of BBD that is anticipated to
be produced and used to satisfy the
advanced biofuel requirement. In other
words, the volume of BBD actually used
in 2022 will be driven not by the
proposed 2022 BBD standard, but rather
by the proposed 2022 advanced biofuel
standard, and potentially also by the
total renewable fuel standard. The net
result of the standards being proposed
in this action is a reduction in burden
as compared to implementation of the
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statutory volume targets assumed in the
RFS2 final rule analysis.
While the rule will not have a
significant economic impact on a
substantial number of small entities,
there are compliance flexibilities in the
program that can help to reduce impacts
on small entities. These flexibilities
include being able to comply through
RIN trading rather than renewable fuel
blending, 20 percent RIN rollover
allowance (up to 20 percent of an
obligated party’s RVO can be met using
previous-year RINs), and deficit carryforward (the ability to carry over a
deficit from a given year into the
following year, provided that the deficit
is satisfied together with the next year’s
RVO). In the RFS2 final rule, we
discussed other potential small entity
flexibilities that had been suggested by
the SBREFA panel or through
comments, but we did not adopt them,
in part because we had serious concerns
regarding our authority to do so.
In sum, this proposed rule will not
change the compliance flexibilities
currently offered to small entities under
the RFS program and available
information shows that the impact on
small entities from implementation of
this rule will not be significant when
viewed either from the perspective of it
being a standalone action or a part of the
overall RFS program. We have therefore
concluded that this action will have no
net regulatory burden for all directly
regulated small entities.
D. Unfunded Mandates Reform Act
(UMRA)
This action does not contain an
unfunded mandate of $100 million or
more as described in UMRA, 2 U.S.C.
1531–1538, and does not significantly or
uniquely affect small governments. This
action implements mandates
specifically and explicitly set forth in
CAA section 211(o), and we believe that
this action represents the least costly,
most cost-effective approach to achieve
the statutory requirements.
E. Executive Order 13132: Federalism
This action does not have federalism
implications. It will not have substantial
direct effects on the states, on the
relationship between the National
Government and the states, or on the
distribution of power and
responsibilities among the various
levels of government.
F. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
This action does not have tribal
implications as specified in Executive
Order 13175. This action will be
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implemented at the Federal level and
affects transportation fuel refiners,
blenders, marketers, distributors,
importers, exporters, and renewable fuel
producers and importers. Tribal
governments will be affected only to the
extent they produce, purchase, or use
regulated fuels. Thus, Executive Order
13175 does not apply to this action.
G. Executive Order 13045: Protection of
Children From Environmental Health
Risks and Safety Risks
EPA interprets Executive Order 13045
as applying only to those regulatory
actions that concern environmental
health or safety risks that EPA has
reason to believe may
disproportionately affect children, per
the definition of ‘‘covered regulatory
action’’ in section 2–202 of the
Executive order. This action is not
subject to Executive Order 13045
because it implements specific
standards established by Congress in
statutes (CAA section 211(o)). While
this action is not covered by Executive
Order 13045, a discussion of
environmental health impacts is
included in Chapter 3 of the DRIA.
H. Executive Order 13211: Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use
This action is not a ‘‘significant
energy action’’ because it is not likely to
have a significant adverse effect on the
supply, distribution, or use of energy.
This action proposes the required
renewable fuel content of the
transportation fuel supply for 2020,
2021, and 2022 pursuant to the CAA.
The RFS program and this rule are
designed to achieve positive effects on
the nation’s transportation fuel supply
by increasing energy independence and
security.
I. National Technology Transfer and
Advancement Act (NTTAA) and 1 CFR
Part 51
This proposed action involves
technical standards. We are proposing
to update the existing test methods and
standards in the RFS regulations to
more recent versions. In accordance
with the requirements of 1 CFR 51.5, we
are proposing to incorporate by
reference the use of test methods and
standards from American Society for
Testing and Materials International
(ASTM International). A detailed
discussion of these test methods and
standards can be found in Section
VIII.H. The standards and test methods
may be obtained through the ASTM
International website (www.astm.org) or
by calling ASTM at (877) 909–2786.
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(ASTM E711 is referenced in the
regulatory text of this proposed rule. It
was approved for IBR as of July 1, 2010
and no changes are being proposed.)
ASTM International routinely updates
many of its reference documents. If
ASTM International publishes an
updated version of any of reference
documents included in this proposal,
we will consider referencing that
updated version in the final rule.
TABLE IX.I–1—PROPOSED STANDARDS AND TEST METHODS TO BE INCORPORATED BY REFERENCE
Organization and standard or test method
Description
ASTM D975–21, Standard Specification for Diesel Fuel, approved August 1, 2021.
ASTM D1250–19e1, Standard Guide for the Use of the Joint API and
ASTM Adjunct for Temperature and Pressure Volume Correction
Factors for Generalized Crude Oils, Refined Products, and Lubricating Oils: API MPMS Chapter 11.1, approved May 1, 2019.
ASTM D4442–20, Standard Test Methods for Direct Moisture Content
Measurement of Wood and Wood-Based Materials, approved March
1, 2020.
ASTM D4444–13 (2018), Standard Test Method for Laboratory Standardization and Calibration of Hand-Held Moisture Meters, reapproved
July 1, 2018.
ASTM D6751–20a, Standard Specification for Biodiesel Fuel Blend
Stock (B100) for Middle Distillate Fuels, approved August 1, 2020.
ASTM D6866–21, Standard Test Methods for Determining the
Biobased Content of Solid, Liquid, and Gaseous Samples Using Radiocarbon Analysis, approved January 15, 2021.
ASTM E870–82 (2019), Standard Test Methods for Analysis of Wood
Fuels, reapproved April 1, 2019.
Diesel fuel specifications that must be met to qualify for RINs for renewable fuels.
Standard guide used by industry for determining temperature corrected
standardized volumes under the RFS program.
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J. Executive Order 12898: Federal
Actions To Address Environmental
Justice in Minority Populations and
Low-Income Populations
Due to time constraints and
uncertainty about where impacts are
likely to occur, EPA is able to evaluate
only qualitatively the extent to which
this action may result in
disproportionately high and adverse
human health or environmental effects
on minority populations, low-income
populations, and/or indigenous peoples,
as specified in Executive Order 12898
(59 FR 7629, February 16, 1994). While
there is the potential for significant GHG
emission reductions as a result of this
action, changes in air and water quality
could occur due to increases in ethanol
or biodiesel production. Land use
change to bring more corn, soy, or other
crops into production in response to the
action could also affect air, water, and
soil quality in specific locations. The
extent to which such changes—as well
as future climate change impacts—may
be unevenly distributed spatially in
ways that coincide with patterns of preexisting exposure and vulnerabilities for
minority populations, low-income
populations, and/or indigenous peoples
is uncertain and would require
predicting where these changes would
occur on a fine spatial scale. A summary
of our approach for considering
potential EJ concerns as a result of this
action can be found in Section I.I, and
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Test method used for determining moisture content of wood samples
that must be met when qualifying for RINs for renewable fuels.
Test method used for determining moisture content of wood samples
that must be met when qualifying for RINs for renewable fuels.
Biodiesel fuel specifications that must be met to qualify for RINs for renewable fuels.
Radiocarbon dating test method to determine the renewable content of
transportation fuel.
Test method that covers the proximate and ultimate analysis of wood
fuels, as well as the determination of the gross caloric value of wood
sampled and prepared by prescribed test methods and analyzed according to ASTM established procedures that must be met when
qualifying for RINs for renewable fuels.
our EJ analysis (including a discussion
of this action’s potential impacts on
GHGs, air quality, water quality, and
fuel and food prices) can be found in
Chapter 8 of the DRIA, available in the
docket for this action.
X. Statutory Authority
Statutory authority for this action
comes from sections 114, 203–05, 208,
211, and 301 of the Clean Air Act, 42
U.S.C. 7414, 7522–24, 7542, 7545, and
7601.
List of Subjects
40 CFR Part 80
Environmental protection,
Administrative practice and procedure,
Air pollution control, Diesel fuel, Fuel
additives, Gasoline, Imports,
Incorporation by reference, Oil imports,
Petroleum, Renewable fuel.
40 CFR Part 1090
Environmental protection,
Administrative practice and procedure,
Air pollution control, Diesel fuel, Fuel
additives, Gasoline, Imports, Oil
imports, Petroleum, Renewable fuel.
Michael S. Regan,
Administrator.
For the reasons set forth in the
preamble, EPA proposes to amend 40
CFR parts 80 and 1090 as follows:
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PART 80—REGULATION OF FUELS
AND FUEL ADDITIVES
1. The authority citation for part 80
continues to read as follows:
■
Authority: 42 U.S.C. 7414, 7521, 7542,
7545, and 7601(a).
Subpart A—General Provisions
■
2. Add § 80.11 to read as follows:
§ 80.11
Confidentiality of information.
(a) Except as specified in paragraph
(b) of this section, information obtained
by the Administrator or his
representatives pursuant to this part
shall be treated, in so far as its
confidentiality is concerned, in
accordance with the provisions of 40
CFR part 2, subpart B.
(b) Information contained in EPA
notices of violation, settlement
agreements, administrative complaints,
civil complaints, criminal information,
and criminal indictments is not entitled
to confidential treatment and therefore
EPA may publicly disclose such
information. Such information includes
the company name and EPA-issued
company identification number, the
facility name and EPA-issued facility
identification number, the total quantity
of fuel and parameter, the time or time
period when the violation occurred,
information relating to the generation,
transfer, or use of credits, and any other
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information relevant to describing the
violation.
Subpart M—Renewable Fuel Standard
3. Amend § 80.1401 by:
a. Revising the definitions of
‘‘Agricultural digester’’ and ‘‘Baseline
volume’’;
■ b. Adding in alphabetical order the
definition of ‘‘Biocrude’’;
■ c. Revising the definition of
‘‘Biodiesel’’;
■ d. Adding in alphabetical order the
definitions of ‘‘Biointermediate,’’
‘‘Biointermediate import facility,’’
‘‘Biointermediate importer,’’
‘‘Biointermediate producer,’’ and
‘‘Biointermediate production facility’’;
■ e. Revising the definitions of
‘‘Combined heat and power (CHP),’’
‘‘Co-processed,’’ ‘‘Facility,’’ and
‘‘Foreign renewable fuel producer’’;
■ f. Adding in alphabetical order the
definition of ‘‘Free fatty acid (FFA)
feedstock’’;
■ g. Revising paragraph (1) in the
definition of ‘‘Non-ester renewable
diesel’’ and the definition of ‘‘Nonrenewable feedstock’’;
■ h. Adding in alphabetical order the
definition of ‘‘Produced from renewable
biomass’’;
■ i. Revising the definitions of ‘‘Quality
assurance audit,’’ ‘‘Quality assurance
plan,’’ paragraph (7) in the definition of
‘‘Renewable biomass,’’ the introductory
text and paragraph (1)(i) in the
definition of ‘‘Renewable fuel’’; and
■ j. Adding in alphabetical order the
definitions of ‘‘Separated food waste,’’
‘‘Separated municipal solid waste
(MSW),’’ ‘‘Separated yard waste,’’ and
‘‘Undenatured ethanol’’.
The revisions and additions read as
follows:
■
■
§ 80.1401
Definitions.
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*
*
*
*
Agricultural digester means an
anaerobic digester that processes only
animal manure, crop residues, or
separated yard waste with an adjusted
cellulosic content of at least 75%. Each
and every material processed in an
agricultural digester must have an
adjusted cellulosic content of at least
75%.
*
*
*
*
*
Baseline volume means the permitted
capacity or, if permitted capacity cannot
be determined, the actual peak capacity
or nameplate capacity as applicable
pursuant to § 80.1450(b)(1)(v)(A)
through (C), of a specific renewable fuel
production facility on a calendar year
basis.
Biocrude means a liquid
biointermediate produced from
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renewable biomass through gasification
or pyrolysis at a biointermediate
production facility to be used to
produce renewable fuel at a refinery as
defined in 40 CFR 1090.80.
Biodiesel means a mono-alkyl ester
that meets ASTM D6751 (incorporated
by reference, see § 80.1468).
*
*
*
*
*
Biointermediate means any feedstock
material that is used to produce
renewable fuel and meets all of the
following requirements:
(1) It is derived from renewable
biomass.
(2) It does not meet the definition of
renewable fuel in this section and RINs
were not generated for it as a renewable
fuel in its own right.
(3) It is produced at a facility
registered with EPA that is different
than the facility at which it is used to
produce renewable fuel.
(4) It is made from the feedstock and
will be used to produce the renewable
fuel in accordance with the process(es)
listed in the approved pathway (as
described in table 1 to § 80.1426 or a
pathway approval pursuant to
§ 80.1416) that the biointermediate
producer and renewable fuel producer
are using to convert renewable biomass
to renewable fuel.
(5) Is one of the following:
(i) Biocrude.
(ii) Free fatty acid (FFA) feedstock.
(iii) Undenatured ethanol feedstock.
(6) A feedstock listed in a pathway in
Table 1 to § 80.1426, or in an approved
pathway petition under § 80.1416, and
used to produce the renewable fuel
specified in that pathway or approved
petition using the specified process
requirements, as applicable, is not a
biointermediate.
Biointermediate import facility means
any facility as defined in 40 CFR
1090.80 where a biointermediate is
imported from outside the covered
location into the covered location.
Biointermediate importer means any
person who owns, leases, operates,
controls, or supervises a biointermediate
import facility.
Biointermediate producer means any
person who owns, leases, operates,
controls, or supervises a biointermediate
production facility.
Biointermediate production facility
means all of the activities and
equipment associated with the
production of a biointermediate starting
from the point of delivery of feedstock
material to the point of final storage of
the end biointermediate product, which
are located on one property, and are
under the control of the same person (or
persons under common control).
*
*
*
*
*
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Combined heat and power (CHP), also
known as cogeneration, refers to
industrial processes in which waste heat
from the production of electricity is
used for process energy in a
biointermediate or renewable fuel
production facility.
*
*
*
*
*
Co-processed means that renewable
biomass or a biointermediate was
simultaneously processed with fossil
fuels or other non-renewable feedstock
in the same unit or units to produce a
fuel that is partially derived from
renewable biomass or a biointermediate.
*
*
*
*
*
Facility means all of the activities and
equipment associated with the
production of renewable fuel or a
biointermediate starting from the point
of delivery of feedstock material to the
point of final storage of the end product,
which are located on one property, and
are under the control of the same person
(or persons under common control).
*
*
*
*
*
Foreign renewable fuel producer
means a person from a foreign country
or from an area outside the covered
locations who produces renewable fuel
for use in transportation fuel, heating
oil, or jet fuel. Foreign ethanol
producers are considered foreign
renewable fuel producers.
*
*
*
*
*
Free fatty acid (FFA) feedstock means
a biointermediate that is composed of at
least 80 percent free fatty acids that are
separated from renewable biomass. FFA
feedstock must not include any free
fatty acids from the refining of crude
palm oil.
*
*
*
*
*
Non-ester renewable diesel * * *
(1) A fuel or fuel additive that meets
the ASTM D975 (incorporated by
reference, see § 80.1468) Grade No. 1–D
or No. 2–D specifications and can be
used in an engine designed to operate
on conventional diesel fuel; or
*
*
*
*
*
Non-renewable feedstock means a
feedstock (or any portion thereof) that
does not meet the definition of
renewable biomass or biointermediate
in this section.
*
*
*
*
*
Produced from renewable biomass
means that the energy in the finished
fuel or biointermediate comes from
renewable biomass.
*
*
*
*
*
Quality assurance audit means an
audit of a renewable fuel production
facility or biointermediate production
facility conducted by an independent
third-party auditor in accordance with a
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QAP that meets the requirements of
§§ 80.1469, 80.1472, and 80.1477.
Quality assurance plan, or QAP,
means the list of elements that an
independent third-party auditor will
check to verify that the RINs generated
by a renewable fuel producer or
importer are valid or to verify the
appropriate production of a
biointermediate. A QAP includes both
general and pathway specific elements.
*
*
*
*
*
Renewable biomass * * *
(7) Separated yard waste or food
waste, including recycled cooking and
trap grease.
*
*
*
*
*
Renewable fuel means a fuel that
meets all of the requirements of
paragraph (1) and (2) of this definition:
(1)(i) Fuel that is produced from
renewable biomass or a biointermediate
produced from renewable biomass.
*
*
*
*
*
Separated food waste means a
feedstock stream consisting of food
waste kept separate since generation
from other waste materials, and which
includes food and beverage production
waste and post-consumer food and
beverage waste.
Separated municipal solid waste
(MSW) means material remaining after
separation actions have been taken to
remove recyclable paper, cardboard,
plastics, rubber, textiles, metals, and
glass from municipal solid waste, and
which is composed of both cellulosic
and non-cellulosic materials.
Separated yard waste means a
feedstock stream consisting of yard
waste kept separate since generation
from other waste materials.
*
*
*
*
*
Undenatured ethanol means ethanol
that has not been denatured as required
in 27 CFR parts 19 through 21.
Undenatured ethanol is not renewable
fuel.
*
*
*
*
*
■ 4. Amend § 80.1402 by removing the
second sentence in paragraph (a) and
adding paragraphs (b) through (f) to read
as follows:
§ 80.1402 Availability of information;
confidentiality of information.
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*
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(b) Information contained in EPA
determinations that RINs are invalid
under § 80.1474(b)(4)(i)(C)(2) and
(b)(4)(ii)(C)(2), notices of violation,
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settlement agreements, administrative
complaints, civil complaints, criminal
information, and criminal indictments
under the Renewable Fuel Standard
(RFS) program is not entitled to
confidential treatment and therefore
EPA may publicly disclose such
information. Such information includes
the company name and company
identification number of the party that
produced the fuel or generated the RINs
in question, the facility name and
facility identification number of the
facility at which the fuel associated with
the RINs in question was allegedly
produced or imported, the total quantity
of fuel and RINs in question, the time
period when the fuel was allegedly
produced, the time period when the
RINs in question were generated, the
batch number(s) and the D code(s) of the
RINs in question, information relating to
the generation, transfer, or use of RINs,
and any other information relevant to
describing the violation.
(c) The following information
contained in submissions under this
subpart is not entitled to confidential
treatment and, except as otherwise
provided, the provisions of 40 CFR part
2, subpart B, do not apply:
(1) Submitter’s name.
(2) The name and location of the
facility, if applicable.
(3) The date the submission was
transmitted to EPA.
(4) Any EPA-issued company or
facility identification numbers
associated with the request.
(5) The purpose of the submission.
(6) The relevant time period for the
request, if applicable.
(d) The following information
incorporated into EPA determinations
on submissions under this subpart is not
entitled to confidential treatment and,
except as otherwise provided, the
provisions of 40 CFR part 2, subpart B,
do not apply:
(1) Submitter’s name.
(2) The name and location of the
facility, if applicable.
(3) The date the submission was
transmitted to EPA.
(4) Any EPA-issued company or
facility identification numbers
associated with the request.
(5) The purpose of the submission.
(6) The relevant time period of the
request, if applicable.
(7) The extent to which EPA either
granted or denied the request and any
relevant terms and conditions.
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(e) Except as otherwise specified in
this section, any information submitted
under this part claimed as confidential
remains subject to evaluation by EPA
under 40 CFR part 2, subpart B.
(f) EPA may disclose the information
specified in paragraphs (a) through (d)
of this section on its website, or
otherwise make it available to interested
parties, without additional notice or
process, notwithstanding any claims
that the information is entitled to
confidential treatment under 40 CFR
part 2, subpart B.
■ 5. Amend § 80.1405 by revising
paragraph (a)(11), adding paragraphs
(a)(12) and (13), and revising the
equations in paragraph (c) to read as
follows:
§ 80.1405 What are the Renewable Fuel
Standards?
(a) * * *
(11) Renewable Fuel Standards for
2020. (i) The value of the cellulosic
biofuel standard for 2021 shall be 0.32
percent.
(ii) The value of the biomass-based
diesel standard for 2021 shall be 2.37
percent.
(iii) The value of the advanced biofuel
standard for 2021 shall be 2.91 percent.
(iv) The value of the renewable fuel
standard for 2021 shall be 10.78 percent.
(12) Renewable Fuel Standards for
2021. (i) The value of the cellulosic
biofuel standard for 2021 shall be 0.36
percent.
(ii) The value of the biomass-based
diesel standard for 2021 shall be 2.19
percent.
(iii) The value of the advanced biofuel
standard for 2021 shall be 3.03 percent.
(iv) The value of the renewable fuel
standard for 2021 shall be 10.79 percent.
(13) Renewable Fuel Standards for
2022. (i) The value of the cellulosic
biofuel standard for 2022 shall be 0.44
percent.
(ii) The value of the biomass-based
diesel standard for 2022 shall be 2.42
percent.
(iii) The value of the advanced biofuel
standard for 2022 shall be 3.27 percent.
(iv) The value of the renewable fuel
standard for 2022 shall be 11.76 percent.
(v) The value of the supplemental
renewable fuel standard for 2022 shall
be 0.14 percent.
*
*
*
*
*
(c) * * *
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*
*
*
*
(f) * * *
(1) Any renewable fuel as defined in
§ 80.1401. Renewable fuel for which a
RIN is determined to be invalidly
generated under § 80.1431 may not be
excluded from a party’s Renewable
Volume Obligations.
*
*
*
*
*
§ 80.1408
[Amended]
7. Amend § 80.1408 by, in paragraphs
(a)(2)(i)(B) and (a)(2)(ii)(B), removing
‘‘§ 80.1454(t)’’ and adding
‘‘§ 80.1454(o)’’ in its place.
■ 8. Amend § 80.1415 by revising
paragraphs (c)(2)(ii) and (iii) to read as
follows:
■
§ 80.1415 How are equivalence values
assigned to renewable fuel?
*
*
*
*
(c) * * *
(2) * * *
(ii) For each feedstock,
biointermediate, component, or additive
that is used to make the renewable fuel,
provide a description, the percent input,
and identify whether or not it is
renewable biomass or is derived from
renewable biomass.
(iii) For each feedstock or
biointermediate that also qualifies as a
renewable fuel, state whether or not
RINs have been previously generated for
such feedstock.
*
*
*
*
*
■ 9. Amend § 80.1416 by revising
paragraphs (b)(1)(ii) and (iii) to read as
follows:
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*
§ 80.1416 Petition process for evaluation
of new renewable fuels pathways.
*
*
*
*
*
(b)(1) * * *
(ii) A technical justification that
includes a description of the renewable
fuel, feedstock(s), and
biointermediate(s) used to make it, and
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§ 80.1426 How are RINs generated and
assigned to batches of renewable fuel?
(a) * * *
(4) Where a feedstock or
biointermediate is used to produce
renewable fuel and is not entirely
renewable biomass, RINs may only be
generated for the portion of fuel that is
derived from renewable biomass, as
calculated under paragraph (f)(4) of this
section.
*
*
*
*
*
(c) * * *
(8) RINs must not be generated for a
biointermediate.
*
*
*
*
*
(f) * * *
(1) Applicable pathways. (i) D codes
shall be used in RINs generated by
producers or importers of renewable
fuel according to the pathways listed in
Table 1 to this section, paragraph (f)(6)
of this section, or as approved by the
Administrator.
(ii) In choosing an appropriate D code,
producers and importers may disregard
any incidental, de minimis feedstock
contaminants that are impractical to
remove and are related to customary
feedstock production and transport.
(iii) Tables 1 and 2 to this section do
not apply to, and impose no
requirements with respect to, volumes
of fuel for which RINs are generated
pursuant to paragraph (f)(6) of this
section.
(iv) Pathways in Table 1 to this
section and advanced technologies in
Table 2 to this section also apply in
cases where the renewable fuel
producer is using a biointermediate.
(v) For the purposes of identifying the
appropriate pathway in Table 1 to this
section, biointermediates used for the
production of renewable fuel are
considered to be equivalent to the
renewable biomass from which they
were derived, with the following
exceptions:
(A) Oil that is physically separated
from any woody or herbaceous biomass
and used to produce renewable fuel
shall not generate D-code 3 or 7 RINs.
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§ 80.1407 How are the Renewable Volume
Obligations calculated?
the production process. The justification
must include process modeling flow
charts.
(iii) A mass balance for the pathway,
including feedstocks and
biointermediates, fuels produced, coproducts, and waste materials
production.
*
*
*
*
*
■ 10. Amend § 80.1426 by:
■ a. Adding paragraphs (a)(4);
■ b. Removing the headings from
paragraphs (c)(2) and (3);
■ c. Adding paragraph (c)(8);
■ d. Removing paragraph (f)(1)
introductory text;
■ e. Adding paragraph (f)(1) heading
and paragraphs (f)(1)(i) through (vi)
prior to Table 1 to § 80.1426;
■ f. Redesignating paragraph (f)(3)(vi) as
paragraph (f)(3)(vi)(A);
■ g. In newly redesignated paragraph
(f)(3)(vi)(A):
■ i. Revising the introductory text and
the definitions of ‘‘FE3,’’ ‘‘FE4,’’ ‘‘FE5,’’
‘‘FE6,’’ and ‘‘FE7’’ following Table 4 to
§ 80.1426; and
■ ii. Designating the undesignated text
following the definition of ‘‘FE7’’ as
paragraph (f)(3)(vi)(B);
■ h. In newly designated paragraph
(f)(3)(vi)(B), revising the definitions of
‘‘FE,’’ ‘‘M,’’ ‘‘m,’’ ‘‘CF,’’ and ‘‘E’’;
■ i. Revising the paragraph (f)(4)
heading;
■ j. Revising the definitions of ‘‘FER’’
and ‘‘FENR’’ in paragraph (f)(4)(i)(A)(1);
■ k. Adding paragraph (f)(4)(iv);
■ l. Revising paragraphs (f)(5) heading,
(f)(5)(i) and (ii), (f)(5)(iii) introductory
text, (f)(5)(iv)(A) introductory text,
(f)(5)(iv)(B) introductory text, (f)(5)(v)
introductory text, (f)(7)(v)(A) and (B),
(f)(8)(ii)(B), (f)(9)(ii), (f)(15)(i)
introductory text, (f)(16)(iii);
■ m. Adding paragraph (f)(17) heading;
and
■ n. Revising paragraphs (f)(17)(i)
introductory text and (f)(17)(i)(B)(1) and
(2).
The additions and revisions read as
follows:
EP21DE21.019</GPH>
*
*
*
*
6. Amend § 80.1407 by revising
paragraph (f)(1) to read as follows:
■
EP21DE21.018</GPH>
*
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(B) Sugar or starch that is physically
separated from cellulosic biomass and
used to produce renewable fuel shall
not generate D-code 3 or 7 RINs.
(vi) If a renewable fuel producer uses
a biointermediate for the production of
renewable fuel, additional requirements
apply to both the renewable fuel
producer and the biointermediate
producer as described in § 80.1476.
*
*
*
*
*
(3) * * *
(vi)(A) If a producer produces a single
type of renewable fuel using two or
more different feedstocks or
biointermediates which are processed
simultaneously, and each batch is
comprised of a single type of fuel, then
the number of gallon-RINs that shall be
generated for a batch of renewable fuel
and assigned a particular D code shall
be determined according to the formulas
in Table 4 to this section.
*
*
*
*
*
FE3 = Feedstock energy from all
feedstocks or biointermediates whose
pathways have been assigned a D code
of 3 under Table 1 to this section, or a
D code of 3 as approved by the
Administrator, in Btu.
FE4 = Feedstock energy from all
feedstocks or biointermediates whose
pathways have been assigned a D code
of 4 under Table 1 to this section, or a
D code of 4 as approved by the
Administrator, in Btu.
FE5 = Feedstock energy from all
feedstocks or biointermediates whose
pathways have been assigned a D code
of 5 under Table 1 to this section, or a
D code of 5 as approved by the
Administrator, in Btu.
FE6 = Feedstock energy from all
feedstocks or biointermediates whose
pathways have been assigned a D code
of 6 under Table 1 to this section, or a
D code of 6 as approved by the
Administrator, in Btu.
FE7 = Feedstock energy from all
feedstocks or biointermediates whose
pathways have been assigned a D code
of 7 under Table 1 to this section, or a
D code of 7 as approved by the
Administrator, in Btu.
(B) * * *
FE = Feedstock or biointermediate
energy, in Btu.
M = Mass of feedstock or
biointermediate, in pounds, measured
on a daily or per-batch basis.
m = Average moisture content of the
feedstock or biointermediate, in mass
percent.
CF = Converted Fraction in annual
average mass percent, except as
otherwise provided by
§ 80.1451(b)(1)(ii)(U), representing that
portion of the feedstock or
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biointermediate that is converted into
renewable fuel by the producer.
E = Energy content of the components
of the feedstock or biointermediate that
are converted to renewable fuel, in
annual average Btu/lb, determined
according to paragraph (f)(7) of this
section.
(4) Renewable fuel that is produced by
co-processing renewable biomass
(including a biointermediate) and nonrenewable feedstocks simultaneously to
produce a fuel that is partially
renewable. (i) * * *
(A) * * *
(1) * * *
FER = Feedstock energy from
renewable biomass (including the
renewable portion of a biointermediate)
used to make the transportation fuel, in
Btu.
FENR = Feedstock energy from nonrenewable feedstocks (including the
non-renewable portion of a
biointermediate) used to make the
transportation fuel, heating oil, or jet
fuel, in Btu.
*
*
*
*
*
(iv) In determining the RIN volume
VRIN for co-processed fuels produced
from a biointermediate, RIN-generating
parties must use Method B as described
in paragraph (f)(4)(i)(B) of this section
and calculate the renewable fraction of
a fuel R using Method B of ASTM
D6866 (incorporated by reference, see
§ 80.1468) as described in paragraph
(f)(9)(ii) of this section.
(5) Renewable fuel produced from
separated yard waste, separated food
waste, and separated MSW. (i)(A)
Separated yard waste is deemed to be
composed entirely of cellulosic
materials.
(B) Separated food waste is deemed to
be composed entirely of non-cellulosic
materials, unless a party demonstrates
that a portion of the feedstock is
cellulosic through approval of their
facility registration.
(ii)(A) A feedstock qualifies as
separated yard waste or separated food
waste only if it is collected according to
a plan submitted to and accepted by
EPA under the registration procedures
specified in § 80.1450(b)(1)(vii).
(B) A feedstock qualifies as separated
MSW only if it is collected according to
a plan submitted to and approved by
EPA.
(iii) Separation and recycling actions
for separated MSW are considered to
occur if:
*
*
*
*
*
(iv)(A) The number of gallon-RINs
that shall be generated for a batch of
renewable fuel derived from separated
yard waste shall be equal to a volume
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VRIN and is calculated according to the
following formula:
*
*
*
*
*
(B) The number of gallon-RINs that
shall be generated for a batch of
renewable fuel derived from separated
food waste shall be equal to a volume
VRIN and is calculated according to the
following formula:
*
*
*
*
*
(v) The number of cellulosic biofuel
gallon-RINs that shall be generated for
the cellulosic portion of a batch of
renewable fuel derived from separated
MSW shall be determined according to
the following formula:
*
*
*
*
*
(7) * * *
(v) * * *
(A) ASTM E870 or ASTM E711 for
gross calorific value (both incorporated
by reference, see § 80.1468).
(B) ASTM D4442 or ASTM D4444 for
moisture content (both incorporated by
reference, see § 80.1468).
*
*
*
*
*
(8) * * *
(ii) * * *
(B) The standardized volume of
biodiesel at 60 °F, in gallons, as
calculated from the use of the American
Petroleum Institute Refined Products
Table 6B, as referenced in ASTM D1250
(incorporated by reference, see
§ 80.1468).
*
*
*
*
*
(9) * * *
(ii) Parties must use Method B or
Method C of ASTM D6866 (incorporated
by reference, see § 80.1468), or an
alternative test method as approved by
EPA.
*
*
*
*
*
(15) * * *
(i) If a producer seeking to generate D
code 3 or D code 7 RINs produces a
single type of renewable fuel using two
or more feedstocks or biointermediates
converted simultaneously, and at least
one of the feedstocks or
biointermediates does not have a
minimum 75% average adjusted
cellulosic content, one of the following
additional requirements apply:
*
*
*
*
*
(16) * * *
(iii) Recordkeeping requirements
under § 80.1454(n).
(17) Qualifying use demonstration for
certain renewable fuels. (i) For purposes
of this section, any renewable fuel other
than ethanol, biodiesel, renewable
gasoline, or renewable diesel that meets
the ASTM D975 Grade No. 1–D or No.
2–D specifications (incorporated by
reference, see § 80.1468) is considered
renewable fuel and the producer or
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importer may generate RINs for such
fuel only if all of the following apply:
*
*
*
*
*
(B) * * *
(1) Blending the renewable fuel into
gasoline or distillate fuel to produce a
transportation fuel, heating oil, or jet
fuel that meets all applicable standards
under this part and 40 CFR part 1090.
(2) Entering into a written contract for
the sale of the renewable fuel, which
specifies the purchasing party must
blend the fuel into gasoline or distillate
fuel to produce a transportation fuel,
heating oil, or jet fuel that meets all
applicable standards under this part and
40 CFR part 1090.
*
*
*
*
*
■ 11. Amend § 80.1428 by revising
paragraph (b)(2) to read as follows:
Treatment of invalid RINs.
(a) * * *
(3) In the event that EPA determines
that any RIN generated for a batch of
renewable fuel produced using a
biointermediate is invalid, then all RINs
generated for that batch of renewable
fuel are deemed invalid, unless EPA in
its sole discretion determines that some
portion of those RINs are valid.
*
*
*
*
*
§ 80.1435
[Amended]
15. Amend § 80.1435 by, in paragraph
(a)(4), removing ‘‘§ 80.1454(u)’’ and
adding ‘‘§ 80.1454(p)’’ in its place.
■ 16. Amend § 80.1449 by revising
paragraph (a)(4)(iii) to read as follows:
■
§ 80.1449 What are the Production Outlook
Report requirements?
*
*
*
*
(b) * * *
(9) Except as provided in paragraphs
(b)(2) through (5) and (8) of this section,
parties whose non-export renewable
volume obligations are solely related to
the importation of products listed in
§ 80.1407(c) or (e), the addition of
blendstocks into a volume of finished
gasoline, finished diesel fuel, or BOB, or
that incur a renewable volume
obligation (RVO) under § 80.1408, can
only separate RINs from volumes of
renewable fuel if the number of gallonRINs separated in a calendar year is less
than or equal to a limit set as follows:
*
*
*
*
*
■ 13. Amend § 80.1430 by revising
paragraph (e)(2) to read as follows:
(a) * * *
(4) * * *
(iii) Feedstocks, biointermediates, and
production processes to be used at each
production facility.
*
*
*
*
*
■ 17. Amend § 80.1450 by:
■ a. Revising paragraphs (b)
introductory text, (b)(1) introductory
text, (b)(1)(i), and (b)(1)(ii) introductory
text;
■ b. Adding paragraph (b)(1)(ii)(B); and
■ c. Revising paragraphs (b)(1)(iii),
(b)(1)(iv)(A)(1) and (2), (b)(1)(iv)(B)(3),
(b)(1)(v)(B) and (C), (b)(1)(vii)(A)
introductory text, (b)(1)(vii)(B)
introductory text, (b)(1)(viii)
introductory text, (b)(1)(viii)(B)(1)
through (3), (b)(1)(xii) introductory text,
(b)(1)(xii)(B), (b)(1)(xii)(C) introductory
text, (b)(1)(xiii)(A), (b)(1)(xiii)(B)
introductory text, (b)(1)(xiii)(B)(1) and
(5), (b)(1)(xv) introductory text,
(b)(2)(i)(A) and (B), (b)(2)(ii)(A) through
(C), (b)(2)(iv), and (d);
■ d. Adding paragraph (g) heading; and
■ e. Revising the second sentence of
paragraph (g) introductory text,
paragraphs (g)(5) through (7) and (9) and
(g)(10)(ii), the second sentence of
paragraph (g)(11)(ii), (h)(1)(i), and the
last sentence of paragraph (h)(2)(i).
The revisions and additions read as
follows:
§ 80.1430 Requirements for exporters of
renewable fuels.
§ 80.1450 What are the registration
requirements under the RFS program?
*
*
§ 80.1428 General requirements for RIN
distribution.
*
*
*
*
*
(b) * * *
(2) Unless otherwise specified, any
person that has registered pursuant to
§ 80.1450 can own a separated RIN.
*
*
*
*
*
■ 12. Amend § 80.1429 by revising
paragraph (b)(9) introductory text to
read as follows:
§ 80.1429 Requirements for separating
RINs from volumes of renewable fuel.
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§ 80.1431
*
*
*
*
(e) * * *
(2) Determination of the renewable
portion of the blend using Method B or
Method C of ASTM D6866 (incorporated
by reference, see § 80.1468), or an
alternative test method as approved by
the EPA.
*
*
*
*
*
■ 14. Amend § 80.1431 by adding
paragraph (a)(3) to read as follows:
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*
*
*
*
(b) Producers. Any RIN-generating
foreign producer, any non-RINgenerating foreign producer, any
domestic renewable fuel producer that
generates RINs, or any biointermediate
producer that transfers any
biointermediate for the production of a
renewable fuel for RIN generation, must
provide EPA the information specified
under 40 CFR 1090.805 if such
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information has not already been
provided under the provisions of this
part, and must receive EPA-issued
company and facility identification
numbers prior to the generation of any
RINs for their fuel or for fuel made with
their ethanol, or prior to the transfer of
any biointermediate to be used in the
production of a renewable fuel for
which RINs may be generated. Unless
otherwise specifically indicated, all the
following registration information must
be submitted and accepted by EPA 60
days prior to the generation of RINs or
the transfer of any biointermediate to be
used in the production of a renewable
fuel for which RINs may be generated.
(1) A description of the types of
renewable fuels, ethanol, or
biointermediates that the producer
intends to produce at the facility and
that the facility is capable of producing
without significant modifications to the
existing facility. For each type of
renewable fuel, ethanol, or
biointermediate the renewable fuel
producer or foreign ethanol producer
must also provide all the following:
(i)(A) A list of all the feedstocks and
biointermediates the facility intends to
utilize without significant modification
to the existing facility.
(B) A description of the type(s) of
renewable biomass that will be used as
feedstock material to produce the
biointermediate, if applicable.
(C) A list of the EPA-issued company
and facility registration numbers of all
biointermediate producers and
biointermediate production facilities
that will supply biointermediates for
renewable fuel production.
(ii) A description of the facility’s
renewable fuel, ethanol, or
biointermediate production processes,
including:
*
*
*
*
*
(B) For registrations indicating the
production of any biointermediate, the
biointermediate producer must provide
all of the following:
(1) For each biointermediate
production facility, the company name,
EPA company registration number, and
EPA facility registration number of the
renewable fuel producer and renewable
fuel production facility at which the
biointermediate produced from the
biointermediate production facility will
be transferred and used.
(2) Copies of documents and
corresponding calculations
demonstrating production capacity of
each biointermediate produced at the
biointermediate production facility.
(3) For each type of feedstock that the
biointermediate producer intends to
process the biointermediate producer
must provide all the following:
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(i) A list of all the feedstocks the
facility intends to utilize without
significant modification to the existing
facility.
(ii) A description of the type(s) of
renewable biomass that will be used as
feedstock material to produce the
biointermediate.
(4) The pathway(s) in Table 1 to
§ 80.1426 or the approved pathway
under § 80.1416 that the biointermediate
could be used in to produce renewable
fuel.
(iii) The type(s) of co-products
produced with each type of renewable
fuel, ethanol, or biointermediate.
(iv) * * *
(A) * * *
(1) Each type of process heat fuel used
at the facility to produce the renewable
fuel, ethanol, or biointermediate.
(2) The name and address of the
company supplying each process heat
fuel to the renewable fuel facility,
foreign ethanol facility, or
biointermediate production facility.
(B) * * *
(3) An affidavit from the biogas
supplier stating its intent to supply
biogas to the renewable fuel producer,
foreign ethanol producer, or
biointermediate producer, and the
quantity and energy content of the
biogas that it intends to provide to the
renewable fuel producer or foreign
ethanol producer.
(v) * * *
(B) For facilities claiming the
exemption described in § 80.1403(c) or
(d):
(1) Applicable air permits issued by
EPA, state, local air pollution control
agencies, or foreign governmental
agencies that govern the construction
and/or operation of the renewable fuel
facility that were:
(i) Issued or revised no later than
December 19, 2007, for facilities
described in § 80.1403(c); or
(ii) Issued or revised no later than
December 31, 2009, for facilities
described in § 80.1403(d).
(2) If the air permits specified in
paragraph (b)(1)(v)(B)(1) of this section
do not specify the maximum rated
annual volume output of renewable
fuel, copies of documents demonstrating
the facility’s actual peak capacity.
(C) For facilities not claiming the
exemption described in § 80.1403(c) or
(d) and that are exempt from air permit
requirements or for which the maximum
rated annual volume output of
renewable fuel is not specified in their
air permits, appropriate documentation
demonstrating the facility’s actual peak
capacity or nameplate capacity.
*
*
*
*
*
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(vii)(A) For a renewable fuel
producer, foreign ethanol producer, or
biointermediate producer using
separated yard waste:
*
*
*
*
*
(B) For a renewable fuel producer,
foreign ethanol producer, or
biointermediate producer using
separated food waste:
*
*
*
*
*
(viii) For a renewable fuel producer,
foreign ethanol producer, or
biointermediate producer using
separated municipal solid waste:
*
*
*
*
*
(B) * * *
(1) Extent and nature of recycling that
occurred prior to receipt of the waste
material by the renewable fuel producer,
foreign ethanol producer, or
biointermediate producer;
(2) Identification of available
recycling technology and practices that
are appropriate for removing recycling
materials from the waste stream by the
fuel producer, foreign ethanol producer,
or biointermediate producer; and
(3) Identification of the technology or
practices selected for implementation by
the fuel producer, foreign ethanol
producer, or biointermediate producer
including an explanation for such
selection, and reasons why other
technologies or practices were not.
*
*
*
*
*
(xii) For a producer or importer of any
renewable fuel other than ethanol,
biodiesel, renewable gasoline,
renewable diesel that meets the ASTM
D975 Grade No. 1–D or No. 2–D
specifications (incorporated by
reference, see § 80.1468), biogas, or
renewable electricity, all the following:
*
*
*
*
*
(B) A statement regarding whether the
renewable fuel producer or importer
will blend the renewable fuel into
gasoline or diesel fuel or enter into a
written contract for the sale and use of
a specific quantity of the renewable fuel
with a party who blends the fuel into
gasoline or distillate fuel to produce a
transportation fuel, heating oil, or jet
fuel that meets all applicable standards
under this part and 40 CFR part 1090.
(C) If the renewable fuel producer or
importer enters into a written contract
for the sale and use of a specific
quantity of the renewable fuel with a
party who blends the fuel into gasoline
or distillate fuel to produce a
transportation fuel, heating oil, or jet
fuel, provide all the following:
*
*
*
*
*
(xiii)(A) A renewable fuel producer
seeking to generate D code 3 or D code
7 RINs, a foreign ethanol producer
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seeking to have its product sold as
cellulosic biofuel after it is denatured,
or a biointermediate producer seeking to
have its biointermediate made into
cellulosic biofuel, who intends to
produce a single type of fuel using two
or more feedstocks converted
simultaneously, where at least one of
the feedstocks does not have a
minimum 75% average adjusted
cellulosic content, and who uses only a
thermochemical process to convert
feedstock into renewable fuel, must
provide all the following:
(1) Data showing the average adjusted
cellulosic content of the feedstock(s) to
be used to produce fuel or
biointermediate, based on the average of
at least three representative samples.
Cellulosic content data must come from
an analytical method certified by a
voluntary consensus standards body or
using a method that would produce
reasonably accurate results as
demonstrated through peer reviewed
references provided to the third party
engineer performing the engineering
review at registration. Samples must be
of representative feedstock from the
primary feedstock supplier that will
provide the renewable fuel or
biointermediate producer with
feedstock subsequent to registration.
(2) For renewable fuel and
biointermediate producers who want to
use a new feedstock(s) after initial
registration, updates to their registration
under paragraph (d) of this section
indicating the average adjusted
cellulosic content of the new feedstock.
(3) For renewable fuel producers
already registered as of August 18, 2014,
to produce a single type of fuel that
qualifies for D code 3 or D code 7 RINs
(or would do so after denaturing) using
two or more feedstocks converted
simultaneously using only a
thermochemical process, the
information specified in this paragraph
(b)(1)(xiii)(A) shall be provided at the
next required registration update under
paragraph (d) of this section.
(B) A renewable fuel producer seeking
to generate D code 3 or D code 7 RINs,
a foreign ethanol producer seeking to
have its product sold as cellulosic
biofuel after it is denatured, or a
biointermediate producer seeking to
have its biointermediate made into
cellulosic biofuel, who intends to
produce a single type of fuel using two
or more feedstocks converted
simultaneously, where at least one of
the feedstocks does not have a
minimum 75% adjusted cellulosic
content, and who uses a process other
than a thermochemical process or a
combination of processes to convert
feedstock into renewable fuel or
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biointermediate, must provide all the
following:
(1) The expected overall fuel or
biointermediate yield, calculated as the
total volume of fuel produced per batch
(e.g., cellulosic biofuel plus all other
fuel) divided by the total feedstock mass
per batch on a dry weight basis (e.g.,
cellulosic feedstock plus all other
feedstocks).
*
*
*
*
*
(5) For renewable fuel producers
already registered as of August 18, 2014,
to produce a single type of fuel that
qualifies for D code 3 or D code 7 RINs
(or would do so after denaturing) using
two or more feedstocks converted
simultaneously using a combination of
processes or a process other than a
thermochemical process, the
information specified in this paragraph
(b)(1)(xiii)(B) shall be provided at the
next required registration update under
paragraph (d) of this section.
*
*
*
*
*
(xv) For a producer of cellulosic
biofuel made from crop residue, a
foreign ethanol producer making
ethanol from crop residue and seeking
to have it sold after denaturing as
cellulosic biofuel, or a biointermediate
producer producing a biointermediate
for use in the production of a cellulosic
biofuel made from crop residue, provide
all the following information:
*
*
*
*
*
(2) * * *
(i) * * *
(A) For a domestic renewable fuel
production facility, a foreign ethanol
production facility, or a biointermediate
production facility, a professional
engineer who is licensed by an
appropriate state agency in the United
States, with professional work
experience in the chemical engineering
field or related to renewable fuel
production.
(B) For a foreign renewable fuel or
foreign biointermediate production
facility, an engineer who is a foreign
equivalent to a professional engineer
licensed in the United States with
professional work experience in the
chemical engineering field or related to
renewable fuel production.
(ii) * * *
(A) The third-party shall not be
operated by the renewable fuel
producer, foreign ethanol producer, or
biointermediate producer, or any
subsidiary or employee of the renewable
fuel producer foreign ethanol producer,
or biointermediate producer.
(B) The third-party shall be free from
any interest in the renewable fuel
producer, foreign ethanol producer, or
biointermediate producer’s business.
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(C) The renewable fuel producer,
foreign ethanol producer, or
biointermediate producer shall be free
from any interest in the third-party’s
business.
*
*
*
*
*
(iv) The renewable fuel producer,
foreign ethanol producer, or
biointermediate producer must retain
records of the review and verification,
as required in § 80.1454(b)(6) or (i)(4), as
applicable.
*
*
*
*
*
(d) Registration updates. (1)(i)(A) Any
renewable fuel producer or any foreign
ethanol producer that makes changes to
their facility that will allow them to
produce renewable fuel or use a
biointermediate that is not reflected in
the producer’s registration information
on file with EPA must update their
registration information and submit a
copy of an updated independent thirdparty engineering review on file with
EPA at least 60 days prior to producing
the new type of renewable fuel.
(B) Any biointermediate producer
who makes changes to their
biointermediate production facility that
will allow them to produce a
biointermediate for use in the
production of a renewable fuel that is
not reflected in the biointermediate
producer’s registration information on
file with EPA must update their
registration information and submit a
copy of an updated independent thirdparty engineering review on file with
EPA at least 60 days prior to producing
the new biointermediate for use in the
production of the renewable fuel.
(ii) The renewable fuel producer,
foreign ethanol producer, or
biointermediate producer may also
submit an addendum to the
independent third-party engineering
review on file with EPA provided the
addendum meets all the requirements in
paragraph (b)(2) of this section and
verifies for EPA the most up-to-date
information at the producer’s existing
facility.
(2)(i) Any renewable fuel producer or
any foreign ethanol producer that makes
any other changes to a facility that will
affect the producer’s registration
information but will not affect the
renewable fuel category for which the
producer is registered per paragraph (b)
of this section must update their
registration information 7 days prior to
the change.
(ii)(A) Any biointermediate producer
that makes any other changes to a
biointermediate production facility that
will affect the biointermediate
producer’s registration must update
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their registration information 7 days
prior to the change.
(B)(1) Any biointermediate producer
that intends to change the designated
renewable fuel production facility under
paragraph (b)(1)(ii)(G)(1) of this section
for one of its biointermediate
production facilities must update their
registration information with EPA at
least 30 days prior to transferring the
biointermediate to the newly designated
renewable fuel production facility.
(2) A biointermediate producer may
only change the designated renewable
fuel production facility under paragraph
(b)(1)(ii)(G)(1) of this section for each
biointermediate production facility one
time per calendar year unless EPA, in its
sole discretion, allows the
biointermediate producer to change the
designated renewable fuel production
facility more frequently.
(3) All renewable fuel producers,
foreign ethanol producers, and
biointermediate producers must update
registration information and submit an
updated independent third-party
engineering review according to the
schedule in paragraph (d)(3)(i) or (ii) of
this section, and include the
information specified in paragraph
(d)(3)(iii) or (iv) of this section, as
applicable:
(i) For all renewable fuel producers
and foreign ethanol producers registered
in calendar year 2010, the updated
registration information and
independent third-party engineering
review must be submitted to EPA by
January 31, 2013, and by January 31 of
every third calendar year thereafter; or
(ii) For all renewable fuel producers,
foreign ethanol producers, and
biointermediate producers registered in
any calendar year after 2010, the
updated registration information and
independent third-party engineering
review must be submitted to EPA by
January 31 of every third calendar year
after the first year of registration.
(iii) For all renewable fuel producers,
in addition to conducting the
engineering review and written report
and verification required by paragraph
(b)(2) of this section, the updated
independent third-party engineering
review must include a detailed review
of the renewable fuel producer’s
calculations used to determine VRIN of
a representative sample of batches of
each type of renewable fuel produced
since the last registration. The
representative sample must be selected
in accordance with the sample size
guidelines set forth at 40 CFR
1090.1805.
(iv) For biointermediate producers, in
addition to conducting the engineering
review and written report and
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verification required by paragraph (b)(2)
of this section, the updated independent
third-party engineering review must
include a detailed review of the
biointermediate producer’s calculations
used to determine the renewable
biomass and cellulosic renewable
biomass proportions, as required to be
reported to EPA under § 80.1451(i)(2), of
a representative sample of batches of
each type of biointermediate produced
since the last registration. The
representative sample must be selected
in accordance with the sample size
guidelines set forth at 40 CFR
1090.1805.
*
*
*
*
*
(g) Independent third-party auditors.
* * * Registration information must be
submitted at least 30 days prior to
conducting audits of renewable fuel
production or biointermediate
production facilities. * * *
*
*
*
*
*
(5) List of audited producers. Name,
address, and company and facility
identification numbers of all renewable
fuel production or biointermediate
production facilities that the
independent third-party auditor intends
to audit under § 80.1472.
(6) Audited producer associations. An
affidavit, or electronic consent, from
each renewable fuel producer, foreign
renewable fuel producer, or
biointermediate producer stating its
intent to have the independent thirdparty auditor conduct a quality
assurance audit of any of the renewable
fuel producer’s or foreign renewable
fuel producer’s facilities.
(7) Independence affidavits. An
affidavit stating that an independent
third-party auditor and its contractors
and subcontractors are independent, as
described in § 80.1471(b), of any
renewable fuel producer, foreign
renewable fuel producer, or
biointermediate producer.
*
*
*
*
*
(9) Registration updates. (i) Any
independent third-party auditor who
makes changes to its quality assurance
plan(s) that will allow it to audit new
renewable fuel production or
biointermediate production facilities, as
defined in § 80.1401, that is not
reflected in the independent third-party
auditor’s registration information on file
with EPA must update its registration
information and submit a copy of an
updated QAP on file with EPA at least
60 days prior to auditing new renewable
fuel production or biointermediate
production facilities.
(ii) Any independent third-party
auditor who makes any changes other
than those specified in paragraphs
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(g)(9)(i), (iii), and (iv) of this section that
will affect the third-party auditor’s
registration information must update its
registration information 7 days prior to
the change.
(iii) Independent third-party auditors
must update their QAPs at least 60 days
prior to verifying RINs generated or
biointermediate produced by a
renewable fuel or biointermediate
production facility, respectively, for a
pathway not covered in the independent
third-party auditor’s QAPs.
(iv) Independent third-party auditors
must update their QAPs at least 60 days
prior to verifying RINs generated or
biointermediate produced by any
renewable fuel or biointermediate
production facility not identified in the
independent third-party auditor’s
existing registration.
(10) * * *
(ii) The independent third-party
auditor submits an affidavit affirming
that he or she has only verified RINs
and biointermediates using a QAP
approved under § 80.1469, notified all
appropriate parties of all potentially
invalid RINs as described in
§ 80.1471(d), and fulfilled all of his or
her RIN replacement obligations under
§ 80.1474.
*
*
*
*
*
(11) * * *
(ii) * * * Communications should be
sent to the EMTS support line
(fuelsprogramsupport@epa.gov). * * *
*
*
*
*
*
(h) * * *
(1) * * *
(i) Unless the party is a
biointermediate producer, the party has
reported no activity in EMTS for
twenty-four consecutive months.
*
*
*
*
*
(2) * * *
(i) * * * The party will have 30
calendar days from the date of the
notification to correct the deficiencies
identified or explain why there is no
need for corrective action.
*
*
*
*
*
■ 18. Amend § 80.1451 by:
■ a. Revising paragraphs (b)(1)(ii)(K)
and (L), the first sentence of paragraph
(b)(1)(ii)(R), (b)(1)(ii)(T), (b)(1)(ii)(U)
introductory text, (g)(1)(i), (g)(1)(ii)
introductory text, (g)(1)(ii)(A) through
(C), (K), and (L), and (g)(2)(vii) and
(viii);
■ b. Redesignating paragraph (g)(2)(x) as
paragraph (g)(2)(xi) and adding new
paragraph (g)(2)(x); and
■ c. Redesignating paragraphs (j) and (k)
as paragraphs (k) and (l) and adding
new paragraph (j).
The revisions and additions read as
follows:
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§ 80.1451 What are the reporting
requirements under the RFS program?
*
*
*
*
*
(b) * * *
(1) * * *
(ii) * * *
(K) The types and quantities of
feedstocks and biointermediates used.
(L) The process(es), feedstock(s), and
biointermediate(s) used and proportion
of renewable volume attributable to
each process and feedstock.
*
*
*
*
*
(R) Producers or importers of
renewable fuel made from separated
municipal solid waste must report the
amount of paper, cardboard, plastics,
rubber, textiles, metals, and glass
separated from municipal solid waste
for recycling. * * *
*
*
*
*
*
(T) Producers or importers of any
renewable fuel other than ethanol,
biodiesel, renewable gasoline,
renewable diesel that meets ASTM D975
Grade No. 1–D or No. 2–D specifications
(incorporated by reference, see
§ 80.1468), biogas or renewable
electricity, must report, on a quarterly
basis, all the following for each volume
of fuel:
(1) Total volume of renewable fuel
produced or imported, total volume of
renewable fuel blended into gasoline
and distillate fuel by the producer or
importer, and the percentage of
renewable fuel in each batch of finished
fuel.
(2) If the producer or importer
generates RINs under
§ 80.1426(f)(17)(i)(B)(2), report the
name, location, and contract
information for each party that
purchased the renewable fuel.
(U) Producers generating D code 3 or
D code 7 RINs for fuel derived from
feedstocks or biointermediates other
than biogas (including through
pathways listed in rows K, L, M, and N
of Table 1 to § 80.1426), and that was
produced from two or more feedstocks
converted simultaneously, at least one
of which has less than 75% average
adjusted cellulosic content, and using a
combination of processes or a process
other than a thermochemical process or
a combination of processes shall report
all of the following:
*
*
*
*
*
(g) * * *
(1)(i) For RINs verified beginning on
September 16, 2014, RIN and
biointermediate verification reports for
each renewable fuel or biointermediate
production facility audited by the
independent third-party auditor shall be
submitted according to the schedule
specified in paragraph (f)(2) of this
section.
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(ii) The RIN and biointermediate
verification reports shall include all the
following information for each batch of
renewable fuel produced or imported
verified per § 80.1469(c), where ‘‘batch’’
means a discrete quantity of renewable
fuel produced or imported and assigned
a unique batch-RIN per § 80.1426(d):
(A) The RIN generator or
biointermediate producer’s name.
(B) The RIN generator or
biointermediate producer’s EPA
company registration number.
(C) The renewable fuel or
biointermediate producer’s EPA facility
registration number.
*
*
*
*
*
(K) The volume and type of each
feedstock and biointermediate used to
produce the verified batch.
(L) Whether the feedstocks and
biointermediates used to produce each
verified batch met the definition of
renewable biomass.
*
*
*
*
*
(2) * * *
(vii) A list of all renewable fuel and
biointermediate facilities including the
EPA’s company and facility registration
numbers audited under an approved
quality assurance plan under § 80.1469
along with the date the independent
third-party auditor conducted the onsite visit and audit.
(viii) Mass and energy balances
calculated for each renewable fuel and
biointermediate production facility
audited under an approved quality
assurance plan under § 80.1469.
*
*
*
*
*
(x) A list of all biointermediates that
were identified as potentially
improperly produced biointermediates
under § 80.1477(d).
*
*
*
*
*
(j) Biointermediate producers. For
each biointermediate production
facility, any biointermediate producer
must submit quarterly reports for
biointermediate batch production to
EPA containing all of the information in
this paragraph (j).
(1) Include all the following
information for each batch of
biointermediate produced:
(i) The biointermediate producer’s
name.
(ii) The biointermediate producer’s
EPA company registration number.
(iii) The biointermediate producer’s
EPA facility registration number.
(iv) The applicable compliance
period.
(v) The production date.
(vi) The batch number.
(vii) The adjusted cellulosic content
of each batch, as defined in § 80.1401,
and certification that the cellulosic
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content of each batch was derived from
cellulose, hemicellulose, or lignin that
was derived from renewable biomass, as
defined in § 80.1401.
(viii) The volume of each batch
produced.
(ix) The types and quantities of
feedstocks used.
(x) The renewable fuel type(s) each
batch of biointermediate was designated
to be used as a feedstock material for.
(xi) The EPA company registration
number and EPA facility registration
number for each renewable fuel
producer or foreign renewable fuel
producer that received title to each
batch.
(xii) The percentage of each batch of
biointermediate that met the definition
of renewable feedstock and certification
that this portion of the batch of
biointermediate was derived from
renewable biomass, as defined in
§ 80.1401.
(xiii) The process(es) and feedstock(s)
used and proportion of biointermediate
volume attributable to each process and
feedstock.
(xiv) The type of co-products
produced with each batch.
(xv) The quantity of co-products
produced in each quarter.
(xvi) Any additional information the
Administrator may require.
(2) Quarterly reports under this
paragraph of this section must be
submitted according to the schedule in
paragraph (f)(2) of this section.
*
*
*
*
*
■ 19. Amend § 80.1452 by redesignating
paragraph (b)(16) as paragraph (b)(18)
and adding new paragraphs (b)(16) and
(17) to read as follows:
§ 80.1452 What are the requirements
related to the EPA Moderated Transaction
System (EMTS)?
*
*
*
*
*
(b) * * *
(16) The type and quantity of each
biointermediate used for the batch, if
applicable.
(17) The EPA facility registration
number of each biointermediate
production facility at which a
biointermediate used for the batch was
produced, if applicable.
*
*
*
*
*
■ 20. Amend § 80.1453 by adding
paragraphs (a)(11)(v) and (f) to read as
follows:
§ 80.1453 What are the product transfer
document (PTD) requirements for the RFS
program?
(a) * * *
(11) * * *
(v) For RINs that are generated from
renewable fuel produced from a
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biointermediate, the PTD must include
the following:
(A) The EPA-issued company and
facility identification number of each
biointermediate producer for which the
RINs represent renewable fuel generated
from biointermediates.
(B) The type(s) of biointermediate
used to make the renewable fuel.
(C) The following statement: ‘‘These
RINs were generated from renewable
fuel produced from a biointermediate.’’
*
*
*
*
*
(f) On each occasion when any party
transfers title or custody of a
biointermediate, the transferor must
provide to the transferee documents that
include all of the following information:
(1) The name and address of the
transferor and transferee.
(2) The transferor’s and transferee’s
EPA company registration and
applicable facility registration numbers.
(3) The volume of biointermediate
that is being transferred.
(4) The date of the transfer.
(5) The location of the
biointermediate at the time of the
transfer.
(6) The renewable fuel type the
biointermediate was designated to be
used as a feedstock material for by the
biointermediate producer under
§ 80.1476(i).
(7) The composition of the
biointermediate being transferred,
including:
(i) The type and quantity of each
feedstock that was used to make the
biointermediate.
(ii) The percentage of each feedstock
that is renewable biomass, rounded to
two decimal places.
(iii) For a biointermediate that
contains both renewable and nonrenewable feedstocks:
(A) The percentage of each feedstock
that is not renewable biomass, rounded
to two decimal places.
(B) The feedstock energy from the
renewable biomass used to make the
biointermediate, in Btu.
(C) The feedstock energy from the
non-renewable biomass used to make
the biointermediate, in Btu.
(D) The total percentage of the
biointermediate that may generate RINs,
rounded to two decimal places.
(E) The total percentage of the
biointermediate that may not generate
RINs, rounded to two decimal places.
(iv) For a biointermediate that
contains cellulosic material:
(A) The percentage of each feedstock
in paragraph (f)(7)(ii) of this section that
is cellulosic, rounded to two decimal
places.
(B) The percentage of each feedstock
in paragraph (f)(7)(ii) of this section that
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is non-cellulosic, rounded to two
decimal places, if applicable.
(C) The total percentage of the
biointermediate that may generate
cellulosic RINs, rounded to two decimal
places.
(D) For separated municipal solid
waste, the cellulosic portion of the
biointermediate is equivalent to the
biogenic portion.
(E) For separated food waste, the noncellulosic percentage is assumed to be
zero percent unless it is demonstrated to
be partially cellulosic.
(F) For separated yard waste, 100% of
separated yard waste is deemed to be
cellulosic.
(G) The following statement: ‘‘I certify
that the cellulosic content of this
feedstock was derived from cellulose,
hemicellulose, or lignin that was
derived from renewable biomass.’’
(8) Copies of records specified in
§ 80.1454(i)(3), (5), and (6) for the
volume being transferred, as applicable.
(9) The following statement
designating the volume of
biointermediate as feedstock for the
production of a renewable fuel: ‘‘This
volume is designated and intended for
use as biointermediate in the production
of renewable fuel as defined in 40 CFR
80.1401. Parties may not generate RINs
on this feedstock material.’’
■ 21. Amend § 80.1454 by:
■ a. Redesignating paragraphs (b)(3)(vii)
through (xii) as paragraphs (b)(3)(viii)
through (xiii) and adding new paragraph
(b)(3)(vii);
■ b. Revising paragraphs (b)(6), the first
sentence of paragraph (d)(4), (i), and (j)
introductory text;
■ c. Adding paragraph (k) heading;
■ d. Revising paragraphs (l)
introductory text and (l)(1);
■ e. Redesignating paragraph (l)(3) as
paragraph (l)(4) and adding new
paragraph (l)(3);
■ f. Revising the first sentence of
paragraph (m) introductory text;
■ g. Redesignating paragraph (m)(10) as
paragraph (m)(11) and adding new
paragraph (m)(10);
■ h. Removing paragraphs (n), (o), (p),
and (q);
■ i. Redesignating paragraphs (s), (t), (u),
and (v) as paragraphs (n), (o), (p), and
(q);
■ j. Revising newly redesignated
paragraph (n) introductory text;
■ k. Revising paragraph (r);
■ l. Adding new paragraphs (s), (t), (u),
and (v); and
■ m. Removing paragraph (w).
The revisions and addition read as
follows:
§ 80.1454 What are the recordkeeping
requirements under the RFS program?
*
*
*
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(b) * * *
(3) * * *
(vii) Type and quantity of
biointermediates used.
*
*
*
*
*
(6) Copies of registration documents
required under § 80.1450, including
information on fuels and products,
feedstocks, biointermediates, facility
production processes, process changes,
and capacity, energy sources, and a
copy of the independent third party
engineering review report submitted to
EPA per § 80.1450(b)(2).
*
*
*
*
*
(d) * * *
(4) Domestic producers of renewable
fuel or biointermediates made from any
other type of renewable biomass must
have documents from their feedstock
supplier certifying that the feedstock
qualifies as renewable biomass as
defined in § 80.1401, describing the
feedstock. * * *
*
*
*
*
*
(i) Requirements for biointermediate
producers. Any biointermediate
producer producing a biointermediate
must keep all of the following records
in addition to those required under
paragraphs (a) through (m) of this
section:
(1) Product transfer documents
consistent with § 80.1453(e) and
associated with the biointermediate
producer’s activities, if any, as
transferor or transferee of
biointermediates.
(2) Copies of all reports submitted to
EPA under § 80.1451(i).
(3) Records related to the production
of biointermediates for each
biointermediate production facility,
including all of the following:
(i) Batch volume.
(ii) Batch number.
(iii) Type and quantity of co-products
produced.
(iv) Type and quantity of feedstocks
used.
(v) Type and quantity of fuel used for
process heat.
(vi) Feedstock energy calculations per
§ 80.1426(f)(4), as applicable.
(vii) Date of production.
(viii) Results of any laboratory
analysis of batch chemical composition
or physical properties.
(4) Copies of registration documents
required under § 80.1450, including
information on products, feedstocks,
facility production processes, process
changes, and capacity, energy sources,
and a copy of the independent third
party engineering review submitted to
EPA per § 80.1450(b)(2)(i).
(5) Records demonstrating that
feedstocks are renewable biomass, as
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required under paragraphs (d), (g), (h),
and (j) of this section, as applicable.
(6) For any biointermediate made
from Arundo donax or Pennisetum
purpureum per § 80.1426(f)(14), all
applicable records described in
paragraph (b)(7) of this section.
(7) Records, including contracts,
related to the implementation of a QAP
under §§ 80.1469 and 80.1477.
(j) Additional requirements for
producers that use separated yard
waste, separate food waste, separated
municipal solid waste, or biogenic waste
oils/fats/greases. A renewable fuel or
biointermediate producer that produces
fuel or biointermediate from separated
yard waste, separated food waste,
separated municipal solid waste, or
biogenic waste oils/fats/greases must
keep all the following additional
records:
*
*
*
*
*
(k) Additional requirements for
producers of renewable fuel using
biogas. * * *
(l) Additional requirements for
producers or importers of any renewable
fuel other than ethanol, biodiesel,
renewable gasoline, renewable diesel,
biogas, or renewable electricity. A
renewable fuel producer that generates
RINs for any renewable fuel other than
ethanol, biodiesel, renewable gasoline,
renewable diesel that meets ASTM D975
Grade No. 1–D or No. 2–D specifications
(incorporated by reference, see
§ 80.1468), biogas or renewable
electricity shall keep all of the following
additional records:
(1) Documents demonstrating the total
volume of renewable fuel produced,
total volume of renewable fuel blended
into gasoline and distillate fuel, and the
percentage of renewable fuel in each
batch of finished fuel.
*
*
*
*
*
(3) For each batch of renewable fuel
that generated RINs under
§ 80.1426(f)(17)(i)(B)(2), one or more
affidavits from the party that blended or
used the renewable fuel that includes all
the following information:
(i) Quantity of renewable fuel
received from the producer or importer.
(ii) Date the renewable fuel was
received from producer.
(iii) A description of the fuel that the
renewable fuel was blended into and the
blend ratios for each batch, if
applicable.
(iv) A description of the finished fuel,
and a statement that the fuel meets all
applicable standards and was sold for
use as a transportation fuel, heating oil
or jet fuel.
(v) Quantity of assigned RINs received
with the renewable fuel, if applicable.
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(vi) Quantity of assigned RINs that the
end user separated from the renewable
fuel, if applicable.
*
*
*
*
*
(m) Requirements for independent
third-party auditors. * * *
(10) Copies of all reports required
under § 80.1464.
*
*
*
*
*
(n) Additional requirements for
producers of renewable fuel using crop
residue. Producers of renewable fuel
using crop residue must keep records of
all of the following:
*
*
*
*
*
(r) Transaction requirement.
Beginning July 1, 2010, all parties must
keep transaction information sent to
EMTS in addition to other records
required under this section.
(1) For buy or sell transactions of
separated RINs, parties must retain
records substantiating the price reported
to EPA under § 80.1452.
(2) For buy or sell transactions of
separated RINs on or after January 1,
2020, parties must retain records
demonstrating the transaction
mechanism (e.g., spot market or
fulfilling a term contract).
(s) Record retention requirement. (1)
The records required under paragraphs
(a) through (d), (f) through (l), (n), and
(r) of this section and under § 80.1453
must be kept for five years from the date
they were created, except that records
related to transactions involving RINs
must be kept for five years from the date
of the RIN transaction.
(2) The records required under
paragraph (e) of this section must be
kept through calendar year 2022.
(t) Record availability requirement.
On request by the EPA, the records
required under this section and under
§ 80.1453 must be made available to the
Administrator or the Administrator’s
authorized representative. For records
that are electronically generated or
maintained, the equipment or software
necessary to read the records shall be
made available; or, if requested by the
EPA, electronic records shall be
converted to paper documents.
(u) Record transfer requirement. The
records required in paragraphs (b)(3)
and (c)(1) of this section must be
transferred with any renewable fuel sent
to the importer of that renewable fuel by
any non-RIN-generating foreign
producer.
(v) English language records. Any
document requested by the
Administrator under this section must
be submitted in English or must include
an English translation.
■ 22. Amend § 80.1460 by revising
paragraphs (b)(5) and (6) and adding
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paragraphs (b)(8) and (k) to read as
follows:
§ 80.1460 What acts are prohibited under
the RFS program?
*
*
*
*
*
(b) * * *
(5) Introduce into commerce any
renewable fuel produced from a
feedstock, biointermediate, or through a
process that is not described in the
person’s registration information.
(6) Generate a RIN for fuel for which
RINs have previously been generated
unless the RINs were generated under
§ 80.1426(c)(6).
*
*
*
*
*
(8) Generate a RIN for fuel that was
produced from a biointermediate for
which the fuel and biointermediate
were not audited under an EPAapproved quality assurance plan.
*
*
*
*
*
(k) Biointermediate-related violations.
No person may do any of the following:
(1) Introduce into commerce for use in
the production of a renewable fuel any
biointermediate produced from a
feedstock or through a process that is
not described in the person’s
registration information.
(2) Produce a renewable fuel at more
than one facility unless the person uses
a biointermediate as defined under
§ 80.1401 or the renewable biomass is
not substantially altered. Form changes
of renewable biomass such as chopping,
crushing, grinding, pelletizing, filtering,
compacting/compression, centrifuging,
degumming, dewatering/drying,
melting, or the addition of water to
produce a slurry do not constitute
substantial alteration.
(3) Transfer a biointermediate from a
biointermediate production facility to a
facility other than the renewable fuel
production facility specified in the
biointermediate producer’s registration
under § 80.1450(b)(1)(ii)(G)(1).
(4) Isolate or concentrate noncharacteristic components of the
feedstock to yield an intermediate
product not contemplated by EPA in
establishing an approved pathway that
the biointermediate producer and the
renewable fuel producer are using to
convert renewable biomass to renewable
fuel.
■ 23. Amend § 80.1461 by revising
paragraphs (a)(1) and (2) and adding
paragraph (e) to read as follows:
§ 80.1461 Who is liable for violations
under the RFS program?
(a) * * *
(1) Any person who violates a
prohibition under § 80.1460(a) through
(d) or (g) through (k) is liable for the
violation of that prohibition.
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(2) Any person who causes another
person to violate a prohibition under
§ 80.1460(a) through (d) or (g) through
(k) is liable for a violation of
§ 80.1460(e).
*
*
*
*
*
(e) Biointermediate liability. When a
biointermediate contained in any
storage tank at any facility owned,
leased, operated, controlled, or
supervised by any biointermediate
producer, biointermediate importer,
renewable fuel producer, or foreign
ethanol producer is found in violation
of a prohibition described in
§ 80.1460(k)(1) and (3), the following
persons shall be deemed in violation:
(1) Each biointermediate producer,
biointermediate importer, renewable
fuel producer, renewable fuel importer,
or foreign ethanol producer who owns,
leases, operates, controls, or supervises
the facility where the violation is found.
(2) Each biointermediate producer,
biointermediate importer, renewable
fuel producer, renewable fuel importer,
or foreign ethanol producer who
manufactured, imported, sold, offered
for sale, dispensed, offered for supply,
stored, transported, or caused the
transportation of any biointermediate
that is in the storage tank containing the
biointermediate found to be in violation.
(3) Each carrier who dispensed,
supplied, stored, or transported any
biointermediate that was in the storage
tank containing the biointermediate
found to be in violation, provided that
EPA demonstrates, by reasonably
specific showings using direct or
circumstantial evidence, that the carrier
caused the violation.
■ 24. Amend § 80.1463 by revising
paragraph (d) to read as follows:
§ 80.1463 What penalties apply under the
RFS program?
*
*
*
*
*
(d) Any person liable under
§ 80.1461(a) for a violation of
§ 80.1460(b)(1) through (4) or (6)
through (8) is subject to a separate day
of violation for each day that an invalid
RIN remains available for an obligated
party or exporter of renewable fuel to
demonstrate compliance with the RFS
program.
■ 25. Amend § 80.1464 by:
■ a. Removing ‘‘§ 80.127’’ everywhere it
appears and adding ‘‘40 CFR
1090.1805’’ in its place;
■ b. Revising paragraph (a)(3)(ii);
■ c. Adding paragraph (a)(7);
■ d. Revising paragraph (b)(1)(v)(A);
■ e. Adding paragraph (b)(1)(v)(C);
■ f. Revising paragraphs (b)(3)(ii) and
(b)(4)(i);
■ g. Adding paragraphs (b)(4)(iii) and
(b)(8);
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h. Revising paragraphs (c)
introductory text and (c)(2)(ii);
■ i. Adding paragraphs (c)(6) and (7)
and (h); and
■ j. Revising paragraphs (i)(1) heading,
(i)(1)(i) and (iii), (i)(2) heading, and
(i)(2)(i) and (ii).
The revisions and additions read as
follows:
■
§ 80.1464 What are the attest engagement
requirements under the RFS program?
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*
*
*
*
*
(a) * * *
(3) * * *
(ii) Obtain the database, spreadsheet,
or other documentation used to generate
the information in the RIN activity
reports; compare the RIN transaction
samples reviewed under paragraph
(a)(2) of this section with the
corresponding entries in the database or
spreadsheet and report as a finding any
discrepancies; compute the total
number of current-year and prior-year
RINs owned at the start and end of each
quarter, and for parties that reported
RIN activity for RINs assigned to a
volume of renewable fuel, the volume
and type of renewable fuel owned at the
end of each quarter, as represented in
these documents; and state whether this
information agrees with the party’s
reports to EPA.
*
*
*
*
*
(7) Compliance reports. Compare the
list of compliance reports submitted to
EPA during the compliance period to
the reporting requirements for the entity
in § 80.1451. Report as a finding any
reporting requirements that were not
completed.
(b) * * *
(1) * * *
(v)(A) Obtain documentation, as
required under § 80.1451(b), (d), and (e),
associated with feedstock and
biointermediate purchases for a
representative sample of feedstocks and
biointermediates separately, selected in
accordance with the guidelines in 40
CFR 1090.1805, of renewable fuel
batches produced or imported during
the year being reviewed.
*
*
*
*
*
(C) Verify that biointermediates were
properly identified in the reports, as
applicable.
*
*
*
*
*
(3) * * *
(ii) Obtain the database, spreadsheet,
or other documentation used to generate
the information in the RIN activity
reports; compare the RIN transaction
samples reviewed under paragraph
(b)(2) of this section with the
corresponding entries in the database or
spreadsheet and report as a finding any
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discrepancies; report the total number of
each RIN generated during each quarter
and compute and report the total
number of current-year and prior-year
RINs owned at the start and end of each
quarter, and for parties that reported
RIN activity for RINs assigned to a
volume of renewable fuel, the volume of
renewable fuel owned at the end of each
quarter, as represented in these
documents; and state whether this
information agrees with the party’s
reports to EPA.
(4) * * *
(i) Obtain documentation of
independent third-party engineering
reviews required under § 80.1450(b)(2).
Such documentation must include the
date of the last engineering review along
with date of the actual site visit by the
professional engineer.
*
*
*
*
*
(iii) Verify that independent thirdparty engineering reviews conducted
under § 80.1450(d)(3) occurred within
the three-year cycle. Report as a finding
if the engineering review was not
updated as part of the three-year cycle
under § 80.1450(d)(3).
*
*
*
*
*
(8) Compliance reports. Compare the
list of compliance reports submitted to
EPA during the compliance period to
the reporting requirements for the entity
in § 80.1451. Report as a finding any
reporting requirements that were not
completed.
(c) Other parties owning RINs. Except
as specified in paragraph (c)(6) of this
section, the following attest procedures
must be completed for any party other
than an obligated party or renewable
fuel producer or importer that owns any
RINs during a calendar year:
*
*
*
*
*
(2) * * *
(ii) Obtain the database, spreadsheet,
or other documentation used to generate
the information in the RIN activity
reports; compare the RIN transaction
samples reviewed under paragraph
(c)(1) of this section with the
corresponding entries in the database or
spreadsheet and report as a finding any
discrepancies; compute the total
number of current-year and prior-year
RINs owned at the start and end of each
quarter, and for parties that reported
RIN activity for RINs assigned to a
volume of renewable fuel, the volume of
renewable fuel owned at the end of each
quarter, as represented in these
documents; and state whether this
information agrees with the party’s
reports to EPA.
*
*
*
*
*
(6) Low-volume RIN owner exemption.
Any party who meets all the following
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criteria in a given compliance period is
not required to submit an attest
engagement for that compliance period:
(i) The party must be solely registered
as a party owning RINs (i.e., a ‘‘RIN
Owner Only’’) and must not also be
registered in any other role under
§ 80.1450 (e.g., the party must not also
be an obligated party, exporter of
renewable fuel, renewable fuel
producer, RIN generating importer, etc.).
(ii) The party must have transacted
(e.g., generated, bought, sold, separated,
or retired) 10,000 or fewer RINs in the
given compliance period.
(iii) The party has not exceeded the
RIN holding threshold(s) specified in
§ 80.1435.
(7) Compliance reports. Compare the
list of compliance reports submitted to
EPA during the compliance period to
the reporting requirements for the entity
in § 80.1451. Report as a finding any
reporting requirements that were not
completed.
*
*
*
*
*
(h) Biointermediate producers. The
following attest reports must be
completed for any biointermediate
producer that produces a
biointermediate in a compliance year:
(1) Biointermediate production
reports. (i) Obtain and read copies of the
quarterly biointermediate production
reports required under § 80.1451(i);
compare the reported information to the
requirements under § 80.1451(i); and
report as a finding any missing or
incomplete information in the reports.
(ii) Obtain any database, spreadsheet,
or other documentation used to generate
the information in the biointermediate
production reports; compare the
corresponding entries in the database or
spreadsheet and report as a finding any
discrepancies.
(iii) For a representative sample of
biointermediate batches, selected in
accordance with the guidelines in 40
CFR 1090.1805, obtain records required
under § 80.1454(i); compare these
records to the corresponding batch
entries in the reports procured in
paragraph (h)(1)(i) of this section and
report as a finding any discrepancies.
(iv) Obtain the list of designated
renewable fuel production facilities
under § 80.1450(b)(1)(ii)(G)(1); compare
the list of registered designated
renewable fuel production facilities to
those identified in the biointermediate
production report; and report as a
finding any discrepancies.
(v) Provide the list of renewable fuel
producers receiving any transfer of
biointermediate batches and calculate
the total volume from the batches
received.
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(2) Independent third-party
engineering review. (i) Obtain
documentation of independent thirdparty engineering reviews required
under § 80.1450(b)(2).
(ii) Review and verify the written
verification and records generated as
part of the independent third-party
engineering review.
(iii) Provide the date of the
submission of the last engineering
review along with the date of the actual
site visit by the professional engineer.
Report as a finding if the engineering
review was not updated as part of the
three-year cycle under § 80.1450(d)(3).
(iv) Compare and provide the total
volume of produced biointermediate
during the compliance year as compared
to the production capacity stated in the
engineering review and report as a
finding if the volume of produced
biointermediate is greater than the
stated production capacity.
(3) Product transfer documents. (i)
Obtain contracts, invoices, or other
documentation for each batch in the
representative sample under paragraph
(h)(1)(iii) of this section and the
corresponding copies of product transfer
documents required under § 80.1453;
compare the product transfer documents
with the contracts and invoices and
report as a finding any discrepancies.
(ii) Verify that the product transfer
documents obtained in paragraph
(h)(3)(i) of this section contain the
applicable information required under
§ 80.1453 and report as a finding any
product transfer document that does not
contain the required information.
(iii) Verify the accuracy of the
information contained in the product
transfer documents reviewed pursuant
to paragraph (h)(3)(ii) of this section
with the records obtained and reviewed
under paragraph (h)(1)(iii) of this
section and report as a finding any
exceptions.
(i) * * *
(1) Comparing RIN and
biointermediate verification reports with
approved QAPs. (i) Obtain and read
copies of reports required under
§ 80.1451(g)(1). Compare the list of
compliance reports submitted to EPA
during the compliance period to the
reporting requirements for the entity in
§ 80.1451. Report as a finding any
reporting requirements that were not
completed.
*
*
*
*
*
(iii) Confirm that the independent
third-party auditor only verified RINs
and biointermediates covered by
approved QAPs under § 80.1469.
Identify as a finding any discrepancies.
(2) Checking third-party auditor’s RIN
and biointermediate verification. (i)
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Obtain and read copies of reports
required under § 80.1451(g)(2). Compare
the list of compliance reports submitted
to EPA during the compliance period to
the reporting requirements for the entity
in § 80.1451. Report as a finding any
reporting requirements that were not
completed.
(ii) Obtain all notifications of
potentially invalid RINs and potentially
improperly produced biointermediate
submitted to the EPA under
§§ 80.1474(b)(3) and 80.1477(d)(2)
respectively.
*
*
*
*
*
■ 26. Revise § 80.1468 to read as
follows:
§ 80.1468
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. All approved material is
available for inspection at U.S. EPA, Air
and Radiation Docket and Information
Center, WJC West Building, Room 3334,
1301 Constitution Ave. NW,
Washington, DC 20460, (202) 566–1742,
and is available from the sources listed
in this section. It is also available for
inspection at the National Archives and
Records Administration (NARA). For
information on the availability of this
material at NARA, email fr.inspection@
nara.gov, or go to www.archives.gov/
federal-register/cfr/ibr-locations.html.
(b) ASTM International, 100 Barr
Harbor Dr., P.O. Box C700, West
Conshohocken, PA 19428–2959, (877)
909–2786, or www.astm.org.
(1) ASTM D975–21, Standard
Specification for Diesel Fuel, approved
August 1, 2021 (‘‘ASTM D975’’); IBR
approved for §§ 80.1401, 80.1426(f),
80.1450(b), 80.1451(b), and 80.1454(l).
(2) ASTM D1250–19e1, Standard
Guide for the Use of the Joint API and
ASTM Adjunct for Temperature and
Pressure Volume Correction Factors for
Generalized Crude Oils, Refined
Products, and Lubricating Oils: API
MPMS Chapter 11.1, approved May 1,
2019 (‘‘ASTM D1250’’); IBR approved
for § 80.1426(f).
(3) ASTM D4442–20, Standard Test
Methods for Direct Moisture Content
Measurement of Wood and Wood-Based
Materials, approved March 1, 2020
(‘‘ASTM D4442’’); IBR approved for
§ 80.1426(f).
(4) ASTM D4444–13 (2018), Standard
Test Method for Laboratory
Standardization and Calibration of
Hand-Held Moisture Meters, reapproved
July 1, 2018 (‘‘ASTM D4444’’); IBR
approved for § 80.1426(f).
(5) ASTM D6751–20a, Standard
Specification for Biodiesel Fuel Blend
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Stock (B100) for Middle Distillate Fuels,
approved August 1, 2020 (‘‘ASTM
D6751’’); IBR approved for § 80.1401.
(6) ASTM D6866–21, Standard Test
Methods for Determining the Biobased
Content of Solid, Liquid, and Gaseous
Samples Using Radiocarbon Analysis,
approved January 15, 2021 (‘‘ASTM
D6866’’); IBR approved for §§ 80.1426(f)
and 80.1430(e).
(7) ASTM E711–87 (2004), Standard
Test Method for Gross Calorific Value of
Refuse-Derived Fuel by the Bomb
Calorimeter, reapproved 2004 (‘‘ASTM
E711’’); IBR approved for § 80.1426(f).
(8) ASTM E870–82 (2019), Standard
Test Methods for Analysis of Wood
Fuels, reapproved April 1, 2019
(‘‘ASTM E870’’); IBR approved for
§ 80.1426(f).
■ 27. Amend § 80.1469 by revising the
introductory text and paragraphs
(c)(1)(vi) and (vii), (c)(2)(i), (c)(3)(i),
(c)(5), and (f)(1) and (2) to read as
follows:
§ 80.1469 Requirements for Quality
Assurance Plans.
This section specifies the
requirements for Quality Assurance
Plans (QAPs) for renewable fuels and
biointermediates.
*
*
*
*
*
(c) * * *
(1) * * *
(vi) Feedstock(s) and
biointermediate(s) are consistent with
production process and D code being
used as permitted under Table 1 to
§ 80.1426 or a petition approved
through § 80.1416, and is consistent
with information recorded in EMTS.
(vii) Feedstock(s) and
biointermediate(s) are not renewable
fuel for which RINs were previously
generated unless the RINs were
generated under § 80.1426(c)(6). For
renewable fuels that have RINs
generated under § 80.1426(c)(6), verify
that renewable fuels used as a feedstock
meet all applicable requirements of this
paragraph (c)(1).
*
*
*
*
*
(2) * * *
(i) Production process is consistent
with the renewable fuel producer or
biointermediate producer’s registration
under § 80.1450(b).
*
*
*
*
*
(3) * * *
(i) If applicable, renewable fuel was
designated for qualifying uses as
transportation fuel, heating oil, or jet
fuel in the covered location pursuant to
§ 80.1453.
*
*
*
*
*
(5) Representative sampling.
Independent third-party auditors may
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use a representative sample of batches
of renewable fuel or biointermediate in
accordance with the procedures
described in 40 CFR 1090.1805 for all
components of this paragraph (c) except
for paragraphs (c)(1)(ii) and (iii),
(c)(2)(ii), (c)(3)(vi), and (c)(4)(ii) and (iii)
of this section. If a facility produces
both a renewable fuel and a
biointermediate, the independent thirdparty auditor must select separate
representative samples for the
renewable fuel and biointermediate.
*
*
*
*
*
(f) * * *
(1) A new QAP must be submitted to
EPA according to paragraph (e) of this
section and the independent third-party
auditor must update their registration
according to § 80.1450(g)(9) whenever
any of the following changes occur at a
renewable fuel or biointermediate
production facility audited by an
independent third-party auditor and the
auditor does not possess an appropriate
pathway-specific QAP that encompasses
the change:
(i) Change in feedstock or
biointermediates.
(ii) Change in type of fuel or
biointermediate produced.
(iii) Change in facility operations or
equipment that may impact the
capability of the QAP to verify that RINs
are validly generated or
biointermediates are properly produced.
(2) A QAP ceases to be valid as the
basis for verifying RINs or a
biointermediate under a new pathway
until a new pathway-specific QAP,
submitted to the EPA under this
paragraph (f), is approved pursuant to
paragraph (e) of this section.
■ 28. Amend § 80.1471 by:
■ a. Revising paragraphs (b)(1), (4), (5),
and (6) and (c);
■ b. Adding paragraph (e)(5); and
■ c. Revising paragraphs (f)(1)
introductory text, (f)(1)(ii), and (g).
The revisions and addition read as
follows:
§ 80.1471
Requirements for QAP auditors.
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*
*
*
*
*
(b) * * *
(1) The independent third-party
auditor and its contractors and
subcontractors must not be owned or
operated by the renewable fuel
producer, foreign renewable fuel
producer, or biointermediate producer
or any subsidiary or employee of the
renewable fuel producer, foreign
ethanol producer, or biointermediate
producer.
*
*
*
*
*
(4) The independent third-party
auditor and its contractors and
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subcontractors must be free from any
interest or the appearance of any
interest in the renewable fuel producer,
foreign renewable fuel producer, or
biointermediate producer’s business.
(5) The renewable fuel producer,
foreign renewable fuel producer, or
biointermediate producer must be free
from any interest or the appearance of
any interest in the third-party auditor’s
business and the businesses of thirdparty auditor’s contractors and
subcontractors.
(6) The independent third-party
auditor and its contractors and
subcontractors must not have performed
an attest engagement under § 80.1464
for the renewable fuel producer, foreign
renewable fuel producer, or
biointermediate producer in the same
calendar year as a QAP audit conducted
pursuant to § 80.1472.
*
*
*
*
*
(c) Independent third-party auditors
must maintain professional liability
insurance, as defined in 31 CFR 50.4(t).
Independent third-party auditors must
use insurance providers that possess a
financial strength rating in the top four
categories from Standard & Poor’s or
Moody’s (i.e., AAA, AA, A or BBB for
Standard & Poor’s and Aaa, Aa, A, or
Baa for Moody’s), or a comparable rating
acceptable to EPA. Independent thirdparty auditors must disclose the level of
professional liability insurance they
possess when entering into contracts to
provide RIN verification services.
*
*
*
*
*
(e) * * *
(5) The independent third-party
auditor must not identify RINs
generated for renewable fuel produced
using a biointermediate as having been
verified under a QAP unless the
biointermediate used to produce the
renewable fuel was verified under an
approved QAP pursuant to § 80.1477.
(f)(1) Except as specified in paragraph
(f)(2) of this section, auditors may only
verify RINs that have been generated
after the audit required under § 80.1472
has been completed. Auditors may only
verify biointermediates that were
produced after the audit required under
§ 80.1472 has been completed. Auditors
must only verify RINs generated from
renewable fuels produced from
biointermediates after the audit required
under § 80.1472 has been completed for
both the biointermediate production
facility and the renewable fuel
production facility.
*
*
*
*
*
(ii) Verification of RINs or
biointermediates may continue for no
more than 200 days following an on-site
visit or 380 days after an on-site visit if
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a previously the EPA-approved remote
monitoring system is in place at the
renewable fuel production facility.
*
*
*
*
*
(g) The independent third-party
auditor must permit any representative
of the EPA to monitor at any time the
implementation of QAPs and renewable
fuel and biointermediate production
facility audits.
*
*
*
*
*
■ 29. Amend § 80.1472 by revising
paragraphs (a)(4), (b)(3)(i) introductory
text, (b)(3)(ii)(B), and (b)(3)(iii) to read
as follows:
§ 80.1472 Requirements for quality
assurance audits.
(a) * * *
(4) Each audit shall include a review
of documents generated by the
renewable fuel producer or
biointermediate producer.
(b) * * *
(3) * * *
(i) As applicable, the independent
third-party auditor shall conduct an onsite visit at the renewable fuel
production facility, foreign ethanol
production facility, or biointermediate
production facility:
*
*
*
*
*
(ii) * * *
(B) 380 days after the previous on-site
visit if a previously approved (by EPA)
remote monitoring system is in place at
the renewable fuel production facility,
foreign ethanol production facility, or
biointermediate production facility, as
applicable. The 380-day period shall
start the day after the previous on-site
visit ends.
(iii) An on-site visit shall include
verification of all QAP elements that
require inspection or evaluation of the
physical attributes of the renewable fuel
production facility, foreign ethanol
production facility, or biointermediate
production facility, as applicable.
*
*
*
*
*
§ 80.1473
[Amended]
30. Amend § 80.1473 by, in the first
sentence of paragraph (f), removing
‘‘support@epamts-support.com’’ and
adding ‘‘fuelsprogramsupport@epa.gov’’
in its place.
■
§ 80.1474
[Amended]
31. Amend § 80.1474 by, in
paragraphs (b)(2) introductory text,
(b)(3), (b)(4)(i)(C) introductory text, and
(b)(4)(ii)(C) introductory text, removing
‘‘support@epamts-support.com’’ and
adding ‘‘fuelsprogramsupport@epa.gov’’
in its place.
■ 32. Amend § 80.1475 by:
■ a. In paragraph (a)(2), removing
‘‘§§ 80.125 through 80.127 and
■
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§ 80.130’’ and adding ‘‘40 CFR
1090.1800 through 1090.1850’’ in its
place;
■ b. Revising the first sentence of
paragraph (d)(1) and paragraph (d)(3);
and
■ c. In paragraph (d)(4), removing
‘‘§ 80.127’’ and adding ‘‘40 CFR
1090.1805’’ in its place.
The revisions read as follows:
§ 80.1475 What are the additional attest
engagement requirements for parties that
redesignate certified NTDF as MVNRLM
diesel fuel?
*
*
*
*
*
(d) * * *
(1) For each of the volumes listed in
paragraphs (c)(1)(iii) through (vi) of this
section, obtain a separate listing of all
tenders from the refiner or importer for
the reporting period. * * *
*
*
*
*
*
(3) Agree the volume totals on the
listing to the tender volume total in the
inventory reconciliation analysis
obtained in paragraph (c) of this section.
*
*
*
*
*
■ 33. Section 80.1476 is added to read
as follows:
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§ 80.1476 Requirements for
biointermediate producers.
Biointermediate producers must
comply with the following
requirements:
(a) Registration. No later than 60 days
prior to the transfer of any
biointermediate to be used in the
production of a renewable fuel for
which RINs may be generated,
biointermediate producers must register
with EPA pursuant to the requirements
of § 80.1450(b).
(b) Reporting. Biointermediate
producers must comply with the
reporting requirements pursuant to
§ 80.1451(i).
(c) Recordkeeping. Biointermediate
producers must comply with the
recordkeeping requirements pursuant to
§ 80.1454(i).
(d) PTDs. Biointermediate producers
must comply with the PTD
requirements pursuant to § 80.1453(e).
(e) Quality Assurance Plans. Prior to
the transfer of any biointermediate to be
used in the production of a renewable
fuel for which RINs may be generated,
biointermediate producers must have an
approved quality assurance plan
pursuant to § 80.1477(b) and the
independent third-party auditor must
have conducted a site visit of the
biointermediate production facility
under § 80.1472.
(f) Attest engagements.
Biointermediate producers must comply
with the annual attest engagement
requirements pursuant to § 80.1464(h).
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(g) Limitations on biointermediate
transfers and production. (1) A
biointermediate producer must only
transfer a biointermediate produced
from a single biointermediate facility to
a single renewable fuel production
facility as designated under
§ 80.1450(b)(1)(ii)(G)(1).
(2) A batch of biointermediate must be
segregated from other batches of
biointermediate (even if it is the same
type of biointermediate) and other
feedstocks from the point that the batch
of biointermediate is produced to the
point where the batch of
biointermediate is received at the
renewable fuel production facility
designated under
§ 80.1450(b)(1)(ii)(G)(1).
(3) Renewable fuel producers that
receive biointermediate at a renewable
fuel production facility may not be a
biointermediate producer.
(4) A biointermediate must not be
used to make another biointermediate.
(h) Batch numbers and volumes. (1)
Each batch of biointermediate produced
at a biointermediate production facility
must be assigned a number (the ‘‘batch
number’’), consisting of the EPAassigned company registration number,
the EPA-assigned facility registration
number, the last two digits of the year
in which the batch was produced, and
a unique number for the batch,
beginning with the number one for the
first batch produced each calendar year
and each subsequent batch during the
calendar year being assigned the next
sequential number (e.g., 4321–54321–
95–000001, 4321–54321–95–000002,
etc.).
(2) The volume of each batch of
biointermediate must be adjusted to a
standard temperature of 60 °F.
(i) Designation. Each batch of
biointermediate produced at a
biointermediate production facility
must be designated for use in the
production of a renewable fuel in
accordance with the biointermediate
producer’s registration under § 80.1450.
The designation for the batch of
biointermediate must be clearly
indicated on PTDs for the
biointermediate as described in
§ 80.1453(e)(6).
■ 34. Section 80.1477 is added to read
as follows:
§ 80.1477 Requirements for QAPs for
biointermediate producers.
(a) Independent third-party auditors
that verify biointermediate production
must meet the requirements of
§ 80.1471(a) through (c) and (f) through
(h), as applicable.
(b) QAPs approved by EPA to verify
biointermediate production must meet
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72499
the requirements in § 80.1469(c) through
(f), as applicable.
(c) Quality assurance audits, when
performed, must be conducted in
accordance with the requirements in
§ 80.1472(a) and (b)(3).
(d)(1) If an independent third-party
auditor identifies a potentially
improperly produced biointermediate,
the independent third-party auditor
must notify EPA, the biointermediate
producer, and the renewable fuel
producer that may have been transferred
the biointermediate within five business
days of the identification, including an
initial explanation of why the
biointermediate may have been
improperly produced.
(2) If RINs were generated from the
potentially improperly produced
biointermediate, the RIN generator must
follow the applicable identification and
treatment of PIRs as specified in
§ 80.1474.
(e) For the generation of Q–RINs for
renewable fuels that were produced
from a biointermediate, the
biointermediate must be verified under
an approved QAP as described in
paragraph (b) of this section and the RIN
generating facility must be verified
under an approved QAP as described in
§ 80.1469.
■ 35. Section 80.1478 is added to read
as follows:
§ 80.1478 Requirements for foreign
biointermediate producers and importers.
(a) Foreign biointermediate producer.
For purposes of this subpart, a foreign
biointermediate producer is a person
located outside the United States, the
Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern
Mariana Islands (collectively referred to
in this section as ‘‘the United States’’)
that has been approved by EPA to
produce biointermediate for use in the
production of renewable fuel by a RINgenerating renewable fuel producer.
(b) Foreign biointermediate producer
requirements. Any foreign
biointermediate producer must meet all
requirements that apply to
biointermediate producers under this
subpart as a condition of being
approved as a foreign biointermediate
producer under this subpart.
(c) Foreign biointermediate producer
commitments. Any foreign
biointermediate producer must commit
to the following provisions as a
condition of being approved as a foreign
biointermediate producer under this
subpart:
(1) Any EPA inspector or auditor must
be given full, complete, and immediate
access to conduct inspections and
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audits of the foreign biointermediate
producer facility.
(i) Inspections and audits may be
either announced in advance by EPA, or
unannounced.
(ii) Access will be provided to any
location where:
(A) Biointermediate is produced.
(B) Documents related to foreign
biointermediate producer operations are
kept.
(C) Biointermediate is stored or
transported between the foreign
biointermediate producer and the
renewable fuel producer, including
storage tanks, vessels, and pipelines.
(iii) EPA inspectors and auditors may
be EPA employees or contractors to
EPA.
(iv) Any documents requested that are
related to matters covered by
inspections and audits must be
provided to an EPA inspector or auditor
on request.
(v) Inspections and audits may
include review and copying of any
documents related to the following:
(A) The volume of biointermediate
produced or delivered to renewable fuel
production facilities.
(B) Transfers of title or custody to the
biointermediate.
(C) Work performed and reports
prepared by independent third parties
and by independent auditors under the
requirements of this section, including
work papers.
(vi) Inspections and audits by EPA
may include interviewing employees.
(vii) Any employee of the foreign
biointermediate producer must be made
available for interview by the EPA
inspector or auditor, on request, within
a reasonable time period.
(viii) English language translations of
any documents must be provided to an
EPA inspector or auditor, on request,
within 10 business days as defined in 40
CFR 1090.80.
(ix) English language interpreters
must be provided to accompany EPA
inspectors and auditors, on request.
(2) An agent for service of process
located in the District of Columbia must
be named, and service on this agent
constitutes service on the foreign
biointermediate producer or any
employee of the foreign biointermediate
producer for any action by EPA or
otherwise by the United States related to
the requirements of this subpart.
(3) The forum for any civil or criminal
enforcement action related to the
provisions of this section for violations
of the Clean Air Act or regulations in
this title promulgated thereunder must
be governed by the Clean Air Act,
including the EPA administrative forum
where allowed under the Clean Air Act.
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(4) United States substantive and
procedural laws apply to any civil or
criminal enforcement action against the
foreign biointermediate producer or any
employee of the foreign biointermediate
producer related to the provisions of
this section.
(5) Applying to be an approved
foreign biointermediate producer under
this section, or producing or exporting
biointermediate under such approval,
and all other actions to comply with the
requirements of this subpart relating to
such approval constitute actions or
activities covered by and within the
meaning of the provisions of 28 U.S.C.
1605(a)(2), but solely with respect to
actions instituted against the foreign
biointermediate producer, its agents and
employees in any court or other tribunal
in the United States for conduct that
violates the requirements applicable to
the foreign biointermediate producer
under this subpart, including conduct
that violates the False Statements
Accountability Act of 1996 (18 U.S.C.
1001) and section 113(c)(2) of the Clean
Air Act (42 U.S.C. 7413).
(6) The foreign biointermediate
producer, or its agents or employees,
will not seek to detain or to impose civil
or criminal remedies against EPA
inspectors or auditors for actions
performed within the scope of EPA
employment or contract related to the
provisions of this section.
(7) The commitment required by this
paragraph (c) must be signed by the
owner or president of the foreign
biointermediate producer company.
(8) In any case where the
biointermediate produced at a foreign
biointermediate production facility is
stored or transported by another
company between the production
facility and the vessel that transports the
biointermediate to the United States, the
foreign biointermediate producer must
obtain from each such other company a
commitment that meets the
requirements specified in paragraphs
(c)(1) through (7) of this section, and
these commitments must be included in
the foreign biointermediate producer’s
application to be an approved foreign
biointermediate producer under this
subpart.
(d) Sovereign immunity. By
submitting an application to be an
approved foreign biointermediate
producer under this subpart, or by
producing and exporting
biointermediate fuel to the United States
under such approval, the foreign
biointermediate producer, and its agents
and employees, without exception,
become subject to the full operation of
the administrative and judicial
enforcement powers and provisions of
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the United States without limitation
based on sovereign immunity, with
respect to actions instituted against the
foreign biointermediate producer, its
agents and employees in any court or
other tribunal in the United States for
conduct that violates the requirements
applicable to the foreign
biointermediate producer under this
subpart, including conduct that violates
the False Statements Accountability Act
of 1996 (18 U.S.C. 1001) and section
113(c)(2) of the Clean Air Act (42 U.S.C.
7413).
(e) English language reports. Any
document submitted to EPA by a foreign
biointermediate producer must be in
English or must include an English
language translation.
(f) Foreign biointermediate producer
contractual relationship. Any foreign
biointermediate producer must establish
a contractual relationship with the RINgenerating renewable fuel producer
prior to the sale of a biointermediate.
Any foreign biointermediate producer
must retain contracts and documents
memorializing the sale of
biointermediates for five years from the
date they were created and must deliver
such records to the Administrator upon
request.
(g) Withdrawal or suspension of
foreign biointermediate producer
approval. EPA may withdraw or
suspend a foreign biointermediate
producer’s approval where any of the
following occur:
(1) A foreign biointermediate
producer fails to meet any requirement
of this section.
(2) A foreign government fails to
allow EPA inspections or audits as
provided in paragraph (c)(1) of this
section.
(3) A foreign biointermediate
producer asserts a claim of, or a right to
claim, sovereign immunity in an action
to enforce the requirements in this
subpart.
(h) Additional requirements for
applications, reports, and certificates.
Any application for approval as a
foreign biointermediate producer, any
report, certification, or other submission
required under this section shall be:
(1) Submitted in accordance with
procedures specified by the
Administrator, including use of any
forms that may be specified by the
Administrator.
(2) Signed by the president or owner
of the foreign biointermediate producer
company, or by that person’s immediate
designee, and must contain the
following declarations:
(i) ‘‘I hereby certify:
(A) That I have actual authority to
sign on behalf of and to bind [NAME OF
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FOREIGN BIOINTERMEDIATE
PRODUCER] with regard to all
statements contained herein;
(B) That I am aware that the
information contained herein is being
Certified, or submitted to the United
States Environmental Protection
Agency, under the requirements of 40
CFR part 80, subpart M, and that the
information is material for determining
compliance under these regulations; and
(C) That I have read and understand
the information being Certified or
submitted, and this information is true,
complete and correct to the best of my
knowledge and belief after I have taken
reasonable and appropriate steps to
verify the accuracy thereof.’’
(ii) ‘‘I affirm that I have read and
understand the provisions of 40 CFR
part 80, subpart M, including 40 CFR
80.1478 apply to [NAME OF FOREIGN
BIOINTERMEDIATE PRODUCER].
Pursuant to Clean Air Act section 113(c)
and 18 U.S.C. 1001, the penalty for
furnishing false, incomplete or
misleading information in this
certification or submission is a fine of
up to $10,000 U.S., and/or
imprisonment for up to five years.’’
(i) Requirements for biointermediate
importers. Any biointermediate
importer must meet all the following
requirements:
(1) For each biointermediate batch,
any biointermediate importer must have
an independent third party do all the
following:
(i) Determine the volume of
biointermediate in the truck, railcar,
vessel, or other shipping container.
(ii) Determine the name and EPAassigned registration number of the
foreign biointermediate producer that
produced the biointermediate.
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(iii) Determine the name and country
of registration of the truck, railcar,
vessel, or other shipping container used
to transport the biointermediate to the
United States.
(iv) Determine the date and time the
truck, railcar, vessel, or other shipping
container arrives at the United States
port of entry.
(2) Any biointermediate importer
must submit documentation of the
information determined under
paragraph (i)(1) of this section within 30
days following the date any truck,
railcar, vessel, or other shipping
container transporting biointermediate
arrives at the United States port of entry
to all the following:
(i) The foreign biointermediate
producer.
(ii) The renewable fuel producer.
(3) The biointermediate importer and
the independent third party must keep
records of the audits and reports
required under paragraphs (h)(1) and (2)
of this section for five years from the
date of creation.
PART 1090—REGULATION OF FUELS,
FUEL ADDITIVES, AND REGULATED
BLENDSTOCKS
36. The authority citation for part
1090 continues to read as follows:
■
Authority: 42 U.S.C. 7414, 7521, 7522–
7525, 7541, 7542, 7543, 7545, 7547, 7550,
and 7601.
Subpart A—General Provisions
37. Amend § 1090.15 by:
a. In paragraph (a), removing ‘‘(b) and
(c)’’ and adding ‘‘(b) through (d)’’ in its
place;
■ b. In paragraph (c) introductory text,
removing ‘‘section’’ and adding ‘‘part’’
in its place;
■
■
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c. Redesignating paragraph (d) as
paragraph (e);
■ d. Adding a new paragraph (d); and
■ e. In newly redesignated paragraph
(e), removing ‘‘(b) and (c)’’ and adding
‘‘(b) through (d)’’ in its place.
The addition reads as follows:
■
§ 1090.15 Confidential business
information.
*
*
*
*
*
(d)(1) The following information
contained in any enforcement action
taken under this part is not entitled to
confidential treatment under 40 CFR
part 2, subpart B:
(i) The company’s name.
(ii) The facility’s name.
(iii) Any EPA-issued company and
facility identification numbers.
(iv) The time or time period when any
violation occurred.
(v) The quantity of fuel, fuel additive,
or regulated blendstock affected by the
violation.
(vi) Information relating to the
exceedance of the fuel standard
associated with the violation.
(vii) Information relating to the
generation, transfer, or use of credits
associated with the violation.
(viii) Any other information relevant
to describing the violation.
(2) Enforcement actions within the
scope of paragraph (d)(1) of this section
include notices of violation, settlement
agreements, administrative complaints,
civil complaints, criminal information,
and criminal indictments.
*
*
*
*
*
[FR Doc. 2021–26839 Filed 12–20–21; 8:45 am]
BILLING CODE 6560–50–P
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]]>Agencies
[Federal Register Volume 86, Number 242 (Tuesday, December 21, 2021)]
[Proposed Rules]
[Pages 72436-72501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26839]
[[Page 72435]]
Vol. 86
Tuesday,
No. 242
December 21, 2021
Part V
Environmental Protection Agency
-----------------------------------------------------------------------
40 CFR Parts 80 and 1090
Renewable Fuel Standard (RFS) Program: RFS Annual Rules; Proposed Rule
Federal Register / Vol. 86 , No. 242 / Tuesday, December 21, 2021 /
Proposed Rules
[[Page 72436]]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 80 and 1090
[EPA-HQ-OAR-2021-0324; FRL-8521-02-OAR]
RIN 2060-AV11
Renewable Fuel Standard (RFS) Program: RFS Annual Rules
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: Under section 211 of the Clean Air Act, the Environmental
Protection Agency (EPA) is required to set standards every year to
implement nationally applicable renewable fuel volume targets. This
action proposes to modify the 2021 and 2022 statutory volume targets
for cellulosic biofuel, advanced biofuel, and total renewable fuel, as
well as to establish the 2022 volume target for biomass-based diesel.
This action also proposes to modify the previously established
cellulosic biofuel, advanced biofuel, and total renewable fuel volume
requirements for 2020. In addition, this action proposes the 2020,
2021, and 2022 renewable fuel standards for all four of the above
biofuel categories. Finally, this action also proposes to address the
remand of the 2016 standard-setting rulemaking, as well as several
regulatory changes to the Renewable Fuel Standard (RFS) program
including regulations for the use of biointermediates to produce
qualifying renewable fuel, flexibilities for regulated parties, and
clarifications of existing regulations.
DATES: Comments. Comments must be received on or before February 4,
2022.
Public hearing. EPA announced information regarding the public
hearing for this proposal in a Federal Register document published on
December 10, 2021, at 86 FR 70426.
ADDRESSES: Comments. You may send your comments, identified by Docket
ID No. EPA-HQ-OAR-2021-0324, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov
(our preferred method). Follow the online instructions for submitting
comments.
Email: [email protected]. Include Docket ID No. EPA-
HQ-OAR-2021-0324 in the subject line of the message.
Mail: U.S. Environmental Protection Agency, EPA Docket
Center, Air Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW,
Washington, DC 20460.
Hand Delivery or Courier (by scheduled appointment only):
EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution
Avenue NW, Washington, DC 20004. The Docket Center's hours of
operations are 8:30 a.m.-4:30 p.m., Monday-Friday (except Federal
Holidays).
Instructions: All submissions received must include the Docket ID
No. for this rulemaking. Comments received may be posted without change
to https://www.regulations.gov, including any personal information
provided. For the full EPA public comment policy, information about
confidential business information (CBI) or multimedia submissions, and
general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
Out of an abundance of caution for members of the public and our
staff, the EPA Docket Center and Reading Room are closed to the public,
with limited exceptions, to reduce the risk of transmitting COVID-19.
Our Docket Center staff will continue to provide remote customer
service via email, phone, and webform. We encourage the public to
submit comments via https://www.regulations.gov or email, as there may
be a delay in processing mail and faxes. Hand deliveries and couriers
may be received by scheduled appointment only. For further information
on EPA Docket Center services and the current status, please visit us
online at https://www.epa.gov/dockets.
EPA continues to carefully and continuously monitor information
from the Centers for Disease Control and Prevention (CDC), local area
health departments, and our Federal partners so that we can respond
rapidly as conditions change regarding COVID-19.
FOR FURTHER INFORMATION CONTACT: Dallas Burkholder, Office of
Transportation and Air Quality, Assessment and Standards Division,
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI
48105; telephone number: 734-214-4766; email address: [email protected]. Comments on this proposal should not be submitted
to this email address, but rather through https://www.regulations.gov
as discussed in the ADDRESSES section.
SUPPLEMENTARY INFORMATION: Entities potentially affected by this
proposed rule are those involved with the production, distribution, and
sale of transportation fuels, including gasoline and diesel fuel, as
well as renewable fuels such as ethanol, biodiesel, renewable diesel,
and biogas. Potentially affected categories include:
------------------------------------------------------------------------
Examples of
Category NAICS \1\ potentially affected
codes entities
------------------------------------------------------------------------
Industry.......................... 324110 Petroleum
refineries.
Industry.......................... 325193 Ethyl alcohol
manufacturing.
Industry.......................... 325199 Other basic organic
chemical
manufacturing.
Industry.......................... 424690 Chemical and allied
products merchant
wholesalers.
Industry.......................... 424710 Petroleum bulk
stations and
terminals.
Industry.......................... 424720 Petroleum and
petroleum products
merchant
wholesalers.
Industry.......................... 221210 Manufactured gas
production and
distribution.
Industry.......................... 454319 Other fuel dealers.
------------------------------------------------------------------------
\1\ North American Industry Classification System (NAICS).
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be affected by this
proposed action. This table lists the types of entities that EPA is now
aware could potentially be affected by this proposed action. Other
types of entities not listed in the table could also be affected. To
determine whether your entity would be affected by this proposed
action, you should carefully examine the applicability criteria in 40
CFR parts 80 and 1090. If you have any questions regarding the
applicability of this proposed action to a particular entity, consult
the person listed in the FOR FURTHER INFORMATION CONTACT section.
Outline of This Preamble
I. Executive Summary
A. Legal Authorities To Modify and Establish Renewable Fuel Volumes
B. 2020 Volumes
C. 2021 Volumes
D. 2022 Volumes
E. Response to the ACE Remand
F. Annual Percentage Standards
[[Page 72437]]
G. Biointermediates
H. Other Changes
I. Environmental Justice
J. Endangered Species Act
II. Legal Authorities To Reduce and Establish Volumes
A. Authorities To Modify Statutory Volumes Targets
B. Authority To Establish BBD Volumes
C. Considerations for Retroactive and Late Rulemaking
D. Considerations in Revisiting an Established RFS Standard
E. Applicability of Legal Authorities To Establish the Volume
Requirements
F. Severability
III. Proposed Volumes
A. EPA's Assessment of the Statutory Factors for Each Component
Category of Biofuel
B. Proposed Volumes for 2020
C. Proposed Volumes for 2021
D. Proposed Volumes for 2022
E. Proposed Biomass-Based Diesel Volume for 2022
F. Summary of the Proposed Volumes
G. Impacts of the Proposed Volumes
IV. Interactions Between the RFS Annual Volumes
A. Treatment of Carryover RINs
B. Ability for the RFS Volumes To Impact Renewable Fuel Supply
V. Response to ACE Remand
A. Reevaluating the 2014-2016 Annual Rule
B. Consideration of Approaches for Responding to the ACE Remand
C. Demonstrating Compliance With the 2022 Supplemental Standard
D. Authority and Consideration of the Benefits and Burdens
E. Calculating a Supplemental Percentage Standard for 2022
VI. Percentage Standards
A. Calculation of Percentage Standards
B. Small Refineries and Small Refiners
C. Modification of the 2020 Biomass-Based Diesel Percentage
Standard
D. Proposed Standards
VII. Biointermediates
A. Background
B. Re-Proposal of Biointermediates Provisions Previously Proposed
in REGS
C. Changes to the Biointermediates Provisions Previously Proposed
in the REGS Rule
D. Other Considerations Related to Biointermediates
VIII. Amendments to Fuel Quality and RFS Regulations
A. BBD Conversion Factor for Percentage Standard
B. Changes to Registration for Baseline Volume
C. Changes to Attest Engagements for Parties Owning RINs (``RIN
Owner Only'')
D. Public Access to Information
E. Clarifying the Definition of ``Agricultural Digester''
F. Definition of ``Produced from Renewable Biomass''
G. Estimating Landfill Emissions for Lifecycle GHG Analysis of
Fuels Produced From Separated Municipal Solid Waste
H. Technical Corrections and Clarifications
IX. 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 (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act (UMRA)
E. Executive Order 13132: Federalism
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 and Advancement Act (NTTAA) and 1
CFR part 51
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
X. Statutory Authority
A red-line version of the regulatory language that incorporates the
proposed changes in this action is available in the docket for this
action.
I. Executive Summary
The Renewable Fuel Standard (RFS) program began in 2006 pursuant to
the requirements of the Energy Policy Act of 2005 (EPAct), which were
codified in Clean Air Act (CAA) section 211(o). The statutory
requirements were subsequently amended by the Energy Independence and
Security Act of 2007 (EISA). The statute sets forth annual, nationally
applicable volume targets for each of the four categories of renewable
fuel. It also directs EPA to modify or establish volume targets in
certain circumstances. EPA must then translate the volume targets into
compliance obligations that obligated parties must meet every year.
In this action we are proposing the applicable volumes for
cellulosic biofuel, advanced biofuel, and total renewable fuel for 2021
and 2022, and the biomass-based diesel (BBD) applicable volume for
2022,\1\ as well as to modify the applicable volumes that EPA
previously established for cellulosic biofuel, advanced biofuel, and
total renewable fuel for 2020.2 3 We are also proposing the
annual percentage standards (also known as ``percent standards'') for
cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel
that would apply to gasoline and diesel produced or imported by
obligated parties in 2020, 2021, and 2022. In addition, we are also
proposing to address the remand of the 2014-2016 annual rule by the
D.C. Circuit Court of Appeals, in Americans for Clean Energy v. EPA,
864 F.3d 691 (2017) (hereafter ``ACE'') by proposing a supplemental
volume of 250 million gallons in 2022, and we intend to propose an
additional supplemental volume of 250 million gallons for 2023 in a
subsequent action.
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\1\ The 2021 BBD volume requirement was established in the 2020
final rule. 85 FR 7016 (February 6, 2020).
\2\ 85 FR 7016 (February 6, 2020).
\3\ As explained in Section II, we did not trigger the reset
authority for BBD. Thus, we are not proposing to reset the
previously finalized 2020 and 2021 BBD volumes. In addition, actual
BBD use in both 2020 and 2021 is projected to exceed the previously
finalized volumes, so we see no need to retroactively reconsider the
BBD volumes in any event. As discussed in Section III.E, we are
proposing to set the 2022 BBD volume pursuant our ``set'' authority
under CAA section 211(o)(2)(B)(ii)).
Table I-1--Proposed Volume Requirements
[Billion RINs] \a\
----------------------------------------------------------------------------------------------------------------
Category 2020 2021 2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel.............................................. 0.51 0.62 0.77
Biomass-Based Diesel \b\........................................ \c\ 2.43 \d\ 2.43 2.76
Advanced Biofuel................................................ 4.63 5.20 5.77
[[Page 72438]]
Total Renewable Fuel............................................ 17.13 18.52 20.77
Supplemental Standard........................................... n/a n/a 0.25
----------------------------------------------------------------------------------------------------------------
\a\ One Renewable Identification Number (RIN) is equivalent to one ethanol-equivalent gallon of renewable fuel.
Throughout this preamble, RINs are generally used to describe total volumes in each of the four categories
shown above, while gallons are generally used to describe volumes for individual types of biofuel such as
ethanol, biodiesel, renewable diesel, etc. Exceptions include BBD, which is always given in physical volumes,
and biogas and electricity, which are always given in RINs.
\b\ The BBD volumes are in physical gallons (rather than RINs).
\c\ Established in the 2019 RFS annual rule (83 FR 63704, December 11, 2018).
\d\ Established in the 2020 RFS annual rule (85 FR 7016, February 6, 2020).
Finally, we are proposing several regulatory changes to the RFS
program, including regulations for the use of biointermediates to
produce qualifying renewable fuel, flexibilities for regulated parties,
and clarifications of existing regulations.
A. Legal Authorities To Modify and Establish Renewable Fuel Volumes
For the 2020, 2021, and 2022 cellulosic biofuel, advanced biofuel,
and total renewable fuel volumes, EPA is fulfilling our statutory
obligation to ``reset'' the statutory volumes in accordance with CAA
section 211(o)(7)(F). This provision, entitled ``Modification of
Applicable Volumes,'' provides that, if a waiver of any statutory
volume target exceeds specified thresholds, EPA shall modify or
``reset'' the statutory volume targets for all years following the year
that the threshold was exceeded. This obligation has been triggered by
EPA actions waiving volumes in previous annual standard-setting
rulemakings. Under this statutory provision, we are proposing new
volume targets for cellulosic biofuel, advanced biofuel, and total
renewable fuel for 2020, 2021, and 2022.\4\
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\4\ As we explain further in Section II, we are also
independently justifying the 2020, 2021, and 2022 cellulosic biofuel
volumes and the 2022 advanced biofuel and total renewable fuel
volumes under the cellulosic waiver authority.
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When resetting the statutory targets, EPA must comply with the
processes, criteria, and standards set forth in CAA section
211(o)(2)(B)(ii). In addition to reviewing the implementation of the
program during previous years and coordinating with the Secretary of
Energy and the Secretary of Agriculture, EPA must also analyze several
factors:
The impact of the production and use of renewable fuels on
the environment, including on air quality, climate change, conversion
of wetlands, ecosystems, wildlife habitat, water quality, and water
supply;
The impact of renewable fuels on the energy security of
the U.S.;
The expected annual rate of future commercial production
of renewable fuels, including advanced biofuels in each category
(cellulosic biofuel and BBD);
The impact of renewable fuels on the infrastructure of the
U.S., including deliverability of materials, goods, and products other
than renewable fuel, and the sufficiency of infrastructure to deliver
and use renewable fuel;
The impact of the use of renewable fuels on the cost to
consumers of transportation fuel and on the cost to transport goods;
and
The impact of the use of renewable fuels on other factors,
including job creation, the price and supply of agricultural
commodities, rural economic development, and food prices.
With respect to the 2022 BBD volume, we are setting this volume
under CAA section 211(o)(2)(B)(ii). The requirement to reset the
statutory volume targets does not apply to BBD. However, CAA section
211(o)(2)(B)(ii) separately requires that EPA set the BBD volume for
years including 2022 based on an analysis of the same statutory factors
as the reset authority.
In addition to these statutory provisions, the D.C. Circuit has
also established principles that EPA must follow when promulgating RFS
rulemakings after the statutory deadline as well as retroactive RFS
rulemakings.\5\ Namely, EPA has authority to promulgate such RFS rules,
but EPA must reasonably consider and mitigate the burdens on obligated
parties. Several aspects of this rulemaking are either retroactive or
will be finalized after the statutory deadline, or both. Therefore we
consider this caselaw as required by the court. We further discuss all
our legal authorities to modify or establish volumes in Section II.
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\5\ See, e.g., Americans for Clean Energy v. EPA, 864 F.3d 691
(D.C. Cir. 2017); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir.
2014); Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145,
154-58 (D.C. Cir. 2010).
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B. 2020 Volumes
EPA established the applicable 2020 volume requirements and
percentage standards in late 2019.\6\ Since we promulgated those
standards, several significant and unanticipated events occurred that
affected the fuels markets in 2020. The two most prominent of these
events were:
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\6\ 85 FR 7016 (February 6, 2020).
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The COVID-19 pandemic and the ensuing fall in
transportation fuel demand, especially the disproportionate fall in
gasoline demand relative to diesel demand, which significantly reduced
the production and use of biofuels in 2020 below the volumes we
anticipated could be achieved, and
The potential that the volume of gasoline and diesel
exempted from 2020 RFS obligations through small refinery exemption
(SREs) will be far lower than projected in the 2020 final rule.
These events are expected to adversely affect the ability of
obligated parties to comply with the applicable standards and to
achieve the intended volumes in the 2020 final rule.\7\ As a result, we
are proposing to retroactively adjust the 2020 volumes and standards to
reflect the actual volumes of renewable fuels and transportation fuel
consumed in the U.S. As we discuss further in Sections III and IV,
these revised volumes are supported by our analysis of the statutory
factors that we must consider when resetting RFS volumes.
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\7\ EPA extended the 2020 compliance deadline for obligated
parties to January 31, 2022 (86 FR 17073, April 1, 2021). We have
proposed to further extend that deadline in a separate action (86 FR
67419, November 26, 2021).
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C. 2021 Volumes
We are proposing volumes for 2021 that are equal to our projection
of the volume of cellulosic biofuel, advanced biofuel, and total
renewable fuel that will be used in the U.S. in 2021. Much like our
proposed volumes for 2015,\8\ which were similarly retroactive and
promulgated after the statutory
[[Page 72439]]
deadline, these volume projections are based on actual renewable fuel
use for months in 2021 where data are available and projections of
renewable fuel use for the remainder of the year. These volumes include
both renewable fuel that is produced domestically as well as imported
renewable fuel that is used in the U.S. As discussed in further detail
in Sections III and IV of this proposal, we believe this approach for
2021 is appropriate based on our analysis of the statutory factors EPA
must analyze when resetting the RFS volumes, including our finding that
this retroactive rulemaking has limited ability to incentivize
increased production and use of renewable fuel in 2021.
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\8\ 80 FR 33100 (June 10, 2015).
---------------------------------------------------------------------------
D. 2022 Volumes
The proposed volumes for 2022 are significantly higher than the
proposed volumes for 2020 and 2021. As we discuss further in Sections
III and IV, these volumes are based on our analysis of the statutory
factors, including our assessment of the ability for the RFS program to
incentivize increased production and use of renewable fuel in 2022, the
statutory intent to support increasing production and use of renewable
fuels, and the potential positive impacts of renewable fuels on several
of the statutory factors such as climate change and energy security.
The proposed volumes for 2022 also reflect the adverse impacts of
biofuels on some statutory factors, including market and infrastructure
constraints to the ability of RFS annual volume requirements to
incentivize increased production and use of renewable fuel in the near
term. These constraints include the commercial availability of
cellulosic biofuel, the price and availability of feedstocks, and the
availability of infrastructure to distribute higher level blends of
ethanol.
E. Response to the ACE Remand
In 2015, EPA established the total renewable fuel standard for
2016. As part of that rule, we relied upon the general waiver authority
under a finding of inadequate domestic supply to reduce the total
renewable fuel volume target by 500 million gallons.\9\ Several parties
challenged that action, and in ACE the U.S. Court of Appeals for the
D.C. Circuit vacated EPA's use of the general waiver authority, finding
that such use exceeded EPA's authority under the CAA. Specifically, EPA
had impermissibly considered demand-side factors in its assessment of
inadequate domestic supply, rather than limiting that assessment to
supply-side factors. The court remanded the rule back to EPA for
further consideration.
---------------------------------------------------------------------------
\9\ See 80 FR 77420 (December 14, 2015); CAA section
211(o)(7)(A)(ii).
---------------------------------------------------------------------------
We now intend to restore the full 500 million gallons that we
improperly waived in the 2016 rule but to do so over two years.
Specifically, as we discuss further in Section V, we are proposing to
add a supplemental volume obligation of 250 million gallons to the
proposed 2022 standards. We also intend to propose an additional
supplemental volume of 250 million gallons for 2023 in a subsequent
action.
F. Annual Percentage Standards
The statute directs EPA to establish annual standards that
translate the nationally applicable volume targets into compliance
obligations on obligated parties. In this action, EPA is proposing
annual standards for 2020, 2021, and 2022 for all four categories of
renewable fuel. We are also proposing a supplemental standard to
address the ACE remand, which will apply in the 2022 compliance year.
The renewable fuel standards are expressed as a volume percentage
and are used by each refiner and importer of fossil-based gasoline or
diesel to determine their renewable fuel volume obligations. The
specific formulas we use in calculating the renewable fuel percentage
standards are found in 40 CFR 80.1405. Four separate percentage
standards are required under the RFS program, corresponding to the four
separate renewable fuel categories shown in Table I-1. The proposed
standards are shown in Table I.E-1. Details, including the projected
gasoline and diesel volumes used, can be found in Section VI.
In the 2020 standards final rule, we modified the formulas used to
calculate the percentage standards to account for a projection of
exempt gasoline and diesel volumes produced by small refineries.\10\
Subsequent to the promulgation of that rule, the Tenth Circuit Court of
Appeals vacated three EPA SRE decisions as exceeding our statutory
authority in Renewable Fuels Association v. EPA (hereinafter RFA).\11\
Most recently, the Supreme Court, in HollyFrontier v. Renewable Fuels
Association (hereinafter HollyFrontier), vacated one of the bases for
the RFA decision, holding that small refineries need not have had
continuous exemptions since the original statutory exemption, but did
not opine on the other two holdings in RFA because those issues were
not appealed to the Court. We continue to consider the impact of these
decisions on our SRE policy, and it is still unclear at this time
whether we will be granting SREs for 2020, 2021, or 2022, and if so, to
what degree. Thus, we are proposing a range of exempted volumes of
gasoline and diesel as a result of SREs in the calculation of the
applicable percentage standards, ranging from zero to 8.19 billion
gallons.
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\10\ 85 FR 7016 (February 6, 2020).
\11\ Renewable Fuels Ass'n v. EPA, 948 F.3d 1206 (10th Cir.
2020), rev'd in part sub nom., HollyFrontier Cheyenne Refining, LLC,
v. Renewable Fuels Ass'n, 114 S. Ct. 2172 (2021).
---------------------------------------------------------------------------
The resulting range in the proposed percentage standards is shown
in Table I.F-1.
Table I.F-1--Proposed Percentage Standards a
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020 2021 2022
Category -----------------------------------------------------------------------------------------------
Low (%) High (%) Low (%) High (%) Low (%) High (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel...................................... 0.32 0.34 0.36 0.38 0.44 0.46
Biomass-Based Diesel.................................... 2.37 2.50 2.19 2.30 2.42 2.54
Advanced Biofuel........................................ 2.91 3.07 3.03 3.18 3.27 3.42
Renewable Fuel.......................................... 10.78 11.36 10.79 11.33 11.76 12.33
Supplemental Standard................................... n/a n/a n/a n/a 0.14 0.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Low values do not include any projected exempted gasoline and diesel volumes from SREs. High values include 8.19 billion gallons of projected
exempted gasoline and diesel from SREs.
[[Page 72440]]
G. Biointermediates
Since the RFS2 program was finalized in 2010, we have been made
increasingly aware of renewable fuel producers that would like to
process fuel at more than one facility. Specifically, renewable fuel
producers would like to first have a facility process renewable biomass
into a proto-renewable fuel (or ``biointermediate'') and then have a
second, separate facility process that biointermediate into renewable
fuel. In some cases, it may be preferable for economic or practical
reasons for renewable biomass to be subjected to substantial pre-
processing at one facility before being sent to a different facility
where it is converted into renewable fuel. For example, renewable
biomass may be converted into a biointermediate (such as a biocrude) at
one facility that requires some additional processing at a different
facility before it can be used as transportation fuel. These production
methodologies have the potential to lower the cost of using cellulosic
and other feedstocks for the production of renewable fuels by reducing
capital costs for new facilities and/or the storage and transportation
costs associated with feedstock handling--especially for cellulosic
biomass. Thus, we believe that such technologies provide an opportunity
for the future growth in production of the cellulosic biofuels required
under the RFS program. Based on this potential for future growth, in
2016 we included in the proposed the Renewables Enhancement and Growth
Support (REGS) rule provisions to allow for the production, transfer,
and use of biointermediates to generate qualifying renewable fuel under
the RFS program.\12\
---------------------------------------------------------------------------
\12\ See 81 FR 80828 (November 16, 2016).
---------------------------------------------------------------------------
Due to the elapsed time since the proposed REGS rule and our
continued consideration of how to most effectively allow
biointermediates into the program, we are proposing anew provisions to
allow for the use of biointermediates to produce qualifying renewable
fuels. Consistent with what we previously proposed in the REGS rule,
these provisions specify requirements that apply when renewable fuel is
produced through sequential operations at more than one facility. These
provisions center around the production, transfer, and use of
biointermediates and the creation of new regulatory requirements
related to registration, recordkeeping, and reporting for facilities
producing or using a biointermediate for renewable fuel production. We
are reproposing many of the proposed biointermediate provisions from
the REGS rule without significant changes, making significant changes
to some of the previously proposed provisions, and proposing some
provisions for the first time here. We further discuss biointermediates
in Section VII.
H. Other Changes
We have identified several areas where regulatory changes would
assist EPA in implementing our fuel quality and RFS programs. These
proposed regulatory changes include:
Changing the BBD weighting factor from 1.50 to 1.55
Changes to registration for baseline volumes
Changes to attest engagements for parties owning Renewable
Identification Numbers (RINs)
Treatment of confidential business information
Clarifying the definition of ``agricultural digesters''
Adding a definition of ``produced from renewable biomass''
Other minor changes and technical corrections
Each of these regulatory changes is discussed in greater detail in
Section VIII. In Section VIII, we also seek comment on potential
changes to our treatment of landfill emissions in our lifecycle
greenhouse gas (GHG) analysis for fuels produced from separated
municipal solid waste.
I. Environmental Justice
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes
Federal executive policy on environmental justice (``EJ''). It directs
Federal agencies, to the greatest extent practicable and permitted by
law, to make achieving EJ part of their mission by identifying and
addressing, as appropriate, disproportionately high and adverse human
health or environmental effects of their programs, policies, and
activities on minority populations and low-income populations in the
United States. EPA defines EJ as the fair treatment and meaningful
involvement of all people regardless of race, color, national origin,
or income with respect to the development, implementation, and
enforcement of environmental laws, regulations, and policies.\13\
Executive Order 14008 (86 FR 7619, February 1, 2021) also calls on
Federal agencies to make achieving EJ part of their missions ``by
developing programs, policies, and activities to address the
disproportionately high and adverse human health, environmental,
climate-related and other cumulative impacts on disadvantaged
communities, as well as the accompanying economic challenges of such
impacts.'' It also declares a policy ``to secure environmental justice
and spur economic opportunity for disadvantaged communities that have
been historically marginalized and overburdened by pollution and under-
investment in housing, transportation, water and wastewater
infrastructure and health care.'' EPA also released its ``Technical
Guidance for Assessing Environmental Justice in Regulatory Analysis''
providing recommendations on conducting the highest quality analysis
feasible, recognizing that data limitations, time and resource
constraints, and analytic challenges will vary by media and regulatory
context.\14\
---------------------------------------------------------------------------
\13\ See, e.g., ``Environmental Justice.'' Epa.gov,
Environmental Protection Agency, 4 Mar. 2021, https://www.epa.gov/environmentaljustice.
\14\ The definitions and criteria for ``disproportionate
impacts,'' ``difference,'' and ``differential'' are contained in
EPA's June 2016 guidance document ``Technical Guidance for Assessing
Environmental Justice in Regulatory Analysis.'' Epa.gov,
Environmental Protection Agency, https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf.
---------------------------------------------------------------------------
When assessing the potential for disproportionately high and
adverse health or environmental impacts of regulatory actions on
minority populations, low-income populations, tribes, and/or indigenous
peoples, EPA strives to answer three broad questions: (1) Is there
evidence of potential EJ concerns in the baseline (the state of the
world absent the regulatory action)? Assessing the baseline will allow
EPA to determine whether pre-existing disparities are associated with
the pollutant(s) under consideration (e.g., if the effects of the
pollutant(s) are more concentrated in some population groups). (2) Is
there evidence of potential EJ concerns for the regulatory option(s)
under consideration? Specifically, how are the pollutant(s) and their
effects distributed for the regulatory options under consideration?
And, (3) do the regulatory option(s) under consideration exacerbate or
mitigate EJ concerns relative to the baseline? It is not always
possible to assess these questions in ways that produce quantitative
results, though it may still be possible to describe them
qualitatively.
EPA's 2016 Technical Guidance does not prescribe or recommend a
specific approach or methodology for conducting an EJ analysis, though
a key consideration is consistency with the assumptions underlying
other parts of the regulatory analysis when evaluating
[[Page 72441]]
the baseline and regulatory options. Where applicable and practicable,
the Agency endeavors to conduct such an analysis. Going forward, EPA is
committed to conducting EJ analysis for rulemakings based on a
framework similar to what is outlined in EPA's Technical Guidance, in
addition to investigating ways to further weave EJ into the fabric of
the rulemaking process.
In 2009, under the Endangerment and Cause or Contribute Findings
for Greenhouse Gases Under Section 202(a) of the Clean Air Act
(``Endangerment Finding''), the Administrator considered how climate
change threatens the health and welfare of the U.S. population. As part
of that consideration, he also considered risks to minority and low-
income individuals and communities, finding that certain parts of the
U.S. population may be especially vulnerable based on their
characteristics or circumstances. These groups include economically and
socially disadvantaged communities; individuals at vulnerable
lifestages, such as the elderly, the very young, and pregnant or
nursing women; those already in poor health or with comorbidities; the
disabled; those experiencing homelessness, mental illness, or substance
abuse; and/or Indigenous or minority populations dependent on one or
limited resources for subsistence due to factors including but not
limited to geography, access, and mobility.
Scientific assessment reports produced over the past decade by the
U.S. Global Change Research Program (USGCRP),15 16 the
Intergovernmental Panel on Climate Change (IPCC),17 18 19 20
and the National Academies of Science, Engineering, and Medicine
21 22 add more evidence that the impacts of climate change
raise potential EJ concerns. These reports conclude that poorer or
predominantly non-White communities can be especially vulnerable to
climate change impacts because they tend to have limited adaptive
capacities and are more dependent on climate-sensitive resources such
as local water and food supplies, or have less access to social and
information resources. Some communities of color, specifically
populations defined jointly by ethnic/racial characteristics and
geographic location, may be uniquely vulnerable to climate change
health impacts in the United States. In particular, the 2016 scientific
assessment on the Impacts of Climate Change on Human Health found with
high confidence that vulnerabilities are place- and time-specific,
lifestages and ages are linked to immediate and future health impacts,
and social determinants of health are linked to greater extent and
severity of climate change-related health impacts.
---------------------------------------------------------------------------
\15\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
\16\ USGCRP, 2016: The Impacts of Climate Change on Human Health
in the United States: A Scientific Assessment. Crimmins, A., J.
Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J. Eisen,
N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M. Mills, S.
Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S. Global Change
Research Program, Washington, DC, 312 pp. https://dx.doi.org/10.7930/J0R49NQX.
\17\ Oppenheimer, M., M. Campos, R.Warren, J. Birkmann, G.
Luber, B. O'Neill, and K. Takahashi, 2014: Emergent risks and key
vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and
Vulnerability. Part A: Global and Sectoral Aspects. Contribution of
Working Group II to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros,
D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee,
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N.
Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)].
Cambridge University Press, Cambridge, United Kingdom and New York,
NY, USA, pp. 1039-1099.
\18\ Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M.
Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso, 2014: Food
security and food production systems. In: Climate Change 2014:
Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral
Aspects. Contribution of Working Group II to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Field,
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E.
Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma,
E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.
White (eds.)]. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA, pp. 485-533.
\19\ Smith, K.R., A. Woodward, D. Campbell-Lendrum, D.D. Chadee,
Y. Honda, Q. Liu, J.M. Olwoch, B. Revich, and R. Sauerborn, 2014:
Human health: Impacts, adaptation, and co-benefits. In: Climate
Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global
and Sectoral Aspects. Contribution of Working Group II to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change
[Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea,
T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B.
Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and
L.L. White (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA, pp. 709-754.
\20\ IPCC, 2018: Global Warming of 1.5 [deg]C. An IPCC Special
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner,
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press.
\21\ National Research Council. 2011. America's Climate Choices.
Washington, DC: The National Academies Press. https://doi.org/10.17226/12781.
\22\ National Academies of Sciences, Engineering, and Medicine.
2017. Communities in Action: Pathways to Health Equity. Washington,
DC: The National Academies Press. https://doi.org/10.17226/24624.
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This proposed rule has the potential to reduce GHG emissions which
would benefit all populations including minority populations, low-
income populations, and indigenous populations. The manner in which the
market responds to the provisions in this proposed rule could also have
non-GHG impacts. For instance, replacing petroleum fuels with renewable
fuels could have impacts on water, air, and hazardous waste exposure
for communities living near either existing or new facilities that
produce these fuels. Replacing petroleum fuels with renewable fuels
could also impact feedstock supplies and land-use, which could impact a
range of communities through their impacts on air, water, and soil
quality, as well as water quantity. Impacts on water quality in
particular could impact communities that rely on aquatic ecosystems for
income or sustenance, including indigenous peoples. While replacing
petroleum fuels with renewable fuels is projected to cause small
increases in food and fuel prices, these price impacts also may
disproportionately affect low-income populations who spend a larger
portion of their income on food and fuel.
The extent to which such changes may be unevenly distributed
spatially in ways that coincide with patterns of pre-existing exposure
and vulnerabilities for minority populations, low income populations,
and/or indigenous peoples is uncertain and would require predicting
where these changes in production and land use change would occur at a
fine spatial scale. EPA is taking comment on ways in which such effects
could be better evaluated for future rulemakings. A more detailed
discussion of potential EJ concerns as a result of this action can be
found in Chapter 8 of the Draft Regulatory Impacts Analysis (DRIA),
available in the docket for this action.
J. Endangered Species Act
Section 7(a)(2) of the Endangered Species Act (ESA), 16 U.S.C.
1536(a)(2), requires that Federal agencies such as EPA, along with the
U.S. Fish and Wildlife Service (USFWS) and/or the National Marine
Fisheries Service (NMFS) (collectively ``the Services''), ensure that
any action authorized, funded, or carried out by the agency is not
likely to jeopardize the continued existence of any endangered or
threatened species or result in the destruction or adverse modification
of designated critical habitat for such species. Under relevant
implementing regulations, consultation is required
[[Page 72442]]
only for actions that ``may affect'' listed species or designated
critical habitat. 50 CFR 402.14. Consultation is not required where the
action has no effect on such species or habitat. For several prior RFS
annual standard-setting rules, EPA did not consult with the Services
under section 7(a)(2).
On September 6, 2019, the United States Court of Appeals for the
D.C. Circuit decided American Fuel & Petrochemical Manufacturers v.
EPA, 937 F.3d 559 (2019), finding that EPA had failed to make an
effects determination for ESA purposes with regard to the 2018 RFS rule
and remanding the rule without vacatur to the Agency to make an
appropriate effects determination. See id. at 598.
On July 16, 2021, the same court decided Growth Energy v. EPA, 5
F.4th 1 (2021), finding that EPA's determination that the 2019 RFS rule
would have no effect on listed species or the designated critical
habitat of such species was arbitrary and capricious and remanding the
rule to the Agency without vacatur to comply with the ruling. See id.
at 32.
In light of this case law pertaining to EPA's action in prior years
and consistent with section 7(a)(2) of the ESA and relevant ESA
implementing regulations at 50 CFR part 402, EPA intends to initiate
consultation, as appropriate, with the Services regarding this proposed
rule.\23\ At this time, EPA is evaluating whether any federally listed
threatened or endangered species or their critical habitat are likely
to be adversely affected by the finalization of this rulemaking.
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\23\ EPA also intends to respond to the court's remand of the
2018 and 2019 RFS rules in a separate proceeding. We are not
revisiting our ESA obligations related to the 2018 or 2019 rules in
this rulemaking; any comments received on those topics will be
deemed beyond the scope of this rulemaking.
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II. Legal Authorities To Reduce and Establish Volumes
The CAA provides EPA with several authorities to reduce or
establish the applicable renewable fuel volumes. This section discusses
the statutory authorities, additional factors we are considering due to
the retroactivity or lateness of parts of this rulemaking, additional
factors related to our reconsideration of the previously finalized
standards for 2020, how we are applying our authorities to propose
these volumes, as well as the severability of the various portions of
this proposed rule.
A. Authorities To Modify Statutory Volumes Targets
In CAA section 211(o)(2), Congress specified increasing annual
volume targets for total renewable fuel, advanced biofuel, and
cellulosic biofuel for each year through 2022. However, Congress also
recognized that under certain circumstances it would be appropriate for
EPA to set different volume requirements than the statutory volume
targets and thus provided waiver provisions in CAA section 211(o)(7).
In this proposal, we are utilizing the cellulosic waiver authority
under CAA section 211(o)(7)(D), and the reset authority under CAA
section 211(o)(7)(F) to reduce volumes for 2020, 2021, and 2022. As
discussed below, while we have previously sought comment on the use of
general waiver authority to reduce volumes for 2020, the reductions
proposed in this action are based on the use of our other authorities.
1. Cellulosic Waiver Authority.
Section 211(o)(7)(D)(i) of the CAA provides that if EPA determines
that the projected volume of cellulosic biofuel production for a given
year is less than the applicable volume specified in the statute, then
EPA must reduce the applicable volume of cellulosic biofuel required to
the projected volume available for that calendar year. In making this
projection, EPA must take a ``neutral aim at accuracy.'' API v. EPA,
706 F.3d 474, 479 (D.C. Cir. 2013). Pursuant to this provision, EPA has
set the cellulosic biofuel requirement lower than the statutory volume
for each year since 2010.
CAA section 211(o)(7)(D)(i) also provides EPA with the authority to
reduce the applicable volume of total renewable fuel and advanced
biofuel in years when it reduces the applicable volume of cellulosic
biofuel under that provision. The reduction must be less than or equal
to the reduction in cellulosic biofuel. EPA has used this aspect of the
cellulosic waiver authority to lower the advanced biofuel and total
renewable fuel volumes every year since 2014. Further discussion of the
cellulosic waiver authority, and EPA's interpretation of it, can be
found in the preamble to the 2017 final rule.\24\
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\24\ See 81 FR 89752-89753 (December 12, 2016); see also API v.
EPA, 706 F.3d 474 (D.C. Cir. 2013) (requiring that EPA's cellulosic
biofuel projections reflect a neutral aim at accuracy); Monroe
Energy v. EPA, 750 F.3d 909, 915-16 (D.C. Cir. 2014) (affirming
EPA's broad discretion under the cellulosic waiver authority to
reduce volumes of advanced biofuel and total renewable fuel);
Americans for Clean Energy v. EPA (``ACE''), 864 F.3d 691, 730-735
(D.C. Cir. 2017) (same); Alon Refining Krotz Spring, Inc. v. EPA,
936 F.3d 628, 662-663 (D.C. Cir. 2019) (same); American Fuel &
Petrochemical Manufacturers v. EPA, 937 F.3d 559, 577-78 (D.C. Cir.
2019) (same).
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2. Reset Authority.
The CAA provides that EPA shall modify the statutorily prescribed
RFS volumes once certain triggers are met. This section discusses the
statutory requirements that trigger the use of this reset authority,
describes the process and criteria for such use, and explains the
impact of this modification on our other waiver authorities.
a. Conditions for Resetting Volume Targets
CAA section 211(o)(7)(F) sets forth EPA's authority to modify (or
reset) the applicable volumes once certain triggers have been met.
Specifically, EPA must reset the applicable volumes for a particular
category of biofuel when, under CAA section 211(o)(7)(F)(i), we waive
at least 20 percent of the applicable volume requirement for such
category for two consecutive years, or, under CAA section
211(o)(7)(F)(ii), we waive at least 50 percent of such applicable
volume requirement for a single year. With the promulgation of the 2019
annual standards, these conditions have been met for three categories
of biofuel: Cellulosic biofuel, advanced biofuel, and total renewable
fuel.\25\ We describe below, for each category of biofuel, the specific
annual rules that satisfied these conditions.
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\25\ Because the statutory volumes for biomass-based diesel
lapsed after 2012, the reset provision, which only applies to 2016
and subsequent years, does not apply to BBD.
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The conditions for resetting cellulosic biofuel volumes were met by
the 2010 annual standard, which reduced the applicable cellulosic
biofuel volume by at least 50 percent triggering application of the
reset authority under CAA section 211(o)(7)(F). In that rule, we waived
the cellulosic applicable volume for the first time using the
cellulosic waiver authority.\26\ We set the cellulosic biofuel
applicable volume at 6.5 million gallons for 2010.\27\ This waiver
resulted in an applicable volume that was 93.5 percent lower than the
applicable volume requirement provided in the statute, 100 million,
thus triggering the reset requirement under CAA section
211(o)(7)(F)(ii). However, the statute also provides that ``no such
modification in applicable volumes shall be made for any year before
2016.'' CAA section 211(o)(7)(F). Therefore, although the trigger to
modify the cellulosic biofuel volume target under the reset provision
was met in 2010, the
[[Page 72443]]
statute did not require a change to the applicable volumes until 2016.
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\26\ 75 FR 14670 (March 26, 2010).
\27\ 75 FR 14675.
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The conditions for resetting advanced biofuel volumes were met by
the 2014 and 2015 annual standards, which reduced the applicable
advanced biofuel volume by at least 20 percent for two consecutive
years. For the 2014 annual standard, we waived the advanced biofuel
volume for the first time.\28\ We set the advanced biofuel volume at
2.67 billion gallons.\29\ This represented a reduction of 28.8 percent
from the applicable volume requirement provided in the statute (3.75
billion). This reduction therefore triggered the first year of
reductions of at least 20 percent under CAA section 211(o)(7)(F)(i).
For the 2015 annual standard, we reduced the advanced biofuel
applicable volume to 2.88 billion gallons.\30\ This represented a
reduction of 47.6 percent from the applicable volume requirement
provided in the statute (5.5 billion). This represented the second
consecutive year for which the Administrator waived volumes by at least
20 percent, thus triggering the modification of the advanced biofuel
volume under CAA section 211(o)(7)(F)(i).
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\28\ 80 FR 77420 (December 14, 2015).
\29\ Id.
\30\ Id.
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The conditions for resetting total renewable fuel volumes were met
by the 2018 and 2019 annual standards, which reduced the applicable
total renewable fuel volume by at least 20 percent for two consecutive
years. For the 2018 annual standard, we reduced the total renewable
fuel volume to 19.29 billion gallons.\31\ This represented a reduction
of 25.8 percent from the applicable volume requirement provided in the
statute (26 billion). This reduction therefore triggered the first year
of reductions of at least 20 percent under CAA section 211(o)(7)(F)(i).
For the 2019 annual standard, we reduced the total renewable fuel
applicable volume to 19.92 billion gallons.\32\ This represented a
reduction of 29 percent from the applicable volume requirement provided
in the statute (28 billion). This represented the second consecutive
year for which the Administrator waived volumes by at least 20 percent,
thus triggering the modification of the total renewable fuel volume
under CAA section 211(o)(7)(F)(i).\33\
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\31\ 82 FR 58486 (December 12, 2017).
\32\ 83 FR 63704 (December 11, 2018).
\33\ Although we are exercising the reset authority in this
action for 2020-2022 volumes, we could have exercised the reset
authority for the 2016-2019 cellulosic and advanced biofuel volumes
as well. We do not, however, have authority to reset total renewable
fuel volumes for those years. In any event, we are not proposing to
revisit the 2016-2019 volumes in this rulemaking.
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b. Factors That Must Be Analyzed
In resetting the statutory volumes, EPA must comply with the
processes, criteria, and standards set forth in CAA section
211(o)(2)(B)(ii). That provision provides that the Administrator shall,
in coordination with the Secretary of Energy and the Secretary of
Agriculture, determine the applicable volumes of each biofuel category
specified based on a review of implementation of the program during the
calendar years specified in the table, and an analysis of the impact
of:
The production and use of renewable fuels on the
environment;
The impact of renewable fuels on the energy security of
the U.S.;
The expected annual rate of future commercial production
of renewable fuels;
The impact of renewable fuels on the infrastructure of the
U.S.;
The impact of the use of renewable fuels on the cost to
consumers of transportation fuel and on the cost to transport goods;
and
The impact of the use of renewable fuels on other factors,
including job creation, the price and supply of agricultural
commodities, rural economic development, and food prices.
While the statute requires that EPA base its determination on an
analysis of these factors, it does not establish any numeric criteria,
require a specific type of analysis (such as quantitative analysis), or
provide guidance on how EPA should weigh the various factors.
Additionally, we are not aware of anything in the legislative history
of EISA that addresses these issues. Thus, as the Act ``does not state
what weight should be accorded to the relevant factors,'' it ``give[s]
EPA considerable discretion to weigh and balance the various factors
required by statute.'' \34\
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\34\ Nat'l Wildlife Fed'n v. EPA, 286 F.3d 554, 570 (D.C. Cir.
2002); accord Riverkeeper, Inc. v. United States EPA, 358 F.3d 174,
195 (2d Cir. 2004); BP Exploration & Oil, Inc. v. EPA, 66 F.3d 784,
802 (6th Cir. 1995); see also Cal. by Brown v. Watt, 668 F.2d 1290,
1317 (D.C. Cir. 1981) (``A balancing of factors is not the same as
treating all factors equally. The obligation instead is to look at
all factors and then balance the results. The Act does not mandate
any particular balance, but vests the Secretary with discretion to
weigh the elements. . . .'').
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Additionally, we also have authority to consider other factors,
including implied authority to consider factors that inform our
analysis of the statutory factors, as well as explicit authority to
consider ``the impact of the use of renewable fuels on other factors. .
. .'' \35\ Accordingly, we have considered several other factors,
including the intertwined nature of compliance with the 2020-2022
standards, the size of the carryover RIN bank,\36\ how the retroactive
nature of the 2020 and 2021 standards as compared to the prospective
nature of the 2022 annual and supplemental standards affects the
feasibility of compliance (Section IV),\37\ the supply of qualifying
renewable fuels to U.S. consumers (Section III),\38\ soil quality
(Chapter 3 of the DRIA),\39\ and environmental justice (Section I of
this preamble and Chapter 8 of the DRIA).\40\
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\35\ CAA section 211(o)(2)(B)(ii)(VI).
\36\ The first two factors inform our analysis of the statutory
factor ``review of the implementation of the program.'' CAA section
211(o)(2)(B)(ii).
\37\ The third factor (how the standards affect the feasibility
of compliance) also informs our analysis of the statutory factor
``the expected annual rate of future commercial production of
renewable fuels.'' CAA section 211(o)(2)(B)(ii)(III).
\38\ The fourth factor (supply of renewable fuels) is based on
our analysis of this same statutory factor as well as of downstream
constraints on biofuel use, including the statutory factors relating
to infrastructure and costs. CAA section 211(o)(2)(B)(ii)(IV)-(V).
\39\ Soil quality is closely tied to water quality and is also
relevant to the impact of renewable fuels on the environment more
generally.
\40\ Environmental justice involves consideration of the impact
of renewable fuels on several factors, including environmental and
cost factors. This and the other non-enumerated factors are also
relevant under the statutory factor ``the impact of the use of
renewable fuels on other factors. . . .'' CAA section
211(o)(2)(B)(ii)(VI).
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c. Impact on other Statutory Authorities To Waive Volumes
Our proposed use of the reset authority in this action does not
preclude our legal authority to waive volumes under the other waiver
authorities. Nothing in the CAA suggests that once the volumes are
reset they cannot be modified further, or that the reset authority
cannot be used in conjunction with other waiver authorities such as the
cellulosic waiver authority.\41\
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\41\ See J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Intern.,
Inc., 534 U.S. 124, 143-44 (2001) (holding that when two statutes
are capable of coexistence and there is not clearly expressed
legislative intent to the contrary, each should be regarded as
effective).
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3. General Waiver Authority
Section 211(o)(7)(A) of the CAA provides that EPA, in consultation
with the Secretary of Agriculture and the Secretary of Energy, may
waive the applicable volumes specified in the Act in whole or in part
based on a petition by one or more States, by any person subject to the
requirements of the Act, or by the EPA Administrator by his own
initiative. Such a waiver must be based on a determination by the
Administrator, after public notice and opportunity for comment that:
(1)
[[Page 72444]]
Implementation of the requirement would severely harm the economy or
the environment of a State, a region, or the United States; or (2)
there is an inadequate domestic supply.
EPA received several requests for use of the general waiver
authority for the 2020 standards from stakeholders concerned about the
impacts on the fuels markets resulting from the COVID-19 pandemic.
These included requests from the governors of multiple states based on
their belief that the criteria for application of the general waiver
authority were satisfied and that lowering the required volumes for
2020 was appropriate. We published a notice in the Federal Register
seeking comment on these requests.\42\ We are not proposing
modifications to the 2020 volumes utilizing the general waiver
authority in this action. In lieu of doing so, we are proposing to
revise the 2020 volumes under our reset authority as discussed in
Section III.B. Our proposal addresses many of the concerns raised in
the general waiver petitions, including the shortfall in RIN generation
in 2020, uncertainty regarding SREs following the Tenth Circuit's
decision in RFA, and the hurdles those may present to obligated
parties' compliance.
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\42\ 86 FR 5182 (January 19, 2021). Comments on these requests
are available in the docket for that notice, EPA-HQ-OAR-2020-0322.
We have recently received an additional request to waive volumes
using the general waiver authority from the Governor of Montana,
available in the docket for this action.
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B. Authority To Establish BBD Volumes
EPA has established the biomass-based diesel requirement under CAA
section 211(o)(2)(B)(ii) since 2013 because the statute only provided
BBD volumes through 2012. Thus, EPA is proposing an applicable volume
for BBD for 2022 under this authority, which we term the ``set''
authority.\43\ As discussed in prior annual rulemakings, EPA is to
determine the applicable volume of BBD, in coordination with the
Secretary of Energy and the Secretary of Agriculture, based on an
analysis of the same statutory factors enumerated above for
``resetting'' volumes for the other fuel categories.\44\ The statute
also requires that the BBD volume be set at or greater than the 1.0
billion gallon volume requirement for 2012 in the statute, but does not
provide any other numerical criteria that EPA is to consider.
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\43\ The applicable volume for BBD for 2021 was established in
the 2020 annual rulemaking. 85 FR 7016 (February 6, 2020).
\44\ 85 FR 7016, 7047-7048 (February 6, 2020).
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C. Considerations for Retroactive and Late Rulemaking
In this rulemaking, we are proposing several late or retroactive
standards. EPA has in the past also missed statutory deadlines for
promulgating RFS annual standards. In those cases, the D.C. Circuit
found that EPA retains authority to promulgate annual standards for the
years in question, so long as EPA exercises this authority
reasonably.\45\ In doing so, EPA must balance the burden on obligated
parties of a retroactive standard with the broader goal of the RFS
program to increase renewable fuel use.\46\ Even if the rule does not
operate retroactively, but is promulgated after the statutory deadline,
EPA must consider and mitigate the burdens on obligated parties
associated with a delayed rulemaking.\47\ In upholding EPA's
retroactive standards for 2014 and 2015 in ACE, the court considered
several specific factors, including the availability of RINs for
compliance, the amount of lead time and adequate notice for obligated
parties, and the availability of compliance flexibilities.
Additionally, the court separately addressed rulemakings that were late
(i.e., those issued after the statutory deadline) but were nonetheless
not retroactive, emphasizing in that context the amount of lead time
and adequate notice for obligated parties.\48\
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\45\ Americans for Clean Energy v. EPA, 864 F.3d 691, 720 (D.C.
Cir. 2017) (ACE); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir.
2014); Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145,
154-58 (D.C. Cir. 2010) (NPRA).
\46\ NPRA, at 154-58 (D.C. Cir. 2010).
\47\ ACE, 864 F.3d 691, 718 (D.C. Cir. 2017).
\48\ Id. at 721.
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In this rulemaking, we are proposing to exercise our reset
authority after the statutory deadline of December 11, 2019 (which is
one year after the promulgation of the 2019 final rule, which triggered
the reset obligation for total renewable fuel).\49\ We are also
proposing to exercise our set authority for the 2022 BBD volume after
the statutory deadline of October 31, 2020. We are also promulgating
the 2020 and 2021 standards after their statutory deadlines of November
30, 2019 and 2020 respectively.\50\ These standards are retroactive and
apply to gasoline and diesel produced or imported in 2020 and 2021. We
discuss in detail the considerations for late or retroactive rulemaking
for each of these requirements further in Section III.
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\49\ This was the deadline for resetting total renewable fuel
volumes. The deadline for resetting advanced and cellulosic volumes
passed earlier.
\50\ These are also the deadlines for exercising the cellulosic
waiver authority for those years, which we will also miss.
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In addition, in responding to the ACE remand of the 2016 annual
rule, EPA is proposing a supplemental standard for 2022.\51\ We are
proposing this supplemental standard after the statutory deadline for
the 2016 standards (November 30, 2015). However, the proposed
supplemental standard would prospectively apply to gasoline and diesel
produced or imported in 2022. We further discuss our response to the
ACE remand in Section V.
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\51\ We also intend to propose a supplemental standard for 2023
in a subsequent action.
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We acknowledge that the final rule will issued after November 30,
2021, thus rendering the 2022 and supplemental standards late and
retroactive.\52\ Nonetheless, we are issuing this proposal in advance
of 2022, and we anticipate that the final rule will apply mostly, if
not entirely, prospectively to 2022. Thus, we believe the rule will be
able to incent increased renewable fuel demand in that year consistent
with the analysis in this proposal.
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\52\ As discussed in Section V, the supplemental standard in
response to the ACE remand is already late.
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D. Considerations in Revisiting an Established RFS Standard
We are proposing to revise the previously finalized 2020 standards
in this rulemaking. We generally have authority to reconsider and
revise previously finalized RFS standards.\53\ In addition, the D.C.
Circuit has held that EPA has authority to promulgate RFS standards
retroactively. CAA section 211(o)(7) generally authorizes EPA to adjust
the volume requirements based on appropriate considerations as well. In
this action we are proposing to revise the 2020 standards in response
to several unanticipated and exceptional events that have occurred
since the promulgation of the standards and that have had direct and
significant impacts on the fuels market and the ability of obligated
parties to comply. We discuss these events and our rationale for
revising the 2020 standards further in Section III.B.\54\
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\53\ Nonetheless, we believe that we generally should not
revisit past RFS standards. Doing so carries inherent costs for
regulatory certainty and may unduly disrupt market expectations
created by previously promulgated standards. Moreover, in the 2020
final rule itself, we expressly stated that we did not intend to
revisit that rulemaking and subsequently adjust the standards. See
Response to Comments at 173, EPA-HQ-OAR-2019-0136.
\54\ EPA also received two petitions from AFPM and API in early
2020 seeking reconsideration of the 2020 annual rule under CAA
section 307(d)(7)(B) in light of the RFA decision and its impact on
EPA's projections of SREs in calculating the percentage standards.
These petitions are available in the docket. See AFPM, Petition for
Administrative Reconsideration of Renewable Fuel Standard Program:
Standards for 2020 and Biomass-Based Diesel Volume for 2021 and
Other Changes, 85 FR 7016 (Feb. 6, 2020) (Mar. 24, 2020); API,
Petition for Reconsideration of the RFS 2020 Rule, EPA-HQ-OAR-2019-
0136 (April 6, 2020). We are not at this time determining whether
these petitions met the standards for reconsideration under CAA
section 307(d)(7)(B). Nonetheless, for the reasons described in this
document, we believe it is appropriate to reconsider the 2020 RFS
standards, and we are providing the procedural process (i.e., a CAA
section 307(d) rulemaking to reconsider the 2020 RFS standards)
requested in the petitions.
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[[Page 72445]]
E. Applicability of Legal Authorities To Establish the Volume
Requirements
EPA is proposing to reduce the applicable statutory volumes for
2020, 2021 and 2022 utilizing both the cellulosic waiver and reset
authorities. As described in Chapter 4 of the DRIA, the projected
volumes of cellulosic biofuel production for 2020, 2021, and 2022 are
all significantly less than the volume targets in the statute.
Therefore, the cellulosic waiver authority requires EPA to lower the
cellulosic biofuel volume for each year to the projected volumes
available in each year. We are proposing to do so in this action.
Additionally, we propose to find that these volumes are also
appropriate under our reset authority.
For advanced biofuel and total renewable fuel, we are proposing,
under the reset authority alone, volumes equal to the projected actual
volumes of such fuels available in 2020 and 2021. We recognize that
this exceeds our maximum discretion under the cellulosic waiver
authority; however, as we explain further in Section III, we do not
believe that the lowest volumes permissible under the cellulosic waiver
authority are appropriate based upon our consideration of the reset
factors.\55\ For 2022, we are proposing, under both the cellulosic
waiver authority and the reset authority, advanced biofuel and total
renewable fuel volumes equal to the implied statutory volumes. This
represents the maximum permitted reduction under the cellulosic waiver
authority.\56\ We also believe these volumes are appropriate under the
reset authority.
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\55\ Under the cellulosic waiver authority, when EPA reduces the
volume of cellulosic biofuel, EPA may reduce the advanced biofuel
and total renewable fuel volumes by the same or a lesser amount.
\56\ This is also consistent with our authority to apply equal
reductions to the volumes of advanced biofuel and total renewable
fuel under the cellulosic waiver. CAA(o)(7)(D)(i), see also 85 FR
7016, 7047-7048 (February 6, 2020).
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In Sections III and IV and Chapter 2 of the DRIA, we set forth our
policy and technical rationale for the proposed 2020, 2021, and 2022
volumes for cellulosic biofuel, advanced biofuel, and total renewable
fuel. Our analysis is framed in terms of the statutory factors that the
reset authority requires us to consider, along with the considerations
for retroactive and late rules identified by the D.C. Circuit.\57\
Since this analysis subsumes our policy and technical rationale for
exercising the cellulosic waiver authority as well, we are not
providing a separate analysis for the application of the cellulosic
waiver authority.
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\57\ Further detail on our analysis of the statutory factors is
found in the DRIA.
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We believe that subsuming the analysis for the application of the
cellulosic waiver authority into the analysis for the application of
the reset authority is appropriate for three reasons. First, with
respect to the cellulosic biofuel volume for each year, the cellulosic
waiver authority requires EPA to lower that volume to the projected
volume available. This quantity is also a relevant consideration under
the reset authority, and, accordingly, we have considered it in that
context. See, e.g., CAA section 211(o)(2)(B)(ii)(III) (``the expected
annual rate of future commercial production of renewable fuels'').
Second, with respect to advanced biofuel and total renewable fuel, the
cellulosic waiver authority does not specify any factors for EPA to
consider (besides limiting the maximum quantity of reductions to the
reduction in the cellulosic biofuel volume), and thus provides EPA
broad discretion to consider relevant factors, including the factors we
are considering in this proposal under the reset authority.\58\ Third,
given the significant overlap between the analyses used for the
cellulosic waiver and reset authorities, we do not believe that two
sets of analyses would provide significant additional value, but would
be redundant for both EPA and the public.
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\58\ In past annual rules, we considered many of the same
factors as we do in this proposal, albeit under the guise of
different terminology, such as ``reasonably attainable'' and
``attainable'' volumes. See Section IV of the 2020 final rule at 85
FR 7016. For instance, in that rule, just as in this rule, we
considered feedstock availability, advanced biofuel production and
distribution capacity, environmental impacts, and costs. We
acknowledge that the analytical framework has shifted somewhat given
the focus on the statutory reset factors. For instance, in the 2020
final rule, unlike in this proposed rule, we did not explicitly
consider the impacts of renewable fuels on job creation or rural
economic development. Nonetheless, we believe those statutory
factors (along with all the other factors we are considering under
the reset authority) are ones that EPA may consider under the
discretion we have under the cellulosic waiver authority. Congress's
specification of those factors in the reset authority further
suggests that they are permissible considerations for determining
volumes generally, including in exercising the cellulosic waiver.
This approach presents a shift in EPA's policy for the cellulosic
waiver that we explicitly recognize and adopt as reasonable for the
reasons described in this proposal. See FCC v. Fox Television
Stations, Inc., 556 U.S. 502, 515 (2009). Ultimately, we note that
the 2020, 2021, and 2022 total renewable fuel, advanced biofuel, and
cellulosic biofuel volumes are all independently justified by the
reset authority. Thus, any defect in our exercise of the cellulosic
waiver authority is harmless so long as we have properly exercised
the reset authority.
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We are also proposing a BBD volume for 2022 of 2.76 billion gallons
under CAA section 211(o)(2)(B)(ii). Our policy and technical rationale
for this volume is also set forth in Section III and Chapter 10 of the
DRIA.
F. Severability
The following portions of this rulemaking are mutually severable
from each other: (1) The volumes and percentage standards for 2020,
2021, and 2022; (2) The 2022 supplemental volume and standard; (3) The
proposed provisions for biointermediates (discussed in Section VII);
and (4) The regulatory amendments discussed in Section VIII. Each of
the regulatory amendments in Section VIII is also severable from all
the other regulatory amendments.
If any of the above portions is set aside by a reviewing court, we
intend the remainder of this action to remain effective. For instance,
if a reviewing court sets aside the 2022 supplemental volume and
standard, we intend the remaining 2020-2022 volumes and percentage
standards, biointermediates provisions, and other regulatory
amendments, to remain effective.
III. Proposed Volumes
We are proposing 2020, 2021, and 2022 cellulosic biofuel, advanced
biofuel, and total renewable fuel volumes under our reset
authority.\59\ We are proposing the 2022 biomass-based diesel (BBD)
volume under our set authority. As required by both the reset and set
authorities, we have analyzed the statutory factors under CAA section
211(o)(2)(B)(ii). We have also coordinated with the Secretary of Energy
and the Secretary of Agriculture, including through the interagency
review process, and their input is reflected in this proposal.
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\59\ As we explained in Section II.D, some of the volumes we are
proposing in this action are also independently justified under the
cellulosic waiver authority, but the policy and technical analysis
for our exercise of the cellulosic waiver is subsumed under our
analysis of the reset factors.
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In Section III.A, we summarize our analyses as they apply to each
of three component categories of biofuel: Cellulosic biofuel, non-
cellulosic
[[Page 72446]]
advanced biofuel, and conventional renewable fuel.\60\ In Sections
III.B through F, we describe our proposed volumes for 2020, 2021, and
2022, along with our supporting assessment of the statutory factors. In
Section III.G, we summarize the fuel costs and energy security benefits
of the proposed volumes. In Section IV, we further discuss the
relationship between the volume requirements for all three years as
part of our review of the implementation of the program. Our preamble
discussion provides a high-level, narrative summary of the statutory
factors, focusing on the factors that we deem most appropriate. A more
detailed discussion of all the statutory factors is set forth in the
DRIA.
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\60\ Cellulosic biofuel corresponds directly to the statutory
biofuel category. Cellulosic biofuel plus non-cellulosic advanced
biofuel constitute the statutory advanced biofuel category. Finally,
advanced biofuel plus conventional renewable fuel constitute the
statutory total renewable fuel category. See CAA section
211(o)(2)(B)(i)(I)-(IV).
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A. EPA's Assessment of the Statutory Factors for Each Component
Category of Biofuel
1. Cellulosic Biofuel
In EISA, Congress established escalating targets for cellulosic
biofuel, reaching 16 billion gallons in 2022. After 2015, 84 percent of
the growth in statutory volume of total renewable fuel was intended to
come from cellulosic biofuel.\61\ This indicates that Congress intended
the RFS program to provide a significant incentive for cellulosic
biofuels and that the focus for years after 2015 was to be on
cellulosic. Consistent with this intent, our assessment of the
statutory factors suggests that cellulosic biofuels have multiple
benefits, including the potential for very low lifecycle GHG emissions
that meet or exceed the 60 percent GHG reduction threshold for
cellulosic biofuel. Many of these benefits stem from the fact that
nearly all of the feedstocks projected to be used to produce cellulosic
biofuel through 2022 are either waste materials (as in the case of
compressed natural gas and liquified natural gas (CNG/LNG) derived from
biogas) or residues (in the cases of cellulosic ethanol from corn
kernel fiber and corn stover, as well as cellulosic diesel and heating
oil from mill residue). The use of many of the feedstocks currently
being used to produce cellulosic biofuel are not expected to cause
significant land use changes that might lead to adverse environmental
impacts.
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\61\ From 2015 through 2022 the statutory target for cellulosic
biofuel increases by 13.0 billion gallons, from 3.0 billion gallons
to 16.0 billion gallons. During this same time period the statutory
target for total renewable fuel increases by 15.5 billion gallons,
from 20.5 billion gallons to 36.0 billion gallons. Thus, cellulosic
biofuel was expected to account for 84% (13.0 billion gallons/15.5
billion gallons) of the total renewable fuel increase.
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Despite these similarities, there are also significant differences
between liquid cellulosic biofuels and CNG/LNG derived from biogas.
None of the cellulosic biofuel feedstocks expected to be used to
produce liquid cellulosic biofuels through 2022 are specifically
produced to be used as feedstocks for cellulosic biofuel production.
Many of these feedstocks (including agricultural residues, mill
residue, and separated municipal solid waste (MSW)) have limited uses
in other markets.\62\ Because of this, using these feedstocks to
produce liquid cellulosic biofuel is not expected to have significant
adverse impacts related to several of the statutory factors, including
the conversion of wetlands, ecosystems and wildlife habitat, soil and
water quality, the price and supply of agricultural commodities, and
food prices. Notwithstanding these benefits, the cost of producing
liquid cellulosic biofuel is high. These high costs are generally the
result of low yields (e.g., gallons of fuel per ton of feedstocks) and
the high capital costs of liquid cellulosic biofuel production
facilities. In the near term (through 2022), the production of these
fuels is likely to be dependent on relatively high cellulosic RIN
prices (in addition to state level programs such as California's low
carbon fuel standard (LCFS)) to be economically competitive with
petroleum-based fuels.
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\62\ One potential exception is corn kernel fiber. Corn kernel
fiber is a component of distillers grains, which is currently sold
as animal feed. Depending on the type of animal to which the
distillers grain is fed, corn kernel fiber removed from the
distillers grain through conversion to cellulosic biofuel may need
to be replaced with additional feed.
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CNG/LNG derived from biogas, like liquid cellulosic biofuel, is
generally produced from waste materials or residues (e.g., through
biogas collection from landfills, municipal wastewater treatment
facility digesters, agricultural digesters, and separated MSW
digesters) and thus is not expected to affect the conversion of
wetlands, ecosystems and wildlife habitat, soil and water quality, the
price and supply of agricultural commodities, and food prices. However,
in contrast to the feedstocks generally used to produce liquid
cellulosic biofuels, significant quantities of biogas from these
sources are currently used to produce electricity, while smaller
quantities are injected into natural gas pipelines. In some situations,
such as at larger landfills, CNG/LNG derived from biogas may also be
able to be produced at a price comparable to fossil natural gas.
Despite this relatively low cost of production, the combination of the
high cellulosic biofuel RIN price and the significant volume potential
for CNG/LNG derived from biogas used as transportation fuel could have
a relatively significant impact (about $0.01 per gallon) on the price
of gasoline and diesel.\63\
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\63\ See Chapter 5.1.2.2 of the DRIA for a further discussion of
the expected impact of RINs generated for CNG/LNG derived from
biogas on the transportation fuel market.
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2. Non-Cellulosic Advanced Biofuel
The volume targets established by Congress also anticipated
significant growth in advanced biofuel beyond what is needed to satisfy
the cellulosic standard. The statutory target for advanced biofuel in
2022 (21 billion gallons) allowed for up to 5 billion gallons of non-
cellulosic advanced biofuel to be used towards the advanced biofuel
volume target. In practice the vast majority of non-cellulosic advanced
biofuel in the RFS program has been biomass-based diesel, with
relatively small volumes of sugarcane ethanol and other advanced
biofuels. Some of the statutory factors assessed by EPA suggest that
the targets for non-cellulosic advanced biofuel established by
Congress, or even higher volumes, are still appropriate. Notably, all
advanced biofuels have the potential to provide significant GHG
reductions as they are required to achieve at least 50 percent GHG
reductions relative to the petroleum fuels they displace. Some types of
advanced fuels, such as biodiesel and renewable diesel produced from
fats, oils, and greases, provide even greater reductions than the 50
percent threshold. This summary focuses on the impacts of advanced
biodiesel and renewable diesel.
Advanced biodiesel and renewable diesel together comprise 95
percent or more of the total supply of non-cellulosic advanced biofuel
over the last several years, and is expected to supply all of increase
in advanced biofuel through 2022. High domestic production capacity and
availability of imports indicate that volumes of non-cellulosic
advanced biofuel in 2021 and 2022 may meet or even exceed the implied
statutory targets. Similarly, the feedstocks used to make advanced
biodiesel and renewable diesel (such as soy oil, canola oil, and corn
oil, as well as waste oils such as white grease, yellow grease, trap
grease, poultry fat, and tallow) currently exist in sufficient
quantities globally to supply these increasing volumes. These
feedstocks
[[Page 72447]]
have many existing uses that may require replacement with other
suitable substitutes, but there is also potential for ongoing growth in
the production of many of these feedstocks. Higher volume requirements
for non-cellulosic advanced biofuel may also have energy security
benefits, increase domestic employment in the biofuels industry, and
increase income for biofuel feedstock producers.
However, some of the factors assessed would support lower volumes
of advanced biofuel. For instance, as described in Chapter 9 of the
DRIA, the cost of biodiesel and renewable diesel is significantly
higher than petroleum-based diesel fuel and is expected to remain so
over the next several years. Even if biodiesel and renewable diesel
blends are priced similarly to petroleum diesel at the pump after
accounting for the relevant Federal and state incentives (including the
RIN value), society as a whole nevertheless bears their full costs.
Moreover, the fact that sufficient feedstocks exist to produce
increasing quantities of advanced biodiesel and renewable diesel does
not mean that those feedstocks are readily available or could be
diverted to biofuel production without adverse consequences. As
described in Chapter 5 of the DRIA, we expect only limited quantities
of fats, oils, and greases and distillers corn oil to be available for
increased biodiesel and renewable diesel production in future years. We
expect that the primary feedstock available to biodiesel and renewable
diesel producers in significant quantities through 2022 will be soybean
oil and other vegetable oils whose primary markets are for food.
Increased demand for soybean oil could lead to diversion of feedstocks
from food and other current uses in addition to further incentivizing
increased soybean crushing and soybean production. Increased soybean
production in the U.S. and abroad in turn could result in greater
conversion of wetlands, adverse impacts on ecosystems and wildlife
habitat, adverse impacts negative impacts on water quality and supply,
and increased prices for agricultural commodities and food prices. We
request comment on the impacts of advanced biofuel production on the
statutory factors, including impacts on wetlands, ecosystems, and
wildlife habitat.
3. Conventional Renewable Fuel
As with non-cellulosic advanced biofuel, some of the statutory
factors assessed for conventional renewable fuel favor the implied
statutory volume (15 billion gallons) or higher volumes, while other
factors favor lower volumes. While conventional renewable fuels are
generally required by EISA to achieve 20 percent GHG reductions
relative to the petroleum fuels they displace, some conventional
biofuel facilities exceed this threshold. Notably, EPA has developed an
expedited petition process for ethanol production facilities using more
efficient process technologies.\64\ The statute, however, also contains
grandfathering provisions exempting any facility that had begun
construction on or before December 19, 2007, from this requirement, so
not all producers of conventional renewable fuels meet or are required
to meet the 20 percent GHG reduction threshold.\65\
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\64\ EPA has developed an ``Efficient Producer Petition
Process,'' which encourages adoption of efficiency improvements in
new ethanol facilities by expediting petition review and approval.
Existing EPA estimates for corn starch ethanol produced in 2022
using a dry mill process and natural gas fired process heat range
from a 42 percent to a 17 percent reduction over baseline gasoline,
depending on the technologies used at the production facility.
\65\ See CAA section 211(o)(2)(A)(i).
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The vast majority of conventional renewable fuel that has been
supplied to the U.S. is corn ethanol. Domestic production capacity for
corn ethanol exceeds 16 billion gallons. Production of corn-ethanol in
the U.S. reached a peak of 16.1 billion gallons in 2018.\66\ Higher
volumes of conventional renewable fuel could result in more domestic
jobs in the biofuels industry. At the same time, there are also
significant volumes of palm biodiesel and renewable diesel that are
produced internationally that could qualify as conventional renewable
fuel under the grandfathering provisions of the RFS program. In the
past, small volumes of grandfathered biodiesel and renewable diesel
have been supplied to the U.S.\67\
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\66\ Energy Information Administration (EIA) Monthly Energy
Review.
\67\ Use of grandfathered biodiesel and renewable diesel reached
a maximum of 157 million gallons in 2016. Since 2018 use of
grandfathered biodiesel and renewable diesel has been very small
(less than 1 million gallons each year). See Chapter 1.6 of the
DRIA.
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However, some of the analyses we conducted support lower volumes of
conventional renewable fuel. As with soy biodiesel, increased corn
production in the U.S. could result in greater conversion of wetlands,
adverse impacts on ecosystems and wildlife habitat, adverse impacts
negative impacts on water quality and supply, and increased prices for
agricultural commodities and food prices. Furthermore, constraints on
ethanol use may also support lower implied volume requirements for
conventional biofuel. The market has not achieved 15 billion gallons of
actual use of conventional renewable fuel in any year in which the RFS
standards were based on it. This was due to various factors, including
limitations on ethanol use above the E10 blendwall, strong export
markets for domestically produced ethanol, the effect of exempted small
refinery volumes in depressing the effective RFS standards, and use of
advanced biodiesel and renewable diesel, buoyed by its tax subsidy and
other incentive programs, to meet the implied conventional portion of
the total renewable fuel requirement.
While the use of ethanol as E10 has been, and continues to be,
economical for refiners and blenders, the use of E10 alone has not been
sufficient to achieve the 15 billion gallons of ethanol use due to
declining gasoline demand. The RFS program has had limited success in
helping to increase the use of higher ethanol blends, and growth in the
nationwide average gasoline ethanol concentration has virtually
stagnated as the market reached the E10 blendwall. While the use of
higher ethanol blends has increased since 2011, that growth has been
small compared to prior growth in the use of E10 and in the use of non-
ethanol biofuels. We do not anticipate that growth in the use of higher
ethanol blends through 2022 will increase rapidly enough to result in
significantly greater volumes of ethanol consumption in the U.S., even
with the incentives created by the RFS program standards and other
governmental efforts such as Department of Agriculture's (USDA's)
Blender Infrastructure Program and Higher Blends Infrastructure
Incentive Program. Moreover, exporting ethanol to be blended with
gasoline abroad has been more profitable in recent years than selling
greater volumes of E15 or E85 domestically. We expect these trends in
exports to continue given international demand for ethanol.
In addition, total demand for gasoline was lower in 2020 and is
expected to remain lower in 2021 and 2022 relative to the volume of
gasoline consumed in 2017-2019 according to EIA's May 2021 Short Term
Energy Outlook (STEO), which will limit the volume of ethanol used as
E10.\68\ Most notably, the COVID-19 pandemic caused a significant fall
in gasoline demand and sales of E10 starting in 2020. We would
[[Page 72448]]
expect, therefore, that even maintaining the implied 15 billion gallon
statutory volume target for conventional renewable fuel going forward
would require that volumes of biodiesel and renewable diesel, the least
costly alternative source, increase to compensate for the reduction in
ethanol use.
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\68\ The May 2021 STEO estimates gasoline consumption of 8.03
million barrels per day (123.5 billion gallons) in 2020, projects
8.70 million barrels per day (133.3 billion gallons) in 2021, and
projects 8.92 million barrels per day (136.8 billion gallons) in
2022. The STEO reported gasoline consumption in 2017-2019 at 9.31-
9.33 million barrels per day (142.7-143.0 billion gallons) annually.
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If biodiesel and/or renewable diesel were able to be supplied in
sufficient quantities to enable a conventional renewable fuel
requirement at 15 billion gallons to be met despite lower ethanol
consumption, there could still be other potentially adverse impacts. We
project that much of this biodiesel and renewable diesel would be
imported. Further, these fuels could be sourced from grandfathered
facilities that may not achieve the desired GHG reductions. If imported
biodiesel and renewable diesel were to increase, we would expect either
an increase in the use of petroleum fuels from countries that
previously used these fuels, or, alternatively, an expansion of palm
oil production to produce biodiesel and renewable diesel, likely
resulting in additional foreign land being converted to cropland for
the production of palm oil. There would likely be both adverse wildlife
impacts and higher GHG emissions of such international land use changes
that would be associated with a higher implied conventional volume
mandate satisfied by grandfathered biodiesel and renewable diesel.
At the same time, we do not believe that setting volumes such that
the implied conventional renewable fuel volume is below the E10
blendwall would be appropriate either. Under such a scenario, imports
of biodiesel and renewable diesel to meet the demand provided by the
implied conventional renewable fuel volume would cease altogether which
would have some benefits for domestic energy independence and may have
some environmental benefits as well insofar as those imports are
produced from palm oil. However, impacts on domestic ethanol production
would be small as E10 would continue to be used regardless. There would
most likely be some decrease in the small amounts of higher ethanol
blends used, but the use of E10 would be essentially unchanged, and
since ethanol blended as E10 dominates the total volume of ethanol
consumed, the overall ethanol volume would be minimally affected. Thus,
we expect that setting the implied volume for conventional renewable
fuel below the E10 blendwall would have little impact on domestic
biofuel production or use.
B. Proposed Volumes for 2020
We are proposing to revise previously finalized 2020 total
renewable fuel, advanced biofuel, and cellulosic biofuel volumes to
equal the volume of such fuels actually used in the U.S. in 2020.\69\
As we discuss in Section VI, we are also proposing to make
corresponding adjustments to the percent standards applicable to
obligated parties.\70\
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\69\ We also call such volumes the volumes that are actually
consumed or actually supplied. In this context, we are using the
term ``supply'' distinct from the statutory term ``inadequate
domestic supply'' in CAA section 211(o)(7)(A)(ii).
\70\ As discussed in Section VI, the adjustments to the
percentage standards would also include changes to the non-renewable
gasoline and diesel volumes to reflect actual 2020 consumption.
---------------------------------------------------------------------------
Since 2020 has already passed, this rulemaking has no ability to
affect actual production, imports, and use of renewable fuel in 2020.
The impact of the rule on each of the statutory factors is similarly
limited. In contrast, were we to revise the 2020 volumes to be greater
than the volume of renewable fuel that was supplied or were we to
simply leave the original volumes from the 2020 final rule in place, we
would expect some combination of potentially disruptive outcomes: (1) A
reduction in the quantity of carryover RINs; (2) obligated parties
carrying deficits into 2021; and/or (3) obligated parties being out of
compliance with their RFS obligations.\71\ While this approach could
have the effect of prospectively increasing demand for renewable fuels
in 2022, simply establishing higher volumes for 2022 is expected to
have the same effect on renewable fuel producers with a much lower risk
of market disruptions that could result from maintaining volume
obligations for 2020. As we explain in Section IV.B, we are proposing
to revise the 2020 volume obligations to forestall potential
disruptions in the fuels market that would impair the ongoing
implementation of the RFS program.
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\71\ See Section IV.A for a discussion of carryover RINs.
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We acknowledge that this proposal to reconsider and revise the
already finalized 2020 standards will be finalized after the November
30, 2019, statutory deadline for the 2020 standards and can operate
only retroactively.\72\ We generally do not think it is appropriate to
reconsider and revise previously finalized RFS standards. Nonetheless,
we are proposing to do so because critical and unanticipated events
have occurred affecting fuels markets and RFS compliance. First, we
anticipate a significant and unprecedented shortfall in renewable fuel
use in 2020 relative to the volumes that we required in the 2020 final
rule. This is largely due to the COVID-19 pandemic, which caused an
unforeseen and drastic fall in transportation fuel demand generally and
in biofuel demand more specifically.
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\72\ 85 FR 7016 (February 6, 2020). In addition, the 2020 BBD
volume was established in the 2019 final rule. 83 FR 63704.
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In general, under the RFS program, a shortfall in gasoline and
diesel fuel consumption relative to the projected volumes results in a
corresponding decrease in the volume of renewable fuel required. This
self-adjusting nature of the program is a function of the fact that the
RFS standards are applied as a percentage to an obligated party's
gasoline and diesel fuel production; the obligation to acquire RINs for
compliance rises and falls along with gasoline and diesel fuel
production volume. Further, historical deviations between the volumes
of gasoline and diesel actually used relative to their projected
volumes have been relatively small. As a result, we have historically
not adjusted the RFS standards after they have been established to
account for updated gasoline and diesel consumption levels. This is
consistent with our general policy of not reconsidering and revising
previously finalized RFS standards.
However, the situation in 2020 was different. As explained further
in Section IV.B, the shortfalls in 2020 were both significantly larger
than in any previous year and disproportionately affected gasoline more
than diesel fuel. This is important because on average finished
gasoline contains more renewable content than finished diesel. The vast
majority of gasoline contains at least 10% ethanol, mostly in the form
of E10, whereas the average concentration of renewables in diesel falls
far short of that. Thus, while the decrease in transportation fuel
demand in 2020 proportionally decreased the required renewable fuel
volume, the decrease in the demand for renewable fuel was greater given
the greater drop in gasoline versus diesel demand.
Further, even with the lesser impact on diesel fuel consumption, we
still observed a shortfall in the use of biodiesel and renewable diesel
relative to our projections in the 2020 final rule. That is to say, the
projections in the 2020 final rule overestimated the use of biodiesel
and renewable diesel, even if we adjust those projections by the
shortfall in diesel demand.
Second, when we promulgated the 2020 volume requirements, we did so
while projecting for the first time that we would be granting a large
number of SREs for 2020. The 2020 final rule
[[Page 72449]]
reallocated the projected exempted volumes onto the remaining obligated
parties, thereby significantly increasing the obligations on those
parties. As we explain in Section VI.B, there continues to be
substantial uncertainty regarding whether we will grant or deny the
many SRE petitions for 2020 in the wake of the Tenth Circuit's decision
in RFA and the Supreme Court's reversal of one of the bases for the
Tenth Circuit's decision in HollyFrontier.\73\ Among the uncertainties
are the impacts of the additional holdings in RFA that were not
addressed on appeal to the Supreme Court. The significant impact of our
earlier projection on the standards and the consequent impact on our
SRE policy by the litigation in RFA and HollyFrontier suggest that
reconsideration is warranted.\74\
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\73\ Renewable Fuels Ass'n v. EPA, 948 F.3d 1206 (10th Cir.
2020), rev'd in part sub nom., HollyFrontier Cheyenne Refining, LLC,
v. Renewable Fuels Ass'n, 114 S. Ct. 2172 (2021).
\74\ As noted in Section II.D, we have received petitions
seeking reconsideration of the 2020 annual rule under CAA section
307(d)(7)(B).
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The decrease in biofuel use, together with the potential impacts of
SRE decisions, means that compliance with the original 2020 standards
would likely result in a significant drawdown of the number of
carryover RINs available for use in 2021, which could negatively impact
the functionality of the RIN market that enables the successful
implementation of the RFS program. A well-functioning RIN market is
foundational for allowing obligated parties to comply with their RFS
mandates, particularly for obligated parties that do not themselves
produce or blend renewable fuels. As discussed in Section IV.A, the
carryover RIN bank is already projected to drop from 3.48 billion RINs
in 2019 to 1.85 billion RINs in 2020, following 2019 compliance. We
project that the 2020 standards, if unmodified and SREs are not
granted, would result in a significant drawdown of the total number of
carryover RINs, to a volume (630 million RINs) that would represent
less than 4 percent of the proposed 2021 and 2022 total renewable fuel
standards.\75\ The number of carryover cellulosic biofuel RINs would
also be projected to decrease significantly, as we project that the
number of cellulosic carryover RINs would be reduced to just 2.2
million RINs, which is less than 0.5 percent of the proposed 2021 and
2022 cellulosic biofuel volumes. Such a drastic reduction in the
carryover RIN bank has the potential to reduce the liquidity of RINs
and could negatively impact parties that do not currently have
sufficient RINs to meet their 2020 obligation. This could make it
difficult for some parties to acquire enough RINs to comply with their
2020 RFS obligations, as well as the 2021 and 2022 standards being
proposed, and could cause those parties to carry forward deficits or to
become non-compliant. This could lead to significant negative impacts
on the fuels market and the ongoing implementation of the RFS program,
as discussed in Section IV.B.
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\75\ See Section VI of ``Carryover RIN Bank Calculations for
2020-2022 Proposed Rule,'' available in the docket for this action.
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These considerations also support our decision to retroactively
reduce the 2020 volumes to those actually used. In doing so, we are
relieving burdens on obligated parties, and in some cases, the
potentially onerous burden of non-compliance with the RFS program and
the possibility of penalty payments. This approach also ensures
sufficient RINs for compliance. It also ensures the continued
functioning of the carryover RIN bank, a necessary compliance
flexibility for obligated parties. It also protects the ongoing
implementation of the RFS program and facilitates the higher volumes
proposed for 2022, as we discuss further in Section IV.B.
With regard to lead time, less lead time is needed for obligated
parties given that we are reducing the stringency of their obligations,
as opposed to increasing the stringency of their obligations.
Nonetheless, we are providing significant lead time. We extended the
2020 compliance deadline for obligated parties to January 31, 2022,
providing these parties with additional time to acquire RINs,\76\ and
have proposed to further extend that deadline in a separate action.\77\
Had we not adjusted the compliance deadline, obligated parties would
have needed to demonstrate compliance by March 31, 2021.
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\76\ 86 FR 17073 (April 1, 2021).
\77\ 86 FR 67419 (November 26, 2021).
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We recognize that retroactively adjusting the 2020 standards will
disrupt market expectations created by the prior final rule, for
instance on the part of biofuel producers who made investments or other
parties who transacted biofuels or RINs, based on the higher standards
originally finalized. As a general matter, these expectations may not
rise to the level of reliance interests recognized by the courts.\78\
Even if they do, however, we believe that revising the standards is
nonetheless warranted based on the events and factors described above,
which likely confounded market expectations in any event.
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\78\ Monroe Energy, LLC v. EPA, 750 F.3d 909, 919-20 (D.C. Cir.
2014).
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As explained in Section II.A.2, the statutory deadline for
resetting the total renewable fuel volume was in December 2019, or one
year after the promulgation of the 2019 final rule. The statutory
deadlines for resetting the advanced biofuel and cellulosic biofuel
volumes occurred even earlier. Despite being late to meet our statutory
obligations, we are proposing to exercise the reset authority for
several reasons. First, doing so satisfies our statutory obligation to
reset the statutory volumes. Second, we have already notified the
public that we intended to exercise the reset authority.\79\ This
proposal is a key step in making good on that intent and meeting our
statutory obligation. Third, the reset authority also provides EPA
broad discretion to modify the renewable fuel volumes and to establish
biofuel volume requirements at the volumes actually consumed. Such
volumes for advanced biofuel and total renewable fuel could not be
established under the cellulosic waiver authority, which was the legal
basis for the original 2020 final rule.\80\ Nonetheless, we believe
that these are the appropriate volumes for the reasons explained above.
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\79\ See 84 FR 36766 (July 29, 2019).
\80\ The cellulosic waiver authority limits reductions in the
statutory total renewable fuel and advanced biofuel volumes to no
more than the reduction in the cellulosic biofuel volume. In the
2020 final rule, we exercised the cellulosic waiver to the maximum
extent, resulting in an implied conventional renewable fuel volume
of 15 billion gallons and an implied non-cellulosic advanced biofuel
volume of 4.5 billion gallons. However, the volumes of advanced
biofuel and total renewable fuel actually supplied in 2020 fell
short of these numbers.
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The proposed revised 2020 volumes, along with the original volumes,
are shown in Table III.B-1. The proposed revised 2020 percentage
standards, along with the original percentage standards, are provided
in Section VI.C.
[[Page 72450]]
Table III.B-1--Proposed Revised Volume Requirements for 2020
[Billion RINs]
------------------------------------------------------------------------
Standard Original Revised
------------------------------------------------------------------------
Cellulosic Biofuel...................... 0.59 0.51
Biomass-Based Diesel.................... \a\ 2.43 \a\ 2.43
Advanced Biofuel........................ 5.09 4.63
Total Renewable Fuel.................... 20.09 17.13
------------------------------------------------------------------------
Source: EMTS (EPA Moderated Transaction System). See ``RIN supply as of
3-22-21''.
\a\ The BBD volume for 2020 is in physical gallons (rather than RINs)
and was established in the 2019 final rule (83 FR 63704, December 11,
2018). We are not proposing to revise the 2020 BBD volume in this
action.
We request comment on our proposed approach of reconsidering and
revising the 2020 RFS volumes from those promulgated in the prior final
rule. We also request comment on modifying 2020 volumes to the volumes
of renewable fuel actually supplied in 2020. We further request comment
on whether we should include the approximately 40 million cellulosic
biofuel carryover RINs in the 2020 cellulosic biofuel volume
requirement. We discuss this issue in detail in Section IV.A.3.
C. Proposed Volumes for 2021
We are proposing 2021 total renewable fuel, advanced biofuel, and
cellulosic biofuel volumes at our projections of the volume of such
fuels used in the U.S. this year. This is the same general approach as
for 2020, with the difference that we do not yet have complete data for
biofuel use in 2021, and therefore we are projecting biofuel use
throughout the remainder of 2021.
Given that we are using the same basic approach as for 2020, the
rationale for our 2021 volumes is similar to the rationale for our 2020
volumes. Below we present some of the key similarities and also note
differences where they exist. As with 2020, due to the expected timing
of the finalization of this rule, the ability for the rule to affect
renewable fuel production, imports, and use in the U.S. in 2021 is
limited. As such, the impact of the rule on each of the statutory
factors is similarly limited. Also, as for 2020, we could also set
volumes for 2021 that are greater or lesser than the volume of
renewable fuel that is actually supplied in 2021, but we do not believe
that doing so would be appropriate for similar reasons. EPA does,
however, believe that the RFS program should drive increases in
renewable fuel volumes over time. Given that we are setting volumes for
2020-2022 in this rule and the fact that retrospective volumes have
limited ability to affect biofuel use, we believe that increases in
volume requirements are more appropriate in 2022. That is when this
rule applies prospectively and has the potential to affect actual
biofuel use. We discuss this relationship between the three years
further in Section IV.B.
As with 2020, the 2021 volumes both are late and would operate
retroactively. Unlike for 2020, however, we are not modifying
previously finalized standards for 2021. The lateness and retroactivity
of the 2021 volumes are appropriate for similar reasons as for 2020. We
believe that establishing the 2021 volumes at the volumes projected to
be used properly balances the statutory goal of increasing renewable
fuel use with mitigating burdens on obligated parties. It ensures that
the obligated parties should have sufficient RINs to comply. In a
separate action, we have proposed to extend the compliance and attest
engagement dates for 2021, providing additional lead time, as well as
compliance flexibilities for obligated parties including access to
carryover RINs and carryforward deficits.\81\ In addition, we note that
this approach, of setting volumes at those actually used, is consistent
with our approach in the 2014 and 2015 standards, which the D.C.
Circuit upheld in ACE.
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\81\ 86 FR 67419 (November 26, 2021).
---------------------------------------------------------------------------
As with the 2020 volumes, the 2021 volumes also depend upon a
belated exercise of the reset authority. We believe using the reset
authority is appropriate for similar reasons as 2020: We are
statutorily obligated to reset 2021 volumes, we have previously
informed the public that we intended to reset the volumes, and the
reset authority gives us discretion to reduce the total renewable fuel
volume beyond what we could establish under the cellulosic waiver.
There is also an additional reason, which is that the statute indicates
that when we reset the volumes, we must do so for all remaining years
in the statutory volume tables, which extend through 2022. Thus, in
resetting the 2020 volumes, we are obligated to reset the 2021 and 2022
volumes.\82\
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\82\ See CAA section 211(o)(7)(F) (``the Administrator shall
promulgate a rule . . . that modifies the applicable volumes set
forth in the table concerned for all years following the final year
to which the waiver applies'').
---------------------------------------------------------------------------
The volumes of cellulosic biofuel, advanced biofuel, and total
renewable fuel we are proposing for 2021 are shown in Table III.C-1.
The biomass-based diesel volume for 2021 was previously established in
the 2020 final rule and is included in Table III.C-1 for context. These
volumes are based on the projected use of renewable fuels in the U.S.,
as discussed in greater detail in Chapter 5 of the DRIA.
Table III.C-1--Proposed RFS Volumes for 2021
[Billion RINs]
------------------------------------------------------------------------
Proposed
Category volume
------------------------------------------------------------------------
Cellulosic Biofuel...................................... 0.62
Biomass-Based Diesel.................................... \a\ 2.43
Advanced Biofuel........................................ 5.20
Total Renewable Fuel.................................... 18.52
------------------------------------------------------------------------
\a\ The BBD volume for 2021 is in physical gallons (rather than RINs)
and was established in the 2020 final rule (85 FR 7016, February 6,
2020). We are not proposing to revise the 2021 BBD volume in this
action.
In the final rule, we intend to consider additional data, including
more recent data on renewable fuel production and use, and public
comments, and update our projections accordingly. We request comment on
both our proposed approach of establishing the RFS volumes for 2021 at
the volume of renewable fuel projected to be supplied in 2021, as well
as our projections of these volumes. We also request comment on whether
or not to include volumes of cellulosic ethanol produced from corn
kernel fiber in our projection of cellulosic biofuel production in
2021, as discussed in Chapter 5 of the DRIA.
D. Proposed Volumes for 2022
We are proposing 2022 total renewable fuel, advanced biofuel, and
cellulosic biofuel volumes that represent growth compared to historical
volumes and compared to the volumes proposed for 2020 and 2021. We are
[[Page 72451]]
proposing a 150 million gallon increase in the 2022 cellulosic biofuel
volume over the proposed 2021 volume based on the expected continued
growth in biogas use. We are also proposing the full implied statutory
volumes for non-cellulosic advanced biofuel (i.e., 5 billion gallons,
or 500 million gallons more than the proposed 2021 volume) and
conventional renewable fuel (15 billion gallons).\83\ We anticipate
significant growth in the use of non-cellulosic advanced biofuels,
especially in advanced renewable diesel.\84\ While we expect that
conventional ethanol use will fall short of the implied 15 billion
gallon volume in 2022 by roughly 1.2 billion gallons, we project that
greater volumes of biodiesel and renewable diesel could be produced and
imported to offset this shortfall. We discuss the 2022 BBD volume
separately in Section III.D.
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\83\ The implied statutory volume for non-cellulosic advanced
biofuel in 2022 (5 billion gallons) is the difference between the
statutory volumes for advanced biofuel (21 billion gallons) and
cellulosic biofuel (16 billion gallons) in 2022. Similarly, the
implied statutory volume for conventional renewable fuel in 2022 (15
billion gallons) is the difference between the statutory volumes for
total renewable fuel (36 billion gallons) and advanced biofuel (21
billion gallons) in 2022.
\84\ See Chapter 2 of the DRIA.
---------------------------------------------------------------------------
The proposed cellulosic biofuel volume for 2022 is equal to the
projected available volume of cellulosic biofuel (see Chapter 5.1 of
the DRIA). This volume represents the highest volume of cellulosic
biofuel we can establish for 2022 given the cellulosic waiver
provision, which requires EPA to reduce the statutory cellulosic volume
to the projected volume available. While EPA does have the authority to
establish a lower cellulosic volume under the reset authority, we do
not believe this would be appropriate for 2022, as discussed below.
EPA's approach to the proposed cellulosic biofuel volume for 2022
seeks to realize the potential for GHG benefits associated with
increased cellulosic biofuel production despite the relatively high
costs (or in the case of CNG/LNG derived from biogas, the relatively
high impact on the price of transportation fuel). Thus, while some of
the statutory factors (such as the cost to consumers of transportation
fuel) may suggest that a volume of cellulosic biofuel lower than the
volume projected to be produced in 2022 would be appropriate, we have
determined that these factors are outweighed by other factors (such as
climate change).
The proposed advanced biofuel and total renewable fuel volumes
strike a balance between numerous competing statutory factors. They
reflect the potential for growth in the volume of renewable fuel
produced and consumed in the U.S., and the energy security and
potential climate change benefits that producing and consuming
increasing volumes of qualifying renewable fuels provide. They also
take into consideration the potential negative impacts of renewable
fuels produced from crops such as corn or soybeans on environmental
factors such as the conversion of wetlands, ecosystems, and wildlife
habitat, water quality, and water supply.
We acknowledge that the implied conventional renewable fuel volume
is higher than the volume of these fuels projected to be consumed in
the U.S. in 2022. We believe this may incentivize the continued
expansion of the infrastructure necessary to use higher level blends of
ethanol, which remains the dominant form of conventional renewable
fuel. In recent years, ethanol consumption beyond the E10 blendwall in
the U.S. has been limited by infrastructure constraints (as well as
other factors) to a volume significantly lower than the volume of
ethanol produced in the U.S. and the total production capacity of the
U.S. ethanol industry. If these infrastructure constraints are
addressed, domestic ethanol consumption and ultimately domestic ethanol
production could increase, and this could result in job creation, rural
economic development, higher corn prices for farmers, and a greater
supply of agricultural commodities. Alternatively, additional volumes
of conventional biodiesel and renewable diesel could be supplied in
2022, including renewable fuels that are grandfathered under 40 CFR
80.1403 and are thus not required to meet the minimum 20 percent GHG
reduction required for all qualifying renewable fuel. These fuels would
most likely be produced in foreign facilities, which may cause
additional environmental impacts and would not provide the same
benefits to domestic job creation and rural economic development, but
they could still provide energy security benefits.\85\
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\85\ Registered capacity to produce conventional biodiesel and
renewable diesel exists at grandfathered facilities. Because
grandfathered renewable fuels are not required to meet the GHG
reduction thresholds, the GHG impacts of these fuels are highly
uncertain.
---------------------------------------------------------------------------
At the same time, this higher volume requirement means that
obligated parties will likely need to look to other sources of
renewable fuel beyond corn ethanol to meet their compliance obligations
for 2022. While we are proposing the non-cellulosic portion of the
advanced biofuel standard at the full implied statutory volume of 5
billion gallons, our assessment of potential supply indicates that some
additional volume will likely be used in 2022. This means that if, as
expected, the market falls short of the implied volume of conventional
renewable fuel in 2022, as has happened in several years in the past,
excess volumes of advanced biofuel beyond what is needed to meet the
advanced biofuel volume could be available to fulfill some portion of
the shortfall. Finally, as discussed for in the context of the proposed
volume requirements for 2020 and 2021, there may also be implications
of the proposed 2022 volume requirements on the carryover RIN bank.
While we are projecting that sufficient renewable diesel, both advanced
and conventional, will be available to meet the proposed 2022 volume
requirements, there is the potential that the market may fall short, in
which case the existence of sufficient carryover RINs in the carryover
RIN bank can still enable compliance. Specifically, obligated parties
may use carryover RINs to help them comply with the proposed 2022
standards. See Section IV.A for a more detailed discussion of carryover
RINs.
We acknowledge that in lieu of maintaining the implied statutory
volumes of non-cellulosic advanced biofuel and conventional renewable
fuel and relying on higher volumes of advanced biofuel to fulfill an
expected shortfall in conventional biofuel, we could instead raise the
advanced biofuel requirement and lower the conventional biofuel volume.
However, we have chosen not to propose this. We expect that the impact
on GHG emissions of the decision not to propose a higher advanced
biofuel volume with a corresponding lower implied conventional biofuel
volume will be minimal, given that additional volumes of advanced
biofuels will likely be used to satisfy the conventional portion of the
total renewable fuel requirement. Moreover, we believe that providing
incentives for increased ethanol distribution and blending
infrastructure through the higher implied volumes of conventional
renewable fuel may result in the potential for greater renewable fuel
consumption in future years.
We note that this approach of maintaining the statutory implied
conventional and non-cellulosic advanced biofuel volumes is inherently
consistent with the volumes Congress itself established in EISA. It is
also consistent with EPA's policy in prior years, during which we have
never established prospective volume requirements lower than the
implied statutory volume targets, with a single
[[Page 72452]]
exception.\86\ While we have discretion to deviate from this policy, we
continue to believe that maintaining the implied statutory volumes
strikes the proper balance based upon our consideration of the reset
factors.
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\86\ We prospectively established a volume for conventional
renewable fuel for 2016 (14.5 billion gallons) that was lower than
the statutory implied volume (15 billion gallons). In doing so, we
exercised our ``inadequate domestic supply'' waiver authority based
largely on the limited demand for ethanol in the United States. That
decision that was subsequently set aside by the U.S. Court of
Appeals for the District of Columbia Circuit in ACE, as exceeding
our waiver authority.
---------------------------------------------------------------------------
We also acknowledge that we are already late in resetting the 2022
volumes. We nonetheless believe that this late exercise of our reset
authority is appropriate for similar reasons as for 2020 and for 2021.
Moreover, the proposed 2022 volumes are also independently justified
under our cellulosic waiver authority.
The volumes of cellulosic biofuel, biomass-based diesel, advanced
biofuel, and total renewable fuel we are proposing for 2022 are shown
in Table III.D-1. We request comment on these proposed volumes. (The
proposed BBD volume for 2022 is also included in Table III.D-1 for
context, although we discuss it in Section III.E)
Table III.D-1--Proposed RFS Volumes for 2022
[Billion RINs]
------------------------------------------------------------------------
Proposed
Category volume
------------------------------------------------------------------------
Cellulosic Biofuel...................................... 0.77
Biomass-Based Diesel.................................... \a\ 2.76
Advanced Biofuel........................................ 5.77
Total Renewable Fuel.................................... 20.77
------------------------------------------------------------------------
\a\ The BBD volume for 2022 is in physical gallons (rather than RINs).
In particular, we request comment on our projection of cellulosic
biofuel for 2022. As discussed in greater detail in Chapter 4 of the
DRIA, our cellulosic biofuel projections for 2022 do not include any
volume of cellulosic ethanol produced from corn kernel fiber from
facilities that are not currently registered to generate cellulosic
RINs due to outstanding issues. If these technical and regulatory
issues are resolved, we project that as much as 210 million additional
gallons of cellulosic biofuel could be produced from corn kernel fiber
in 2022. Our projections also do not include any volumes that might
result from our proposed biointermediate regulations, as we believe the
impacts of that proposal will not occur until after 2022. We request
comment on whether we should project additional cellulosic biofuel
production from corn kernel fiber or biointermediates in 2022, and, if
so, the volume we should project.
E. Proposed Biomass-Based Diesel Volume for 2022
As described above, we are proposing an increase of 500 million
gallons in the non-cellulosic advanced biofuel volume for 2022.
Consistent with this, we are also proposing to increase the BBD volume
requirement by the same energy-equivalent amount (330 million physical
gallons) to 2.76 billion gallons.
As in recent years, we believe that excess volumes of BBD (above
2.76 billion gallons) will be used in 2022 to satisfy the advanced
standard. Historically, the BBD standard has not independently driven
the use of BBD in the market. This is due to the nested nature of the
standards and the competitiveness of BBD relative to other advanced
biofuels. Instead, the advanced biofuel standard, and occasionally the
total renewable fuel standard, have driven the use of BBD in the
market. We believe this trend will continue in 2022, and that the 2022
advanced standard, and potentially the total renewable fuel standard,
will drive the use of BBD in the market in 2022.
At the same time, we think it is important to maintain space for
other advanced biofuels to participate in the RFS program. Although the
BBD industry has matured over the past decade, the production of other
advanced biofuels continues to be relatively low and uncertain.
Maintaining this space for other advanced biofuels can facilitate in
the long-term increased commercialization and use of other advanced
biofuels, which may have superior environmental benefits and lower
costs relative to BBD. Conversely, we do not think increasing the size
of this space is necessary for 2022 given that only small quantities of
these other advanced biofuels have been used in recent years relative
to the space we have already provided.
The proposed BBD volume for 2022 is consistent with our policy in
previous annual rules, where we also set the BBD volume consistent with
the change, if any, in the advanced volume. In the 2019 final rule, we
set the 2020 BBD volume at 2.43 billion gallons. This was an increase
from the prior year's BBD volume by the same energy-equivalent amount
(330 million physical gallons) as the increase in the 2019 non-
cellulosic advanced biofuel volume (500 million ethanol-equivalent
gallons). By contrast, in the 2020 final rule, when the 2020 non-
cellulosic advanced biofuel volume did not change, we also maintained
the 2021 BBD volume at 2.43 billion gallons. In both rules, we
preserved a significant space for other advanced biofuels to compete,
approximately equal to 850 million RINs (approximately equal to 566
million physical gallons). In reality, only 334 million ethanol-
equivalent gallons of other advanced biofuel was consumed in 2020.
We acknowledge that in proposing the 2022 BBD volume in this
action, we are proposing a late BBD volume. CAA section
211(o)(2)(B)(ii) provides that EPA shall determine the applicable
volume 14 months prior to the year for which the standard will apply.
That deadline has already passed. However, we do anticipate
establishing the 2022 BBD standard ahead of the 2022 compliance year.
The D.C. Circuit in ACE has affirmed EPA's ability to promulgate late
BBD standards as long as those standards are reasonable.\87\ In
evaluating the reasonableness of EPA's standards, the Court suggested
that EPA must ``consider[ ] various ways to minimize the hardship
caused to obligated parties.'' \88\ In this action, we are providing
obligated parties with notice of the potential 2022 BBD volume
requirement well in advance of the 2022 compliance deadline.
Additionally, we are proposing a volume requirement that is consistent
with our treatment of the BBD volume requirement in the past, i.e.,
increasing the BBD volume requirement in accordance with increases in
the implied statutory non-cellulosic advanced volume. Further, as in
this case of previous annual rules, we continue to believe that it will
be the advanced biofuel standard for 2022 that will drive the use of
BBD in the market, and thus, the BBD standard we propose to establish
is unlikely to result in additional burdens on obligated parties.
Finally, we solicit comment on whether we should instead maintain the
BBD standard for 2022 at 2.43 billion gallons. This would increase the
space allowed for other advanced biofuels, as we are proposing to
increase the advanced biofuel volume for 2022 by 500 million gallons
over the proposed 2021 volume.
---------------------------------------------------------------------------
\87\ ACE at 721.
\88\ Id. (quoting Monroe Energy, LLC v. EPA, 750 F.3d 909, 920
(D.C. Cir. 2014)).
---------------------------------------------------------------------------
F. Summary of the Proposed Volumes
The proposed volumes for 2020, 2021, and 2022 are summarized in
Table III.F-1. We request comment on these volumes (excepting the 2020
and 2021 BBD volumes, which were set in the 2019 and 2020 final rules,
respectively), as well as any data or analysis that
[[Page 72453]]
would support alternative volumes for these years.
Table III.F-1--Proposed RFS Volumes for 2020, 2021, and 2022
[Billion RINs]
----------------------------------------------------------------------------------------------------------------
Category 2020 2021 2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel.............................................. 0.51 0.62 0.77
Biomass-Based Diesel \a\........................................ \b\ 2.43 \c\ 2.43 2.76
Advanced Biofuel................................................ 4.63 5.20 5.77
Total Renewable Fuel............................................ 17.13 18.52 20.77
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume for 2020 was established in the 2019 final rule (83 FR 63704, December 11, 2018).
\c\ The BBD volume for 2021 was established in the 2020 final rule (85 FR 7016, February 6, 2020).
G. Impacts of the Proposed Volumes
As explained in Chapter 2.2 of the DRIA, we have used a baseline of
the volumes actually supplied in 2020 to assess the impacts of this
proposed rule, and thus the proposed 2020 volumes have no costs or
benefits. We therefore focus on the projected impacts of the 2021 and
2022 volumes.\89\ We recognize that there are other possible baselines
that could be used as a point of comparison, and that the choice of
baseline significantly influences our impact analyses. A potential
alternative baseline that might be informative would be the volumes of
renewable fuels that would be used each year from 2020-2022 in the
absence of RFS obligations. While we have not used this alternative
baseline in this rule, Chapter 2.2 of the DRIA contains a brief
description of what such a baseline might look like. We request comment
on the volumes of renewable fuel and feedstock use that would occur in
these years in the absence of the RFS obligations.
---------------------------------------------------------------------------
\89\ The values for both 2021 and 2022 are calculated relative
to the actual volumes of renewable fuel used in 2020. The 2022
values therefore reflect the incremental volumes for both 2021 and
2022.
---------------------------------------------------------------------------
For two of the statutory factors (fuel costs and energy security
benefits) we were able to quantify and monetize the expected impacts of
this proposed rule.\90\ Information and specifics on how fuel costs are
calculated are presented in Chapter 9 of the DRIA, while energy
security benefits are discussed in Chapter 4 of the DRIA. A summary of
the fuel costs and energy security benefits are shown in Table III.G-1
and Table III.G-2. Other factors, such as job creation and the price
and supply of agricultural commodities, are quantified but have not
been monetized. Further information and the quantified impacts of this
proposed rule on these factors can be found in the DRIA. We were not
able to quantify many of the impacts of this rulemaking, including
impacts on many of the statutory factors such as the environmental
impacts and rural economic development.
---------------------------------------------------------------------------
\90\ Due to the uncertainty related to the GHG emission impacts
of this proposed rule (discussed in further detail in Chapter 3.2 of
the RIA) we have not included a quantified projection of the GHG
emission impacts of this proposal. However, to provide perspective
regarding the scope of the potential benefits, Chapter 3.2.2 of the
RIA illustrates the potential GHG benefits associated with the
proposed volumes in this rule using the lifecycle GHG values
calculated in the 2010 RFS final rule and other prior actions.
Table III.G-1--Fuel Costs of the Proposed Volumes
[2020 and nominal year dollars, millions] \a\
----------------------------------------------------------------------------------------------------------------
Discounted
Year Undiscounted -------------------------------
Rate: 7% Rate: 3%
----------------------------------------------------------------------------------------------------------------
2021............................................................ 278 278 278
2022
Excluding Supplemental Volumes.............................. 2,158 2,017 2,095
Including Supplemental Volumes.............................. 2,302 2,151 2,235
----------------------------------------------------------------------------------------------------------------
\a\ These costs represent the costs of producing and using biofuels relative to the petroleum fuels they
displace. They do not include other factors, such as the potential impacts on soil and water quality or
potential GHG reduction benefits.
Table III.G-2--Energy Security Benefits of the Proposed Volumes
[2020 dollars, millions]
----------------------------------------------------------------------------------------------------------------
Discounted
Year Undiscounted -------------------------------
Rate: 7% Rate: 3%
----------------------------------------------------------------------------------------------------------------
2021............................................................ 64 64 64
2022
Excluding Supplemental Volumes.............................. 151 141 147
Including Supplemental Volumes.............................. 162 151 157
----------------------------------------------------------------------------------------------------------------
Regardless of whether or not we were able to quantify or monetize
the impact of this proposed rule on each of the statutory factors,
consideration of these factors is still required by the statute. We
believe that the proposed standards
[[Page 72454]]
in this rulemaking are appropriate under our reset authority when we
balance all of the relevant factors described throughout this preamble
and the DRIA. We request comment generally on how costs and benefits
quantified in this proposed rule are calculated and accounted for, as
well as methods to quantify and monetize additional statutory factors.
IV. Interactions Between the RFS Annual Volumes
In resetting the volumes, EPA must review the implementation of the
program. In conducting this review, we have assessed the carryover RIN
bank \91\ and carryforward deficits, which are two important compliance
mechanisms. Specifically, the RFS regulations contain provisions that
allow an obligated party to satisfy their RFS obligations for a given
year by using up to 20 percent of RINs generated in the previous
year.\92\ Similarly, the RFS regulations also allow an obligated party
to carry forward a compliance deficit from one year to the next,
provided the party meets their full RFS obligations in the following
year.\93\ These provisions operate such that any excess RINs generated
in one year, or any RIN deficits, can impact the market for RINs and
renewable fuels in the next year. As such, compliance with the RFS
standards for one year is inherently intertwined with compliance for
the prior year. This section discusses the projected volume of
carryover RINs (net of carryforward deficits) that will be available
for use towards compliance with the 2020, 2021, and 2022 RFS
obligations. We also evaluate whether we should intentionally set the
2020, 2021, and 2022 volumes at levels that would intentionally reduce
the size of the carryover RIN bank, and we propose that this would not
be appropriate.
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\91\ CAA section 211(o)(5) requires that EPA establish a credit
program as part of its RFS regulations, and that the credits be
valid for obligated parties to show compliance for 12 months as of
the date of generation. EPA implemented this requirement through the
use of RINs, which are generated for the production of qualifying
renewable fuels. Obligated parties can comply by blending renewable
fuels themselves, or by purchasing the RINs that represent the
renewable fuels from other parties that perform the blending. There
are different ``D'' codes representing the different RFS standards
that the various renewable fuels can be used to comply with. (e.g.,
D3 represents cellulosic biofuel that can be used to comply with the
cellulosic biofuel standard.) RINs can be used to demonstrate
compliance for the year in which they are generated or the
subsequent compliance year. Obligated parties can obtain more RINs
than they need in a given compliance year, allowing them to ``carry
over'' these excess RINs for use in the subsequent compliance year,
although our regulations limit the use of these carryover RINs to 20
percent of the obligated party's RVO. For the bank of carryover RINs
to be preserved from one year to the next, individual carryover RINs
are used for compliance before they expire and are essentially
replaced with newer vintage RINs that are then held for use in the
next year. For example, vintage 2020 carryover RINs must be used for
compliance in 2021, or they will expire. However, vintage 2021 RINs
can then be ``banked'' for use in 2022.
\92\ 40 CFR 80.1427(a)(5).
\93\ 40 CFR 80.1427(b).
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In addition, in reviewing the implementation of the program, we
recognize the difference between the ability of retroactive versus
prospective volume requirements to affect renewable fuel use. As we
explained in Section II, we anticipate that the 2020 and 2021 standards
will be largely retrospective, while the 2022 standards will be
prospective. In this section, we explain that we do not expect the
retroactive 2020 and 2021 standards to significantly affect renewable
fuel use in 2020 and 2021, respectively, but we do expect the
prospective 2022 standards to significantly affect renewable fuel use
in 2022. Given this dynamic, we generally believe that higher renewable
fuel volumes should occur in 2022 as opposed to 2020 or 2021.\94\
---------------------------------------------------------------------------
\94\ We further discuss our review of the implementation of the
program throughout the preamble and DRIA, especially in Chapter 1 of
the DRIA.
---------------------------------------------------------------------------
A. Treatment of Carryover RINs
Consistent with our approach in recent annual rules, we have also
considered the availability and role of carryover RINs in setting the
volume requirements for 2020, 2021, and 2022. In general, we have
authority to consider the size of the carryover RIN bank in deciding
whether and to what extent to exercise any of our discretionary waiver
authorities.\95\ EPA's approach to the consideration of carryover RINs
in exercising our cellulosic waiver authority was affirmed in Monroe
Energy and ACE.\96\
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\95\ These discretionary waiver authorities include the reset
and set authorities, CAA section 211(o)(7)(F) and 211(o)(2)(B)(ii)
(both of which allow EPA to establish RFS volumes based upon a
``review of the implementation of the program''), discretionary
portion of the cellulosic waiver authority, CAA section
211(o)(7)(D)(i) (``the Administrator may also reduce the applicable
volume of renewable fuel and advanced biofuels requirement''), the
general waiver authority, CAA section 211(o)(7)(A) (``The
Administrator . . . may waive the requirements''), and the BBD
waiver authority with regard to the extent of the reduction in the
BBD volume, CAA section 211(o)(7)(E)(ii) (``the Administrator . . .
shall issue an order to reduce . . . the quantity of biomass-based
diesel . . . by an appropriate quantity'').
\96\ Monroe Energy v. EPA, 750 F.3d 909 (D.C. Cir. 2014); ACE,
864 F.3d at 713.
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As noted in past RFS annual rules, carryover RINs are a
foundational element of the design and implementation of the RFS
program.\97\ A bank of carryover RINs is extremely important in
providing a liquid and well-functioning RIN market upon which success
of the entire program depends, and in providing obligated parties
compliance flexibility in the face of substantial uncertainties in the
transportation fuel marketplace.\98\ Carryover RINs enable parties
``long'' on RINs to trade them to those ``short'' on RINs instead of
forcing all obligated parties to comply through physical blending.
Carryover RINs also provide flexibility in the face of a variety of
unforeseeable circumstances that could limit the availability of RINs
and reduce spikes in compliance costs, including weather-related damage
to renewable fuel feedstocks and other circumstances potentially
affecting the production and distribution of renewable fuel.
---------------------------------------------------------------------------
\97\ See, e.g., 72 FR 23904 (May 1, 2007).
\98\ See 80 FR 77482-87 (December 14, 2015), 81 FR 89754-55
(December 12, 2016), 82 FR 58493-95 (December 12, 2017), 83 FR
63708-10 (December 11, 2018), 85 FR 7016 (February 6, 2020).
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Just as the economy as a whole is able to function efficiently when
individuals and businesses prudently plan for unforeseen events by
maintaining inventories and reserve money accounts, we believe that the
RFS program is able to function when sufficient carryover RINs are held
in reserve for potential use by the RIN holders themselves, or for
possible sale to others that may not have established their own
carryover RIN reserves. Were there to be too few RINs in reserve, then
even minor disruptions causing shortfalls in renewable fuel production
or distribution, or higher than expected transportation fuel demand
(requiring greater volumes of renewable fuel to comply with the
percentage standards that apply to all volumes of transportation fuel,
including the unexpected volumes) could result in deficits and/or
noncompliance by parties without RIN reserves. Because carryover RINs
are individually and unequally held by market participants, a small RIN
bank may negatively impact the RIN market, even where the market
overall could satisfy the standards. Consequently, were market
disruptions to occur with an insufficient carryover RIN bank, it could
force the need for a new waiver of the standards, undermining the
market certainty so critical to the RFS program. For all of these
reasons, the collective carryover RIN bank provides a necessary
programmatic buffer that both facilitates individual compliance,
provides for smooth overall functioning of the program to the benefit
of all market
[[Page 72455]]
participants, and is consistent with the statutory provision allowing
for the generation and use of credits. We anticipate that the carryover
RIN bank will serve this very purpose for compliance with the 2019
standards, when actual biofuel use in that year is expected to have
fallen short of the RFS standards.\99\
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\99\ EPA extended the 2019 compliance deadline for small
refineries to November 30, 2021. See 86 FR 17073 (April 1, 2021). We
have proposed to further extend that deadline in a separate action
(86 FR 67419, November 26, 2021).
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EPA can also rely on the availability of carryover RINs to support
ambitious volumes that may not be able to be met with renewable fuel
production and use in that year, and in the context of the 2013 RFS
rulemaking we noted that an abundance of carryover RINs available in
that year, together with possible increases in renewable fuel
production and import, justified maintaining the advanced and total
renewable fuel volume requirements for that year at the levels
specified in the statute.\100\
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\100\ 79 FR 49793-95 (August 15, 2013).
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1. Carryover RIN Bank Size
We project a significant drawdown in the number of carryover RINs
as a result of compliance with the 2019 standards. After compliance
with the 2019 RFS standards, we project that there will be
approximately 1.85 billion total carryover RINs available, a decrease
of 1.62 billion RINs from the previous estimate of 3.48 billion total
carryover RINs in the 2020 final rule.\101\ Since we are proposing to
set both the 2020 and 2021 volume requirements at the actual volume of
renewable fuel produced in those years, we project that 1.85 billion
total carryover RINs would be available for compliance with the 2022
standards as well.
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\101\ The calculations performed to estimate the size of the
carryover RIN bank can be found in the memorandum, ``Carryover RIN
Bank Calculations for 2020-2022 Proposed Rule,'' available in the
docket for this action.
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However, there remains considerable uncertainty surrounding the
ultimate number of carryover RINs that will be available for compliance
with the 2020, 2021, and 2022 standards for several reasons, including
the possibility of SREs and the fact that compliance with the 2019
standards has not yet occurred for all parties. Furthermore, as
discussed in Section V, our proposed response to the remand of the 2016
rulemaking may reduce the total number of carryover RINs by up to 250
million RINs in 2022 (and up to another 250 million RINs in 2023).
Finally, we note that there have been enforcement actions in past years
that have resulted in the retirement of carryover RINs to make up for
the generation and use of invalid RINs and/or the failure to retire
RINs for exported renewable fuel. Future enforcement actions could have
similar results and require that obligated parties or renewable fuel
exporters settle past enforcement-related obligations in addition to
complying with the annual standards. In light of these uncertainties,
the net result could be a total carryover RIN bank larger or smaller
than 1.85 billion RINs.
2. EPA's Decision Regarding the Treatment of Carryover RINs
We evaluated the volume of carryover RINs projected to be available
and considered whether we should intentionally draw down the carryover
RIN bank in setting the 2020, 2021, and 2022 volume requirements. We do
not believe that would be appropriate. As described above, the current
bank of carryover RINs provides an important and necessary programmatic
and cost spike buffer that will both facilitate individual compliance
and provide for smooth overall functioning of the program. We believe
that a balanced consideration of the possible role of carryover RINs in
achieving the statutory volumes for cellulosic biofuel, advanced
biofuel, and total renewable fuel, versus maintaining an adequate bank
of carryover RINs for important programmatic functions, is appropriate
when EPA exercises its discretion under its statutory authorities.
Furthermore, as noted earlier, after compliance with the 2019
standards, we project that there will be a significant drawdown in the
number of carryover RINs. The advanced biofuel and total renewable fuel
standards we are proposing for 2022, moreover, are significantly higher
than the volume of renewable fuel used in previous years, as well as
the volume of renewable fuel expected to be used in 2020 and 2021. As
we explain further in Sections III and V, it may be challenging for the
market to satisfy the 2022 annual standards and the 2022 supplemental
standard entirely with renewable fuel use in 2022. Given this, the
projected shortfall in RIN generation in 2019, and the uneven holding
of carryover RINs among obligated parties, we expect that further
increasing the standards with the intent to draw down the carryover RIN
bank would lead to significant deficit carryovers and potential non-
compliance by some obligated parties that own relatively few or no
carryover RINs. We do not believe this is an appropriate outcome.
Therefore, consistent with the approach we have taken in previous
annual rules, we are not proposing to set the 2020, 2021, and 2022
volume requirements at levels that would intentionally draw down in the
bank of carryover RINs.
As noted above, it is possible the size of the RIN bank may be
different than our projection. Regardless, however, we do not believe
an intentional drawdown of the carryover RIN bank would be appropriate
for many of the reasons stated above. The carryover RIN bank would
continue to be an important compliance flexibility for obligated
parties. Moreover, the standards we are proposing for 2022, along with
the 2022 supplemental standard, are forward leaning and if the
projected growth in renewable fuel volumes do not materialize would
lead to a drawdown of the carryover RIN bank.
3. Consideration of Cellulosic Carryover RINs
In comments on the 2020 proposed rule and supplemental proposal,
several parties suggested that EPA prospectively establish the
cellulosic biofuel volume at the volume projected to be supplied plus
the volume of available carryover RINs from the prior year.\102\ That
is, these parties argued that EPA should set the cellulosic biofuel
volume at a level that would intentionally eliminate the entire
cellulosic carryover RIN bank. Because EPA established volumes solely
under the cellulosic waiver authority that year, those parties focused
their arguments on a legal interpretation of that provision, asserting
that it required or allowed EPA to include, in its projection of the
available volume, cellulosic carryover RINs that are projected to be
available for compliance.
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\102\ For example, see comments from the Coalition for Renewable
Natural Gas (EPA-HQ-OAR-2019-0136-0723) and AJW and Iogen (EPA-HQ-
OAR-2019-0136-0467).
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Section 211(o)(7)(D)(i) of the CAA requires EPA to set the
applicable volume of cellulosic biofuel at the ``projected volume
available during [the] calendar year.'' EPA has consistently
interpreted the statutory phrase ``projected volume available'' to
refer to the volume of qualifying cellulosic biofuel projected to be
produced or imported and available for use as transportation fuel in
the U.S. in that year. This is equivalent to the projected number of
cellulosic RINs generated in the year that are available for obligated
parties to use for compliance. Since we first exercised the cellulosic
waiver authority in the 2010 annual rule, we have never included
carryover cellulosic RINs in this projection.
Parties that requested that EPA include carryover RINs in our
projection of the available volume of cellulosic biofuel generally
argued that despite the
[[Page 72456]]
continued rapid growth in cellulosic biofuel volumes, excess carryover
cellulosic RINs in 2018 and 2019 resulted in low cellulosic RIN prices,
which in turn may have negatively affected investment in cellulosic
biofuel production. They further claimed that by including carryover
RINs in the projected volume available, EPA would ensure that there was
a strong market for cellulosic biofuel and cellulosic biofuel RINs in
years when cellulosic biofuel production exceeded the number of
cellulosic biofuel RINs needed by obligated parties for compliance.
Commenters stated that this increased market certainty would result in
increased investment in cellulosic biofuel production and ultimately
increased cellulosic biofuel production. One commenter suggested that
in conjunction with adding projected carryover RINs to the projected
production volume of cellulosic biofuel when establishing the
cellulosic biofuel volume, EPA could also subtract any projected
deficits to account for years when cellulosic biofuel production falls
short of EPA's projected production volume.\103\
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\103\ See comment from AJW and Iogen (Docket Item No. EPA-HQ-
OAR-2019-0136-0467).
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In our response to these comments in the 2020 final rule,\104\ we
disagreed with parties who claimed that the statutory language of the
cellulosic waiver authority requires EPA to include carryover RINs in
establishing the required volume of cellulosic biofuel. The statutory
term ``projected volume available'' does not directly address the topic
of carryover RINs. Indeed, the cellulosic waiver provision, CAA section
211(o)(7)(D)(i), does not mention carryover RINs at all, or otherwise
refer to the statutory basis for such RINs, CAA section 211(o)(5).
Thus, we believe there are multiple reasonable interpretations of this
ambiguous statutory provision, including both the interpretation put
forward by the stakeholders as well as the interpretation adopted by
EPA in previous years.
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\104\ See Section 3.3 of the Response to Comments document for
the 2020 final rule (EPA-420-R-19-018, December 2019).
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We further stated that the interpretation EPA adopted in previous
years struck an appropriate balance between the interests of the
cellulosic producers, those obligated to purchase and use cellulosic
biofuels and cellulosic biofuel RINs, and consumers; and best ensured
the ongoing smooth implementation of the RFS program.\105\ Finally,
since the 2020 proposed rule did not raise the possibility of including
cellulosic carryover RINs in the projected volume available, we did not
think it would be appropriate to make such a change without first
giving all stakeholders an opportunity to comment.
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\105\ See Chevron USA, Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984).
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We are now providing stakeholders notice and opportunity for
comment in this proposal on whether to include cellulosic carryover
RINs as part of the projected volume available. With respect to the
volumes in this rule, were we to include cellulosic carryover RINs, it
would increase the 2020 cellulosic biofuel volume by 40 million gallons
over the currently proposed volume.\106\ It would not affect the 2021
and 2022 cellulosic biofuel volumes, since we are establishing the
cellulosic biofuel volumes based on actual supply for 2020 and 2021,
and therefore at this time we do not project that excess RINs will be
generated for carryover into 2021 or 2022.\107\
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\106\ The calculations performed to estimate the number of
cellulosic carryover RINs can be found in the memorandum,
``Carryover RIN Bank Calculations for 2020-2022 Proposed Rule,''
available in the docket for this action.
\107\ We acknowledge of course that our projections of the
available volume of cellulosic biofuel are inherently uncertain, and
that there may be more or fewer cellulosic RINs generated in 2020
and 2021 than what we project. However, at the time of this rule, we
have done our best to take neutral aim at accuracy of the projected
volume available.
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While we acknowledge that some aspects of the cellulosic category
(such as the cellulosic waiver authority and the cellulosic waiver
credits) \108\ are unique, at this time we believe the benefits of
carryover RINs, discussed in Section IV.A, also apply to cellulosic
carryover RINs. Adding carryover RINs to the volume projected to be
produced would effectively guarantee that the demand for these RINs was
always equal to the overall market supply and would likely result in
cellulosic RIN prices at or near the price of an advanced biofuel RIN
plus the price of a cellulosic waiver credit in future years. While
raising prices would increase revenue for cellulosic biofuel producers,
it may also increase the price of cellulosic biofuel. These higher
prices would be passed on to consumers, who ultimately bear these
costs.
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\108\ Cellulosic waiver credits may be purchased from EPA by
obligated parties in years when EPA uses the cellulosic waiver
authority to reduce the statutory volumes of cellulosic biofuel.
Regulations related to cellulosic waiver credits can be found in 40
CFR 80.1456.
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We also note that the legal arguments made by the previous
commenters, while still relevant, are less so in the context of this
rulemaking. The prior comments focused on an interpretation of the
cellulosic waiver authority. In this rulemaking, however, we are
concurrently exercising both our cellulosic waiver and reset
authorities. Under the reset authority, we have broad discretion to
establish volumes, including cellulosic biofuel volumes lower than the
volume required under the cellulosic waiver. Thus, regardless of
whether the prior commenters are correct about EPA's legal authority
under the cellulosic waiver, we have legal authority under reset to
establish volumes at actual supply, excluding any carryover RINs. At
the same time, however, the cellulosic waiver authority establishes the
ceiling for cellulosic biofuel volumes. If we agree with the commenters
that the cellulosic waiver mandates or allows volumes at supply plus
carryover RINs, then we may establish cellulosic biofuel volumes up to
that level. Thus, although the legal framework has changed somewhat
since the comments were submitted, their arguments remain relevant, and
EPA is soliciting comment on this issue.
B. Ability for the RFS Volumes To Impact Renewable Fuel Supply
In developing the proposed volume requirements, we considered the
timing of this action and its ability to impact renewable fuel
production, imports, and use. Since only prospective requirements have
a significant chance of affecting actual renewable fuel use, we are
proposing to require higher volumes for 2022. Imposing higher volumes
for 2020 or 2021, in contrast, would have no effect on demand for fuels
in those years. By contrast, retroactively requiring volumes higher
than what the market has actually supplied could create market
disruption and thus interfere with program implementation without
advancing program goals. Setting 2020 and 2021 volumes at those
actually supplied reflects the fact that we are acting retroactively,
while in requiring higher volumes for 2022 we are setting prospective
obligations.
With respect to 2020, that year has already passed, so our
retroactive revision of the RFS volumes cannot affect the production or
use of renewable fuels in 2020 or consequently the statutory reset
factors (e.g., the impacts of the use of renewable fuels on cost, the
environment, and so forth). Any actual market effects will be felt
after the rule is promulgated and mediated through the carryover RIN
bank.
With respect to 2021, there will not be sufficient time for the
market to respond to the volumes that we finalize for 2021. The market
may also respond in a more limited fashion to this proposed rule.
[[Page 72457]]
Regardless, any impact on the production, import, and use of renewable
fuel in 2021 is likely to be limited, and therefore the ability for
this rule to affect the statutory factors is likewise limited.
The situation for 2022, however, is different. The RFS standards
for 2022 will be in place throughout 2022 and should be able to affect
market decisions for renewable fuel production, import, and use in
2022, albeit still within the bounds of the lead time available.
Similarly, the ability for this action to affect the statutory factors
in 2022 will be significantly greater than in 2021 or 2020. Thus, we
believe that increased renewable fuel requirements should be imposed in
2022, when this rule has a much greater chance of actually increasing
renewable fuel use and production, as opposed to 2020 or 2021.
Conversely, there are also disadvantages to requiring higher
volumes for 2020 and 2021 retroactively, or similarly, to maintaining
the 2020 standards in the original final rule. Notably, such higher
volumes would cause some combination of a drawdown of the carryover RIN
bank, carryforward deficits, or non-compliance by obligated parties.
While we have previously found an intentional drawdown of the carryover
RIN bank to be appropriate in one case, we do not think that this is
appropriate in this situation for reasons we describe below. We also do
not think that intentionally relying on or effectively compelling
carryforward deficits or intentionally causing non-compliance is
generally appropriate.
Given the drastic shortfall in renewable fuel use relative to what
we projected in the 2020 final rule as discussed in Section III.B,
compliance with the original 2020 standards would likely result in a
significant drawdown in the number of carryover RINs available for use
in 2021 and 2022. As discussed in Section IV.A.1, we currently project
that as a result of compliance with the 2019 RFS standards, the number
of carryover RINs available for compliance with the 2020 standards will
be approximately 1.85 billion RINs, a considerable drop from the 3.48
billion total carryover RINs we projected in the 2020 final rule. We
expect that as a result of revising the 2020 standards to equal the
actual volume of renewable fuels consumed, the number of carryover RINs
available for compliance with the 2021 and 2022 standards will remain
at 1.85 billion RINs. Were we not to modify the 2020 standards, we
anticipate that the total number of carryover RINs available for
compliance with the 2021 and 2022 standards would decrease dramatically
to 630 million RINs, or less than 4 percent of the proposed 2021 and
2022 total renewable fuel standards.\109\ This would be the lowest
quantity of carryover RINs available since EPA began projecting the
size of the carryover RIN bank in 2013, and the relatively small
carryover RIN bank could increase the risk of disruptions in the RIN
trading market. A number of obligated parties would also likely have to
carry deficits into 2022, fail to comply with the 2021 total renewable
fuel standard if they had already carried a deficit forward from 2020,
or similarly fail to comply with the 2022 total renewable fuel
standard.\110\
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\109\ The calculations performed to project the number of
carryover RINs that would be available if we did not revise the 2020
standards can be found in the memorandum, ``Carryover RIN Bank
Calculations for 2020-2022 Proposed Rule,'' available in the docket
for this action.
\110\ The regulations at 40 CFR 80.1427(b) allows obligated
parties to only carry forward a deficit if they did not carry
forward a deficit from the previous calendar year; thus, an
obligated party that carries forward a deficit from 2020 into 2021
may not carry forward a deficit from 2021 into 2022.
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If these compliance difficulties occur, we believe that the harms
would not just be felt by directly affected obligated parties but also
extend to the entire fuels market and the RFS program. Notably, if
insufficient RINs are available to obligated parties to meet their
compliance obligations, that could negatively impact the regulatory and
market certainty critical to the investments needed to increase
renewable fuel volumes in 2022 and into the future. This could in turn
diminish the expected future rate of production of renewable fuels,
impair the development of infrastructure to distribute and use
increased volumes of such fuels, and reduce the expected energy
security, job creation, and rural economic benefits associated with
higher renewable fuel use and production. Reduced business certainty
could also deter the commercialization of novel advanced biofuels,
which have the potential for lower costs and superior environmental
benefits.
Retroactively reducing the 2020 volumes mitigates these concerns.
Specifically, our proposal to reduce the 2020 volumes to those actually
supplied preserves an estimated carryover RIN bank of 1.85 billion RINs
for use in 2021 and establishing the 2021 volumes at those actually
supplied preserves the same estimated carryover RIN bank for compliance
with the relatively aggressive 2022 standards.
We note lesser reductions to 2020 or 2021 would give rise to the
same concerns. The magnitude of those concerns would depend on how high
the resulting volumes are. We think that some of these concerns,
moreover, would remain even were we to make offsetting reductions to
the 2022 volumes (e.g., were we to increase the proposed 2021 volumes
by 500 million gallons and decrease the proposed 2022 volumes by the
same amount). In that case, even though the aggregate incentive for
renewable fuels across all three years might remain the same,
retroactively requiring compliance for past years would be more likely
to lead more RIN bank drawdowns, carryforward deficits, and non-
compliance, and less likely to lead to actual increases in renewable
fuel use and production.
In sum, in proposing the 2020, 2021, and 2022 volumes, we recognize
the interconnected nature of the RFS annual volume requirements. We
believe that the volume should reflect both a desire to provide the
necessary incentives for significant growth in renewable fuel
production and use and our obligation to consider and mitigate the
burdens on obligated parties associated with a retroactive rulemaking.
In general, this indicates that required growth in renewable fuel use
should occur prospectively in 2022, as opposed to retroactively in 2020
and 2021. We request comment on how EPA should consider the carryover
RIN bank in establishing RFS volume obligations.
V. Response to ACE Remand
In addition to proposing the applicable volume requirements and
percentage standards for 2020, 2021, and 2022, in this rulemaking we
are also proposing to address the remand of the 2014-2016 annual rule
\111\ by the U.S. Court of Appeals for the D.C. Circuit in ACE.\112\ In
the 2020 proposal, we proposed to address the D.C. Circuit's remand by
retaining the original 2016 total renewable fuel standard.\113\ We
received many comments both in support of and against this
approach.\114\ In the 2020 final rule, we deferred taking action in
response to the remand.\115\ We now believe that we should address the
remand through supplemental renewable fuel volume requirements totaling
500 million gallons spread over two years. We are proposing a
supplemental renewable fuel obligation of 250 million gallons to be
applied in 2022 coupled with the intention of proposing an additional
250
[[Page 72458]]
million gallon supplemental standard in a subsequent action for 2023.
We propose to establish the supplemental total renewable fuel volume
requirement and the corresponding percentage standard for 2022 in this
rulemaking. This section describes the relevant aspects of the 2014-
2016 annual rule, the court's decision, EPA's responsibilities
following the court's remand, and our proposed approach.
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\111\ 80 FR 77420 (December 14, 2015).
\112\ 864 F.3d 691 (2017).
\113\ 84 FR 36762 (July 29, 2019).
\114\ See Docket No. EPA-HQ-OAR-2019-0136.
\115\ 85 FR 7016 (February 6, 2020).
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A. Reevaluating the 2014-2016 Annual Rule
1. The 2016 Renewable Fuel Standard
On December 14, 2015, we promulgated a rulemaking establishing the
volume requirements and percentage standards for 2014, 2015, and
2016.\116\ In establishing those standards for 2016, we utilized the
cellulosic waiver authority under CAA section 211(o)(7)(D) to lower the
cellulosic biofuel, advanced biofuel, and total renewable fuel volume
requirements, and the general waiver authority under CAA section
211(o)(7)(A) to lower total renewable fuel by an additional
increment.\117\
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\116\ 80 FR 77420. The rule also established BBD volumes for
2017.
\117\ 80 FR 77439.
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As an initial step, under CAA section 211(o)(7)(D), we lowered the
cellulosic biofuel volume requirement by 4.02 billion gallons, to the
projected production of cellulosic biofuel for 2016, as required by the
statute.\118\ Using that same authority, we then elected to reduce the
advanced biofuel and total renewable fuel volumes. We did not reduce
the advanced biofuel volume requirement by the full 4.02 billion
gallons that was permitted under this authority, but rather by a lesser
3.64 billion gallons that resulted in an advanced biofuel volume
requirement that was ``reasonably attainable.'' \119\ This allowed some
advanced biofuel to ``backfill'' for the shortfall in cellulosic
biofuel. We then reduced the total renewable fuel volume by an amount
equivalent to the reduction in advanced biofuel in accordance with our
longstanding interpretation that when making reductions to advanced
biofuel and total renewable fuel under CAA section 211(o)(7)(D), the
best reading of the statute is to reduce them both by the same
amount.\120\
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\118\ See 80 FR 77499.
\119\ 80 FR 77427.
\120\ Id.
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As a second step, under CAA section 211(o)(7)(A), under a finding
of inadequate domestic supply, we further lowered the total renewable
fuel standard by 500 million gallons for 2016.\121\ In assessing
``inadequate domestic supply,'' we considered the availability of
renewable fuel to consumers. Based on such demand-side considerations,
we made the additional 500 million gallon reduction in the total
renewable fuel requirement.
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\121\ 80 FR 77444.
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The 2016 total renewable fuel standard was challenged in court. In
an opinion issued on July 28, 2017, the D.C. Circuit vacated our use of
the general waiver authority under a finding of inadequate domestic
supply to reduce the 2016 total renewable fuel standard, the second
step of setting the 2016 total renewable fuel standard.\122\ The court
in ACE held that we had improperly focused on supply of renewable fuel
to consumers, and that the statute instead requires a ``supply-side''
assessment of the volumes of renewable fuel that can be supplied to
refiners, blenders, and importers.\123\ Other components of our
interpretation of ``inadequate domestic supply'' were either upheld by
the court in ACE (e.g., EPA need not consider carryover RINs as a
``supply source of renewable fuel for purposes of determining the
supply of renewable fuel in a given year'') or were not challenged
(e.g., our consideration of biofuel imports as part of the domestic
supply). Our use of the cellulosic waiver authority to provide the
initial reduction in total renewable fuel was also upheld by the court.
In establishing volume requirements for subsequent years, EPA has
applied the court's holding and not proposed to reduce volumes under a
finding of inadequate domestic supply.\124\
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\122\ ACE, 864 F.3d 691.
\123\ Id. at 696.
\124\ We note that the precedential effect of the ACE decision
has governed subsequent RFS annual rules. Compare, e.g., 82 FR 34229
& n.82 (July 21, 2017) (2018 annual rule proposal, issued prior to
ACE) (soliciting comment on whether it would be appropriate to
exercise the inadequate domestic supply waiver authority based on
the maximum reasonably achievable volume'' of renewable fuel, which
incorporates demand-side considerations), with 82 FR 46177 (Oct. 4,
2017) (2018 annual rule availability of supplemental information and
request for comment, issued after ACE) (recognizing, under ACE, that
EPA may not consider demand-side constraints in determining
inadequate domestic supply).
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2. Agency Responsibility
The court in ACE upheld our volume requirements for advanced
biofuel, BBD, and cellulosic biofuel; there is, therefore, no need for
the agency to adjust those 2016 final volume requirements, or to take
further action with regard to these standards in light of the court's
decision. The court also upheld EPA's use of the cellulosic waiver
authority to reduce the 2016 total renewable fuel volume requirement.
The court only vacated our decision to further reduce that requirement
under the ``inadequate domestic supply'' waiver authority, remanding
this issue to the Agency for further consideration consistent with the
court's opinion.\125\ Our obligation is thus to reevaluate the 2016
total renewable fuel volume requirement in accordance with the court's
decision.
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\125\ Id. at 703.
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B. Consideration of Approaches for Responding to the ACE Remand
As discussed in the previous section, we waived 500 million gallons
of total renewable fuel volume associated with the 2016 volume
requirements. In 2017, after the compliance year had passed, and after
obligated parties had complied with those requirements, we received the
ACE court's decision rejecting our use of the general waiver authority
under a finding of inadequate domestic supply to reduce volumes as
being beyond our statutory authority, and remanded the rulemaking
action back to EPA. In this action, we propose to address the court's
remand through a supplemental standard of 250 million gallons of total
renewable fuel in 2022, with the intent of proposing an additional
supplemental volume of 250 million gallons of renewable fuel to be
required in 2023 in a subsequent action. As the court invalidated only
the 500 million gallon total renewable fuel reduction, we therefore
would limit our response to the remand to only the 2016 total renewable
fuel standard and the corresponding 500 million gallon reduction
stemming from our use of the general waiver authority. As the total
renewable fuel volume is the outermost standard in the nested renewable
fuel standards, this approach would not affect the other standards.
1. Proposed Response to the ACE Remand
We are proposing to address the ACE decision by applying a
supplemental standard of 250 million gallons in 2022 with the intention
of proposing an additional 250-million-gallon supplemental standard in
a subsequent action for 2023. Under this approach, the original 2016
standard for total renewable fuel would remain unchanged and the
compliance demonstrations that obligated parties made for it would
likewise remain in place. A supplemental standard would thus avoid the
difficulties associated with reopening 2016 compliance, as discussed
below. This proposed supplemental standard would have the
[[Page 72459]]
same practical effect as increasing the 2022 total renewable fuel
volume requirement by 250 million gallons, as compliance would be
demonstrated using the same RINs as used for the 2022 standard. The
percentage standard for the supplemental standard would be calculated
the same way as the 2022 percentage standards (i.e., using the same
gasoline and diesel projections), such that the supplemental standard
would be additive to the 2022 total renewable fuel percentage standard.
The proposed approach would provide a meaningful remedy in response to
the court's vacatur and remand in ACE and would effectuate the
Congressionally determined renewable fuel volume for 2016, modified
only by the proper exercise of EPA's waiver authorities, as upheld by
the court in ACE. It is with emphasis on these considerations that we
are proposing a different approach from the one proposed in the 2020
proposal.\126\
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\126\ See FCC v. Fox, 556 U.S. 502 (2009), acknowledging an
agency's ability to change policy direction.
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We propose to treat such a supplemental standard as a supplement to
the 2022 standards, rather than as a supplement to standards for 2016,
which has passed. In order to comply with any supplemental standard,
obligated parties would need to retire available RINs; it is thus
logical to require the retirement of available RINs in the marketplace
at the time of compliance with this supplemental standard. As discussed
below, there are insufficient 2015 and 2016 RINs currently available to
meet a supplemental 2016 standard, and additional 2015 or 2016 RINs
cannot be generated. By applying the supplemental standard to 2022
instead of 2016, RINs generated in 2021 and 2022 could be used to
comply with the 2022 supplemental standard.
In applying the supplemental standard to 2022, we would treat the
supplemental standards like a 2022 standard in all respects. That is,
producers and importers of gasoline and diesel that are subject to the
2022 standards would also be subject to the supplemental standard. The
applicable deadlines for attest engagements and compliance
demonstrations that apply to the 2022 standards would also apply to the
supplemental standard. The gasoline and diesel volumes used by
obligated parties to calculate their obligation would be their 2022
gasoline and diesel production or importation. Additionally, obligated
parties could use 2021 RINs for up to 20 percent of their 2022
supplemental standard.
As described more fully in Section III, the proposed volume
requirements for 2022 are forward leaning, requiring a growth in
renewable fuel volumes that we believe is achievable. We also believe
that compliance with the 2022 supplemental standard in addition to the
proposed standards for 2022 is feasible. If it cannot be fully met
through the supply of additional renewable fuel volumes in 2022, it
could be met through a drawdown of the carryover RIN bank.\127\ After
compliance with the 2019 standards, the carryover RIN bank is expected
to consist of approximately 1.85 billion total carryover RINs for
compliance in 2022 as discussed in Section IV.A.\128\ We acknowledge
that the size of the carryover RIN bank may change by the time this
action is finalized. However, given the projected size of the carryover
RIN bank, we think it is very likely that more than 250 million total
carryover RINs will be available in 2022 for compliance with the
supplemental standard, enabling the market to meet the supplemental
standard entirely with carryover RINs, if necessary.
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\127\ See Section IV.A for a discussion of carryover RINs.
\128\ The calculations performed to estimate the number of
carryover RINs currently available can be found in the memorandum,
``Carryover RIN Bank Calculations for 2020-2022 Proposed Rule,''
available in the docket for this action.
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We believe that the potential drawdown of the carryover RIN bank by
250 million RINs is appropriate. As we stated in the 2020 final rule,
``[t]he current bank of carryover RINs provides an important and
necessary programmatic and cost spike buffer that will both facilitate
individual compliance and provide for smooth overall functioning of the
program.'' \129\ As discussed in Section IV.A, we continue to believe
that a significant carryover RIN bank is fundamental to the
functionality and success of the RFS program. Therefore, we are
reluctant to take potentially counterproductive actions which would
force any significant drawdown of its volume. However, we believe that
the important programmatic benefits of the carryover RIN bank would be
preserved even if the market were to satisfy the supplemental standard
purely by drawing down the carryover RIN bank. It is important to note
that we would only be reducing the carryover RIN bank by up to 250
million RINs per year due to the phased-in nature of our response.
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\129\ 85 FR 7020-22 (February 6, 2020).
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By phasing in the 500 million gallons of total renewable fuel
associated with the ACE remand through the implementation of two
supplemental standards over two compliance years we believe we can
maintain the functionality of the carryover RIN bank and lessen both
the disruption to the market and the burden on obligated parties.
Imposing two 250 million gallon standards in two compliance years, as
opposed to one 500 million gallon supplemental standard in a single
compliance year, provides additional notice for both obligated parties
and the renewable fuel industry about the additional volume
requirements and lessens the additional requirements for each
compliance year. This could increase the likelihood that the volumes
are met with additional renewable fuel use and, in turn, lessen the
likelihood that the carryover RIN bank be drawn down.
In summary, we are proposing to implement a 250 million gallon
supplemental volume requirement in 2022 and intend to propose an
additional 250 million gallon supplemental volume requirement in 2023,
totaling 500 million gallons, that represent the reduction in the 2016
total renewable fuel volume improperly waived under the general waiver
authority. This approach would address our obligation to respond to the
ACE remand while accounting for the unique timing of imposing a 2016
requirement in 2022. Importantly, because there are insufficient 2015
and 2016 RINs to satisfy a supplemental standard, this approach would
allow obligated parties to comply with the 2022 supplemental standard
using 2021 and 2022 RINs. We seek comment on this approach of applying
a supplemental standard for 2022 associated with the ACE remand on top
of the proposed standards for 2022.
2. Reopening 2016 Compliance
In the alternative, we considered an approach where EPA could have
obligated parties comply with a modified 2016 total renewable fuel
standard that requires an additional 500 million gallons of renewable
fuel relative to the 2016 standard promulgated in 2015. However, we
have determined that such an approach would be impractical if not
infeasible to implement. Under our current regulations, only 2015 and
2016 RINs can be used to demonstrate compliance with the 2016
standard.\130\ There are far fewer 2015 and 2016 RINs available today
(i.e., RINs that are valid but have not already been retired to comply
with the 2015, 2016, or 2017 standards) than would be needed to comply
with a supplemental standard commensurate
[[Page 72460]]
with our exercise of the general waiver authority for 2016 (i.e., 500
million gallons).\131\ Additionally, the few 2015 and 2016 RINs
available are unevenly held among obligated parties; because of the
small number of RINs, any parties that held excess 2015 and 2016 RINs
could attempt to sell them at a high price, creating dysfunction within
the RIN market. These high prices would create a burden on obligated
parties without providing any incentive for additional renewable fuel
use in 2016 since that year has already passed. Because this approach
would result in some parties being in noncompliance, we do not consider
this a viable option to respond to the court's remand.
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\130\ 40 CFR 80.1427(a).
\131\ RINs have a 2-year lifespan. Based on EMTS data, 29
million 2016 RINs are still being held in obligated party accounts.
Although these RINs still show up in the database as ``available,''
it is likely that many of these RINs are not actually valid. This
simply means that these RINs have not been retired by obligated
parties as the compliance year has passed and they are expired.
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As we have stated in the past, we believe the burdens associated
with altering the 2016 standard are high.\132\ To illustrate the
burdens associated with such an approach, we considered the steps that
would be required to implement a revised 2016 standard. First, we would
need to rescind the 2016 standard and promulgate a new 2016 standard.
Next, we would need to return all of the RINs used for compliance to
the original owners. Once those RINs were unretired (a process that
could take several months), trading of those RINs could resume for a
designated amount of time before retirements would again be required to
demonstrate compliance. Obligated parties could then attempt to comply
with a new, higher standard that includes an adjustment to the required
total renewable fuel volume to address the ACE decision. However,
simply unretiring 2016 RINs would not result in sufficient RINs for
compliance with the higher standard. Furthermore, because the suite of
obligated parties is no longer the same as it was in 2016, with some
companies no longer in business, the distribution of unretired RINs
could be perceived as unfair as well as uneven, highlighting the
complexity of attempting to go back in time.
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\132\ 84 FR 36762, 36788 (July 29, 2019).
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To remedy the insufficient 2016 RINs used for compliance with the
2016 standard, we also considered an approach where 2016 RINs used for
compliance with the 2017 standards could be unretired and used for
compliance with the increased 2016 standard, but this would essentially
also reopen 2017 compliance, with cascading impacts on each subsequent
year's compliance. Reopening compliance would impose a significant
burden on both obligated parties and EPA as described above. Moreover,
stakeholders have expressed strong desires for consistent compliance
requirements on an annual basis. Having compliance demonstrations for
the prior year complete before requiring compliance with the subsequent
year is considered essential to allow obligated parties to properly
account for the vintage of the various RINs in their holdings as they
develop their compliance strategies and avoid having RINs expire.
Therefore, we do not find that it would be appropriate or reasonable to
reopen compliance with the 2016 total renewable fuel standard.
Aside from the paucity of available 2015 and 2016 RINs, applying a
supplemental standard to the 2016 compliance year would require us to
consider whether the obligated gasoline and diesel volumes used in the
calculation of the percentage standards would be derived from the
projected volumes used in the rulemaking that established the 2016
standards, or instead the actual obligated gasoline and diesel volumes
in 2016. Of these two choices, using the actual obligated gasoline and
diesel volumes would more accurately result in the full volume of the
adjustment being realized through the retirement of RINs.\133\ However,
using the actual obligated gasoline and diesel volumes for the
supplemental standard would make it inconsistent with the other 2016
standards, and call into question whether the other percentage
standards should also be revised to account for actual obligated 2016
gasoline and diesel volumes and compliance revised for all obligated
parties. We do not believe that it would be appropriate to revise the
other 2016 percentage standards when only the total renewable fuel
standard is at issue under the ACE remand. Applying the supplemental
standard to 2022 and 2023 would avoid this issue.
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\133\ The projected 2016 non-renewable gasoline volume and
diesel volume used in the rulemaking that set the 2016 standards was
179.33 billion gallons. According to EIA's May 2021 STEO, the actual
non-renewable gasoline and diesel consumption volume in 2016 was
179.16 billion gallons.
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C. Demonstrating Compliance With the 2022 Supplemental Standard
We intend to prescribe formats and procedures as specified in 40
CFR 80.1451(j) for how obligated parties would demonstrate compliance
with the 2022 supplemental standard that simplifies the process in this
unique circumstance.\134\ Although the proposed 2022 supplemental
standard would be a regulatory requirement separate from and in
addition to the 2022 total renewable fuel standard, we intend that
obligated parties would submit a single annual compliance report for
both the 2022 annual standards and the supplemental standard. Under
this intended approach, obligated parties would only report a single
number for their total renewable fuel obligation in the 2022 annual
compliance report.\135\ Obligated parties would also only need to
submit a single annual attest engagement report for the 2022 compliance
period that covers both the 2022 annual standards and 2022 supplemental
standard.\136\ If we set a 2023 supplemental standard as intended, we
would intend to use the same approach for annual compliance
demonstrations for both the 2022 and 2023 compliance periods.
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\134\ We note that we are not proposing to change the reporting
regulations at 40 CFR 80.1451(a) as we do not believe that
regulatory changes are needed to accommodate annual compliance
demonstration for the proposed 2022 supplemental standard. Any
comments suggesting changes to such reporting regulations will be
considered outside the scope of this rulemaking.
\135\ Obligated parties demonstrate annual compliance by
following the reporting instructions entitled, ``Instructions for
RFS0304: RFS Annual Compliance Report'' (RFS0304 report). A copy of
these reporting instructions is available in the docket of this
action. Under our intended approach, obligated parties would combine
the 2022 total renewable fuel standard with the 2022 supplemental
standard in ``Field 18'' of the RFS0304 report. This combined value
would then be multiplied by the obligated gasoline and diesel fuel
volume reported as specified in reporting instructions for ``Field
20'' of the RFS0304 report.
\136\ The deadline for the attest engagement reports for the
2022 compliance period is June 1, 2023, and we are not proposing to
modify that deadline in this action.
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To assist obligated parties with this unique compliance situation,
we intend to issue guidance with instructions on how to calculate and
report the values to be submitted in the 2022 compliance reports.
D. Authority and Consideration of the Benefits and Burdens
In establishing the 2016 total renewable fuel standard, EPA waived
the required volume of total renewable fuel by 500 million gallons
using the inadequate domestic supply general waiver authority. The use
of that waiver authority was vacated by the court in ACE and the rule
was remanded to the EPA. In order to remedy our improper use of the
inadequate domestic supply general waiver authority, we find that it is
appropriate to treat our authority to
[[Page 72461]]
propose a supplemental volume requirement at this time as the same
authority used to establish the 2016 total renewable fuel volume
requirement--CAA section 211(o)(3)(B)(i), which requires EPA to
establish percentage standard requirements by November 30 of the year
prior to which the standards will apply and to ``ensure'' that the
volume requirements ``are met.'' EPA exercised this authority for the
2016 standards once already. However, the effect of the ACE vacatur is
that there remain 500 million gallons of total renewable fuel from the
2016 statutory volumes that were not included under the original
exercise of EPA's authority under CAA section 211(o)(3)(B)(i).
Therefore, EPA has retained authority for the remaining 500 million
gallons. EPA also has authority under CAA section 211(o)(2)(A)(i). The
D.C. Circuit in NPRA noted Congress granted EPA authority to ``
`ensure' that `at least' the set volumes were used each year.'' \137\
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\137\ NPRA, 630 F.3d at 157.
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We have sought to mitigate the burdens of a late or retroactive
standard in part by proposing a supplemental standard that applies for
the 2022 compliance year. Although we established a total renewable
fuel standard in 2016, we did so while erroneously waiving 500 million
gallons of total renewable fuel through the use of our general waiver
authority. In this action, we are proposing to begin to remedy that
error by requiring an additional 250 million gallon total renewable
fuel volume requirement in the 2022 compliance year.\138\
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\138\ As noted earlier, we intend to propose an additional
supplemental volume of 250 million gallon for 2023 in a subsequent
action.
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As noted in Section II.C, in ACE and two prior cases, the court
upheld EPA's authority to issue late renewable fuel standards, even
those applied retroactively, so long as EPA's approach is
reasonable.\139\ EPA must consider and mitigate the burdens on
obligated parties associated with a delayed rulemaking.\140\ When
imposing a late or retroactive standard, we must balance the burden on
obligated parties of a retroactive standard with the broader goal of
the RFS program to increase renewable fuel use.\141\ The approach we
are proposing in this action would implement a late standard as
described in these cases. Obligated parties made their RIN acquisition
decisions in 2016 based on the standards as established in 2016 and
they may have made different decisions had we not reduced the 2016
total renewable fuel standard by 500 million gallons using the general
waiver authority. Were EPA to create a supplemental standard for 2016
designed to address the use of the general waiver authority in 2016, we
would be imposing a wholly retroactive standard on obligated parties,
but because the proposed supplemental standard will be complied with in
the 2022 compliance year, it will instead be a late standard. Pursuant
to the court's direction, we have carefully considered the benefits and
burdens of our approach and considered and mitigated the burdens to
obligated parties caused by the lateness.
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\139\ See ACE, 864 F.3d at 718; Monroe Energy, LLC v. EPA, 750
F.3d at 920; NPRA, 630 F.3d at 154-58.
\140\ ACE, 864 F.3d at 718.
\141\ NPRA, 630 F.3d at 154-58.
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We acknowledge that in the 2020 proposal, we stated that a
supplemental standard would ``impose a significant burden on obligated
parties'' that would ``be unduly burdensome and inappropriate'' and
lack ``any corresponding benefit as any additional standard cannot
result in additional renewable fuel use in 2016.'' \142\ We seek
comment on whether the approach described in this document mitigates
the associated burdens or even entirely avoids most of the burdens we
described in the 2020 proposal (such as those associated with allowing
only 2015 and 2016 RINs to be used for compliance). We seek comment on
whether the current size of the carryover RIN bank is sufficient to
mitigate the burden on obligated parties from a supplemental standard
as well as whether the proposal to spread the 500 million gallon volume
over two compliance years also mitigates the burdens on the carryover
RIN bank. In short, we seek comment on whether this approach would
reasonably balance the benefits and burdens and whether it would
provide appropriate and meaningful relief in response to the ACE
remand.
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\142\ 84 FR 36788 (July 29, 2019).
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We believe that the approach proposed in this action, if finalized,
could provide benefits that outweigh potential burdens. Consistent with
the 2016 renewable fuel volume established by Congress, our proposed
and intended supplemental standards for 2022 and 2023, respectively,
are in total equivalent to the volume of total renewable fuel that we
inappropriately waived for the 2016 total renewable fuel standard. The
use of these supplemental standards phased across two compliance years
would provide a meaningful remedy to the D.C. Circuit's vacatur of
EPA's use of the general waiver authority and remand of the 2016 rule
in ACE.
We have carefully considered and designed this approach to mitigate
any burdens on obligated parties. We have considered the availability
of RINs to satisfy this additional requirement. We are soliciting
comment on the feasibility of the proposed 250-million-gallon
supplemental standard in 2022. As explained earlier, there are
insufficient 2015 and 2016 RINs available to satisfy the proposed 250-
million-gallon standard.\143\ Instead, we are proposing a supplemental
volume requirement to the 2022 standards that will apply in the 2022
compliance year. Doing so would allow 2021 and 2022 RINs to be used for
compliance with the 2022 supplemental standard, in keeping with
existing RFS regulations. We believe there would be a sufficient number
of 2021 and 2022 RINs to satisfy the 2022 supplemental standard.
Although it is possible that the supplemental standard could be met
through additional renewable fuel production, we generally believe that
requiring volumes for the 2022 annual standards beyond those we are
proposing in this action results in increasing difficulty in the
standards being met through additional renewable fuel production. We
believe that potential drawdown of the carryover RIN bank as a result
of compliance with the proposed supplemental standard would be
appropriate in light of the projected size of the carryover RIN bank in
2022 and the desire to provide a meaningful remedy to the court's
remand and the Congressional intent evidenced by the statutory 2016
total renewable fuel standard.
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\143\ As also described above, it is likely that some amount of
the existing carryover RIN bank represents RINs generated but not
used for compliance in 2016, as the market over complied with the
total renewable fuel standard that year.
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Second, we provide significant lead-time for obligated parties by
proposing this standard as supplemental to the 2022 standard: More than
one year prior to the 2022 compliance deadline.
Third, we are proposing multiple mechanisms to mitigate the
potential compliance burden. One step is to designate that the response
to the ACE remand will be a supplement to the 2022 standards. This
approach would not only allow the use of 2021 and 2022 RINs for
compliance with the 2022 standard, as described earlier, but it would
also avoid the need for obligated parties to revise their 2016 (and
potentially 2017, 2018, 2019, etc.) compliance demonstrations, which
would be a burdensome and time-consuming process. In addition, our
proposal allows obligated parties to
[[Page 72462]]
satisfy both the 2022 standards and the supplement in a single set of
compliance and attest engagement demonstrations. We are also proposing
to extend the same compliance flexibility options already available for
the 2022 standards to the 2022 supplemental standard, including
allowing the use of carryover RINs and deficit carry forward subject to
the conditions of 40 CFR 80.1427(b)(1). We also intend to spread out
the 500-million-gallon obligation over two compliance years as
described above. This will allow obligated parties and renewable fuel
producers additional lead time to meet the standard because the RFS
program will phase in the requirement, thus providing about a year of
lead time for the second 250 million gallon requirement.
Lastly, we have carefully considered alternatives, including
retaining the 2016 total renewable fuel volume as described in the 2020
proposal. We seek comment on this alternative, as well as on any other
alternative approaches for addressing the ACE remand.
On balance, we find that requiring an additional 500 million
gallons of total renewable fuel to be complied with through two
supplemental standards spread over two years would be an appropriate
response to the court's vacatur and remand of our use of the general
waiver authority to waive the 2016 total renewable fuel standard by 500
million gallons. We seek comment on this approach.
E. Calculating a Supplemental Percentage Standard for 2022
The formulas in 40 CFR 80.1405(c) for calculating the applicable
percentage standards were designed explicitly to associate a percentage
standard for a particular year with the volume requirement for that
same year. The formulas are not designed to address the approach that
we are proposing in this action, namely the use of a 2016 volume
requirement to calculate a 2022 percentage standard. Nonetheless, we
can apply the same general approach to calculating a supplemental
percentage standard for 2022.
If this proposed approach to the ACE remand in finalized, the
numerator in the formula in 40 CFR 80.1405(c) would be the supplemental
volume of 250 million gallons of total renewable fuel. The values in
the denominator would remain the same as those used to calculate the
proposed 2022 percentage standards in Section VI.C, which can be found
in Table VI.C-1.\144\ As described in Section VI.C, the resulting
supplemental renewable fuel standard percentage standard for a 250
million gallon volume requirement in 2022 would be 0.14-0.15 percent,
depending on the projection of exempt volume of gasoline and diesel.
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\144\ We intend to update the values in the denominator, such as
the projected gasoline and diesel volumes, based on updated
information available at the time of the final rule.
---------------------------------------------------------------------------
The proposed supplemental standard for 2022 would be a requirement
for obligated parties separate from and in addition to the 2022
standard for total renewable fuel. The two percentage standards would
be listed separately in the regulations at 40 CFR 80.1405(a), but in
practice obligated parties would demonstrate compliance with both at
the same time. Thus, the two percentage standards would effectively be
additive (e.g., 11.76% + 0.14% = 11.90%, using the low end of the
proposed percentage standards in Section VI.C).
VI. Percentage Standards
EPA implements the nationally applicable volume requirements by
establishing percent standards that apply to obligated parties. The
obligated parties are producers and importers of gasoline and diesel,
as defined by 40 CFR 80.1406(a). The standards are expressed as volume
percentages. Each obligated party multiplies the percentage standards
by sum of all non-renewable gasoline and diesel they produce or import
to determine their Renewable Volume Obligations (RVOs).\145\ The RVOs
are the number of RINs that the obligated party is responsible for
procuring to demonstrate compliance with the RFS rule for that year.
Since there are four separate standards under the RFS program, there
are likewise four separate RVOs applicable to each obligated party for
each year.
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\145\ 40 CFR 80.1407.
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The volumes used to determine the proposed 2020, 2021, and 2022
percentage standards are described in Section III and are shown in
Table VI-1.
Table VI-1--Volumes for Use in Determining the Proposed Applicable Percentage Standards
(billion RINs)
----------------------------------------------------------------------------------------------------------------
Standard 2020 2021 2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel.............................................. 0.51 0.62 0.77
Biomass-Based Diesel \a\........................................ \b\ 2.43 \c\ 2.43 2.76
Advanced Biofuel................................................ 4.63 5.20 5.77
Total Renewable Fuel............................................ 17.13 18.52 20.77
Supplemental Standard........................................... n/a n/a 0.25
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume requirement for 2020 was established in the 2019 standards rulemaking (83 FR 63704, December
11, 2018).
\c\ The BBD volume requirement for 2021 was established in the 2020 standards rulemaking (85 FR 7016, February
6, 2020).
A. Calculation of Percentage Standards
The formulas used to calculate the percentage standards applicable
to obligated parties are provided in 40 CFR 80.1405(c). The formulas
apply to the estimates of the volumes of non-renewable gasoline and
diesel fuel, for both highway and nonroad uses, which are projected to
be used in the year in which the standards will apply. EIA provides
projected gasoline and diesel volumes, but these include projections of
ethanol and biomass-based diesel used in transportation fuel. Since the
percentage standards apply only to the non-renewable gasoline and
diesel, the volumes of renewable fuel are subtracted out of the EIA
projections of gasoline and diesel. In addition, transportation fuels
other than gasoline or diesel, such as natural gas, propane, and
electricity from fossil fuels, are not currently subject to the
standards, and volumes of such fuels are not used in calculating the
annual percentage standards or obligated parties' RVOs.
As specified in the 2010 RFS2 final rule,\146\ the percentage
standards are based on energy-equivalent gallons of renewable fuel,
with the cellulosic biofuel, advanced biofuel, and total renewable fuel
standards based on ethanol equivalence and the BBD
[[Page 72463]]
standard based on biodiesel equivalence. However, all RIN generation is
based on ethanol-equivalence. To effectuate this difference between BBD
and the other three standards, the formula used to calculate the
percent standard for BBD in 40 CFR 80.1405 includes a factor of 1.5 to
convert physical volumes of BBD into ethanol-equivalent volumes.
However, as discussed more fully in Section VII.A, based on updated
data regarding BBD use, we are proposing to change this factor from 1.5
to 1.55.
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\146\ See 75 FR 14670 (March 26, 2010).
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B. Small Refineries and Small Refiners
In CAA section 211(o)(9), Congress exempted small refineries from
RFS compliance temporarily through December 31, 2010. Congress also
provided that small refineries could receive an extension of the
exemption beyond 2010 based either on the results of a required
Department of Energy (DOE) study or in response to individual small
refinery petitions demonstrating ``disproportionate economic
hardship.'' CAA section 211(o)(9)(B)(i).
In the 2020 final rule, EPA revised certain definitions in the
percentage standards formulae at 40 CFR 80.1405(c) to account for a
projection of the total exempted volume of gasoline and diesel produced
at small refineries, including for those exemptions granted after the
final rule. In this proposed action, we are applying these revised
definitions to calculate the projected exemptions for 2020, 2021, and
2022 and proposing a range of values. On the low end, we are proposing
that the exempted volume is zero; on the high end, we are proposing to
project the volume using the same methodology used in the 2020 final
rule and updating values with more recent data.
The low end of the range of applicable percentage standards would
be based on the fact that on January 24, 2020, the United States Court
of Appeals for the Tenth Circuit ruled in RFA that EPA's grant of three
individual SREs exceeded our statutory authority.\147\ The court
vacated EPA's actions under multiple bases. First, under the Tenth
Circuit's reading of the CAA, a small refinery is eligible for relief
only if it has received a continuous exemption from the RFS program
since the initial blanket exemption through 2010.\148\ The Supreme
Court subsequently reversed the Tenth Circuit's decision in part on
this basis.
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\147\ Renewable Fuels Ass'n v. EPA, 948 F.3d 1206 (10th Cir.
2020), rev'd in part sub nom., HollyFrontier Cheyenne Refining, LLC,
v. Renewable Fuels Ass'n, 114 S. Ct. 2172 (2021).
\148\ RFA at 1244-49.
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However, the Tenth Circuit also vacated EPA's actions for two other
reasons: EPA may grant relief only when it finds that the small
refinery would suffer disproportionate economic hardship due to
compliance with the RFS program, not due to other factors, and EPA had
failed to discuss how granting the exemptions was consistent with our
findings on RIN cost pass-through.\149\ Were EPA to follow these
aspects of the RFA decision nationwide, we would not anticipate
granting any SREs for 2020, 2021, or 2022.
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\149\ RFA at 1253-54.
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As described in previous actions, our assessment indicates that
small refineries fully recover the costs of RFS compliance through
higher prices on sales of gasoline and diesel, and that as a result
they do not suffer economic hardship due to the RFS.\150\ EPA has
stated that refineries, including small refineries, are generally able
to recover the costs of the RIN in the revenues received for their
petroleum products, and that the cost of the RIN is passed through to
consumers in the marketplace and does not represent a net cost to
obligated parties.\151\ While some small refineries have contested RIN
cost pass-through in their exemption petitions, we have not credited
such arguments in the past. Even when we granted relief in past years,
we did so for other reasons.
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\150\ ``A Preliminary Assessment of RIN Market Dynamics, RIN
Prices, and Their Effects,'' Dallas Burkholder, Office of
Transportation and Air Quality, US EPA. May 14, 2015.
\151\ ``Denial of Petitions for Rulemaking to Change the RFS
Point of Obligation,'' EPA-420-R-17-008, EPA-HQ-OAR-2016-0544-0525,
(November 22, 2017).
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In addition, because the applicable standards are expressed as a
percentage of production basis, the cost of RFS compliance (prior to
being recovered in the marketplace through higher sales prices on
gasoline and diesel) is proportional to the amount of gasoline and
diesel the obligated party produces. In other words, the cost of RFS
compliance, per gallon of gasoline and diesel production, is the same
for all obligated parties. This same cost applies to all obligated
parties and is not disproportionate.
The high end of the proposed range of applicable percentage
standards is based on the fact that small refineries subsequently
sought review of RFA from the U.S. Supreme Court in HollyFrontier and
received a favorable ruling.\152\ At this time we do not yet know how
the court's ruling will affect SRE decisions currently before EPA or in
the future. The high end of the proposed range therefore reflects a
continuation of the intent described in the 2020 final rule to project
the volumes of gasoline and diesel associated with future SREs.\153\
Specifically, we are proposing to project the SRE volume for 2020,
2021, and 2022 using the same methodology used in the 2020 final rule,
but updating the values using more recent data for 2016-2018 SRE
petitions.\154\
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\152\ 114 S. Ct. 2172 (2021).
\153\ 85 FR 7049 (February 6, 2020).
\154\ We are not adjudicating any SREs in this action, and this
action does not prejudge any SRE petition. Rather, this proposal
simply reflects our best estimate at this time of the potential
range of exempt volumes in 2020, 2021, and 2022.
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EPA is also soliciting comment on the revisions we made in the 2020
final rule to the definitions in the percentage standards formulae at
40 CFR 80.1405(c) to account for a projection of the exempted small
refinery volume, including for exemptions granted after the final rule.
In the 2020 final rule, we justified the revised formulae based in part
on our then-prospective SRE policy of following DOE's recommendations.
As noted above, EPA does not know at this time how RFA and Holly
Frontier will affect our SRE policy going forward, so we are co-
proposing a range of exempted small refinery volumes. Since the
revisions to the formulae were based in part on our SRE policy, we are
also soliciting comment on the revisions, specifically with regard to
our decision to account for a projection of exemptions granted after
the final rule.
C. Modification of the 2020 Biomass-Based Diesel Percentage Standard
As noted above, the percentage standards implement the nationally
applicable volume requirements. Since EPA is proposing to revise the
nationally applicable volume requirements for 2020 in this action under
our reset authorities, we are proposing to also establish revised
percentage standards corresponding to those volumes. With regard to the
2020 and 2021 BBD volumes, EPA is not proposing to revise such volumes,
which were established in the 2019 and 2020 final rules,
respectively.\155\ Nonetheless, EPA is proposing to revise the percent
standards for the 2020 volume. We are also proposing to establish the
volume requirement and associated percentage standard for 2022 for the
nationally applicable volume requirement for BBD using our set
authority as described in Section III.E.
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\155\ 83 FR 63704 (December 11, 2018); 85 FR 7016 (February 6,
2020). In this action, we are not reopening nor seeking comment on
the 2020 or 2021 BBD volume requirements.
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With regard to 2021 BBD, EPA did not previously promulgate
percentage
[[Page 72464]]
standards, and thus we do so now for the first time.\156\ With regard
to 2020 BBD, EPA previously promulgated percentage standards in the
2020 final rule.\157\ In this action, EPA is proposing to modify the
2020 BBD percentage standard, even though we are not modifying the 2020
BBD volume requirement that we previously established. Specifically, we
are proposing to use the same volume requirement previously promulgated
(2.43 billion gallons) but to update the other inputs for calculating
the standard (such as the projections of gasoline and diesel
consumption and exempted small refinery volumes in 2020), which we term
``inputs'' in the remainder of this section. We are also proposing to
apply the new BBD multiplier of 1.55, which we discuss further in
Section VIII.A.
---------------------------------------------------------------------------
\156\ This action is consistent with past annual rules, which
have generally promulgated the BBD percentage standard for the BBD
volume set in the prior year's annual rule. This is due to the
unique statutory timing applicable to BBD, where EPA must set the
volume 14 months in advance but promulgate percentage standards by
November 30 of the immediately preceding year. See CAA section
211(o)(2)(B)(ii), (o)(3)(B)(i).
\157\ 85 FR 7049 (February 6, 2020).
---------------------------------------------------------------------------
We are proposing to update the inputs because it is logical for all
of the 2020 percentage standards to be calculated using the same
inputs. This is consistent with EPA's policy since the beginning of the
RFS program, where we have generally calculated all the percentage
standards for a given year based on the same inputs. Here, because we
are updating the inputs for the other 2020 percentage standards, we
also propose to modify the inputs for the 2020 BBD percentage standard.
This approach is supported by the nested nature of the standards, where
BBD is a subset of the advanced biofuel and total renewable fuel
standards, and compliance with all three is accomplished in part by
using the same RIN credits. We think it would not be appropriate to use
updated inputs for the other standards, while simultaneously using what
is now outdated data for the BBD standard alone.
Additionally, the inputs we are proposing to use in this action are
quite different from the inputs used in the 2020 final rule. As
discussed in Section II.D. and III.B., the projections for gasoline and
diesel consumption in 2020 final rule, which were used to establish the
BBD standard, are significantly different than the actual gasoline and
diesel consumed in 2020. Relative to the 2020 final rule, we are also
co-proposing different projections of SREs, as discussed in the prior
section.
Finally, we note that our proposed modification to the 2020 BBD
percentage standard is not anticipated to have any significant real-
world impacts. As set forth in the next section, the proposed
modification results in an increase in the BBD percentage standard,
which will increase the number of RINs required for compliance with
this standard. However, even were we to retain the original, lower
standard, we would nonetheless expect the same number of BBD RINs to be
used for 2020 compliance given that BBD is nested within the advanced
biofuel category and we are proposing to set the advanced biofuel
percentage standard based on actual use of renewable fuels.
D. Proposed Standards
The formulas in 40 CFR 80.1405 for the calculation of the
percentage standards require the specification of a total of 14
variables comprising the renewable fuel volume requirements, projected
gasoline and diesel demand for all states and territories where the RFS
program applies, renewable fuels projected by EIA to be included in the
gasoline and diesel demand, and projected gasoline and diesel volumes
from exempt small refineries. The values of all the variables used for
this proposed rule are shown in Table VI.C-1 for the applicable 2020,
2021, and 2022 standards.\158\
---------------------------------------------------------------------------
\158\ See the technical memoranda, ``Calculation of proposed %
standards for 2020,'' ``Calculation of proposed % standards for
2021,'' and ``Calculation of proposed % standards for 2022,''
available in the docket for this action.
Table VI.C-1--Volumes for Terms in Calculation of the Proposed Percentage Standards
[Billion RINs]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022
Term Description 2020 2021 2022 supplemental
--------------------------------------------------------------------------------------------------------------------------------------------------------
RFVCB.......................................... Required volume of cellulosic biofuel.. 0.51 0.62 0.77 0
RFVBBD......................................... Required volume of biomass-based diesel 2.43 2.43 2.76 0
\a\.
RFVAB.......................................... Required volume of advanced biofuel.... 4.63 5.20 5.77 0
RFVRF.......................................... Required volume of renewable fuel...... 17.13 18.52 20.77 0.25
G.............................................. Projected volume of gasoline........... 123.25 133.06 136.49 136.49
D.............................................. Projected volume of diesel............. 50.49 54.52 56.81 56.81
RG............................................. Projected volume of renewables in 12.63 13.64 13.98 13.98
gasoline.
RD............................................. Projected volume of renewables in 2.15 2.23 2.66 2.66
diesel.
GS............................................. Projected volume of gasoline for opt-in 0 0 0 0
areas.
RGS............................................ Projected volume of renewables in 0 0 0 0
gasoline for opt-in areas.
DS............................................. Projected volume of diesel for opt-in 0 0 0 0
areas.
RDS............................................ Projected volume of renewables in 0 0 0 0
diesel for opt-in areas.
GE............................................. Projected volume of gasoline for exempt 0.00 0.00 0.00 0.00
small refineries (low).
Projected volume of gasoline for exempt 4.80 4.80 4.80 4.80
small refineries (high).
DE............................................. Projected volume of diesel for exempt 0.00 0.00 0.00 0.00
small refineries (low).
Projected volume of diesel for exempt 3.39 3.39 3.39 3.39
small refineries (high).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The BBD volume used in the formula represents physical gallons. The formula contains a proposed 1.55 multiplier to convert this physical volume to
ethanol-equivalent volume.
[[Page 72465]]
Projected volumes of gasoline and diesel, and the renewable fuels
contained within them, were derived from EIA's May 2021 STEO. For the
final rule, the 2022 gasoline and diesel projections will be provided
by EIA in a letter to EPA that is required under the statute, while the
projections for 2020 and 2021 will be derived from the latest version
of the STEO, which we anticipate being the October 2021 STEO.\159\
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\159\ To determine the 49-state values for gasoline and diesel,
the amount of these fuels used in Alaska is subtracted from the
totals provided by EIA because petroleum-based fuels used in Alaska
do not incur RFS obligations. The Alaska fractions are determined
from the June 26, 2020 EIA State Energy Data System (SEDS), Energy
Consumption Estimates. In addition, fuel used in ocean-going vessels
is also subtracted from the total because it is excluded from the
definition of transportation fuel by the statute. This volume is
provided directly by EIA.
---------------------------------------------------------------------------
Using the volumes shown in Table VI.C-1, we have calculated the
proposed percentage standards for 2020, 2021, and 2022 as shown in
Table VI.C-2.
Table VI.C-2--Proposed Percentage Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020 2021 2022
Standard ---------------------------------------------------------------------------------------------------------------
Original Revised low Revised high Low High Low High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel...................... 0.34% 0.32% 0.34% 0.36% 0.38% 0.44% 0.46%
Biomass-Based Diesel.................... 2.10 2.37 2.50 2.19 2.30 2.42 2.54
Advanced Biofuel........................ 2.93 2.91 3.07 3.03 3.18 3.27 3.42
Renewable Fuel.......................... 11.56 10.78 11.36 10.79 11.33 11.76 12.33
Supplemental Standard................... n/a n/a n/a n/a n/a 0.14 0.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
The proposed regulations at 40 CFR 80.1405 can only contain one set
of percentage standards. Given this constraint, the proposed
regulations contain only the percentage standards representing the low
end of the range shown in the table above. However, we do not intend
this approach to indicate a preference for the low end of the range of
proposed percentage standards.
VII. Biointermediates
A. Background
The RFS regulations were designed with the general expectation that
renewable biomass would be converted into renewable fuel at a single
facility (e.g., a renewable fuel producer purchases corn directly from
several farmers in a region, crushes the corn in a mill, and then
ferments the corn into ethanol, all at the same facility). The
regulations therefore impose requirements on renewable fuel producers
to provide EPA with information necessary to verify that their fuel was
made with qualifying renewable biomass, through production processes
corresponding with approved pathways, and in volumes corresponding to
feedstocks used. Such information submissions are necessary for
oversight and enforcement, leading to increased integrity and
confidence in the program.
Since the RFS2 regulatory program was promulgated in 2010, however,
EPA has received a number of inquiries from companies regarding the
possible use of renewable biomass that has been substantially pre-
processed at one facility to produce a proto-renewable fuel (referred
to as a biointermediate) that is subsequently used at a different
facility to produce renewable fuel for which RINs would be generated.
For example, a number of companies have approached us with the proposed
use of woody biomass or separated MSW to produce a biocrude (a pre-
processed feedstock that could then be processed into renewable fuel at
a crude oil refinery). In response to these requests, EPA has stated
that the existing RFS regulations are insufficient to generally allow
RINs to be generated in situations wherein multiple facilities are
involved in the conversion of renewable biomass feedstocks into
renewable fuel.
On November 16, 2016, EPA issued the proposed Renewables
Enhancement and Growth Support (REGS) rule that outlined proposed
provisions to allow the use of biointermediates to produce qualifying
renewable fuels under the RFS program.\160\ The proposed REGS rule
outlined a comprehensive set of compliance provisions, enforcement
provisions, and oversight mechanisms for biointermediates that would
have allowed biointermediates into the RFS program while maintaining
effective oversight of the production, transfer, and use of
biointermediates to make renewable fuels. A public hearing was held in
Chicago, IL, on December 16, 2016, and the public comment period ended
on January 17, 2017.
---------------------------------------------------------------------------
\160\ See 81 FR 80828 (November 16, 2016).
---------------------------------------------------------------------------
Since the proposed REGS rule was issued, EPA has continued to
review public comments and other information and to carefully consider
how best to develop and implement a program that would allow for the
production, transfer, and use of biointermediates to produce renewable
fuel under RFS. We continue to believe that the use of biointermediates
to produce renewable fuels would be a reasonable and positive
development for the future growth in production particularly of
cellulosic and advanced biofuels. However, we also continue to believe
that the existing regulations are insufficient to allow the use of
biointermediates because we are unable to verify the validity of RINs
generated in situations where feedstocks are allowed to be processed at
multiple facilities, and where partially processed feedstocks, which
may appear very similar to renewable fuels themselves, are transferred
between parties. The value of these RINs provides considerable
incentive for fraudulent activity, and therefore it is important for
the integrity of the program that mechanisms be in place to verify
their validity.\161\
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\161\ We note that there has been a long history of RIN fraud in
the RFS program. We detail several of the major RIN fraud civil
enforcement cases on our website, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
---------------------------------------------------------------------------
After careful consideration of public comments received in response
to the proposed biointermediates provisions in the proposed REGS rule
and further thought on how best to design and implement a potential
biointermediates program, we are proposing biointermediates provisions
anew. This proposal re-proposes many aspects of the biointermediate
provisions in the proposed REGS rule but also updates several key
aspects of that proposal reflecting what we have learned since the
original proposal. We discuss what biointermediate provisions we are
re-proposing without significant changes from the proposed REGS rule in
Section VII.B and the updated revisions in Section VII.C. We also
specifically seek comment on a number of issues related
[[Page 72466]]
to including biointermediates in the RFS program in Section VII.D.
We are reproposing (i.e., proposing anew) the biointermediates
provisions here for two main reasons. First, since the publication of
the proposed REGS rule, we have reviewed comments received on that
proposed rulemaking and have engaged in numerous discussions with
parties interested in bringing biointermediates into the RFS program.
After almost five years of further consideration, we have identified
several areas that we would like to modify or enhance. These changes
impact what biointermediates would be allowed under the program and
what parties that produce, transfer, and use biointermediates would
need to do to demonstrate compliance.
Second, we believe it would be useful to provide an additional
opportunity for stakeholders interested in biointermediates to comment
on the proposed biointermediates provisions more generally. Due to the
amount of time that has passed since we proposed the REGS rule, the
nature and number of the parties interested in bringing
biointermediates into the program has changed. We believe that by
providing an additional opportunity for public comment on all aspects
of the proposed biointermediates provisions, we would receive
additional comments with reasonable suggestions to modify and enhance
the proposed biointermediates provision in addition to those we
received during the proposed REGS rule comment period. Furthermore, we
believe there are specific provisions that we proposed in the REGS rule
that would benefit from additional public comment (these are discussed
in Section VII.D).
For these reasons, we are proposing all the biointermediates
provisions anew and broadly seek comment on these reproposed
biointermediate provisions. Commenters that submitted comments on the
proposed biointermediates provisions in the REGS rule must resubmit any
relevant comments in order for those comments to be considered. As this
is a new proposal, we do not intend to respond to comments that were
submitted only on the previously proposed biointermediates provisions
in the REGS rule. Such comments are outside the scope of this action.
We also seek comment from potential producers of biointermediates
on the current status of operations, potential production volumes,
timelines for production, and any other information that may help
inform EPA as to the expected use of biointermediates to produce
renewable fuel both during 2022 and out into the future.
B. Re-Proposal of Biointermediates Provisions Previously Proposed in
REGS
In this action, we are reproposing certain biointermediate
provisions that we previously proposed in the REGS rule. Many of the
program design elements for proposed biointermediate provisions remain
unchanged from the REGS proposal and are being reproposed here with no
modifications other than ministerial changes. The provisions we are
reproposing without substantive changes are the following:
The calculation of lifecycle GHG emissions where
biointermediates are used to make renewable fuels and the treatment of
pathways for RIN generation where biointermediates are converted into
renewable fuels;
Limiting the production of biointermediates to a single
facility;
The potential liability of biointermediate and renewable
fuel producers for violations of the proposed biointermediate
provisions;
Registration, reporting, and recordkeeping requirements
for biointermediate producers as well as additional registration,
reporting, and recordkeeping requirements for renewable fuel producers
that use biointermediates;
Annual attest engagements for biointermediate producers;
RFS quality assurance program (QAP) provisions for
biointermediate producers and renewable fuel producers that use
biointermediates; and
The treatment of biointermediates produced at foreign
facilities.
This preamble incorporates the discussions of each of these
elements that are contained in the referenced memo to the docket.\162\
We note that because the RFS regulations have undergone several
revisions since these elements were previously proposed, we have
updated the proposed regulatory language to accommodate these revisions
to help ensure consistency between the proposed biointermediate
provisions and the rest of the RFS regulations. Additionally, while
each of these individual provisions is substantively unchanged from the
REGS proposal, how they fit into and function within the larger
biointermediates program may be different under our proposed revised
program. We discuss broader, substantive changes to the proposed
biointermediate provisions in Section VII.C.
---------------------------------------------------------------------------
\162\ Each of these elements are described in greater detail in
the memorandum to the docket, ``Proposed Biointermediate Provisions
in the proposed Renewables Enhancement Growth Support Rule,''
available in the docket for this action.
---------------------------------------------------------------------------
As explained above, we are requesting comment on these re-proposed
provisions. Comments on these provisions previously submitted to the
REGS rulemaking docket will not be considered unless they are
resubmitted to the docket for this action (i.e., EPA-HQ-OAR-2021-0324).
C. Changes to the Biointermediates Provisions Previously Proposed in
the REGS Rule
In this action, we are also proposing some additions and updates to
the biointermediate provisions previously proposed in the REGS rule.
Specifically, we are proposing changes to the definition of
biointermediate, limits on biointermediate transfers, and mandatory
participation in the RFS QAP. We are also proposing changes to the
compliance and enforcement provisions, including: New product transfer
document requirements for RINs generated from renewable fuels produced
from biointermediates; changes to the registration, reporting,
recordkeeping, and attest engagement requirements; and provisions for
the treatment of invalid RINs generated from biointermediates. These
changes are discussed in more detail below.
1. Implementation Dates
We are proposing that the biointermediates provisions will be
implemented starting 60 days after the publication of the final rule in
the Federal Register. In recognition of the time that has passed since
EPA first identified the need to revise the regulations to allow the
use of biointermediates, we now intend to put a biointermediates
program in place as soon as possible. We believe this proposed
implementation date is achievable based on the scope of
biointermediates provisions as proposed here. However, we note that
depending on the complexity of the final biointermediate provisions, we
may need to finalize a later implementation date to provide us enough
time to put in place the compliance and oversight mechanisms necessary
to effectively oversee the program.
We are seeking specific comments on when biointermediate producers
expect to be able to begin production so we can consider the potential
impacts of a later implementation date.
2. Definition of Biointermediate
We are proposing a definition of biointermediate that differs from
what we proposed in the REGS rule. Previously, we proposed to define a
[[Page 72467]]
biointermediate as any renewable fuel feedstock material that meets all
of the following criteria:
It was derived from renewable biomass.
It did not meet the definition of renewable fuel and RINs
were not generated for it.
It was produced at a facility that is registered with EPA,
but which is different than the facility at which it is used to produce
renewable fuel.
It was made from the feedstock and would be used to
produce the renewable fuel in accordance with the process(es) listed in
the approved pathway.
It was processed in such a way that it is substantially
altered from the feedstock listed in the approved pathway.
We pointed out in the proposed REGS rule that our intent was that
feedstocks currently listed in an approved pathway or that underwent
form changes would not be considered biointermediates \163\ and
excluded form changes from the definition included in the proposed REGS
rule. Such form changes included, but were not limited to the
following:
---------------------------------------------------------------------------
\163\ See 81 FR 80834 (November 16, 2016).
---------------------------------------------------------------------------
Chopping biomass into small pieces, pressing it, or
grinding it into powder.
Filtering out suspended solids from recycled cooking and
trap grease.
Degumming vegetable oils.
Drying wet biomass.
Adding water to biomass to produce a slurry.
We received several public comments suggesting that the proposed
definition was too broad and would include existing feedstocks that are
currently used in approved pathways. These commenters argued that the
additional registration, reporting, and recordkeeping requirements
would be unnecessarily burdensome on the production of renewable fuels
that already can generate RINs under the current RFS program.
Commenters pointed to EPA's stated intent in the proposed REGS rule to
avoid inclusion of almost all feedstocks covered by existing pathways
either in Table 1 to 40 CFR 80.1426 or an EPA-approved pathway under 40
CFR 80.1416.
Additionally, since the proposed REGS rule, we have developed a
better understanding of the potential implementation oversight
challenges surrounding the inclusion of certain types of
biointermediates. We now believe that the general, one-size-fits-all
regulatory framework proposed in the REGS rule would not work in many
of the biointermediates situations anticipated now and in the future
and that it would be difficult for us to implement appropriately. In
some cases it would treat situations as biointermediates when it was
not necessary to do so, in other cases it would not treat situations as
biointermediates that should be in order to provide proper oversight,
and in still other cases it might treat situations as biointermediates
but not in the way that our regulations were intended to address. Our
additional consideration of biointermediates since REGS has emphasized
that some potential biointermediates require unique provisions for
ensuring that qualifying renewable biomass was used to make the
biointermediate, ensuring that the biointermediate and the resultant
renewable fuel processed at separate facilities continues to fall under
an approved pathway, and ensuring that the renewable fuel gets used as
transportation fuel, heating oil, or jet fuel. In other cases, we have
concerns with the potential generation of invalid or fraudulent RINs
especially when a biointermediate either is itself or is similar to a
renewable fuel. Historically, when we have brought renewable fuels into
the program that required unique considerations or had concerns over
the generation of valid RINs, we have either promulgated specific
regulatory requirements to address any concerns (e.g., renewable fuel
oil) or imposed certain terms and conditions on approved pathways as
described at 40 CFR 80.1460(a)(7).
Based on the concerns highlighted in comments and what we have
learned about individual biointermediates over the last several years,
we no longer believe a broad approach to defining biointermediates
would allow us to have sufficient oversight of the program (i.e., to
ensure that renewable fuels that generate RINs meet the applicable
statutory and regulatory requirements). Each biointermediate has
particular compliance and enforcement considerations, including how to
track the biointermediate back to renewable biomass, how a
biointermediate may be processed with other feedstocks to produce
renewable fuel, how a biointermediate fits within existing pathways,
and how to demonstrate the cellulosic content of the biointermediate.
As such, we now believe it is necessary to design a program that allows
us to consider and, if necessary, address these challenges on a
biointermediate-by-biointermediate basis. We are thus proposing to
specifically define the scope of which biointermediates would be
covered by a biointermediates program. In other words, under this
proposal we are defining the specific situations in which it would be
permitted to process feedstocks into renewable fuels at multiple
facilities. Under this proposal, if we do not list a
``biointermediate'' explicitly in the definition of biointermediate,
the ``biointermediate'' would not be lawful for use in making renewable
fuels under the RFS program. In order for a new biointermediate to be
brought into the program, under this proposal, we would amend the
regulations again in the future to add the new biointermediate to the
list and make any other necessary regulatory changes needed to provide
proper oversight for its potentially unique circumstances.
In this action, we are proposing to initially include the following
biointermediates: Biocrude, free fatty acid (FFA) feedstock, and
undenatured ethanol (including ethanol solutions containing less than
95% ethanol). We are also seeking comment on a longer list of
additional potential biointermediates that we may choose to include in
the final rulemaking depending upon the comments we receive on this
proposal. We believe that the three proposed types of biointermediates
we are proposing could effectively be accommodated by the updated
provisions described in this action. We believe these biointermediates
are likely to be available in measurable quantities in the near future
and that our proposed biointermediate regulations can ensure proper
compliance oversight and enforcement. We have had discussions with a
variety of parties interested in producing and using biointermediates
since the proposed REGS rule. Some parties making fuels from biocrude,
FFA feedstocks, and undenatured ethanol could begin producing volumes
as early as 2022. Since these parties are relatively close or already
capable of producing renewable fuels from biocrude, FFA feedstock, and
undenatured ethanol, and it is relatively clear to us how they will do
so and what the compliance oversight issues might be with these
biointermediates, we believe that it would be appropriate to allow the
use of these biointermediates to produce renewable fuel after we
finalize a biointermediates program.
To clearly establish what would be allowed under this proposed
biointermediates program, we are also proposing definitions for the
specific biointermediates that would initially be included in the
program. We are proposing to define undenatured ethanol as ethanol that
has not been denatured per Department of Treasury
[[Page 72468]]
requirements.\164\ We are also proposing specific definitions for
biocrude and FFA feedstock. In the future as we revise the regulations
to allow new biointermediate into the program, we would then also
define those biointermediates. We also note that if we finalize
additional biointermediates as part of the biointermediate definition
in the final rule, we will also include specific definitions for those
additional biointermediates.
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\164\ See 27 CFR parts 19 through 21. Ethanol does not become a
``renewable fuel'' under the RFS regulations until it is denatured.
The preamble to the RFS2 regulations explains that ``ethanol that is
valid under RFS2 must be denatured.'' See 75 FR 14670, 14713 (March
26, 2010).
---------------------------------------------------------------------------
The inclusion of FFA feedstock in the proposed definition of
biointermediates implies that the existing pathways in Table 1 to 40
CFR 80.1426 satisfy the applicable GHG reduction thresholds in cases
where FFA is produced from a feedstock and used to produce a renewable
fuel in accordance with a process(es) listed in an approved pathway. We
believe this conclusion is supported for the feedstocks listed in Table
1 that FFA biointermediates may be produced from, including biogenic
waste fats, oils, and greases (FOG), distillers corn oil and sorghum
oil, food wastes, oil crops, and algal oil. As discussed in the 2020
proposed rule, our original approval of pathways that use these
feedstocks was based on lifecycle GHG assessments; our basis for
potentially allowing FFAs produced from those feedstocks as
biointermediates is that we believe the potential additional processing
and transport associated with the additional FFA production step would
add a limited amount of GHG emissions to the fuel's lifecycle.\165\
However, where EPA has not conducted a lifecycle GHG assessment and
determined that the original renewable biomass feedstock meets the GHG
emission reduction requirements of the CAA, we cannot say that FFAs
produced from that feedstock fit within existing pathways. Therefore,
as explained further below, the proposed definition of FFA feedstock
includes the following restriction: ``FFA feedstock must not include
any free fatty acids from the refining of crude palm oil.''
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\165\ 84 FR 36801-36803 (July 29, 2019).
---------------------------------------------------------------------------
The existing pathways using waste FOG feedstocks were approved
based on our lifecycle GHG analysis of yellow grease (also known as
used cooking oil or ``UCO'') for the RFS2 rule, which found, for
example, that biodiesel produced from UCO results in a greater than 80%
GHG reduction compared to baseline conventional diesel. In addition to
UCO, the waste FOG feedstock category includes inedible animal tallow,
the FOG components of food wastes and other similar materials that
``would otherwise normally be discarded or used for another secondary
purpose because they are no longer suitable for their original intended
use.'' \166\ EPA has not determined whether FFA from the refining of
crude palm oil (hereafter referred to as palm fatty-acid distillate or
``PFAD'') is consistent with and covered by our existing analyses and
pathways. In particular, we have not investigated potential existing
markets for PFAD and the potential market effects associated with using
it as a biofuel feedstock. Although PFAD is a secondary product from
crude palm oil refining, we believe that additional analysis is needed
to determine whether fuel produced from PFAD would qualify for the
applicable GHG reduction thresholds. Our lifecycle analysis of palm oil
biodiesel, which has not been finalized through rulemaking, estimated
that palm oil-based biodiesel and renewable diesel do not satisfy the
20% GHG reduction for renewable fuel.\167\ Those estimates underscore
the need to further evaluate the GHG emissions associated with using
PFAD as a biofuel feedstock. For these reasons, we are specifying at
this time that FFA feedstock does not include FFA from the refining of
crude palm oil.
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\166\ 75 FR 14794 (March 26, 2010).
\167\ 77 FR 4300 (January 27, 2012).
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Our proposed approach to defining biointermediates is not intended
to affect pre-processing steps for feedstocks in Table 1 that are
limited to form changes. We recognize that it has been common practice
for some feedstocks listed in Table 1 to 40 CFR 80.1426 or in an
approved pathway pursuant to 40 CFR 80.1416 to be physically pre-
processed at separate facilities before they are delivered to a
renewable fuel production facility and used to produce renewable fuel.
We do not intend to disrupt this practice. However, in order to assure
that EPA can verify that renewable fuel was made with qualifying
renewable biomass, through production processes corresponding with
approved pathways, we need to impose limits on the type of pre-
processing of qualifying feedstocks that will be allowed without
complying with the biointermediate requirements. We intend to balance
these interests by allowing the pre-processing of feedstocks listed in
approved pathways at facilities other than the renewable fuel
production facility, but only if the pre-processing results only in a
form change such as chopping, crushing, grinding, pelletizing,
filtering, compacting/compression, centrifuging, degumming, dewatering/
drying, melting, or the addition of water to produce a slurry.
To implement this approach, we are proposing to prohibit any person
from producing a renewable fuel at more than one facility unless the
person uses a biointermediate as defined in 40 CFR 80.1401 or uses
feedstocks identified in Table 1 to 40 CFR 80.1426 or in an approved
pathway pursuant to 40 CFR 80.1416, which were pre-processed at a
different facility, and the pre-processing results only in a form
change such as chopping, crushing, grinding, pelletizing, filtering,
compacting, compression, centrifuging, degumming, dewatering/drying,
melting, or the addition of water to produce a slurry. We seek comment
on whether we should expand or narrow the types of pre-processing that
should be allowed for feedstocks that are not biointermediates at
facilities other than the renewable fuel production facilities. Our
intent with this proposed addition is to make clear the specific
situations where feedstocks will be allowed to be processed at multiple
facilities without being subject to the proposed biointermediates
provisions. We believe this change would address comments received in
the proposed REGS rule that we were overly inclusive of feedstocks
already in use in current pathways.
We recognize that the proposed definition of biointermediates does
not reflect the full range of potential biointermediates identified to
the Agency over the years. As such, we seek comment on whether we
should include other potential biointermediates in the proposed
definition for the final rulemaking. We will consider adding these
additional biointermediates in the definition in the final rulemaking
if the potential biointermediate could appropriately be produced,
transferred, and used to make renewable fuel within the proposed
provisions for biointermediates in this action. Specifically, we intend
to base our consideration of including a potential biointermediate on
whether there are adequate controls to limit opportunities to generate
fraudulent RINs, whether feedstocks used to produce the biointermediate
qualify as renewable biomass, and whether there are any unique
considerations for the potential biointermediate that would require
further regulatory requirements to ensure that generated RINs are
valid. Commenters suggesting that we include a potential
biointermediate in the final rulemaking should specifically address
[[Page 72469]]
these issues in their comments. Furthermore, commenters should provide
information describing the type of potential biointermediate, the
potential volume of renewable fuel(s) that could be produced from it,
and the timeline for its development and ultimate production. Based on
consideration of information submitted from commenters on potential
biointermediates, we would only intend to finalize those potential
biointermediates for which we believe that proposed compliance and
oversight provisions can be effectively overseen, have a low likelihood
of being susceptible to generation of fraudulent RINs, can be verified
as being renewable biomass, and would not require further regulatory
provisions.
To aid commenters as to some of the potential biointermediates we
will consider including in the final rulemaking, we are providing a
memorandum to the docket that lists potential biointermediates that
have come to our attention over the past 5 years.\168\ The list of
potential biointermediates described in the memorandum to the docket is
not intended to be exhaustive, and we will consider potential
biointermediates not included in the memorandum in the final rule.
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\168\ See memorandum to the docket entitled, ``Potential
Biointermediates,'' available in the docket for this action.
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3. Limits on Biointermediate Transfers
We are proposing that renewable fuel production facilities would be
able to receive biointermediates from multiple biointermediate
production facilities. However, unlike under the proposed REGS rule
provisions, under this new proposal biointermediate production
facilities would not be able to send biointermediates to multiple
renewable fuel production facilities.\169\ We believe this limitation
will significantly simplify and improve oversight of RIN generation for
renewable fuels produced from biointermediates without unreasonably
limiting the production and use of biointermediates. Since the proposed
REGS rule, we have become increasingly concerned that, were we to allow
biointermediate production facilities to transfer product to multiple
renewable fuel production facilities and renewable fuel production
facilities to also receive product from multiple biointermediate
producers, some parties could take advantage of the increased
complexity in tracking relationships and batches to use non-qualifying
feedstocks to make renewable fuel or generate fraudulent RINs through
double-counting. We believe that without this restriction on
biointermediates transfers the use of non-qualifying feedstocks would
be more likely to occur and more difficult to detect. In order to
effectively audit whether the correct type(s) and volumes of
biointermediates were used, all facilities that produced and used
biointermediates would need to be audited, which could be a large
number of facilities if there were no limits on biointermediate
transfers. Such oversight would be unrealistic for EPA or independent
third parties to oversee, which would increase opportunities for the
generation of invalid or fraudulent RINs and undermine the intent of
the program. Since we expect most biointermediate situations will
involve relatively small biointermediate production facilities and
relatively large renewable fuel production facilities, we have
structured the program to provide flexibility where it is most needed
and most beneficial for enabling increased renewable fuel production.
Namely this new proposal continues to allow multiple biointermediate
producers to provide their product to a single renewable fuel
production facility to be converted into renewable fuel. We seek
comment on our proposal to limit biointermediate transfers such that
renewable fuel production facilities can receive biointermediates from
multiple biointermediate producers but each biointermediate producer
can transfer its product to only one renewable fuel producer.
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\169\ Informally, this type of relationship is called a ``many-
to-one'' relationship in that under this approach many
biointermediate production facilities could only transfer
biointermediates to a single renewable fuel production facility. In
contrast, the proposed REGS rule would have allowed biointermediate
production facilities to transfer a biointermediate to more than one
renewable fuel production facility and for renewable fuel production
facilities to receive biointermediates from multiple biointermediate
production facilities. Informally, this type of relationship is
called a ``many-to-many'' relationship in that biointermediate
production facilities could transfer biointermediates to many
renewable fuel production facilities, and renewable fuel production
facilities could receive biointermediates from many biointermediate
production facilities.
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Under this proposal, the biointermediate and renewable fuel
producer would need to designate through registration the receiving
renewable fuel production facility to which biointermediate would be
transferred. As explained in Section VII.B and docket memo, we are
proposing anew the REGS provisions that require tracking of the volumes
of biointermediate, and associated properties of the biointermediate,
through periodic reporting requirements.\170\ Recognizing that
biointermediate producers may need to periodically change the receiving
renewable fuel production facility, we are proposing that
biointermediate producers would be allowed to change their designated
renewable fuel production facility no more than one time per calendar
year unless, in its sole discretion, EPA determined that it was
appropriate to allow the biointermediate producer to change its
designated renewable fuel production facility more than once in a year.
An example of a situation where EPA would consider it appropriate is
the closure of the receiving renewable fuel production facility.
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\170\ These provisions are described in greater detail in the
memorandum to the docket, ``Proposed Biointermediate Provisions in
the proposed Renewables Enhancement Growth Support Rule,'' available
in the docket for this action.
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We do not believe this restriction would impose much practical
burden on transfers of biointermediate producers. We note that under
the proposed biointermediates program, the newly designated receiving
renewable fuel production facility would need to be registered to use
the biointermediate, which would in turn require an engineering review
by a professional engineer. This process can take several months to
arrange for a PE to conduct the engineering review, submit the
registration update to EPA, and have it ultimately accepted by EPA.
Also, as discussed in Section VII.C.4, under this proposal both the
biointermediate and renewable fuel producers would need their
respective facilities audited under the QAP program, which would also
increase the amount of time needed to change the designated receiving
renewable fuel production facility. Consequently, because of the time
to conduct new engineering reviews and have new quality assurance plans
approved by EPA, we believe that biointermediate producers would be
practically limited to only being able to change their receiving
renewable fuel production facility once per calendar year. Despite
these practical limitations, we seek comment on whether and in which
narrow circumstances we should allow biointermediate producers to
change their designated receiving renewable fuel production facility
more than once a calendar year.
We believe that the proposed biointermediate transfer provisions
will enable both the production and use of biointermediates and enhance
our ability to provide compliance and enforcement oversight. In most
cases, we believe that a single renewable fuel production facility
would receive all
[[Page 72470]]
biointermediate produced from a biointermediate production facility.
This approach is primarily based on discussions with parties interested
in the production and use of biointermediates, and on our understanding
of how we believe that biointermediate transfers would be contracted by
biointermediate and renewable fuel productions and how renewable fuel
production facilities would be designed to accommodate the use of
biointermediates.
We seek comment on the proposed provisions for biointermediate
transfers. We specifically seek comment on specific examples of where
the proposed provisions may encourage or restrict the use of
biointermediates to generate renewable fuel volumes and the likely
volumes that may be affected, as well as on any examples of how the
proposed provisions may or may not provide for sufficient oversight or
RIN fraud prevention. We also ask that commenters describe any
additional or alternative provisions that might allow the use of
biointermediates from multiple facilities to be used to produce fuel at
multiple renewable fuel producers while still allowing effective
oversight.
4. Mandatory QAP
We are proposing anew the revisions to the RFS QAP to cover
biointermediate production and use.\171\ The RFS QAP provides for
auditing of renewable fuel production facilities by independent third-
party auditors who review feedstock elements, process elements, and RIN
generation elements to determine if renewable fuel production is
consistent with EPA requirements. These independent third-party
auditors verify the RINs generated from these renewable fuel production
facilities. Under this proposal, independent third-party auditors would
review feedstock and process elements for biointermediate production
facilities like those currently reviewed for renewable fuel production
facilities. In turn, these independent third-party auditors would
verify that the biointermediate was properly produced.
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\171\ As explained in Section VII.B, we are reproposing the
biointermediates provisions of the REGS rule. We discuss the
proposed QAP requirements in more detail in the memorandum to the
docket, ``Proposed Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,'' available in the
docket for this action.
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We are also proposing to require QAP participation for
biointermediate producers and renewable fuel producers that use
biointermediates. Due to the need to balance the competing priorities
of allowing the timely use of biointermediates for the production of
renewable fuel in the near term and establishing a program that EPA can
effectively oversee for the long term, we are proposing that
biointermediate producers and renewable fuel producers that use
biointermediates must participate in the RFS QAP. Mandating QAP
participation for biointermediate producers and renewable fuel
producers that use biointermediates will help ensure that RINs
generated from biointermediates are valid.
Under the REGS proposal, we had proposed that participation in the
QAP could have become voluntary after the end of the proposed interim
period.\172\ However, since the time of the proposed REGS rule, we have
developed a better understanding of the potential complexity of
overseeing the transfers of biointermediates and renewable fuels under
the RFS program. Based on this understanding, we believe that allowing
the production and use of biointermediates to go unverified would
provide increased opportunity for the use of unapproved feedstocks and
the generation of fraudulent RINs through double-counting. We believe
having an independent third-party auditor verify the production of both
the biointermediate and the renewable fuel is necessary to help oversee
the added complexity that results from having renewable fuel processing
occur at two different facilities. Further, we are proposing that the
biointermediate producer and renewable fuel producer must use the same
QAP vendor to ensure consistent oversight of the two facilities.
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\172\ In the proposed REGS rule, the interim period was a period
of approximately 12 months where a more limited set of regulatory
provisions would have applied to parties that produced, transferred,
and used biointermediates. This action does not include a proposed
interim period.
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We do not believe that mandatory QAP participation would be overly
burdensome. Many of the parties that have encouraged EPA to adopt
biointermediate regulations have indicated they intend to participate
in the QAP program. We also expect that obligated parties that obtain
and use RINs generated for renewable fuels made from biointermediates
for compliance would request that biointermediate and renewable fuel
producers participate in the QAP as obligated parties would continue to
be liable for the replacement of any invalid RINs generated on such
renewable fuels.
We seek comment on making QAP participation mandatory for both the
biointermediate producer and the renewable fuel producer where
renewable fuel is produced from biointermediates.
5. Product Transfer Documents (PTD)
Consistent with the REGS proposal, we are proposing anew PTD
requirements for the transfers of biointermediates from biointermediate
producers to renewable fuel producers.\173\ These PTD requirements
include information about the biointermediates type, volume, renewable
content, cellulosic content (if applicable), and the transfer of
records needed for the renewable fuel producer to demonstrate that the
biointermediate was produced using qualifying renewable biomass and
that other aspects needed to ensure that the RFS regulations were met.
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\173\ As explained in Section VII.B, we are reproposing the
biointermediates provisions of the REGS rule. We discuss the
proposed PTD requirements in more detail in the memorandum to the
docket, ``Proposed Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,'' available in the
docket for this action.
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In addition to reproposing the PTD requirements for transfers of
biointermediates, we are also proposing for the first time PTD
requirements for RINs generated from renewable fuel produced from
biointermediates. In the REGS proposal, we did not propose any changes
to the PTD requirements for RINs generated from renewable fuels
produced from biointermediates. Since the REGS proposal, due to the way
that RINs are transacted in EMTS,\174\ we have realized that parties
that transfer and use RINs generated from renewable fuels made from
biointermediates may not be aware that the RINs came from
biointermediates. Such parties may wish to have identified such RINs
because 40 CFR 80.1460 prohibits any party from transferring invalid
RINs. These parties may wish to have information related to whether the
RIN was produced from a renewable fuel made from a biointermediate
prior to transacting the RINs. Therefore, we are also proposing
additional elements for PTDs related to RINs under 40 CFR 80.1453(a).
Under this proposal, RINs PTDs would need to identify that the RINs
were generated from renewable fuels produced from biointermediates as
well as the EPA-issued company and
[[Page 72471]]
facility numbers of the biointermediate producer. We believe that by
requiring such information on the RIN PTDs, parties that transfer or
use such RINs would better understand whether they were transferring
and using RINs generated from renewable fuels produced from
biointermediates. This would allow parties that transact RINs generated
from renewable fuels made with biointermediates to make decisions on
whether to transact the RIN. We seek comment on both the proposed PTD
requirements for transfers of biointermediates and on the newly
proposed RIN PTD requirements.
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\174\ In EMTS, parties can specify to transact RINs from
specific renewable fuel producers by facility and D-code. Current
EMTS functionality would not allow parties to transact RINs based on
a whether the RINs were generated from renewable fuel made from a
specific feedstock (or biointermediate if the proposed
biointermediate provisions are finalized). Furthermore, EMTS would
not indicate to parties transacting the RINs in any way whether such
RINs came from a renewable fuel made from a biointermediate.
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6. Registration, EMTS and Reporting Requirements
As in the REGS proposal, we are proposing here the registration,
reporting, and EMTS requirements for biointermediates that are needed
in order to implement the program.\175\ Some of these proposed elements
have already been discussed in conjunction with the proposed
biointermediates provisions addressed in this section. Others are
additional elements reflecting our current implementation of related
provisions under the RFS program that have changed since we proposed
the REGS rule. Registration elements include proposed requirements for
renewable fuel producers that intend to produce or utilize
biointermediates as part of their production process to register these
processes and related information similar to other feedstock
registration requirements. Biointermediate producers must also register
production capacities, information on the feedstocks intended for
processing, co-products produced and, similar to renewable fuel
producers, complete an initial engineering review followed by an update
every three years. For EMTS, the renewable fuel producer utilizing
biointermediates in the production of renewable fuel would report the
type and quantity of biointermediates used for the batch and the EPA
facility registration number for each production facility. Renewable
fuel producers utilizing biointermediates would report total co-
products and the process(es), feedstock(s), and biointermediate(s) used
and proportion of renewable volume attributable to each process and
feedstock. Biointermediate producers or importers would report for each
batch the volume, identifying information for the entity receiving
title to the batch and other characteristics of the batch and
associated production processes and characteristics of the batch.
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\175\ We discuss the proposed registration, EMTS, and reporting
requirements for biointermediates in more detail in the memorandum
to the docket, ``Proposed Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,'' available in the
docket for this action.
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We seek comment on the proposed registration, reporting, and EMTS
requirements for biointermediates. We are also seeking comment on
potential improvements regarding the functionality of EMTS or other
information systems related to the production, transfer, and use of
biointermediates. While not part of the proposed regulations
themselves, we believe it is important to identify areas where
functional improvement is desired by the users of our information
systems. Such feedback as part of this proposal would help us identify
areas for improvement and prioritize development. For example, as
discussed in Section VII.C.5, we believe parties that transfer and use
RINs generated from renewable fuel produced from biointermediates may
want the ability to tie the RINs back to specific biointermediates or
biointermediate producers. We believe some parties may want to track
whether RINs were generated from a specific biointermediate producer in
EMTS. However, such a change would involve significant modification to
EMTS, and therefore is not something that EPA would undertake unless
desired and resources permitted. However, knowing what additional
functionality is desired may allow us to include such features into our
upcoming development plans.
7. Attest Engagement and Recordkeeping Requirements
We are proposing anew the attest engagement and recordkeeping
requirements for biointermediates discussed in the proposed REGS rule,
as well as some updating some of these requirements for
biointermediates since that proposal.\176\ Updated proposed
requirements for attest engagement audits include validating the list
of renewable fuel producers receiving any transfer of biointermediate
batches and calculating the total volume received. We believe these
updated requirements for attest engagement audit are appropriate to
help ensure that the limits on biointermediate transfers discussed in
Section VII.C.3 are followed.
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\176\ We discuss the proposed attest engagement and
recordkeeping requirements for biointermediates in more detail in
the memorandum to the docket, ``Proposed Biointermediate Provisions
in the proposed Renewables Enhancement Growth Support Rule,''
available in the docket for this action.
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We are proposing updated recordkeeping requirements to reflect the
other changes discussed in this section. These updates are needed to
help independent third parties and EPA conduct audits.
We seek comment on the proposed attest engagement and recordkeeping
requirements for biointermediates. Specifically, we request comment on
whether the attest engagement and recordkeeping requirements are
adequate and whether any additional requirements are needed to enable
implementation of the program.
8. Invalid RINs From Biointermediates
We are proposing anew the provisions that address the treatment of
invalid RINs generated on renewable fuels produced from
biointermediates.\177\ Due to the potential complexity involved in
determining the validity of RINs generated for renewable fuel produced
from a biointermediate, we proposed in the REGS rule and are proposing
anew that if any of the RINs in any batch of renewable fuel produced
from a biointermediate are deemed invalid, then all RINs generated for
that batch of renewable fuel would be considered invalid except to the
extent that EPA, in its sole discretion, determines that some portions
of these RINs would be valid. Since the proposed REGS rule, we have
further considered how invalid RINs generated on renewable fuels
produced from biointermediates could potentially be treated in
complicated circumstances: Where multiple biointermediate and/or non-
biointermediates are simultaneously processed to make renewable fuel
with the same D-code, where biointermediate and/or non-biointermediates
are simultaneously processed that result in multiple D-codes, and where
biointermediates are co-processed with non-renewable biomass (e.g.,
crude oil). Given the range of biointermediates that would be permitted
under this proposal and based on discussions with parties that have
expressed interest in using various types of biointermediates in the
future, we believe it is important to address this situation clearly in
the regulations as apportioning which RINs were tied to which gallons
of renewable fuel made in these situations is complicated.
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\177\ We discuss the proposed liability provisions for
biointermediates in more detail in the memorandum to the docket,
``Proposed Biointermediate Provisions in the proposed Renewables
Enhancement Growth Support Rule,'' available in the docket for this
action.
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In all cases, where a biointermediate is processed simultaneously
with other feedstocks or co-processed with non-
[[Page 72472]]
renewable biomass, we are proposing that all RINs generated from the
renewable fuel would be invalid. This means that even if multiple
different RIN batches would be generated in EMTS for apportioned
volumes of the batch of renewable fuel, all RIN batches in their
entirety would be invalid if any amount of non-qualifying
biointermediate was used to generate any RIN on any volume of the
renewable fuel. This would also include situations where the multiple
RIN batches were for different D-codes or where multiple different
biointermediates were used. We proposed this approach in the REGS rule,
and we are now proposing additional regulatory provisions to better
effectuate the intended outcome. We believe this provision is
appropriate to avoid having to determine specifically which RINs are
invalid in situations where biointermediates are processed
simultaneously with other feedstocks or co-processed with non-renewable
biomass, which may be difficult to ascertain. We also believe that this
proposed provision would provide a strong incentive for renewable fuel
producers to conduct due diligence oversight procedures on the
biointermediate producer to avoid the invalidation of an entire batch
of RINs.
We are also proposing that in cases where the renewable fuel is a
renewable diesel, renewable gasoline, renewable diesel blendstock, or
renewable gasoline blendstock, if a RIN is invalid under 40 CFR
80.1431(a)(1), the gallon of gasoline or diesel fuel for which the RIN
was generated would incur an RVO. The regulations at 40 CFR
80.1407(f)(1) already exclude ``[a]ny renewable fuel as defined in
Sec. 80.1401'' from the volume of gasoline or diesel fuel produced or
imported used to calculate an obligated party's annual RVO. In many
cases, RINs are determined to be invalid because the renewable fuel was
not made from renewable biomass, the RINs were double-counted, or were
otherwise invalidly generated. In such cases, any volume of renewable
gasoline or renewable diesel fuel would no longer be considered
renewable fuel and therefore could not be excluded from an obligated
party's RVO. We believe the situation in which a volume of renewable
fuel (e.g., a renewable diesel or gasoline) that was excluded from an
obligated party's RVO but is no longer considered a renewable fuel will
become more common if we allow the use of biocrude processed through
crude refineries as a way to produce more advanced and cellulosic
biofuels. We are proposing changes to the regulations at 40 CFR
80.1407(f)(1) to reiterate the requirement that renewable fuel for
which a RIN is determined to be invalidly generated may not be excluded
from a party's RVOs.
Finally, as a result of the proposed changes described above, we
are proposing corresponding prohibited activities to address situations
where biointermediates are produced, transferred, and used.\178\
Specifically, we are proposing the following prohibited activities:
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\178\ For a discussion of the proposed REGS rule liability and
prohibited act provisions that we are reproposing see 81 FR 80839
(November 16, 2016).
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Use of a feedstock to produce a biointermediate not
covered by an existing pathway or in the proposed definition of a
biointermediate discussed in Section VII.C.1;
Illegal transfers of biointermediates consistent with the
newly proposed provisions described in Section VII.C.2; and
Generation of RINs from renewable fuels produced from
biointermediates that have not been verified under the QAP as described
in Section VII.C.3.
We believe these additional proposed prohibited activities are
needed to help us enforce violations and ensure compliance of the
proposed biointermediate provisions. We seek comments on these proposed
prohibited activities and whether any additional prohibited activities
related to the production, transfer, and use of biointermediates are
necessary to ensure the integrity of RINs generated from
biointermediates.
We believe that these additional elements coupled with the
reproposed REGS rule provisions concerning liability and the treatment
of invalid biointermediates would provide strong incentives on the part
of renewable fuel producers to diligently be involved in overseeing the
production, transfer, and use of biointermediates. We believe these
provisions are necessary to address the increased complexity of
allowing renewable fuels to be processed at more than one production
facility. We seek comment on our proposed liability provisions for the
production, transfer, and use of biointermediates and the treatment of
invalid RINs generated from renewable fuels produced from
biointermediates.
D. Other Considerations Related to Biointermediates
1. C-14 Testing and Mass Balance for RIN Generation
We are reproposing the requirement that C-14 testing, specifically
Method B (accelerator mass spectrometry) of ASTM International (ASTM)
D6866, be used in cases where biointermediates are co-processed with
petroleum feedstocks at a renewable fuel production facility.\179\ We
are also seeking comment on potential alternatives to direct C-14
measurement of renewable content of co-processed fuels. In the proposed
REGS rule, we proposed to require C-14 testing for co-processed fuels
because we believe that the volume of biointermediate co-processed with
petroleum at a crude refinery would likely be a small fraction of the
refinery's throughput and would make it difficult to rely on a mass
balance approach for RIN generation. Our primary concern was, and is,
that the co-processed fuel would contain little or no renewable content
from the biointermediate and that using the mass balance approach could
result in the generation of RINs for the nonrenewable portion of the
co-processed fuel. Additionally, as noted in the REGS proposal Method B
of ASTM D6866 has greater precision compared with Method C.\180\
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\179\ In the 2010 RFS2 final rule (see 75 FR 14876, March 26,
2010), EPA promulgated requirements for the generation of RINs for
renewable fuel co-processed with petroleum-based fuels, and provided
two methods for determining the renewable content of co-processed
fuels: (1) Mass balance; or (2) Using Methods B or C of ASTM D6866
C-14 testing. See 40 CFR 80.1426(f)(4). These provisions from the
proposed REGS rule are described in greater detail in the memorandum
to the docket, ``Proposed Biointermediate Provisions in the proposed
Renewables Enhancement Growth Support Rule,'' available in the
docket for this action.
\180\ See Martin R. Haverly et al., Biobased Carbon Content
Quantification through AMS Radiocarbon Analysis of Liquid Fuels, 237
Fuel, 1108, (2019).
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In the proposed REGS rule we sought comment on whether our proposed
approach was appropriate, whether there are other methods that could
produce similarly accurate and precise renewable content measurement to
Method B of ASTM D6866 in co-processed fuels, and whether EPA should
allow parties to petition for the use of a company-specific method to
determine the renewable content of co-processed, partially renewable
fuel produced from a biointermediate. We received a number of comments
suggesting that EPA allow for the use of mass balance instead of
requiring direct testing of renewable content using C-14 analysis in
co-processed fuels. While many commenters highlighted the practical and
financial benefits of using mass balance instead of direct C-14
measurements, commenters on the REGS proposal did not substantially
address the concerns we raised regarding the accuracy and precision of
a mass balance approach especially
[[Page 72473]]
where the biointermediate constitutes a relatively small portion of the
co-processed feedstock. Specifically, commenters noted how difficult it
is to collect samples for direct C-14 measurement from a crude
refinery, the added expense and time to conduct the testing, and issues
related to the validity of C-14 testing when there is only a small
amount of renewable content in the co-processed fuel. We also received
comments in support of a facility specific approach, but commenters did
not provide information on how such a process would work or how such a
process could result in sufficiently accurate and precise measurements
of renewable content in co-processed fuels.
We continue to believe that direct C-14 measurement is the most
accurate and precise way to determine the renewable content of co-
processed fuels and that it is necessary to ensure whether a co-
processed fuel actually contains renewable content. We also note that
in Section VIII.F, we are proposing to define what it means for a
renewable fuel to be ``produced from renewable biomass.'' Under this
proposed definition, only energy in the renewable content of the
finished fuel that was produced from renewable biomass would qualify as
renewable fuel for RIN generation. As discussed in Section VIII.F, this
proposed regulatory definition of ``produced from renewable biomass''
is consistent with the statutory requirements that renewable fuels be
transportation fuel, heating oil, or jet fuel. Our proposal for direct
measurement of renewable content in co-processed fuels is consistent
with and necessary to effectuate this proposed definition of ``produced
from renewable biomass.'' That is, because we do not believe a mass
balance approach is capable of accurately determining the renewable
content of fuels produced through co-processing of biointermediates,
allowing renewable fuel production facilities to rely on this approach
for RIN generation would be inconsistent with the definition of
``produced from renewable biomass.''
We seek comment on whether we should provide alternatives to
requiring direct C-14 measurement of renewable content in co-processed
fuels where biointermediates are used. While we are proposing to remove
the allowance for use of mass balance for renewable fuel production
facilities that co-process biointermediates with petroleum feedstocks,
we also seek comment on whether and under what conditions it might be
appropriate to allow for the use of mass balance when there is a
sufficient amount of co-processed biointermediate to ensure that mass
balance calculations actually represent renewable content in the co-
processed fuel. For example, we could allow the use of mass balance if
the biointermediate represented at least 10 percent of the total
feedstock processed to produce the batch. If a sufficient amount of a
biointermediate was used to make the co-processed fuel, we might have
assurance that some of the biointermediate was converted into renewable
fuel.
We also seek comment on whether we could allow the parties that co-
process renewable fuels to develop a facility specific statistical
model for use in estimating low levels of renewable content in co-
processed fuel. Through such a process, renewable fuel producers could
conduct a rigorous test program on a range of biointermediate levels
processed through a specific facility to develop a statistical model to
estimate renewable content of co-processed fuels at that specific
facility for RIN generation. Similar to a mass balance approach, we
acknowledge that a poorly-designed statistical model may inaccurately
estimate the amount of renewable content in a co-processed fuel or
indicate that renewable content was present in a co-processed fuel when
there was none, especially at low levels.
Finally, we seek comment on whether there are any circumstances
where we could rely upon results from Method C of ASTM D6866 (``Method
C'') to measure renewable content of co-processed fuels made from
biointermediates. As mentioned above, we continue to have concerns with
Method C when measuring relatively small amounts of renewable content
in co-processed fuels due to Method C's lower precision. However, we
would consider the use of Method C if its accuracy and precision were
improved and codified in an updated ASTM method or if Method C was
restricted to measuring higher levels of renewable content (e.g., above
10 percent) where we could be assured that measurement represented
valid renewable content in co-processed fuels.
When commenting on the proposed requirement for direct C-14
testing, we specifically ask that commenters provide any relevant
information or data on any demonstrating that an alternative is as
accurate or precise in measuring the renewable content of co-processed
fuels as the proposed C-14 method.
2. Standalone Esterification Pathway
In the proposed 2020 RVO rule, we proposed to add a standalone
esterification pathway to rows F and H of Table 1 of 40 CFR
80.1426.\181\ This would have allowed parties who have processing units
that can take feedstocks listed in rows F and H of Table 1 of 40 CFR
80.1426 that have high-FFA content to separate the FFAs and
triglycerides for chemical processing in separate standalone
esterification and transesterification units, and generate RINs for the
biodiesel produced.\182\ We also noted in the proposed 2020 RVO rule
that while this proposal would allow the separation of FFAs and
triglycerides in qualified high-FFA feedstocks at the facility
producing the biodiesel through these processes, regulatory amendments
were needed to address situations where this separation took place at a
facility other than the ultimate renewable fuel production
facility.\183\ We stated that the biointermediates provisions of the
REGS rule would need to be finalized for parties to use FFAs separated
from triglycerides in a feedstock at a location other than the
biodiesel production facility.\184\
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\181\ See 84 FR 36801-36802 (July 29, 2019).
\182\ See 84 FR 36801-36803 (July 29, 2019).
\183\ See 84 FR 36802 (July 29, 2019).
\184\ Id.
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In the final 2020 RVO rule, we did not finalize the standalone
esterification pathway, but noted that we may finalize the standalone
esterification pathway in a future action.\185\ We are proposing to
include FFA feedstocks as one of the biointermediates specifically
included in the proposed definition of biointermediate. We note that we
would also need to finalize the previously proposed standalone
esterification pathway for parties to process FFA feedstocks to
biodiesel through direct esterification, which is one of the primary
methods for producing renewable fuel from FFA feedstocks. If the
proposed biointermediates provisions in this action are finalized and
FFA feedstocks are included in the definition of biointermediates, we
intend to also finalize the previously proposed standalone
esterification pathway. In this case, we would respond to the public
comments received previously on the proposed standalone esterification
pathway in the 2020 RVO rule proposal and any additional public
comments related to the standalone esterification pathway received on
this proposal in such a final action. Unlike the biointermediates
provisions from the REGS rule that are being re-proposed in this
action, we are not re-proposing the standalone esterification pathway
here and commenters do not have to resubmit
[[Page 72474]]
previously submitted comments to this docket in order for them to be
considered.
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\185\ See 85 FR 7058 (February 6, 2019).
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3. Intracompany Transfers of Biointermediates
We are seeking comment on whether we should provide flexibility for
intracompany transfers of biointermediates (i.e., cases where the same
company owns both the biointermediate production facility and the
renewable fuel production facility). In the proposed REGS rule, we did
not propose any flexibilities for companies that transferred
biointermediates between their biointermediate production facility and
renewable fuel production facility. Under the proposed REGS rule, such
companies would have to comply with all of the requirements regardless
of whether they owned both the biointermediate production facility and
the renewable fuel production facility.
During the public comment period for the REGS proposal, we received
comments suggesting that we should not impose the new requirements for
biointermediates when the party produces both the biointermediate and
the renewable fuel. These commenters argued that they would be able to
effectively track the production and use of biointermediates so
additional compliance and enforcement provisions would not be needed.
However, we believe that all parties should have consistent
requirements on biointermediates. We believe that there could still be
concerns with intracompany transfers of biointermediates as this lack
of transparency could incent the generation of fraudulent RINs. In
fact, we believe that the issues could be worse because if we exempted
intracompany transfers from the proposed biointermediates provisions,
there would be no required records, reports, or oversight on whether
that company appropriately produced, transferred, or used the
biointermediate. This would allow ample opportunities for parties to
use non-qualifying feedstocks or generate fraudulent RINs and provide
EPA no oversight mechanisms. The main purpose of the proposed
biointermediate provisions is to ensure that EPA and third parties such
as QAP and attest auditors have records and reports to verify the
production, transfer, and use of biointermediates. These provisions
help ensure that RINs generated from renewable fuels produced from
biointermediates are valid.
We continue to believe that the proposed regulatory requirements
are needed in this case, and, as such, we are not proposing to provide
any flexibilities for intracompany transfers of biointermediates at
this time. Nevertheless, we seek comment on whether such flexibilities
are appropriate. Commenters should articulate in their public comments
specifically what provisions they believe EPA could provide flexibility
and how effective oversight of the program would be maintained.
VIII. Amendments to Fuel Quality and RFS Regulations
This section describes the regulatory changes we are proposing for
fuel quality and RFS regulations.
A. BBD Conversion Factor for Percentage Standard
In the 2010 RFS2 rule, we determined that because the BBD standard
was a ``diesel'' standard, its volume must be met on a biodiesel-
equivalent energy basis.\186\ In contrast, the other three standards
(cellulosic biofuel, advanced biofuel, and total renewable fuel) must
be met on an ethanol-equivalent energy basis. At that time, biodiesel
was the only advanced renewable fuel that could be blended into diesel
fuel, qualified as an advanced biofuel, and was available at greater
than de minimis quantities.
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\186\ See 75 FR 14670, 14682 (March 26, 2010).
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The formula for calculating the applicable percentage standards for
BBD needed to accommodate the fact that the volume requirement for BBD
would be based on biodiesel equivalence while the other three volume
requirements would be based on ethanol equivalence. Given the nested
nature of the standards, however, RINs representing BBD would also need
to be valid for complying with the advanced biofuel and total renewable
fuel standards. To this end, we designed the formula for calculating
the percentage standard for BBD to include a factor that would convert
biodiesel volumes into their ethanol equivalent. This factor was the
same as the Equivalence Value for biodiesel, 1.5, as discussed in the
2007 RFS1 final rule.\187\ The resulting formula \188\ (incorporating
the recent modification to the definitions of GEi and
DEi) \189\ is shown below:
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\187\ See 72 FR 23900, 23921 at Table III.B.4-1 (May 1, 2007).
\188\ See 40 CFR 80.1405(c).
\189\ See 85 FR 7016 (February 6, 2020).
[GRAPHIC] [TIFF OMITTED] TP21DE21.015
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Where:
StdBBD,i = The biomass-based diesel standard for year
i, in percent.
RFVBBD,i = Annual volume of biomass-based diesel
required by 42 U.S.C. 7545(o)(2)(B) for year i, in gallons.
Gi = Amount of gasoline projected to be used in the
48 contiguous states and Hawaii, in year i, in gallons.
Di = Amount of diesel projected to be used in the 48
contiguous states and Hawaii, in year i, in gallons.
RGi = Amount of renewable fuel blended into gasoline
that is projected to be consumed in the 48 contiguous states and
Hawaii, in year i, in gallons.
RDi = Amount of renewable fuel blended into diesel
that is projected to be consumed in the 48 contiguous states and
Hawaii, in year i, in gallons.
GSi = Amount of gasoline projected to be used in
Alaska or a U.S. territory, in year i, if the state or territory has
opted-in or opts-in, in gallons.
RGSi = Amount of renewable fuel blended into gasoline that is
projected to be consumed in Alaska or a U.S. territory, in year i,
if the state or territory opts-in, in gallons.
DSi = Amount of diesel projected to be used in Alaska
or a U.S. territory, in year i, if the state or territory has opted-
in or opts-in, in gallons.
RDSi = Amount of renewable fuel blended into diesel
that is projected to be consumed in Alaska or a U.S. territory, in
year i, if the state or territory opts-in, in gallons.
GEi = The total amount of gasoline projected to be
exempt in year i, in gallons, per Sec. Sec. 80.1441 and 80.1442.
DEi = The total amount of diesel projected to be
exempt in year i, in gallons, per Sec. Sec. 80.1441 and 80.1442.
In the years following 2010 when the percent standard formula
for BBD was first promulgated, advanced renewable diesel production
has grown. Most renewable diesel has an Equivalence Value of 1.7,
and its growing presence in the BBD pool means that
[[Page 72475]]
the average Equivalence Value of BBD has also grown.\190\
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\190\ Under 40 CFR 80.1415(b)(4), renewable diesel with a lower
heating value of at least 123,500 Btu/gallon is assigned an
Equivalence Value of 1.7. A minority of renewable diesel has a lower
heating value below 123,500 BTU/gallon and is therefore assigned an
Equivalence Value of 1.5 or 1.6 based on applications submitted
under 40 CFR 80.1415(c)(2).
[GRAPHIC] [TIFF OMITTED] TP21DE21.016
Because the formula currently specified in the regulations for
calculation of the BBD percentage standard assumes that all BBD used to
satisfy the BBD standard is biodiesel, it biases the resulting
percentage standard low, given that in reality there is some renewable
diesel in BBD. The bias is small, on the order of 2 percent, and has
not impacted the supply of BBD since it is the higher advanced biofuel
standard rather than the BBD standard that has driven the demand for
BBD. Nevertheless, we believe that it would be appropriate to modify
the factor used in the formula to more accurately reflect the amount of
renewable diesel in the BBD pool. The average Equivalence Value of BBD
appears to have grown over time without stabilizing. Given the growth
in facilities producing renewable diesel as discussed in Chapter 5.2 of
the DRIA, it is possible that the average Equivalence Value for BBD
could continue to grow after 2020. As a result, we believe that the
average Equivalence Value for BBD is likely to be at least 1.55. We
therefore propose and seek comment on replacing the factor of 1.5 in
the percentage standard formula for BBD with a factor of 1.55.\191\ We
are not proposing to change any other aspect of the percentage standard
formula for BBD.
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\191\ While we are proposing to only revise the factor of 1.5 in
the percentage standard formula for BBD, we are including all four
of the percentage standard formulas in our proposed amendatory text
for 40 CFR 80.1405(c). This is due to the manner in which the
original formulas were published in the CFR, which does not allow
for revisions to a single formula without republishing all of the
formulas. We are not reexamining any aspect of these formulas beyond
the change to the factor of 1.5 in the BBD formula, and any comments
on other aspects of the formulas are beyond the scope of this
rulemaking.
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The proposed change would have a small impact on the calculation of
the applicable percentage standard for BBD. For instance, for the 2021
BBD volume of 2.43 billion gallons finalized in the 2020 final rule,
the applicable percentage standard would be 2.20 percent using the
factor of 1.55, as compared to 2.13 percent using the factor of 1.5.
However, this proposed change would have no impact on the generation of
RINs. All biodiesel has generated and would continue to generate 1.5
RINs per gallon, and most renewable diesel has generated and would
continue to generate 1.7 RINs per gallon. Similarly, compliance with
the applicable percentage standards would not change, in that all D4
RINs would continue to count toward meeting the RVO for BBD.
Finally, the volume requirement for BBD (RFVBBD,i in the
formula above) would be unaffected by the change to the formula for
calculating the percentage standard.
B. Changes To Registration for Baseline Volume
We are proposing to revise the registration requirements at 40 CFR
80.1450(b)(1)(v) as well as the definition of ``baseline volume'' at 40
CFR 80.1401 to allow non-exempt (i.e., non-grandfathered) renewable
fuel producers to use either nameplate capacity or actual peak capacity
for their facility's baseline volume if permitted capacity cannot be
determined. We are not proposing to change the requirements for
establishing the baseline volume of grandfathered facilities.\192\
\193\ All non-grandfathered facilities with an applicable permitted
capacity would continue to be required to register using the permitted
capacity pursuant to 40 CFR 80.1450(b)(1)(v)(A). Under the existing
requirement, these facilities
[[Page 72476]]
must use their actual peak capacity \194\ as their baseline volume if
the air permits do not specify the maximum rated annual output of
renewable fuel and can only use nameplate capacity \195\ to establish
baseline volume if insufficient production records existed to establish
actual peak capacity. The proposed regulatory revision would give non-
grandfathered facilities that do not have an applicable permitted
capacity the flexibility to establish baseline volume using either
actual peak capacity or nameplate capacity.
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\192\ For purposes of this preamble, a ``grandfathered
facility'' is a renewable fuel production facility that has volumes
that are exempt from the renewable fuel lifecycle GHG reduction
threshold under 40 CFR 80.1403(c). This provision exempts (i.e.,
``grandfathers'') facilities that commenced construction on or
before December 19, 2007, did not discontinue construction for a
period of 18 months after commencement of construction, and
completed construction by December 19, 2010.
\193\ For grandfathered facilities, baseline volume is the
maximum volume of grandfathered fuel for which the facility is
allowed to generate RINs. For non-grandfathered facilities, baseline
volume is intended to indicate the maximum amount of renewable fuel
that the facility is capable of producing. Actual peak capacity,
however, may not be a good indicator of maximum capacity.
\194\ Actual peak capacity is based on either the five years
prior to registration or, if there was no production prior to
registration, the first three years after start-up.
\195\ Nameplate capacity is the peak designed capacity of the
facility.
---------------------------------------------------------------------------
We are proposing this revision in order to allow for more up-to-
date information to be used in establishing the baseline volumes of
non-grandfathered facilities. Actual peak capacity is based on actual
production tied to when EISA was enacted (i.e., December 2007), which
is now more than a decade in the past. This historical peak capacity is
not necessarily an accurate reflection of the facility's current
production capacity. Since the passage of EISA, facilities may have
improved efficiency, expanded the facility, or experienced an increase
in production due to increased demand, resulting in larger production
than the year used to calculate actual peak capacity. Having accurate
capacity information for registered renewable fuel facilities is
important for EPA in helping to identify whether facilities are
generating an appropriate number of RINs.\196\ This proposed change
would allow a non-exempt facility to choose whether to use actual peak
capacity or nameplate capacity if permitted capacity cannot be
determined. Non-exempt facilities already registered using actual peak
capacity would have the option to switch to nameplate capacity at any
time.\197\ This change would have no impact on facilities who choose
not to use this option. We seek comment on this proposed change.
---------------------------------------------------------------------------
\196\ Because the baseline volume of an exempt (i.e.,
grandfathered) facility is by definition tied to either December 19,
2007, or December 31, 2009 (see 40 CFR 80.1403(c) and (d) and
80.1450(b)(1)(v)(B)), current production capacity is not relevant
for such a facility.
\197\ Facilities could also choose to keep their baseline volume
as actual peak capacity.
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C. Changes To Attest Engagements for Parties Owning RINs (``RIN Owner
Only'')
We are proposing to exempt parties that transact a relatively small
number of RINs from the annual attest engagement requirements. In order
to qualify for the proposed exemption, parties would need to be
registered as a ``RIN Owner Only'' and not registered or engaged in any
other role (e.g., obligated party, exporter of renewable fuel,
renewable fuel producer, renewable fuel importer, etc.). Such parties
are currently required to submit an annual attest engagement under 40
CFR 80.1464(c), regardless of the number of RINs they transact or hold
in a compliance year. Under the existing regulations, for example, a
party whose only activity was to buy and sell a single RIN in any given
compliance year would be required to complete an attest engagement for
that year. Additionally, some parties that own a small number of RINs
have difficulty selling such small denominations of RINs (e.g.,
hundreds of separated D6 RINs) and can hold such RINs until they
expire. These parties must then arrange for an annual attest engagement
performed by a certified professional accountant (CPA) for those RINs,
which can be quite costly especially when compared to the relatively
low value of the small number of RINs owned.
We believe that parties who, in a given compliance year, are
registered as a ``RIN Owner Only,'' who transact 10,000 or fewer RINs,
and who do not exceed a RIN holding threshold under 40 CFR 80.1435,
should not be required to complete an attest engagement for that
compliance year. A party who is registered as a ``RIN Owner Only'' does
not generate RINs and does not have an RVO. We believe that the
information contained in EMTS and RIN activity reports for a RIN Owner
Only who transacts a relatively small number of RINs and who does not
exceed a RIN holding threshold conveys the necessary compliance
information, and that the attest engagements for these parties do not
add much value relative to their expense. Many of the affected parties
are smaller businesses that are required to arrange the services of a
CPA to perform their annual attest engagement. Making this change to
the attest engagement requirements may result in a cost savings to
these typically smaller businesses, without adversely affecting RFS
program oversight.
We intend that the total number of RINs transacted in the year be
counted toward the 10,000 RIN limit. RINs ``transacted'' includes RINs
retired for reasons other than compliance retirements, such as the
reason code ``voluntary RIN retirement.'' This means that if a party
buys 5,000 RINs and sells 6,000 RINs in a year, the party will have
transacted 11,000 RINs and would be required to complete the attest
engagement for that year. We are proposing the 10,000 RIN limit based
upon programmatic experience--specifically, we believe it reflects a
reasonable level of activity below which the utility of the attest
engagement is reduced. We seek comment on establishing this proposed
attest engagement exemption for parties that transact fewer than 10,000
RINs in a compliance year and what the appropriate level of RIN
transactions for this exemption should be.
D. Public Access to Information
Exemption 4 of the Freedom of Information Act (FOIA) exempts from
disclosure ``trade secrets and commercial or financial information
obtained from a person [that is] privileged or confidential.'' \198\ In
order for information to meet the requirements of Exemption 4, EPA must
find that the information is either: (1) A trade secret, or (2)
commercial or financial information that is: (a) Obtained from a
person, and (b) privileged or confidential. Information meeting these
criteria is commonly referred to as ``confidential business
information'' or ``CBI.'' \199\
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\198\ 5 U.S.C. 552(b)(4).
\199\ We note that CAA section 114(c) explicitly excludes
emissions data from treatment as confidential information.
---------------------------------------------------------------------------
In June 2019, the U.S. Supreme Court issued its decision in Food
Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019)
(Argus Leader). Argus Leader addressed the meaning of ``confidential''
within the context of FOIA Exemption 4. The Court held that ``[a]t
least where commercial or financial information is both customarily and
actually treated as private by its owner and provided to the government
under an assurance of privacy, the information is `confidential' within
the meaning of Exemption 4.'' \200\ The Court identified two conditions
``that might be required for information communicated to another to be
considered confidential.'' \201\ Under the first condition,
``information communicated to another remains confidential whenever it
is customarily kept private, or at least closely held, by the person
imparting it.'' \202\ The second condition provides that ``information
might be considered confidential only if the party receiving it
provides some assurance that it will remain secret.'' \203\ The Court
found the first condition necessary for information to be considered
confidential within the
[[Page 72477]]
meaning of Exemption 4, but did not address whether the second
condition must also be met.
---------------------------------------------------------------------------
\200\ Argus Leader, 139 S. Ct. at 2366.
\201\ Id. at 2363.
\202\ Id. (internal citations omitted).
\203\ Id. (internal citations omitted).
---------------------------------------------------------------------------
Following the issuance of the Court's opinion, the U.S. Department
of Justice (DOJ) issued guidance concerning the confidentiality prong
of Exemption 4, articulating ``the newly defined contours of Exemption
4'' post-Argus Leader.\204\ Where the Government provides an express or
implied indication to the submitter prior to or at the time the
information is submitted to the Government that the Government would
publicly disclose the information, then the submitter generally cannot
reasonably expect confidentiality of the information upon submission,
and the information is not entitled to confidential treatment under
Exemption 4.\205\
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\204\ ``Exemption 4 After the Supreme Court's Ruling in Food
Marketing Institute v. Argus Leader Media and Accompanying Step-by-
Step Guide,'' Office of Information Policy, U.S. DOJ, (October 4,
2019), available at https://www.justice.gov/oip/exemption-4-after-supreme-courts-ruling-food-marketing-institute-v-argus-leader-media.
\205\ See id.; see also ``Step-by-Step Guide for Determining if
Commercial or Financial Information Obtained from a Person is
Confidential under Exemption 4 of the FOIA,'' Office of Information
Policy, U.S. DOJ, (updated October 7, 2019), available at https://www.justice.gov/oip/step-step-guide-determining-if-commercial-or-financial-information-obtained-person-confidential.
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1. Treatment of Information Contained in Enforcement Actions and
Invalid RIN Determinations
EPA has a longstanding practice of posting on its website or
otherwise publicly releasing information describing fuels violations
and invalid RIN determinations.\206\ Accordingly, we are proposing
regulations to codify the types of information contained in fuels-
related enforcement actions and invalid RIN determinations that are not
entitled to confidential treatment pursuant to Exemption 4 of FOIA.
This proposal covers notices of violation, settlement agreements,
administrative complaints, civil complaints, criminal information, and
criminal indictments related to EPA's fuel quality and RFS regulations
in 40 CFR parts 80 and 1090 and invalid RIN determinations related to
EPA's RFS regulations in 40 CFR part 80.
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\206\ See, e.g., ``Clean Air Act Fuels Settlement Information,''
U.S. EPA, available at https://www.epa.gov/enforcement/clean-air-act-fuels-settlement-information; ``Civil Enforcement of the
Renewable Fuel Standard Program,'' U.S. EPA, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
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Since at least 2013,\207\ EPA has posted on its website or
otherwise publicly released information relating to violations of the
fuel quality and RFS regulations. This information includes the company
name and identification number, the total quantity of fuel and
parameter, information relating to the generation, transfer, or use of
credits or RINs, and the total quantity of RINs in question. Therefore,
EPA has already provided an implied indication to any submitters of
such information after at least 2013 that EPA may publicly disclose
such information. Accordingly, the information is not entitled to
confidential treatment, and EPA intends to continue to release such
information without further notice.
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\207\ EPA began posting RFS enforcement-related determinations
and actions in 2013. See ``Civil Enforcement of the Renewable Fuel
Standard Program,'' U.S. EPA, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program. EPA
has been posting gasoline and diesel enforcement actions for much
longer. See ``Clean Air Act Fuels Settlement Information,'' U.S.
EPA, available at https://www.epa.gov/enforcement/clean-air-act-fuels-settlement-information.
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Through this proposal, we are also providing an express indication
that such information is not entitled to confidential treatment and
will be affirmatively disclosed to the public without providing further
notice or process to the affected businesses. Once finalized, this rule
will effectively serve as an advance confidentiality determination
through rulemaking and will cover the information identified below.
Except as otherwise provided, 40 CFR 2.201 through 2.215 and 2.301 do
not apply to the specified information submitted under this part and 40
CFR part 1090 that is determined through this rulemaking to not qualify
for confidential treatment. In particular, this proposal will impact
certain information contained in EPA determinations that RINs are
invalid under 40 CFR 80.1474(b)(4)(i)(C)(2) and (b)(4)(ii)(C)(2),
notices of violation, settlement agreements, administrative complaints,
civil complaints, criminal information, and criminal indictments. The
information that EPA intends to continue release in the context of
these determinations and actions includes the company name and company
identification number, the facility name and facility identification
number, the total quantity of fuel and parameter, information relating
to the generation, transfer, or use of credits or RINs, the total
quantity of RINs in question, the batch number(s) and the D codes of
the RINs in question, the time period when the RINs in question were
generated or when the violation occurred, and any other information
relevant to describing the violation at issue. We are proposing to
codify this determination at 40 CFR 80.11 and 80.1402(b) as well as 40
CFR 1090.15.
Publicly disclosing this information is important in providing
transparency to stakeholders and the public with respect to violations
of EPA's fuel quality and RFS programs and the relief EPA is seeking to
remedy those violations through its enforcement actions. Public
disclosure is also important to the successful operation and integrity
of the RFS program as it may prevent parties from unwittingly
transferring or attempting to use invalid RINs for compliance, in
contravention of the RFS regulations, or from buying invalid RINs that
they will be unable to use for compliance. We seek comment on whether
any additional EPA enforcement-related determinations and actions, or
additional factual information relating to such determinations and
actions described above should be identified as not entitled to
confidential treatment. Therefore, although the public release of such
information since at least 2013 constitutes an implied indication that
such information is not entitled to confidential treatment, EPA is also
providing an express indication that such information is not entitled
to confidential treatment through this proposal.
2. Treatment of Information Contained in Requests Submitted Under the
RFS Program
We are proposing regulations that would help facilitate our
processing of claims that RFS-related information should be withheld
from public disclosure under FOIA, 5 U.S.C. 552(b)(4), as CBI. If
finalized, the proposed regulations would identify certain types of RFS
information collected by EPA under 40 CFR part 80, subpart M, that EPA
would consider as not entitled to confidential treatment pursuant to
Exemption 4 of the FOIA and that EPA will release without further
notice.
We are proposing regulations that would facilitate our processing
of claims that requests for information submitted under 40 CFR part 80,
subpart M, should be withheld from the public under Exemption (b)(4) of
the FOIA, 5 U.S.C. 552(b)(4), as CBI. If finalized, this rule would
provide an express indication that we would not consider certain basic
information incorporated into EPA actions on petitions and submissions,
as well as that same information as it appears in the submissions to
EPA under 40 CFR part 80, subpart M, to be entitled to treatment as CBI
under Exemption 4 of the FOIA. In particular, this proposal would apply
to all submissions to EPA under 40 CFR part 80, subpart M,
[[Page 72478]]
including, but not limited to: SREs submitted under 40 CFR 80.1441,
small refiner exemptions under 40 CFR 80.1442, pathway petitions under
40 CFR 80.1416, and compliance demonstration reports. Accordingly, if
finalized, such information will be released without further notice to
the submitter and without following EPA's procedures set forth in 40
CFR part 2, subpart B. We are proposing to codify this determination at
40 CFR 80.1402(c) and (d).
Through this proposal, we are providing an express indication that,
after finalization of this rule, such information is not entitled to
confidential treatment and will be affirmatively disclosed to the
public without providing further notice to affected businesses. Once
finalized, this rule will effectively serve as an advance
confidentiality determination through rulemaking covering the
information identified below. Except as otherwise provided, 40 CFR
2.201 through 2.215 and 2.301 do not apply to the specified information
submitted under this part that is determined through this rulemaking
not to qualify for confidential treatment. In particular, the
information affected by this proposal is the submitter's name, the name
and location of the facility, the date the submission was transmitted
to EPA, any EPA-issued company or facility identification numbers
associated with the submission, the general nature or purpose of the
submission, and the relevant time period for the request. Additionally,
for submissions making requests that EPA must adjudicate, under this
proposal, once we have adjudicated the request, we will release the
following information: The submitter's name; the name and location of
the facility; the date the request was transmitted to EPA; any EPA-
issued company or facility identification numbers associated with the
request, the general nature or purpose of the request, the relevant
time period for the request, the extent to which EPA either granted or
denied the request, and any relevant terms and conditions. For
information submitted under 40 CFR part 80, subpart M, and not
specified in the proposed regulations at 40 CFR 80.1402, EPA would
continue to evaluate such CBI claims in accordance with 40 CFR part 2,
subpart B.
It is appropriate to release the information described above in the
interest of transparency and to provide the public with information
about entities seeking exemptions or requests under part 80, subpart M.
If finalized, this proposed approach would also provide certainty to
submitters regarding the release of information under 40 CFR part 80,
subpart M. With this advance notice, each submitter would have
certainty regarding how EPA would treat the information specified
above, and, as applicable, have the discretion to decide whether to
make such a request with the understanding that EPA may release certain
information about the request without further notice.
We seek comment on our proposal to release the aforementioned basic
information about submissions and EPA's adjudication of those
submissions under the RFS program.
E. Clarifying the Definition of ``Agricultural Digester''
Row Q in Table 1 to 40 CFR 80.1426 makes renewable compressed
natural gas, renewable liquefied natural gas, and renewable electricity
eligible to generate cellulosic biofuel (D-code 3) RINs if the fuel is
produced from, among other feedstocks, biogas from agricultural
digesters and if the producer meets all of the other regulatory
requirements under the RFS program. An agricultural digester is
currently defined at 40 CFR 80.1401 as ``an anaerobic digester that
processes predominantly cellulosic materials, including animal manure,
crop residues, and/or separated yard waste.'' In the preamble to the
Pathways II final rule, we explained that predominantly cellulosic
materials are materials that are at least 75 percent cellulose, hemi-
cellulose or lignin by mass.\208\ We received multiple questions from
stakeholders asking if they could generate D3 RINs for biogas produced
in a digester if materials that are not predominantly cellulosic are
used in the digester. We are proposing revisions to the definition of
agricultural digester to clarify that each and every material processed
must be predominantly cellulosic in order for the digester to qualify
as an agricultural digester under the RFS regulations. This revision
does not change the existing requirements but will make it easier for
the regulated community to understand the limitations on generating D3
RINs for biogas produced in anerobic digesters.
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\208\ The Pathways II final rule contained a list of feedstocks
EPA determined are ``predominately cellulosic feedstocks'': ``Crop
residue, slash, pre-commercial thinnings and tree residue,
switchgrass, miscanthus, Arundo donax, Pennisetum purpureum, and
biogas from landfills, municipal wastewater treatment facility
digesters, agricultural digesters, and separated MSW digesters'' (79
FR 42130-31, July 18, 2014). EPA further determined that feedstocks
with minimum average adjusted cellulosic content of 75 percent,
measured on a dry mass basis, were ``predominantly cellulosic,''
meaning fuel produced from these feedstocks would be eligible to
generate 100 percent cellulosic RINs.
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The existing definition of agricultural digester states that the
digester must processes ``predominantly cellulosic materials,''
including animal manure, crop residues, and/or separated yard waste.
The preamble to the Pathways II rule makes it clear that the term
``predominantly cellulosic'' means that eligible feedstocks must
contain a cellulosic content of at least 75%, and that this term does
not authorize renewable fuel producers to introduce non-cellulosic
materials into an agricultural digester. Allowing other materials into
the digester or any materials that are not at least 75 percent
cellulosic would be inconsistent with the analysis underlying the rule
and the definition of agricultural digester. The Pathways II rule
identified agricultural digesters as a type of digester that will
process wastes that are predominantly cellulosic. For the Pathways II
rule we defined agricultural digesters narrowly based on the feedstocks
we understood to be the most common inputs and assessed in that
rulemaking, all of which we determined to be predominantly cellulosic.
Thus, the ability to generate cellulosic RINs for 100 percent of the
fuel produced under the pathway in row Q is predicated on the
assumption and associated requirement that all the inputs to an
agricultural digester are predominantly cellulosic. However, EPA does
allow renewable fuel to be produced by ``other waste digesters'' and in
some cases this fuel may qualify as cellulosic or partly cellulosic. A
digester processing at least one type of material that is not at least
75 percent cellulosic content cannot be an agricultural digester and is
instead an ``other waste digester'' under row T of Table 1 to 40 CFR
80.1426. If cellulosic material is used in an ``other waste digester,''
the renewable compressed natural gas would either be eligible for 100
percent D5 RINs or may be eligible to generate D3 RINs for the portion
of the fuel that was demonstrated to be produced from cellulosic
biomass through proper testing and D5 RINs for the rest of the fuel
produced as specified at 40 CFR 80.1426(f)(15)(i)(B).
In order to clarify the materials that may be processed in an
agricultural digester, we are proposing to revise the definition of
agricultural digester to specify that such digesters may process
``only'' predominantly cellulosic materials and that ``each and every
material processed in an agricultural digester must be predominantly
cellulosic.'' These revisions are consistent with the current
regulations, and the analyses undertaken for the
[[Page 72479]]
Pathway II rule that formed the basis for the agricultural digester
pathways. They are a clarification of the regulatory text, but not a
change in our interpretation of our existing regulations or practice in
implementing them. The revisions are meant to clarify that a digester
that processes multiple feedstocks, including a material that is less
than 75 percent cellulosic content is not an agricultural digester,
even if the total cellulosic content of all the processed materials
taken together exceeds the 75 percent threshold.
F. Definition of ``Produced From Renewable Biomass''
CAA section 211(o)(1)(J) defines renewable fuel as ``fuel that is
produced from renewable biomass and that is used to replace or reduce
the quantity of fossil fuel present in a transportation fuel.'' In
order to satisfy the definition of renewable fuel under the RFS
regulations, the fuel must: (1) Be ``produced from renewable biomass'';
(2) be ``used to replace or reduce the quantity of fossil fuel present
in a transportation fuel, heating oil, or jet fuel''; and (3) have
``lifecycle [GHG] emissions that are at least 20 percent less than
baseline lifecycle [GHG] emissions'' (unless exempted under 40 CFR
80.1403). We are proposing to define in 40 CFR 80.1401 that ``produced
from renewable biomass'' means the energy in the finished fuel comes
from renewable biomass. This definition would align the regulatory
definition with our existing interpretation of the statute and
regulations. We believe this definition is needed because we have
received multiple questions from stakeholders on this aspect of the
renewable fuel definition.
The statutory requirement that renewable fuel be produced from
renewable biomass is fairly straightforward for the vast majority of
renewable fuel produced under the RFS program. For example, corn starch
ethanol is clearly produced from renewable biomass \209\ because
essentially all of the mass, volume, and energy contained in the
undenatured fuel ethanol comes from fermented corn starch. However, the
application of this requirement is less clear for some fuels that are
produced by co-processing multiple feedstocks. For example, some
relatively new process technologies seek to produce transportation fuel
by bonding carbon atoms obtained from biogenic carbon dioxide with
hydrogen atoms obtained from fossil fuels. In this case, some of the
mass and volume in the finished fuel may come from renewable
biomass,\210\ but, since carbon dioxide is not an energy carrier, all
of the energy in the finished fuel would come from the fossil-based
hydrogen. In these cases, we look at the existing RFS regulations to
determine whether or how much of this fuel qualifies as renewable fuel.
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\209\ Provided the corn starch qualifies as renewable biomass
(e.g., it must come from qualifying land).
\210\ Provided the biogenic carbon dioxide was produced from
renewable biomass (e.g., carbon dioxide from fermented corn starch).
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The RFS regulations at 40 CFR 80.1426(f)(4) determine the number of
gallon-RINs generated for fuel that is produced by co-processing
renewable biomass and non-renewable feedstocks simultaneously to
produce a fuel. The formula in the regulations states that the share of
the fuel that is renewable is calculated as the feedstock energy from
renewable biomass divided by the total feedstock energy. In the example
given above, the carbon dioxide provides zero feedstock energy, so the
regulations stipulate that zero RINs would be generated for the fuel.
In other words, no portion of the fuel would qualify as renewable fuel.
We believe this outcome is appropriate given that the fundamental
purpose of transportation fuel is to provide energy, thus the source of
the energy in the finished fuel should be the criterion for determining
from what the fuel was produced, as opposed to the source of the mass
or volume of the fuel. It is also consistent with statutory definition
that renewable fuel must ``be used to replace or reduce the quantity of
fossil fuel present in a transportation fuel.'' Fuel that derives its
energy from fossil fuel (a subset of non-renewable feedstocks) is
replacing one form of fossil fuel for another, not reducing the
quantity of fossil fuel present in a transportation fuel.
As stated above, we have received multiple questions related to
fuels that derive their energy from non-renewable feedstocks, and
whether such fuels qualify as renewable fuel under the RFS program. We
believe that adding this definition would reduce future confusion on
this issue. In particular, we want to avoid a situation where resources
may be allocated to researching or developing a new fuel technology
with the hopes of generating RINs only to later find out that the fuel
does not qualify because its energy does not come from renewable
biomass. Thus, we propose to add a definition of ``produced from
renewable biomass'' at 40 CFR 80.1401 that defines it as the energy in
the finished fuel comes from renewable biomass. As explained above,
this proposed definition is consistent with our existing interpretation
of the statute and implementing regulations. We seek comment on this
proposed regulatory definition.
G. Estimating Landfill Emissions for Lifecycle GHG Analysis of Fuels
Produced From Separated Municipal Solid Waste
EPA has previously approved fuel pathways that use the biogenic
components of separated municipal solid waste (MSW), as defined at 40
CFR 80.1426(f)(5)(i)(C), as satisfying the 60 percent lifecycle GHG
reduction for qualification as cellulosic biofuel under the RFS program
(see Table 1 to 40 CFR 80.1426). Through the petition process at 40 CFR
80.1416 and engagement with stakeholders, we are aware of growing
interest in the use of biogenic components of separated MSW to produce
diesel, gasoline, and jet fuel. The existing separated MSW pathways
were based on engineering assessments and other projections about the
processes, process efficiencies and types of process energy that would
be used to convert separated MSW to fuels. In some cases, there are
separated MSW-to-fuel projects under consideration that likely do not
fit the assumptions underlying our previous assessments. For example,
our previous assessments \211\ were based on engineering and cost
projections that separated MSW would be used as both the feedstock and
the predominant source of fuel to heat the conversion process.\212\
However, some of the projects being developed intend to use natural gas
for process heat fuel instead of the separated MSW itself. In such
cases, the fuels produced would be unlikely to meet the 60 percent GHG
reduction threshold using our existing assessment methodology. However,
stakeholders have suggested that our past assessment methodology does
not fully capture the full lifecycle GHG impacts of using the biogenic
components of separated MSW as biofuel feedstock because it does not
account for the future reductions in methane emissions from the
landfills and improved recycling that may occur by diverting separated
MSW from the landfill. Inclusion of change in landfill emissions could
allow fuels produced from separated MSW to satisfy the 60 percent GHG
reduction threshold even if the process heat comes from fossil
[[Page 72480]]
sources. We have not estimated the GHG emissions effects of using the
biogenic components of separated MSW as feedstock instead of its
current fate (e.g., landfill, landfill with flaring, landfill with
power generation, composting, waste to energy). Thus, we are seeking
comment on the appropriateness of doing so and on the appropriate
methodologies, models, and data to estimate the potential effects of
diverting separated MSW from landfills. Seeking comment on this topic
is particularly relevant in this rulemaking because some of the
projects under consideration intend to use separated MSW to produce a
biocrude, which we are proposing to consider a biointermediate (see
Section VII).
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\211\ 78 FR 14190 (March 5, 2013).
\212\ Kinchin, Christopher. Catalytic Fast Pyrolysis with
Upgrading to Gasoline and Diesel Blendstocks. National Renewable
Energy Laboratory (NREL). 2011. Docket Item No. EPA-HQ-OAR-2011-
0542-0007.
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The concept of avoided landfill emissions is that diverting
separated MSW from a landfill would reduce the subsequent GHG emissions
associated with landfilling that material. When landfilled, biogenic
materials decompose under anaerobic conditions and produce landfill gas
composed of methane, carbon dioxide, and other gases. Landfills in the
United States typically capture the landfill gas and flare it or use it
to produce electricity or CNG or for other purposes. However, a share
of the landfill gas evades capture or is not fully combusted by the
flares and is emitted from the landfill. Since landfill gas generation
is a function of the amount and biogenic content of MSW landfilled,
diverting separated MSW from a landfill can reduce the overall amount
of landfill GHG emissions. On the other hand, some of the biogenic MSW
decomposes slowly and remains in the landfill when the landfill cell is
capped, resulting in long-term carbon storage at the landfill.
Combusting carbon that would otherwise be stored, in the form of
transportation fuel, increases GHG emissions. The net result of all of
these processes in a landfill requires modelling to estimate the effect
of diverting the separated MSW on landfill emissions.
In addition to avoided methane emissions, there may be emissions
reductions from enhanced recycling associated with the use of MSW as a
biofuel feedstock. Using MSW as a biofuel feedstock may entail
additional separation and recycling than would otherwise occur,
enhancing the effectiveness of recycling efforts for metals, plastics,
and potentially other materials. The reduced GHG emissions associated
with recycling these additional materials as opposed to producing new
metals, plastics and other materials could then provide additional GHG
reduction that could be estimated and allocated to the finished fuel
for purposes of lifecycle GHG analysis.
A number of models and data sources are available to estimate
landfill emissions--we briefly describe a few here but this is not
intended as a comprehensive list. The GREET-2020 fuel cycle model
includes data and formulas to estimate the lifecycle GHG emissions
associated with ethanol and CNG produced from MSW feedstock, and these
data and formulas could be adapted for analysis of other MSW to fuel
pathways.\213\ The EPA Waste Reduction Model (WARM) is a tool to help
solid waste planners estimate GHG emissions reductions, energy savings,
and economic impacts from several different waste management
practices.\214\ WARM estimates avoided landfill emissions based on user
inputs on MSW composition and landfill characteristics. WARM does not
model pathways for manufacturing fuel from MSW. Municipal solid waste
landfills report annually under EPA's GHG reporting program based on
protocols and formulas specified at 40 CFR part 98, subpart HH. Subpart
HH includes formulas to estimate landfill emissions each year but does
not address carbon storage at landfills or metal and plastic recycling.
In 2019, the International Civil Aviation Organization (ICAO) published
a methodology for calculating landfill emissions for aviation fuels
produced from MSW.\215\ These models and methodologies have many
similarities but they differ in their intended purposes and the default
assumptions they recommend for certain key inputs, such as the decay
rates for certain types of biogenic MSW components and the oxidation
rates for uncaptured landfill methane. Based on our review of these
models, formulas and estimates we observe that the landfill emissions
estimates are sensitive to inputs for key assumptions.
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\213\ The Greenhouse gases, Regulated Emissions, and Energy use
in Technologies (GREET) Model is developed and maintained by Argonne
National Laboratory. https://greet.es.anl.gov.
\214\ EPA. (2019). Waste Reduction Model (WARM) Tool User's
Guide. May 2019. EPA530-R-19-002. https://www.epa.gov/sites/production/files/2020-12/documents/warm-users-guide_v15_10-29-2020.pdf.
\215\ ICAO. (2019). Carbon Offsetting and Reduction Scheme for
International Aviation (CORSIA) Methodology for Calculating Actual
Life Cycle Emissions Values. November 2019. 19 pages. https://www.icao.int/environmental-protection/CORSIA/Documents/ICAO%20document%2007%20-%20Methodology%20for%20Actual%20Life%20Cycle%20Emissions.pdf.
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We seek comment on the appropriateness of accounting for changes in
landfill emissions and, if appropriate, on the best available models,
data, and methodologies to estimate changes in landfill emissions
associated with the use of biogenic components of separated MSW as a
feedstock for the production of biofuel for purposes of lifecycle GHG
analysis for the RFS program. Specifically, we seek comment on the
extent to which we should account for net emissions associated with
changes in landfill methane emissions, landfill carbon storage, metal
and plastic recycling, or other activities. In our previous assessments
of landfill biogas, we used landfill gas flaring as the alternative
baseline scenario (Pathways II rule, 79 FR 42141-2); in this
rulemaking, we seek comment on whether there are any new data that
would support using a different baseline for evaluation of using
biogenic components of separate MSW as feedstock for biofuel
production. Given the fact that landfill emissions can occur for
decades after material is disposed, we also seek comment on the most
appropriate methodology for addressing the temporal aspects of landfill
emissions. In other parts of EPA's lifecycle analysis, we consider
emissions over a 30-year period. We seek comment on whether a 30-year
period is also appropriate for the purposes of quantifying changes in
landfill emissions.
The composition of separated MSW used as biofuel feedstock has a
significant impact on the potential emissions from the landfill. We
seek comment on whether and how EPA should track and verify the
feedstock composition if accounting for net avoided landfill emissions
under the RFS program as well as changes in stored carbon. In addition,
landfill emissions can differ significantly from one landfill to
another based on differences in climate, management practices and other
characteristics; however, evaluating individual landfills requires
additional collection, tracking, and verification of data. We seek
comment on whether to consider landfill emissions from individual
landfills or take a more aggregated approach whereby landfills are
evaluated nationally, regionally or based on a limited set of other
characteristics (e.g., temperature, moisture, gas collection
technology). We intend to consider the comments received on this topic
as we evaluate new fuel pathway petitions, submitted pursuant to 40 CFR
80.1416, that include the use of separated MSW feedstock.
H. Technical Corrections and Clarifications
We are proposing to make numerous technical corrections to the RFS
[[Page 72481]]
regulations. These amendments are being made to correct minor
inaccuracies and updates in the current regulations. These changes are
described in Table VIII.H-1 below.
Table VIII.H-1--Miscellaneous Technical Corrections and Clarifications
to RFS Regulations
------------------------------------------------------------------------
Part and section of title 40 Description of revision
------------------------------------------------------------------------
80.1401...................... Amended by revising the definition of
``Renewable fuel'' to reiterate that
undenatured ethanol is not renewable
fuel.
80.1401, 80.1426(f)(5)(i)- Amended by moving the definitions of
(iii), (f)(5)(iv)(A) and ``Separated yard waste,'' ``Separated
(B), and (f)(5)(v), food waste,'' and ``Separated municipal
80.1450(b)(1)(vii)(A) and solid waste'' from Sec. 80.1426(f)(5)
(B) and (b)(1)(viii), to the RFS definitions section (Sec.
80.1451(b)(1)(ii)(R), and 80.1401) and updating associated cross-
80.1454(j). references.
80.1401, 80.1426(f)(17)(i), Amended by updating the incorporation by
80.1450(b)(1)(xii), reference (IBR) for ``Standard
80.1451(b)(1)(ii)(T), Specification for Diesel Fuel,'' ASTM
80.1454(l), and 80.1468(b). D975-13a, to now be ASTM D975-21, which
is the most recent ASTM version.
80.1401 and 80.1468(b)....... Amended by updating the IBR for
``Standard Specification for Biodiesel
Fuel Blend Stock (B100) for Middle
Distillate Fuels,'' ASTM D6751-09, to
now be ASTM D6751-20a, which is the most
recent ASTM version.
80.1426(f)(7)(v)(A) and Amended by updating the IBR for
80.1468(b). ``Standard Test Methods for Analysis of
Wood Fuels,'' ASTM E870-82(2006), to now
be ASTM E870-82(2019), which is the most
recent ASTM version.
80.1426(f)(7)(v)(B) and Amended by updating the IBR for
80.1468(b). ``Standard Test Methods for Direct
Moisture Content Measurement of Wood and
Wood-Based Materials,'' ASTM D4442-07,
to now be ASTM D4442-20, which is the
most recent ASTM version.
80.1426(f)(7)(v)(B) and Amended by updating the IBR for
80.1468(b). ``Standard Test Method for Laboratory
Standardization and Calibration of Hand-
Held Moisture Meters,'' ASTM D4444-08,
to now be ASTM D4444-13 (2018), which is
the most recent ASTM version.
80.1426(f)(8)(ii)(B) and Amended by updating the IBR for
80.1468(b). ``Standard Guide for the Use of the
Joint American Petroleum Institute (API)
and ASTM Adjunct for Temperature and
Pressure Volume Correction Factors for
Generalized Crude Oils, Refined
Products, and Lubricating Oils: API
Manual of Petroleum Measurement
Standards (MPMS) Chapter 11.1,'' ASTM
D1250-08, to now be ASTM D1250-19e1,
which is the most recent ASTM version.
80.1426(f)(9)(ii), Amended by updating the IBR for
80.1430(e)(2), and ``Standard Test Methods for Determining
80.1468(b). the Biobased Content of Solid, Liquid,
and Gaseous Samples Using Radiocarbon
Analysis,'' ASTM D6866-08, to now be
ASTM D6866-21, which is the most recent
ASTM version.
80.1426(f)(17)(i)............ Amended by adding ``renewable gasoline,''
consistent with other related sections.
80.1426(f)(17)(i)(B)(1) and Amended by replacing ``diesel'' with
(2), 80.1450(b)(1)(xii)(B) ``distillate'' to clarify that parties
and (C), that blend renewable jet fuel with
80.1451(b)(1)(ii)(T)(1), and conventional jet fuel must currently
80.1454(1)(1). comply with these requirements. This
would remove perceived ambiguity over
whether these provisions apply to
producers of blended renewable jet fuel
(jet fuel is not diesel fuel per the
definition of ``diesel fuel'' at 40 CFR
80.2 but rather distillate fuel).
80.1428(b)(2)................ Amended to be consistent with the
restriction that independent third-party
auditors may not own RINs under Sec.
80.1471(a)(3).
80.1429(b)(9)................ Amended to limit the number of RINs that
a party can separate when they incur an
RVO due to redesignating certified-NTDF
under Sec. 80.1408. This is consistent
with similar situations involving
exporters of renewable fuel or importers
of gasoline and diesel fuel.
80.1450(g)(11)(ii), Amended by updating the email address for
80.1473(f), 80.1474(b)(2), EPA's EMTS help desk to
(b)(3), (b)(4)(i)(C), and fuelsprogramsup[email protected].
(b)(4)(ii)(C).
80.1450(h)(2)(i)............. Amended by changing the time for
responding to EPA's notice of intent to
deactivate a company's registration from
14 to 30 calendar days to allow
additional time for company action.
80.1451(b)(1)(ii)(T)(2) and Amended to clarify reporting instructions
80.1454(l)(3). and move the affidavit requirement from
the reporting section (Sec. 80.1451)
to the recordkeeping section (Sec.
80.1454).
80.1460(b)(6)................ Amended to clarify that generating a RIN
for fuel for which RINs have previously
been generated is not a prohibited act
if those RINs were generated pursuant to
Sec. 80.1426(c)(6).
80.1464(a)(3)(ii), Amended to modify the attest engagements
(b)(3)(ii), and (c)(2)(ii). requirements to be consistent with the
RIN activity report requirements in Sec.
80.1451(c)(2).
80.1464(a)(4)(ii), Amended by updating outdated references
(b)(5)(ii), and (c)(3)(ii) to expired provisions of part 80 to part
and 80.1475(a)(2) and (d)(4). 1090.
80.1464(a)(7), (b)(8), Amended to add the requirement that the
(c)(7), (i)(1)(i), and attest auditor verifies the submission
(i)(2)(i). of required compliance reports and
states as a finding any compliance
reports missing.
80.1464(b)(4)(i) and (iii)... Amended to modify the requirements to
include verification of last date of
independent third-party engineering
review as occurring within the three-
year cycle under Sec. 80.1450(d)(3).
80.1469(c)(1)(vii)........... Amended to modify the requirements for
Quality Assurance Plans to allow for a
renewable fuel for which RINs were
previously generated to be used as a
feedstock if done in accordance with
Sec. 80.1426(c)(6).
80.1471(c)................... Amended to correct an erroneous reference
to 31 CFR 50.5(q) to now be 31 CFR
50.4(t), and to allow comparable
financial strength ratings if acceptable
to EPA.
80.1475(d)(1) and (3)........ Amended by correcting erroneous
references to paragraph (b) to now be to
paragraph (c).
------------------------------------------------------------------------
[[Page 72482]]
IX. Statutory and Executive Order Reviews
Additional information about these statutes and Executive orders
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.
A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review
This action is an economically significant regulatory action that
was submitted to the Office of Management and Budget (OMB) for review.
Any changes made in response to OMB recommendations have been
documented in the docket. EPA prepared an analysis of potential costs
and benefits associated with this action. This analysis is presented in
the DRIA, available in the docket for this action.
B. Paperwork Reduction Act (PRA)
The information collection activities in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the PRA. The Information Collection Request (ICR) document
that EPA prepared has been assigned EPA ICR number 2691.01. You can
find a copy of the ICR in the docket for this rule, and it is briefly
summarized here.
The information to be collected is necessary to implement the
proposed inclusion of biointermediates to the RFS program. As part of
this proposal, biointermediate producers and importers would be added
as respondents and certain existing respondents (e.g., renewable fuel
producers) may have additional reporting and recordkeeping requirements
related to their use of biointermediates. Recordkeeping and reporting
requirements include the registration of biointermediate producers and
their facilities; product transfer documentation; records retention
related to the production, transfer, and use of biointermediates;
annual attest engagements; quality assurance plans for
biointermediates; and the submission of information related to
renewable fuels produced using biointermediates. These items are
discussed in detail in the supporting statement in the docket.
Respondents/affected entities: Biointermediate producers, renewable
fuel producers, biointermediate importers, and third parties who submit
reports for these parties.
Respondent's obligation to respond: Mandatory, under 40 CFR parts
80 and 1090.
Estimated number of respondents: 1,670.
Frequency of response: On occasion, daily, quarterly, or annually.
Total estimated burden: 47,988 hours (per year). Burden is defined
at 5 CFR 1320.3(b).
Total estimated cost: $2,828,180 (per year), all of which is
purchased services, and which includes $0 annualized capital or
operation & maintenance costs.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
Submit your comments on the Agency's need for this information, the
accuracy of the provided burden estimates and any suggested methods for
minimizing respondent burden to EPA using the docket identified at the
beginning of this rule. You may also send your ICR-related comments to
OMB's Office of Information and Regulatory Affairs via email to
[email protected], Attention: Desk Officer for EPA. Since OMB
is required to make a decision concerning the ICR between 30 and 60
days after receipt, OMB must receive comments no later than January 20,
2022. EPA will respond to any ICR-related comments in the final rule.
C. Regulatory Flexibility Act (RFA)
I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. In
making this determination, the impact of concern is any significant
adverse economic impact on small entities. An agency may certify that a
rule will not have a significant economic impact on a substantial
number of small entities if the rule relieves regulatory burden, has no
net burden, or otherwise has a positive economic effect on the small
entities subject to the rule.
With respect to the proposed biointermediates provisions, we do not
believe that a small biointermediate producer or renewable fuel
producer would choose to take advantage of the proposed program for
biointermediates unless there was sufficient economic incentive for
them to do so. Current small renewable fuel producers would not be
compelled to use biointermediates, and as such, any costs associated
with these provisions are purely voluntary. With respect to the other
proposed amendments to the RFS regulations, this action makes
relatively minor corrections and modifications to those regulations. As
such, we do not anticipate that there will be any significant adverse
economic impact on directly regulated small entities as a result of
these provisions.
The small entities directly regulated by the annual percentage
standards associated with the RFS volumes are small refiners, which are
defined at 13 CFR 121.201. With respect to the 2020, 2021, and 2022
percentage standards and 2022 supplemental standard, we have evaluated
the impacts on small entities from two perspectives: As if the
standards were a standalone action or if they are a part of the overall
impacts of the RFS program as a whole.
To evaluate the impacts of the volume requirements on small
entities, we have conducted a screening analysis \216\ to assess
whether we should make a finding that this action will not have a
significant economic impact on a substantial number of small entities.
Currently available information shows that the impact on small entities
from implementation of this rule will not be significant. We have
reviewed and assessed the available information, which shows that
obligated parties, including small entities, are generally able to
recover the cost of acquiring the RINs necessary for compliance with
the RFS standards through higher sales prices of the petroleum products
they sell than would be expected in the absence of the RFS
program.\217\ This is true whether they acquire RINs by purchasing
renewable fuels with attached RINs or purchase separated RINs. The
costs of the RFS program are thus generally being passed on to
consumers in the highly competitive marketplace. Even if we were to
assume that the cost of acquiring RINs was not recovered by obligated
parties, a cost-to-sales ratio test shows that the costs to small
entities of the proposed RFS standards are far less than 1 percent of
the value of their sales.
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\216\ See Chapter 11 of the DRIA.
\217\ For a further discussion of the ability of obligated
parties to recover the cost of RINs see ``Denial of Petitions for
Rulemaking to Change the RFS Point of Obligation,'' EPA-420-R-17-
008, November 2017.
---------------------------------------------------------------------------
While the screening analysis described above supports a
certification that this rule will not have a significant economic
impact on small refiners, we continue to believe that it is more
appropriate to consider the standards as a part of our ongoing
implementation of the overall RFS program. When considered this way,
the impacts of the RFS program as a whole on small entities were
addressed in the RFS2 final rule, which was the rule that implemented
the entire program as required by EISA 2007.\218\ As such, the
[[Page 72483]]
Small Business Regulatory Enforcement Fairness Act (SBREFA) panel
process that took place prior to the 2010 rule was also for the entire
RFS program and looked at impacts on small refiners through 2022.
---------------------------------------------------------------------------
\218\ 75 FR 14670 (March 26, 2010).
---------------------------------------------------------------------------
For the SBREFA process for the RFS2 final rule, we conducted
outreach, fact-finding, and analysis of the potential impacts of the
program on small refiners, which are all described in the Final
Regulatory Flexibility Analysis, located in the rulemaking docket (EPA-
HQ-OAR-2005-0161). This analysis looked at impacts to all refiners,
including small refiners, through the year 2022 and found that the
program would not have a significant economic impact on a substantial
number of small entities, and that this impact was expected to decrease
over time, even as the standards increased. For gasoline and/or diesel
small refiners subject to the standards, the analysis included a cost-
to-sales ratio test, a ratio of the estimated annualized compliance
costs to the value of sales per company. From this test, we estimated
that all directly regulated small entities would have compliance costs
that are less than one percent of their sales over the life of the
program (75 FR 14862, March 26, 2010).
We have determined that this proposed rule will not impose any
additional requirements on small entities beyond those already
analyzed, since the impacts of this rule are not greater or
fundamentally different than those already considered in the analysis
for the RFS2 final rule assuming full implementation of the RFS
program. The proposed cellulosic biofuel, advanced biofuel, and total
renewable fuel volumes remain significantly below the statutory volume
targets analyzed in the RFS2 final rule. Compared to the burden that
would be imposed under the volumes that we assessed in the screening
analysis for the RFS2 final rule (i.e., the volumes specified in the
Clean Air Act), the proposed volume requirements in this rule reduce
burden on small entities. Regarding the BBD standard, it is a nested
standard within the advanced biofuel category, and as discussed in
Section III.D, the proposed 2022 BBD volume requirement is below the
volume of BBD that is anticipated to be produced and used to satisfy
the advanced biofuel requirement. In other words, the volume of BBD
actually used in 2022 will be driven not by the proposed 2022 BBD
standard, but rather by the proposed 2022 advanced biofuel standard,
and potentially also by the total renewable fuel standard. The net
result of the standards being proposed in this action is a reduction in
burden as compared to implementation of the statutory volume targets
assumed in the RFS2 final rule analysis.
While the rule will not have a significant economic impact on a
substantial number of small entities, there are compliance
flexibilities in the program that can help to reduce impacts on small
entities. These flexibilities include being able to comply through RIN
trading rather than renewable fuel blending, 20 percent RIN rollover
allowance (up to 20 percent of an obligated party's RVO can be met
using previous-year RINs), and deficit carry-forward (the ability to
carry over a deficit from a given year into the following year,
provided that the deficit is satisfied together with the next year's
RVO). In the RFS2 final rule, we discussed other potential small entity
flexibilities that had been suggested by the SBREFA panel or through
comments, but we did not adopt them, in part because we had serious
concerns regarding our authority to do so.
In sum, this proposed rule will not change the compliance
flexibilities currently offered to small entities under the RFS program
and available information shows that the impact on small entities from
implementation of this rule will not be significant when viewed either
from the perspective of it being a standalone action or a part of the
overall RFS program. We have therefore concluded that this action will
have no net regulatory burden for all directly regulated small
entities.
D. Unfunded Mandates Reform Act (UMRA)
This action does not contain an unfunded mandate of $100 million or
more as described in UMRA, 2 U.S.C. 1531-1538, and does not
significantly or uniquely affect small governments. This action
implements mandates specifically and explicitly set forth in CAA
section 211(o), and we believe that this action represents the least
costly, most cost-effective approach to achieve the statutory
requirements.
E. Executive Order 13132: Federalism
This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the National Government and the states, or on the distribution of power
and responsibilities among the various levels of government.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
This action does not have tribal implications as specified in
Executive Order 13175. This action will be implemented at the Federal
level and affects transportation fuel refiners, blenders, marketers,
distributors, importers, exporters, and renewable fuel producers and
importers. Tribal governments will be affected only to the extent they
produce, purchase, or use regulated fuels. Thus, Executive Order 13175
does not apply to this action.
G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks
EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that EPA has reason to believe may disproportionately affect children,
per the definition of ``covered regulatory action'' in section 2-202 of
the Executive order. This action is not subject to Executive Order
13045 because it implements specific standards established by Congress
in statutes (CAA section 211(o)). While this action is not covered by
Executive Order 13045, a discussion of environmental health impacts is
included in Chapter 3 of the DRIA.
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution, or use of energy. This action proposes the required
renewable fuel content of the transportation fuel supply for 2020,
2021, and 2022 pursuant to the CAA. The RFS program and this rule are
designed to achieve positive effects on the nation's transportation
fuel supply by increasing energy independence and security.
I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR
Part 51
This proposed action involves technical standards. We are proposing
to update the existing test methods and standards in the RFS
regulations to more recent versions. In accordance with the
requirements of 1 CFR 51.5, we are proposing to incorporate by
reference the use of test methods and standards from American Society
for Testing and Materials International (ASTM International). A
detailed discussion of these test methods and standards can be found in
Section VIII.H. The standards and test methods may be obtained through
the ASTM International website (www.astm.org) or by calling ASTM at
(877) 909-2786.
[[Page 72484]]
(ASTM E711 is referenced in the regulatory text of this proposed rule.
It was approved for IBR as of July 1, 2010 and no changes are being
proposed.)
ASTM International routinely updates many of its reference
documents. If ASTM International publishes an updated version of any of
reference documents included in this proposal, we will consider
referencing that updated version in the final rule.
Table IX.I-1--Proposed Standards and Test Methods to be Incorporated by
Reference
------------------------------------------------------------------------
Organization and standard or test
method Description
------------------------------------------------------------------------
ASTM D975-21, Standard Specification Diesel fuel specifications that
for Diesel Fuel, approved August 1, must be met to qualify for
2021. RINs for renewable fuels.
ASTM D1250-19e1, Standard Guide for the Standard guide used by industry
Use of the Joint API and ASTM Adjunct for determining temperature
for Temperature and Pressure Volume corrected standardized volumes
Correction Factors for Generalized under the RFS program.
Crude Oils, Refined Products, and
Lubricating Oils: API MPMS Chapter
11.1, approved May 1, 2019.
ASTM D4442-20, Standard Test Methods Test method used for
for Direct Moisture Content determining moisture content
Measurement of Wood and Wood-Based of wood samples that must be
Materials, approved March 1, 2020. met when qualifying for RINs
for renewable fuels.
ASTM D4444-13 (2018), Standard Test Test method used for
Method for Laboratory Standardization determining moisture content
and Calibration of Hand-Held Moisture of wood samples that must be
Meters, reapproved July 1, 2018. met when qualifying for RINs
for renewable fuels.
ASTM D6751-20a, Standard Specification Biodiesel fuel specifications
for Biodiesel Fuel Blend Stock (B100) that must be met to qualify
for Middle Distillate Fuels, approved for RINs for renewable fuels.
August 1, 2020.
ASTM D6866-21, Standard Test Methods Radiocarbon dating test method
for Determining the Biobased Content to determine the renewable
of Solid, Liquid, and Gaseous Samples content of transportation
Using Radiocarbon Analysis, approved fuel.
January 15, 2021.
ASTM E870-82 (2019), Standard Test Test method that covers the
Methods for Analysis of Wood Fuels, proximate and ultimate
reapproved April 1, 2019. analysis of wood fuels, as
well as the determination of
the gross caloric value of
wood sampled and prepared by
prescribed test methods and
analyzed according to ASTM
established procedures that
must be met when qualifying
for RINs for renewable fuels.
------------------------------------------------------------------------
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Due to time constraints and uncertainty about where impacts are
likely to occur, EPA is able to evaluate only qualitatively the extent
to which this action may result in disproportionately high and adverse
human health or environmental effects on minority populations, low-
income populations, and/or indigenous peoples, as specified in
Executive Order 12898 (59 FR 7629, February 16, 1994). While there is
the potential for significant GHG emission reductions as a result of
this action, changes in air and water quality could occur due to
increases in ethanol or biodiesel production. Land use change to bring
more corn, soy, or other crops into production in response to the
action could also affect air, water, and soil quality in specific
locations. The extent to which such changes--as well as future climate
change impacts--may be unevenly distributed spatially in ways that
coincide with patterns of pre-existing exposure and vulnerabilities for
minority populations, low-income populations, and/or indigenous peoples
is uncertain and would require predicting where these changes would
occur on a fine spatial scale. A summary of our approach for
considering potential EJ concerns as a result of this action can be
found in Section I.I, and our EJ analysis (including a discussion of
this action's potential impacts on GHGs, air quality, water quality,
and fuel and food prices) can be found in Chapter 8 of the DRIA,
available in the docket for this action.
X. Statutory Authority
Statutory authority for this action comes from sections 114, 203-
05, 208, 211, and 301 of the Clean Air Act, 42 U.S.C. 7414, 7522-24,
7542, 7545, and 7601.
List of Subjects
40 CFR Part 80
Environmental protection, Administrative practice and procedure,
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports,
Incorporation by reference, Oil imports, Petroleum, Renewable fuel.
40 CFR Part 1090
Environmental protection, Administrative practice and procedure,
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports,
Oil imports, Petroleum, Renewable fuel.
Michael S. Regan,
Administrator.
For the reasons set forth in the preamble, EPA proposes to amend 40
CFR parts 80 and 1090 as follows:
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
0
1. The authority citation for part 80 continues to read as follows:
Authority: 42 U.S.C. 7414, 7521, 7542, 7545, and 7601(a).
Subpart A--General Provisions
0
2. Add Sec. 80.11 to read as follows:
Sec. 80.11 Confidentiality of information.
(a) Except as specified in paragraph (b) of this section,
information obtained by the Administrator or his representatives
pursuant to this part shall be treated, in so far as its
confidentiality is concerned, in accordance with the provisions of 40
CFR part 2, subpart B.
(b) Information contained in EPA notices of violation, settlement
agreements, administrative complaints, civil complaints, criminal
information, and criminal indictments is not entitled to confidential
treatment and therefore EPA may publicly disclose such information.
Such information includes the company name and EPA-issued company
identification number, the facility name and EPA-issued facility
identification number, the total quantity of fuel and parameter, the
time or time period when the violation occurred, information relating
to the generation, transfer, or use of credits, and any other
[[Page 72485]]
information relevant to describing the violation.
Subpart M--Renewable Fuel Standard
0
3. Amend Sec. 80.1401 by:
0
a. Revising the definitions of ``Agricultural digester'' and ``Baseline
volume'';
0
b. Adding in alphabetical order the definition of ``Biocrude'';
0
c. Revising the definition of ``Biodiesel'';
0
d. Adding in alphabetical order the definitions of ``Biointermediate,''
``Biointermediate import facility,'' ``Biointermediate importer,''
``Biointermediate producer,'' and ``Biointermediate production
facility'';
0
e. Revising the definitions of ``Combined heat and power (CHP),'' ``Co-
processed,'' ``Facility,'' and ``Foreign renewable fuel producer'';
0
f. Adding in alphabetical order the definition of ``Free fatty acid
(FFA) feedstock'';
0
g. Revising paragraph (1) in the definition of ``Non-ester renewable
diesel'' and the definition of ``Non-renewable feedstock'';
0
h. Adding in alphabetical order the definition of ``Produced from
renewable biomass'';
0
i. Revising the definitions of ``Quality assurance audit,'' ``Quality
assurance plan,'' paragraph (7) in the definition of ``Renewable
biomass,'' the introductory text and paragraph (1)(i) in the definition
of ``Renewable fuel''; and
0
j. Adding in alphabetical order the definitions of ``Separated food
waste,'' ``Separated municipal solid waste (MSW),'' ``Separated yard
waste,'' and ``Undenatured ethanol''.
The revisions and additions read as follows:
Sec. 80.1401 Definitions.
* * * * *
Agricultural digester means an anaerobic digester that processes
only animal manure, crop residues, or separated yard waste with an
adjusted cellulosic content of at least 75%. Each and every material
processed in an agricultural digester must have an adjusted cellulosic
content of at least 75%.
* * * * *
Baseline volume means the permitted capacity or, if permitted
capacity cannot be determined, the actual peak capacity or nameplate
capacity as applicable pursuant to Sec. 80.1450(b)(1)(v)(A) through
(C), of a specific renewable fuel production facility on a calendar
year basis.
Biocrude means a liquid biointermediate produced from renewable
biomass through gasification or pyrolysis at a biointermediate
production facility to be used to produce renewable fuel at a refinery
as defined in 40 CFR 1090.80.
Biodiesel means a mono-alkyl ester that meets ASTM D6751
(incorporated by reference, see Sec. 80.1468).
* * * * *
Biointermediate means any feedstock material that is used to
produce renewable fuel and meets all of the following requirements:
(1) It is derived from renewable biomass.
(2) It does not meet the definition of renewable fuel in this
section and RINs were not generated for it as a renewable fuel in its
own right.
(3) It is produced at a facility registered with EPA that is
different than the facility at which it is used to produce renewable
fuel.
(4) It is made from the feedstock and will be used to produce the
renewable fuel in accordance with the process(es) listed in the
approved pathway (as described in table 1 to Sec. 80.1426 or a pathway
approval pursuant to Sec. 80.1416) that the biointermediate producer
and renewable fuel producer are using to convert renewable biomass to
renewable fuel.
(5) Is one of the following:
(i) Biocrude.
(ii) Free fatty acid (FFA) feedstock.
(iii) Undenatured ethanol feedstock.
(6) A feedstock listed in a pathway in Table 1 to Sec. 80.1426, or
in an approved pathway petition under Sec. 80.1416, and used to
produce the renewable fuel specified in that pathway or approved
petition using the specified process requirements, as applicable, is
not a biointermediate.
Biointermediate import facility means any facility as defined in 40
CFR 1090.80 where a biointermediate is imported from outside the
covered location into the covered location.
Biointermediate importer means any person who owns, leases,
operates, controls, or supervises a biointermediate import facility.
Biointermediate producer means any person who owns, leases,
operates, controls, or supervises a biointermediate production
facility.
Biointermediate production facility means all of the activities and
equipment associated with the production of a biointermediate starting
from the point of delivery of feedstock material to the point of final
storage of the end biointermediate product, which are located on one
property, and are under the control of the same person (or persons
under common control).
* * * * *
Combined heat and power (CHP), also known as cogeneration, refers
to industrial processes in which waste heat from the production of
electricity is used for process energy in a biointermediate or
renewable fuel production facility.
* * * * *
Co-processed means that renewable biomass or a biointermediate was
simultaneously processed with fossil fuels or other non-renewable
feedstock in the same unit or units to produce a fuel that is partially
derived from renewable biomass or a biointermediate.
* * * * *
Facility means all of the activities and equipment associated with
the production of renewable fuel or a biointermediate starting from the
point of delivery of feedstock material to the point of final storage
of the end product, which are located on one property, and are under
the control of the same person (or persons under common control).
* * * * *
Foreign renewable fuel producer means a person from a foreign
country or from an area outside the covered locations who produces
renewable fuel for use in transportation fuel, heating oil, or jet
fuel. Foreign ethanol producers are considered foreign renewable fuel
producers.
* * * * *
Free fatty acid (FFA) feedstock means a biointermediate that is
composed of at least 80 percent free fatty acids that are separated
from renewable biomass. FFA feedstock must not include any free fatty
acids from the refining of crude palm oil.
* * * * *
Non-ester renewable diesel * * *
(1) A fuel or fuel additive that meets the ASTM D975 (incorporated
by reference, see Sec. 80.1468) Grade No. 1-D or No. 2-D
specifications and can be used in an engine designed to operate on
conventional diesel fuel; or
* * * * *
Non-renewable feedstock means a feedstock (or any portion thereof)
that does not meet the definition of renewable biomass or
biointermediate in this section.
* * * * *
Produced from renewable biomass means that the energy in the
finished fuel or biointermediate comes from renewable biomass.
* * * * *
Quality assurance audit means an audit of a renewable fuel
production facility or biointermediate production facility conducted by
an independent third-party auditor in accordance with a
[[Page 72486]]
QAP that meets the requirements of Sec. Sec. 80.1469, 80.1472, and
80.1477.
Quality assurance plan, or QAP, means the list of elements that an
independent third-party auditor will check to verify that the RINs
generated by a renewable fuel producer or importer are valid or to
verify the appropriate production of a biointermediate. A QAP includes
both general and pathway specific elements.
* * * * *
Renewable biomass * * *
(7) Separated yard waste or food waste, including recycled cooking
and trap grease.
* * * * *
Renewable fuel means a fuel that meets all of the requirements of
paragraph (1) and (2) of this definition:
(1)(i) Fuel that is produced from renewable biomass or a
biointermediate produced from renewable biomass.
* * * * *
Separated food waste means a feedstock stream consisting of food
waste kept separate since generation from other waste materials, and
which includes food and beverage production waste and post-consumer
food and beverage waste.
Separated municipal solid waste (MSW) means material remaining
after separation actions have been taken to remove recyclable paper,
cardboard, plastics, rubber, textiles, metals, and glass from municipal
solid waste, and which is composed of both cellulosic and non-
cellulosic materials.
Separated yard waste means a feedstock stream consisting of yard
waste kept separate since generation from other waste materials.
* * * * *
Undenatured ethanol means ethanol that has not been denatured as
required in 27 CFR parts 19 through 21. Undenatured ethanol is not
renewable fuel.
* * * * *
0
4. Amend Sec. 80.1402 by removing the second sentence in paragraph (a)
and adding paragraphs (b) through (f) to read as follows:
Sec. 80.1402 Availability of information; confidentiality of
information.
* * * * *
(b) Information contained in EPA determinations that RINs are
invalid under Sec. 80.1474(b)(4)(i)(C)(2) and (b)(4)(ii)(C)(2),
notices of violation, settlement agreements, administrative complaints,
civil complaints, criminal information, and criminal indictments under
the Renewable Fuel Standard (RFS) program is not entitled to
confidential treatment and therefore EPA may publicly disclose such
information. Such information includes the company name and company
identification number of the party that produced the fuel or generated
the RINs in question, the facility name and facility identification
number of the facility at which the fuel associated with the RINs in
question was allegedly produced or imported, the total quantity of fuel
and RINs in question, the time period when the fuel was allegedly
produced, the time period when the RINs in question were generated, the
batch number(s) and the D code(s) of the RINs in question, information
relating to the generation, transfer, or use of RINs, and any other
information relevant to describing the violation.
(c) The following information contained in submissions under this
subpart is not entitled to confidential treatment and, except as
otherwise provided, the provisions of 40 CFR part 2, subpart B, do not
apply:
(1) Submitter's name.
(2) The name and location of the facility, if applicable.
(3) The date the submission was transmitted to EPA.
(4) Any EPA-issued company or facility identification numbers
associated with the request.
(5) The purpose of the submission.
(6) The relevant time period for the request, if applicable.
(d) The following information incorporated into EPA determinations
on submissions under this subpart is not entitled to confidential
treatment and, except as otherwise provided, the provisions of 40 CFR
part 2, subpart B, do not apply:
(1) Submitter's name.
(2) The name and location of the facility, if applicable.
(3) The date the submission was transmitted to EPA.
(4) Any EPA-issued company or facility identification numbers
associated with the request.
(5) The purpose of the submission.
(6) The relevant time period of the request, if applicable.
(7) The extent to which EPA either granted or denied the request
and any relevant terms and conditions.
(e) Except as otherwise specified in this section, any information
submitted under this part claimed as confidential remains subject to
evaluation by EPA under 40 CFR part 2, subpart B.
(f) EPA may disclose the information specified in paragraphs (a)
through (d) of this section on its website, or otherwise make it
available to interested parties, without additional notice or process,
notwithstanding any claims that the information is entitled to
confidential treatment under 40 CFR part 2, subpart B.
0
5. Amend Sec. 80.1405 by revising paragraph (a)(11), adding paragraphs
(a)(12) and (13), and revising the equations in paragraph (c) to read
as follows:
Sec. 80.1405 What are the Renewable Fuel Standards?
(a) * * *
(11) Renewable Fuel Standards for 2020. (i) The value of the
cellulosic biofuel standard for 2021 shall be 0.32 percent.
(ii) The value of the biomass-based diesel standard for 2021 shall
be 2.37 percent.
(iii) The value of the advanced biofuel standard for 2021 shall be
2.91 percent.
(iv) The value of the renewable fuel standard for 2021 shall be
10.78 percent.
(12) Renewable Fuel Standards for 2021. (i) The value of the
cellulosic biofuel standard for 2021 shall be 0.36 percent.
(ii) The value of the biomass-based diesel standard for 2021 shall
be 2.19 percent.
(iii) The value of the advanced biofuel standard for 2021 shall be
3.03 percent.
(iv) The value of the renewable fuel standard for 2021 shall be
10.79 percent.
(13) Renewable Fuel Standards for 2022. (i) The value of the
cellulosic biofuel standard for 2022 shall be 0.44 percent.
(ii) The value of the biomass-based diesel standard for 2022 shall
be 2.42 percent.
(iii) The value of the advanced biofuel standard for 2022 shall be
3.27 percent.
(iv) The value of the renewable fuel standard for 2022 shall be
11.76 percent.
(v) The value of the supplemental renewable fuel standard for 2022
shall be 0.14 percent.
* * * * *
(c) * * *
[GRAPHIC] [TIFF OMITTED] TP21DE21.017
[[Page 72487]]
[GRAPHIC] [TIFF OMITTED] TP21DE21.018
[GRAPHIC] [TIFF OMITTED] TP21DE21.019
[GRAPHIC] [TIFF OMITTED] TP21DE21.020
* * * * *
0
6. Amend Sec. 80.1407 by revising paragraph (f)(1) to read as follows:
Sec. 80.1407 How are the Renewable Volume Obligations calculated?
* * * * *
(f) * * *
(1) Any renewable fuel as defined in Sec. 80.1401. Renewable fuel
for which a RIN is determined to be invalidly generated under Sec.
80.1431 may not be excluded from a party's Renewable Volume
Obligations.
* * * * *
Sec. 80.1408 [Amended]
0
7. Amend Sec. 80.1408 by, in paragraphs (a)(2)(i)(B) and
(a)(2)(ii)(B), removing ``Sec. 80.1454(t)'' and adding ``Sec.
80.1454(o)'' in its place.
0
8. Amend Sec. 80.1415 by revising paragraphs (c)(2)(ii) and (iii) to
read as follows:
Sec. 80.1415 How are equivalence values assigned to renewable fuel?
* * * * *
(c) * * *
(2) * * *
(ii) For each feedstock, biointermediate, component, or additive
that is used to make the renewable fuel, provide a description, the
percent input, and identify whether or not it is renewable biomass or
is derived from renewable biomass.
(iii) For each feedstock or biointermediate that also qualifies as
a renewable fuel, state whether or not RINs have been previously
generated for such feedstock.
* * * * *
0
9. Amend Sec. 80.1416 by revising paragraphs (b)(1)(ii) and (iii) to
read as follows:
Sec. 80.1416 Petition process for evaluation of new renewable fuels
pathways.
* * * * *
(b)(1) * * *
(ii) A technical justification that includes a description of the
renewable fuel, feedstock(s), and biointermediate(s) used to make it,
and the production process. The justification must include process
modeling flow charts.
(iii) A mass balance for the pathway, including feedstocks and
biointermediates, fuels produced, co-products, and waste materials
production.
* * * * *
0
10. Amend Sec. 80.1426 by:
0
a. Adding paragraphs (a)(4);
0
b. Removing the headings from paragraphs (c)(2) and (3);
0
c. Adding paragraph (c)(8);
0
d. Removing paragraph (f)(1) introductory text;
0
e. Adding paragraph (f)(1) heading and paragraphs (f)(1)(i) through
(vi) prior to Table 1 to Sec. 80.1426;
0
f. Redesignating paragraph (f)(3)(vi) as paragraph (f)(3)(vi)(A);
0
g. In newly redesignated paragraph (f)(3)(vi)(A):
0
i. Revising the introductory text and the definitions of
``FE3,'' ``FE4,'' ``FE5,''
``FE6,'' and ``FE7'' following Table 4 to Sec.
80.1426; and
0
ii. Designating the undesignated text following the definition of
``FE7'' as paragraph (f)(3)(vi)(B);
0
h. In newly designated paragraph (f)(3)(vi)(B), revising the
definitions of ``FE,'' ``M,'' ``m,'' ``CF,'' and ``E'';
0
i. Revising the paragraph (f)(4) heading;
0
j. Revising the definitions of ``FER'' and
``FENR'' in paragraph (f)(4)(i)(A)(1);
0
k. Adding paragraph (f)(4)(iv);
0
l. Revising paragraphs (f)(5) heading, (f)(5)(i) and (ii), (f)(5)(iii)
introductory text, (f)(5)(iv)(A) introductory text, (f)(5)(iv)(B)
introductory text, (f)(5)(v) introductory text, (f)(7)(v)(A) and (B),
(f)(8)(ii)(B), (f)(9)(ii), (f)(15)(i) introductory text, (f)(16)(iii);
0
m. Adding paragraph (f)(17) heading; and
0
n. Revising paragraphs (f)(17)(i) introductory text and
(f)(17)(i)(B)(1) and (2).
The additions and revisions read as follows:
Sec. 80.1426 How are RINs generated and assigned to batches of
renewable fuel?
(a) * * *
(4) Where a feedstock or biointermediate is used to produce
renewable fuel and is not entirely renewable biomass, RINs may only be
generated for the portion of fuel that is derived from renewable
biomass, as calculated under paragraph (f)(4) of this section.
* * * * *
(c) * * *
(8) RINs must not be generated for a biointermediate.
* * * * *
(f) * * *
(1) Applicable pathways. (i) D codes shall be used in RINs
generated by producers or importers of renewable fuel according to the
pathways listed in Table 1 to this section, paragraph (f)(6) of this
section, or as approved by the Administrator.
(ii) In choosing an appropriate D code, producers and importers may
disregard any incidental, de minimis feedstock contaminants that are
impractical to remove and are related to customary feedstock production
and transport.
(iii) Tables 1 and 2 to this section do not apply to, and impose no
requirements with respect to, volumes of fuel for which RINs are
generated pursuant to paragraph (f)(6) of this section.
(iv) Pathways in Table 1 to this section and advanced technologies
in Table 2 to this section also apply in cases where the renewable fuel
producer is using a biointermediate.
(v) For the purposes of identifying the appropriate pathway in
Table 1 to this section, biointermediates used for the production of
renewable fuel are considered to be equivalent to the renewable biomass
from which they were derived, with the following exceptions:
(A) Oil that is physically separated from any woody or herbaceous
biomass and used to produce renewable fuel shall not generate D-code 3
or 7 RINs.
[[Page 72488]]
(B) Sugar or starch that is physically separated from cellulosic
biomass and used to produce renewable fuel shall not generate D-code 3
or 7 RINs.
(vi) If a renewable fuel producer uses a biointermediate for the
production of renewable fuel, additional requirements apply to both the
renewable fuel producer and the biointermediate producer as described
in Sec. 80.1476.
* * * * *
(3) * * *
(vi)(A) If a producer produces a single type of renewable fuel
using two or more different feedstocks or biointermediates which are
processed simultaneously, and each batch is comprised of a single type
of fuel, then the number of gallon-RINs that shall be generated for a
batch of renewable fuel and assigned a particular D code shall be
determined according to the formulas in Table 4 to this section.
* * * * *
FE3 = Feedstock energy from all feedstocks or
biointermediates whose pathways have been assigned a D code of 3 under
Table 1 to this section, or a D code of 3 as approved by the
Administrator, in Btu.
FE4 = Feedstock energy from all feedstocks or
biointermediates whose pathways have been assigned a D code of 4 under
Table 1 to this section, or a D code of 4 as approved by the
Administrator, in Btu.
FE5 = Feedstock energy from all feedstocks or
biointermediates whose pathways have been assigned a D code of 5 under
Table 1 to this section, or a D code of 5 as approved by the
Administrator, in Btu.
FE6 = Feedstock energy from all feedstocks or
biointermediates whose pathways have been assigned a D code of 6 under
Table 1 to this section, or a D code of 6 as approved by the
Administrator, in Btu.
FE7 = Feedstock energy from all feedstocks or
biointermediates whose pathways have been assigned a D code of 7 under
Table 1 to this section, or a D code of 7 as approved by the
Administrator, in Btu.
(B) * * *
FE = Feedstock or biointermediate energy, in Btu.
M = Mass of feedstock or biointermediate, in pounds, measured on a
daily or per-batch basis.
m = Average moisture content of the feedstock or biointermediate,
in mass percent.
CF = Converted Fraction in annual average mass percent, except as
otherwise provided by Sec. 80.1451(b)(1)(ii)(U), representing that
portion of the feedstock or biointermediate that is converted into
renewable fuel by the producer.
E = Energy content of the components of the feedstock or
biointermediate that are converted to renewable fuel, in annual average
Btu/lb, determined according to paragraph (f)(7) of this section.
(4) Renewable fuel that is produced by co-processing renewable
biomass (including a biointermediate) and non-renewable feedstocks
simultaneously to produce a fuel that is partially renewable. (i) * * *
(A) * * *
(1) * * *
FER = Feedstock energy from renewable biomass (including
the renewable portion of a biointermediate) used to make the
transportation fuel, in Btu.
FENR = Feedstock energy from non-renewable feedstocks
(including the non-renewable portion of a biointermediate) used to make
the transportation fuel, heating oil, or jet fuel, in Btu.
* * * * *
(iv) In determining the RIN volume VRIN for co-processed
fuels produced from a biointermediate, RIN-generating parties must use
Method B as described in paragraph (f)(4)(i)(B) of this section and
calculate the renewable fraction of a fuel R using Method B of ASTM
D6866 (incorporated by reference, see Sec. 80.1468) as described in
paragraph (f)(9)(ii) of this section.
(5) Renewable fuel produced from separated yard waste, separated
food waste, and separated MSW. (i)(A) Separated yard waste is deemed to
be composed entirely of cellulosic materials.
(B) Separated food waste is deemed to be composed entirely of non-
cellulosic materials, unless a party demonstrates that a portion of the
feedstock is cellulosic through approval of their facility
registration.
(ii)(A) A feedstock qualifies as separated yard waste or separated
food waste only if it is collected according to a plan submitted to and
accepted by EPA under the registration procedures specified in Sec.
80.1450(b)(1)(vii).
(B) A feedstock qualifies as separated MSW only if it is collected
according to a plan submitted to and approved by EPA.
(iii) Separation and recycling actions for separated MSW are
considered to occur if:
* * * * *
(iv)(A) The number of gallon-RINs that shall be generated for a
batch of renewable fuel derived from separated yard waste shall be
equal to a volume VRIN and is calculated according to the
following formula:
* * * * *
(B) The number of gallon-RINs that shall be generated for a batch
of renewable fuel derived from separated food waste shall be equal to a
volume VRIN and is calculated according to the following
formula:
* * * * *
(v) The number of cellulosic biofuel gallon-RINs that shall be
generated for the cellulosic portion of a batch of renewable fuel
derived from separated MSW shall be determined according to the
following formula:
* * * * *
(7) * * *
(v) * * *
(A) ASTM E870 or ASTM E711 for gross calorific value (both
incorporated by reference, see Sec. 80.1468).
(B) ASTM D4442 or ASTM D4444 for moisture content (both
incorporated by reference, see Sec. 80.1468).
* * * * *
(8) * * *
(ii) * * *
(B) The standardized volume of biodiesel at 60 [deg]F, in gallons,
as calculated from the use of the American Petroleum Institute Refined
Products Table 6B, as referenced in ASTM D1250 (incorporated by
reference, see Sec. 80.1468).
* * * * *
(9) * * *
(ii) Parties must use Method B or Method C of ASTM D6866
(incorporated by reference, see Sec. 80.1468), or an alternative test
method as approved by EPA.
* * * * *
(15) * * *
(i) If a producer seeking to generate D code 3 or D code 7 RINs
produces a single type of renewable fuel using two or more feedstocks
or biointermediates converted simultaneously, and at least one of the
feedstocks or biointermediates does not have a minimum 75% average
adjusted cellulosic content, one of the following additional
requirements apply:
* * * * *
(16) * * *
(iii) Recordkeeping requirements under Sec. 80.1454(n).
(17) Qualifying use demonstration for certain renewable fuels. (i)
For purposes of this section, any renewable fuel other than ethanol,
biodiesel, renewable gasoline, or renewable diesel that meets the ASTM
D975 Grade No. 1-D or No. 2-D specifications (incorporated by
reference, see Sec. 80.1468) is considered renewable fuel and the
producer or
[[Page 72489]]
importer may generate RINs for such fuel only if all of the following
apply:
* * * * *
(B) * * *
(1) Blending the renewable fuel into gasoline or distillate fuel to
produce a transportation fuel, heating oil, or jet fuel that meets all
applicable standards under this part and 40 CFR part 1090.
(2) Entering into a written contract for the sale of the renewable
fuel, which specifies the purchasing party must blend the fuel into
gasoline or distillate fuel to produce a transportation fuel, heating
oil, or jet fuel that meets all applicable standards under this part
and 40 CFR part 1090.
* * * * *
0
11. Amend Sec. 80.1428 by revising paragraph (b)(2) to read as
follows:
Sec. 80.1428 General requirements for RIN distribution.
* * * * *
(b) * * *
(2) Unless otherwise specified, any person that has registered
pursuant to Sec. 80.1450 can own a separated RIN.
* * * * *
0
12. Amend Sec. 80.1429 by revising paragraph (b)(9) introductory text
to read as follows:
Sec. 80.1429 Requirements for separating RINs from volumes of
renewable fuel.
* * * * *
(b) * * *
(9) Except as provided in paragraphs (b)(2) through (5) and (8) of
this section, parties whose non-export renewable volume obligations are
solely related to the importation of products listed in Sec.
80.1407(c) or (e), the addition of blendstocks into a volume of
finished gasoline, finished diesel fuel, or BOB, or that incur a
renewable volume obligation (RVO) under Sec. 80.1408, can only
separate RINs from volumes of renewable fuel if the number of gallon-
RINs separated in a calendar year is less than or equal to a limit set
as follows:
* * * * *
0
13. Amend Sec. 80.1430 by revising paragraph (e)(2) to read as
follows:
Sec. 80.1430 Requirements for exporters of renewable fuels.
* * * * *
(e) * * *
(2) Determination of the renewable portion of the blend using
Method B or Method C of ASTM D6866 (incorporated by reference, see
Sec. 80.1468), or an alternative test method as approved by the EPA.
* * * * *
0
14. Amend Sec. 80.1431 by adding paragraph (a)(3) to read as follows:
Sec. 80.1431 Treatment of invalid RINs.
(a) * * *
(3) In the event that EPA determines that any RIN generated for a
batch of renewable fuel produced using a biointermediate is invalid,
then all RINs generated for that batch of renewable fuel are deemed
invalid, unless EPA in its sole discretion determines that some portion
of those RINs are valid.
* * * * *
Sec. 80.1435 [Amended]
0
15. Amend Sec. 80.1435 by, in paragraph (a)(4), removing ``Sec.
80.1454(u)'' and adding ``Sec. 80.1454(p)'' in its place.
0
16. Amend Sec. 80.1449 by revising paragraph (a)(4)(iii) to read as
follows:
Sec. 80.1449 What are the Production Outlook Report requirements?
(a) * * *
(4) * * *
(iii) Feedstocks, biointermediates, and production processes to be
used at each production facility.
* * * * *
0
17. Amend Sec. 80.1450 by:
0
a. Revising paragraphs (b) introductory text, (b)(1) introductory text,
(b)(1)(i), and (b)(1)(ii) introductory text;
0
b. Adding paragraph (b)(1)(ii)(B); and
0
c. Revising paragraphs (b)(1)(iii), (b)(1)(iv)(A)(1) and (2),
(b)(1)(iv)(B)(3), (b)(1)(v)(B) and (C), (b)(1)(vii)(A) introductory
text, (b)(1)(vii)(B) introductory text, (b)(1)(viii) introductory text,
(b)(1)(viii)(B)(1) through (3), (b)(1)(xii) introductory text,
(b)(1)(xii)(B), (b)(1)(xii)(C) introductory text, (b)(1)(xiii)(A),
(b)(1)(xiii)(B) introductory text, (b)(1)(xiii)(B)(1) and (5),
(b)(1)(xv) introductory text, (b)(2)(i)(A) and (B), (b)(2)(ii)(A)
through (C), (b)(2)(iv), and (d);
0
d. Adding paragraph (g) heading; and
0
e. Revising the second sentence of paragraph (g) introductory text,
paragraphs (g)(5) through (7) and (9) and (g)(10)(ii), the second
sentence of paragraph (g)(11)(ii), (h)(1)(i), and the last sentence of
paragraph (h)(2)(i).
The revisions and additions read as follows:
Sec. 80.1450 What are the registration requirements under the RFS
program?
* * * * *
(b) Producers. Any RIN-generating foreign producer, any non-RIN-
generating foreign producer, any domestic renewable fuel producer that
generates RINs, or any biointermediate producer that transfers any
biointermediate for the production of a renewable fuel for RIN
generation, must provide EPA the information specified under 40 CFR
1090.805 if such information has not already been provided under the
provisions of this part, and must receive EPA-issued company and
facility identification numbers prior to the generation of any RINs for
their fuel or for fuel made with their ethanol, or prior to the
transfer of any biointermediate to be used in the production of a
renewable fuel for which RINs may be generated. Unless otherwise
specifically indicated, all the following registration information must
be submitted and accepted by EPA 60 days prior to the generation of
RINs or the transfer of any biointermediate to be used in the
production of a renewable fuel for which RINs may be generated.
(1) A description of the types of renewable fuels, ethanol, or
biointermediates that the producer intends to produce at the facility
and that the facility is capable of producing without significant
modifications to the existing facility. For each type of renewable
fuel, ethanol, or biointermediate the renewable fuel producer or
foreign ethanol producer must also provide all the following:
(i)(A) A list of all the feedstocks and biointermediates the
facility intends to utilize without significant modification to the
existing facility.
(B) A description of the type(s) of renewable biomass that will be
used as feedstock material to produce the biointermediate, if
applicable.
(C) A list of the EPA-issued company and facility registration
numbers of all biointermediate producers and biointermediate production
facilities that will supply biointermediates for renewable fuel
production.
(ii) A description of the facility's renewable fuel, ethanol, or
biointermediate production processes, including:
* * * * *
(B) For registrations indicating the production of any
biointermediate, the biointermediate producer must provide all of the
following:
(1) For each biointermediate production facility, the company name,
EPA company registration number, and EPA facility registration number
of the renewable fuel producer and renewable fuel production facility
at which the biointermediate produced from the biointermediate
production facility will be transferred and used.
(2) Copies of documents and corresponding calculations
demonstrating production capacity of each biointermediate produced at
the biointermediate production facility.
(3) For each type of feedstock that the biointermediate producer
intends to process the biointermediate producer must provide all the
following:
[[Page 72490]]
(i) A list of all the feedstocks the facility intends to utilize
without significant modification to the existing facility.
(ii) A description of the type(s) of renewable biomass that will be
used as feedstock material to produce the biointermediate.
(4) The pathway(s) in Table 1 to Sec. 80.1426 or the approved
pathway under Sec. 80.1416 that the biointermediate could be used in
to produce renewable fuel.
(iii) The type(s) of co-products produced with each type of
renewable fuel, ethanol, or biointermediate.
(iv) * * *
(A) * * *
(1) Each type of process heat fuel used at the facility to produce
the renewable fuel, ethanol, or biointermediate.
(2) The name and address of the company supplying each process heat
fuel to the renewable fuel facility, foreign ethanol facility, or
biointermediate production facility.
(B) * * *
(3) An affidavit from the biogas supplier stating its intent to
supply biogas to the renewable fuel producer, foreign ethanol producer,
or biointermediate producer, and the quantity and energy content of the
biogas that it intends to provide to the renewable fuel producer or
foreign ethanol producer.
(v) * * *
(B) For facilities claiming the exemption described in Sec.
80.1403(c) or (d):
(1) Applicable air permits issued by EPA, state, local air
pollution control agencies, or foreign governmental agencies that
govern the construction and/or operation of the renewable fuel facility
that were:
(i) Issued or revised no later than December 19, 2007, for
facilities described in Sec. 80.1403(c); or
(ii) Issued or revised no later than December 31, 2009, for
facilities described in Sec. 80.1403(d).
(2) If the air permits specified in paragraph (b)(1)(v)(B)(1) of
this section do not specify the maximum rated annual volume output of
renewable fuel, copies of documents demonstrating the facility's actual
peak capacity.
(C) For facilities not claiming the exemption described in Sec.
80.1403(c) or (d) and that are exempt from air permit requirements or
for which the maximum rated annual volume output of renewable fuel is
not specified in their air permits, appropriate documentation
demonstrating the facility's actual peak capacity or nameplate
capacity.
* * * * *
(vii)(A) For a renewable fuel producer, foreign ethanol producer,
or biointermediate producer using separated yard waste:
* * * * *
(B) For a renewable fuel producer, foreign ethanol producer, or
biointermediate producer using separated food waste:
* * * * *
(viii) For a renewable fuel producer, foreign ethanol producer, or
biointermediate producer using separated municipal solid waste:
* * * * *
(B) * * *
(1) Extent and nature of recycling that occurred prior to receipt
of the waste material by the renewable fuel producer, foreign ethanol
producer, or biointermediate producer;
(2) Identification of available recycling technology and practices
that are appropriate for removing recycling materials from the waste
stream by the fuel producer, foreign ethanol producer, or
biointermediate producer; and
(3) Identification of the technology or practices selected for
implementation by the fuel producer, foreign ethanol producer, or
biointermediate producer including an explanation for such selection,
and reasons why other technologies or practices were not.
* * * * *
(xii) For a producer or importer of any renewable fuel other than
ethanol, biodiesel, renewable gasoline, renewable diesel that meets the
ASTM D975 Grade No. 1-D or No. 2-D specifications (incorporated by
reference, see Sec. 80.1468), biogas, or renewable electricity, all
the following:
* * * * *
(B) A statement regarding whether the renewable fuel producer or
importer will blend the renewable fuel into gasoline or diesel fuel or
enter into a written contract for the sale and use of a specific
quantity of the renewable fuel with a party who blends the fuel into
gasoline or distillate fuel to produce a transportation fuel, heating
oil, or jet fuel that meets all applicable standards under this part
and 40 CFR part 1090.
(C) If the renewable fuel producer or importer enters into a
written contract for the sale and use of a specific quantity of the
renewable fuel with a party who blends the fuel into gasoline or
distillate fuel to produce a transportation fuel, heating oil, or jet
fuel, provide all the following:
* * * * *
(xiii)(A) A renewable fuel producer seeking to generate D code 3 or
D code 7 RINs, a foreign ethanol producer seeking to have its product
sold as cellulosic biofuel after it is denatured, or a biointermediate
producer seeking to have its biointermediate made into cellulosic
biofuel, who intends to produce a single type of fuel using two or more
feedstocks converted simultaneously, where at least one of the
feedstocks does not have a minimum 75% average adjusted cellulosic
content, and who uses only a thermochemical process to convert
feedstock into renewable fuel, must provide all the following:
(1) Data showing the average adjusted cellulosic content of the
feedstock(s) to be used to produce fuel or biointermediate, based on
the average of at least three representative samples. Cellulosic
content data must come from an analytical method certified by a
voluntary consensus standards body or using a method that would produce
reasonably accurate results as demonstrated through peer reviewed
references provided to the third party engineer performing the
engineering review at registration. Samples must be of representative
feedstock from the primary feedstock supplier that will provide the
renewable fuel or biointermediate producer with feedstock subsequent to
registration.
(2) For renewable fuel and biointermediate producers who want to
use a new feedstock(s) after initial registration, updates to their
registration under paragraph (d) of this section indicating the average
adjusted cellulosic content of the new feedstock.
(3) For renewable fuel producers already registered as of August
18, 2014, to produce a single type of fuel that qualifies for D code 3
or D code 7 RINs (or would do so after denaturing) using two or more
feedstocks converted simultaneously using only a thermochemical
process, the information specified in this paragraph (b)(1)(xiii)(A)
shall be provided at the next required registration update under
paragraph (d) of this section.
(B) A renewable fuel producer seeking to generate D code 3 or D
code 7 RINs, a foreign ethanol producer seeking to have its product
sold as cellulosic biofuel after it is denatured, or a biointermediate
producer seeking to have its biointermediate made into cellulosic
biofuel, who intends to produce a single type of fuel using two or more
feedstocks converted simultaneously, where at least one of the
feedstocks does not have a minimum 75% adjusted cellulosic content, and
who uses a process other than a thermochemical process or a combination
of processes to convert feedstock into renewable fuel or
[[Page 72491]]
biointermediate, must provide all the following:
(1) The expected overall fuel or biointermediate yield, calculated
as the total volume of fuel produced per batch (e.g., cellulosic
biofuel plus all other fuel) divided by the total feedstock mass per
batch on a dry weight basis (e.g., cellulosic feedstock plus all other
feedstocks).
* * * * *
(5) For renewable fuel producers already registered as of August
18, 2014, to produce a single type of fuel that qualifies for D code 3
or D code 7 RINs (or would do so after denaturing) using two or more
feedstocks converted simultaneously using a combination of processes or
a process other than a thermochemical process, the information
specified in this paragraph (b)(1)(xiii)(B) shall be provided at the
next required registration update under paragraph (d) of this section.
* * * * *
(xv) For a producer of cellulosic biofuel made from crop residue, a
foreign ethanol producer making ethanol from crop residue and seeking
to have it sold after denaturing as cellulosic biofuel, or a
biointermediate producer producing a biointermediate for use in the
production of a cellulosic biofuel made from crop residue, provide all
the following information:
* * * * *
(2) * * *
(i) * * *
(A) For a domestic renewable fuel production facility, a foreign
ethanol production facility, or a biointermediate production facility,
a professional engineer who is licensed by an appropriate state agency
in the United States, with professional work experience in the chemical
engineering field or related to renewable fuel production.
(B) For a foreign renewable fuel or foreign biointermediate
production facility, an engineer who is a foreign equivalent to a
professional engineer licensed in the United States with professional
work experience in the chemical engineering field or related to
renewable fuel production.
(ii) * * *
(A) The third-party shall not be operated by the renewable fuel
producer, foreign ethanol producer, or biointermediate producer, or any
subsidiary or employee of the renewable fuel producer foreign ethanol
producer, or biointermediate producer.
(B) The third-party shall be free from any interest in the
renewable fuel producer, foreign ethanol producer, or biointermediate
producer's business.
(C) The renewable fuel producer, foreign ethanol producer, or
biointermediate producer shall be free from any interest in the third-
party's business.
* * * * *
(iv) The renewable fuel producer, foreign ethanol producer, or
biointermediate producer must retain records of the review and
verification, as required in Sec. 80.1454(b)(6) or (i)(4), as
applicable.
* * * * *
(d) Registration updates. (1)(i)(A) Any renewable fuel producer or
any foreign ethanol producer that makes changes to their facility that
will allow them to produce renewable fuel or use a biointermediate that
is not reflected in the producer's registration information on file
with EPA must update their registration information and submit a copy
of an updated independent third-party engineering review on file with
EPA at least 60 days prior to producing the new type of renewable fuel.
(B) Any biointermediate producer who makes changes to their
biointermediate production facility that will allow them to produce a
biointermediate for use in the production of a renewable fuel that is
not reflected in the biointermediate producer's registration
information on file with EPA must update their registration information
and submit a copy of an updated independent third-party engineering
review on file with EPA at least 60 days prior to producing the new
biointermediate for use in the production of the renewable fuel.
(ii) The renewable fuel producer, foreign ethanol producer, or
biointermediate producer may also submit an addendum to the independent
third-party engineering review on file with EPA provided the addendum
meets all the requirements in paragraph (b)(2) of this section and
verifies for EPA the most up-to-date information at the producer's
existing facility.
(2)(i) Any renewable fuel producer or any foreign ethanol producer
that makes any other changes to a facility that will affect the
producer's registration information but will not affect the renewable
fuel category for which the producer is registered per paragraph (b) of
this section must update their registration information 7 days prior to
the change.
(ii)(A) Any biointermediate producer that makes any other changes
to a biointermediate production facility that will affect the
biointermediate producer's registration must update their registration
information 7 days prior to the change.
(B)(1) Any biointermediate producer that intends to change the
designated renewable fuel production facility under paragraph
(b)(1)(ii)(G)(1) of this section for one of its biointermediate
production facilities must update their registration information with
EPA at least 30 days prior to transferring the biointermediate to the
newly designated renewable fuel production facility.
(2) A biointermediate producer may only change the designated
renewable fuel production facility under paragraph (b)(1)(ii)(G)(1) of
this section for each biointermediate production facility one time per
calendar year unless EPA, in its sole discretion, allows the
biointermediate producer to change the designated renewable fuel
production facility more frequently.
(3) All renewable fuel producers, foreign ethanol producers, and
biointermediate producers must update registration information and
submit an updated independent third-party engineering review according
to the schedule in paragraph (d)(3)(i) or (ii) of this section, and
include the information specified in paragraph (d)(3)(iii) or (iv) of
this section, as applicable:
(i) For all renewable fuel producers and foreign ethanol producers
registered in calendar year 2010, the updated registration information
and independent third-party engineering review must be submitted to EPA
by January 31, 2013, and by January 31 of every third calendar year
thereafter; or
(ii) For all renewable fuel producers, foreign ethanol producers,
and biointermediate producers registered in any calendar year after
2010, the updated registration information and independent third-party
engineering review must be submitted to EPA by January 31 of every
third calendar year after the first year of registration.
(iii) For all renewable fuel producers, in addition to conducting
the engineering review and written report and verification required by
paragraph (b)(2) of this section, the updated independent third-party
engineering review must include a detailed review of the renewable fuel
producer's calculations used to determine VRIN of a
representative sample of batches of each type of renewable fuel
produced since the last registration. The representative sample must be
selected in accordance with the sample size guidelines set forth at 40
CFR 1090.1805.
(iv) For biointermediate producers, in addition to conducting the
engineering review and written report and
[[Page 72492]]
verification required by paragraph (b)(2) of this section, the updated
independent third-party engineering review must include a detailed
review of the biointermediate producer's calculations used to determine
the renewable biomass and cellulosic renewable biomass proportions, as
required to be reported to EPA under Sec. 80.1451(i)(2), of a
representative sample of batches of each type of biointermediate
produced since the last registration. The representative sample must be
selected in accordance with the sample size guidelines set forth at 40
CFR 1090.1805.
* * * * *
(g) Independent third-party auditors. * * * Registration
information must be submitted at least 30 days prior to conducting
audits of renewable fuel production or biointermediate production
facilities. * * *
* * * * *
(5) List of audited producers. Name, address, and company and
facility identification numbers of all renewable fuel production or
biointermediate production facilities that the independent third-party
auditor intends to audit under Sec. 80.1472.
(6) Audited producer associations. An affidavit, or electronic
consent, from each renewable fuel producer, foreign renewable fuel
producer, or biointermediate producer stating its intent to have the
independent third-party auditor conduct a quality assurance audit of
any of the renewable fuel producer's or foreign renewable fuel
producer's facilities.
(7) Independence affidavits. An affidavit stating that an
independent third-party auditor and its contractors and subcontractors
are independent, as described in Sec. 80.1471(b), of any renewable
fuel producer, foreign renewable fuel producer, or biointermediate
producer.
* * * * *
(9) Registration updates. (i) Any independent third-party auditor
who makes changes to its quality assurance plan(s) that will allow it
to audit new renewable fuel production or biointermediate production
facilities, as defined in Sec. 80.1401, that is not reflected in the
independent third-party auditor's registration information on file with
EPA must update its registration information and submit a copy of an
updated QAP on file with EPA at least 60 days prior to auditing new
renewable fuel production or biointermediate production facilities.
(ii) Any independent third-party auditor who makes any changes
other than those specified in paragraphs (g)(9)(i), (iii), and (iv) of
this section that will affect the third-party auditor's registration
information must update its registration information 7 days prior to
the change.
(iii) Independent third-party auditors must update their QAPs at
least 60 days prior to verifying RINs generated or biointermediate
produced by a renewable fuel or biointermediate production facility,
respectively, for a pathway not covered in the independent third-party
auditor's QAPs.
(iv) Independent third-party auditors must update their QAPs at
least 60 days prior to verifying RINs generated or biointermediate
produced by any renewable fuel or biointermediate production facility
not identified in the independent third-party auditor's existing
registration.
(10) * * *
(ii) The independent third-party auditor submits an affidavit
affirming that he or she has only verified RINs and biointermediates
using a QAP approved under Sec. 80.1469, notified all appropriate
parties of all potentially invalid RINs as described in Sec.
80.1471(d), and fulfilled all of his or her RIN replacement obligations
under Sec. 80.1474.
* * * * *
(11) * * *
(ii) * * * Communications should be sent to the EMTS support line
([email protected]). * * *
* * * * *
(h) * * *
(1) * * *
(i) Unless the party is a biointermediate producer, the party has
reported no activity in EMTS for twenty-four consecutive months.
* * * * *
(2) * * *
(i) * * * The party will have 30 calendar days from the date of the
notification to correct the deficiencies identified or explain why
there is no need for corrective action.
* * * * *
0
18. Amend Sec. 80.1451 by:
0
a. Revising paragraphs (b)(1)(ii)(K) and (L), the first sentence of
paragraph (b)(1)(ii)(R), (b)(1)(ii)(T), (b)(1)(ii)(U) introductory
text, (g)(1)(i), (g)(1)(ii) introductory text, (g)(1)(ii)(A) through
(C), (K), and (L), and (g)(2)(vii) and (viii);
0
b. Redesignating paragraph (g)(2)(x) as paragraph (g)(2)(xi) and adding
new paragraph (g)(2)(x); and
0
c. Redesignating paragraphs (j) and (k) as paragraphs (k) and (l) and
adding new paragraph (j).
The revisions and additions read as follows:
Sec. 80.1451 What are the reporting requirements under the RFS
program?
* * * * *
(b) * * *
(1) * * *
(ii) * * *
(K) The types and quantities of feedstocks and biointermediates
used.
(L) The process(es), feedstock(s), and biointermediate(s) used and
proportion of renewable volume attributable to each process and
feedstock.
* * * * *
(R) Producers or importers of renewable fuel made from separated
municipal solid waste must report the amount of paper, cardboard,
plastics, rubber, textiles, metals, and glass separated from municipal
solid waste for recycling. * * *
* * * * *
(T) Producers or importers of any renewable fuel other than
ethanol, biodiesel, renewable gasoline, renewable diesel that meets
ASTM D975 Grade No. 1-D or No. 2-D specifications (incorporated by
reference, see Sec. 80.1468), biogas or renewable electricity, must
report, on a quarterly basis, all the following for each volume of
fuel:
(1) Total volume of renewable fuel produced or imported, total
volume of renewable fuel blended into gasoline and distillate fuel by
the producer or importer, and the percentage of renewable fuel in each
batch of finished fuel.
(2) If the producer or importer generates RINs under Sec.
80.1426(f)(17)(i)(B)(2), report the name, location, and contract
information for each party that purchased the renewable fuel.
(U) Producers generating D code 3 or D code 7 RINs for fuel derived
from feedstocks or biointermediates other than biogas (including
through pathways listed in rows K, L, M, and N of Table 1 to Sec.
80.1426), and that was produced from two or more feedstocks converted
simultaneously, at least one of which has less than 75% average
adjusted cellulosic content, and using a combination of processes or a
process other than a thermochemical process or a combination of
processes shall report all of the following:
* * * * *
(g) * * *
(1)(i) For RINs verified beginning on September 16, 2014, RIN and
biointermediate verification reports for each renewable fuel or
biointermediate production facility audited by the independent third-
party auditor shall be submitted according to the schedule specified in
paragraph (f)(2) of this section.
[[Page 72493]]
(ii) The RIN and biointermediate verification reports shall include
all the following information for each batch of renewable fuel produced
or imported verified per Sec. 80.1469(c), where ``batch'' means a
discrete quantity of renewable fuel produced or imported and assigned a
unique batch-RIN per Sec. 80.1426(d):
(A) The RIN generator or biointermediate producer's name.
(B) The RIN generator or biointermediate producer's EPA company
registration number.
(C) The renewable fuel or biointermediate producer's EPA facility
registration number.
* * * * *
(K) The volume and type of each feedstock and biointermediate used
to produce the verified batch.
(L) Whether the feedstocks and biointermediates used to produce
each verified batch met the definition of renewable biomass.
* * * * *
(2) * * *
(vii) A list of all renewable fuel and biointermediate facilities
including the EPA's company and facility registration numbers audited
under an approved quality assurance plan under Sec. 80.1469 along with
the date the independent third-party auditor conducted the on-site
visit and audit.
(viii) Mass and energy balances calculated for each renewable fuel
and biointermediate production facility audited under an approved
quality assurance plan under Sec. 80.1469.
* * * * *
(x) A list of all biointermediates that were identified as
potentially improperly produced biointermediates under Sec.
80.1477(d).
* * * * *
(j) Biointermediate producers. For each biointermediate production
facility, any biointermediate producer must submit quarterly reports
for biointermediate batch production to EPA containing all of the
information in this paragraph (j).
(1) Include all the following information for each batch of
biointermediate produced:
(i) The biointermediate producer's name.
(ii) The biointermediate producer's EPA company registration
number.
(iii) The biointermediate producer's EPA facility registration
number.
(iv) The applicable compliance period.
(v) The production date.
(vi) The batch number.
(vii) The adjusted cellulosic content of each batch, as defined in
Sec. 80.1401, and certification that the cellulosic content of each
batch was derived from cellulose, hemicellulose, or lignin that was
derived from renewable biomass, as defined in Sec. 80.1401.
(viii) The volume of each batch produced.
(ix) The types and quantities of feedstocks used.
(x) The renewable fuel type(s) each batch of biointermediate was
designated to be used as a feedstock material for.
(xi) The EPA company registration number and EPA facility
registration number for each renewable fuel producer or foreign
renewable fuel producer that received title to each batch.
(xii) The percentage of each batch of biointermediate that met the
definition of renewable feedstock and certification that this portion
of the batch of biointermediate was derived from renewable biomass, as
defined in Sec. 80.1401.
(xiii) The process(es) and feedstock(s) used and proportion of
biointermediate volume attributable to each process and feedstock.
(xiv) The type of co-products produced with each batch.
(xv) The quantity of co-products produced in each quarter.
(xvi) Any additional information the Administrator may require.
(2) Quarterly reports under this paragraph of this section must be
submitted according to the schedule in paragraph (f)(2) of this
section.
* * * * *
0
19. Amend Sec. 80.1452 by redesignating paragraph (b)(16) as paragraph
(b)(18) and adding new paragraphs (b)(16) and (17) to read as follows:
Sec. 80.1452 What are the requirements related to the EPA Moderated
Transaction System (EMTS)?
* * * * *
(b) * * *
(16) The type and quantity of each biointermediate used for the
batch, if applicable.
(17) The EPA facility registration number of each biointermediate
production facility at which a biointermediate used for the batch was
produced, if applicable.
* * * * *
0
20. Amend Sec. 80.1453 by adding paragraphs (a)(11)(v) and (f) to read
as follows:
Sec. 80.1453 What are the product transfer document (PTD)
requirements for the RFS program?
(a) * * *
(11) * * *
(v) For RINs that are generated from renewable fuel produced from a
biointermediate, the PTD must include the following:
(A) The EPA-issued company and facility identification number of
each biointermediate producer for which the RINs represent renewable
fuel generated from biointermediates.
(B) The type(s) of biointermediate used to make the renewable fuel.
(C) The following statement: ``These RINs were generated from
renewable fuel produced from a biointermediate.''
* * * * *
(f) On each occasion when any party transfers title or custody of a
biointermediate, the transferor must provide to the transferee
documents that include all of the following information:
(1) The name and address of the transferor and transferee.
(2) The transferor's and transferee's EPA company registration and
applicable facility registration numbers.
(3) The volume of biointermediate that is being transferred.
(4) The date of the transfer.
(5) The location of the biointermediate at the time of the
transfer.
(6) The renewable fuel type the biointermediate was designated to
be used as a feedstock material for by the biointermediate producer
under Sec. 80.1476(i).
(7) The composition of the biointermediate being transferred,
including:
(i) The type and quantity of each feedstock that was used to make
the biointermediate.
(ii) The percentage of each feedstock that is renewable biomass,
rounded to two decimal places.
(iii) For a biointermediate that contains both renewable and non-
renewable feedstocks:
(A) The percentage of each feedstock that is not renewable biomass,
rounded to two decimal places.
(B) The feedstock energy from the renewable biomass used to make
the biointermediate, in Btu.
(C) The feedstock energy from the non-renewable biomass used to
make the biointermediate, in Btu.
(D) The total percentage of the biointermediate that may generate
RINs, rounded to two decimal places.
(E) The total percentage of the biointermediate that may not
generate RINs, rounded to two decimal places.
(iv) For a biointermediate that contains cellulosic material:
(A) The percentage of each feedstock in paragraph (f)(7)(ii) of
this section that is cellulosic, rounded to two decimal places.
(B) The percentage of each feedstock in paragraph (f)(7)(ii) of
this section that
[[Page 72494]]
is non-cellulosic, rounded to two decimal places, if applicable.
(C) The total percentage of the biointermediate that may generate
cellulosic RINs, rounded to two decimal places.
(D) For separated municipal solid waste, the cellulosic portion of
the biointermediate is equivalent to the biogenic portion.
(E) For separated food waste, the non-cellulosic percentage is
assumed to be zero percent unless it is demonstrated to be partially
cellulosic.
(F) For separated yard waste, 100% of separated yard waste is
deemed to be cellulosic.
(G) The following statement: ``I certify that the cellulosic
content of this feedstock was derived from cellulose, hemicellulose, or
lignin that was derived from renewable biomass.''
(8) Copies of records specified in Sec. 80.1454(i)(3), (5), and
(6) for the volume being transferred, as applicable.
(9) The following statement designating the volume of
biointermediate as feedstock for the production of a renewable fuel:
``This volume is designated and intended for use as biointermediate in
the production of renewable fuel as defined in 40 CFR 80.1401. Parties
may not generate RINs on this feedstock material.''
0
21. Amend Sec. 80.1454 by:
0
a. Redesignating paragraphs (b)(3)(vii) through (xii) as paragraphs
(b)(3)(viii) through (xiii) and adding new paragraph (b)(3)(vii);
0
b. Revising paragraphs (b)(6), the first sentence of paragraph (d)(4),
(i), and (j) introductory text;
0
c. Adding paragraph (k) heading;
0
d. Revising paragraphs (l) introductory text and (l)(1);
0
e. Redesignating paragraph (l)(3) as paragraph (l)(4) and adding new
paragraph (l)(3);
0
f. Revising the first sentence of paragraph (m) introductory text;
0
g. Redesignating paragraph (m)(10) as paragraph (m)(11) and adding new
paragraph (m)(10);
0
h. Removing paragraphs (n), (o), (p), and (q);
0
i. Redesignating paragraphs (s), (t), (u), and (v) as paragraphs (n),
(o), (p), and (q);
0
j. Revising newly redesignated paragraph (n) introductory text;
0
k. Revising paragraph (r);
0
l. Adding new paragraphs (s), (t), (u), and (v); and
0
m. Removing paragraph (w).
The revisions and addition read as follows:
Sec. 80.1454 What are the recordkeeping requirements under the RFS
program?
* * * * *
(b) * * *
(3) * * *
(vii) Type and quantity of biointermediates used.
* * * * *
(6) Copies of registration documents required under Sec. 80.1450,
including information on fuels and products, feedstocks,
biointermediates, facility production processes, process changes, and
capacity, energy sources, and a copy of the independent third party
engineering review report submitted to EPA per Sec. 80.1450(b)(2).
* * * * *
(d) * * *
(4) Domestic producers of renewable fuel or biointermediates made
from any other type of renewable biomass must have documents from their
feedstock supplier certifying that the feedstock qualifies as renewable
biomass as defined in Sec. 80.1401, describing the feedstock. * * *
* * * * *
(i) Requirements for biointermediate producers. Any biointermediate
producer producing a biointermediate must keep all of the following
records in addition to those required under paragraphs (a) through (m)
of this section:
(1) Product transfer documents consistent with Sec. 80.1453(e) and
associated with the biointermediate producer's activities, if any, as
transferor or transferee of biointermediates.
(2) Copies of all reports submitted to EPA under Sec. 80.1451(i).
(3) Records related to the production of biointermediates for each
biointermediate production facility, including all of the following:
(i) Batch volume.
(ii) Batch number.
(iii) Type and quantity of co-products produced.
(iv) Type and quantity of feedstocks used.
(v) Type and quantity of fuel used for process heat.
(vi) Feedstock energy calculations per Sec. 80.1426(f)(4), as
applicable.
(vii) Date of production.
(viii) Results of any laboratory analysis of batch chemical
composition or physical properties.
(4) Copies of registration documents required under Sec. 80.1450,
including information on products, feedstocks, facility production
processes, process changes, and capacity, energy sources, and a copy of
the independent third party engineering review submitted to EPA per
Sec. 80.1450(b)(2)(i).
(5) Records demonstrating that feedstocks are renewable biomass, as
required under paragraphs (d), (g), (h), and (j) of this section, as
applicable.
(6) For any biointermediate made from Arundo donax or Pennisetum
purpureum per Sec. 80.1426(f)(14), all applicable records described in
paragraph (b)(7) of this section.
(7) Records, including contracts, related to the implementation of
a QAP under Sec. Sec. 80.1469 and 80.1477.
(j) Additional requirements for producers that use separated yard
waste, separate food waste, separated municipal solid waste, or
biogenic waste oils/fats/greases. A renewable fuel or biointermediate
producer that produces fuel or biointermediate from separated yard
waste, separated food waste, separated municipal solid waste, or
biogenic waste oils/fats/greases must keep all the following additional
records:
* * * * *
(k) Additional requirements for producers of renewable fuel using
biogas. * * *
(l) Additional requirements for producers or importers of any
renewable fuel other than ethanol, biodiesel, renewable gasoline,
renewable diesel, biogas, or renewable electricity. A renewable fuel
producer that generates RINs for any renewable fuel other than ethanol,
biodiesel, renewable gasoline, renewable diesel that meets ASTM D975
Grade No. 1-D or No. 2-D specifications (incorporated by reference, see
Sec. 80.1468), biogas or renewable electricity shall keep all of the
following additional records:
(1) Documents demonstrating the total volume of renewable fuel
produced, total volume of renewable fuel blended into gasoline and
distillate fuel, and the percentage of renewable fuel in each batch of
finished fuel.
* * * * *
(3) For each batch of renewable fuel that generated RINs under
Sec. 80.1426(f)(17)(i)(B)(2), one or more affidavits from the party
that blended or used the renewable fuel that includes all the following
information:
(i) Quantity of renewable fuel received from the producer or
importer.
(ii) Date the renewable fuel was received from producer.
(iii) A description of the fuel that the renewable fuel was blended
into and the blend ratios for each batch, if applicable.
(iv) A description of the finished fuel, and a statement that the
fuel meets all applicable standards and was sold for use as a
transportation fuel, heating oil or jet fuel.
(v) Quantity of assigned RINs received with the renewable fuel, if
applicable.
[[Page 72495]]
(vi) Quantity of assigned RINs that the end user separated from the
renewable fuel, if applicable.
* * * * *
(m) Requirements for independent third-party auditors. * * *
(10) Copies of all reports required under Sec. 80.1464.
* * * * *
(n) Additional requirements for producers of renewable fuel using
crop residue. Producers of renewable fuel using crop residue must keep
records of all of the following:
* * * * *
(r) Transaction requirement. Beginning July 1, 2010, all parties
must keep transaction information sent to EMTS in addition to other
records required under this section.
(1) For buy or sell transactions of separated RINs, parties must
retain records substantiating the price reported to EPA under Sec.
80.1452.
(2) For buy or sell transactions of separated RINs on or after
January 1, 2020, parties must retain records demonstrating the
transaction mechanism (e.g., spot market or fulfilling a term
contract).
(s) Record retention requirement. (1) The records required under
paragraphs (a) through (d), (f) through (l), (n), and (r) of this
section and under Sec. 80.1453 must be kept for five years from the
date they were created, except that records related to transactions
involving RINs must be kept for five years from the date of the RIN
transaction.
(2) The records required under paragraph (e) of this section must
be kept through calendar year 2022.
(t) Record availability requirement. On request by the EPA, the
records required under this section and under Sec. 80.1453 must be
made available to the Administrator or the Administrator's authorized
representative. For records that are electronically generated or
maintained, the equipment or software necessary to read the records
shall be made available; or, if requested by the EPA, electronic
records shall be converted to paper documents.
(u) Record transfer requirement. The records required in paragraphs
(b)(3) and (c)(1) of this section must be transferred with any
renewable fuel sent to the importer of that renewable fuel by any non-
RIN-generating foreign producer.
(v) English language records. Any document requested by the
Administrator under this section must be submitted in English or must
include an English translation.
0
22. Amend Sec. 80.1460 by revising paragraphs (b)(5) and (6) and
adding paragraphs (b)(8) and (k) to read as follows:
Sec. 80.1460 What acts are prohibited under the RFS program?
* * * * *
(b) * * *
(5) Introduce into commerce any renewable fuel produced from a
feedstock, biointermediate, or through a process that is not described
in the person's registration information.
(6) Generate a RIN for fuel for which RINs have previously been
generated unless the RINs were generated under Sec. 80.1426(c)(6).
* * * * *
(8) Generate a RIN for fuel that was produced from a
biointermediate for which the fuel and biointermediate were not audited
under an EPA-approved quality assurance plan.
* * * * *
(k) Biointermediate-related violations. No person may do any of the
following:
(1) Introduce into commerce for use in the production of a
renewable fuel any biointermediate produced from a feedstock or through
a process that is not described in the person's registration
information.
(2) Produce a renewable fuel at more than one facility unless the
person uses a biointermediate as defined under Sec. 80.1401 or the
renewable biomass is not substantially altered. Form changes of
renewable biomass such as chopping, crushing, grinding, pelletizing,
filtering, compacting/compression, centrifuging, degumming, dewatering/
drying, melting, or the addition of water to produce a slurry do not
constitute substantial alteration.
(3) Transfer a biointermediate from a biointermediate production
facility to a facility other than the renewable fuel production
facility specified in the biointermediate producer's registration under
Sec. 80.1450(b)(1)(ii)(G)(1).
(4) Isolate or concentrate non-characteristic components of the
feedstock to yield an intermediate product not contemplated by EPA in
establishing an approved pathway that the biointermediate producer and
the renewable fuel producer are using to convert renewable biomass to
renewable fuel.
0
23. Amend Sec. 80.1461 by revising paragraphs (a)(1) and (2) and
adding paragraph (e) to read as follows:
Sec. 80.1461 Who is liable for violations under the RFS program?
(a) * * *
(1) Any person who violates a prohibition under Sec. 80.1460(a)
through (d) or (g) through (k) is liable for the violation of that
prohibition.
(2) Any person who causes another person to violate a prohibition
under Sec. 80.1460(a) through (d) or (g) through (k) is liable for a
violation of Sec. 80.1460(e).
* * * * *
(e) Biointermediate liability. When a biointermediate contained in
any storage tank at any facility owned, leased, operated, controlled,
or supervised by any biointermediate producer, biointermediate
importer, renewable fuel producer, or foreign ethanol producer is found
in violation of a prohibition described in Sec. 80.1460(k)(1) and (3),
the following persons shall be deemed in violation:
(1) Each biointermediate producer, biointermediate importer,
renewable fuel producer, renewable fuel importer, or foreign ethanol
producer who owns, leases, operates, controls, or supervises the
facility where the violation is found.
(2) Each biointermediate producer, biointermediate importer,
renewable fuel producer, renewable fuel importer, or foreign ethanol
producer who manufactured, imported, sold, offered for sale, dispensed,
offered for supply, stored, transported, or caused the transportation
of any biointermediate that is in the storage tank containing the
biointermediate found to be in violation.
(3) Each carrier who dispensed, supplied, stored, or transported
any biointermediate that was in the storage tank containing the
biointermediate found to be in violation, provided that EPA
demonstrates, by reasonably specific showings using direct or
circumstantial evidence, that the carrier caused the violation.
0
24. Amend Sec. 80.1463 by revising paragraph (d) to read as follows:
Sec. 80.1463 What penalties apply under the RFS program?
* * * * *
(d) Any person liable under Sec. 80.1461(a) for a violation of
Sec. 80.1460(b)(1) through (4) or (6) through (8) is subject to a
separate day of violation for each day that an invalid RIN remains
available for an obligated party or exporter of renewable fuel to
demonstrate compliance with the RFS program.
0
25. Amend Sec. 80.1464 by:
0
a. Removing ``Sec. 80.127'' everywhere it appears and adding ``40 CFR
1090.1805'' in its place;
0
b. Revising paragraph (a)(3)(ii);
0
c. Adding paragraph (a)(7);
0
d. Revising paragraph (b)(1)(v)(A);
0
e. Adding paragraph (b)(1)(v)(C);
0
f. Revising paragraphs (b)(3)(ii) and (b)(4)(i);
0
g. Adding paragraphs (b)(4)(iii) and (b)(8);
[[Page 72496]]
0
h. Revising paragraphs (c) introductory text and (c)(2)(ii);
0
i. Adding paragraphs (c)(6) and (7) and (h); and
0
j. Revising paragraphs (i)(1) heading, (i)(1)(i) and (iii), (i)(2)
heading, and (i)(2)(i) and (ii).
The revisions and additions read as follows:
Sec. 80.1464 What are the attest engagement requirements under the
RFS program?
* * * * *
(a) * * *
(3) * * *
(ii) Obtain the database, spreadsheet, or other documentation used
to generate the information in the RIN activity reports; compare the
RIN transaction samples reviewed under paragraph (a)(2) of this section
with the corresponding entries in the database or spreadsheet and
report as a finding any discrepancies; compute the total number of
current-year and prior-year RINs owned at the start and end of each
quarter, and for parties that reported RIN activity for RINs assigned
to a volume of renewable fuel, the volume and type of renewable fuel
owned at the end of each quarter, as represented in these documents;
and state whether this information agrees with the party's reports to
EPA.
* * * * *
(7) Compliance reports. Compare the list of compliance reports
submitted to EPA during the compliance period to the reporting
requirements for the entity in Sec. 80.1451. Report as a finding any
reporting requirements that were not completed.
(b) * * *
(1) * * *
(v)(A) Obtain documentation, as required under Sec. 80.1451(b),
(d), and (e), associated with feedstock and biointermediate purchases
for a representative sample of feedstocks and biointermediates
separately, selected in accordance with the guidelines in 40 CFR
1090.1805, of renewable fuel batches produced or imported during the
year being reviewed.
* * * * *
(C) Verify that biointermediates were properly identified in the
reports, as applicable.
* * * * *
(3) * * *
(ii) Obtain the database, spreadsheet, or other documentation used
to generate the information in the RIN activity reports; compare the
RIN transaction samples reviewed under paragraph (b)(2) of this section
with the corresponding entries in the database or spreadsheet and
report as a finding any discrepancies; report the total number of each
RIN generated during each quarter and compute and report the total
number of current-year and prior-year RINs owned at the start and end
of each quarter, and for parties that reported RIN activity for RINs
assigned to a volume of renewable fuel, the volume of renewable fuel
owned at the end of each quarter, as represented in these documents;
and state whether this information agrees with the party's reports to
EPA.
(4) * * *
(i) Obtain documentation of independent third-party engineering
reviews required under Sec. 80.1450(b)(2). Such documentation must
include the date of the last engineering review along with date of the
actual site visit by the professional engineer.
* * * * *
(iii) Verify that independent third-party engineering reviews
conducted under Sec. 80.1450(d)(3) occurred within the three-year
cycle. Report as a finding if the engineering review was not updated as
part of the three-year cycle under Sec. 80.1450(d)(3).
* * * * *
(8) Compliance reports. Compare the list of compliance reports
submitted to EPA during the compliance period to the reporting
requirements for the entity in Sec. 80.1451. Report as a finding any
reporting requirements that were not completed.
(c) Other parties owning RINs. Except as specified in paragraph
(c)(6) of this section, the following attest procedures must be
completed for any party other than an obligated party or renewable fuel
producer or importer that owns any RINs during a calendar year:
* * * * *
(2) * * *
(ii) Obtain the database, spreadsheet, or other documentation used
to generate the information in the RIN activity reports; compare the
RIN transaction samples reviewed under paragraph (c)(1) of this section
with the corresponding entries in the database or spreadsheet and
report as a finding any discrepancies; compute the total number of
current-year and prior-year RINs owned at the start and end of each
quarter, and for parties that reported RIN activity for RINs assigned
to a volume of renewable fuel, the volume of renewable fuel owned at
the end of each quarter, as represented in these documents; and state
whether this information agrees with the party's reports to EPA.
* * * * *
(6) Low-volume RIN owner exemption. Any party who meets all the
following criteria in a given compliance period is not required to
submit an attest engagement for that compliance period:
(i) The party must be solely registered as a party owning RINs
(i.e., a ``RIN Owner Only'') and must not also be registered in any
other role under Sec. 80.1450 (e.g., the party must not also be an
obligated party, exporter of renewable fuel, renewable fuel producer,
RIN generating importer, etc.).
(ii) The party must have transacted (e.g., generated, bought, sold,
separated, or retired) 10,000 or fewer RINs in the given compliance
period.
(iii) The party has not exceeded the RIN holding threshold(s)
specified in Sec. 80.1435.
(7) Compliance reports. Compare the list of compliance reports
submitted to EPA during the compliance period to the reporting
requirements for the entity in Sec. 80.1451. Report as a finding any
reporting requirements that were not completed.
* * * * *
(h) Biointermediate producers. The following attest reports must be
completed for any biointermediate producer that produces a
biointermediate in a compliance year:
(1) Biointermediate production reports. (i) Obtain and read copies
of the quarterly biointermediate production reports required under
Sec. 80.1451(i); compare the reported information to the requirements
under Sec. 80.1451(i); and report as a finding any missing or
incomplete information in the reports.
(ii) Obtain any database, spreadsheet, or other documentation used
to generate the information in the biointermediate production reports;
compare the corresponding entries in the database or spreadsheet and
report as a finding any discrepancies.
(iii) For a representative sample of biointermediate batches,
selected in accordance with the guidelines in 40 CFR 1090.1805, obtain
records required under Sec. 80.1454(i); compare these records to the
corresponding batch entries in the reports procured in paragraph
(h)(1)(i) of this section and report as a finding any discrepancies.
(iv) Obtain the list of designated renewable fuel production
facilities under Sec. 80.1450(b)(1)(ii)(G)(1); compare the list of
registered designated renewable fuel production facilities to those
identified in the biointermediate production report; and report as a
finding any discrepancies.
(v) Provide the list of renewable fuel producers receiving any
transfer of biointermediate batches and calculate the total volume from
the batches received.
[[Page 72497]]
(2) Independent third-party engineering review. (i) Obtain
documentation of independent third-party engineering reviews required
under Sec. 80.1450(b)(2).
(ii) Review and verify the written verification and records
generated as part of the independent third-party engineering review.
(iii) Provide the date of the submission of the last engineering
review along with the date of the actual site visit by the professional
engineer. Report as a finding if the engineering review was not updated
as part of the three-year cycle under Sec. 80.1450(d)(3).
(iv) Compare and provide the total volume of produced
biointermediate during the compliance year as compared to the
production capacity stated in the engineering review and report as a
finding if the volume of produced biointermediate is greater than the
stated production capacity.
(3) Product transfer documents. (i) Obtain contracts, invoices, or
other documentation for each batch in the representative sample under
paragraph (h)(1)(iii) of this section and the corresponding copies of
product transfer documents required under Sec. 80.1453; compare the
product transfer documents with the contracts and invoices and report
as a finding any discrepancies.
(ii) Verify that the product transfer documents obtained in
paragraph (h)(3)(i) of this section contain the applicable information
required under Sec. 80.1453 and report as a finding any product
transfer document that does not contain the required information.
(iii) Verify the accuracy of the information contained in the
product transfer documents reviewed pursuant to paragraph (h)(3)(ii) of
this section with the records obtained and reviewed under paragraph
(h)(1)(iii) of this section and report as a finding any exceptions.
(i) * * *
(1) Comparing RIN and biointermediate verification reports with
approved QAPs. (i) Obtain and read copies of reports required under
Sec. 80.1451(g)(1). Compare the list of compliance reports submitted
to EPA during the compliance period to the reporting requirements for
the entity in Sec. 80.1451. Report as a finding any reporting
requirements that were not completed.
* * * * *
(iii) Confirm that the independent third-party auditor only
verified RINs and biointermediates covered by approved QAPs under Sec.
80.1469. Identify as a finding any discrepancies.
(2) Checking third-party auditor's RIN and biointermediate
verification. (i) Obtain and read copies of reports required under
Sec. 80.1451(g)(2). Compare the list of compliance reports submitted
to EPA during the compliance period to the reporting requirements for
the entity in Sec. 80.1451. Report as a finding any reporting
requirements that were not completed.
(ii) Obtain all notifications of potentially invalid RINs and
potentially improperly produced biointermediate submitted to the EPA
under Sec. Sec. 80.1474(b)(3) and 80.1477(d)(2) respectively.
* * * * *
0
26. Revise Sec. 80.1468 to read as follows:
Sec. 80.1468 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. All approved material is available for
inspection at U.S. EPA, Air and Radiation Docket and Information
Center, WJC West Building, Room 3334, 1301 Constitution Ave. NW,
Washington, DC 20460, (202) 566-1742, and is available from the sources
listed in this section. It is also available for inspection at the
National Archives and Records Administration (NARA). For information on
the availability of this material at NARA, email
[email protected], or go to www.archives.gov/federal-register/cfr/ibr-locations.html.
(b) ASTM International, 100 Barr Harbor Dr., P.O. Box C700, West
Conshohocken, PA 19428-2959, (877) 909-2786, or www.astm.org.
(1) ASTM D975-21, Standard Specification for Diesel Fuel, approved
August 1, 2021 (``ASTM D975''); IBR approved for Sec. Sec. 80.1401,
80.1426(f), 80.1450(b), 80.1451(b), and 80.1454(l).
(2) ASTM D1250-19e1, Standard Guide for the Use of the Joint API
and ASTM Adjunct for Temperature and Pressure Volume Correction Factors
for Generalized Crude Oils, Refined Products, and Lubricating Oils: API
MPMS Chapter 11.1, approved May 1, 2019 (``ASTM D1250''); IBR approved
for Sec. 80.1426(f).
(3) ASTM D4442-20, Standard Test Methods for Direct Moisture
Content Measurement of Wood and Wood-Based Materials, approved March 1,
2020 (``ASTM D4442''); IBR approved for Sec. 80.1426(f).
(4) ASTM D4444-13 (2018), Standard Test Method for Laboratory
Standardization and Calibration of Hand-Held Moisture Meters,
reapproved July 1, 2018 (``ASTM D4444''); IBR approved for Sec.
80.1426(f).
(5) ASTM D6751-20a, Standard Specification for Biodiesel Fuel Blend
Stock (B100) for Middle Distillate Fuels, approved August 1, 2020
(``ASTM D6751''); IBR approved for Sec. 80.1401.
(6) ASTM D6866-21, Standard Test Methods for Determining the
Biobased Content of Solid, Liquid, and Gaseous Samples Using
Radiocarbon Analysis, approved January 15, 2021 (``ASTM D6866''); IBR
approved for Sec. Sec. 80.1426(f) and 80.1430(e).
(7) ASTM E711-87 (2004), Standard Test Method for Gross Calorific
Value of Refuse-Derived Fuel by the Bomb Calorimeter, reapproved 2004
(``ASTM E711''); IBR approved for Sec. 80.1426(f).
(8) ASTM E870-82 (2019), Standard Test Methods for Analysis of Wood
Fuels, reapproved April 1, 2019 (``ASTM E870''); IBR approved for Sec.
80.1426(f).
0
27. Amend Sec. 80.1469 by revising the introductory text and
paragraphs (c)(1)(vi) and (vii), (c)(2)(i), (c)(3)(i), (c)(5), and
(f)(1) and (2) to read as follows:
Sec. 80.1469 Requirements for Quality Assurance Plans.
This section specifies the requirements for Quality Assurance Plans
(QAPs) for renewable fuels and biointermediates.
* * * * *
(c) * * *
(1) * * *
(vi) Feedstock(s) and biointermediate(s) are consistent with
production process and D code being used as permitted under Table 1 to
Sec. 80.1426 or a petition approved through Sec. 80.1416, and is
consistent with information recorded in EMTS.
(vii) Feedstock(s) and biointermediate(s) are not renewable fuel
for which RINs were previously generated unless the RINs were generated
under Sec. 80.1426(c)(6). For renewable fuels that have RINs generated
under Sec. 80.1426(c)(6), verify that renewable fuels used as a
feedstock meet all applicable requirements of this paragraph (c)(1).
* * * * *
(2) * * *
(i) Production process is consistent with the renewable fuel
producer or biointermediate producer's registration under Sec.
80.1450(b).
* * * * *
(3) * * *
(i) If applicable, renewable fuel was designated for qualifying
uses as transportation fuel, heating oil, or jet fuel in the covered
location pursuant to Sec. 80.1453.
* * * * *
(5) Representative sampling. Independent third-party auditors may
[[Page 72498]]
use a representative sample of batches of renewable fuel or
biointermediate in accordance with the procedures described in 40 CFR
1090.1805 for all components of this paragraph (c) except for
paragraphs (c)(1)(ii) and (iii), (c)(2)(ii), (c)(3)(vi), and (c)(4)(ii)
and (iii) of this section. If a facility produces both a renewable fuel
and a biointermediate, the independent third-party auditor must select
separate representative samples for the renewable fuel and
biointermediate.
* * * * *
(f) * * *
(1) A new QAP must be submitted to EPA according to paragraph (e)
of this section and the independent third-party auditor must update
their registration according to Sec. 80.1450(g)(9) whenever any of the
following changes occur at a renewable fuel or biointermediate
production facility audited by an independent third-party auditor and
the auditor does not possess an appropriate pathway-specific QAP that
encompasses the change:
(i) Change in feedstock or biointermediates.
(ii) Change in type of fuel or biointermediate produced.
(iii) Change in facility operations or equipment that may impact
the capability of the QAP to verify that RINs are validly generated or
biointermediates are properly produced.
(2) A QAP ceases to be valid as the basis for verifying RINs or a
biointermediate under a new pathway until a new pathway-specific QAP,
submitted to the EPA under this paragraph (f), is approved pursuant to
paragraph (e) of this section.
0
28. Amend Sec. 80.1471 by:
0
a. Revising paragraphs (b)(1), (4), (5), and (6) and (c);
0
b. Adding paragraph (e)(5); and
0
c. Revising paragraphs (f)(1) introductory text, (f)(1)(ii), and (g).
The revisions and addition read as follows:
Sec. 80.1471 Requirements for QAP auditors.
* * * * *
(b) * * *
(1) The independent third-party auditor and its contractors and
subcontractors must not be owned or operated by the renewable fuel
producer, foreign renewable fuel producer, or biointermediate producer
or any subsidiary or employee of the renewable fuel producer, foreign
ethanol producer, or biointermediate producer.
* * * * *
(4) The independent third-party auditor and its contractors and
subcontractors must be free from any interest or the appearance of any
interest in the renewable fuel producer, foreign renewable fuel
producer, or biointermediate producer's business.
(5) The renewable fuel producer, foreign renewable fuel producer,
or biointermediate producer must be free from any interest or the
appearance of any interest in the third-party auditor's business and
the businesses of third-party auditor's contractors and subcontractors.
(6) The independent third-party auditor and its contractors and
subcontractors must not have performed an attest engagement under Sec.
80.1464 for the renewable fuel producer, foreign renewable fuel
producer, or biointermediate producer in the same calendar year as a
QAP audit conducted pursuant to Sec. 80.1472.
* * * * *
(c) Independent third-party auditors must maintain professional
liability insurance, as defined in 31 CFR 50.4(t). Independent third-
party auditors must use insurance providers that possess a financial
strength rating in the top four categories from Standard & Poor's or
Moody's (i.e., AAA, AA, A or BBB for Standard & Poor's and Aaa, Aa, A,
or Baa for Moody's), or a comparable rating acceptable to EPA.
Independent third-party auditors must disclose the level of
professional liability insurance they possess when entering into
contracts to provide RIN verification services.
* * * * *
(e) * * *
(5) The independent third-party auditor must not identify RINs
generated for renewable fuel produced using a biointermediate as having
been verified under a QAP unless the biointermediate used to produce
the renewable fuel was verified under an approved QAP pursuant to Sec.
80.1477.
(f)(1) Except as specified in paragraph (f)(2) of this section,
auditors may only verify RINs that have been generated after the audit
required under Sec. 80.1472 has been completed. Auditors may only
verify biointermediates that were produced after the audit required
under Sec. 80.1472 has been completed. Auditors must only verify RINs
generated from renewable fuels produced from biointermediates after the
audit required under Sec. 80.1472 has been completed for both the
biointermediate production facility and the renewable fuel production
facility.
* * * * *
(ii) Verification of RINs or biointermediates may continue for no
more than 200 days following an on-site visit or 380 days after an on-
site visit if a previously the EPA-approved remote monitoring system is
in place at the renewable fuel production facility.
* * * * *
(g) The independent third-party auditor must permit any
representative of the EPA to monitor at any time the implementation of
QAPs and renewable fuel and biointermediate production facility audits.
* * * * *
0
29. Amend Sec. 80.1472 by revising paragraphs (a)(4), (b)(3)(i)
introductory text, (b)(3)(ii)(B), and (b)(3)(iii) to read as follows:
Sec. 80.1472 Requirements for quality assurance audits.
(a) * * *
(4) Each audit shall include a review of documents generated by the
renewable fuel producer or biointermediate producer.
(b) * * *
(3) * * *
(i) As applicable, the independent third-party auditor shall
conduct an on-site visit at the renewable fuel production facility,
foreign ethanol production facility, or biointermediate production
facility:
* * * * *
(ii) * * *
(B) 380 days after the previous on-site visit if a previously
approved (by EPA) remote monitoring system is in place at the renewable
fuel production facility, foreign ethanol production facility, or
biointermediate production facility, as applicable. The 380-day period
shall start the day after the previous on-site visit ends.
(iii) An on-site visit shall include verification of all QAP
elements that require inspection or evaluation of the physical
attributes of the renewable fuel production facility, foreign ethanol
production facility, or biointermediate production facility, as
applicable.
* * * * *
Sec. 80.1473 [Amended]
0
30. Amend Sec. 80.1473 by, in the first sentence of paragraph (f),
removing ``support.com">[email protected]support.com'' and adding
``[email protected]'' in its place.
Sec. 80.1474 [Amended]
0
31. Amend Sec. 80.1474 by, in paragraphs (b)(2) introductory text,
(b)(3), (b)(4)(i)(C) introductory text, and (b)(4)(ii)(C) introductory
text, removing ``support.com">[email protected]support.com'' and adding
``[email protected]'' in its place.
0
32. Amend Sec. 80.1475 by:
0
a. In paragraph (a)(2), removing ``Sec. Sec. 80.125 through 80.127 and
[[Page 72499]]
Sec. 80.130'' and adding ``40 CFR 1090.1800 through 1090.1850'' in its
place;
0
b. Revising the first sentence of paragraph (d)(1) and paragraph
(d)(3); and
0
c. In paragraph (d)(4), removing ``Sec. 80.127'' and adding ``40 CFR
1090.1805'' in its place.
The revisions read as follows:
Sec. 80.1475 What are the additional attest engagement requirements
for parties that redesignate certified NTDF as MVNRLM diesel fuel?
* * * * *
(d) * * *
(1) For each of the volumes listed in paragraphs (c)(1)(iii)
through (vi) of this section, obtain a separate listing of all tenders
from the refiner or importer for the reporting period. * * *
* * * * *
(3) Agree the volume totals on the listing to the tender volume
total in the inventory reconciliation analysis obtained in paragraph
(c) of this section.
* * * * *
0
33. Section 80.1476 is added to read as follows:
Sec. 80.1476 Requirements for biointermediate producers.
Biointermediate producers must comply with the following
requirements:
(a) Registration. No later than 60 days prior to the transfer of
any biointermediate to be used in the production of a renewable fuel
for which RINs may be generated, biointermediate producers must
register with EPA pursuant to the requirements of Sec. 80.1450(b).
(b) Reporting. Biointermediate producers must comply with the
reporting requirements pursuant to Sec. 80.1451(i).
(c) Recordkeeping. Biointermediate producers must comply with the
recordkeeping requirements pursuant to Sec. 80.1454(i).
(d) PTDs. Biointermediate producers must comply with the PTD
requirements pursuant to Sec. 80.1453(e).
(e) Quality Assurance Plans. Prior to the transfer of any
biointermediate to be used in the production of a renewable fuel for
which RINs may be generated, biointermediate producers must have an
approved quality assurance plan pursuant to Sec. 80.1477(b) and the
independent third-party auditor must have conducted a site visit of the
biointermediate production facility under Sec. 80.1472.
(f) Attest engagements. Biointermediate producers must comply with
the annual attest engagement requirements pursuant to Sec. 80.1464(h).
(g) Limitations on biointermediate transfers and production. (1) A
biointermediate producer must only transfer a biointermediate produced
from a single biointermediate facility to a single renewable fuel
production facility as designated under Sec. 80.1450(b)(1)(ii)(G)(1).
(2) A batch of biointermediate must be segregated from other
batches of biointermediate (even if it is the same type of
biointermediate) and other feedstocks from the point that the batch of
biointermediate is produced to the point where the batch of
biointermediate is received at the renewable fuel production facility
designated under Sec. 80.1450(b)(1)(ii)(G)(1).
(3) Renewable fuel producers that receive biointermediate at a
renewable fuel production facility may not be a biointermediate
producer.
(4) A biointermediate must not be used to make another
biointermediate.
(h) Batch numbers and volumes. (1) Each batch of biointermediate
produced at a biointermediate production facility must be assigned a
number (the ``batch number''), consisting of the EPA-assigned company
registration number, the EPA-assigned facility registration number, the
last two digits of the year in which the batch was produced, and a
unique number for the batch, beginning with the number one for the
first batch produced each calendar year and each subsequent batch
during the calendar year being assigned the next sequential number
(e.g., 4321-54321-95-000001, 4321-54321-95-000002, etc.).
(2) The volume of each batch of biointermediate must be adjusted to
a standard temperature of 60 [deg]F.
(i) Designation. Each batch of biointermediate produced at a
biointermediate production facility must be designated for use in the
production of a renewable fuel in accordance with the biointermediate
producer's registration under Sec. 80.1450. The designation for the
batch of biointermediate must be clearly indicated on PTDs for the
biointermediate as described in Sec. 80.1453(e)(6).
0
34. Section 80.1477 is added to read as follows:
Sec. 80.1477 Requirements for QAPs for biointermediate producers.
(a) Independent third-party auditors that verify biointermediate
production must meet the requirements of Sec. 80.1471(a) through (c)
and (f) through (h), as applicable.
(b) QAPs approved by EPA to verify biointermediate production must
meet the requirements in Sec. 80.1469(c) through (f), as applicable.
(c) Quality assurance audits, when performed, must be conducted in
accordance with the requirements in Sec. 80.1472(a) and (b)(3).
(d)(1) If an independent third-party auditor identifies a
potentially improperly produced biointermediate, the independent third-
party auditor must notify EPA, the biointermediate producer, and the
renewable fuel producer that may have been transferred the
biointermediate within five business days of the identification,
including an initial explanation of why the biointermediate may have
been improperly produced.
(2) If RINs were generated from the potentially improperly produced
biointermediate, the RIN generator must follow the applicable
identification and treatment of PIRs as specified in Sec. 80.1474.
(e) For the generation of Q-RINs for renewable fuels that were
produced from a biointermediate, the biointermediate must be verified
under an approved QAP as described in paragraph (b) of this section and
the RIN generating facility must be verified under an approved QAP as
described in Sec. 80.1469.
0
35. Section 80.1478 is added to read as follows:
Sec. 80.1478 Requirements for foreign biointermediate producers and
importers.
(a) Foreign biointermediate producer. For purposes of this subpart,
a foreign biointermediate producer is a person located outside the
United States, the Commonwealth of Puerto Rico, the Virgin Islands,
Guam, American Samoa, and the Commonwealth of the Northern Mariana
Islands (collectively referred to in this section as ``the United
States'') that has been approved by EPA to produce biointermediate for
use in the production of renewable fuel by a RIN-generating renewable
fuel producer.
(b) Foreign biointermediate producer requirements. Any foreign
biointermediate producer must meet all requirements that apply to
biointermediate producers under this subpart as a condition of being
approved as a foreign biointermediate producer under this subpart.
(c) Foreign biointermediate producer commitments. Any foreign
biointermediate producer must commit to the following provisions as a
condition of being approved as a foreign biointermediate producer under
this subpart:
(1) Any EPA inspector or auditor must be given full, complete, and
immediate access to conduct inspections and
[[Page 72500]]
audits of the foreign biointermediate producer facility.
(i) Inspections and audits may be either announced in advance by
EPA, or unannounced.
(ii) Access will be provided to any location where:
(A) Biointermediate is produced.
(B) Documents related to foreign biointermediate producer
operations are kept.
(C) Biointermediate is stored or transported between the foreign
biointermediate producer and the renewable fuel producer, including
storage tanks, vessels, and pipelines.
(iii) EPA inspectors and auditors may be EPA employees or
contractors to EPA.
(iv) Any documents requested that are related to matters covered by
inspections and audits must be provided to an EPA inspector or auditor
on request.
(v) Inspections and audits may include review and copying of any
documents related to the following:
(A) The volume of biointermediate produced or delivered to
renewable fuel production facilities.
(B) Transfers of title or custody to the biointermediate.
(C) Work performed and reports prepared by independent third
parties and by independent auditors under the requirements of this
section, including work papers.
(vi) Inspections and audits by EPA may include interviewing
employees.
(vii) Any employee of the foreign biointermediate producer must be
made available for interview by the EPA inspector or auditor, on
request, within a reasonable time period.
(viii) English language translations of any documents must be
provided to an EPA inspector or auditor, on request, within 10 business
days as defined in 40 CFR 1090.80.
(ix) English language interpreters must be provided to accompany
EPA inspectors and auditors, on request.
(2) An agent for service of process located in the District of
Columbia must be named, and service on this agent constitutes service
on the foreign biointermediate producer or any employee of the foreign
biointermediate producer for any action by EPA or otherwise by the
United States related to the requirements of this subpart.
(3) The forum for any civil or criminal enforcement action related
to the provisions of this section for violations of the Clean Air Act
or regulations in this title promulgated thereunder must be governed by
the Clean Air Act, including the EPA administrative forum where allowed
under the Clean Air Act.
(4) United States substantive and procedural laws apply to any
civil or criminal enforcement action against the foreign
biointermediate producer or any employee of the foreign biointermediate
producer related to the provisions of this section.
(5) Applying to be an approved foreign biointermediate producer
under this section, or producing or exporting biointermediate under
such approval, and all other actions to comply with the requirements of
this subpart relating to such approval constitute actions or activities
covered by and within the meaning of the provisions of 28 U.S.C.
1605(a)(2), but solely with respect to actions instituted against the
foreign biointermediate producer, its agents and employees in any court
or other tribunal in the United States for conduct that violates the
requirements applicable to the foreign biointermediate producer under
this subpart, including conduct that violates the False Statements
Accountability Act of 1996 (18 U.S.C. 1001) and section 113(c)(2) of
the Clean Air Act (42 U.S.C. 7413).
(6) The foreign biointermediate producer, or its agents or
employees, will not seek to detain or to impose civil or criminal
remedies against EPA inspectors or auditors for actions performed
within the scope of EPA employment or contract related to the
provisions of this section.
(7) The commitment required by this paragraph (c) must be signed by
the owner or president of the foreign biointermediate producer company.
(8) In any case where the biointermediate produced at a foreign
biointermediate production facility is stored or transported by another
company between the production facility and the vessel that transports
the biointermediate to the United States, the foreign biointermediate
producer must obtain from each such other company a commitment that
meets the requirements specified in paragraphs (c)(1) through (7) of
this section, and these commitments must be included in the foreign
biointermediate producer's application to be an approved foreign
biointermediate producer under this subpart.
(d) Sovereign immunity. By submitting an application to be an
approved foreign biointermediate producer under this subpart, or by
producing and exporting biointermediate fuel to the United States under
such approval, the foreign biointermediate producer, and its agents and
employees, without exception, become subject to the full operation of
the administrative and judicial enforcement powers and provisions of
the United States without limitation based on sovereign immunity, with
respect to actions instituted against the foreign biointermediate
producer, its agents and employees in any court or other tribunal in
the United States for conduct that violates the requirements applicable
to the foreign biointermediate producer under this subpart, including
conduct that violates the False Statements Accountability Act of 1996
(18 U.S.C. 1001) and section 113(c)(2) of the Clean Air Act (42 U.S.C.
7413).
(e) English language reports. Any document submitted to EPA by a
foreign biointermediate producer must be in English or must include an
English language translation.
(f) Foreign biointermediate producer contractual relationship. Any
foreign biointermediate producer must establish a contractual
relationship with the RIN-generating renewable fuel producer prior to
the sale of a biointermediate. Any foreign biointermediate producer
must retain contracts and documents memorializing the sale of
biointermediates for five years from the date they were created and
must deliver such records to the Administrator upon request.
(g) Withdrawal or suspension of foreign biointermediate producer
approval. EPA may withdraw or suspend a foreign biointermediate
producer's approval where any of the following occur:
(1) A foreign biointermediate producer fails to meet any
requirement of this section.
(2) A foreign government fails to allow EPA inspections or audits
as provided in paragraph (c)(1) of this section.
(3) A foreign biointermediate producer asserts a claim of, or a
right to claim, sovereign immunity in an action to enforce the
requirements in this subpart.
(h) Additional requirements for applications, reports, and
certificates. Any application for approval as a foreign biointermediate
producer, any report, certification, or other submission required under
this section shall be:
(1) Submitted in accordance with procedures specified by the
Administrator, including use of any forms that may be specified by the
Administrator.
(2) Signed by the president or owner of the foreign biointermediate
producer company, or by that person's immediate designee, and must
contain the following declarations:
(i) ``I hereby certify:
(A) That I have actual authority to sign on behalf of and to bind
[NAME OF
[[Page 72501]]
FOREIGN BIOINTERMEDIATE PRODUCER] with regard to all statements
contained herein;
(B) That I am aware that the information contained herein is being
Certified, or submitted to the United States Environmental Protection
Agency, under the requirements of 40 CFR part 80, subpart M, and that
the information is material for determining compliance under these
regulations; and
(C) That I have read and understand the information being Certified
or submitted, and this information is true, complete and correct to the
best of my knowledge and belief after I have taken reasonable and
appropriate steps to verify the accuracy thereof.''
(ii) ``I affirm that I have read and understand the provisions of
40 CFR part 80, subpart M, including 40 CFR 80.1478 apply to [NAME OF
FOREIGN BIOINTERMEDIATE PRODUCER]. Pursuant to Clean Air Act section
113(c) and 18 U.S.C. 1001, the penalty for furnishing false, incomplete
or misleading information in this certification or submission is a fine
of up to $10,000 U.S., and/or imprisonment for up to five years.''
(i) Requirements for biointermediate importers. Any biointermediate
importer must meet all the following requirements:
(1) For each biointermediate batch, any biointermediate importer
must have an independent third party do all the following:
(i) Determine the volume of biointermediate in the truck, railcar,
vessel, or other shipping container.
(ii) Determine the name and EPA-assigned registration number of the
foreign biointermediate producer that produced the biointermediate.
(iii) Determine the name and country of registration of the truck,
railcar, vessel, or other shipping container used to transport the
biointermediate to the United States.
(iv) Determine the date and time the truck, railcar, vessel, or
other shipping container arrives at the United States port of entry.
(2) Any biointermediate importer must submit documentation of the
information determined under paragraph (i)(1) of this section within 30
days following the date any truck, railcar, vessel, or other shipping
container transporting biointermediate arrives at the United States
port of entry to all the following:
(i) The foreign biointermediate producer.
(ii) The renewable fuel producer.
(3) The biointermediate importer and the independent third party
must keep records of the audits and reports required under paragraphs
(h)(1) and (2) of this section for five years from the date of
creation.
PART 1090--REGULATION OF FUELS, FUEL ADDITIVES, AND REGULATED
BLENDSTOCKS
0
36. The authority citation for part 1090 continues to read as follows:
Authority: 42 U.S.C. 7414, 7521, 7522-7525, 7541, 7542, 7543,
7545, 7547, 7550, and 7601.
Subpart A--General Provisions
0
37. Amend Sec. 1090.15 by:
0
a. In paragraph (a), removing ``(b) and (c)'' and adding ``(b) through
(d)'' in its place;
0
b. In paragraph (c) introductory text, removing ``section'' and adding
``part'' in its place;
0
c. Redesignating paragraph (d) as paragraph (e);
0
d. Adding a new paragraph (d); and
0
e. In newly redesignated paragraph (e), removing ``(b) and (c)'' and
adding ``(b) through (d)'' in its place.
The addition reads as follows:
Sec. 1090.15 Confidential business information.
* * * * *
(d)(1) The following information contained in any enforcement
action taken under this part is not entitled to confidential treatment
under 40 CFR part 2, subpart B:
(i) The company's name.
(ii) The facility's name.
(iii) Any EPA-issued company and facility identification numbers.
(iv) The time or time period when any violation occurred.
(v) The quantity of fuel, fuel additive, or regulated blendstock
affected by the violation.
(vi) Information relating to the exceedance of the fuel standard
associated with the violation.
(vii) Information relating to the generation, transfer, or use of
credits associated with the violation.
(viii) Any other information relevant to describing the violation.
(2) Enforcement actions within the scope of paragraph (d)(1) of
this section include notices of violation, settlement agreements,
administrative complaints, civil complaints, criminal information, and
criminal indictments.
* * * * *
[FR Doc. 2021-26839 Filed 12-20-21; 8:45 am]
BILLING CODE 6560-50-P
