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FOR DISTRICT OF COLUMACIRCUlfl1 ITED STATES COURT OF APPEALSF FdR ‘HE DISTRICT OF COLUMBIA CIRCUIT

FILED [A 6 ZUlSJ

____________________________

CLERK )AMERICANFUEt PETROCHEMICAL )MANUFACTURERS, )

)Petitioner, ) 1’ 1 t

) No.

US. ENVIRONMENTAL PROTECTION )

) MAR—6Z020

Respondent. ) RECEIVED

PETITION FOR REVIEW

Pursuant to section 307(b)(l) of the Clean Air Act, 42 U.S.C. § 7607(b)(1),

and Rule 15(a) of the Federal Rules of Appellate Procedure, American Fuel &

Petrochemical Manufacturers hereby petitions the Court for review of the final

action of Respondent United States Environmental Protection Agency (“EPA”)

entitled, “Renewable Fuel Standard Program: Standards for 2020 and Biomass

Based Diesel Volume for 2021 and Other Changes,” 40 C.F.R. Parts 79 and $0

(the “Final Rule”). The Final Rule was published by EPA in the Federal Register

at 85 Fed. Reg. 7016 on February 6, 2020. This Petition is timely filed within

sixty days of said publication. A copy of EPA’s final rule is attached as

Attachment A.

USCA Case #20-1066 Document #1726428 Filed: 03/06/2020 of 75USCA Case #20-1066 Document #1833430 Filed: 03/06/2020 Page 1 of 75

Respectfully submitted,

Robert J. eyerThomas A. LorenzenElizabeth B. DawsonCR0wELL & M0RING LLP1001 Pennsylvania Ave., N.W.Washington, DC 20004Telephone: (202) 624-2500Facsimile: (202) 628-5116

Ofcounsel:Richard S. MoskowitzAMERICAN FuEL &PETRocHEMICAL MANuFAcTuRERs

1800 M Street, NWSuite 900 NorthWashington, DC 20036Telephone: (202) 457-0480Facsimile: (202) 457-0486

Counselfor Petitioner American fuel &Petrochemical Manufacturers

Dated: March 6, 2020

2


CERTIFICATE OF SERVICE

Pursuant to Fed. R. App. P. 15(c), Circuit Rule 15(a), Fed. R. App. P. 25,

and 40 C.F.R. § 23.12(a), on this date, I hereby certify that I will cause to be

delivered, via certified U.S. mail, return-receipt requested, a copy of the foregoing

Petition for Review to the following:

Andrew Wheeler, AdministratorU.S. Environmental Protection Agency1200 Pennsylvania Ave., N.W.Washington, D.C. 20460

Correspondence Control UnitOffice of General Counsel (2311)U.S. Environmental Protection Agency1200 Pennsylvania Ave., N.W.Washington, D.C. 20460

William P. BarrAttorney General of the United StatesU.S. Department of Justice950 Pennsylvania Ave., N.W.Washington, D.C. 20530

Jeffrey Bossert ClarkAssistant Attorney GeneralEnvironmental and Natural Resources DivisionU.S. Department of Justice950 Pennsylvania Ave., N.W.Washington, D.C. 20530

Robert J.



UNITED STATES COURT OF APPEALSFOR THE DISTRICT OF COLUMBIA CIRCUIT

)AMERICAN FUEL & PETROCHEMICAL )MANUFACTURERS, )

)Petitioner, )

) No.v. )

)U.S. ENVIRONMENTAL PROTECTION )AGENCY, )

))

Respondent. )

_________________________________________________________________________________

)

RULE 26.1 DISCLOSURE STATEMENT OFAMERICAN FUEL & PETROCHEMICAL MANUFACTURERS

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and

Circuit Rule 26.1, Petitioner American Fuel & Petrochemical Manufacturers

(“AFPM”) states that it is a national trade association of more than 300 companies,

including most U.S. refiners and petrochemical manufacturers. AFPM has no

parent companies, and no publicly held company has a 10% or greater ownership

interest in AFPM.

AFPM is a “trade association” within the meaning of Circuit Rule 26.1(b).

AFPM is a continuing association operating for the purpose of promoting the

general commercial, professional, legislative, or other interests of its membership.


Respectfully submitted,

Robert JyMe sThomas A. LorenzenElizabeth B. DawsonCR0wELL & M0RLNG LLP1001 Pennsylvania Ave., N.W.Washington, DC 20004Telephone: (202) 624-2500Facsimile: (202) 628-5116

Ofcounsel:Richard MoskowitzAMERIcAN FuEL &PETRocHEMIcAL MANuFAcTuRERs

1800 M Street, NWSuite 900 NorthWashington, DC 20036Telephone: (202) 457-0480Facsimile: (202) 457-0486

Counselfor Petitioner American Fuel &Petrochemical Manufacturers


2


7016

ENVIRONMENTAL PROTECTIONAGENCY

40 CFR Parts 79 and 80

[EPA—HQ—OAR—201 9—0136; FRL—1 0003—79—OAR]

RIN 2060—AU42

Renewable Fuel Standard Program:Standards for 2020 and BiomassBased Diesel Volume for 2021 andOther Changes

AGENCY: Environmental ProtectionAgency (EPA).ACTION: Final rule.

SUMMARY: Under section 211 of theClean Air Act, the EnvironmentalProtection Agency (EPA) is required toset renewable fuel percentage standardsevery year. This action establishes theannual percentage standards forcellulosic biofuel, biomass-based diesel,advanced biofuel, and total renewablefuel that apply to gasoline and dieseltransportation fuel produced orimported in the year 2020. Relying on

statutory waiver authority that isavailable when the projected cellulosicbiofuel production volume is less thanthe applicable volume specified in thestatute, EPA is establishing volumerequirements for cellulosic biofuel,advanced biofuel, and total renewablefuel that are below the statutory volumetargets. We are also establishing theapplicable volume of biomass-baseddiesel for 2021. In addition, we arefinalizing changes to the percentagestandard calculations to account forvolumes of gasoline and diesel weproject will be exempted from therenewable volume obligations. Finally,this action finalizes several regulatorychanges to the Renewable fuel Standard(RFS) program including new pathways,ftexibilities for regulated parties, andclarifications of existing regulations.

DATES: This final rule is effective onApril 6, 2020.

ADDRESSES: The EPA has established adocket for this action under Docket IDNo. EPA—HQ—OAR—2019—0136. Alldocuments in the docket are listed on

k

,,

the https://www.re.gblatio’as.govwebsite. Although lit4in f& ex, Usome information is not pu1iicly.available, e.g., CBI or other intbi’.rnationwhose disclosure is restricted by statute.Certain other material is not availableon the internet and will be publiclyavailable only in hard copy form.Publicly available docket materials areavailable electronically through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: JuliaMacAllister, Office of Transportationand Air Quality, Assessment andStandards Division, EnvironmentalProtection Agency, 2000 TraverwoodDrive, Ann Arbor, MI 48105; telephonenumber: 734—214—4131; email address:[email protected].

SUPPLEMENTARY INFORMATiON: Entitiespotentially affected by this final rule arethose involved with the production,distribution, and sale of transportationfuels, including gasoline and diesel fuelor renewable fuels such as ethanol,biodiesel, renewable diesel, and biogas.Potentially affected categories include:

This table is not intended to beexhaustive, but rather provides a guidefor readers regarding entities likely to beaffected by this final action. This tablelists the types of entities that EPA isnow aware could potentially be affectedby this action. Other types of entitiesnot listed in the table could also beaffected. To determine whether yourentity would be affected by this action,you should carefully examine theapplicability criteria in 40 CFR part 80.If you have any questions regarding theapplicability of this action to aparticular entity, consult the personlisted in the FOR FURTHER INFORMATIONCONTACT section.

Outline of This Preamble

I. Executive SummaryA. Approach To Setting Volume

Requirements3. Cellulosic BiofuelC. Advanced BiofuelD. Total Renewable FuelE. 2021 Biomass-Based DieselF. Annual Percentage Standards

G. Amendments to the RFS and FuelsPrograms Regulations

H. Response To Remand of 2016 StandardsRulemaking

II. Authority and Need for Waiver ofStatutory Applicable Volumes

A. Statutory Authorities for ReducingVolume Targets

1. Cellulosic Waiver Authority2. General Waiver AuthorityB. SeverabilityC. Treatment of Carryover RINs1. Carryover RIN Bank Size2. EPA’s Decision Regarding the Treatment

of Carryover RINsIII. Cellulosic Biofuel Volume for 2020

A. Statutory RequirementsB. Cellulosic Biofuel Industry Assessment1. Review of EPA’s Projection of Cellulosic

Biofuel in Previous Years2. Potential Domestic Producers3. Potential Foreign Sources of Cellulosic

Biofuel4. Summary of Volume Projections for

Individual CompaniesC. Projection From the Energy Information

AdministrationD. Cellulosic Biofuel Volume for 20201. Liquid Cellulosic Biofuel2. CNG/LNG Derived From Biogas

3. Total Cellulosic Biofuel in 2020IV. Advanced Biofuel and Total Renewable

Fuel Volumes for 2020A. Volumetric Limitation on Use of the

Cellulosic Waiver AuthorityB. Attainable Volumes of Advanced

Biofuel1. Imported Sugarcane Ethanol2. Other Advanced Biofuel3. Biodiesel and Renewable Diesela. Volume of Advanced Biodiesel and

Renewable Diesel To Achieve AdvancedBiofuel Volume

b. Historical Supply of Biodiesel andRenewable Diesel

c. Consideration of Production Capacityand Distribution Infrastructure

d. Consideration of the Availability ofAdvanced Feedstocks

e. Biodiesel and Renewable Diesel Importsand Exports

f. Attainable and Reasonably AttainableVolumes of Advanced Biodiesel andRenewable Diesel

C. Volume Requirement for AdvancedBiofuel

D. Volume Requirement for TotalRenewable Fuel

V. Impacts of 2020 Volumes on Costs

Federal Register/Vol. 85, No. 25 /Thursday, February 6, 2020/Rules and Regulations jti.

Category NAICS 1 codes SIC2 codes Examples of potentially affected entities

Industry 324110 2911 Petroleum refineries.Industry 325193 2869 Ethyl alcohol manufacturing.Industry 325199 2869 Other basic organic chemical manufacturing.Industry 424690 5169 Chemical and allied products merchant wholesalers.Industry 424710 5171 Petroleum bulk stations and terminals.Industry 424720 5172 Petroleum and petroleum products merchant wholesalers.Industry 221210 4925 Manufactured gas production and distribution.Industry 454319 5989 Other fuel dealers.

1 North American Industry Classification System (NAICS).2 Standard Industrial Classification (SIC).


Federal Register/VoL 85, No. 25/Thursday, February 6, 2020/Rules and Regulations 7017

A. Illustrative Costs Analysis of 2020 FinalVolumes Compared to the 2020 StatutoryVolumes Baseline

3. Illustrative Cost Analysis of the 2020Final Volumes Compared to the 2019final Volumes

VI. Biomass-Based Diesel Volume for 2021A. Statutory RequirementsB. Review of Implementation of the

Program and the 2021 ApplicableVolume of Biomass-Based Diesel

C. Consideration of Statutory Factors inCAA Section 211(o)(2)(B)(ii)(l)—(VI) for2021 and Determination of the 2021Biomass-Based Diesel Volume

D. BBD Volume Requirement for 2021VII. Percentage Standards for 2020

A. Calculation of Percentage StandardsB. Small Refineries and Small Refiners1. Changes to the Projected Volume of

Gasoline and Diesel for Exempt SmallRefineries

2. Projecting the Exempted Volume ofGasoline and Diesel in 2020

C. Final StandardsVIII. Administrative Actions

A. Assessment of the Domestic AggregateCompliance Approach

B. Assessment of the Canadian AggregateCompliance Approach

IX. Amendments to the RFS and FuelsProgram Regulations

A. Clarification of Diesel RVO Calculations1. Overview2. Downstream Re-Designation of Certified

Non-Transportation 15 ppm DistillateFuel to MVNRLM Diesel Fuel

B. Pathway Petition ConditionsC. Esterification Pretreatment PathwayD. Distillers Corn Oil and Distillers

Sorghum Oil PathwaysE. Clarification of the Definition of

Renewable Fuel Exporter and AssociatedProvisions

F. REGS Rule Provisions1. Flexibilities for Renewable Fuel

Blending for Military Use2. Heating Oil Used for Cooling3. Separated Food Waste Plans4. Additional Registration Deactivation

Justifications5. New RIN Retirement Section6. New Pathway for Co-Processing Biomass

With Petroleum to Produce Co-ProcessedCellulosic Diesel, Jet Fuel, and HeatingOil

7. Other Revisions to the Fuels Programa. Testing Revisionsb. Oxygenate Added Downstream in Tier 3c. Technical Corrections and Clarifications

X. Public ParticipationXI. Statutory and Executive Order Reviews

A. Executive Order 12866: RegulatoryPlanning and Review and ExecutiveOrder 13563: Improving Regulation andRegulatory Review

B. Executive Order 13771: ReducingRegulations and Controlling RegulatoryCosts

C. Paperwork Reduction Act (PRA)D. Regulatory Flexibility Act (RFA)E. Unfunded Mandates Reform Act

(UMRA)

F. Executive Order 13132: FederalismG. Executive Order 13175: Consultation

and Coordination With Indian TribalGovernments

H. Executive Order 13045: Protection ofChildren From Environmental HealthRisks and Safety Risks

I. Executive Order 13211: ActionsConcerning Regulations ThatSignificantly Affect Energy Supply,Distribution, or Use

J. National Technology Transfer andAdvancement Act (NTTAA)

K. Executive Order 12898: Federal ActionsTo Address Environmental Justice inMinority Populations and Low-IncomePopulations

L. Congressional Review Act (CRA)XII. Statutory Authority

I. Executive Summary

The Renewable Fuel Standard (RFS)program began in 2006 pursuant to therequirements in Clean Air Act (CAA)section 2 11(o) that were added throughthe Energy Policy Act of 2005 (EPAct).The statutory requirements for the RFSprogram were subsequently modifiedthrough the Energy Independence andSecurity Act of 2007 (EISA), leading tothe publication of major revisions to theregulatory requirements on March 26,2010.’ EISA’s stated goals includemoving the United States (U.S.) toward“greater energy independence andsecurity [andi increas[ingl theproduction of clean renewable fuels.” 2

The statute includes annual volumetargets and requires EPA to translatethose volume targets (or alternativevolume requirements established byEPA in accordance with statutorywaiver authorities) into complianceobligations that obligated parties mustmeet every year. In this action we areestablishing the applicable volumes forcellulosic biofuel, advanced biofuel, andtotal renewable fuel for 2020, andbiomass-based diesel (BBD) for 2021.’

We are also finalizing changes to thepercentage standard calculations toaccount for volumes of gasoline anddiesel we project will be exempted fromthe renewable volume obligations, andestablishing the annual percentagestandards (also known as “percentstandards”) for cellulosic biofuel, BBD,advanced biofuel, and total renewablefuel that would apply to gasoline anddiesel produced or imported in 2020.

75 FR 14670, March 26, 2010.2Public Law 110—140, 121 Stat. 1492 (2007)

(‘EISA”).‘2020 BBD volume requirement was

established in the 2019 final rule. 83 FR 63704(December 11, 2018).

For a list of the statutory provisions related tothe determination of applicable volumes, see the

Finally, we are finalizing severalregulatory changes to the RFS programto facilitate the implementation of thisprogram going forward including newpathways, flexibilities for regulatedparties, and clarifications of existingregulations.

Today, nearly all gasoline used fortransportation purposes contains 10percent ethanol (ElO), and on averagediesel fuel contains nearly 5 percent ofbiodiesel and renewable diesel.5However, the market has fallen wellshort of the statutory volumes forcellulosic biofuel, resulting in shortfallsin the advanced biofuel and totalrenewable fuel volumes. In this action,we are establishing a volumerequirement for cellulosic biofuel at thelevel we project to be available for 2020,along with an associated applicablepercentage standard. For advancedbiofuel and total renewable fuel, we arefinalizing volume requirements usingthe “cellulosic waiver authority” thatresult in advanced biofuel and totalrenewable fuel volume requirementsthat are lower than the statutory targetsby the same magnitude as the reductionin the cellulosic biofuel reduction. Thiswould effectively maintain the impliedstatutory volumes for non-cellulosicbiofuel and conventional biofuel.6

The resulting volume requirementsfor 2020 are shown in Table I—i.Relative to the levels finalized for 2019,the 2020 volume requirements forcellulosic biofuel, advanced biofuel andtotal renewable fuel would be higher byapproximately 170 million gallons. Thisentire increase for each category isattributable to the increased projectionof cellulosic biofuel production in 2020(see Section III for a further discussionof our cellulosic biofuel projection). Weare also establishing the volumerequirement for BBD for 2021 at 2.43billion gallons. This volume is equal tothe BBD volume finalized for 2020.

2018 final rule (82 FR 58486, December 12, 2017;Table l,A—2).

Average biodiesel and/or renewable diesel blendpercentages based on EIA’s October 2019 ShortTerm Energy Outlook (STEO) and EPA’s ModeratedTransaction System fEMTS).

The statutory total renewable fuel, advancedbiofuel and cellulosic biofuel requirements for 2020are 30.0, 15.0 and 10.5 billion gallons respectively.This implies a conventional renewable fuelapplicable volume (the difference between the totalrenewable fuel and advanced biofuel volumes) of15.0 billion gallons, and a non-cellulosic advancedbiofuel applicable volume (the difference betweenthe advanced biofuel and cellulosic biofuelvolumes) of 4.5 billion gallons.


7018 Federal Register/Vol. 85, No. 25 /Thursday, February 6, 2020/Rules and Regulations

TABLE I—i—FINAL VOLUME REQUIREMENTS a

2020 2020 2020 20212019b Statutory Proposed Final Final

volumes volumes volumes volumes

Cellulosic biofuel (billion gallons) 0.42 10.50 0.54 0.59 n/aBiomass-based diesel (billion gallons) 2.1 l.0 cN/A C 2.43 2.43Advanced biofuel (billion gallons) 4.92 15.00 5.04 5.09 n/aRenewable fuel (billion gallons) 19.92 30.00 20.04 20.09 n/a

aAll values are ethanol-equivalent on an energy content basis, except for BBD which is biodiesel-equivalent.bThe 2019 volume requirements for cellulosic biofuel, advanced biotuel, and renewable fuel were established in the 2019 final rule (83 FR

63704, December 11, 2018). The 2019 BBD volume requirement was established in the 2018 final rule (82 FR 58486, December 12, 2017).CThe 2020 BBD volume requirement of 2.43 billion gallons was established in the 2019 final rule (83 FR 63704, December11, 2018).

A. Approach To Setting VolumeRequirements

For advanced biofuel and totalrenewable fuel, we are reducing thestatutory volumes based on the“cellulosic waiver authority” that resultin advanced biofuel and total renewablefuel volume requirements that are lowerthan the statutory targets by the samemagnitude as the reduction in thecellulosic biofuel applicable volume.Further discussion of our cellulosicwaiver authority is found in Section II.This follows the same general approachas in the 2018 and 2019 final rules, aswell as the 2020 proposed rule. Thevolumes for cellulosic biofuel, advancedbiofuel, and total renewable fuel exceedthe required volumes for these fueltypes in 2019.

B. Cellulosic Biofuel

The CAA requires EPA to annuallydetermine the projected volume ofcellulosic biofuel production for thefollowing year. If the projected volumeof cellulosic biofuel production is lessthan the applicable volume specified insection 211(o)(2)(B)(i)(III) of the statute,EPA must lower the applicable volumeused to set the annual cellulosic biofuelpercentage standard to the projectedvolume available. In this rule we areestablishing a cellulosic biofuel volumerequirement of 0.59 billion ethanol-equivalent gallons for 2020 based on ourprojection. This volume is 0.17 billionethanol-equivalent gallons higher thanthe cellulosic biofuel volume finalizedfor 2019. Our projection in Section IIIconsiders many factors, including theestimate of cellulosic biofuel productionreceived from the Energy InformationAdministration (ETA); RIN generationdata for past years and 2019 to date thatis available to EPA through the EPAModerated Transaction System (EMTS);the information we have receivedregarding individual facilities’

7Letter from Linda Capuano, ETA Administratorto Andrew Wheeler, EPA Administrator. October 9,2019. Available in docket EPA—HQ—OAR—2019—0136.

capacities, production start dates, andbiofuel production plans; a review ofcellulosic biofuel production relative toEPA’s projections in previous annualrules; and EPA’s own engineeringjudgment. To project cellulosic biofuelproduction for 2020 we used the samegeneral methodology as in the 2018 and2019 final rules, together with updateddata.

C. Advanced Biofuel

If we reduce the applicable volume ofcellulosic biofuel below the volumespecified in CAA section211(o)(2)(B)(i)(III), we also have theauthority to reduce the applicablevolumes of advanced biofuel and totalrenewable fuel by the same or a lesseramount. We refer to this as the“cellulosic waiver authority.” Theconditions that caused us to reduce the2019 volume requirement for advancedbiofuel below the statutory target remainrelevant in 2020.

As in the 2019 final rule, weinvestigated the projected availability ofnon-cellulosic advanced biofuels in2020. In Section IV, we describe ourconsideration of many factors,including:

• The ability of the market to makeadvanced biofuels available,

• The ability of the standards we setto bring about market changes in thetime available,

• The potential impacts associatedwith diverting biofuels and/or biofuelfeedstocks from current uses to theproduction of advanced biofuel used inthe U.S.,

• The fact that the biodiesel tax creditis currently not available for 2020,

• Current tariffs on imports ofbiodiesel from Argentina and Indonesiaand the proposal to change those tariffs,and

• The cost of advanced biofuelsWe also considered the size of the

carryover RIN bank. Based on theseconsiderations, we have determined thatthe statutory volume target for advancedbiofuel should be reduced by the sameamount as the reduction in the statutory

volume target for cellulosic biofuel,consistent with our July 29, 2019,proposal (“the July 29 proposal”).Specifically, the statutory volume targetfor advanced biofuel should be reducedby 9.91 billion gallons. This maintainsthe implied statutory volumerequirement for non-cellulosic advancedbiofuel of 4.5 billion gallons, and resultsin a final advanced biofuel volumerequirement for 2020 of 5.09 billiongallons, which is 0.17 billion gallonshigher than the advanced biofuelvolume requirement for 2019.

D. Total Renewable Fuel

As we have articulated in previousannual standard-setting rulemakings,8we believe that the cellulosic waiverauthority is best interpreted to requireequal reductions in advanced biofueland total renewable fuel. Consistentwith previous years, we are reducingtotal renewable fuel by the same amountas the reduction in advanced bio fuel,such that the resulting implied volumerequirement for conventional renewablefuel would be 15 billion gallons, thesame as the implied volumerequirement in the statute. The result isthat the final 2020 volume requirementis 20.09 billion gallons.

E. 2021 Biomass-Based Diesel

In EISA, Congress specified increasingapplicable volumes of BBD through2012. Beyond 2012, Congress stipulatedthat EPA, in coordination with DOE andUSDA, was to establish the BBD volumebased on a review of theimplementation of the program duringcalendar years specified in the tables inCAA 211(o)(B)(i) and other statutoryfactors, provided that the requiredvolume for BBD could not be less than1.0 billion gallons. Starting in 2013,EPA has set the BBD volumerequirement above the statutoryminimum, most recently resulting in2.43 billion gallons for 2020. In this rulewe are maintaining the BBD volume for2021 at 2.43 billion gallons.

8See, e.g., 83 FR 63704 (December11, 20181.


Federal Register/Vol. 85, No. 25 / Thursday, February 6, 2020 / Rules and Regulations 7019

Given current and recent marketconditions, the advanced biofuelrequirement is driving the productionand use of biodiesel and renewablediesel volumes over and above volumesrequired through the separate BBDstandard, and we expect this tocontinue. While EPA continues tobelieve it is appropriate to maintain theopportunity for other advanced biofuelsto compete for market share, the vastmajority of the advanced biofuelobligations in recent years have beensatisfied with BBD. Thus, after a reviewof implementation of the program todate and considering the statutoryfactors, we are establishing, incoordination with USDA and DOE, anapplicable volume of BBD for 2020 of2.43 billion gallons.

F. Annual Percentage Standards

The renewable fuel standards areexpressed as a volume percentage andare used by each refiner and importer offossil-based gasoline or diesel todetermine their renewable fuel volumeobligations.

Four separate percentage standardsare required under the RFS program,corresponding to the four separaterenewable fuel categories shown inTable I—i. The specific formulas we usein calculating the renewable fuelpercentage standards are contained inthe regulations at 40 CfR 80.1405. OnOctober 28, 2019, we proposed changesto our percentage standard formulas in40 CFR 80.1405. (“October 28Proposal”). These changes wereintended to project the exemptedvolume of gasoline and diesel due tosmall refinery exemptions, regardless ofwhether we grant those exemptionsprior or after the annual rule. For 2020,we proposed to project exempt volumesare based on a three-year average of therelief recommended by the Departmentof Energy (DOE) for 2016—2018. In thisaction, we are finalizing these proposedchanges. These changes result inincreases to the percentage standards ascompared to the percentage standards inthe July 29 proposal.

Consistent with these changes, we arealso announcing our general policyapproach to small refinery exemptionsgoing forward, including for now-pending 2019 petitions as well as forfuture 2019 and 2020 petitions.Although final decisions on anyexemption petition must await EPA’sreceipt and adjudication of thosepetitions, EPA intends to grant reliefconsistent with DOE’s recommendationswhere appropriate. This policy extendsto DOE’s recommendations of partial(50%) relief: Where appropriate, we

intend to grant 50% relief where DOErecommends 50% relief.

The volume of transportation gasolineand diesel used to calculate theproposed percentage standards wasbased on Energy InformationAdministration’s (ETA) October 2019Short Term Energy Outlook (STEO),minus an estimate of fuel consumptionin Alaska. The final applicablepercentage standards for 2020 areshown in Table I.B.6—1. Details,including the projected gasoline anddiesel volumes used, can be found inSection VII.

TABLE I.E—i—FINAL 2020PERCENTAGE STANDARDS

Cellulosic biofuel 0.34%Biomass-based diesel 2.10Advanced biofuel 2.93Renewable fuel 1 1.56

C. Amendments to the RFS and FuelsPrograms Regulations

In implementing the RFS programEPA has identified several areas whereregulatory changes would assist EPA inimplementing the RFS program infuture years. EPA requested commenton several of these regulatory changes inthe July 29 proposal: Clarification ofdiesel RVO calculations, pathwaypetition conditions, a biodieselesterification pathway, distillers corn oiland distillers sorghum oil pathways,and renewable fuel exporter provisions.Each of these regulatory changes isdiscussed in greater detail in Section IX.

Additionally, we proposed a numberof changes to the RFS regulations as partof the proposed RenewablesEnhancement and Growth Support(REGS) Rule.9 EPA noted that it wasconsidering finalizing several of thoseproposed changes along with the 2020RVO final rule,’° and are now finalizingthe REGS Rule provisions listed below.• Flexibilities for Renewable Fuel

Blending for Military Use (REGSSection VIII.E)

• Heating Oil Used for Cooling (REGSSection VIII.F)

• Separated Food Waste Plans (REGSSection VIII.G)

• Additional Registration DeactivationJustifications (REGS Section VIII.J)

• New RTN Retirement Section (REGSSection VIII.L)

• New Pathway for Co-ProcessingBiomass With Petroleum To Produce

9See 81 FR 80828 (November 16, 2016(.10 See 84 FR 36765 (July 29, 20191.

Cellulosic Diesel, Jet Fuel, andHeating Oil (REGS Section VIIT.M)Other Revisions to the Fuels Program(REGS Section IX)The other provisions proposed in the

REGS Rule remain under considerationbut are not being finalized at this time.

H. Response to Remand of 2016Standards Rulemaking

In 2015, EPA established the totalrenewable fuel standard for 2016,relying in part on the general waiverauthority under a finding of inadequatedomestic supply.T’ Several partieschallenged that action, and the U.S.Court of Appeals for the D.C. Circuit, inAmericans for Clean Energy v. EPA, 864

__________

F.3d 691 (2017) (hereafter “ACE”’),

Percentage vacated EPA’s use of the general waiverstandards authority under a finding of inadequate

domestic supply, finding that such useexceeded EPA’s authority under theClean Air Act. Specifically, EPA hadimpermissibly considered demand-side

______________

factors in its assessment of inadequatedomestic supply, rather than limitingthat assessment to supply-side factors.The court remanded the rule back toEPA for further consideration in light ofthe court’s ruling.

In the July 29 proposal, we proposedthat the applicable 2016 volumerequirement for total renewable fuel andthe associated percentage standardshould not be changed. In light of themany comments received, we are stillactively considering this issue. We aretherefore not taking final agency actionon this issue in today’s final rule. Weare instead deferring action on this issueto a separate action, which weanticipate in early 2020.

II. Authority and Need for Waiver ofStatutory Applicable Volumes

The CAA provides EPA with theauthority to promulgate volumerequirements below the applicablevolume targets specified in the statuteunder specific circumstances. Thissection discusses those authorities. Asdescribed in the executive summary, weare setting the volume requirement forcellulosic biofuel at the level we projectto be available for 2020, and anassociated applicable percentagestandard. For advanced biofuel and totalrenewable fuel, we are setting volumerequirements and associated applicablepercentage standards, based on use ofthe “cellulosic waiver authority” thatwould result in advanced biofuel andtotal renewable fuel volumerequirements that are equivalent to thereduction in the cellulosic biofuel

‘ See 80 FR 77420 (December 14, 2015); CAAsection 211(o)(7)(A((ii(.



reduction. This would effectivelymaintain the implied statutory volumesfor non-cellulosic advanced andconventional renewable fuel.

A. Statutory Authorities for ReducingVolume Targets

In CAA section 211(o)(2), Congressspecified increasing annual volumetargets for total renewable fuel,advanced biofuel, and cellulosic biofuelfor each year through 2022. However,Congress also recognized that undercertain circumstances it would beappropriate for EPA to set volumerequirements at a lower level thanreflected in the statutory volume targets,and thus provided waiver provisions inCAA section 211(o)(7). Congress alsospecified increasing annual volumetargets for BBD through 2012 andauthorized EPA to set volumerequirements for subsequent years (i.e.,after 2012] in coordination with USDAand DOE, and based upon considerationof specified factors.

1. Cellulosic Waiver Authority

Section 211(o)(7)(D)(i) of the CAAprovides that if EPA determines that theprojected volume of cellulosic biofuelproduction for a given year is less thanthe applicable volume specified in thestatute, then EPA must reduce theapplicable volume of cellulosic biofuelrequired to the projected volumeavailable for that calendar year. Inmaking this projection, EPA may not“adopt a methodology in which the riskof overestimation is set deliberately tooutweigh the risk of underestimation”but must make a projection that “takesneutral aim at accuracy.” API v. EPA,706 F.3d 474, 479, 476 (D.C. Cir. 2013].Pursuant to this provision, EPA has setthe cellulosic biofuel requirement lowerthan the statutory volume for each yearsince 2010. As described in SectionhID, the projected volume of cellulosicbiofuel production for 2020 is less thanthe 10.5 billion gallon volume target inthe statute. Therefore, for 2020, we arefinalizing a ceHulosic biofuel volumelower than the statutory applicablevolume, in accordance with thisprovision.

CAA section 211 (o)(7](D](i] alsoprovides EPA with the authority toreduce the applicable volume of totalrenewable fuel and advanced biofuel inyears when it reduces the applicablevolume of cellulosic biofuel under thatprovision. The reduction must be lessthan or equal to the reduction incelisilosic biofuel. For 2020, we arereducing the applicable volumes ofadvanced biofuel and total renewablefuel under this authority.

EPA has used the cellulosic waiverauthority to lower the advanced biofueland total renewable fuel volumes everyyear since 2014 as a result of waivingthe cellulosic volumes. Furtherdiscussion of the cellulosic waiverauthority, and EPA’s interpretation of it,can be found in the preamble to the2017 final rule.12

In this action we are using thecellulosic waiver authority to reduce thestatutory volume targets for advancedbiofuel and total renewable fuel byequal amounts, consistent with ourlong-held interpretation of thisprovision and our approach in settingthe 2014—2019 standards. This approachconsiders the Congressional objectivesreflected in the volume tables in thestatute, and the environmentalobjectives that generally favor the use ofadvanced biofuels over non-advancedbiofuels.’3 As described in Section IV,we are reducing the advanced biofuelvolume under the cellulosic waiverauthority by the amount of thereduction in cellulosic biofuel andproviding an equal reduction under thecellulosic waiver authority in theapplicable volume of total renewablefuel. We are taking this action bothbecause we do not believe that thestatutory volumes can be achieved, andbecause we believe that backfilling ofthe shortfall in cellulosic with advancedbiofuel would not be appropriate inlight of concerns about high costs of theadvanced biofuels and the potential forfeedstock switching. The volumes ofadvanced biofuel and total renewablefuel resulting from this exercise of thecellulosic waiver authority provide foran implied volume allowance forconventional renewable fuel of 15

billion gallons, and an implied volumeallowance for non-cellulosic advancedbiofuel of 4.5 billion gallons, equal to

12See 81 FR 89752—89753 (December 12, 2016);see also APIv. EPA, 706 F.3d 474 (D.C. Cir. 2013)(requiring that EPA’s cellulosic biofliel projectionsreflect 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 thecellulosic waiver authority to reduce volumes ofadvanced biofuel and total renewable fuel);Americons for Cleon Energyv. EPA (“ACE”), 864F.3d 691, 730—735 (D.C. Cir. 2017) (same); AlonRefining 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).

13See 81 FR 89752—89753 (December 12, 2016).See also 78 FR 49809—49810 (August 15, 2013); 80FR 77434 (December 14, 2015). Advanced biofuelsare required to have lifecycle GHG emissions thatare at least 50% less than the baseline defined inEISA. Non-advanced biofuels are required to havelifecycle CRC emissions that are at least 20% lessthan the baseline defined in EISA unless the fuelproducer meets the grandfathering provisions in 40CFR 80.1403. Beginning in 2015, all growth in thevolumes established by Congress come fromadvanced biofuels.

the implied statutory volumes for 2020.As discussed in Section IV, we alsobelieve that the resulting volume ofadvanced biofuel is attainable, and thatthe resulting volume of total renewablefuel can be made available by themarket.

2. General Waiver Authority

Section 211(o](7](A) of the CAAprovides that EPA, in consultation withthe Secretary of Agriculture and theSecretary of Energy, may waive theapplicable volumes specified in the Actin whole or in part based on a petitionby one or more States, by any personsubject to the requirements of the Act,or by the EPA Administrator on his ownmotion. Such a waiver must be based ona determination by the Administrator,after public notice and opportunity forcomment that: (1] Implementation of therequirement would severely harm theeconomy or the environment of a State,a region, or the United States; or (2)

there is an inadequate domestic supply.EPA received comments requesting

that EPA should use the general waiverauthority to further reduce volumesunder findings of inadequate domesticsupply and/or severe harm to theeconomy or environment, as well ascomments to the contrary. Based on ourreview of the comments and updateddata, and consistent with EPA’srationale and decisions in setting the2019 standards, we decline to exerciseour discretion to reduce volumes underthe general waiver authority. Furtherdiscussion of these issues is found inthe Response To Comments (“RTC”]document.’

B. Severability

The various portions of this rule areseverable. Specifically, the followingportions are severable from each other:The percentage standards for 2020

(described in Section VII); the 2021 BBDvolume requirement (Section VI]; theadministrative actions (Section VIII];and the regulatory amendments (SectionIX]. In addition, each of the regulatoryamendments is severable from the otherregulatory amendments. If any of theabove portions is set aside by areviewing court, we intend theremainder of this action to remaineffective. For instance, if a reviewingcourt sets aside one of the regulatoryamendments, we intend for the 2020

percentage standards to go into effect.

C. Treatment of Carryover RINs

Consistent with our approach in therules establishing the RFS standards for

“ See also “Endangered Species Act No EffectFinding for the 2020 Final Rule.”


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2013 through 2019, we have alsoconsidered the availability and role ofcarryover RINs in setting the cellulosicbiofuel, advanced biofuel, and totalrenewable fuel volume requirements for2020. Neither the statute nor EPAregulations specify how or whether EPAshould consider the availability ofcarryover RINs in exercising ourstatutory authorities.’ As noted in thecontext of the rules establishing the RFSstandards for 2014 through 2019, webelieve that a bank of carryover RINs isextremely important in providingobligated parties compliance flexibilityin the face of substantial uncertaintiesin the transportation fuel marketplace,and in providing a liquid and well-functioning RIN market upon whichsuccess of the entire program depends.’6Carryover RINs provide flexibility in theface of a variety of unforeseeablecircumstances that could limit theavailability of RINs and reduce spikes incompliance costs, including weather-related damage to renewable fuelfeedstocks and other circumstancespotentially affecting the production anddistribution of renewable fuel. On theother hand, carryover RINs can be usedfor compliance purposes, and in thecontext of the 2013 RFS rulemaking wenoted that an abundance of carryoverRINs available in that year, togetherwith possible increases in renewablefuel production and import, justifiedmaintaining the advanced and totalrenewable fuel volume requirements forthat year at the levels specified in thestatute.’7 In general, we have authorityto consider the size of the carryover RINbank in deciding whether and to whatextent to exercise any of our

discretionary waiver authorities.’8EPA’s approach to the consideration ofcarryover RINs in exercising ourcellulosic waiver authority was affirmedin Monroe Energy and ACE.’9

The RIN system was established inaccordance with CAA section 211(o)(5),which authorizes the generation ofcredits by any person who refines,blends, or imports renewable fuel inexcess of the requirements of thestatute.2° In the RFS1 and RFS2rulemakings, we also established a 20percent rollover cap on the amount ofan obligated party’s RVO that can bemet using previous-year RINs.2’ Inimplementing the RFS program, wehave observed that an adequatecarryover RIN bank serves to make theRIN market liquid wherein RINs arefreely traded in an open market makingthem readily available and accessible tothose obligated parties who need themfor compliance at prices established bythat open market. Just as the economyas a whole functions best whenindividuals and businesses prudentlyplan for unforeseen events bymaintaining inventories and reservemoney accounts, we believe that theRFS program functions best whensufficient carryover RINs are held inreserve for potential use by the RINholders themselves, or for possible saleto others that may not have establishedtheir own carryover RIN reserves. Werethere to be too few RINs in reserve, theneven minor disruptions causingshortfalls in renewable fuel productionor distribution, or higher than expectedtransportation fuel demand (requiringgreater volumes of renewable fuel tocomply with the percentage standardsthat apply to all volumes oftransportation fuel, including theunexpected volumes) could lead to theneed for a new waiver of the standardsand higher compliance costs,undermining the market certainty socritical to the RFS program. Moreover,a significant drawdown of the carryoverRIN bank leading to a scarcity of RINs

may stop the market from functioning inan efficient manner (i.e., one in whichthere are a sufficient number ofreasonably available RINs for obligatedparties seeking to purchase them), evenwhere the market overall could satisfythe standards. For all of these reasons,the collective carryover RIN bankprovides a necessary programmaticbuffer that both facilitates individualcompliance, provides for smooth overallfunctioning of the program, and isconsistent with the statutory provisionallowing for the generation and use ofcredits.22

1. Carryover RIN Bank SizeWe estimate that there are currently

approximately 3.48 billion totalcarryover RINs available, an increase of1.29 billion RINs from the previousestimate of 2.19 billion total carryoverRINs in the July 29 proposal.23 We alsoestimate that there are currentlyapproximately 680 million advancedcarryover RINs available (which are asubset of the 3.48 billion total carryoverRINs), an increase of 290 million RINsfrom the previous estimate in the July29 proposal. This increase in thecarryover RIN bank is primarily theresult of the millions of RINs that wereunretired by small refineries that weregranted hardship exemptions after theJuly 29 proposal.24 These volumes ofcarryover RINs are approximately 17percent of the 2020 total renewable fuelvolume requirement and 13 percent ofthe 2020 advanced biofuel volumerequirement, which are less than the 20percent maximum limit permitted bythe RFS regulations to be carried overfor use in complying with the 2020standards.2

However, there remains considerableuncertainty surrounding the ultimatesize of the carryover RIN bank availablefor compliance with the 2020 standardsfor several reasons, including thepossibility of additional small refineryexemptions, higher or lower thanexpected transportation fuel demand(requiring greater or lower volumes ofrenewable fuel to comply with thepercentage standards that apply to all

22 Here we use the term ‘buffer” as shorthandreference to all of the benefits that are provided bya sufficient bank of carryover RINs.

23 The calculations performed to estimate thenumber of carryover RINs currently available can befound in the memorandum, “Carryover RIN BankCalculations for 2020 final Rule,” available in thedocket.

24 Information about the number of small refineryexemptions (SREs) granted and the volume of RINsnot required to be retired as a result of thoseexemptions can be found at: https://www.epa.gov/fuels-registration-reporting-ond-complionce-help/rfs-small-refinery-exemptions.

25 See 40 CfR 80,1427(a)(5).

5 CAA section 211(o)(5) requires that EPAestablish a credit program as part of its RF Sregulations, and that the credits be valid forobligated parties to show compliance for 12 monthsas of the date of generation. EPA implemented thisrequirement through the use of RINs, which can beused to demonstrate compliance for the year inwhich they are generated or the subsequentcompliance year. Obligated parties can obtain moreRINs than they need in a given compliance year,allowing them to “carry over” these excess RINs foruse in the subsequent compliance year, althoughour regulations limit the use of these carryover RINsto 20 percent of the obligated party’s RVO. for thebank of carryover RINs to be preserved from oneyear to the next, individual carryover RINs are usedfor compliance before they expire and areessentially replaced with newer vintage RINs thatare then held for use in the next year. For example,vintage 2018 carryover RINs must be used forcompliance in 2019, or they will expire. However,vintage 2019 RINs can then be “banked” for use in2020.

16See 80 FR 77482—87 (December 14, 2015), 81FR 89754—55 (December 12, 2016), 82 FR 58493—95 (December 12, 2017), and 83 FR 63708—10(December11, 2018).

See 79 FR 49793—95 (August 15, 2013).

“ These discretionary waiver authorities includethe discretionary portion of the cellulosic waiverauthority, CAA section 211(o)(7)(D)(i) (“theAdministrator may also reduce the applicablevolume of renewable fuel and advanced biofuelsrequirement”), the general waiver authority, CAAsection 211(o)(7)(A) (“The Administrator ,..maywaive the requirements”), and the BBD waiverauthority with regard to the extent of the reductionin the BBD volume, CAA section 211(o)(7)(E)(ii)(“the Administrator.., shall issue an order toreduce . . . the quantity of biomass-based diesel

by an appropriate quantity”).“Monroe Energyv. EPA, 750 F.3d 909 (D.C. Cir.

2014); ACE, 864 F.3d at 713.

205ee 75 FR 14670 (March 26, 2010) and 72 FR23900 (May 1, 2007).

21 See 75 FR 14734—35 (March 26, 2010) and 72FR 23934—35 (May 1, 2007].


7022 Federal Register/Vol. 85, No. 25/Thursday, February 6, 2020/Rules and Regulations

volumes of transportation fuel), and theimpact of 2019 RFS compliance on thebank of carryover RINs. In addition, wenote that there have been enforcementactions in past years that have resultedin the retirement of carryover RINs tomake up for the generation and use ofinvalid RINs and/or the failure to retireRINs for exported renewable fuel.Future enforcement actions could havesimilar results and require that obligatedparties and/or renewable fuel exporterssettle past enforcement-relatedobligations in addition to complyingwith the annual standards, therebypotentially creating demand for RINsgreater than can be accommodatedthrough actual renewable fuel blendingin 2020. In light of these uncertainties,the net result could be a bank of totalcarryover RINs larger or smaller than 17percent of the 2020 total renewable fuelvolume requirement, and a bank ofadvanced carryover RINs larger orsmaller than 13 percent of the 2020advanced biofuel volume requirement.

2. EPA’s Decision Regarding theTreatment of Carryover RINs

We have evaluated the volume ofcarryover RINs currently available andconsidered whether it would justify anintentional drawdown of the carryoverRIN bank in setting the 2020 volumerequirements. We also carefullyconsidered the comments received,including comments on the role ofcarryover RINs under our waiverauthorities and the policy implicationsof our decision.2° For the reasons

26 In their comments on the 2020 NPRM, partiesgenerally expressed two opposing points of view.

described throughout Section II.C, wedo not believe we should intentionallydraw down the carryover RIN bank insetting the 2020 volumes. The currentbank of carryover RINs provides animportant and necessary programmaticand cost spike buffer that will bothfacilitate individual compliance andprovide for smooth overall functioningof the program. We believe that abalanced consideration of the possiblerole of carryover RINs in achieving thestatutory volumes for cellulosic biofuel,advanced biofuel, and total renewablefuel, versus maintaining an adequatebank of carryover RINs for importantprogrammatic functions, is appropriatewhen EPA exercises its discretion underits statutory authorities, and that thestatute does not specify the extent towhich EPA should require a drawdownin the bank of carryover RINs when itexercises its waiver authorities.Therefore, for the reasons noted aboveand consistent with the approach wetook in the rules establishing the RFSstandards for 2014 through 2019, wehave decided to maintain our proposed

commenters representing obligated partiessupported EPA’s proposed decision to not assumea drawdown in the bank of carryover RINs indetermining the appropriate volume requirements,reiterating the importance of maintaining thecarryover RIN bank in order to provide obligatedparties with necessary compliance flexibilities,better market trading liquidity, and a cushionagainst future program uncertainty. commentersrepresenting renewable fuel producers, however,stated that not accounting for carryover RINs goesagainst congressional intent of the RFS program toincrease renewable fuel volumes every year anddeters investment in cellulosic and advancedbiofuels. A full description of comments received,and our detailed responses to them, is available inthe RTC document in the docket.

approach and are not setting the 2020volume requirements at levels thatwould envision an intentionaldrawdown in the bank of carryoverRINs. We note that we may or may nottake a similar approach in future years;we will assess the situation on a case-by-case basis going forward and takeinto account the size of the carryoverRIN bank in the future and any lessonslearned from implementing past rules.

III. Cellulosic Biofuel Volume for 2020

In the past several years, productionof cellulosic biofuel has continued toincrease. Cellulosic biofuel productionreached record levels in 2018, drivenlargely by CNG and LNG derived frombiogas.2 The projected volume ofcellulosic biofuel production in 2019 iseven higher that the volume producedin 2018. Production of liquid cellulosicbiofuel has also increased in recentyears, even as the total production ofliquid cellulosic biofuels remains muchsmaller than the production volumes ofCNG and LNG derived from biogas (seeFigure 111—1). This section describes ourassessment of the volume of qualifyingcellulosic biofuel that we project will beproduced or imported into the U.S. in2020, and some of the uncertaintiesassociated with those volumes.

27 The majority of the cellulosic RINs generatedfor CNG!LNG are sourced from biogas fromlandfills; however, the biogas may come from avariety of sources including municipal wastewatertreatment facility digesters, agricultural digesters,separated municipal solid waste (MSW) digesters,and the cellulosic components of biomassprocessed in other waste digesters.


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500

figure 111-1

Cellulosic RINs Generated (2013-2019)

2013 2014 2015 2016 2017 201$ 2019

$ CNG/LNG Derived from Biogas • iquid Celiuiosic Bofues

Droected

In order to project the volume ofcellulosic biofuel production in 2020,we considered numerous factors,including EIA’s projection of cellulosicbiofuel production in 2020, the accuracyof the methodologies used to projectcellulosic biofuel production inprevious years, data reported to EPAthrough EMTS, and information wecollected through meetings withrepresentatives of facilities that haveproduced or have the potential toproduce qualifying volumes ofcellulosic biofuel in 2020.

There are two main elements to thecellulosic biofuel production projection:Liquid cellulosic biofuel and CNG/LNGderived from biogas. To project therange of potential production volumesof liquid cellulosic biofuel we used thesame general methodology as themethodology used in the 2018 and 2019final rules. We have adjusted thepercentile values used to select a pointestimate within a projected productionrange for each group of companies basedon updated information (throughSeptember 2019) with the objective ofimproving the accuracy of theprojections. To project the production ofcellulosic biofuel RINs for CNG/LNGderived from biogas, we used the samegeneral year-over-year growth ratemethodology as in the 2018 and 2019final rules, with updated RIN generation

data through September 2019. Thismethodology reflects the mature statusof this industry, the large number offacilities registered to generatecellulosic biofuel RINs from these fuels,and EPA’s continued attempts to refineits methodology to yield estimates thatare as accurate as possible. Thismethodology is an improvement on themethodology that EPA used to projectcellulosic biofuel production for CNG/LNG derived from biogas in the 2017and previous years (see Section III.B fora further discussion of the accuracy ofEPA’s methodology in previous years).The methodologies used to project theproduction of liquid cellulosic biofuelsand cellulosic CNG/LNG derived frombiogas are described in more detail inSections hID—i and hII.D—2.

The balance of this section isorganized as follows. Section III.Aprovides a brief description of thestatutory requirements. Section 111.3reviews the accuracy of EPA’sprojections in prior years, and alsodiscusses the companies EPA assessedin the process of projecting qualifyingcellulosic biofuel production in the U.S.Section III.C discusses ETA’s projectionof cellulosic biofuel production in 2020.Section III.D discusses themethodologies used by EPA to projectcellulosic biofuel production in 2020

and the resulting projection of 0.59billion ethanol-equivalent gallons.

A. Statutory Requirements

CAA section 211(o)(2)(3)(i)(III) statesthe statutory volume targets forcellulosic biofuel. The volume ofcellulosic biofuel specified in the statutefor 2020 is 10.5 billion gallons. Thestatute provides that if EPA determines,based on a letter provided to the EPA byETA, that the projected volume ofcellulosic biofuel production in a givenyear is less than the statutory volume,then EPA shall reduce the applicablevolume of cellulosic biofuel to theprojected volume available during thatcalendar year.28

2CAA section 211(o)(7)(D)(i). The U.S. Court ofAppeals for the District of Columbia Circuitevaluated this requirement in API v. EPA, 706 f.3d474, 479—480 (D.C. Cir. 2013), in the context of achallenge to the 2012 cellulosic biofuel standard.The Court stated that in projecting potentiallyavailable volumes of cellulosic biofuel EPA mustapply an “outcome-neutral methodology” aimed atproviding a prediction of “what will octuotlyhappen.” Id. at 480, 479. The Court also determinedthat Congress did not require “slavish adherence byEPA to the EIA estimate” and that EPA could “readthe phrase ‘based on’ as requiring great respect butallowing deviation consistent with that respect.” Inaddition, EPA has consistently interpreted the term“projected volume of cellulosic biofuel production”in CAA section 211(o)(7)(D)(i) to include volumesof cellulosic binfuel likely to be made available inthe U.S., including from both domestic production

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In addition, if EPA reduces therequired volume of cellulosic biofuelbelow the level specified in the statute,we may reduce the applicable volumesof advanced biofuels and totalrenewable fuel by the same or a lesservolume,29 and we are also required tomake cellulosic waiver creditsavailable.30 Our consideration of the2020 volume requirements for advancedbiofuel and total renewable fuel ispresented in Section IV.

B. Cellulosic Biofuel IndustryAssessment

In this section, we first explain ourgeneral approach to assessing facilitiesor groups of facilities (which wecollectively refer to as “facilities”) thathave the potential to produce cellulosicbiofuel in 2020. We then review theaccuracy of EPA’s projections in prioryears. Next, we discuss the criteria usedto determine whether to includepotential domestic and foreign sourcesof cellulosic biofuel in our projection for2020. Finally, we provide a summarytable of all facilities that we expect toproduce cellulosic biofuel in 2020.

In order to project ceHulosic biofuelproduction for 2020, we have trackedthe progress of a number of potentialcellulosic biofuel production facilities,located both in the U.S. and in foreigncountries. We considered a number offactors, including ETA’s projection ofcellulosic biofuel production in 2020,

information from EMTS, the registrationstatus of potential biofuel productionfacilities as cellulosic biofuel producersin the RFS program, publicly availableinformation (including press releasesand news reports), and informationprovided by representatives of potentialcellulosic biofuel producers. Asdiscussed in greater detail in SectionIII.D.1, our projection of liquidcellulosic biofuel is based on a facility-by-facility assessment of each of thelikely sources of cellulosic biofuel in2020, while our projection of CNG/LNGderived from biogas is based on anindustry-wide assessment. To make adetermination of which facilities aremost likely to produce liquid cellulosicbiofuel and generate cellulosic biofuelRINs in 2020, each potential producer ofliquid cellulosic biofuel wasinvestigated further to determine thecurrent status of its facilities and itslikely cellulosic biofuel production andRIN generation volumes for 2020. Bothin our discussions with representativesof individual companies and as part ofour internal evaluation process, wegathered and analyzed informationincluding, but not limited to, thefunding status of these facilities, currentstatus of the production technologies,anticipated construction and productionramp-up periods, facility registrationstatus, and annual fuel production andRIN generation targets.

1. Review of EPA’s Projection ofCellulosic Biofuel in Previous Years

As an initial matter, it is useful toreview the accuracy of EPA’s pastcellulosic biofuel projections. Therecord of actual cellulosic biofuelproduction, including both cellulosicbio fuel (which generate D3 RINs) andcellulosic diesel (which generate D7RINs), and EPA’s projected productionvolumes from 2015—2019 are shown inTable HI.B—1. These data indicate thatEPA’s projection was lower than theactual number of cellulosic RINs madeavailable in 2015,31 higher than theactual number of RINs made available in2016 and 2017, and lower than theactual number of RINs made available in2018. Based on our current projection ofcellulosic biofuel production for 2019based on data through September 2019,EPA’s projection of cellulosic biofuel in2019 also appears likely to be lowerthan actual RIN generation in 2019. Thefact that the projections made using thismethodology have been somewhatinaccurate, under-estimating the actualnumber of RINs made available in 2015,2018, and likely 2019, and overestimating in 2016 and 2017, reflects theinherent difficulty with projectingcellulosic biofuel production. It alsoemphasizes the importance ofcontinuing to make refinements to ourprojection methodology in order tomake our projections more accurate.

TABLE III.B.1—1—PR0JEcTED AND ACTUAL CELLuL0sIc BI0FuEL PRODUCTION (2015—2018)[Million gallons] a

and imports (see, e.g., 80 FR 77420 (December 14,2015) and 81 FR 89746 (December 12, 2016)). Thisinterpretation is consistent with the statutorydirection to establish the cellulosic volume at the“projected volume available.” We do not believe itwould be reasonable to include in the projection allcellulosic biofuel produced throughout the world,regardless of likelihood of import to the U.S., since

volumes that are not imported would not beavailable to obligated parties for compliance andincluding them in the projection would render theresulting volume requirement and percentagestandards unachievable through the use ofcellulosic biofuel RINs.

29CAA section 211(o)(7)(D)(i).

30See CAA section 211(o)(7)(O)(iil; 40 CFR80.1456.

EPA only projected cellulosic biofuelproduction for the final three months of 2015, sincedata on the availability of cellulosic biofuel RINs(D3+D7) for the first nine months of the year wereavailable at the time the analyses were completedfor the final rule.

Projected volumeb Actual production volume C

Liquid CNG/LNG Total Liquid CNG/LNG Totalcellulosic derived from cellulosic cellulosic derived from cellulosic

biofuel biogas biofuel d biofuel biogas biofuel d

2015e 2 33 35 0.5 52.8 53.32016 23 207 230 4.1 186.2 190.32017 13 298 311 11.8 239.5 251.32018 14 274 288 10.6 303.2 313.82O19 20 399 418 15.5 418.2 433.7

aAs noted in Section lIlA. above, EPA has consistently interpreted the term “projected volume of cellulosic biofuel production” to include volumes of cellulosic biofuel likely to be made available in the U.S., including from both domestic production and imports. The volumes in this tabletherefore include both domestic production of cellulosic biofuel and imported cellulosic biofuel.

bprojected volumes for 2015 and 2016 can be found in the 2014—2016 Final Rule (80 FR 77506, 77508, December 14, 2015); projected volumes for 2017 can be found in the 2017 Final Rule (81 FR 89760, December 12, 2016); projected volumes for 2018 can be found in the 2018Final Rule (82 FR 58503, December 12, 2017); projected volumes for 2019 can be found in the 2019 Final Rule (83 FR 63704, December 11,2018).

C Actual production volumes are the total number of RINs generated minus the number of RINs retired for reasons other than compliance withthe annual standards, based on EMTS data.

dTotal cellulosic biofuel may not be precisely equal to the sum of liquid cellulosic biofuel and CNG/LNG derived from biogas due to rounding.Projected and actual volumes for 2015 represent only the final 3 months of 2015 (October—December) as EPA used actual RIN generation

data for the first 9 months of the year.


Federal Register / Vol. 85, No. 25 / Thursday, February 6, 2020/ Rules and Regulations 7025

Actual production in 2019 is a projection based on actual data from January—September 2019 and a projection of likely production for October—December 2019.

EPA’s projections of liquid cellulosicbiofuel were higher than the actualvolume of liquid cellulosic biofuelproduced each year from 2015 to2018.32 Depending on liquid cellulosicbiofuel production in the last 3 monthsor 2019, our projection for 2019 mayultimately be an over-projection orunder-projection of actual production,however at this time it appears likely toresult in an over-projection. As a resultof the over-projections in 2015—2016(and the anticipated over-projection in2017), and in an effort to take intoaccount the most recent data availableand make the liquid cellulosic biofuelprojections more accurate, EPA adjustedour methodology in the 2018 finalrule. The adjustments to ourmethodology adopted in the 2018 finalrule resulted in a projection that is closeto the volume of liquid cellulosicbiofuel produced in 2018 and appearlikely to result in a reasonably accurateprojection in 2019. In this final rule weare again applying the approach we firstused in the 2018 final rule: Usingpercentile values based on actualproduction in previous years, relative tothe projected volume of liquid cellulosicbiofuel in these years. We have adjustedthe percentile values to project liquidcellulosic biofuel production based onactual liquid cellulosic biofuelproduction in 2016 to 2019. We believethat the use of the methodology(described in more detail in SectionIII.D.1), with the adjusted percentilevalues, results in a projection thatreflects a neutral aim at accuracy sinceit accounts for expected growth in thenear future by using historical data thatis free of any subjective bias.

We next turn to the projection ofGNG/LNG derived from biogas. For 2018and 2019, EPA used an industry-wideapproach, rather than an approach thatprojects volumes for individualcompanies or facilities, to project theproduction of CNG/LNG derived frombiogas. EPA used a facility-by-facilityapproach to project the production ofCNG/LNG derived from biogas from2015—2017. Notably the facility-by-facility methodology resulted insignificant over-estimates of CNG/LNGproduction in 2016 and 2017, leadingEPA to develop the alternative industry

We note, however, that because the projectedvolume of liquid cellulosic biofuel in each year wasvery small relative to the total volume of cellulosicbiofuel, these over-projections had a minimalimpact on the accuracy of our projections ofcellulosic biofuel for each of these years.

82 FR 58486 (December 12, 2017).

wide projection methodology first usedin 2018. This updated approach reflectsthe fact that this industry is far moremature than the liquid cellulosic biofuelindustry, with a far greater number ofpotential producers of CNG/LNGderived from biogas. In such cases,industry-wide projection methods canbe more accurate than a facility-by-facility approach, especially as macromarket and economic factors becomemore influential on total productionthan the success or challenges at anysingle facility. The industry-wideprojection methodology slightly under-projected the production of CNG/LNGderived from biogas in 2018 and appearslikely to slightly under-project theproduction of these fuels in 2019.However, the difference between theprojected and actual production volumeof these fuels was smaller than in 2017.

As further described in SectionlII.D.2, EPA is again projectingproduction of CNG/LNG derived frombiogas using the industry-wideapproach. We calculate a year-over-yearrate of growth in the renewable CNG/LNG industry and apply this year-over-year growth rate to the total number ofcellulosic RINs generated and availableto be used for compliance with theannual standards in 2018 to estimate theproduction of CNG/LNG derived frombiogas in 2020. We have applied thegrowth rate to the number of available2018 RINs generated for CNG/LNGderived from biogas as data from thisyear allows us to adequately account fornot only RIN generation, but also forRINs retired for reasons other thancompliance with the annual standards.While more recent RIN generation datais available, the retirement of RINs forreasons other than compliance with theannual standards generally lags RINgeneration, sometimes by up to a year ormore.

The production volumes of cellulosicbiofuel in previous years also highlightthat the production of CNG/LNGderived from biogas has beensignificantly higher than the productionof liquid cellulosic biofuel in previousyears. This is likely the result of acombination of several factors,including the mature state of thetechnology used to produce CNG/LNG

34To project the volume of CNG/LNG derivedfrom biogas in 2020, we multiply the number of2018 RINs generated for these fuels and availableto be used for compliance with the annualstandards by the calculated growth rate to projectproduction of these fuels in 2019 and then multiplythe resulting number by the growth rate again toproject the production of these fuels in 2020.

derived from biogas relative to thetechnologies used to produce liquidcellulosic biofuel and the relatively lowproduction cost of CNG/LNG derivedfrom biogas (discussed in further detailin Section V). These factors are unlikelyto change in 2020. While we projectproduction volumes of liquid cellulosicbiofuel and CNG/LNG derived frombiogas separately, the actual volume ofeach fuel type produced may be higheror lower than projected.

2. Potential Domestic Producers

There are several companies andfacilities located in the U.S. that haveeither already begun producingcellulosic biofuel for use astransportation fuel, heating oil, or jetfuel at a commercial scale, or areanticipated to be in a position to do soat some time during 2020. The RFSprogram provides a strong financialincentive for domestic cellulosic biofuelproducers to sell any fuel they producefor domestic consumption.36 To datenearly all cellulosic biofuel produced inthe U.S. has been used domesticallyand all the domestic facilities we havecontacted in deriving our projectionsintend to produce fuel on a commercialscale for domestic consumption andplan to use approved pathways. Thesefactors give us a high degree ofconfidence that cellulosic biofuel RINswill be generated for all cellulosicbiofuel produced by domesticcommercial scale facilities. To generateRINs, each of these facilities must beregistered with EPA under the RFSprogram and comply with all theregulatory requirements. This includesusing an approved RIN-generatingpathway and verifying that theirfeedstocks meet the definition ofrenewable biomass. Most of thedomestic companies and facilitiesconsidered in our assessment ofpotential cellulosic biofuel producers in2019 have already successfully

For a further discussion of EPA’s decision tofocus on conunercial scale facilities, rather thanR&D and pilot scale facilities, see the 2019proposed rule (83 FR 32031, July 10, 2018).

to data from EMTS, the averageprice for a 2019 cellulosic biofuel RINs sold in 2019(through September 2019) was $1.30. Alternatively,obligated parties can satisfy their cellulosic biofuelobligations by purchasing an advanced (or biomassbased diesel) RIN and a cellulosic waiver credit.The average price for a 2019 advanced biofuel RINssold in 2019 (through September 2019) was $0.43while the price for a 2019 cellulosic waiver creditis $1.77 (EPA—420—B—18—052].

37The only known exception was a small volumeof fuel produced at a demonstration scale facilityexported to be used for promotional purposes.


7026 Federal Register / Vol. 85, No. 25 I Thursday, February 6, 2020 / Rules and Regulations

completed facility registration, and havesuccessfully generated RINs.38 A briefdescription of each of the domesticcompanies (or group of companies forcellulosic CNG/LNG producers and thefacilities using Edeniq’s technology) thatEPA believes may produce commercial-scale volumes of RIN generatingcellulosic biofuel by the end of 2020 canbe found in a memorandum to thedocket for this final rule.° Generalinformation on each of these companiesor group of companies considered in ourprojection of the potentially availablevolume of ceflulosic biofuel in 2020 issummarized in Table 111.3.4—1.

3. Potential Foreign Sources ofCellulosic Biofuel

In addition to the potential sources ofcellulosic biofuel located in the U.S.,there are several foreign cellulosicbiofuel companies that may producecellulosic biofuel in 2020. Theseinclude facilities owned and operatedby Beta Renewables, Enerkem, Ensyn,GranBio, and Raizen. All of thesefacilities use fuel production pathwaysthat have been approved by EPA forcellulosic RIN generation providedeligible sources of renewable feedstockare used and other regulatoryrequirements are satisfied. Thesecompanies would therefore be eligibleto register their facilities under the RFSprogram and generate RINs for anyqualifying fuel imported into the U.S.While these facilities may be able togenerate RINs for any volumes of

cellulosic biofuel they import into theU.S., demand for the cellulosic biofuelsthey produce is expected to be high intheir own local markets.

EPA’s projection of cellulosic biofuelproduction in 2020 includes cellulosicbiofuel that is projected to be importedinto the U.S. in 2020, includingpotential imports from all the registeredforeign facilities under the RFSprogram. We believe that due to thestrong demand for cellulosic biofuel inlocal markets and the time necessary forpotential foreign cellulosic biofuelproducers to register under the RfSprogram and arrange for the importationof cellulosic biofuel to the U.S.,cellulosic biofuel imports from foreignfacilities not currently registered togenerate cellulosic biofuel RINs aregenerally highly unlikely in 2020. Forpurposes of our 2020 cellulosic biofuelprojection we have excluded potentialvolumes from foreign cellulosic biofuelproduction facilities that are notcurrently registered under the RFSprogram.

Cellulosic biofuel produced at threeforeign facilities (Ensyn’s Renfrewfacility, GranBio’s Brazilian facility, andRaizen’s Brazilian facility) generatedcellulosic biofuel RINs for fuel exportedto the U.S. since 2017; projectedvolumes from each of these facilities areincluded in our projection of availablevolumes for 2020. EPA has alsoincluded projected volume from twoadditional foreign facilities. These twofacilities (Enerkem’s Canadian facility

and Ensyn’s Port-Cartier, Quebecfacility) have both completed theregistration process as cellulosic biofuelproducers. We believe that it isappropriate to include volume fromthese facilities in light of their proximityto the U.S., the proven technology usedby these facilities, the volumes ofcellulosic biofuel exported to the U.S.by the company in previous years (inthe case of Ensyn), and the company’sstated intentions to market fuelproduced at these facilities to qualifyingmarkets in the U.S. All of the facilitiesincluded in EPA’s cellulosic biofuelprojection for 2020 are listed in TableIII.B.4—1.

4. Summary of Volume Projections forIndividual Companies

General information on each of thecellulosic biofuel producers (or group ofproducers, for producers of CNG/LNGderived from biogas and producers ofliquid cellulosic biofuel using Edeniq’stechnology) that factored into ourprojection of cellulosic biofuelproduction for 2020 is shown in TableIII.B.4—1. This table includes bothfacilities that have already generatedcellulosic RINs, as well as those thathave not yet generated cellulosic RINs,but are projected to do so by the end of2020. As discussed above, we havefocused on commercial-scale cellulosicbiofuel production facilities. Each ofthese facilities (or group of facilities) isdiscussed further in a memorandum tothe docket.4°

TABLE III.B.4—1—PR0JEcTED PRODUCERS OF CELLUL0SIC BI0FUEL FOR U.S. CONSUMPTION IN 202041

Facility capacity Construction startCompany name Location Feedstock Fuel (million gallons date First production43per year)42

CNG/LNG Pro- Various Biogas CNG/LNG Various Various Various.ducers

Edeniq Various Corn Kernel Fiber Ethanol Various Various October 2016.Enerkem Edmonton, AL, Separated MSW Ethanol 10 2012 September

Canada. 2017.46Ensyn Rentrew, ON, Wood Waste Heating Oil 3 2005 2014.

Canada.Ensyn Port-Cartier, QC, Wood Waste Heating Oil 10.5 June 2016 January 2018.

Canada.GranBio São Miguel dos Sugarcane ba- Ethanol 21 Mid 2012 September 2014.

Campos, Brazil gasse.QCCP/Syngenta Galva, IA Corn Kernel Fiber Ethanol 4 Late 2013 October 2014.Red Rock Biofuels Lakeview, OR Wood Waste Diesel, Jet Fuel, 15 July 2018 1Q 2020.

Naphtha.Raizen Piracicaba City, Sugarcane ba- Ethanol 11 January 2014 July 2015.

Brazil gasse.

Most of the facilities listed in Table III.B.3—1are registered to produce cellulosic (D3 or D7) RINswith the exception of several of the producers ofCNG/LNG derived from biogas and Red RockBiofuels. EPA is unaware of any outstanding issuesthat would reasonably be expected to prevent these

facilities from registering as cellulosic bioftselproducers and producing qualifying cellulosicbiofliel in 2020.

39”Cellulosic Biofuel Producer CompanyDescriptions (May 2019),” memorandum from

Dallas Burtholder to EPA Docket EPA—HQ—OAR—2019—0136.

Cellulosic Biofuel Producer CompanyDescriptions (May 2019),” memorandum fromDallas Burtholder to EPA Docket EPA—HQ—0AR—2019—0136.



C. Projection From the EnergyInformation Administration

Section 211(o)(3)(A] of the CAArequires EIA to “provide to theAdministrator of the EnvironmentalProtection Agency an estimate, withrespect to the following calendar year,of the volumes of transportation fuel,biomass-based diesel, and cellulosicbiofuel projected to be sold orintroduced into commerce in the UnitedStates.” EIA provided these estimates toEPA on October 9, 2019. With regardto domestically produced cellulosicethanol, the EIA estimated that theavailable volume in 2020 would be 7million gallons. In its letter, ETA did notidentify the facilities on which theirestimate of liquid cellulosic biofuelproduction was based. ETA did,however, indicate in the letter that itonly included domestic production ofcellulosic ethanol in their projections.These EIA projections, therefore, do notinclude cellulosic biofuel produced byforeign entities and imported into theU.S., nor estimates of cellulosic diesel,cellulosic heating oil or CNG/LNGproduced from biogas, which togetherrepresent approximately 99 percent ofour projected cellulosic biofuel volumefor 2020. When limiting the scope of our

projection to the companies assessed byETA, we note that our volumeprojections are similar. EPA projectsapproximately 5 million gallons ofcellulosic ethanol will be produceddomestically in 2020.

D. Cellulosic Biofuel Volume for 2020

1. Liquid Cellulosic Biofuel

For our 2020 liquid cellulosic biofuelprojection, we use the same generalapproach as we have in projecting thesevolumes in previous years. We begin byfirst categorizing potential liquidcellulosic biofuel producers in 2020according to whether or not they haveachieved consistent commercial scaleproduction of cellulosic biofuel to date.We refer to these facilities as consistentproducers and new producers,respectively. Next, we define a range oflikely production volumes for 2020 foreach group of companies. Finally, weuse a percentile value to project fromthe established range a single projectedproduction volume for each group ofcompanies in 2020. As in the 2018 and2019 final rules, we calculatedpercentile values for each group ofcompanies based on the pastperformance of each group relative toour projected production ranges. This

methodology is briefly described in thissection and is described in detail inmemoranda to the docket.48

We first separate the list of potentialproducers of cellulosic biofuel (listed inTable IIT.B.4—1) into two groupsaccording to whether the facilities haveachieved consistent commercial-scaleproduction and cellulosic biofuel RINgeneration. We next defined a range oflikely production volumes for eachgroup of potential cellulosic biofuelproducers. The low end of the range foreach group of producers reflects actualRIN generation data over the last 12

months for which data were available atthe time our technical assessment wascompleted (October 2018—September20l9).9 For potential producers thathave not yet generated any cellulosicRINs, the low end of the range is zero.For the high end of the range, weconsidered a variety of factors,including the expected start-up date andramp-up period, facility capacity, andthe number of RINs the producerexpects to generate in 2020.50 Theprojected range for each group ofcompanies is shown in Tables III.D.1—1and IIT.D.1—2.5’

TABLE III.D.1—1—2020 PRODUCTION RANGES FOR NEW PRODUCERS OF LIQUID CELLuL0SIC BI0FUEL[Million ethanol-equivalent gallons]

Companies included lt’’

Enerkem, Ensyn (Port Cartier facility), BioEnergy, Red Rock Biofuels 0 30

a Rounded to the nearest million gallons.

Despite generating cellulosic RINs in previousyears Poet-DSM’s facility has not been included inTable lII.B.4—1 after announcing their plans tosuspend commercial production at this facility.

42 The Facility Capacity is generally equal to thenameplate capacity provided to EPA by companyrepresentatives or found in publicly availableinformation. Capacities are listed in physicalgallons (rather than ethanol-equivalent gallons). Ifthe facility has completed registration and the totalpermitted capacity is lower than the nameplatecapacity, then this lower volume is used as thefacility capacity.

4 Where a quarter is listed for the first productiondate EPA has assumed production begins in themiddle month of the quarter (i.e., August for the 3rdquarter) for the purposes of projecting volumes.

“ for more information on these facilities see“December 2019 Assessment of Cellulosic BiofuelProductioo from Biogas (2020),” memorandum fromDallas Burkholder to EPA Docket EPA—HQ—OAR—2019—0136.

The nameplate capacity of Enerkem’s facility is10 million gallons per year. However, we anticipatethat a portion of their feedstock will be nonbiogenic municipal solid waste (MSW). RINs cannotbe generated for the portion of the fuel producedfrom non-biogenic feedstocks. We have taken this

into account in our production projection for thisfacility (See “May 2019 Liquid Cellulosic BiofuelProiections for 2020 CBI”).

46 This date reflects the first production of ethanolfrom this facility. The facility began production ofmethanol in 2015.

“ Letter from Linda Capuano, EIA Administratorto Andrew Wheeler, EPA Administrator. October 9,2019. Available in docket EPA—HQ—OAR—2019—0136.

8”December 2019 Liquid Cellulosic BiofuelProjections for 2020 CBI” and “Calculating thePercentile Values Used to Project Liquid CellulosicBinfuel Production for the 2020 FRM,”memorandums from Dallas Burkholder to EPADocket EPA—HQ—OAR—201 9—0136.

“° Consistent with previous years, we haveconsidered whether there is reason to believe anyof the facilities considered as potential cellulosicbiofuel producers for 2020 is likely to produce asmaller volume of cellulosic biofuel in 2020 thanin the previous 12 months for which data areavailable. At this time, EPA is not aware of anyinformation that would indicate lower productionin 2020 from any facility considered than in theprevious 12 months for which data are available.Despite generating cellulosic RINs in previous yearsPoet-DSM’s facility has not been included in our

projection of cellulosic biofuel production irs 2020after announcing their plans to suspend commercialproduction at this facility.

50As in our 2015—2019 projections, EPAcalculated a high end of the range for each facility(or group of facilities) based on the expected startup date and a six-month straight-line ramp-upperiod. The high end of the range for each facility(or group of facilities) is equal to the valuecalculated by EPA using this methodology, or thenumber of RINs the producer expects to generate in2020, whichever is lower.

More information on the data and methods EPAused to calculate each of the ranges in these tablesin contained in “December 2019 Liquid CetlulosicBiofuel Projections for 2020 CBI” memorandumfrom Dallas Burkbolder to EPA Docket EPA—HQ—OAR—2019—0136. We have not shown the projectedranges for each individual company. This isbecause the high end of the range for some of thesecompanies are based on the company’s productionprojections, which they consider confidentialbusiness information (CBI). Additionally, the lowend of the range for facilities that have achievedconsistent commercial scale production is based onactual RIN generation data in the most recent 12months, which is also claimed as CBI,



TABLE IIt.D.1—2—2020 PRODUCTION RANGES FOR CONSISTENT PRODUCERS OF LIQUID CELLUL0SIC BI0FuEL

[Million ethanol-equivalent gallons)

C I d d I Low end of High end ofompanies inc u e the range a the range b

Facilities using Edeniq’s technology (registered facilities), Ensyn (Renf row facility), GranBio, QCCP/Syngenta,Raizen 10 36


After defining likely production which EPA used the current III.C.1—3 shows the projected ranges forranges for each group of companies, we methodology for developing the range liquid cellulosic biofuel productionnext determined the percentile values to potential production volumes for each (from the 2014—16, 2017, 2018, anduse in projecting a production volume company was 2016, while 2019 is the 2019 final rules), actual production, andfor each group of companies. We most recent year for which we have the percentile values that would havecalculated the percentile values using data. resulted in a projection equal to theactual production data from 2016 For each group of companies and for actual production volume.through 2019.52 The first full year in each year from 2016—2019, Table

TABLE III.D.1—3—PR0JECTED AND ACTUAL LIQUID CELLuwsIC BI0FUEL PRODUCTION IN 2016—2019[Million gallons]

Low end of High end of Actual Actualthe range the range production53 percentile

New Producers54

2016 0 76 1.06 1st2017 0 33 8.79 27th2018 0 47 2.87 6th2019 0 10 0.00 0thAverage a N/A N/A N/A 9th

Consistent Producers55

2016 2 5 3.28 43rd2017 3.5 7 3.02 —14th2018 7 24 7.74 4th2019 14 44 15.51 5thAverage a N/A N/A N/A 10th

aWe have not averaged the low and high ends of the ranges, or actual production, as we believe it is more appropriate to average the actualpercentiles from 2016—2019 rather than calculating a percentile value for 2016—2019 in aggregate. This approach gives equal weight to the accuracy of our projections for each year from 2016—2019, rather than allowing the average percentiles calculated to be dominated by years withgreater projected volumes.

Based upon this analysis, EPA hasprojected cellulosic biofuel productionfrom new producers at the 9thpercentile of the calculated range andfrom consistent producers at the 10thpercentile.56 These percentiles arecalculated by averaging the percentilesthat would have produced cellulosic

biofuel projections equal to the volumesproduced by each group of companiesin 2016—2019. Prior to 2016, EPA useddifferent methodologies to projectavailable volumes of cellulosic biofueland thus believes it inappropriate tocalculate percentile values based onprojections from those years.57

We then used these percentile values,together with the ranges determined foreach group of companies discussedabove, to project a volume for eachgroup of companies in 2020. Thesecalculations are summarized in TableIII.D.1—4.

52 To calculate the percentile value that wouldhave resulted in a projection equal to actualproduction for 2019 we projected actual liquidcellulosic biofuel production for 2019 using datathrough September 2019 and an updated projectionof liquid cellulosic biofuel production for October—December 2019.

Actual production is calculated by subtractingRINs retired for any reason other than compliancewith the RFS standards from the total number ofcellulosic RINs generated.

Companies characterized as new producers inthe 2014—2016, 2017, 2018, and 2019 final ruleswere as follows: Abengoa (2016), CoolPlanet (2016),

DuPont (2016, 2017), Edeniq (2016, 2017), Enerkem(2018, 2019), Ensyn Port Cartier (2018. 2019),GranBio (2016, 2017), IneosBio (2016), and Poet(2016, 2017).

Companies characterized as consistentproducers in the 2014—2016, 2017, 2018, and 2019final rules were as follows: Edeniq Active facilities(2018, 2019), Ensyn Renfrew (2016—2019), GranBio(2018, 2019), Poet (2018, 2019), Quad County CornProcessors/Syngenta (2016—2019), and Raizen(2019).

For more detail on the calculation of thepercentile values used in this final rule see“Calculating the Percentile values Used to Project

Liquid Cellulosic Biofuel Production for 2020FRM,” available in EPA docket EPA—HQ—OAR—2019—0136.

57EPA used a similar projection methodology for2015 as in 2016—2018, however we only prolectedcellulosic biofuel production volume for the final3 months of the year, as actual production datawere available for the first 9 months. We do notbelieve it is appropriate to consider data from a yearfor which 9 months of the data were known at thetime the projection was made in determining thepercentile values used to project volume over a fullyear.



TABLE III.D.1—4—PR0JEcTED VOLUME OF LIQUID CELLUL05Ic BI0FUEL IN 2020[Million ethanol-equivalent gallons]

Low end of High end of Percentile Projectedthe rangea the range a volume a

Liquid Cellulosic Biofuel Producers; Producers without Consistent Commercial Scale Production 0 30 9th 3

Liquid Cellulosic Biofuel Producers; Producers with Consistent CommercialScale Production 10 36 10th 13

Total N/A N/A N/A b 15

a Volumes rounded to the nearest million gallons.bVolumes do not add due to rounding.

2. CNG/LNG Derived From Biogas biogas used as transportation fuel.58 the 12 months that immediately precedeEPA calculated the year-over-year this time period (October 2017 to

F or 2020, EPA is using the same growth rate in CNG/LNG derived from September 2018). The growth rateindustry wide projection approach as biogas by comparing RIN generation calculated using this data is 37.9used for 2018 and 2019 based on a yearfrom October 2018 to September 2019 percent.59 These RIN generationover-year growth rate to project (the most recent 12 months for which volumes are shown in Table III.D.2—1.production of CNG/LNG derived from data are available) to RIN generation in

TABLE III.D.2—1—GENERATI0N OF CELLUL0SIC BI0FUEL RIN5 FOR CNG/LNG DERIVED FROM BloGAs[Million gallons] 60

RIN generation RIN generation Year-over-year(October 2017—September 2018) (October 2018—September 2019) increase

278,134,565 383,605,247 I

EPA then applied this 37.9 percentyear-over-year growth rate to the totalnumber of 2018 cellulosic RINsgenerated and available for compliancefor CNG/LNG. This methodology resultsin a projection of 576.8 million gallonsof CNG/LNG derived from biogas in2020. In this rule, as in the 2018 and2019 final rules, we are again applyingthe calculated year-over-year rate ofgrowth to the volume of CNG/LNGactually supplied in 2018 (taking intoaccount actual RIN generation as well asRINs retired for reasons other thancompliance with the annual volumeobligations) to provide an updatedprojection of the production of thesefuels in 2019, and then applying the rateof growth to this updated 2019projection to project the production ofthese fuels in 2020.61

We believe that projecting theproduction of CNG/LNG derived frombiogas in this manner appropriatelytakes into consideration the actualrecent rate of growth of this industry,and that this growth rate accounts forboth the potential for future growth andthe challenges associated withincreasing RIN generation from thesefuels in future years. This methodologymay not be appropriate to use as theprojected volume of CNG/LNG derivedfrom biogas approaches the total volumeof CNG/LNG that is used astransportation fuel, as RINs can begenerated only for CNG/LNG used astransportation fuel. We do not believethat this is yet a constraint as ourprojection for 2020 is below the totalvolume of CNG/LNG that is currentlyused as transportation fuel.62

3. Total Cellulosic Biofuel in 2020

After projecting production ofcellulosic biofuel from liquid cellulosicbiofuel production facilities andproducers of CNG/LNG derived frombiogas, EPA combined these projectionsto project total cellulosic biofuelproduction for 2020. These projectionsare shown in Table III.D.3—l. Using themethodologies described in this section,we project that 0.59 billion ethanol-equivalent gallons of qualifyingcellulosic biofuel will be produced in2020. We believe that projecting overallproduction in 2020 in the mannerdescribed above results in a neutralestimate (neither biased to produce aprojection that is too high nor too low)of likely cellulosic biofuel production in2020.

58 Historically RIN generation for CNG/LNGderived from biogas has increased each year. It ispossible, however, that RIN generation for thesefuels in the most recent 12 months for which dataare available could be lower than the preceding 12months. We believe our methodology accounts forthis possibility. In such a case, the calculated rateof growth would be negative.

This growth rate is higher than the growth ratesused to project CNG/LNG volumes in the 2019 finalrule (29.0%, see 83 FR 63717, December 11, 2018)and tlse 2018 final rule (21.6%, see 82 FR 58502,December 12, 2017),

° Further detail on the data used to calculateeach of these numbers in this table, as well as theprojected volume of CNG/LNG derived from biogas

used as transportation fuel in 2020 can be found in“December 2019 Assessment of Cellulosic BiofuelProduction from Biogas (2020)” memorandum fromDallas Burltholder to EPA Docket PA—HQ—OAR—2019—01 36.

To calculate this value, EPA multiplied thenumber of 2018 RINs generated and available forcompliance for CNG/LNG derived from biogas(303.2 million), by 1.379 (representing a 37.9percent year-over-year increase) to projectproduction of CNG/LNG in 2019, and multipliedthis number (418.2 million RINs) by 1.379 again toproject production of CNG/LNG in 2020.

62 EPA is aware of several estimates for thequantity of CNG/LNG that will be used astransportation fuel in 2020. As discussed in a paper

prepared by Bates White for the Coalition forRenewable Gas (“Renewable Natural Gas Supplyand Demand for Transportation.” Bates WhiteEconomic Consulting, April 5, 2019) these estimatesrange from nearly 600 million ethanol-equivalentgallons in 2020 (February 2019 STEO) to over 1.5billion gallons (Fuels Institute—US Share). Asdiscussed in further detail in a memorandum to thedocket (“December 2019 Assessment of CellulosicBiofuel Production from Biogas (2020)”memorandum from Dallas Burkholder to EPADocket EPA—HQ—OAR—2019—0136) we believe thehigher projections are likely to be more accurate.Thus, the volume of CNG/LNG used astransportation fuel would not appear to constrainthe number of RINs generated for this fuel in 2020.



TABLE IlI.D.3—1—PR0JEcTED VOLUME OF CELLuL0sIc BI0FUEL IN 2020

Projectedvolume a

Liquid Cellulosic Biotuel Producers; Producers without Consistent Commercial Scale Production (million gallons) 3Liquid Cellulosic Biofuel Producers; Producers with Consistent Commercial Scale Production (million gallons) 13CNG/LNG Derived from Biogas (million gallons) 577

Total (billion gallons) 0.59


Unlike in previous years, we haverounded the final projected volume ofcellulosic biofuel to the nearest 10million gallons as proposed. This isconsistent with the volumes in thetables containing the statutory volumetargets for cellulosic bio fuel through2022, which also specify volumes to nomore than the nearest 10 million gallons(and in many cases only to the nearest100 million gallons). While in previousyears we have rounded the requiredcellulosic biofuel volume to the nearestmillion gallon, the projected volume ofcellulosic biofuel has grown such thatthis level of precision is unnecessary,and likely unfounded. By rounding tothe nearest 10 million gallons the totalprojected volume of cellulosic biofuel isaffected in the most extreme case byonly 5 million gallons, or approximately1 percent of the total projected volume.The uncertainty in the projected volumeof cellulosic biofuel is significantlyhigher than any error introduced byrounding the projected volume to thenearest 10 million gallons.

IV. Advanced Biofuel and TotalRenewable fuel Volumes for 2020

The national volume targets foradvanced biofuel and total renewablefuel to be used under the RFS programeach year through 2022 are specified inCAA section 211(o)(2)(B)(i)(I) and (II].Congress set annual renewable fuelvolume targets that envisioned growthat a pace that far exceeded historicalgrowth and, for years after 2011,prioritized that growth as occurringprincipally in advanced biofuels(contrary to previous growth patternswhere most growth was in conventionalrenewable fuel). Congressional intent isevident in the fact that the impliedstatutory volume requirement forconventional renewable fuel is 15

billion gallons for all years after 2014,while the advanced biofijel volumerequirements, driven largely by growthin cellulosic biofuel, continue to groweach year through 2022 to a total of 21billion gallons. Early growth inconventional renewable fuels wasexpected to provide a bridge to the new,

more beneficial cellulosic biofuels inthe later years.63

Due to a projected shortfall in theavailability of cellulosic biofuel, andconsistent with our long-heldinterpretation that the cellulosic waiverauthority is best interpreted to provideequal reductions to advanced biofueland total renewable fuel volumes, weare reducing the statutory volumetargets for both advanced biofuel andtotal renewable fuel for 2020 by themaximum amount permitted under thecellulosic waiver authority, 9.91 billiongallons. Section IV.A explains thevolumetric limitation on our use of thecellulosic waiver authority to reduceadvanced biofuel and total renewablefuel volumes. Section IV.B presents ourtechnical analysis of the reasonablyattainable and attainable volumes ofadvanced biofuel. Sections IV.C andIV.D further explain our decision toexercise the maximum discretionavailable under the cellulosic waiverauthority to reduce advanced biofueland total renewable fuel, respectively.

To begin, we have evaluated thecapabilities of the market and aremaking a finding that the 15.0 billiongallons specified in the statute foradvanced biofuel cannot be reached in2020. This is primarily due to theexpected continued shortfall incellulosic biofuel; production of thisfuel type has consistently fallen short ofthe statutory targets by 90 percent ormore, and as described in Section III, weproject that it will fall far short of thestatutory target of 10.5 billion gallons in2020. For this and other reasonsdescribed in this section we arereducing the advanced biofuel statutorytarget by 9.91 billion gallons for 2020.

In previous years when we have usedthe cellulosic waiver authority, we havedetermined the extent to which weshould reduce advanced biofuelvolumes by considering a number ofdifferent factors under the broad

See, for instance, comments from GrowthEnergy where they note that” ... producers ofstarch ethanol . . . are leading investors incellulosic biofuels, which may be derived fromcorn.” Page 31 of “Comments from Growth Energyon proposed 2018 standards,” available in docketEPA—HQ—OAR—2019—0136.

discretion which that authorityprovides, including:• The availability of advanced biofuels

(e.g., historic data on domesticsupply, expiration of the bio dieselblenders’ tax credit, potential importsof biodiesel in light of the CommerceDepartment’s determination on tariffson biodiesel imports from Argentinaand Indonesia, potential imports ofsugarcane ethanol, and anticipatedchanges in the production offeedstocks for advanced biodiesel andrenewable diesel)

• The energy security and greenhousegas (GHG) impacts of advancedbiofuels

• The availability of carryover RINs• The intent of Congress as reflected in

the statutory volumes tables tosubstantially increase the use ofadvanced biofuels over time

• Increased costs associated with theuse of advanced biofuels, and

• The increasing likelihood of adverseunintended impacts associated withuse of advanced biofuel volumesachieved through diversion of foreignfuels or substitution of advancedfeedstocks from other uses to bio fuelproduction.Before the 2018 standards were set,

the consideration of these factors led usto conclude that it was appropriate toset the advanced biofuel standard in amanner that would allow the partialbackfilling of missing cellulosicvolumes with non-cellulosic advancedbiofuels.64 In the 2018 and 2019standards final rules, we concluded thatpartial backfilling of missing cellulosicbiofuel volumes with advanced biofuelwas not warranted, primarily due to ashortfall in reasonably attainablevolumes of advanced biofuels, highcosts, the potential for feedstockswitching and/or foreign fuel diversionwhich could compromise GHG benefitsand disrupt markets, and an interest inpreserving the existing carryover RINbank.65 66

64 For instance, see 81 FR 89750 (December 12,2016).

655ee 82 FR 58504 (December 12, 2017).°6See 83 FR 63719 (December Ii, 2016).



For 2020, we have determined thatthe concerns surrounding partialbackfilling of missing cellulosic biofuelwith advanced biofuel remain valid. Asa result, we are reducing the statutoryvolume target for advanced biofuel bythe same amount as the reduction incellulosic biofuel. This results in thenon-cellulosic component of theadvanced biofuel volume requirementbeing equal to 4.50 billion gallons in2020, which is the same as the impliedstatutory volume requirement for noncellulosic advanced biofuel for 2020.

The impact of our exercise of thecellulosic waiver authority is that afterwaiving the statutory volume target forcellulosic biofuel down to the projectedavailable level, and then reducing thestatutory volume target for advancedbiofuel by the same amount, theresulting volume requirement foradvanced biofuel for 2020 is 5.09 billion

gallons. This volume requirement is 170million gallons more than the applicablevolume used to derive the 2019percentage standard. Furthermore, afterapplying the same reduction to thestatutory volume target for totalrenewable fuel, the volume requirementfor total renewable fuel is also 170million gallons more than the applicablevolume used to derive the 2019

percentage standard. These increases areentirely attributable to a 170 milliongallon increase in the cellulosic biofuelvolume requirement. The impliedvolumes of non-cellulosic advancedbiofuel and conventional renewable fuelwill remain the same as in 2019 at 4.5and 15 billion gallons respectively.

A. Volumetric Limitation on Use of theCellulosic Waiver Authority

As described in Section hA, whenmaking reductions in advanced biofuel

and total renewable fuel under thecellulosic waiver authority, the statutelimits those reductions to no more thanthe reduction in cellulosic biofuel. Asdescribed in Section lII.C, we areestablishing a 2020 applicable volumefor cellulosic biofuel of 590 milliongallons, representing a reduction of9,910 million gallons from the statutorytarget of 10,500 million gallons. As aresult, 9,910 million gallons is themaximum volume reduction foradvanced biofuel and total renewablefuel that is permissible using thecellulosic waiver authority. Use of thecellulosic waiver authority to thismaximum extent would result involumes of 5.09 and 20.09 billiongallons for advanced biofuel and totalrenewable fuel, respectively.

TABLE V.A—i—LowEsT PERMISSIBLE VOLUMES USING ONLY THE CELLuLO5Ic WAIVER AUTHORITY[Million gallons]

Advanced Totalbiofuel renewable fuel

Statutory target 15,000 30,000Maximum reduction permitted under the cellulosic waiver authority 9,910 9,910Lowest 2020 volume requirement permitted using only the cellulosic waiver authority 5,090 20,090

We are authorized under thecellulosic waiver authority to reduce theadvanced biofuel and total renewablefuel volumes “by the same or a lesser”amount as the reduction in thecellulosic biofuel volume.67 Asdiscussed in Section hA, EPA hasbroad discretion in using the cellulosicwaiver authority in instances where itsuse is authorized under the statute,since Congress did not specify factorsthat EPA must consider in determiningwhether to use the authority to reduceadvanced biofuel or total renewablefuel, nor what the appropriate volumereductions (within the range permittedby statute) should be. Thus, we have theauthority to set the 2020 advancedbiofuel volume requirement at a levelthat is designed to partially backfill forthe shortfall in cellulosic biofuel.However, as discussed below, we do notbelieve this would be appropriate for2020.

B. Attainable Volumes of AdvancedBiofuel

We have evaluated whether it wouldbe appropriate to require 5.09 billionethanol-equivalent gallons of advancedbiofuel for 2020. In doing so, we haveconsidered both attainable and

67CAA section 211(o)(7)(D)(i).

reasonably attainable volumes ofadvanced biofuel to inform our exerciseof the cellulosic 68 waiver authority. Aswe explained in the 2019 final rule,both “reasonably attainable” and“attainable” are terms of art defined byEPA.69 Volumes described as“reasonably attainable” are those thatcan be reached with minimal marketdisruptions, increased costs, reducedGHG benefits, and diversion ofadvanced biofuels or advanced biofuelfeedstocks from existing uses. Volumesdescribed as “attainable,” in contrast,are those we believe can be reached butwould likely result in marketdisruption, higher costs, and/or reducedGHG benefits. Neither “reasonablyattainable” nor “attainable” are meantto convey the “maximum achievable”level, which, as we explained in the2017 final rule, we do not consider tobe an appropriate target under the

83 FR 63704, 63721 (December11, 2019).600ur consideration of “reasonably attainable”

volumes is not intended to imply that “attainable”volumes are unreasonable or otherwiseinappropriate. As we explain in this section, webelieve that an advanced biofuel volume of 5.09billion gallons, although not reasonably attainable,is attainable, and that establishing such volume isan appropriate exercise of our cellulosic waiverauthority.

cellulosic waiver authority.70 Finally,we note that our assessments of the“reasonably attainable” and“attainable” volumes of non-cellulosicadvanced biofuels are not intended to beas exacting as our projection ofcellulosic biofuel production, describedin Section III of this rule.’

°81 FR 89762 (December 12, 2016]. Themaximum achievable volume may be relevant toour consideration of whether to exercise the generalwaiver authority on the basis of inadequatedomestic supply. However, for 2020, we havedetermined that after exercising our cellulosicwaiver authority to the full extent permitted, theresulting advanced biofuel volume is attainable.Therefore, further reductions using the generalwaiver authority on the basis of inadequatedomestic supply are not necessary.

The statute directs EPA to lower the cellulosicbiofuel volume to the proiected production levelwhere that level falls short of the statutory volume.Under APIv. EPA, 706 F.3d 474, 479—80 (D.C. Cir.2013), we must project this production level withneutral aim at accuracy, that is, make a technicaldetermination about the market’s ability to producecetlulosic biofuels. By contrast, the discretionaryportion of the cellulosic waiver authority does notexplicitly require EPA to project the availability ofadvanced biofuels, but instead confers broaddiscretion on EPA. Moreover, while we have chosento estimate reasonably attainable and attainablevolumes of advanced biofuel, these volumes do notequate to projected production alone. Rather, inexercising the discretionary portion of the cellulosicwaiver authority, we also consider a range of policyfactors—such as costs, greenhouse gas emissions,

continued



As in prior rulemakings, we begin byconsidering what volumes of advancedbiofuels are reasonably attainable. InACE, the Court noted that in assessingwhat volumes are “reasonablyattainable,” EPA had considered theavailability of feedstocks, domesticproduction capacity, imports, andmarket capacity to produce, distribute,and consume renewable fuel.72 Theseconsiderations include both demand-side and supply-side factors.73 We aretaking a similar approach for 2020. Weare establishing the advanced biofuelvolume requirement at a level that takesinto consideration both the benefits anddrawbacks of an increase in the impliednon-cellulosic advanced biofuel volumerequirement, as well as the ability of themarket to make such increased volumesavailable.

Our individual assessments ofreasonably attainable volumes of eachtype of advanced biofuel reflect thisapproach. As discussed in further detailin this section, we find that 70 milliongallons of imported advanced ethanol,50 million gallons of other advancedbiofuels, and 2.77 billion gallons ofadvanced biodiesel and renewablediesel are reasonably attainable.Together with our projected volume of590 million gallons of cellulosic biofuel,the sum of these volumes is 5.00 billion

energy security, market disruptions, etc., asdescribed throughout this section.

72 See ACE, 864 F.3d at 735—36.See id. at 730—35.

gallons. This is the volume ofadvanced biofuel that we believe isreasonably attainable.

As described in Section IV.A above,5.09 billion gallons is the lowest levelthat we could set under the cellulosicwaiver authority. Since the volume thatwe have determined to be reasonablyattainable—5.00 billion gallons—is lessthan the lowest volume we can setunder the cellulosic waiver authority,we also have considered whether themarket can make more than 5.00 billiongallons of advanced biofuel,notwithstanding the potential forfeedstock/fuel diversions. That is, weassess whether 5.09 billion gallons ismerely “attainable,” as opposed to“reasonably attainable.” In particular,we assess whether additional volumesof advanced biodiesel and renewablediesel are attainable. We conclude that2.83 billion gallons of advancedbiodiesel and renewable diesel areattainable, notwithstanding potentialfeedstock/fuel diversions. This quantityof advanced biodiesel and renewablediesel, together with the cellulosicbiofuel, sugarcane ethanol, and otheradvanced biofuels described above, willenable the market to make available 5.09billion gallons of advanced biofuels.

1. Imported Sugarcane Ethanol

The predominant available source ofadvanced biofuel other than cellulosicbiofuel and BBD has historically been

0.07 ÷ 0.05 + 2.77 x 1.55 + 0.59 = 5.00.

imported sugarcane ethanol. Importedsugarcane ethanol from Brazil is thepredominant form of imported ethanoland the only significant source ofimported advanced ethanol. In settingthe 2019 standards, we estimated that100 million gallons of importedsugarcane ethanol would be reasonablyattainable. This was based on acombination of data from recent yearsdemonstrating relatively low importvolumes and older data indicating thathigher volumes were possible. We alsonoted the high variability in ethanolimport volumes in the past (including ofBrazilian sugarcane ethanol), increasinggasoline consumption in Brazil, andvariability in Brazilian production ofsugar as reasons that it would beinappropriate to assume that sugarcaneethanol imports would reach the muchhigher levels suggested by somestakeholders.

At the time of the 2019 standards finalrule, we used available data from aportion of 2018 to estimate that importvolumes of sugarcane ethanol werelikely to fall significantly below the 200million gallons we had assumed whenwe set the 2018 standards. Since the2019 final rule, new data reveals acontinued trend of low imports.Specifically, import data for all of 2018is now available and indicates thatimports of sugarcane ethanol reachedjust 54 million gallons.

7533 FR 63704 (December11, 2018).


Federal Register / Vol. 85, No. 25 / Thursday, February 6, 2020 / Rules and Regulations 7033

0400

300

figure IV.B.1-1

Historical Sugarcane Ethanol Imports

Data for 2019 through August indicatethat advanced ethanol imports reached95 million gallons. While we cannotproject precisely what total importvolumes will be by the end of 2019, asa first approximation is may bereasonable to assume that the monthlyrate of import is consistent throughoutthe year. If so, then total 2019 importscould be 143 million gallons.

However, there is little evidence thatthe increase potentially exhibited in2019 would continue into 2020 as thereis no consistent upward or downwardtrend after 2013. Moreover, severalfactors create disincentives forincreasing imports above the levels inrecent years, including the BIDblendwall, the potential existence of arecurring tax credit for biodiesel andrenewable diesel with which sugarcaneethanol competes within the advancedbiofuel category, and the fact thatimported sugarcane ethanol typicallycosts more than corn ethanol.76 As a

76 The difference between 05 and D6 kIN pricescan also influence the relative attractiveness toconsumers of advanced ethanol compared toconventional ethanol. However, there has been

result of these factors and the lowerlevels that have occurred in recentyears, we believe it would beappropriate to reduce the expectedvolume of imported sugarcane ethanolbelow 100 million gallons.

Imports of sugarcane ethanol appearto have stabilized in the 2014 to 2018timeframe in comparison to previousyears. The average for these years is 67million gallons. Due to the difficulty inprecisely projecting future importvolumes as described further below, webelieve that a rounded value of 70million gallons would be moreappropriate and thus we use 70 milliongallons of imported sugarcane ethanolfor the purposes of projectingreasonably attainable volumes ofadvanced biofuel for 2020. We believethe volume of fuel imported in previousyears is a reasonable way to project thereasonably attainable volume ofsugarcane ethanol in 2020.

In the July 29 proposal, we projectedthat 60 million gallons of importedsugarcane ethanol would be available in

considerable variability in this particular kIN pricedifference over the last few years.

2020. Our revised estimate of 70 milliongallons reflects updated data on 2018imports as well as a more robustquantitative approach to calculatingrecent actual imports.

We note that the future projection ofimports of sugarcane ethanol isinherently imprecise and that actualimports in 2020 could be lower orhigher than 70 million gallons. Factorsthat could affect import volumesinclude uncertainty in the Brazilianpolitical climate, weather and harvestsin Brazil, world ethanol demand andprices, constraints associated with theElO blendwall in the U.S., the status ofthe biodiesel tax credit which affects theeconomic attractiveness of sugarcaneethanol’s primary competitor, worlddemand for and prices of sugar, and thecost of sugarcane ethanol relative to thatof corn ethanol. After considering thesefactors, and in light of the high degreeof variability in historical imports ofsugarcane ethanol, we believe that 70

700

600

500

I200

Source: “US Imports of Brazilian Fuel Ethanol from EIA - Oct2019.” docket EPA-HQ

OAR-2019-0136. Includes imports directly from Brazil and those that are transmitted

through the Caribbean Basin Initiative and Central America Free Trade Agreement

(CAFTA).



million gallons is reasonably attainable advanced biodiesel and renewable non-cellulosic CNG, naphtha, heatingfor 2O20. diesel, there are other advanced biofuels oil, and domestically produced

2. Other Advanced Biofuel that can be counted in the advanced ethanol. However, the supplydetermination of reasonably attainable of these fuels has been relatively low in

In addition to cellulosic biofuel, volumes of advanced biofuel for 2020. the last several years.imported sugarcane ethanol, and These other advanced biofuels include

TABLE IV.B.2—1—HI5T0RIcAL SUPPLY OF OTHER ADVANCED BIOFUELs[Million ethanol-equivalent gallons]

CNG/LNG Heating oil Naphtha Dog1estc Total a

2013 26 0 3 23, 522014 20 0 18 26 642015 0 1 24 25 502016 0 2 27 27. 562017 2 2 32 26 622018 0 1 18] 27 46

a Excludes consideration of D5 renewable diesel, as this category of renewable fuel is considered as part of biodiesel and renewable diesel asdiscussed in Section IV.B.3.

The significant decrease after 2014 inCNG/LNG from biogas as advancedbiofuel with a D code of 5 is due to there-categorization in 2014 of landfillbiogas from advanced (D code 5) tocellulosic (D code 3)78 Subsequently,total supply of these other advancedbiofuels has exhibited no consistenttrend during 2015 to 2018. The averageduring those four years was 54 milliongallons. However, due to the highvariability, and consistent with theapproach we are taking for estimatingvolumes of imported sugarcane ethanol,we believe that this average should berounded to the nearest 10 milliongallons. As a result, we have used 50million gallons to represent otheradvanced biofuels in the context ofestimating attainable volumes ofadvanced biofuel.° As with sugarcaneethanol, we have not conducted an in-depth assessment of the volume of otheradvanced biofuels that could be madeavailable to the U.S. without divertingthis fuel from other markets. We believethe volume of fuel supplied in previousyears is a reasonable way to project thereasonably attainable volume of otheradvanced biofuels in 2020.

We acknowledge that, in the July 29

proposal, we proposed using 60 milliongallons of other advanced biofuel inestimating attainable volumes ofadvanced biofuel. This value was basedon the same data shown in TableIV.B.2—1, but using a more qualitativeapproach wherein 60 million gallonswas deemed representative of bothhistorical volumes and those that could

Given the relatively small volumes of sugarcaneethanol we are projecting (approximately 1 percentof the advanced biofuel standard), even a significantdeviation in its actual availability would likely havenegligible impact on the market’s ability to meet theadvanced biofliel volumes.

be attained in 2020. For this final rulewe have chosen to use a mathematicalapproach that is consistent with theapproach we have taken for importedsugarcane ethanol, and which webelieve represents a more robustmethodology for making futureprojections. As the change in theprojected 2020 volume of otheradvanced biofuel is very small, we donot believe this change in approachmeaningfully affects the broaderassessment of advanced biofuelvolumes. Moreover, we note that thisfinal action uses a volume of importedsugarcane ethanol that is 10 milliongallons higher than that proposed, whilesimultaneously using a volume of otheradvanced that is 10 million gallonslower than that proposed. The net effecton projections of advanced biofuel forboth of these changes combined is zero.

We recognize that the potential existsfor additional volumes of advancedbiofuel from sources such as jet fuel,liquefied petroleum gas (LPG), butanol,and liquefied natural gas (as distinctfrom CNG), as well as non-cellulosicCNG from biogas produced in digesters.However, since they have beenproduced, if at all, in only de minimisand sporadic amounts in the past, we donot have a reasonable basis forrojecting substantial volumes fromthese sources in 2020.80

3. Biodiesel and Renewable Diesel

Having projected the available volumeof cellulosic biofuel, and the reasonablyattainable volumes of imported

7879 FR 42128 (July 18, 2014).

As with sugarcane ethanol, given the relativelysmall volumes of other advanced biofuels we areprojecting (approximately 1% of the advancedbiofuel standard), even a significant deviation in itsactual availability would likely have negligible

sugarcane ethanol and “other”advanced biofuels, we next assess theavailability of advanced biodiesel andrenewable diesel by considering a widerange of factors. First, we calculate theamount of advanced biodiesel andrenewable diesel that would be neededto meet the 5.09 billion ethanol-equivalent gallon advanced requirementwere we to exercise our maximumdiscretion under the cellulosic waiverauthority discussed in Section IV.A.This calculation, shown in TableIV.B.3—1, helps inform the exercise ofour waiver authorities. Second, weconsider the historical availability ofthese fuels, including the impacts ofbiodiesel tax policy and tariffs. Third,we consider other factors that couldpotentially limit the availability of thesefuels including the production capacityof advanced biodiesel and renewablediesel production facilities, and theability for the market to distribute anduse these fuels. Fourth, we assess theavailability of advanced feedstocks. Aspart of this analysis, we consider thevolume of advanced biodiesel andrenewable diesel that can be madeavailable with minimal diversions ofadvanced feedstocks and biofuels fromexisting uses, i.e., the reasonablyattainable volume of advanced biodieseland renewable diesel. We calculate thisvolume based on our projection ofgrowth in qualifying feedstocks and onthe reasonably attainable volumecalculated in the 2019 final rule. Fifth,we consider how changes to the importand export of advanced bio diesel and

impact on the market’s ability to meet the advancedbiofuel volumes.

50 RIN-generating volumes of these otheradvanced biofuels were produced in 2018, and tessthan 1 million gallons total in prior years.



renewable diesel could impact theavailable volume of these fuels.

These analyses support three keyfindings. First, were EPA to exercise thecellulosic waiver authority to themaximum extent, we would require anadvanced biofuel volume of 5.09 billionethanol-equivalent gallons, of which weestimate 4.37 billion ethanol-equivalentgallons (2.83 billion actual gallons ofbiodiesel and renewable diesel) wouldbe met by advanced biodiesel andrenewable diesel. Second, thereasonably attainable volume ofadvanced biodiesel and renewablediesel, which can be achieved withminimal diversions of advancedfeedstocks and biofuels (2.77 billiongallons) is slightly lower than thisvolume. This finding, together with thehigh cost of advanced biofuels, supportsour decision to exercise the cellulosicwaiver authority to the maximum extentand not to permit backfilling of missingcellulosic volumes with additionaladvanced biofuels. Third, 2.83 billiongallons of advanced biodiesel andrenewable diesel are attainable by themarket. These findings, together withadditional discussions in the RTCdocument and docket memoranda,

supports our decisions to neitherrequire the use of additional volumes ofadvanced biofuel to backfill for theshortfall in cellulosic biofuel nor tofurther waive volumes under the generalwaiver authority.6’

a. Volume of Advanced Biodiesel andRenewable Diesel To Achieve AdvancedBiofuel Volume

We begin by calculating the volume ofadvanced biodiesel and renewablediesel that would be needed to meet the2020 advanced biofuel volume wereEPA to exercise the cellulosic waiverauthority to the maximum extent. Thisimportant benchmark informs EPA’sconsideration of our waiver authorities,albeit as only one factor among many.Specifically, in past annual rules wherethe reasonably attainable volume ofbiodiesel and renewable diesel hasexceeded this benchmark, as was thecase in 2017 and 2018, EPA hasconsidered whether or not to allowadditional volumes of these fuels tobackfill for missing cellulosic biofuelvolumes. By contrast, where thereasonably attainable volume ofadvanced biodiesel and renewablediesel has been less than thisbenchmark, as was the case in 2019, this

weighs in favor of exercising thecellulosic waiver authority to themaximum extent so as to minimizediversions of advanced biofuels andfeedstocks and the associated harms andthe need for additional volumes of highcost advanced biofuel. Relatedly, wereEPA to find that volume of advancedbiodiesel and renewable diesel neededto meet this benchmark is not attainable,that would weigh in favor of EPAexercising its discretion underadditional waiver authorities, to theextent available, to make furtherreductions to the advanced biofuelvolume.

As shown in Table IV.B.3—1, wereEPA to exercise the cellulosic waiverauthority to the maximum extent, therequired volume of advanced biofuelwould be 5.09 billion ethanol-equivalent gallons. After subtractingfrom this volume the available volumeof cellulosic biofuel and reasonablyattainable volumes of importedsugarcane ethanol and “other”advanced biofuels, we estimate thatapproximately 2,83 billion gallons ofadvanced biodiesel and renewablediesel would be needed to meet the2020 advanced biofuel volume.

TABLE IV.B.3—1—DETERMINATI0N OF VOLUME OF BI0DIE5EL AND RENEWABLE DIESEL NEEDED IN 2020 To ACHIEVE 5.09BILLION GALLONS OF ADVANCED BI0FUEL

[Million ethanol-equivalent gallons except as noted]

Target 2020 advanced biofuel volume requirement absent any backfilling of missing cellulosic biofuelCellulosic biofuelImported sugarcane ethanolOther advancedCalculated advanced biodiesel and renewable diesel needed (ethanol-equivalent gallons/physical gallons)82

b. Historical Supply of Biodiesel andRenewable Diesel

We next consider the volumes ofadvanced biodiesel and renewablediesel supplied in previous years, aswell as the impacts of biodiesel taxpolicy and tariffs on these volumes. Areview of the volumes of advancedbiodiesel and renewable diesel used inprevious years is especially useful inprojecting the potential availability of

81 We note that we have not attempted todetermine the maximum achievable volume ofthese fuels. While the maximum achievable volumeof advanced biodiesel and renewable diesel in 2020is likely greater than 2.83 billion gallons we do notbelieve it would be appropriate to require a greatervolume of these fuels due to the high cost andincreased likelihood of adverse unintended impactsassociated with these fuels.

8Z To calculate the volume of advanced biodieseland renewable diesel that would generate the 4.37billion RINs needed to meet the advanced biofuelvolume EPA divided the 4.37 billion RINs by 1.55,which is the approximate average (weighted by the

these fuels, since there are a number ofcomplex and inter-related factorsbeyond simply total production capacity(including the availability of advancedbiodiesel and renewable dieselfeedstocks,83 the expiration of thebiodiesel tax credit, changes to tariffs onbiodiesel from Argentina and Indonesia,import and distribution infrastructure,and other market-based factors) thatcould affect the supply of advancedbiodiesel and renewable diesel. While

volume of these fuels expected to be produced in2020) of the equivalence values for biodiesel(generally 1.5) and renewable diesel (generally 1.7).

8 this section we refer to advancedbiodiesel and renewable diesel as well as advancedbiodiesel and renewable diesel feedstocks. In thiscontext, advanced biodiesel and renewable dieselrefer to any biodiesel or renewable diesel for whichRINs can be generated that satisfy an obligatedparty’s advanced biofuel obligation (i.e., D4 or D5RINs). While cellulosic diesel (07) can alsocontribute towards an obligated party’s advancedbiofuel obligation, these fuels are discussed inSection III rather than in this section. An advanced

historic data and trends alone areinsufficient to project the volumes ofbiodiesel and renewable diesel thatcould be provided in future years,historic data can serve as a usefulreference in considering future volumes.

Past experience suggests that a highpercentage of the biodiesel andrenewable diesel used in the U.S. (fromboth domestic production and imports)qualifies as advanced biofuel.84 In

biodiesel or renewable feedstock refers to any of thebiodiesel, renewable diesel, jet fuel, and heating oilfeedstocks listed in Table 1 to 40 CFR 80.1426 orin petition approvals issued pursuant to section80.1416, that can be used to produce fuel thatqualifies for D4 or 05 RINs. These feedstocksinclude, for example, soy bean oil; oil from annualcover crops; oil from algae grownphotosynthetically; biogenic waste oils/fats/greases;non-food grade corn oil; camelina saliva oil; andcanola/rapeseed oil (See pathways F, G, and H ofTable I to section 80.1426).

84 From 2011 through 2018 approximately 96percent of all biodiesel and renewable diesel

continued

5,090590

7050

4,380\2,826



previous years, biodiesel and renewable and renewable diesel, have varied biodiesel and renewable diesel arediesel produced in the U.S. have been significantly from year to year, as they shown in Table IV.B.3—2, while volumesalmost exclusively advanced biofuel.8 are impacted both by domestic and of conventional biodiesel and renewableVolumes of imported biodiesel andrenewable diesel, which include bothadvanced and conventional biodiesel

TABLE IV.B.3—2 86—ADvANcED (D4 AND D5) BI0DIE5EL AND RENEWABLE DIESEL FROM 201 1 TO 2019

[Million gallons] a

2011 2012 2013 20J4b 2015b 2016 2017 2018 2019c

Domestic Biodiesel 969 984 1,364 1,296 1,245 1,581 1,530 1,843 1825(Annual Change) (N/A) (+15) (+380) (—68) (—51) (+336) (—51) (+313) (—18)Domestic Renewable Diesel 59 50 112 158 174 236 251 306 531(Annual Change) (N/A) (—9) (+62) (+46) (+16) (+62) (+1 5) (+55) (÷225)Imported Biodiesel 43 39 153 130 261 562 462 175 246(Annual Change) (N/A) (—4) (+114) (—23) (+131) (+301) (—100) (—287) (+71)Imported Renewable Diesel 0 28 145 130 120 165 191 178 256(Annual Change) (N/A) (+28) (+1 17) (— 15) ( — 10) (+45) (+26) ( — 13) (+78)Exported Biodiesel and Renew

able Diesel 32 68 84 87 94 129 166 154 122(Annual Change) (N/A) (+36) (+16) (+3) (+7) (+35) (+37) (—12) (—32)

Totald 1,039 1,033 1,690 1,627 1,706 2,415 2,268 2,348 2,736(Annual Change) (N/A) (—6) (+657) ( — 63) (+79) (+709) (— 147) (+80) (+388)

aAII data from EMTS. EPA reviewed all advanced biodiesel and renewable diesel RINs retired for reasons other than demonstrating compliance with the RFS standards and subtracted these RINs from the RIN generation totals for each category in the table above to calculate the volume in each year.

b RFS required volumes for these years were not established until December 2015.cData for 2019 is based on actual production and import data through September 2019, and a projection for October—December 2019. For

more information on how the volumes for 2019 were determined see ‘Projecting Advanced Biofuel Production and Imports for 2019 (November2019),” Memorandum from Dallas Burkholder to EPA Docket EPA—HQ—OAR—201 9—0136.

U Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

TABLE IV.B.3—3—CONvENTIONAL (D6) BIODIESEL AND RENEWABLE DIESEL FROM 2011 TO 2019[Million gallonsla

2011 2012 2013 2014b 2015b 2016 2017 2018 2019c

Domestic Biodiesel 2 0 1 1 0 0 0 0 0(Annual Change) (N/A) (—2) (+1) (+0) (—1) (+0) (+0) (+0) (+0)Domestic Renewable Diesel 0 0 0 0 0 0 0 0 0(Annual Change) (N/A) (+0) (+0) (+0) (+0) (+0) (+0) (+0) (+0)Imported Biodiesel 0 0 31 52 74 113 0 0 0(Annual Change) (N/A) (+0) (+31) (+21) (+22) (+39) (-113) (+0) (+0)Imported Renewable Diesel 0 0 70 2 87 45 2 1 0(Annual Change) (N/A) (+0) (+70) (—68) (+85) (—42) (—43) (—1) (—1)Exported Biodiesel and Renew

able Diesel 0 0 0 0 1 1 0 0 0(Annual Change) (N/A) (+0) (+0) (+0) (+1) (+0) (—1) (+0) (+0)

Total’ 2 0 102 55 160 157 2 1 0(Annual Change) (N/A) (—2) (+102) ( — 47) (+105) (—3) ( — 155) ( — 1) ( — 1)

aAII data from EMTS. EPA reviewed all conventional biodiesel and renewable diesel RIN5 retired for reasons other than demonstrating compliance with the RFS standards and subtracted these RINs from the RIN generation totals for each category in the table above to calculate the volume in each year.

b RFS required volumes for these years were not established until December 2015.C While a significant number of D6 RIN5 have been generated for biodiesel and renewable diesel in 2019 in recent years nearly all of these

RINs have later been retired for reasons other than compliance with the volume obligations. Since D6 RIN prices have been relatively low in2019 and the biodiesel tax credit is currently not available we are not projecting any production or import of D6 biodiesel or renewable diesel in2019.

U Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

supplied to the US. (including domesticallyproduced and imported biodiesel and renewablediesel) qualified as advanced biodiesel andrenewable diesel (14,214 million gallons of the14,869 million gallons] according to EMTS data.This section focuses on the availability of advancedbiodiesel and renewable diesel to meet theadvanced biofuel volume. For a discussion of theavailability of all biodiesel and renewable dieselthat could be used to meet the total renewable fuel

all the domestically produced biodiesel andrenewable diesel supplied to the U.S. qualified asadvanced biodiesel and renewable diesel (12,268million gallons of the 12.275 million gallons)according to EMTS data.

renewable fuel production and RIN generation data.This updated data can be found in “Historical RINsupply as of 8—12—19,” memorandum from DavidKorotney to EPA docket EPA—HQ—OAR—2019—0136.Tables in this final rule that contain historical data(such as Tables lV.B.3—2, IV.B.3—3, VI.B.1—1 andVI.B.1—2) have been updated accordingly.

foreign policies, as well as manyeconomic factors. Production, import,export, and total volumes of advanced

diesel are shown in the following TableIV.B.3—3.

volume see “Updated market impacts of bioftiels in ° For this final rule EPA reviewed the data2020,” memorandum from David Korotney to available in EMTS and updated historicaldocket EPA—HQ—OAR—2019—0136.

From 2011 through 2018 over 99.9 percent of



As we explained above, to meet anadvanced biofuel volume of 5.09 billionethanol-equivalent gallons we projectthat the market would supply 2.83billion gallons of advanced biodieseland renewable diesel. This volume (2.83billion gallons) is approximately 90million gallons greater than the volumeof these fuels projected to be suppliedin 2019 based on data throughSeptember 2019. Since 2011, the year-over-year changes in the volume ofadvanced biodiesel and renewablediesel used in the U.S. have variedgreatly, from a low of 147 million fewergallons from 2016 to 2017 to a high of709 million additional gallons from2015 to 2016. These changes were likelyinfluenced by multiple factors such asthe cost of biodiesel feedstocks andpetroleum diesel, the status of thebiodiesel blenders tax credit, growth inmarketing of biodiesel at high volumetruck stops and centrally fueled fleetlocations, demand for biodiesel andrenewable diesel in other countries,biofuel policies in both the U.S. andforeign countries, and the volumes ofrenewable fuels (particularly advancedbiofuels) required by the RFS. Thishistorical information does not indicatethat the maximum previously observedincrease of 709 million gallons ofadvanced biodiesel and renewablediesel would be reasonable to expect in2020, nor does it indicate that the low(or negative) growth rates observed inother years would recur. Rather, thesedata illustrate both the magnitude of thechanges in advanced biodiesel andrenewable diesel in previous years andthe significant variability in thesechanges.

The historic data indicates that thebiodiesel tax policy in the U.S. can havea significant impact on the volume ofbiodiesel and renewable diesel used inthe U.S. in any given year.87 While thebio diesel blenders tax credit has appliedin each year from 2010 to 2017, it hasonly been prospectively in effect duringthe calendar year in 2011, 2013, and2016, while other years it has beenapplied retroactively. Each of the yearsin which the bio diesel blenders taxcredit was in effect during the calendaryear (2013 and 2016) resulted insignificant increases in the volume ofadvanced biodiesel and renewable

We note that the status of the tax credit doesnot impact our assessment of the reasonablyattainable volume of advanced biodiesel andrenewable diesel in 2020 as that assessment isprimarily based on feedstock availability. The statusof the tax credit could potentially affect themaximum achievable volume of these fuels, but ourassessment demonstrates that 2.83 billion gallons ofadvanced biodiesel and renewable diesel isattainable whether or not the tax credit is renewedprospectively (or retrospectively) for 2020.

diesel used in the U.S. over the previousyear (656 million gallons and 742million gallons respectively). However,following these large increases in 2013and 2016, there was little to no growthin the use of advanced biodiesel andrenewable diesel in the following years.More recent data from 2019 suggeststhat while the availability of the taxcredit certainly incentivizes anincreasing supply of biodiesel andrenewable diesel, supply increases canalso occur in the absence of the taxcredit, likely as the result of theincentives provided by the RfS programand other economic factors. Theavailability of this tax credit alsoprovides biodiesel and renewable dieselwith a competitive advantage relative toother advanced biofuels that do notqualify for the tax credit.88

Another important factor highlightedby the historic data is the tariffsimposed by the U.S. on biodieselimported from Argentina and Indonesia.In December 2017 the U.S. InternationalTrade Commission adopted tariffs onbiodiesel imported from Argentina andIndonesia.89 According to data fromETA,°° no biodiesel was imported fromArgentina or Indonesia since September2017, after a preliminary decision toimpose tariffs on biodiesel importedfrom these countries was announced inAugust 2017. As a result of these tariffs,total imports of biodiesel into the U.S.were significantly lower in 2018 thanthey had been in 2016 and 2017. Thedecrease in imported biodiesel did not,however, result in a decrease in thevolume of advanced biodiesel andrenewable diesel supplied to the U.S. in2018. Instead, higher domesticproduction of advanced biodiesel andrenewable diesel, in combination withlower exported volumes of domesticallyproduced biodiesel, resulted in anoverall increase in the volume ofadvanced biodiesel and renewablediesel supplied in 2018. On July 9,2019, the Department of Commercepublished a preliminary determinationto reduce the countervailing duty onbiodiesel imported from Argentina.91 Iffinalized this could result in increasingvolumes of biodiesel imports fromArgentina in future years.

for a further discussion of the impact of the taxcredit on the supply of biodiesel and renewablediesel, see the discussion from the proposed rule(84 FR 36783, July 29, 2019).

“Biodiesel from Argentina and IndonesiaInjures U.S. Industry, says USITC,” Availableonline at: hftps://www. usitc.gov/press_room/news_releose/201 7/er120511876.hfm.

90See “EIA Biomass-Based Diesel Import Data”available in docket EPA—KQ—OAR—2019—0136.

° 84 FR 32714 (July 9, 2019).

The historical data suggests that the2.83 billion gallons of advancedbiodiesel and renewable dieselprojected to be used to meet anadvanced biofuel volume of 5.09 billionethanol-equivalent gallons is attainable.This would represent a projectedincrease of approximately 90 milliongallons from 2019 to 2020. This increaseis less than the average increase in thevolume of advanced biodiesel andrenewable diesel used in the U.S. from2011 through 2019 (212 million gallonsper year) and significantly less than thehighest annual increase during this time(742 million gallons from 2015 to 2016).We note, however, that this assessmentdoes not consider the sources offeedstock that would be used to meetthis increase, or the potential impacts ofsupplying 2.83 billion gallons ofadvanced biodiesel and renewablediesel, which are discussed in greaterdetail in the following sections.

c. Consideration of Production Capacityand Distribution Infrastructure

After reviewing the historical volumeof advanced biodiesel and renewablediesel used in the U.S., EPA nextconsiders other factors that may impactthe production, import, and use ofadvanced biodiesel and renewablediesel in 2020. The production capacityof registered advanced biodiesel andrenewable diesel production facilities ishighly unlikely to limit the productionof these fuels, as the total productioncapacity for biodiesel and renewablediesel at registered facilities in the U.S.(4.1 billion gallons) exceeds the volumeof these fuels that are projected to beneeded to meet the advanced biofuelvolume for 2020 after exercising thecellulosic waiver authority (2.83 billiongallons).92 Significant registeredproduction also exists internationally.Similarly, the ability for the market todistribute and use advanced biodieseland renewable diesel appears unlikelyconstrain the growth of these fuels to avolume lower than 2.83 billion gallons.The investments required to distributeand use this volume of biodiesel andrenewable diesel are expected to bemanageable by the marketplace giventhe RIN value incentive, as this volumeis approximately 90 million gallonsgreater than the volume of biodiesel andrenewable diesel produced, imported,and used in the U.S. in 2019. Themagnitude of the increase projected

9 The production capacity of the sub-set ofbiodiesel and renewable diesel producers thatgenerated RINs in 2018 is approximately 2.9 billiongallons. See “Biodiesel and Renewable DieselRegistered capacity (March 2019)” Memorandumfrom Dallas Burkholder to EPA Docket EPA—HQ—OAR—2019—0136.



from 2019 to 2020 (90 million gallons)is much smaller than the increasesobserved in previous years. Thesefactors further support our finding that2.83 billion gallons of advancedbiodiesel and renewable diesel isattainable.

d. Consideration of the Availability ofAdvanced feedstocks

We next consider the availability ofadvanced feedstocks that can be used toproduce advanced biodiesel andrenewable diesel. This assessment hastwo parts. First, we assess whether thereare sufficient advanced feedstocks toproduce 2.83 billion gallons ofadvanced biodiesel and renewablediesel. We find that the quantity offeedstocks exceeds the amount neededto do so, further supporting ourconclusion that 2.83 billion gallons ofadvanced biodiesel and renewablediesel is attainable. Second, we assesswhether the growth in advancedfeedstocks suffices to produce 2.83billion gallons of advanced biodieseland renewable diesel without divertingadvanced feedstocks or biofuels fromexisting uses, i.e., the reasonablyattainable volume. We find that thereasonably attainable volume fallsslightly short at 2.77 billion gallons.

We believe the most reliable sourcefor projecting the expected increase invirgin vegetable oils in the U.S. isUSDA’s World Agricultural Supply andDemand Estimates (WASDE). At thetime of our assessment for this rule, theOctober 2019 version was the mostcurrent version of the WASDE report.The October 2019 WASDE projects thatproduction of vegetable oil in the U.S.in the 2019/2020 market year will besufficient to produce approximately 3.6billion gallons of biodiesel andrenewable diesel (including bothadvanced and conventional biofuels) ifthe entire volume of vegetable oil wasused to produce these fuels. Additionaladvanced biodiesel and renewablediesel could also be produced fromwaste fats, oils, and greases as they havebeen in past years.93 Thus, theavailability of domestic vegetable oils,in combination the potential to sourceadditional feedstocks from waste fats,oils, and greases, supports ourconclusion that 2.83 billion gallons ofadvanced biodiesel and renewablediesel is attainable.

In addition, the global production ofvegetable oil projected in the 2019/2020marketing year in the October 2019

See “Projections of FOG biodiesel andrenewable diesel 2015—2018,” memorandum fromDavid Korotney to EPA Docket, EPA—HQ—OAR—2019—0136.

WASDE would be sufficient to produceapproximately 59.3 billion gallons ofbiodiesel and renewable diesel(including both advanced andconventional biofuels).94 While it wouldnot be reasonable to assume that all, oreven a significant portion, of globalvegetable oil production globally ordomestically could be available toproduce biodiesel or renewable dieselsupplied to the U.S. for a number ofreasons,95 the large global supply ofvegetable oil further indicates that 2.83billion gallons of advanced bio dieseland renewable diesel is attainable in2020.

We now turn to the reasonablyattainable volume of advanced biodiesetand renewable diesel, which we find tobe 2.77 billion gallons. This volumerepresents the amount of advancedbiodiesel and renewable diesel that canbe supplied without relying on thediversion of advanced biofuels andfeedstocks from existing uses and theassociated harms of such diversions. Wecalculate this volume by summing thereasonable attainable volume from lastyear’s final rule (2.61 billion gallons)with the volume that can be producedfrom the projected increase in advancedfeedstocks from 2019 to 2020 (159million gallons).96

We acknowledge that an increase inthe required use of advanced biodieseland renewable diesel could be realizedthrough the production or collection ofadditional advanced feedstocks, adiversion of advanced feedstocks from

94The October 2019 WASDE projects productionof vegetable oils in 2019/2020 in the U.S. and theWorld to be 12.58 and 207.50 million metric tonsrespectively. To convert projected vegetable oilproduction to potential biodiesel and renewablediesel production we have used a conversion of 7.7pounds of feedstock per gallon of biodiesel orrenewable diesel (World Agricultural Supply andDemand Estimates. United States Department ofAgriculture, Office of the Chief Economist. October10, 2019. ISSN 1554—9089). In addition, globalproduction of biodiesel is projected to be 44.2billion liters (11.7 billion gallons) in 2020 accordingto the July 2019 OECO—FAO Agricultural Outlook.Based on the projected production of biodiesel bycountry we estimate that over 80% of this biodiesel(all biodiesel except that produced in Columbia,Indonesia, Malaysia, and Thailand) could qualify asadvanced bioftsel if the feedstocks meet thedefinition of renewable biomass.

These reasons include the demand forvegetable oil in the food, feed, and industrialmarkets both domestically and globally; constraintsrelated to the production, import, distribution, anduse of significantly higher volumes of biodiesel andrenewable diesel; and the fact that biodiesel andrenewable diesel produced from much of thevegetable oil available globally would not qualify asan advanced biofuel under the RFS program.

° As discussed in more detail in this section, this159 million gallons increase is projected to becomprised of 94 million gallons from increasedvegetable oil production. 17 million gallons fromdistillers corn oil, and 48 million gallons fromwaste fats, oils, and greases.

other uses, or a diversion of advancedbiodiesel and renewable diesel fromexisting markets in other countries. Asalready explained, the volume ofadvanced biodiesel and renewablediesel and their correspondingfeedstocks projected to be producedglobally exceeds the volume projectedto be required in 2020 (2.83 billiongallons of advanced biodiesel andrenewable diesel and the correspondingvolume of advanced feedstocks) by asignificant margin. However, we expectthat increases in advanced biofuel andrenewable fuel volumes beyond thosethat can be produced from the projectedgrowth in advanced feedstockproduction and/or consumption (e.g., bydiverting advanced feedstocks oradvanced biodiesel and renewablediesel from existing markets and uses)would be increasingly likely to incuradverse unintended impacts.97

This is because of several factors,notably the potential disruption of thecurrent biogenic fats, oils, and greasesmarket, the associated cost impacts toother industries resulting from feedstockdiversion, and the potential adverseeffect on lifecycle GHG emissions andenergy security associated withfeedstocks for biofuel production thatwould have been used for otherpurposes and which must then bebackfilled with other feedstocks.98Similarly, increasing the supply ofbiodiesel and renewable diesel to theU.S. by diverting fuel that wouldotherwise have been used in othercountries results in higher lifecycleGHG emissions than if the supply ofthese fuels was increased by anincreased collection of waste fats andoils or increased production offeedstocks that are byproducts of otherindustries, especially if this diversionresults in increased consumption ofpetroleum fuels in the countries thatwould have otherwise consumed thebiodiesel or renewable diesel. Byassessing the expected growth in theproduction of advanced feedstocks, weare attempting to minimize theincentives for the RFS program toincrease the supply of advanced

57The volume of advanced biodiesel andrenewable diesel projected to be used to meet theadvanced biofliel volume (2.83 billion gallons) isapproximately 1 billion gallons greater than thevolume of these fuels we projected would be usedto meet the advanced biofuel volume for 2022 inthe 2010 RFS final rule analyses (1.82 billiongallons). For a further discussion of this issue seeSection 4.2.2.4 of the RTC.

° For instance, see the draft COG assessment ofpalm oil biodiesel and renewable diesel at 77 FR4300 (January 27, 2012). We believe palm orpetroleum-derived products would likely be used toreplace advanced biodiesel and renewable dieseldiverted to the U.S. as these products are currentlythe lowest cost substitutes.


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biodiesel and renewable diesel throughfeedstock switching or divertingbiodiesel and renewable diesel fromforeign markets to the U.S.

Advanced biodiesel and renewablediesel feedstocks include both wasteoils, fats, and greases; and oils fromplanted crops. The projected growth inthese feedstocks is expected to bemodest relative to the volume of thesefeedstocks that is currently being usedto produce biodiesel and renewablediesel. Most of the waste oils, fats, andgreases that can be recoveredeconomically are already beingrecovered and used in biodiesel andrenewable diesel production or for otherpurposes. The availability of animal fatswill likely increase with beef, pork, andpoultry production. Most of thevegetable oil used to produce advancedbiodiesel and renewable diesel that issourced from planted crops comes fromcrops primarily grown for purposesother than providing feedstocks forbiodiesel and renewable diesel, such asfor livestock feed, with the oil that isused as feedstock for renewable fuelproduction a co-product.99 This is truefor soybeans and corn, which are thetwo largest sources of feedstock fromplanted crops used for biodieselproduction in the We do notbelieve that the increased demand forsoybean oil or corn oil caused by ahigher 2020 advanced biofuel standardwould result in an increase in soybeanor corn prices large enough to inducesignificant changes in agriculturalactivity.’01 However, production ofthese feedstocks is likely to increaseover time as crop yields, oil extractionrates, and demand for the primaryproducts increase.

Based on the October 2019 WASDEreport the projected increase invegetable oil production in the U.S.from the 2018/2019 marketing year tothe 2019/2020 marketing year is 0.33million metric tons per year.’°2 This

° For example, corn oil is a co-product of corngrown primarily for animal feed or ethanolproduction, while soy and canola are primarilygrown as livestock feed.

100 According to EIA data 7,542 million poundsof soy bean oil and 2,085 million pounds of cornoil were used to produce biodiesel in the U.S. in2018. Other significant sources of feedstock wereyellow grease (1,668 million pounds), canola oil(total volume withheld, but monthly data suggestsgreater than 700 million pounds), and white grease(618 million pounds).”Monthly BiodieselProduction Report with Data for February 2019,”U.S. Energy Information Administration. April2019.

101 This position is supportod by severalcommenters, including the American SoybeanAssociation (EPA—HQ—OAR—2 019—0136—0177) andthe Nebraska Soybean Association (EPA—HQ—OAR—2019—0136—0117).

102 U.S. vegetable oil production is projected to be12.25 million metric tons in the 2018/2019

additional quantity of vegetable oilscould be used to produce approximately94 million additional gallons ofadvanced biodiesel or renewable dieselin 2020 relative to 2019.’°’

In the 2019 final rule we also notedthat the WASDE projected a decrease intrade of both oilseeds and vegetable oils.The projected decrease in oilseed tradewas likely due to tariffs enacted byChina on soybean exports from the U.S.While the projected trade in oilseeds isexpected to increase slightly from 2018/2019 to 2019/2020, trade in vegetableoils is projected to decrease by 0.12million metric tons from 2018/2019 to2019/2020. If converted to biodiesel,this volume of vegetable oils could beused to produce approximately 34million additional gallons of advancedbiodiesel or renewable diesel in 2020relative to 2019. As in the 2019 finalrule, we did not include in ourprojection of the reasonably attainablevolumes the potential biodiese) orrenewable diesel that couldtheoretically be produced from theoilseeds and vegetable oil projected toremain in the U.S. due to changes intrade of these products. This is becauseany bio diesel and renewable dieselproduced from soybeans previouslyexported are necessarily diverted fromother uses (even if the reason for thisdiversion is the tariffs, rather than theRFS program), and biodiesel producedfrom these diverted feedstocks istherefore more likely to have theadverse unintended effects aspreviously discussed.

In addition to virgin vegetable oils, wealso expect increasing volumes ofdistillers corn oil 104 to be available foruse in 2020. The WASDE report doesnot project distillers corn oilproduction, so EPA must use analternative source to project the growthin the production of this feedstock. Forthis final rule we use results from theWorld Agricultural Economic andEnvironmental Services (WAEES) modelto project the growth in the productionof distillers corn oil.105 In assessing the

agricultural marketing year and 12.58 millionmetric tons in the 2019/2020 agricultural marketingyear.

103 To calculate this volume, we have used aconversion of 7.7 pounds of feedstock per gallon ofbindiesel or renewable diesel. This is based on theexpected conversion of soybean oil (http://extension missouri.edu/p/G2 990), which is thelargest source of feedstock used to produceadvanced biodiesel and renewable diesel.Conversion rates for other types of vegetable oilsused to produce biodiesel and renewable diesel aresimilar to those for soybean oil.

104 Distillers corn oil is non-food grade corn oilproduced by ethanol production facilities.

105 For the purposes of this rule, EPA relied onWAEES modeling results submitted as commentsby the National Biodiesel Board on the 2020

likely increase in the availability ofdistillers corn oil from 2019 to 2020, theauthors of the WAEES modelconsidered the effects of an increasingadoption rate of distillers corn oilextraction technologies at domesticethanol production facilities, as well asincreased corn oil extraction ratesenabled by advances in this technology.The WAEES model projects thatproduction of distillers corn oil willincrease by approximately 130 millionpounds from the 2018/2019 to the 2019/2020 agricultural marketing year. Thisquantity of feedstock could be used toproduce approximately 17 milliongallons of advanced biodiesel orrenewable diesel. We believe it isreasonable to use these estimates fromthe WAEES model for these purposesbased on the projected increase in theuse of corn oil extraction and corn oilyield increases.

While much of the increase inadvanced biodiesel and renewablediesel feedstocks produced in the U.S.from 2019 to 2020 is expected to comefrom virgin vegetable oils and distillerscorn oil, increases in the supply of othersources of advanced bio diesel andrenewable diesel feedstocks, such asbiogenic waste fats, oils, and greases(FOG), could also occur. In scenarioswith increases to the advanced biofueland biomass-based diesel volumerequirements in 2020 and 2021 theWAEES model projects minimalincreases in the volume of biodieselproduced from total other fats and oilsin the 2018/2019 and 2019/2020marketing years.’°6 Conversely, anassessment conducted by LMCInternational in 2017 and submitted incomments on our 2018 proposed ruleprojected that the waste oil supply inthe U.S. could increase byapproximately 2.4 million metric tonsfrom 2016 to 2022.’° This estimaterepresents a growth rate ofapproximately 0.4 billion tons per year,or enough feedstock to produceapproximately 115 million gallons ofbiodiesel and renewable diesel per year.This estimate, however, only accountsfor potential sources of feedstock and

proposed rule (Kruse, I., “Implications of anAlternative 2021 Biomass Based Diesel volumeObligation for Global Agriculture and Binfuels,”August 26, 2019, WorLd Agricultural Economic andEnvironmental Services (WAEES)).

105 The WAEES model projects a 7 million gallonincrease in 2019/2020 and a 16 million gallonincrease in 2020/2021. See Kruse, I., “Implicationsof an Alternative Biomass Based Diesel VolumeObligation for Global Agriculture and Biofuels,”August 26, 2019, World Agricultural Economic andEnvironmental Services.

107 LMC International. Global Woste GreaseSupply. August 2017 (EPA—HQ—OAR—2o17—0091—3880).


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not for the economic viability ofrecovering waste oils.

To project the increase in the use ofbiogenic FOG we used historical data todetermine the increase in the use ofthese feedstocks to produce biodieseland renewable diesel. from 2015—2018,advanced biodiesel and renewablediesel produced from biogenic FOGincreased by an average of 48 milliongallons per year.’°8 This annual increaseis higher than the increase in the use ofthese feedstocks projected by theWAEES model, but lower than thepotential increase projected by LMC. Wehave included an additional 48 milliongallons of advanced biodiesel andrenewable diesel from FOG in ourassessment of the reasonably attainablevolume for 2020, consistent with theobserved annual increase in advancedbiodiesel and renewable dieselproduced from these feedstocks inrecent years.

In total, we project that increases infeedstocks produced in the U.S. aresufficient to produce approximately 159million more gallons of advancedbiodiesel and renewable diesel in 2020relative to 2019. This number includes94 million gallons from increasedvegetable oil production, 17 milliongallons from increased corn oilproduction, and 48 million gallons fromincreased waste oil collection. Thisincrease does not include the projected34 million gallons of bio diesel thatcould be produced from the projectedreduction in vegetable oil trade sincedecreases in exported volumes ofvegetable oils represent feedstocksdiverted from use in other countries.Our projection also does not considerfactors that could potentially affect theavailability of advanced biofuelfeedstocks that could be used toproduce biodiesel or renewable diesel,such as changes in the volume ofvegetable oils used in food markets orother non-biofuel industries. In our2019 final rule, we determined that 2.61billion gallons of advanced bio dieseland renewable diesel were reasonablyattainable in 2019,109 therefore ourprojection of the reasonably attainablevolume of advanced biodiesel andrenewable diesel in 2020 is 2.77 billiongallons.hbo

105 ‘Projections of FOG biodiesel and renewablediesel 2015—2018,” memorandum from DavidKorotney to EPA Docket, EPA—HQ—OAR—2019—0136.

10983 FR 63704 (December11, 2018).110We calculated the reasonably attainable

volume for 2020 by adding the projected increasein advanced feedstocks (159 million gallons) to thereasonably attainable volume of these fuels weprojected for 2019 (2.61 billion gallons). Anotherpossible approach would be to add the 159-million-gallon increment in the reasonably attainable

e. Biodiesel and Renewable DieselImports and Exports

EPA next considered potentialchanges in the imports of advancedbiodiesel and renewable dieselproduced in other countries. In previousyears, significant volumes of foreignproduced advanced biodiesel andrenewable diesel have been supplied tomarkets in the U.S. (see Table IV.B.2—1].These significant imports were likelythe result of a strong U.S. demand foradvanced biodiesel and renewablediesel, supported by the RFS standards,the low carbon fuel standard (LCFS) inCalifornia, the biodiesel blenders taxcredit, and the opportunity for importedbiodiesel and renewable diesel to realizethese incentives. We have not includedthe potential for increased (ordecreased) volumes of importedadvanced biodiesel and renewablediesel in our projection of thereasonably attainable volume for 2020.As discussed previously, any increasesin the import of advanced biodiesel andrenewable diesel is necessarily divertedfrom other markets. There is also a farhigher degree of uncertainty related tothe availability and production ofadvanced biodiesel and renewablediesel in foreign countries, as thissupply can be affected by a number ofunpredictable factors such as theimposition of tariffs and increasedincentives for the use of these fuels inother countries (such as tax incentivesor blend mandates). EPA also lacks thedata necessary to determine the quantityof these fuels that would otherwise beproduced and used in other countries,and thus the degree to which the Rf Sstandards are simply diverting this fuelfrom use in other countries as opposedto incentivizing additional production.

While we do not consider changes inimports or exports of advancedbiodiesel and renewable diesel in ourprojection of the reasonably attainablevolume, changes to the volume of thesefuels that is imported and exported

volume to the volume we now project to be usedin 2019, 2.74 billion gallons (rather than thereasonably attainable volume we projected for2019). This would result in a reasonably attainablevolume of 2.90 billion gallons. While this approachuses more recent data on the availability ofadvanced biodiesel and renewable diesel in 2019,it does not account for whether or not theadditional use of these fuels in 2019, beyond thereasonably attainable volume calculated in the 2019final rule, resulted in diversions of advancedbiofuels or feedstocks. In any event, even were weto adopt this approach, it would make no differenceto our final decision on the volumes as (1) thedifference in the calculated reasonably attainablevolume is slight, (2) the high costs of advancedbiodiesel and renewable diesel would justifyexercising the maximum cellulosic waiver in anyevent, and (3) the volume we are finalizing isattainable under either approach.

could potentially impact the attainablevolume. Imports of advanced biodieseland renewable diesel are projected toincrease by 150 million gallons from2018 to 2019 (from approximately 350million gallons in 2018 toapproximately 500 million gallons in2019, see Table IV.B.3—2), At the sametime, data through July 2019 suggeststhat the U.S. will export approximately122 million gallons of domesticallyproduced biodiesel in 2019h1

Increased imports and/or decreasedexports of these fuels in 2020 couldcontribute to the market supplying 2.83billion gallons of advanced biodieseland renewable diesel. The highervolumes of imported advanced biodieseland renewable diesel in previous years(shown in Table IV.B.3—2) suggest thatthese changes are possible, especially ifthe tariffs on bio diesel imported fromArgentina are reduced. Thus thepotential for increased imports anddecreased exports further supports ourdetermination that 2.83 billion gallonsof advanced biodiesel and renewablediesel is attainable.

While changes to the volumes ofimports/exports of advanced biodieseland renewable could supply theapproximately 60 million gallondifference between the reasonablyattainable volume of these fuels (2.77

billion gallons) and the volume neededto meet an advanced biofuel volume of5.09 billion ethanol-equivalent gallons(2.83 billion gallons), these changes arenot without impacts. Diverting this fuelto markets in the U.S. may becomplicated as doing so would likelyrequire higher prices for these fuels inthe U.S. to divert the fuels from foreignmarkets that are presumably moreprofitable currently. It may also be moredifficult and costly to distribute thisadditional volume of biodiesel andrenewable diesel to domestic marketsthan the current foreign markets.Finally, reducing advanced biodieseland renewable diesel exports mayindirectly result in the decreasedavailability of imported volumes ofthese fuels, as other countries seek toreplace volumes previously importedfrom the U.S.

f. Attainable and Reasonably AttainableVolumes of Advanced Biodiesel andRenewable Diesel

In sum, the 2.83 billion gallons ofadvanced biodiesel and renewable

111 Projection is based on EIA data on exports ofbiomass-based diesel (biodiesel) through July 2019.For more detail on this projection see “ProjectingAdvanced Biofuel Production and Imports for 2019(November 2019),” memorandum from DallasBurkholder to EPA docket EPA—HQ—QAR—2019—0136.



diesel projected to be needed to achievean advanced biofuel volume of 5.09billion ethanol-equivalent gallons areattainable. We have reached thisconclusion based on our analysis of theabove factors, including historicalsupply of biodiesel and renewablediesel, the impacts of tax policy andtariffs, production capacity anddistribution infrastructure, availabilityof advanced feedstocks, and importsand exports. By contrast, we find thatonly 2.77 billion gallons of advancedbiodiesel and renewable diesel arereasonably attainable. This estimate isbased on our analysis of growth inqualifying feedstocks, and representsthe volume that can be supplied withminimal diversions of advancedbiofuels and feedstocks from existinguses, and the associated harms of suchdiversions. These assessments supportEPA’s decision to establish theadvanced biofuel volume for 2020 at5.09 billion gallons, a volume whichneither requires the use of EPA’s generalwaiver authority nor the use ofadditional volumes of advanced biofuelin place of cellulosic biofuel.

C. Volume Requirement for AdvancedBiofuel

In exercising the cellulosic waiverauthority for 2017 and earlier, wedetermined it was appropriate to requirea partial backfilling of missing cellulosicvolumes with volumes of non-cellulosicadvanced biofuel we determined to bereasonably attainable, notwithstandingthe increase in costs associated withthose decisions.112 For the 2018 and2019 standards, in contrast, we placeda greater emphasis on costs in thecontext of balancing the variousconsiderations, ultimately concludingthat the applicable volume requirementshould be based on the maximumreduction permitted under the cellulosicwaiver authority, effectively preventingany backfilling of missing cellulosicbiofuel with advanced biofuel. In settingthe 2019 standards, we also found thatgreater volumes of advanced biofuelwould be attainable but did not believethat requiring higher volumes would beappropriate as such volumes were notreasonably attainable and would lead todiversion of advanced feedstocks orbiofuels and the associated harms.

For 2020, we are following the sameapproach as in 2018 and 2019 andexercising the cellulosic waiverauthority to reduce the advanced biofuelrequirement by the maximum extent

112 See, e.g., Renewable Fuel Standards for 2014,2015 and 2016, and the Biomass-Based Volume for2017: Response to Comments (EPA—420—R—l 5—024,November 2015], pages 628—631, available indocket EPA—HQ—OAR—2015—01l1—3671.

permitted. This results in an advancedbiofuel volume of 5.09 billion gallons.This also preserves the impliedstatutory volume target for noncellulosic advanced biofuel at 4.5billion gallons, identical to that for2019. As in the 2019 standards, we aretaking this approach for two reasons,each of which is an independent andsufficient justification. First, as in 2019,the reasonably attainable volume ofadvanced biofuel for 2020 falls short ofthe volume resulting from the maximumexercise of the cellulosic authority. It isthus appropriate to exercise thecellulosic waiver authority to themaximum extent to minimize the harmsassociated with advanced biofuel andfeedstock diversions.

Second, even if greater volumes ofadvanced biofuel are reasonablyattainable, the high cost of these fuelsindependently justifies reducing theadvanced biofuel volume for 2020 bythe maximum amount permitted underthe cellulosic waiver authority. In the2019 final rule we presented illustrativecost projections for sugarcane ethanoland soybean biodiesel in 2019, the twoadvanced biofuels that would be mostlikely to provide the marginal increasein volumes of advanced bio fuel in 2019in comparison to 2018. Sugarcaneethanol results in a cost increasecompared to gasoline that ranges from$0.39—$1.04 per ethanol-equivalentgallon. Soybean biodiesel results in acost increase compared to diesel fuelthat ranges from $0.74—$1.23 perethanol-equivalent gallon. Thus, thecost of these renewable fuels is high ascompared to the petroleum fuels theydisplace.

In conclusion, we believe that a 2020advanced biofuel volume requirement of5.09 billion ethanol-equivalent gallonsis appropriate following our assessmentof volumes that are attainable and inconsideration of carryover RINs,potential feedstock/fuel diversions, andcosts. Comments requesting higher orlower volumes are addressed in theseparate Response to Commentsdocument.

D. Volume Requirement for TotalRenewable Fuel

As discussed in Section II.A.1, webelieve that the cellulosic waiverprovision is best interpreted as requiringthat the advanced biofuel and totalrenewable fuel volumes be reduced byequal amounts. For the reasons we havepreviously articulated, we believe thisinterpretation is consistent with thestatutory language and best effectuatesthe objectives of the statute, includingthe environmental objectives thatgenerally favor the use of advanced

biofuels over non-advanced biofuels andthe legislative intent reflected in thestatutory volume tables.113 If we were toreduce the total renewable fuel volumerequirement by a lesser amount than theadvanced biofuel volume requirement,we would effectively increase theopportunity for conventional biofuels toparticipate in the RFS program beyondthe implied statutory volume of 15billion gallons. Applying an equalreduction of 9.91 billion gallons to boththe statutory target for advanced biofueland the statutory target for totalrenewable fuel results in a totalrenewable fuel volume of 20.09 billiongallons as shown in Table IV.A—1. Thisvolume of total renewable fuel results inan implied volume of 15 billion gallonsof conventional renewable fuel, whichis the same as in the 2019 final rule. Wehave investigated the different ways thatthe market could respond to a totalrenewable fuel volume requirement of20.09 billion gallons in a memorandumto the docket.’1 115

We note that the statute providesother authorities for EPA to reduce therequired volumes beyond that permitted

See 81 FR 89752—89753 (December 12, 2016).See also 76 FR 49809—49810 (August 15, 2013); 80FR 77434 (December 14, 2015).

“Updated market impacts of biofuels in 2020,”memorandum from David Korotney to docket EPA—HQ—OAR—2019—0136. In prior actions, similaranalyses to those described in this memorandumindicated that the market was capable of bothproducing and consuming the required volume ofrenewable fuels, and that as a result there was nobasis for finding an inadequate domestic supply oftotal renewable fuel. See 82 FR 34229 & n.82 (July21, 2017). Given the D.C. Circuit’s decision in ACE,however, assessment of demand-side constraints isno longer relevant for determining inadequatedomestic supply. Even so, we believe considerationof the ways that the market could make this volumeavailable may still be generally relevant to whetherand how EPA exercises its waiver authorities, suchas our consideration of whether the volumes willcause severe economic harm.

115 We note that the previously citedmemorandum discusses the potential for totalethanol consumption in 2020, but does not makespecific projections for E0, E15 and E85. Volumesof these ethanol blends are highly dependent uponconsumer demand and retail distributioninfrastructure. In prior annual rules, we assessedvolumes of these blends in determining whetherand to what extent to exercise the inadequatedomestic supply waiver prong of the general waiverauthority. The D.C. Circuit’s decision ACEprecludes assessment of demand-side constraints indetermining inadequate domestic supply. While wecould still assess such blend volumes in decidingwhether and to what extent to exercise our otherdiscretionary waiver authorities, and in evaluatingthe market’s ability to meet the total renewable fuelrequirement, doing so is not necessary. In terms ofthe market’s ability to satisfy the total renewablefuel requirement, the more relevant consideration iswhether the pool-wide ethanol volume, togetherwith volumes of other biofuels, suffices. We notethat EPA does not establish separate standards forED, E15, or E85, Moreover, there has historicallybeen a lack of reliable data on volumes of theseblends, making reliance on the pool-wide ethanolvolume a more technically robust approach.



by the cellulosic waiver. As explainedin Section II of this rule and in Section2 of the Response to Commentsdocument, we do not believe it isappropriate to further reduce volumesunder the general waiver authority.

We acknowledge that there is someuncertainty regarding whether themarket will actually make available 5.09billion ethanol-equivalent gallons ofadvanced biofuel or 20.09 billionethanol-equivalent gallons of totalrenewable fuel in 2020. In the event thatthe market is not able to meet thesevolume requirements with biofuelsproduced and used in 2020, thecarryover RIN bank represents a sourceof RINs that could help obligated partiesmeet them if the market fails to suppiysufficient advanced biofuels. Asdiscussed in greater detail in Section11.3.1, carryover RINs provide obligatedparties compliance flexibility in the faceof substantial uncertainties in thetransportation fuel marketplace andprovide a liquid and well-functioningRIN market upon which success of theentire program depends. We currentlyestimate that there are approximately680 million advanced biofuel carryoverRINs and 2.80 billion non-advanced(D6) carryover RINs available.

V. Impacts of 2020 Volumes on Costs

In this section, EPA presents itsassessment of the illustrative costs ofthis final RFS annual rulemaking. It isimportant to note that these illustrativecosts do not attempt to capture the fullimpacts of this final rule. We frame theanalyses we have performed for this ruleas “illustrative” so as not to give theimpression of comprehensive estimates.These estimates are provided for thepurpose of showing how the cost toproduce a gallon of a “representative”renewable fuel compares to the cost offossil fuels (e.g., petroleum-derivedfuels). There are a significant number ofcaveats that must be considered wheninterpreting these illustrative costestimates. For example, there are manydifferent feedstocks that could be usedto produce biofuels, and there is asignificant amount of heterogeneity inthe costs associated with these differentfeedstocks and fuels. Some renewablefuels may be cost competitive with thefossil fuels they replace; however, we donot have cost data on every type offeedstock and every type of fuel.Therefore, we do not attempt to capturethis range of potential costs in ourillustrative estimates.

The renewable fuel volumes forwhich we provide cost estimates aredescribed in Section III. In this section,we estimate illustrative costs for twodifferent cases. In the first case, we

provide illustrative cost estimates bycomparing the final 2020 RFS renewablefuel volumes to 2020 Rf S statutoryrenewable fuel volumes. In the secondcase, we examine the final 2020 RFSrenewable fuel volumes to the final2019 RFS renewable fuel volumes toestimate changes in the annual costs ofthe final 2020 RFS annual rule incomparison to the final 2019 RfSannual rule.116

A. Illustrative Costs Analysis of 2020Final Volumes Compared to the 2020Statutory Volumes Baseline

In this section, EPA providesillustrative cost estimates that comparethe final 2020 RFS cellulosic renewablevolume requirement to the 2020 RFScellulosic statutory renewable fuelvolume that would be required absentthe exercise of our cellulosic waiverauthority under CAA section211(o)(7)(D)(i). As described in SectionIII, we are finalizing a cellulosic volumeof 0.59 billion gallons for 2020, usingour cellulosic waiver authority to waivethe statutory cellulosic volume of 10.5billion gallons by 9.91 billion gallons.Estimating the cost savings fromrenewable fuel volumes that are notprojected to be produced is inherentlychallenging. EPA has taken therelatively straightforward methodologyof multiplying the waived cellulosicvolume by the wholesale per-galloncosts of cellulosic biofuel productionrelative to the fossil fuels they displace.

While there may be growth in othercellulosic renewable fuel sources, webelieve it is appropriate to use cellulosicethanol produced from corn kernel fiberat an existing corn starch ethanolproduction facility as representative ofcellulosic renewable fuel. As explainedin Section III, we believe thatproduction of the major alternativecellulosic biofuel—compressed naturalgas/liquefied natural gas (CNG/LNG)derived from biogas—is constrained in2020 due to a limitation in the numberof vehicles capable of using this form offuel 117

EPA uses a “bottom-up” engineeringcost analysis to quantify the costs ofproducing a gallon of cellulosic ethanolderived from corn kernel fiber. Thereare multiple processes that could yieldceHiilosic ethanol from corn kernelfiber. EPA assumes a cellulosic ethanol

116 This action imposes renewable fuel standardsonly for 2020. However, solely for ED. 13771purposes in this section, we estimate the costs ofthe relevant volumes as though they applied infuture years as well. Therefore, we use the term“annual costs” in this section.

117 See Section III.D.2 for a further discussion ofthe quantity of CNG/LNG projected to be used astransportation fuel in 2020.

production process that generatesbiofuel using distiller’s grains, a coproduct of generating corn starchethanol that is commonly dried and soldinto the feed market as distillers driedgrains with solubles (DDGS), as therenewable biomass feedstock. Weassume an enzymatic hydrolysis processwith cellulosic enzymes to break downthe cellulosic components of thedistiller’s grains. This process forgenerating cellulosic ethanol is similarto approaches currently used byindustry to generate cellulosic ethanolat a commercial scale, and we believethese cost estimates are likelyrepresentative of the range of differenttechnology options being developed toproduce ethanol from corn kernel fiber.We then compare the per-gallon costs ofthe cellulosic ethanol to the fossil fuelthat would be replaced at the wholesalestage, since that is when the two areblended together.

These cost estimates do not considertaxes, retail margins, or other costs ortransfers that occur at or after the pointof blending. Transfers are paymentswithin society and are not additionalcosts (e.g., RIN payments are oneexample of a transfer payment). We donot attempt to estimate potential costsavings related to avoided infrastructurecosts (e.g., the cost savings of not havingto provide pumps and storage tanksassociated with higher-level ethanolblends). When estimating per-galloncosts, we consider the costs of gasolineon an energy-equivalent basis ascompared to ethanol, since moreethanol gallons must be consumed totravel the same distance as on gasolinedue to the ethanol’s lower energycontent.

Table V.A—I below presents thecellulosic fuel cost savings associatedwith this final rule that are estimatedusing this approach.”8 The per-galloncost differences for cellulosic ethanolrange from $0.46—$3.30 per ethanol-equivalent gallon ($/EEG).”° Given thatcommercial cellulosic ethanolproduction is still at an early stage in itsdeployment, these cost estimates have asignificant range. Multiplying the per

116 Details of the data and assumptions used canbe found in a Memorandum available in the docketentitled “cost Impacts of the Final 2020 AnnualRenewable fuel Standards”, Memorandum fromMichael Shelby, Dallas Burkholder, and AaronSobel available in docket EPA—HQ—OAR—2019—0136.

119 For the purposes of the cost estimates in thissection, EPA has not attempted to adjust the priceof the petroleum fuels to account for the impact ofthe RfS program, since the changes in therenewable fuel volume are relatively modest incomparison to the quantity of fuel associated withthe petroleum market. Rather, we have used thewholesale price projections for gasoline and dieselas reported in EIA’s October 2019 STEO.



TABLE V.A—i—ILLusTRATIvE COSTS ANALYSIS OF 2020 FINAL CELLuL0sIc VOLUMES COMPARED TO THE 2020STATUTORY VOLUMES

Cellulosic Volume Required (Million Ethanol-Equivalent Gallons) 590Change in Required Cellulosic Biofuel from 2020 Statutory Volume (Million Ethanol-Equivalent Gallons) (9,910)Cost Difference Between Cellulosic Corn Kernel Fiber Ethanol and Gasoline Per-Gallon f$/Ethanol-Equivalent Gal

lons) 120 ($/EEG) 121 $0.46—$3.30Annual Change in Overall Costs (Million $) 122

I $(4,600)—$(33,000)

B. Illustrative Cost Analysis of the 2020 Energy Cost Model, or LFGcostWeb.123 Table V.B—l presents estimates of perFinal Volumes Compared to the 2019 LFGcost-Web is a software tool energy-equivalent gallon costs forFinal Volumes developed by EPA’s Landfill Methane producing CNG/LNG derived from

Outreach Program (LMOP) to conduct landfill biogas relative to natural gas atIn this section, we provide illustrative initial economic feasibility analysis of the wholesale level. These per-galloncost estimates for the final 2020 RFS developing LFG energy recovery costs are then multiplied by the increasevolumes compared to the final 2019 RFS projects in the United States. The in the final 2020 RFS cellulosic biofuelvolumes. In comparison to the final default inputs and cost estimates by volume relative to the 2019 final RFS2019 RFS volumes, the final 2020 RFS LFGcost-Web are based on typical cellulosic biofuel volume to obtain anvolumes result in an overall increase of project designs and for typical landfill estimate of costs of using increased

172 million ethanol-equivalent gallons situations. The Model attempts to qualities of CNG/LNG from landfillof cellulosic biofuel derived from CNG/ include all equipment, site work, biogas. An estimate of overall costsLNG from landfill biogas. To estimate permits, operating activities, and associated with the increase in thethe cost of production of CNG/LNG maintenance that would normally be cellulosic biofuel volume is calculatedderived from landfill gas (LFG), EPA required for constructing and operatinguses Version 3.2 of the Landfill Gas a typical project. as the range of $(1.1)—$17 million.

TABLE V.B—1—ILLUSTRATIvE COSTS ANALYSIS OF THE 2020 FINAL CELLUL0sIC VOLUME COMPARED TO THE 2019CELLUL0SIC VOLUME 124

Cellulosic Volume

Change in Volume (Million Ethanol-Equivalent Gallons) 172

CNG/LNG Derived from Biogas Costs

Cost Difference Between CNG/LNG Derived from Landfill Biogas and Natural Gas Per Gallon ($/Ethanol-Equivalent Gallons) ($IEEG) $(0.01)—$0.10

Annual Increase in Overall Costs (Million $) $(1.1)—$17

The annual volume-setting processencourages consideration of the RFSprogram on a piecemeal (i.e., year-to-year] basis, which may not reflect thefull, long-term costs and benefits of theprogram. For the purposes of this finalrule, other than the estimates of costs ofproducing a “representative” renewablefuel compared to cost of fossil fuel, EPAdid not quantitatively assess other directand indirect costs or benefits of changesin renewable fuel volumes. These directand indirect costs and benefits mayinclude infrastructure costs, investment,climate change impacts, air quality

120 For this table and all subsequent tables in thissection, approximate costs in per-gallon costdifference estimates are rounded to the cents place.

121 Since the proposed rule, we have updatedthese per-gallon and total annual cost differencesbased on EIA’s updated proiections for petroleumgasoline costs in 2020 from the October Short-TermEnergy Outlook.

122 For this table and all subsequent tables in thissection, approximate resulting costs (other than inper-gallon cost difference eslimates) are rounded totwo significant figures.

impacts, and energy security benefits,which all to some degree may beaffected by the annual volumes. Forexample, we do not have a quantifiedestimate of the lifecycle GHG or energysecurity benefits for a single year (e.g.,2020). Also, there are impacts that aredifficult to quantify, such as ruraleconomic development andemployment changes from morediversified fuel sources, that are notquantified in this rulemaking. Whilesome of these impacts were analyzed inthe 2010 final rulemaking thatestablished the current RFS program, we

123 The current version of this model and user’smanual are downloadable from the LMOP website.https://www. epo.gov/Imop/download-lfgcost-web/.

124 For the proposed 2020 annual RFS rule, weestimated that there would be an increase ofcellulosic biofuel derived from CNG/LNG fromlandfill biogas of 126 million gallons (ethanolequivalent] compared to the 2019 final annual RFSvolumes. The total costs of the proposed 2020cellulosic volume compared to 2019 RFS cellulosicvolume range from 5(3.2)—sb million. In this final

have not analyzed these impacts for the2020 volume requirements.’2

VI. Biomass-Based Diesel Volume for2021

In this section we discuss the BBDapplicable volume for 2021. We aresetting this volume in advance of thosefor other renewable fuel categories inlight of the statutory requirement inCAA section 211(o)(2)(B)(ii) to establishthe applicable volume of BBD for yearsafter 2012 no later than 14 monthsbefore the applicable volume will apply.We are not at this time setting the BBD

rule, both the proiected volume increase of CNG/LNG derived from biogas and the cost of natural gasto which this fuel is compared have been updated.

125 RFS2 Regulatory Impact Analysis (RIA). U.S.EPA 2010, Renewable Fuel Standard Program(RFS2] Regulatory Impact Analysis. EPA—420—R—10—006. February 2010. Docket EPA—HQ—OAR—2009—0472—11332.

gallon cost differences by the amount ofceflulosic biofuel waived in this final

rule results in approximately $4.6—$33billion in cost savings.



percentage standards that would applyto obligated parties in 2021 but intendto do so in late 2020, after receivingEIA’s estimate of gasoline and dieselconsumption for 2021. At that time, wewill also set the percentage standardsfor the other renewable fuel types for2021. Although the BBD applicablevolume sets a floor for required BBDuse, because the BBD volumerequirement is nested within both theadvanced biofuel and the totalrenewable fuel volume requirements,any BBD produced can be used tosatisfy both of these other applicablevolume requirements, even beyond themandated BBD volume.

A. Statutory Requirements

The statute establishes applicablevolume targets for years through 2022for cellulosic biofuel, advanced biofuel,and total renewable fuel. For BBD,applicable volume targets are specifiedin the statute only through 2012. Foryears after those for which volumes arespecified in the statute, EPA is requiredunder CAA section 211(o)(2)(B)(ii) todetermine the applicable volume ofBBD, in coordination with the Secretaryof Energy and the Secretary ofAgriculture, based on a review of theimplementation of the program duringcalendar years for which the statutespecifies the volumes and an analysis ofthe following factors:

1. The impact of the production anduse of renewable fuels on theenvironment, including on air quality,climate change, conversion of wetlands,ecosystems, wildlife habitat, waterquality, and water supply;

2. The impact of renewable fuels onthe energy security of the United States;

3. The expected annual rate of futurecommercial production of renewablefuels, including advanced biofuels ineach category (cellulosic biofuel andBBD);

4. The impact of renewable fuels onthe infrastructure of the United States,including deliverability of materials,goods, and products other thanrenewable fuel, and the sufficiency ofinfrastructure to deliver and userenewable fuel;

5. The impact of the use of renewablefuels on the cost to consumers oftransportation fuel and on the cost totransport goods; and

6. The impact of the use of renewablefuels on other factors, including jobcreation, the price and supply ofagricultural commodities, ruraleconomic development, and food prices.

The statute also specifies that thevolume requirement for BBD cannot beless than the applicable volumespecified in the statute for calendar year2012, which is 1.0 billion gallons.126The statute does not, however, establishany other numeric criteria, and providesEPA discretion over how to weigh theimportance of the often competingfactors and the overarching goals of thestatute when the EPA sets the applicablevolumes of BBD in years after those forwhich the statute specifies suchvolumes. In the period 2013—2022, thestatute specifies increasing applicablevolumes of cellulosic biofuel, advancedbiofuel, and total renewable fuel, butprovides no numeric criteria, beyondthe 1.0 billion gallon minimum, on thelevel at which BBD volumes should beset.

In establishing the BBD and cellulosicstandards as nested within the advancedbiofuel standard, Congress clearlyintended to support development ofBBD and especially cellulosic biofuels,while also providing an incentive forthe growth of other non-specified typesof advanced biofuels. In general, theadvanced biofuel standard provides anopportunity for other advanced biofuels(advanced biofuels that do not qualify ascellulosic biofuel or BBD) to competewith cellulosic biofuel and BBD tosatisfy the advanced biofuel standardafter the cellulosic biofuel and BBDstandards have been met.

In Alan Refining Krotz Spring, Inc. v.EPA, the D.C. Circuit affirmed EPA’sapproach to setting the 2017 BBDvolume as “consistent with the structureand purposes of the statute.” 127 Intoday’s rule, we have applied the same

‘26See CAA section 211(o)(2)(B)(v).‘27Alon Refining Krotz Springs, Inc. v. EPA, 936

F.3d 628, 666 (D.c. Cir 2019).

general methodology upheld in Alanwith updated information. Similar tothe rule reviewed in Alan, today’s rulefinds that it is the advanced biofuelstandard, when set in 2021, that willdrive the use of BBD in 2021.Furthermore, in light of the benefits ofincentivizing other advanced biofuels,we choose to preserve the existing gapfor other advanced biofuels, andaccordingly establish the BBD volume atthe same level as for 2020: 2.43 billiongallons.

B. Review of Implementation of theProgram and the 2021 ApplicableVolume of Biomass-Based Diesel

One of the considerations indetermining the BBD volume for 2021 isa review of the implementation of theprogram to date, as it affects BBD. Thisreview is required by the CAA, and alsoprovides insight into the capabilities ofthe industry to produce, import, export,distribute, and use BBD. It also helps usto understand what factors, beyond theBBD standard, may incentivize theavailability of 33D. In reviewing theprogram, we assess numerousregulatory, economic, and technicalfactors, including the availability ofBBD in past years relative to the BBDand advanced standards; the prices ofBBD, advanced, and conventional RINs;the competition between BBD and otheradvanced biofuels in meeting theportion of the advanced standard notrequired to be met by BBD or cellulosicRINs; the maturation of the BBDindustry over the course of the RFSprogram; and the effects of the BBDstandard on the production anddevelopment of both BBD and otheradvanced biofuels.

Table VI.B.1—l shows, for 2011—2019,the number of BBD RINs generated, thenumber of RINs retired due to export,the number of RINs retired for reasonsother than compliance with the annualBBD standards, and the consequentnumber of available BBD RINs; for2011—2019, the BBD and advancedbiofuel standards; and for 2020, the BBDand advanced biofuel standards.



TABLE VI.B.1—1—BloMAss-BAsED DIESEL (D4) RIN GENERATION AND ADVANCED BIOFuEL AND BloMAss-BA5ED DIESELSTANDARDS IN 201 1—2020

[Million RINs or gallonsJ 128

E rt d BBD RINs BBD BBD AdvancedBBD RINs XPO e retired, non- Available bfofuelgenerated

RlNs compliance BBD RINsa 15Bjl&,,b standard‘ / reasons g / (RlNs)

2011 1,692 48 102 1,542 800 1,200 1,3502012 1,738 102 91 1,545 1,000 1,500 2,0002013 2,740 125 101 2,514 1,280 1,920 2,7502014 2,710 134 99 2,477 1,630 c2,490 2,6702015 2,796 145 45 2,606 1,730 02,655 2,8802016 4,009 203 121 3,685 1,900 2,850 3,6102017 3,849 257 115 3,477 2,000 3,000 4,2802018 3,871 247 59 3,565 2,100 3,150 : 4,290d2O19 4,381 183 0 4,198 2,100 3,150 4,9202020 N/A N/A N/A N/A 2,430 3,645 5,100

a Available BBD RINs may not be exactly equal to BBD RINs Generated minus Exported RINs and BBD RIN5 Retired, Non-Compliance Reasons, due to rounding.

bThe volumes for each year are those used as the basis for calculating the percentage standards in the final rule. They have not been retroactively adjusted for subsequent events, such as differences between projected and actual gasoline and diesel use and exempted small refineryvolumes.

c Each gallon of biodiesel qualifies for 1.5 RINs due to its higher energy content per gallon than ethanol. Renewable diesel qualifies for between 1.5 and 1.7 RlNs per gallon, but generally has an equivalence value of 1.7. While some fuels that qualify as BBD generate more than 1.5RINs per gallon, EPA multiplies the required volume of BBD by 1.5 in calculating the percent standard per 80.1405(c). In 2014 and 2015 however, the number of RlNs in the BBD Standard column is not exactly equal to 1.5 times the BBD volume standard as these standards were established based on actual RIN generation data for 2014 and a combination of actual data and a projection of RIN generation for the last threemonths of the year for 2015, rather than by multiplying the required volume of BBD by 1.5. Some of the volume used to meet the BBD standardin these years was renewable diesel, with an equivalence value higher than 1 .5.

U2019 “BBD RINs generated,” “Exported BBD,” and “BBD RlNs retired, Non-compliance reason” are projected based on data through September 2019.

In reviewing historical BBD RINgeneration and use, we see that thenumber of RINs available forcompliance purposes exceeded thevolume required to meet the BBDstandard in 2011—13 and 2016_19.129

Additional production and use ofbiodiesel was likely driven by a numberof factors, including demand to satisfythe advanced biofuel and totalrenewable fuels standards, the biodieseltax credit,13° and various other Stateand local incentives and mandatesallowing for favorable blendingeconomics. Moreover, additionalproduction of BBD, beyond the volumesshown in the above table, was exported.

1Z8 Available BBD RINs Generated, Exported BBDRINs, and BBD RINs Retired for Non-ComplianceReasons information from EMTs.

129 The number of RINs available in 2014 and2015 was approximately equal to the numberrequired for compliance in those years, as thestandards for these years were finalized at the endof November 2015 and EPA’s intent at that time wasto set the standards for 2014 and 2015 to reflectactual BBD use. See 80 FR 77490—92, 77495(December 14, 2015).

130 The biodiesel tax credit was reauthorized inJanuary 2013. It applied retroactively for 2012 andfor the remainder of 2013. It was once againextended in December 2014 and appliedretroactively to all of 2014 as well as to theremaining weeks of 2014. In December 2015 thebiodiesel tax credit was authorized and appliedretroactively for all of 2015 as well as through theend of 2016. In February 2018 the biodiesel taxcredit was authorized and applied retroactively forall of 2017. The biodiesel tax credit is not currentlyin place for 2018, 2019, or 2020.

The prices paid for advanced biofueland BBD RINs beginning in early 2013

through September 2019 (the last monthfor which data is available) also supportthe conclusion that the advancedbiofuel, and in some periods the totalrenewable fuel standards, provide asufficient incentive for additionalbiodiesel volume beyond what isrequired by the 330 standard. Becausethe BBD standard is nested within theadvanced biofuel and total renewablefuel standards, and therefore can help tosatisfy three RVOs, we would expect theprice of BBD RINs to exceed that ofadvanced and conventional renewableRINs.13’ If, however, BBD RINs arebeing used (or are expected to be used)by obligated parties to satisfy theiradvanced biofuel obligations, above andbeyond the BBD standard, we wouldexpect the prices of advanced biofueland BBD RINs to converge.132 Further,

11 This is because when an obligated party retiresa BBD RIN (D4) to help satisfy their BBD obligation,the nested nature of the BBD standard means thatthis RIN also counts towards satisfying theiradvanced and total renewable fuel obligations.Advanced RINs (D5) count towards both theadvanced and total renewable fuel obligations,while conventional RINs (D6) count towards onlythe total renewable fuel obligation.

132We would still expect D4 RINs to be valuedat a slight premium to D5 and D6 RINs in this case(and D5 RINs at a slight premium to 06 RINs) toreflect the greater flexibility of the D4 RINs to beused towards the BBD, advanced biofuel, and totalrenewable fuel standard. This pricing has beenobserved over the past several years.

if 330 RINs are being used (or areexpected to be used) to satisfy obligatedparties’ total renewable fuel obligation,above and beyond their BBD andadvanced biofuel requirements, wewould expect the price for all three RINtypes to converge.

When examining RIN price data from2011 through September 2019, shown inFigure VI.B.2—1, we see that beginningin early 2013 and through September2019 the advanced RIN (05) price and330 (04) RIN prices wereapproximately equal. Similarly, fromearly 2013 through late 2016 theconventional renewable fuel (D6) RINand BBD RIN prices were approximatelyequal. This demonstrates that theadvanced biofuel standard, and in someperiods the total renewable fuelstandard, are capable of incentivizingincreased BBD volumes beyond the 330standard. The advanced biofuelstandard has incentivized additionalvolumes of BBD since 2013, while thetotal standard had incentivizedadditional volumes of BBD from 2013

through 2016.’ We do note, however,

133 Although we did not issue a rule establishingthe final 2013 standards until August of 2013, webelieve that the market anticipated the finalstandards, based on EPA’s July 2011 proposal andthe volume targets for advanced and total renewablefuel established in the statute. (76 FR 38844, 38843July 1, 2011). Similarly, for 2014 and 2015,although we issued the final standards in late 2015,the proposed rule incentivized the market to use

continued



that in 2011—2012 the BBD RIN pricewas significantly higher than both theadvanced biofuel and conventionalrenewable fuel RIN prices. At this time,

the ElO blendwall had not yet beenreached, and it was likely more costeffective for most obligated parties tosatisfy the portion of the advanced

biofuel requirement that exceeded theBBD and cellulosic biofuel requirementswith advanced ethanol.

52.00

$1.80

$1.60

$1.40

• 51.20

$1.00

50.80

$0.60

$0.40

$0.20

50.00

Figure VI.B.2-1

D4. D5, and D6 RIN Prices (July 2010 — September 2019)

D5 RiNs 1)5 RINs

RIN Price Source: EMTS Data

We also examined the opportunity foradvanced biofuels other than BBD andcellulosic biofuels, as shown in TableVI.B.1—2. We believe it is important topreserve this opportunity for otheradvanced biofuels, and we areconscious of public comments claimingthat BBD volume requirements that are

a significant portion of the advancedvolume requirements effectivelydisincentivize the future developmentof other promising advanced biofuelpathways.134 A variety of different typesof advanced biofuels, rather than asingle type such as BBD, would increaseenergy security (e.g., by increasing the

diversity of feedstock sources used tomake biofuels, thereby reducing theimpacts associated with a shortfall in aparticular type of feedstock) andincrease the likelihood of thedevelopment of lower cost advancedbiofuels that meet the same GHGreduction threshold as BBD.’35

TABLE VI.B.1—2—OPPORTuNrrY FOR AND RIN GENERATION OF “OTHER” ADVANCED BI0FuELs[Million RINsJ

20112012201320142015c2016

150 223500829147102530

BBD volumes exceeding the proposed BBD standardto help satisfy the proposed advanced and totalstandards. See 80 FR 33100 (2014—16 standardsproposed June 10, 2015); 78 FR 71732 (2014standards proposed Nov. 29, 2013).

134 See, e.g., Comments from Advanced BiofuelAssociation, available in EPA docket EPA—HQ—OAR—2o18—0167—1277.

‘35All types of advanced biofuel, including BBD,must achieve lifecycle GHG reductions of at least50 percent. See CAA section 211(o)(1)(B)(i), (D).

I

...- I.,

1

— D4 RiNs

Opportunity for Available BBD

“other” advanced Available advanced fD4) RINs inbiofuelsa (D5) RINs excess of the BBD

Iequirementb

59754814314798

34245

594—13—49835


federal Register/Vol. 85, No. 25 /Thursday, February 6, 2020/Rules and Regulations 7047

TABLE VI.B.1—2—OPP0RTuNITY FOR AND RIN GENERATION OF “OTHER” ADVANCED BIOFuELS—Continued[Million RINsJ

0 ortunit for Available BBD

“other” advXnced Available advanced (D4) RINs inbiofuelsa (D5) RINs excess of the BBD

equirement b

2017 969 144 4772018 852 178 4152Ol9d 1,352 310 1,048

aThe opportunity for “other” advanced biofuel is calculated by subtracting the number of cellulosic biofuel and BBD RIN5 required each yearfrom the number of advanced biofuel RINs required. This portion of the advanced standard can be satisfied by advanced (D5) RINs, BBD RINsin excess of those required by the BBD standard, or cellulosic RINs in excess of those required by the cellulosic standard.

bThe available BBD (D4) RINs in excess of the BBD requirement is calculated by subtracting the required BBD volume (multiplied by 1.5 toaccount for the equivalence value of biodiesel) required each year from the number ot BBD RINs available for compliance in that year. This number does not include carryover RIN5, nor do we account for factors that may impact the number of BBD RIN5 that must be retired for compliance, such as differences between the projected and actual volume of obligated gasoline and diesel. The required BBD volume has not beenretroactively adjusted for subsequent events, such as differences between projected and actual gasoline and diesel use and exempted small refinery volumes.

cThe 2014 and 2015 volume requirements were established in November 2015 and were set equal to the number of RINs projected to beavailable for each year.

dAvailable advanced RINs and available D4 RIN5 in excess of the BBD requirement are projected based on data through September 2019.

In each year since 2016, there hasbeen a significant gap for otheradvanced biofuels, but this gap hasnonetheless been dominated by BBD.While the RFS volumes created theopportunity for up to 530 million, 969million, 852 million, and 1,352 milliongallons of “other” advanced for 2016,2017, 2018, and 2019 respectively to beused to satisfy the advanced biofuelobligation, only 98 million, 144 million,178 million, and 310 million gallons of“other” advanced biofuels weregenerated. This is significantly less thanthe volumes of “other” advancedavailable in 2012—2013. Despite creatingspace within the advanced biofuelstandard for “other” advanced, in recentyears, only a small fraction of that spacehas been filled with “other” advanced,and BBD continues to fill most of thegap between the BBD standard and theadvanced standard. Thus, there does notappear to be a compelling reason toincrease the “space” maintained for“other” advanced biofuel volumes.

This conclusion is consistent with ourapproach in the 2019 final rule, whenwe established the 2019 advancedbiofuel volume and the 2020 BBDvolume. The overall volume of noncellulosic advanced biofuel increased by500 million gallons for 2019. For the2020 BBD volume, we determined thatit was appropriate to also increase theBBD volume by the same energy-equivalent amount (330 millionphysical gallons) as it would preservethe space already available for otheradvanced biofuels to compete in 2018(850 million RINs). This space is manytimes the amount of other advancedbiofuels used in each year starting from2016.

In this action, we are maintaining theimplied non-cellulosic advanced biofuel

standard for 2021 that is presented inthe statute, and that is equivalent to theimplied non-cellulosic advanced biofuelstandard for 2020. For the 2021 BBDvolume, we thus find that it isappropriate to maintain the BBD volumefor 2021 at 2.43 billion gallons. Even inan optimistic scenario, we do notbelieve that the use of other advancedbiofuels will approach 850 milliongallons by 2021. We recognize, however,the dynamic nature of the fuelsmarketplace, and the impact that theBBD blender’s tax credit can have on therelative economics of BBD versus otheradvanced biofuels, so going forward weintend to assess the appropriate spacefor other advanced biofuels insubsequent rules setting BBD volumes.

At the same time, the rationale forpreserving the “space” for “other”advanced biofuels remains. We note thatthe BBD industry in the U.S. and abroadhas matured since EPA first increasedthe required volume of BBD beyond thestatutory minimum in 2013136 Toassess the maturity of the biodieselindustry, EPA compared information onBBD RIN generation by company in2012 and 2018 (the most recent year forwhich complete RIN generation bycompany is available). In 2012, theannual average RIN generation percompany producing BBD was about 11million RINs (about 7.3 million gallons)with approximately 50 percent ofcompanies producing less than 1million gallons of BBD a year.137 Sincethat time, the BBD industry has maturedin a number of critical areas, including

See also generally 84 FR 36794—95 (furtherexplaining our approach in establishing the 2013BBD volume and our experience since that time).

‘7’3BD RIN Generation by Company in 2012and 2018,” available in EPA docket EPA—KQ—OAR—

growth in the size of companies, theconsolidation of the industry, and morestable funding and access to capital. By2018, the average BBD RIN generationper company had climbed to over 36million RINs (23.7 million gallons)annually, more than a 3-fold increase.Only 20 percent of the companiesproduced less than 1 million gallons ofBBD in 2017.138

We recognize that the space for otheradvanced biofuels in 2021 willultimately depend on the 2021advanced biofuel volume. While EPA isnot establishing the advanced biofuelvolume for 2021 in this action, weanticipate that the non-cellulosicadvanced biofuel volume for 2021,when established, will be greater than3.65 billion gallons (equivalent to 2.43billion gallons of BBD, after applyingthe 1.5 equivalence ratio). Thisexpectation is consistent with ouractions in previous years. Accordingly,we expect that the 2021 advancedbiofuel volume, together with the 2021BBD volume established today, willcontinue to preserve a considerableportion of the advanced biofuel volumethat could be satisfied by eitheradditional gallons of BBD or by otherunspecified and potentially less costlytypes of qualifying advanced biofuels.

C. Consideration of Statutory Factors inCAA Section 211 (o)(2)(B)(ii)(I)—(VI) for2021 and Determination of the 2021Biomass-Based Diesel Volume

As in past annual standard-settingrulemakings, we find that additionalvolumes of BBD would displace otheradvanced biofuel, due to the nested

1332019—0136.



nature of the standards,’3° as opposed topetroleum fuels. More specifically, for agiven advanced biofuel standard, greateror lesser BBD volume requirementsgenerally do not change the amount ofadvanced biofuel used to displacepetroleum fuels; the total volume ofadvanced biofuels is unchangedregardless of the BBD volumerequirement. Thus increasing the BBDvolume requirement would result in thedisplacement of other types of advancedbiofuels that could have been used tomeet the advanced biofuels volumerequirement.

As a result, as in past assessments ofthe factors articulated in CAA211 (o)(2)(B)(ii)(I)—(VI), we consider BBDin comparison to other advancedbiofuels, and not in comparison topetroleum diesel. Our primaryassessment of the statutory factors isthat because the BBD requirement isnested within the advanced bio fuelvolume requirement, we expect that the2021 advanced volume requirement willdetermine the level of BBD use,production, and imports that occur in2021. Therefore, we continue to believethat approximately the same overallvolume of BBD would likely besupplied in 2021 regardless of the 2021BBD volume requirement. In the long-term, however, leaving adequate roomfor growth of other advanced biofuelscould have a beneficial impact oncertain statutory factors. Notably, thisincentivizes the development of otheradvanced biofuels with potentiallysuperior cost, climate, environmental,and other characteristics, relative toBBD. We present a detailed analysis ofthe statutory factors for the BBD volumerequirement in a memorandum to thedocket.’4°

D. BBD Volume Requirement for 2021

Based on the above analysis, we aresetting the applicable volume of BBD at2.43 billion gallons for 2021. We believethis volume sets the appropriate floorfor BBD, and that the volume of BBDactually used in 2021 will be driven bythe level of the advanced biofuel andpotentially the total renewable fuelstandards that the Agency will establishfor 2021. In addition, despite providing

139 The BBD volume requirement is nested withinthe advanced biofuel requirement, and theadvanced biofuel requirement is, in turn, nestedwithin the total renewable fuel volumerequirement. See CAA section 211 (o)(2)(B)(i)(IV).(II). This means that any BBD produced can be usedto satisfy both these other applicable volumerequirements even beyond the BBD volumerequirement.

140 to docket: Statutory FactorsAssessment for the 2021 Biomass-Based Diesel(BBD) Applicable Volumes.” See Docket EPA—FIQ—OAR—2019—o136.

a significant degree of space for “other”advanced biofuels in recent years, farsmaller volumes of “other” advancedhave been utilized to meet the advancedstandard. The BBD volume we arefinalizing today continues to preservethe existing gap between the advancedbiofuel volume and the sum of thecellulosic biofuel and BBD volumes. Webelieve this provides sufficientincentive to producers of “other”advanced biofuels, while alsoacknowledging that the advancedstandard has been met predominantlywith biomass-based diesel. Namely, thiswould allow other advanced biofuels tocontinue to compete with excessvolumes of BBD for market share underthe advanced biofuel standard. Thiswould provide significant long termcertainty for investments in otheradvanced biofuels that over time couldcompete with BBD to fill the advancedbiofuel standard. In sum, ourassessment of the statutory factors andthe implementation of the programsupports a volume of 2.43 billiongallons.

VII. Percentage Standards for 2020

The renewable fuel standards areexpressed as volume percentages andare used by each obligated party todetermine their Renewable VolumeObligations (RVOs). Since there are fourseparate standards under the RFSprogram, there are likewise fourseparate RVOs applicable to eachobligated party. Each standard appliesto the sum of all non-renewable gasolineand diesel produced or imported.

Sections II through IV provide ourrationale and basis for the final volumerequirements for 2020.141 The volumesused to determine the final percentagestandards are shown in Table VII—1.

TABLE Vu—i—VoLuMEs FOR USE INDETERMINING THE FINAL 2020 ApPLICABLE PERCENTAGE STANDARDS

[Billion gallons]

Cellulosic biofuel 0.59Biomass-based diesel 2.43Advanced biofuel 5.09Renewable fuel 20.09

For the purposes of converting thesevolumes into percentage standards, wegenerally use two decimal places to beconsistent with the volume targets asgiven in the statute, and similarly twodecimal places in the percentagestandards. In past years we have used

141 The 2020 volume requirement for DOD wasestablished in the 2019 standards final rule (83 FR63704, December 11, 2018)

three decimal places for cellulosicbiofuel in both the volume requirementand percentage standards to moreprecisely capture the smaller volumeprojections and the unique methodologythat in some cases results in estimatesof only a few million gallons for a groupof cellulosic biofuel producers (seeSection III for a further discussion of themethodology for projecting cellulosicbiofuel production and our decision toround the projected volume of cellulosicbiofuel to the nearest 10 milliongallons). However, the volumerequirements for cellulosic biofuel haveincreased over time. We have thereforedetermined that volume requirementsand percentage standards for cellulosicbiofuel will now use two decimalplaces.

In this section, we also discuss ourregulatory change to the percentstandard formulas to account for aprojection of the aggregate volume forSREs that we expect to grant for the2020 compliance year. This section alsoprovides our rationale for thatprojection of exempt gasoline and dieselvolume. Additionally, we also provideour approach for evaluating SREs goingforward, including for the currentlypending 2019 petitions and for 2020petitions we receive in the future.

A. Calculation of Percentage Standards

The formulas used to calculate thepercentage standards applicable toproducers and importers of gasoline anddiesel are provided in 40 CFR 80.1405.The formulas rely on estimates of thevolumes of gasoline and diesel fuel, forboth highway and nonroad uses, whichare projected to be used in the year inwhich the standards will apply. Theprojected gasoline and diesel volumesare provided by EIA and includeprojections of ethanol and biomassbased diesel used in transportationfuel.’42 Since the percentage standardsapply only to the non-renewablegasoline and diesel produced orimported, the volumes of renewable fuelare subtracted out of the EIA projectionsof gasoline and diesel.

Transportation fuels other thangasoline or diesel, such as natural gas,propane, and electricity from fossilfuels, are not currently subject to thestandards, and volumes of such fuels arenot used in calculating the annualpercentage standards. Since under theregulations the standards apply only toproducers and importers of gasoline anddiesel, these are the transportation fuels

142 Letter from Linda Capuano. EIA Administratorto Andrew Wheeler, EPA Administrator. October 9,2019. Available in docket EPA—HQ—OAR—2019—0136.



used to set the percentage standards, aswell as to determine the annual volumeobligations of an individual gasoline ordiesel producer or importer under 40

CfR 80.1407.As specified in the Rf52 final rule,143

the percentage standards are based onenergy-equivalent gallons of renewablefuel, with the cellulosic biofuel,advanced biofuel, and total renewablefuel standards based on ethanolequivalence and the BBD standardbased on biodiesel equivalence.However, all RIN generation is based onethanol-equivalence. For example, theRfS regulations provide that productionor import of a gallon of qualifyingbiodiesel will lead to the generation of1.5 RINs. The formula specified in theregulations for calculation of the BBDpercentage standard is based onbiodiesel-equivalence, and thus assumesthat all BBD used to satisfy the BBDstandard is biodiesel and requires thatthe applicable volume requirement bemultiplied by 1.5 in order to calculatea percentage standard that is on thesame basis (i.e., ethanol-equivalent) asthe other three standards. However,BBD often contains some renewablediesel, and a gallon of renewable dieseltypically generates 1.7 RIMs.’44 Inaddition, there is often some renewablediesel in the conventional renewablefuel pool. As a result, the actual numberof RIMs generated by biodiesel andrenewable diesel is used in the contextof our assessment of the applicablevolume requirements and associatedpercentage standards for advancedbiofuel and total renewable fuel, andlikewise in obligated parties’determination of compliance with anyof the applicable standards. While thereis a difference in the treatment of

biodiesel and renewable diesel in thecontext of determining the percentagestandard for BBD versus determiningthe percentage standard for advancedbiofuel and total renewable fuel, it is nota significant one given our approach todetermining the BBD volumerequirement. Our intent in setting theBBD applicable volume is to provide alevel of guaranteed volume for BBD, butas described in Section VII.B of the 2019standards final rule, we do not expectthe BBD standard to be binding in2020.145 That is, we expect that actualsupply of BBD, as well as supply ofconventional biodiesel and renewablediesel, will be driven by the advancedbiofuel and total renewable fuelstandards and will exceed the BBDstandard.

B. Small Refineries and Small Refiners

In CAA section 211(o)(9), enacted aspart of the EPAct, and amended byEISA, Congress provided a temporaryexemption to small refineries 146

through December 31, 2010. Congressprovided that small refineries couldreceive a temporary extension of theexemption beyond 2010 based either onthe results of a required DOE study, orfor the reason of “disproportionateeconomic hardship” in response tosmall refinery petitions submitted “atany time.” CAA section 211(o)(9)(B)(i).

Pursuant to this petition process, EPAoften granted SREs for a givencompliance year after the applicablepercentage standards for thatcompliance year had been established.Under our prior approach to calculatingthe percentage standards, we did notaccount for these exemptions inestablishing the percentagestandards.’47 We only accounted for

exemptions already granted at the timeof the final annual rule.148

In the October 28 proposal, weproposed to modify the regulations at 40CfR 80.1405(c) to account for aprojection of the total exempted volumeof gasoline and diesel produced at smallrefineries, including for thoseexemptions granted after the finalannual rule.’9 We are finalizing thechange as proposed. The result is thatour calculation of the applicablepercentage standards for 2020 takes intoaccount a projection of the totalexempted volume of gasoline and dieselproduced by small refineries in 2020.

1. Changes to the Projected Volume ofGasoline and Diesel for Exempt SmallRefineries

The formulas used to calculate thepercentage standards applicable toproducers and importers of gasoline anddiesel are provided in 40 CFR80.1405(c). The formula for thepercentage standard calculation for totalrenewable fuel, including thedefinitions of the terms prior to thisaction, is shown below. The formulasfor the other three percentage standardsfollow the same format, with thenumerator of the fraction replaced withthe annual volume of cellulosic biofuel,biomass-based diesel, and advancedbiofuel, respectively. In this action weare only modifying the definitions of theterms GE1 and DE1, which previouslyreferred to the amount of gasoline anddiesel projected to be produced byexempt small refineries, to now refer tothe amount of gasoline and dieselprojected to be exempt. All other termsremain in the same and were notreexamined in this rulemaking.

RFVRFI

) + (GS, — RGS1) — GE, + (D1— RDL) + (DS,

—RDS1) — DE,

Where:Std,1 = The renewable fuel standard for year

i, in percent.RFV1.1 = Annual volume of renewable fuel

required by 42 U.S.C. 7545(o)(2)(B) foryear i, in gallons.

G1 = Amount of gasoline projected to be usedin the 48 contiguous states and Hawaii,in year i, in gallons.

‘43See 75 FR 14670 (March 26, 2010).‘ 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. Aminority of renewable diesel has a lower heatingvalue below 123,500 BTU/gallon and is thereforeassigned an equivalence value of 1.5 or 1.6 basedon applications submitted under 40 CFR80.1415 (c)(2).

14583 FR 63704 (December 11, 2018).

in the 48 contiguous states and Hawaii,in year i, in gallons.

G51 = Amount of gasoline projected to beused in Alaska or a U.S. territory, in yeari, if the state or territory has opted-in oropts-in, in gallons.

RGS1 = Amount of renewable fuel blendedinto gasoline that is projected to beconsumed in Alaska or a U.S. territory,

FR 63740; see also, e.g.. 77 FR 1320, 1340; 78 FR49794, 49825—49826; 80 FR 77420, 77511. We alsoproposed to follow this interpretation in the July 29proposal for this final rule. 84 FR 36797 (July 29,2019).

148 See, e.g., 80 FR 77420, 77511 (December 14,2015).

14984 FR 57677.

StURF,, = 100(G, — RG

Amount of diesel projected to be usedin the 48 contiguous states and Hawaii,in year i, in gallons.

RG, = Amount of renewable fuel blended intogasoline that is projected to be consumedin the 48 contiguous states and Hawaii,in year i, in gallons.

RU, = Amount of renewable fuel blended intodiesel that is projected to be consumed

‘‘° A small refiner that meets the requirements of40 CFR 80.1442 may also be eligible for anexemption.

147 We adopted this interpretation of ourregulations in the 2011 final rule. 75 FR 76804. Wereaffirmed it in annual rulemakings since then,including most recently in the 2019 fiiial rule. 83



in year i, if the state or territory opts-in,in gallons.

OS, = Amount of diesel projected to be usedin Alaska or a U.S. territory, in year i, ifthe state or territory has opted-in or opts-in, in gallons.

RDS1 = Amount of renewable fuel blendedinto diesel that is projected to beconsumed in Alaska or a U.S. territory,in year i, if the state or territory opts-in,in gallons.

GE = The amount of gasoline projected to beproduced by exempt small refineries andsmall refiners, in year i, in gallons in anyyear they are exempt per § 80.1441 and80.1442.

OF1 = The amount of diesel fuel projected tobe produced by exempt small refineriesand small refiners in year i, in gallons,in any year they are exempt per§ 80.1441 and 80.1442.

Historically, EPA has interpreted theterms GE1 and DE1 to refer to the amountof gasoline and diesel projected to beproduced by small refineries that havealready been granted exemptions fromtheir RFS obligations prior to ourissuing the final rule for the relevantcompliance year.’5° As a result of thisinterpretation, any SREs granted afterwe issued the annual rule containingthe percentage standards for that yeareffectively reduced the required volumeof renewable fuel for that year. Forexample, in August 2019 we granted 31SREs for the 2018 compliance year afterthe percentage standards for 2018 hadbeen estabIished.’’ These SREsreduced the obligated volume ofgasoline and diesel for 2018 by 13.42billion gallons, effectively reducing therequired volume of total renewable fuelfor 2018 by 1.43 billion RINs.

In comments on the July 29 proposal,many commenters requested that EPAadopt a different interpretation of theterms for the amount of gasoline anddiesel projected to be produced byexempt small refineries in the existingpercentage standard formula.152 Manycommenters requested that these termsrefer to a projection of the exemptedvolume of gasoline and diesel producedby small refineries, regardless ofwhether EPA had already adjudicatedsuch exemption petitions by the time ofthe final rule. These commenters arguedthat this interpretation of the regulationsis reasonable and better implements thestatutory requirement that EPA must“ensure” the renewable fuel volumesare met. Some commenters suggestedthat adjusting the percentage standards

1505ee, e.g.. 84 FR 36797 (July 29, 20191.151 The percentage standards for 2018 were

established in December 2017 (82 FR 58486,December 12, 2017).

152 See, e.g., comments from the Renewable FuelsAssociation (Docket Item No. EPA—HQ—OAR—2019—0136—0281).

formula is more important now than inearlier years of the program as we haverecently granted exemptions for moresignificant volumes of gasoline anddiesel, potentially resulting in moresignificant volumes that are not beingmet at the time of compliance.’53 Apetition for administrativereconsideration raised similar issues,asking EPA to reconsider our approachfor accounting for exempted volumesthrough the formula at 40 CfR80.1405(c).154 In the October 28proposal, EPA undertook a process torevisit this issue, albeit under ourinherent authority to revise or amend arulemaking, rather than as an exercise ofour reconsideration authority underCAA section 307(d](7)(B).’55

In the October 28 proposal weproposed to change the definitions ofthe two relevant terms in the percentagestandard formula at 40 CFR 80.1405(c),GE1 and DE1. We proposed that theseterms represent a projection of theexempted volume of gasoline anddiesel, regardless of whether we hadadjudicated exemptions for that year bythe time of the final rule establishing thepercentage standards. We are finalizingthese changes, and in turn, alsocompleting the process of revisiting thisissue that we undertook as describedabove in response to the above-notedadministrative petition. The term “GE1”,representing the volume of exemptgasoline, is now defined as “the totalamount of gasoline projected to beexempt in year i, in gallons, per§ 80.1441 and 80.1442.” Similarly, theterm “DE1”, representing the volume ofexempt diesel, is now defined as “thetotal amount of diesel projected to beexempt in year i, in gallons, per§ 80.1441 and 80.1442.”

We begin by explaining our legalauthority to adopt the new definitions,as well as our rationale for the changein our policy. While the statute does notspecifically require EPA to redistributeexempted volumes in this manner, webelieve that this is a reasonableinterpretation of our authority underChevron v. NBDC.’56 Indeed, makingthis projection harmonizes variousstatutory provisions. The statuteauthorizes small refineries to petition

‘53See, e.g.. comments from Growth Energy(Docket Item No. EPA—HQ—OAR—2019—0136—0312).

‘‘ “Petition for Reconsideration of 40 CFR80.1405(c), EPA Docket No. EPA—HQ—OAR—2005—0161, promulgated in 75 FR 14670 (Mar. 26, 20101;Petition for Reconsideration of Periodic Reviews forthe Renewable Fuel Standard Program, 82 FR 56364(Dec. 12, 2017)” (June 4, 2018).

See 84 FR 57680 & n.13 (explaining in greaterdetail the basis for EPA’s reconsideration of thisissue).

156 Chevron, U.S.A., Inc. v. Nat. Res. Def Council,Inc., 467 U.S. 837, 842—44 (1984).

for and EPA to grant an exemptionbased on disproportionate economichardship “at any time,” ‘57 while alsodirecting EPA to promulgate standardsby November 30 of the prior year to“ensure[j” that the renewable fuelvolumes are met.lse In other words,small refineries may seek and EPA maygrant hardship exemptions at any time,including after the percentage standardsare established. Meanwhile, EPA mayaccount for a projection of theseexemptions in the annual rule to“ensure” the renewable fuel volumes.’°

In more concrete terms, should EPAgrant SREs without accounting for themin the percentage formula, thoseexemptions would effectively reducethe volumes of renewable fuel requiredby the RFS program, potentiallyimpacting renewable fuel use in theU.S.’° By contrast, under our newapproach, the percentage standard foreach category of renewable fuel wouldincrease to account for a projection ofthe exempted volume. These higherpercentage standards would have theeffect of ensuring that the requiredvolumes of renewable fuel are met whensmall refineries are granted exemptionsfrom their 2020 obligations after theissuance of the final rule, providedEPA’s projection of the exemptedvolume is accurate.

This new approach entails a change inpolicy.161 We previously did notaccount for exemptions granted after theannual rule, and at times we evensuggested that doing so wasimproper.’62 We believe our changedapproach is appropriate and largelyavoids the problems we previouslyidentified. First, we had previouslystated that “the Act is best interpretedto require issuance of a single annualstandard in November that is applicablein the following calendar year, therebyproviding advance notice and certaintyto obligated parties regarding their

157CAA section 211(o)(9)(B)(i).‘58CAA section 211(o)(3)(B)(i); see also CAA

section 211 (o)(2)(A)(i), (2)(A)(iii)(I), CAA section301(a). This projection, moreover, is hardly uniquein the RFS program as Congress required numerousprojections in the implementation of the program.See, e.g.. CAA section 211(o)(7)(D) (projection of thevolume of cellulosic biofuel production); (o)(3)(A)(projection of the volumes of transportation fuel,biomass-based diesel, and cellulosic biofuel).“ See CAA section 211(ol(2)(A)(i), (2)(A)(iii)(I),

(3)(B)(i); see also CAA section 301(a).‘60We note that there are other factors, besides

the RFS program, that affect renewable fuel use.See, e.g., “Endangered Species Act No EffectFinding for the 2020 Final Rule,” available in thedocket for this action.“ FCCv. fox Television Stotions, Inc., 556 U.S.

502, 515 (2009).‘62See 78 FR 49825—49826; 77 FR 1340; EPA’s

Br., Doc No. 1757157, D.C. Cir. No. 17—1258, AFPMv. EPA (Oct. 25, 2018) (“EPA Br. in AfPM”).



regulatory requirements. Periodicrevisions to the standards to reflectwaivers issued to small refineries orrefiners would be inconsistent with thestatutory text, and would introduce anundesirable level of uncertainty forobligated parties” 163 Today’s changesare consistent with these views. Byprojecting exempted volumes inadvance of issuing annual standards, wecan issue a single set of standards foreach year without the need for periodicrevisions and the associated uncertaintyfor obligated parties.

Second, we also had previously notedthat “Congress allowed for someimprecision to exist in the actualvolumes of renewable fuel that areconsumed as a result of the percentagestandards that we set eachNovember 164 Relatedly, we hadnoted the inherent difficulties ofprojecting exempted small refineryvolumes.165 We still agree that Congressallowed for some imprecision to exist inthe actual required volumes ofrenewable fuel, and that projectingfuture exempted volumes involves someuncertainty.

But several recent developmentspersuade us to reach a differentconclusion in accounting for aprojection of exempted small refineryvolumes. For one, we are projecting theaggregate exempted volume in 2020. Wethus need not wrestle with thedifficulties of predicting preciselywhich refineries will apply or theeconomic circumstances of specificrefineries in 2020. We only need toestimate the total exempted volume.Moreover, we have the benefit ofadditional experience administering theRf S program and knowledge of therelatively high levels of exemptedvolumes in recent years, whereexempted volumes associated with SREsgranted after the annual percentagestandards were established haveconstituted a significant portion of thetotal volume of obligated fuel, resultingin fewer RINs being used to complywith the RFS standards.

Finally, in recent annual rulemakings,EPA has not articulated its prospectivepolicy to adjudicating SRE petitions forthose compliance years. F or instance, inthe 2018 final rule, we did not state ourpolicy to adjudicating 2018 SREpetitions. Instead we articulated thatpolicy in a separate memorandumissued after the annual rule.166 Since

“‘ 77 FR 1340.16477 FR 1340 (January 9, 2012).

Br. in AfPM 72—77.166 “Decision on 2018 Small Refinery Exemption

Petitions,” Memorandum from Anne Idsal, ActingAssistant Administrator, Office of Air and Radiation

EPA’s policy to adjudicating SREpetitions affects the exempted volume,not having established this policy at thetime of the annual rule made it verychallenging to project the exemptedvolume. In today’s rule, by contrast, weare articulating our prospective policyto adjudicating SRE petitions (beginningwith the 2019 SRE petitions andincluding the 2020 SRE petitions)concurrently with issuing this final rule.Doing so augments our ability toreasonably project the exempted volumefor 2020. We explain this policy furtherbelow.

2. Projecting the Exempted Volume ofGasoline and Diesel in 2020

As already noted, we acknowledge theinherent uncertainty in projecting theexempted volume. More concretely, animprecise projection has consequenceson the actual required volume ofrenewable fuel. If we over-project thevolume of gasoline and diesel producedby exempt small refineries in 2020, theactual required volumes of renewablefuel will be higher than the volumesused in calculating the percentagestandards. By contrast, if we under-project the volume of exempted gasolineand diesel, the actual required volumesof renewable fuel will be lower than thevolumes used in calculating thepercentage standards. If we project thevolume correctly, we will ensure that, asfar as exempted small refinery volumesare concerned, the actual requiredvolume is equal to the volumeestablished in this final rule.167

In selecting the methodology forprojecting the exempted volume, wethus aim to make a neutral projection ofexemptions based on the informationnow before us. As proposed, we arefinalizing a projection methodologybased on a 20 16—18 annual average ofexempted volumes had EPA strictlyfollowed DOE recommendations inthose years, including by granting 50percent relief where DOE recommended50 percent relief. We explain why we doso below, beginning with our decisionto base the projection on DOErecommendations and then our decisionto use a 2016—18 annual average.Finally, we state the projected exemptvolumes of gasoline and diesel based onthis approach and the correspondingnumber of RINs.

first, we choose to base the projectionof exempted volumes on DOE’srecommendations for two reasons, one

to Sarah Dunham, Director, Office of Transportationand Air Quality. August 9, 2019.

167 TIse actual required volume is subject to otheruncertainties besides small refinery exemptions,such as unexpected changes in gasoline and dieseluse.

prospective and one retrospective.Prospectively, this is our generalapproach to adjudicating SRE petitionsgoing forward, beginning with 2019 SREpetitions and including 2020 SREpetitions. Our approach to evaluatingSREs going forward is to follow DOE’srecommendations, including grantingpartial (i.e., 50 percent) exemptions,where appropriate. The statuteauthorizes EPA to evaluate petitions forSREs considering DOE’s study,recommendation, and other economicfactors. While final decisions on 2020

SREs must await EPA’s receipt andadjudication of those petitions, wegenerally have the statutory authority toissue a final decision consistent withDOE’s recommendation.’68 This readingof the statute is consistent withcongressional guidance to DOE 169 andEPA.’7°

We acknowledge that on August 9,2019, we took final agency action on 36

then-pending small refinery petitionsfor the 2018 compliance year (“August9 Memorandum Decision”),’’ andstated that the “best interpretation” ofthe statute was that EPA should eithergrant or deny petitions in full, and “not

‘65Other factors, such as judicial resolution ofpending decisions or subsequent Congressionaldirection, could potentially affect EPA’s SRE policygoing forward.

169 See Consolidated Appropriations Act, 2016,Public Law 114—113 (2015), Explanatory Statementto Senate amendment to HR. 2029 MilitaryConstruction and Veterans Affairs and RelatedAgencies Appropriations Act, 2016, Division 0—Energy and Water Development and RelatedAgencies Appropriations Act, 2016, ovailabte athttps://docs.house.gav/meetings/R U/B UOO/20151216/104298/HMTG-1 14-B UOO-2015 1216-SDOO5.pdf. Congress in this Statement directedDOE, under certain circumstances, “to recommendto the EPA Administrator a 50 percent waiver ofRfS requirements for the [small refinery)petitioner.” Id. at 35. Consistent with that guidanceand since 2014, DOE has recommended 50 percentexemptions as it deemed appropriate.

°S. Rep. 114—281. Congress in this Reportprovided that “[w[hen making decisions aboutsmall refmery exemptions under the RFS program,the Agency is directed to follow DOE’srecommendations.” See also ConsolidatedAppropriations Act, 2019, Public Law No. 116—6(2019), H. Rep. 116—9 at 741, continuing thedirective contained in Senate Report 114—281. Seealso Sen. Rep. 116—123, Department of the Interior,Environment, and Related Agencies AppropriationsBill, 2020, Report Accompanying Sen. 2580, at 87—88 (Sept. 26, 2019) (again “continujingi thedirective contained in Senate Report 114—281related to small refinery relief’), available athttps://www.cangress.gav/; I 6/crpt/srptl 23/CRPT-1 l6srptl23.pdf This guidance, read together withthat discussed in the previous footnote, supportsthe interpretation that DOE has authority torecommend partial exemptions for particular smallrefineries, and that EPA has discretion to followthat recommendation and grant a partial exemption.

171 “Decision an 2018 Small Refinery ExemptionPetitions,” Memorandum from Anne Idsal, ActingAssistant Administrator, Office of Air and Radiationto Sarah Dunham, Director, Office of Transportationand Air Quality. August 9, 2019 (“August 9Memorandum Decision”).



grant partial relief.” Specifically, weobserved that the statute provided forexemptions as an “extension of theexemption under subparagraph (A)”,where subparagraph (A) stated that theRFS program requirements “shall notapply to small refineries under calendaryear 2011.” 172 We had implemented the“subparagraph (A)” pre-2011 exemptionas a full exemption for all qualifyingsmall refineries. Consistent with thisinterpretation, we concluded that“when Congress authorized theAdministrator to provide an ‘extension’of that exemption for the reason of[disproportionate economic hardshipl,Congress intended that extension to bea full, and not partial, exemption.” ‘‘

We believe, however, that this is notthe only reasonable way to adjudicateexemption petitions. Had Congressspoken directly to the issue of theamount of relief EPA could provide tosmall refineries, EPA would be boundby that directive. However, the statute issilent with respect to EPA’s authority toissue partial exemptions. Nothing in thestatute directly addresses this issue. Nostatutory language exists characterizingthe scope of an exemption; there are noterms employed such as “partial” or“full,” or “50%” or “100%.” Moreover,nothing in the statute obligates EPA toprovide full relief where we find thatonly partial relief is warranted.

We think there is another reasonablereading of this provision of the statute:EPA may issue partial exemptions.Notably, EPA may determine that onlypartial relief is warranted based on a

particular small refinery’scircumstances. In that case, it isreasonable for the level of relief thatEPA grants to reflect that determination.For purposes of making the projection ofthe aggregate exempted volume ofgasoline and diesel in 2020, and goingforward, we are adopting thisinterpretation of the statute,174 andthereby depart from the interpretationtaken in the August 9 MemorandumDecision, under which EPA “shalleither grant or deny petitions for smallrefinery hardship in full, and not grantpartial relief.” 175 We adopt this newapproach for several reasons, consistentwith FCC v. Fox Television Stations,In c.’76

As already noted, this new policywould allow EPA to ensure that thelevel of relief that it grants appropriatelyreflects the particular small refinery’sdisproportionate economic hardship.This allows EPA to more preciselycalibrate its RFS policy, and to strike anappropriate balance between furtheringthe production and use of renewablefuels while granting relief to smallrefineries that meet the statutorycriteria. This balance, moreover, is alsoappropriate in light of the above-citedrecent Congressional direction.177

Even independent of our prospectiveSRE policy, we believe this approach isa reasonable estimate of the aggregateexempted volume based on aretrospective review of EPA’s past SREpolicies. In prior years, EPA has takendifferent approaches in evaluating smallrefinery petitions. As noted above, in

the August 9 Memorandum Decision,we granted full exemptions topetitioners where DOE eitherrecommended full or 50 percent relief.That is, in cases where DOE found asmall refinery experienced eitherdisproportionate impacts or viabilityimpairment, EPA found the smallrefinery experienced disproportionateeconomic hardship and granted a fullexemption. By contrast, in earlier yearsof the program, we denied petitions andprovided no exemption in certain caseswhere DOE recommended a 50 percentexemption, finding thatdisproportionate economic hardshipexisted only where the small refineryexperienced both disproportionateimpacts and viability impairment.’78Our approach to projection, then, takesa middle ground between these priorapproaches, and is a reasonable estimateof the aggregate exempted volume in2020.

We now turn to our decision to usethe 20 16—18 annual average under thismethodology. As we have not yetreceived SRE petitions for 2020, wemust estimate the aggregate amount ofDOE recommended relief for that year.To do so, it is instructive to look backat what the exempted volumes ofgasoline and diesel in previous yearswould have been had EPA followedDOE’s recommendations, includinggranting partial exemptions. Thesevolumes, along with the RenewableVolume Obligation (RVO) that wouldhave been exempted, are shown inTable VII.B—l.

As demonstrated in Table VII.B—1, thevolume of gasoline and diesel thatwould have been exempted if EPA hadfollowed DOE’s recommendations hasvaried significantly in previous years.’79This is because there are many factorsthat affect the number of SREs that aregranted in a given year and the aggregateexempted volume. We believe that it is

172 CAA section 211(o)(9)(B), (o)(9)(A).171 August 9 Memorandum Decision at 2.“‘ See Chevron, 467 U.S. at 842—44.175 August 9 Memorandum Decision at 2.176 See generally FCC, 556 U.S. at 515.177 See supro notes 20 and 21.

appropriate to use an average volume ofthe gasoline and diesel that would havebeen exempted over a three-year periodas our projection of gasoline and dieselthat will be exempted in 2020, ratherthan the volume of gasoline and dieselthat would have been exempted in anysingle year. This approach averages outthe effects of unique events or market

178 See, e.g., Hermes Consol., LLCv. EPA, 787F.3d 568, 575 (D.C. Cir. 2015).

179 Information about the number of SREs grantedand the volume of RINs not required to be retiredas a result of those exemptions can be found at:https://www. epo.gov/fuels-registration-reporting

circumstances that occurred inindividual past years that may or maynot occur in 2020. Given that the lastyear for which we have data on smallrefinery exemptions is 2018,180 we takethe average exempted volume from2016—18.

The average volume of these fuels thatwould have been exempted in 2016—18

ond-complionce-help/rfs-smoll-refineryexemptions.

180To date, we have adjudicated all 2018 smallrefinery exemption petitions submitted to us. EPAhas not yet adjudicated any small refineryexemptions for the 2019 or 2020 compliance years.

TABLE VII.B—1—EsTIMAIED ExEMPTED VOLUME OF GASOLINE AND DIESEL AND ESTIMATED RVO EXEMPTED BYCOMPLIANCE YEAR FOLLOWING DOE’S RECOMMENDATIONS

Estimated exempted Estimated exempted Estimated RVOCompliance year volume of gasoline volume of diesel exempted

(million gallons) (million gallons) (million RIN5)

2016 2,450 1,930 4402017 5,650 3,870 10202018 4,620 3,270 840



if EPA had followed DOE’s reduction to the RVO of approximately diesel demand for all states andrecommendations is 4,240 and 3,020 770 million RINs. territories where the RFS programmillion gallons, for gasoline and diesel C Final Standards applies, renewable fuels projected byfuel, respectively. We use these values EIA to be included in the gasoline andfor GE1 and DE1, respectively, in The formulas in 40 CFR 80.1405 for diesel demand, and projected gasolinecalculating the percentage standards for the calculation of the percentage and diesel volumes from exempt smalleach of the renewable fuel types. We standards require the specification of a refineries. The values of all the variablesalso note that these exempted volumes total of 14 variables covering factors used for this final rule are shown inwould have resulted in an average such as the renewable fuel volume Table VII.C—i for the applicable 2020

requirements, rojected gasoline and standards.181

TABLE VII.C—1—-VALuEs FOR TERMS IN CALCULATION OF THE FINAL 2020 STANDARDS 182

(billion gallons)

Term Description Value f1ir 020

RFVc Required volume of cellulosic biotuel 0.59RFVBBD Required volume of biomass-based diesel a 2.43RFVAB Required volume of advanced biofuel 5.09RFVRF Required volume of renewable fuel 20.09G Projected volume of gasoline 142.68D Projected volume of diesel 55.30RG Projected volume of renewables in gasoline 14.42RD Projected volume of renewables in diesel 2.48GS Projected volume of gasoline for opt-in areas 0RGS Projected volume of renewables in gasoline for opt-in areas 0DS Projected volume of diesel for opt-in areas 0RDS Projected volume of renewables in diesel for opt-in areas 0GE Projected volume of gasoline for exempt small refineries 4.24DE Projected volume of diesel for exempt small refineries 3.02

a The BBD volume used in the formula represents physical gallons. The formula contains a 1 .5 multiplier to convert this physical volume to ethanol-equivalent volume.

Projected volumes of gasoline anddiesel, and the renewable fuelscontained within them, were providedby ETA in a letter to EPA that is requiredunder the statute, and representconsumption values from the October2019 version of EIA’s Short-TermEnergy Outlook.183 An estimate of fuelconsumed in Alaska, derived from theJune 28, 2019 release of ETA’s StateEnergy Data System (SEDS) and basedon the 2017 volumes contained therein,was subtracted from the nationwidevolumes.

Using the volumes shown in TableVII.C—i, we have calculated the finalpercentage standards for 2020 as shownin Table VlI.C—2.

TABLE VII.C—2—FINAL PERCENTAGESTANDARDS FOR 2020

Cellulosic biofuelBiomass-based dieselAdvanced biofuel

To determine the 49-state values for gasolineand diesel, the amount of these fuels used in Alaskais subtracted from the totals provided by EIAbecause petroleum based fuels used in Alaska donot incur RFS obligations. The Alaska fractions aredetermined from the June 28, 2019 EIA State EnergyData System (SEDS), Energy ConsumptionEstimates.

182 See “Calculation of final % standards for2020” in docket EPA—I IQ—OAR—2019—0136.

TABLE VII.C—2—FINAL PERCENTAGESTANDARDS FOR 2020—Continued

Renewable fuel 1 1.56%

a Based on the ethanol-equivalent volumeBBD.

VIII. Administrative Actions

A. Assessment of the DomesticAggregate Compliance Approach

of

The RFS regulations specify an“aggregate compliance” approach fordemonstrating that planted crops andcrop residue from the U.S. complieswith the “renewable biomass”requirements that address lands fromwhich qualifying feedstocks may beharvested.1a4 In the 2010 RFS2rulemaking, EPA established a baselinenumber of acres for U.S. agriculturalland in 2007 (the year of EISAenactment) and determined that as long

0 34% as this baseline number of acres was nota 2:10% exceeded, it was unlikely that new land

2.93 outside of the 2007 baseline would be

183 “EIA letter to EPA with 2020 volumeprojections 10—9—2019,” available in docket EPA—HQ—OAR—2019—01 36.

‘40 CfR 80.1454(g). EPA has applied this“aggregate compliance” approach for the UnitedStates in annual RFS rulemakings since establishingit in the 2010 RFS2 rule. See 75 FR 14701—04. Inthis annual rulemaking, we have not reexamined orreopened this policy, including the regulations at80.1454(g) and 80.1457. Similarly, as further

devoted to crop production based onhistorical trends and economicconsiderations. The regulations specify,therefore, that renewable fuel producersusing planted crops or crop residuefrom the U.S. as feedstock in renewablefriel production need not undertakeindividual recordkeeping and reportingrelated to documenting that theirfeedstocks come from qualifying lands,unless EPA determines through one ofits annual evaluations that the 2007baseline acreage of 402 million acresagricultural land has been exceeded.

In the 2010 RFS2 rulemaking, EPAcommitted to make an annual findingconcerning whether the 2007 baselineamount of U.S. agricultural land hasbeen exceeded in a given year. If thebaseline is found to have beenexceeded, then producers using U.S.planted crops and crop residue asfeedstocks for renewable fuelproduction would be required tocomply with individual recordkeepingand reporting requirements to verify

explained below, we have applied this approach forCanada since our approval of Canada’s petition touse aggregate compliance in 2011. In thisrulemaking, we have also not reexamined orreopened our decision on that petition. Anycomments on these issues are beyond the scope ofthis rulemaking.



that their feedstocks are renewablebiomass.

Based on data provided by the USDAfarm Service Agency (FSA) and NaturalResources Conservation Service (NRCS),we have estimated that U.S. agriculturalland reached approximately 379.8million acres in 2019 and thus did notexceed the 2007 baseline acreage of 402million acres. The USDA data used tomake this derivation can be found in thedocket to this ru1e.’

B. Assessment of the CanadianAggregate Compliance Approach

The RFS regulations specify a petitionprocess through which EPA mayapprove the use of an aggregatecompliance approach for planted cropsand crop residue from foreigncountries.’86 On September 29, 2011,EPA approved such a petition from theGovernment of Canada.’87

The total agricultural land in Canadain 2019 is estimated at 118.1 millionacres. This total agricultural land areaincludes 95.9 million acres of croplandand summer fallow, 12.4 million acresof pastureland and 9.8 million acres ofagricultural land under conservationpractices. This acreage estimate is basedon the same methodology used to set the2007 baseline acreage for Canadianagricultural land in EPA’s response toCanada’s petition. The data used tomake this calculation can be found inthe docket to this rule. This acreagedoes not exceed the 2007 baselineacreage of 122.1 million acres.

IX. Amendments to the RFS and FuelsProgram Regulations

In implementing the RFS program, wehave identified several changes to theprogram that will assist withimplementation in future years. Theseregulatory changes include bothrevisions we proposed in the July 29proposal—clarification of diesel RVOcalculations, pathway petitionconditions, a biodiesel esterificationpretreatment pathway, distillers corn oiland distillers sorghum oil pathways,and renewable fuel exporter

155 USDA also provided EPA with 2019 data fromthe discontinued Grassland Reserve Program (GRP)and Wetlands Reserve Program (WRP). Given thisdata, EPA estimated the total U.S. agricultural landboth including and omitting the GRF and WRPacreage. In 2019, combined land under GRP andWRP totaled 2,974,573 acres. Subtracting the GRP,WRP, and Agriculture Conservation EasementProgram acreage yields an estimate of 376,853632acres or approximately 376.9 million total acres ofU.S. agricultural land in 2019. Omitting the GRPand WRP data yields approximately 379.8 millionacres of U.S. agricultural land in 2019.

CFR 80.1457.157 See “EPA Decision on Canadian Aggregate

Compliance Approach Petition” available in docketEPA—HQ—OAR—2 019—0136.

provisions—and certain provisions ofthe 2016 REGS rule proposal that we arefinalizing here.’88 These regulatorychanges are described in this section.Comments on these regulatory revisionsfrom both the 2016 REGS and 2020 RVOproposals, as well as EPA’s responses,are contained in the response tocomments (RTC) document in thedocket for this action.’89

A. Clarification of Diesel RVOCalculations

1. Overview

We are finalizing certain provisionsregarding clarification of diesel RVOcalculations. Specifically, we arefinalizing the “primary approach”prop osbd in the July 29 proposal, withsome modifications based on commentsreceived. We are not finalizing either ofthe two alternative approachespresented in the July 29 proposal, afterconsideration of negative comments onthese two approaches.

Historically, home heating oil (HO)and diesel fuel were virtuallyindistinguishable because bothcontained the same distillation range ofhydrocarbons and high level of sulfur.EPA’s diesel fuel sulfur regulationsresulted in a distinction in themarketplace beginning in the 1990s andconcluding in 2010 with the phase-in ofthe ultra-low sulfur diesel regulationsfor diesel fuel used in motor vehiclesand motor vehicle engines (MV dieselfuel). Similarly, beginning in 2004, EPApromulgated requirements for dieselfuel used in nonroad, locomotive, andmarine vehicles and engines (NRLMdiesel fuel) that concluded phasing in atthe end of 2014. Thus, all diesel fuel foruse in motor vehicles and motor vehicleengines, and nonroad, locomotive, andmarine vehicles and engines, iscurrently required to meet a 15 ppmsulfur per-gallon standard, underregulations set out in 40 CfR part 80,subpart I 190 (For purposes of subpart I,

155 See 81 FR 80828 (November 16, 2016).159 All comments submitted on the REGS

proposal can be found in Docket No. EPA—HQ—OAR—2016—0041. Specific comments relevant to theprovisions that were under consideration forfinalization in this action have also been added tothe docket for this action (Docket Item No. EPA—HQ—OAR—2019—0136—0002). We are onlyresponding to comments from the REGS proposalon the provisions that are being finalized in thisaction. Comments on the remaining provisions inthe REGS proposal, as well as those on provisionslisted in the July 29 proposal but that are not beingfinalized here, remain under consideration. We arenot responding to them in this action.

Subpart I includes an exception to thisrequirement that allows diesel fuel used inlocomotive or marine engines to meet a 500 ppmsulfur standard if the fuel is produced fromtransmix processors and distributed under anapproved compliance plan.

such diesel fuel is also now collectivelyknown as MVNRLM diesel fuel). We didnot set standards for HO under subpartI, with the result that it remained highin sulfur content and cost less toproduce than MVNRLM diesel fuel. Assuch, subpart I also requires all partiesin the distribution system to ensure thatdiesel fuel containing 15 ppm sulfur orless (referred to as 15 ppm diesel fuel,ultra-low sulfur diesel fuel, or ULSD)remains segregated from higher sulfurfuels and to take measures to preventsulfur contamination of ULSD.19’

The RFS regulations, which place anRVO on the production and importationof diesel transportation fuel, but not onthe production or importation of HO,were promulgated in 2010 and, similarto subpart I regulations, made the samepresumption that HO and MVNRLMdiesel fuel would be segregated. TheRFS regulations did not anticipate thatthese fuels would becomeindistinguishable, have the same valuein the marketplace (apart from their RfScompliance cost), and be commingled inthe fuel distribution system. Forexample, 40 CFR 80.1407 set forthrequirements for obligated parties toinclude all products meeting thedefinition of MVNRLM diesel fuel,collectively called “diesel fuel,” at 40CFR 80.2(qqq) that are produced orimported during a compliance period inthe volume used to calculate their RVOsunless the diesel fuel is nottransportation fuel.’92 Under definitionsof MV and NRLM diesel fuel, theseproducts include diesel fuel that is“made available” for use in motorvehicles and motor vehicle engines, andnonroad, locomotive, or marine vehiclesand engines.’93

When the RfS regulations werepromulgated in 2010, the lowerproduction cost of HO relative to dieselfuel provided economic incentive forrefiners, pipelines, and terminals toproduce and distribute HO separatelyfrom diesel fuel. After we promulgatedthe RFS regulations, however, manystates began implementing programsdesigned to reduce the sulfur content ofHO to 15 ppm or less (15 ppm HO).Currently, the majority of HO isrequired to meet a 15 ppm sulfurstandard under numerous state and cityprograms in the Northeast and MidAtlantic,’9 making HO once againindistinguishable from ULSD and of thesame economic value as MVNRLM

191 See, e.g., 40 CFR 80.610(g).112 See 40 CFR 80.1407(e) and (f).‘93See 40 CFR 80.2(y) and (nnn).194 Connecticut, Delaware, Maine, Massachusetts,

New Hampshire, New Jersey, New York, RhodeIsland, Vermont, the District of Columbia, and thecity of Philadelphia.



diesel fuel.’95 Further, in 2015,additional regulations became effectivethat required marine diesel fuel used inEmissions Control Areas (ECA marinefuel) to contain 1,000 ppm sulfur orless.’96 In response, many companieshave opted to produce and distributeECA marine fuel containing 15 ppmsulfur or less (15 ppm ECA marine fuel]fungibly with 15 ppm diesel fuel, ratherthan invest in infrastructure todistribute and segregate higher-sulfurECA marine fuel. Since HO, ECA marinefuel, and other non-transportation fuelsthat meet a 15 ppm sulfur standard areessentially identical in the marketplace,we believe that some parties in the fueldistribution system are distributingthem together—i.e., comminglingMVNRLM diesel fuel with 15 ppm HOand 15 ppm ECA marine fuel.

The regulations in 40 CFR part 80,subpart I, do not prohibit parties fromcommingling MVNRLM diesel fuel withother 15 ppm distillate fuel (i.e.,distillate fuel that contains 15 ppmsulfur or less) that is designated for non-transportation purposes. However,commingled fuel must meet all of theapplicable requirements in subpart Ibecause the resulting fuel is “madeavailable” for use in motor vehicles, ornonroad, locomotive, or marine vehiclesand engines.’97 This means that anyrefiner or importer that produces orimports 15 ppm distillate fuel that isdesignated for non-transportationpurposes and is commingled withMVNRLM diesel fuel must also certifythe fuel as meeting the sampling,testing, reporting, and recordkeepingrequirements in subpart 1.198

Although this approach does notcreate compliance issues relating tosubpart I requirements, at proposal weexplained that we were concerned thatsome obligated parties (e.g., refiners andimporters) under the RFS program maybe calculating RVOs without accountingfor all of their 15 ppm distillate fuel thatis ultimately sold for use as MVNRLMdiesel fuel. Specifically, obligated

See the New England Fuel Institute’s (NEFI]“State Sulfur & Bioheat Requirements for No. 2Heating Oil in the Northeast & Mid-Atlantic States,”available in the docket for this action.

196 See 40 CfR 80.610(e)(6). ECA marine fuel isnot transportation fuel under the RFS regulations.Therefore, refiners and importers do not incur anRVO for ECA marine fuel that they produce orimport.

197 See 40 CFR 80.2(y) and (nnn).198 We have received requests from a number of

regulated parties asking the agency to amend thefuels regulations to allow parties to more easily mixand fungibly ship HO, ECA marine fuel, andMVNRLM fuel that meet the 15 ppm sulfurstandard. In a separate action, we intend to proposeadditional amendments that would significantlystreamline these regulations (see RIN 206o—AT3I inEPA’s Regulatory Agenda).

parties may be excluding 15 ppm HO or15 ppm ECA marine fuel from theirRVO calculations, and downstreamparties may be re-designating this fuelas MVNRLM diesel fuel and notincurring an RVO’99

We also explained that with theconvergence of the MVNRLM dieselfuel, HO, and ECA marine fuel sulfurstandards, some stakeholders hadexpressed confusion to EPA onaccounting for 15 ppm distillate fuelthat leaves the obligated party’s gatedesignated as HO, ECA marine fuel, orother non-transportation fuels, but issubsequently re-designated as eitherMVNRLM diesel fuel or ultimately usedas MVNRLM diesel fuel by adownstream entity. Specifically, someobligated parties had asked whetherthey are required to add re-designatedMVNRLM diesel fuel back to their RVOcalculations while some downstreamentities had asked whether they arerequired to incur an RVO for MVNRLMdiesel fuel they re-designate from non-transportation fuel to transportationfuel.

We further explained in the July 29proposal that we intended for any dieselfuel not used as transportation fuel,such as HO or ECA marine fuel, to beexcluded from RVO calculations inkeeping with statutory requirements.20°We also intended for all diesel fuelultimately used as transportation fuel toincur an RVO, even 15 ppm distillatefuel that is initially designated as non-transportation fuel and subsequently redesignated as transportation fuel bydownstream parties.20’ Thus, existingregulations allow downstream partieswho are registered as refiners and whocomply with all sampling, testing,recordkeeping, and other refinerrequirements to “produce” MVNRLMdiesel fuel from HO, ECA marine fuel,and other non-transportation fuels.These refiners incur RVOs for allMVNRLM diesel fuel that they“produce” from the non-transportationfuel. However, we believe thatstakeholder confusion over who shouldaccount for re-designated fuel in theirRVO may be causing the omission ofsome re-designated MVNRLM dieselfuel from RVO calculations altogether.Therefore, we are revising the RFSregulations to more clearly specify howvolumes of re-designated MVNRLMdiesel fuel are accounted for inobligated parties’ RVO calculations in

99 A similar situation exists with respect to #1diesel fuel, which is used/blended in the winterdue to cold temperature constraints and its often-identical counterparts of kerosene and jet fuel.

200 See 40 CFR 80.1407(0(8).201 With the other exceptions listed in 40 CFR

80.1407(1].

order to ensure that the RFS mandatescontinue to be met.

Consistent with our proposal, we areclarifying the requirement for refinersand importers to include distillate fuelin their RVO compliance calculationsand providing exceptions for thefollowing three additional categories offuel:

• Distillate fuel, such as HO or ECAmarine fuel, with a sulfur contentgreater than 15 ppm that is clearlydesignated for a use other thantransportation fuel.

• Distillate fuel that meets the 15ppm sulfur standard, that is designatedfor non-transportation use, and thatremains completely segregated fromMVNRLM diesel fuel from the point ofproduction through to the point of usefor a non-transportation purpose.

• Distillate fuel that meets the 15ppm diesel sulfur standard, that isultimately used for non-transportationpurposes, and that does not remaincompletely segregated from MVNRLMdiesel fuel.

As also explained in the July 29proposal, since the first two categoriesof distillate fuel above are completelysegregated from MVNRLM diesel fuel,we do not believe that they would beused as transportation fuel and aretherefore not finalizing any additionalrequirements for these fuels to beexcluded from a refiner or importer’sRVO compliance calculations. However,consistent with the July 29 proposal,and as described below, because thethird category of distillate fuel is notcompletely segregated and isindistinguishable from MVNRLM dieselfuel, we are finalizing additionalrequirements for this type of distillatefuel to be excluded from a refiner orimporter’s RVO compliancecalculations.

2. Downstream Re-Designation ofCertified Non-Transportation 15 ppmDistillate Fuel to MVNRLM Diesel Fuel

Consistent with the July 29 proposal,and in order to allow refiners andimporters to exclude distillate fuel thatthat meets the 15 ppm diesel sulfurstandard, is ultimately used for non-transportation purposes, and does notremain completely segregated fromMVNRLM diesel fuel from their RVOcalculations, we are establishing a newcategory of distillate fuel: Certified non-transportation 15 ppm distillate fuel(“certified NTDF”). We are definingcertified NTDF as distillate fuel thatmeets all of the following requirements:

• Fuel that is certified as complyingwith the 15 ppm sulfur standard,cetane/aromatics standard, and allapplicable sampling, testing, and



recordkeeping requirements of 40 CFRpart 80, subpart I.

• Fuel that is designated on theproduct transfer document as 15 ppmHO, 15 ppm ECA marine fuel, or othernon-transportation fuel (e.g., jet fuel,kerosene, No. 4 fuel, or distillate fuel forexport only) with a notation that thefuel is “15 ppm sulfur (maximum)certified NTDF—This fuel is designatedfor non-transportation use.” with nodesignation as MVNRLM diesel fuel.

Some commenters noted that ourproposed PTD language stating, “Thisfuel meets all MVNRLM diesel fuelstandards” could potentially causeconfusion as to whether the fuelqualified as MVNRLM diesel fuel or not.We are therefore finalizing PTDlanguage similar to that suggested bycommenters, which avoids anyreference to MVNRLM diesel fuel.

In order to prevent refiners andimporters from circumventing therequirement to incur an RVO for alltransportation fuel by simplydesignating transportation fuel as non-transportation fuel, we had proposedthat refiners or importers must have areasonable expectation that their NTDFwill be used as HO, ECA marine fuel, oranother non-transportation purpose inorder to exclude it from their RVOcalculations. We proposed that refinersor importers would need to meet thefollowing three criteria to demonstratethey have a reasonable expectation thatNTDF will not be used as transportationfuel:

• The refiner or importer suppliesareas that use HO, ECA marine fuel, or15 ppm distillate fuel for non-transportation purposes in thequantities being supplied by the refineror importer.

• The refiner or importer has enteredinto a contractual arrangement thatprohibits the buyer from selling the fuelas MVNRLM diesel fuel.

• The volume of fuel designated asHO, ECA marine fuel, or other non-transportation purposes is consistentwith the refiner’s or importer’s pastpractices or reflect changed marketconditions.

We also noted that EPA may considerany other relevant information inassessing whether a refiner or importerhas a reasonable expectation that thefuel was used for non-transportationpurposes.

We received comments indicating thatit would be complex and disruptive torequire refiners and importers to enterinto contractual arrangements thatprohibit the buyers from selling NTDFas MVNRLM diesel fuel. We agree withthese comments and have eliminatedthis criterion. In light of these comments

and in order to simplify the proposedregulations, we have also consolidatedthe first and third criterion into onesentence that states “[tb establish areasonable expectation that the fuel willbe used for non-transportation purposes,a refiner or importer must, at aminimum, be able to demonstrate thatthey supply areas that use heating oil,ECA marine fuel, or 15 ppm distillatefuel for non-transportation purposes inquantities that are consistent with pastpractices or changed circumstances.”With these changes, we are finalizingthe requirement that refiners orimporters may only exclude NTDf fromtheir compliance calculations if theyhave a reasonable expectation that thefuel will be used for non-transportationpurposes.

Some commenters also noted thatthere is normally a noticeable pricedifference between fuel sold fortransportation fuel and non-transportation fuel, and that this pricedifference is a relevant consideration fordetermining if the fuel was intended tobe sold as transportation fuel or non-transportation fuel. We agree with thiscomment and the final rule explicitlyidentifies price as relevant informationthat EPA may consider in evaluatingwhether a refiner or importer had areasonable expectation that the fuel willbe sold for non-transportation purposes.

As previously noted, our intent is toensure that all fuel ultimately used asMVNRLM diesel fuel incurs an RVO. Inorder to achieve this goal, we are alsofinalizing requirements that will allowparties in the fuel distribution system(e.g., downstream of the originalrefinery or import facility] to sellcertified NTDF as MVNRLM diesel fuelwithout incurring an RVO if the totalvolume of MVNRLM diesel fueldelivered during each complianceperiod does not exceed the amount ofMVNRLM diesel fuel received duringthat compliance period. Any party whore-designates certified NTDF asMVNRLM diesel fuel is a refiner forpurposes of the RFS program and istherefore required to register as arefiner. They will also be required tocalculate whether the volume ofMVNRLM diesel fuel that they deliverexceeds the volume of MVNRLM dieselfuel that they receive, during an annualcompliance period. If a downstreamparty delivers a volume of MVNRLMdiesel fuel that exceeds the volume ofMVNRLM diesel fuel they receivedduring a compliance period, they arerequired to treat the difference as dieselfuel that they “produced” and incur anRVO on this volume. This will enableproper accounting for the aggregatevolume of non-transportation fuel that is

re-designated as MVNRLM diesel fuelunder the RfS program. This one-sidedtest allows MVNRLM diesel fuel to besold as HO or ECA marine fuel butprevents the erosion of the renewablefuel mandate. These parties will also besubject to recordkeeping requirementsto ensure the enforceability of thisprogram.

We received several commentsrecommending modifications andclarifications to the proposed volumebalance provisions, and are finalizingthe following changes in response tothese comments:

We are adding an equation to theregulations that provides specificguidance on how to calculate thevolume balance. This is in response toa comment suggesting that EPA shouldinclude a balance equation for dieselfuel, similar to the heating oil balancein 40 CfR 80.599(c)(3) and (4). The newbalance equation accounts for changesin diesel inventory, in addition to dieselvolumes in and out.

We are clarifying that the volumebalance requirement applies to eachfacility that is registered as a dieselrefinery. This is in response tocomments suggesting that EPA clarifywhether the volume balances wereapplicable on a facility basis or anaggregated basis. Our intent was that thebalances apply on a facility basis andhave clarified this in the finalregulations.

One commenter also recommendedthat the new provisions forredesignation of certified NTDF toMVNRLM diesel fuel should apply tothe owner of the certified NTDF at thetime of redesignation and not thecustody holder of the certified NTDF, orthe original refiner of the NTDF. Weagree with this recommendation andhave included final rule requirementsthat reflect this recommendation. Sincethe owner of certified NTDF would beresponsible for making any decisionsregarding redesignation of NTDF toMVNRLM diesel fuel, we intend for theowner of the certified NTDF to meet theregulatory requirements associated withredesignation, such as registration,reporting, and incurring an RVO.

We are also finalizing correspondingreporting requirements, includingrequiring refiners and importers toreport the volume of MVNRLM dieselfuel they produce or import, the volumeof distillate fuel they produce or importthat is not transportation fuel, and thevolume of distillate fuel they produce orimport that is certified NTDf. We arealso requiring some downstream partieswho redesignate NTDF as MVNRLMdiesel fuel to submit reports to EPAidentifying the volume of MVNRLM



diesel fuel received, the volume ofMVNRLM diesel fuel delivered, thevolume of fuel re-designated fromcertified NTDF to MVNRLM diesel fuel,and the volume of MVNRLM diesel fuelredesignated to non-transportation use.Further, for purposes of evaluatingcompliance, we are also:

• Requiring parties who re-designatecertified NTDF to MVNRLM diesel fuelto keep all records relating to thesetransactions.

• Prohibiting a party from exceedingits balance requirements withoutincurring an RVO.

• Ensuring that the attest auditorsreview relevant information to ensurecompliance with applicable RFSprogram requirements.

Some commenters stated that it wasnot necessary to require that volumebalance reports and attest engagementsbe submitted by all parties whoredesignate certified NTDF to MVNRLMdiesel fuel, and that EPA should onlyrequire reports from those parties whoredesignated a net positive volume ofcertified NTDF to MVNRLM diesel fuel(i.e., incurred an RVO). We agree withthese comments and are finalizingprovisions to require parties that onlyincur an RVO through redesignation ofcertified NTDF to MVNRLM diesel fuelto submit volume balance reports andmeet the required attest engagements.Obligated parties that would otherwisehave an attest engagement performed(e.g., because they produced gasoline ordiesel fuel, exported renewable fuels,etc.) would now have the attest auditorperform the additional attestengagement procedures for the obligatedparty. We believe that the types ofreports and records attest auditorsreview for obligated parties annualattest engagements would alreadyinclude much of the information we arerequiring and would therefore representa minimal increase in burden for theseobligated parties. Parties thatredesignate certified NTDF to MVNRLMdiesel fuel during a compliance periodbut did not incur an RVO (because theyredesignated an equivalent or greatervolume of MVNRLM diesel fuel to non-transportation fuel during thecompliance period) are required tosubmit a short report stating that theyredesignated certified NTDf toMVNRLM diesel fuel, but did not incuran RVO. We are also not finalizing theproposed requirement for quarterlyreports, since compliance will be on anannual basis and can be demonstratedthrough annual reports.

Lastly, implementation of these newprovisions will be delayed until January1, 2021, to allow time for updates toproduct codes and tracking software

used by distillate distributors. Somecommenters suggested that this wouldbe helpful for them to avoidimplementing the new regulations inthe middle of a compliance period, andwe agree with these commenters.

B. Pathway Petition Conditions

We are clarifying our authority toenforce conditions created byrequirements included in an approvaldocument for a facility-specific pathwaypetition submitted under 40 CFR80.1416. Since December 2010, we haveapproved over 100 facility-specificpathway petitions. To qualify for thegeneration of RINs under an approvedpathway petition, the fuel producedunder that pathway must also meet theconditions and applicable regulatoryprovisions specified in EPA’s petitionapproval document and the otherdefinitional and regulatory requirementsfor renewable fuel specified in the CAAand EPA implementing regulations,including for RIN generation,registration, reporting, andrecordkeeping. Common conditionsinclude, but are not limited to,compliance monitoring plans detailinghow parties will accurately and reliablymeasure and record the energy andmaterial inputs and outputs required toensure fuels are produced consistentwith the specifications evaluated in thelifecycle analysis, process flow diagramsshowing the energy used for feedstock,fuel, and co-product operations, andcertifications signed by responsiblecorporate officers (RCOs).

We have authority to bring anenforcement action of these conditionsunder 40 CFR 80.1460(a), whichprohibits producing or importing arenewable fuel without complying withthe RIN generation and assignmentrequirements. The RFS regulationsprovide that RINs may only begenerated if the fuel qualifies for a Dcode pursuant to 40 CFR 80.1426(f) oran approved petition submitted under40 CFR 80.1416.202 If any of theconditions required by an approvaldocument for a pathway petition are notmet, then the fuel does not qualify foraD code per the terms of the approval,and RINs may not be generated. Theseconditions are also enforceable under 40CFR 80. 1460(b)(2), which prohibitscreating a RIN that is invalid; a RIN isinvalid if it was improperlygenerated.203 As stated above, a RIN isimproperly generated if the fuelrepresenting the RIN does not qualifyfor a D code, which is the case if a fuelproducer does not follow all of the

202See 40 CfR 80.1426(a)(1)(i).203 See 40 CFR 80.1431(a)(ix].

required conditions in the pathwaypetition approval document.

We are adding a provision at 40 CFR80.1426(a)(l)(iii) to clarify thatrenewable fuel that qualifies for a Dcode pursuant to an approved petitionsubmitted under 40 CFR 80.1416 mustbe produced in compliance with allconditions set forth in the petitionapproval document (in addition to theapplicable statutory requirements andrequirements of subpart M). We are alsoadding a prohibited act at 40 CFR80.1460(b)(7) for generating a RIN forfuel that fails to meet all the conditionsset forth in a petition approvaldocument for a pathway petitionsubmitted under 40 CFR 80.1416 inorder to provide more clarity regardingour ability to bring enforcement actionsfor failure to meet such conditions.

C. Esterification Pretreatment Pathway

We are revising rows F and H of Table1 to 40 CFR 80.1426 by changing theexisting approved production process“Trans-Esterification” to be“Transesterification with or withoutesterification pretreatment.” We arefinalizing these revisions to rows F andH without modifying the feedstockslisted in those rows, as these changes donot make any additional feedstockseligible beyond those already listed inrows F and H. Table 1 to 40 CFR80.1426 includes pathways for theproduction of biodiesel using specifiedfeedstocks and the production processtransesterification.204

Transesterification is the mostcommonly used method to producebiodiesel and involves reactingtriglycerides with methanol, typicallyunder the presence of a base catalyst.205While the main component of oils, fats,and grease feedstocks are typicallytriglycerides, other components, such asfree fatty acids (FfAs), can also exist.Removal or conversion of the FFAs isimportant where the traditional base-catalyzed transesterification productionprocess is used; if they are not removedor converted prior to this process, FfAswill react with base catalysts to producesoaps that inhibit the transesterificationreaction.

One of the most widely used methodsfor treating biodiesel feedstocks with ahigher FFA content is acid catalysis.Acid catalysis typically uses a strong

204 While we expect these pathways to be usedpredominately for biodiesel, they may also be usedfor heating oil and jet fuel. Renewable diesel isexcluded because it is by definition ‘not a monoalkyl ester” (40 CFR 80.1401) and that is whattransesterification produces.

205 commonly used base catalysts include sodiumhydroxide (NaOH), potassium hydroxide (KOH) andsodium methoxide (NaOCH5).



acid, such as sulfuric acid, to catalyzethe esterification of the FFAs prior tothe transesterification of thetriglycerides as a pre-treatment step.Acid esterification can be applied tofeedstocks with FFA contents above 5percent to produce biodiesel. Becausethe transesterification of triglycerides isslow under acid catalysis, a techniquecommonly used to overcome thereaction rate issue is to first convert thefFAs through an acid esterification (alsoknown as an acid “pretreatment” step),and then follow-up with the traditionalbase-catalyzed transesterification oftriglycerides.

Under the RFS2 final rule, bio dieselfrom biogenic waste oils/fats/greasesqualifies for D-codes 4 or 5 using atransesterification process. Thisconclusion was based on the analysis ofyellow grease as a feedstock, wherethere was an acid pretreatment of theFFAs contained in the feedstock. In fact,one of the material inputs assumed inthe modeling for the final RFS2 ruleyellow grease pathway was sulfuricacid, which is the catalyst commonlyused for acid esterification.206 As wehad not stipulated transesterificationwith esterification pretreatment as aqualified production process in rows Fand H to Table 1 to 40 CFR 80.1426, weare revising these entries to include“transesterification with or withoutesterification pre-treatment” as aproduction process requirement so thatRINs may be generated for biodieselproduced by the esterificationpretreatment, as well as for the biodieselproduced through transesterification.20

In the July 29 proposal, we alsoproposed to add a standaloneesterification pathway to rows F and Hto Table 1 to 40 CFR 80.1426, whichwould allow parties who haveprocessing units that can take feedstockslisted in rows F and H of Table I to 40CFR 80.1426 that have high-fFAcontent and separate the FFAs andtriglycerides for chemical processing in

206 Section 2.4.7.3.3 of the Regulatory ImpactAnalysis for the March 2010 final rule describes thematerial inputs evaluated for biodiesel production.For conversion of yellow grease to biodiesel,sulfuric acid accounted for 4.7 percent of thematerial inputs on a mass basis (0.02 kg per gallonof biodiesel).

207 In 2012, we issued a direct final rule and aparallel proposed rule (see 77 FR 700 and 77 FR462, respectively; January 5, 2012) that would havedetermined that, among other regulatory changes,biodiesel produced from esterification met the GHGreduction requirements. Because we receivedadverse comment, we withdrew the direct final rulein its entirety (see 77 FR 13009, March 5, 2012). Inthe 2013 final rule based on the parallel proposal(78 FR 14190, March 5, 2013), we decided not tofinalize a determination at that time on biodieselproduced from esterification and noted that wewould instead make a final determination at a latertime.

separate standalone esterification andtransesterification units to generate RINsfor the biodiesel produced. However, weare not at this time finalizing theproposed standalone esterificationpathway. It remains under considerationand may be finalized in a future action.

D. Distillers Corn Oil and DistillersSorghum Oil Path ways

We are adding distillers corn oil andcommingled distillers corn oil andsorghum oil as feedstocks to row I ofTable 1 to 40 CFR 80.1426. While thelifecycle GHG emissions associated withusing a very similar feedstock—distillers sorghum oil—as part of thispathway were evaluated in the grainsorghum oil pathway final rule(“sorghum oil rule”),208 these twofeedstocks were not added to row I aspart of that rulemaking. This sectiondiscusses the addition of distillers cornoil and commingled distillers corn oiland sorghum oil as feedstocks to row Iand presents the lifecycle GHGemissions associated with thesepathways. We also explain why themost likely effect of adding thesepathways will be to reduce the numberof petitions submitted pursuant to 40CFR 80.1416.

The March 2010 RFS2 rule includedpathways for biodiesel and renewablediesel produced from non-food gradecorn oil. The March 2013 Pathways Irule added pathways for heating oil andjet fuel from non-food grade corn oil inrows F and H of Table 1 to 40 CFR80.1426, and added pathways fornaphtha and LPG from Camelina sativaoil in row 1.209 The sorghum oil ruleamended the RFS regulations to add anew definition of distillers sorghum oiland to replace existing references tonon-food grade corn oil with the newlydefined term “distillers corn oil.” Thatrule also added a number of pathwaysto rows F and H of Table 1 to 40 CFR80.1426 for biodiesel, renewable diesel,jet fuel, and heating oil produced fromdistillers sorghum oil and commingleddistillers sorghum and corn oil.Pathways for naphtha and LPGproduced from distillers sorghum oil viaa hydrotreating process were also addedto row I of Table 1 to 40 CFR 80.1426.

Commingled distillers corn oil andsorghum oil was added as a feedstock torows F and H of Table I to 40 CFR80.1426 because distillers sorghum oil isoften co-produced with distillers cornoil at ethanol plants using acombination of grain sorghum and cornas feedstocks for ethanol production.Due to the recovery process of the oils

205 See 83 FR 37735 (August 2, 2018).209 See 78 FR 14190 (March 5, 2013).

from the distillers grains and solubles(DGS], where the ethanol plant is usinga feedstock that combines grainsorghum and corn, it is not possible tophysically separate the distillerssorghum and corn oils into two streams,nor is it possible to account for thevolume of sorghum oil or corn oil in thismixture. For these and other reasons,21°after concluding that distillers sorghumoil satisfies the 50 percent GHGreduction threshold required for theadvanced biofuel and biomass-baseddiesel, we added both distillers sorghumoil and “commingled distillers corn oiland sorghum oil” to rows F and H ofTable 1 to 40 CFR 80.1426 in thesorghum oil rule. However, unlike rowsF and H, row I did not include apathway using “non-food grade cornoil” prior to that final rule, nor did wepropose to add “distillers corn oil” tothat row in the December 2017 sorghumoil proposed rule.211 Thus, in theabsence of an assessment of lifecycleemissions showing that distillers cornoil also meets the GHG reductionthreshold required for the pathwaystherein, in the sorghum oil rule wedecided “it would be premature for EPAto add either distillers corn oil orcommingled distillers corn and sorghumoil as feedstocks in row “

212 Currently,in order to generate D-code 5 RINs fornaphtha and/or LPG produced fromdistillers corn oil and/or commingleddistillers corn and sorghum oil, a fuelproducer would first need to petitionEPA pursuant to 40 CFR 80.14 16, haveEPA review and approve their requestedpathway, and then submit and haveEPA accept the registration for the newpathway. Adding these feedstocks torow I eliminates the need for thesepetitions.

Table IX.D—l shows the lifecycle GHGemissions associated with renewablediesel, jet fuel, naphtha, and LPGproduced from distillers sorghum oil.These results are based on the analysiscompleted for the sorghum oil rule.213The lifecycle GHG emissions associatedwith the statutory baseline fuels, 2005average diesel and gasoline, are shownfor comparison. Based on the distillerssorghum oil results, as explained belowwe have concluded that naphtha andLPG produced from distillers corn oiland commingled distillers corn andsorghum oil also satisfy the 50 percentlifecycle GHG reduction requirement atCAA section 211(o)(I)(B), relative to the

210 For the other reasons discussed in thesorghum oil rule preamble, see 83 FR 37737—39(August 2, 2018].

211 See 82 FR 61205 (December 27, 2017).212 See 83 FR 37738 (August 2, 2018).213 See Table 111.4 of the sorghum oil rule

preamble (83 FR 37743, August 2, 2018).



statutory petroleum baseline, to beeligible for advanced biofsiel RINs.

TABLE IX.D-1—LIFEcYcLE GHG EMISSIONS ASSOCIATED WITH BI0FuELS PRODUCED FROM DISTILLERS SORGHUM OIL[kgCO2-eq/mmBtuJ

Fuel dseL jet fuel Naphtha LPG 20059iesel 200GsoBne

Production Process Hydrotreating Refining

Livestock Sector Impacts 19.4 19.4 19.4Feedstock Production 6.2 6.2 6.2 18.0 19.2Feedstock Transport 0.3 0.3 0.3Feedstock Pretreatment 0.0 0.0 0.0Fuel Production 8.0 8.0 8.0Fuel Distribution 0.8 0.8 0.8Fuel Use 0.7 1.7 1.5 79.0 79.0

Total 35.4 36.4 36.2 97.0 98.2Percent Reduction 64% 63% 63%

Although the lifecycle GHG analysisfor the sorghum oil rule focused ondistillers sorghum oil, we believe it isalso applicable to distillers corn oil andcommingled distillers corn oil andsorghum oil for purposes of determiningwhether these satisfy the 50 percentGHG reduction requirement. For thesorghum oil rule, we estimated thelivestock sector impacts associated withdistillers sorghum oil based on a set ofassumptions about the type of feed thatwould need to backfill for the reductionin mass of de-oiled DGS as compared tofull-oil UGS. For that analysis wecalculated a substitution rate for howmuch corn would be needed to backfillin livestock feed for every pound ofgrain sorghum oil diverted to biofuelproduction, by livestock type. Theamounts of corn needed to replace eachpound of extracted sorghum oil werelargely based on studies that evaluatedthe nutritional values of regular andreduced-oil distillers grains produced asa co-product of corn starch ethanoL214Given that the underlying data for ourdistillers sorghum oil assessment waslargely based on studies conducted oncorn ethanol co-products, we believe itis appropriate to apply the same resultsto similar pathways using distillers cornoil feedstock. Based on the similaritiesbetween the two products and how theyare produced (i.e., co-produced atethanol plants), we are also assumingthat the lifecycle GHG emission fordistillers corn oil and distillers sorghumoil are the same for the other lifecycle

214 See Table 111.2 (Full-Oil and Reduced-OilSorghum Distillers Grains with SoLublesDisplacement Ratios) of the sorghum oil rule (83 FR37741, August 2, 2018) and accompanying footnotenumber 36, which lists the sources for the data inthat table.

stages evaluated (e.g., feedstockproduction, fuel production).

One difference between distillers cornoil and sorghum oil is the rate of oilrecovered per pound of corn versusgrain sorghum processed. The distillerssorghum oil petition submitted by theNational Sorghum Producers reportedthat 0.67 pounds of distillers sorghumoil are recovered per bushel of grainsorghum processed to ethanol, whereas0.84 pounds of distillers corn oil isextracted per bushel of corn.215Adjusting for this difference results inslightly lower livestock sector GHGemissions associated with naphtha andLPG produced from distillers cornoil.216 Based on this adjustment theresults in Table IX.D—1 change from a 63percent GHG reduction for naphtha andLPG produced from distillers sorghumoil to a 64 percent reduction for naphthaand LPG production from distillers cornoil. We have therefore concluded thatthese pathways satisfy the 50 percentGHG reduction requirement to qualifyas advanced biofuel under the RFSprogram and are adding “distillers cornoil” and “commingled distillers corn oil

See Table 4 of “Grain Sorghum Oil PathwayPetition,” Docket Item No. EPA—HQ—OAR—2017—0655—0005.

216The source of the difference is the amount ofcorn needed to replace one pound of full-oil versusreduced-oiled DOGS in beef cattle diets. In ouranalysis for the sorghum oil rule, we assumed,based on the best available data provided by NSP,USDA, and cominenters, that reduced-oil DOGS arereplaced at a lower rate (1.173 lbs corn per lbsDOGS) than full-oil DOGS (1.196 lbs corn per lbsDOGS). Increasing the rate of oil extractionproduces less de-oiled DOGS and requires cornreplacement at the lower rate of 1.173. Thus, all elseequal, higher rates of oil extraction result in lowerGHG emissions per pound of oil extracted. It ispossible this effect would disappear if we hadhigher resolution data on corn displacement ratiosfor DOGS with different oil contents, but such dataare currently not available.

and sorghum oil” as feedstocks in rowIto Table 1 to 40 CFR 80.1426.

E. Clarification of the Definition ofRenewable Fuel Exporter andAssociated Provisions

We are finalizing our proposedclarification of the definition of“exporter of renewable fuel.” Thesechanges are meant to ensure appropriateflexibility for market participants tomeet export obligations and to ensureRINs are properly retired, as well to asto clarify exporter obligations for partieswho transfer renewable fuel between the48 states or Hawaii and an approvedopt-in area (i.e., Alaska or the U.S.territories were any of them to opt-in).

The RFS regulations require anexporter of renewable fuel to acquiresufficient RINs to comply with allapplicable RVOs incurred from thevolumes of the renewable fuelexported.217 We previously defined“exporter of renewable fuel” in 40 CFR80.1401 as: “(1) A person that transfersany renewable fuel from a locationwithin the contiguous 48 states orHawaii to a location outside thecontiguous 48 states and Hawaii; and (2)A person that transfers any renewablefuel from a location in the contiguous 48states or Hawaii to Alaska or a United

2171n this rulemaking, we did not reexamine ourwell-settled policy of exporter RVOs, whichgenerally require exporters to retire RINs forbiofliels they export. We established this policywhen we promulgated the regulationsimplementing the RFS1 and RFS2 programs in 2007and 2010. See 72 FR 23936 (May 1, 2007); 75 FR14724 (March 26, 2010). We did not reexamine thisissue in this rulemaking, and comments on it arebeyond the scope of the rulemaking. We are notmaking any substantive changes to the relevantprovisions, particularly those at 40 CFR 80.1430(a)or (ii). Consistent with our long-standing policy,exporters of renewable fuel must continue toacquire sufficient RlNs to comply with allapplicable RVOs.



States territory, unless that state orterritory has received an approval fromthe Administrator to opt in to therenewable fuel program pursuant to§80.1443.” 218

We are revising these regulations fortwo key reasons. First, duringimplementation of the RfS program, wehave observed contract structuringpractices that may have erodedcompliance assurance. Notably, we haveobserved instances of exporttransactions in which parties have soldrenewable fuel for export to entitiespurporting to accept RIN retirementobligations that were then not fulfilledby the buyer. These instancesdemonstrate that the RFS program couldbenefit from regulatory changesdesigned to ensure that exporterobligations are fulfilled. Therefore, weare revising the definition to resolve anypotential ambiguity and clarify whichparties may and may not be liable forexporter obligations in order to ensureexporter obligations are fulfilled.

Second, the previous definition couldhave been construed to include partieswho transfer renewable fuel from thecontiguous 48 states and Hawaii, to anarea (either Alaska or a U.S. territory)that has received an approval to opt-into the RFS program. We did not intendto impose a RIN retirement obligationon these parties. We are thereforeclarifying how exporter obligationsapply to renewable fuel transferredbetween the 48 states and Hawaii, andopt-in areas.

To achieve these goals when wedeveloped the proposal, we initiallyconsidered whether to amend the RFSprogram regulations consistent with theForeign Trade Regulations (fTR) andother federal export-related regulations,such as United States Principal Party inInterest (USPPI) and Foreign PrincipalParty in Interest (fPPJ).219 While therewere some commenters that suggestedadopting those terms, we chose not todo so for the following reasons. The FTRand other export-related obligations inother federal programs use a traditionaldefinition of “export” where exportedgoods leave the U.S. The RFS programaddresses obligations incurred throughthe transfer of renewable fuel from areascovered by the program to bothdomestic and foreign areas not coveredby the program. For instance, the

21875 FR 14865 (March 26, 2010).219 See, e.g., 15 CFR 772.1 (defining exporter as

“)t]he person in the United States who has theauthority of a principal party in interest todetermine and control the sending of items out ofthe United States”). We also considered andrejected other alternatives, which we discussfurther in the RTC document in the docket for thisaction.

transport of goods from Oregon toAlaska would not qualify as exportunder most federal export regulations,but the transport of biofuel from Oregon,a covered area, to Alaska, a non-coveredarea (unless Alaska chooses to opt in),would qualify as export under the RFSprogram. In addition, if we merelyadopted the FTR approach to allowallocation of exporter obligations amongparties to an export transaction, we haveconcerns that a party that is insolvent orlacking assets in the U.S. couldundertake those obligations, andenforcement efforts could becomeoverly resource intensive where the fuelhas left the country. For these reasons,we do not believe it would beappropriate to amend the RFS programregulations to define an exporter as theUSPPI or the FPPI.

In reviewing the FTR, we alsoconsidered the concept of routed exporttransactions and the associatedflexibility for parties to an exporttransaction to structure that transactionto place some responsibilities with anFPPI.22° We believe that this frameworkis reflective of market custom, practice,and capability to contractually allocateliabilities and indemnities amongparties to a commercial transaction. Weprefer regulations that accommodatethese flexibilities, while also balancingthe need to protect RFS programintegrity. Specifically, we want to allowparties to an export transaction toallocate RFS program exporterobligations as they see fit amongthemselves, but we also want to protectagainst contract structuring that mayerode compliance assurance.

Therefore, we are revising thedefinition of “exporter of renewablefuel” to mean “all buyers, sellers, andowners of the renewable fuel in anytransaction that results in renewablefuel being transferred from a coveredlocation to a destination outside of thecovered locations.” In conjunction withthis revision, we are creating adefinition of “covered location” as “thecontiguous 48 states, Hawaii, and anystate or territory that has received anapproval from the Administrator to opt-in to the RFS program under § 80.1443.”As described above, this reviseddefinition permits contract flexibilitiesfrequently employed in exporttransactions with respect to exportobligations under other regulatoryprograms, such as the FTR. All buyers,sellers, and owners of the renewablefuel in a transaction that results in

220 Routed export transaction is the term used todescribe an export transaction in which an FPPIdirects the movement of goods out of the U.S. andauthorizes a U.S. agent to file certain informationrequired by the FTR.

renewable fuel being transferred from acovered location to a destination outsideof any covered location maycontractually allocate RFS programobligations, indemnities, and pricing asthey see fit in light of the regulatoryrequirements. At the same time, therevised definition provides enhancedcompliance assurance so as to maintaina level playing field among would-beexporters and ensures RIN retirement soas to maintain the integrity of thatmarket in accordance with theregulatory requirements. Ultimately, therevised definition contributes tosatisfying Congress’s mandate that EPApromulgate regulations that “ensure”the nationally-applicable renewable fuelvolumes are met.221 We note, moreover,that the existing RFS regulationsprovide that “[nb person shall causeanother person to commit an act inviolation of any prohibited act underthis section.” 222 We believe that thisprohibition coupled with the reviseddefinitions will deter parties fromengaging in sham transactions to evadeRIN retirement obligations bytransferring ownership of renewablefuels to undercapitalized entities that donot meet their RIN retirementobligations. This includes the specificearlier-described practices we havealready observed. The revised definitionalso clarifies how exporter obligationsapply to transfers to and from thecontiguous 48 states and Hawaii, andopt-in areas (i.e., Alaska and U.S.territories were they to opt-in). Notably,it avoids imposing exporter obligationson biofuels transferred from the 48states and Hawaii to an opt-in area.

Under the revised definition, multipleparties may meet the definition of anexporter of renewable fuel for the samevolume of renewable fuel. In addition,although the definition uses the term“transaction,” in many cases there maybe more than one discrete exchange orinteraction that results in a volume ofrenewable fuel being exported. Weintend the regulatory term “transaction”to cover all those exchanges andinteractions in which the buyers, sellers,and owners know or have reason toknow will result in renewable fuel beingtransferred from a covered location to adestination outside of any coveredlocation.223 For instance, a personholding title to renewable fuel in theU.S. may sell renewable fuel to anotherperson (either inside or outside of the

221 CAA section 211(o)(2)(A)(i); see also CAAsection 301(a).

222 See 40 CFR 60.1460(c).223 To clarify this point, we have revised the

regulatory text from the proposed “a transaction” to“any transaction” in this final rulemaking.


Federal Register! Vol. 85, No. 25 ! Thursday, February 6, 2020 ! Rules and Regulations 7061

covered areas) and cause the renewablefuel to leave the covered areas. further,that buyer and seller may have a thirdparty hold title to the renewable fuelduring transit out of the covered areas.In this case, the buyer and the seller,both of whom are also owners of therenewable fuel, and the third-partyholding company, as another owner ofthe renewable fuel in the transaction,would be jointly-and-severally liable forcomplying with the exporterprovisions.224

However, our revised regulationscreate broad flexibility for parties toassign responsibilities as they see fitamong themselves in structuring anexport transaction. These parties maycontractually allocate RIN retirement,and associated registration, reporting,and attest engagement obligations, toany one of the parties that meets thedefinition of an exporter of renewablefuel. The party undertaking theserequirements would then register as anexporter of renewable fuel as set forth in40 CFR 80.1450(a). This approach isalso consistent with our approach to theterm “refiner,” under which multipleparties could be considered the refinerof a batch of fuel. In such instances, wehave stated that each party meeting thedefinition of refiner will be held jointly-and-severally liable for refinerrequirements, and we are adopting aconsistent approach for exporters ofrenewable fuel.225 However, our revisedregulations create broad flexibility forparties to assign responsibilities as theysee fit among themselves in structuringan export transaction. These parties maycontractually allocate RIN retirement,and associated registration, reporting,and attest engagement obligations, toany one of the parties that meets thedefinition of an exporter of renewablefuel. The party undertaking theserequirements would then register as anexporter of renewable fuel as set forth in40 CFR 80.1450(a). This approach isalso consistent with our approach to theterm “refiner,” under which multipleparties could be considered the refinerof a batch of fuel. In such instances, wehave stated that each party meeting the

224 This exampLe is meant to be a stylizedillustration of how our regulations could apply. Itis not meant to exhaustively detail the entities thatcould meet the definition of exporter of renewablefuel in this type of transaction. To the extent thatother parties meet the definition of exporter ofrenewable fuel, they would also be subject to theexporter provisions.

225 See “Consolidated List of ReformulatedGasoline and Anti-Dumping Questions andAnswers: July 1, 1994 through November 10, 1997,”EPA42O—R—03—009, at 256 (July 2003) (discussing ascenario in which two parties would be consideredrefiners and would be independently responsiblefor all refinery requirements, which would onlyneed to be met once).

definition of refiner will be held jointly-and-severally liable for refinerrequirements, and we are adopting aconsistent approach for exporters ofrenewable fuel.22°

EPA does not consider a person to bean exporter of renewable fuel if thatperson does not know and does nothave reason to know that the renewablefuel will be exported. For instance, arenewable fuel producer who producesa batch of fuel, generates RINs, and sellsthe renewable fuel with attached RINsinto the fungible fuel distributionsystem would not be considered anexporter of renewable fuel under therevised definition unless they know orhave reason to know that the batch offuel would be exported. Morespecifically, the mere fact that aproducer introduces renewable fuelsinto the stream of commerce, coupledwith the fact that a significant portionof domestically produced biofuel isexported, does not make the produceran exporter of renewable fuel.

We are also finalizing minor, non-substantive changes throughout the Rf Sregulations to more consistently use theterm “exporter of renewable fuel” ratherthan the term “exporter.” Theseclarifying edits reflect that the “exporterof renewable fuel” may be different thanthe “exporter” under other state andfederal regulatory programs.

F. BEGS Rule Provisions

We are finalizing a number of changesto the RFS and fuels programs that werepreviously proposed in the REGSrule,22 and that we listed in thepreamble to July 29 proposal ascandidates for finalization in thisaction.228 In reaching our final decisionson these provisions we consideredrelevant comments on both the 2016REGS proposal and the July 29 proposal.As noted in the July 29 proposal, we

226 See “Consolidated List of ReformulatedGasoline and Anti-Dumping Questions andAnswers: July 1, 1994 through November 10, 1997,”EPA42O—R—03—009, at 256 (July 2003) (discussing ascenario in which two parties would be consideredrefiners and would be independently responsiblefor all refinery requirements, which would onlyneed to be met once).

227 See 81 FR 80828 (November 16, 2016).226 we are not taking final action at this time on

several changes from the REGS proposal that werelisted in the July 29 proposal (Allowing Productionof Biomass-Based Diesel From Separated foodWaste (REGS Section VIII.C), RFS FacilityOwnership Changes (REGS Section VIII.H), PublicAccess to Information (REGS Section VlII.O), andRedesignation of Renewable Fuel on a PTD for Non-Qualifying Uses (REGS Section VIII.R), and certainportions of Other Revisions to the Fuels Program(REGS Section IX], primarily related to testmethods). These provisions, along with the otherprovisions in the REGS proposal that are not beingfinalized here, remain under consideration and maybe finalized in a future action.

believe these provisions to be relativelystraightforward and would reduce theburden of RFS program implementation.Commenters were generally supportiveof these provisions and we are largelyfinalizing them as proposed; changes tothe final provisions relative to the 2016REGS proposal are discussed in detail inthe following sections.

1. F lexibilities for Renewable FuelBlending for Military Use

We are amending 40 CFR 80.1440 toprovide new flexibilities for parties thatblend renewable fuel to produce fuelsfor use as transportation fuel, heatingoil, or jet fuel under a national securityexemption or that sell neat renewablefuel for use in vehicles, engines, andequipment that have a national securityexemption for emissions certification.Specifically, these parties will be able todelegate to an upstream party the RINrelated responsibilities (i.e., RINseparation, reporting, recordkeeping,and attest engagement requirements)associated with the renewable fuel.These parties could include the U.S.Military itself, or contractors workingfor the U.S. Military. The RFS programhas a provision that allows blenders thathandle and blend small volumes ofrenewable fuel per year (less than250,000 gallons per year) to delegateRIN-related responsibilities to anupstream party. We have received anumber of inquiries from parties thathave wished to provide renewable fuel,either neat or blended intotransportation fuel, for use by the U.S.Military as part of Department ofDefense (DOD) renewable militaryinitiatives. One obstacle to this use ofrenewable fuel by the DOD is that,unlike other EPA fuels programs, therewere no exemptions related to nationalsecurity uses in the RFS regulatoryprogram.

We believe that it is appropriate toallow DOD or its contractors to delegateRFS RIN responsibilities to upstreamparties; doing so removes a potentialobstacle to the use of renewable fuels byDOD and will promote use of renewablefuel by the military. Therefore, we arefinalizing similar upstream delegationprovisions for neat and blendedrenewable fuels supplied to DOD undera national security exemption as thosealready in place for small renewablefuel blenders.

2. Heating Oil Used for CoolingWe are expanding the definition of

heating oil in 40 CFR 80.1401 to includefuels that differ from those meeting thecurrent definition only because they areused to cool, rather than heat, interiorspaces of homes or buildings. The first



sentence of the definition of heating oilthus now reads: “A fuel oil that is usedto heat or cool interior spaces of homesor buildings to control ambient climatefor human comfort.” We are also makingminor modifications to the registration,reporting, PTD, and recordkeepingrequirements for renewable heating oilto correspond with this change. We hadreceived questions related to the use ofrenewable heating oil in equipment thatcools interior spaces and believe thatdisplacing the use of petroleum basedfuel oil with renewable heating oil forcooling is consistent with CAA section211(o)’s provision for home heating oilto be treated as additional renewablefuel and should be allowed.

3. Separated Food Waste Plans

We are amending the RFS registrationprocedures for separated food wasteplans at 40 CFR 80.1450(b)(1)(vii)(B)and the recordkeeping requirements forseparated food waste at 40 CfR80.1454(j). We are also addingrequirements for renewable fuelproduced from biogenic waste oils/fats!greases at 40 CFR 80.1450(b)(1)(vii)(B)and 80.1454(d)(4) and (j).

The RfS regulations promulgated inthe RFS2 rulemaking required thatseparated food waste plans include: “(1)The location of any municipal wastefacility or other facility from which thewaste stream consisting solely ofseparated food waste is collected; and(2) A plan documenting how the wastewill be collected, how the cellulosic andnon-cellulosic portions of the waste willbe quantified, and for ongoingverification that such waste consistsonly of food waste (and incidental othercomponents such as paper and plastics)that is kept separate since generationfrom other waste materials.” 229 Inaddition to the initial submission ofseparated food waste plans during RFSregistration, we also required thatrenewable fuel producers usingseparated food waste feedstock updatethe registration information wheneverthere was a change to the plan,including to the location(s) ofestablishments from which theseparated food waste is collected, and insome cases the newly updated planmust have been reviewed by a third-party engineer in accordance with EPAregistration procedures. We havereceived numerous company up datesfor production facilities with separatedfood waste plans, and some partiesnoted that the requirement to identifyand update suppliers of feedstocksthrough a plan was overly burdensome.

Recognizing that businessrelationships for recovery of food wastesevolve and that a renewable fuelproducer may elect over time topurchase feedstocks from different ormultiple parties, we are removing therequirement to provide the location ofevery facility from which separated foodwaste feedstock is collected as part ofthe information required for registration.Removing this registration requirementalleviates the need for numerouscompany registration updates as afacility’s feedstock supplier list evolves,as well as makes it easier for EPA toreview renewable fuel producers’separated food waste plans in a timelymanner. However, the recordkeepingsection of the regulations requiresrenewable fuel producers to keepdocuments associated with feedstockpurchases and transfers that identifywhere the feedstocks were produced;these documents must be sufficient toverify that the feedstocks meet thedefinition of renewable biomass.23°Thus, renewable fuel producers willstill be required to maintain records thatdemonstrate that they used a qualifyingfeedstock to produce renewable fuels forthe generation of RINs pursuant to therecordkeeping requirements at 40 CFR80.1454(d) (4) and (j). We are also addinga provision at 40 CFR 80.1454(j)(1)(ii)that will require renewable fuelproducers to maintain recordsdemonstrating the location of anyestablishment from which the wastestream is collected. Since manyrenewable fuel producers receive wastesused as feedstocks from an aggregator,we interpret the term “location” tomean the physical address that theaggregator obtained the wastes used asfeedstocks from, not the physical orcompany address of the aggregator.

In addition to removing theregistration requirement to provide thelocations of establishments from whichseparated food waste is collected, we arealso modifying the registrationregulations to require that separatedfood waste plans identify the type(s) ofseparated food waste(s) to be used andthe type(s) of establishment(s) the wastewill be collected from. For instance,CAA section 211(o) identifies “recycledcooking and trap grease” as a type ofseparated food waste. Examples of typesof establishments could be restaurants,slaughterhouses, or specific foodproduction plants (the kind of foodproduction should be provided). Webelieve this information is necessary forEPA to determine at registrationwhether a renewable fuel producer canmake fuel from its proposed feedstock

230 See 40 Cf R 80.1454(d)(4) and (j).

under currently approved separatedfood waste pathways. Without thisinformation, we would not know whatthe specific feedstock is (e.g., tallow,yellow grease, etc.) or whether itqualifies as a separated food waste.

We are also requiring under 40 CFR80.1450(b)(1)(vii)(B) that producers ofrenewable fuels made from biogenicwaste oils/fats/greases that are notseparated food waste submit a plan atregistration with the same requirementsas the plan for producers of renewablefuels made from separated food waste.We are henceforth referring to suchplans as “waste oils/fats/greasesfeedstock plans.” There is significantoverlap between the two categories offeedstock, with a considerable quantityof biogenic waste oils/fats/greasesqualifying as renewable biomass as aresult of its additional qualification asseparated food waste. For these reasons,as a matter of practice we have requiredparties intending to use biogenic wasteoils/fats/greases as a renewable fuelfeedstock to submit separated foodwaste plans at registration. In additionto helping EPA determine if thefeedstock in question meets renewablebiomass requirements, we have foundthat the plans help us assess whetherthe feedstocks specified by aprospective producer qualify as biogenicwaste oils/fats/greases. This assessmentis made on a case-by-case basis. Thisamendment conforms the regulations toEPA’s current practice. A party fullydescribing its feedstock in a separatedfood waste plan will not be required tosubmit an additional waste oils/fats!greases plan. Since most, if not all,producers of renewable fuel frombiogenic waste oils/fats/greases havesubmitted a separated food waste planat registration, we do not believe thatthis revision will add much, if any,burden to existing registered facilities.Those few registered producers usingbiogenic waste oils/fats/greases thathave not previously submitted aseparated food waste plan at registrationor in a subsequent registration updatewill be required to do so as part of theirnext periodic registration update.

In addition to adding the registrationrequirement for a waste oils/fats/greasesfeedstock plan to 40 CFR80.1540(b)(l)(vii)(B), we are also addingthe same recordkeeping requirementsfor biogenic oils/fats/greases as forseparated food waste at 40 CFR80.1454(d)(4) and (j), and providingfurther clarity that the locations fromwhich separated food waste or biogenicoils/fats/greases was sourced is arecordkeeping requirement.229 See 40 CfR 80.1450(b)(1)(vii)(B).



4. Additional Registration DeactivationJustifications

We are adding additionalcircumstances in which EPA maydeactivate the registration of any partyrequired to register under 40 CFR80.1450. These amendments will helpparties better understand when EPAintends to restrict a party’s participationin the RfS program as well as theprocedures that will be used in suchcircumstances.

In July 2014, we finalizedrequirements that describedcircumstances under which EPA maydeactivate a company registration andan administrative process to initiatedeactivation that provides companies anopportunity to respond to and/or submitthe required information in a timelymanner.231 Since finalizing theserequirements, we have identified anumber of other cases in which it isappropriate to deactivate the registrationof a company. In addition, we believethe provisions should be extended tocover deactivation of registrations forany party required to register with EPAunder 40 CfR 80.145 0 (e.g., third-partyauditors).232 Specifically, we areamending 40 CFR 80.1450(h)(1) toprovide that EPA may deactivateregistrations of a party for the followingreasons in addition to those previouslylisted:

• The party fails to comply with theregistration requirements of 40 CFR80.1450.

• The party fails to submit anyrequired report within thirty days of therequired submission date.

• The party fails to pay a penalty orto perform any requirements under theterms of a court order, administrativeorder, consent decree, or administrativesettlement agreement between the partyand EPA.

• The party submits false orincomplete information.

• The party denies EPA access orprevents EPA from completingauthorized activities under CAA section114 despite our presenting a warrant orcourt order. This includes a failure toprovide reasonable assistance.

• The party fails to keep or provideEPA with the records required in 40CFR part 80, subpart M.

231 Under this administrative process, the partyhas 14 calendar days from the date of thenotification to correct the deficiencies identified orexplain why there is no need for corrective action.See 40 cFR 80.1450(h)(2)(i).

2321n the REGS proposal, we proposed to use theterm “company, third-party auditor, or third-partyengineer” in the registration deactivationprovisions; however, we are now using the term“party” to refer more generally to any person thatmay be required to register with EPA.

• The party otherwise circumventsthe intent of the CAA or 40 CFR part 80,subpart M.

These deactivation circumstances areconsistent with cases where EPA maydeny or revoke a certificate ofconformity under 40 CFR 1051.255(c)and 86.442—78 for engines and vehiclesmanufactured in or imported into theU.S. In addition, we are finalizingrequirements that state that in instancesof willful violation of an applicablerequirement or those in which publichealth, interest, or safety requiresotherwise, EPA may also deactivate theregistration of a party without providingnotice to the party prior to deactivationand will send written notification to theRCO describing the reasons for thedeactivation. Parties can still submitnew registrations after appropriateactions are taken by the party to remedythe deficiency.

5. New RIN Retirement Section

We are creating a new section in theRfS regulations for RIN retirements.The regulations have specific sectionsthat address when and how parties maygenerate and separate RINs. However,the cases where parties must retire RINswere identified in various sectionsthroughout the regulations. The newsection of the RFS regulations for RINretirements, 40 CFR 80.1434, simplyorganizes these current sections into oneplace and will provide beneficialclarification by enumerating the specificinstances in which a party must retireRINs in a new section of the regulationsand by making those retirementsconsistent with how partiesadministratively retire RINs in EMTS.We are aware of some confusion forsome parties causing those parties toimproperly retire RINs or fail to retireRINs when they have a responsibility todo so under the regulations. Improperretirements can lead to a time-consuming remediation process, bothfor EPA and responsible parties. Thisnew section organizes theserequirements into one location in theregulations to make the circumstancesunder which RINs must be retiredsimpler to locate and understand. Thesection also includes new regulatorylanguage for cases requiring RINretirement that are identified in EMTS,but may not be clear in the regulations,given their current organization (e.g., inthe case of contaminated or spoiledfuel). Our intent is not to add additionalburden on parties that must retire RINsunder the RFS program, but rather tomake the regulations consistent withhow parties already retire RINs in EMTSand help reduce potential confusion

regarding the situations in which partiesmust retire RINs.

We are finalizing the elements of thenew RIN retirement section at 40 CfR80.1434 as proposed, with the exceptionof the provisions for expired RINs andredesignated renewable fuel, which weare not finalizing because we havedetermined they are not necessary forprogram implementation at this time.

6. New Pathway for Co-ProcessingBiomass With Petroleum To ProduceCo-Processed Cellulosic Diesel, Jet Fuel,and Heating Oil

We are creating a new definition of“co-processed cellulosic diesel” to referto biodiesel or non-ester renewablediesel fuels that meet the definition forcellulosic biofuel but not the definitionof biomass-based diesel. We are alsofinalizing new pathways that allow coprocessed cellulosic diesel, jet fuel, andheating oil that are derived from coprocessing biomass with petroleum toqualify as cellulosic biofuel andgenerate cellulosic (D-code 3) RINs,provided certain production processrequirements are satisfied. fuels thatmeet the cellulosic diesel definition willcontinue to be able to generate D7 RINs,while fuels that meet the co-processedcellulosic diesel definition but not thecellulosic diesel definition due to coprocessing with petroleum will be ableto generate D3 RINs. Fuels producedthrough co-processing with petroleumwill also be required to meet, amongother requirements, the requirements of40 CFR 80.1426(f)(4) to determine thenumber of RINs that can be generated.

While pathways existed for renewablegasoline and gasoline blendstock (rowM in Table 1 to 40 CFR 80.1426) andnap htha (row N in Table I to 40 CFR80.1426) produced from cellulosicbiomass that is co-processed withpetroleum, there was no pathway fordiesel, jet fuel, or heating oil producedin this manner. The pathway forcellulosic diesel, jet fuel, and heating oil(Pathway L in Table I to 40 CFR80.1426) excludes processes that coprocess renewable biomass andpetroleum. To qualify as cellulosicdiesel, a fuel must meet therequirements for both cellulosic biofueland biomass-based diesel. Thedefinition of biomass-based dieselexplicitly excludes renewable fuels thatare derived from co-processing biomasswith petroleum, and therefore a processthat produced diesel, jet fuel, or heatingoil by co-processing renewable biomasswith petroleum could not qualify asbiomass-based diesel or cellulosic dieselunder Pathway L in Table I to 40 CfR80.1426. However, cellulosic biofuelsother than cellulosic diesel are not



prohibited from being derived frombiomass co-processed with petroleum.

In the 2016 REGS proposed rule, weproposed to add a new row U to Table1 to 40 CFR 80.1426 that would haveallowed for cellulosic diesel, jet fuel andheating oil produced from any of thefeedstocks listed in row L via anyprocess that co-processes renewablebiomass with petroleum and convertscellulosic biomass to fuel to qualify forcellulosic biofuel (D-code 3) RINs.233While most commenters supported thisproposed addition, several commentersdisagreed. The dissenting commentersstated that EPA had not conducted asufficient lifecycle GHG analysis tosupport the pathways proposed for rowU. After reviewing these comments, wehave decided to finalize a narrower setof pathways for co-processed cellulosicdiesel. Instead of adding a new row Uto Table 1 to 40 CFR 80.142 6, we areinstead adding “Co-Processed CellulosicDiesel, Jet Fuel, and Heating Oil” as fueltypes in row M. Thus, as we hadproposed, we are finalizing newpathways for co-processed cellulosicdiesel, jet fuel, and heating oil, but fora narrower set of feedstocks andproduction process requirements.Compared to the proposed row U, rowM contains the same feedstocks exceptthat it does not include any energygrasses (i.e., switchgrass, miscanthus,energy cane, Arundo donax, Pennisetumpurpureum), and row M contains a morenarrowly defined set of productionprocess requirements. Note that theenergy grass feedstocks are the onlyones in the proposed row U that includesignificant indirect land use changeemissions based on EPA’s lifecycle GHGanalysis of switchgrass for the March2010 RFS2 rule. finalizing thisnarrower set of pathways addresses thecommenters concerns about insufficientanalysis because approval of thesepathways is supported by the extensiveanalyses that we conducted for aprevious rule.

The pathways in row M wereapproved in the March 2013 PathwaysI rule and may include fuels producedthrough the co-processing renewablebiomass and petroleum.23 The analysissupporting that rulemaking found thatthe pathways evaluated for corn stoverfeedstock reduced lifecycle GHGemissions by at least 65 to 129 percentcompared to the statutory petroleumbaseline, and the results for corn stoverwere extended to the other feedstocks

233 Another part of the 2016 REGS proposal,which we are not finalizing here, would haveamended the definition of “cellulosic diesel” sothat it no longer required that such fuel meet thedefinition of biomass-based diesel.

2J4 See 78 FR 14190 (March 5, 2013).

listed in row M. We are now extendingthose results to cover co-processedcellulosic diesel, jet fuel, and heating oilproduced from the same feedstocks andprocesses listed in row M. The analysisfor the March 2013 Pathways I rule didnot explicitly evaluate co-processing butthe upgrading processes were modeledas using the same types of equipmentand processes as petroleum refining.235Indeed, the analysis was largely basedon a report that evaluated processes thatco-produce gasoline and dieselproducts.236 The most likely processesin row M to include co-processing arethe ones that have upgrading as the finalstep, as upgrading is a common part ofpetroleum refining. Our analysis for theMarch 2013 Pathways I rule estimated a67 percent GHG reduction compared toconventional gasoline for renewablegasoline and renewable gasolineblendstock produced from corn stoverthrough catalytic pyrolysis andupgrading. Producing cellulosic dieselinstead of renewable gasoline throughthis same pathway would producesimilar results satisfying the 60 percentGHG reduction threshold. When energyallocation is used for GHG accounting,which is the approach we have used forco-produced RIN generating fuels,237 coproduced gasoline and diesel productswill have the same, or nearly the sameGHG emissions per unit of energy.Studies looking at petroleum refininghave also found that upgrading to dieselfuel is less GHG-intensive thanupgrading to gasoline.238 Based on theseassessments we conclude that thelifecycle GHG emissions associated withthe new pathways being added to rowM satisfy the statutory 60 percent GHGreduction requirement to qualify ascellulosic biofuel. In summary, theanalyses conducted for the March 2013Pathways I rule support the addition of“co-processed cellulosic diesel, jet fueland heating oil” as feedstocks to row M

235 Kinchin, christopher. Catalytic Fast Pyrolysiswith Upgrading to Gasoline and Diesel Blendstocks.National Renewable Energy Laboratory (NREL).2011. EPA—HQ—OAR—2011—0542—0007

2361d237 See for example discussion of hydrotreated

camelina oil in that March 2013 Pathways I rule at78 FR 14198.

238 For example, for the 2010 RFS2 rule EPAestimated slightly lower refining emissions (9.2gCO2e/MJ) for 2005 average U.S. gasoline than for2005 U.S. average diesel (9.0 gCO2e/MJ). Otherstudies have found an even larger reduction forrefining diesel as compared to gasoline. See forexample: Cooney, C., et al. (2017). “Updating theU.S. Life Cycle GHG Petroleum Baseline to 2014with Projections to 2040 Using Open-SourceEngineering-Based Models.” Environmental Science& Technology 51(2): 977—987. While this may bedifferent when biogenic feedstocks are used, it isreasonable to conclude that any differences wouldnot be large enough to disqualify the fuel fromsatisfying the 60 percent GHG reduction threshold.

of Table 1 to 40 CFR 80.1426, andcommenters did not provide sufficientdata or information to support adifferent conclusion.

The 2016 REGS proposal alsoincluded a revised definition for“cellulosic diesel” and a new term,“cellulosic biomass-based diesel.” 239

These proposed revisions would have,among other things, removed therequirement for “cellulosic diesel” tomeet the definitions of both cellulosicbiofuel and biomass-based diesel. Thenew term, “cellulosic biomass-baseddiesel,” would have effectively replaced“cellulosic diesel” and would haverequired that the renewable fuel meetboth definitions. However, afterconsidering the implementation issuesassociated with revising an existingdefinition within EPA’s IT systems (e.g.,changing existing registrations), we havedecided not to finalize either of thedefinitional changes proposed in the2016 REGS rule. Instead, we areaccomplishing the same result byleaving the definition of “cellulosicdiesel” as-is and are adding a new term,“co-processed cellulosic diesel,” whichis, among other things, a renewable fuelthat meets the definitions of cellulosicbiofuel and either biodiesel or non-esterrenewable diesel.240 Importantly, coprocessed cellulosic diesel can beproduced as a result of co-processingcellulosic feedstocks with petroleumand is eligible for D-code 3 RINs, but not0-code 7 RINs. It is thus “co-processedcellulosic diesel, jet fuel, and heatingoil” that we are adding to row M ofTable 1 to 40 CFR 80.14626.

7. Other Revisions to the fuels Program

a. Testing RevisionsWe are removing the requirement for

periodic resubmitting of non-voluntaryconsensus standard body (non-VCSB)test methods that have not beenapproved by VCSBs in 40 CfR80.585(d)(4). Currently, non-VCSB testmethods are required to resubmitaccuracy and precision qualificationinformation every 5 years if the nonVCSB test method has not beenapproved by a VCSB organization. Atthis time, VCSBs, such as ASTM, haveyet to qualify any non-VCSB testmethods for measuring the sulfurcontent in diesel, gasoline, or butane.Moreover, we require minimal statisticalquality control requirements on every

23981 FR 80927 (November 16, 2016).240 This new definition for “co-processed

cellulosic diesel” is essentially the same as therevised definition of”cellulosic diesel” that weproposed in the 2016 REGS proposal: creating anew term rather than revising an existing definitionallows us to avoid legacy issues within our ITsystem.



type test method approved under thediesel sulfur accuracy and precisionrequirements 241 to ensure proper testmethod instrumentation use is asintended in practice. We are, therefore,amending the regulatory requirement byeliminating the provision for non-VCSBtest methods to re-submit accuracy andprecision qualification informationevery 5 years.

We are also removing the sunset datefor designated primary test methods in40 CFR 80.47. EPA fuels regulationsexempted those designated primary testmethods that were in use prior toOctober 28, 2013, from meeting theaccuracy and precision qualificationrequirements.242 We provided thissunset exemption date in the Tier 3 finalrule because we were confident that testfacilities were utilizing designatedprimary test methods prior to this date.However, since the statistical qualitycontrol (SQC) requirements at 40 CfR80.47 are intended to ensure properutilization of designated primary testmethods in practice, we are removingthis sunset exemption date. This actionexempts all designated primary testmethods from the accuracy andprecision requirements of 40 CFR 80.47.

b. Oxygenate Added Downstream inTier 3

After the Tier 3 final rule waspublished,243 we received severalquestions concerning the language at 40CFR 80.1603(d) about accounting fordownstream oxygenate blending inrefiners’ and importers’ average annualsulfur calculations. Specifically, somerefiners asked whether 40 CFR80.1603(d) is consistent with the relatedreformulated gasoline (RFG) provisionsfor downstream oxygenate blending in40 CFR 80.69. Currently, refiners maycertify RFG after the addition ofoxygenate to the reformulatedblendstock for oxygenate blending(RBOB) sample at the refinery lab

(creating a so-called “hand blend”), asallowed in 40 CFR 80.69(a). The Tier 3regulations at 40 CFR 80.1603(d) requirethat refiners and importers account fordownstream oxygenate blending to anygasoline or blendstock for oxygenateblending (BOB) by volume weightingthe sulfur content of the gasoline orBOB with the sulfur content of theadded oxygenate. Under the Tier 3regulations, refiners and importers mayeither rely upon test results of batchesof oxygenate supplied by the producerof the oxygenate or use an assumedvalue of 5.00 ppm added at 10 volumepercent ethanol concentration if actualsulfur results are not available. Theserefiners and importers suggested thatthe regulatory language at 40 CFR80.1603(d) may be interpreted tocontinue to allow the use of hand-blended RBOB samples for determiningoxygenate sulfur content addeddownstream by arguing that thelanguage at 40 CFR 80.1603(d) onlyapplied to conventional gasoline andconventional blendstock for oxygenateblending (CBOB).

We intended for the downstreamoxygenate blending regulations at 40CfR 80.1603(d) to apply to all gasolineand BOBs, not just conventionalgasoline and CBOB. In the preamble tothe Tier 3 final rule, we explained thatthe “final rule requires that indetermining their compliance withtoday’s sulfur standards, refiners andimporters must either use the actualsulfur content of the denatured fuelethanol (DFE) established throughtesting of the DfE actually blended orassume a 5 ppm sulfur content for theDfE added downstream. To preventpotential bias, a refiner or importer mustchoose to use only one method duringeach annual compliance period.” 244

The regulations at 40 CFR 80.101(d)(4)set forth the criteria that a refiner mustmeet to include downstream ethanol intheir conventional gasoline compliance

calculations, and 40 CFR 80.69 setsforth the criteria a refiner must meet toinclude downstream ethanol in theirRfG or RBOB compliance calculations.If a refiner satisfies these criteria, 40CFR 80.1603(d) sets forth themechanism for accounting fordownstream ethanol in annualcompliance calculations for all gasolineand BOBs. This section of theregulations was designed to ensure thatall refiners calculate their annualaverage sulfur levels by including theethanol that is actually added to theirgasoline or BOBs, or to use the defaultvalue of 5 ppm sulfur content. Thiswould alleviate the need for refiners touse hand blends prepared with ethanolthat has less sulfur than is actuallyblended with the refiner’s gasoline orBOB for their compliance calculations.

Although we believe that 40 CFR80.1603(d) clearly applies to all gasolineand BOBs, not just RfG or RBOB, we aremaking minor amendments to ensurethat these requirements are as clear aspossible to the regulated community.We are also making minor amendmentsto the Tier 3 sulfur reportingrequirements at 40 CfR 80.165 2 tobetter accommodate the inclusion ofdownstream oxygenate blending inannual average sulfur compliancedemonstrations. These addedrequirements will help align thereported batch information with theannual average compliance report and isnecessary to ensure that refiners metboth the per-gallon and annual averagesulfur standards.

c. Technical Corrections andClarifications

We are making numerous technicalcorrections to EPA’s fuels programs.These amendments are being made tocorrect inaccuracies and oversights inthe current regulations. These changesare described in Table IX.F.7—2 below.

TABLE IX.F.7—2—MIscELLANE0u5 TECHNICAL CORRECTIONS AND CLARIFICATIONS TO TITLE 40

Part and section of Title 40

79.51 (f)(6)(iii), 79.59(a)(1 ), 80.27(e)(1 )(i), 80.69(a)(1 1 )(viii)(C),80.93(d)(4), 80.174(b), 80.174(c), 80.235(b), 80.290(b), 80.533(b),80.574(b), 80.595(b), 80.607(a), 80.855(c)(2), 80.1285(b),80.1340(b), 80.141 5(c)(4), 80.1441(h), 80.1442(i), 80. 1443(d)(2),80.1449(d), 80.1 454(h)(6)(iii), 80.1501 (b)(5)(i), 80.1501 (b)(5)(ii),80.1622(g), 80.1 625(c)(2), and 80.1656(h).

80.1080.27(b)

Description of revision

See 40 CFR 80.534.242 See, e.g., 40 CFR 80.47(j)(2).

Redirecting the mailing addresses to the new address section in 80.10.

Adding a new address section that reflects the address change.Clarifying the Performance-Based Analytical lest Method Approach

(PBATMA) implementation for Reid vapor pressure (RVP) compliance assurance measurements.

See 79 FR 23414 (April 28, 2014).See 79 FR 23544 (April 28, 2014).



TABLE IX. F.7—2—MISCELLANEOuS TECHNICAL CORRECTIONS AND CLARIFICATIONS TO TITLE 40—Continued

Part and section of Title 40 Description of revision

80.46

80.47(b)f2)(i) and 80.47fb)(2)(ii)

80.47(b)(3), 80.47(c)(3), 80.47(d)(2), 80.47(e)(2), 80.47(f)(2),80.47(g)(2), 80.47(h)(2), 80.47(i)(2), 80.47(j)(2), and 80.47(I)(4).

80.47(c)(2)(i) and 80.47(c)(2)(ii)

80.47(I)(2)fi)

80.47(n)(1 )(i), 80.47(o)(1 )(i), 80.47(p)(1 )(i), and 80.47(p)(2)(i)

80.47(n)(1 )(ii), 80.47(o)(1 )(ii), and 80.47(p)(1 )(ii)

80.47(o)(1)(i)

80.47(n)(2)(i), 80.47(o)(2)(i), and 80.47fp)(3)(i)

80.585(d)(1) and (2)

80.1240(a)(1)(i) and 80.1 603(f)(1)

80.1401

80.1 426(a)(2), 80.1 426(c)(4)-(5), 80.1450(b), 80.1450(d)(1), 80.1451(b),80.1 451(b)(1)(ii)(D), 80.1451 (g)(1)(ii)(D), 80.1454(q), 80.1466,80.1 472(b)(3)(i), 80.1 472(b)(3)(ii)(B), and 80.1 472(b)(3)(iii).

80.1440

80.1 450(b)(1 )(ix)(A), 80.1451 (b)(1 )(ii)(I), 80.1451 (g)f1 )(ii)(l),80.1 452(b)(1 1), and 80.1 464(b)(1)(ii).

80.1450(g)(9)

80.1466(d)f3)(ii)

80.1469(f)f1)

80.1501fb)(3)()

80.1600

80.1609(a)80.1616(c)(3)

80.1650(b)(3)

80.1 650(e)(1 )(iii)(A) and 80.1 650(g)(1 )(iii)(A)

Clarifying that the PBATMA requirements in 80.47 are now effective,removing the VCSB alternative analytical test methods from 80.46,as the VCSB analytical test methods in 80.46 must now meet the requirements in 80.47.

Clarifying accuracy criterion for sulfur in gasoline by adding exampleswith accuracy criterion.

Removing the reference to the October 28, 2013, date and making thedesignated primary test methods exempt from the applicable accuracy and precision requirements of 40 CFR 80.47, given that thereare SQC requirements for these methods that will verify if they arebeing carried out properly.

Clarifying accuracy criterion for sulfur in butane by adding exampleswith accuracy criterion.

Clarifying that test facilities meet applicable precision requirements forVCSB method defined and non-VCSB absolute fuel parameters.

Removing the accuracy SQC requirement for pre-treatment and assessment of results from the check standard testing after at least 15testing occasions as described in section 8.2 of ASTM D6299.

Clarifying the expanded uncertainty of the accepted reference value ofconsensus named fuels shall be included in the accuracy SQC qualification criterion.

Clarifying participation in a commercially available Inter LaboratoryCrosscheck Program (ILCP) at least three times a year meeting theASTM D6299 requirements for ILCP check standards that meet therequirements for absolute differences between test results and theaccepted reference value of the check standard based on the designated primary test method obtained through participation in theILCP satisfies the accuracy SQC requirement as well as appropriatecalculation for adherence to SOC criteria. Also clarifying the accuracy SOC criteria is 0.75 times the published reproducibility of theapplicable designated primary test method for each method definedfuel parameter to be consistent with non-VCSB method defined fuelparameter accuracy SOC requirements.

Clarification in Precision SOC requirements that the test facility’s longterm precision standard deviation, as demonstrated by control charts,is expected to meet applicable precision criterion for the test method.

Removing reference to expired provisions related to approval of testmethods approved by VCSBs.

Clarifying that gasoline benzene and sulfur credits must be used forcompliance purposes (i.e., retired) instead of simply being obtained.

Adding definition of foreign renewable fuel producer, non-renewableteedstock, non-RI N-generating foreign producer, and RI N-generatingforeign producer; amended by revising the definition of foreign ethanol producer and renewable fuel.

Applying the new and revised definitions in 80.1401.

Adding a new paragraph related to RIN responsibilities for renewablefuel used for purposes subject to national security exemptions.

Clarifying the term “denaturant” to mean “ethanol denaturant.”

Clarifying the third-party auditor registration updates language to makeOAP updates consistent with registration updates.

Revising erroneous reference for third-party independence requirements from 80.65(e)(2)(iii) to 80.65(f)(2)(iii).

Clarifying to clearly link updates to quality assurance plans with updates to a third-party auditor’s registration under 80.1450(g)(9).

Clarifying that the word “ATTENTION” should be in black font, not orange.

Removing the duplicative definition of “Ethanol denaturant,” which isalready defined in 80.2(iiii).

Revising cross-reference to 80.1603(d)(3).Clarifying that Tier 2 credits generated from January 1, 2017 through

December 31, 2019, must be used between January 1, 2017 andDecember 31, 2019.

Clarifying that the oxygenate blender registration dates also apply topersons who blend oxygenate into CBOB and conventional gasoline.

Clarifying that records are kept at the oxygenate production “facility”(instead of the oxygenate production “refinery”).


federal Register/Vol. 85, No. 25/Thursday, february 6, 2020/Rules and Regulations 7067

X. Public Participation

Many interested parties participatedin the rulemaking process thatculminates with this final rule. Thisprocess provided opportunity forsubmitting written public commentsfollowing the proposal that wepublished on July 29, 2019 (84 FR36762) and the supplemental notice ofproposed rulemaking published onOctober 28, 2019. We also held publichearings on July 31, 2019 and October30, 2019, at which many partiesprovided both verbal and writtentestimony. All comments received, bothverbal and written, are available inDocket ID No. EPA—HQ—OAR—2019—0136 and we considered thesecomments in developing the final rule.Public comments and EPA responses arediscussed throughout this preamble andin the accompanying RTC document,which is available in the docket for thisaction.

XI. Statutory and Executive OrderReviews

A. Executive Order 12866: RegulatoryPlanning and Review and ExecutiveOTder 13563: Improving Regulation andRegulatory Review

This action is a significant regulatoryaction that was submitted to the Officeof Management and Budget (0MB) forreview. Any changes made in responseto 0MB recommendations have beendocumented in the docket. EPAprepared an analysis of illustrative costsassociated with the 2020 percentagestandards. This analysis is presented inSection V.

B. Executive Order 13771: ReducingRegulations and Controlling RegulatoryCosts

This action is considered anExecutive Order 13771 regulatoryaction. Details on the estimated costs ofthe 2020 percentage standards can befound in EPA’s analysis of theillustrative costs. This analysis ispresented in Section V.

C. Paperwork Reduction Act (PRA)

The existing Information CollectionRequest (ICR) covering the RFS programis entitled “Recordkeeping andReporting for the Renewable FuelStandard Program,” EPA ICR No.2546.01, 0MB Control Number 2060—0725; expires August 31, 2022. Theexisting RFS ICR covers registration,recordkeeping, and reportingrequirements currently in 40 CFR part80, subpart M. The changes affectingRVO calculations will not change therecordkeeping and reporting burdensvis-ã-vis the existing collection.

However, certain of the amendments inthis action will result in an additionalburden. The information collectionactivities related to the amendments tothe RFS regulations in this rule havebeen submitted for approval to theOffice of Management and Budget(0MB) under the PRA. You can find acopy of the ICR in the docket for thisrule, identified by EPA ICR Number2595.02, 0MB Control Number 2060—NEW, and ft is briefly summarized here.The parties for whom we anticipate anincrease in burden are generallydescribed as RIN generators(specifically, those who are producers ofrenewable fuel) due the amendmentsrelated to pathways, and those who aregenerally described as obligated parties(specifically, those who are refiners andimporters) due to the provisions forcertified NTDF. The supportingstatement clearly indicates theamendments and includes detailedtables with regulatory burden laid outby type of party, regulatory citation,description of information to becollected, estimated burden in hoursand dollars, and reporting form orformat. Certain amendments in thisaction are related to non-RFS fuelsprograms, but these amendments aremostly technical corrections (e.g.,address corrections) and do not imposeany additional recordkeeping andreporting burden.

The following Summarizes the BurdenRespondents/affected entities: The

respondents to this informationcollection are RIN generators andobligated parties under the RFSprogram, and fall into the followinggeneral industry categories: Petroleumrefineries, ethyl alcohol manufacturers,other basic organic chemicalmanufacturing, chemical and alliedproducts merchant wholesalers,petroleum bulk stations and terminals,petroleum and petroleum productsmerchant wholesalers, gasoline servicestations, and marine service stations.

Respondent’s obligation to respond:Mandatory.

Estimated number of respondents:6,042.

Total number of responses: 357,512.Frequency of response: Annually and

occasionally.Total estimated burden: 32,548 hours

(per year). Burden is defined at 5 CFR13 20.3(b).

Total estimated cost: $3,511,813 (peryear).

An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless it displays a currently valid 0MBcontrol number. The 0MB control

numbers for EPA’s regulations in 40CFR are listed in 40 CFR part 9. When0MB approves this ICR, EPA willannounce that approval in the FederalRegister and publish a technicalamendment to 40 CFR part 9 to displaythe 0MB control number for theapproved information collectionactivities contained in this final rule.

D. Regulatory Flexibility Act (RFA)

I certify that this action will not havea significant economic impact on asubstantial number of small entitiesunder the RFA. In making thisdetermination, the impact of concern isany significant adverse economicimpact on small entities. An agency maycertify that a rule will not have asignificant economic impact on asubstantial number of small entities ifthe rule relieves regulatory burden, hasno net burden, or otherwise has apositive economic effect on the smallentities subject to the rule.

With respect to the amendments tothe RFS regulations and other fuelsprograms, this action makes relativelyminor corrections and modifications tothose regulations, and we do notanticipate that there will be anysignificant adverse economic impact ondirectly regulated small entities.

The small entities directly regulatedby the annual percentage standardsassociated with the RFS volumes aresmall refiners, which are defined at 13CFR 121.201. With respect to the 2020percentage standards, we haveevaluated the impacts on small entitiesfrom two perspectives: As if thestandards were a standalone action or ifthey are a part of the overall impacts ofthe RFS program as a whole.

When evaluating the standards as ifthey were a standalone action separateand apart from the original rulemakingthat established the RFS2 program, thestandards could be viewed as increasingthe cellulosic biofuel, advanced biofuel,and total renewable fuel volumerequirements by 170 million gallonsbetween 2019 and 2020. To evaluate theimpacts of the volume requirements onsmall entities relative to 2019, we haveconducted a screening analysis 245 toassess whether we should make afinding that this action will not have asignificant economic impact on asubstantial number of small entities.Currently available information showsthat the impact on small entities fromimplementation of this rule will not besignificant. We have reviewed and

“Screening Analysis fnr the Final RenewableFuel Standards for 2020,” memorandum fromDallas Burkholder and Nick Parsons to EPA AirDocket EPA—HQ—OAR—2018—0205.



assessed the available information,which shows that obligated parties,including small entities, are generallyable to recover the cost of acquiring theRINs necessary for compliance with theRFS standards through higher salesprices of the petroleum products theysell than would be expected in theabsence of the RFS program.24° This istrue whether they acquire RINs bypurchasing renewable fuels withattached RINs or purchase separatedRINs. The costs of the RFS program arethus generally being passed on toconsumers in the highly competitivemarketplace. Even if we were to assumethat the cost of acquiring RINs was notrecovered by obligated parties, and weused the maximum values of the costsdiscussed in Section V and the gasolineand diesel fuel volume projections andwholesale prices from the October 2019version of ETA’s Short Term EnergyOutlook, along with current wholesalebiofuel prices, a cost-to-sales ratio testshows that the costs to small entities ofthe RFS standards are far less than Ipercent of the value of their sales.

While the screening analysisdescribed above supports a certificationthat this rule will not have a significanteconomic impact on small refiners, wecontinue to believe that it is moreappropriate to consider the standards asa part of our ongoing implementation ofthe overall RFS program. Whenconsidered this way, the impacts of theRFS program as a whole on smallentities were addressed in the RFS2final rule, which was the rule thatimplemented the entire program asrequired by EISA 200 7247 As such, theSmall Business Regulatory Enforcementfairness Act (SBREFA) panel processthat took place prior to the 2010 rulewas also for the entire RFS program andlooked at impacts on small refinersthrough 2022.

For the SBREfA process for the RFS2final rule, we conducted outreach, fact-finding, and analysis of the potentialimpacts of the program on smallrefiners, which are all described in theFinal Regulatory Flexibility Analysis,located in the rulemaking docket (EPA—HQ—OAR—2005—0161). This analysislooked at impacts to all refiners,including small refiners, through theyear 2022 and found that the programwould not have a significant economicimpact on a substantial number of smallentities, and that this impact wasexpected to decrease over time, even as

246 For a further discussion of the ability ofobligated parties to recover the cost of RINs see“Denial of Petitions for Rulemaking to change theRfS Point of Obligation,” EPA—42o--R—17—008,November 2017.

24775 FR 14670 (March 26, 2010).

the standards increased. For gasolineand/or diesel small refiners subject tothe standards, the analysis included acost-to-sales ratio test, a ratio of theestimated annualized compliance coststo the value of sales per company. Fromthis test, we estimated that all directlyregulated small entities would havecompliance costs that are less than onepercent of their sales over the life of theprogram (75 FR 14862, March 26, 2010).

We have determined that this finalrule will not impose any additionalrequirements on small entities beyondthose already analyzed, since theimpacts of this rule are not greater orfundamentally different than thosealready considered in the analysis forthe RFS2 final rule assuming fullimplementation of the RFS program.This rule increases the 2020 cellulosicbiofuel, advanced biofuel, and totalrenewable fuel volume requirements by170 million gallons relative to the 2019volume requirements, but thosevolumes remain significantly below thestatutory volume targets analyzed in theRF52 final rule. Compared to the burdenthat would be imposed under thevolumes that we assessed in thescreening analysis for the RFS2 finalrule (i.e., the volumes specified in theClean Air Act), the volume requirementsin this rule reduce burden on smallentities. Regarding the BBD standard,we are maintaining the volumerequirement for 2021 at the same levelas the 2020 volume requirement wefinalized in the 2019 final rule.248 Whilethis volume is an increase over thestatutory minimum value of I billiongallons, the 330 standard is a nestedstandard within the advanced biofuelcategory, which we are significantlyreducing from the statutory volumetargets. As discussed in Section VI, theBBD volume requirement is below whatis anticipated to be produced and usedto satisfy the advanced biofuelrequirement. The net result of thestandards being finalized in this action

245 Moreover, we note that the 2021 BBD volumeonly establishes the maximum BOO volume for thatyear and may be adjusted in subsequent actions.This volume does not directly regulate any entity.We intend to translate this volume, subject to anyappropriate adjustments, into a percentage standardin the 2021 annual rulemaking. We alsoacknowledge that today’s action does impose the2020 BBD percentage standard. As we explain inSection VI and in the preamble to the 2019 finalrule, this percentage standard is not practicallybinding, as we expect obligated parties to rely onBBD RINs, in excess of this standard, to satisfy the2020 advanced biofuel standard. Thus, any impacton directly regulated entities from the 2020 BBDpercentage standard is subsumed into the impact ofthe 2020 advanced biofuel standard. As we explainin this section and the screening memo, we findthat the 2020 advanced biofuel standard will nothave a significant economic impact on a substantialnumber of snsall entities under the RFA.

is a reduction in burden as compared toimplementation of the statutory volumetargets assumed in the RFS2 final ruleanalysis.

While the rule will not have asignificant economic impact on asubstantial number of small entities,there are compliance flexibilities in theprogram that can help to reduce impactson small entities, These ftexibilitiesinclude being able to comply throughRIN trading rather than renewable fuelblending, 20 percent RIN rolloverallowance (up to 20 percent of anobligated party’s RVO can be met usingprevious-year RINs), and deficit carry-forward (the ability to carry over adeficit from a given year into thefollowing year, provided that the deficitis satisfied together with the next year’sRVO). In the RfS2 final rule, wediscussed other potential small entityflexibilities that had been suggested bythe SBREFA panel or throughcomments, but we did not adopt them,in part because we had serious concernsregarding our authority to do so.

Additionally, we realize that theremay be cases in which a small entitymay be in a difficult financial situationand the level of assistance afforded bythe program flexibilities is insufficient.For such circumstances, the programprovides hardship relief provisions forsmall entities (small refiners), as well asfor small refineries,2° As required bythe statute, the RFS regulations includea hardship relief provision (at 40 CFR80.1441(e)(2)) that allows for a smallrefinery to petition for an extension ofits small refinery exemption at any timebased on a showing that the refinery isexperiencing a “disproportionateeconomic hardship.” EPA regulationsprovide similar relief to small refinersthat are not eligible for small refineryrelief (see 40 CFR 80.1442(h)), We havecurrently identified a total of 9 smallrefiners that own 11 refineries subject tothe RFS program, all of which are alsosmall refineries.

We evaluate these petitions on a case-by-case basis and may approve suchpetitions if it finds that adisproportionate economic hardshipexists. In evaluating such petitions, weconsult with the U.S. Department ofEnergy and consider the findings ofDOE’s 2011 Small Refinery Study andother economic factors. To date, EPAhas adjudicated petitions for exemptionfrom 37 small refineries for the 2018RFS standards (10 of which are ownedby a small refiner).250 We have not yet

240 See CAA section 211(o)(9)(B).250 Information about the number of SREs granted

can be found at: https://www,epo.gov/fuels


Federal Register / Vol. 85, No. 25 / Thursday, February 6, 2020/ Rules and Regulations 7069

adjudicated any small refineryexemption petitions for the 2019 or2020 RfS standards.

In sum, this final rule will not changethe compliance ilexibilities currentlyoffered to small entities under the RFSprogram (including the small refineryhardship provisions we continue toimplement) and available informationshows that the impact on small entitiesfrom implementation of this rule willnot be significant viewed either from theperspective of it being a standaloneaction or a part of the overall RFSprogram. We have therefore concludedthat this action will not have anysignificant adverse economic impact ondirectly regulated small entities.

E. Unfunded Mandates Reform Act(UMRA)

This action does not contain anunfunded mandate of $100 million ormore as described in UMRA, 2 U.S.C.1531—1538, and does not significantly oruniquely affect small governments. Thisaction implements mandatesspecifically and explicitly set forth inCAA section 211(o) and we believe thatthis action represents the least costly,most cost-effective approach to achievethe statutory requirements.

F. Executive Order 13132: Federalism

This action does not have federalismimplications. It will not have substantialdirect effects on the states, on therelationship between the nationalgovernment and the states, or on thedistribution of power andresponsibilities among the variouslevels of government.

G. Executive Order 13175: Consultationand Coordination With Indian TribalGovernments

This action does not have tribalimplications as specified in ExecutiveOrder 13175. This action will beimplemented at the Federal level andaffects transportation fuel refiners,blenders, marketers, distributors,importers, exporters, and renewable fuelproducers and importers. Tribalgovernments will be affected only to theextent they produce, purchase, or useregulated fuels. Thus, Executive Order13175 does not apply to this action.

H. Executive Order 13045: Protection ofChildren From Environmental HealthRisks and Safety Risks

EPA interprets Executive Order 13045as applying only to those regulatoryactions that concern environmentalhealth or safety risks that EPA has

registration-reporting-and-compliance-help/rfssmall-refinery-exemptions.

reason to believe maydisproportionately affect children, perthe definition of “covered regulatoryaction” in section 2—202 of theExecutive Order. This action is notsubject to Executive Order 13045because it implements specificstandards established by congress instatutes (CAA section 211(o)) and doesnot concern an environmental healthrisk or safety risk.

I. Executive Order 13211: ActionsConcerning Regulations ThatSignificantly Affect Energy Supply,Distribution, or Use

This action is not a “significantenergy action” because it is not likely tohave a significant adverse effect on thesupply, distribution, or use of energy.This action establishes the requiredrenewable fuel content of thetransportation fuel supply for 2020,consistent with the CAA and waiverauthorities provided therein. The RFSprogram and this rule are designed toachieve positive effects on the nation’stransportation fuel supply, by increasingenergy independence and security andlowering lifecycle GHG emissions oftransportation fuel.

I. National Technology Transfer andAdvancement Act (NTTAA)

This rulemaking does not involvetechnical standards.

K. Executive Order 12898: FederalActions To Address EnvironmentalJustice in Minority Populations andLow-Income Populations

EPA believes that this action does nothave disproportionately high andadverse human health or environmentaleffects on minority populations, lowincome populations, and/or indigenouspeoples, as specified in Executive Order12898 (59 FR 7629, February 16, 1994).This regulatory action does not affectthe level of protection provided tohuman health or the environment byapplicable air quality standards. Thisaction does not relax the controlmeasures on sources regulated by theRFS and other fuels regulations.

L. Congressional Review Act (CRA)

This action is subject to the cRA, andthe EPA will submit a rule report toeach House of the congress and to thecomptroller General of the UnitedStates. This action is a “major rule” asdefined by 5 u.s.c. 804(2).

XII. Statutory Authority

Statutory authority for this actioncomes from sections 114, 203—05, 208,211, and 301 of the clean Air Act, 42

U.S.C. 7414, 7522—24, 7542, 7545, and7601.

List of Subjects

40 CFR Part 79

Environmental protection, Fueladditives, Gasoline, Motor vehiclepollution, Penalties, Reporting andrecordkeeping requirements.

40 CFR Part 80

Environmental protection,Administrative practice and procedure,Air pollution control, Diesel fuel, Fueladditives, Gasoline, Imports, Oilimports, Petroleum, Renewable fuel.

Dated: December 19, 2019.Andrew R. Wheeler,Administrator.

For the reasons set forth in thepreamble, EPA amends 40 CFR parts 79and 80 as follows:

PART 79—REGISTRATION OF FUELAND FUEL ADDITIVES

• 1. The authority citation for part 79continues to read as follows:

Authority: 42 U.S.C. 7414, 7524, 7545 and7601.

Subpart F—Testing Requirements forRegistration

• 2. Section 79.51 is amended byrevising the last sentence of paragraph(f)(6)(iii) to read as follows:

§79.51 General requirements andprovisions.* * *

(f) * * *

(6) * * *

* *

(iii) * * * The registrants’communications should be sent to thefollowing address: Attn: Fuel/AdditivesRegistration, U.S. EnvironmentalProtection Agency, 1200 PennsylvaniaAve. NW, Mail Code 6405A,Washington, DC 20460.* * * * *

• 3. Section 79.59 is amended byrevising the last sentence of paragraph(a)(1) introductory text to read asfollows:

§79.59 Reporting requirements.

(a) * * *

(1) * * * Forms for submitting thisdata may be obtained from EPA at thefollowing address: Attn: Fuel/AdditivesRegistration, U.S. EnvironmentalProtection Agency, 1200 PennsylvaniaAve., NW, Mail Code 6405A,Washington, DC 20460.* * * * *


7070 Federal Register / VoL 85, No. 25 / Thursday, February 6, 2020/ Rules and Regulations

PART 80—REGULATION OF FUELSAND FUEL ADDITIVES

• 4. The authority citation for part 80continues to read as follows:

Authority: 42 U.S.C. 7414, 7521, 7542,7545, and 7601(a).

Subpart A—General Provisions

• 5. Section 80.10 is added to read asfollows:

§80.10 Addresses.(a) For submitting notifications,

applications, petitions, or othercommunications with EPA, use one ofthe following addresses for mailing:

(1) For U.S. Mail: Attn: [TITLE ASDIRECTED], U.S. EnvironmentalProtection Agency, 1200 PennsylvaniaAve. NW, Mail Code 6405A,Washington, DC 20460.

(2) for commercial service: Attn:[TITLE AS DIRECTED], U.S.Environmental Protection Agency,William Jefferson Clinton BuildingNorth, Mail Code 6405A, Room 6520V,1200 Pennsylvania Ave. NW,Washington, DC 20004; Phone: 1—800—385—6164.

(b) [Reserved]

Subpart B—Controls and Prohibitions

I 6. Section 80.27 is amended byrevising paragraphs (b) and (e)(1)(i) toread as follows:

§80.27 Controls and prohibitions ongasoline volatility.* * * * *

(b) Determination of compliance.Compliance with the standards listed inparagraph (a) of this section shall bedetermined by the use of the samplingmethodologies specified in § 80.8 andthe testing methodology specified in§ 80.46(c) until December 31, 2015, and§ 80.47 beginning January 1, 2016.* * * * *

(e) * * *

(1) * * *

(i) Any person may request a testingexemption by submitting an applicationthat includes all the information listedin paragraphs (e)(3) through (6) of thissection to the attention of “TestExemptions” to the address in§ 80.10(a).* * * * *

Subpart D—Reformulated Gasoline

• 7. Section 80.46 is amended by:• a. Revising paragraphs (a), (b), (d), (e),(f], and (g); and• b. Removing and reserving paragraphs(h)(1)(iv), (v), (vii), (viii), (x), (xiii), (xv),and (xvi).

The revisions read as follows:

§80.46 Measurement of reformulatedgasoline and conventional gasoline fuelparameters.

(a) Sulfur. Sulfur content of gasolineand butane must be determined by useof the following methods:

(1)(i) Through December 31, 2015, thesulfur content of gasoline must bedetermined by ASTM D2622.

(ii) Beginning January 1, 2016, thesulfur content of gasoline must bedetermined by a test method approvedunder § 80.47.

(2)(i) Through December 31, 2015, thesulfur content of butane must bedetermined by ASTM 06667.

(ii) Beginning January 1, 2016, thesulfur content of butane must bedetermined by a test method approvedunder § 80.47.

(b) Olefins. Olefin content must bedetermined by use of the followingmethods:

(1) Through December 31, 2015, olefincontent must be determined usingASTM D1319.

(2) Beginning January 1, 2016, olefincontent must be determined by a testmethod approved under § 80.47.

(d) Distillation. Distillationparameters must be determined by useof the following test methods:

(1) Through December 31, 2015,distillation parameters must bedetermined using ASTM 086.

(2) Beginning January 1, 2016,distillation parameters must bedetermined by a test method approvedunder § 80.47. (Note: The precisionestimates for reproducibility in ASTMD86—12 do not apply; see § 80.47(h).)

(e) Benzene. Benzene content must bedetermined by use of the following testmethods:

(1) Through December 31, 2015,benzene content must be determinedusing ASTM 03606, except thatinstrument parameters shall be adjustedto ensure complete resolution of thebenzene, ethanol, and methanol peaksbecause ethanol and methanol maycause interference with ASTM D3606when present.

(2) Beginning January 1, 2016,benzene content must be determined bya test method approved under § 80.47.

(f) Aromatic content. Aromaticcontent must be determined by use ofthe following methods:

(1) Through December 31, 2015,aromatic content must be determinedusing ASTM 05769, except the samplechilling requirements in section 8 of thisstandard method are optional.

(2) Beginning January 1, 2016,aromatic content must be determined bya test method approved under § 80.47.

(g) Oxygen and oxygenate contentanalysis. Oxygen and oxygenate contentmust be determined by use of thefollowing methods:

(1) Through December 31, 2015,oxygen and oxygenate content must bedetermined using ASTM 05599.

(2) Beginning January 1, 2016, oxygenand oxygenate content must bedetermined by a test method approvedunder § 80.47.* * * * *

• 8. Section 80.47 is amended byrevising paragraphs (b), (c)(2)(i) and (ii),(c)(3), (d)(2), (e)(2], (f)(2), (g)(2), (h)(2),(i)(2), (j)(2), (I)(2)(i), (l)(4), (n)(l),(n)(2)(i), (o)(l), (o)(2)(i), (p)(l), (p)(2)(i),and (p)(3)(i) to read as follows:

§ 80.47 Performance-based Analytical TestMethod Approach.* * * * *

(b) Precision and accuracy criteria forapproval for the absolute fuel parameterof gasoline sulfur—(1) Precision.Beginning January 1, 2016, for motorvehicle gasoline, gasoline blendstock,and gasoline fuel additives subject tothe gasoline sulfur standard at § 80.195and 80.1603, the maximum allowablestandard deviation computed from theresults of a minimum of 20 tests madeover 20 days (tests may be arranged intono fewer than five batches of four orfewer tests each, with only one suchbatch allowed per day over theminimum of 20 days) on samples usinggood laboratory practices taken from asingle homogeneous commerciallyavailable gasoline must be less than orequal to 1.5 times the repeatability “r”divided by 2.77, where “r” equals theASTM repeatability of ASTM D7039(Example: A 10 ppm sulfur gasolinesample: Maximum allowable standarddeviation of 20 tests1.5*(l.73ppm/2.77) = 0.94 ppm). The 20 results mustbe a series of tests with a sequentialrecord of analysis and no omissions. Alaboratory facility may exclude a givensample or test result only if theexclusion is for a valid reason undergood laboratory practices and itmaintains records regarding the sampleand test results and the reason forexcluding them.

(2) Accuracy. Beginning January 1,2016, for motor vehicle gasoline,gasoline blendstock, and gasoline fueladditives subject to the gasoline sulfurstandard at § 80.195 and 80.1603:

(i) The arithmetic average of acontinuous series of at least 10 testsperformed using good laboratorypractices on a commercially availablegravimetric sulfur standard in the rangeof 1—10 ppm shall not differ from theaccepted reference value (ARV) of thestandard by more than 0.47 ppm sulfur,



where the accuracy criteria is0.75*(1.5*r/2.77), where “r” is therepeatability for ARV of thecommercially available gravimetricsulfur standard (Example:0.75*(1.5*1.l5ppm/2.77) = 0.47 ppm);

(ii) The arithmetic average of acontinuous series of at least 10 testsperformed using good laboratorypractices on a commercially availablegravimetric sulfur standard in the rangeof 10—2 0 ppm shall not differ from theARV of the standard by more than 0.94ppm sulfur, where the accuracy criteriais 0.75*(1.5*r12.77), where “r” is therepeatability for ARV of thecommercially available gravimetricsulfur standard (Example:0.75*(1.5*2.3oppm/2.77) = 0.94 ppm);and

(iii) In applying the tests ofparagraphs (b)(2)(i) and (ii) of thissection, individual test results shall becompensated for any known chemicalinterferences using good laboratorypractices.

(3) The test method specified at§ 80.46(a)(1) is exempt from therequirements of paragraphs (b)(i) and(2) of this section.

(c) * * *

(2) * * *

(i) The arithmetic average of acontinuous series of at least 10 testsperformed using good laboratorypractices on a commercially availablegravimetric sulfur standard in the rangeof 1—10 ppm, say 10 ppm, shall notdiffer from the ARV of the standard bymore than 0.47 ppm sulfur, where theaccuracy criteria is 0.75*(1.5*r/2.77),where “r” is the repeatability for ARVof the commercially availablegravimetric sulfur standard (Example:0.75*(1.5*1.l5ppm/2.77) = 0.47 ppm);

(ii) The arithmetic average of acontinuous series of at least 10 testsperformed using good laboratorypractices on a commercially availablegravimetric sulfur standard in the rangeof 10—2 0 ppm, say 20 ppm, shall notdiffer from the ARV of the standard bymore than 0.94 ppm sulfur, where theaccuracy criteria is 0.75 *(15*r/277)where “r” is the repeatability for ARVof the commercially availablegravimetric sulfur standard (Example:0.75*(1.5*2.3OppmI2.77) = 0.94 ppm);and* * * * *

(3) The test method specified at§ 80.46(a)(2) is exempt from therequirements of paragraphs (c)(1) and(2) of this section.

(d) * * *

(2) The test method specified at§ 80.46(b)(1) is exempt from therequirements of paragraph (d)(i) of thissection.

(e) * * *

(2) The test method specified at§ 80.46(f)(1) is exempt from therequirements of paragraph (e)(1) of thissection.

(f) * * *

(2) The test method specified at§ 80.46(g)(1) is exempt from therequirements of paragraph (f)(i) of thissection.

(g) * * *

(2) The test method specified at§ 80.46(c)(1) is exempt from therequirements of paragraph (g)(1) of thissection.

(h) * * *

(2) The test method specified at§ 80.46(d)(1) is exempt from therequirements of paragraph (h)(i) of thissection.

(i) * * *

(2) The test methods specified at§ 80.46(e)(1) are exempt from therequirements of paragraph (i)(1) of thissection.

() * * *

(2) The test method specified at§ 80.2(z) is exempt from therequirements of paragraph (j)(1) of thissection.* * * * *

(1) * * *

(2)(i) The test facility demonstratesthat the test method meets theapplicable precision information for themethod-defined or non-VCSB absolutefuel parameter as described in thissection.* * * * *

(4) The test methods specified at§ 80.2(z) and 80.46(a)(l), (a)(2), (b)(i),(c)(1), (d)(i), (e)(1), (f)(i), and (g)(l) areexempt from the requirements ofparagraphs (l)(1) through (3) of thissection.* * * * *

(n) * * *

(l)(i) Accuracy SQC. Every facilityshall conduct tests on every instrumentwith a commercially availablegravimetric reference material, or checkstandard as defined in ASTM D6299 atleast three times a year using goodlaboratory practices. The facility mustconstruct “MR” and “I” charts withcontrol lines as described in section 8.4and appropriate Annex sections of thisstandard practice. In circumstanceswhere the absolute difference betweenthe mean of multiple back-to-back testsof the standard reference material andthe ARV of the standard referencematerial is greater than 0.75 times thepublished reproducibility of the testmethod, the cause of such differencemust be investigated by the facility.Records of the standard referencematerials measurements as well as any

investigations into any exceedance ofthese criteria must be kept for a periodof five years.

(ii) The expanded uncertainty of theARV of consensus named fuels shall beincluded in the following accuracyqualification criterion: Accuracyqualification criterion = square root[(0.75R)”2 + (0.75R)’2/LI, where L thenumber of single results obtained fromdifferent labs used to calculate theconsensus ARV.

(2)(i) Precision SQC. Every facilityshall conduct tests of every instrumentwith a quality control material asdefined in paragraph 3.2.8 in ASTMD6299 either once per week or once perevery 20 production tests, whichever ismore frequent. The facility mustconstruct and maintain an “I” chart asdescribed in section 8 and sectionA1.5.1 and a “MR” chart as described insection A1.5.4. Any violations of controllimit(s) shall be investigated bypersonnel of the facility and recordskept for a period of five years. The testfacility’s long term site precisionstandard deviation, as demonstrated bythe “I” chart and “M” chart, must meetthe applicable precision criterion asdescribed in paragraph (b)(i) or (c)(l) ofthis section.* * * * *

(o) * * *

(1)(i) Accuracy SQC. Every facilityshall conduct tests of every instrumentwith a commercially available checkstandard as defined in ASTM D6299 atleast three times a year using goodlaboratory practices. The check standardmust be an ordinary fuel with levels ofthe fuel parameter of interest close toeither the applicable regulatory standardor the average level of use for thefacility. For facilities using a VCSBdesignated method defined test method,the ARV of the check standard must bedetermined by the respective designatedtest method for the fuel parameterfollowing the guidelines of ASTMD6299. Facilities using a VCSBalternative method defined test methodmust use the ARV of the check standardas determined in a VCSB InterLaboratory Crosscheck Program (ILCP)or a commercially available ILCPfollowing the guidelines of ASTMD6299. If the ARV is not provided in theILCP, accuracy must be assessed basedupon the respective EPA-designated testmethod using appropriate productionsamples. The facility must construct“MR” and “I” charts with control linesas described in section 8.4 andappropriate Annex sections of thisstandard practice. In circumstanceswhere the absolute difference betweentest results and the ARV of the check


7072 Federal Register/Vol. 85, No. 25/Thursday, february 6, 2020/Rules and Regulations

standard based on the designatedprimary test method is greater than 0.75times the published reproducibility ofthe designated primary test method, thecause of such difference must beinvestigated by the facility. Participationin a VCSB ILCP or a commerciallyavailable ILCP meeting the ASTM06299 requirements for ILCP checkstandards, based on the designatedprimary test method, at least three timesa year, and, meeting the requirements inthis section for absolute differencesbetween the test results and the ARV ofthe check standard based on thedesignated primary test method of lessthan 0.75 times the publishedreproducibility of the designatedprimary test method obtained throughparticipation in the ILCP satisfies thisAccuracy SQC requirement (Examplesof VCSB ILCPs: ASTM ReformulatedGasoline ILCP or ASTM motor gasolineILCP). Records of the standard referencematerials measurements as well as anyinvestigations into any exceedance ofthese criteria must be kept for a periodof five years.

(ii) The expanded uncertainty of theARV of consensus named fuels shall beincluded in the following accuracyqualification criterion: Accuracyqualification criterion = square root[(0.75R)”2 ÷ (0.75R)’2/LJ, where L = thenumber of single results obtained fromdifferent labs used to calculate theconsensus ARV.

(2)(i) Precision SQC. Every facilityshall conduct tests of every instrumentwith a quality control material asdefined in paragraph 3.2.8 in ASTMD6299 either once per week or once perevery 20 production tests, whichever ismore frequent. The facility mustconstruct and maintain an “I” chart asdescribed in section 8 and sectionA1.5.1 and a “MR” chart as described insection A1.5.4. Any violations of controllimit(s) shall be investigated bypersonnel of the facility and recordskept for a period of five years. The testfacility’s long term site precisionstandard deviation, as demonstrated bythe “I” chart and “M” chart, must meetthe applicable precision criterion asdescribed in paragraph (d)(i), (e)(l),(f)(i], (g)(1), (h)(i), (i)(1), or (j)(l) of thissection.* * * * *

() * * *

(1)(i) Accuracy SQC for Non-VCSBMethod-Defined test methods withminimal matrix effects. Every facilityshall conduct tests on every instrumentwith a commercially available checkstandard as defined in the ASTM D6299at least three times a year using goodlaboratory practices. The check standard

must be an ordinary fuel with levels ofthe fuel parameter of interest close toeither the applicable regulatory standardor the average level of use for thefacility. Facilities using a Non-VCSBalternative method defined test methodmust use the ARV of the check standardas determined in either a VCSB InterLaboratory Crosscheck Program (ILCP)or a commercially available ILCPfollowing the guidelines of ASTM06299. If the ARV is not provided in theILCP, accuracy must be assessed basedupon the respective EPA designated testmethod using appropriate productionsamples. The facility must construct“MR” and “I” charts with control linesas described in section 8.4 andappropriate Annex sections of thisstandard practice. In circumstanceswhere the absolute difference betweenthe mean of multiple back-to-back testsof the standard reference material andthe ARV of the standard referencematerial is greater than 0.75 times thepublished reproducibility of the fuelparameter’s respective designated testmethod, the cause of such differencemust be investigated by the facility.Records of the standard referencematerials measurements as well as anyinvestigations into any exceedance ofthese criteria must be kept for a periodof five years.

(ii] The expanded uncertainty of theARV of consensus named fuels shall beincluded in the following accuracyqualification criterion: Accuracyqualification criterion = square root[(0.75R)’’2 + (0.75R)’2/Lj, where L = thenumber of single results obtained fromdifferent labs used to calculate theconsensus ARV.

(2)(i) Accuracy SQC for Non-VCSBMethod-Defined test methods with highsensitivity to matrix effects. Everyfacility shall conduct tests on everyinstrument with a production fuel on atleast a quarterly basis using goodlaboratory practices. The productionfuel must be representative of theproduction fuels that are routinelyanalyzed by the facility. The ARV of theproduction fuel must be determined bythe respective reference installation ofthe designated test method for the fuelparameter following the guidelines ofASTM 06299. The facility mustconstruct ‘MR’ and “I” charts withcontrol lines as described in section 8.4and appropriate Annex sections of thisstandard practice. In circumstanceswhere the absolute difference betweenthe mean of multiple back-to-back testsof the standard reference material andthe ARV of the standard referencematerial is greater than 0.75 times thepublished reproducibility of the testmethod must be investigated by the

facility. Documentation on the identityof the reference installation and itscontrol status must be maintained onthe premises of the method-definedalternative test method. Records of thestandard reference materialsmeasurements as well as anyinvestigations into any exceedances ofthis criterion must be kept for a periodof five years.* * * * *

(3)(i) Precision SQC. Every facilityshall conduct tests of every instrumentwith a quality control material asdefined in paragraph 3.2.8 in ASTMD6299 either once per week or once perevery 20 production tests, whichever ismore frequent. The facility mustconstruct and maintain an “I” chart asdescribed in section 8 and sectionA1.5.1 and a “MR” chart as described insection A1.5.4. Any violations of controllimit(s) shall be investigated bypersonnel of the facility and recordskept for a period of five years. The testfacility’s long term site precisionstandard deviation, as demonstrated bythe “I” chart and “M” chart, must meetthe applicable precision criterion asdescribed in paragraph (b)(i), (c)(l),(d)(i), (e)(1), (f)(i), (g)(1), (h)(i), (i)(1), or(j)(l) of this section.* * * * *

• 9. Section 80.69 is amended byrevising paragraph (a)(11)(viii)(C) toread as follows:

§80.69 Requirements for downstreamoxygenate blending.

(a) * * *

(Ii) * * *

(viii) * * *

(C) The survey plan must be sent tothe attention of “RfG Program (SurveyPlan)” to the address in § 80.10(a);* * * * *

Subpart E—Anti-Dumping

• 10. Section 80.93 is amended byrevising paragraph (d)(4) to read asfollows:

§80.93 Individual baseline submissionand approval.* * * * *

(d) * * *

(4) For U.S. Postal delivery, thepetition shall be sent to the attention of“RFG Program (Baseline Petition)” tothe address in § 80.10(a).* * * * *

Subpart G—Detergent Gasoline

• ii. Section 80.174 is amended byrevising paragraphs (b) and (c) to readas follows:



§ 80.174 Addresses.* * * * *

(b) Other detergent registration andcertification data, and certain otherinformation which may be specified inthis subpart, shall be sent to theattention of “Detergent AdditiveCertification” to the address in§ 80.10(a).

(c) Notifications to EPA regardingprogram exemptions, detergent dilutionand commingling, and certain otherinformation which may be specified inthis subpart, shall be sent to theattention of “Detergent EnforcementProgram” to the address in § 80.10(a).

Subpart H—Gasoline Sulfur

• 12. Section 80.235 is amended byrevising paragraph (b) to read as follows:

§80.235 How does a refiner obtainapproval as a small refiner?* * * * *

(b) Applications for small refinerstatus must be sent to the attention of“Gasoline Sulfur Program (SmallRefiner)” to the address in § 80.10(a).* * * * *


§80.290 How does a refiner apply for asulfur baseline?* * * * *

(b) The sulfur baseline request mustbe sent to the attention of “GasolineSulfur Program (Sulfur Baseline)” to theaddress in § 80.10(a).* * * * *

Subpart I—Motor Vehicle Diesel Fuel;Nonroad, Locomotive, and MarineDiesel Fuel; and ECA Marine Fuel

• 14. Section 80.533 is amended byrevising paragraph (b) as follows:

§80.533 How does a refiner or importerapply for a motor vehicle or non-highwaybaseline for the generation of NRLM creditsor the use of the NRLM small refinercompliance options?* * * * *

(b) The baseline must be sent to theattention of “Nonroad Rule Diesel FuelBaseline” to the address in § 80.10(a).* * * * *

• 15. Section 80.5 74 is amended byrevising paragraph (b) as follows:

§80.574 What labeling requirements applyto retailers and wholesale purchaser-consumers of ECA marine fuel beginningJune 1,2014?* * * * *

(b) Alternative labels to thosespecified in paragraph (a) of this sectionmay be used as approved by EPA. Send

requests to the attention of “ECA MarineFuel Alternative Label Request” to theaddress in § 80.10(a).• 16. Section 80.585 is amended:• a. In paragraph (d)(i), by removing“paragraph (a) or (b)” and adding“paragraph (b)” in its place;• b. In the first sentence of paragraph(d)(2), by removing “paragraph (a) or(b)” and adding “paragraph (b)” in itsplace; and• c. By revising paragraph (d)(4).

The revision reads as follows:

§ 80.585 What is the process for approvalof a test method for determining the sulfurcontent of diesel or ECA marine fuel?* * * * *

(d) * * *

(4] The approval of any test methodunder paragraph (b) of this section shallbe valid from the date of approval fromthe Administrator.* * * * *


§80.595 How does a small or GPA refinerapply for a motor vehicle diesel fuel volumebaseline for the purpose of extending theirgasoline sulfur standards?* * * * *

(b) The volume baseline must be sentvia certified mail with return receipt orexpress mail with return receipt to theattention of “Diesel Baseline” to theaddress in § 80.10(a).* * * * *

• 18. Section 80.60 7 is amended byrevising paragraph (a) to read as follows:

§ 80.607 What are the requirements forobtaining an exemption for diesel fuel usedfor research, development or testingpurposes?

(a) Written request for a research anddevelopment exemption. Any personmay receive an exemption from theprovisions of this subpart for diesel fuelor ECA marine fuel used for research,development, or testing purposes bysubmitting the information listed inparagraph (c) of this section to theattention of “Diesel Program (DieselExemption Request)” to the address in§ 80.10(a).* * * * *

• Subpart I—Gasoline Toxics• 19. Section 80.855 is amended byrevising paragraph (c)(2) to read asfollows:

§80.855 What is the compliance baselinefor refineries or importers with insufficientdata?* * * * *

(c) * * *

(2) Application process. Applicationsmust be submitted to the attention of

“Anti-Dumping Compliance Period” tothe address in § 80.10(a).* * *

Subpart L—Gasoline Benzene

• 20. Section 80.1240 is amended inparagraph (a)(1)(i) in the equation byrevising the definition “OC” to read asfollows:

§80.1240 How is a refinery’s or importer’scompliance with the gasoline benzenerequirements of this subpart determined?

(a) * * *

(1)(i) * * *

OC = Benzene credits used by therefinery or importer to show compliance(gallons benzene).* * * * *

• 21. Section 80.1285 is amended byrevising paragraph (5] to read as follows:

§80.1285 How does a refiner apply for abenzene baseline?* * * * *

(5) For U.S. Postal delivery, thebenzene baseline application shall besent to the attention of “MSAT2Benzene” to the address in § 80.10(a).* * * * *

I 22. Section 80.1340 is amended byrevising paragraph (b) to read as follows:

§80.1340 How does a refiner obtainapproval as a small refiner?* * * * *

(b) Applications for small refinerstatus must be sent to the attention of“MSAT2 Benzene” to the address in§ 80.10(a).* * * * *

Subpart M—Renewable Fuel Standard

• 23. Section 80.1401 is amended by:• a. Adding in alphabetical orderdefinitions for “Certified non-transportation 15 ppm distillate fuel,”“Co-processed cellulosic diesel,” and“Covered location”;• 5. Revising the definition of “Exporterof renewable fuel” and “Foreign ethanolproducer”;• c. Adding in alphabetical order adefinition for “Foreign renewable fuelproducer”;• d. Revising paragraph (2) in thedefinition of “Heating oil”;• e. Adding in alphabetical orderdefinitions for “Non-renewablefeedstock” and “Non-RIN-generatingforeign producer”;• f. Revising paragraph (2) in thedefinition of “Renewable fuel”; and• g. Adding in alphabetical order adefinition for “RIN-generating foreignproducer”. The additions and revisionsread as follows:



§ 80.1401 Definitions* * * * *

Certified non-transportation 15 ppmdistillate fuel or certified NTDF meansdistillate fuel that meets all of thefollowing:

(1) ft has been certified as complyingwith the 15 ppm sulfur standard,cetane/aromatics standard, and allapplicable sampling, testing, andrecordkeeping requirements of subpart Iof this part.

(2] It has been designated as 15 ppmheating oil, 15 ppm ECA marine fuel, orother non-transportation fuel (e.g., jetfuel, kerosene, heating oil, or No. 4 fuel)on its product transfer document andhas not been designated as MVNRLMdiesel fuel.

(3) The PTD for the distillate fuelmeets the requirements in § 80.1453(e).* * * * *

Co-processed cellulosic diesel is anyrenewable fuel that meets the definitionof cellulosic biofuel, as defined in thissection 80.1401, and meets all of therequirements of paragraph (1) of thisdefinition:

(1)(i) Is a transportation fuel,transportation fuel additive, heating oil,or jet fuel.

(ii) Meets the definition of eitherbiodiesel or non-ester renewable diesel.

(iii) Is registered as a motor vehiclefuel or fuel additive under 40 CfR part79, if the fuel or fuel additive isintended for use in a motor vehicle.

(2) Co-processed cellulosic dieselincludes heating oil and jet fuel madefrom cellulosic feedstocks and cellulosicbiofuel produced as a result of coprocessing cellulosic feedstocks withpetroleum.* * * * *

Covered location means thecontiguous 48 states, Hawaii, and anystate or territory that has received anapproval from the Administrator to opt-in to the RFS program under § 80.1443.

Exporter of renewable fuel means allbuyers, sellers, and owners of therenewable fuel in any transaction thatresults in renewable fuel beingtransferred from a covered location to adestination outside of the coveredlocations.* * * * *

foreign ethanol producer means aforeign renewable fuel producer whoproduces ethanol for use intransportation fuel, heating oil, or jetfuel but who does not add ethanoldenaturant to their product as describedin paragraph (2) of the definition of“renewable fuel” in this section.

Foreign renewable fuel producermeans a person from a foreign country

or from an area outside the coveredlocations who produces renewable fuel(including neat (undenatured) ethanolfor use in transportation fuel, heatingoil, or jet fuel).* * * * *

Heating oil * * *

(2) A fuel oil that is used to heat orcool interior spaces of homes orbuildings to control ambient climate forhuman comfort. The fuel oil must beliquid at 60 degrees Fahrenheit and Iatmosphere of pressure, and contain nomore than 2.5% mass solids.* * * * *

Non-renewable feedstock means afeedstock that does not meet thedefinition of renewable biomass.

Non-BIN-generating foreign producermeans a foreign renewable fuelproducer that has been registered byEPA to produce renewable fuel forwhich RINs have not been generated.* * * * *

Renewablefuel* * *

(2) Ethanol covered by this definitionshall be denatured using an ethanoldenaturant as required in 27 CFR parts19 through 21. Any volume of ethanoldenaturant added to the undenaturedethanol by a producer or importer inexcess of 2 volume percent shall not beincluded in the volume of ethanol forpurposes of determining compliancewith the requirements under thissubpart.* * * * *

BIN-generating foreign producermeans a foreign renewable fuelproducer that has been registered byEPA to generate RINs for renewable fuelit produces.* * * * *

• 24. Section 80.1405 is amended byadding paragraph (a)(l1) and revisingthe definitions of GE1 and DE1 in theequation in paragraph (c) to read asfollows:

§80.1405 What are the Renewable FuelStandards?

(a) * * *

(ii) Renewable Fuel Standards for2020. (i) The value of the cellulosicbiofuel standard for 2020 shall be 0.34percent.

(ii) The value of the biomass-baseddiesel standard for 2020 shall be 2.10percent.

(iii) The value of the advanced biofuelstandard for 2020 shall be 2.93 percent.

(iv) The value of the renewable fuelstandard for 2020 shall be 11.56 percent.* * * * *

(c) * * *

GE = The total amount of gasolineprojected to be exempt in year i, ingallons, per § 80.1441 and 80.1442.

DE1 = The total amount of diesel fuelprojected to be exempt in year i, ingallons, per § 80.1441 and 80.1442.* * * * *

• 25. Section 80.1407 is amended byadding paragraphs (fl(9) through (ii) toread as follows:

§80.1 407. How are the Renewable VolumeObligations calculated?* * * * *

(f) * * *

(9) Distillate fuel with a sulfur contentgreater than 15 ppm that is clearlydesignated for a use other thantransportation fuel, such as heating oilor ECA marine fuel,

(10) Distillate fuel that meets a 15ppm sulfur standard, is designated fornon-transportation use, and thatremains completely segregated fromMVNRLM diesel fuel from the point ofproduction through to the point of usefor a non-transportation purpose, suchas heating oil or ECA marine fuel.

(11) Certified NTDF, if the refiner orimporter has a reasonable expectationthat the fuel will be used for non-transportation purposes. To establish areasonable expectation that the fuel willbe used for non-transportation purposes,a refiner or importer must, at aminimum, be able to demonstrate thatthey supply areas that use heating oil,ECA marine fuel, or 15 ppm distillatefuel for non-transportation purposes inquantities that are consistent with pastpractices or changed circumstances.EPA may consider any other relevantinformation, including the price of thefuel, in assessing whether a refiner orimporter has a reasonable expectationthat the fuel will be used for non-transportation purposes.• 26. Section 80.1408 is added to readas follows:

§80.1408. What are the requirements forparties that own and redesignate certifiedNTDF as MVNRLM diesel fuel?

(a) Beginning January 1, 2021, a partythat owns certified NTDF, and only aparty that owns certified NTDF, mayredesignate NTDF as MVNRLM dieselfuel if they meet all of the followingrequirements:

(1) Register as a refiner and registereach facility where redesignation occursas a refinery under § 80.76. NTDF mayonly be redesignated as MVNRLM dieselfuel at a facility registered as a refinery.

(2) At each facility, calculate abalance of MVNRLM diesel fuel duringeach annual compliance periodaccording to the following equation:MVNRLM111. = MVNRLM0 +

MVNRLMINvQH(I - MVNRLM1Where:



MVNRLM11. = the balance for MVNRLMdiesel fuel for the compliance period.

MVNRLM1 = the total volume of all batchesof fuel designated as MVNRLM dieselfuel owned when the fuel was receivedat the facility and acquired at the facilityduring the compliance period. AnyMVNRLM diesel fuel produced (apartfrom redesignation of NTDF to MVNRLMdiesel fuel) or imported into the facilitymust also be included in this volume.

MVNRLM() = the total volume of all batchesof fuel designated as MVNRLM dieselfuel owned and sold or transferred toother parties at the facility during thecompliance period.

MVNRLM1i10 = the volume of MVNRLMdiesel fuel owned at the end of thecompliance period minus the volume ofMVNRLM diesel fuel owned at thebeginning of the compliance period,including accounting for any correctionsin inventory due to volume swell orshrinkage, difference in measurementcalibration between receiving anddelivering meters, and similar matters,where corrections that increaseinventory are defined as positive.

(i) If MVNRLMIIAI. is greater than 0,an RVO is incurred by the redesignatingparty for the volume of diesel fuel equalto MVNRLM. The redesignating partymust also comply with all of thefollowing:

(A) The reporting requirements of§ 80.1451(a)(1)(xix).

(B) The recordkeeping requirementsof § 80.1454(t).

(C) The attest engagementrequirements of § 80.1464 and 80.1475,as applicable.

(ii) If MVNRLMIAt. is less than orequal to 0, no RVO is incurred by theredesignating party for any redesignated

certified NTDF. These parties mustcomply with all of the following:

(A) The reporting requirements of§ 80.1451(i).

(B) The recordkeeping requirementsof § 80.1454(t).

(b) Parties that incur an RVO underparagraph (a)(2)(i) of this section mustcomply with all applicable requirementsfor obligated parties under this subpart.

(c) The provisions of this section donot apply to gasoline or diesel fuel thatis designated for export.• 27. Section 80.1415 is amended byrevising paragraph (c)(4) to read asfollows:

§80.1415 How are equivalence valuesassigned to renewable fuel?* * * * *

(c) * * *

(4) Applications for equivalencevalues must be sent to the attention of“RFS2 Program (Equivalence ValueApplication)” to the address in§ 80.10(a).* * * * *

• 28. Section 801426 is amended:• a. By revising the section heading andparagraphs (a)(1)(iii), (a)(2), and (c)(4)and (5); and• b. In paragraph (f)(i), in Table 1 to§ 80.1426, by revising the entries F, H,I, and M.

The revisions read as follows:

§80.1426 How are RINs generated andassigned to batches of renewable fuel?

(a) * * *

(1) * * *

(iii) The fuel was produced incompliance with the registration

requirements of § 80.1450, the reportingrequirements of § 80.145 1, therecordkeeping requirements of§ 80.1454, all conditions set forth in anapproval document for a pathwaypetition submitted under § 80.14 16, andall other applicable regulations of thissubpart M.* * * * *

(2) To generate RIMs for importedrenewable fuel, including anyrenewable fuel contained in importedtransportation fuel, heating oil, or jetfuel, importers must obtain informationfrom a non-RIN-generating foreignrenewable fuel producer that isregistered pursuant to § 80.145 0sufficient to make the appropriatedetermination regarding the applicableD code and compliance with therenewable biomass definition for eachimported batch for which RINs aregenerated.* * * * *

(c) * * *

(4) Importers shall not generate RINsfor renewable fuel imported from a nonRIM-generating foreign renewable fuelproducer unless the foreign renewablefuel producer is registered with EPA asrequired in §80.1450.

(5) Importers shall not generate RINsfor renewable fuel that has already beenassigned RINs by a RIM-generatingforeign renewable fuel producer.* * * * *

(f) * * *

(1) * * *

TABLE 1 TO §80.1426—APPLICABLE D CODES FOR EACH FUEL PATHWAY FOR USE IN GENERATING RIN5

Fuel type Feedstock Production process requirements D-code

F Biodiesel, renewablediesel, jet fuel andheating oil.

Soy bean oil; Oil from annual covercrops; Oilfrom algae grown photosynthetically; Biogenic waste oils/fats/greases; Camelinasativa oil; Distillers corn oil; Distillers sorghum oil; Commingled distillers corn oil andsorghum oil.

One of the following: Transesterification withor without esterification pre-treatment, orHydrotreating; excludes processes that coprocess renewable biomass and petroleum.

4

H Biodiesel, renewablediesel, jet fuel andheating oil.

Soy bean oil; Oil from annual covercrops; Oilfrom algae grown photosynthetically; Biogenic waste oils/fats/greases; Camelinasativa oil; Distillers corn oil; Distillers sorghum oil; Commingled distillers corn oil andsorghum oil.

Camelina sativa oil; Distillers sorghum oil;Distillers corn oil; Commingled distillerscorn oil and distillers sorghum oil.

One of the following: Transesterification withor without esterification pre-treatment, orHydrotreating; includes only processes thatco-process renewable biomass and petroleum.

Hydrotreating 5

Naphtha,

LPG

5


7076 federal Register/Vol. 85, No. 25/Thursday, February 6, 2020/Rules and Regulations

TABLE 1 TO §80.1426—APPLICABLE D CODES FOR EACH FUEL PATHWAY FOR USE IN GENERATING RINS—Continued

Fuel type Feedstock Production process requirements D-code

M Renewable Gasoline Crop residue, slash, pre-commercial Catalytic Pyrolysis and Upgrading, Gasifi- 3and Renewable thinnings, tree residue, and separated yard cation and Upgrading, Thermo-CatalyticGasoline waste; biogenic components of separated Hydrodeoxygenation and Upgrading, DirectBlendstock; Co- MSW; cellulosic components of separated Biological Conversion, Biological ConverProcessed Cellulosic food waste; and cellulosic components of sion and Upgrading utilizing natural gas,Diesel, Jet Fuel, and annual cover crops. biogas, and/or biomass as the only processHeating Oil. energy sources providing that process used

converts cellulosic biomass to fuel; anyprocess utilizing biogas and/or biomass asthe only process energy sources which converts cellulosic biomass to fuel.

* * * *

• 29. Section 80.142 7 is amended byrevising the definition of “RVO1” inparagraph (b)(2) and by revisingparagraph (c)(2) to read as follows:

§80.1427 How are RINs used todemonstrate compliance?* * * * *

(b) * * *

(2) * * *

RVO1 = The Renewable VolumeObligation for the obligated party orexporter of renewable fuel for calendaryear 1, in gallons.* * * * *

(c) * * *

(2) In fulfillment of its ERVOs, eachexporter of renewable fuel is subject tothe provisions of paragraphs (a)(2), (3),(6), and (8) of this section.* * * * *

• 30. Section 80.1429 is amended byrevising paragraph (b)(3) to read asfollows:

§ 80.1429 Requirements for separatingRlNs from volumes of renewable fuel.* * * * *

(b) * * *

(3) Any exporter of renewable fuelmust separate any RINs that have beenassigned to the exported renewable fuelvolume. An exporter of renewable fuelmay separate up to 2.5 RINs per gallonof exported renewable fuel.* * * * *

• 31. Section 80.1430 is amended byparagraph (a), the definition of “k” inparagraph (b)(i), and paragraphs (c),(d)(i), and (e) introductory text andadding paragraph (h] to read as follows:

§80.1430 Requirements for exporters ofrenewable fuels.

(a) Any exporter of renewable fuel,whether in its neat form or blendedshall acquire sufficient RINs to complywith all applicable Renewable VolumeObligations under paragraphs (b)

through (e) of this section representingthe exported renewable fuel. Noprovision of this section applies torenewable fuel purchased directly fromthe renewable fuel producer and forwhich the exporter of renewable fuelcan demonstrate that no RINs weregenerated through the recordkeepingrequirements of § 80.1454(a)(6).

(b) * * *

(1) * * *

k = A discrete volume of renewablefuel that the exporter of renewable fuelknows or has reason to know iscellulosic biofuel that is exported in asingle shipment.* * * * *

(c) If the exporter of renewable fuelknows or has reason to know that avolume of exported renewable fuel iscellulosic diesel, the exporter ofrenewable fuel must treat the exportedvolume as either cellulosic biofuel orbiomass-based diesel when determininghis Renewable Volume Obligationspursuant to paragraph (b) of this section.

(d) * * *

(1) If the equivalence value for avolume of exported renewable fuel canbe determined pursuant to § 80.1415based on its composition, then theappropriate equivalence value shall beused in the calculation of the exporterof renewable fuel’s Renewable VolumeObligations under paragraph (b) of thissection.* * * * *

(e) For renewable fuels that are in theform of a blend at the time of export, theexporter of renewable fuel shalldetermine the volume of exportedrenewable fuel based on one of thefollowing:* * * * *

(h) Each person meeting the definitionof exporter of renewable fuel for aparticular export transaction is jointlyand severally liable for completion ofthe requirements of this section and all

associated RIN retirementdemonstration, registration, reporting,and attest engagement obligations underthis subpart. However, theserequirements for exporters of renewablefuel must be met only once for anyexport transaction.• 32. Section 80.143 1 is amended byrevising paragraph (b)(2) to read asfollows:

§80.1431 Treatment of invalid RINs.* * * * *

(b) * * *

(2) Invalid RINs cannot be used toachieve compliance with the RenewableVolume Obligations of an obligatedparty or exporter of renewable fuel,regardless of the party’s good faith beliefthat the RINs were valid at the time theywere acquired.* * * * *

• 33. Section 80.1434 is added to readas follows:

§80.1434 RIN retirement.

(a) A RIN must be retired in any of thefollowing cases:

(1) Demonstrate annual compliance.Except as specified in paragraph (b) ofthis section or § 80.1456, each party thatis an obligated party under § 80.1406and is obligated to meet the RVO under§ 80.140 7 must retire a sufficientnumber of RINs to demonstratecompliance with an applicable RVO.

(2) Exported renewable fuel. Anyexporter of renewable fuel that incurs anERVO as described in § 80.1430(a) shallretire RINs pursuant to § 80.1430(b)through (g) and 80.1427(c).

(3) Volume error correction. A RINmust be retired when it was based onincorrect volumes or volumes that havenot been standardized to 60 °F asdescribed in § 80.1426(f)(8).

(4) Import volume correction. Wherethe port of entry volume is the lesser ofthe two volumes in § 80.1466(e)(1)(i),the importer shall calculate the



difference between the number of RINsoriginally assigned by the foreignproducer and the number of RINscalculated under § 80.142 6 for thevolume of renewable fuel as measuredat the port of entry, and retire thatamount of RINs in accordance with§ 80.1466(k)(4).

(5) Spillage or disposal of renewablefuels. Except as provided in§ 80.1432(c), in the event that a reportedspillage or disposal of any volume ofrenewable fuel, the owner of therenewable fuel must notify any holderor holders of the attached RINs andretire a number of gallon-RINscorresponding to the volume of spilledor disposed of renewable fuelmultiplied by its equivalence value inaccordance with § 80.1432(b).

(6) Contaminated or spoiled fuel. Inthe event that contamination orspoliation of any volume of renewablefuel is reported, the owner of therenewable fuel must notify any holderor holders of the attached RINs andretire a number of gallon-RINscorresponding to the volume ofcontaminated or spoiled renewable fuelmultiplied by its equivalence value.

(1) If the equivalence value for thecontaminated or spoiled volume may bedetermined pursuant to § 80.1415 basedon its composition, then the appropriateequivalence value shall be used.

(ii) If the equivalence value for acontaminated or spoiled volume ofrenewable fuel cannot be determined,the equivalence value shall be 1.0.

(iii) If the owner of a volume ofrenewable fuel that is contaminated orspoiled and reported establishes that noRINs were generated to represent thevolume, then no gallon-RINs shall beretired.

(7) Delayed BIN generation. In theevent that a party generated a delayedRIN as described in § 80.1426(g)(1)through (4), parties must retire RINs asdescribed in accordance with§ 80.1426(g)(5) and (6).

(8) Invalid RIN. In the case that a RINis invalid as described in § 80.1431(a),the RIN will be considered invalid andmust be retired as described in§ 80.1431(5).

(9) Potentially invalid RINs. In thecase that a RIN is identified as a PIRunder § 80.1474(b)(1), the PIRs orreplacement RINs must be retired asdescribed in § 80.1474(b)(2) through (5).

(10) Replacement. As required by§ 80.1431(b) or § 80.1474, any party thatmust replace an invalid RIN or PIR thatwas used for compliance must retirevalid RINs to replace the invalid RINsoriginally used for any RVO.

(11) Other. Any other instanceidentified by EPA.

(b) In the case that retirement of a RINis necessary, the following provisionsapply:

(1) Any party affected by suchretirement must keep copies and adjustits records, reports, and compliancecalculations in which the retired RINwas used.

(2) The retired RIN must be reportedin the applicable reports under§ 80.1451.

(3) The retired RIN must be reportedin the EPA Moderated TransactionSystem pursuant to § 80.1452(c).

(4) Where the importer of renewablefuel is required to retire RINs underparagraph (a)(5) of this section, theimporter must report the retired RINs inthe applicable reports under § 80.1451,80.1466(k), and 80.1466(m).• 34. Section 80.1440 is amended byrevising the section heading andparagraph (a) and adding paragraph (f)to read as follows:

§80.1440 What are the provisions forblenders who handle and blend less than250,000 gallons of renewable fuel per yearor who handle renewable fuel blended forfuels under a national security exemption?

(a)(l) Renewable fuel blenders whohandle and blend less than 250,000gallons of renewable fuel per year, andwho do not have one or more reportedor unreported Renewable VolumeObligations, are permitted to delegatetheir RIN-related responsibilities to theparty directly upstream of them whosupplied the renewable fuel forblending.

(2) Renewable fuel blenders whohandle and blend renewable fuel forparties that have a national securityexemption under paragraph (f) of thissection, or a national securityexemption under any other subpart of40 CFR part 80 (e.g., §S 80.606, 80.1655),and who do not have one or morereported or unreported RenewableVolume Obligations, are permitted todelegate their RIN-relatedresponsibilities to the party directlyupstream of them who supplied therenewable fuel for blending.* * * * *

(f) The requirements described inparagraph (b) of this section may bedelegated directly upstream forrenewable fuel (neat or blended) that isproduced, imported, sold, offered forsale, supplied, offered for supply,stored, dispensed, or transported for usein any of the following:

(1) Tactical military vehicles, engines,or equipment having an EPA nationalsecurity exemption from emissionstandards under 40 CFR 85.1708,89.908, 92.908, 94.908, 1042.635, or1068.225.

(2) Tactical military vehicles, engines,or equipment that are not subject to anational security exemption fromvehicle or engine emissions standards asdescribed in paragraph (f)(i) of thissection but, for national securitypurposes (for purposes of readiness fordeployment overseas), need to be fueledon the same transportation fuel, heatingoil, or jet fuel as the vehicles, engines,or equipment for which EPA hasgranted such a national securityexemption.• 35. Section 80.1441 is amended byrevising paragraph (h) to read asfollows:

§ 80.1441 Small refinery exemption.* * * *

(h) Verification letters underparagraph (b) of this section, petitionsfor small refinery hardship extensionsunder paragraph (e) of this section, andsmall refinery exemption waiver noticesunder paragraph (f) of this section shallbe sent to the attention of “RFSProgram” to the address in § 80.10(a).S 36. Section 80.1442 is amended byrevising paragraph (1) to read as follows:

§ 80.1442 What are the provisions forsmall refiners under the RFS program?* * * * *

(i) Small refiner status verificationletters, small refiner exemption waivers,or applications for extensions of thesmall refiner temporary exemptionunder this section must be sent to theattention of “RFS Program” to theaddress in § 80.10(a).• 37. Section 80.1443 is amended byrevising paragraph (d)(2) to read asfollows:

§80.1443 What are the opt-in provisionsfor noncontiguous states and territories?* * * * *

(d) * * *

(2) A petition submitted under thissection should be sent to the attentionof “RFS Program” to the address in§ 80.10(a).* * * * *

• 38. Section 80.1449 is amended byrevising paragraph (d) to read asfollows:

§80.1449 What are the Production OutlookReport requirements?* * * * *

(d) Production outlook reports shallbe sent to the attention of “RFS Program(Production Output Reports)” to theaddress in § 80.10(a).* * * * *

• 39. Section 80.1450 is amended byrevising paragraphs (b) introductorytext, (b)(1)(vii)(A)(1), (b)(1)(vii)(B),(b)(i )(viii)(A), (b)(l )(ix)(A) introductory



text, (b)(1)(xi)(A) and (B], the firstsentence of paragraph (d)(i], andparagraphs (g)(9) and (h) to read asfollows:

§80.1450 What are the registrationrequirements under the RFS program’* * * * *

(b) Producers. Any RIN-generatingforeign producer, any non-RINgenerating foreign producer, or anydomestic renewable fuel producer thatgenerates RINs must provide EPA theinformation specified under § 80.76 ifsuch information has not already beenprovided under the provisions of thispart, and must receive EPA-issuedcompany and facility identificationnumbers prior to the generation of anyRINs for their fuel or for fuel made withtheir ethanol. Unless otherwisespecifically indicated, all the followingregistration information must besubmitted and accepted by EPA by July1, 2010, or 60 days prior to thegeneration of RIMs, whichever datecomes later, subject to this subpart:

(1) * * *

(vii) * * *

(A] * * *

(1] The location of any establishmentfrom which the waste stream consistingsolely of separated yard waste iscollected.* * * * *

(B) For a producer of renewable fuelor a foreign producer of ethanol madefrom separated food waste per§ 80.1426(f)(5)(i)(B) or from biogenicwaste oils/fats/greases:

(1) A plan documenting the type(s) ofseparated food waste or biogenic wasteoils/fats/greases, the type(s) ofestablishment from which the waste iscollected, how the waste will becollected, a description of ongoingverification measures that demonstratesuch waste consists only of food waste(and an incidental amount of othercomponents such as paper and plastics)or biogenic waste oils/fats/greases thatis kept separate from other wastematerials, and if applicable, how thecellulosic and non-cellulosic portions ofthe waste will be quantified.

(2) [Reservedj* * * * *

(viii) * * *

(A) The location of the municipalwaste establishment(s) from which theseparated municipal solid waste iscollected or from which material iscollected that will be processed toproduce separated municipal solidwaste.* * * * *

(ix) * * *

(A) For a producer of ethanol fromgrain sorghum or a foreign ethanol

producer making product from grainsorghum and seeking to have it sold asrenewable fuel after addition of ethanoldenaturant, provide a plan that has beensubmitted and accepted by U.S. EPAthat includes the following information:* * * * *

(xi) * * *

(A) An affidavit from the producer ofthe fuel oil meeting paragraph (2] of thedefinition of “heating oil” in § 80.1401stating that the fuel oil for which RINshave been generated will be sold for thepurposes of heating or cooling interiorspaces of homes or buildings to controlambient climate for human comfort, andno other purpose.

(B) Affidavits from the final end useror users of the fuel oil stating that thefuel oil meeting paragraph (2] of thedefinition of “heating oil” in § 80.1401is being used or will be used forpurposes of heating or cooling interiorspaces of homes or buildings to controlambient climate for human comfort, andno other purpose, and acknowledgingthat any other use of the fuel oil wouldviolate EPA regulations and subject theuser to civil and/or criminal penaltiesunder the Clean Air Act.* * * * *

(d) * * *

(1) Any producer of renewable fuel orany foreign ethanol producer that makeschanges to their facility that will allowthem to produce renewable fuel that isnot reflected in the producer’sregistration information on file withEPA must update their registrationinformation and submit a copy of anupdated independent third-partyengineering review on file with EPA atleast 60 days prior to producing the newtype of renewable fuel. * * *

* * * * *

(g] * * *

(9] Registration updates. (i) Anyindependent third-party auditor whomakes changes to its quality assuranceplan(s) that will allow it to audit newrenewable fuel production facilities, asdefined in § 80.1401, that is notreflected in the independent third-partyauditor’s registration information on filewith EPA must update its registrationinformation and submit a copy of anupdated QAP on file with EPA at least60 days prior to auditing new renewablefuel production facilities.

(ii) Any independent third-partyauditor who makes any changes otherthan those specified in paragraphs(g](9](i], (iii), and (iv) of this section thatwill affect the third-party auditor’sregistration information must update itsregistration information 7 days prior tothe change.

(iii) Independent third-party auditorsmust update their QAPs at least 60 daysprior to verifying RINs generated by arenewable fuel facility for a pathway notcovered in the independent third-partyauditor’s QAPs.

(iv) Independent third-party auditorsmust update their QAPs at least 60 daysprior to verifying RIMs generated by anyrenewable fuel facility not identified inthe independent third-party auditor’sexisting registration.* * * * *

(h) Deactivation of registration. (1)EPA may deactivate the registration ofany party required to register under thissection § 80.145 0, using the process inparagraph (h)(2] of this section, if any ofthe following criteria are met:

(i) The party has reported no activityin EMTS for twenty-four consecutivemonths.

(ii) The party has failed to complywith the registration requirements ofthis section.

(iii) The party has failed to submit anyrequired notification or report within 30days of the required submission dateunder §80.1451.

(iv) The attest engagement requiredunder § 80.1464 has not been receivedwithin 30 days of the requiredsubmission date.

(v) The party fails to pay a penalty orto perform any requirements under theterms of a court order, administrativeorder, consent decree, or administrativesettlement between the party and EPA.

(vi) The party submits false orincomplete information.

(vii] The party denies EPA access orprevents EPA from completingauthorized activities under sections 114or 208 of the Clean Air Act despitepresenting a warrant or court order. Thisincludes a failure to provide reasonableassistance.

(viii] The party fails to keep orprovide the records required by thissubpart.

(ix) The party otherwise circumventsthe intent of the Clean Air Act or of thissubpart.

(2] Except as provided in paragraph(h](3) of this section, EPA will use thefollowing process whenever it decidesto deactivate the registration of a party:

(i) EPA will provide writtennotification to the responsible corporateofficer identifying the reasons ordeficiencies for which EPA intends todeactivate the party’s registration. Theparty will have fourteen calendar daysfrom the date of the notification tocorrect the deficiencies identified orexplain why there is no need forcorrective action.

(ii) If the basis for EPA’s notice ofintent to deactivate registration is the



absence of EMTS activity underparagraph (h)(1)(i) of this section, astated intent to engage in activityreported through EMTS will besufficient to avoid deactivation ofregistration.

(iii) If the party does not correctidentified deficiencies under paragraphs(h)(1)(ii) through (ix) of this section, ordoes not provide an adequateexplanation regarding why suchcorrection is not necessary within thetime allotted for response, EPA maydeactivate the party’s registrationwithout further notice to the party.

(3) In instances of willfulness or thosein which public health, interest, orsafety requires otherwise, EPA maydeactivate the registration of the partywithout any notice to the party. EPAwill provide written notification to theresponsible corporate officer identifyingthe reasons EPA deactivated theregistration of the party.

(4) Impact of registration deactivation:(i) A party whose registration is

deactivated shall still be liable forviolation of any requirements of thissubpart.

(ii) A party whose registration isdeactivated will not be listed on anypublic list of actively registered partiesthat is maintained by EPA.

(iii) A party whose registration isdeactivated will not have access to anyof the electronic reporting systemsassociated with the renewable fuelstandard program, including the EPAModerated Transaction System (EMTS).

(iv) A party whose registration isdeactivated must submit any correctionsof deficiencies to EPA on forms, andfollowing policies, established by EPA.

(v) If a party whose registration hasbeen deactivated wishes to re-register,they may seek to do so by submitting anew registration pursuant to therequirements in paragraphs (a) through(c), (e), and (g) of this section, asapplicable.* * * * *

• 40. Section 80.1451 is amended by:• a. Revising paragraphs (a)(1)(i) and(v);• b. Adding paragraph (a)(l)(xix);• c. Revising paragraphs (a)(4), (b)introductory text, (b)(1)(ii)(D) and (I),(g)(1)(ii)(D) and (I);• d. Redesignating paragraphs (i) and (j)as paragraphs (j) and (k); and• e. Adding new paragraph (1). Therevisions and additions read as follows:

§80.1451 What are the reportingrequirements under the RFS program?

(a) * * *

(1) * * *

(i] The obligated party’s or exporter ofrenewable fuel’s name.* * * * *

(v)(A) For the 2010 through 2019compliance periods, the productionvolume and import volume of all of theproducts listed in § 80.1407(c) and (e)for the compliance period.

(B) For the 2020 compliance period,separately, the production volume andimport volume of all of the gasolineproducts listed in § 80.1407(c), theproduction volume and import volumeof all of the MVNRLM diesel fuelproducts listed in § 80.1407(e), and thecombined volume of all gasolineproducts and MVNRLM diesel fuellisted in § 80.1407(c) and (e) for thecompliance period.

(C) Beginning with the 2021compliance period, separately, theproduction volume and import volumefor the compliance period of all of thefollowing:

(1) All of the gasoline products listedin §80.1407(c).

(2) All of the MVNRLM diesel fuelproducts listed in § 80.1407(e).

(3) The combined production volumeof all gasoline products and MVNRLMdiesel fuel.

(4) Distillate fuel that is nottransportation fuel.

(5) Distillate fuel that is certifiedNTDF.* * * * *

(xix) For parties that redesignatecertified NTDF as MVNRLM diesel fuelunder § 80.1408 at any time during thecompliance period, the volumesMVNRLMI3AI, MVNRLM0,MVNRLMINVcHu, and MVNRLM1 ascalculated in § 80.1408(a)(2).* * * * *

(4) Reports required under thisparagraph (a) must be signed andcertified as meeting all the applicablerequirements of this subpart by theowner or a responsible corporate officerof the obligated party or exporter ofrenewable fuel.

(b) Renewable fuel producers(domestic and foreign) and importers.Any domestic producer or importer ofrenewable fuel who generates RINs, orany RIN-generating foreign producermust submit to EPA reports according tothe schedule, and containing all of thefollowing information:

(1) * * *

(ii) * * *

(D) The importer EPA facilityregistration number and foreignrenewable fuel producer companyregistration number, if applicable.* * * * *

(I) The volume of ethanol denaturantand applicable equivalence value ofeach batch.* * * * *

(1) * * *

(ii) * * *

(D) The importer EPA facilityregistration number and foreignrenewable fuel producer companyregistration number, if applicable.* * * * *

(I) The volume of ethanol denaturantand applicable equivalence value ofeach verified batch.* * * * *

(i) Parties that redesignate certifiedNTDF as MVNRLM diesel fuel under§ 80.1408 at any time during thecompliance period, but do not incur anRVO under § 80.1408(a)(2)(i), mustsubmit a report to EPA stating that theyredesignated certified NTDF toMVNRLM diesel fuel during thecompliance period, but that their netredesignated volume was less than orequal to zero, and they therefore did notincur an RVO for the complianceperiod.* * * * *

• 41. Section 80.1452 is amended byrevising paragraph (b)(ii) and the lastsentence in paragraph (c) introductorytext to read as follows:

§80.1452 What are the requirementsrelated to the EPA Moderated TransactionSystem (EMTS)?* * * * *

(b) * * *

(11) The volume of ethanoldenaturant and applicable equivalencevalue of each batch.* * * * *

(c) * * * The reportable event for aRIN separation or retirement occurs onthe date of separation or retirement asdescribed in § 80.1429 or § 80.1434.* * * * *

• 42. Section 80.145 3 is amended byrevising paragraphs (b) and (d) andadding paragraph (e) to read as follows:

§80.1453 What are the product transferdocument (PTD) requirements for the RFSprogram?* * * * *

(b) Except for transfers to truckcarriers, retailers, or wholesalepurchaser-consumers, product codesmay be used to convey the informationrequired under paragraphs (a)(1)through (11) and (e) of this section ifsuch codes are clearly understood byeach transferee.* * * * *

(d) F or fuel oil meeting paragraph (2)of the definition of “heating oil” in§80.1401, the PTD of the fuel oil shallstate: “This volume of renewable fueloil is designated and intended to beused to heat or cool interior spaces ofhomes or buildings to control ambient(g) * * *



climate for human comfort. Do NOT usefor process heat or cooling or any otherpurpose, as these uses are prohibitedpursuant to 40 CFR 80.1460(g).”.

(e) Beginning January 1, 2021, on eachoccasion when any party transferscustody or ownership of certified NTDf,except when such fuel is dispensed intomotor vehicles or nonroad vehicles,engines, or equipment, the transferormust provide to the transfereedocuments that include all thefollowing information, as applicable:

(1) The transferor of certified NTDFmust list all applicable requiredinformation as specified at § 80.5 90 and,if the distillate fuel contains renewablefuel, all applicable required informationin paragraphs (a), (b), and (d) of thissection.

(2) The transferor must include thefollowing statement on the PTD: “15ppm sulfur (maximum) certifiedNTDf—This fuel is designated for non-transportation use.”• 43. Section 80.1454 is amended by:• a. Revising paragraphs (a)introductory text, (a](l), (d)(4),(h)(6)(iii), (j) introductory text, (j)(1),and (j)(2) introductory text;• b. Removing vacant paragraph (k)designation;• c. Revising paragraphs (n) and (q);id. Redesignating paragraph (t) asparagraph (w); and• e. Adding new paragraph (t).

The revisions and addition reads asfollows:

§ 80.1454 What are the recordkeepingrequirements under the RFS program?

(a) Requirements for obligated partiesand exporters of renewable fuel.Beginning July 1, 2010, any obligatedparty (as described at § 80.1406) orexporter of renewable fuel (as describedat § 80.1430) must keep all of thefollowing records:

(1) Product transfer documentsconsistent with § 80.1453 and associatedwith the obligated party’s or exporter ofrenewable fuel’s activity, if any, astransferor or transferee of renewable fuelor separated RINs.* * * * *

(d) * * *

(4) Domestic producers of renewablefuel made from any other type ofrenewable biomass must havedocuments from their feedstock suppliercertifying that the feedstock qualifies asrenewable biomass as defined in§ 80.1401, describing the feedstock.Separated yard and food waste, biogenicoils/fats/greases, and separatedmunicipal solid waste are also subject tothe requirements in paragraph (j) of thissection.* * * * *

(h) * * *

(6) * * *

(iii) The survey plan must be sent tothe attention of “RfS Program” to theaddress in § 80.10(a).* * * * *

(j) A renewable fuel producer thatproduces fuel from separated yard waste(as described in §80.1426(fl(5)(i)(A)),separated food waste (as described in§ 80.1426(f)(5)(i)(B)), separatedmunicipal solid waste (as described in§ 80.1426(f)(5)(i)(C)), or biogenic wasteoils/fats/greases must keep all thefollowing additional records:

(1) For separated yard waste,separated food waste, and biogenicwaste oils/fats/greases:

(i) Documents demonstrating theamounts, by weight, purchased ofseparated yard waste, separated foodwaste, or biogenic waste oils/fats/greases for use as a feedstock inproducing renewable fuel.

(ii) Documents demonstrating thelocation of any establishment(s) fromwhich the waste stream consistingsolely of separated yard waste,separated food waste, or biogenic wasteoils/fats/greases is collected.

(iii) Such other records as may berequested by the Administrator.

(2) For separated municipal solidwaste:* * * * *

(n) The records required underparagraphs (a) through (d), (f) through(1), and (t) of this section and under§ 80.145 3 shall be kept for five yearsfrom the date they were created, exceptthat records related to transactionsinvolving RINs shall be kept for fiveyears from the date of the RINtransaction.* * * * *

(q) The records required in paragraphs(b)(3) and (c)(1) of this section must betransferred with any renewable fuel sentto the importer of that renewable fuel byany non-RIN-generating foreignproducer.* * * * *

(t) Requirements for parties thatredesignate certified NTDF as MVNRLMdieselfuel. Parties that redesignatecertified NTDF as MVNRLM diesel fuelunder § 80.1408 must keep all of thefollowing additional records:

(1) Records related to all transactionsin which certified NTDF is redesignatedas MVNRLM diesel fuel.

(2) Records related to all transactionsin which MVNRLM diesel fuel isredesignated to a non-transportationuse.

(3) Records related to the volume ofMVNRLM diesel fuel received.

(4) Records related to the volume ofMVNRLM diesel fuel delivered.

(5) Records related to the volume ofcertified NTDF received.

(6) Records related to the volume ofcertified NTDF delivered.* * * * *

• 44. Section 80.1460 is amended byadding paragraph (b)(7], revisingparagraph (g), and adding paragraph (j)to read as follows:

§80.1460 What acts are prohibited underthe RFS program?* * * * *

(b) * * *

(7) Generate a RIN for fuel that failsto meet all the conditions set forth in anapproval document for a pathwaypetition submitted under § 80.1416.* * * * *

(g) failing to use a renewable fuel oilfor its intended use. No person shall usefuel oil that meets paragraph (2) of thedefinition of “heating oil” in § 80.1401and for which RINs have been generatedin an application other than to heat orcool interior spaces of homes orbuildings to control ambient climate forhuman comfort.* * * * *

(j) Redesignation violations. Noperson may exceed the balancerequirements at § 80.1408(a)(2)(i)without incurring an RVO.• 45. Section 80.1461 is amended byrevising paragraphs (a)(1) and (2) to readas follows:

§80.1461. Who is liable for violationsunder the RFS program?

(a) * * *

(1) Any person who violates aprohibition under § 80.1460(a) through(d) or § 80.1460(g) through (j) is liablefor the violation of that prohibition.

(2) Any person who causes anotherperson to violate a prohibition under§ 80.1460(a) through (d) or § 80.1460(g)through (j) is liable for a violation of§ 80.1460(e).* * * * *

• 46. Section 80.1463 is amended byrevising paragraph (d) to read asfollows:

§ 80.1463 What penalties apply under theRFS program?* * * * *

(d) Any person liable under§ 80.1461(a) for a violation of§80.1460(b)(1) through (4), (6), or (7) issubject to a separate day of violation foreach day that an invalid RIN remainsavailable for an obligated party orexporter of renewable fuel todemonstrate compliance with the RFSprogram.• 47. Section 80.1464 is amended byrevising paragraphs (a) introductorytext, (a)(l)(i)(A), (a)(1)(iii), (a)(1)(iv)



introductory text, (a)(1)(iv)(A) and (D),and (a)(1)(v), adding paragraph(a)(1)(vii), and revising the first sentenceof paragraph (b)(1)(ii) to read as follows:

§80.1464 What are the attest engagementrequirements under the RFS program?* * * * *

(a) Obligated parties and exporters ofrenewable fuel. The following attestprocedures shall be completed for anyobligated party (as described at§ 80.1406(a)) or exporter of renewablefuel (as described at § 80.1430):

(1) * * *

(i) * * *

(A) The obligated party’s volume ofall products listed in § 80.1407(c) and(e), or the exporter of renewable fuel’svolume of each category of exportedrenewable fuel identified in§ 80.1430(b)(1) through (b)(4).

(iii) For obligated parties, compare thevolumes of products listed in§ 80.1407(c), (e), and (f) reported to EPAin the report required under§ 80.1451(a)(1) with the volumes,excluding any renewable fuel volumes,contained in the inventoryreconciliation analysis under §80.133and the volume of non-renewable dieselproduced or imported. Verify that thevolumes reported to EPA agree with thevolumes in the inventory reconciliationanalysis and the volumes of nonrenewable diesel produced or imported,and report as a finding any exception.

(iv) F or exporters of renewable fuel,perform all of the following:

(A) Obtain the database, spreadsheet,or other documentation that theexporter of renewable fuel maintains forall exported renewable fuel.

(0) Select sample batches inaccordance with the guidelines in§ 80.12 7 from each separate category ofrenewable fuel exported and identifiedin § 80.1451(a); obtain invoices, bills oflading and other documentation for therepresentative samples; state whetherany of these documents refer to theexported fuel as advanced biofuel orcellulosic biofuel; and report as afinding whether or not the exporter ofrenewable fuel calculated an advancedbiofuel or cellulosic biofuel RVO forthese fuels pursuant to § 80.1430(b)(1)or(3).

(v) Compute and report as a findingthe RVOs for the obligated party orexporter of renewable fuel, and anydeficit RVOs carried over from theprevious year or carried into thesubsequent year, and verify that thevalues agree with the values reported toEPA.* * * * *

(vii) For obligated parties thatredesignate certified NTDF as MVNRLMdiesel fuel under § 80.1408, perform theadditional attest engagement proceduresdescribed at § 80.1475 and report anyfindings in the report described inparagraph (d) of this section. Parties thatdo not incur an RVO under§ 80.1408(a)(2)(i) and do not otherwiseneed to complete an attest engagementunder this paragraph (a) do not need toarrange for the additional attestengagement procedures under § 80.1475to be performed.* * * * *

(b) * * *

(1) * * *

(H) Obtain production data for eachrenewable fuel batch by type ofrenewable fuel that was produced orimported during the year beingreviewed; compute the RIN numbers,production dates, types, volumes ofethanol denaturant and applicableequivalence values, and productionvolumes for each batch; report the totalRINs generated during the year beingreviewed; and state whether thisinformation agrees with the party’sreports to EPA. * * *

* * * * *

• 48. Section 80.1466 is amended by:• a. Revising the section heading,paragraphs (a) and (b), the paragraph (c)subject heading, paragraphs (c)(1),(d)(1)(iii) and (v), (d)(1)(vi)(B), (d)(3)(ii),(e)(2)(ii], (I] introductory text, (f)(i)introductory text, (f)(i )(ii)(C), (f)(1)(v)(A)and (C), (fJ(1)(vii), (fl(2), (f](4) through(8), (g), and (h) introductory text;• b. In the equation in paragraph (h)(l)revising the definition “C”;• c. Revising paragraphs (h)(3)(iii),(h)(4), (i), (j)(2) through (4), (k)(l),(k)(2)(ii), (k)(4)(ii), the paragraph (1)subject heading, paragraphs (l)(i)introductory text, (l)(2)(i), (l)(3),(m)(3)(ii), (m)(6)(i), (n) introductory text,(n)(1), (3), and (4), (o) introductory text,and (o)(2); and• d. Adding paragraph (p).

The revisions and addition read asfollows:

§80.1466 What are the additionalrequirements under this subpart for foreignrenewable fuel producers and importers ofrenewable fuels?

(a) Applicability. This section onlyapplies to foreign renewable fuelproducers that are located outside theUnited States, the Commonwealth ofPuerto Rico, the Virgin Islands, Guam,American Samoa, and theCommonwealth of the Northern MarianaIslands (collectively referred to in thissection as “the United States”).

(b) General requirements. A registeredforeign renewable fuel producer under

this section must meet all requirementsthat apply to renewable fuel producersunder this subpart.

(c) Designation, RIN-generatingforeign producer certification, andproduct transfer documents. (1) Anyregistered foreign renewable fuelproducer must designate each batch ofsuch renewable fuel as “RFS—FRRF” atthe time the renewable fuel is produced.

(d) * * *

(1) * * *

(iii) Obtain the EPA-assignedregistration number of the foreignrenewable fuel producer.* * * * *

(v) Determine the date and time thevessel departs the port serving the RINgenerating foreign producer.

(vi) * * *

(B) That the RFS—FRRF remainedsegregated from Non-RFS—FRRF andother RFS—FRRF produced by adifferent foreign producer.

(3) * * *

(ii) Be independent under the criteriaspecified in § 80.65(f)(2)(iii); and* * * * *

(e) * * *

(2) * * *

(ii) Where the port of entry volume isthe lesser of the two volumes inparagraph (e)(1)(i] of this section, theimporter shall calculate the differencebetween the number of RINs originallyassigned by the RIN-generating foreignproducer and the number of RINscalculated under § 80.1426 for thevolume of renewable fuel as measuredat the port of entry, and acquire andretire that amount of RINs in accordancewith paragraph (k)(3) of this section.

(f) foreign producer commitments.Any foreign renewable fuel producershall commit to and comply with thefollowing provisions as a condition tobeing registered as a foreign renewablefuel producer under this subpart:

(1) Any EPA inspector or auditor mustbe given full, complete, and immediateaccess to conduct inspections andaudits of the foreign renewable fuelproducer facility.

*

(ii) * * *

(C) Renewable fuel is stored ortransported between the foreignrenewable fuel producer and the UnitedStates, including storage tanks, vesselsand pipelines.* * * * *

(v) * * *

(A) The volume of renewable fuel.* * * * *



(C) Transfers of title or custody torenewable fuel.* * * * *

(vii) Any employee of the foreignrenewable fuel producer must be madeavailable for interview by the EPAinspector or auditor, on request, withina reasonable time period.

(2) An agent for service of processlocated in the District of Columbia shallbe named, and service on this agentconstitutes service on the foreignrenewable fuel producer or anyemployee of the foreign renewable fuelproducer for any action by EPA orotherwise by the United States related tothe requirements of this subpart.

(4) United States substantive andprocedural laws shall apply to any civilor criminal enforcement action againstthe foreign renewable fuel producer orany employee of the foreign renewablefuel producer related to the provisionsof this section.

(5) Applying to be an approvedforeign renewable fuel producer underthis section, or producing or exportingrenewable fuel under such approval,and all other actions to comply with therequirements of this subpart relating tosuch approval constitute actions oractivities covered by and within themeaning of the provisions of 28 U.S.C.1605(a)(2), but solely with respect toactions instituted against the foreignrenewable fuel producer, its agents andemployees in any court or other tribunalin the United States for conduct thatviolates the requirements applicable tothe foreign renewable fuel producerunder this subpart, including conductthat violates the False StatementsAccountability Act of 1996 (18 U.S.C.1001) and section 113(c)(2) of the CleanAir Act (42 U.S.C. 7413).

(6) The foreign renewable fuelproducer, or its agents or employees,will not seek to detain or to impose civilor criminal remedies against EPAinspectors or auditors for actionsperformed within the scope of EPAemployment or contract related to theprovisions of this section.

(7) The commitment required by thisparagraph shall be signed by the owneror president of the foreign renewablefuel producer company.

(8) In any case where renewable fuelproduced at a foreign renewable fuelproduction facility is stored ortransported by another companybetween the production facility and thevessel that transports the renewable fuelto the United States, the foreignrenewable fuel producer shall obtainfrom each such other company a

commitment that meets therequirements specified in paragraphs(f)(1) through (7) of this section, andthese commitments shall be included inthe foreign renewable fuel producer’sapplication to be an approved foreignrenewable fuel producer under thissubpart.

(g) Sovereign immunity. Bysubmitting an application to be anapproved foreign renewable fuelproducer under this subpart, or byproducing and exporting renewable fuelto the United States under suchapproval, the foreign renewable fuelproducer, and its agents and employees,without exception, become subject tothe full operation of the administrativeand judicial enforcement powers andprovisions of the United States withoutlimitation based on sovereign immunity,with respect to actions instituted againstthe foreign renewable fuel producer, itsagents and employees in any court orother tribunal in the United States forconduct that violates the requirementsapplicable to the foreign renewable fuelproducer under this subpart, includingconduct that violates the FalseStatements Accountability Act of 1996(18 U.S.C. 1001) and section 113(c)(2) ofthe Clean Air Act (42 U.S.C. 7413).

(h) Bond posting. Any RIN-generatingforeign producer shall meet thefollowing requirements as a condition toapproval as a RIN-generating foreignproducer under this subpart:

(1) * * *

G = the greater of: the largest volumeof renewable fuel produced by the RINgenerating foreign producer andexported to the United States, ingallons, during a single calendar yearamong the five preceding calendaryears, or the largest volume ofrenewable fuel that the Rin-generatingforeign producers expects to export tothe United States during any calendaryear identified in the ProductionOutlook Report required by § 80.1449. Ifthe volume of renewable fuel exportedto the United States increases above thelargest volume identified in theProduction Outlook Report during anycalendar year, the RIN-generatingforeign producer shall increase the bondto cover the shortfall within 90 days.* * * * *

(3) * * *

(iii) Include a commitment that thebond will remain in effect for at leastfive years following the end of latestannual reporting period that the RINgenerating foreign producer producesrenewable fuel pursuant to therequirements of this subpart.

(4) On any occasion a RIN-generatingforeign producer bond is used to satisfy

any judgment, the RIN-generatingforeign producer shall increase the bondto cover the amount used within 90days of the date the bond is used.

(i) English longuage reports. Anydocument submitted to EPA by a foreignrenewable fuel producer shall be inEnglish, or shall include an Englishlanguage translation.

(j) * * *

(2) No foreign renewable fuelproducer or other person may causeanother person to commit an actionprohibited in paragraph (j)(l) of thissection, or that otherwise violates therequirements of this section.

(3) No foreign renewable fuelproducer or importer may generate RINsfor the same volume of renewable fuel.

(4) A foreign renewable fuel produceris prohibited from generating RINs inexcess of the number for which thebond requirements of this section havebeen satisfied.

(k) * * *

(1) Renewable fuel shall be classifiedas RFS—FRRF according to thedesignation by the RIN-generatingforeign producer if this designation issupported by product transferdocuments prepared by the foreignproducer as required in paragraph (c) ofthis section.

(2) * * *

(ii) Use the RIN-generating foreignproducer’s RFS—FRRF certification todetermine the name and EPA-assignedregistration number of the RINgenerating foreign producer thatproduced the RFS—FRRF.* * * * *

(4) * * *

(ii) The RIN-generating foreignproducer, containing the informationdetermined under paragraph (k)(2)(i) ofthis section, and includingidentification of the port at which theproduct was offloaded, and any RINsretired under paragraph (e)(2) of thissection.* * * * *

(1) Truck imports of RFS-fRBFproduced by a RIN-generating foreignproducer. (1) Any RIN-generatingforeign producer whose RFS—FRRF istransported into the United States bytruck may petition EPA to usealternative procedures to meet all thefollowing requirements:

(2) * * *

(i) Contracts with any facilities thatreceive and/or transport RFS—FRRf thatprohibit the commingling of RFS—FRRfwith Non-RFS—FRRf or RFS—FRRF fromother foreign renewable fuel producers.* * * * *

(3) The petition described in thissection must be submitted to EPA along


Federal Register / Vol. 85, No. 25 / Thursday, February 6, 2020 / Rules and Regulations 7083

with the application for approval as aRIN-generating foreign producer underthis subpart.

(m) * * *

(3) * * *

(ii) Obtain the documents used by theindependent third party to determinetransportation and storage of the RfS—FRRF from the RIN-generating foreignproducer’s facility to the load port,under paragraph (d) of this section.Obtain tank activity records for anystorage tank where the RFS—FRRF isstored, and activity records for anymode of transportation used to transportthe RFS—FRRF prior to being loadedonto the vessel. Use these records todetermine whether the RFS—FRRF wasproduced at the RIN-generating foreignproducer’s facility that is the subject ofthe attest engagement, and whether theRFS—FRRf was mixed with any NonRFS—FRRF or any RFS—FRRF producedat a different facility.* * * * *

(6) * * *

(1) Be independent of the RINgenerating foreign producer;

(n) With drawal or suspension offoreign renewable fuel producerapprovol. EPA may withdraw orsuspend a foreign renewable fuelproducer’s approval where any of thefollowing occur:

(1) A foreign renewable fuel producerfails to meet any requirement of thissection.* * * * *

(3) A foreign renewable fuel producerasserts a claim of, or a right to claim,sovereign immunity in an action toenforce the requirements in this subpart.

(4) A foreign renewable fuel producerfails to pay a civil or criminal penaltythat is not satisfied using the foreignrenewable fuel producer bond specifiedin paragraph (h) of this section.

(o) Additional requirements forapplications, reports, and certificates.Any application for approval as aforeign renewable fuel producer,alternative procedures under paragraph(1) of this section, any report,certification, or other submissionrequired under this section shall be:* * * * *

(2) Signed by the president or ownerof the foreign renewable fuel producercompany, or by that person’s immediatedesignee, and shall contain thefollowing declarations:

(i) hereby certify:(A) That I have actual authority to

sign on behalf of and to bind [NAME OfFOREIGN RENEWABLE FUELPRODUCER] with regard to allstatements contained herein;

(B) That I am aware that theinformation contained herein is beingCertified, or submitted to the UnitedStates Environmental ProtectionAgency, under the requirements of 40CFR part 80, subpart M, and that theinformation is material for determiningcompliance under these regulations; and

(C) That I have read and understandthe information being Certified orsubmitted, and this information is true,complete and correct to the best of myknowledge and belief after I have takenreasonable and appropriate steps toverify the accuracy thereof.”

(ii) affirm that I have read andunderstand the provisions of 40 CFRpart 80, subpart M, including 40 CFR80.1465 apply to [NAME OF FOREIGNRENEWABLE FUEL PRODUCER].Pursuant to Clean Air Act section 113(c)and 18 U.S.C. 100;, the penalty forfurnishing false, incomplete ormisleading information in thiscertification or submission is a fine ofup to $10,000 U.S., and/orimprisonment for up to five years.”.

(p) Requirements for non-RINgenerating foreign producer. Any nonRIN-generating foreign producer mustcomply with the requirements of thissection beginning on the effective dateof the final rule or prior to EPAacceptance, whichever is later.• 49. Section 80.1469 is amended byrevising paragraphs (c)(1)(ii) and (f)(i)introductory text to read as follows:

§80.1469 Requirements for QualityAssurance Plans.* * * * *

(c) * * *

(1) * * *

(ii) If applicable, plans under§ 80.1426(f)(5)(ii) are accepted and up todate.* * * * *

(f) * * *

(1) A new QAP shall be submitted toEPA according to paragraph (e) of thissection and the third-party auditor shallupdate their registration according to§ 80.1450(g)(9) whenever any of thefollowing changes occur at a productionfacility audited by a third-partyindependent auditor and the auditordoes not possess an appropriatepathway-specific QAP that encompassesthe changes:* * * * *

• 50. Section 80.1472 is amended byrevising paragraphs (b)(3)(i)introductory text, (b)(3)(ii)(B), and(b)(3)(iii) to read as follows:

§80.1472 Requirements for qualityassurance audits.* * * * *

(b) * * *

(3) * * *

(i) The independent third-partyauditor shall conduct an on-site visit atthe renewable fuel production facility orforeign ethanol production facility:* * * * *

(ii) * * *

(B) 380 days after the previous on-sitevisit if a previously approved (by EPA)remote monitoring system is in place atthe renewable fuel production facility orforeign ethanol production facility, asapplicable. The 380-day period shallstart the day after the previous on-sitevisit ends.

(iii) An on-site visit shall includeverification of all QAP elements thatrequire inspection or evaluation of thephysical attributes of the renewable fuelproduction facility or foreign ethanolproduction facility.

*

• 51. Section 80.1475 is added asfollows:

§80.1475 What are the additional attestengagement requirements for parties thatredesignate certified NTDF as MVNRLMdiesel fuel?

(a) General requirements. (1) Inaddition to the attest engagementrequirements under § 80.1464, allobligated parties required to arrange foradditional attest engagement proceduresunder § 80.1464(a)(l)(vii) must have anannual attest engagement conducted byan auditor using the minimum attestprocedures specified in this section.

(2) All applicable requirements andprocedures outlined in § 80.125through 80.127 and § 80.130 apply tothe auditors and attest engagementprocedures specified in this section.

(3) Obligated parties must include anyadditional information required underthis section in the attest engagementreport under § 80.1464(d).

(4) Report as a finding if the partyfailed to either incur or satisfy an RVOif required.

(b) EPA reports. Auditors mustperform the following:

(1) Obtain and read a copy of theobligated party’s reports filed with EPAas required by § 80.1451(a)(l)(xix] forthe reporting period.

(2) In the case of an obligated party’sreport to EPA that represents aggregatecalculations for more than one facility,obtain the facility-specific volume andproperty information that was used bythe refiner to prepare the aggregatereport. Foot and crossfoot the facilityspecific totals and agree to the values inthe aggregate report. The procedures inparagraphs (b) and (c) of this section arethen performed separately for eachfacility.



(3) Obtain a written representationfrom a company representative that thereport copies are complete and accuratecopies of the reports filed with EPA.

(4) Identify, and report as a finding,the name of the commercial computerprogram used by the refiner or importerto track the data required by theregulations in this part, if any.

(c) Inventory reconiition analysis.Auditors must perform the following:

(1) Obtain an inventory reconciliationanalysis for the facility for the reportingperiod for each of the following andperform the procedures at paragraphs(c)(2) through (4) of this sectionseparately for each of the followingproducts:

(i) The volume of certified NTDF thatwas redesignated as MVNRLM dieselfuel.

(ii) The volume of MVNRLM dieselfuel that was redesignated to a non-transportation use.

(iii) The volume of MVNRLM dieselfuel owned when the fuel was receivedat the facility and acquired at the facilityduring the compliance period.

(iv) The volume of MVNRLM dieselfuel owned and sold or transferred toother parties at the facility during thecompliance period.

(v) The volume of certified NTDFreceived.

(vi) The volume of certified NTDFdelivered.

(2) Foot and crossfoot the volumetotals reflected in the analysis.

(3) Agree the beginning and endinginventory amounts in the analysis to thefacility’s inventory records.

(4] If the obligated party deliveredmore MVNRLM diesel fuel thanreceived, agree the annual balance withthe reports obtained at § 80.1475(b)(l)and verify whether the obligated partyincurred and satisfied its RVO under§ 80.1408(a)(2)(i).

(5) Report as a finding each of thevolume totals along with anydiscrepancies.

(d) Listing of tenders. Auditors mustperform the following:

(1] For each of the volumes listed inparagraphs (b)(1)(iii) through (b)(1](vi)of this section, obtain a separate listingof all tenders from the refiner orimporter for the reporting period. Eachlisting should provide for each tenderthe volume shipped and otherinformation as needed to distinguishtenders.

(2) Foot to the volume totals per thelistings.

(3) Agree the volume totals on thelisting to the tender volume total in theinventory reconciliation analysisobtained in paragraph (b) of this section.

(4) For each of the listings select arepresentative sample of the tenders in

accordance with the guidelines in§ 80.12 7, and for each tender selectedperform the following:

(i) Obtain product transfer documentsassociated with the tender and agree thevolume on the tender listing to thevolume on the product transferdocuments.

(ii) Note whether the product transferdocuments include the informationrequired by § 80.590 and, for tendersinvolving the transfer of certified NTDF,the information required by§ 80.1453(e).

(5) Report as a finding anydiscrepancies.

Subpart N—Additional Requirementsfor Gasoline-Ethanol Blends

• 52. Section 80.1501 is amended byrevising the section heading andparagraphs (b)(3)(i) and (b)(5)(i) andremoving and reserving paragraph(b)(5)(ii). The revisions read as follows:

§80.1 507 Labeling requirements thatapply to retailers and wholesale purchaser-consumers of gasoline that containsgreater than 10 volume percent ethanol andnot more than 15 volume percent ethanol.* * * * *

(b) * * *

(3) * * *

(i) The word “ATTENTION” shall becapitalized in 20-point, black, HelveticaNeue LT 77 Bold Condensed font, andshall be placed in the top 1.25 inches ofthe label as further described inparagraph (b)(4)(iii) of this section.* * * * *

(5) * * *

(I) A request for approval of analternative label shall be sent to theattention of “E15 Alternative LabelRequest” to the address in § 80.10(a).* * * * *

Subpart 0—Gasoline Sulfur

§ 80.7 600 [Amended]

• 53. Section 80.1600 is amended byremoving the definition for “Ethanoldenaturant”.• 54. Section 80.1603 is amended by:• a. Revising paragraph (d)(i);• b. Redesignating paragraph (d)(2) asparagraph (d)(3) and adding a newparagraph (d)(2); and• c. In the equation in paragraph (f](i)revising the definition of “OC”. Therevisions and addition read as follows:

§80.1603 Gasoline sulfur standards forrefiners and importers.* * * * *

(d] * * *

(1) The refiner or importer shallcalculate the sulfur content of the batchby volume weighting the sulfur content

of the gasoline or BOB and the sulfurcontent of the added oxygenatepursuant to one of the methods listed inparagraphs (d)(1)(i] and (ii) of thissection. A refiner or importer mustchoose to use only one method duringeach annual compliance period.

(i) Testing the sulfur content of asample of the oxygenate pursuant to§ 80.46 or § 80.47, as applicable. Therefiner or importer must demonstratethrough records relating to sampling,testing, and blending that the test resultwas derived from a representativesample of the oxygenate that wasblended with the batch of gasoline orBOB.

(ii) If the oxygenate is denatured fuelethanol, and the sulfur content has notbeen tested under paragraph (d)(i)(i) ofthis section, then the sulfur contentmust be assumed to be 5.00 ppm.

(2) For denatured fuel ethanol, therefiner or importer may assume that thedenatured fuel ethanol was blendedwith gasoline or BOB at a concentrationof 10 volume percent, unless the refineror importer can demonstrate that adifferent amount of denatured fuelethanol was actually blended with abatch of gasoline or BOB.

(1) The refiner or importer ofconventional gasoline or CBOB mustcomply with the requirements of§ 80.101(d)(4)(ii).

(ii) The refiner or importer ofreformulated gasoline or RBOB mustcomply with the requirements of§ 80.69(a).

(iii) Any gasoline or BOB must meetthe per-gallon sulfur standard ofparagraph (a)(2) of this section prior tocalculating any dilution from theoxygenate added downstream.

(iv) The reported volume of the batchis the combined volume of thereformulated gasoline, RBOB,conventional gasoline, or CBOB and thedownstream added oxygenate.* * * * *

(f) * * *

(1) * * *

OC = Sulfur credits used by therefinery or importer to showcompliance, in ppm-gallons.* * * * *

• 55. Section 80.1609 is amended byrevising the last sentence of paragraph(a) to read as follows:

§80.1609 Oxygenate blenderrequirements.

(a) * * * Such oxygenate blenders aresubject to the requirements of paragraph(b) of this section, the requirements andprohibitions applicable to downstreamparties, the requirements of



§ 80.1603(d)(3), and the prohibitionspecified in § 80.1660(e).* * * * *

• 56. Section 80.1616 is amended byrevising paragraph (c)(3) to read asfollows:

§80.161 6 Credit use and transfer.* * * * *

(c) * * *

(3) CR12 credits generated under§ 80.1615(d) from January 1, 2017,through December 31, 2019, may onlybe traded to and ultimately used fromJanuary 1, 2017, through December 31,2019, by small refiners and smallvolume refineries approved under§ 80.1622.I 57. Section 80.1622 is amended byrevising paragraph (g) to read as follows:

§80.1622 Approval for small refiner andsmall volume refinery status.* * * * *

(g) Small refiner and small volumerefinery status applications, and anyother correspondence required by thissection, § 80.1620, or § 80.1621 shall besent to the attention of “Tier 3 Program(Small Refiner/Small Volume RefineryApplication)” to the address in§ 80.10(a).• 58. Section 80.1625 is amended byrevising paragraph (c)(2) to read asfollows:

§80.1625 Hardship provisions.* * * * *

(2) Hardship applications under thissection must be sent to the attention of“Tier 3 Program (HardshipApplication)” to the address in§ 80.10(a).• 59. Section 80.1650 is amended byrevising paragraphs (b)(3], (e)(1)(iii](A),and (g)(l](iii)(A) to read as follows:

§ 80.1650 Registration.* * * * *

(b) * * *

(3) Any oxygenate blender required toregister shall do so by November 1,2016, or at least 90 days in advance ofthe first date that such person will blendoxygenate into gasoline, RBOB, or CBOBwhere the resulting gasoline is subject tothe gasoline sulfur standards under thissubpart 0.* * * * *

(e) * * *

(1) * * *

(iii) * * *

(A) Whether records are kept on-siteor off-site of the facility.* * * * *

(g) * * *

(1) * * *

(iii) * * *

(A) Whether records are kept on-siteor off-site of the facility.* * * * *

I 60. Section 80.165 2 is amended byrevising paragraph (a)(7) introductorytext and adding paragraphs (a)(7)(v) and(vi) to read as follows:

§80.1652 Reporting requirements forgasoline refiners, gasoline importers,oxygenate producers, and oxygenateimporters.* * * * *

(a) * * *

(7) For each batch of BOB or gasolineproduced or imported during theaveraging period, all the following:* * * * *

(v) The type and amount of oxygenate,along with identification of the methodused to determine the type and amountof oxygenate content of the batch, asdetermined under § 80.1603(d).

(vi) The sulfur content of theoxygenate, reported to two decimalplaces, along with identification of themethod used to determine the sulfurcontent of the oxygenate, as determinedunder § 80.1603(d).* * * * *

• 61. Section 80.1656 is amended byrevising paragraph (h) to read asfollows:

§80.1656 Exemptions for gasoline usedfor research, development, or testingpurposes.* * * * *

(h) Submission. Requests for researchand development exemptions shall besent to the attention of “Tier 3 Program(R&D Exemption Request)” to theaddress in § 80.10(a).[FR Doc. 2020—00431 Filed 2—5—20; 8:45 amj

BILLING CODE 6560—50—P(c) * * *
