VALERO ENERGY CORPORATION, ) ) Petitioner, ) Case No

USCA Case #20-1073 Document #1834806 Filed: 03/19/2020 Page 1 of 76

IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT ______VALERO ENERGY CORPORATION, ) ) Petitioner, ) Case No. ______20-1073 v. ) ) UNITED STATES ENVIRONMENTAL ) PROTECTION AGENCY, ) ) Respondent. ) ______)

PETITION FOR REVIEW Pursuant to Section 307(b)(1) of the Clean Air Act, 42 U.S.C. § 7607(b)(1),

Section 702 of the Administrative Procedure Act, 5 U.S.C. § 702, Rule 15(a) of the

Federal Rules of Appellate Procedure, Rule 15(a) of the D.C. Circuit Rules, and the

U.S. Constitution, Valero Energy Corporation hereby petitions this Court to review

the final action of the Administrator of the United States Environmental Protection

Agency in promulgating a final rule entitled “Renewable Fuel Standard Program:

Standards for 2020 and Biomass-Based Diesel Volume for 2021 and Other Changes,”

published in the Federal Register at 85 Fed. Reg. 7,016 (Feb. 06, 2020) (“2020 Rule”).

A copy of the 2020 Rule is attached as Exhibit A.

This Court has jurisdiction, and venue is proper under 42 U.S.C. § 7607(b)(1). USCA Case #20-1073 Document #1834806 Filed: 03/19/2020 Page 2 of 76

Respectfully submitted,

Date: March 19, 2020 /s/ Brittany Pemberton

Samara L. Kline Brittany M. Pemberton 5600 Lovers Lane Bracewell LLP Suite 116-324 2001 M Street, NW Dallas, TX 75209 Suite 900 214.679.7671 telephone Washington, DC 20036 [email protected] 202.828.1708 telephone 202.857.4824 facsimile [email protected]

Clara Poffenberger Clara Poffenberger Environmental Law and Policy LLC 2933 Fairhill Road Fairfax, VA 22031 703.231.5251 telephone [email protected]

Counsel for Petitioner Valero Energy Corporation

-2- USCA Case #20-1073 Document #1834806 Filed: 03/19/2020 Page 3 of 76

CORPORATE DISCLOSURE STATEMENT 1. Valero Energy Corporation (“Valero”) submits the following corporate

disclosure statement pursuant to Rule 26.1 of the Federal Rules of Appellate

Procedure and Rule 26.1 of the D.C. Circuit Rules.

2. Valero is a Texas-based energy company incorporated under the laws of

Delaware. Valero refines transportation fuels, owns multiple biofuels plants,

and markets these fuels throughout the U.S. Valero has no parent corporation

and no publicly held company owns a 10 percent or greater interest of its stock. USCA Case #20-1073 Document #1834806 Filed: 03/19/2020 Page 4 of 76

Respectfully submitted,

Date: March 19, 2020 /s/ Brittany Pemberton

Clara Poffenberger Clara Poffenberger Environmental Law and Policy LLC 2933 Fairhill Road Fairfax, VA 22031 703.231.5251 telephone [email protected]

Counsel for Petitioner Valero Energy Corporation

2 USCA Case #20-1073 Document #1834806 Filed: 03/19/2020 Page 5 of 76

CERTIFICATE OF SERVICE Pursuant to Rule 15(c) of the Federal Rules of Appellate Procedure, I hereby

certify that I have this day caused the foregoing “Petition for Review” and “Corporate

Disclosure Statement” to be served, by first-class mail, postage prepaid, upon the

following:

The Honorable Andrew Wheeler Correspondence Control Unit Administrator Office of General Counsel (2311) U.S. Environmental Protection U.S. Environmental Protection Agency Agency 1200 Pennsylvania Ave., NW 1200 Pennsylvania Ave., NW Washington, D.C. 20460 Washington, D.C. 20460

The Honorable William Barr The Honorable Jeffrey Bossert Clark Attorney General of the United Assistant Attorney General States U.S. Department of Justice U.S. Department of Justice Environment and Natural Resources 950 Pennsylvania Ave., NW Division Washington, D.C. 20530 U.S. Department of Justice 950 Pennsylvania Ave., NW Washington, D.C. 20530

Date: March 19, 2020 /s/ Brittany Pemberton Brittany Pemberton

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EXHIBIT A 7016 USCAFederal Case #20-1073Register / Vol. Document85, No. 25 / Thursday,#1834806 February Filed:6, 2020 03/19/2020 / Rules and Regulations Page 7 of 76

ENVIRONMENTAL PROTECTION statutory waiver authority that is the https://www.regulations.gov AGENCY available when the projected cellulosic website. Although listed in the index, biofuel production volume is less than some information is not publicly 40 CFR Parts 79 and 80 the applicable volume specified in the available, e.g., CBI or other information [EPA–HQ–OAR–2019–0136; FRL–10003–79– statute, EPA is establishing volume whose disclosure is restricted by statute. OAR] requirements for cellulosic biofuel, Certain other material is not available advanced biofuel, and total renewable on the internet and will be publicly RIN 2060–AU42 fuel that are below the statutory volume available only in hard copy form. Renewable Fuel Standard Program: targets. We are also establishing the Publicly available docket materials are Standards for 2020 and Biomass- applicable volume of biomass-based available electronically through https:// Based Diesel Volume for 2021 and diesel for 2021. In addition, we are www.regulations.gov. Other Changes finalizing changes to the percentage FOR FURTHER INFORMATION CONTACT: Julia standard calculations to account for MacAllister, Office of Transportation AGENCY: Environmental Protection volumes of gasoline and diesel we and Air Quality, Assessment and Agency (EPA). project will be exempted from the Standards Division, Environmental ACTION: Final rule. renewable volume obligations. Finally, Protection Agency, 2000 Traverwood this action finalizes several regulatory Drive, Ann Arbor, MI 48105; telephone SUMMARY: Under section 211 of the changes to the Renewable Fuel Standard Clean Air Act, the Environmental number: 734–214–4131; email address: (RFS) program including new pathways, [email protected]. Protection Agency (EPA) is required to flexibilities for regulated parties, and set renewable fuel percentage standards clarifications of existing regulations. SUPPLEMENTARY INFORMATION: Entities every year. This action establishes the potentially affected by this final rule are annual percentage standards for DATES: This final rule is effective on those involved with the production, cellulosic biofuel, biomass-based diesel, April 6, 2020. distribution, and sale of transportation advanced biofuel, and total renewable ADDRESSES: The EPA has established a fuels, including gasoline and diesel fuel fuel that apply to gasoline and diesel docket for this action under Docket ID or renewable fuels such as ethanol, transportation fuel produced or No. EPA–HQ–OAR–2019–0136. All biodiesel, renewable diesel, and biogas. imported in the year 2020. Relying on documents in the docket are listed on Potentially affected categories include:

Category NAICS 1 codes SIC 2 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).

This table is not intended to be G. Amendments to the RFS and Fuels 3. Total Cellulosic Biofuel in 2020 exhaustive, but rather provides a guide Programs Regulations IV. Advanced Biofuel and Total Renewable for readers regarding entities likely to be H. Response To Remand of 2016 Standards Fuel Volumes for 2020 Rulemaking A. Volumetric Limitation on Use of the affected by this final action. This table II. Authority and Need for Waiver of lists the types of entities that EPA is Cellulosic Waiver Authority Statutory Applicable Volumes B. Attainable Volumes of Advanced now aware could potentially be affected A. Statutory Authorities for Reducing Biofuel by this action. Other types of entities Volume Targets 1. Imported Sugarcane Ethanol not listed in the table could also be 1. Cellulosic Waiver Authority 2. Other Advanced Biofuel affected. To determine whether your 2. General Waiver Authority 3. Biodiesel and Renewable Diesel entity would be affected by this action, B. Severability a. Volume of Advanced Biodiesel and C. Treatment of Carryover RINs you should carefully examine the Renewable Diesel To Achieve Advanced 1. Carryover RIN Bank Size Biofuel Volume applicability criteria in 40 CFR part 80. 2. EPA’s Decision Regarding the Treatment If you have any questions regarding the of Carryover RINs b. Historical Supply of Biodiesel and applicability of this action to a III. Cellulosic Biofuel Volume for 2020 Renewable Diesel particular entity, consult the person A. Statutory Requirements c. Consideration of Production Capacity and Distribution Infrastructure listed in the FOR FURTHER INFORMATION B. Cellulosic Biofuel Industry Assessment d. Consideration of the Availability of CONTACT section. 1. Review of EPA’s Projection of Cellulosic Biofuel in Previous Years Advanced Feedstocks Outline of This Preamble 2. Potential Domestic Producers e. Biodiesel and Renewable Diesel Imports 3. Potential Foreign Sources of Cellulosic and Exports I. Executive Summary Biofuel f. Attainable and Reasonably Attainable A. Approach To Setting Volume 4. Summary of Volume Projections for Volumes of Advanced Biodiesel and Requirements Individual Companies Renewable Diesel B. Cellulosic Biofuel C. Projection From the Energy Information C. Volume Requirement for Advanced C. Advanced Biofuel Administration Biofuel D. Total Renewable Fuel D. Cellulosic Biofuel Volume for 2020 D. Volume Requirement for Total E. 2021 Biomass-Based Diesel 1. Liquid Cellulosic Biofuel Renewable Fuel F. Annual Percentage Standards 2. CNG/LNG Derived From Biogas V. Impacts of 2020 Volumes on Costs

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A. Illustrative Costs Analysis of 2020 Final F. Executive Order 13132: Federalism Finally, we are finalizing several Volumes Compared to the 2020 Statutory G. Executive Order 13175: Consultation regulatory changes to the RFS program Volumes Baseline and Coordination With Indian Tribal to facilitate the implementation of this B. Illustrative Cost Analysis of the 2020 Governments Final Volumes Compared to the 2019 H. Executive Order 13045: Protection of program going forward including new Final Volumes Children From Environmental Health pathways, flexibilities for regulated VI. Biomass-Based Diesel Volume for 2021 Risks and Safety Risks parties, and clarifications of existing A. Statutory Requirements I. Executive Order 13211: Actions regulations. B. Review of Implementation of the Concerning Regulations That Program and the 2021 Applicable Significantly Affect Energy Supply, Today, nearly all gasoline used for Volume of Biomass-Based Diesel Distribution, or Use transportation purposes contains 10 C. Consideration of Statutory Factors in J. National Technology Transfer and percent ethanol (E10), and on average CAA Section 211(o)(2)(B)(ii)(I)–(VI) for Advancement Act (NTTAA) diesel fuel contains nearly 5 percent of 2021 and Determination of the 2021 K. Executive Order 12898: Federal Actions biodiesel and renewable diesel.5 Biomass-Based Diesel Volume To Address Environmental Justice in However, the market has fallen well Minority Populations and Low-Income D. BBD Volume Requirement for 2021 short of the statutory volumes for VII. Percentage Standards for 2020 Populations A. Calculation of Percentage Standards L. Congressional Review Act (CRA) cellulosic biofuel, resulting in shortfalls B. Small Refineries and Small Refiners XII. Statutory Authority in the advanced biofuel and total 1. Changes to the Projected Volume of renewable fuel volumes. In this action, Gasoline and Diesel for Exempt Small I. Executive Summary we are establishing a volume Refineries The Renewable Fuel Standard (RFS) requirement for cellulosic biofuel at the 2. Projecting the Exempted Volume of program began in 2006 pursuant to the level we project to be available for 2020, Gasoline and Diesel in 2020 requirements in Clean Air Act (CAA) along with an associated applicable C. Final Standards section 211(o) that were added through VIII. Administrative Actions percentage standard. For advanced A. Assessment of the Domestic Aggregate the Energy Policy Act of 2005 (EPAct). biofuel and total renewable fuel, we are Compliance Approach The statutory requirements for the RFS finalizing volume requirements using B. Assessment of the Canadian Aggregate program were subsequently modified the ‘‘cellulosic waiver authority’’ that Compliance Approach through the Energy Independence and result in advanced biofuel and total IX. Amendments to the RFS and Fuels Security Act of 2007 (EISA), leading to renewable fuel volume requirements Program Regulations the publication of major revisions to the that are lower than the statutory targets A. Clarification of Diesel RVO Calculations regulatory requirements on March 26, 1. Overview 1 by the same magnitude as the reduction 2010. EISA’s stated goals include in the cellulosic biofuel reduction. This 2. Downstream Re-Designation of Certified moving the United States (U.S.) toward Non-Transportation 15 ppm Distillate would effectively maintain the implied ‘‘greater energy independence and Fuel to MVNRLM Diesel Fuel statutory volumes for non-cellulosic security [and] increas[ing] the B. Pathway Petition Conditions biofuel and conventional biofuel.6 C. Esterification Pretreatment Pathway production of clean renewable fuels.’’ 2 D. Distillers Corn Oil and Distillers The statute includes annual volume The resulting volume requirements Sorghum Oil Pathways targets and requires EPA to translate for 2020 are shown in Table I–1. E. Clarification of the Definition of those volume targets (or alternative Relative to the levels finalized for 2019, Renewable Fuel Exporter and Associated volume requirements established by the 2020 volume requirements for Provisions EPA in accordance with statutory cellulosic biofuel, advanced biofuel and F. REGS Rule Provisions waiver authorities) into compliance total renewable fuel would be higher by 1. Flexibilities for Renewable Fuel obligations that obligated parties must Blending for Military Use approximately 170 million gallons. This 2. Heating Oil Used for Cooling meet every year. In this action we are entire increase for each category is 3. Separated Food Waste Plans establishing the applicable volumes for attributable to the increased projection 4. Additional Registration Deactivation cellulosic biofuel, advanced biofuel, and of cellulosic biofuel production in 2020 Justifications total renewable fuel for 2020, and (see Section III for a further discussion 5. New RIN Retirement Section biomass-based diesel (BBD) for 2021.3 of our cellulosic biofuel projection). We 6. New Pathway for Co-Processing Biomass We are also finalizing changes to the are also establishing the volume With Petroleum to Produce Co-Processed percentage standard calculations to Cellulosic Diesel, Jet Fuel, and Heating requirement for BBD for 2021 at 2.43 account for volumes of gasoline and billion gallons. This volume is equal to Oil diesel we project will be exempted from 7. Other Revisions to the Fuels Program the BBD volume finalized for 2020. a. Testing Revisions the renewable volume obligations, and establishing the annual percentage b. Oxygenate Added Downstream in Tier 3 2018 final rule (82 FR 58486, December 12, 2017; c. Technical Corrections and Clarifications standards (also known as ‘‘percent Table I.A–2). X. Public Participation standards’’) for cellulosic biofuel, BBD, 5 Average biodiesel and/or renewable diesel blend XI. Statutory and Executive Order Reviews advanced biofuel, and total renewable percentages based on EIA’s October 2019 Short A. Executive Order 12866: Regulatory fuel that would apply to gasoline and Term Energy Outlook (STEO) and EPA’s Moderated Planning and Review and Executive diesel produced or imported in 2020.4 Transaction System (EMTS). Order 13563: Improving Regulation and 6 The statutory total renewable fuel, advanced Regulatory Review biofuel and cellulosic biofuel requirements for 2020 1 75 FR 14670, March 26, 2010. B. Executive Order 13771: Reducing are 30.0, 15.0 and 10.5 billion gallons respectively. 2 Public Law 110–140, 121 Stat. 1492 (2007) Regulations and Controlling Regulatory This implies a conventional renewable fuel (‘‘EISA’’). applicable volume (the difference between the total Costs 3 The 2020 BBD volume requirement was renewable fuel and advanced biofuel volumes) of C. Paperwork Reduction Act (PRA) established in the 2019 final rule. 83 FR 63704 15.0 billion gallons, and a non-cellulosic advanced D. Regulatory Flexibility Act (RFA) (December 11, 2018). biofuel applicable volume (the difference between E. Unfunded Mandates Reform Act 4 For a list of the statutory provisions related to the advanced biofuel and cellulosic biofuel (UMRA) the determination of applicable volumes, see the volumes) of 4.5 billion gallons.

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TABLE I–1—FINAL VOLUME REQUIREMENTS a

2020 2020 2020 2021 2019 b Statutory Proposed Final Final volumes volumes volumes volumes

Cellulosic biofuel (billion gallons) ...... 0.42 10.50 0.54 0.59 n/a Biomass-based diesel (billion gallons) ...... 2.1 ≥1.0 c N/A c 2.43 2.43 Advanced biofuel (billion gallons) ...... 4.92 15.00 5.04 5.09 n/a Renewable fuel (billion gallons) ...... 19.92 30.00 20.04 20.09 n/a a All values are ethanol-equivalent on an energy content basis, except for BBD which is biodiesel-equivalent. b The 2019 volume requirements for cellulosic biofuel, advanced biofuel, 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). c The 2020 BBD volume requirement of 2.43 billion gallons was established in the 2019 final rule (83 FR 63704, December 11, 2018).

A. Approach To Setting Volume capacities, production start dates, and volume target for cellulosic biofuel, Requirements biofuel production plans; a review of consistent with our July 29, 2019, For advanced biofuel and total cellulosic biofuel production relative to proposal (‘‘the July 29 proposal’’). renewable fuel, we are reducing the EPA’s projections in previous annual Specifically, the statutory volume target statutory volumes based on the rules; and EPA’s own engineering for advanced biofuel should be reduced ‘‘cellulosic waiver authority’’ that result judgment. To project cellulosic biofuel by 9.91 billion gallons. This maintains in advanced biofuel and total renewable production for 2020 we used the same the implied statutory volume fuel volume requirements that are lower general methodology as in the 2018 and requirement for non-cellulosic advanced than the statutory targets by the same 2019 final rules, together with updated biofuel of 4.5 billion gallons, and results magnitude as the reduction in the data. in a final advanced biofuel volume requirement for 2020 of 5.09 billion cellulosic biofuel applicable volume. C. Advanced Biofuel Further discussion of our cellulosic gallons, which is 0.17 billion gallons If we reduce the applicable volume of waiver authority is found in Section II. higher than the advanced biofuel cellulosic biofuel below the volume This follows the same general approach volume requirement for 2019. specified in CAA section as in the 2018 and 2019 final rules, as 211(o)(2)(B)(i)(III), we also have the D. Total Renewable Fuel well as the 2020 proposed rule. The authority to reduce the applicable As we have articulated in previous volumes for cellulosic biofuel, advanced volumes of advanced biofuel and total annual standard-setting rulemakings,8 biofuel, and total renewable fuel exceed renewable fuel by the same or a lesser we believe that the cellulosic waiver the required volumes for these fuel amount. We refer to this as the authority is best interpreted to require types in 2019. ‘‘cellulosic waiver authority.’’ The equal reductions in advanced biofuel B. Cellulosic Biofuel conditions that caused us to reduce the and total renewable fuel. Consistent The CAA requires EPA to annually 2019 volume requirement for advanced with previous years, we are reducing determine the projected volume of biofuel below the statutory target remain total renewable fuel by the same amount cellulosic biofuel production for the relevant in 2020. as the reduction in advanced biofuel, following year. If the projected volume As in the 2019 final rule, we such that the resulting implied volume of cellulosic biofuel production is less investigated the projected availability of requirement for conventional renewable than the applicable volume specified in non-cellulosic advanced biofuels in fuel would be 15 billion gallons, the section 211(o)(2)(B)(i)(III) of the statute, 2020. In Section IV, we describe our same as the implied volume EPA must lower the applicable volume consideration of many factors, requirement in the statute. The result is including: that the final 2020 volume requirement used to set the annual cellulosic biofuel • percentage standard to the projected The ability of the market to make is 20.09 billion gallons. volume available. In this rule we are advanced biofuels available, • The ability of the standards we set E. 2021 Biomass-Based Diesel establishing a cellulosic biofuel volume to bring about market changes in the In EISA, Congress specified increasing requirement of 0.59 billion ethanol- time available, applicable volumes of BBD through equivalent gallons for 2020 based on our • The potential impacts associated 2012. Beyond 2012, Congress stipulated projection. This volume is 0.17 billion with diverting biofuels and/or biofuel that EPA, in coordination with DOE and ethanol-equivalent gallons higher than feedstocks from current uses to the USDA, was to establish the BBD volume the cellulosic biofuel volume finalized production of advanced biofuel used in based on a review of the for 2019. Our projection in Section III the U.S., implementation of the program during considers many factors, including the • The fact that the biodiesel tax credit calendar years specified in the tables in estimate of cellulosic biofuel production is currently not available for 2020, CAA 211(o)(B)(i) and other statutory received from the Energy Information • 7 Current tariffs on imports of factors, provided that the required Administration (EIA); RIN generation biodiesel from Argentina and Indonesia volume for BBD could not be less than data for past years and 2019 to date that and the proposal to change those tariffs, 1.0 billion gallons. Starting in 2013, is available to EPA through the EPA and EPA has set the BBD volume Moderated Transaction System (EMTS); • The cost of advanced biofuels requirement above the statutory the information we have received We also considered the size of the minimum, most recently resulting in regarding individual facilities’ carryover RIN bank. Based on these 2.43 billion gallons for 2020. In this rule considerations, we have determined that we are maintaining the BBD volume for 7 Letter from Linda Capuano, EIA Administrator to Andrew Wheeler, EPA Administrator. October 9, the statutory volume target for advanced 2021 at 2.43 billion gallons. 2019. Available in docket EPA–HQ–OAR–2019– biofuel should be reduced by the same 0136. amount as the reduction in the statutory 8 See, e.g., 83 FR 63704 (December 11, 2018).

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Given current and recent market intend to grant 50% relief where DOE Cellulosic Diesel, Jet Fuel, and conditions, the advanced biofuel recommends 50% relief. Heating Oil (REGS Section VIII.M) requirement is driving the production The volume of transportation gasoline • Other Revisions to the Fuels Program and use of biodiesel and renewable and diesel used to calculate the (REGS Section IX) diesel volumes over and above volumes proposed percentage standards was The other provisions proposed in the required through the separate BBD based on Energy Information REGS Rule remain under consideration standard, and we expect this to Administration’s (EIA) October 2019 but are not being finalized at this time. continue. While EPA continues to Short Term Energy Outlook (STEO), H. Response to Remand of 2016 believe it is appropriate to maintain the minus an estimate of fuel consumption Standards Rulemaking opportunity for other advanced biofuels in Alaska. The final applicable to compete for market share, the vast percentage standards for 2020 are In 2015, EPA established the total majority of the advanced biofuel shown in Table I.B.6–1. Details, renewable fuel standard for 2016, obligations in recent years have been including the projected gasoline and relying in part on the general waiver satisfied with BBD. Thus, after a review diesel volumes used, can be found in authority under a finding of inadequate of implementation of the program to Section VII. domestic supply.11 Several parties date and considering the statutory challenged that action, and the U.S. factors, we are establishing, in TABLE I.F–1—FINAL 2020 Court of Appeals for the D.C. Circuit, in coordination with USDA and DOE, an PERCENTAGE STANDARDS Americans for Clean Energy v. EPA, 864 applicable volume of BBD for 2020 of F.3d 691 (2017) (hereafter ‘‘ACE’’), 2.43 billion gallons. Percentage vacated EPA’s use of the general waiver standards authority under a finding of inadequate F. Annual Percentage Standards domestic supply, finding that such use The renewable fuel standards are Cellulosic biofuel ...... 0.34% exceeded EPA’s authority under the Biomass-based diesel ...... 2.10 expressed as a volume percentage and Clean Air Act. Specifically, EPA had Advanced biofuel ...... 2.93 impermissibly considered demand-side are used by each refiner and importer of Renewable fuel ...... 11.56 fossil-based gasoline or diesel to factors in its assessment of inadequate determine their renewable fuel volume domestic supply, rather than limiting G. Amendments to the RFS and Fuels that assessment to supply-side factors. obligations. Programs Regulations Four separate percentage standards The court remanded the rule back to are required under the RFS program, In implementing the RFS program EPA for further consideration in light of corresponding to the four separate EPA has identified several areas where the court’s ruling. renewable fuel categories shown in regulatory changes would assist EPA in In the July 29 proposal, we proposed Table I–1. The specific formulas we use implementing the RFS program in that the applicable 2016 volume in calculating the renewable fuel future years. EPA requested comment requirement for total renewable fuel and percentage standards are contained in on several of these regulatory changes in the associated percentage standard the regulations at 40 CFR 80.1405. On the July 29 proposal: Clarification of should not be changed. In light of the October 28, 2019, we proposed changes diesel RVO calculations, pathway many comments received, we are still to our percentage standard formulas in petition conditions, a biodiesel actively considering this issue. We are 40 CFR 80.1405. (‘‘October 28 esterification pathway, distillers corn oil therefore not taking final agency action Proposal’’). These changes were and distillers sorghum oil pathways, on this issue in today’s final rule. We intended to project the exempted and renewable fuel exporter provisions. are instead deferring action on this issue volume of gasoline and diesel due to Each of these regulatory changes is to a separate action, which we small refinery exemptions, regardless of discussed in greater detail in Section IX. anticipate in early 2020. whether we grant those exemptions Additionally, we proposed a number II. Authority and Need for Waiver of prior or after the annual rule. For 2020, of changes to the RFS regulations as part Statutory Applicable Volumes of the proposed Renewables we proposed to project exempt volumes The CAA provides EPA with the are based on a three-year average of the Enhancement and Growth Support 9 authority to promulgate volume relief recommended by the Department (REGS) Rule. EPA noted that it was considering finalizing several of those requirements below the applicable of Energy (DOE) for 2016–2018. In this volume targets specified in the statute action, we are finalizing these proposed proposed changes along with the 2020 RVO final rule,10 and are now finalizing under specific circumstances. This changes. These changes result in section discusses those authorities. As increases to the percentage standards as the REGS Rule provisions listed below. • described in the executive summary, we compared to the percentage standards in Flexibilities for Renewable Fuel are setting the volume requirement for the July 29 proposal. Blending for Military Use (REGS cellulosic biofuel at the level we project Consistent with these changes, we are Section VIII.E) • to be available for 2020, and an also announcing our general policy Heating Oil Used for Cooling (REGS associated applicable percentage approach to small refinery exemptions Section VIII.F) • standard. For advanced biofuel and total going forward, including for now- Separated Food Waste Plans (REGS renewable fuel, we are setting volume pending 2019 petitions as well as for Section VIII.G) • requirements and associated applicable future 2019 and 2020 petitions. Additional Registration Deactivation percentage standards, based on use of Although final decisions on any Justifications (REGS Section VIII.J) the ‘‘cellulosic waiver authority’’ that • exemption petition must await EPA’s New RIN Retirement Section (REGS would result in advanced biofuel and receipt and adjudication of those Section VIII.L) total renewable fuel volume • petitions, EPA intends to grant relief New Pathway for Co-Processing requirements that are equivalent to the consistent with DOE’s recommendations Biomass With Petroleum To Produce reduction in the cellulosic biofuel where appropriate. This policy extends to DOE’s recommendations of partial 9 See 81 FR 80828 (November 16, 2016). 11 See 80 FR 77420 (December 14, 2015); CAA (50%) relief: Where appropriate, we 10 See 84 FR 36765 (July 29, 2019). section 211(o)(7)(A)(ii).

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reduction. This would effectively EPA has used the cellulosic waiver the implied statutory volumes for 2020. maintain the implied statutory volumes authority to lower the advanced biofuel As discussed in Section IV, we also for non-cellulosic advanced and and total renewable fuel volumes every believe that the resulting volume of conventional renewable fuel. year since 2014 as a result of waiving advanced biofuel is attainable, and that the cellulosic volumes. Further the resulting volume of total renewable A. Statutory Authorities for Reducing discussion of the cellulosic waiver fuel can be made available by the Volume Targets authority, and EPA’s interpretation of it, market. In CAA section 211(o)(2), Congress can be found in the preamble to the 2. General Waiver Authority specified increasing annual volume 2017 final rule.12 targets for total renewable fuel, In this action we are using the Section 211(o)(7)(A) of the CAA advanced biofuel, and cellulosic biofuel cellulosic waiver authority to reduce the provides that EPA, in consultation with for each year through 2022. However, statutory volume targets for advanced the Secretary of Agriculture and the Congress also recognized that under biofuel and total renewable fuel by Secretary of Energy, may waive the certain circumstances it would be equal amounts, consistent with our applicable volumes specified in the Act appropriate for EPA to set volume long-held interpretation of this in whole or in part based on a petition requirements at a lower level than provision and our approach in setting by one or more States, by any person reflected in the statutory volume targets, the 2014–2019 standards. This approach subject to the requirements of the Act, and thus provided waiver provisions in considers the Congressional objectives or by the EPA Administrator on his own CAA section 211(o)(7). Congress also reflected in the volume tables in the motion. Such a waiver must be based on specified increasing annual volume statute, and the environmental a determination by the Administrator, targets for BBD through 2012 and objectives that generally favor the use of after public notice and opportunity for authorized EPA to set volume advanced biofuels over non-advanced comment that: (1) Implementation of the 13 requirements for subsequent years (i.e., biofuels. As described in Section IV, requirement would severely harm the after 2012) in coordination with USDA we are reducing the advanced biofuel economy or the environment of a State, and DOE, and based upon consideration volume under the cellulosic waiver a region, or the United States; or (2) of specified factors. authority by the amount of the there is an inadequate domestic supply. reduction in cellulosic biofuel and EPA received comments requesting 1. Cellulosic Waiver Authority providing an equal reduction under the that EPA should use the general waiver Section 211(o)(7)(D)(i) of the CAA cellulosic waiver authority in the authority to further reduce volumes provides that if EPA determines that the applicable volume of total renewable under findings of inadequate domestic projected volume of cellulosic biofuel fuel. We are taking this action both supply and/or severe harm to the production for a given year is less than because we do not believe that the economy or environment, as well as statutory volumes can be achieved, and the applicable volume specified in the comments to the contrary. Based on our because we believe that backfilling of statute, then EPA must reduce the review of the comments and updated the shortfall in cellulosic with advanced applicable volume of cellulosic biofuel data, and consistent with EPA’s biofuel would not be appropriate in required to the projected volume rationale and decisions in setting the light of concerns about high costs of the available for that calendar year. In 2019 standards, we decline to exercise advanced biofuels and the potential for making this projection, EPA may not our discretion to reduce volumes under feedstock switching. The volumes of ‘‘adopt a methodology in which the risk the general waiver authority. Further advanced biofuel and total renewable of overestimation is set deliberately to discussion of these issues is found in fuel resulting from this exercise of the outweigh the risk of underestimation’’ the Response To Comments (‘‘RTC’’) cellulosic waiver authority provide for document.14 but must make a projection that ‘‘takes an implied volume allowance for neutral aim at accuracy.’’ API v. EPA, conventional renewable fuel of 15 B. Severability 706 F.3d 474, 479, 476 (D.C. Cir. 2013). billion gallons, and an implied volume The various portions of this rule are Pursuant to this provision, EPA has set allowance for non-cellulosic advanced severable. Specifically, the following the cellulosic biofuel requirement lower biofuel of 4.5 billion gallons, equal to portions are severable from each other: than the statutory volume for each year The percentage standards for 2020 since 2010. As described in Section 12 See 81 FR 89752–89753 (December 12, 2016); (described in Section VII); the 2021 BBD III.D, the projected volume of cellulosic see also API v. EPA, 706 F.3d 474 (D.C. Cir. 2013) volume requirement (Section VI); the biofuel production for 2020 is less than (requiring that EPA’s cellulosic biofuel projections administrative actions (Section VIII); the 10.5 billion gallon volume target in reflect a neutral aim at accuracy); Monroe Energy v. EPA, 750 F.3d 909, 915–16 (D.C. Cir. 2014) and the regulatory amendments (Section the statute. Therefore, for 2020, we are (affirming EPA’s broad discretion under the IX). In addition, each of the regulatory finalizing a cellulosic biofuel volume cellulosic waiver authority to reduce volumes of amendments is severable from the other lower than the statutory applicable advanced biofuel and total renewable fuel); Americans for Clean Energy v. EPA (‘‘ACE’’), 864 regulatory amendments. If any of the volume, in accordance with this F.3d 691, 730–735 (D.C. Cir. 2017) (same); Alon above portions is set aside by a provision. Refining Krotz Spring, Inc. v. EPA, 936 F.3d 628, reviewing court, we intend the 662–663 (D.C. Cir. 2019) (same); American Fuel & CAA section 211(o)(7)(D)(i) also remainder of this action to remain provides EPA with the authority to Petrochemical Manufacturers v. EPA, 937 F.3d 559, 577–78 (D.C. Cir. 2019) (same). effective. For instance, if a reviewing reduce the applicable volume of total 13 See 81 FR 89752–89753 (December 12, 2016). court sets aside one of the regulatory renewable fuel and advanced biofuel in See also 78 FR 49809–49810 (August 15, 2013); 80 amendments, we intend for the 2020 FR 77434 (December 14, 2015). Advanced biofuels years when it reduces the applicable percentage standards to go into effect. volume of cellulosic biofuel under that are required to have lifecycle GHG emissions that are at least 50% less than the baseline defined in provision. The reduction must be less EISA. Non-advanced biofuels are required to have C. Treatment of Carryover RINs than or equal to the reduction in lifecycle GHG emissions that are at least 20% less Consistent with our approach in the cellulosic biofuel. For 2020, we are than the baseline defined in EISA unless the fuel rules establishing the RFS standards for reducing the applicable volumes of producer meets the grandfathering provisions in 40 CFR 80.1403. Beginning in 2015, all growth in the advanced biofuel and total renewable volumes established by Congress come from 14 See also ‘‘Endangered Species Act No Effect fuel under this authority. advanced biofuels. Finding for the 2020 Final Rule.’’

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2013 through 2019, we have also discretionary waiver authorities.18 may stop the market from functioning in considered the availability and role of EPA’s approach to the consideration of an efficient manner (i.e., one in which carryover RINs in setting the cellulosic carryover RINs in exercising our there are a sufficient number of biofuel, advanced biofuel, and total cellulosic waiver authority was affirmed reasonably available RINs for obligated renewable fuel volume requirements for in Monroe Energy and ACE.19 parties seeking to purchase them), even 2020. Neither the statute nor EPA The RIN system was established in where the market overall could satisfy regulations specify how or whether EPA accordance with CAA section 211(o)(5), the standards. For all of these reasons, should consider the availability of which authorizes the generation of the collective carryover RIN bank carryover RINs in exercising our credits by any person who refines, provides a necessary programmatic blends, or imports renewable fuel in statutory authorities.15 As noted in the buffer that both facilitates individual excess of the requirements of the context of the rules establishing the RFS compliance, provides for smooth overall statute.20 In the RFS1 and RFS2 standards for 2014 through 2019, we functioning of the program, and is rulemakings, we also established a 20 consistent with the statutory provision believe that a bank of carryover RINs is percent rollover cap on the amount of extremely important in providing allowing for the generation and use of an obligated party’s RVO that can be credits.22 obligated parties compliance flexibility met using previous-year RINs.21 In in the face of substantial uncertainties implementing the RFS program, we 1. Carryover RIN Bank Size in the transportation fuel marketplace, have observed that an adequate We estimate that there are currently and in providing a liquid and well- carryover RIN bank serves to make the approximately 3.48 billion total functioning RIN market upon which RIN market liquid wherein RINs are carryover RINs available, an increase of success of the entire program depends.16 freely traded in an open market making 1.29 billion RINs from the previous Carryover RINs provide flexibility in the them readily available and accessible to estimate of 2.19 billion total carryover face of a variety of unforeseeable those obligated parties who need them RINs in the July 29 proposal.23 We also circumstances that could limit the for compliance at prices established by estimate that there are currently availability of RINs and reduce spikes in that open market. Just as the economy approximately 680 million advanced compliance costs, including weather- as a whole functions best when carryover RINs available (which are a related damage to renewable fuel individuals and businesses prudently subset of the 3.48 billion total carryover feedstocks and other circumstances plan for unforeseen events by RINs), an increase of 290 million RINs potentially affecting the production and maintaining inventories and reserve from the previous estimate in the July distribution of renewable fuel. On the money accounts, we believe that the 29 proposal. This increase in the other hand, carryover RINs can be used RFS program functions best when carryover RIN bank is primarily the for compliance purposes, and in the sufficient carryover RINs are held in result of the millions of RINs that were context of the 2013 RFS rulemaking we reserve for potential use by the RIN unretired by small refineries that were noted that an abundance of carryover holders themselves, or for possible sale granted hardship exemptions after the RINs available in that year, together to others that may not have established July 29 proposal.24 These volumes of their own carryover RIN reserves. Were with possible increases in renewable carryover RINs are approximately 17 there to be too few RINs in reserve, then fuel production and import, justified percent of the 2020 total renewable fuel even minor disruptions causing volume requirement and 13 percent of maintaining the advanced and total shortfalls in renewable fuel production renewable fuel volume requirements for the 2020 advanced biofuel volume or distribution, or higher than expected requirement, which are less than the 20 that year at the levels specified in the transportation fuel demand (requiring 17 percent maximum limit permitted by statute. In general, we have authority greater volumes of renewable fuel to to consider the size of the carryover RIN the RFS regulations to be carried over comply with the percentage standards for use in complying with the 2020 bank in deciding whether and to what that apply to all volumes of standards.25 extent to exercise any of our transportation fuel, including the However, there remains considerable unexpected volumes) could lead to the uncertainty surrounding the ultimate 15 CAA section 211(o)(5) requires that EPA need for a new waiver of the standards size of the carryover RIN bank available establish a credit program as part of its RFS and higher compliance costs, regulations, and that the credits be valid for for compliance with the 2020 standards obligated parties to show compliance for 12 months undermining the market certainty so for several reasons, including the as of the date of generation. EPA implemented this critical to the RFS program. Moreover, possibility of additional small refinery requirement through the use of RINs, which can be a significant drawdown of the carryover exemptions, higher or lower than used to demonstrate compliance for the year in RIN bank leading to a scarcity of RINs which they are generated or the subsequent expected transportation fuel demand compliance year. Obligated parties can obtain more (requiring greater or lower volumes of RINs than they need in a given compliance year, 18 These discretionary waiver authorities include renewable fuel to comply with the allowing them to ‘‘carry over’’ these excess RINs for the discretionary portion of the cellulosic waiver percentage standards that apply to all use in the subsequent compliance year, although authority, CAA section 211(o)(7)(D)(i) (‘‘the our regulations limit the use of these carryover RINs Administrator may also reduce the applicable to 20 percent of the obligated party’s RVO. For the volume of renewable fuel and advanced biofuels 22 Here we use the term ‘‘buffer’’ as shorthand bank of carryover RINs to be preserved from one requirement’’), the general waiver authority, CAA reference to all of the benefits that are provided by year to the next, individual carryover RINs are used section 211(o)(7)(A) (‘‘The Administrator . . . may a sufficient bank of carryover RINs. for compliance before they expire and are waive the requirements’’), and the BBD waiver 23 The calculations performed to estimate the essentially replaced with newer vintage RINs that authority with regard to the extent of the reduction number of carryover RINs currently available can be are then held for use in the next year. For example, in the BBD volume, CAA section 211(o)(7)(E)(ii) found in the memorandum, ‘‘Carryover RIN Bank vintage 2018 carryover RINs must be used for (‘‘the Administrator . . . shall issue an order to Calculations for 2020 Final Rule,’’ available in the compliance in 2019, or they will expire. However, reduce . . . the quantity of biomass-based diesel docket. vintage 2019 RINs can then be ‘‘banked’’ for use in . . . by an appropriate quantity’’). 24 Information about the number of small refinery 2020. 19 Monroe Energy v. EPA, 750 F.3d 909 (D.C. Cir. exemptions (SREs) granted and the volume of RINs 16 See 80 FR 77482–87 (December 14, 2015), 81 2014); ACE, 864 F.3d at 713. not required to be retired as a result of those FR 89754–55 (December 12, 2016), 82 FR 58493– 20 See 75 FR 14670 (March 26, 2010) and 72 FR exemptions can be found at: https://www.epa.gov/ 95 (December 12, 2017), and 83 FR 63708–10 23900 (May 1, 2007). fuels-registration-reporting-and-compliance-help/ (December 11, 2018). 21 See 75 FR 14734–35 (March 26, 2010) and 72 rfs-small-refinery-exemptions. 17 See 79 FR 49793–95 (August 15, 2013). FR 23934–35 (May 1, 2007). 25 See 40 CFR 80.1427(a)(5).

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volumes of transportation fuel), and the described throughout Section II.C, we approach and are not setting the 2020 impact of 2019 RFS compliance on the do not believe we should intentionally volume requirements at levels that bank of carryover RINs. In addition, we draw down the carryover RIN bank in would envision an intentional note that there have been enforcement setting the 2020 volumes. The current drawdown in the bank of carryover actions in past years that have resulted bank of carryover RINs provides an RINs. We note that we may or may not in the retirement of carryover RINs to important and necessary programmatic take a similar approach in future years; make up for the generation and use of and cost spike buffer that will both we will assess the situation on a case- invalid RINs and/or the failure to retire facilitate individual compliance and by-case basis going forward and take RINs for exported renewable fuel. provide for smooth overall functioning into account the size of the carryover Future enforcement actions could have of the program. We believe that a RIN bank in the future and any lessons similar results and require that obligated balanced consideration of the possible learned from implementing past rules. parties and/or renewable fuel exporters role of carryover RINs in achieving the settle past enforcement-related statutory volumes for cellulosic biofuel, III. Cellulosic Biofuel Volume for 2020 obligations in addition to complying advanced biofuel, and total renewable with the annual standards, thereby fuel, versus maintaining an adequate In the past several years, production potentially creating demand for RINs bank of carryover RINs for important of cellulosic biofuel has continued to greater than can be accommodated programmatic functions, is appropriate increase. Cellulosic biofuel production through actual renewable fuel blending when EPA exercises its discretion under reached record levels in 2018, driven in 2020. In light of these uncertainties, its statutory authorities, and that the largely by CNG and LNG derived from the net result could be a bank of total statute does not specify the extent to biogas.27 The projected volume of carryover RINs larger or smaller than 17 which EPA should require a drawdown cellulosic biofuel production in 2019 is percent of the 2020 total renewable fuel in the bank of carryover RINs when it even higher that the volume produced volume requirement, and a bank of exercises its waiver authorities. in 2018. Production of liquid cellulosic advanced carryover RINs larger or Therefore, for the reasons noted above biofuel has also increased in recent smaller than 13 percent of the 2020 and consistent with the approach we years, even as the total production of advanced biofuel volume requirement. took in the rules establishing the RFS liquid cellulosic biofuels remains much standards for 2014 through 2019, we 2. EPA’s Decision Regarding the smaller than the production volumes of have decided to maintain our proposed Treatment of Carryover RINs CNG and LNG derived from biogas (see Figure III–1). This section describes our We have evaluated the volume of Commenters representing obligated parties carryover RINs currently available and supported EPA’s proposed decision to not assume assessment of the volume of qualifying considered whether it would justify an a drawdown in the bank of carryover RINs in cellulosic biofuel that we project will be determining the appropriate volume requirements, produced or imported into the U.S. in intentional drawdown of the carryover reiterating the importance of maintaining the RIN bank in setting the 2020 volume carryover RIN bank in order to provide obligated 2020, and some of the uncertainties requirements. We also carefully parties with necessary compliance flexibilities, associated with those volumes. considered the comments received, better market trading liquidity, and a cushion against future program uncertainty. Commenters 27 The majority of the cellulosic RINs generated including comments on the role of representing renewable fuel producers, however, for CNG/LNG are sourced from biogas from carryover RINs under our waiver stated that not accounting for carryover RINs goes against Congressional intent of the RFS program to landfills; however, the biogas may come from a authorities and the policy implications variety of sources including municipal wastewater 26 increase renewable fuel volumes every year and of our decision. For the reasons deters investment in cellulosic and advanced treatment facility digesters, agricultural digesters, biofuels. A full description of comments received, separated municipal solid waste (MSW) digesters, 26 In their comments on the 2020 NPRM, parties and our detailed responses to them, is available in and the cellulosic components of biomass generally expressed two opposing points of view. the RTC document in the docket. processed in other waste digesters.

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In order to project the volume of data through September 2019. This and the resulting projection of 0.59 cellulosic biofuel production in 2020, methodology reflects the mature status billion ethanol-equivalent gallons. we considered numerous factors, of this industry, the large number of A. Statutory Requirements including EIA’s projection of cellulosic facilities registered to generate biofuel production in 2020, the accuracy cellulosic biofuel RINs from these fuels, CAA section 211(o)(2)(B)(i)(III) states of the methodologies used to project and EPA’s continued attempts to refine the statutory volume targets for cellulosic biofuel production in its methodology to yield estimates that cellulosic biofuel. The volume of previous years, data reported to EPA are as accurate as possible. This cellulosic biofuel specified in the statute through EMTS, and information we methodology is an improvement on the for 2020 is 10.5 billion gallons. The collected through meetings with methodology that EPA used to project statute provides that if EPA determines, representatives of facilities that have cellulosic biofuel production for CNG/ based on a letter provided to the EPA by produced or have the potential to LNG derived from biogas in the 2017 EIA, that the projected volume of produce qualifying volumes of and previous years (see Section III.B for cellulosic biofuel production in a given year is less than the statutory volume, cellulosic biofuel in 2020. a further discussion of the accuracy of then EPA shall reduce the applicable There are two main elements to the EPA’s methodology in previous years). volume of cellulosic biofuel to the cellulosic biofuel production projection: The methodologies used to project the projected volume available during that Liquid cellulosic biofuel and CNG/LNG production of liquid cellulosic biofuels calendar year.28 derived from biogas. To project the and cellulosic CNG/LNG derived from range of potential production volumes biogas are described in more detail in of liquid cellulosic biofuel we used the 28 CAA section 211(o)(7)(D)(i). The U.S. Court of Sections III.D–1 and III.D–2. Appeals for the District of Columbia Circuit same general methodology as the evaluated this requirement in API v. EPA, 706 F.3d methodology used in the 2018 and 2019 The balance of this section is 474, 479–480 (D.C. Cir. 2013), in the context of a final rules. We have adjusted the organized as follows. Section III.A challenge to the 2012 cellulosic biofuel standard. percentile values used to select a point provides a brief description of the The Court stated that in projecting potentially statutory requirements. Section III.B available volumes of cellulosic biofuel EPA must estimate within a projected production apply an ‘‘outcome-neutral methodology’’ aimed at range for each group of companies based reviews the accuracy of EPA’s providing a prediction of ‘‘what will actually on updated information (through projections in prior years, and also happen.’’ Id. at 480, 479. The Court also determined September 2019) with the objective of discusses the companies EPA assessed that Congress did not require ‘‘slavish adherence by in the process of projecting qualifying EPA to the EIA estimate’’ and that EPA could ‘‘read improving the accuracy of the the phrase ‘based on’ as requiring great respect but projections. To project the production of cellulosic biofuel production in the U.S. allowing deviation consistent with that respect.’’ In cellulosic biofuel RINs for CNG/LNG Section III.C discusses EIA’s projection addition, EPA has consistently interpreted the term derived from biogas, we used the same of cellulosic biofuel production in 2020. ‘‘projected volume of cellulosic biofuel production’’ Section III.D discusses the in CAA section 211(o)(7)(D)(i) to include volumes general year-over-year growth rate of cellulosic biofuel likely to be made available in methodology as in the 2018 and 2019 methodologies used by EPA to project the U.S., including from both domestic production final rules, with updated RIN generation cellulosic biofuel production in 2020 Continued

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In addition, if EPA reduces the information from EMTS, the registration 1. Review of EPA’s Projection of required volume of cellulosic biofuel status of potential biofuel production Cellulosic Biofuel in Previous Years below the level specified in the statute, facilities as cellulosic biofuel producers we may reduce the applicable volumes in the RFS program, publicly available As an initial matter, it is useful to review the accuracy of EPA’s past of advanced biofuels and total information (including press releases cellulosic biofuel projections. The renewable fuel by the same or a lesser and news reports), and information record of actual cellulosic biofuel volume,29 and we are also required to provided by representatives of potential production, including both cellulosic make cellulosic waiver credits cellulosic biofuel producers. As 30 biofuel (which generate D3 RINs) and available. Our consideration of the discussed in greater detail in Section 2020 volume requirements for advanced cellulosic diesel (which generate D7 III.D.1, our projection of liquid RINs), and EPA’s projected production biofuel and total renewable fuel is cellulosic biofuel is based on a facility- presented in Section IV. volumes from 2015–2019 are shown in by-facility assessment of each of the Table III.B–1. These data indicate that B. Cellulosic Biofuel Industry likely sources of cellulosic biofuel in EPA’s projection was lower than the Assessment 2020, while our projection of CNG/LNG actual number of cellulosic RINs made In this section, we first explain our derived from biogas is based on an available in 2015,31 higher than the general approach to assessing facilities industry-wide assessment. To make a actual number of RINs made available in or groups of facilities (which we determination of which facilities are 2016 and 2017, and lower than the collectively refer to as ‘‘facilities’’) that most likely to produce liquid cellulosic actual number of RINs made available in have the potential to produce cellulosic biofuel and generate cellulosic biofuel 2018. Based on our current projection of biofuel in 2020. We then review the RINs in 2020, each potential producer of cellulosic biofuel production for 2019 accuracy of EPA’s projections in prior liquid cellulosic biofuel was based on data through September 2019, years. Next, we discuss the criteria used investigated further to determine the EPA’s projection of cellulosic biofuel in to determine whether to include current status of its facilities and its 2019 also appears likely to be lower potential domestic and foreign sources likely cellulosic biofuel production and than actual RIN generation in 2019. The of cellulosic biofuel in our projection for RIN generation volumes for 2020. Both fact that the projections made using this 2020. Finally, we provide a summary in our discussions with representatives methodology have been somewhat table of all facilities that we expect to of individual companies and as part of inaccurate, under-estimating the actual produce cellulosic biofuel in 2020. our internal evaluation process, we number of RINs made available in 2015, In order to project cellulosic biofuel gathered and analyzed information 2018, and likely 2019, and over- production for 2020, we have tracked including, but not limited to, the estimating in 2016 and 2017, reflects the the progress of a number of potential funding status of these facilities, current inherent difficulty with projecting cellulosic biofuel production facilities, status of the production technologies, cellulosic biofuel production. It also located both in the U.S. and in foreign anticipated construction and production emphasizes the importance of countries. We considered a number of ramp-up periods, facility registration continuing to make refinements to our factors, including EIA’s projection of status, and annual fuel production and projection methodology in order to cellulosic biofuel production in 2020, RIN generation targets. make our projections more accurate.

TABLE III.B.1–1—PROJECTED AND ACTUAL CELLULOSIC BIOFUEL PRODUCTION (2015–2018) [Million gallons] a

Projected volume b Actual production volume c Liquid CNG/LNG Total Liquid CNG/LNG Total cellulosic derived from cellulosic cellulosic derived from cellulosic biofuel biogas biofuel d biofuel biogas biofuel d

2015 e ...... 2 33 35 0.5 52.8 53.3 2016 ...... 23 207 230 4.1 186.2 190.3 2017 ...... 13 298 311 11.8 239.5 251.3 2018 ...... 14 274 288 10.6 303.2 313.8 2019 f ...... 20 399 418 15.5 418.2 433.7 a As noted in Section III.A. 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 table therefore include both domestic production of cellulosic biofuel and imported cellulosic biofuel. b Projected 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 2018 Final 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 with the annual standards, based on EMTS data. d Total cellulosic biofuel may not be precisely equal to the sum of liquid cellulosic biofuel and CNG/LNG derived from biogas due to rounding. e 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.

and imports (see, e.g., 80 FR 77420 (December 14, volumes that are not imported would not be 30 See CAA section 211(o)(7)(D)(ii); 40 CFR 2015) and 81 FR 89746 (December 12, 2016)). This available to obligated parties for compliance and 80.1456. interpretation is consistent with the statutory including them in the projection would render the 31 EPA only projected cellulosic biofuel direction to establish the cellulosic volume at the resulting volume requirement and percentage production for the final three months of 2015, since ‘‘projected volume available.’’ We do not believe it standards unachievable through the use of data on the availability of cellulosic biofuel RINs would be reasonable to include in the projection all cellulosic biofuel RINs. (D3+D7) for the first nine months of the year were cellulosic biofuel produced throughout the world, available at the time the analyses were completed 29 CAA section 211(o)(7)(D)(i). regardless of likelihood of import to the U.S., since for the final rule.

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f Actual production in 2019 is a projection based on actual data from January–September 2019 and a projection of likely production for Octo- ber–December 2019.

EPA’s projections of liquid cellulosic wide projection methodology first used derived from biogas relative to the biofuel were higher than the actual in 2018. This updated approach reflects technologies used to produce liquid volume of liquid cellulosic biofuel the fact that this industry is far more cellulosic biofuel and the relatively low produced each year from 2015 to mature than the liquid cellulosic biofuel production cost of CNG/LNG derived 2018.32 Depending on liquid cellulosic industry, with a far greater number of from biogas (discussed in further detail biofuel production in the last 3 months potential producers of CNG/LNG in Section V). These factors are unlikely or 2019, our projection for 2019 may derived from biogas. In such cases, to change in 2020. While we project ultimately be an over-projection or industry-wide projection methods can production volumes of liquid cellulosic under-projection of actual production, be more accurate than a facility-by- biofuel and CNG/LNG derived from however at this time it appears likely to facility approach, especially as macro biogas separately, the actual volume of result in an over-projection. As a result market and economic factors become each fuel type produced may be higher of the over-projections in 2015–2016 more influential on total production or lower than projected. (and the anticipated over-projection in than the success or challenges at any 2. Potential Domestic Producers 2017), and in an effort to take into single facility. The industry-wide account the most recent data available projection methodology slightly under- There are several companies and and make the liquid cellulosic biofuel projected the production of CNG/LNG facilities located in the U.S. that have projections more accurate, EPA adjusted derived from biogas in 2018 and appears either already begun producing our methodology in the 2018 final likely to slightly under-project the cellulosic biofuel for use as rule.33 The adjustments to our production of these fuels in 2019. transportation fuel, heating oil, or jet methodology adopted in the 2018 final However, the difference between the fuel at a commercial scale,35 or are rule resulted in a projection that is close projected and actual production volume anticipated to be in a position to do so to the volume of liquid cellulosic of these fuels was smaller than in 2017. at some time during 2020. The RFS biofuel produced in 2018 and appear As further described in Section program provides a strong financial likely to result in a reasonably accurate III.D.2, EPA is again projecting incentive for domestic cellulosic biofuel projection in 2019. In this final rule we production of CNG/LNG derived from producers to sell any fuel they produce are again applying the approach we first biogas using the industry-wide for domestic consumption.36 To date used in the 2018 final rule: Using approach. We calculate a year-over-year nearly all cellulosic biofuel produced in percentile values based on actual rate of growth in the renewable CNG/ the U.S. has been used domestically 37 production in previous years, relative to LNG industry and apply this year-over- and all the domestic facilities we have the projected volume of liquid cellulosic year growth rate to the total number of contacted in deriving our projections biofuel in these years. We have adjusted cellulosic RINs generated and available intend to produce fuel on a commercial the percentile values to project liquid to be used for compliance with the scale for domestic consumption and cellulosic biofuel production based on annual standards in 2018 to estimate the plan to use approved pathways. These production of CNG/LNG derived from factors give us a high degree of actual liquid cellulosic biofuel 34 production in 2016 to 2019. We believe biogas in 2020. We have applied the confidence that cellulosic biofuel RINs that the use of the methodology growth rate to the number of available will be generated for all cellulosic (described in more detail in Section 2018 RINs generated for CNG/LNG biofuel produced by domestic III.D.1), with the adjusted percentile derived from biogas as data from this commercial scale facilities. To generate values, results in a projection that year allows us to adequately account for RINs, each of these facilities must be not only RIN generation, but also for reflects a neutral aim at accuracy since registered with EPA under the RFS RINs retired for reasons other than it accounts for expected growth in the program and comply with all the compliance with the annual standards. near future by using historical data that regulatory requirements. This includes While more recent RIN generation data is free of any subjective bias. using an approved RIN-generating is available, the retirement of RINs for We next turn to the projection of pathway and verifying that their reasons other than compliance with the CNG/LNG derived from biogas. For 2018 feedstocks meet the definition of annual standards generally lags RIN and 2019, EPA used an industry-wide renewable biomass. Most of the generation, sometimes by up to a year or approach, rather than an approach that domestic companies and facilities more. considered in our assessment of projects volumes for individual The production volumes of cellulosic potential cellulosic biofuel producers in companies or facilities, to project the biofuel in previous years also highlight 2019 have already successfully production of CNG/LNG derived from that the production of CNG/LNG biogas. EPA used a facility-by-facility derived from biogas has been approach to project the production of 35 For a further discussion of EPA’s decision to significantly higher than the production focus on commercial scale facilities, rather than CNG/LNG derived from biogas from of liquid cellulosic biofuel in previous R&D and pilot scale facilities, see the 2019 2015–2017. Notably the facility-by- years. This is likely the result of a proposed rule (83 FR 32031, July 10, 2018). facility methodology resulted in combination of several factors, 36 According to data from EMTS, the average significant over-estimates of CNG/LNG including the mature state of the price for a 2019 cellulosic biofuel RINs sold in 2019 production in 2016 and 2017, leading (through September 2019) was $1.30. Alternatively, technology used to produce CNG/LNG obligated parties can satisfy their cellulosic biofuel EPA to develop the alternative industry obligations by purchasing an advanced (or biomass- 34 To project the volume of CNG/LNG derived based diesel) RIN and a cellulosic waiver credit. 32 We note, however, that because the projected from biogas in 2020, we multiply the number of The average price for a 2019 advanced biofuel RINs volume of liquid cellulosic biofuel in each year was 2018 RINs generated for these fuels and available sold in 2019 (through September 2019) was $0.43 very small relative to the total volume of cellulosic to be used for compliance with the annual while the price for a 2019 cellulosic waiver credit biofuel, these over-projections had a minimal standards by the calculated growth rate to project is $1.77 (EPA–420–B–18–052). impact on the accuracy of our projections of production of these fuels in 2019 and then multiply 37 The only known exception was a small volume cellulosic biofuel for each of these years. the resulting number by the growth rate again to of fuel produced at a demonstration scale facility 33 82 FR 58486 (December 12, 2017). project the production of these fuels in 2020. exported to be used for promotional purposes.

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completed facility registration, and have cellulosic biofuel they import into the and Ensyn’s Port-Cartier, Quebec successfully generated RINs.38 A brief U.S., demand for the cellulosic biofuels facility) have both completed the description of each of the domestic they produce is expected to be high in registration process as cellulosic biofuel companies (or group of companies for their own local markets. producers. We believe that it is cellulosic CNG/LNG producers and the EPA’s projection of cellulosic biofuel appropriate to include volume from facilities using Edeniq’s technology) that production in 2020 includes cellulosic these facilities in light of their proximity EPA believes may produce commercial- biofuel that is projected to be imported to the U.S., the proven technology used scale volumes of RIN generating into the U.S. in 2020, including by these facilities, the volumes of cellulosic biofuel by the end of 2020 can potential imports from all the registered cellulosic biofuel exported to the U.S. be found in a memorandum to the foreign facilities under the RFS by the company in previous years (in docket for this final rule.39 General program. We believe that due to the the case of Ensyn), and the company’s information on each of these companies strong demand for cellulosic biofuel in stated intentions to market fuel or group of companies considered in our local markets and the time necessary for produced at these facilities to qualifying projection of the potentially available potential foreign cellulosic biofuel markets in the U.S. All of the facilities volume of cellulosic biofuel in 2020 is producers to register under the RFS included in EPA’s cellulosic biofuel summarized in Table III.B.4–1. program and arrange for the importation projection for 2020 are listed in Table of cellulosic biofuel to the U.S., III.B.4–1. 3. Potential Foreign Sources of cellulosic biofuel imports from foreign Cellulosic Biofuel 4. Summary of Volume Projections for facilities not currently registered to Individual Companies In addition to the potential sources of generate cellulosic biofuel RINs are cellulosic biofuel located in the U.S., generally highly unlikely in 2020. For General information on each of the there are several foreign cellulosic purposes of our 2020 cellulosic biofuel cellulosic biofuel producers (or group of biofuel companies that may produce projection we have excluded potential producers, for producers of CNG/LNG cellulosic biofuel in 2020. These volumes from foreign cellulosic biofuel derived from biogas and producers of include facilities owned and operated production facilities that are not liquid cellulosic biofuel using Edeniq’s by Beta Renewables, Enerkem, Ensyn, currently registered under the RFS technology) that factored into our GranBio, and Raizen. All of these program. projection of cellulosic biofuel facilities use fuel production pathways Cellulosic biofuel produced at three production for 2020 is shown in Table that have been approved by EPA for foreign facilities (Ensyn’s Renfrew III.B.4–1. This table includes both cellulosic RIN generation provided facility, GranBio’s Brazilian facility, and facilities that have already generated eligible sources of renewable feedstock Raizen’s Brazilian facility) generated cellulosic RINs, as well as those that are used and other regulatory cellulosic biofuel RINs for fuel exported have not yet generated cellulosic RINs, requirements are satisfied. These to the U.S. since 2017; projected but are projected to do so by the end of companies would therefore be eligible volumes from each of these facilities are 2020. As discussed above, we have to register their facilities under the RFS included in our projection of available focused on commercial-scale cellulosic program and generate RINs for any volumes for 2020. EPA has also biofuel production facilities. Each of qualifying fuel imported into the U.S. included projected volume from two these facilities (or group of facilities) is While these facilities may be able to additional foreign facilities. These two discussed further in a memorandum to generate RINs for any volumes of facilities (Enerkem’s Canadian facility the docket.40

TABLE III.B.4–1—PROJECTED PRODUCERS OF CELLULOSIC BIOFUEL FOR U.S. CONSUMPTION IN 2020 41

Facility capacity Construction start 43 Company name Location Feedstock Fuel (million gallons date First production per year) 42

CNG/LNG Pro- Various ...... Biogas ...... CNG/LNG ...... Various ...... Various ...... Various. ducers 44. Edeniq ...... Various ...... Corn Kernel Fiber Ethanol ...... Various ...... Various ...... October 2016. Enerkem ...... Edmonton, AL, Separated MSW .. Ethanol ...... 45 10 ...... 2012 ...... September Canada. 2017.46 Ensyn ...... Renfrew, 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 ...... Sa˜o 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.

38 Most of the facilities listed in Table III.B.3–1 facilities from registering as cellulosic biofuel Dallas Burkholder to EPA Docket EPA–HQ–OAR– are registered to produce cellulosic (D3 or D7) RINs producers and producing qualifying cellulosic 2019–0136. with the exception of several of the producers of biofuel in 2020. 40 ‘‘Cellulosic Biofuel Producer Company CNG/LNG derived from biogas and Red Rock 39 ‘‘Cellulosic Biofuel Producer Company Descriptions (May 2019),’’ memorandum from Biofuels. EPA is unaware of any outstanding issues Descriptions (May 2019),’’ memorandum from Dallas Burkholder to EPA Docket EPA–HQ–OAR– that would reasonably be expected to prevent these 2019–0136.

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C. Projection From the Energy projection to the companies assessed by methodology is briefly described in this Information Administration EIA, we note that our volume section and is described in detail in Section 211(o)(3)(A) of the CAA projections are similar. EPA projects memoranda to the docket.48 requires EIA to ‘‘provide to the approximately 5 million gallons of We first separate the list of potential cellulosic ethanol will be produced Administrator of the Environmental producers of cellulosic biofuel (listed in domestically in 2020. Protection Agency an estimate, with Table III.B.4–1) into two groups respect to the following calendar year, D. Cellulosic Biofuel Volume for 2020 according to whether the facilities have of the volumes of transportation fuel, 1. Liquid Cellulosic Biofuel achieved consistent commercial-scale biomass-based diesel, and cellulosic production and cellulosic biofuel RIN biofuel projected to be sold or For our 2020 liquid cellulosic biofuel generation. We next defined a range of introduced into commerce in the United projection, we use the same general likely production volumes for each States.’’ EIA provided these estimates to approach as we have in projecting these group of potential cellulosic biofuel EPA on October 9, 2019.47 With regard volumes in previous years. We begin by to domestically produced cellulosic first categorizing potential liquid producers. The low end of the range for ethanol, the EIA estimated that the cellulosic biofuel producers in 2020 each group of producers reflects actual available volume in 2020 would be 7 according to whether or not they have RIN generation data over the last 12 million gallons. In its letter, EIA did not achieved consistent commercial scale months for which data were available at identify the facilities on which their production of cellulosic biofuel to date. the time our technical assessment was estimate of liquid cellulosic biofuel We refer to these facilities as consistent completed (October 2018–September production was based. EIA did, producers and new producers, 2019).49 For potential producers that however, indicate in the letter that it respectively. Next, we define a range of have not yet generated any cellulosic only included domestic production of likely production volumes for 2020 for RINs, the low end of the range is zero. cellulosic ethanol in their projections. each group of companies. Finally, we For the high end of the range, we These EIA projections, therefore, do not use a percentile value to project from considered a variety of factors, include cellulosic biofuel produced by the established range a single projected including the expected start-up date and foreign entities and imported into the production volume for each group of ramp-up period, facility capacity, and U.S., nor estimates of cellulosic diesel, companies in 2020. As in the 2018 and the number of RINs the producer cellulosic heating oil or CNG/LNG 2019 final rules, we calculated expects to generate in 2020.50 The produced from biogas, which together percentile values for each group of projected range for each group of represent approximately 99 percent of companies based on the past companies is shown in Tables III.D.1–1 our projected cellulosic biofuel volume performance of each group relative to and III.D.1–2.51 for 2020. When limiting the scope of our our projected production ranges. This

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

Companies included Low end of High end of the range the range a

Enerkem, Ensyn (Port Cartier facility), BioEnergy, Red Rock Biofuels ...... 0 30 a Rounded to the nearest million gallons.

41 Despite generating cellulosic RINs in previous into account in our production projection for this projection of cellulosic biofuel production in 2020 years Poet-DSM’s facility has not been included in facility (See ‘‘May 2019 Liquid Cellulosic Biofuel after announcing their plans to suspend commercial Table III.B.4–1 after announcing their plans to Projections for 2020 CBI’’). production at this facility. suspend commercial production at this facility. 46 This date reflects the first production of ethanol 50 As in our 2015–2019 projections, EPA 42 The Facility Capacity is generally equal to the from this facility. The facility began production of calculated a high end of the range for each facility nameplate capacity provided to EPA by company methanol in 2015. (or group of facilities) based on the expected start- representatives or found in publicly available 47 Letter from Linda Capuano, EIA Administrator up date and a six-month straight-line ramp-up information. Capacities are listed in physical to Andrew Wheeler, EPA Administrator. October 9, period. The high end of the range for each facility gallons (rather than ethanol-equivalent gallons). If 2019. Available in docket EPA–HQ–OAR–2019– (or group of facilities) is equal to the value the facility has completed registration and the total 0136. calculated by EPA using this methodology, or the permitted capacity is lower than the nameplate 48 ‘‘December 2019 Liquid Cellulosic Biofuel number of RINs the producer expects to generate in capacity, then this lower volume is used as the Projections for 2020 CBI’’ and ‘‘Calculating the facility capacity. 2020, whichever is lower. Percentile Values Used to Project Liquid Cellulosic 51 43 Where a quarter is listed for the first production Biofuel Production for the 2020 FRM,’’ More information on the data and methods EPA date EPA has assumed production begins in the memorandums from Dallas Burkholder to EPA used to calculate each of the ranges in these tables middle month of the quarter (i.e., August for the 3rd Docket EPA–HQ–OAR–2019–0136. in contained in ‘‘December 2019 Liquid Cellulosic quarter) for the purposes of projecting volumes. 49 Consistent with previous years, we have Biofuel Projections for 2020 CBI’’ memorandum 44 For more information on these facilities see considered whether there is reason to believe any from Dallas Burkholder to EPA Docket EPA–HQ– ‘‘December 2019 Assessment of Cellulosic Biofuel of the facilities considered as potential cellulosic OAR–2019–0136. We have not shown the projected Production from Biogas (2020),’’ memorandum from biofuel producers for 2020 is likely to produce a ranges for each individual company. This is Dallas Burkholder to EPA Docket EPA–HQ–OAR– smaller volume of cellulosic biofuel in 2020 than because the high end of the range for some of these 2019–0136. in the previous 12 months for which data are companies are based on the company’s production 45 The nameplate capacity of Enerkem’s facility is available. At this time, EPA is not aware of any projections, which they consider confidential 10 million gallons per year. However, we anticipate information that would indicate lower production business information (CBI). Additionally, the low that a portion of their feedstock will be non- in 2020 from any facility considered than in the end of the range for facilities that have achieved biogenic municipal solid waste (MSW). RINs cannot previous 12 months for which data are available. consistent commercial scale production is based on be generated for the portion of the fuel produced Despite generating cellulosic RINs in previous years actual RIN generation data in the most recent 12 from non-biogenic feedstocks. We have taken this Poet-DSM’s facility has not been included in our months, which is also claimed as CBI.

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TABLE III.D.1–2—2020 PRODUCTION RANGES FOR CONSISTENT PRODUCERS OF LIQUID CELLULOSIC BIOFUEL [Million ethanol-equivalent gallons]

Companies included Low end of High end of the range a the range b

Facilities using Edeniq’s technology (registered facilities), Ensyn (Renfrew facility), GranBio, QCCP/Syngenta, Raizen ...... 10 36 a Rounded to the nearest million gallons.

After defining likely production which EPA used the current III.C.1–3 shows the projected ranges for ranges for each group of companies, we methodology for developing the range liquid cellulosic biofuel production next determined the percentile values to potential production volumes for each (from the 2014–16, 2017, 2018, and use in projecting a production volume company was 2016, while 2019 is the 2019 final rules), actual production, and for each group of companies. We most recent year for which we have the percentile values that would have calculated the percentile values using data. resulted in a projection equal to the actual 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—PROJECTED AND ACTUAL LIQUID CELLULOSIC BIOFUEL PRODUCTION IN 2016–2019 [Million gallons]

Low end of High end of Actual Actual the range the range production 53 percentile

New Producers 54

2016 ...... 0 76 1.06 1st 2017 ...... 0 33 8.79 27th 2018 ...... 0 47 2.87 6th 2019 ...... 0 10 0.00 0th Average a ...... N/A N/A N/A 9th

Consistent Producers 55

2016 ...... 2 5 3.28 43rd 2017 ...... 3.5 7 3.02 ¥14th 2018 ...... 7 24 7.74 4th 2019 ...... 14 44 15.51 5th Average a ...... N/A N/A N/A 10th a We have not averaged the low and high ends of the ranges, or actual production, as we believe it is more appropriate to average the actual percentiles 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 with greater projected volumes.

Based upon this analysis, EPA has biofuel projections equal to the volumes We then used these percentile values, projected cellulosic biofuel production produced by each group of companies together with the ranges determined for from new producers at the 9th in 2016–2019. Prior to 2016, EPA used each group of companies discussed percentile of the calculated range and different methodologies to project above, to project a volume for each from consistent producers at the 10th available volumes of cellulosic biofuel group of companies in 2020. These percentile.56 These percentiles are and thus believes it inappropriate to calculations are summarized in Table calculated by averaging the percentiles calculate percentile values based on III.D.1–4. that would have produced cellulosic projections from those years.57

52 To calculate the percentile value that would DuPont (2016, 2017), Edeniq (2016, 2017), Enerkem Liquid Cellulosic Biofuel Production for 2020 have resulted in a projection equal to actual (2018, 2019), Ensyn Port Cartier (2018, 2019), FRM,’’ available in EPA docket EPA–HQ–OAR– production for 2019 we projected actual liquid GranBio (2016, 2017), IneosBio (2016), and Poet 2019–0136. cellulosic biofuel production for 2019 using data (2016, 2017). 57 EPA used a similar projection methodology for through September 2019 and an updated projection 55 Companies characterized as consistent 2015 as in 2016–2018, however we only projected of liquid cellulosic biofuel production for October– producers in the 2014–2016, 2017, 2018, and 2019 cellulosic biofuel production volume for the final December 2019. final rules were as follows: Edeniq Active Facilities 53 Actual production is calculated by subtracting (2018, 2019), Ensyn Renfrew (2016–2019), GranBio 3 months of the year, as actual production data RINs retired for any reason other than compliance (2018, 2019), Poet (2018, 2019), Quad County Corn were available for the first 9 months. We do not with the RFS standards from the total number of Processors/Syngenta (2016–2019), and Raizen believe it is appropriate to consider data from a year cellulosic RINs generated. (2019). for which 9 months of the data were known at the 54 Companies characterized as new producers in 56 For more detail on the calculation of the time the projection was made in determining the the 2014–2016, 2017, 2018, and 2019 final rules percentile values used in this final rule see percentile values used to project volume over a full were as follows: Abengoa (2016), CoolPlanet (2016), ‘‘Calculating the Percentile Values Used to Project year.

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TABLE III.D.1–4—PROJECTED VOLUME OF LIQUID CELLULOSIC BIOFUEL IN 2020 [Million ethanol-equivalent gallons]

Low end of High end of Percentile Projected the range a the range a volume a

Liquid Cellulosic Biofuel Producers; Producers without Consistent Commer- cial Scale Production ...... 0 30 9th 3 Liquid Cellulosic Biofuel Producers; Producers with Consistent Commercial Scale Production ...... 10 36 10th 13

Total ...... N/A N/A N/A b 15 a Volumes rounded to the nearest million gallons. b Volumes do not add due to rounding.

2. CNG/LNG Derived From Biogas biogas used as transportation fuel.58 the 12 months that immediately precede EPA calculated the year-over-year this time period (October 2017 to For 2020, EPA is using the same growth rate in CNG/LNG derived from September 2018). The growth rate industry wide projection approach as biogas by comparing RIN generation calculated using this data is 37.9 used for 2018 and 2019 based on a year- from October 2018 to September 2019 percent.59 These RIN generation over-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—GENERATION OF CELLULOSIC BIOFUEL RINS FOR CNG/LNG DERIVED FROM BIOGAS [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 37.9%

EPA then applied this 37.9 percent We believe that projecting the 3. Total Cellulosic Biofuel in 2020 year-over-year growth rate to the total production of CNG/LNG derived from number of 2018 cellulosic RINs biogas in this manner appropriately After projecting production of generated and available for compliance takes into consideration the actual cellulosic biofuel from liquid cellulosic for CNG/LNG. This methodology results recent rate of growth of this industry, biofuel production facilities and in a projection of 576.8 million gallons and that this growth rate accounts for producers of CNG/LNG derived from of CNG/LNG derived from biogas in both the potential for future growth and biogas, EPA combined these projections 2020. In this rule, as in the 2018 and the challenges associated with to project total cellulosic biofuel 2019 final rules, we are again applying increasing RIN generation from these production for 2020. These projections the calculated year-over-year rate of fuels in future years. This methodology are shown in Table III.D.3–1. Using the growth to the volume of CNG/LNG may not be appropriate to use as the methodologies described in this section, actually supplied in 2018 (taking into projected volume of CNG/LNG derived we project that 0.59 billion ethanol- account actual RIN generation as well as from biogas approaches the total volume equivalent gallons of qualifying RINs retired for reasons other than of CNG/LNG that is used as cellulosic biofuel will be produced in compliance with the annual volume transportation fuel, as RINs can be 2020. We believe that projecting overall obligations) to provide an updated generated only for CNG/LNG used as production in 2020 in the manner projection of the production of these transportation fuel. We do not believe described above results in a neutral fuels in 2019, and then applying the rate that this is yet a constraint as our estimate (neither biased to produce a of growth to this updated 2019 projection for 2020 is below the total projection that is too high nor too low) projection to project the production of volume of CNG/LNG that is currently of likely cellulosic biofuel production in these fuels in 2020.61 used as transportation fuel.62 2020.

58 Historically RIN generation for CNG/LNG used as transportation fuel in 2020 can be found in prepared by Bates White for the Coalition for derived from biogas has increased each year. It is ‘‘December 2019 Assessment of Cellulosic Biofuel Renewable Gas (‘‘Renewable Natural Gas Supply possible, however, that RIN generation for these Production from Biogas (2020)’’ memorandum from and Demand for Transportation.’’ Bates White fuels in the most recent 12 months for which data Dallas Burkholder to EPA Docket PA–HQ–OAR– Economic Consulting, April 5, 2019) these estimates are available could be lower than the preceding 12 2019–0136. range from nearly 600 million ethanol-equivalent months. We believe our methodology accounts for 61 To calculate this value, EPA multiplied the gallons in 2020 (February 2019 STEO) to over 1.5 this possibility. In such a case, the calculated rate number of 2018 RINs generated and available for billion gallons (Fuels Institute—US Share). As of growth would be negative. compliance for CNG/LNG derived from biogas discussed in further detail in a memorandum to the 59 This growth rate is higher than the growth rates (303.2 million), by 1.379 (representing a 37.9 docket (‘‘December 2019 Assessment of Cellulosic used to project CNG/LNG volumes in the 2019 final percent year-over-year increase) to project Biofuel Production from Biogas (2020)’’ rule (29.0%, see 83 FR 63717, December 11, 2018) production of CNG/LNG in 2019, and multiplied memorandum from Dallas Burkholder to EPA and the 2018 final rule (21.6%, see 82 FR 58502, this number (418.2 million RINs) by 1.379 again to Docket EPA–HQ–OAR–2019–0136) we believe the December 12, 2017). project production of CNG/LNG in 2020. higher projections are likely to be more accurate. 60 Further detail on the data used to calculate 62 EPA is aware of several estimates for the Thus, the volume of CNG/LNG used as each of these numbers in this table, as well as the quantity of CNG/LNG that will be used as transportation fuel would not appear to constrain projected volume of CNG/LNG derived from biogas transportation fuel in 2020. As discussed in a paper the number of RINs generated for this fuel in 2020.

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TABLE III.D.3–1—PROJECTED VOLUME OF CELLULOSIC BIOFUEL IN 2020

Projected volume a

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

Total (billion gallons) ...... 0.59 a Rounded to the nearest million gallons.

Unlike in previous years, we have more beneficial cellulosic biofuels in discretion which that authority rounded the final projected volume of the later years.63 provides, including: cellulosic biofuel to the nearest 10 Due to a projected shortfall in the • The availability of advanced biofuels million gallons as proposed. This is availability of cellulosic biofuel, and (e.g., historic data on domestic consistent with the volumes in the consistent with our long-held supply, expiration of the biodiesel tables containing the statutory volume interpretation that the cellulosic waiver blenders’ tax credit, potential imports targets for cellulosic biofuel through authority is best interpreted to provide of biodiesel in light of the Commerce 2022, which also specify volumes to no equal reductions to advanced biofuel Department’s determination on tariffs more than the nearest 10 million gallons and total renewable fuel volumes, we on biodiesel imports from Argentina (and in many cases only to the nearest are reducing the statutory volume and Indonesia, potential imports of 100 million gallons). While in previous targets for both advanced biofuel and sugarcane ethanol, and anticipated years we have rounded the required total renewable fuel for 2020 by the changes in the production of cellulosic biofuel volume to the nearest maximum amount permitted under the feedstocks for advanced biodiesel and million gallon, the projected volume of cellulosic waiver authority, 9.91 billion renewable diesel) cellulosic biofuel has grown such that gallons. Section IV.A explains the • The energy security and greenhouse this level of precision is unnecessary, volumetric limitation on our use of the gas (GHG) impacts of advanced and likely unfounded. By rounding to cellulosic waiver authority to reduce biofuels the nearest 10 million gallons the total advanced biofuel and total renewable • The availability of carryover RINs projected volume of cellulosic biofuel is fuel volumes. Section IV.B presents our • The intent of Congress as reflected in technical analysis of the reasonably affected in the most extreme case by the statutory volumes tables to attainable and attainable volumes of only 5 million gallons, or approximately substantially increase the use of advanced biofuel. Sections IV.C and 1 percent of the total projected volume. advanced biofuels over time IV.D further explain our decision to The uncertainty in the projected volume • Increased costs associated with the exercise the maximum discretion of cellulosic biofuel is significantly use of advanced biofuels, and available under the cellulosic waiver • The increasing likelihood of adverse higher than any error introduced by authority to reduce advanced biofuel unintended impacts associated with rounding the projected volume to the and total renewable fuel, respectively. nearest 10 million gallons. To begin, we have evaluated the use of advanced biofuel volumes capabilities of the market and are achieved through diversion of foreign IV. Advanced Biofuel and Total fuels or substitution of advanced Renewable Fuel Volumes for 2020 making a finding that the 15.0 billion gallons specified in the statute for feedstocks from other uses to biofuel The national volume targets for advanced biofuel cannot be reached in production. advanced biofuel and total renewable 2020. This is primarily due to the Before the 2018 standards were set, fuel to be used under the RFS program expected continued shortfall in the consideration of these factors led us each year through 2022 are specified in cellulosic biofuel; production of this to conclude that it was appropriate to CAA section 211(o)(2)(B)(i)(I) and (II). fuel type has consistently fallen short of set the advanced biofuel standard in a Congress set annual renewable fuel the statutory targets by 90 percent or manner that would allow the partial volume targets that envisioned growth more, and as described in Section III, we backfilling of missing cellulosic at a pace that far exceeded historical project that it will fall far short of the volumes with non-cellulosic advanced growth and, for years after 2011, statutory target of 10.5 billion gallons in biofuels.64 In the 2018 and 2019 prioritized that growth as occurring 2020. For this and other reasons standards final rules, we concluded that principally in advanced biofuels described in this section we are partial backfilling of missing cellulosic (contrary to previous growth patterns reducing the advanced biofuel statutory biofuel volumes with advanced biofuel where most growth was in conventional target by 9.91 billion gallons for 2020. was not warranted, primarily due to a renewable fuel). Congressional intent is In previous years when we have used shortfall in reasonably attainable evident in the fact that the implied the cellulosic waiver authority, we have volumes of advanced biofuels, high statutory volume requirement for determined the extent to which we costs, the potential for feedstock conventional renewable fuel is 15 should reduce advanced biofuel switching and/or foreign fuel diversion billion gallons for all years after 2014, volumes by considering a number of which could compromise GHG benefits while the advanced biofuel volume different factors under the broad and disrupt markets, and an interest in requirements, driven largely by growth preserving the existing carryover RIN 63 See, for instance, comments from Growth bank.65 66 in cellulosic biofuel, continue to grow Energy where they note that ‘‘ . . . producers of each year through 2022 to a total of 21 starch ethanol . . . are leading investors in 64 cellulosic biofuels, which may be derived from For instance, see 81 FR 89750 (December 12, billion gallons. Early growth in 2016). conventional renewable fuels was corn.’’ Page 31 of ‘‘Comments from Growth Energy on proposed 2018 standards,’’ available in docket 65 See 82 FR 58504 (December 12, 2017). expected to provide a bridge to the new, EPA–HQ–OAR–2019–0136. 66 See 83 FR 63719 (December 11, 2018).

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For 2020, we have determined that gallons. This volume requirement is 170 and total renewable fuel under the the concerns surrounding partial million gallons more than the applicable cellulosic waiver authority, the statute backfilling of missing cellulosic biofuel volume used to derive the 2019 limits those reductions to no more than with advanced biofuel remain valid. As percentage standard. Furthermore, after the reduction in cellulosic biofuel. As a result, we are reducing the statutory applying the same reduction to the described in Section III.C, we are volume target for advanced biofuel by statutory volume target for total establishing a 2020 applicable volume the same amount as the reduction in renewable fuel, the volume requirement for cellulosic biofuel of 590 million cellulosic biofuel. This results in the for total renewable fuel is also 170 gallons, representing a reduction of non-cellulosic component of the million gallons more than the applicable 9,910 million gallons from the statutory advanced biofuel volume requirement volume used to derive the 2019 target of 10,500 million gallons. As a being equal to 4.50 billion gallons in percentage standard. These increases are result, 9,910 million gallons is the 2020, which is the same as the implied entirely attributable to a 170 million maximum volume reduction for statutory volume requirement for non- gallon increase in the cellulosic biofuel cellulosic advanced biofuel for 2020. volume requirement. The implied advanced biofuel and total renewable The impact of our exercise of the volumes of non-cellulosic advanced fuel that is permissible using the cellulosic waiver authority is that after biofuel and conventional renewable fuel cellulosic waiver authority. Use of the waiving the statutory volume target for will remain the same as in 2019 at 4.5 cellulosic waiver authority to this cellulosic biofuel down to the projected and 15 billion gallons respectively. maximum extent would result in available level, and then reducing the volumes of 5.09 and 20.09 billion statutory volume target for advanced A. Volumetric Limitation on Use of the gallons for advanced biofuel and total biofuel by the same amount, the Cellulosic Waiver Authority renewable fuel, respectively. resulting volume requirement for As described in Section II.A, when advanced biofuel for 2020 is 5.09 billion making reductions in advanced biofuel

TABLE IV.A–1—LOWEST PERMISSIBLE VOLUMES USING ONLY THE CELLULOSIC WAIVER AUTHORITY [Million gallons]

Advanced Total biofuel renewable fuel

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

We are authorized under the reasonably attainable volumes of cellulosic waiver authority.70 Finally, cellulosic waiver authority to reduce the advanced biofuel to inform our exercise we note that our assessments of the advanced biofuel and total renewable of the cellulosic 68 waiver authority. As ‘‘reasonably attainable’’ and fuel volumes ‘‘by the same or a lesser’’ we explained in the 2019 final rule, ‘‘attainable’’ volumes of non-cellulosic amount as the reduction in the both ‘‘reasonably attainable’’ and advanced biofuels are not intended to be cellulosic biofuel volume.67 As ‘‘attainable’’ are terms of art defined by as exacting as our projection of discussed in Section II.A, EPA has EPA.69 Volumes described as cellulosic biofuel production, described broad discretion in using the cellulosic ‘‘reasonably attainable’’ are those that in Section III of this rule.71 waiver authority in instances where its can be reached with minimal market use is authorized under the statute, disruptions, increased costs, reduced 70 81 FR 89762 (December 12, 2016). The since Congress did not specify factors GHG benefits, and diversion of maximum achievable volume may be relevant to that EPA must consider in determining advanced biofuels or advanced biofuel our consideration of whether to exercise the general whether to use the authority to reduce waiver authority on the basis of inadequate feedstocks from existing uses. Volumes advanced biofuel or total renewable domestic supply. However, for 2020, we have described as ‘‘attainable,’’ in contrast, determined that after exercising our cellulosic fuel, nor what the appropriate volume are those we believe can be reached but waiver authority to the full extent permitted, the reductions (within the range permitted resulting advanced biofuel volume is attainable. by statute) should be. Thus, we have the would likely result in market Therefore, further reductions using the general authority to set the 2020 advanced disruption, higher costs, and/or reduced waiver authority on the basis of inadequate domestic supply are not necessary. biofuel volume requirement at a level GHG benefits. Neither ‘‘reasonably attainable’’ nor ‘‘attainable’’ are meant 71 The statute directs EPA to lower the cellulosic that is designed to partially backfill for biofuel volume to the projected production level the shortfall in cellulosic biofuel. to convey the ‘‘maximum achievable’’ where that level falls short of the statutory volume. However, as discussed below, we do not level, which, as we explained in the Under API v. EPA, 706 F.3d 474, 479–80 (D.C. Cir. believe this would be appropriate for 2017 final rule, we do not consider to 2013), we must project this production level with neutral aim at accuracy, that is, make a technical 2020. be an appropriate target under the determination about the market’s ability to produce B. Attainable Volumes of Advanced cellulosic biofuels. By contrast, the discretionary 68 83 FR 63704, 63721 (December 11, 2019). portion of the cellulosic waiver authority does not Biofuel 69 Our consideration of ‘‘reasonably attainable’’ explicitly require EPA to project the availability of advanced biofuels, but instead confers broad volumes is not intended to imply that ‘‘attainable’’ We have evaluated whether it would discretion on EPA. Moreover, while we have chosen volumes are unreasonable or otherwise be appropriate to require 5.09 billion to estimate reasonably attainable and attainable ethanol-equivalent gallons of advanced inappropriate. As we explain in this section, we volumes of advanced biofuel, these volumes do not biofuel for 2020. In doing so, we have believe that an advanced biofuel volume of 5.09 equate to projected production alone. Rather, in billion gallons, although not reasonably attainable, considered both attainable and exercising the discretionary portion of the cellulosic is attainable, and that establishing such volume is waiver authority, we also consider a range of policy an appropriate exercise of our cellulosic waiver factors—such as costs, greenhouse gas emissions, 67 CAA section 211(o)(7)(D)(i). authority. Continued

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As in prior rulemakings, we begin by gallons.74 This is the volume of imported sugarcane ethanol. Imported considering what volumes of advanced advanced biofuel that we believe is sugarcane ethanol from Brazil is the biofuels are reasonably attainable. In reasonably attainable. predominant form of imported ethanol ACE, the Court noted that in assessing As described in Section IV.A above, and the only significant source of what volumes are ‘‘reasonably 5.09 billion gallons is the lowest level imported advanced ethanol. In setting attainable,’’ EPA had considered the that we could set under the cellulosic the 2019 standards, we estimated that availability of feedstocks, domestic waiver authority. Since the volume that 100 million gallons of imported production capacity, imports, and we have determined to be reasonably sugarcane ethanol would be reasonably market capacity to produce, distribute, attainable—5.00 billion gallons—is less attainable.75 This was based on a and consume renewable fuel.72 These than the lowest volume we can set combination of data from recent years considerations include both demand- under the cellulosic waiver authority, demonstrating relatively low import side and supply-side factors.73 We are we also have considered whether the volumes and older data indicating that taking a similar approach for 2020. We market can make more than 5.00 billion higher volumes were possible. We also are establishing the advanced biofuel gallons of advanced biofuel, noted the high variability in ethanol volume requirement at a level that takes notwithstanding the potential for import volumes in the past (including of into consideration both the benefits and feedstock/fuel diversions. That is, we Brazilian sugarcane ethanol), increasing drawbacks of an increase in the implied assess whether 5.09 billion gallons is gasoline consumption in Brazil, and non-cellulosic advanced biofuel volume merely ‘‘attainable,’’ as opposed to variability in Brazilian production of requirement, as well as the ability of the ‘‘reasonably attainable.’’ In particular, sugar as reasons that it would be market to make such increased volumes we assess whether additional volumes inappropriate to assume that sugarcane available. of advanced biodiesel and renewable ethanol imports would reach the much Our individual assessments of diesel are attainable. We conclude that higher levels suggested by some reasonably attainable volumes of each 2.83 billion gallons of advanced stakeholders. type of advanced biofuel reflect this biodiesel and renewable diesel are At the time of the 2019 standards final approach. As discussed in further detail attainable, notwithstanding potential rule, we used available data from a in this section, we find that 70 million feedstock/fuel diversions. This quantity portion of 2018 to estimate that import gallons of imported advanced ethanol, of advanced biodiesel and renewable volumes of sugarcane ethanol were 50 million gallons of other advanced diesel, together with the cellulosic likely to fall significantly below the 200 biofuels, and 2.77 billion gallons of biofuel, sugarcane ethanol, and other million gallons we had assumed when advanced biodiesel and renewable advanced biofuels described above, will we set the 2018 standards. Since the diesel are reasonably attainable. enable the market to make available 5.09 2019 final rule, new data reveals a Together with our projected volume of billion gallons of advanced biofuels. continued trend of low imports. 590 million gallons of cellulosic biofuel, 1. Imported Sugarcane Ethanol Specifically, import data for all of 2018 the sum of these volumes is 5.00 billion The predominant available source of is now available and indicates that energy security, market disruptions, etc., as advanced biofuel other than cellulosic imports of sugarcane ethanol reached described throughout this section. biofuel and BBD has historically been just 54 million gallons. 72 See ACE, 864 F.3d at 735–36. 73 See id. at 730–35. 74 0.07 + 0.05 + 2.77 × 1.55 + 0.59 = 5.00. 75 83 FR 63704 (December 11, 2018).

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Data for 2019 through August indicate result of these factors and the lower 2020. Our revised estimate of 70 million that advanced ethanol imports reached levels that have occurred in recent gallons reflects updated data on 2018 95 million gallons. While we cannot years, we believe it would be imports as well as a more robust project precisely what total import appropriate to reduce the expected quantitative approach to calculating volumes will be by the end of 2019, as volume of imported sugarcane ethanol recent actual imports. below 100 million gallons. a first approximation is may be We note that the future projection of Imports of sugarcane ethanol appear reasonable to assume that the monthly imports of sugarcane ethanol is to have stabilized in the 2014 to 2018 rate of import is consistent throughout inherently imprecise and that actual the year. If so, then total 2019 imports timeframe in comparison to previous imports in 2020 could be lower or could be 143 million gallons. years. The average for these years is 67 million gallons. Due to the difficulty in higher than 70 million gallons. Factors However, there is little evidence that precisely projecting future import that could affect import volumes the increase potentially exhibited in volumes as described further below, we include uncertainty in the Brazilian 2019 would continue into 2020 as there believe that a rounded value of 70 political climate, weather and harvests is no consistent upward or downward million gallons would be more in Brazil, world ethanol demand and trend after 2013. Moreover, several appropriate and thus we use 70 million prices, constraints associated with the factors create disincentives for gallons of imported sugarcane ethanol E10 blendwall in the U.S., the status of increasing imports above the levels in for the purposes of projecting the biodiesel tax credit which affects the recent years, including the E10 reasonably attainable volumes of economic attractiveness of sugarcane blendwall, the potential existence of a advanced biofuel for 2020. We believe ethanol’s primary competitor, world recurring tax credit for biodiesel and the volume of fuel imported in previous demand for and prices of sugar, and the renewable diesel with which sugarcane years is a reasonable way to project the cost of sugarcane ethanol relative to that ethanol competes within the advanced reasonably attainable volume of biofuel category, and the fact that of corn ethanol. After considering these sugarcane ethanol in 2020. factors, and in light of the high degree imported sugarcane ethanol typically In the July 29 proposal, we projected costs more than corn ethanol.76 As a of variability in historical imports of that 60 million gallons of imported sugarcane ethanol, we believe that 70 sugarcane ethanol would be available in 76 The difference between D5 and D6 RIN prices can also influence the relative attractiveness to consumers of advanced ethanol compared to considerable variability in this particular RIN price conventional ethanol. However, there has been difference over the last few years.

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million gallons is reasonably attainable advanced biodiesel and renewable non-cellulosic CNG, naphtha, heating for 2020.77 diesel, there are other advanced biofuels oil, and domestically produced that can be counted in the 2. Other Advanced Biofuel advanced ethanol. However, the supply determination 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—HISTORICAL SUPPLY OF OTHER ADVANCED BIOFUELS [Million ethanol-equivalent gallons]

Domestic a CNG/LNG Heating oil Naphtha ethanol Total

2013 ...... 26 0 3 23 52 2014 ...... 20 0 18 26 64 2015 ...... 0 1 24 25 50 2016 ...... 0 2 27 27 56 2017 ...... 2 2 32 26 62 2018 ...... 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 as discussed in Section IV.B.3.

The significant decrease after 2014 in be attained in 2020. For this final rule sugarcane ethanol and ‘‘other’’ CNG/LNG from biogas as advanced we have chosen to use a mathematical advanced biofuels, we next assess the biofuel with a D code of 5 is due to the approach that is consistent with the availability of advanced biodiesel and re-categorization in 2014 of landfill approach we have taken for imported renewable diesel by considering a wide biogas from advanced (D code 5) to sugarcane ethanol, and which we range of factors. First, we calculate the cellulosic (D code 3).78 Subsequently, believe represents a more robust amount of advanced biodiesel and total supply of these other advanced methodology for making future renewable diesel that would be needed biofuels has exhibited no consistent projections. As the change in the to meet the 5.09 billion ethanol- trend during 2015 to 2018. The average projected 2020 volume of other equivalent gallon advanced requirement during those four years was 54 million advanced biofuel is very small, we do were we to exercise our maximum gallons. However, due to the high not believe this change in approach discretion under the cellulosic waiver variability, and consistent with the meaningfully affects the broader authority discussed in Section IV.A. approach we are taking for estimating assessment of advanced biofuel This calculation, shown in Table volumes of imported sugarcane ethanol, volumes. Moreover, we note that this IV.B.3–1, helps inform the exercise of we believe that this average should be final action uses a volume of imported our waiver authorities. Second, we rounded to the nearest 10 million sugarcane ethanol that is 10 million consider the historical availability of gallons. As a result, we have used 50 gallons higher than that proposed, while these fuels, including the impacts of million gallons to represent other simultaneously using a volume of other biodiesel tax policy and tariffs. Third, advanced biofuels in the context of advanced that is 10 million gallons we consider other factors that could estimating attainable volumes of lower than that proposed. The net effect potentially limit the availability of these advanced biofuel.79 As with sugarcane on projections of advanced biofuel for fuels including the production capacity ethanol, we have not conducted an in- both of these changes combined is zero. of advanced biodiesel and renewable depth assessment of the volume of other We recognize that the potential exists diesel production facilities, and the advanced biofuels that could be made for additional volumes of advanced ability for the market to distribute and available to the U.S. without diverting biofuel from sources such as jet fuel, use these fuels. Fourth, we assess the this fuel from other markets. We believe liquefied petroleum gas (LPG), butanol, availability of advanced feedstocks. As the volume of fuel supplied in previous and liquefied natural gas (as distinct part of this analysis, we consider the years is a reasonable way to project the from CNG), as well as non-cellulosic volume of advanced biodiesel and reasonably attainable volume of other CNG from biogas produced in digesters. renewable diesel that can be made advanced biofuels in 2020. However, since they have been available with minimal diversions of We acknowledge that, in the July 29 produced, if at all, in only de minimis advanced feedstocks and biofuels from proposal, we proposed using 60 million and sporadic amounts in the past, we do existing uses, i.e., the reasonably gallons of other advanced biofuel in not have a reasonable basis for attainable volume of advanced biodiesel estimating attainable volumes of projecting substantial volumes from and renewable diesel. We calculate this advanced biofuel. This value was based these sources in 2020.80 volume based on our projection of on the same data shown in Table 3. Biodiesel and Renewable Diesel growth in qualifying feedstocks and on IV.B.2–1, but using a more qualitative the reasonably attainable volume approach wherein 60 million gallons Having projected the available volume calculated in the 2019 final rule. Fifth, was deemed representative of both of cellulosic biofuel, and the reasonably we consider how changes to the import historical volumes and those that could attainable volumes of imported and export of advanced biodiesel and

77 Given the relatively small volumes of sugarcane 78 79 FR 42128 (July 18, 2014). impact on the market’s ability to meet the advanced ethanol we are projecting (approximately 1 percent 79 As with sugarcane ethanol, given the relatively biofuel volumes. of the advanced biofuel standard), even a significant small volumes of other advanced biofuels we are 80 No RIN-generating volumes of these other deviation in its actual availability would likely have projecting (approximately 1% of the advanced advanced biofuels were produced in 2018, and less negligible impact on the market’s ability to meet the biofuel standard), even a significant deviation in its than 1 million gallons total in prior years. advanced biofuel volumes. actual availability would likely have negligible

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renewable diesel could impact the supports our decisions to neither weighs in favor of exercising the available volume of these fuels. require the use of additional volumes of cellulosic waiver authority to the These analyses support three key advanced biofuel to backfill for the maximum extent so as to minimize findings. First, were EPA to exercise the shortfall in cellulosic biofuel nor to diversions of advanced biofuels and further waive volumes under the general feedstocks and the associated harms and cellulosic waiver authority to the 81 maximum extent, we would require an waiver authority. the need for additional volumes of high advanced biofuel volume of 5.09 billion a. Volume of Advanced Biodiesel and cost advanced biofuel. Relatedly, were ethanol-equivalent gallons, of which we Renewable Diesel To Achieve Advanced EPA to find that volume of advanced estimate 4.37 billion ethanol-equivalent Biofuel Volume biodiesel and renewable diesel needed gallons (2.83 billion actual gallons of to meet this benchmark is not attainable, We begin by calculating the volume of that would weigh in favor of EPA biodiesel and renewable diesel) would advanced biodiesel and renewable be met by advanced biodiesel and exercising its discretion under diesel that would be needed to meet the additional waiver authorities, to the renewable diesel. Second, the 2020 advanced biofuel volume were reasonably attainable volume of extent available, to make further EPA to exercise the cellulosic waiver reductions to the advanced biofuel advanced biodiesel and renewable authority to the maximum extent. This volume. diesel, which can be achieved with important benchmark informs EPA’s minimal diversions of advanced consideration of our waiver authorities, As shown in Table IV.B.3–1, were feedstocks and biofuels (2.77 billion albeit as only one factor among many. EPA to exercise the cellulosic waiver gallons) is slightly lower than this Specifically, in past annual rules where authority to the maximum extent, the volume. This finding, together with the the reasonably attainable volume of required volume of advanced biofuel high cost of advanced biofuels, supports biodiesel and renewable diesel has would be 5.09 billion ethanol- our decision to exercise the cellulosic exceeded this benchmark, as was the equivalent gallons. After subtracting waiver authority to the maximum extent case in 2017 and 2018, EPA has from this volume the available volume and not to permit backfilling of missing considered whether or not to allow of cellulosic biofuel and reasonably cellulosic volumes with additional additional volumes of these fuels to attainable volumes of imported advanced biofuels. Third, 2.83 billion backfill for missing cellulosic biofuel sugarcane ethanol and ‘‘other’’ gallons of advanced biodiesel and volumes. By contrast, where the advanced biofuels, we estimate that renewable diesel are attainable by the reasonably attainable volume of approximately 2.83 billion gallons of market. These findings, together with advanced biodiesel and renewable advanced biodiesel and renewable additional discussions in the RTC diesel has been less than this diesel would be needed to meet the document and docket memoranda, benchmark, as was the case in 2019, this 2020 advanced biofuel volume.

TABLE IV.B.3–1—DETERMINATION OF VOLUME OF BIODIESEL AND RENEWABLE DIESEL NEEDED IN 2020 TO ACHIEVE 5.09 BILLION GALLONS OF ADVANCED BIOFUEL [Million ethanol-equivalent gallons except as noted]

Target 2020 advanced biofuel volume requirement absent any backfilling of missing cellulosic biofuel ...... 5,090 Cellulosic biofuel ...... 590 Imported sugarcane ethanol ...... 70 Other advanced ...... 50 Calculated advanced biodiesel and renewable diesel needed (ethanol-equivalent gallons/physical gallons) 82 ...... 4,380\2,826

b. Historical Supply of Biodiesel and these fuels, since there are a number of historic data and trends alone are Renewable Diesel complex and inter-related factors insufficient to project the volumes of beyond simply total production capacity biodiesel and renewable diesel that We next consider the volumes of (including the availability of advanced could be provided in future years, advanced biodiesel and renewable biodiesel and renewable diesel historic data can serve as a useful diesel supplied in previous years, as feedstocks,83 the expiration of the reference in considering future volumes. well as the impacts of biodiesel tax biodiesel tax credit, changes to tariffs on Past experience suggests that a high policy and tariffs on these volumes. A biodiesel from Argentina and Indonesia, percentage of the biodiesel and review of the volumes of advanced import and distribution infrastructure, renewable diesel used in the U.S. (from biodiesel and renewable diesel used in and other market-based factors) that previous years is especially useful in both domestic production and imports) could affect the supply of advanced 84 projecting the potential availability of biodiesel and renewable diesel. While qualifies as advanced biofuel. In

81 We note that we have not attempted to volume of these fuels expected to be produced in biodiesel or renewable feedstock refers to any of the determine the maximum achievable volume of 2020) of the equivalence values for biodiesel biodiesel, renewable diesel, jet fuel, and heating oil these fuels. While the maximum achievable volume (generally 1.5) and renewable diesel (generally 1.7). feedstocks listed in Table 1 to 40 CFR 80.1426 or of advanced biodiesel and renewable diesel in 2020 83 Throughout this section we refer to advanced in petition approvals issued pursuant to section is likely greater than 2.83 billion gallons we do not biodiesel and renewable diesel as well as advanced 80.1416, that can be used to produce fuel that believe it would be appropriate to require a greater biodiesel and renewable diesel feedstocks. In this qualifies for D4 or D5 RINs. These feedstocks volume of these fuels due to the high cost and context, advanced biodiesel and renewable diesel include, for example, soy bean oil; oil from annual increased likelihood of adverse unintended impacts refer to any biodiesel or renewable diesel for which cover crops; oil from algae grown associated with these fuels. RINs can be generated that satisfy an obligated photosynthetically; biogenic waste oils/fats/greases; 82 To calculate the volume of advanced biodiesel party’s advanced biofuel obligation (i.e., D4 or D5 non-food grade corn oil; camelina sativa oil; and and renewable diesel that would generate the 4.37 RINs). While cellulosic diesel (D7) can also canola/rapeseed oil (See pathways F, G, and H of billion RINs needed to meet the advanced biofuel contribute towards an obligated party’s advanced Table 1 to section 80.1426). volume EPA divided the 4.37 billion RINs by 1.55, biofuel obligation, these fuels are discussed in 84 From 2011 through 2018 approximately 96 which is the approximate average (weighted by the Section III rather than in this section. An advanced percent of all biodiesel and renewable diesel Continued

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previous years, biodiesel and renewable and renewable diesel, have varied biodiesel and renewable diesel are diesel produced in the U.S. have been significantly from year to year, as they shown in Table IV.B.3–2, while volumes almost exclusively advanced biofuel.85 are impacted both by domestic and of conventional biodiesel and renewable Volumes of imported biodiesel and foreign policies, as well as many diesel are shown in the following Table renewable diesel, which include both economic factors. Production, import, IV.B.3–3. advanced and conventional biodiesel export, and total volumes of advanced

TABLE IV.B.3–2 86—ADVANCED (D4 AND D5) BIODIESEL AND RENEWABLE DIESEL FROM 2011 TO 2019 [Million gallons] a

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

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) (+15) (+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) (+117) (¥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)

Total d ...... 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) a All 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. c Data 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 (November 2019),’’ Memorandum from Dallas Burkholder to EPA Docket EPA–HQ–OAR–2019–0136. d 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 gallons] a

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

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 d ...... 2 0 102 55 160 157 2 1 0 (Annual Change) ...... (N/A) (¥2) (+102) (¥47) (+105) (¥3) (¥155) (¥1) (¥1) a All data from EMTS. EPA reviewed all conventional 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. c While a significant number of D6 RINs 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 in 2019 and the biodiesel tax credit is currently not available we are not projecting any production or import of D6 biodiesel or renewable diesel in 2019. d Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

supplied to the U.S. (including domestically volume see ‘‘Updated market impacts of biofuels in 86 For this final rule EPA reviewed the data produced and imported biodiesel and renewable 2020,’’ memorandum from David Korotney to available in EMTS and updated historical diesel) qualified as advanced biodiesel and docket EPA–HQ–OAR–2019–0136. renewable fuel production and RIN generation data. renewable diesel (14,214 million gallons of the 85 From 2011 through 2018 over 99.9 percent of This updated data can be found in ‘‘Historical RIN 14,869 million gallons) according to EMTS data. supply as of 8–12–19,’’ memorandum from David This section focuses on the availability of advanced all the domestically produced biodiesel and biodiesel and renewable diesel to meet the renewable diesel supplied to the U.S. qualified as Korotney to EPA docket EPA–HQ–OAR–2019–0136. advanced biofuel volume. For a discussion of the advanced biodiesel and renewable diesel (12,268 Tables in this final rule that contain historical data availability of all biodiesel and renewable diesel million gallons of the 12,275 million gallons) (such as Tables IV.B.3–2, IV.B.3–3, VI.B.1–1 and that could be used to meet the total renewable fuel according to EMTS data. VI.B.1–2) have been updated accordingly.

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As we explained above, to meet an diesel used in the U.S. over the previous The historical data suggests that the advanced biofuel volume of 5.09 billion year (656 million gallons and 742 2.83 billion gallons of advanced ethanol-equivalent gallons we project million gallons respectively). However, biodiesel and renewable diesel that the market would supply 2.83 following these large increases in 2013 projected to be used to meet an billion gallons of advanced biodiesel and 2016, there was little to no growth advanced biofuel volume of 5.09 billion and renewable diesel. This volume (2.83 in the use of advanced biodiesel and ethanol-equivalent gallons is attainable. billion gallons) is approximately 90 renewable diesel in the following years. This would represent a projected million gallons greater than the volume More recent data from 2019 suggests increase of approximately 90 million of these fuels projected to be supplied that while the availability of the tax gallons from 2019 to 2020. This increase in 2019 based on data through credit certainly incentivizes an is less than the average increase in the September 2019. Since 2011, the year- increasing supply of biodiesel and volume of advanced biodiesel and over-year changes in the volume of renewable diesel, supply increases can renewable diesel used in the U.S. from advanced biodiesel and renewable also occur in the absence of the tax 2011 through 2019 (212 million gallons diesel used in the U.S. have varied credit, likely as the result of the per year) and significantly less than the greatly, from a low of 147 million fewer incentives provided by the RFS program highest annual increase during this time gallons from 2016 to 2017 to a high of and other economic factors. The (742 million gallons from 2015 to 2016). 709 million additional gallons from availability of this tax credit also We note, however, that this assessment 2015 to 2016. These changes were likely provides biodiesel and renewable diesel does not consider the sources of influenced by multiple factors such as with a competitive advantage relative to feedstock that would be used to meet the cost of biodiesel feedstocks and other advanced biofuels that do not this increase, or the potential impacts of petroleum diesel, the status of the qualify for the tax credit.88 supplying 2.83 billion gallons of biodiesel blenders tax credit, growth in advanced biodiesel and renewable marketing of biodiesel at high volume Another important factor highlighted diesel, which are discussed in greater truck stops and centrally fueled fleet by the historic data is the tariffs detail in the following sections. locations, demand for biodiesel and imposed by the U.S. on biodiesel c. Consideration of Production Capacity renewable diesel in other countries, imported from Argentina and Indonesia. and Distribution Infrastructure biofuel policies in both the U.S. and In December 2017 the U.S. International foreign countries, and the volumes of Trade Commission adopted tariffs on After reviewing the historical volume renewable fuels (particularly advanced biodiesel imported from Argentina and of advanced biodiesel and renewable biofuels) required by the RFS. This Indonesia.89 According to data from diesel used in the U.S., EPA next historical information does not indicate EIA,90 no biodiesel was imported from considers other factors that may impact that the maximum previously observed Argentina or Indonesia since September the production, import, and use of increase of 709 million gallons of 2017, after a preliminary decision to advanced biodiesel and renewable advanced biodiesel and renewable impose tariffs on biodiesel imported diesel in 2020. The production capacity diesel would be reasonable to expect in from these countries was announced in of registered advanced biodiesel and 2020, nor does it indicate that the low August 2017. As a result of these tariffs, renewable diesel production facilities is (or negative) growth rates observed in total imports of biodiesel into the U.S. highly unlikely to limit the production other years would recur. Rather, these were significantly lower in 2018 than of these fuels, as the total production data illustrate both the magnitude of the they had been in 2016 and 2017. The capacity for biodiesel and renewable changes in advanced biodiesel and decrease in imported biodiesel did not, diesel at registered facilities in the U.S. renewable diesel in previous years and however, result in a decrease in the (4.1 billion gallons) exceeds the volume the significant variability in these volume of advanced biodiesel and of these fuels that are projected to be changes. renewable diesel supplied to the U.S. in needed to meet the advanced biofuel The historic data indicates that the 2018. Instead, higher domestic volume for 2020 after exercising the biodiesel tax policy in the U.S. can have production of advanced biodiesel and cellulosic waiver authority (2.83 billion 92 a significant impact on the volume of renewable diesel, in combination with gallons). Significant registered biodiesel and renewable diesel used in lower exported volumes of domestically production also exists internationally. 87 the U.S. in any given year. While the produced biodiesel, resulted in an Similarly, the ability for the market to biodiesel blenders tax credit has applied overall increase in the volume of distribute and use advanced biodiesel in each year from 2010 to 2017, it has advanced biodiesel and renewable and renewable diesel appears unlikely only been prospectively in effect during diesel supplied in 2018. On July 9, constrain the growth of these fuels to a the calendar year in 2011, 2013, and 2019, the Department of Commerce volume lower than 2.83 billion gallons. 2016, while other years it has been published a preliminary determination The investments required to distribute applied retroactively. Each of the years to reduce the countervailing duty on and use this volume of biodiesel and in which the biodiesel blenders tax biodiesel imported from Argentina.91 If renewable diesel are expected to be credit was in effect during the calendar finalized this could result in increasing manageable by the marketplace given year (2013 and 2016) resulted in volumes of biodiesel imports from the RIN value incentive, as this volume significant increases in the volume of Argentina in future years. is approximately 90 million gallons advanced biodiesel and renewable greater than the volume of biodiesel and renewable diesel produced, imported, 88 For a further discussion of the impact of the tax 87 We note that the status of the tax credit does credit on the supply of biodiesel and renewable and used in the U.S. in 2019. The not impact our assessment of the reasonably diesel, see the discussion from the proposed rule magnitude of the increase projected attainable volume of advanced biodiesel and (84 FR 36783, July 29, 2019). renewable diesel in 2020 as that assessment is 89 primarily based on feedstock availability. The status ‘‘Biodiesel from Argentina and Indonesia 92 The production capacity of the sub-set of of the tax credit could potentially affect the Injures U.S. Industry, says USITC,’’ Available biodiesel and renewable diesel producers that _ _ maximum achievable volume of these fuels, but our online at: https://www.usitc.gov/press room/news generated RINs in 2018 is approximately 2.9 billion assessment demonstrates that 2.83 billion gallons of release/2017/er1205ll876.htm. gallons. See ‘‘Biodiesel and Renewable Diesel advanced biodiesel and renewable diesel is 90 See ‘‘EIA Biomass-Based Diesel Import Data’’ Registered Capacity (March 2019)’’ Memorandum attainable whether or not the tax credit is renewed available in docket EPA–HQ–OAR–2019–0136. from Dallas Burkholder to EPA Docket EPA–HQ– prospectively (or retrospectively) for 2020. 91 84 FR 32714 (July 9, 2019). OAR–2019–0136.

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from 2019 to 2020 (90 million gallons) WASDE would be sufficient to produce other uses, or a diversion of advanced is much smaller than the increases approximately 59.3 billion gallons of biodiesel and renewable diesel from observed in previous years. These biodiesel and renewable diesel existing markets in other countries. As factors further support our finding that (including both advanced and already explained, the volume of 2.83 billion gallons of advanced conventional biofuels).94 While it would advanced biodiesel and renewable biodiesel and renewable diesel is not be reasonable to assume that all, or diesel and their corresponding attainable. even a significant portion, of global feedstocks projected to be produced vegetable oil production globally or globally exceeds the volume projected d. Consideration of the Availability of domestically could be available to to be required in 2020 (2.83 billion Advanced Feedstocks produce biodiesel or renewable diesel gallons of advanced biodiesel and We next consider the availability of supplied to the U.S. for a number of renewable diesel and the corresponding advanced feedstocks that can be used to reasons,95 the large global supply of volume of advanced feedstocks) by a produce advanced biodiesel and vegetable oil further indicates that 2.83 significant margin. However, we expect renewable diesel. This assessment has billion gallons of advanced biodiesel that increases in advanced biofuel and two parts. First, we assess whether there and renewable diesel is attainable in renewable fuel volumes beyond those are sufficient advanced feedstocks to 2020. that can be produced from the projected produce 2.83 billion gallons of We now turn to the reasonably growth in advanced feedstock advanced biodiesel and renewable attainable volume of advanced biodiesel production and/or consumption (e.g., by diesel. We find that the quantity of and renewable diesel, which we find to diverting advanced feedstocks or feedstocks exceeds the amount needed be 2.77 billion gallons. This volume advanced biodiesel and renewable to do so, further supporting our represents the amount of advanced diesel from existing markets and uses) conclusion that 2.83 billion gallons of biodiesel and renewable diesel that can would be increasingly likely to incur advanced biodiesel and renewable be supplied without relying on the adverse unintended impacts.97 diesel is attainable. Second, we assess diversion of advanced biofuels and This is because of several factors, whether the growth in advanced feedstocks from existing uses and the notably the potential disruption of the feedstocks suffices to produce 2.83 associated harms of such diversions. We current biogenic fats, oils, and greases billion gallons of advanced biodiesel calculate this volume by summing the market, the associated cost impacts to and renewable diesel without diverting reasonable attainable volume from last other industries resulting from feedstock advanced feedstocks or biofuels from year’s final rule (2.61 billion gallons) diversion, and the potential adverse existing uses, i.e., the reasonably with the volume that can be produced effect on lifecycle GHG emissions and attainable volume. We find that the from the projected increase in advanced energy security associated with reasonably attainable volume falls feedstocks from 2019 to 2020 (159 feedstocks for biofuel production that slightly short at 2.77 billion gallons. million gallons).96 would have been used for other We believe the most reliable source We acknowledge that an increase in purposes and which must then be 98 for projecting the expected increase in the required use of advanced biodiesel backfilled with other feedstocks. virgin vegetable oils in the U.S. is and renewable diesel could be realized Similarly, increasing the supply of USDA’s World Agricultural Supply and through the production or collection of biodiesel and renewable diesel to the Demand Estimates (WASDE). At the additional advanced feedstocks, a U.S. by diverting fuel that would time of our assessment for this rule, the diversion of advanced feedstocks from otherwise have been used in other October 2019 version was the most countries results in higher lifecycle current version of the WASDE report. 94 The October 2019 WASDE projects production GHG emissions than if the supply of The October 2019 WASDE projects that of vegetable oils in 2019/2020 in the U.S. and the these fuels was increased by an World to be 12.58 and 207.50 million metric tons production of vegetable oil in the U.S. increased collection of waste fats and respectively. To convert projected vegetable oil oils or increased production of in the 2019/2020 market year will be production to potential biodiesel and renewable sufficient to produce approximately 3.6 diesel production we have used a conversion of 7.7 feedstocks that are byproducts of other billion gallons of biodiesel and pounds of feedstock per gallon of biodiesel or industries, especially if this diversion renewable diesel (World Agricultural Supply and results in increased consumption of renewable diesel (including both Demand Estimates. United States Department of advanced and conventional biofuels) if petroleum fuels in the countries that Agriculture, Office of the Chief Economist. October would have otherwise consumed the the entire volume of vegetable oil was 10, 2019. ISSN 1554–9089). In addition, global biodiesel or renewable diesel. By used to produce these fuels. Additional production of biodiesel is projected to be 44.2 billion liters (11.7 billion gallons) in 2020 according assessing the expected growth in the advanced biodiesel and renewable to the July 2019 OECD–FAO Agricultural Outlook. production of advanced feedstocks, we diesel could also be produced from Based on the projected production of biodiesel by are attempting to minimize the waste fats, oils, and greases as they have country we estimate that over 80% of this biodiesel incentives for the RFS program to been in past years.93 Thus, the (all biodiesel except that produced in Columbia, Indonesia, Malaysia, and Thailand) could qualify as increase the supply of advanced availability of domestic vegetable oils, advanced biofuel if the feedstocks meet the in combination the potential to source definition of renewable biomass. 97 The volume of advanced biodiesel and additional feedstocks from waste fats, 95 These reasons include the demand for renewable diesel projected to be used to meet the oils, and greases, supports our vegetable oil in the food, feed, and industrial advanced biofuel volume (2.83 billion gallons) is conclusion that 2.83 billion gallons of markets both domestically and globally; constraints approximately 1 billion gallons greater than the related to the production, import, distribution, and volume of these fuels we projected would be used advanced biodiesel and renewable use of significantly higher volumes of biodiesel and to meet the advanced biofuel volume for 2022 in diesel is attainable. renewable diesel; and the fact that biodiesel and the 2010 RFS final rule analyses (1.82 billion In addition, the global production of renewable diesel produced from much of the gallons). For a further discussion of this issue see vegetable oil projected in the 2019/2020 vegetable oil available globally would not qualify as Section 4.2.2.4 of the RTC. an advanced biofuel under the RFS program. 98 For instance, see the draft GHG assessment of marketing year in the October 2019 96 As discussed in more detail in this section, this palm oil biodiesel and renewable diesel at 77 FR 159 million gallons increase is projected to be 4300 (January 27, 2012). We believe palm or 93 See ‘‘Projections of FOG biodiesel and comprised of 94 million gallons from increased petroleum-derived products would likely be used to renewable diesel 2015–2018,’’ memorandum from vegetable oil production, 17 million gallons from replace advanced biodiesel and renewable diesel David Korotney to EPA Docket, EPA–HQ–OAR– distillers corn oil, and 48 million gallons from diverted to the U.S. as these products are currently 2019–0136. waste fats, oils, and greases. the lowest cost substitutes.

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biodiesel and renewable diesel through additional quantity of vegetable oils likely increase in the availability of feedstock switching or diverting could be used to produce approximately distillers corn oil from 2019 to 2020, the biodiesel and renewable diesel from 94 million additional gallons of authors of the WAEES model foreign markets to the U.S. advanced biodiesel or renewable diesel considered the effects of an increasing Advanced biodiesel and renewable in 2020 relative to 2019.103 adoption rate of distillers corn oil diesel feedstocks include both waste In the 2019 final rule we also noted extraction technologies at domestic oils, fats, and greases; and oils from that the WASDE projected a decrease in ethanol production facilities, as well as planted crops. The projected growth in trade of both oilseeds and vegetable oils. increased corn oil extraction rates these feedstocks is expected to be The projected decrease in oilseed trade enabled by advances in this technology. modest relative to the volume of these was likely due to tariffs enacted by The WAEES model projects that feedstocks that is currently being used China on soybean exports from the U.S. production of distillers corn oil will to produce biodiesel and renewable While the projected trade in oilseeds is increase by approximately 130 million diesel. Most of the waste oils, fats, and expected to increase slightly from 2018/ pounds from the 2018/2019 to the 2019/ greases that can be recovered 2019 to 2019/2020, trade in vegetable 2020 agricultural marketing year. This economically are already being oils is projected to decrease by 0.12 quantity of feedstock could be used to recovered and used in biodiesel and million metric tons from 2018/2019 to produce approximately 17 million renewable diesel production or for other 2019/2020. If converted to biodiesel, gallons of advanced biodiesel or purposes. The availability of animal fats this volume of vegetable oils could be renewable diesel. We believe it is will likely increase with beef, pork, and used to produce approximately 34 reasonable to use these estimates from poultry production. Most of the million additional gallons of advanced the WAEES model for these purposes vegetable oil used to produce advanced biodiesel or renewable diesel in 2020 based on the projected increase in the biodiesel and renewable diesel that is relative to 2019. As in the 2019 final use of corn oil extraction and corn oil sourced from planted crops comes from rule, we did not include in our yield increases. crops primarily grown for purposes projection of the reasonably attainable While much of the increase in other than providing feedstocks for volumes the potential biodiesel or advanced biodiesel and renewable biodiesel and renewable diesel, such as renewable diesel that could diesel feedstocks produced in the U.S. for livestock feed, with the oil that is theoretically be produced from the from 2019 to 2020 is expected to come used as feedstock for renewable fuel oilseeds and vegetable oil projected to from virgin vegetable oils and distillers production a co-product.99 This is true remain in the U.S. due to changes in corn oil, increases in the supply of other for soybeans and corn, which are the trade of these products. This is because sources of advanced biodiesel and two largest sources of feedstock from any biodiesel and renewable diesel renewable diesel feedstocks, such as planted crops used for biodiesel produced from soybeans previously biogenic waste fats, oils, and greases production in the U.S.100 We do not exported are necessarily diverted from (FOG), could also occur. In scenarios believe that the increased demand for other uses (even if the reason for this with increases to the advanced biofuel soybean oil or corn oil caused by a diversion is the tariffs, rather than the and biomass-based diesel volume higher 2020 advanced biofuel standard RFS program), and biodiesel produced requirements in 2020 and 2021 the would result in an increase in soybean from these diverted feedstocks is WAEES model projects minimal or corn prices large enough to induce therefore more likely to have the increases in the volume of biodiesel significant changes in agricultural adverse unintended effects as produced from total other fats and oils 101 activity. However, production of previously discussed. in the 2018/2019 and 2019/2020 these feedstocks is likely to increase In addition to virgin vegetable oils, we marketing years.106 Conversely, an over time as crop yields, oil extraction also expect increasing volumes of 104 assessment conducted by LMC rates, and demand for the primary distillers corn oil to be available for International in 2017 and submitted in products increase. use in 2020. The WASDE report does comments on our 2018 proposed rule Based on the October 2019 WASDE not project distillers corn oil projected that the waste oil supply in report the projected increase in production, so EPA must use an the U.S. could increase by vegetable oil production in the U.S. alternative source to project the growth approximately 2.4 million metric tons from the 2018/2019 marketing year to in the production of this feedstock. For from 2016 to 2022.107 This estimate the 2019/2020 marketing year is 0.33 this final rule we use results from the represents a growth rate of million metric tons per year.102 This World Agricultural Economic and approximately 0.4 billion tons per year, Environmental Services (WAEES) model or enough feedstock to produce 99 For example, corn oil is a co-product of corn to project the growth in the production approximately 115 million gallons of grown primarily for animal feed or ethanol of distillers corn oil.105 In assessing the production, while soy and canola are primarily biodiesel and renewable diesel per year. grown as livestock feed. This estimate, however, only accounts agricultural marketing year and 12.58 million 100 According to EIA data 7,542 million pounds for potential sources of feedstock and of soy bean oil and 2,085 million pounds of corn metric tons in the 2019/2020 agricultural marketing oil were used to produce biodiesel in the U.S. in year. 2018. Other significant sources of feedstock were 103 To calculate this volume, we have used a proposed rule (Kruse, J., ‘‘Implications of an yellow grease (1,668 million pounds), canola oil conversion of 7.7 pounds of feedstock per gallon of Alternative 2021 Biomass Based Diesel Volume (total volume withheld, but monthly data suggests biodiesel or renewable diesel. This is based on the Obligation for Global Agriculture and Biofuels,’’ greater than 700 million pounds), and white grease expected conversion of soybean oil (http:// August 26, 2019, World Agricultural Economic and (618 million pounds).’’Monthly Biodiesel extension.missouri.edu/p/G1990), which is the Environmental Services (WAEES)). Production Report with Data for February 2019,’’ largest source of feedstock used to produce 106 The WAEES model projects a 7 million gallon U.S. Energy Information Administration. April advanced biodiesel and renewable diesel. increase in 2019/2020 and a 16 million gallon 2019. Conversion rates for other types of vegetable oils increase in 2020/2021. See Kruse, J., ‘‘Implications 101 This position is supported by several used to produce biodiesel and renewable diesel are of an Alternative Biomass Based Diesel Volume commenters, including the American Soybean similar to those for soybean oil. Obligation for Global Agriculture and Biofuels,’’ Association (EPA–HQ–OAR–2019–0136–0177) and 104 Distillers corn oil is non-food grade corn oil August 26, 2019, World Agricultural Economic and the Nebraska Soybean Association (EPA–HQ–OAR– produced by ethanol production facilities. Environmental Services. 2019–0136–0117). 105 For the purposes of this rule, EPA relied on 107 LMC International. Global Waste Grease 102 U.S. vegetable oil production is projected to be WAEES modeling results submitted as comments Supply. August 2017 (EPA–HQ–OAR–2017–0091– 12.25 million metric tons in the 2018/2019 by the National Biodiesel Board on the 2020 3880).

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not for the economic viability of e. Biodiesel and Renewable Diesel could potentially impact the attainable recovering waste oils. Imports and Exports volume. Imports of advanced biodiesel To project the increase in the use of EPA next considered potential and renewable diesel are projected to biogenic FOG we used historical data to changes in the imports of advanced increase by 150 million gallons from determine the increase in the use of biodiesel and renewable diesel 2018 to 2019 (from approximately 350 these feedstocks to produce biodiesel produced in other countries. In previous million gallons in 2018 to and renewable diesel. From 2015–2018, years, significant volumes of foreign approximately 500 million gallons in advanced biodiesel and renewable produced advanced biodiesel and 2019, see Table IV.B.3–2). At the same diesel produced from biogenic FOG renewable diesel have been supplied to time, data through July 2019 suggests increased by an average of 48 million that the U.S. will export approximately 108 markets in the U.S. (see Table IV.B.2–1). gallons per year. This annual increase These significant imports were likely 122 million gallons of domestically 111 is higher than the increase in the use of the result of a strong U.S. demand for produced biodiesel in 2019. these feedstocks projected by the advanced biodiesel and renewable Increased imports and/or decreased WAEES model, but lower than the diesel, supported by the RFS standards, exports of these fuels in 2020 could potential increase projected by LMC. We the low carbon fuel standard (LCFS) in contribute to the market supplying 2.83 have included an additional 48 million California, the biodiesel blenders tax billion gallons of advanced biodiesel gallons of advanced biodiesel and credit, and the opportunity for imported and renewable diesel. The higher renewable diesel from FOG in our biodiesel and renewable diesel to realize volumes of imported advanced biodiesel assessment of the reasonably attainable these incentives. We have not included and renewable diesel in previous years volume for 2020, consistent with the the potential for increased (or (shown in Table IV.B.3–2) suggest that observed annual increase in advanced decreased) volumes of imported these changes are possible, especially if biodiesel and renewable diesel advanced biodiesel and renewable the tariffs on biodiesel imported from produced from these feedstocks in diesel in our projection of the Argentina are reduced. Thus the recent years. reasonably attainable volume for 2020. potential for increased imports and In total, we project that increases in As discussed previously, any increases decreased exports further supports our feedstocks produced in the U.S. are in the import of advanced biodiesel and determination that 2.83 billion gallons sufficient to produce approximately 159 renewable diesel is necessarily diverted of advanced biodiesel and renewable million more gallons of advanced from other markets. There is also a far diesel is attainable. biodiesel and renewable diesel in 2020 While changes to the volumes of higher degree of uncertainty related to relative to 2019. This number includes imports/exports of advanced biodiesel the availability and production of 94 million gallons from increased and renewable could supply the advanced biodiesel and renewable vegetable oil production, 17 million approximately 60 million gallon diesel in foreign countries, as this gallons from increased corn oil difference between the reasonably supply can be affected by a number of production, and 48 million gallons from attainable volume of these fuels (2.77 unpredictable factors such as the increased waste oil collection. This billion gallons) and the volume needed imposition of tariffs and increased increase does not include the projected to meet an advanced biofuel volume of incentives for the use of these fuels in 34 million gallons of biodiesel that 5.09 billion ethanol-equivalent gallons other countries (such as tax incentives could be produced from the projected (2.83 billion gallons), these changes are or blend mandates). EPA also lacks the reduction in vegetable oil trade since not without impacts. Diverting this fuel data necessary to determine the quantity decreases in exported volumes of to markets in the U.S. may be of these fuels that would otherwise be vegetable oils represent feedstocks complicated as doing so would likely produced and used in other countries, diverted from use in other countries. require higher prices for these fuels in and thus the degree to which the RFS Our projection also does not consider the U.S. to divert the fuels from foreign standards are simply diverting this fuel factors that could potentially affect the markets that are presumably more from use in other countries as opposed availability of advanced biofuel profitable currently. It may also be more to incentivizing additional production. feedstocks that could be used to difficult and costly to distribute this produce biodiesel or renewable diesel, While we do not consider changes in imports or exports of advanced additional volume of biodiesel and such as changes in the volume of renewable diesel to domestic markets vegetable oils used in food markets or biodiesel and renewable diesel in our projection of the reasonably attainable than the current foreign markets. other non-biofuel industries. In our Finally, reducing advanced biodiesel 2019 final rule, we determined that 2.61 volume, changes to the volume of these fuels that is imported and exported and renewable diesel exports may billion gallons of advanced biodiesel indirectly result in the decreased and renewable diesel were reasonably availability of imported volumes of attainable in 2019,109 therefore our volume to the volume we now project to be used in 2019, 2.74 billion gallons (rather than the these fuels, as other countries seek to projection of the reasonably attainable reasonably attainable volume we projected for replace volumes previously imported volume of advanced biodiesel and 2019). This would result in a reasonably attainable from the U.S. renewable diesel in 2020 is 2.77 billion volume of 2.90 billion gallons. While this approach gallons.110 uses more recent data on the availability of f. Attainable and Reasonably Attainable advanced biodiesel and renewable diesel in 2019, Volumes of Advanced Biodiesel and it does not account for whether or not the 108 ‘‘Projections of FOG biodiesel and renewable additional use of these fuels in 2019, beyond the Renewable Diesel diesel 2015–2018,’’ memorandum from David reasonably attainable volume calculated in the 2019 In sum, the 2.83 billion gallons of Korotney to EPA Docket, EPA–HQ–OAR–2019– final rule, resulted in diversions of advanced 0136. biofuels or feedstocks. In any event, even were we advanced biodiesel and renewable 109 83 FR 63704 (December 11, 2018). to adopt this approach, it would make no difference 110 We calculated the reasonably attainable to our final decision on the volumes as (1) the 111 Projection is based on EIA data on exports of volume for 2020 by adding the projected increase difference in the calculated reasonably attainable biomass-based diesel (biodiesel) through July 2019. in advanced feedstocks (159 million gallons) to the volume is slight, (2) the high costs of advanced For more detail on this projection see ‘‘Projecting reasonably attainable volume of these fuels we biodiesel and renewable diesel would justify Advanced Biofuel Production and Imports for 2019 projected for 2019 (2.61 billion gallons). Another exercising the maximum cellulosic waiver in any (November 2019),’’ memorandum from Dallas possible approach would be to add the 159-million- event, and (3) the volume we are finalizing is Burkholder to EPA docket EPA–HQ–OAR–2019– gallon increment in the reasonably attainable attainable under either approach. 0136.

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diesel projected to be needed to achieve permitted. This results in an advanced biofuels over non-advanced biofuels and an advanced biofuel volume of 5.09 biofuel volume of 5.09 billion gallons. the legislative intent reflected in the billion ethanol-equivalent gallons are This also preserves the implied statutory volume tables.113 If we were to attainable. We have reached this statutory volume target for non- reduce the total renewable fuel volume conclusion based on our analysis of the cellulosic advanced biofuel at 4.5 requirement by a lesser amount than the above factors, including historical billion gallons, identical to that for advanced biofuel volume requirement, supply of biodiesel and renewable 2019. As in the 2019 standards, we are we would effectively increase the diesel, the impacts of tax policy and taking this approach for two reasons, opportunity for conventional biofuels to tariffs, production capacity and each of which is an independent and participate in the RFS program beyond distribution infrastructure, availability sufficient justification. First, as in 2019, the implied statutory volume of 15 of advanced feedstocks, and imports the reasonably attainable volume of billion gallons. Applying an equal and exports. By contrast, we find that advanced biofuel for 2020 falls short of reduction of 9.91 billion gallons to both only 2.77 billion gallons of advanced the volume resulting from the maximum the statutory target for advanced biofuel biodiesel and renewable diesel are exercise of the cellulosic authority. It is and the statutory target for total reasonably attainable. This estimate is thus appropriate to exercise the renewable fuel results in a total based on our analysis of growth in cellulosic waiver authority to the renewable fuel volume of 20.09 billion qualifying feedstocks, and represents maximum extent to minimize the harms gallons as shown in Table IV.A–1. This the volume that can be supplied with associated with advanced biofuel and volume of total renewable fuel results in minimal diversions of advanced feedstock diversions. an implied volume of 15 billion gallons biofuels and feedstocks from existing Second, even if greater volumes of of conventional renewable fuel, which uses, and the associated harms of such advanced biofuel are reasonably is the same as in the 2019 final rule. We diversions. These assessments support attainable, the high cost of these fuels have investigated the different ways that EPA’s decision to establish the independently justifies reducing the the market could respond to a total advanced biofuel volume for 2020 at advanced biofuel volume for 2020 by renewable fuel volume requirement of 5.09 billion gallons, a volume which the maximum amount permitted under 20.09 billion gallons in a memorandum neither requires the use of EPA’s general the cellulosic waiver authority. In the to the docket.114 115 waiver authority nor the use of 2019 final rule we presented illustrative We note that the statute provides additional volumes of advanced biofuel cost projections for sugarcane ethanol other authorities for EPA to reduce the in place of cellulosic biofuel. and soybean biodiesel in 2019, the two required volumes beyond that permitted advanced biofuels that would be most C. Volume Requirement for Advanced likely to provide the marginal increase 113 See 81 FR 89752–89753 (December 12, 2016). Biofuel in volumes of advanced biofuel in 2019 See also 78 FR 49809–49810 (August 15, 2013); 80 In exercising the cellulosic waiver in comparison to 2018. Sugarcane FR 77434 (December 14, 2015). 114 ‘‘Updated market impacts of biofuels in 2020,’’ authority for 2017 and earlier, we ethanol results in a cost increase memorandum from David Korotney to docket EPA– determined it was appropriate to require compared to gasoline that ranges from HQ–OAR–2019–0136. In prior actions, similar a partial backfilling of missing cellulosic $0.39–$1.04 per ethanol-equivalent analyses to those described in this memorandum volumes with volumes of non-cellulosic gallon. Soybean biodiesel results in a indicated that the market was capable of both producing and consuming the required volume of advanced biofuel we determined to be cost increase compared to diesel fuel renewable fuels, and that as a result there was no reasonably attainable, notwithstanding that ranges from $0.74–$1.23 per basis for finding an inadequate domestic supply of the increase in costs associated with ethanol-equivalent gallon. Thus, the total renewable fuel. See 82 FR 34229 & n.82 (July those decisions.112 For the 2018 and cost of these renewable fuels is high as 21, 2017). Given the D.C. Circuit’s decision in ACE, however, assessment of demand-side constraints is 2019 standards, in contrast, we placed compared to the petroleum fuels they no longer relevant for determining inadequate a greater emphasis on costs in the displace. domestic supply. Even so, we believe consideration context of balancing the various In conclusion, we believe that a 2020 of the ways that the market could make this volume considerations, ultimately concluding advanced biofuel volume requirement of available may still be generally relevant to whether and how EPA exercises its waiver authorities, such that the applicable volume requirement 5.09 billion ethanol-equivalent gallons as our consideration of whether the volumes will should be based on the maximum is appropriate following our assessment cause severe economic harm. reduction permitted under the cellulosic of volumes that are attainable and in 115 We note that the previously cited waiver authority, effectively preventing consideration of carryover RINs, memorandum discusses the potential for total any backfilling of missing cellulosic ethanol consumption in 2020, but does not make potential feedstock/fuel diversions, and specific projections for E0, E15 and E85. Volumes biofuel with advanced biofuel. In setting costs. Comments requesting higher or of these ethanol blends are highly dependent upon the 2019 standards, we also found that lower volumes are addressed in the consumer demand and retail distribution greater volumes of advanced biofuel separate Response to Comments infrastructure. In prior annual rules, we assessed would be attainable but did not believe document. volumes of these blends in determining whether that requiring higher volumes would be and to what extent to exercise the inadequate D. Volume Requirement for Total domestic supply waiver prong of the general waiver appropriate as such volumes were not authority. The D.C. Circuit’s decision ACE reasonably attainable and would lead to Renewable Fuel precludes assessment of demand-side constraints in diversion of advanced feedstocks or As discussed in Section II.A.1, we determining inadequate domestic supply. While we could still assess such blend volumes in deciding biofuels and the associated harms. believe that the cellulosic waiver whether and to what extent to exercise our other For 2020, we are following the same provision is best interpreted as requiring discretionary waiver authorities, and in evaluating approach as in 2018 and 2019 and that the advanced biofuel and total the market’s ability to meet the total renewable fuel exercising the cellulosic waiver renewable fuel volumes be reduced by requirement, doing so is not necessary. In terms of authority to reduce the advanced biofuel the market’s ability to satisfy the total renewable equal amounts. For the reasons we have fuel requirement, the more relevant consideration is requirement by the maximum extent previously articulated, we believe this whether the pool-wide ethanol volume, together interpretation is consistent with the with volumes of other biofuels, suffices. We note 112 See, e.g., Renewable Fuel Standards for 2014, statutory language and best effectuates that EPA does not establish separate standards for 2015 and 2016, and the Biomass-Based Volume for the objectives of the statute, including E0, E15, or E85. Moreover, there has historically 2017: Response to Comments (EPA–420–R–15–024, been a lack of reliable data on volumes of these November 2015), pages 628–631, available in the environmental objectives that blends, making reliance on the pool-wide ethanol docket EPA–HQ–OAR–2015–0111–3671. generally favor the use of advanced volume a more technically robust approach.

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by the cellulosic waiver. As explained provide illustrative cost estimates by production process that generates in Section II of this rule and in Section comparing the final 2020 RFS renewable biofuel using distiller’s grains, a co- 2 of the Response to Comments fuel volumes to 2020 RFS statutory product of generating corn starch document, we do not believe it is renewable fuel volumes. In the second ethanol that is commonly dried and sold appropriate to further reduce volumes case, we examine the final 2020 RFS into the feed market as distillers dried under the general waiver authority. renewable fuel volumes to the final grains with solubles (DDGS), as the We acknowledge that there is some 2019 RFS renewable fuel volumes to renewable biomass feedstock. We uncertainty regarding whether the estimate changes in the annual costs of assume an enzymatic hydrolysis process market will actually make available 5.09 the final 2020 RFS annual rule in with cellulosic enzymes to break down billion ethanol-equivalent gallons of comparison to the final 2019 RFS the cellulosic components of the advanced biofuel or 20.09 billion annual rule.116 distiller’s grains. This process for ethanol-equivalent gallons of total generating cellulosic ethanol is similar renewable fuel in 2020. In the event that A. Illustrative Costs Analysis of 2020 to approaches currently used by the market is not able to meet these Final Volumes Compared to the 2020 industry to generate cellulosic ethanol volume requirements with biofuels Statutory Volumes Baseline at a commercial scale, and we believe produced and used in 2020, the In this section, EPA provides these cost estimates are likely carryover RIN bank represents a source illustrative cost estimates that compare representative of the range of different of RINs that could help obligated parties the final 2020 RFS cellulosic renewable technology options being developed to meet them if the market fails to supply volume requirement to the 2020 RFS produce ethanol from corn kernel fiber. sufficient advanced biofuels. As cellulosic statutory renewable fuel We then compare the per-gallon costs of discussed in greater detail in Section volume that would be required absent the cellulosic ethanol to the fossil fuel II.B.1, carryover RINs provide obligated the exercise of our cellulosic waiver that would be replaced at the wholesale parties compliance flexibility in the face authority under CAA section stage, since that is when the two are of substantial uncertainties in the 211(o)(7)(D)(i). As described in Section blended together. transportation fuel marketplace and III, we are finalizing a cellulosic volume These cost estimates do not consider provide a liquid and well-functioning of 0.59 billion gallons for 2020, using taxes, retail margins, or other costs or RIN market upon which success of the our cellulosic waiver authority to waive transfers that occur at or after the point entire program depends. We currently the statutory cellulosic volume of 10.5 of blending. Transfers are payments estimate that there are approximately billion gallons by 9.91 billion gallons. within society and are not additional 680 million advanced biofuel carryover Estimating the cost savings from costs (e.g., RIN payments are one RINs and 2.80 billion non-advanced renewable fuel volumes that are not example of a transfer payment). We do (D6) carryover RINs available. projected to be produced is inherently not attempt to estimate potential cost savings related to avoided infrastructure V. Impacts of 2020 Volumes on Costs challenging. EPA has taken the relatively straightforward methodology costs (e.g., the cost savings of not having In this section, EPA presents its of multiplying the waived cellulosic to provide pumps and storage tanks assessment of the illustrative costs of volume by the wholesale per-gallon associated with higher-level ethanol this final RFS annual rulemaking. It is costs of cellulosic biofuel production blends). When estimating per-gallon important to note that these illustrative relative to the fossil fuels they displace. costs, we consider the costs of gasoline costs do not attempt to capture the full While there may be growth in other on an energy-equivalent basis as impacts of this final rule. We frame the cellulosic renewable fuel sources, we compared to ethanol, since more analyses we have performed for this rule believe it is appropriate to use cellulosic ethanol gallons must be consumed to as ‘‘illustrative’’ so as not to give the ethanol produced from corn kernel fiber travel the same distance as on gasoline impression of comprehensive estimates. at an existing corn starch ethanol due to the ethanol’s lower energy These estimates are provided for the production facility as representative of content. purpose of showing how the cost to cellulosic renewable fuel. As explained Table V.A–1 below presents the produce a gallon of a ‘‘representative’’ in Section III, we believe that cellulosic fuel cost savings associated renewable fuel compares to the cost of production of the major alternative with this final rule that are estimated fossil fuels (e.g., petroleum-derived 118 cellulosic biofuel—compressed natural using this approach. The per-gallon fuels). There are a significant number of gas/liquefied natural gas (CNG/LNG)- cost differences for cellulosic ethanol caveats that must be considered when derived from biogas—is constrained in range from $0.46–$3.30 per ethanol- interpreting these illustrative cost 119 2020 due to a limitation in the number equivalent gallon ($/EEG). Given that estimates. For example, there are many of vehicles capable of using this form of commercial cellulosic ethanol different feedstocks that could be used production is still at an early stage in its fuel.117 to produce biofuels, and there is a EPA uses a ‘‘bottom-up’’ engineering deployment, these cost estimates have a significant amount of heterogeneity in cost analysis to quantify the costs of significant range. Multiplying the per- the costs associated with these different producing a gallon of cellulosic ethanol feedstocks and fuels. Some renewable 118 Details of the data and assumptions used can derived from corn kernel fiber. There fuels may be cost competitive with the be found in a Memorandum available in the docket are multiple processes that could yield fossil fuels they replace; however, we do entitled ‘‘Cost Impacts of the Final 2020 Annual cellulosic ethanol from corn kernel Renewable Fuel Standards’’, Memorandum from not have cost data on every type of fiber. EPA assumes a cellulosic ethanol Michael Shelby, Dallas Burkholder, and Aaron feedstock and every type of fuel. Sobel available in docket EPA–HQ–OAR–2019– Therefore, we do not attempt to capture 0136. 116 This action imposes renewable fuel standards 119 For the purposes of the cost estimates in this this range of potential costs in our only for 2020. However, solely for E.O. 13771 section, EPA has not attempted to adjust the price illustrative estimates. purposes in this section, we estimate the costs of of the petroleum fuels to account for the impact of The renewable fuel volumes for the relevant volumes as though they applied in the RFS program, since the changes in the which we provide cost estimates are future years as well. Therefore, we use the term renewable fuel volume are relatively modest in ‘‘annual costs’’ in this section. described in Section III. In this section, comparison to the quantity of fuel associated with 117 See Section III.D.2 for a further discussion of the petroleum market. Rather, we have used the we estimate illustrative costs for two the quantity of CNG/LNG projected to be used as wholesale price projections for gasoline and diesel different cases. In the first case, we transportation fuel in 2020. as reported in EIA’s October 2019 STEO.

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gallon cost differences by the amount of rule results in approximately $4.6–$33 cellulosic biofuel waived in this final billion in cost savings.

TABLE V.A–1—ILLUSTRATIVE COSTS ANALYSIS OF 2020 FINAL CELLULOSIC VOLUMES COMPARED TO THE 2020 STATUTORY VOLUMES

Cellulosic Volume Required (Million Ethanol-Equivalent Gallons) ...... 590 Change 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 ($/Ethanol-Equivalent Gal- lons) 120 ($/EEG) 121 ...... $0.46–$3.30 Annual Change in Overall Costs (Million $) 122 ...... $(4,600)–$(33,000)

B. Illustrative Cost Analysis of the 2020 Energy Cost Model, or LFGcost-Web.123 Table V.B–1 presents estimates of per Final Volumes Compared to the 2019 LFGcost-Web is a software tool energy-equivalent gallon costs for Final Volumes developed by EPA’s Landfill Methane producing CNG/LNG derived from Outreach Program (LMOP) to conduct landfill biogas relative to natural gas at In this section, we provide illustrative initial economic feasibility analysis of the wholesale level. These per-gallon cost estimates for the final 2020 RFS developing LFG energy recovery costs are then multiplied by the increase volumes compared to the final 2019 RFS projects in the United States. The in the final 2020 RFS cellulosic biofuel volumes. In comparison to the final default inputs and cost estimates by volume relative to the 2019 final RFS 2019 RFS volumes, the final 2020 RFS LFGcost-Web are based on typical cellulosic biofuel volume to obtain an volumes 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 landfill of cellulosic biofuel derived from CNG/ include all equipment, site work, biogas. An estimate of overall costs LNG from landfill biogas. To estimate permits, operating activities, and associated with the increase in the the cost of production of CNG/LNG maintenance that would normally be cellulosic biofuel volume is calculated derived from landfill gas (LFG), EPA required for constructing and operating uses 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 CELLULOSIC VOLUME COMPARED TO THE 2019 CELLULOSIC 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 ($/Ethanol-Equivalent Gal- lons) ($/EEG) ...... $(0.01)–$0.10 Annual Increase in Overall Costs (Million $) ...... $(1.1)–$17

The annual volume-setting process impacts, and energy security benefits, have not analyzed these impacts for the encourages consideration of the RFS which all to some degree may be 2020 volume requirements.125 program on a piecemeal (i.e., year-to- affected by the annual volumes. For VI. Biomass-Based Diesel Volume for year) basis, which may not reflect the example, we do not have a quantified 2021 full, long-term costs and benefits of the estimate of the lifecycle GHG or energy program. For the purposes of this final security benefits for a single year (e.g., In this section we discuss the BBD rule, other than the estimates of costs of 2020). Also, there are impacts that are applicable volume for 2021. We are producing a ‘‘representative’’ renewable difficult to quantify, such as rural setting this volume in advance of those fuel compared to cost of fossil fuel, EPA economic development and for other renewable fuel categories in did not quantitatively assess other direct employment changes from more light of the statutory requirement in and indirect costs or benefits of changes diversified fuel sources, that are not CAA section 211(o)(2)(B)(ii) to establish in renewable fuel volumes. These direct quantified in this rulemaking. While the applicable volume of BBD for years and indirect costs and benefits may some of these impacts were analyzed in after 2012 no later than 14 months include infrastructure costs, investment, the 2010 final rulemaking that before the applicable volume will apply. climate change impacts, air quality established the current RFS program, we We are not at this time setting the BBD

120 For this table and all subsequent tables in this 123 The current version of this model and user’s rule, both the projected volume increase of CNG/ section, approximate costs in per-gallon cost manual are downloadable from the LMOP website. LNG derived from biogas and the cost of natural gas difference estimates are rounded to the cents place. https://www.epa.gov/lmop/download-lfgcost-web/. to which this fuel is compared have been updated. 121 Since the proposed rule, we have updated 124 For the proposed 2020 annual RFS rule, we 125 RFS2 Regulatory Impact Analysis (RIA). U.S. these per-gallon and total annual cost differences estimated that there would be an increase of EPA 2010, Renewable Fuel Standard Program based on EIA’s updated projections for petroleum gasoline costs in 2020 from the October Short-Term cellulosic biofuel derived from CNG/LNG from (RFS2) Regulatory Impact Analysis. EPA–420–R– Energy Outlook. landfill biogas of 126 million gallons (ethanol- 10–006. February 2010. Docket EPA–HQ–OAR– 122 For this table and all subsequent tables in this equivalent) compared to the 2019 final annual RFS 2009–0472–11332. section, approximate resulting costs (other than in volumes. The total costs of the proposed 2020 per-gallon cost difference estimates) are rounded to cellulosic volume compared to 2019 RFS cellulosic two significant figures. volume range from $(3.2)–$10 million. In this final

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percentage standards that would apply 5. The impact of the use of renewable general methodology upheld in Alon to obligated parties in 2021 but intend fuels on the cost to consumers of with updated information. Similar to to do so in late 2020, after receiving transportation fuel and on the cost to the rule reviewed in Alon, today’s rule EIA’s estimate of gasoline and diesel transport goods; and finds that it is the advanced biofuel consumption for 2021. At that time, we 6. The impact of the use of renewable standard, when set in 2021, that will will also set the percentage standards fuels on other factors, including job drive the use of BBD in 2021. for the other renewable fuel types for creation, the price and supply of Furthermore, in light of the benefits of 2021. Although the BBD applicable agricultural commodities, rural incentivizing other advanced biofuels, volume sets a floor for required BBD economic development, and food prices. we choose to preserve the existing gap use, because the BBD volume The statute also specifies that the for other advanced biofuels, and requirement is nested within both the volume requirement for BBD cannot be accordingly establish the BBD volume at advanced biofuel and the total less than the applicable volume the same level as for 2020: 2.43 billion renewable fuel volume requirements, specified in the statute for calendar year gallons. any BBD produced can be used to 2012, which is 1.0 billion gallons.126 satisfy both of these other applicable The statute does not, however, establish B. Review of Implementation of the volume requirements, even beyond the any other numeric criteria, and provides Program and the 2021 Applicable mandated BBD volume. EPA discretion over how to weigh the Volume of Biomass-Based Diesel importance of the often competing A. Statutory Requirements factors and the overarching goals of the One of the considerations in The statute establishes applicable statute when the EPA sets the applicable determining the BBD volume for 2021 is volume targets for years through 2022 volumes of BBD in years after those for a review of the implementation of the for cellulosic biofuel, advanced biofuel, which the statute specifies such program to date, as it affects BBD. This and total renewable fuel. For BBD, volumes. In the period 2013–2022, the review is required by the CAA, and also applicable volume targets are specified statute specifies increasing applicable provides insight into the capabilities of in the statute only through 2012. For volumes of cellulosic biofuel, advanced the industry to produce, import, export, years after those for which volumes are biofuel, and total renewable fuel, but distribute, and use BBD. It also helps us specified in the statute, EPA is required provides no numeric criteria, beyond to understand what factors, beyond the under CAA section 211(o)(2)(B)(ii) to the 1.0 billion gallon minimum, on the BBD standard, may incentivize the determine the applicable volume of level at which BBD volumes should be availability of BBD. In reviewing the BBD, in coordination with the Secretary set. program, we assess numerous of Energy and the Secretary of In establishing the BBD and cellulosic regulatory, economic, and technical Agriculture, based on a review of the standards as nested within the advanced factors, including the availability of implementation of the program during biofuel standard, Congress clearly BBD in past years relative to the BBD calendar years for which the statute intended to support development of and advanced standards; the prices of specifies the volumes and an analysis of BBD and especially cellulosic biofuels, BBD, advanced, and conventional RINs; the following factors: while also providing an incentive for the competition between BBD and other 1. The impact of the production and the growth of other non-specified types advanced biofuels in meeting the use of renewable fuels on the of advanced biofuels. In general, the portion of the advanced standard not environment, including on air quality, advanced biofuel standard provides an required to be met by BBD or cellulosic climate change, conversion of wetlands, opportunity for other advanced biofuels RINs; the maturation of the BBD ecosystems, wildlife habitat, water (advanced biofuels that do not qualify as industry over the course of the RFS quality, and water supply; cellulosic biofuel or BBD) to compete program; and the effects of the BBD 2. The impact of renewable fuels on with cellulosic biofuel and BBD to standard on the production and the energy security of the United States; satisfy the advanced biofuel standard development of both BBD and other 3. The expected annual rate of future after the cellulosic biofuel and BBD advanced biofuels. commercial production of renewable standards have been met. fuels, including advanced biofuels in In Alon Refining Krotz Spring, Inc. v. Table VI.B.1–1 shows, for 2011–2019, each category (cellulosic biofuel and EPA, the D.C. Circuit affirmed EPA’s the number of BBD RINs generated, the BBD); approach to setting the 2017 BBD number of RINs retired due to export, 4. The impact of renewable fuels on volume as ‘‘consistent with the structure the number of RINs retired for reasons the infrastructure of the United States, and purposes of the statute.’’ 127 In other than compliance with the annual including deliverability of materials, today’s rule, we have applied the same BBD standards, and the consequent goods, and products other than number of available BBD RINs; for renewable fuel, and the sufficiency of 126 See CAA section 211(o)(2)(B)(v). 2011–2019, the BBD and advanced infrastructure to deliver and use 127 Alon Refining Krotz Springs, Inc. v. EPA, 936 biofuel standards; and for 2020, the BBD renewable fuel; F.3d 628, 666 (D.C. Cir 2019). and advanced biofuel standards.

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TABLE VI.B.1–1—BIOMASS-BASED DIESEL (D4) RIN GENERATION AND ADVANCED BIOFUEL AND BIOMASS-BASED DIESEL STANDARDS IN 2011–2020 [Million RINs or gallons] 128

BBD RINs Advanced BBD RINs Exported retired, non- Available BBD BBD BBD standard standard biofuel generated compliance BBD RINs a standard (RINs) (gallons) b (RINs) b reasons (RINs) b

2011 ...... 1,692 48 102 1,542 800 1,200 1,350 2012 ...... 1,738 102 91 1,545 1,000 1,500 2,000 2013 ...... 2,740 125 101 2,514 1,280 1,920 2,750 2014 ...... 2,710 134 99 2,477 1,630 c 2,490 2,670 2015 ...... 2,796 145 45 2,606 1,730 c 2,655 2,880 2016 ...... 4,009 203 121 3,685 1,900 2,850 3,610 2017 ...... 3,849 257 115 3,477 2,000 3,000 4,280 2018 ...... 3,871 247 59 3,565 2,100 3,150 4,290 d 2019 ...... 4,381 183 0 4,198 2,100 3,150 4,920 2020 ...... 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 RINs Retired, Non-Compliance Rea- sons, due to rounding. b The 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 refinery volumes. 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 RINs per gallon, but generally has an equivalence value of 1.7. While some fuels that qualify as BBD generate more than 1.5 RINs 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 RINs 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 three months 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 standard in these years was renewable diesel, with an equivalence value higher than 1.5. d 2019 ‘‘BBD RINs generated,’’ ‘‘Exported BBD,’’ and ‘‘BBD RINs retired, Non-compliance reason’’ are projected based on data through Sep- tember 2019.

In reviewing historical BBD RIN The prices paid for advanced biofuel if BBD RINs are being used (or are generation and use, we see that the and BBD RINs beginning in early 2013 expected to be used) to satisfy obligated number of RINs available for through September 2019 (the last month parties’ total renewable fuel obligation, compliance purposes exceeded the for which data is available) also support above and beyond their BBD and volume required to meet the BBD the conclusion that the advanced advanced biofuel requirements, we standard in 2011–13 and 2016–19.129 biofuel, and in some periods the total would expect the price for all three RIN Additional production and use of renewable fuel standards, provide a types to converge. biodiesel was likely driven by a number sufficient incentive for additional When examining RIN price data from of factors, including demand to satisfy biodiesel volume beyond what is 2011 through September 2019, shown in the advanced biofuel and total required by the BBD standard. Because Figure VI.B.2–1, we see that beginning renewable fuels standards, the biodiesel the BBD standard is nested within the in early 2013 and through September tax credit,130 and various other State advanced biofuel and total renewable 2019 the advanced RIN (D5) price and and local incentives and mandates fuel standards, and therefore can help to BBD (D4) RIN prices were allowing for favorable blending satisfy three RVOs, we would expect the approximately equal. Similarly, from economics. Moreover, additional price of BBD RINs to exceed that of early 2013 through late 2016 the production of BBD, beyond the volumes advanced and conventional renewable conventional renewable fuel (D6) RIN shown in the above table, was exported. RINs.131 If, however, BBD RINs are and BBD RIN prices were approximately being used (or are expected to be used) equal. This demonstrates that the 128 Available BBD RINs Generated, Exported BBD by obligated parties to satisfy their advanced biofuel standard, and in some RINs, and BBD RINs Retired for Non-Compliance advanced biofuel obligations, above and periods the total renewable fuel Reasons information from EMTs. beyond the BBD standard, we would standard, are capable of incentivizing 129 The number of RINs available in 2014 and expect the prices of advanced biofuel increased BBD volumes beyond the BBD 2015 was approximately equal to the number 132 required for compliance in those years, as the and BBD RINs to converge. Further, standard. The advanced biofuel standards for these years were finalized at the end standard has incentivized additional of November 2015 and EPA’s intent at that time was 131 This is because when an obligated party retires volumes of BBD since 2013, while the to set the standards for 2014 and 2015 to reflect a BBD RIN (D4) to help satisfy their BBD obligation, total standard had incentivized actual BBD use. See 80 FR 77490–92, 77495 the nested nature of the BBD standard means that (December 14, 2015). this RIN also counts towards satisfying their additional volumes of BBD from 2013 133 130 The biodiesel tax credit was reauthorized in advanced and total renewable fuel obligations. through 2016. We do note, however, January 2013. It applied retroactively for 2012 and Advanced RINs (D5) count towards both the for the remainder of 2013. It was once again advanced and total renewable fuel obligations, 133 Although we did not issue a rule establishing extended in December 2014 and applied while conventional RINs (D6) count towards only the final 2013 standards until August of 2013, we retroactively to all of 2014 as well as to the the total renewable fuel obligation. believe that the market anticipated the final remaining weeks of 2014. In December 2015 the 132 We would still expect D4 RINs to be valued standards, based on EPA’s July 2011 proposal and biodiesel tax credit was authorized and applied at a slight premium to D5 and D6 RINs in this case the volume targets for advanced and total renewable retroactively for all of 2015 as well as through the (and D5 RINs at a slight premium to D6 RINs) to fuel established in the statute. (76 FR 38844, 38843 end of 2016. In February 2018 the biodiesel tax reflect the greater flexibility of the D4 RINs to be July 1, 2011). Similarly, for 2014 and 2015, credit was authorized and applied retroactively for used towards the BBD, advanced biofuel, and total although we issued the final standards in late 2015, all of 2017. The biodiesel tax credit is not currently renewable fuel standard. This pricing has been the proposed rule incentivized the market to use in place for 2018, 2019, or 2020. observed over the past several years. Continued

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that in 2011–2012 the BBD RIN price the E10 blendwall had not yet been biofuel requirement that exceeded the was significantly higher than both the reached, and it was likely more cost BBD and cellulosic biofuel requirements advanced biofuel and conventional effective for most obligated parties to with advanced ethanol. renewable fuel RIN prices. At this time, satisfy the portion of the advanced

We also examined the opportunity for a significant portion of the advanced diversity of feedstock sources used to advanced biofuels other than BBD and volume requirements effectively make biofuels, thereby reducing the cellulosic biofuels, as shown in Table disincentivize the future development impacts associated with a shortfall in a VI.B.1–2. We believe it is important to of other promising advanced biofuel particular type of feedstock) and preserve this opportunity for other pathways.134 A variety of different types increase the likelihood of the advanced biofuels, and we are of advanced biofuels, rather than a development of lower cost advanced conscious of public comments claiming single type such as BBD, would increase biofuels that meet the same GHG that BBD volume requirements that are energy security (e.g., by increasing the reduction threshold as BBD.135

TABLE VI.B.1–2—OPPORTUNITY FOR AND RIN GENERATION OF ‘‘OTHER’’ ADVANCED BIOFUELS [Million RINs]

Available BBD Opportunity for Available advanced (D4) RINs in ‘‘other’’ advanced (D5) RINs excess of the BBD biofuels a equirement b

2011 ...... 150 223 342 2012 ...... 500 597 45 2013 ...... 829 548 594 2014 c ...... 147 143 ¥13 2015 c ...... 102 147 ¥49 2016 ...... 530 98 835

BBD volumes exceeding the proposed BBD standard 134 See, e.g., Comments from Advanced Biofuel 135 All types of advanced biofuel, including BBD, to help satisfy the proposed advanced and total Association, available in EPA docket EPA–HQ– must achieve lifecycle GHG reductions of at least standards. See 80 FR 33100 (2014–16 standards OAR–2018–0167–1277. 50 percent. See CAA section 211(o)(1)(B)(i), (D). proposed June 10, 2015); 78 FR 71732 (2014 standards proposed Nov. 29, 2013).

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TABLE VI.B.1–2—OPPORTUNITY FOR AND RIN GENERATION OF ‘‘OTHER’’ ADVANCED BIOFUELS—Continued [Million RINs]

Opportunity for Available BBD ‘‘other’’ advanced Available advanced (D4) RINs in (D5) RINs excess of the BBD biofuels a equirement b

2017 ...... 969 144 477 2018 ...... 852 178 415 2019 d ...... 1,352 310 1,048 a The opportunity for ‘‘other’’ advanced biofuel is calculated by subtracting the number of cellulosic biofuel and BBD RINs required each year from the number of advanced biofuel RINs required. This portion of the advanced standard can be satisfied by advanced (D5) RINs, BBD RINs in excess of those required by the BBD standard, or cellulosic RINs in excess of those required by the cellulosic standard. b The available BBD (D4) RINs in excess of the BBD requirement is calculated by subtracting the required BBD volume (multiplied by 1.5 to account for the equivalence value of biodiesel) required each year from the number of BBD RINs available for compliance in that year. This number does not include carryover RINs, nor do we account for factors that may impact the number of BBD RINs 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 been retroactively adjusted for subsequent events, such as differences between projected and actual gasoline and diesel use and exempted small refinery volumes. c The 2014 and 2015 volume requirements were established in November 2015 and were set equal to the number of RINs projected to be available for each year. d Available advanced RINs and available D4 RINs in excess of the BBD requirement are projected based on data through September 2019.

In each year since 2016, there has standard for 2021 that is presented in growth in the size of companies, the been a significant gap for other the statute, and that is equivalent to the consolidation of the industry, and more advanced biofuels, but this gap has implied non-cellulosic advanced biofuel stable funding and access to capital. By nonetheless been dominated by BBD. standard for 2020. For the 2021 BBD 2018, the average BBD RIN generation While the RFS volumes created the volume, we thus find that it is per company had climbed to over 36 opportunity for up to 530 million, 969 appropriate to maintain the BBD volume million RINs (23.7 million gallons) million, 852 million, and 1,352 million for 2021 at 2.43 billion gallons. Even in annually, more than a 3-fold increase. gallons of ‘‘other’’ advanced for 2016, an optimistic scenario, we do not Only 20 percent of the companies 2017, 2018, and 2019 respectively to be believe that the use of other advanced produced less than 1 million gallons of used to satisfy the advanced biofuel biofuels will approach 850 million BBD in 2017.138 obligation, only 98 million, 144 million, gallons by 2021. We recognize, however, 178 million, and 310 million gallons of the dynamic nature of the fuels We recognize that the space for other ‘‘other’’ advanced biofuels were marketplace, and the impact that the advanced biofuels in 2021 will generated. This is significantly less than BBD blender’s tax credit can have on the ultimately depend on the 2021 the volumes of ‘‘other’’ advanced relative economics of BBD versus other advanced biofuel volume. While EPA is available in 2012–2013. Despite creating advanced biofuels, so going forward we not establishing the advanced biofuel space within the advanced biofuel intend to assess the appropriate space volume for 2021 in this action, we standard for ‘‘other’’ advanced, in recent for other advanced biofuels in anticipate that the non-cellulosic years, only a small fraction of that space subsequent rules setting BBD volumes. advanced biofuel volume for 2021, has been filled with ‘‘other’’ advanced, At the same time, the rationale for when established, will be greater than and BBD continues to fill most of the preserving the ‘‘space’’ for ‘‘other’’ 3.65 billion gallons (equivalent to 2.43 gap between the BBD standard and the advanced biofuels remains. We note that billion gallons of BBD, after applying advanced standard. Thus, there does not the BBD industry in the U.S. and abroad the 1.5 equivalence ratio). This appear to be a compelling reason to has matured since EPA first increased expectation is consistent with our increase the ‘‘space’’ maintained for the required volume of BBD beyond the actions in previous years. Accordingly, ‘‘other’’ advanced biofuel volumes. statutory minimum in 2013.136 To we expect that the 2021 advanced This conclusion is consistent with our assess the maturity of the biodiesel biofuel volume, together with the 2021 approach in the 2019 final rule, when industry, EPA compared information on BBD volume established today, will we established the 2019 advanced BBD RIN generation by company in continue to preserve a considerable biofuel volume and the 2020 BBD 2012 and 2018 (the most recent year for portion of the advanced biofuel volume volume. The overall volume of non- which complete RIN generation by that could be satisfied by either cellulosic advanced biofuel increased by company is available). In 2012, the additional gallons of BBD or by other annual average RIN generation per 500 million gallons for 2019. For the unspecified and potentially less costly 2020 BBD volume, we determined that company producing BBD was about 11 types of qualifying advanced biofuels. it was appropriate to also increase the million RINs (about 7.3 million gallons) BBD volume by the same energy- with approximately 50 percent of C. Consideration of Statutory Factors in equivalent amount (330 million companies producing less than 1 CAA Section 211(o)(2)(B)(ii)(I)–(VI) for physical gallons) as it would preserve million gallons of BBD a year.137 Since 2021 and Determination of the 2021 the space already available for other that time, the BBD industry has matured Biomass-Based Diesel Volume advanced biofuels to compete in 2018 in a number of critical areas, including (850 million RINs). This space is many As in past annual standard-setting times the amount of other advanced 136 See also generally 84 FR 36794–95 (further rulemakings, we find that additional biofuels used in each year starting from explaining our approach in establishing the 2013 volumes of BBD would displace other 2016. BBD volume and our experience since that time). advanced biofuel, due to the nested 137 ‘‘BBD RIN Generation by Company in 2012 In this action, we are maintaining the and 2018,’’ available in EPA docket EPA–HQ–OAR– implied non-cellulosic advanced biofuel 2019–0136. 138 Id.

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nature of the standards,139 as opposed to a significant degree of space for ‘‘other’’ three decimal places for cellulosic petroleum fuels. More specifically, for a advanced biofuels in recent years, far biofuel in both the volume requirement given advanced biofuel standard, greater smaller volumes of ‘‘other’’ advanced and percentage standards to more or lesser BBD volume requirements have been utilized to meet the advanced precisely capture the smaller volume generally do not change the amount of standard. The BBD volume we are projections and the unique methodology advanced biofuel used to displace finalizing today continues to preserve that in some cases results in estimates petroleum fuels; the total volume of the existing gap between the advanced of only a few million gallons for a group advanced biofuels is unchanged biofuel volume and the sum of the of cellulosic biofuel producers (see regardless of the BBD volume cellulosic biofuel and BBD volumes. We Section III for a further discussion of the requirement. Thus increasing the BBD believe this provides sufficient methodology for projecting cellulosic volume requirement would result in the incentive to producers of ‘‘other’’ biofuel production and our decision to displacement of other types of advanced advanced biofuels, while also round the projected volume of cellulosic biofuels that could have been used to acknowledging that the advanced biofuel to the nearest 10 million meet the advanced biofuels volume standard has been met predominantly gallons). However, the volume requirement. with biomass-based diesel. Namely, this requirements for cellulosic biofuel have As a result, as in past assessments of would allow other advanced biofuels to increased over time. We have therefore the factors articulated in CAA continue to compete with excess determined that volume requirements 211(o)(2)(B)(ii)(I)–(VI), we consider BBD volumes of BBD for market share under and percentage standards for cellulosic in comparison to other advanced the advanced biofuel standard. This biofuel will now use two decimal biofuels, and not in comparison to would provide significant long term places. petroleum diesel. Our primary certainty for investments in other In this section, we also discuss our assessment of the statutory factors is advanced biofuels that over time could regulatory change to the percent that because the BBD requirement is compete with BBD to fill the advanced standard formulas to account for a nested within the advanced biofuel biofuel standard. In sum, our projection of the aggregate volume for volume requirement, we expect that the assessment of the statutory factors and SREs that we expect to grant for the 2021 advanced volume requirement will the implementation of the program 2020 compliance year. This section also determine the level of BBD use, supports a volume of 2.43 billion provides our rationale for that production, and imports that occur in gallons. projection of exempt gasoline and diesel 2021. Therefore, we continue to believe volume. Additionally, we also provide VII. Percentage Standards for 2020 that approximately the same overall our approach for evaluating SREs going volume of BBD would likely be The renewable fuel standards are forward, including for the currently supplied in 2021 regardless of the 2021 expressed as volume percentages and pending 2019 petitions and for 2020 BBD volume requirement. In the long- are used by each obligated party to petitions we receive in the future. term, however, leaving adequate room determine their Renewable Volume for growth of other advanced biofuels Obligations (RVOs). Since there are four A. Calculation of Percentage Standards could have a beneficial impact on separate standards under the RFS The formulas used to calculate the certain statutory factors. Notably, this program, there are likewise four percentage standards applicable to incentivizes the development of other separate RVOs applicable to each producers and importers of gasoline and advanced biofuels with potentially obligated party. Each standard applies diesel are provided in 40 CFR 80.1405. superior cost, climate, environmental, to the sum of all non-renewable gasoline The formulas rely on estimates of the and other characteristics, relative to and diesel produced or imported. volumes of gasoline and diesel fuel, for BBD. We present a detailed analysis of Sections II through IV provide our both highway and nonroad uses, which the statutory factors for the BBD volume rationale and basis for the final volume are projected to be used in the year in requirement in a memorandum to the requirements for 2020.141 The volumes which the standards will apply. The docket.140 used to determine the final percentage projected gasoline and diesel volumes standards are shown in Table VII–1. D. BBD Volume Requirement for 2021 are provided by EIA and include projections of ethanol and biomass- Based on the above analysis, we are based diesel used in transportation setting the applicable volume of BBD at TABLE VII–1—VOLUMES FOR USE IN fuel.142 Since the percentage standards 2.43 billion gallons for 2021. We believe DETERMINING THE FINAL 2020 AP- apply only to the non-renewable this volume sets the appropriate floor PLICABLE PERCENTAGE STANDARDS gasoline and diesel produced or for BBD, and that the volume of BBD [Billion gallons] imported, the volumes of renewable fuel actually used in 2021 will be driven by are subtracted out of the EIA projections the level of the advanced biofuel and Cellulosic biofuel ...... 0.59 of gasoline and diesel. potentially the total renewable fuel Biomass-based diesel ...... 2.43 Transportation fuels other than standards that the Agency will establish Advanced biofuel ...... 5.09 gasoline or diesel, such as natural gas, for 2021. In addition, despite providing Renewable fuel ...... 20.09 propane, and electricity from fossil fuels, are not currently subject to the 139 The BBD volume requirement is nested within For the purposes of converting these standards, and volumes of such fuels are the advanced biofuel requirement, and the volumes into percentage standards, we advanced biofuel requirement is, in turn, nested not used in calculating the annual within the total renewable fuel volume generally use two decimal places to be percentage standards. Since under the requirement. See CAA section 211(o)(2)(B)(i)(IV), consistent with the volume targets as regulations the standards apply only to (II). This means that any BBD produced can be used given in the statute, and similarly two producers and importers of gasoline and to satisfy both these other applicable volume decimal places in the percentage requirements even beyond the BBD volume diesel, these are the transportation fuels requirement. standards. In past years we have used 140 ‘‘Memorandum to docket: Statutory Factors 142 Letter from Linda Capuano, EIA Administrator Assessment for the 2021 Biomass-Based Diesel 141 The 2020 volume requirement for BBD was to Andrew Wheeler, EPA Administrator. October 9, (BBD) Applicable Volumes.’’ See Docket EPA–HQ– established in the 2019 standards final rule (83 FR 2019. Available in docket EPA–HQ–OAR–2019– OAR–2019–0136. 63704, December 11, 2018) 0136.

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used to set the percentage standards, as biodiesel and renewable diesel in the exemptions already granted at the time well as to determine the annual volume context of determining the percentage of the final annual rule.148 obligations of an individual gasoline or standard for BBD versus determining In the October 28 proposal, we diesel producer or importer under 40 the percentage standard for advanced proposed to modify the regulations at 40 CFR 80.1407. biofuel and total renewable fuel, it is not 143 CFR 80.1405(c) to account for a As specified in the RFS2 final rule, a significant one given our approach to projection of the total exempted volume the percentage standards are based on determining the BBD volume of gasoline and diesel produced at small energy-equivalent gallons of renewable requirement. Our intent in setting the refineries, including for those fuel, with the cellulosic biofuel, BBD applicable volume is to provide a exemptions granted after the final advanced biofuel, and total renewable level of guaranteed volume for BBD, but annual rule.149 We are finalizing the fuel standards based on ethanol as described in Section VII.B of the 2019 change as proposed. The result is that equivalence and the BBD standard standards final rule, we do not expect our calculation of the applicable based on biodiesel equivalence. the BBD standard to be binding in percentage standards for 2020 takes into However, all RIN generation is based on 145 2020. That is, we expect that actual account a projection of the total ethanol-equivalence. For example, the supply of BBD, as well as supply of exempted volume of gasoline and diesel RFS regulations provide that production conventional biodiesel and renewable produced by small refineries in 2020. or import of a gallon of qualifying diesel, will be driven by the advanced biodiesel will lead to the generation of biofuel and total renewable fuel 1. Changes to the Projected Volume of 1.5 RINs. The formula specified in the standards and will exceed the BBD Gasoline and Diesel for Exempt Small regulations for calculation of the BBD standard. Refineries percentage standard is based on biodiesel-equivalence, and thus assumes B. Small Refineries and Small Refiners The formulas used to calculate the that all BBD used to satisfy the BBD In CAA section 211(o)(9), enacted as percentage standards applicable to standard is biodiesel and requires that part of the EPAct, and amended by producers and importers of gasoline and the applicable volume requirement be EISA, Congress provided a temporary diesel are provided in 40 CFR multiplied by 1.5 in order to calculate exemption to small refineries 146 80.1405(c). The formula for the a percentage standard that is on the through December 31, 2010. Congress percentage standard calculation for total same basis (i.e., ethanol-equivalent) as provided that small refineries could renewable fuel, including the the other three standards. However, receive a temporary extension of the definitions of the terms prior to this BBD often contains some renewable exemption beyond 2010 based either on action, is shown below. The formulas diesel, and a gallon of renewable diesel the results of a required DOE study, or for the other three percentage standards typically generates 1.7 RINs.144 In for the reason of ‘‘disproportionate follow the same format, with the addition, there is often some renewable economic hardship’’ in response to numerator of the fraction replaced with diesel in the conventional renewable small refinery petitions submitted ‘‘at the annual volume of cellulosic biofuel, fuel pool. As a result, the actual number any time.’’ CAA section 211(o)(9)(B)(i). biomass-based diesel, and advanced of RINs generated by biodiesel and Pursuant to this petition process, EPA biofuel, respectively. In this action we renewable diesel is used in the context often granted SREs for a given are only modifying the definitions of the of our assessment of the applicable compliance year after the applicable terms GEi and DEi, which previously volume requirements and associated percentage standards for that referred to the amount of gasoline and percentage standards for advanced compliance year had been established. diesel projected to be produced by biofuel and total renewable fuel, and Under our prior approach to calculating exempt small refineries, to now refer to likewise in obligated parties’ the percentage standards, we did not the amount of gasoline and diesel determination of compliance with any account for these exemptions in projected to be exempt. All other terms of the applicable standards. While there establishing the percentage remain in the same and were not is a difference in the treatment of standards.147 We only accounted for reexamined in this rulemaking.

Where: Di = Amount of diesel projected to be used in the 48 contiguous states and Hawaii, StdRF,i = The renewable fuel standard for year in the 48 contiguous states and Hawaii, in year i, in gallons. i, in percent. in year i, in gallons. GSi = Amount of gasoline projected to be RFVRF,i = Annual volume of renewable fuel RGi = Amount of renewable fuel blended into used in Alaska or a U.S. territory, in year required by 42 U.S.C. 7545(o)(2)(B) for gasoline that is projected to be consumed i, if the state or territory has opted-in or year i, in gallons. in the 48 contiguous states and Hawaii, opts-in, in gallons. Gi = Amount of gasoline projected to be used in year i, in gallons. RGSi = Amount of renewable fuel blended in the 48 contiguous states and Hawaii, RDi = Amount of renewable fuel blended into into gasoline that is projected to be in year i, in gallons. diesel that is projected to be consumed consumed in Alaska or a U.S. territory,

143 See 75 FR 14670 (March 26, 2010). 145 83 FR 63704 (December 11, 2018). FR 63740; see also, e.g., 77 FR 1320, 1340; 78 FR 144 Under 40 CFR 80.1415(b)(4), renewable diesel 146 A small refiner that meets the requirements of 49794, 49825–49826; 80 FR 77420, 77511. We also with a lower heating value of at least 123,500 Btu/ 40 CFR 80.1442 may also be eligible for an proposed to follow this interpretation in the July 29 gallon is assigned an equivalence value of 1.7. A exemption. proposal for this final rule. 84 FR 36797 (July 29, minority of renewable diesel has a lower heating 147 2019). value below 123,500 BTU/gallon and is therefore We adopted this interpretation of our 148 assigned an equivalence value of 1.5 or 1.6 based regulations in the 2011 final rule. 75 FR 76804. We See, e.g., 80 FR 77420, 77511 (December 14, on applications submitted under 40 CFR reaffirmed it in annual rulemakings since then, 2015). 80.1415(c)(2). including most recently in the 2019 final rule. 83 149 84 FR 57677.

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in year i, if the state or territory opts-in, formula is more important now than in for and EPA to grant an exemption in gallons. earlier years of the program as we have based on disproportionate economic DSi = Amount of diesel projected to be used recently granted exemptions for more hardship ‘‘at any time,’’ 157 while also in Alaska or a U.S. territory, in year i, if significant volumes of gasoline and directing EPA to promulgate standards the state or territory has opted-in or opts- diesel, potentially resulting in more in, in gallons. by November 30 of the prior year to significant volumes that are not being ‘‘ensure[]’’ that the renewable fuel RDSi = Amount of renewable fuel blended 153 into diesel that is projected to be met at the time of compliance. A volumes are met.158 In other words, consumed in Alaska or a U.S. territory, petition for administrative small refineries may seek and EPA may in year i, if the state or territory opts-in, reconsideration raised similar issues, grant hardship exemptions at any time, in gallons. asking EPA to reconsider our approach including after the percentage standards GEi = The amount of gasoline projected to be for accounting for exempted volumes are established. Meanwhile, EPA may produced by exempt small refineries and through the formula at 40 CFR account for a projection of these small refiners, in year i, in gallons in any 80.1405(c).154 In the October 28 exemptions in the annual rule to year they are exempt per §§ 80.1441 and proposal, EPA undertook a process to 159 80.1442. ‘‘ensure’’ the renewable fuel volumes. revisit this issue, albeit under our In more concrete terms, should EPA DEi = The amount of diesel fuel projected to be produced by exempt small refineries inherent authority to revise or amend a grant SREs without accounting for them and small refiners in year i, in gallons, rulemaking, rather than as an exercise of in the percentage formula, those in any year they are exempt per our reconsideration authority under exemptions would effectively reduce §§ 80.1441 and 80.1442. CAA section 307(d)(7)(B).155 the volumes of renewable fuel required In the October 28 proposal we Historically, EPA has interpreted the by the RFS program, potentially proposed to change the definitions of impacting renewable fuel use in the terms GEi and DEi to refer to the amount the two relevant terms in the percentage U.S.160 By contrast, under our new of gasoline and diesel projected to be standard formula at 40 CFR 80.1405(c), produced by small refineries that have approach, the percentage standard for GEi and DEi. We proposed that these each category of renewable fuel would already been granted exemptions from terms represent a projection of the their RFS obligations prior to our increase to account for a projection of exempted volume of gasoline and the exempted volume. These higher issuing the final rule for the relevant diesel, regardless of whether we had 150 percentage standards would have the compliance year. As a result of this adjudicated exemptions for that year by interpretation, any SREs granted after effect of ensuring that the required the time of the final rule establishing the volumes of renewable fuel are met when we issued the annual rule containing percentage standards. We are finalizing the percentage standards for that year small refineries are granted exemptions these changes, and in turn, also from their 2020 obligations after the effectively reduced the required volume completing the process of revisiting this of renewable fuel for that year. For issuance of the final rule, provided issue that we undertook as described EPA’s projection of the exempted example, in August 2019 we granted 31 above in response to the above-noted SREs for the 2018 compliance year after volume is accurate. administrative petition. The term ‘‘GEi’’, the percentage standards for 2018 had This new approach entails a change in representing the volume of exempt 161 been established.151 These SREs policy. We previously did not gasoline, is now defined as ‘‘the total account for exemptions granted after the reduced the obligated volume of amount of gasoline projected to be gasoline and diesel for 2018 by 13.42 annual rule, and at times we even exempt in year i, in gallons, per suggested that doing so was billion gallons, effectively reducing the §§ 80.1441 and 80.1442.’’ Similarly, the improper.162 We believe our changed required volume of total renewable fuel term ‘‘DE ’’, representing the volume of i approach is appropriate and largely for 2018 by 1.43 billion RINs. exempt diesel, is now defined as ‘‘the avoids the problems we previously In comments on the July 29 proposal, total amount of diesel projected to be identified. First, we had previously many commenters requested that EPA exempt in year i, in gallons, per stated that ‘‘the Act is best interpreted adopt a different interpretation of the §§ 80.1441 and 80.1442.’’ terms for the amount of gasoline and We begin by explaining our legal to require issuance of a single annual diesel projected to be produced by authority to adopt the new definitions, standard in November that is applicable exempt small refineries in the existing as well as our rationale for the change in the following calendar year, thereby percentage standard formula.152 Many in our policy. While the statute does not providing advance notice and certainty commenters requested that these terms specifically require EPA to redistribute to obligated parties regarding their refer to a projection of the exempted exempted volumes in this manner, we 157 volume of gasoline and diesel produced believe that this is a reasonable CAA section 211(o)(9)(B)(i). 158 CAA section 211(o)(3)(B)(i); see also CAA by small refineries, regardless of interpretation of our authority under section 211(o)(2)(A)(i), (2)(A)(iii)(I), CAA section whether EPA had already adjudicated Chevron v. NRDC.156 Indeed, making 301(a). This projection, moreover, is hardly unique such exemption petitions by the time of this projection harmonizes various in the RFS program as Congress required numerous the final rule. These commenters argued statutory provisions. The statute projections in the implementation of the program. See, e.g., CAA section 211(o)(7)(D) (projection of the that this interpretation of the regulations authorizes small refineries to petition volume of cellulosic biofuel production); (o)(3)(A) is reasonable and better implements the (projection of the volumes of transportation fuel, statutory requirement that EPA must 153 See, e.g., comments from Growth Energy biomass-based diesel, and cellulosic biofuel). ‘‘ensure’’ the renewable fuel volumes (Docket Item No. EPA–HQ–OAR–2019–0136–0312). 159 See CAA section 211(o)(2)(A)(i), (2)(A)(iii)(I), are met. Some commenters suggested 154 ‘‘Petition for Reconsideration of 40 CFR (3)(B)(i); see also CAA section 301(a). 80.1405(c), EPA Docket No. EPA–HQ–OAR–2005– 160 We note that there are other factors, besides that adjusting the percentage standards 0161, promulgated in 75 FR 14670 (Mar. 26, 2010); the RFS program, that affect renewable fuel use. Petition for Reconsideration of Periodic Reviews for See, e.g., ‘‘Endangered Species Act No Effect 150 See, e.g., 84 FR 36797 (July 29, 2019). the Renewable Fuel Standard Program, 82 FR 58364 Finding for the 2020 Final Rule,’’ available in the 151 The percentage standards for 2018 were (Dec. 12, 2017)’’ (June 4, 2018). docket for this action. established in December 2017 (82 FR 58486, 155 See 84 FR 57680 & n.13 (explaining in greater 161 FCC v. Fox Television Stations, Inc., 556 U.S. December 12, 2017). detail the basis for EPA’s reconsideration of this 502, 515 (2009). 152 See, e.g., comments from the Renewable Fuels issue). 162 See 78 FR 49825–49826; 77 FR 1340; EPA’s Association (Docket Item No. EPA–HQ–OAR–2019– 156 Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Br., Doc No. 1757157, D.C. Cir. No. 17–1258, AFPM 0136–0281). Inc., 467 U.S. 837, 842–44 (1984). v. EPA (Oct. 25, 2018) (‘‘EPA Br. in AFPM’’).

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regulatory requirements. Periodic EPA’s policy to adjudicating SRE prospective and one retrospective. revisions to the standards to reflect petitions affects the exempted volume, Prospectively, this is our general waivers issued to small refineries or not having established this policy at the approach to adjudicating SRE petitions refiners would be inconsistent with the time of the annual rule made it very going forward, beginning with 2019 SRE statutory text, and would introduce an challenging to project the exempted petitions and including 2020 SRE undesirable level of uncertainty for volume. In today’s rule, by contrast, we petitions. Our approach to evaluating obligated parties.’’ 163 Today’s changes are articulating our prospective policy SREs going forward is to follow DOE’s are consistent with these views. By to adjudicating SRE petitions (beginning recommendations, including granting projecting exempted volumes in with the 2019 SRE petitions and partial (i.e., 50 percent) exemptions, advance of issuing annual standards, we including the 2020 SRE petitions) where appropriate. The statute can issue a single set of standards for concurrently with issuing this final rule. authorizes EPA to evaluate petitions for each year without the need for periodic Doing so augments our ability to SREs considering DOE’s study, revisions and the associated uncertainty reasonably project the exempted volume recommendation, and other economic for obligated parties. for 2020. We explain this policy further factors. While final decisions on 2020 Second, we also had previously noted below. SREs must await EPA’s receipt and adjudication of those petitions, we that ‘‘Congress allowed for some 2. Projecting the Exempted Volume of generally have the statutory authority to imprecision to exist in the actual Gasoline and Diesel in 2020 volumes of renewable fuel that are issue a final decision consistent with consumed as a result of the percentage As already noted, we acknowledge the DOE’s recommendation.168 This reading standards that we set each inherent uncertainty in projecting the of the statute is consistent with November....’’164 Relatedly, we had exempted volume. More concretely, an congressional guidance to DOE 169 and noted the inherent difficulties of imprecise projection has consequences EPA.170 projecting exempted small refinery on the actual required volume of We acknowledge that on August 9, volumes.165 We still agree that Congress renewable fuel. If we over-project the 2019, we took final agency action on 36 allowed for some imprecision to exist in volume of gasoline and diesel produced then-pending small refinery petitions the actual required volumes of by exempt small refineries in 2020, the for the 2018 compliance year (‘‘August 171 renewable fuel, and that projecting actual required volumes of renewable 9 Memorandum Decision’’), and future exempted volumes involves some fuel will be higher than the volumes stated that the ‘‘best interpretation’’ of uncertainty. used in calculating the percentage the statute was that EPA should either standards. By contrast, if we under- But several recent developments grant or deny petitions in full, and ‘‘not project the volume of exempted gasoline persuade us to reach a different and diesel, the actual required volumes 168 conclusion in accounting for a Other factors, such as judicial resolution of of renewable fuel will be lower than the pending decisions or subsequent Congressional projection of exempted small refinery volumes used in calculating the direction, could potentially affect EPA’s SRE policy volumes. For one, we are projecting the going forward. percentage standards. If we project the aggregate exempted volume in 2020. We 169 See Consolidated Appropriations Act, 2016, volume correctly, we will ensure that, as thus need not wrestle with the Public Law 114–113 (2015), Explanatory Statement far as exempted small refinery volumes to Senate amendment to H.R. 2029 Military difficulties of predicting precisely are concerned, the actual required Construction and Veterans Affairs and Related which refineries will apply or the Agencies Appropriations Act, 2016, Division D— volume is equal to the volume economic circumstances of specific Energy and Water Development and Related established in this final rule.167 Agencies Appropriations Act, 2016, available at refineries in 2020. We only need to In selecting the methodology for https://docs.house.gov/meetings/RU/RU00/ estimate the total exempted volume. projecting the exempted volume, we 20151216/104298/HMTG-114-RU00-20151216- Moreover, we have the benefit of thus aim to make a neutral projection of SD005.pdf. Congress in this Statement directed additional experience administering the DOE, under certain circumstances, ‘‘to recommend exemptions based on the information to the EPA Administrator a 50 percent waiver of RFS program and knowledge of the now before us. As proposed, we are RFS requirements for the [small refinery] relatively high levels of exempted finalizing a projection methodology petitioner.’’ Id. at 35. Consistent with that guidance volumes in recent years, where based on a 2016–18 annual average of and since 2014, DOE has recommended 50 percent exempted volumes associated with SREs exemptions as it deemed appropriate. exempted volumes had EPA strictly 170 S. Rep. 114–281. Congress in this Report granted after the annual percentage followed DOE recommendations in provided that ‘‘[w]hen making decisions about standards were established have those years, including by granting 50 small refinery exemptions under the RFS program, constituted a significant portion of the percent relief where DOE recommended the Agency is directed to follow DOE’s total volume of obligated fuel, resulting recommendations.’’ See also Consolidated 50 percent relief. We explain why we do Appropriations Act, 2019, Public Law No. 116–6 in fewer RINs being used to comply so below, beginning with our decision (2019), H. Rep. 116–9 at 741, continuing the with the RFS standards. to base the projection on DOE directive contained in Senate Report 114–281. See Finally, in recent annual rulemakings, recommendations and then our decision also Sen. Rep. 116–123, Department of the Interior, EPA has not articulated its prospective Environment, and Related Agencies Appropriations to use a 2016–18 annual average. Bill, 2020, Report Accompanying Sen. 2580, at 87– policy to adjudicating SRE petitions for Finally, we state the projected exempt 88 (Sept. 26, 2019) (again ‘‘continu[ing] the those compliance years. For instance, in volumes of gasoline and diesel based on directive contained in Senate Report 114–281 the 2018 final rule, we did not state our this approach and the corresponding related to small refinery relief’’), available at policy to adjudicating 2018 SRE https://www.congress.gov/116/crpt/srpt123/CRPT- number of RINs. 116srpt123.pdf. This guidance, read together with petitions. Instead we articulated that First, we choose to base the projection that discussed in the previous footnote, supports policy in a separate memorandum of exempted volumes on DOE’s the interpretation that DOE has authority to issued after the annual rule.166 Since recommendations for two reasons, one recommend partial exemptions for particular small refineries, and that EPA has discretion to follow that recommendation and grant a partial exemption. 163 77 FR 1340. to Sarah Dunham, Director, Office of Transportation 171 ‘‘Decision on 2018 Small Refinery Exemption 164 77 FR 1340 (January 9, 2012). and Air Quality. August 9, 2019. Petitions,’’ Memorandum from Anne Idsal, Acting 165 EPA Br. in AFPM 72–77. 167 The actual required volume is subject to other Assistant Administrator, Office of Air and Radiation 166 ‘‘Decision on 2018 Small Refinery Exemption uncertainties besides small refinery exemptions, to Sarah Dunham, Director, Office of Transportation Petitions,’’ Memorandum from Anne Idsal, Acting such as unexpected changes in gasoline and diesel and Air Quality. August 9, 2019 (‘‘August 9 Assistant Administrator, Office of Air and Radiation use. Memorandum Decision’’).

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grant partial relief.’’ Specifically, we particular small refinery’s the August 9 Memorandum Decision, observed that the statute provided for circumstances. In that case, it is we granted full exemptions to exemptions as an ‘‘extension of the reasonable for the level of relief that petitioners where DOE either exemption under subparagraph (A)’’, EPA grants to reflect that determination. recommended full or 50 percent relief. where subparagraph (A) stated that the For purposes of making the projection of That is, in cases where DOE found a RFS program requirements ‘‘shall not the aggregate exempted volume of small refinery experienced either apply to small refineries under calendar gasoline and diesel in 2020, and going disproportionate impacts or viability year 2011.’’ 172 We had implemented the forward, we are adopting this impairment, EPA found the small ‘‘subparagraph (A)’’ pre-2011 exemption interpretation of the statute,174 and refinery experienced disproportionate as a full exemption for all qualifying thereby depart from the interpretation economic hardship and granted a full small refineries. Consistent with this taken in the August 9 Memorandum exemption. By contrast, in earlier years interpretation, we concluded that Decision, under which EPA ‘‘shall of the program, we denied petitions and ‘‘when Congress authorized the either grant or deny petitions for small provided no exemption in certain cases Administrator to provide an ‘extension’ refinery hardship in full, and not grant where DOE recommended a 50 percent of that exemption for the reason of partial relief.’’ 175 We adopt this new exemption, finding that [disproportionate economic hardship], approach for several reasons, consistent disproportionate economic hardship Congress intended that extension to be with FCC v. Fox Television Stations, existed only where the small refinery a full, and not partial, exemption.’’ 173 Inc.176 experienced both disproportionate We believe, however, that this is not As already noted, this new policy impacts and viability impairment.178 the only reasonable way to adjudicate would allow EPA to ensure that the Our approach to projection, then, takes exemption petitions. Had Congress level of relief that it grants appropriately a middle ground between these prior spoken directly to the issue of the reflects the particular small refinery’s approaches, and is a reasonable estimate amount of relief EPA could provide to disproportionate economic hardship. of the aggregate exempted volume in small refineries, EPA would be bound This allows EPA to more precisely 2020. by that directive. However, the statute is calibrate its RFS policy, and to strike an We now turn to our decision to use silent with respect to EPA’s authority to appropriate balance between furthering the 2016–18 annual average under this issue partial exemptions. Nothing in the the production and use of renewable methodology. As we have not yet statute directly addresses this issue. No fuels while granting relief to small received SRE petitions for 2020, we statutory language exists characterizing refineries that meet the statutory must estimate the aggregate amount of the scope of an exemption; there are no criteria. This balance, moreover, is also DOE recommended relief for that year. terms employed such as ‘‘partial’’ or appropriate in light of the above-cited To do so, it is instructive to look back ‘‘full,’’ or ‘‘50%’’ or ‘‘100%.’’ Moreover, recent Congressional direction.177 at what the exempted volumes of nothing in the statute obligates EPA to Even independent of our prospective gasoline and diesel in previous years provide full relief where we find that SRE policy, we believe this approach is would have been had EPA followed only partial relief is warranted. a reasonable estimate of the aggregate DOE’s recommendations, including We think there is another reasonable exempted volume based on a granting partial exemptions. These reading of this provision of the statute: retrospective review of EPA’s past SRE volumes, along with the Renewable EPA may issue partial exemptions. policies. In prior years, EPA has taken Volume Obligation (RVO) that would Notably, EPA may determine that only different approaches in evaluating small have been exempted, are shown in partial relief is warranted based on a refinery petitions. As noted above, in Table VII.B–1.

TABLE VII.B–1—ESTIMATED EXEMPTED VOLUME OF GASOLINE AND DIESEL AND ESTIMATED RVO EXEMPTED BY COMPLIANCE YEAR FOLLOWING DOE’S RECOMMENDATIONS

Estimated exempted Estimated exempted Estimated RVO Compliance year volume of gasoline volume of diesel exempted (million gallons) (million gallons) (million RINs)

2016 ...... 2,450 1,930 440 2017 ...... 5,650 3,870 1020 2018 ...... 4,620 3,270 840

As demonstrated in Table VII.B–1, the appropriate to use an average volume of circumstances that occurred in volume of gasoline and diesel that the gasoline and diesel that would have individual past years that may or may would have been exempted if EPA had been exempted over a three-year period not occur in 2020. Given that the last followed DOE’s recommendations has as our projection of gasoline and diesel year for which we have data on small varied significantly in previous years.179 that will be exempted in 2020, rather refinery exemptions is 2018,180 we take This is because there are many factors than the volume of gasoline and diesel the average exempted volume from that affect the number of SREs that are that would have been exempted in any 2016–18. granted in a given year and the aggregate single year. This approach averages out The average volume of these fuels that exempted volume. We believe that it is the effects of unique events or market would have been exempted in 2016–18

172 CAA section 211(o)(9)(B), (o)(9)(A). 178 See, e.g., Hermes Consol., LLC v. EPA, 787 and-compliance-help/rfs-small-refinery- 173 August 9 Memorandum Decision at 2. F.3d 568, 575 (D.C. Cir. 2015). exemptions. 174 See Chevron, 467 U.S. at 842–44. 179 Information about the number of SREs granted 180 To date, we have adjudicated all 2018 small 175 August 9 Memorandum Decision at 2. and the volume of RINs not required to be retired refinery exemption petitions submitted to us. EPA 176 See generally FCC, 556 U.S. at 515. as a result of those exemptions can be found at: has not yet adjudicated any small refinery 177 See supra notes 20 and 21. https://www.epa.gov/fuels-registration-reporting- exemptions for the 2019 or 2020 compliance years.

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if EPA had followed DOE’s reduction to the RVO of approximately diesel demand for all states and recommendations is 4,240 and 3,020 770 million RINs. territories where the RFS program applies, renewable fuels projected by million gallons, for gasoline and diesel C. Final Standards fuel, respectively. We use these values EIA to be included in the gasoline and for GEi and DEi, respectively, in The formulas in 40 CFR 80.1405 for diesel demand, and projected gasoline calculating the percentage standards for the calculation of the percentage and diesel volumes from exempt small each of the renewable fuel types. We standards require the specification of a refineries. The values of all the variables also note that these exempted volumes total of 14 variables covering factors used for this final rule are shown in would have resulted in an average such as the renewable fuel volume Table VII.C–1 for the applicable 2020 requirements, projected gasoline and standards.181

TABLE VII.C–1—VALUES FOR TERMS IN CALCULATION OF THE FINAL 2020 STANDARDS 182 (billion gallons)

Value for 2020 Term Description standards

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

TABLE VII.C–2—FINAL PERCENTAGE devoted to crop production based on Projected volumes of gasoline and STANDARDS FOR 2020—Continued historical trends and economic diesel, and the renewable fuels considerations. The regulations specify, contained within them, were provided Renewable fuel ...... 11.56% therefore, that renewable fuel producers by EIA in a letter to EPA that is required a Based on the ethanol-equivalent volume of using planted crops or crop residue under the statute, and represent BBD. from the U.S. as feedstock in renewable consumption values from the October fuel production need not undertake VIII. Administrative Actions 2019 version of EIA’s Short-Term individual recordkeeping and reporting Energy Outlook.183 An estimate of fuel A. Assessment of the Domestic related to documenting that their consumed in Alaska, derived from the Aggregate Compliance Approach feedstocks come from qualifying lands, June 28, 2019 release of EIA’s State unless EPA determines through one of Energy Data System (SEDS) and based The RFS regulations specify an its annual evaluations that the 2007 on the 2017 volumes contained therein, ‘‘aggregate compliance’’ approach for baseline acreage of 402 million acres was subtracted from the nationwide demonstrating that planted crops and agricultural land has been exceeded. volumes. crop residue from the U.S. complies In the 2010 RFS2 rulemaking, EPA Using the volumes shown in Table with the ‘‘renewable biomass’’ committed to make an annual finding VII.C–1, we have calculated the final requirements that address lands from concerning whether the 2007 baseline which qualifying feedstocks may be amount of U.S. agricultural land has percentage standards for 2020 as shown 184 in Table VII.C–2. harvested. In the 2010 RFS2 been exceeded in a given year. If the rulemaking, EPA established a baseline baseline is found to have been TABLE VII.C–2—FINAL PERCENTAGE number of acres for U.S. agricultural exceeded, then producers using U.S. land in 2007 (the year of EISA planted crops and crop residue as STANDARDS FOR 2020 enactment) and determined that as long feedstocks for renewable fuel Cellulosic biofuel ...... 0.34% as this baseline number of acres was not production would be required to Biomass-based diesel ...... a 2.10% exceeded, it was unlikely that new land comply with individual recordkeeping Advanced biofuel ...... 2.93 outside of the 2007 baseline would be and reporting requirements to verify

181 To determine the 49-state values for gasoline 183 ‘‘EIA letter to EPA with 2020 volume explained below, we have applied this approach for and diesel, the amount of these fuels used in Alaska projections 10–9–2019,’’ available in docket EPA– Canada since our approval of Canada’s petition to is subtracted from the totals provided by EIA HQ–OAR–2019–0136. use aggregate compliance in 2011. In this because petroleum based fuels used in Alaska do 184 40 CFR 80.1454(g). EPA has applied this rulemaking, we have also not reexamined or not incur RFS obligations. The Alaska fractions are ‘‘aggregate compliance’’ approach for the United reopened our decision on that petition. Any determined from the June 28, 2019 EIA State Energy States in annual RFS rulemakings since establishing comments on these issues are beyond the scope of Data System (SEDS), Energy Consumption it in the 2010 RFS2 rule. See 75 FR 14701–04. In Estimates. this annual rulemaking, we have not reexamined or this rulemaking. 182 See ‘‘Calculation of final % standards for reopened this policy, including the regulations at 2020’’ in docket EPA–HQ–OAR–2019–0136. 80.1454(g) and 80.1457. Similarly, as further

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that their feedstocks are renewable provisions—and certain provisions of such diesel fuel is also now collectively biomass. the 2016 REGS rule proposal that we are known as MVNRLM diesel fuel). We did Based on data provided by the USDA finalizing here.188 These regulatory not set standards for HO under subpart Farm Service Agency (FSA) and Natural changes are described in this section. I, with the result that it remained high Resources Conservation Service (NRCS), Comments on these regulatory revisions in sulfur content and cost less to we have estimated that U.S. agricultural from both the 2016 REGS and 2020 RVO produce than MVNRLM diesel fuel. As land reached approximately 379.8 proposals, as well as EPA’s responses, such, subpart I also requires all parties million acres in 2019 and thus did not are contained in the response to in the distribution system to ensure that exceed the 2007 baseline acreage of 402 comments (RTC) document in the diesel fuel containing 15 ppm sulfur or million acres. The USDA data used to docket for this action.189 less (referred to as 15 ppm diesel fuel, make this derivation can be found in the ultra-low sulfur diesel fuel, or ULSD) A. Clarification of Diesel RVO docket to this rule.185 remains segregated from higher sulfur Calculations fuels and to take measures to prevent B. Assessment of the Canadian 191 Aggregate Compliance Approach 1. Overview sulfur contamination of ULSD. The RFS regulations, which place an The RFS regulations specify a petition We are finalizing certain provisions regarding clarification of diesel RVO RVO on the production and importation process through which EPA may of diesel transportation fuel, but not on approve the use of an aggregate calculations. Specifically, we are finalizing the ‘‘primary approach’’ the production or importation of HO, compliance approach for planted crops were promulgated in 2010 and, similar and crop residue from foreign proposed in the July 29 proposal, with some modifications based on comments to subpart I regulations, made the same countries.186 On September 29, 2011, presumption that HO and MVNRLM EPA approved such a petition from the received. We are not finalizing either of the two alternative approaches diesel fuel would be segregated. The Government of Canada.187 RFS regulations did not anticipate that The total agricultural land in Canada presented in the July 29 proposal, after consideration of negative comments on these fuels would become in 2019 is estimated at 118.1 million indistinguishable, have the same value acres. This total agricultural land area these two approaches. Historically, home heating oil (HO) in the marketplace (apart from their RFS includes 95.9 million acres of cropland compliance cost), and be commingled in and summer fallow, 12.4 million acres and diesel fuel were virtually indistinguishable because both the fuel distribution system. For of pastureland and 9.8 million acres of example, 40 CFR 80.1407 set forth agricultural land under conservation contained the same distillation range of hydrocarbons and high level of sulfur. requirements for obligated parties to practices. This acreage estimate is based include all products meeting the on the same methodology used to set the EPA’s diesel fuel sulfur regulations resulted in a distinction in the definition of MVNRLM diesel fuel, 2007 baseline acreage for Canadian collectively called ‘‘diesel fuel,’’ at 40 agricultural land in EPA’s response to marketplace beginning in the 1990s and concluding in 2010 with the phase-in of CFR 80.2(qqq) that are produced or Canada’s petition. The data used to imported during a compliance period in the ultra-low sulfur diesel regulations make this calculation can be found in the volume used to calculate their RVOs for diesel fuel used in motor vehicles the docket to this rule. This acreage unless the diesel fuel is not and motor vehicle engines (MV diesel does not exceed the 2007 baseline transportation fuel.192 Under definitions fuel). Similarly, beginning in 2004, EPA acreage of 122.1 million acres. of MV and NRLM diesel fuel, these promulgated requirements for diesel products include diesel fuel that is IX. Amendments to the RFS and Fuels fuel used in nonroad, locomotive, and ‘‘made available’’ for use in motor Program Regulations marine vehicles and engines (NRLM vehicles and motor vehicle engines, and diesel fuel) that concluded phasing in at In implementing the RFS program, we nonroad, locomotive, or marine vehicles the end of 2014. Thus, all diesel fuel for have identified several changes to the and engines.193 program that will assist with use in motor vehicles and motor vehicle When the RFS regulations were implementation in future years. These engines, and nonroad, locomotive, and promulgated in 2010, the lower regulatory changes include both marine vehicles and engines, is production cost of HO relative to diesel revisions we proposed in the July 29 currently required to meet a 15 ppm fuel provided economic incentive for proposal—clarification of diesel RVO sulfur per-gallon standard, under refiners, pipelines, and terminals to calculations, pathway petition regulations set out in 40 CFR part 80, produce and distribute HO separately 190 conditions, a biodiesel esterification subpart I (For purposes of subpart I, from diesel fuel. After we promulgated pretreatment pathway, distillers corn oil the RFS regulations, however, many and distillers sorghum oil pathways, 188 See 81 FR 80828 (November 16, 2016). states began implementing programs and renewable fuel exporter 189 All comments submitted on the REGS proposal can be found in Docket No. EPA–HQ– designed to reduce the sulfur content of OAR–2016–0041. Specific comments relevant to the HO to 15 ppm or less (15 ppm HO). 185 USDA also provided EPA with 2019 data from provisions that were under consideration for Currently, the majority of HO is the discontinued Grassland Reserve Program (GRP) finalization in this action have also been added to required to meet a 15 ppm sulfur and Wetlands Reserve Program (WRP). Given this the docket for this action (Docket Item No. EPA– standard under numerous state and city data, EPA estimated the total U.S. agricultural land HQ–OAR–2019–0136–0002). We are only both including and omitting the GRP and WRP responding to comments from the REGS proposal programs in the Northeast and Mid- acreage. In 2019, combined land under GRP and on the provisions that are being finalized in this Atlantic,194 making HO once again WRP totaled 2,974,573 acres. Subtracting the GRP, action. Comments on the remaining provisions in indistinguishable from ULSD and of the WRP, and Agriculture Conservation Easement the REGS proposal, as well as those on provisions same economic value as MVNRLM Program acreage yields an estimate of 376,853,632 listed in the July 29 proposal but that are not being acres or approximately 376.9 million total acres of finalized here, remain under consideration. We are U.S. agricultural land in 2019. Omitting the GRP not responding to them in this action. 191 See, e.g., 40 CFR 80.610(g). and WRP data yields approximately 379.8 million 190 Subpart I includes an exception to this 192 See 40 CFR 80.1407(e) and (f). acres of U.S. agricultural land in 2019. requirement that allows diesel fuel used in 193 See 40 CFR 80.2(y) and (nnn). 186 40 CFR 80.1457. locomotive or marine engines to meet a 500 ppm 194 Connecticut, Delaware, Maine, Massachusetts, 187 See ‘‘EPA Decision on Canadian Aggregate sulfur standard if the fuel is produced from New Hampshire, New Jersey, New York, Rhode Compliance Approach Petition’’ available in docket transmix processors and distributed under an Island, Vermont, the District of Columbia, and the EPA–HQ–OAR–2019–0136. approved compliance plan. city of Philadelphia.

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diesel fuel.195 Further, in 2015, parties may be excluding 15 ppm HO or order to ensure that the RFS mandates additional regulations became effective 15 ppm ECA marine fuel from their continue to be met. that required marine diesel fuel used in RVO calculations, and downstream Consistent with our proposal, we are Emissions Control Areas (ECA marine parties may be re-designating this fuel clarifying the requirement for refiners fuel) to contain 1,000 ppm sulfur or as MVNRLM diesel fuel and not and importers to include distillate fuel less.196 In response, many companies incurring an RVO.199 in their RVO compliance calculations have opted to produce and distribute We also explained that with the and providing exceptions for the ECA marine fuel containing 15 ppm convergence of the MVNRLM diesel following three additional categories of sulfur or less (15 ppm ECA marine fuel) fuel, HO, and ECA marine fuel sulfur fuel: fungibly with 15 ppm diesel fuel, rather standards, some stakeholders had • Distillate fuel, such as HO or ECA than invest in infrastructure to expressed confusion to EPA on marine fuel, with a sulfur content distribute and segregate higher-sulfur accounting for 15 ppm distillate fuel greater than 15 ppm that is clearly ECA marine fuel. Since HO, ECA marine that leaves the obligated party’s gate designated for a use other than fuel, and other non-transportation fuels designated as HO, ECA marine fuel, or transportation fuel. that meet a 15 ppm sulfur standard are other non-transportation fuels, but is • Distillate fuel that meets the 15 essentially identical in the marketplace, subsequently re-designated as either ppm sulfur standard, that is designated we believe that some parties in the fuel MVNRLM diesel fuel or ultimately used for non-transportation use, and that distribution system are distributing as MVNRLM diesel fuel by a remains completely segregated from them together—i.e., commingling downstream entity. Specifically, some MVNRLM diesel fuel from the point of MVNRLM diesel fuel with 15 ppm HO obligated parties had asked whether production through to the point of use and 15 ppm ECA marine fuel. they are required to add re-designated for a non-transportation purpose. The regulations in 40 CFR part 80, MVNRLM diesel fuel back to their RVO • Distillate fuel that meets the 15 subpart I, do not prohibit parties from calculations while some downstream ppm diesel sulfur standard, that is commingling MVNRLM diesel fuel with entities had asked whether they are ultimately used for non-transportation other 15 ppm distillate fuel (i.e., required to incur an RVO for MVNRLM purposes, and that does not remain distillate fuel that contains 15 ppm diesel fuel they re-designate from non- completely segregated from MVNRLM sulfur or less) that is designated for non- transportation fuel to transportation diesel fuel. transportation purposes. However, fuel. As also explained in the July 29 commingled fuel must meet all of the We further explained in the July 29 proposal, since the first two categories applicable requirements in subpart I proposal that we intended for any diesel of distillate fuel above are completely because the resulting fuel is ‘‘made fuel not used as transportation fuel, segregated from MVNRLM diesel fuel, available’’ for use in motor vehicles, or such as HO or ECA marine fuel, to be we do not believe that they would be nonroad, locomotive, or marine vehicles excluded from RVO calculations in used as transportation fuel and are and engines.197 This means that any keeping with statutory requirements.200 therefore not finalizing any additional refiner or importer that produces or We also intended for all diesel fuel requirements for these fuels to be imports 15 ppm distillate fuel that is ultimately used as transportation fuel to excluded from a refiner or importer’s designated for non-transportation incur an RVO, even 15 ppm distillate RVO compliance calculations. However, purposes and is commingled with fuel that is initially designated as non- consistent with the July 29 proposal, MVNRLM diesel fuel must also certify transportation fuel and subsequently re- and as described below, because the the fuel as meeting the sampling, designated as transportation fuel by third category of distillate fuel is not testing, reporting, and recordkeeping downstream parties.201 Thus, existing completely segregated and is requirements in subpart I.198 regulations allow downstream parties indistinguishable from MVNRLM diesel Although this approach does not who are registered as refiners and who fuel, we are finalizing additional create compliance issues relating to comply with all sampling, testing, requirements for this type of distillate subpart I requirements, at proposal we recordkeeping, and other refiner fuel to be excluded from a refiner or explained that we were concerned that requirements to ‘‘produce’’ MVNRLM importer’s RVO compliance some obligated parties (e.g., refiners and diesel fuel from HO, ECA marine fuel, calculations. and other non-transportation fuels. importers) under the RFS program may 2. Downstream Re-Designation of be calculating RVOs without accounting These refiners incur RVOs for all MVNRLM diesel fuel that they Certified Non-Transportation 15 ppm for all of their 15 ppm distillate fuel that Distillate Fuel to MVNRLM Diesel Fuel is ultimately sold for use as MVNRLM ‘‘produce’’ from the non-transportation diesel fuel. Specifically, obligated fuel. However, we believe that Consistent with the July 29 proposal, stakeholder confusion over who should and in order to allow refiners and 195 See the New England Fuel Institute’s (NEFI) account for re-designated fuel in their importers to exclude distillate fuel that ‘‘State Sulfur & Bioheat Requirements for No. 2 RVO may be causing the omission of that meets the 15 ppm diesel sulfur Heating Oil in the Northeast & Mid-Atlantic States,’’ some re-designated MVNRLM diesel standard, is ultimately used for non- available in the docket for this action. fuel from RVO calculations altogether. transportation purposes, and does not 196 See 40 CFR 80.610(e)(6). ECA marine fuel is not transportation fuel under the RFS regulations. Therefore, we are revising the RFS remain completely segregated from Therefore, refiners and importers do not incur an regulations to more clearly specify how MVNRLM diesel fuel from their RVO RVO for ECA marine fuel that they produce or volumes of re-designated MVNRLM calculations, we are establishing a new import. diesel fuel are accounted for in category of distillate fuel: Certified non- 197 See 40 CFR 80.2(y) and (nnn). obligated parties’ RVO calculations in transportation 15 ppm distillate fuel 198 We have received requests from a number of regulated parties asking the agency to amend the (‘‘certified NTDF’’). We are defining fuels regulations to allow parties to more easily mix 199 A similar situation exists with respect to #1 certified NTDF as distillate fuel that and fungibly ship HO, ECA marine fuel, and diesel fuel, which is used/blended in the winter meets all of the following requirements: MVNRLM fuel that meet the 15 ppm sulfur due to cold temperature constraints and its often- • Fuel that is certified as complying standard. In a separate action, we intend to propose identical counterparts of kerosene and jet fuel. additional amendments that would significantly 200 See 40 CFR 80.1407(f)(8). with the 15 ppm sulfur standard, streamline these regulations (see RIN 2060–AT31 in 201 With the other exceptions listed in 40 CFR cetane/aromatics standard, and all EPA’s Regulatory Agenda). 80.1407(f). applicable sampling, testing, and

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recordkeeping requirements of 40 CFR and in order to simplify the proposed re-designated as MVNRLM diesel fuel part 80, subpart I. regulations, we have also consolidated under the RFS program. This one-sided • Fuel that is designated on the the first and third criterion into one test allows MVNRLM diesel fuel to be product transfer document as 15 ppm sentence that states ‘‘[t]o establish a sold as HO or ECA marine fuel but HO, 15 ppm ECA marine fuel, or other reasonable expectation that the fuel will prevents the erosion of the renewable non-transportation fuel (e.g., jet fuel, be used for non-transportation purposes, fuel mandate. These parties will also be kerosene, No. 4 fuel, or distillate fuel for a refiner or importer must, at a subject to recordkeeping requirements export only) with a notation that the minimum, be able to demonstrate that to ensure the enforceability of this fuel is ‘‘15 ppm sulfur (maximum) they supply areas that use heating oil, program. certified NTDF—This fuel is designated ECA marine fuel, or 15 ppm distillate We received several comments for non-transportation use.’’ with no fuel for non-transportation purposes in recommending modifications and designation as MVNRLM diesel fuel. quantities that are consistent with past clarifications to the proposed volume Some commenters noted that our practices or changed circumstances.’’ balance provisions, and are finalizing proposed PTD language stating, ‘‘This With these changes, we are finalizing the following changes in response to fuel meets all MVNRLM diesel fuel the requirement that refiners or these comments: standards’’ could potentially cause importers may only exclude NTDF from • We are adding an equation to the confusion as to whether the fuel their compliance calculations if they regulations that provides specific qualified as MVNRLM diesel fuel or not. have a reasonable expectation that the guidance on how to calculate the We are therefore finalizing PTD fuel will be used for non-transportation volume balance. This is in response to language similar to that suggested by purposes. a comment suggesting that EPA should commenters, which avoids any Some commenters also noted that include a balance equation for diesel reference to MVNRLM diesel fuel. there is normally a noticeable price fuel, similar to the heating oil balance In order to prevent refiners and difference between fuel sold for in 40 CFR 80.599(c)(3) and (4). The new importers from circumventing the transportation fuel and non- balance equation accounts for changes requirement to incur an RVO for all transportation fuel, and that this price in diesel inventory, in addition to diesel transportation fuel by simply difference is a relevant consideration for volumes in and out. designating transportation fuel as non- determining if the fuel was intended to • We are clarifying that the volume transportation fuel, we had proposed be sold as transportation fuel or non- balance requirement applies to each that refiners or importers must have a transportation fuel. We agree with this facility that is registered as a diesel reasonable expectation that their NTDF comment and the final rule explicitly refinery. This is in response to will be used as HO, ECA marine fuel, or identifies price as relevant information comments suggesting that EPA clarify another non-transportation purpose in that EPA may consider in evaluating whether the volume balances were order to exclude it from their RVO whether a refiner or importer had a applicable on a facility basis or an calculations. We proposed that refiners reasonable expectation that the fuel will aggregated basis. Our intent was that the or importers would need to meet the be sold for non-transportation purposes. balances apply on a facility basis and following three criteria to demonstrate As previously noted, our intent is to have clarified this in the final they have a reasonable expectation that ensure that all fuel ultimately used as regulations. NTDF will not be used as transportation MVNRLM diesel fuel incurs an RVO. In One commenter also recommended fuel: order to achieve this goal, we are also that the new provisions for • The refiner or importer supplies finalizing requirements that will allow redesignation of certified NTDF to areas that use HO, ECA marine fuel, or parties in the fuel distribution system MVNRLM diesel fuel should apply to 15 ppm distillate fuel for non- (e.g., downstream of the original the owner of the certified NTDF at the transportation purposes in the refinery or import facility) to sell time of redesignation and not the quantities being supplied by the refiner certified NTDF as MVNRLM diesel fuel custody holder of the certified NTDF, or or importer. without incurring an RVO if the total the original refiner of the NTDF. We • The refiner or importer has entered volume of MVNRLM diesel fuel agree with this recommendation and into a contractual arrangement that delivered during each compliance have included final rule requirements prohibits the buyer from selling the fuel period does not exceed the amount of that reflect this recommendation. Since as MVNRLM diesel fuel. MVNRLM diesel fuel received during the owner of certified NTDF would be • The volume of fuel designated as that compliance period. Any party who responsible for making any decisions HO, ECA marine fuel, or other non- re-designates certified NTDF as regarding redesignation of NTDF to transportation purposes is consistent MVNRLM diesel fuel is a refiner for MVNRLM diesel fuel, we intend for the with the refiner’s or importer’s past purposes of the RFS program and is owner of the certified NTDF to meet the practices or reflect changed market therefore required to register as a regulatory requirements associated with conditions. refiner. They will also be required to redesignation, such as registration, We also noted that EPA may consider calculate whether the volume of reporting, and incurring an RVO. any other relevant information in MVNRLM diesel fuel that they deliver We are also finalizing corresponding assessing whether a refiner or importer exceeds the volume of MVNRLM diesel reporting requirements, including has a reasonable expectation that the fuel that they receive, during an annual requiring refiners and importers to fuel was used for non-transportation compliance period. If a downstream report the volume of MVNRLM diesel purposes. party delivers a volume of MVNRLM fuel they produce or import, the volume We received comments indicating that diesel fuel that exceeds the volume of of distillate fuel they produce or import it would be complex and disruptive to MVNRLM diesel fuel they received that is not transportation fuel, and the require refiners and importers to enter during a compliance period, they are volume of distillate fuel they produce or into contractual arrangements that required to treat the difference as diesel import that is certified NTDF. We are prohibit the buyers from selling NTDF fuel that they ‘‘produced’’ and incur an also requiring some downstream parties as MVNRLM diesel fuel. We agree with RVO on this volume. This will enable who redesignate NTDF as MVNRLM these comments and have eliminated proper accounting for the aggregate diesel fuel to submit reports to EPA this criterion. In light of these comments volume of non-transportation fuel that is identifying the volume of MVNRLM

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diesel fuel received, the volume of used by distillate distributors. Some required conditions in the pathway MVNRLM diesel fuel delivered, the commenters suggested that this would petition approval document. volume of fuel re-designated from be helpful for them to avoid We are adding a provision at 40 CFR certified NTDF to MVNRLM diesel fuel, implementing the new regulations in 80.1426(a)(1)(iii) to clarify that and the volume of MVNRLM diesel fuel the middle of a compliance period, and renewable fuel that qualifies for a D redesignated to non-transportation use. we agree with these commenters. code pursuant to an approved petition Further, for purposes of evaluating submitted under 40 CFR 80.1416 must B. Pathway Petition Conditions compliance, we are also: be produced in compliance with all • Requiring parties who re-designate We are clarifying our authority to conditions set forth in the petition certified NTDF to MVNRLM diesel fuel enforce conditions created by approval document (in addition to the to keep all records relating to these requirements included in an approval applicable statutory requirements and transactions. document for a facility-specific pathway requirements of subpart M). We are also • Prohibiting a party from exceeding petition submitted under 40 CFR adding a prohibited act at 40 CFR its balance requirements without 80.1416. Since December 2010, we have 80.1460(b)(7) for generating a RIN for incurring an RVO. approved over 100 facility-specific fuel that fails to meet all the conditions • Ensuring that the attest auditors pathway petitions. To qualify for the set forth in a petition approval review relevant information to ensure generation of RINs under an approved document for a pathway petition compliance with applicable RFS pathway petition, the fuel produced submitted under 40 CFR 80.1416 in program requirements. under that pathway must also meet the order to provide more clarity regarding Some commenters stated that it was conditions and applicable regulatory our ability to bring enforcement actions not necessary to require that volume provisions specified in EPA’s petition for failure to meet such conditions. balance reports and attest engagements approval document and the other be submitted by all parties who definitional and regulatory requirements C. Esterification Pretreatment Pathway redesignate certified NTDF to MVNRLM for renewable fuel specified in the CAA We are revising rows F and H of Table diesel fuel, and that EPA should only and EPA implementing regulations, 1 to 40 CFR 80.1426 by changing the require reports from those parties who including for RIN generation, existing approved production process redesignated a net positive volume of registration, reporting, and ‘‘Trans-Esterification’’ to be certified NTDF to MVNRLM diesel fuel recordkeeping. Common conditions ‘‘Transesterification with or without (i.e., incurred an RVO). We agree with include, but are not limited to, esterification pretreatment.’’ We are these comments and are finalizing compliance monitoring plans detailing finalizing these revisions to rows F and provisions to require parties that only how parties will accurately and reliably H without modifying the feedstocks incur an RVO through redesignation of measure and record the energy and listed in those rows, as these changes do certified NTDF to MVNRLM diesel fuel material inputs and outputs required to not make any additional feedstocks to submit volume balance reports and ensure fuels are produced consistent eligible beyond those already listed in meet the required attest engagements. with the specifications evaluated in the rows F and H. Table 1 to 40 CFR Obligated parties that would otherwise lifecycle analysis, process flow diagrams 80.1426 includes pathways for the have an attest engagement performed showing the energy used for feedstock, production of biodiesel using specified (e.g., because they produced gasoline or fuel, and co-product operations, and feedstocks and the production process diesel fuel, exported renewable fuels, certifications signed by responsible transesterification.204 etc.) would now have the attest auditor corporate officers (RCOs). Transesterification is the most perform the additional attest We have authority to bring an commonly used method to produce engagement procedures for the obligated enforcement action of these conditions biodiesel and involves reacting party. We believe that the types of under 40 CFR 80.1460(a), which triglycerides with methanol, typically reports and records attest auditors prohibits producing or importing a under the presence of a base catalyst.205 review for obligated parties annual renewable fuel without complying with While the main component of oils, fats, attest engagements would already the RIN generation and assignment and grease feedstocks are typically include much of the information we are requirements. The RFS regulations triglycerides, other components, such as requiring and would therefore represent provide that RINs may only be free fatty acids (FFAs), can also exist. a minimal increase in burden for these generated if the fuel qualifies for a D Removal or conversion of the FFAs is obligated parties. Parties that code pursuant to 40 CFR 80.1426(f) or important where the traditional base- redesignate certified NTDF to MVNRLM an approved petition submitted under catalyzed transesterification production diesel fuel during a compliance period 202 40 CFR 80.1416. If any of the process is used; if they are not removed but did not incur an RVO (because they conditions required by an approval or converted prior to this process, FFAs redesignated an equivalent or greater document for a pathway petition are not will react with base catalysts to produce volume of MVNRLM diesel fuel to non- met, then the fuel does not qualify for soaps that inhibit the transesterification transportation fuel during the a D code per the terms of the approval, reaction. compliance period) are required to and RINs may not be generated. These One of the most widely used methods submit a short report stating that they conditions are also enforceable under 40 for treating biodiesel feedstocks with a redesignated certified NTDF to CFR 80.1460(b)(2), which prohibits higher FFA content is acid catalysis. MVNRLM diesel fuel, but did not incur creating a RIN that is invalid; a RIN is Acid catalysis typically uses a strong an RVO. We are also not finalizing the invalid if it was improperly proposed requirement for quarterly 203 generated. As stated above, a RIN is 204 While we expect these pathways to be used reports, since compliance will be on an improperly generated if the fuel predominately for biodiesel, they may also be used annual basis and can be demonstrated representing the RIN does not qualify for heating oil and jet fuel. Renewable diesel is through annual reports. for a D code, which is the case if a fuel excluded because it is by definition ‘‘not a mono- Lastly, implementation of these new alkyl ester’’ (40 CFR 80.1401) and that is what producer does not follow all of the transesterification produces. provisions will be delayed until January 205 Commonly used base catalysts include sodium 1, 2021, to allow time for updates to 202 See 40 CFR 80.1426(a)(1)(i). hydroxide (NaOH), potassium hydroxide (KOH) and 203 product codes and tracking software See 40 CFR 80.1431(a)(ix). sodium methoxide (NaOCH3).

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acid, such as sulfuric acid, to catalyze separate standalone esterification and from the distillers grains and solubles the esterification of the FFAs prior to transesterification units to generate RINs (DGS), where the ethanol plant is using the transesterification of the for the biodiesel produced. However, we a feedstock that combines grain triglycerides as a pre-treatment step. are not at this time finalizing the sorghum and corn, it is not possible to Acid esterification can be applied to proposed standalone esterification physically separate the distillers feedstocks with FFA contents above 5 pathway. It remains under consideration sorghum and corn oils into two streams, percent to produce biodiesel. Because and may be finalized in a future action. nor is it possible to account for the the transesterification of triglycerides is volume of sorghum oil or corn oil in this D. Distillers Corn Oil and Distillers slow under acid catalysis, a technique mixture. For these and other reasons,210 Sorghum Oil Pathways commonly used to overcome the after concluding that distillers sorghum reaction rate issue is to first convert the We are adding distillers corn oil and oil satisfies the 50 percent GHG FFAs through an acid esterification (also commingled distillers corn oil and reduction threshold required for the known as an acid ‘‘pretreatment’’ step), sorghum oil as feedstocks to row I of advanced biofuel and biomass-based and then follow-up with the traditional Table 1 to 40 CFR 80.1426. While the diesel, we added both distillers sorghum base-catalyzed transesterification of lifecycle GHG emissions associated with oil and ‘‘commingled distillers corn oil triglycerides. using a very similar feedstock— and sorghum oil’’ to rows F and H of Under the RFS2 final rule, biodiesel distillers sorghum oil—as part of this Table 1 to 40 CFR 80.1426 in the from biogenic waste oils/fats/greases pathway were evaluated in the grain sorghum oil rule. However, unlike rows qualifies for D-codes 4 or 5 using a sorghum oil pathway final rule F and H, row I did not include a transesterification process. This (‘‘sorghum oil rule’’),208 these two pathway using ‘‘non-food grade corn conclusion was based on the analysis of feedstocks were not added to row I as oil’’ prior to that final rule, nor did we yellow grease as a feedstock, where part of that rulemaking. This section propose to add ‘‘distillers corn oil’’ to there was an acid pretreatment of the discusses the addition of distillers corn that row in the December 2017 sorghum FFAs contained in the feedstock. In fact, oil and commingled distillers corn oil oil proposed rule.211 Thus, in the one of the material inputs assumed in and sorghum oil as feedstocks to row I absence of an assessment of lifecycle the modeling for the final RFS2 rule and presents the lifecycle GHG emissions showing that distillers corn yellow grease pathway was sulfuric emissions associated with these oil also meets the GHG reduction acid, which is the catalyst commonly pathways. We also explain why the threshold required for the pathways used for acid esterification.206 As we most likely effect of adding these therein, in the sorghum oil rule we had not stipulated transesterification pathways will be to reduce the number decided ‘‘it would be premature for EPA with esterification pretreatment as a of petitions submitted pursuant to 40 to add either distillers corn oil or qualified production process in rows F CFR 80.1416. commingled distillers corn and sorghum and H to Table 1 to 40 CFR 80.1426, we The March 2010 RFS2 rule included oil as feedstocks in row I.’’ 212 Currently, are revising these entries to include pathways for biodiesel and renewable in order to generate D-code 5 RINs for ‘‘transesterification with or without diesel produced from non-food grade naphtha and/or LPG produced from esterification pre-treatment’’ as a corn oil. The March 2013 Pathways I distillers corn oil and/or commingled production process requirement so that rule added pathways for heating oil and distillers corn and sorghum oil, a fuel RINs may be generated for biodiesel jet fuel from non-food grade corn oil in producer would first need to petition produced by the esterification rows F and H of Table 1 to 40 CFR EPA pursuant to 40 CFR 80.1416, have pretreatment, as well as for the biodiesel 80.1426, and added pathways for EPA review and approve their requested produced through transesterification.207 naphtha and LPG from Camelina sativa pathway, and then submit and have In the July 29 proposal, we also oil in row I.209 The sorghum oil rule EPA accept the registration for the new proposed to add a standalone amended the RFS regulations to add a pathway. Adding these feedstocks to esterification pathway to rows F and H new definition of distillers sorghum oil row I eliminates the need for these to Table 1 to 40 CFR 80.1426, which and to replace existing references to petitions. would allow parties who have non-food grade corn oil with the newly Table IX.D–1 shows the lifecycle GHG processing units that can take feedstocks defined term ‘‘distillers corn oil.’’ That emissions associated with renewable listed in rows F and H of Table 1 to 40 rule also added a number of pathways diesel, jet fuel, naphtha, and LPG CFR 80.1426 that have high-FFA to rows F and H of Table 1 to 40 CFR produced from distillers sorghum oil. content and separate the FFAs and 80.1426 for biodiesel, renewable diesel, These results are based on the analysis triglycerides for chemical processing in jet fuel, and heating oil produced from completed for the sorghum oil rule.213 distillers sorghum oil and commingled The lifecycle GHG emissions associated 206 Section 2.4.7.3.3 of the Regulatory Impact distillers sorghum and corn oil. with the statutory baseline fuels, 2005 Analysis for the March 2010 final rule describes the Pathways for naphtha and LPG average diesel and gasoline, are shown material inputs evaluated for biodiesel production. For conversion of yellow grease to biodiesel, produced from distillers sorghum oil via for comparison. Based on the distillers sulfuric acid accounted for 4.7 percent of the a hydrotreating process were also added sorghum oil results, as explained below material inputs on a mass basis (0.02 kg per gallon to row I of Table 1 to 40 CFR 80.1426. we have concluded that naphtha and of biodiesel). Commingled distillers corn oil and LPG produced from distillers corn oil 207 In 2012, we issued a direct final rule and a parallel proposed rule (see 77 FR 700 and 77 FR sorghum oil was added as a feedstock to and commingled distillers corn and 462, respectively; January 5, 2012) that would have rows F and H of Table 1 to 40 CFR sorghum oil also satisfy the 50 percent determined that, among other regulatory changes, 80.1426 because distillers sorghum oil is lifecycle GHG reduction requirement at biodiesel produced from esterification met the GHG often co-produced with distillers corn CAA section 211(o)(1)(B), relative to the reduction requirements. Because we received adverse comment, we withdrew the direct final rule oil at ethanol plants using a 210 in its entirety (see 77 FR 13009, March 5, 2012). In combination of grain sorghum and corn For the other reasons discussed in the the 2013 final rule based on the parallel proposal as feedstocks for ethanol production. sorghum oil rule preamble, see 83 FR 37737–39 (August 2, 2018). (78 FR 14190, March 5, 2013), we decided not to Due to the recovery process of the oils finalize a determination at that time on biodiesel 211 See 82 FR 61205 (December 27, 2017). produced from esterification and noted that we 212 See 83 FR 37738 (August 2, 2018). would instead make a final determination at a later 208 See 83 FR 37735 (August 2, 2018). 213 See Table III.4 of the sorghum oil rule time. 209 See 78 FR 14190 (March 5, 2013). preamble (83 FR 37743, August 2, 2018).

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statutory petroleum baseline, to be eligible for advanced biofuel RINs.

TABLE IX.D-1—LIFECYCLE GHG EMISSIONS ASSOCIATED WITH BIOFUELS PRODUCED FROM DISTILLERS SORGHUM OIL

[kgCO2-eq/mmBtu]

Renewable 2005 Diesel 2005 Gasoline Fuel diesel, jet fuel Naphtha LPG baseline baseline

Production Process ...... Hydrotreating Refining

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

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

Although the lifecycle GHG analysis stages evaluated (e.g., feedstock and sorghum oil’’ as feedstocks in row for the sorghum oil rule focused on production, fuel production). I to Table 1 to 40 CFR 80.1426. distillers sorghum oil, we believe it is One difference between distillers corn E. Clarification of the Definition of also applicable to distillers corn oil and oil and sorghum oil is the rate of oil Renewable Fuel Exporter and commingled distillers corn oil and recovered per pound of corn versus Associated Provisions sorghum oil for purposes of determining grain sorghum processed. The distillers We are finalizing our proposed whether these satisfy the 50 percent sorghum oil petition submitted by the clarification of the definition of GHG reduction requirement. For the National Sorghum Producers reported ‘‘exporter of renewable fuel.’’ These sorghum oil rule, we estimated the that 0.67 pounds of distillers sorghum changes are meant to ensure appropriate livestock sector impacts associated with oil are recovered per bushel of grain flexibility for market participants to sorghum processed to ethanol, whereas distillers sorghum oil based on a set of meet export obligations and to ensure 0.84 pounds of distillers corn oil is assumptions about the type of feed that RINs are properly retired, as well to as extracted per bushel of corn.215 would need to backfill for the reduction to clarify exporter obligations for parties Adjusting for this difference results in in mass of de-oiled DGS as compared to who transfer renewable fuel between the slightly lower livestock sector GHG full-oil DGS. For that analysis we 48 states or Hawaii and an approved emissions associated with naphtha and calculated a substitution rate for how opt-in area (i.e., Alaska or the U.S. much corn would be needed to backfill LPG produced from distillers corn 216 territories were any of them to opt-in). in livestock feed for every pound of oil. Based on this adjustment the The RFS regulations require an grain sorghum oil diverted to biofuel results in Table IX.D–1 change from a 63 exporter of renewable fuel to acquire percent GHG reduction for naphtha and production, by livestock type. The sufficient RINs to comply with all LPG produced from distillers sorghum amounts of corn needed to replace each applicable RVOs incurred from the oil to a 64 percent reduction for naphtha pound of extracted sorghum oil were volumes of the renewable fuel and LPG production from distillers corn exported.217 We previously defined largely based on studies that evaluated oil. We have therefore concluded that ‘‘exporter of renewable fuel’’ in 40 CFR the nutritional values of regular and these pathways satisfy the 50 percent 80.1401 as: ‘‘(1) A person that transfers reduced-oil distillers grains produced as GHG reduction requirement to qualify 214 any renewable fuel from a location a co-product of corn starch ethanol. as advanced biofuel under the RFS within the contiguous 48 states or Given that the underlying data for our program and are adding ‘‘distillers corn Hawaii to a location outside the distillers sorghum oil assessment was oil’’ and ‘‘commingled distillers corn oil largely based on studies conducted on contiguous 48 states and Hawaii; and (2) A person that transfers any renewable corn ethanol co-products, we believe it 215 See Table 4 of ‘‘Grain Sorghum Oil Pathway fuel from a location in the contiguous 48 is appropriate to apply the same results Petition,’’ Docket Item No. EPA–HQ–OAR–2017– states or Hawaii to Alaska or a United to similar pathways using distillers corn 0655–0005. 216 oil feedstock. Based on the similarities The source of the difference is the amount of corn needed to replace one pound of full-oil versus 217 In this rulemaking, we did not reexamine our between the two products and how they reduced-oiled DDGS in beef cattle diets. In our well-settled policy of exporter RVOs, which are produced (i.e., co-produced at analysis for the sorghum oil rule, we assumed, generally require exporters to retire RINs for ethanol plants), we are also assuming based on the best available data provided by NSP, biofuels they export. We established this policy USDA, and commenters, that reduced-oil DDGS are when we promulgated the regulations that the lifecycle GHG emission for replaced at a lower rate (1.173 lbs corn per lbs implementing the RFS1 and RFS2 programs in 2007 distillers corn oil and distillers sorghum DDGS) than full-oil DDGS (1.196 lbs corn per lbs and 2010. See 72 FR 23936 (May 1, 2007); 75 FR oil are the same for the other lifecycle DDGS). Increasing the rate of oil extraction 14724 (March 26, 2010). We did not reexamine this produces less de-oiled DDGS and requires corn issue in this rulemaking, and comments on it are replacement at the lower rate of 1.173. Thus, all else beyond the scope of the rulemaking. We are not 214 See Table III.2 (Full-Oil and Reduced-Oil equal, higher rates of oil extraction result in lower making any substantive changes to the relevant Sorghum Distillers Grains with Solubles GHG emissions per pound of oil extracted. It is provisions, particularly those at 40 CFR 80.1430(a) Displacement Ratios) of the sorghum oil rule (83 FR possible this effect would disappear if we had or (b). Consistent with our long-standing policy, 37741, August 2, 2018) and accompanying footnote higher resolution data on corn displacement ratios exporters of renewable fuel must continue to number 36, which lists the sources for the data in for DDGS with different oil contents, but such data acquire sufficient RINs to comply with all that table. are currently not available. applicable RVOs.

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States territory, unless that state or transport of goods from Oregon to renewable fuel being transferred from a territory has received an approval from Alaska would not qualify as export covered location to a destination outside the Administrator to opt in to the under most federal export regulations, of any covered location may renewable fuel program pursuant to but the transport of biofuel from Oregon, contractually allocate RFS program § 80.1443.’’ 218 a covered area, to Alaska, a non-covered obligations, indemnities, and pricing as We are revising these regulations for area (unless Alaska chooses to opt in), they see fit in light of the regulatory two key reasons. First, during would qualify as export under the RFS requirements. At the same time, the implementation of the RFS program, we program. In addition, if we merely revised definition provides enhanced have observed contract structuring adopted the FTR approach to allow compliance assurance so as to maintain practices that may have eroded allocation of exporter obligations among a level playing field among would-be compliance assurance. Notably, we have parties to an export transaction, we have exporters and ensures RIN retirement so observed instances of export concerns that a party that is insolvent or as to maintain the integrity of that transactions in which parties have sold lacking assets in the U.S. could market in accordance with the renewable fuel for export to entities undertake those obligations, and regulatory requirements. Ultimately, the purporting to accept RIN retirement enforcement efforts could become revised definition contributes to obligations that were then not fulfilled overly resource intensive where the fuel satisfying Congress’s mandate that EPA by the buyer. These instances has left the country. For these reasons, promulgate regulations that ‘‘ensure’’ demonstrate that the RFS program could we do not believe it would be the nationally-applicable renewable fuel benefit from regulatory changes appropriate to amend the RFS program volumes are met.221 We note, moreover, designed to ensure that exporter regulations to define an exporter as the that the existing RFS regulations obligations are fulfilled. Therefore, we USPPI or the FPPI. provide that ‘‘[n]o person shall cause are revising the definition to resolve any In reviewing the FTR, we also another person to commit an act in potential ambiguity and clarify which considered the concept of routed export violation of any prohibited act under parties may and may not be liable for transactions and the associated this section.’’ 222 We believe that this exporter obligations in order to ensure flexibility for parties to an export prohibition coupled with the revised exporter obligations are fulfilled. transaction to structure that transaction definitions will deter parties from Second, the previous definition could to place some responsibilities with an engaging in sham transactions to evade 220 have been construed to include parties FPPI. We believe that this framework RIN retirement obligations by who transfer renewable fuel from the is reflective of market custom, practice, transferring ownership of renewable contiguous 48 states and Hawaii, to an and capability to contractually allocate fuels to undercapitalized entities that do area (either Alaska or a U.S. territory) liabilities and indemnities among not meet their RIN retirement that has received an approval to opt-in parties to a commercial transaction. We obligations. This includes the specific to the RFS program. We did not intend prefer regulations that accommodate earlier-described practices we have to impose a RIN retirement obligation these flexibilities, while also balancing already observed. The revised definition on these parties. We are therefore the need to protect RFS program also clarifies how exporter obligations clarifying how exporter obligations integrity. Specifically, we want to allow apply to transfers to and from the apply to renewable fuel transferred parties to an export transaction to contiguous 48 states and Hawaii, and between the 48 states and Hawaii, and allocate RFS program exporter opt-in areas (i.e., Alaska and U.S. opt-in areas. obligations as they see fit among territories were they to opt-in). Notably, themselves, but we also want to protect To achieve these goals when we it avoids imposing exporter obligations against contract structuring that may developed the proposal, we initially on biofuels transferred from the 48 erode compliance assurance. considered whether to amend the RFS states and Hawaii to an opt-in area. program regulations consistent with the Therefore, we are revising the definition of ‘‘exporter of renewable Under the revised definition, multiple Foreign Trade Regulations (FTR) and parties may meet the definition of an other federal export-related regulations, fuel’’ to mean ‘‘all buyers, sellers, and owners of the renewable fuel in any exporter of renewable fuel for the same such as United States Principal Party in volume of renewable fuel. In addition, Interest (USPPI) and Foreign Principal transaction that results in renewable fuel being transferred from a covered although the definition uses the term Party in Interest (FPPI).219 While there ‘‘transaction,’’ in many cases there may were some commenters that suggested location to a destination outside of the covered locations.’’ In conjunction with be more than one discrete exchange or adopting those terms, we chose not to interaction that results in a volume of do so for the following reasons. The FTR this revision, we are creating a definition of ‘‘covered location’’ as ‘‘the renewable fuel being exported. We and other export-related obligations in intend the regulatory term ‘‘transaction’’ other federal programs use a traditional contiguous 48 states, Hawaii, and any state or territory that has received an to cover all those exchanges and definition of ‘‘export’’ where exported interactions in which the buyers, sellers, goods leave the U.S. The RFS program approval from the Administrator to opt- in to the RFS program under § 80.1443.’’ and owners know or have reason to addresses obligations incurred through know will result in renewable fuel being the transfer of renewable fuel from areas As described above, this revised definition permits contract flexibilities transferred from a covered location to a covered by the program to both frequently employed in export destination outside of any covered domestic and foreign areas not covered 223 transactions with respect to export location. For instance, a person by the program. For instance, the obligations under other regulatory holding title to renewable fuel in the programs, such as the FTR. All buyers, U.S. may sell renewable fuel to another 218 75 FR 14865 (March 26, 2010). person (either inside or outside of the 219 See, e.g., 15 CFR 772.1 (defining exporter as sellers, and owners of the renewable ‘‘[t]he person in the United States who has the fuel in a transaction that results in authority of a principal party in interest to 221 CAA section 211(o)(2)(A)(i); see also CAA determine and control the sending of items out of 220 Routed export transaction is the term used to section 301(a). the United States’’). We also considered and describe an export transaction in which an FPPI 222 See 40 CFR 80.1460(c). rejected other alternatives, which we discuss directs the movement of goods out of the U.S. and 223 To clarify this point, we have revised the further in the RTC document in the docket for this authorizes a U.S. agent to file certain information regulatory text from the proposed ‘‘a transaction’’ to action. required by the FTR. ‘‘any transaction’’ in this final rulemaking.

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covered areas) and cause the renewable definition of refiner will be held jointly- believe these provisions to be relatively fuel to leave the covered areas. Further, and-severally liable for refiner straightforward and would reduce the that buyer and seller may have a third requirements, and we are adopting a burden of RFS program implementation. party hold title to the renewable fuel consistent approach for exporters of Commenters were generally supportive during transit out of the covered areas. renewable fuel.226 of these provisions and we are largely In this case, the buyer and the seller, EPA does not consider a person to be finalizing them as proposed; changes to both of whom are also owners of the an exporter of renewable fuel if that the final provisions relative to the 2016 renewable fuel, and the third-party person does not know and does not REGS proposal are discussed in detail in holding company, as another owner of have reason to know that the renewable the following sections. the renewable fuel in the transaction, fuel will be exported. For instance, a 1. Flexibilities for Renewable Fuel would be jointly-and-severally liable for renewable fuel producer who produces Blending for Military Use complying with the exporter a batch of fuel, generates RINs, and sells provisions.224 the renewable fuel with attached RINs We are amending 40 CFR 80.1440 to However, our revised regulations into the fungible fuel distribution provide new flexibilities for parties that create broad flexibility for parties to system would not be considered an blend renewable fuel to produce fuels assign responsibilities as they see fit exporter of renewable fuel under the for use as transportation fuel, heating among themselves in structuring an revised definition unless they know or oil, or jet fuel under a national security export transaction. These parties may have reason to know that the batch of exemption or that sell neat renewable contractually allocate RIN retirement, fuel would be exported. More fuel for use in vehicles, engines, and and associated registration, reporting, specifically, the mere fact that a equipment that have a national security and attest engagement obligations, to producer introduces renewable fuels exemption for emissions certification. any one of the parties that meets the into the stream of commerce, coupled Specifically, these parties will be able to definition of an exporter of renewable with the fact that a significant portion delegate to an upstream party the RIN- fuel. The party undertaking these of domestically produced biofuel is related responsibilities (i.e., RIN requirements would then register as an exported, does not make the producer separation, reporting, recordkeeping, exporter of renewable fuel as set forth in an exporter of renewable fuel. and attest engagement requirements) 40 CFR 80.1450(a). This approach is We are also finalizing minor, non- associated with the renewable fuel. also consistent with our approach to the substantive changes throughout the RFS These parties could include the U.S. term ‘‘refiner,’’ under which multiple regulations to more consistently use the Military itself, or contractors working parties could be considered the refiner term ‘‘exporter of renewable fuel’’ rather for the U.S. Military. The RFS program of a batch of fuel. In such instances, we than the term ‘‘exporter.’’ These has a provision that allows blenders that have stated that each party meeting the clarifying edits reflect that the ‘‘exporter handle and blend small volumes of definition of refiner will be held jointly- of renewable fuel’’ may be different than renewable fuel per year (less than and-severally liable for refiner the ‘‘exporter’’ under other state and 250,000 gallons per year) to delegate requirements, and we are adopting a federal regulatory programs. RIN-related responsibilities to an consistent approach for exporters of upstream party. We have received a renewable fuel.225 However, our revised F. REGS Rule Provisions number of inquiries from parties that regulations create broad flexibility for We are finalizing a number of changes have wished to provide renewable fuel, parties to assign responsibilities as they to the RFS and fuels programs that were either neat or blended into see fit among themselves in structuring previously proposed in the REGS transportation fuel, for use by the U.S. an export transaction. These parties may rule,227 and that we listed in the Military as part of Department of contractually allocate RIN retirement, preamble to July 29 proposal as Defense (DOD) renewable military and associated registration, reporting, candidates for finalization in this initiatives. One obstacle to this use of and attest engagement obligations, to action.228 In reaching our final decisions renewable fuel by the DOD is that, any one of the parties that meets the on these provisions we considered unlike other EPA fuels programs, there definition of an exporter of renewable relevant comments on both the 2016 were no exemptions related to national fuel. The party undertaking these REGS proposal and the July 29 proposal. security uses in the RFS regulatory requirements would then register as an As noted in the July 29 proposal, we program. exporter of renewable fuel as set forth in We believe that it is appropriate to 40 CFR 80.1450(a). This approach is 226 See ‘‘Consolidated List of Reformulated allow DOD or its contractors to delegate also consistent with our approach to the Gasoline and Anti-Dumping Questions and RFS RIN responsibilities to upstream term ‘‘refiner,’’ under which multiple Answers: July 1, 1994 through November 10, 1997,’’ parties; doing so removes a potential EPA420–R–03–009, at 256 (July 2003) (discussing a parties could be considered the refiner scenario in which two parties would be considered obstacle to the use of renewable fuels by of a batch of fuel. In such instances, we refiners and would be independently responsible DOD and will promote use of renewable have stated that each party meeting the for all refinery requirements, which would only fuel by the military. Therefore, we are need to be met once). finalizing similar upstream delegation 227 224 This example is meant to be a stylized See 81 FR 80828 (November 16, 2016). provisions for neat and blended 228 illustration of how our regulations could apply. It We are not taking final action at this time on renewable fuels supplied to DOD under is not meant to exhaustively detail the entities that several changes from the REGS proposal that were could meet the definition of exporter of renewable listed in the July 29 proposal (Allowing Production a national security exemption as those fuel in this type of transaction. To the extent that of Biomass-Based Diesel From Separated Food already in place for small renewable other parties meet the definition of exporter of Waste (REGS Section VIII.C), RFS Facility fuel blenders. renewable fuel, they would also be subject to the Ownership Changes (REGS Section VIII.H), Public exporter provisions. Access to Information (REGS Section VIII.O), and 2. Heating Oil Used for Cooling 225 See ‘‘Consolidated List of Reformulated Redesignation of Renewable Fuel on a PTD for Non- Gasoline and Anti-Dumping Questions and Qualifying Uses (REGS Section VIII.R), and certain We are expanding the definition of Answers: July 1, 1994 through November 10, 1997,’’ portions of Other Revisions to the Fuels Program heating oil in 40 CFR 80.1401 to include EPA420–R–03–009, at 256 (July 2003) (discussing a (REGS Section IX), primarily related to test fuels that differ from those meeting the scenario in which two parties would be considered methods). These provisions, along with the other current definition only because they are refiners and would be independently responsible provisions in the REGS proposal that are not being for all refinery requirements, which would only finalized here, remain under consideration and may used to cool, rather than heat, interior need to be met once). be finalized in a future action. spaces of homes or buildings. The first

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sentence of the definition of heating oil Recognizing that business under currently approved separated thus now reads: ‘‘A fuel oil that is used relationships for recovery of food wastes food waste pathways. Without this to heat or cool interior spaces of homes evolve and that a renewable fuel information, we would not know what or buildings to control ambient climate producer may elect over time to the specific feedstock is (e.g., tallow, for human comfort.’’ We are also making purchase feedstocks from different or yellow grease, etc.) or whether it minor modifications to the registration, multiple parties, we are removing the qualifies as a separated food waste. reporting, PTD, and recordkeeping requirement to provide the location of We are also requiring under 40 CFR every facility from which separated food requirements for renewable heating oil 80.1450(b)(1)(vii)(B) that producers of waste feedstock is collected as part of to correspond with this change. We had renewable fuels made from biogenic the information required for registration. received questions related to the use of waste oils/fats/greases that are not Removing this registration requirement renewable heating oil in equipment that separated food waste submit a plan at alleviates the need for numerous cools interior spaces and believe that registration with the same requirements company registration updates as a displacing the use of petroleum based as the plan for producers of renewable fuel oil with renewable heating oil for facility’s feedstock supplier list evolves, as well as makes it easier for EPA to fuels made from separated food waste. cooling is consistent with CAA section We are henceforth referring to such 211(o)’s provision for home heating oil review renewable fuel producers’ plans as ‘‘waste oils/fats/greases to be treated as additional renewable separated food waste plans in a timely feedstock plans.’’ There is significant fuel and should be allowed. manner. However, the recordkeeping section of the regulations requires overlap between the two categories of 3. Separated Food Waste Plans renewable fuel producers to keep feedstock, with a considerable quantity of biogenic waste oils/fats/greases We are amending the RFS registration documents associated with feedstock qualifying as renewable biomass as a procedures for separated food waste purchases and transfers that identify result of its additional qualification as plans at 40 CFR 80.1450(b)(1)(vii)(B) where the feedstocks were produced; separated food waste. For these reasons, and the recordkeeping requirements for these documents must be sufficient to as a matter of practice we have required separated food waste at 40 CFR verify that the feedstocks meet the 230 parties intending to use biogenic waste 80.1454(j). We are also adding definition of renewable biomass. requirements for renewable fuel Thus, renewable fuel producers will oils/fats/greases as a renewable fuel produced from biogenic waste oils/fats/ still be required to maintain records that feedstock to submit separated food greases at 40 CFR 80.1450(b)(1)(vii)(B) demonstrate that they used a qualifying waste plans at registration. In addition and 80.1454(d)(4) and (j). feedstock to produce renewable fuels for to helping EPA determine if the feedstock in question meets renewable The RFS regulations promulgated in the generation of RINs pursuant to the biomass requirements, we have found the RFS2 rulemaking required that recordkeeping requirements at 40 CFR that the plans help us assess whether separated food waste plans include: ‘‘(1) 80.1454(d)(4) and (j). We are also adding the feedstocks specified by a The location of any municipal waste a provision at 40 CFR 80.1454(j)(1)(ii) prospective producer qualify as biogenic facility or other facility from which the that will require renewable fuel waste oils/fats/greases. This assessment waste stream consisting solely of producers to maintain records demonstrating the location of any separated food waste is collected; and is made on a case-by-case basis. This establishment from which the waste (2) A plan documenting how the waste amendment conforms the regulations to stream is collected. Since many will be collected, how the cellulosic and EPA’s current practice. A party fully renewable fuel producers receive wastes non-cellulosic portions of the waste will describing its feedstock in a separated used as feedstocks from an aggregator, be quantified, and for ongoing food waste plan will not be required to we interpret the term ‘‘location’’ to verification that such waste consists submit an additional waste oils/fats/ mean the physical address that the only of food waste (and incidental other greases plan. Since most, if not all, aggregator obtained the wastes used as components such as paper and plastics) producers of renewable fuel from feedstocks from, not the physical or that is kept separate since generation biogenic waste oils/fats/greases have company address of the aggregator. from other waste materials.’’ 229 In submitted a separated food waste plan In addition to removing the at registration, we do not believe that addition to the initial submission of registration requirement to provide the separated food waste plans during RFS this revision will add much, if any, locations of establishments from which burden to existing registered facilities. registration, we also required that separated food waste is collected, we are renewable fuel producers using Those few registered producers using also modifying the registration biogenic waste oils/fats/greases that separated food waste feedstock update regulations to require that separated the registration information whenever have not previously submitted a food waste plans identify the type(s) of separated food waste plan at registration there was a change to the plan, separated food waste(s) to be used and including to the location(s) of or in a subsequent registration update the type(s) of establishment(s) the waste will be required to do so as part of their establishments from which the will be collected from. For instance, next periodic registration update. separated food waste is collected, and in CAA section 211(o) identifies ‘‘recycled some cases the newly updated plan cooking and trap grease’’ as a type of In addition to adding the registration must have been reviewed by a third- separated food waste. Examples of types requirement for a waste oils/fats/greases party engineer in accordance with EPA of establishments could be restaurants, feedstock plan to 40 CFR registration procedures. We have slaughterhouses, or specific food 80.1540(b)(1)(vii)(B), we are also adding received numerous company updates production plants (the kind of food the same recordkeeping requirements for production facilities with separated production should be provided). We for biogenic oils/fats/greases as for food waste plans, and some parties believe this information is necessary for separated food waste at 40 CFR noted that the requirement to identify EPA to determine at registration 80.1454(d)(4) and (j), and providing and update suppliers of feedstocks whether a renewable fuel producer can further clarity that the locations from through a plan was overly burdensome. make fuel from its proposed feedstock which separated food waste or biogenic oils/fats/greases was sourced is a 229 See 40 CFR 80.1450(b)(1)(vii)(B). 230 See 40 CFR 80.1454(d)(4) and (j). recordkeeping requirement.

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4. Additional Registration Deactivation • The party otherwise circumvents regarding the situations in which parties Justifications the intent of the CAA or 40 CFR part 80, must retire RINs. We are finalizing the elements of the We are adding additional subpart M. new RIN retirement section at 40 CFR circumstances in which EPA may These deactivation circumstances are 80.1434 as proposed, with the exception deactivate the registration of any party consistent with cases where EPA may of the provisions for expired RINs and required to register under 40 CFR deny or revoke a certificate of redesignated renewable fuel, which we 80.1450. These amendments will help conformity under 40 CFR 1051.255(c) are not finalizing because we have parties better understand when EPA and 86.442–78 for engines and vehicles determined they are not necessary for intends to restrict a party’s participation manufactured in or imported into the program implementation at this time. in the RFS program as well as the U.S. In addition, we are finalizing procedures that will be used in such requirements that state that in instances 6. New Pathway for Co-Processing circumstances. of willful violation of an applicable Biomass With Petroleum To Produce In July 2014, we finalized requirement or those in which public Co-Processed Cellulosic Diesel, Jet Fuel, requirements that described health, interest, or safety requires and Heating Oil otherwise, EPA may also deactivate the circumstances under which EPA may We are creating a new definition of deactivate a company registration and registration of a party without providing ‘‘co-processed cellulosic diesel’’ to refer an administrative process to initiate notice to the party prior to deactivation to biodiesel or non-ester renewable deactivation that provides companies an and will send written notification to the diesel fuels that meet the definition for opportunity to respond to and/or submit RCO describing the reasons for the cellulosic biofuel but not the definition the required information in a timely deactivation. Parties can still submit of biomass-based diesel. We are also manner.231 Since finalizing these new registrations after appropriate finalizing new pathways that allow co- requirements, we have identified a actions are taken by the party to remedy processed cellulosic diesel, jet fuel, and number of other cases in which it is the deficiency. heating oil that are derived from co- appropriate to deactivate the registration 5. New RIN Retirement Section processing biomass with petroleum to of a company. In addition, we believe qualify as cellulosic biofuel and the provisions should be extended to We are creating a new section in the generate cellulosic (D-code 3) RINs, cover deactivation of registrations for RFS regulations for RIN retirements. provided certain production process any party required to register with EPA The regulations have specific sections requirements are satisfied. Fuels that under 40 CFR 80.1450 (e.g., third-party that address when and how parties may meet the cellulosic diesel definition will auditors).232 Specifically, we are generate and separate RINs. However, continue to be able to generate D7 RINs, amending 40 CFR 80.1450(h)(1) to the cases where parties must retire RINs while fuels that meet the co-processed provide that EPA may deactivate were identified in various sections cellulosic diesel definition but not the registrations of a party for the following throughout the regulations. The new cellulosic diesel definition due to co- reasons in addition to those previously section of the RFS regulations for RIN processing with petroleum will be able listed: retirements, 40 CFR 80.1434, simply to generate D3 RINs. Fuels produced • The party fails to comply with the organizes these current sections into one through co-processing with petroleum registration requirements of 40 CFR place and will provide beneficial will also be required to meet, among 80.1450. clarification by enumerating the specific other requirements, the requirements of • The party fails to submit any instances in which a party must retire 40 CFR 80.1426(f)(4) to determine the required report within thirty days of the RINs in a new section of the regulations number of RINs that can be generated. required submission date. and by making those retirements While pathways existed for renewable • The party fails to pay a penalty or consistent with how parties gasoline and gasoline blendstock (row to perform any requirements under the administratively retire RINs in EMTS. M in Table 1 to 40 CFR 80.1426) and terms of a court order, administrative We are aware of some confusion for naphtha (row N in Table 1 to 40 CFR order, consent decree, or administrative some parties causing those parties to 80.1426) produced from cellulosic settlement agreement between the party improperly retire RINs or fail to retire biomass that is co-processed with and EPA. RINs when they have a responsibility to petroleum, there was no pathway for • The party submits false or do so under the regulations. Improper diesel, jet fuel, or heating oil produced incomplete information. retirements can lead to a time- in this manner. The pathway for • The party denies EPA access or consuming remediation process, both cellulosic diesel, jet fuel, and heating oil prevents EPA from completing for EPA and responsible parties. This (Pathway L in Table 1 to 40 CFR authorized activities under CAA section new section organizes these 80.1426) excludes processes that co- 114 despite our presenting a warrant or requirements into one location in the process renewable biomass and court order. This includes a failure to regulations to make the circumstances petroleum. To qualify as cellulosic provide reasonable assistance. under which RINs must be retired diesel, a fuel must meet the • The party fails to keep or provide simpler to locate and understand. The requirements for both cellulosic biofuel EPA with the records required in 40 section also includes new regulatory and biomass-based diesel. The CFR part 80, subpart M. language for cases requiring RIN definition of biomass-based diesel retirement that are identified in EMTS, explicitly excludes renewable fuels that 231 Under this administrative process, the party but may not be clear in the regulations, are derived from co-processing biomass has 14 calendar days from the date of the given their current organization (e.g., in with petroleum, and therefore a process notification to correct the deficiencies identified or explain why there is no need for corrective action. the case of contaminated or spoiled that produced diesel, jet fuel, or heating See 40 CFR 80.1450(h)(2)(i). fuel). Our intent is not to add additional oil by co-processing renewable biomass 232 In the REGS proposal, we proposed to use the burden on parties that must retire RINs with petroleum could not qualify as term ‘‘company, third-party auditor, or third-party under the RFS program, but rather to biomass-based diesel or cellulosic diesel engineer’’ in the registration deactivation provisions; however, we are now using the term make the regulations consistent with under Pathway L in Table 1 to 40 CFR ‘‘party’’ to refer more generally to any person that how parties already retire RINs in EMTS 80.1426. However, cellulosic biofuels may be required to register with EPA. and help reduce potential confusion other than cellulosic diesel are not

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prohibited from being derived from listed in row M. We are now extending of Table 1 to 40 CFR 80.1426, and biomass co-processed with petroleum. those results to cover co-processed commenters did not provide sufficient In the 2016 REGS proposed rule, we cellulosic diesel, jet fuel, and heating oil data or information to support a proposed to add a new row U to Table produced from the same feedstocks and different conclusion. 1 to 40 CFR 80.1426 that would have processes listed in row M. The analysis The 2016 REGS proposal also allowed for cellulosic diesel, jet fuel and for the March 2013 Pathways I rule did included a revised definition for heating oil produced from any of the not explicitly evaluate co-processing but ‘‘cellulosic diesel’’ and a new term, feedstocks listed in row L via any the upgrading processes were modeled ‘‘cellulosic biomass-based diesel.’’ 239 process that co-processes renewable as using the same types of equipment These proposed revisions would have, biomass with petroleum and converts and processes as petroleum refining.235 among other things, removed the cellulosic biomass to fuel to qualify for Indeed, the analysis was largely based requirement for ‘‘cellulosic diesel’’ to cellulosic biofuel (D-code 3) RINs.233 on a report that evaluated processes that meet the definitions of both cellulosic While most commenters supported this co-produce gasoline and diesel biofuel and biomass-based diesel. The proposed addition, several commenters products.236 The most likely processes new term, ‘‘cellulosic biomass-based disagreed. The dissenting commenters in row M to include co-processing are diesel,’’ would have effectively replaced stated that EPA had not conducted a the ones that have upgrading as the final ‘‘cellulosic diesel’’ and would have sufficient lifecycle GHG analysis to step, as upgrading is a common part of required that the renewable fuel meet support the pathways proposed for row petroleum refining. Our analysis for the both definitions. However, after U. After reviewing these comments, we March 2013 Pathways I rule estimated a considering the implementation issues have decided to finalize a narrower set 67 percent GHG reduction compared to associated with revising an existing of pathways for co-processed cellulosic conventional gasoline for renewable definition within EPA’s IT systems (e.g., diesel. Instead of adding a new row U gasoline and renewable gasoline changing existing registrations), we have to Table 1 to 40 CFR 80.1426, we are blendstock produced from corn stover decided not to finalize either of the instead adding ‘‘Co-Processed Cellulosic through catalytic pyrolysis and definitional changes proposed in the Diesel, Jet Fuel, and Heating Oil’’ as fuel upgrading. Producing cellulosic diesel 2016 REGS rule. Instead, we are types in row M. Thus, as we had instead of renewable gasoline through accomplishing the same result by proposed, we are finalizing new this same pathway would produce leaving the definition of ‘‘cellulosic pathways for co-processed cellulosic similar results satisfying the 60 percent diesel’’ as-is and are adding a new term, diesel, jet fuel, and heating oil, but for GHG reduction threshold. When energy ‘‘co-processed cellulosic diesel,’’ which a narrower set of feedstocks and allocation is used for GHG accounting, is, among other things, a renewable fuel production process requirements. which is the approach we have used for that meets the definitions of cellulosic Compared to the proposed row U, row co-produced RIN generating fuels,237 co- biofuel and either biodiesel or non-ester M contains the same feedstocks except produced gasoline and diesel products renewable diesel.240 Importantly, co- that it does not include any energy will have the same, or nearly the same processed cellulosic diesel can be grasses (i.e., switchgrass, miscanthus, GHG emissions per unit of energy. produced as a result of co-processing energy cane, Arundo donax, Pennisetum Studies looking at petroleum refining cellulosic feedstocks with petroleum purpureum), and row M contains a more have also found that upgrading to diesel and is eligible for D-code 3 RINs, but not narrowly defined set of production fuel is less GHG-intensive than D-code 7 RINs. It is thus ‘‘co-processed process requirements. Note that the upgrading to gasoline.238 Based on these cellulosic diesel, jet fuel, and heating energy grass feedstocks are the only assessments we conclude that the oil’’ that we are adding to row M of ones in the proposed row U that include lifecycle GHG emissions associated with Table 1 to 40 CFR 80.14626. significant indirect land use change the new pathways being added to row 7. Other Revisions to the Fuels Program emissions based on EPA’s lifecycle GHG M satisfy the statutory 60 percent GHG analysis of switchgrass for the March reduction requirement to qualify as a. Testing Revisions 2010 RFS2 rule. Finalizing this cellulosic biofuel. In summary, the We are removing the requirement for narrower set of pathways addresses the analyses conducted for the March 2013 periodic resubmitting of non-voluntary commenters concerns about insufficient Pathways I rule support the addition of consensus standard body (non-VCSB) analysis because approval of these ‘‘co-processed cellulosic diesel, jet fuel test methods that have not been pathways is supported by the extensive and heating oil’’ as feedstocks to row M approved by VCSBs in 40 CFR analyses that we conducted for a 80.585(d)(4). Currently, non-VCSB test previous rule. 235 Kinchin, Christopher. Catalytic Fast Pyrolysis methods are required to resubmit The pathways in row M were with Upgrading to Gasoline and Diesel Blendstocks. accuracy and precision qualification approved in the March 2013 Pathways National Renewable Energy Laboratory (NREL). 2011. EPA–HQ–OAR–2011–0542–0007 information every 5 years if the non- I rule and may include fuels produced 236 Id. VCSB test method has not been through the co-processing renewable 237 See for example discussion of hydrotreated approved by a VCSB organization. At biomass and petroleum.234 The analysis camelina oil in that March 2013 Pathways I rule at this time, VCSBs, such as ASTM, have supporting that rulemaking found that 78 FR 14198. yet to qualify any non-VCSB test the pathways evaluated for corn stover 238 For example, for the 2010 RFS2 rule EPA estimated slightly lower refining emissions (9.2 methods for measuring the sulfur feedstock reduced lifecycle GHG gCO2e/MJ) for 2005 average U.S. gasoline than for content in diesel, gasoline, or butane. emissions by at least 65 to 129 percent 2005 U.S. average diesel (9.0 gCO2e/MJ). Other Moreover, we require minimal statistical compared to the statutory petroleum studies have found an even larger reduction for quality control requirements on every baseline, and the results for corn stover refining diesel as compared to gasoline. See for example: Cooney, G., et al. (2017). ‘‘Updating the were extended to the other feedstocks U.S. Life Cycle GHG Petroleum Baseline to 2014 239 81 FR 80927 (November 16, 2016). with Projections to 2040 Using Open-Source 240 This new definition for ‘‘co-processed 233 Another part of the 2016 REGS proposal, Engineering-Based Models.’’ Environmental Science cellulosic diesel’’ is essentially the same as the which we are not finalizing here, would have & Technology 51(2): 977–987. While this may be revised definition of ‘‘cellulosic diesel’’ that we amended the definition of ‘‘cellulosic diesel’’ so different when biogenic feedstocks are used, it is proposed in the 2016 REGS proposal; creating a that it no longer required that such fuel meet the reasonable to conclude that any differences would new term rather than revising an existing definition definition of biomass-based diesel. not be large enough to disqualify the fuel from allows us to avoid legacy issues within our IT 234 See 78 FR 14190 (March 5, 2013). satisfying the 60 percent GHG reduction threshold. system.

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type test method approved under the (creating a so-called ‘‘hand blend’’), as calculations, and 40 CFR 80.69 sets diesel sulfur accuracy and precision allowed in 40 CFR 80.69(a). The Tier 3 forth the criteria a refiner must meet to requirements 241 to ensure proper test regulations at 40 CFR 80.1603(d) require include downstream ethanol in their method instrumentation use is as that refiners and importers account for RFG or RBOB compliance calculations. intended in practice. We are, therefore, downstream oxygenate blending to any If a refiner satisfies these criteria, 40 amending the regulatory requirement by gasoline or blendstock for oxygenate CFR 80.1603(d) sets forth the eliminating the provision for non-VCSB blending (BOB) by volume weighting mechanism for accounting for test methods to re-submit accuracy and the sulfur content of the gasoline or downstream ethanol in annual precision qualification information BOB with the sulfur content of the compliance calculations for all gasoline every 5 years. added oxygenate. Under the Tier 3 and BOBs. This section of the We are also removing the sunset date regulations, refiners and importers may regulations was designed to ensure that for designated primary test methods in either rely upon test results of batches all refiners calculate their annual 40 CFR 80.47. EPA fuels regulations of oxygenate supplied by the producer average sulfur levels by including the exempted those designated primary test of the oxygenate or use an assumed ethanol that is actually added to their methods that were in use prior to value of 5.00 ppm added at 10 volume gasoline or BOBs, or to use the default October 28, 2013, from meeting the percent ethanol concentration if actual value of 5 ppm sulfur content. This accuracy and precision qualification sulfur results are not available. These would alleviate the need for refiners to requirements.242 We provided this refiners and importers suggested that use hand blends prepared with ethanol sunset exemption date in the Tier 3 final the regulatory language at 40 CFR that has less sulfur than is actually rule because we were confident that test 80.1603(d) may be interpreted to blended with the refiner’s gasoline or facilities were utilizing designated continue to allow the use of hand- BOB for their compliance calculations. primary test methods prior to this date. blended RBOB samples for determining Although we believe that 40 CFR However, since the statistical quality oxygenate sulfur content added 80.1603(d) clearly applies to all gasoline control (SQC) requirements at 40 CFR downstream by arguing that the and BOBs, not just RFG or RBOB, we are 80.47 are intended to ensure proper language at 40 CFR 80.1603(d) only making minor amendments to ensure utilization of designated primary test applied to conventional gasoline and that these requirements are as clear as methods in practice, we are removing conventional blendstock for oxygenate possible to the regulated community. this sunset exemption date. This action blending (CBOB). We are also making minor amendments exempts all designated primary test We intended for the downstream to the Tier 3 sulfur reporting methods from the accuracy and oxygenate blending regulations at 40 requirements at 40 CFR 80.1652 to precision requirements of 40 CFR 80.47. CFR 80.1603(d) to apply to all gasoline and BOBs, not just conventional better accommodate the inclusion of b. Oxygenate Added Downstream in gasoline and CBOB. In the preamble to downstream oxygenate blending in Tier 3 the Tier 3 final rule, we explained that annual average sulfur compliance After the Tier 3 final rule was the ‘‘final rule requires that in demonstrations. These added published,243 we received several determining their compliance with requirements will help align the questions concerning the language at 40 today’s sulfur standards, refiners and reported batch information with the CFR 80.1603(d) about accounting for importers must either use the actual annual average compliance report and is downstream oxygenate blending in sulfur content of the denatured fuel necessary to ensure that refiners met refiners’ and importers’ average annual ethanol (DFE) established through both the per-gallon and annual average sulfur calculations. Specifically, some testing of the DFE actually blended or sulfur standards. refiners asked whether 40 CFR assume a 5 ppm sulfur content for the c. Technical Corrections and 80.1603(d) is consistent with the related DFE added downstream. To prevent Clarifications reformulated gasoline (RFG) provisions potential bias, a refiner or importer must for downstream oxygenate blending in choose to use only one method during We are making numerous technical 40 CFR 80.69. Currently, refiners may each annual compliance period.’’ 244 corrections to EPA’s fuels programs. certify RFG after the addition of The regulations at 40 CFR 80.101(d)(4) These amendments are being made to oxygenate to the reformulated set forth the criteria that a refiner must correct inaccuracies and oversights in blendstock for oxygenate blending meet to include downstream ethanol in the current regulations. These changes (RBOB) sample at the refinery lab their conventional gasoline compliance are described in Table IX.F.7–2 below.

TABLE IX.F.7–2—MISCELLANEOUS TECHNICAL CORRECTIONS AND CLARIFICATIONS TO TITLE 40

Part and section of Title 40 Description of revision

79.51(f)(6)(iii), 79.59(a)(1), 80.27(e)(1)(i), 80.69(a)(11)(viii)(C), Redirecting the mailing addresses to the new address section in 80.10. 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), 80.1415(c)(4), 80.1441(h), 80.1442(i), 80.1443(d)(2), 80.1449(d), 80.1454(h)(6)(iii), 80.1501(b)(5)(i), 80.1501(b)(5)(ii), 80.1622(g), 80.1625(c)(2), and 80.1656(h). 80.10 ...... Adding a new address section that reflects the address change. 80.27(b) ...... Clarifying the Performance-Based Analytical Test Method Approach (PBATMA) implementation for Reid vapor pressure (RVP) compliance assurance measurements.

241 See 40 CFR 80.584. 243 See 79 FR 23414 (April 28, 2014). 242 See, e.g., 40 CFR 80.47(j)(2). 244 See 79 FR 23544 (April 28, 2014).

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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 ...... 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. 80.47(b)(2)(i) and 80.47(b)(2)(ii) ...... Clarifying accuracy criterion for sulfur in gasoline by adding examples with accuracy criterion. 80.47(b)(3), 80.47(c)(3), 80.47(d)(2), 80.47(e)(2), 80.47(f)(2), Removing the reference to the October 28, 2013, date and making the 80.47(g)(2), 80.47(h)(2), 80.47(i)(2), 80.47(j)(2), and 80.47(l)(4). designated primary test methods exempt from the applicable accuracy and precision requirements of 40 CFR 80.47, given that there are SQC requirements for these methods that will verify if they are being carried out properly. 80.47(c)(2)(i) and 80.47(c)(2)(ii) ...... Clarifying accuracy criterion for sulfur in butane by adding examples with accuracy criterion. 80.47(l)(2)(i) ...... Clarifying that test facilities meet applicable precision requirements for VCSB method defined and non-VCSB absolute fuel parameters. 80.47(n)(1)(i), 80.47(o)(1)(i), 80.47(p)(1)(i), and 80.47(p)(2)(i) ...... Removing the accuracy SQC requirement for pre-treatment and assessment of results from the check standard testing after at least 15 testing occasions as described in section 8.2 of ASTM D6299. 80.47(n)(1)(ii), 80.47(o)(1)(ii), and 80.47(p)(1)(ii) ...... Clarifying the expanded uncertainty of the accepted reference value of consensus named fuels shall be included in the accuracy SQC qualification criterion. 80.47(o)(1)(i) ...... Clarifying participation in a commercially available Inter Laboratory Crosscheck Program (ILCP) at least three times a year meeting the ASTM D6299 requirements for ILCP check standards that meet the requirements for absolute differences between test results and the accepted reference value of the check standard based on the designated primary test method obtained through participation in the ILCP satisfies the accuracy SQC requirement as well as appropriate calculation for adherence to SQC criteria. Also clarifying the accuracy SQC criteria is 0.75 times the published reproducibility of the applicable designated primary test method for each method defined fuel parameter to be consistent with non-VCSB method defined fuel parameter accuracy SQC requirements. 80.47(n)(2)(i), 80.47(o)(2)(i), and 80.47(p)(3)(i) ...... Clarification in Precision SQC requirements that the test facility’s long term precision standard deviation, as demonstrated by control charts, is expected to meet applicable precision criterion for the test method. 80.585(d)(1) and (2) ...... Removing reference to expired provisions related to approval of test methods approved by VCSBs. 80.1240(a)(1)(i) and 80.1603(f)(1) ...... Clarifying that gasoline benzene and sulfur credits must be used for compliance purposes (i.e., retired) instead of simply being obtained. 80.1401 ...... Adding definition of foreign renewable fuel producer, non-renewable feedstock, non-RIN-generating foreign producer, and RIN-generating foreign producer; amended by revising the definition of foreign ethanol producer and renewable fuel. 80.1426(a)(2), 80.1426(c)(4)-(5), 80.1450(b), 80.1450(d)(1), 80.1451(b), Applying the new and revised definitions in 80.1401. 80.1451(b)(1)(ii)(D), 80.1451(g)(1)(ii)(D), 80.1454(q), 80.1466, 80.1472(b)(3)(i), 80.1472(b)(3)(ii)(B), and 80.1472(b)(3)(iii). 80.1440 ...... Adding a new paragraph related to RIN responsibilities for renewable fuel used for purposes subject to national security exemptions. 80.1450(b)(1)(ix)(A), 80.1451(b)(1)(ii)(I), 80.1451(g)(1)(ii)(I), Clarifying the term ‘‘denaturant’’ to mean ‘‘ethanol denaturant.’’ 80.1452(b)(11), and 80.1464(b)(1)(ii). 80.1450(g)(9) ...... Clarifying the third-party auditor registration updates language to make QAP updates consistent with registration updates. 80.1466(d)(3)(ii) ...... Revising erroneous reference for third-party independence requirements from 80.65(e)(2)(iii) to 80.65(f)(2)(iii). 80.1469(f)(1) ...... Clarifying to clearly link updates to quality assurance plans with updates to a third-party auditor’s registration under 80.1450(g)(9). 80.1501(b)(3)(i) ...... Clarifying that the word ‘‘ATTENTION’’ should be in black font, not or- ange. 80.1600 ...... Removing the duplicative definition of ‘‘Ethanol denaturant,’’ which is already defined in 80.2(iiii). 80.1609(a) ...... Revising cross-reference to 80.1603(d)(3). 80.1616(c)(3) ...... Clarifying that Tier 2 credits generated from January 1, 2017 through December 31, 2019, must be used between January 1, 2017 and December 31, 2019. 80.1650(b)(3) ...... Clarifying that the oxygenate blender registration dates also apply to persons who blend oxygenate into CBOB and conventional gasoline. 80.1650(e)(1)(iii)(A) and 80.1650(g)(1)(iii)(A) ...... Clarifying that records are kept at the oxygenate production ‘‘facility’’ (instead of the oxygenate production ‘‘refinery’’).

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X. Public Participation However, certain of the amendments in numbers for EPA’s regulations in 40 Many interested parties participated this action will result in an additional CFR are listed in 40 CFR part 9. When in the rulemaking process that burden. The information collection OMB approves this ICR, EPA will culminates with this final rule. This activities related to the amendments to announce that approval in the Federal process provided opportunity for the RFS regulations in this rule have Register and publish a technical submitting written public comments been submitted for approval to the amendment to 40 CFR part 9 to display following the proposal that we Office of Management and Budget the OMB control number for the published on July 29, 2019 (84 FR (OMB) under the PRA. You can find a approved information collection 36762) and the supplemental notice of copy of the ICR in the docket for this activities contained in this final rule. rule, identified by EPA ICR Number proposed rulemaking published on D. Regulatory Flexibility Act (RFA) October 28, 2019. We also held public 2595.02, OMB Control Number 2060– hearings on July 31, 2019 and October NEW, and it is briefly summarized here. I certify that this action will not have 30, 2019, at which many parties The parties for whom we anticipate an a significant economic impact on a provided both verbal and written increase in burden are generally substantial number of small entities testimony. All comments received, both described as RIN generators under the RFA. In making this verbal and written, are available in (specifically, those who are producers of determination, the impact of concern is Docket ID No. EPA–HQ–OAR–2019– renewable fuel) due the amendments any significant adverse economic 0136 and we considered these related to pathways, and those who are impact on small entities. An agency may comments in developing the final rule. generally described as obligated parties certify that a rule will not have a Public comments and EPA responses are (specifically, those who are refiners and significant economic impact on a discussed throughout this preamble and importers) due to the provisions for substantial number of small entities if in the accompanying RTC document, certified NTDF. The supporting the rule relieves regulatory burden, has which is available in the docket for this statement clearly indicates the no net burden, or otherwise has a action. amendments and includes detailed positive economic effect on the small tables with regulatory burden laid out entities subject to the rule. XI. Statutory and Executive Order by type of party, regulatory citation, With respect to the amendments to Reviews description of information to be the RFS regulations and other fuels A. Executive Order 12866: Regulatory collected, estimated burden in hours programs, this action makes relatively Planning and Review and Executive and dollars, and reporting form or minor corrections and modifications to Order 13563: Improving Regulation and format. Certain amendments in this those regulations, and we do not Regulatory Review action are related to non-RFS fuels anticipate that there will be any programs, but these amendments are significant adverse economic impact on This action is a significant regulatory mostly technical corrections (e.g., directly regulated small entities. action that was submitted to the Office address corrections) and do not impose The small entities directly regulated of Management and Budget (OMB) for any additional recordkeeping and by the annual percentage standards review. Any changes made in response reporting burden. associated with the RFS volumes are to OMB recommendations have been small refiners, which are defined at 13 The Following Summarizes the Burden documented in the docket. EPA CFR 121.201. With respect to the 2020 prepared an analysis of illustrative costs Respondents/affected entities: The percentage standards, we have associated with the 2020 percentage respondents to this information evaluated the impacts on small entities standards. This analysis is presented in collection are RIN generators and from two perspectives: As if the Section V. obligated parties under the RFS standards were a standalone action or if B. Executive Order 13771: Reducing program, and fall into the following they are a part of the overall impacts of Regulations and Controlling Regulatory general industry categories: Petroleum the RFS program as a whole. Costs refineries, ethyl alcohol manufacturers, When evaluating the standards as if other basic organic chemical they were a standalone action separate This action is considered an manufacturing, chemical and allied and apart from the original rulemaking Executive Order 13771 regulatory products merchant wholesalers, that established the RFS2 program, the action. Details on the estimated costs of petroleum bulk stations and terminals, standards could be viewed as increasing the 2020 percentage standards can be petroleum and petroleum products the cellulosic biofuel, advanced biofuel, found in EPA’s analysis of the merchant wholesalers, gasoline service and total renewable fuel volume illustrative costs. This analysis is stations, and marine service stations. requirements by 170 million gallons presented in Section V. Respondent’s obligation to respond: between 2019 and 2020. To evaluate the C. Paperwork Reduction Act (PRA) Mandatory. impacts of the volume requirements on Estimated number of respondents: The existing Information Collection small entities relative to 2019, we have 6,042. 245 Request (ICR) covering the RFS program conducted a screening analysis to Total number of responses: 357,512. assess whether we should make a is entitled ‘‘Recordkeeping and Frequency of response: Annually and finding that this action will not have a Reporting for the Renewable Fuel occasionally. Standard Program,’’ EPA ICR No. Total estimated burden: 32,548 hours significant economic impact on a 2546.01, OMB Control Number 2060– (per year). Burden is defined at 5 CFR substantial number of small entities. 0725; expires August 31, 2022. The 1320.3(b). Currently available information shows existing RFS ICR covers registration, Total estimated cost: $3,511,813 (per that the impact on small entities from recordkeeping, and reporting year). implementation of this rule will not be requirements currently in 40 CFR part An agency may not conduct or significant. We have reviewed and 80, subpart M. The changes affecting sponsor, and a person is not required to 245 respond to, a collection of information ‘‘Screening Analysis for the Final Renewable RVO calculations will not change the Fuel Standards for 2020,’’ memorandum from recordkeeping and reporting burdens unless it displays a currently valid OMB Dallas Burkholder and Nick Parsons to EPA Air vis-a`-vis the existing collection. control number. The OMB control Docket EPA–HQ–OAR–2018–0205.

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assessed the available information, the standards increased. For gasoline is a reduction in burden as compared to which shows that obligated parties, and/or diesel small refiners subject to implementation of the statutory volume including small entities, are generally the standards, the analysis included a targets assumed in the RFS2 final rule able to recover the cost of acquiring the cost-to-sales ratio test, a ratio of the analysis. RINs necessary for compliance with the estimated annualized compliance costs While the rule will not have a RFS standards through higher sales to the value of sales per company. From significant economic impact on a prices of the petroleum products they this test, we estimated that all directly substantial number of small entities, sell than would be expected in the regulated small entities would have there are compliance flexibilities in the absence of the RFS program.246 This is compliance costs that are less than one program that can help to reduce impacts true whether they acquire RINs by percent of their sales over the life of the on small entities. These flexibilities purchasing renewable fuels with program (75 FR 14862, March 26, 2010). include being able to comply through attached RINs or purchase separated We have determined that this final RIN trading rather than renewable fuel RINs. The costs of the RFS program are rule will not impose any additional blending, 20 percent RIN rollover thus generally being passed on to requirements on small entities beyond allowance (up to 20 percent of an consumers in the highly competitive those already analyzed, since the obligated party’s RVO can be met using marketplace. Even if we were to assume impacts of this rule are not greater or previous-year RINs), and deficit carry- that the cost of acquiring RINs was not fundamentally different than those forward (the ability to carry over a recovered by obligated parties, and we already considered in the analysis for deficit from a given year into the used the maximum values of the costs the RFS2 final rule assuming full following year, provided that the deficit implementation of the RFS program. discussed in Section V and the gasoline is satisfied together with the next year’s This rule increases the 2020 cellulosic and diesel fuel volume projections and RVO). In the RFS2 final rule, we biofuel, advanced biofuel, and total wholesale prices from the October 2019 discussed other potential small entity renewable fuel volume requirements by version of EIA’s Short Term Energy flexibilities that had been suggested by 170 million gallons relative to the 2019 Outlook, along with current wholesale the SBREFA panel or through volume requirements, but those biofuel prices, a cost-to-sales ratio test comments, but we did not adopt them, volumes remain significantly below the shows that the costs to small entities of in part because we had serious concerns the RFS standards are far less than 1 statutory volume targets analyzed in the regarding our authority to do so. percent of the value of their sales. RFS2 final rule. Compared to the burden While the screening analysis that would be imposed under the Additionally, we realize that there described above supports a certification volumes that we assessed in the may be cases in which a small entity that this rule will not have a significant screening analysis for the RFS2 final may be in a difficult financial situation economic impact on small refiners, we rule (i.e., the volumes specified in the and the level of assistance afforded by continue to believe that it is more Clean Air Act), the volume requirements the program flexibilities is insufficient. appropriate to consider the standards as in this rule reduce burden on small For such circumstances, the program a part of our ongoing implementation of entities. Regarding the BBD standard, provides hardship relief provisions for the overall RFS program. When we are maintaining the volume small entities (small refiners), as well as considered this way, the impacts of the requirement for 2021 at the same level for small refineries.249 As required by RFS program as a whole on small as the 2020 volume requirement we the statute, the RFS regulations include entities were addressed in the RFS2 finalized in the 2019 final rule.248 While a hardship relief provision (at 40 CFR final rule, which was the rule that this volume is an increase over the 80.1441(e)(2)) that allows for a small implemented the entire program as statutory minimum value of 1 billion refinery to petition for an extension of required by EISA 2007.247 As such, the gallons, the BBD standard is a nested its small refinery exemption at any time Small Business Regulatory Enforcement standard within the advanced biofuel based on a showing that the refinery is Fairness Act (SBREFA) panel process category, which we are significantly experiencing a ‘‘disproportionate that took place prior to the 2010 rule reducing from the statutory volume economic hardship.’’ EPA regulations was also for the entire RFS program and targets. As discussed in Section VI, the provide similar relief to small refiners looked at impacts on small refiners BBD volume requirement is below what that are not eligible for small refinery through 2022. is anticipated to be produced and used relief (see 40 CFR 80.1442(h)). We have For the SBREFA process for the RFS2 to satisfy the advanced biofuel currently identified a total of 9 small final rule, we conducted outreach, fact- requirement. The net result of the refiners that own 11 refineries subject to finding, and analysis of the potential standards being finalized in this action the RFS program, all of which are also impacts of the program on small small refineries. refiners, which are all described in the 248 Moreover, we note that the 2021 BBD volume We evaluate these petitions on a case- Final Regulatory Flexibility Analysis, only establishes the maximum BBD volume for that by-case basis and may approve such located in the rulemaking docket (EPA– year and may be adjusted in subsequent actions. This volume does not directly regulate any entity. petitions if it finds that a HQ–OAR–2005–0161). This analysis We intend to translate this volume, subject to any disproportionate economic hardship looked at impacts to all refiners, appropriate adjustments, into a percentage standard exists. In evaluating such petitions, we including small refiners, through the in the 2021 annual rulemaking. We also consult with the U.S. Department of year 2022 and found that the program acknowledge that today’s action does impose the 2020 BBD percentage standard. As we explain in Energy and consider the findings of would not have a significant economic Section VI and in the preamble to the 2019 final DOE’s 2011 Small Refinery Study and impact on a substantial number of small rule, this percentage standard is not practically other economic factors. To date, EPA binding, as we expect obligated parties to rely on entities, and that this impact was has adjudicated petitions for exemption expected to decrease over time, even as BBD RINs, in excess of this standard, to satisfy the 2020 advanced biofuel standard. Thus, any impact from 37 small refineries for the 2018 on directly regulated entities from the 2020 BBD RFS standards (10 of which are owned 246 For a further discussion of the ability of percentage standard is subsumed into the impact of by a small refiner).250 We have not yet obligated parties to recover the cost of RINs see the 2020 advanced biofuel standard. As we explain ‘‘Denial of Petitions for Rulemaking to Change the in this section and the screening memo, we find RFS Point of Obligation,’’ EPA–420–R–17–008, that the 2020 advanced biofuel standard will not 249 See CAA section 211(o)(9)(B). November 2017. have a significant economic impact on a substantial 250 Information about the number of SREs granted 247 75 FR 14670 (March 26, 2010). number of small entities under the RFA. can be found at: https://www.epa.gov/fuels-

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adjudicated any small refinery reason to believe may U.S.C. 7414, 7522–24, 7542, 7545, and exemption petitions for the 2019 or disproportionately affect children, per 7601. 2020 RFS standards. the definition of ‘‘covered regulatory List of Subjects In sum, this final rule will not change action’’ in section 2–202 of the the compliance flexibilities currently Executive Order. This action is not 40 CFR Part 79 offered to small entities under the RFS subject to Executive Order 13045 Environmental protection, Fuel program (including the small refinery because it implements specific additives, Gasoline, Motor vehicle hardship provisions we continue to standards established by Congress in pollution, Penalties, Reporting and implement) and available information statutes (CAA section 211(o)) and does recordkeeping requirements. shows that the impact on small entities not concern an environmental health from implementation of this rule will risk or safety risk. 40 CFR Part 80 not be significant viewed either from the I. Executive Order 13211: Actions perspective of it being a standalone Environmental protection, Concerning Regulations That action or a part of the overall RFS Administrative practice and procedure, Significantly Affect Energy Supply, program. We have therefore concluded Air pollution control, Diesel fuel, Fuel Distribution, or Use that this action will not have any additives, Gasoline, Imports, Oil imports, Petroleum, Renewable fuel. significant adverse economic impact on This action is not a ‘‘significant directly regulated small entities. energy action’’ because it is not likely to Dated: December 19, 2019. Andrew R. Wheeler, E. Unfunded Mandates Reform Act have a significant adverse effect on the (UMRA) supply, distribution, or use of energy. Administrator. This action establishes the required This action does not contain an renewable fuel content of the For the reasons set forth in the unfunded mandate of $100 million or transportation fuel supply for 2020, preamble, EPA amends 40 CFR parts 79 more as described in UMRA, 2 U.S.C. consistent with the CAA and waiver and 80 as follows: 1531–1538, and does not significantly or authorities provided therein. The RFS PART 79—REGISTRATION OF FUEL uniquely affect small governments. This program and this rule are designed to AND FUEL ADDITIVES action implements mandates achieve positive effects on the nation’s specifically and explicitly set forth in transportation fuel supply, by increasing ■ 1. The authority citation for part 79 CAA section 211(o) and we believe that energy independence and security and continues to read as follows: this action represents the least costly, lowering lifecycle GHG emissions of most cost-effective approach to achieve transportation fuel. Authority: 42 U.S.C. 7414, 7524, 7545 and the statutory requirements. 7601. J. National Technology Transfer and F. Executive Order 13132: Federalism Advancement Act (NTTAA) Subpart F—Testing Requirements for Registration This action does not have federalism This rulemaking does not involve implications. It will not have substantial technical standards. ■ direct effects on the states, on the 2. Section 79.51 is amended by relationship between the national K. Executive Order 12898: Federal revising the last sentence of paragraph government and the states, or on the Actions To Address Environmental (f)(6)(iii) to read as follows: distribution of power and Justice in Minority Populations and § 79.51 General requirements and responsibilities among the various Low-Income Populations provisions. levels of government. EPA believes that this action does not * * * * * G. Executive Order 13175: Consultation have disproportionately high and (f) * * * and Coordination With Indian Tribal adverse human health or environmental (6) * * * Governments effects on minority populations, low (iii) * * * The registrants’ income populations, and/or indigenous This action does not have tribal communications should be sent to the peoples, as specified in Executive Order implications as specified in Executive following address: Attn: Fuel/Additives 12898 (59 FR 7629, February 16, 1994). Order 13175. This action will be Registration, U.S. Environmental This regulatory action does not affect implemented at the Federal level and Protection Agency, 1200 Pennsylvania the level of protection provided to affects transportation fuel refiners, Ave. NW, Mail Code 6405A, human health or the environment by blenders, marketers, distributors, Washington, DC 20460. applicable air quality standards. This importers, exporters, and renewable fuel * * * * * action does not relax the control producers and importers. Tribal measures on sources regulated by the ■ 3. Section 79.59 is amended by governments will be affected only to the RFS and other fuels regulations. revising the last sentence of paragraph extent they produce, purchase, or use (a)(1) introductory text to read as regulated fuels. Thus, Executive Order L. Congressional Review Act (CRA) follows: 13175 does not apply to this action. This action is subject to the CRA, and § 79.59 Reporting requirements. H. Executive Order 13045: Protection of the EPA will submit a rule report to Children From Environmental Health each House of the Congress and to the (a) * * * Risks and Safety Risks Comptroller General of the United (1) * * * Forms for submitting this EPA interprets Executive Order 13045 States. This action is a ‘‘major rule’’ as data may be obtained from EPA at the as applying only to those regulatory defined by 5 U.S.C. 804(2). following address: Attn: Fuel/Additives Registration, U.S. Environmental actions that concern environmental XII. Statutory Authority health or safety risks that EPA has Protection Agency, 1200 Pennsylvania Statutory authority for this action Ave., NW, Mail Code 6405A, registration-reporting-and-compliance-help/rfs- comes from sections 114, 203–05, 208, Washington, DC 20460. small-refinery-exemptions. 211, and 301 of the Clean Air Act, 42 * * * * *

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PART 80—REGULATION OF FUELS The revisions read as follows: (g) Oxygen and oxygenate content AND FUEL ADDITIVES analysis. Oxygen and oxygenate content § 80.46 Measurement of reformulated must be determined by use of the ■ 4. The authority citation for part 80 gasoline and conventional gasoline fuel parameters. following methods: continues to read as follows: (1) Through December 31, 2015, (a) Sulfur. Sulfur content of gasoline oxygen and oxygenate content must be Authority: 42 U.S.C. 7414, 7521, 7542, and butane must be determined by use 7545, and 7601(a). determined using ASTM D5599. of the following methods: (2) Beginning January 1, 2016, oxygen Subpart A—General Provisions (1)(i) Through December 31, 2015, the and oxygenate content must be sulfur content of gasoline must be determined by a test method approved ■ 5. Section 80.10 is added to read as determined by ASTM D2622. under § 80.47. follows: (ii) Beginning January 1, 2016, the sulfur content of gasoline must be * * * * * § 80.10 Addresses. determined by a test method approved ■ 8. Section 80.47 is amended by (a) For submitting notifications, under § 80.47. revising paragraphs (b), (c)(2)(i) and (ii), applications, petitions, or other (2)(i) Through December 31, 2015, the (c)(3), (d)(2), (e)(2), (f)(2), (g)(2), (h)(2), communications with EPA, use one of sulfur content of butane must be (i)(2), (j)(2), (l)(2)(i), (l)(4), (n)(1), the following addresses for mailing: determined by ASTM D6667. (n)(2)(i), (o)(1), (o)(2)(i), (p)(1), (p)(2)(i), (1) For U.S. Mail: Attn: [TITLE AS (ii) Beginning January 1, 2016, the and (p)(3)(i) to read as follows: sulfur content of butane must be DIRECTED], U.S. Environmental § 80.47 Performance-based Analytical Test Protection Agency, 1200 Pennsylvania determined by a test method approved Method Approach. Ave. NW, Mail Code 6405A, under § 80.47. (b) Olefins. Olefin content must be * * * * * Washington, DC 20460. (b) Precision and accuracy criteria for (2) For commercial service: Attn: determined by use of the following methods: approval for the absolute fuel parameter [TITLE AS DIRECTED], U.S. of gasoline sulfur—(1) Precision. Environmental Protection Agency, (1) Through December 31, 2015, olefin content must be determined using Beginning January 1, 2016, for motor William Jefferson Clinton Building vehicle gasoline, gasoline blendstock, North, Mail Code 6405A, Room 6520V, ASTM D1319. (2) Beginning January 1, 2016, olefin and gasoline fuel additives subject to 1200 Pennsylvania Ave. NW, content must be determined by a test the gasoline sulfur standard at §§ 80.195 Washington, DC 20004; Phone: 1–800– method approved under § 80.47. and 80.1603, the maximum allowable 385–6164. standard deviation computed from the (b) [Reserved] * * * * * (d) Distillation. Distillation results of a minimum of 20 tests made over 20 days (tests may be arranged into Subpart B—Controls and Prohibitions parameters must be determined by use of the following test methods: no fewer than five batches of four or ■ 6. Section 80.27 is amended by (1) Through December 31, 2015, fewer tests each, with only one such revising paragraphs (b) and (e)(1)(i) to distillation parameters must be batch allowed per day over the read as follows: determined using ASTM D86. minimum of 20 days) on samples using (2) Beginning January 1, 2016, good laboratory practices taken from a § 80.27 Controls and prohibitions on distillation parameters must be single homogeneous commercially gasoline volatility. determined by a test method approved available gasoline must be less than or * * * * * under § 80.47. (Note: The precision equal to 1.5 times the repeatability ‘‘r’’ (b) Determination of compliance. estimates for reproducibility in ASTM divided by 2.77, where ‘‘r’’ equals the Compliance with the standards listed in D86–12 do not apply; see § 80.47(h).) ASTM repeatability of ASTM D7039 paragraph (a) of this section shall be (e) Benzene. Benzene content must be (Example: A 10 ppm sulfur gasoline determined by the use of the sampling determined by use of the following test sample: Maximum allowable standard ≤ methodologies specified in § 80.8 and methods: deviation of 20 tests 1.5*(1.73ppm/ the testing methodology specified in (1) Through December 31, 2015, 2.77) = 0.94 ppm). The 20 results must § 80.46(c) until December 31, 2015, and benzene content must be determined be a series of tests with a sequential § 80.47 beginning January 1, 2016. using ASTM D3606, except that record of analysis and no omissions. A * * * * * instrument parameters shall be adjusted laboratory facility may exclude a given (e) * * * to ensure complete resolution of the sample or test result only if the (1) * * * benzene, ethanol, and methanol peaks exclusion is for a valid reason under (i) Any person may request a testing because ethanol and methanol may good laboratory practices and it exemption by submitting an application cause interference with ASTM D3606 maintains records regarding the sample that includes all the information listed when present. and test results and the reason for in paragraphs (e)(3) through (6) of this (2) Beginning January 1, 2016, excluding them. section to the attention of ‘‘Test benzene content must be determined by (2) Accuracy. Beginning January 1, Exemptions’’ to the address in a test method approved under § 80.47. 2016, for motor vehicle gasoline, § 80.10(a). (f) Aromatic content. Aromatic gasoline blendstock, and gasoline fuel * * * * * content must be determined by use of additives subject to the gasoline sulfur the following methods: standard at §§ 80.195 and 80.1603: Subpart D—Reformulated Gasoline (1) Through December 31, 2015, (i) The arithmetic average of a aromatic content must be determined continuous series of at least 10 tests ■ 7. Section 80.46 is amended by: using ASTM D5769, except the sample performed using good laboratory ■ a. Revising paragraphs (a), (b), (d), (e), chilling requirements in section 8 of this practices on a commercially available (f), and (g); and standard method are optional. gravimetric sulfur standard in the range ■ b. Removing and reserving paragraphs (2) Beginning January 1, 2016, of 1–10 ppm shall not differ from the (h)(1)(iv), (v), (vii), (viii), (x), (xiii), (xv), aromatic content must be determined by accepted reference value (ARV) of the and (xvi). a test method approved under § 80.47. standard by more than 0.47 ppm sulfur,

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where the accuracy criteria is (e) * * * investigations into any exceedance of 0.75*(1.5*r/2.77), where ‘‘r’’ is the (2) The test method specified at these criteria must be kept for a period repeatability for ARV of the § 80.46(f)(1) is exempt from the of five years. commercially available gravimetric requirements of paragraph (e)(1) of this (ii) The expanded uncertainty of the sulfur standard (Example: section. ARV of consensus named fuels shall be 0.75*(1.5*1.15ppm/2.77) = 0.47 ppm); (f) * * * included in the following accuracy (ii) The arithmetic average of a (2) The test method specified at qualification criterion: Accuracy continuous series of at least 10 tests § 80.46(g)(1) is exempt from the qualification criterion = square root performed using good laboratory requirements of paragraph (f)(1) of this [(0.75R)∧2 + (0.75R)∧2/L], where L = the practices on a commercially available section. number of single results obtained from gravimetric sulfur standard in the range (g) * * * different labs used to calculate the of 10–20 ppm shall not differ from the (2) The test method specified at consensus ARV. ARV of the standard by more than 0.94 § 80.46(c)(1) is exempt from the (2)(i) Precision SQC. Every facility ppm sulfur, where the accuracy criteria requirements of paragraph (g)(1) of this shall conduct tests of every instrument is 0.75*(1.5*r/2.77), where ‘‘r’’ is the section. with a quality control material as repeatability for ARV of the (h) * * * defined in paragraph 3.2.8 in ASTM commercially available gravimetric (2) The test method specified at D6299 either once per week or once per sulfur standard (Example: § 80.46(d)(1) is exempt from the every 20 production tests, whichever is 0.75*(1.5*2.30ppm/2.77) = 0.94 ppm); requirements of paragraph (h)(1) of this more frequent. The facility must and section. construct and maintain an ‘‘I’’ chart as (iii) In applying the tests of (i) * * * described in section 8 and section paragraphs (b)(2)(i) and (ii) of this (2) The test methods specified at A1.5.1 and a ‘‘MR’’ chart as described in section, individual test results shall be § 80.46(e)(1) are exempt from the section A1.5.4. Any violations of control compensated for any known chemical requirements of paragraph (i)(1) of this limit(s) shall be investigated by interferences using good laboratory section. personnel of the facility and records practices. (j) * * * kept for a period of five years. The test (3) The test method specified at (2) The test method specified at facility’s long term site precision § 80.46(a)(1) is exempt from the § 80.2(z) is exempt from the standard deviation, as demonstrated by requirements of paragraphs (b)(1) and requirements of paragraph (j)(1) of this the ‘‘I’’ chart and ‘‘M’’ chart, must meet (2) of this section. section. the applicable precision criterion as (c) * * * * * * * * (2) * * * described in paragraph (b)(1) or (c)(1) of (l) * * * (i) The arithmetic average of a this section. (2)(i) The test facility demonstrates continuous series of at least 10 tests * * * * * that the test method meets the performed using good laboratory (o) * * * applicable precision information for the practices on a commercially available (1)(i) Accuracy SQC. Every facility method-defined or non-VCSB absolute gravimetric sulfur standard in the range shall conduct tests of every instrument fuel parameter as described in this of 1–10 ppm, say 10 ppm, shall not with a commercially available check section. differ from the ARV of the standard by standard as defined in ASTM D6299 at more than 0.47 ppm sulfur, where the * * * * * least three times a year using good accuracy criteria is 0.75*(1.5*r/2.77), (4) The test methods specified at laboratory practices. The check standard where ‘‘r’’ is the repeatability for ARV §§ 80.2(z) and 80.46(a)(1), (a)(2), (b)(1), must be an ordinary fuel with levels of of the commercially available (c)(1), (d)(1), (e)(1), (f)(1), and (g)(1) are the fuel parameter of interest close to gravimetric sulfur standard (Example: exempt from the requirements of either the applicable regulatory standard 0.75*(1.5*1.15ppm/2.77) = 0.47 ppm); paragraphs (l)(1) through (3) of this or the average level of use for the (ii) The arithmetic average of a section. facility. For facilities using a VCSB continuous series of at least 10 tests * * * * * designated method defined test method, performed using good laboratory (n) * * * the ARV of the check standard must be practices on a commercially available (1)(i) Accuracy SQC. Every facility determined by the respective designated gravimetric sulfur standard in the range shall conduct tests on every instrument test method for the fuel parameter of 10–20 ppm, say 20 ppm, shall not with a commercially available following the guidelines of ASTM differ from the ARV of the standard by gravimetric reference material, or check D6299. Facilities using a VCSB more than 0.94 ppm sulfur, where the standard as defined in ASTM D6299 at alternative method defined test method accuracy criteria is 0.75*(1.5*r/2.77), least three times a year using good must use the ARV of the check standard where ‘‘r’’ is the repeatability for ARV laboratory practices. The facility must as determined in a VCSB Inter of the commercially available construct ‘‘MR’’ and ‘‘I’’ charts with Laboratory Crosscheck Program (ILCP) gravimetric sulfur standard (Example: control lines as described in section 8.4 or a commercially available ILCP 0.75*(1.5*2.30ppm/2.77) = 0.94 ppm); and appropriate Annex sections of this following the guidelines of ASTM and standard practice. In circumstances D6299. If the ARV is not provided in the * * * * * where the absolute difference between ILCP, accuracy must be assessed based (3) The test method specified at the mean of multiple back-to-back tests upon the respective EPA-designated test § 80.46(a)(2) is exempt from the of the standard reference material and method using appropriate production requirements of paragraphs (c)(1) and the ARV of the standard reference samples. The facility must construct (2) of this section. material is greater than 0.75 times the ‘‘MR’’ and ‘‘I’’ charts with control lines (d) * * * published reproducibility of the test as described in section 8.4 and (2) The test method specified at method, the cause of such difference appropriate Annex sections of this § 80.46(b)(1) is exempt from the must be investigated by the facility. standard practice. In circumstances requirements of paragraph (d)(1) of this Records of the standard reference where the absolute difference between section. materials measurements as well as any test results and the ARV of the check

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standard based on the designated must be an ordinary fuel with levels of facility. Documentation on the identity primary test method is greater than 0.75 the fuel parameter of interest close to of the reference installation and its times the published reproducibility of either the applicable regulatory standard control status must be maintained on the designated primary test method, the or the average level of use for the the premises of the method-defined cause of such difference must be facility. Facilities using a Non-VCSB alternative test method. Records of the investigated by the facility. Participation alternative method defined test method standard reference materials in a VCSB ILCP or a commercially must use the ARV of the check standard measurements as well as any available ILCP meeting the ASTM as determined in either a VCSB Inter investigations into any exceedances of D6299 requirements for ILCP check Laboratory Crosscheck Program (ILCP) this criterion must be kept for a period standards, based on the designated or a commercially available ILCP of five years. primary test method, at least three times following the guidelines of ASTM * * * * * a year, and, meeting the requirements in D6299. If the ARV is not provided in the (3)(i) Precision SQC. Every facility this section for absolute differences ILCP, accuracy must be assessed based shall conduct tests of every instrument between the test results and the ARV of upon the respective EPA designated test with a quality control material as the check standard based on the method using appropriate production defined in paragraph 3.2.8 in ASTM designated primary test method of less samples. The facility must construct D6299 either once per week or once per than 0.75 times the published ‘‘MR’’ and ‘‘I’’ charts with control lines every 20 production tests, whichever is reproducibility of the designated as described in section 8.4 and more frequent. The facility must primary test method obtained through appropriate Annex sections of this construct and maintain an ‘‘I’’ chart as standard practice. In circumstances participation in the ILCP satisfies this described in section 8 and section where the absolute difference between Accuracy SQC requirement (Examples A1.5.1 and a ‘‘MR’’ chart as described in the mean of multiple back-to-back tests of VCSB ILCPs: ASTM Reformulated section A1.5.4. Any violations of control of the standard reference material and Gasoline ILCP or ASTM motor gasoline limit(s) shall be investigated by the ARV of the standard reference ILCP). Records of the standard reference personnel of the facility and records material is greater than 0.75 times the materials measurements as well as any kept for a period of five years. The test published reproducibility of the fuel investigations into any exceedance of facility’s long term site precision parameter’s respective designated test these criteria must be kept for a period standard deviation, as demonstrated by method, the cause of such difference of five years. the ‘‘I’’ chart and ‘‘M’’ chart, must meet (ii) The expanded uncertainty of the must be investigated by the facility. Records of the standard reference the applicable precision criterion as ARV of consensus named fuels shall be described in paragraph (b)(1), (c)(1), included in the following accuracy materials measurements as well as any investigations into any exceedance of (d)(1), (e)(1), (f)(1), (g)(1), (h)(1), (i)(1), or qualification criterion: Accuracy (j)(1) of this section. qualification criterion = square root these criteria must be kept for a period * * * * * [(0.75R)∧2 + (0.75R)∧2/L], where L = the of five years. number of single results obtained from (ii) The expanded uncertainty of the ■ 9. Section 80.69 is amended by different labs used to calculate the ARV of consensus named fuels shall be revising paragraph (a)(11)(viii)(C) to consensus ARV. included in the following accuracy read as follows: (2)(i) Precision SQC. Every facility qualification criterion: Accuracy qualification criterion = square root § 80.69 Requirements for downstream shall conduct tests of every instrument [(0.75R)∧2 + (0.75R)∧2/L], where L = the oxygenate blending. with a quality control material as number of single results obtained from (a) * * * defined in paragraph 3.2.8 in ASTM different labs used to calculate the (11) * * * D6299 either once per week or once per consensus ARV. every 20 production tests, whichever is (viii) * * * (2)(i) Accuracy SQC for Non-VCSB (C) The survey plan must be sent to more frequent. The facility must Method-Defined test methods with high construct and maintain an ‘‘I’’ chart as the attention of ‘‘RFG Program (Survey sensitivity to matrix effects. Every Plan)’’ to the address in § 80.10(a); described in section 8 and section facility shall conduct tests on every * * * * * A1.5.1 and a ‘‘MR’’ chart as described in instrument with a production fuel on at section A1.5.4. Any violations of control least a quarterly basis using good Subpart E—Anti-Dumping limit(s) shall be investigated by laboratory practices. The production personnel of the facility and records fuel must be representative of the ■ 10. Section 80.93 is amended by kept for a period of five years. The test production fuels that are routinely revising paragraph (d)(4) to read as facility’s long term site precision analyzed by the facility. The ARV of the follows: standard deviation, as demonstrated by production fuel must be determined by the ‘‘I’’ chart and ‘‘M’’ chart, must meet the respective reference installation of § 80.93 Individual baseline submission the applicable precision criterion as the designated test method for the fuel and approval. described in paragraph (d)(1), (e)(1), parameter following the guidelines of * * * * * (f)(1), (g)(1), (h)(1), (i)(1), or (j)(1) of this ASTM D6299. The facility must (d) * * * section. construct ‘‘MR’’ and ‘‘I’’ charts with (4) For U.S. Postal delivery, the * * * * * control lines as described in section 8.4 petition shall be sent to the attention of (p) * * * and appropriate Annex sections of this ‘‘RFG Program (Baseline Petition)’’ to (1)(i) Accuracy SQC for Non-VCSB standard practice. In circumstances the address in § 80.10(a). Method-Defined test methods with where the absolute difference between * * * * * minimal matrix effects. Every facility the mean of multiple back-to-back tests shall conduct tests on every instrument of the standard reference material and Subpart G—Detergent Gasoline with a commercially available check the ARV of the standard reference standard as defined in the ASTM D6299 material is greater than 0.75 times the ■ 11. Section 80.174 is amended by at least three times a year using good published reproducibility of the test revising paragraphs (b) and (c) to read laboratory practices. The check standard method must be investigated by the as follows:

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§ 80.174 Addresses. requests to the attention of ‘‘ECA Marine ‘‘Anti-Dumping Compliance Period’’ to * * * * * Fuel Alternative Label Request’’ to the the address in § 80.10(a). (b) Other detergent registration and address in § 80.10(a). * * * * * certification data, and certain other ■ 16. Section 80.585 is amended: information which may be specified in ■ a. In paragraph (d)(1), by removing Subpart L—Gasoline Benzene this subpart, shall be sent to the ‘‘paragraph (a) or (b)’’ and adding ■ 20. Section 80.1240 is amended in attention of ‘‘Detergent Additive ‘‘paragraph (b)’’ in its place; paragraph (a)(1)(i) in the equation by Certification’’ to the address in ■ b. In the first sentence of paragraph revising the definition ‘‘OC’’ to read as § 80.10(a). (d)(2), by removing ‘‘paragraph (a) or follows: (c) Notifications to EPA regarding (b)’’ and adding ‘‘paragraph (b)’’ in its program exemptions, detergent dilution place; and § 80.1240 How is a refinery’s or importer’s and commingling, and certain other ■ c. By revising paragraph (d)(4). compliance with the gasoline benzene information which may be specified in The revision reads as follows: requirements of this subpart determined? this subpart, shall be sent to the (a) * * * attention of ‘‘Detergent Enforcement § 80.585 What is the process for approval of a test method for determining the sulfur (1)(i) * * * Program’’ to the address in § 80.10(a). content of diesel or ECA marine fuel? OC = Benzene credits used by the Subpart H—Gasoline Sulfur * * * * * refinery or importer to show compliance (d) * * * (gallons benzene). ■ 12. Section 80.235 is amended by (4) The approval of any test method * * * * * revising paragraph (b) to read as follows: under paragraph (b) of this section shall ■ 21. Section 80.1285 is amended by be valid from the date of approval from revising paragraph (b) to read as follows: § 80.235 How does a refiner obtain the Administrator. approval as a small refiner? § 80.1285 How does a refiner apply for a * * * * * * * * * * benzene baseline? ■ (b) Applications for small refiner 17. Section 80.595 is amended by * * * * * status must be sent to the attention of revising paragraph (b) to read as follows: (b) For U.S. Postal delivery, the ‘‘Gasoline Sulfur Program (Small § 80.595 How does a small or GPA refiner benzene baseline application shall be Refiner)’’ to the address in § 80.10(a). apply for a motor vehicle diesel fuel volume sent to the attention of ‘‘MSAT2 * * * * * baseline for the purpose of extending their Benzene’’ to the address in § 80.10(a). ■ 13. Section 80.290 is amended by gasoline sulfur standards? * * * * * revising paragraph (b) to read as follows: * * * * * ■ 22. Section 80.1340 is amended by (b) The volume baseline must be sent revising paragraph (b) to read as follows: § 80.290 How does a refiner apply for a via certified mail with return receipt or sulfur baseline? express mail with return receipt to the § 80.1340 How does a refiner obtain * * * * * attention of ‘‘Diesel Baseline’’ to the approval as a small refiner? (b) The sulfur baseline request must address in § 80.10(a). * * * * * be sent to the attention of ‘‘Gasoline * * * * * (b) Applications for small refiner Sulfur Program (Sulfur Baseline)’’ to the status must be sent to the attention of ■ 18. Section 80.607 is amended by address in § 80.10(a). ‘‘MSAT2 Benzene’’ to the address in revising paragraph (a) to read as follows: * * * * * § 80.10(a). § 80.607 What are the requirements for * * * * * Subpart I—Motor Vehicle Diesel Fuel; obtaining an exemption for diesel fuel used Nonroad, Locomotive, and Marine for research, development or testing Subpart M—Renewable Fuel Standard Diesel Fuel; and ECA Marine Fuel purposes? (a) Written request for a research and ■ 23. Section 80.1401 is amended by: ■ 14. Section 80.533 is amended by development exemption. Any person ■ a. Adding in alphabetical order revising paragraph (b) as follows: may receive an exemption from the definitions for ‘‘Certified non- provisions of this subpart for diesel fuel transportation 15 ppm distillate fuel,’’ § 80.533 How does a refiner or importer ‘‘Co-processed cellulosic diesel,’’ and apply for a motor vehicle or non-highway or ECA marine fuel used for research, baseline for the generation of NRLM credits development, or testing purposes by ‘‘Covered location’’; or the use of the NRLM small refiner submitting the information listed in ■ b. Revising the definition of ‘‘Exporter compliance options? paragraph (c) of this section to the of renewable fuel’’ and ‘‘Foreign ethanol * * * * * attention of ‘‘Diesel Program (Diesel producer’’; (b) The baseline must be sent to the Exemption Request)’’ to the address in ■ c. Adding in alphabetical order a attention of ‘‘Nonroad Rule Diesel Fuel § 80.10(a). definition for ‘‘Foreign renewable fuel Baseline’’ to the address in § 80.10(a). * * * * * producer’’; ■ d. Revising paragraph (2) in the * * * * * ■ Subpart J—Gasoline Toxics definition of ‘‘Heating oil’’; ■ ■ 19. Section 80.855 is amended by 15. Section 80.574 is amended by ■ e. Adding in alphabetical order revising paragraph (c)(2) to read as revising paragraph (b) as follows: definitions for ‘‘Non-renewable follows: § 80.574 What labeling requirements apply feedstock’’ and ‘‘Non-RIN-generating to retailers and wholesale purchaser- § 80.855 What is the compliance baseline foreign producer’’; consumers of ECA marine fuel beginning for refineries or importers with insufficient ■ f. Revising paragraph (2) in the June 1, 2014? data? definition of ‘‘Renewable fuel’’; and * * * * * * * * * * ■ g. Adding in alphabetical order a (b) Alternative labels to those (c) * * * definition for ‘‘RIN-generating foreign specified in paragraph (a) of this section (2) Application process. Applications producer’’. The additions and revisions may be used as approved by EPA. Send must be submitted to the attention of read as follows:

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§ 80.1401 Definitions or from an area outside the covered DEi = The total amount of diesel fuel * * * * * locations who produces renewable fuel projected to be exempt in year i, in Certified non-transportation 15 ppm (including neat (undenatured) ethanol gallons, per §§ 80.1441 and 80.1442. distillate fuel or certified NTDF means for use in transportation fuel, heating * * * * * distillate fuel that meets all of the oil, or jet fuel). ■ 25. Section 80.1407 is amended by following: * * * * * adding paragraphs (f)(9) through (11) to (1) It has been certified as complying Heating oil *** read as follows: with the 15 ppm sulfur standard, (2) A fuel oil that is used to heat or cetane/aromatics standard, and all cool interior spaces of homes or § 80.1407. How are the Renewable Volume applicable sampling, testing, and buildings to control ambient climate for Obligations calculated? recordkeeping requirements of subpart I human comfort. The fuel oil must be * * * * * of this part. liquid at 60 degrees Fahrenheit and 1 (f) * * * (2) It has been designated as 15 ppm atmosphere of pressure, and contain no (9) Distillate fuel with a sulfur content heating oil, 15 ppm ECA marine fuel, or more than 2.5% mass solids. greater than 15 ppm that is clearly other non-transportation fuel (e.g., jet * * * * * designated for a use other than fuel, kerosene, heating oil, or No. 4 fuel) Non-renewable feedstock means a transportation fuel, such as heating oil on its product transfer document and feedstock that does not meet the or ECA marine fuel. has not been designated as MVNRLM definition of renewable biomass. (10) Distillate fuel that meets a 15 diesel fuel. Non-RIN-generating foreign producer ppm sulfur standard, is designated for (3) The PTD for the distillate fuel means a foreign renewable fuel non-transportation use, and that meets the requirements in § 80.1453(e). producer that has been registered by remains completely segregated from * * * * * EPA to produce renewable fuel for MVNRLM diesel fuel from the point of Co-processed cellulosic diesel is any which RINs have not been generated. production through to the point of use renewable fuel that meets the definition * * * * * for a non-transportation purpose, such of cellulosic biofuel, as defined in this Renewable fuel *** as heating oil or ECA marine fuel. section 80.1401, and meets all of the (2) Ethanol covered by this definition (11) Certified NTDF, if the refiner or requirements of paragraph (1) of this shall be denatured using an ethanol importer has a reasonable expectation definition: denaturant as required in 27 CFR parts that the fuel will be used for non- (1)(i) Is a transportation fuel, 19 through 21. Any volume of ethanol transportation purposes. To establish a transportation fuel additive, heating oil, denaturant added to the undenatured reasonable expectation that the fuel will or jet fuel. ethanol by a producer or importer in be used for non-transportation purposes, (ii) Meets the definition of either excess of 2 volume percent shall not be a refiner or importer must, at a biodiesel or non-ester renewable diesel. included in the volume of ethanol for minimum, be able to demonstrate that (iii) Is registered as a motor vehicle purposes of determining compliance they supply areas that use heating oil, fuel or fuel additive under 40 CFR part with the requirements under this ECA marine fuel, or 15 ppm distillate 79, if the fuel or fuel additive is subpart. fuel for non-transportation purposes in intended for use in a motor vehicle. quantities that are consistent with past (2) Co-processed cellulosic diesel * * * * * RIN-generating foreign producer practices or changed circumstances. includes heating oil and jet fuel made EPA may consider any other relevant from cellulosic feedstocks and cellulosic means a foreign renewable fuel producer that has been registered by information, including the price of the biofuel produced as a result of co- fuel, in assessing whether a refiner or processing cellulosic feedstocks with EPA to generate RINs for renewable fuel it produces. importer has a reasonable expectation petroleum. that the fuel will be used for non- * * * * * * * * * * transportation purposes. ■ Covered location means the 24. Section 80.1405 is amended by ■ 26. Section 80.1408 is added to read contiguous 48 states, Hawaii, and any adding paragraph (a)(11) and revising as follows: state or territory that has received an the definitions of GEi and DEi in the approval from the Administrator to opt- equation in paragraph (c) to read as § 80.1408. What are the requirements for in to the RFS program under § 80.1443. follows: parties that own and redesignate certified NTDF as MVNRLM diesel fuel? * * * * * § 80.1405 What are the Renewable Fuel (a) Beginning January 1, 2021, a party Exporter of renewable fuel means all Standards? that owns certified NTDF, and only a buyers, sellers, and owners of the (a) * * * party that owns certified NTDF, may renewable fuel in any transaction that (11) Renewable Fuel Standards for redesignate NTDF as MVNRLM diesel results in renewable fuel being 2020. (i) The value of the cellulosic fuel if they meet all of the following transferred from a covered location to a biofuel standard for 2020 shall be 0.34 requirements: destination outside of the covered percent. (1) Register as a refiner and register locations. (ii) The value of the biomass-based each facility where redesignation occurs diesel standard for 2020 shall be 2.10 * * * * * as a refinery under § 80.76. NTDF may percent. Foreign ethanol producer means a only be redesignated as MVNRLM diesel (iii) The value of the advanced biofuel foreign renewable fuel producer who fuel at a facility registered as a refinery. standard for 2020 shall be 2.93 percent. produces ethanol for use in (2) At each facility, calculate a transportation fuel, heating oil, or jet (iv) The value of the renewable fuel standard for 2020 shall be 11.56 percent. balance of MVNRLM diesel fuel during fuel but who does not add ethanol each annual compliance period denaturant to their product as described * * * * * according to the following equation: in paragraph (2) of the definition of (c) * * * GE = The total amount of gasoline MVNRLMBAL = MVNRLMO + ‘‘renewable fuel’’ in this section. i ¥ Foreign renewable fuel producer projected to be exempt in year i, in MVNRLMINVCHG MVNRLMI means a person from a foreign country gallons, per §§ 80.1441 and 80.1442. Where:

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MVNRLMBAL = the balance for MVNRLM certified NTDF. These parties must requirements of § 80.1450, the reporting diesel fuel for the compliance period. comply with all of the following: requirements of § 80.1451, the MVNRLMI = the total volume of all batches (A) The reporting requirements of recordkeeping requirements of of fuel designated as MVNRLM diesel § 80.1451(i). § 80.1454, all conditions set forth in an fuel owned when the fuel was received (B) The recordkeeping requirements at the facility and acquired at the facility approval document for a pathway during the compliance period. Any of § 80.1454(t). petition submitted under § 80.1416, and MVNRLM diesel fuel produced (apart (b) Parties that incur an RVO under all other applicable regulations of this from redesignation of NTDF to MVNRLM paragraph (a)(2)(i) of this section must subpart M. comply with all applicable requirements diesel fuel) or imported into the facility * * * * * must also be included in this volume. for obligated parties under this subpart. MVNRLMO = the total volume of all batches (c) The provisions of this section do (2) To generate RINs for imported of fuel designated as MVNRLM diesel not apply to gasoline or diesel fuel that renewable fuel, including any fuel owned and sold or transferred to is designated for export. renewable fuel contained in imported other parties at the facility during the ■ 27. Section 80.1415 is amended by transportation fuel, heating oil, or jet compliance period. revising paragraph (c)(4) to read as fuel, importers must obtain information MVNRLMINVCHG = the volume of MVNRLM diesel fuel owned at the end of the follows: from a non-RIN-generating foreign compliance period minus the volume of renewable fuel producer that is § 80.1415 How are equivalence values MVNRLM diesel fuel owned at the registered pursuant to § 80.1450 beginning of the compliance period, assigned to renewable fuel? sufficient to make the appropriate including accounting for any corrections * * * * * determination regarding the applicable in inventory due to volume swell or (c) * * * D code and compliance with the shrinkage, difference in measurement (4) Applications for equivalence renewable biomass definition for each calibration between receiving and values must be sent to the attention of delivering meters, and similar matters, imported batch for which RINs are ‘‘RFS2 Program (Equivalence Value generated. where corrections that increase Application)’’ to the address in inventory are defined as positive. § 80.10(a). * * * * * (i) If MVNRLMBAL is greater than 0, * * * * * (c) * * * an RVO is incurred by the redesignating ■ 28. Section 80.1426 is amended: (4) Importers shall not generate RINs party for the volume of diesel fuel equal ■ a. By revising the section heading and for renewable fuel imported from a non- to MVNRLM. The redesignating party paragraphs (a)(1)(iii), (a)(2), and (c)(4) RIN-generating foreign renewable fuel must also comply with all of the and (5); and producer unless the foreign renewable following: ■ b. In paragraph (f)(1), in Table 1 to (A) The reporting requirements of fuel producer is registered with EPA as § 80.1426, by revising the entries F, H, required in § 80.1450. § 80.1451(a)(1)(xix). I, and M. (B) The recordkeeping requirements The revisions read as follows: (5) Importers shall not generate RINs of § 80.1454(t). for renewable fuel that has already been (C) The attest engagement § 80.1426 How are RINs generated and assigned RINs by a RIN-generating requirements of §§ 80.1464 and 80.1475, assigned to batches of renewable fuel? foreign renewable fuel producer. as applicable. (a) * * * * * * * * (ii) If MVNRLMBAL is less than or (1) * * * equal to 0, no RVO is incurred by the (iii) The fuel was produced in (f) * * * redesignating party for any redesignated compliance with the registration (1) * * *

TABLE 1 TO § 80.1426—APPLICABLE D CODES FOR EACH FUEL PATHWAY FOR USE IN GENERATING RINS

Fuel type Feedstock Production process requirements D-code

******* F ...... Biodiesel, renewable Soy bean oil; Oil from annual covercrops; Oil One of the following: Transesterification with 4 diesel, jet fuel and from algae grown photosynthetically; Bio- or without esterification pre-treatment, or heating oil. genic waste oils/fats/greases; Camelina Hydrotreating; excludes processes that co- sativa oil; Distillers corn oil; Distillers sor- process renewable biomass and petroleum. ghum oil; Commingled distillers corn oil and sorghum oil.

******* H ...... Biodiesel, renewable Soy bean oil; Oil from annual covercrops; Oil One of the following: Transesterification with 5 diesel, jet fuel and from algae grown photosynthetically; Bio- or without esterification pre-treatment, or heating oil. genic waste oils/fats/greases; Camelina Hydrotreating; includes only processes that sativa oil; Distillers corn oil; Distillers sor- co-process renewable biomass and petro- ghum oil; Commingled distillers corn oil and leum. sorghum oil. I ...... Naphtha, LPG ...... Camelina sativa oil; Distillers sorghum oil; Hydrotreating ...... 5 Distillers corn oil; Commingled distillers corn oil and distillers sorghum oil.

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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- 3 and Renewable thinnings, tree residue, and separated yard cation and Upgrading, Thermo-Catalytic Gasoline waste; biogenic components of separated Hydrodeoxygenation and Upgrading, Direct Blendstock; Co- MSW; cellulosic components of separated Biological Conversion, Biological Conver- Processed 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 process Heating Oil. energy sources providing that process used converts cellulosic biomass to fuel; any process utilizing biogas and/or biomass as the only process energy sources which converts cellulosic biomass to fuel.

*******

* * * * * through (e) of this section representing associated RIN retirement ■ 29. Section 80.1427 is amended by the exported renewable fuel. No demonstration, registration, reporting, revising the definition of ‘‘RVOi’’ in provision of this section applies to and attest engagement obligations under paragraph (b)(2) and by revising renewable fuel purchased directly from this subpart. However, these paragraph (c)(2) to read as follows: the renewable fuel producer and for requirements for exporters of renewable which the exporter of renewable fuel fuel must be met only once for any § 80.1427 How are RINs used to can demonstrate that no RINs were export transaction. demonstrate compliance? generated through the recordkeeping ■ 32. Section 80.1431 is amended by * * * * * requirements of § 80.1454(a)(6). revising paragraph (b)(2) to read as (b) * * * (b) * * * follows: (2) * * * (1) * * * RVOi = The Renewable Volume k = A discrete volume of renewable § 80.1431 Treatment of invalid RINs. Obligation for the obligated party or fuel that the exporter of renewable fuel * * * * * exporter of renewable fuel for calendar knows or has reason to know is (b) * * * year i, in gallons. cellulosic biofuel that is exported in a (2) Invalid RINs cannot be used to * * * * * single shipment. achieve compliance with the Renewable Volume Obligations of an obligated (c) * * * * * * * * (2) In fulfillment of its ERVOs, each (c) If the exporter of renewable fuel party or exporter of renewable fuel, exporter of renewable fuel is subject to knows or has reason to know that a regardless of the party’s good faith belief the provisions of paragraphs (a)(2), (3), volume of exported renewable fuel is that the RINs were valid at the time they (6), and (8) of this section. cellulosic diesel, the exporter of were acquired. * * * * * renewable fuel must treat the exported * * * * * ■ 30. Section 80.1429 is amended by volume as either cellulosic biofuel or ■ 33. Section 80.1434 is added to read revising paragraph (b)(3) to read as biomass-based diesel when determining as follows: follows: his Renewable Volume Obligations § 80.1434 RIN retirement. pursuant to paragraph (b) of this section. § 80.1429 Requirements for separating (a) A RIN must be retired in any of the (d) * * * RINs from volumes of renewable fuel. following cases: (1) If the equivalence value for a (1) Demonstrate annual compliance. * * * * * volume of exported renewable fuel can (b) * * * Except as specified in paragraph (b) of be determined pursuant to § 80.1415 (3) Any exporter of renewable fuel this section or § 80.1456, each party that based on its composition, then the must separate any RINs that have been is an obligated party under § 80.1406 appropriate equivalence value shall be assigned to the exported renewable fuel and is obligated to meet the RVO under used in the calculation of the exporter volume. An exporter of renewable fuel § 80.1407 must retire a sufficient of renewable fuel’s Renewable Volume may separate up to 2.5 RINs per gallon number of RINs to demonstrate Obligations under paragraph (b) of this of exported renewable fuel. compliance with an applicable RVO. section. * * * * * (2) Exported renewable fuel. Any * * * * * ■ 31. Section 80.1430 is amended by exporter of renewable fuel that incurs an (e) For renewable fuels that are in the paragraph (a), the definition of ‘‘k’’ in ERVO as described in § 80.1430(a) shall form of a blend at the time of export, the paragraph (b)(1), and paragraphs (c), retire RINs pursuant to §§ 80.1430(b) exporter of renewable fuel shall (d)(1), and (e) introductory text and through (g) and 80.1427(c). determine the volume of exported adding paragraph (h) to read as follows: (3) Volume error correction. A RIN renewable fuel based on one of the must be retired when it was based on § 80.1430 Requirements for exporters of following: incorrect volumes or volumes that have renewable fuels. * * * * * not been standardized to 60 °F as (a) Any exporter of renewable fuel, (h) Each person meeting the definition described in § 80.1426(f)(8). whether in its neat form or blended of exporter of renewable fuel for a (4) Import volume correction. Where shall acquire sufficient RINs to comply particular export transaction is jointly the port of entry volume is the lesser of with all applicable Renewable Volume and severally liable for completion of the two volumes in § 80.1466(e)(1)(i), Obligations under paragraphs (b) the requirements of this section and all the importer shall calculate the

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difference between the number of RINs (b) In the case that retirement of a RIN (2) Tactical military vehicles, engines, originally assigned by the foreign is necessary, the following provisions or equipment that are not subject to a producer and the number of RINs apply: national security exemption from calculated under § 80.1426 for the (1) Any party affected by such vehicle or engine emissions standards as volume of renewable fuel as measured retirement must keep copies and adjust described in paragraph (f)(1) of this at the port of entry, and retire that its records, reports, and compliance section but, for national security amount of RINs in accordance with calculations in which the retired RIN purposes (for purposes of readiness for § 80.1466(k)(4). was used. deployment overseas), need to be fueled (5) Spillage or disposal of renewable (2) The retired RIN must be reported on the same transportation fuel, heating fuels. Except as provided in in the applicable reports under oil, or jet fuel as the vehicles, engines, § 80.1432(c), in the event that a reported § 80.1451. or equipment for which EPA has spillage or disposal of any volume of (3) The retired RIN must be reported granted such a national security renewable fuel, the owner of the in the EPA Moderated Transaction exemption. renewable fuel must notify any holder System pursuant to § 80.1452(c). ■ 35. Section 80.1441 is amended by or holders of the attached RINs and (4) Where the importer of renewable revising paragraph (h) to read as retire a number of gallon-RINs fuel is required to retire RINs under follows: corresponding to the volume of spilled paragraph (a)(5) of this section, the or disposed of renewable fuel importer must report the retired RINs in § 80.1441 Small refinery exemption. multiplied by its equivalence value in the applicable reports under §§ 80.1451, * * * * * accordance with § 80.1432(b). 80.1466(k), and 80.1466(m). (h) Verification letters under (6) Contaminated or spoiled fuel. In ■ 34. Section 80.1440 is amended by paragraph (b) of this section, petitions the event that contamination or revising the section heading and for small refinery hardship extensions spoliation of any volume of renewable paragraph (a) and adding paragraph (f) under paragraph (e) of this section, and fuel is reported, the owner of the to read as follows: small refinery exemption waiver notices renewable fuel must notify any holder under paragraph (f) of this section shall § 80.1440 What are the provisions for be sent to the attention of ‘‘RFS or holders of the attached RINs and blenders who handle and blend less than retire a number of gallon-RINs 250,000 gallons of renewable fuel per year Program’’ to the address in § 80.10(a). ■ corresponding to the volume of or who handle renewable fuel blended for 36. Section 80.1442 is amended by contaminated or spoiled renewable fuel fuels under a national security exemption? revising paragraph (i) to read as follows: multiplied by its equivalence value. (a)(1) Renewable fuel blenders who (i) If the equivalence value for the § 80.1442 What are the provisions for handle and blend less than 250,000 small refiners under the RFS program? contaminated or spoiled volume may be gallons of renewable fuel per year, and * * * * * determined pursuant to § 80.1415 based who do not have one or more reported on its composition, then the appropriate (i) Small refiner status verification or unreported Renewable Volume letters, small refiner exemption waivers, equivalence value shall be used. Obligations, are permitted to delegate (ii) If the equivalence value for a or applications for extensions of the their RIN-related responsibilities to the small refiner temporary exemption contaminated or spoiled volume of party directly upstream of them who renewable fuel cannot be determined, under this section must be sent to the supplied the renewable fuel for attention of ‘‘RFS Program’’ to the the equivalence value shall be 1.0. blending. (iii) If the owner of a volume of address in § 80.10(a). (2) Renewable fuel blenders who renewable fuel that is contaminated or ■ 37. Section 80.1443 is amended by handle and blend renewable fuel for spoiled and reported establishes that no revising paragraph (d)(2) to read as parties that have a national security RINs were generated to represent the follows: exemption under paragraph (f) of this volume, then no gallon-RINs shall be section, or a national security § 80.1443 What are the opt-in provisions retired. for noncontiguous states and territories? (7) Delayed RIN generation. In the exemption under any other subpart of event that a party generated a delayed 40 CFR part 80 (e.g., §§ 80.606, 80.1655), * * * * * RIN as described in § 80.1426(g)(1) and who do not have one or more (d) * * * through (4), parties must retire RINs as reported or unreported Renewable (2) A petition submitted under this described in accordance with Volume Obligations, are permitted to section should be sent to the attention § 80.1426(g)(5) and (6). delegate their RIN-related of ‘‘RFS Program’’ to the address in (8) Invalid RIN. In the case that a RIN responsibilities to the party directly § 80.10(a). is invalid as described in § 80.1431(a), upstream of them who supplied the * * * * * the RIN will be considered invalid and renewable fuel for blending. ■ 38. Section 80.1449 is amended by must be retired as described in * * * * * revising paragraph (d) to read as § 80.1431(b). (f) The requirements described in follows: (9) Potentially invalid RINs. In the paragraph (b) of this section may be case that a RIN is identified as a PIR delegated directly upstream for § 80.1449 What are the Production Outlook Report requirements? under § 80.1474(b)(1), the PIRs or renewable fuel (neat or blended) that is replacement RINs must be retired as produced, imported, sold, offered for * * * * * described in § 80.1474(b)(2) through (5). sale, supplied, offered for supply, (d) Production outlook reports shall (10) Replacement. As required by stored, dispensed, or transported for use be sent to the attention of ‘‘RFS Program § 80.1431(b) or § 80.1474, any party that in any of the following: (Production Output Reports)’’ to the must replace an invalid RIN or PIR that (1) Tactical military vehicles, engines, address in § 80.10(a). was used for compliance must retire or equipment having an EPA national * * * * * valid RINs to replace the invalid RINs security exemption from emission ■ 39. Section 80.1450 is amended by originally used for any RVO. standards under 40 CFR 85.1708, revising paragraphs (b) introductory (11) Other. Any other instance 89.908, 92.908, 94.908, 1042.635, or text, (b)(1)(vii)(A)(1), (b)(1)(vii)(B), identified by EPA. 1068.225. (b)(1)(viii)(A), (b)(1)(ix)(A) introductory

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text, (b)(1)(xi)(A) and (B), the first producer making product from grain (iii) Independent third-party auditors sentence of paragraph (d)(1), and sorghum and seeking to have it sold as must update their QAPs at least 60 days paragraphs (g)(9) and (h) to read as renewable fuel after addition of ethanol prior to verifying RINs generated by a follows: denaturant, provide a plan that has been renewable fuel facility for a pathway not submitted and accepted by U.S. EPA covered in the independent third-party § 80.1450 What are the registration requirements under the RFS program? that includes the following information: auditor’s QAPs. * * * * * (iv) Independent third-party auditors * * * * * must update their QAPs at least 60 days (b) Producers. Any RIN-generating (xi) * * * (A) An affidavit from the producer of prior to verifying RINs generated by any foreign producer, any non-RIN- renewable fuel facility not identified in generating foreign producer, or any the fuel oil meeting paragraph (2) of the definition of ‘‘heating oil’’ in § 80.1401 the independent third-party auditor’s domestic renewable fuel producer that existing registration. generates RINs must provide EPA the stating that the fuel oil for which RINs information specified under § 80.76 if have been generated will be sold for the * * * * * (h) Deactivation of registration. (1) such information has not already been purposes of heating or cooling interior EPA may deactivate the registration of provided under the provisions of this spaces of homes or buildings to control any party required to register under this part, and must receive EPA-issued ambient climate for human comfort, and section § 80.1450, using the process in company and facility identification no other purpose. paragraph (h)(2) of this section, if any of numbers prior to the generation of any (B) Affidavits from the final end user or users of the fuel oil stating that the the following criteria are met: RINs for their fuel or for fuel made with (i) The party has reported no activity fuel oil meeting paragraph (2) of the their ethanol. Unless otherwise in EMTS for twenty-four consecutive definition of ‘‘heating oil’’ in § 80.1401 specifically indicated, all the following months. is being used or will be used for registration information must be (ii) The party has failed to comply purposes of heating or cooling interior submitted and accepted by EPA by July with the registration requirements of spaces of homes or buildings to control 1, 2010, or 60 days prior to the this section. generation of RINs, whichever date ambient climate for human comfort, and (iii) The party has failed to submit any comes later, subject to this subpart: no other purpose, and acknowledging required notification or report within 30 (1) * * * that any other use of the fuel oil would days of the required submission date (vii) * * * violate EPA regulations and subject the under § 80.1451. (A) * * * user to civil and/or criminal penalties (iv) The attest engagement required (1) The location of any establishment under the Clean Air Act. under § 80.1464 has not been received from which the waste stream consisting * * * * * within 30 days of the required solely of separated yard waste is (d) * * * submission date. collected. (1) Any producer of renewable fuel or (v) The party fails to pay a penalty or * * * * * any foreign ethanol producer that makes to perform any requirements under the (B) For a producer of renewable fuel changes to their facility that will allow terms of a court order, administrative or a foreign producer of ethanol made them to produce renewable fuel that is order, consent decree, or administrative from separated food waste per not reflected in the producer’s settlement between the party and EPA. § 80.1426(f)(5)(i)(B) or from biogenic registration information on file with (vi) The party submits false or waste oils/fats/greases: EPA must update their registration incomplete information. (1) A plan documenting the type(s) of information and submit a copy of an (vii) The party denies EPA access or separated food waste or biogenic waste updated independent third-party prevents EPA from completing oils/fats/greases, the type(s) of engineering review on file with EPA at authorized activities under sections 114 establishment from which the waste is least 60 days prior to producing the new or 208 of the Clean Air Act despite collected, how the waste will be type of renewable fuel. * * * presenting a warrant or court order. This collected, a description of ongoing * * * * * includes a failure to provide reasonable verification measures that demonstrate assistance. such waste consists only of food waste (g) * * * (viii) The party fails to keep or (and an incidental amount of other (9) Registration updates. (i) Any provide the records required by this components such as paper and plastics) independent third-party auditor who subpart. or biogenic waste oils/fats/greases that makes changes to its quality assurance (ix) The party otherwise circumvents is kept separate from other waste plan(s) that will allow it to audit new the intent of the Clean Air Act or of this materials, and if applicable, how the renewable fuel production facilities, as subpart. cellulosic and non-cellulosic portions of defined in § 80.1401, that is not (2) Except as provided in paragraph the waste will be quantified. reflected in the independent third-party (h)(3) of this section, EPA will use the (2) [Reserved] auditor’s registration information on file following process whenever it decides * * * * * with EPA must update its registration to deactivate the registration of a party: (viii) * * * information and submit a copy of an (i) EPA will provide written (A) The location of the municipal updated QAP on file with EPA at least notification to the responsible corporate waste establishment(s) from which the 60 days prior to auditing new renewable officer identifying the reasons or separated municipal solid waste is fuel production facilities. deficiencies for which EPA intends to collected or from which material is (ii) Any independent third-party deactivate the party’s registration. The collected that will be processed to auditor who makes any changes other party will have fourteen calendar days produce separated municipal solid than those specified in paragraphs from the date of the notification to waste. (g)(9)(i), (iii), and (iv) of this section that correct the deficiencies identified or * * * * * will affect the third-party auditor’s explain why there is no need for (ix) * * * registration information must update its corrective action. (A) For a producer of ethanol from registration information 7 days prior to (ii) If the basis for EPA’s notice of grain sorghum or a foreign ethanol the change. intent to deactivate registration is the

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absence of EMTS activity under (v)(A) For the 2010 through 2019 (1) * * * paragraph (h)(1)(i) of this section, a compliance periods, the production (ii) * * * stated intent to engage in activity volume and import volume of all of the (D) The importer EPA facility reported through EMTS will be products listed in § 80.1407(c) and (e) registration number and foreign sufficient to avoid deactivation of for the compliance period. renewable fuel producer company registration. (B) For the 2020 compliance period, registration number, if applicable. (iii) If the party does not correct separately, the production volume and * * * * * identified deficiencies under paragraphs import volume of all of the gasoline (I) The volume of ethanol denaturant (h)(1)(ii) through (ix) of this section, or products listed in § 80.1407(c), the and applicable equivalence value of does not provide an adequate production volume and import volume each verified batch. explanation regarding why such of all of the MVNRLM diesel fuel * * * * * correction is not necessary within the products listed in § 80.1407(e), and the (i) Parties that redesignate certified time allotted for response, EPA may combined volume of all gasoline NTDF as MVNRLM diesel fuel under deactivate the party’s registration products and MVNRLM diesel fuel § 80.1408 at any time during the without further notice to the party. listed in § 80.1407(c) and (e) for the compliance period, but do not incur an (3) In instances of willfulness or those compliance period. in which public health, interest, or RVO under § 80.1408(a)(2)(i), must (C) Beginning with the 2021 submit a report to EPA stating that they safety requires otherwise, EPA may compliance period, separately, the deactivate the registration of the party redesignated certified NTDF to production volume and import volume MVNRLM diesel fuel during the without any notice to the party. EPA for the compliance period of all of the will provide written notification to the compliance period, but that their net following: redesignated volume was less than or responsible corporate officer identifying (1) All of the gasoline products listed the reasons EPA deactivated the equal to zero, and they therefore did not in § 80.1407(c). incur an RVO for the compliance registration of the party. (2) All of the MVNRLM diesel fuel period. (4) Impact of registration deactivation: products listed in § 80.1407(e). (i) A party whose registration is (3) The combined production volume * * * * * deactivated shall still be liable for of all gasoline products and MVNRLM ■ 41. Section 80.1452 is amended by violation of any requirements of this diesel fuel. revising paragraph (b)(11) and the last subpart. (4) Distillate fuel that is not sentence in paragraph (c) introductory (ii) A party whose registration is transportation fuel. text to read as follows: deactivated will not be listed on any (5) Distillate fuel that is certified § 80.1452 What are the requirements public list of actively registered parties NTDF. that is maintained by EPA. related to the EPA Moderated Transaction (iii) A party whose registration is * * * * * System (EMTS)? deactivated will not have access to any (xix) For parties that redesignate * * * * * of the electronic reporting systems certified NTDF as MVNRLM diesel fuel (b) * * * associated with the renewable fuel under § 80.1408 at any time during the (11) The volume of ethanol standard program, including the EPA compliance period, the volumes denaturant and applicable equivalence Moderated Transaction System (EMTS). MVNRLMBAL, MVNRLMO, value of each batch. (iv) A party whose registration is MVNRLMINVCHG, and MVNRLMI as * * * * * deactivated must submit any corrections calculated in § 80.1408(a)(2). (c) * * * The reportable event for a of deficiencies to EPA on forms, and * * * * * RIN separation or retirement occurs on following policies, established by EPA. (4) Reports required under this the date of separation or retirement as (v) If a party whose registration has paragraph (a) must be signed and described in § 80.1429 or § 80.1434. been deactivated wishes to re-register, certified as meeting all the applicable * * * * * they may seek to do so by submitting a requirements of this subpart by the ■ 42. Section 80.1453 is amended by new registration pursuant to the owner or a responsible corporate officer revising paragraphs (b) and (d) and requirements in paragraphs (a) through of the obligated party or exporter of adding paragraph (e) to read as follows: (c), (e), and (g) of this section, as renewable fuel. applicable. (b) Renewable fuel producers § 80.1453 What are the product transfer * * * * * (domestic and foreign) and importers. document (PTD) requirements for the RFS ■ 40. Section 80.1451 is amended by: Any domestic producer or importer of program? ■ a. Revising paragraphs (a)(1)(i) and renewable fuel who generates RINs, or * * * * * (v); any RIN-generating foreign producer (b) Except for transfers to truck ■ b. Adding paragraph (a)(1)(xix); must submit to EPA reports according to carriers, retailers, or wholesale ■ c. Revising paragraphs (a)(4), (b) the schedule, and containing all of the purchaser-consumers, product codes introductory text, (b)(1)(ii)(D) and (I), following information: may be used to convey the information (g)(1)(ii)(D) and (I); (1) * * * required under paragraphs (a)(1) ■ d. Redesignating paragraphs (i) and (j) (ii) * * * through (11) and (e) of this section if as paragraphs (j) and (k); and (D) The importer EPA facility such codes are clearly understood by ■ e. Adding new paragraph (i). The registration number and foreign each transferee. revisions and additions read as follows: renewable fuel producer company * * * * * § 80.1451 What are the reporting registration number, if applicable. (d) For fuel oil meeting paragraph (2) requirements under the RFS program? * * * * * of the definition of ‘‘heating oil’’ in (a) * * * (I) The volume of ethanol denaturant § 80.1401, the PTD of the fuel oil shall (1) * * * and applicable equivalence value of state: ‘‘This volume of renewable fuel (i) The obligated party’s or exporter of each batch. oil is designated and intended to be renewable fuel’s name. * * * * * used to heat or cool interior spaces of * * * * * (g) * * * homes or buildings to control ambient

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climate for human comfort. Do NOT use (h) * * * (5) Records related to the volume of for process heat or cooling or any other (6) * * * certified NTDF received. purpose, as these uses are prohibited (iii) The survey plan must be sent to (6) Records related to the volume of pursuant to 40 CFR 80.1460(g).’’. the attention of ‘‘RFS Program’’ to the certified NTDF delivered. (e) Beginning January 1, 2021, on each address in § 80.10(a). * * * * * occasion when any party transfers * * * * * ■ 44. Section 80.1460 is amended by custody or ownership of certified NTDF, (j) A renewable fuel producer that adding paragraph (b)(7), revising except when such fuel is dispensed into produces fuel from separated yard waste paragraph (g), and adding paragraph (j) motor vehicles or nonroad vehicles, (as described in § 80.1426(f)(5)(i)(A)), to read as follows: engines, or equipment, the transferor separated food waste (as described in must provide to the transferee § 80.1426(f)(5)(i)(B)), separated § 80.1460 What acts are prohibited under documents that include all the municipal solid waste (as described in the RFS program? following information, as applicable: § 80.1426(f)(5)(i)(C)), or biogenic waste * * * * * (1) The transferor of certified NTDF oils/fats/greases must keep all the (b) * * * must list all applicable required following additional records: (7) Generate a RIN for fuel that fails information as specified at § 80.590 and, (1) For separated yard waste, to meet all the conditions set forth in an if the distillate fuel contains renewable separated food waste, and biogenic approval document for a pathway fuel, all applicable required information waste oils/fats/greases: petition submitted under § 80.1416. in paragraphs (a), (b), and (d) of this (i) Documents demonstrating the * * * * * section. amounts, by weight, purchased of (g) Failing to use a renewable fuel oil (2) The transferor must include the separated yard waste, separated food for its intended use. No person shall use following statement on the PTD: ‘‘15 waste, or biogenic waste oils/fats/ fuel oil that meets paragraph (2) of the ppm sulfur (maximum) certified greases for use as a feedstock in definition of ‘‘heating oil’’ in § 80.1401 NTDF—This fuel is designated for non- producing renewable fuel. and for which RINs have been generated transportation use.’’ (ii) Documents demonstrating the in an application other than to heat or ■ 43. Section 80.1454 is amended by: location of any establishment(s) from cool interior spaces of homes or ■ a. Revising paragraphs (a) which the waste stream consisting buildings to control ambient climate for introductory text, (a)(1), (d)(4), solely of separated yard waste, human comfort. separated food waste, or biogenic waste (h)(6)(iii), (j) introductory text, (j)(1), * * * * * oils/fats/greases is collected. and (j)(2) introductory text; (j) Redesignation violations. No ■ b. Removing vacant paragraph (k) (iii) Such other records as may be requested by the Administrator. person may exceed the balance designation; requirements at § 80.1408(a)(2)(i) ■ c. Revising paragraphs (n) and (q); (2) For separated municipal solid ■ waste: without incurring an RVO. d. Redesignating paragraph (t) as ■ 45. Section 80.1461 is amended by paragraph (w); and * * * * * revising paragraphs (a)(1) and (2) to read ■ e. Adding new paragraph (t). (n) The records required under as follows: The revisions and addition reads as paragraphs (a) through (d), (f) through follows: (l), and (t) of this section and under § 80.1461. Who is liable for violations § 80.1453 shall be kept for five years under the RFS program? § 80.1454 What are the recordkeeping from the date they were created, except requirements under the RFS program? (a) * * * that records related to transactions (1) Any person who violates a (a) Requirements for obligated parties involving RINs shall be kept for five prohibition under § 80.1460(a) through and exporters of renewable fuel. years from the date of the RIN (d) or § 80.1460(g) through (j) is liable Beginning July 1, 2010, any obligated transaction. for the violation of that prohibition. party (as described at § 80.1406) or * * * * * (2) Any person who causes another exporter of renewable fuel (as described (q) The records required in paragraphs person to violate a prohibition under at § 80.1430) must keep all of the (b)(3) and (c)(1) of this section must be § 80.1460(a) through (d) or § 80.1460(g) following records: transferred with any renewable fuel sent through (j) is liable for a violation of (1) Product transfer documents to the importer of that renewable fuel by § 80.1460(e). consistent with § 80.1453 and associated any non-RIN-generating foreign with the obligated party’s or exporter of * * * * * producer. ■ renewable fuel’s activity, if any, as 46. Section 80.1463 is amended by transferor or transferee of renewable fuel * * * * * revising paragraph (d) to read as or separated RINs. (t) Requirements for parties that follows: redesignate certified NTDF as MVNRLM * * * * * diesel fuel. Parties that redesignate § 80.1463 What penalties apply under the (d) * * * RFS program? certified NTDF as MVNRLM diesel fuel (4) Domestic producers of renewable under § 80.1408 must keep all of the * * * * * fuel made from any other type of following additional records: (d) Any person liable under renewable biomass must have (1) Records related to all transactions § 80.1461(a) for a violation of documents from their feedstock supplier in which certified NTDF is redesignated § 80.1460(b)(1) through (4), (6), or (7) is certifying that the feedstock qualifies as as MVNRLM diesel fuel. subject to a separate day of violation for renewable biomass as defined in (2) Records related to all transactions each day that an invalid RIN remains § 80.1401, describing the feedstock. in which MVNRLM diesel fuel is available for an obligated party or Separated yard and food waste, biogenic redesignated to a non-transportation exporter of renewable fuel to oils/fats/greases, and separated use. demonstrate compliance with the RFS municipal solid waste are also subject to (3) Records related to the volume of program. the requirements in paragraph (j) of this MVNRLM diesel fuel received. ■ 47. Section 80.1464 is amended by section. (4) Records related to the volume of revising paragraphs (a) introductory * * * * * MVNRLM diesel fuel delivered. text, (a)(1)(i)(A), (a)(1)(iii), (a)(1)(iv)

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introductory text, (a)(1)(iv)(A) and (D), (vii) For obligated parties that this section must meet all requirements and (a)(1)(v), adding paragraph redesignate certified NTDF as MVNRLM that apply to renewable fuel producers (a)(1)(vii), and revising the first sentence diesel fuel under § 80.1408, perform the under this subpart. of paragraph (b)(1)(ii) to read as follows: additional attest engagement procedures (c) Designation, RIN-generating described at § 80.1475 and report any foreign producer certification, and § 80.1464 What are the attest engagement requirements under the RFS program? findings in the report described in product transfer documents. (1) Any paragraph (d) of this section. Parties that registered foreign renewable fuel * * * * * do not incur an RVO under producer must designate each batch of (a) Obligated parties and exporters of § 80.1408(a)(2)(i) and do not otherwise such renewable fuel as ‘‘RFS–FRRF’’ at renewable fuel. The following attest need to complete an attest engagement the time the renewable fuel is produced. procedures shall be completed for any under this paragraph (a) do not need to obligated party (as described at * * * * * arrange for the additional attest § 80.1406(a)) or exporter of renewable (d) * * * engagement procedures under § 80.1475 fuel (as described at § 80.1430): (1) * * * (1) * * * to be performed. (iii) Obtain the EPA-assigned (i) * * * * * * * * registration number of the foreign (A) The obligated party’s volume of (b) * * * renewable fuel producer. all products listed in § 80.1407(c) and (1) * * * (ii) Obtain production data for each * * * * * (e), or the exporter of renewable fuel’s (v) Determine the date and time the volume of each category of exported renewable fuel batch by type of renewable fuel that was produced or vessel departs the port serving the RIN- renewable fuel identified in generating foreign producer. § 80.1430(b)(1) through (b)(4). imported during the year being (vi) * * * * * * * * reviewed; compute the RIN numbers, production dates, types, volumes of (B) That the RFS–FRRF remained (iii) For obligated parties, compare the segregated from Non-RFS–FRRF and volumes of products listed in ethanol denaturant and applicable other RFS–FRRF produced by a § 80.1407(c), (e), and (f) reported to EPA equivalence values, and production different foreign producer. in the report required under volumes for each batch; report the total § 80.1451(a)(1) with the volumes, RINs generated during the year being * * * * * excluding any renewable fuel volumes, reviewed; and state whether this (3) * * * contained in the inventory information agrees with the party’s (ii) Be independent under the criteria reconciliation analysis under § 80.133 reports to EPA. * * * specified in § 80.65(f)(2)(iii); and and the volume of non-renewable diesel * * * * * * * * * * produced or imported. Verify that the ■ 48. Section 80.1466 is amended by: (e) * * * volumes reported to EPA agree with the ■ a. Revising the section heading, (2) * * * volumes in the inventory reconciliation paragraphs (a) and (b), the paragraph (c) (ii) Where the port of entry volume is analysis and the volumes of non- subject heading, paragraphs (c)(1), the lesser of the two volumes in renewable diesel produced or imported, (d)(1)(iii) and (v), (d)(1)(vi)(B), (d)(3)(ii), paragraph (e)(1)(i) of this section, the and report as a finding any exception. (e)(2)(ii), (f) introductory text, (f)(1) importer shall calculate the difference (iv) For exporters of renewable fuel, introductory text, (f)(1)(ii)(C), (f)(1)(v)(A) between the number of RINs originally perform all of the following: and (C), (f)(1)(vii), (f)(2), (f)(4) through assigned by the RIN-generating foreign (A) Obtain the database, spreadsheet, (8), (g), and (h) introductory text; producer and the number of RINs ■ or other documentation that the b. In the equation in paragraph (h)(1) calculated under § 80.1426 for the exporter of renewable fuel maintains for revising the definition ‘‘G’’; volume of renewable fuel as measured ■ all exported renewable fuel. c. Revising paragraphs (h)(3)(iii), at the port of entry, and acquire and * * * * * (h)(4), (i), (j)(2) through (4), (k)(1), retire that amount of RINs in accordance (D) Select sample batches in (k)(2)(ii), (k)(4)(ii), the paragraph (l) with paragraph (k)(3) of this section. subject heading, paragraphs (l)(1) accordance with the guidelines in (f) Foreign producer commitments. introductory text, (l)(2)(i), (l)(3), § 80.127 from each separate category of Any foreign renewable fuel producer (m)(3)(ii), (m)(6)(i), (n) introductory text, renewable fuel exported and identified shall commit to and comply with the (n)(1), (3), and (4), (o) introductory text, in § 80.1451(a); obtain invoices, bills of following provisions as a condition to and (o)(2); and lading and other documentation for the being registered as a foreign renewable ■ d. Adding paragraph (p). representative samples; state whether fuel producer under this subpart: any of these documents refer to the The revisions and addition read as follows: (1) Any EPA inspector or auditor must exported fuel as advanced biofuel or be given full, complete, and immediate cellulosic biofuel; and report as a § 80.1466 What are the additional access to conduct inspections and finding whether or not the exporter of requirements under this subpart for foreign audits of the foreign renewable fuel renewable fuel calculated an advanced renewable fuel producers and importers of producer facility. biofuel or cellulosic biofuel RVO for renewable fuels? * * * * * these fuels pursuant to § 80.1430(b)(1) (a) Applicability. This section only (ii) * * * or (3). applies to foreign renewable fuel (C) Renewable fuel is stored or (v) Compute and report as a finding producers that are located outside the transported between the foreign the RVOs for the obligated party or United States, the Commonwealth of renewable fuel producer and the United exporter of renewable fuel, and any Puerto Rico, the Virgin Islands, Guam, States, including storage tanks, vessels deficit RVOs carried over from the American Samoa, and the and pipelines. previous year or carried into the Commonwealth of the Northern Mariana subsequent year, and verify that the Islands (collectively referred to in this * * * * * values agree with the values reported to section as ‘‘the United States’’). (v) * * * EPA. (b) General requirements. A registered (A) The volume of renewable fuel. * * * * * foreign renewable fuel producer under * * * * *

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(C) Transfers of title or custody to commitment that meets the any judgment, the RIN-generating renewable fuel. requirements specified in paragraphs foreign producer shall increase the bond * * * * * (f)(1) through (7) of this section, and to cover the amount used within 90 (vii) Any employee of the foreign these commitments shall be included in days of the date the bond is used. renewable fuel producer must be made the foreign renewable fuel producer’s (i) English language reports. Any available for interview by the EPA application to be an approved foreign document submitted to EPA by a foreign inspector or auditor, on request, within renewable fuel producer under this renewable fuel producer shall be in a reasonable time period. subpart. English, or shall include an English (g) Sovereign immunity. By language translation. * * * * * (j) * * * (2) An agent for service of process submitting an application to be an approved foreign renewable fuel (2) No foreign renewable fuel located in the District of Columbia shall producer or other person may cause be named, and service on this agent producer under this subpart, or by producing and exporting renewable fuel another person to commit an action constitutes service on the foreign prohibited in paragraph (j)(1) of this renewable fuel producer or any to the United States under such approval, the foreign renewable fuel section, or that otherwise violates the employee of the foreign renewable fuel requirements of this section. producer for any action by EPA or producer, and its agents and employees, without exception, become subject to (3) No foreign renewable fuel otherwise by the United States related to producer or importer may generate RINs the full operation of the administrative the requirements of this subpart. for the same volume of renewable fuel. and judicial enforcement powers and * * * * * (4) A foreign renewable fuel producer (4) United States substantive and provisions of the United States without is prohibited from generating RINs in procedural laws shall apply to any civil limitation based on sovereign immunity, excess of the number for which the or criminal enforcement action against with respect to actions instituted against bond requirements of this section have the foreign renewable fuel producer or the foreign renewable fuel producer, its been satisfied. any employee of the foreign renewable agents and employees in any court or (k) * * * fuel producer related to the provisions other tribunal in the United States for (1) Renewable fuel shall be classified of this section. conduct that violates the requirements as RFS–FRRF according to the (5) Applying to be an approved applicable to the foreign renewable fuel designation by the RIN-generating foreign renewable fuel producer under producer under this subpart, including foreign producer if this designation is this section, or producing or exporting conduct that violates the False supported by product transfer renewable fuel under such approval, Statements Accountability Act of 1996 documents prepared by the foreign and all other actions to comply with the (18 U.S.C. 1001) and section 113(c)(2) of producer as required in paragraph (c) of requirements of this subpart relating to the Clean Air Act (42 U.S.C. 7413). this section. such approval constitute actions or (h) Bond posting. Any RIN-generating (2) * * * activities covered by and within the foreign producer shall meet the (ii) Use the RIN-generating foreign meaning of the provisions of 28 U.S.C. following requirements as a condition to producer’s RFS–FRRF certification to 1605(a)(2), but solely with respect to approval as a RIN-generating foreign determine the name and EPA-assigned actions instituted against the foreign producer under this subpart: registration number of the RIN- renewable fuel producer, its agents and (1) * * * generating foreign producer that employees in any court or other tribunal G = the greater of: the largest volume produced the RFS–FRRF. in the United States for conduct that of renewable fuel produced by the RIN- * * * * * violates the requirements applicable to generating foreign producer and (4) * * * the foreign renewable fuel producer exported to the United States, in (ii) The RIN-generating foreign under this subpart, including conduct gallons, during a single calendar year producer, containing the information that violates the False Statements among the five preceding calendar determined under paragraph (k)(2)(i) of Accountability Act of 1996 (18 U.S.C. years, or the largest volume of this section, and including 1001) and section 113(c)(2) of the Clean renewable fuel that the Rin-generating identification of the port at which the Air Act (42 U.S.C. 7413). foreign producers expects to export to product was offloaded, and any RINs (6) The foreign renewable fuel the United States during any calendar retired under paragraph (e)(2) of this producer, or its agents or employees, year identified in the Production section. will not seek to detain or to impose civil Outlook Report required by § 80.1449. If * * * * * or criminal remedies against EPA the volume of renewable fuel exported (l) Truck imports of RFS–FRRF inspectors or auditors for actions to the United States increases above the produced by a RIN-generating foreign performed within the scope of EPA largest volume identified in the producer. (1) Any RIN-generating employment or contract related to the Production Outlook Report during any foreign producer whose RFS–FRRF is provisions of this section. calendar year, the RIN-generating transported into the United States by (7) The commitment required by this foreign producer shall increase the bond truck may petition EPA to use paragraph shall be signed by the owner to cover the shortfall within 90 days. alternative procedures to meet all the or president of the foreign renewable * * * * * following requirements: fuel producer company. (3) * * * * * * * * (8) In any case where renewable fuel (iii) Include a commitment that the (2) * * * produced at a foreign renewable fuel bond will remain in effect for at least (i) Contracts with any facilities that production facility is stored or five years following the end of latest receive and/or transport RFS–FRRF that transported by another company annual reporting period that the RIN- prohibit the commingling of RFS–FRRF between the production facility and the generating foreign producer produces with Non-RFS–FRRF or RFS–FRRF from vessel that transports the renewable fuel renewable fuel pursuant to the other foreign renewable fuel producers. to the United States, the foreign requirements of this subpart. * * * * * renewable fuel producer shall obtain (4) On any occasion a RIN-generating (3) The petition described in this from each such other company a foreign producer bond is used to satisfy section must be submitted to EPA along

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with the application for approval as a (B) That I am aware that the (3) * * * RIN-generating foreign producer under information contained herein is being (i) The independent third-party this subpart. Certified, or submitted to the United auditor shall conduct an on-site visit at (m) * * * States Environmental Protection the renewable fuel production facility or (3) * * * Agency, under the requirements of 40 foreign ethanol production facility: (ii) Obtain the documents used by the CFR part 80, subpart M, and that the * * * * * independent third party to determine information is material for determining (ii) * * * transportation and storage of the RFS– compliance under these regulations; and (B) 380 days after the previous on-site FRRF from the RIN-generating foreign (C) That I have read and understand visit if a previously approved (by EPA) producer’s facility to the load port, the information being Certified or remote monitoring system is in place at under paragraph (d) of this section. submitted, and this information is true, the renewable fuel production facility or Obtain tank activity records for any complete and correct to the best of my foreign ethanol production facility, as storage tank where the RFS–FRRF is knowledge and belief after I have taken applicable. The 380-day period shall stored, and activity records for any reasonable and appropriate steps to start the day after the previous on-site mode of transportation used to transport verify the accuracy thereof.’’ visit ends. the RFS–FRRF prior to being loaded (ii) ‘‘I affirm that I have read and (iii) An on-site visit shall include onto the vessel. Use these records to understand the provisions of 40 CFR verification of all QAP elements that determine whether the RFS–FRRF was part 80, subpart M, including 40 CFR require inspection or evaluation of the produced at the RIN-generating foreign 80.1465 apply to [NAME OF FOREIGN physical attributes of the renewable fuel producer’s facility that is the subject of RENEWABLE FUEL PRODUCER]. production facility or foreign ethanol the attest engagement, and whether the Pursuant to Clean Air Act section 113(c) production facility. RFS–FRRF was mixed with any Non- and 18 U.S.C. 1001, the penalty for RFS–FRRF or any RFS–FRRF produced furnishing false, incomplete or * * * * * ■ at a different facility. misleading information in this 51. Section 80.1475 is added as follows: * * * * * certification or submission is a fine of (6) * * * up to $10,000 U.S., and/or § 80.1475 What are the additional attest (i) Be independent of the RIN- imprisonment for up to five years.’’. engagement requirements for parties that generating foreign producer; (p) Requirements for non-RIN- redesignate certified NTDF as MVNRLM * * * * * generating foreign producer. Any non- diesel fuel? (n) Withdrawal or suspension of RIN-generating foreign producer must (a) General requirements. (1) In foreign renewable fuel producer comply with the requirements of this addition to the attest engagement approval. EPA may withdraw or section beginning on the effective date requirements under § 80.1464, all suspend a foreign renewable fuel of the final rule or prior to EPA obligated parties required to arrange for producer’s approval where any of the acceptance, whichever is later. additional attest engagement procedures ■ following occur: 49. Section 80.1469 is amended by under § 80.1464(a)(1)(vii) must have an (1) A foreign renewable fuel producer revising paragraphs (c)(1)(ii) and (f)(1) annual attest engagement conducted by fails to meet any requirement of this introductory text to read as follows: an auditor using the minimum attest section. § 80.1469 Requirements for Quality procedures specified in this section. * * * * * Assurance Plans. (2) All applicable requirements and (3) A foreign renewable fuel producer * * * * * procedures outlined in §§ 80.125 asserts a claim of, or a right to claim, (c) * * * through 80.127 and § 80.130 apply to sovereign immunity in an action to (1) * * * the auditors and attest engagement enforce the requirements in this subpart. (ii) If applicable, plans under procedures specified in this section. (4) A foreign renewable fuel producer § 80.1426(f)(5)(ii) are accepted and up to (3) Obligated parties must include any fails to pay a civil or criminal penalty date. additional information required under that is not satisfied using the foreign * * * * * this section in the attest engagement renewable fuel producer bond specified (f) * * * report under § 80.1464(d). in paragraph (h) of this section. (1) A new QAP shall be submitted to (4) Report as a finding if the party (o) Additional requirements for EPA according to paragraph (e) of this failed to either incur or satisfy an RVO applications, reports, and certificates. section and the third-party auditor shall if required. Any application for approval as a update their registration according to (b) EPA reports. Auditors must foreign renewable fuel producer, § 80.1450(g)(9) whenever any of the perform the following: alternative procedures under paragraph following changes occur at a production (1) Obtain and read a copy of the (l) of this section, any report, facility audited by a third-party obligated party’s reports filed with EPA certification, or other submission independent auditor and the auditor as required by § 80.1451(a)(1)(xix) for required under this section shall be: does not possess an appropriate the reporting period. * * * * * pathway-specific QAP that encompasses (2) In the case of an obligated party’s (2) Signed by the president or owner the changes: report to EPA that represents aggregate of the foreign renewable fuel producer * * * * * calculations for more than one facility, company, or by that person’s immediate ■ 50. Section 80.1472 is amended by obtain the facility-specific volume and designee, and shall contain the revising paragraphs (b)(3)(i) property information that was used by following declarations: introductory text, (b)(3)(ii)(B), and the refiner to prepare the aggregate (i) ‘‘I hereby certify: (b)(3)(iii) to read as follows: report. Foot and crossfoot the facility- (A) That I have actual authority to specific totals and agree to the values in sign on behalf of and to bind [NAME OF § 80.1472 Requirements for quality the aggregate report. The procedures in FOREIGN RENEWABLE FUEL assurance audits. paragraphs (b) and (c) of this section are PRODUCER] with regard to all * * * * * then performed separately for each statements contained herein; (b) * * * facility.

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(3) Obtain a written representation accordance with the guidelines in of the gasoline or BOB and the sulfur from a company representative that the § 80.127, and for each tender selected content of the added oxygenate report copies are complete and accurate perform the following: pursuant to one of the methods listed in copies of the reports filed with EPA. (i) Obtain product transfer documents paragraphs (d)(1)(i) and (ii) of this (4) Identify, and report as a finding, associated with the tender and agree the section. A refiner or importer must the name of the commercial computer volume on the tender listing to the choose to use only one method during program used by the refiner or importer volume on the product transfer each annual compliance period. to track the data required by the documents. (i) Testing the sulfur content of a regulations in this part, if any. (ii) Note whether the product transfer sample of the oxygenate pursuant to (c) Inventory reconciliation analysis. documents include the information § 80.46 or § 80.47, as applicable. The Auditors must perform the following: required by § 80.590 and, for tenders refiner or importer must demonstrate (1) Obtain an inventory reconciliation involving the transfer of certified NTDF, through records relating to sampling, analysis for the facility for the reporting the information required by testing, and blending that the test result period for each of the following and § 80.1453(e). was derived from a representative perform the procedures at paragraphs (5) Report as a finding any sample of the oxygenate that was (c)(2) through (4) of this section discrepancies. blended with the batch of gasoline or separately for each of the following BOB. products: Subpart N—Additional Requirements (ii) If the oxygenate is denatured fuel (i) The volume of certified NTDF that for Gasoline-Ethanol Blends was redesignated as MVNRLM diesel ethanol, and the sulfur content has not fuel. ■ 52. Section 80.1501 is amended by been tested under paragraph (d)(1)(i) of (ii) The volume of MVNRLM diesel revising the section heading and this section, then the sulfur content fuel that was redesignated to a non- paragraphs (b)(3)(i) and (b)(5)(i) and must be assumed to be 5.00 ppm. transportation use. removing and reserving paragraph (2) For denatured fuel ethanol, the (iii) The volume of MVNRLM diesel (b)(5)(ii). The revisions read as follows: refiner or importer may assume that the fuel owned when the fuel was received denatured fuel ethanol was blended at the facility and acquired at the facility § 80.1501 Labeling requirements that with gasoline or BOB at a concentration apply to retailers and wholesale purchaser- during the compliance period. consumers of gasoline that contains of 10 volume percent, unless the refiner (iv) The volume of MVNRLM diesel greater than 10 volume percent ethanol and or importer can demonstrate that a fuel owned and sold or transferred to not more than 15 volume percent ethanol. different amount of denatured fuel other parties at the facility during the * * * * * ethanol was actually blended with a compliance period. batch of gasoline or BOB. (v) The volume of certified NTDF (b) * * * (3) * * * (i) The refiner or importer of received. conventional gasoline or CBOB must (vi) The volume of certified NTDF (i) The word ‘‘ATTENTION’’ shall be capitalized in 20-point, black, Helvetica comply with the requirements of delivered. § 80.101(d)(4)(ii). (2) Foot and crossfoot the volume Neue LT 77 Bold Condensed font, and (ii) The refiner or importer of totals reflected in the analysis. shall be placed in the top 1.25 inches of (3) Agree the beginning and ending the label as further described in reformulated gasoline or RBOB must inventory amounts in the analysis to the paragraph (b)(4)(iii) of this section. comply with the requirements of facility’s inventory records. * * * * * § 80.69(a). (4) If the obligated party delivered (5) * * * (iii) Any gasoline or BOB must meet more MVNRLM diesel fuel than (i) A request for approval of an the per-gallon sulfur standard of received, agree the annual balance with alternative label shall be sent to the paragraph (a)(2) of this section prior to the reports obtained at § 80.1475(b)(1) attention of ‘‘E15 Alternative Label calculating any dilution from the and verify whether the obligated party Request’’ to the address in § 80.10(a). oxygenate added downstream. incurred and satisfied its RVO under * * * * * (iv) The reported volume of the batch § 80.1408(a)(2)(i). is the combined volume of the (5) Report as a finding each of the Subpart O—Gasoline Sulfur reformulated gasoline, RBOB, volume totals along with any conventional gasoline, or CBOB and the discrepancies. § 80.1600 [Amended] downstream added oxygenate. (d) Listing of tenders. Auditors must ■ 53. Section 80.1600 is amended by * * * * * perform the following: removing the definition for ‘‘Ethanol (f) * * * (1) For each of the volumes listed in denaturant’’. (1) * * * paragraphs (b)(1)(iii) through (b)(1)(vi) ■ 54. Section 80.1603 is amended by: of this section, obtain a separate listing ■ a. Revising paragraph (d)(1); OC = Sulfur credits used by the of all tenders from the refiner or ■ b. Redesignating paragraph (d)(2) as refinery or importer to show importer for the reporting period. Each paragraph (d)(3) and adding a new compliance, in ppm-gallons. listing should provide for each tender paragraph (d)(2); and * * * * * the volume shipped and other ■ c. In the equation in paragraph (f)(1) ■ 55. Section 80.1609 is amended by information as needed to distinguish revising the definition of ‘‘OC’’. The revising the last sentence of paragraph tenders. revisions and addition read as follows: (a) to read as follows: (2) Foot to the volume totals per the listings. § 80.1603 Gasoline sulfur standards for § 80.1609 Oxygenate blender (3) Agree the volume totals on the refiners and importers. requirements. listing to the tender volume total in the * * * * * (a) * * * Such oxygenate blenders are inventory reconciliation analysis (d) * * * subject to the requirements of paragraph obtained in paragraph (b) of this section. (1) The refiner or importer shall (b) of this section, the requirements and (4) For each of the listings select a calculate the sulfur content of the batch prohibitions applicable to downstream representative sample of the tenders in by volume weighting the sulfur content parties, the requirements of

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§ 80.1603(d)(3), and the prohibition (2) Hardship applications under this § 80.1652 Reporting requirements for specified in § 80.1660(e). section must be sent to the attention of gasoline refiners, gasoline importers, ‘‘Tier 3 Program (Hardship oxygenate producers, and oxygenate * * * * * importers. ■ 56. Section 80.1616 is amended by Application)’’ to the address in revising paragraph (c)(3) to read as § 80.10(a). * * * * * follows: ■ 59. Section 80.1650 is amended by (a) * * * revising paragraphs (b)(3), (e)(1)(iii)(A), (7) For each batch of BOB or gasoline § 80.1616 Credit use and transfer. and (g)(1)(iii)(A) to read as follows: produced or imported during the * * * * * averaging period, all the following: (c) * * * § 80.1650 Registration. * * * * * (3) CRT2 credits generated under * * * * * (v) The type and amount of oxygenate, § 80.1615(d) from January 1, 2017, (b) * * * along with identification of the method through December 31, 2019, may only (3) Any oxygenate blender required to used to determine the type and amount be traded to and ultimately used from register shall do so by November 1, of oxygenate content of the batch, as January 1, 2017, through December 31, 2016, or at least 90 days in advance of determined under § 80.1603(d). 2019, by small refiners and small the first date that such person will blend volume refineries approved under oxygenate into gasoline, RBOB, or CBOB (vi) The sulfur content of the § 80.1622. where the resulting gasoline is subject to oxygenate, reported to two decimal ■ 57. Section 80.1622 is amended by the gasoline sulfur standards under this places, along with identification of the revising paragraph (g) to read as follows: subpart O. method used to determine the sulfur content of the oxygenate, as determined § 80.1622 Approval for small refiner and * * * * * under § 80.1603(d). small volume refinery status. (e) * * * * * * * * (1) * * * * * * * * ■ (g) Small refiner and small volume (iii) * * * 61. Section 80.1656 is amended by refinery status applications, and any (A) Whether records are kept on-site revising paragraph (h) to read as other correspondence required by this or off-site of the facility. follows: section, § 80.1620, or § 80.1621 shall be * * * * * § 80.1656 Exemptions for gasoline used sent to the attention of ‘‘Tier 3 Program (g) * * * for research, development, or testing (Small Refiner/Small Volume Refinery (1) * * * purposes. Application)’’ to the address in (iii) * * * * * * * * § 80.10(a). (A) Whether records are kept on-site (h) Submission. Requests for research ■ 58. Section 80.1625 is amended by or off-site of the facility. and development exemptions shall be revising paragraph (c)(2) to read as sent to the attention of ‘‘Tier 3 Program follows: * * * * * ■ 60. Section 80.1652 is amended by (R&D Exemption Request)’’ to the § 80.1625 Hardship provisions. revising paragraph (a)(7) introductory address in § 80.10(a). * * * * * text and adding paragraphs (a)(7)(v) and [FR Doc. 2020–00431 Filed 2–5–20; 8:45 am] (c) * * * (vi) to read as follows: BILLING CODE 6560–50–P

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