32024 Federal Register / Vol. 83, No. 132 / Tuesday, July 10, 2018 / Proposed Rules 
ENVIRONMENTAL PROTECTION 
AGENCY 
40 CFR Part 80 
[EPA–HQ–OAR–2018–0167; FRL–9980–37– 
OAR] 
RIN 2060–AT93 
Renewable Fuel Standard Program: 
Standards for 2019 and Biomass- Based Diesel Volume for 2020 
AGENCY : Environmental Protection 
Agency (EPA). 
ACTION : Proposed rule. 
SUMMARY : Under section 211 of the 
Clean Air Act, the Environmental Protection Agency (EPA) is required to set renewable fuel percentage standards every year. This action proposes the annual percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that apply to gasoline and diesel transportation fuel produced or imported in the year 2019. Relying on statutory waiver authority that is available when the projected cellulosic biofuel production volume is less than the applicable volume specified in the statute, EPA is proposing volume requirements for cellulosic biofuel, advanced biofuel, and total renewable fuel that are below the statutory volume targets. We are also proposing the applicable volume of biomass-based diesel for 2020. 
DATES :
Comments. Comments must be 
received on or before August 17, 2018. 
Public Hearing. EPA will announce 
the public hearing date and location for this proposal in a supplemental Federal Register document. 
ADDRESSES : Submit your comments, 
identified by Docket ID No. EPA–HQ– OAR–2018–0167, at http://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or 
other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/ commenting-epa-dockets. 
FOR FURTHER INFORMATION CONTACT : Julia 
MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734–214–4131; email address: macallister.julia@epa.gov. 
SUPPLEMENTARY INFORMATION : Entities 
potentially affected by this proposed rule are those involved with the production, distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable fuels such as ethanol, biodiesel, renewable diesel, and biogas. Potentially affected categories include: 
Category NAICS1codes SIC2codes 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. 
1North American Industry Classification System (NAICS). 
2Standard Industrial Classification (SIC). 
This table is not intended to be 
exhaustive, but rather provides a guide 
for readers regarding entities likely to be affected by this proposed action. This table lists the types of entities that EPA is now aware could potentially be affected by this proposed action. Other types of entities not listed in the table could also be affected. To determine whether your entity would be affected by this proposed action, you should carefully examine the applicability criteria in 40 CFR part 80. If you have any questions regarding the applicability of this proposed action to a particular entity, consult the person listed in the 
FOR FURTHER INFORMATION  
CONTACT section. 
Outline of This Preamble 
I. Executive Summary 
A. Summary of Major Provisions in This 
Action 1. Approach to Setting Volume 
Requirements 
2. Cellulosic Biofuel 
3. Advanced Biofuel 4. Total Renewable Fuel 5. 2020 Biomass-Based Diesel 6. Annual Percentage Standards B. RIN Market Operations C. EPA Response to Court Decision in 
Americans for Clean Energy v. EPA 
II. Authority and Need for Waiver of 
Statutory Applicable Volumes 
A. Statutory Authorities for Reducing 
Volume Targets 
1. Cellulosic Waiver Authority 
2. General Waiver Authority B. Treatment of Carryover RINs 1. Carryover RIN Bank Size 2. EPA’s Proposed Decision Regarding the 
Treatment of Carryover RINs 
III. Cellulosic Biofuel Volume for 2019 
A. Statutory Requirements B. Cellulosic Biofuel Industry Assessment 1. Potential Domestic Producers 2. Potential Foreign Sources of Cellulosic 
Biofuel 
3. Summary of Volume Projections for 
Individual Companies 
C. Cellulosic Biofuel Volume for 2019 
1. Liquid Cellulosic Biofuel 2. CNG/LNG Derived From Biogas 3. Total Cellulosic Biofuel in 2019 
IV. Advanced Biofuel and Total Renewable 
Fuel Volumes for 2019 
A. Volumetric Limitation on Use of the 
Cellulosic Waiver Authority 
B. Attainable Volumes of Advanced 
Biofuel 
1. Imported Sugarcane Ethanol 
2. Other Advanced Biofuel 3. Biodiesel and Renewable Diesel C. Proposed Volume Requirement for 
Advanced Biofuel 
D. Proposed Volume Requirement for Total 
Renewable Fuel 
V. Impacts of 2019 Volumes on Costs 
A. Illustrative Costs Analysis of Exercising 
the Cellulosic Waiver Authority 
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175 FR 14670, March 26, 2010. 
2Public Law 110–140, 121 Stat. 1492 (2007). 
Hereinafter, ‘‘EISA.’’ 
3The 2019 BBD volume requirement was 
established in the 2018 final rule. 
4For a list of the statutory provisions for the 
determination of applicable volumes, see the 2018 
final rule (82 FR 58486; Table I.A–2). 5Average biodiesel and/or renewable diesel blend 
percentages based on EIA’s April 2018 Short Term 
Energy Outlook (STEO). 
6The statutory total renewable fuel, advanced 
biofuel and cellulosic biofuel requirements for 2019 are 28.0, 13.0 and 8.5 billion gallons respectively. 
This implies a conventional renewable fuel applicable volume (the difference between the total renewable fuel and advanced biofuel volumes, 
which can be satisfied by with conventional (D6) RINs) of 15.0 billion gallons, and a non-cellulosic advanced biofuel applicable volume (the difference between the advanced biofuel and cellulosic biofuel volumes, which can be satisfied with advanced (D5) RINs) of 4.5 billion gallons. Compared to the 2019 Statutory Volumes 
Baseline 
B. Illustrative Costs Analysis of Exercising 
the Cellulosic Waiver Authority Compared to the 2018 RFS Volumes Baseline 
VI. Biomass-Based Diesel Volume for 2020 
A. Statutory Requirements B. Determination of the 2020 Applicable 
Volume of Biomass-Based Diesel 
C. Consideration of Statutory Factors Set 
Forth in CAA Section 211(o)(2)(B)(ii)(I)– (VI) for 2020 
VII. Percentage Standards for 2019 
A. Calculation of Percentage Standards B. Small Refineries and Small Refiners C. Proposed Standards 
VIII. Public Participation 
A. How do I submit comments? B. How should I submit CBI to the Agency? 
IX. Statutory and Executive Order Reviews 
A. Executive Order 12866: Regulatory 
Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review 
B. Executive Order 13771: Reducing 
Regulations and Controlling Regulatory Costs 
C. Paperwork Reduction Act (PRA) D. Regulatory Flexibility Act (RFA) E. Unfunded Mandates Reform Act 
(UMRA) 
F. Executive Order 13132: Federalism G. Executive Order 13175: Consultation 
and Coordination With Indian Tribal Governments 
H. Executive Order 13045: Protection of 
Children From Environmental Health Risks and Safety Risks 
I. Executive Order 13211: Actions 
Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use 
J. National Technology Transfer and 
Advancement Act (NTTAA) 
K. Executive Order 12898: Federal Actions 
To Address Environmental Justice in Minority Populations and Low-Income 
Populations 
X. Statutory Authority 
I. Executive Summary 
The Renewable Fuel Standard (RFS) 
program began in 2006 pursuant to the 
requirements in Clean Air Act (CAA) section 211(o) that were added through the Energy Policy Act of 2005 (EPAct). The statutory requirements for the RFS program were subsequently modified through the Energy Independence and Security Act of 2007 (EISA), leading to the publication of major revisions to the regulatory requirements on March 26, 2010.
1EISA’s stated goals include 
moving the United States (U.S) toward ‘‘greater energy independence and security [and] increase[ing] the production of clean renewable fuels.’’
2 
The statute includes annual volume 
targets, and requires EPA to translate those volume targets (or alternative volume requirements established by EPA in accordance with statutory waiver authorities) into compliance obligations that obligated parties must meet every year. In this action we are proposing the applicable volumes for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2019, and biomass-based diesel (BBD) for 2020.
3 
We are also proposing the annual percentage standards (also known as ‘‘percent standards’’) for cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel that would apply to all gasoline and diesel produced or imported in 2019.
4 
Today, nearly all gasoline used for 
transportation purposes contains 10 percent ethanol (E10), and on average 
diesel fuel contains nearly 5 percent biodiesel and/or renewable diesel.
5 
However, the market has fallen well short of the statutory volumes for cellulosic biofuel, resulting in shortfalls in the advanced biofuel and total renewable fuel volumes. In this action, we are proposing a volume requirement for cellulosic biofuel at the level we project to be available for 2019, along with an associated applicable percentage standard. For advanced biofuel and total renewable fuel, we are proposing reductions under the ‘‘cellulosic waiver authority’’ that would result in advanced biofuel and total renewable fuel volume requirements that are lower than the statutory targets by the same magnitude as the reduction in the cellulosic biofuel reduction. This would effectively maintain the implied statutory volumes for non-cellulosic advanced biofuel and conventional biofuel.
6 
The resulting proposed volume 
requirements for 2019 are shown in Table I–1 below. Relative to the levels finalized for 2018, the 2019 volume requirements for advanced biofuel and total renewable fuel would be higher by 590 million gallons. Approximately 90 million gallons of this increase would be due to the increase in the projected 
production of cellulosic biofuel in 2019 relative to 2018. We are also proposing to establish the volume requirement for BBD for 2020 at 2.43 billion gallons. This volume is 330 million gallons higher than the volume for 2019. 
TABLE I–1—P ROPOSED VOLUME REQUIREMENTSa 
2018b 2019 
Statutory 
volumes 2019 
Proposed 
volumes 2020 
Proposed 
volumes 
Cellulosic biofuel (million gallons) .................................................................... 288 8,500 381 n/a 
Biomass-based diesel (billion gallons) ............................................................ 2.1 ≥1.0 c2.1 2.43 
Advanced biofuel (billion gallons) .................................................................... 4.29 13.00 4.88 n/a 
Renewable fuel (billion gallons) ....................................................................... 19.29 28.00 19.88 n/a 
aAll values are ethanol-equivalent on an energy content basis, except for BBD which is biodiesel-equivalent. 
bThe 2018 volume requirements for cellulosic biofuel, advanced biofuel, and renewable fuel were established in the 2018 final rule (82 FR 
58486, December 12, 2017). The 2018 BBD volume requirement was established in the 2017 final rule (81 FR 89746, December 12, 20 16). 
cThe 2019 BBD volume requirement was established in the 2018 final rule (82 FR 58486, December 12, 2017). 
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7The 2015 BBD standard was based on actual 
data for the first 9 months of 2015 and on 
projections for the latter part of the year for which data on actual use was not available at the time. 
8The proposed 330 million gallon increase for 
BBD would generate approximately 500 million RINs, due to the higher equivalence value of biodiesel (1.5 RINs/gallon) and renewable diesel (generally 1.7 RINs/gallon). A. Summary of Major Provisions in This 
Action 
This section briefly summarizes the 
major provisions of this final rule. We are proposing applicable volume requirements and associated percentage standards for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2019; for BBD we are proposing the percentage standard for 2019 and the applicable volume requirement for 2020. 
1. Approach to Setting Volume 
Requirements 
For advanced biofuel and total 
renewable fuel, we are proposing reductions based on the ‘‘cellulosic waiver authority’’ that would result in advanced biofuel and total renewable fuel volume requirements that are lower than the statutory targets by the same magnitude as the reduction in the cellulosic biofuel applicable volume. This follows the same general approach as in the 2018 final rule. The proposed volumes for cellulosic biofuel, advanced biofuel, and total renewable fuel exceed the required volumes for these fuel types in 2018. 
Section II provides a general 
description of our approach to setting volume requirements in today’s rule, including a review of the statutory waiver authorities and our consideration of carryover RINs. Section III provides our assessment of the 2019 cellulosic biofuel volume, based on a projection of production that reflects a neutral aim at accuracy. Section IV describes our assessment of advanced biofuel and total renewable fuel. Finally, Section VI provides our proposal regarding the 2020 BBD volume requirement, reflecting a proposed analysis of a set of factors stipulated in CAA section 211(o)(2)(B)(ii). 
2. Cellulosic Biofuel 
EPA must annually determine the 
projected volume of cellulosic biofuel 
production for the following year. If the projected volume of cellulosic biofuel production is less than the applicable volume specified in section 211(o)(2)(B)(i)(III) of the statute, EPA must lower the applicable volume used to set the annual cellulosic biofuel percentage standard to the projected production volume. In this rule we are proposing a cellulosic biofuel volume requirement of 381 million ethanol- equivalent gallons for 2019 based on our production projection. Our projection reflects consideration of RIN generation data for past years and 2018 to date that is available to EPA through EMTS; the information we have received regarding 
individual facilities’ capacities, production start dates, and biofuel production plans; a review of cellulosic biofuel production relative to EPA’s projections in previous annual rules; and EPA’s own engineering judgment. To project cellulosic biofuel production for 2019 we used the same basic methodology described in the 2018 final rule. However, we have used updated data to derive percentile values used in our production projection for liquid cellulosic biofuels and to derive the year-over-year change in the rate of production of CNG/LNG derived from biogas that is used in the projection for CNG/LNG. EPA anticipates that our final projection of cellulosic biofuel will be based on additional data we will obtain prior to issuing the final rule, including an estimate of cellulosic biofuel production for 2019 to be provided by the Energy Information Administration (EIA). 
3. Advanced Biofuel 
If we reduce the applicable volume of 
cellulosic biofuel below the volume 
specified in CAA section 211(o)(2)(B)(i)(III), we also have the 
authority to reduce the applicable volumes of advanced biofuel and total renewable fuel by the same or a lesser amount. We refer to this as the ‘‘cellulosic waiver authority.’’ The conditions that caused us to reduce the 2018 volume requirement for advanced biofuel below the statutory target remain relevant in 2019. As for 2018, we investigated the projected availability of non-cellulosic advanced biofuels in 2019. We took into account the various constraints on the ability of the market to make advanced biofuels available, the ability of the standards we set to bring about market changes in the time available, the potential impacts associated with diverting biofuels and/ or biofuel feedstocks from current uses to the production of advanced biofuel used in the U.S., the fact that the biodiesel tax credit is currently not available for 2019, the tariffs on imports of biodiesel from Argentina and Indonesia, as well as the cost of advanced biofuels. Based on these considerations we are proposing to reduce the statutory volume target for advanced biofuel by the same amount as we are reducing the statutory volume target for cellulosic biofuel. This would result in an advanced biofuel volume for 2019 of 4.88 billion gallons, which would be 590 million gallons higher than the advanced biofuel volume for 2018. 4. Total Renewable Fuel 
As for advanced biofuel, we are 
proposing the maximum reduction 
permissible under the cellulosic waiver authority. We are proposing that the reduction in total renewable fuel would be the same as the reduction in advanced biofuel, such that the resulting implied volume requirement for conventional renewable fuel would be 15 billion gallons. 
5. 2020 Biomass-Based Diesel 
In EISA, Congress specified increasing 
applicable volumes of BBD through 
2012. Beyond 2012 Congress stipulated that EPA, in coordination with DOE and USDA, was to establish the BBD volume taking into consideration implementation of the program to date and various specified factors, provided that the required volume for BBD could not be less than 1.0 billion gallons. For 2013, EPA established an applicable volume of 1.28 billion gallons. For 2014 and 2015 we established the BBD volume requirement to reflect the actual volume for each of these years of 1.63 and 1.73 billion gallons.
7For 2016 and 
2017, we set the BBD volume requirements at 1.9 and 2.0 billion gallons respectively. Finally, for 2018 and 2019 the BBD volume requirement was set a 2.1 billion gallons. We are proposing to increase the BBD volume for 2020 to 2.43 billion gallons. 
Given current and recent market 
conditions, the advanced biofuel volume requirement is driving the production and use of biodiesel and renewable diesel volumes over and above volumes required through the separate BBD standard, and we expect this to continue. While EPA continues to believe it is appropriate to maintain the opportunity for other advanced biofuels to compete for market share, the vast majority of the advanced biofuel obligations in recent years have been satisfied with BBD. Thus, after a review of the implementation of the program to date and considering the statutory factors, and in light of the 500 million gallon increase we are proposing for non-cellulosic advanced biofuels, we are proposing, in coordination with USDA and DOE, an applicable volume of BBD for 2020 of 2.43 billion gallons.
8 
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9The final percentage standards will be based on 
the most recent gasoline and diesel projected 
volumes provided by EIA. 10See 80 FR 77420 (December 14, 2015). 6. Annual Percentage Standards 
The renewable fuel standards are 
expressed as a volume percentage and 
are used by each refiner and importer of fossil-based gasoline or diesel to determine their renewable fuel volume obligations. 
Four separate percentage standards 
are required under the RFS program, corresponding to the four separate renewable fuel categories shown in Table I.A–1. The specific formulas we use in calculating the renewable fuel percentage standards are contained in the regulations at 40 CFR 80.1405. The percentage standards represent the ratio of the national applicable volume of renewable fuel volume to the national projected non-renewable gasoline and diesel volume less any gasoline and diesel attributable to small refineries granted an exemption prior to the date that the standards are set. The volume of transportation gasoline and diesel used to calculate the proposed percentage standards was based on the April 2018 version of EIA’s Short-Term Energy Outlook.
9The proposed 
percentage standards for 2019 are shown in Table I.B.6–1. Detailed calculations can be found in Section VII, including the projected gasoline and diesel volumes used. 
TABLE I.B.6–1—P ROPOSED 2019 
PERCENTAGE STANDARDS  
Proposed 
percentage 
standards 
Cellulosic biofuel ................... 0.209 
Biomass-based diesel .......... 1.72 
Advanced biofuel .................. 2.67 
Renewable fuel ..................... 10.88 
B. RIN Market Operations 
In the rulemaking notice proposing 
the 2018 RFS volume requirements, EPA noted that various stakeholders had raised concerns regarding lack of transparency and potential manipulation in the RIN market. We asked for comment from the public on those issues, and received multiple suggestions from stakeholders in response. Commenters suggested a number of potential steps EPA could take, including increasing the public availability of data related to the RIN market; establishing new regulations relating to the purchase, ownership, and retirement of RINs; and increasing coordination with sister federal agencies. Since receiving those comments, we have held additional 
meetings with stakeholders on these topics, through which we have continued to hear various perspectives on RIN market operations and potential changes. 
A number of the comments received 
in response to the 2018 NPRM suggested increasing the amount of data related to the RIN market that EPA makes publicly available. For example, commenters urged EPA to consider increasing the frequency at which currently available information is posted. EPA is currently exploring the possibility of posting regular updates to the number of RINs we anticipate will be required for compliance. These updates could take into account several factors, such as updated information on gasoline and diesel consumption throughout the year, the impact of small refinery exemptions, and the volume of renewable fuel exported from the United States for which RINs were generated, and would thus need to be retired. EPA is also considering publicly posting average RIN prices based on the price information submitted to EPA through EMTS. Other information that may be of interest to the public could be aggregated information related to the number of RINs held by different categories of entities, such as renewable fuel producers, obligated parties, and parties that neither produce renewable fuel nor have an RVO under the RFS program. Finally, we are considering whether there may be value in increasing the frequency of the release of data that is already posted publicly, such as information related to RIN generation by D-code and fuel type. 
Stakeholders have also suggested 
ways EPA could amend the RFS regulations to change rules related to who may purchase RINs, the duration for which RINs could be held, and other rules related to the buying, selling, or holding of RINs. The goal of such changes would be to minimize or eliminate potential manipulation in the market. EPA is currently considering a handful of ideas, including: Prohibiting parties other than obligated parties from purchasing separated RINS; requiring public disclosure if a party holds a certain percentage of the RIN market; and/or requiring obligated parties to retire RINs for compliance purposes on a more frequent basis (e.g., requiring 
monthly compliance). EPA requests comment on the expected impact that these specific potential regulatory changes could have on the RIN market, positively or negatively, as well as on any other potential regulatory changes 
commenters may recommend to address perceived vulnerabilities in the RIN market. Today’s action is not proposing 
to make any such regulatory changes. Should EPA decide to move forward on any of these ideas, we would do so through a separate proposed rulemaking. That rulemaking would be informed by comments received in response to today’s notice. 
Finally, we note that multiple 
stakeholders have encouraged cooperation and coordination between EPA and other federal agencies that may play an oversight role in the RFS or broader fuels market, including the Commodity Futures Trading Commission and the Federal Trade Commission. EPA has engaged with both agencies on an ongoing basis and will continue to do so. 
C. EPA Response to Court Decision in 
Americans for Clean Energy v. EPA 
In the annual rule establishing the 
2014–2016 renewable fuel standards, we determined that there would be an ‘‘inadequate domestic supply’’ of renewable fuel to consumers in 2016, and so exercised the general waiver authority to reduce the applicable volume of total renewable fuel to a level we believed could be supplied.
10In 
response to a petition for review of the 2014–2016 rule, the United States Court of Appeals for the District of Columbia Circuit ruled that EPA improperly focused on assessing the supply of renewable fuel to consumers, and that the statute instead requires a ‘‘supply- side’’ assessment of the volumes of renewable fuel that can be supplied to refiners, importers and blenders. The court vacated EPA’s decision to reduce the total renewable fuel volume requirements for 2016 using general waiver authority, and remanded the rule to EPA for further consideration in light of the decision. Americans for Clean Energy (‘‘ACE’’) v. EPA, 864 F.3d 691 
(2017). 
EPA is currently considering a 
number of issues raised by the need to 
respond to the court’s remand in a separate process from this annual rulemaking. EPA is not requesting comment on this rulemaking process at this time and any comments on this issue will be treated as outside of the scope of this rulemaking. EPA understands that there is a compelling need to respond to the remand and intends to expeditiously move ahead with a separate rule to resolve this matter. 
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11The statutory total renewable fuel, advanced 
biofuel and cellulosic biofuel requirements for 2019 
are 28.0, 13.0, and 8.5 billion gallons, respectively. This implies a conventional renewable fuel applicable volume (the difference between the total renewable fuel and advanced biofuel volumes, which can be satisfied by with conventional (D6) RINs) and a non-cellulosic advanced biofuel applicable volume (the difference between the advanced biofuel and cellulosic biofuel volumes, which can be satisfied with advanced (D5) RINs) of 15.0 and 4.5 billion gallons, respectively. 
12See 81 FR 89752–89753 (December 12, 2016). 
13See 80 FR 77433–34 (December 14, 2015). 14ACE, 864 F.3d at 730. 
15Id. at 733. 
16Id. 
17Id. at 734. II. Authority and Need for Waiver of 
Statutory Applicable Volumes 
The CAA provides EPA with the 
authority to enact volume requirements below the applicable volume targets specified in the statute under specific circumstances. This section discusses those authorities. As described in the executive summary, we are proposing a single volume requirement for cellulosic biofuel at the level we project to be available for 2019, and an associated applicable percentage standard. For advanced biofuel and total renewable fuel, we are proposing volume requirements and associated applicable percent standards, based on use of the ‘‘cellulosic waiver authority’’ that would result in advanced biofuel and total renewable fuel volume requirements that are lower than the statutory targets by the same magnitude as the reduction in the cellulosic biofuel reduction. This would effectively maintain the implied statutory volumes for non-cellulosic advanced biofuel and conventional biofuel.
11 
A. Statutory Authorities for Reducing Volume Targets 
In CAA section 211(o)(2), Congress 
specified increasing annual volume targets for total renewable fuel, advanced biofuel, and cellulosic biofuel for each year through 2022, and for BBD through 2012, and authorized EPA to set volume requirements for subsequent years in coordination with USDA and DOE, and after consideration of specified factors. However, Congress also recognized that under certain circumstances it would be appropriate for EPA to set volume requirements at a lower level than reflected in the statutory volume targets, and thus provided waiver provisions in CAA section 211(o)(7). 
1. Cellulosic Waiver Authority 
Section 211(o)(7)(D)(i) of the CAA 
provides that if EPA determines that the 
projected volume of cellulosic biofuel production for a given year is less than the applicable volume specified in the statute, then EPA must reduce the 
applicable volume of cellulosic biofuel required to the projected production volume for that calendar year. In making this projection, EPA may not ‘‘adopt a 
methodology in which the risk of overestimation is set deliberately to outweigh the risk of underestimation’’ but must make a projection that ‘‘takes neutral aim at accuracy.’’ API v. EPA, 
706 F.3d 474, 479, 476 (D.C. Cir. 2013). Pursuant to this provision, EPA has set the cellulosic biofuel requirement lower than the statutory volume for each year since 2010. As described in Section III.D, the projected volume of cellulosic biofuel production for 2019 is less than the 8.5 billion gallon volume target in the statute. Therefore, for 2019, we are proposing to set the cellulosic biofuel volume requirement at a level lower than the statutory applicable volume, in accordance with this provision. 
CAA section 211(o)(7)(D)(i) also 
provides EPA with the authority to reduce the applicable volume of total renewable fuel and advanced biofuel in years when it reduces the applicable volume of cellulosic biofuel under that provision. The reduction must be less than or equal to the reduction in cellulosic biofuel. For 2019, we are also proposing to reduce the applicable volumes of advanced biofuel and total renewable fuel under this authority. 
EPA has used the cellulosic waiver 
authority to lower the cellulosic biofuel, advanced biofuel and total renewable fuel volumes every year since 2014. Further discussion of the cellulosic waiver authority, and EPA’s interpretation of it, can be found in the preamble to the 2017 final rule.
12See 
also API v. EPA, 706 F.3d 474 (D.C. Cir. 
2013) (requiring that EPA’s cellulosic biofuel projections reflect a neutral aim at accuracy); Monroe Energy v. EPA, 750 
F.3d 909 (D.C. Cir. 2014) (affirming 
EPA’s broad discretion under the cellulosic waiver authority to reduce volumes of advanced biofuel and total renewable fuel); Americans for Clean Energy v. EPA (‘‘ACE’’), 864 F.3d 691 
(D.C. Cir. 2017) (discussed below). 
In ACE, the court evaluated EPA’s use 
of the cellulosic waiver authority in the 2014–2016 annual rulemaking to reduce the advanced biofuel and total renewable fuel volumes for 2014, 2015, and 2016. There, EPA used the cellulosic waiver authority to reduce the advanced biofuel volume to a level that was reasonably attainable, and then provided a comparable reduction under this authority for total renewable fuel.
13 
The Court of Appeals for the District of Columbia, relying on the analysis in Monroe Energy, reaffirmed that EPA enjoys ‘‘broad discretion’’ under the cellulosic waiver authority ‘‘to consider a variety of factors—including demand- 
side constraints in the advanced biofuels market.’’
14The Court noted 
that the only textual limitation on the use of the cellulosic waiver authority is that it cannot exceed the amount of the reduction in cellulosic biofuel.
15The 
Court contrasted the general waiver authority under CAA section 211(o)(7)(A) and the biomass based diesel waiver authority under CAA section 211(o)(7)(E), which ‘‘detail the considerations and procedural steps that EPA must take before waiving fuel requirements,’’ with the cellulosic waiver authority, which identifies no factors regarding reductions in advanced and total renewable fuel other than the limitation that any such reductions may not exceed the reduction in cellulosic biofuel volumes.
16The Court also concluded 
that the scope of EPA’s discretionary authority to reduce advanced and total volumes is the same under the cellulosic waiver provision whether EPA is declining to exercise its authority to waive volumes, or choosing to do so.
17 
In this action we are proposing to use 
the cellulosic waiver authority to reduce the statutory volume targets for advanced biofuels and total renewable fuel by equal amounts, consistent with our long-held interpretation of this provision and our approach in setting the 2014–2018 standards. This approach considers the Congressional objectives reflected in the volume tables in the 
statute, and the environmental objectives that generally favor the use of advanced biofuels over non-advanced biofuels. See 81 FR 89752–89753 (December 12, 2016). See also 78 FR 49809–49810 (August 15, 2013); 80 FR 77434 (December 14, 2015). We are proposing, as described in Section IV, that the applicable volume for advanced biofuels specified in the statute for 2019 is not attainable, and thus to exercise our cellulosic waiver authority to lower the applicable volume of advanced biofuel by the same quantity as the reduction in cellulosic biofuel, and to provide an equal reduction under the cellulosic waiver authority in the applicable volume of total renewable fuel. The volumes of advanced and total renewable fuel resulting from this exercise of the cellulosic waiver authority provide for an implied volume allowance for conventional biofuel of fifteen billion gallons, equal to the implied statutory volume for 2019. 
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18CAA section 211(o)(5) requires that EPA 
establish a credit program as part of its RFS 
regulations, and that the credits be valid to show compliance for 12 months as of the date of generation. EPA implemented this requirement though the use of RINs, which can be used to demonstrate compliance for the year in which they are generated or the subsequent compliance year. Obligated parties can obtain more RINs than they need in a given compliance year, allowing them to ‘‘carry over’’ these excess RINs for use in the subsequent compliance year, although use of these carryover RINs is limited to 20 percent of the obligated party’s RVO. For the bank of carryover RINs to be preserved from one year to the next, individual carryover RINs are used for compliance before they expire and are essentially replaced with newer vintage RINs that are then held for use in the next year. For example, if the volume of the collective carryover RIN bank is to remain unchanged from 2017 to 2018, then all of the vintage 2017 carryover RINs must be used for compliance in 2018, or they will expire. However, the same volume of 2018 RINs can then be ‘‘banked’’ for use in 2019. 
19See 80 FR 77482–87 (December 14, 2015), 81 
FR 89754–55 (December 12, 2016), and 82 FR 58493–95 (December 12, 2017). 
20See 72 FR 23900 (May 1, 2007), 80 FR 77482– 
87 (December 14, 2015), 81 FR 89754–55 (December 12, 2016), and 82 FR 58493–95 (December 12, 2017). 
21See 79 FR 49793–95 (August 15, 2013). 
22Monroe Energy v. EPA, 750 F.3d 909 (D.C. Cir. 
2014), ACE at 713. 23Here we use the term ‘‘buffer’’ as shorthand 
reference to all of the benefits that are provided by 
a sufficient bank of carryover RINs. 
24See 82 FR 58494 (December 12, 2017). 
25The calculations performed to estimate the 
number of carryover RINs currently available can be found in the memorandum, ‘‘Carryover RIN Bank Calculations for 2019 NPRM,’’ available in the docket. 
26Per PESRM’s bankruptcy filings, PESRM had an 
RVO of 467 million RINs for 2017 (including its deficit carryforward from 2016). Pursuant to the settlement agreement, which was based on the unique facts and circumstances present in this case, including the insolvency and risk of liquidation, PESRM agreed to retire 138 million RINs to meet its 2017 RVO and the portion of its 2018 RVO during the bankruptcy proceedings (approximately 97 million RINs). See docket for PES Holdings, LLC, 1:18bk10122, ECF Document Nos. 244 (proposed 
settlement agreement), 347 (United States’ motion 
Continued 2. General Waiver Authority 
Section 211(o)(7)(A) of the CAA 
provides that EPA, in consultation with 
the Secretary of Agriculture and the Secretary of Energy, may waive the applicable volumes specified in the Act in whole or in part based on a petition by one or more States, by any person subject to the requirements of the Act, or by the EPA Administrator on his own motion. Such a waiver must be based on a determination by the Administrator, after public notice and opportunity for comment that: (1) Implementation of the requirement would severely harm the economy or the environment of a State, a region, or the United States; or (2) there is an inadequate domestic supply. At this time, we do not believe that the circumstances exist that would justify a waiver of volumes under the general waiver authority. 
As discussed further in Section IV.C 
below, EPA is soliciting comment on whether further reductions under the general waiver authority could be justified. 
B. Treatment of Carryover RINs 
Consistent with our approach in the 
final rules establishing the RFS 
standards for 2013 through 2018, we have also considered the availability and role of carryover RINs in evaluating whether we should exercise our discretion to use our waiver authorities in setting the cellulosic, advanced, and total volume requirements for 2019. Neither the statute nor EPA regulations specify how or whether EPA should consider the availability of carryover RINs in exercising the cellulosic waiver authority.
18As noted in the context of 
the rules establishing the RFS standards for 2014 through 2018, we believe that a bank of carryover RINs is extremely important in providing obligated parties compliance flexibility in the face of 
substantial uncertainties in the transportation fuel marketplace, and in providing a liquid and well-functioning RIN market upon which success of the entire program depends.
19Carryover 
RINs provide flexibility in the face of a variety of circumstances that could limit the availability of RINs, including weather-related damage to renewable fuel feedstocks and other circumstances potentially affecting the production and distribution of renewable fuel.
20On the 
other hand, carryover RINs can be used for compliance purposes, and in the context of the 2013 RFS rulemaking we noted that an abundance of carryover RINs available in that year, together 
with possible increases in renewable fuel production and import, justified maintaining the advanced and total renewable fuel volume requirements for that year at the levels specified in the statute.
21EPA’s approach to the 
consideration of carryover RINs in exercising our cellulosic waiver authority was affirmed in Monroe Energy and ACE.
22 
An adequate RIN bank serves to make 
the RIN market liquid. Just as the economy as a whole functions best when individuals and businesses prudently plan for unforeseen events by maintaining inventories and reserve money accounts, we believe that the RFS program functions best when sufficient carryover RINs are held in reserve for potential use by the RIN holders themselves, or for possible sale to others that may not have established their own carryover RIN reserves. Were there to be no RINs in reserve, then even minor disruptions causing shortfalls in renewable fuel production or distribution, or higher than expected transportation fuel demand (requiring greater volumes of renewable fuel to comply with the percentage standards that apply to all volumes of transportation fuel, including the unexpected volumes) could lead to the need for a new waiver of the standards, undermining the market certainty so critical to the RFS program. Moreover, a significant drawdown of the carryover RIN bank leading to a scarcity of RINs may stop the market from functioning in an efficient manner (i.e., one in which 
there are a sufficient number of reasonably available RINs for obligated 
parties seeking to purchase them), even where the market overall could satisfy the standards. For all of these reasons, the collective carryover RIN bank provides a needed programmatic buffer that both facilitates individual compliance and provides for smooth overall functioning of the program.
23 
1. Carryover RIN Bank Size 
At the time of the 2018 standards final 
rule, we estimated that there were approximately 2.22 billion total carryover RINs available and decided that carryover RINs should not be counted on to avoid or minimize the need to reduce the 2018 statutory volume targets.
24We also stated that we 
may or may not take a similar approach in future years, and that we would evaluate the issue on a case-by-case basis considering the facts in future years. Since that time, obligated parties have submitted their compliance demonstrations for the 2017 compliance year and we now estimate that there are currently approximately 3.06 billion total carryover RINs available, an increase of 840 million RINs from the previous estimate of 2.22 billion total carryover RINs in the 2018 final rule.
25 
This increase in the total carryover RIN bank compared to that projected in the 2018 final rule results from various factors, including market factors, regulatory and enforcement actions, and judicial proceedings. They include the approximately 1,460 million RINs that were not required to be retired by small refineries that were granted hardship exemptions for 2017 and approximately 790 million RINs that were not required to be retired by small refineries that were granted hardship exemptions for 2016, along with the RINs that Philadelphia Energy Solutions Refining and Marketing, LLC (‘‘PESRM’’) was not required to retire as part of its bankruptcy settlement agreement.
26 
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to approve proposed settlement agreement), and 
376 (order approving proposed settlement agreement), (Bankr. D. Del.). 
27See 40 CFR 80.1427(a)(5). 
28See ‘‘Carryover RIN Bank Calculations for 2018 
Final Rule,’’ Docket Item No. EPA–HQ–OAR–2017– 0091–4989. 
29The calculations performed to estimate the 
number of carryover RINs currently available can be found in the memorandum, ‘‘Carryover RIN Bank Calculations for 2019 NPRM,’’ available in the docket. 
30See 40 CFR 80.1427(a)(5). 31The majority of the cellulosic RINs generated 
for CNG/LNG are sourced from biogas from 
landfills; however, the biogas may come from a variety of sources including municipal wastewater 
treatment facility digesters, agricultural digesters, separated MSW digesters, and the cellulosic components of biomass processed in other waste digesters. While EPA cannot predict how 
obligated parties will comply in 2018 or the amount of additional small refinery hardship exemptions that may be granted in the future, the 2016 and 2017 exemptions have directly increased the number of carryover RINs that will likely be available for compliance with the 2019 standards. This total volume of carryover RINs is approximately 15 percent of the total renewable fuel volume requirement that EPA is proposing for 2019, which is less than the 20 percent maximum limit permitted by the regulations to be carried over for use in complying with the 2019 standards.
27 
The above discussion applies to total 
carryover RINs; we have also considered the available volume of advanced biofuel carryover RINs. At the time of the 2018 final rule, we estimated that there were approximately 810 million advanced carryover RINs available.
28 
Since that time, obligated parties have submitted their compliance demonstrations for the 2017 compliance year and we now estimate that there are currently approximately 640 million advanced carryover RINs available, a decrease of 170 million RINs from the previous estimate in the 2018 final rule.
29This volume of advanced 
carryover RINs is approximately 14 percent of the advanced renewable fuel volume requirement that EPA is proposing for 2019, which is less than the 20 percent maximum limit permitted by the regulations to be carried over for use in complying with the 2019 standards.
30 However, there remains considerable 
uncertainty surrounding these estimates 
for a number of reasons, including the potential impact of any future action to address the remand in ACE, the 
possibility of additional small refinery exemptions, and the impact of 2018 RFS compliance on the bank of carryover RINs. In addition, we note that there have been enforcement actions in past years that have resulted in the retirement of carryover RINs to make up for the generation and use of invalid RINs and/or the failure to retire RINs for exported renewable fuel. Future enforcement actions could have similar results, and require that obligated parties and/or renewable fuel exporters settle past enforcement-related obligations in addition to the annual standards, thereby potentially creating demand for RINs greater than can be accommodated through actual renewable fuel blending in 2019. In light of these uncertainties, the net result could be a bank of total carryover RINs larger or smaller than 15 percent of the proposed 2019 total renewable fuel volume requirement, and a bank of advanced carryover RINs larger or smaller than 14 percent of the proposed 2019 advanced biofuel volume requirement. 
2. EPA’s Proposed Decision Regarding 
the Treatment of Carryover RINs 
We have evaluated the volume of 
carryover RINs currently available and considered whether it would justify a reduced use of our cellulosic waiver authority in setting the 2019 volume requirements in order to intentionally draw down the carryover RIN bank. For the reasons described above and in Section IV, we do not believe this to be the case. The current bank of carryover RINs provides an important and necessary programmatic buffer that will both facilitate individual compliance and provide for smooth overall functioning of the program. We believe that a balanced consideration of the possible role of carryover RINs in 
achieving the statutory volume objectives for advanced and total renewable fuels, versus maintaining an adequate bank of carryover RINs for important programmatic functions, is appropriate when EPA exercises its discretion under the cellulosic waiver authority, and that the statute does not specify the extent to which EPA should require a drawdown in the bank of carryover RINs when it exercises this authority. Therefore, for the reasons noted above and consistent with the approach we took in the final rules establishing the RFS standards for 2014 through 2018, we are not proposing to set the 2019 volume requirements at levels that would envision an intentional drawdown in the bank of carryover RINs. 
III. Cellulosic Biofuel Volume for 2019 
In the past several years, production 
of cellulosic biofuel has continued to 
increase. Cellulosic biofuel production reached record levels in 2017, driven largely by CNG and LNG derived from biogas. Production volumes have continued to increase in 2018.
31 
Production of liquid cellulosic biofuel has also increased in recent years, even as the total production of liquid cellulosic biofuels remains much smaller than the production volumes of CNG and LNG derived from biogas. This section describes our assessment of the volume of cellulosic biofuel that we project will be produced or imported into the U.S. in 2018, and some of the uncertainties associated with those volumes. 
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32CAA section 211(o)(7)(D)(i). The U.S. Court of 
Appeals for the District of Columbia Circuit 
evaluated this requirement in API v. EPA, 706 F.3d 
474, 479–480 (D.C. Cir. 2013), in the context of a challenge to the 2012 cellulosic biofuel standard. The Court stated that in projecting potentially available volumes of cellulosic biofuel EPA must apply an ‘‘outcome-neutral methodology’’ aimed at providing a prediction of ‘‘what will actually 
happen.’’ Id. at 480, 479. 
33CAA section 211(o)(7)(D)(i). 
34See CAA section 211(o)(7)(D)(ii); 40 CFR 
80.1456. 
In order to project the volume of 
cellulosic biofuel production in 2019, 
we considered the accuracy of the methodologies used to project cellulosic biofuel production in previous years, data reported to EPA through EMTS, and information we collected through meetings with representatives of facilities that have produced or have the potential to produce qualifying volumes of cellulosic biofuel for consumption as transportation fuel, heating oil, or jet fuel in the U.S. in 2019. Our projection of cellulosic biofuel in the final rule will also reflect Energy Information Administration’s (EIA) projection of cellulosic biofuel production, comments received on the 2019 NPRM, and updated data on cellulosic biofuel production in 2018 and projections for 2019. 
There are two main elements to the 
cellulosic biofuel production projection. To project the range of potential production volumes of liquid cellulosic biofuel we used the same methodology as the methodology used in the 2018 final rule. However, we have adjusted the percentile values used to select a point estimate within a projected production range for each group of companies based on updated information (through the end of 2017) with the objective of improving the accuracy of the projections. To project the production of cellulosic biofuel RINs for CNG/LNG derived from biogas we use the same year-over-year growth rate methodology as in the 2018 final rule. This methodology reflects the mature status of this industry, the large number of facilities registered to 
generate cellulosic biofuel RINs from these fuels, and EPA’s continued attempts to refine its methodology to yield estimates that are as accurate as possible. This methodology is an improvement on the methodology that EPA used to project cellulosic biofuel production for CNG/LNG derived from biogas in the 2017 and previous years. The methodologies used to project the production of liquid cellulosic biofuels and cellulosic CNG/LNG derived from biogas are described in more detail in Sections III.C–1 and III.C–2 below. 
After a brief description of the 
statutory requirements in Section III.A, we discuss the companies the EPA reviewed in the process of projecting qualifying cellulosic biofuel production 
in the U.S. in 2018 in Section III.B. Section III.C discusses the methodologies used by EPA to project cellulosic biofuel production in 2019 and the resulting projection of 381 million ethanol-equivalent gallons. 
A. Statutory Requirements 
CAA section 211(o)(2)(B)(i)(III) states 
the statutory volume targets for 
cellulosic biofuel. The volume of cellulosic biofuel specified in the statute for 2019 is 8.5 billion gallons. The statute provides that if EPA determines, based on a letter provided to the EPA by EIA, that the projected volume of cellulosic biofuel production in a given year is less than the statutory volume, then EPA shall reduce the applicable volume of cellulosic biofuel to the projected volume available during that 
calendar year.
32 
In addition, if EPA reduces the 
required volume of cellulosic biofuel below the level specified in the statute, we may reduce the applicable volumes of advanced biofuels and total renewable fuel by the same or a lesser volume,
33and we are also required to 
make cellulosic waiver credits available.
34Our consideration of the 
2019 volume requirements for advanced biofuel and total renewable fuel is presented in Section IV. 
B. Cellulosic Biofuel Industry 
Assessment 
In order to project liquid cellulosic 
biofuel production for 2019 we have tracked the progress of a number of potential cellulosic biofuel production facilities, located both in the U.S. and in foreign countries. As we have done in previous years, we have focused on facilities with the potential to produce commercial-scale volumes of cellulosic biofuel rather than small research and development (R&D) or pilot-scale facilities. Larger commercial-scale facilities are much more likely to 
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35While a few small R&D and pilot scale facilities 
have registered as cellulosic RIN generators, total 
production from each of these facilities from 2011 through March 2018 has been less than 150,000 RINs. This is approximately 0.6 percent of all liquid cellulosic biofuel production through March 2018. See ‘‘D3 RIN generation by Company Through March 2018—CBI.’’ 36This methodology is most recently described in 
the 2017 final rule. See 81 FR 89746, 89755 
(December 12, 2016). 
37EPA only projected cellulosic biofuel 
production for the final three months of 2015, since data on the availability of cellulosic biofuel RINs (D3+D7) for the first nine months of the year were 
available at the time the analyses were completed for the final rule. 
38EPA projected that 123 million, 230 million 
cellulosic, and 311 million RINs would be generated in 2015, 2016, and 2017 respectively. The number of available cellulosic RINs in these years (RINs generated minus RINs retired for non- compliance reasons) was 140 million, 190 million, and 250 million RINs. All numbers are derived from EMTS data. 
3982 FR 58486 (December 12, 2017). 40The volume projection from CNG/LNG 
producers does not represent production from a single company or facility, but rather a group of facilities utilizing the same production technology. 
41According to data from Argus Media, the price 
for 2017 cellulosic biofuel RINs averaged $2.78 in 2017. Alternatively, obligated parties can obtain a RIN value equivalent to a cellulosic biofuel RIN by purchasing an advanced (or biomass-based diesel) RIN and a cellulosic waiver credit. The price for 2017 advanced biofuel RINs averaged $0.99 in 2017 while the price for a 2017 cellulosic waiver credit is $2.00 (EPA–420–B–17–036). generate RINs for the fuel they produce 
and the volumes they produce will have a far greater impact on the cellulosic biofuel standard for 2019. The volume of cellulosic biofuel produced from R&D and pilot-scale facilities is small in relation to that expected from the commercial-scale facilities. R&D and demonstration-scale facilities have also generally not generated RINs for the fuel they have produced in the past. Their focus is on developing and demonstrating the technology, not producing commercial volumes. RIN generation from R&D and pilot-scale facilities in previous years has not contributed significantly to the overall number of cellulosic RINs generated.
35 
We have therefore not considered production from R&D and pilot-scale facilities in our projection of cellulosic biofuel production for 2019. 
From this list of commercial-scale 
facilities capable of producing liquid cellulosic biofuel, we used information from EMTS, the registration status of potential biofuel production facilities as cellulosic biofuel producers in the RFS program, publicly available information (including press releases and news reports), and information provided by representatives of potential cellulosic 
biofuel producers, to make a determination of which facilities are most likely to produce liquid cellulosic biofuel and generate cellulosic biofuel RINs in 2019. Each of these companies was investigated further in order to determine the current status of its facilities and its likely cellulosic biofuel production and RIN generation volumes for 2019. Both in our discussions with representatives of individual companies and as part of our internal evaluation process we gathered and analyzed information including, but not limited to, the funding status of these facilities, current status of the production technologies, anticipated construction and production ramp-up periods, facility registration status, and annual fuel production and RIN generation targets. 
As an initial matter, it is useful to 
review the accuracy of EPA’s past cellulosic biofuel projections. EPA used a consistent methodology to project cellulosic biofuel production in the final three months of 2015 and all of 2016 and 2017.
36The record of actual 
production indicates that EPA’s 
projection was lower than the actual number of cellulosic RINs made available in 2015,
37and higher than the 
actual number of RINs made available in 2016 and 2017.
38The fact that the 
projections made using this methodology have been somewhat inaccurate, under-estimating the actual number of RINs made available in 2015 and over-estimating in 2016 and 2017, reflects the inherent difficulty with projecting cellulosic biofuel production. It also emphasizes the importance of continuing to make refinements to our projection methodology in order to make our projections more accurate. 
EPA’s projections of liquid cellulosic 
biofuel were higher than the actual volume of liquid cellulosic biofuel produced in 2015–2017. As a result of these over-projections, and in an effort to take into account the most recent data available and make the liquid cellulosic biofuel projections more accurate, EPA adjusted our methodology in the 2018 final rule.
39In this 2019 proposed rule 
we are once again using adjusted percentile values to project liquid cellulosic biofuel production based on actual liquid cellulosic biofuel production in 2016 and 2017. Use of this updated data also results in different percentile values than we used to project production of liquid cellulosic biofuel for 2018. We believe that the use of the methodology (described in Section III.C.1 below), with the adjusted percentile values used to project production volumes for liquid cellulosic biofuels, results in a projection that reflects a neutral aim at accuracy since it accounts for expected growth in the near future by using historical data that is free of any subjective bias. At this time, we do not have sufficient data to assess the accuracy of this methodology to project cellulosic biofuel production for 2018, however we anticipate that for the final rule we will assess the accuracy of this methodology in projecting liquid cellulosic biofuel in 2018 and will make adjustments where appropriate. 
We next turn to the projection of 
CNG/LNG derived from biogas. For 2018, EPA used for the first time an industry-wide approach, rather than an approach that projects volumes for individual companies or facilities, to project the production of CNG/LNG derived from biogas. This updated approach reflects the fact that this 
industry is far more mature than the liquid cellulosic biofuel industry, and that there are a large number of facilities registered to generate cellulosic biofuel RINs from biogas, rendering a facility- by-facility analysis difficult and unnecessary for purposes of accuracy. As described in Section III.C.2 below, EPA is again proposing to project production of CNG/LNG derived from biogas by calculating a year-over-year rate of growth in the renewable CNG/ LNG industry by comparing RIN generation for CNG/LNG derived from biogas from April 2016–March 2017 to the RIN generation for these same fuels from April 2017–March 2018 (the most recent month for which data are available). We then apply this year-over- year growth rate to the total number of cellulosic RINs available for compliance from CNG/LNG in 2017 (the most recent year for which complete data are available), to estimate the production of CNG/LNG derived from biogas in 2019. 
The remainder of this section 
describes in more detail the methodology EPA is using to project cellulosic biofuel production in 2019 (including a review of cellulosic biofuel production and the accuracy of the projection methodology in previous years). 
1. Potential Domestic Producers 
There are several companies and 
facilities
40located in the U.S. that have 
either already begun producing 
cellulosic biofuel for use as transportation fuel, heating oil, or jet fuel at a commercial scale, or are anticipated to be in a position to do so at some time during 2019. The financial incentive provided by cellulosic biofuel RINs,
41combined with the fact that to 
date nearly all cellulosic biofuel 
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42The only known exception was a small volume 
of fuel produced at a demonstration scale facility 
exported to be used for promotional purposes. 
43Most of the facilities listed in Table III.B.3–1 
are registered to produce cellulosic (D3 or D7) RINs with the exception of several of the producers of CNG/LNG derived from biogas and Ensyn’s Port- Cartier, Quebec facility. 
44‘‘Cellulosic Biofuel Producer Company 
Descriptions (May 2018),’’ memorandum from Dallas Burkholder to EPA Docket EPA–HQ–OAR– 2018–0167. 45EPA has consistently interpreted the term 
‘‘projected volume of cellulosic biofuel production’’ in CAA section 211(o)(7)(D)(i) to include volumes of cellulosic biofuel likely to be made available in the U.S., including from both domestic production and imports (see 80 FR 77420 (December 14, 2015) and 81 FR 89746 (December 12, 2016)). We do not believe it would be reasonable to include in the projection all cellulosic biofuel produced throughout the world, regardless of likelihood of import to the U.S., since volumes that are not imported would not be available to obligated parties for compliance and including them in the projection would render the resulting volume requirement and percentage standards unachievable. 
46‘‘Cellulosic Biofuel Producer Company 
Descriptions (May 2018),’’ memorandum from 
Dallas Burkholder to EPA Docket EPA–HQ–OAR– 2018–0167. produced in the U.S. has been used 
domestically42and all the domestic 
facilities we have contacted in deriving our projections intend to produce fuel on a commercial scale for domestic consumption and plan to use approved pathways, gives us a high degree of confidence that cellulosic biofuel RINs will be generated for any fuel produced by domestic commercial scale facilities. In order to generate RINs, each of these facilities must be registered with EPA under the RFS program and comply with all the regulatory requirements. This includes using an approved RIN- generating pathway and verifying that their feedstocks meet the definition of renewable biomass. Most of the domestic companies and facilities considered in our assessment of potential cellulosic biofuel producers in 2018 have already successfully completed facility registration, and have successfully generated RINs.
43A brief 
description of each of the domestic companies (or group of companies for cellulosic CNG/LNG producers) that EPA believes may produce commercial- scale volumes of RIN generating cellulosic biofuel by the end of 2019 can be found in a memorandum to the docket for this final rule.
44General 
information on each of these companies or group of companies considered in our projection of the potentially available volume of cellulosic biofuel in 2019 is summarized in Table III.B.3–1 below. 
2. Potential Foreign Sources of 
Cellulosic Biofuel 
In addition to the potential sources of 
cellulosic biofuel located in the U.S., there are several foreign cellulosic biofuel companies that may produce cellulosic biofuel in 2019. These include facilities owned and operated by Beta Renewables, Enerkem, Ensyn, GranBio, and Raizen. All of these facilities use fuel production pathways that have been approved by EPA for cellulosic RIN generation provided eligible sources of renewable feedstock are used and other regulatory requirements are satisfied. These companies would therefore be eligible to register their facilities under the RFS program and generate RINs for any qualifying fuel imported into the U.S. While these facilities may be able to generate RINs for any volumes of cellulosic biofuel they import into the U.S., demand for the cellulosic biofuels they produce is expected to be high in their own local markets. 
In addition to projecting the domestic 
production of cellulosic biofuel, EPA also projects the volume of cellulosic biofuel that will be imported into the U.S.
45For the purposes of this final rule 
we have considered all the registered foreign facilities under the RFS program to be potential sources of cellulosic biofuel in 2019. We believe that due to the strong demand for cellulosic biofuel in local markets, the significant technical challenges associated with the operation of cellulosic biofuel facilities, and the time necessary for potential foreign cellulosic biofuel producers to register under the RFS program and arrange for the importation of cellulosic biofuel to the U.S., cellulosic biofuel imports from foreign facilities not currently registered to generate cellulosic biofuel RINs are generally highly unlikely in 2019. For purposes of our 2019 cellulosic biofuel projection we have, with one exception (described below), excluded potential volumes from foreign cellulosic biofuel production facilities that are not currently registered under the RFS program. 
Cellulosic biofuel produced at three 
foreign facilities (Ensyn’s Renfrew facility, GranBio’s Brazilian facility, and 
Raizen’s Brazilian facility) generated cellulosic biofuel RINs for fuel exported to the U.S. in 2017; projected volumes from each of these facilities are included in our projection of available volumes for 2019. EPA has also included projected volume from two additional foreign facilities. One of these facilities has completed the registration process as a cellulosic biofuel producer (Enerkem’s Canadian facility). The other facility (Ensyn’s Port-Cartier, Quebec facility), while not yet registered as a cellulosic biofuel producer, is owned by a Ensyn, a company that has previously generated cellulosic biofuel RINs using the same technology at a different facility. We believe that it is appropriate to include volume from these facilities in light of their proximity to the U.S., the proven technology used by these facilities, the volumes of cellulosic biofuel exported to the U.S. by the company in previous years (in the case of Ensyn), and the company’s stated intentions to market fuel produced at these facilities to qualifying markets in the U.S. All of the facilities included in EPA’s cellulosic biofuel projection for 2019 are listed in Table III.B.3–1 below. 
3. Summary of Volume Projections for 
Individual Companies 
General information on each of the 
cellulosic biofuel producers (or group of producers in the case of producers of CNG/LNG derived from biogas and liquid cellulosic biofuel facilities using Edeniq’s technology) that factored into our projection of cellulosic biofuel production for 2019 is shown in Table III.B.3–1. This table includes both facilities that have already generated cellulosic RINs, as well as those that have not yet generated cellulosic RINs, but are projected to do so by the end of 2019. As discussed above, we have focused on commercial-scale cellulosic biofuel production facilities. Each of these facilities (or group of facilities) is discussed further in a memorandum to 
the docket.
46 
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47The Facility Capacity is generally equal to the 
nameplate capacity provided to EPA by company 
representatives or found in publicly available information. Capacities are listed in physical gallons (rather than ethanol-equivalent gallons). If the facility has completed registration and the total permitted capacity is lower than the nameplate capacity then this lower volume is used as the facility capacity. For companies generating RINs for CNG/LNG derived from biogas the Facility Capacity is equal to the lower of the annualized rate of production of CNG/LNG from the facility at the time of facility registration or the sum of the volume of contracts in place for the sale of CNG/LNG for use as transportation fuel (reported as the actual peak capacity for these producers). 
48Where a quarter is listed for the first production 
date EPA has assumed production begins in the middle month of the quarter (i.e., August for the 3rd 
quarter) for the purposes of projecting volumes. 
49For more information on these facilities see 
‘‘May 2018 Assessment of Cellulosic Biofuel Production from Biogas (2019),’’ memorandum from Dallas Burkholder to EPA Docket EPA–HQ–OAR– 2018–0167. 
50The nameplate capacity of Enerkem’s facility is 
10 million gallons per year. However, we anticipate 
that a portion of their feedstock will be non- biogenic MSW. RINs cannot be generated for the 
portion of the fuel produced from non-biogenic feedstocks. We have taken this into account in our production projection for this facility (See ‘‘May 2018 Liquid Cellulosic Biofuel Projections for 2018 CBI’’). 
51This date reflects the first production of ethanol 
from this facility. The facility began production of methanol in 2015. 
52‘‘May 2018 Liquid Cellulosic Biofuel 
Projections for 2018 CBI’’ and ‘‘Calculating the Percentile Values Used to Project Liquid Cellulosic Biofuel Production for the 2019 NPRM,’’ memorandums from Dallas Burkholder to EPA Docket EPA–HQ–OAR–2018–0167. 
53Consistent with previous years, we have 
considered whether there is reason to believe any of the facilities considered as potential cellulosic biofuel producers for 2019 is likely to produce a 
smaller volume of cellulosic biofuel in 2019 than in the previous 12 months for which data are available. At this time, EPA is not aware of any information that would indicate lower production in 2019 from any facility considered than in the previous 12 months for which data are available. 
54As in our 2015–2018 projections, EPA 
calculated a high end of the range for each facility (or group of facilities) based on the expected start- 
up date and a six-month straight line ramp-up period. The high end of the range for each facility (or group of facilities) is equal to the value calculated by EPA using this methodology, or the number of RINs the producer expects to generate in 2019, whichever is lower. 
55More information on the data and methods EPA 
used to calculate each of the ranges in these tables in contained in ‘‘May 2018 Liquid Cellulosic Biofuel Projections for 2018 CBI’’ memorandum from Dallas Burkholder to EPA Docket EPA–HQ– OAR–2018–0167. We have not shown the projected ranges for each individual company. This is because the high end of the range for some of these companies are based on the company’s production projections, which they consider confidential business information (CBI). Additionally, the low end of the range for facilities that have achieved consistent commercial scale production is based on actual RIN generation data in the most recent 12 months, with is also claimed as CBI. EPA has included additional information on the calculations 
used to define the production ranges, including the production ranges for each individual company or facility, in a memo to the docket, ‘‘May 2018 Liquid Cellulosic Biofuel Projections for 2018 CBI’’. TABLE III.B.3–1—P ROJECTED PRODUCERS OF CELLULOSIC BIOFUEL IN 2019 
Company name Location Feedstock Fuel Facility 
capacity 
(million 
gallons 
per year)47 Construction 
start date First production48 
CNG/LNG Producers49......... Various .................................. Biogas ................................... CNG/LNG ..... Various ......... Various . ........ August 2014. 
Edeniq ................................... Various .................................. Corn Kernel Fiber .................. Ethanol ......... Various ......... Various ......... October 2016. 
Enerkem ................................ Edmonton, AL, Canada ......... Separated MSW .................... Ethanol ......... 1050.............. 2012 .............. September 2017.51 
Ensyn ..................................... Renfrew, ON, Canada ........... Wood Waste .......................... Heating Oil .... 3 ... ................. 2005 .............. 2014. 
Ensyn ..................................... Port-Cartier, QC, Canada ..... Wood Waste .......................... Heating Oil .... 10.5 ............... June 2016 ..... January 2018. 
Envia Energy ......................... Oklahoma City, OK ............... Biogas ................................... Diesel ............ 2 .................... May 2015 ...... February 2017. 
GranBio ................................. Sa ˜o Miguel dos Campos, 
Brazil.Sugarcane bagasse .............. Ethanol ......... 21 .................. Mid 2012 ....... September 2014. 
Poet-DSM .............................. Emmetsburg, IA .................... Corn Stover ........................... Ethanol ......... 20 .................. March 2012 .. 4Q 2015. 
QCCP .................................... Galva, IA ............................... Corn Kernel Fiber .................. Ethanol ......... 4 .................... Late 2013 ..... October 2014. 
Raizen ................................... Piracicaba City, Brazil ........... Sugarcane bagasse .............. Ethanol ......... 11 .................. January 2014 July 2015. 
C. Cellulosic Biofuel Volume for 2019 
1. Liquid Cellulosic Biofuel 
For our 2019 liquid cellulosic biofuel 
projection, we use the same general 
approach as we have in projecting these volumes in previous years. We begin by first categorizing potential liquid cellulosic biofuel producers in 2019 according to whether or not they have achieved consistent commercial scale production of cellulosic biofuel to date. Next we define a range of likely production volumes for 2019 for each 
group of companies. Finally, we use a percentile value to project from the established range a single projected production volume for each group of companies in 2019. As in 2018, we are proposing to calculate percentile values for each group of companies based on 
the past performance of each group relative to our projected production ranges. This methodology is briefly described here, and is described in 
detail in memoranda to the docket.
52 
Consistent with our approach in 
previous years, we separated the list of potential producers of cellulosic biofuel (listed in Table III.B.3–1) into two groups according to whether the facilities have achieved consistent commercial-scale production and cellulosic biofuel RIN generation. We next defined a range of likely production volumes for each group of potential cellulosic biofuel producers. The low end of the range for each group of producers reflects actual RIN generation data over the last 12 months 
for which data are available at the time our technical assessment was completed (April 2017–March 2018).
53For 
potential producers that have not yet generated any cellulosic RINs, the low end of the range is zero. For the high end of the range of production volumes for companies expected to produce liquid cellulosic biofuel we considered a variety of factors, including the expected start-up date and ramp-up period, facility capacity, and the number of RINs the producer expects to generate in 2019.
54The projected range 
for the groups of companies considered in our 2019 cellulosic biofuel projection 
are shown in Tables III.C.1–1 and III.C.1–2 below.
55 
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56Actual production is calculated by subtracting 
RINs retired for any reason other than compliance 
with the RFS standards from the total number of cellulosic RINs generated. 
57Companies characterized as new producers in 
the 2014–2016 and 2017 final rules were as follows: Abengoa (2016), CoolPlanet (2016), DuPont (2016, 2017), Edeniq (2016, 2017), GranBio (2016, 2017), IneosBio (2016), and Poet (2016, 2017). 
58Companies characterized as consistent 
producers in the 2014–2016 and 2017 final rules were as follows: Ensyn (2016 and 2017) and Quad County Corn Processors (2016 and 2017). 59In the 2018 final rule EPA used the 10th and 
12th percentile for new facilities and consistent 
producers respectively. The slightly higher percentile values used to project liquid cellulosic biofuel production in 2019 reflect additional production data from the fourth quarter of 2017 that was not available at the time the analyses were completed for the 2018 final rule. For more detail on the calculation of the percentile values used in 
this proposed rule see ‘‘Calculating the Percentile Values Used to Project Liquid Cellulosic Biofuel 
Production for the 2019 NPRM,’’ available in EPA 
docket EPA–HQ–OAR–2018–0167. TABLE III.C.1–1—2019 P RODUCTION RANGES FOR LIQUID CELLULOSIC BIOFUEL PRODUCERS WITHOUT CONSISTENT  
COMMERCIAL SCALE PRODUCTION  
[Million ethanol-equivalent gallons] 
Companies included Low end of 
the range High end of 
the rangea 
Enerkem, Ensyn (Port Cartier facility), Envia Energy ........................................................................... .................. 0 18 
aRounded to the nearest million gallons. 
TABLE III.C.1–2—2019 P RODUCTION RANGES FOR LIQUID CELLULOSIC BIOFUEL PRODUCERS WITHCONSISTENT  
COMMERCIAL SCALE PRODUCTION  
[Million ethanol-equivalent gallons] 
Companies included Low end of 
the rangea High end of 
the rangeb 
Facilities using Edeniq’s technology (registered facilities), Ensyn (Renfrew facility), Poet-DSM, GranBio, Quad 
County Corn Processors, Raizen ................................................................................................. ....................... 15 56 
aRounded to the nearest million gallons. 
After defining likely production 
ranges for each group of companies we 
next considered the percentile values to use in projecting a production volume for each group of companies. In this 
proposed rule we have calculated the percentile values used to project liquid cellulosic biofuel production from within the range of projected production values, using data on actual liquid cellulosic biofuel production from both 2016 and 2017. This is consistent with 
the approach taken in the 2018 final rule, however we now have complete data from 2017, rather than only data through September 2017. For the final rule we anticipate using available production data from 2018 to make further adjustments to the percentile values used to project liquid cellulosic biofuel production for 2019. The projected ranges for liquid 
cellulosic biofuel production in 2016 and 2017, along with the actual number of cellulosic RINs generated in each year that are/were available for compliance, and the percentile values that would have resulted in a projection equal to the actual production volume are shown in Table III.C.1–3 below. 
TABLE III.C.1–3—P ROJECTED AND ACTUAL LIQUID CELLULOSIC BIOFUEL PRODUCTION IN 2016 AND2017 
[Million gallons] 
l Low end of 
the range High end of 
the range Actual 
production56 Actual 
percentile 
New Facilities:57 
2016 .......................................................................................................... 0 76 1.06 1st 
2017 .......................................................................................................... 0 33 8.79 27th 
Averagea.................................................................................................. N/A N/A N/A 14th 
Consistent Producers58 
2016 .......................................................................................................... 2 5 3.28 43rd 
2017 .......................................................................................................... 3.5 7 3.02 ¥14th 
Averagea.......................................................................................................... N/A N/A N/A 15th 
aWe have not averaged the low and high ends of the ranges, or actual production, as we believe it is more appropriate to average the actual 
percentiles from 2016 and 2017 rather than calculating a percentile value for 2016 and 2017 in aggregate. This approach gives equal weight to 
the accuracy of our projections from 2016 and 2017, rather than allowing the average percentiles calculated to be dominated by years with great-er projected volumes. 
For this proposed rule EPA has 
projected cellulosic biofuel production 
from facilities that have not yet achieved consistent commercial scale production at the 14th percentile of the 
calculated range and projected cellulosic biofuel production from facilities that have achieved commercial scale production at the 15th percentile.
59These percentiles are calculated by averaging the percentiles 
that would have produced cellulosic biofuel projections equal to the volumes produced by each group of companies in 2016 and 2017. We have not considered data from years prior to 2016, as prior to 2016 a different methodology was used to project available volumes of cellulosic biofuel. In determining the percentile values to use for 2019 we have decided to weight the observed actual percentile values from 2016 and 2017 equally. While the 
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60For example, rather than weighting the 
percentiles that would have resulted in the actual 
production volumes in 2016 and 2017 equally, EPA could first aggregate the projected ranges for companies with and without consistent commercial scale production for 2016 and 2017 (5.5 million–12 million and 0–109 million respectively) and then use the combined production volumes for 2016 and 2017 for each group (6.3 million and 9.8 million 
respectively) to calculate percentile values for each group of companies for 2019. This would result in slightly different percentile values (12th percentile for companies with consistent production and the 9th percentile for companies without consistent production). 61Historically RIN generation for CNG/LNG 
derived from biogas has increased each year. It is 
possible, however, that RIN generation for these fuels in the most recent 12 months for which data are available could be lower than the preceding 12 months. We believe our methodology accounts for this possibility. In such a case, the calculated rate of growth would be negative. percentile value from 2017 represents 
the most recent data available, it is also dependent on the performance of a relatively small number of companies in a single year. Using data from multiple years is likely more representative of the future performance of these groups of companies than data from any single year. For the final rule we anticipate using available production data from 2018 (likely January–September), along 
with updated production projections for months in which data is not available (likely October–December) to make further adjustments to the percentile values used to project liquid cellulosic biofuel production for 2019. We propose using production volumes for months for which data is not available (likely October–December 2018) in a similar 
manner to the way we projected production volumes for months in which data were not available in the 2018 final rule (based on available historical data along with seasonal production trends; see ‘‘Calculating the Percentile Values Used to Project Liquid Cellulosic Biofuel Production for 2018, EPA–HQ–OAR–2017–0091). We request comment on this projection 
methodology, as well as the appropriateness of using data from 2018 to adjust the percentile values used to projection liquid cellulosic biofuel production for 2019. We believe that adjusting the percentile values used in this final rule will improve the accuracy of the production projection and will further EPA’s objective to project 
volumes with a ‘‘neutral aim at accuracy.’’ We request comment on the data that should be used to calculate the percentile values used to project liquid cellulosic biofuel production in 2019 (e.g. whether we should use data from 
2016–2018, or just a sub-set of this data) and how to weight data from each of these years.
60 
Finally, we used these percentile 
values, together with the ranges determined for each group of companies discussed above, to project a volume for each group of companies in 2019. These calculations are summarized in Table III.C.1–4 below. 
TABLE III.C.1–4—P ROJECTED VOLUME OF LIQUID CELLULOSIC BIOFUEL IN 2019 
[Million ethanol-equivalent gallons] 
Low end of 
the rangea High end of 
the rangea Percentile Projected 
volumea 
Liquid Cellulosic Biofuel Producers; Producers without Consistent Commer-
cial Scale Production ................................................................................... 0 18 14th 3 
Liquid Cellulosic Biofuel Producers; Producers with Consistent Commercial 
Scale Production .......................................................................................... 15 56 15th 21 
Total .......................................................................................................... N/A N/A N/A 24 
aVolumes rounded to the nearest million gallons. 
EPA also considered whether it would 
be appropriate to modify other 
individual components of the past methodology for projecting liquid cellulosic biofuel (such as the factors used to calculate the high or low end of the projected range for each company), but we do not believe that such changes are warranted at this time. Making the adjustment to the percentile values used in the methodology while keeping other components of the methodology constant should, we believe, provide an appropriate refinement of the methodology that reflects recent experience. We acknowledge, however, that using the calculated percentile values from previous years to project 
liquid cellulosic biofuel production in future years does not eliminate the 
possibility that actual production will differ from our projections. This is especially true for the liquid cellulosic biofuel industry, which is currently in the early stages of commercialization. Nevertheless, based on the record before us, we believe the ranges of projected production volumes for each company (or group of companies for those using the Edeniq technology) are reasonable, and that projecting overall production in 2019 in the manner described above results in a neutral estimate (neither biased to produce a projection that is too high or too low) of likely liquid cellulosic biofuel production in 2019 (24 million gallons). 2. CNG/LNG Derived From Biogas 
For 2019, EPA is using the same 
methodology as in the 2018 final rule, 
an industry wide projected based on a year-over-year growth rate, to project production of CNG/LNG derived from biogas used as transportation fuel.
61For 
this proposed rule, EPA has calculated the year-over-year growth rate in CNG/ LNG derived from biogas by comparing RIN generation from April 2017–March 2018 (the most recent 12 months for which data are available) to RIN 
generation in the 12 months that immediately precede this time period (April 2016–March 2017). These RIN generation volumes are shown in Table III.C.2–1 below. 
TABLE III.C.2–1—G ENERATION OF CELLULOSIC BIOFUEL RIN S FOR CNG/LNG D ERIVED FROM BIOGAS  
[Million gallons]62 
RIN Generation (April 2016–March 2017) RIN Generation (April 2017–March 2018) Year-Over-Year Increase 
189 247 30.5% 
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62Further detail on the data used to calculate 
each of these numbers in this table, as well as the 
projected volume of CNG/LNG derived from biogas used as transportation fuel in 2019 can be found in ‘‘May 2018 Assessment of Cellulosic Biofuel Production from Biogas (2019)’’ memorandum from Dallas Burkholder to EPA Docket EPA–HQ–OAR– 2018–0167. 
63To calculate this value, EPA multiplied the 
number of 2018 RINs projected to be generated for 
CNG/LNG derived from biogas in the 2018 final rule (274 million), see 82 FR 58502–03, by 1.305 (representing a 30.5 percent year-over-year increase). 64EPA projects that 580 million ethanol- 
equivalent gallons of CNG/LNG will be used as transportation fuel in 2019 based on EIA’s March 2018 Short Term Energy Outlook (STEO). To calculate this estimate, EPA used the Natural Gas Vehicle Use from the STEO Custom Table Builder (0.13 billion cubic feet/day in 2019). This projection includes all CNG/LNG used as transportation fuel from both renewable and non-renewable sources. EIA does not project the amount of CNG/LNG from biogas used as transportation fuel. To convert 
billion cubic feet/day to ethanol-equivalent gallons EPA used conversion factors of 946.5 BTU per cubic foot of natural gas (lower heating value, per calculations using ASTM D1945 and D3588) and 
77,000 BTU of natural gas per ethanol-equivalent gallon per § 80.1415(b)(5). 
65‘‘Cellulosic Biofuel Producer Company 
Descriptions (May 2018),’’ memorandum from Dallas Burkholder to EPA Docket EPA–HQ–OAR– 2018–0167. In the case of cellulosic biofuel produced from CNG/LNG and facilities using Edeniq’s technology, we have discussed the production potential from these facilities as a group rather than individually. EPA then applied this 30.5 percent 
year-over-year growth rate to the total 
number of 2018 cellulosic RINs projected to be generated for CNG/LNG in the 2018 final rule. This methodology results in a projection of 358 million gallons of CNG/LNG derived from biogas in 2019.
63We believe that 
projecting the production of CNG/LNG derived from biogas in this manner appropriately takes into consideration the actual recent rate of growth of this industry, and that this growth rate accounts for both the potential for future growth and the challenges associated with increasing RIN generation from these fuels in future years. This methodology may not be appropriate to use as the projected volume of CNG/ LNG derived from biogas approaches the total volume of CNG/LNG that is used as transportation fuel, as RINs can be generated only for CNG/LNG used as transportation fuel. We do not believe that this is yet a constraint, however, as our projection for 2019 is well below the total volume of CNG/LNG that is currently used as transportation fuel.
64 
We request comment on estimates of the volume of CNG/LNG likely to be used as transportation fuel in 2019, as well as the ability of the CNG/LNG market to provide the documentation necessary to verify the use of this fuel as transportation fuel. 
EPA has also reviewed data submitted 
by potential producers of CNG/LNG derived from biogas that is used as transportation fuel. The total volume of CNG/LNG derived from biogas projected to be produced in 2019 by the potential producers of these fuels exceeds the volume that EPA is projecting for 2019. Since producers of CNG/LNG derived from biogas have historically over- estimated their production of these fuels, it would not be appropriate to simply adopt this projection for 2019. The fact that the industry projections exceed EPA’s projected volume, however, indicates that the volume of these fuels projected for 2019 can be satisfied by a combination of projects currently producing CNG/LNG derived from biogas for these purposes and projects expected to product biogas by the end of 2019. 
We believe that while our projection 
methodology uses a growth rate based on historical data it adequately anticipates higher production volumes in future years, including both increased production from existing facilities as well as production from new facilities. In this way it satisfies our charge to project future cellulosic biofuel production in a reasonable manner, and with neutrality, despite the fact that it does not consider all potential producers of these fuels on a facility-by- facility basis. For the final rule we anticipate using all available data from 2018 to update both the year-over-year increase as well as the projected production volume of cellulosic biofuel for 2018 to which we apply the year- over-year increase to project the production of CNG/LNG derived from biogas in 2019. 
3. Total Cellulosic Biofuel in 2019 
After projecting production of 
cellulosic biofuel from liquid cellulosic 
biofuel production facilities and producers of CNG/LNG derived from biogas, EPA combined these projections to project total cellulosic biofuel production for 2019. These projections are shown in Table III.C.3–1. Using the methodologies described in this section, we project that 381 million ethanol- equivalent gallons of cellulosic biofuel will be produced in 2019. We believe that projecting overall production in 2019 in the manner described above results in a neutral estimate (neither biased to produce a projection that is too high nor too low) of likely cellulosic biofuel production in 2019. 
TABLE III.C.3–1—P ROJECTED VOLUME OF CELLULOSIC BIOFUEL IN 2019 
[Million gallons] 
Projected 
volumea 
Liquid Cellulosic Biofuel Producers; Producers without Consistent Commercial Scale Production .................................. ................. 3 
Liquid Cellulosic Biofuel Producers; Producers with Consistent Commercial Scale Production ..................................... ................... 21 
CNG/LNG Derived from Biogas .................................................................................................... ...................................................... 358 
Total ..............................................................................................................................................................................................b381 
aVolumes rounded to the nearest million gallons. 
bTotal projection of cellulosic biofuel appears less than the sum of the projected volume for each group of companies due to rou nding 
Further discussion of the individual 
companies we believe will produce 
cellulosic biofuel and make it 
commercially available in 2019 can be found in a memorandum to the docket.
65We request comment on this 
projection of cellulosic biofuel production for 2019, including the various aspects of the methodology used 
to project production of both liquid cellulosic biofuels and CNG/LNG derived from biogas. IV. Advanced Biofuel and Total Renewable Fuel Volumes for 2019 
The national volume targets for 
advanced biofuel and total renewable fuel to be used under the RFS program each year through 2022 are specified in CAA section 211(o)(2)(B)(i)(I) and (II). 
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66For instance, see 81 FR 89750 (December 12, 
2016). 
67While sugarcane ethanol, as well as a number 
of other fuel types, can also contribute to the supply 
of advanced biofuel, in recent years supply of these other advanced biofuels has been considerably lower than supply of advanced biodiesel or renewable diesel. See Table IV.B.3–1. 68‘‘Affirmative Final Antidumping Duty 
Determinations on Biodiesel From Argentina and Indonesia,’’ available in docket EPA–HQ–OAR– 2018–0167. 
69‘‘US adds more duties on biodiesel from 
Argentina & Indonesia,’’ Reuters article available in docket EPA–HQ–OAR–2018–0167. Congress set annual renewable fuel 
volume targets that envisioned growth at a pace that far exceeded historical growth and, for years after 2011, prioritized that growth as occurring principally in advanced biofuels (contrary to previous growth patterns where most growth was in conventional renewable fuel). Congressional intent is evident in the fact that the implied statutory volume for conventional renewable fuel is 15 billion gallons for all years after 2014, while the advanced volumes, driven largely by growth in cellulosic volumes, continue to grow each year through 2022 to a total of 21 billion gallons. 
Due to a shortfall in reasonably 
attainable volumes of cellulosic and advanced biofuel, and consistent with our long-held interpretation of the cellulosic waiver authority as best interpreted and applied by providing equal reductions in advanced biofuel and total renewable fuel, we are proposing a reduction from the statutory volumes for both advanced biofuel and total renewable fuel for 2019 using the full extent of the cellulosic waiver authority. 
In this Section we discuss our 
proposed use of the discretion afforded by the cellulosic waiver authority at CAA 211(o)(7)(D)(i) to reduce volumes of advanced biofuel and total renewable fuel. We first discuss our assessment of advanced biofuel and the considerations which have led us to conclude that the advanced biofuel volume target in the statute should be reduced by the full amount permitted under the cellulosic waiver authority. We then address total renewable fuel in the context of our interpretation, articulated in previous annual rulemakings, that advanced biofuel and total renewable fuel should be reduced by the same amount under the cellulosic waiver authority. 
To begin, we have evaluated the 
capabilities of the market and are proposing to find that the 13.0 billion gallons specified in the statute for 
advanced biofuel cannot be reached in 2019. This is primarily due to the expected continued shortfall in cellulosic biofuel; production of this fuel type has consistently fallen short of the statutory targets by 95 percent or more, and as described in Section III, we project that it will fall far short of the statutory target of 8.5 billion gallons in 2019. For this and other reasons described in this section we are proposing to reduce the advanced biofuel statutory target by the full amount of the shortfall in cellulosic biofuel for 2019. 
In previous years when we have used 
the cellulosic waiver authority, we have determined the appropriate amount of 
the permissible waiver to apply to advanced biofuel by taking into account the availability of advanced biofuels, their energy security and GHG impacts, the availability of carryover RINs, the apparent intent of Congress as reflected in the statutory volumes tables to substantially increase the use of advanced biofuels over time, as well as factors such as increased costs associated with the use of advanced biofuels and the reduced benefits likely associated with use of advanced volumes achieved through diversion of foreign fuels or substitution of advanced feedstocks from other uses to biofuel production. Until the 2018 standards rule, the consideration of these factors led us to conclude that it was appropriate to set the advanced biofuel standard in a manner that would allow the partial backfilling of missing cellulosic volumes with non-cellulosic advanced biofuels.
66For the 2018 
standards, we placed a greater emphasis on cost considerations in the context of balancing the various considerations, ultimately concluding that partial backfilling with non-cellulosic 
advanced biofuels was not warranted and the applicable volume requirement for advanced biofuel should be based on the maximum reduction permitted under the cellulosic waiver authority. 
Although we continue to believe that 
the factors earlier considered in exercising the cellulosic waiver authority are relevant and appropriate, we project that there will be insufficient reasonably attainable volumes of non- cellulosic biofuels in 2019 to allow any backfilling for missing volumes of cellulosic biofuel. As a result of this projection and our proposed consideration of carryover RINs, we are proposing to reduce the statutory volume target for advanced biofuel by the same amount as the reduction in cellulosic biofuel. This would result in the non-cellulosic component of the advanced biofuel volume requirement being equal to the implied statutory volume of 4.5 billion gallons in 2019. 
We note that the predominant non- 
cellulosic advanced biofuels available in the near term are advanced biodiesel and renewable diesel.
67We expect a 
decreasing rate of growth in the availability of feedstocks used to produce these fuel types, absent the diversion of these feedstocks from other uses. In addition, we expect diminishing GHG benefits and higher per gallon costs as the required volumes of advanced biodiesel and renewable diesel increase. These outcomes are a result of the fact that the lowest cost and most easily available feedstocks are typically used first, and each additional increment of advanced biodiesel and renewable diesel requires the use of feedstocks that are incrementally more costly and/or more difficult to obtain. Moreover, to the extent that higher advanced biofuel requirements cannot be satisfied through growth in the production of advanced biofuel feedstocks, they would instead be satisfied through a re-direction of such feedstocks from competing uses. Products that were formerly produced using these feedstocks are likely to be replaced by products produced using the lowest cost alternatives, likely derived from palm or petroleum sources. This in turn could increase the lifecycle GHG emissions associated with these incremental volumes of non- cellulosic advanced biofuel. There would also likely be market disruptions and increased burden associated with shifting feedstocks among the wide range of companies that are relying on them today and which have optimized their processes to use them. Higher advanced biofuel standards could also be satisfied by diversion of foreign advanced biofuel from foreign markets, and there would also likely be diminished benefits associated with such diversions. Taking these considerations into account, we believe, as discussed in more detail below, that we should exercise our discretion under the cellulosic waiver authority to set the advanced biofuel volume requirement at a level that would minimize such diversions. 
Furthermore, two other factors have 
added uncertainty regarding the volume of advanced biofuels that we project to be attainable in 2019. The first is the fact that the tax credit for biodiesel has not been renewed for 2019. The second is the final determination by the Department of Commerce that tariffs should be imposed on biodiesel imports from Argentina and Indonesia, and the potential for those tariffs to increase.
68 69 
Each of these factors is discussed in more detail in Section IV.B.2 below. 
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70When expressing volumes in billion gallons, 
we use standard rounding methods to two decimal 
places, as done in previous annual standard-setting rulemakings. Volumes are sometimes shown in 
million gallons for clarity, but with the exception of cellulosic biofuel it is volumes in billion gallons 
that are used to calculate the applicable percentage standards. For cellulosic biofuel, it is million gallons that are used to calculate the percentage 
standards. 71CAA section 211(o)(7)(D)(i). 
72See ACE, 864 F.3d at 730–35 (citing Monroe, 
750 F.3d 909, 915–16). We believe that the factors and 
considerations noted above are all 
appropriate to consider under the broad discretion provided under the cellulosic waiver authority, and that consideration of these factors supports our proposed use of this authority. Many of the considerations discussed in this proposed rule are related to the availability of non-cellulosic advanced biofuels (e.g., historic data on domestic 
supply, expiration of the biodiesel blenders’ tax credit, potential imports of biodiesel in light of the Commerce Department’s determination on tariffs on biodiesel imports from Argentina and Indonesia, potential imports of sugarcane ethanol, and anticipated decreasing growth in production of feedstocks for advanced biodiesel and renewable diesel), while others focus on the potential benefits and costs of requiring use of available volumes (e.g., relative cost of advanced biofuels to the petroleum fuels they displace, GHG reduction benefits, and energy security benefits). As discussed in further detail in the following sections, EPA’s preliminary projection of the available volume of advanced biofuel in 2019 suggests that while achieving the implied statutory volume for non- 
cellulosic advanced biofuel in 2019 (4.5 billion gallons) may be attainable, doing 
so would likely require a higher rate of growth in the domestic advanced biofuel industry than we have seen in recent years. This is especially true if the tariffs on biodiesel imported from Argentina and Indonesia result in decreased volumes of imported advanced biofuel in 2019. While it may also be possible that a volume of non- cellulosic advanced biofuel greater than 4.5 billion gallons may be attainable, this higher volume would very likely result in the diversion of advanced feedstocks from other uses or diversion of advanced biofuels from foreign sources. In that case, our preliminary assessment of other factors, such as cost and GHG impacts, indicate that it would not be appropriate to set the advanced biofuel volume requirement so as to require use of such volumes to partially backfill for missing cellulosic volumes. 
The impact of our exercise of the 
cellulosic waiver authority is that after waiving the cellulosic biofuel volume down to the projected available level, and applying the same volume reduction to the statutory volume target for advanced biofuel, the resulting volume requirement for advanced 
biofuel for 2019 would be 590 million gallons more than the applicable volume used to derive the 2018 percentage standard. Furthermore, after 
applying the same reduction to the statutory volume target for total renewable fuel, the volume requirement for total renewable fuel would also be 
590 million gallons more than the applicable volume used to derive the 2018 percentage standard. 
A. Volumetric Limitation on Use of the 
Cellulosic Waiver Authority 
As described in Section II.A, when 
making reductions in advanced biofuel and total renewable fuel under the cellulosic waiver authority, the statute limits those reductions to no more than the reduction in cellulosic biofuel. As described in Section III.D, we are proposing to establish a 2019 applicable volume for cellulosic biofuel of 381 million gallons, representing a reduction of 8,119 million gallons from the statutory target of 8,500 million gallons. As a result, 8,119 million gallons is the maximum volume reduction for advanced biofuel and total renewable fuel that is permissible using the cellulosic waiver authority. Use of the cellulosic waiver authority to this maximum extent would result in volumes of 4.88 and 19.88 billion gallons for advanced biofuel and total renewable fuel, respectively.
70 
TABLE IV.A–1—L OWEST PERMISSIBLE VOLUMES USING ONLY THE CELLULOSIC WAIVER AUTHORITY  
[Million gallons]a 
Advanced 
biofuel Total 
renewable 
fuel 
Statutory target ............................................................................................................... ......................................... 13,000 28,000 
Maximum reduction permitted under the cellulosic waiver authority .............................................................. ........ 8,119 8,119 
Lowest 2019 volume requirement permitted using only the cellulosic waiver authority ......................................... 4,881 19,881 
aCalculations are typically shown in million gallons for all four standards for clarity. However, when using volumes to calculate percentage 
standards, we specify the volume requirements as billion gallons with two decimal places to be consistent with the volume targets as given in the 
statute. The only exception is for cellulosic biofuel which we specify in million gallons due to the substantial reduction from the statutory target. 
We are authorized under the 
cellulosic waiver authority to reduce the 
advanced biofuel and total renewable fuel volumes ‘‘by the same or a lesser’’ amount as the reduction in the cellulosic biofuel volume.
71As 
discussed in Section II.A, EPA has broad discretion in using the cellulosic waiver authority in instances where its use is authorized under the statute, since Congress did not specify factors that EPA must consider in determining whether to use the authority or what the appropriate volume reductions (within the range permitted by statute) should be. This broad discretion was affirmed in both Monroe and ACE.
72Thus, EPA 
could potentially set the 2019 advanced biofuel standard at a level that is designed to partially backfill for the shortfall in cellulosic biofuel. However, based on our consideration of a number of relevant factors, we are proposing to use the full extent of the cellulosic waiver authority in deriving volume requirements for 2019. B. Attainable Volumes of Advanced 
Biofuel 
We have considered both reasonably 
attainable and attainable volumes of advanced biofuel to inform our exercise of the cellulosic waiver authority. Volumes described as ‘‘reasonably attainable’’ are those that can be reached without market disruptions and/or higher costs, such as those that could result from diverting advanced biofuels or advanced biofuel feedstocks from existing uses. We use this phrase in today’s action in the same way that we 
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7381 FR 89762 (December 12, 2016). 
74See ACE, 864 F.3d at 730–35. However, EPA 
may not consider demand-side factors in assessing 
whether there is an ‘‘inadequate domestic supply’’ that would justify use of the general waiver authority. See id. at 704–13. 
75See ACE, 864 F.3d at 735–36. 7682 FR 58507 (December 12, 2017). used it in previous actions. Volumes 
described as ‘‘attainable,’’ in contrast, are those we believe can be reached, but would likely result in market disruption and/or higher costs. Neither ‘‘reasonably attainable’’ nor ‘‘attainable’’ are meant to convey the ‘‘maximum achievable’’ level, which as described in the 2017 final rule we do not consider, in our discretion, to be an appropriate target under the cellulosic waiver authority.
73 
As in prior rulemakings, EPA has 
considered what volumes of advanced biofuels are reasonably attainable. As 
the Court noted in ACE, EPA may 
consider demand-side considerations in addition to supply-side considerations when it assesses ‘‘reasonably attainable’’ volumes for purposes of its cellulosic waiver assessment.
74Our proposed 
assessment of reasonably attainable volumes of advanced biofuel is described below. 
In ACE, the Court noted that in 
assessing what volumes are ‘‘reasonably attainable,’’ EPA had considered the availability of feedstocks, domestic production capacity, imports, and market capacity to produce, distribute, and consume renewable fuel.
75We are 
taking a similar approach for 2019, with the added consideration of the possibility that higher volume requirements would lead to ‘‘feedstock switching’’ or diversion of advanced biofuels from use in other countries, which we took into account in setting the 2017 and 2018 volume requirements and, we believe, are appropriate considerations under the broad discretion provided by the cellulosic waiver authority. 
As noted above, a higher advanced 
biofuel volume requirement has a greater potential to increase the incentive for switching advanced biofuel feedstocks from existing uses to biofuel production. We are proposing to set the advanced biofuel volume requirement at a level that would seek to minimize such feedstock/fuel diversions. Our individual assessments of reasonably attainable volumes of each type of advanced biofuel reflects this approach. That is, while we refer to them as ‘‘reasonably attainable’’ volumes for convenience, they represent those volumes that are not likely to lead to feedstock/fuel diversions. Greater volumes could likely be made available if such diversions were not of concern. 
EPA proposes to find that 100 million 
gallons of advanced ethanol, 60 million gallons of other advanced biofuels, and 2.65 billion gallons of advanced biodiesel and renewable diesel are reasonably attainable. Together with our projected volume of 381 million gallons of cellulosic biofuel, the sum of these volumes falls short of 4.88 billion gallons, which is the lowest advanced biofuel requirement that EPA can determine under the cellulosic waiver authority. 
Therefore, we also have considered 
whether the market can nonetheless make available 4.88 billion gallons of advanced biofuel, notwithstanding likely feedstock/fuel diversions. In particular, we assess whether additional volumes of advanced biodiesel and renewable diesel are attainable. We conclude that 2.8 billion gallons of advanced biodiesel and renewable diesel is likely attainable notwithstanding likely feedstock/fuel diversions. This quantity of advanced biodiesel and renewable diesel, together with the cellulosic biofuel, sugarcane ethanol, and other advanced biofuels described above, would enable the market to make available 4.88 billion gallons of advanced biofuels. 
1. Imported Sugarcane Ethanol 
The predominant available source of 
advanced biofuel other than cellulosic 
biofuel and BBD is imported sugarcane ethanol. In setting the 2018 standards, we estimated that 100 million gallons of imported sugarcane ethanol would be reasonably attainable.
76This was a 
reduction from the 200 million gallons we had assumed for 2016 and 2017, and was based on a combination of data from 2016 and part of 2017 as well as an attempt to balance the lower-than- expected imports from recent data with indications that higher volumes were possible based on older data. We also noted the high variability in ethanol import volumes in the past (including of Brazilian sugarcane ethanol, the predominant form of imported ethanol, and the only significant source of imported advanced ethanol), increasing gasoline consumption in Brazil, and variability in Brazilian production of sugar as reasons that it would be inappropriate to assume that sugarcane ethanol imports would reach the much higher levels suggested by some stakeholders. 
During 2017 when we were 
developing the 2018 standards rulemaking, we used available data from a portion of 2017 to estimate that import volumes of sugarcane ethanol were likely to fall significantly below the 200 million gallons we had assumed when we set the 2017 standards. Import data for most of 2017 is now available, and indicates that imports of sugarcane ethanol reached just 77 million gallons. 
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77‘‘Sugar—World Markets and Trade,’’ USDA, 
November 2016. Available in docket EPA–HQ–
OAR–2018–0167. 78‘‘Commodity Markets Outlook,’’ World Bank 
Group, January 2017. Available in docket EPA–HQ– 
OAR–2018–0167. 
While it is difficult to predict imports 
for 2019, we believe it would be 
reasonable not to increase the assumed volume above 100 million gallons for purposes of determining whether an 
advanced biofuel volume requirement of 4.88 billion gallons is reasonably attainable for 2019. Although imports of advanced ethanol have been below 100 million gallons for 2014–2017, our proposed advanced biofuel volume requirement for 2019 would be higher than that for 2018, creating some incentive for increases in imports. However, the E10 blendwall and the fact that imported sugarcane ethanol typically costs more than corn ethanol create disincentives for increasing imports above the levels in recent years. Taking all of these considerations into account, we propose using 100 million gallons of imported sugarcane ethanol for the purposes of projecting reasonably attainable volumes of advanced biofuel for 2019. This level reflects a balancing of the information available to EPA at this time; both the lower import volumes that have occurred more recently with the higher volumes that are possible based on earlier years and under the influence of the higher standards in 2019. 
We note that the future projection of 
imports of sugarcane ethanol is inherently imprecise, and that actual imports in 2019 could be lower or higher than 100 million gallons. Factors that could result in import volumes below 100 million gallons include weather and harvests in Brazil, world ethanol demand and prices, constraints associated with the E10 blendwall in the U.S., and the cost relative to that of corn ethanol. Also, global sugar consumption has continued to increase steadily, while global production has decreased.
77If this trend continues, 
Brazilian production of sugar could increase, with a concurrent reduction in Brazilian production of ethanol. On the other hand, the world average price of sugar has been projected to remain relatively flat between 2016 and 2018, suggesting little change in sugar production and implying that ethanol production in Brazil might likewise remain unchanged.
78After considering 
these factors, and in light of the high degree of variability in historical imports of sugarcane ethanol, we believe that 100 million gallons is reasonably attainable for 2019. As we have done in past years, we plan to take into consideration available data on imports in 2018, as well as information provided in comments, in making a final estimate of reasonably attainable volumes of sugarcane ethanol for the final rule. 
2. Other Advanced Biofuel 
In addition to cellulosic biofuel, 
imported sugarcane ethanol, and 
advanced biodiesel and renewable diesel, there are other D5 advanced biofuels that can be counted in the determination of reasonably attainable volumes of advanced biofuel for 2019. These other D5 advanced biofuels include non-cellulosic CNG, naphtha, heating oil, and domestically-produced advanced ethanol. However, the supply of these fuels has been relatively low in the last several years. 
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7979 FR 42128 (July 18, 2014). 
80No RIN-generating volumes of these other 
advanced biofuels were produced in 2017, and less 
than 1 million gallons total in prior years. 
81To calculate the volume of advanced biodiesel 
and renewable diesel that would generate the 4.34 
billion RINs needed to meet the proposed advanced biofuel volume EPA divided the 4.34 billion RINs by 1.55. 1.55 is the approximate average (weighted 
by the volume of these fuels expected to be produced in 2019) of the equivalence values for biodiesel (generally 1.5) and renewable diesel (generally 1.7). 
82Throughout this section we refer to advanced 
biodiesel and renewable diesel as well as advanced 
biodiesel and renewable diesel feedstocks. In this context, advanced biodiesel and renewable diesel 
refer to any biodiesel or renewable diesel for which RINs can be generated that satisfy an obligated 
party’s advanced biofuel obligation (i.e., D4 or D5 
RINs). An advanced biodiesel or renewable feedstock refers to any of the biodiesel, renewable diesel, jet fuel, and heating oil feedstocks listed in Table 1 to § 80.1426 or in petition approvals issued TABLE IV.B.2–1—H ISTORICAL SUPPLY OF OTHER ADVANCED BIOFUELS  
[Million ethanol-equivalent gallons] 
CNG/LNG Heating oil Naphtha Domestic 
ethanol Totala 
2013 ..................................................................................... 26 0 3 23 52 
2014 ..................................................................................... 20 0 18 26 64 
2015 ..................................................................................... 0 1 24 25 50 
2016 ..................................................................................... 0 2 26 27 55 
2017 ..................................................................................... 2 2 32 26 62 
aExcludes consideration of D5 renewable diesel, as this category of renewable fuel is considered separately as part of advanced biodiesel and 
renewable diesel in Section IV.B.3 below. 
The downward trend over time in 
CNG/LNG from biogas as advanced 
biofuel with a D code of 5 is due to the re-categorization in 2014 of landfill biogas from advanced (D code 5) to cellulosic (D code 3).
79Total supply of 
these other advanced biofuels has exhibited no consistent trend during 2013–2017. Based on this historical record, we propose that 60 million 
gallons would be reasonably attainable in 2019. 
We recognize that the potential exists 
for additional volumes of advanced biofuel from sources such as jet fuel, liquefied petroleum gas (LPG), butanol, and liquefied natural gas (as distinct from compressed natural gas), as well as non-cellulosic CNG from biogas produced in digesters. However, since they have been produced, if at all, in only de minimis and sporadic amounts in the past, we do not have a basis for projecting substantial volumes from these sources in 2019.
80 3. Biodiesel and Renewable Diesel 
Having projected the production 
volume of cellulosic biofuel, and the 
reasonably attainable volumes of imported sugarcane ethanol and ‘‘other’’ advanced biofuels, we next calculated the volume of advanced biodiesel and renewable diesel that would need to be supplied to meet the volume of advanced biofuel for 2019 after reducing the advanced biofuel volume by the same amount as the cellulosic biofuel volume. Based on our projections of other advanced biofuels presented in the preceding sections, the market would need to supply 2.8 billion gallons 
of biodiesel and renewable diesel, generating 4.34 billion RINs, to meet a total advanced biofuel volume of 4.88 billion gallons. This calculation is shown in Table IV.B.3–1 below. 
Calculating the volume of advanced 
biodiesel and renewable diesel that would be needed to meet the volume of advanced biofuel for 2019 is an important benchmark to help inform EPA’s consideration of our waiver 
authorities. In situations where the reasonably attainable volume of biodiesel and renewable diesel exceeds the volume of these fuels that would be needed to meet the volume of advanced biofuel after reducing the advanced biofuel volume by the same amount as the cellulosic biofuel volume, as was the case in 2017 and 2018, EPA may consider whether or not to allow 
additional volumes of these fuels to backfill for missing cellulosic biofuel volumes. In situations where the reasonably attainable volume of biodiesel and renewable diesel is less than the volume of these fuels that would be needed to meet the volume of advanced biofuel after reducing the advanced biofuel volume by the same amount as the cellulosic biofuel volume, EPA may consider whether or not to use additional waiver authorities, to the extent available, to make further reductions to the advanced biofuel volume. 
TABLE IV.B.3–1—D ETERMINATION OF VOLUME OF BIODIESEL AND RENEWABLE DIESEL NEEDED IN 2019 T OACHIEVE 4.88 
BILLION GALLONS OF ADVANCED BIOFUEL  
[Million ethanol-equivalent gallons except as noted] 
Lowest 2019 advanced biofuel volume requirement permitted using under the cellulosic waiver authority .......................... ............ 4,881 
Cellulosic biofuel ............................................................................................................. ..................................................................... 381 
Imported sugarcane ethanol ..................................................................................................... ........................................................... 100 
Other advanced ................................................................................................................. .................................................................. 60 
Calculated advanced biodiesel and renewable diesel needed (ethanol-equivalent gallons/physical gallons)81............................... 4,340/2,800 
Having calculated the volume of 
advanced biodiesel and renewable 
diesel that would need to be supplied to 
meet the volume of advanced biofuel for 2019 after reducing the advanced biofuel volume by the same amount as the cellulosic biofuel volume, EPA next projected the reasonably attainable volume of these fuels for 2019. With 
regard to advanced biodiesel and renewable diesel, there are many 
different factors that could potentially influence the reasonably attainable volume of these fuels used as transportation fuel or heating oil in the U.S. These factors could include the availability of qualifying biodiesel and 
renewable diesel feedstocks, the production capacity of biodiesel and renewable diesel facilities (both in the U.S. and internationally), and the availability of imported volumes of these fuels.
82A review of the volumes 
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pursuant to § 80.1416, that can be used to produce 
fuel that qualifies for D4 or D5 RINs. These feedstocks include, for example, soy bean oil; oil from annual cover crops; oil from algae grown photosynthetically; biogenic waste oils/fats/greases; non-food grade corn oil; camelina sativa oil; and canola/rapeseed oil (See pathways F, G, and H of Table 1 to § 80.1426). 83We believe palm or petroleum derived 
products would likely be used replace advanced 
biodiesel and renewable diesel diverted to the U.S. as these products are currently the lowest cost sources. 
84From 2011 through 2017 approximately 95% of 
all biodiesel and renewable diesel supplied to the 
U.S. (including domestically-produced and imported biodiesel and renewable diesel) qualified as advanced biodiesel and renewable diesel (11,701 
million gallons of the 12,323 million gallons) according to EMTS data. 
85From 2011 through 2017 over 99.9% of all the 
domestically produced biodiesel and renewable diesel supplied to the U.S. qualified as advanced 
biodiesel and renewable diesel (10,089 million gallons of the 10,096 million gallons) according to EMTS data. of advanced biodiesel and renewable 
diesel used in previous years is especially useful in projecting the potential for growth in the production and use of such fuels, since for these fuels there are a number of complex and inter-related factors beyond simply the total production capacity for biodiesel and renewable diesel (including the availability of advanced feedstocks, the expiration of the biodiesel tax credit, recent tariffs on biodiesel from Argentina and Indonesia, and other market-based factors) that are likely to affect the supply of advanced biodiesel and renewable diesel. 
In addition to a review of the volumes 
of advanced biodiesel and renewable diesel used in previous years, we believe the likely growth in production of feedstocks used to produce these fuels, as well as the total projected available volumes of these feedstocks, are important factors to consider. This is because while there are many factors that could potentially limit the production and availability of these fuels, the impacts of increasing 
production of advanced biodiesel and renewable diesel on factors such as costs, energy security, and GHG emissions are expected to vary depending on whether the feedstocks used to produce these fuels are sourced from increased production of advanced feedstocks or alternatively from 
diverting these feedstocks from existing uses. The energy security and GHG reduction value associated with the growth in the use of advanced biofuels is greater when that growth is associated with an increase in advanced feedstock production, rather than a switching of existing advanced feedstocks from other uses to renewable fuel production or the diversion of advanced biodiesel and renewable diesel from foreign markets. This is especially true if the parties that previously used the advanced biofuel or feedstocks replace these oils with low cost palm or petroleum derived products, as we believe would likely be the case in 2019.
83In this case the 
global supply of advanced biodiesel and renewable diesel would not increase, and the potential benefits associated with increasing the diversity of the supply of transportation fuel (energy security) and the production of additional volumes of advanced biodiesel and renewable diesel (low GHG sources of transportation fuel) would not be realized. Such feedstock switching or fuel diversion could also result in unintended negative consequences, such as market disruption in other markets where such oils are used, which could offset some or all of the anticipated GHG benefits of the production and use of advanced biofuels. 
Before considering the projected 
growth in the production of qualifying 
feedstocks that could be used to produce advanced biodiesel and renewable diesel, as well as the total volume of feedstocks that could be used to produce these fuels, it is helpful to review the volumes of biodiesel and renewable diesel that have been used in the U.S. in recent years. While historic data and trends alone are insufficient to project the volumes of biodiesel and renewable diesel that could be provided in future years, historic data can serve as a useful reference in considering future volumes. Past experience suggests that a high percentage of the biodiesel and renewable diesel used in the U.S. (from both domestic production and imports) qualifies as advanced biofuel.
84In previous years, biodiesel 
and renewable diesel produced in the U.S. have been almost exclusively advanced biofuel.
85Imports of 
advanced biodiesel have also increased in recent years, as seen in Table IV.B.2– 1. Volumes of imported advanced biodiesel and renewable diesel have varied significantly from year to year, as they are impacted both by domestic and foreign policies, as well as many economic factors. 
TABLE IV.B.2–1—A DVANCED (D4 ANDD5) B IODIESEL AND RENEWABLE DIESEL FROM 2011 TO2017 
[Million gallons]a 
2011 2012 2013 2014b 2015b 2016 2017 
Domestic Biodiesel (An-
nual Change) ............ 967 (N/A) 1,014 (+47) 1,376 (+362) 1,303 (¥73) 1,253 (¥50) 1,633 (+380) 1,573 (¥60) 
Domestic Renewable 
Diesel (Annual 
Change) .................... 58 (N/A) 11 (¥47) 92 (+81) 155 (+63) 175 (+20) 221 (+46) 258 (+37) 
Imported Biodiesel (An-
nual Change) ............ 44 (N/A) 40 (¥4) 156 (+116) 130 (¥26) 261 (+131) 561 (+300) 462 (¥99) 
Imported Renewable 
Diesel (Annual Change) .................... 0 (N/A) 28 (+28) 145 (+117) 129 (¥16) 121 (¥8) 170 (+49) 193 (+23) 
Exported Biodiesel and 
Renewable Diesel (Annual Change) ...... 48 (N/A) 102 (+54) 125 (+23) 134 (+9) 133 (¥1) 129 (¥4) 157 (+28) 
Total (Annual 
Change) ............. 1,021 (N/A) 991 (¥30) 1,644 (+653) 1,583 (¥61) 1,677 (+94) 2,456 (+779) 2,329 (¥127) 
aAll data from EMTS. EPA reviewed all advanced biodiesel and renewable diesel RINs retired for reasons other than demonstrating compli-
ance with the RFS standards and subtracted these RINs from the RIN generation totals for each category in the table above to calculate the vol-
ume in each year. 
bRFS required volumes for these years were not established until December 2015. 
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86We also acknowledge that the fact that EPA did 
not finalize the required volumes of renewable fuel 
under the RFS program for 2014 and 2015 until December 2015 likely had an impact on the volume of advanced biodiesel and renewable diesel supplied in these years. Further, the preliminary tariffs on biodiesel imported from Argentina and Indonesia announced in August 2017 likely had a negative impact on the volume of biodiesel supplied in 2017. TABLE IV.B.2–2—C ONVENTIONAL (D6) B IODIESEL AND RENEWABLE DIESEL FROM 2011 TO2016 
[Million gallons]a 
2011 2012 2013 2014b 2015b 2016 2017 
Domestic Biodiesel (An-
nual Change) ............ 0 (N/A) 0 (+0) 6 (+6) 1 (¥5) 0 (+0) 0 (+0) 0 (+0) 
Domestic Renewable 
Diesel (Annual 
Change) .................... 0 (N/A) 0 (+0) 0 (+0) 0 (+0) 0 (+0) 0 (+0) 0 (+0) 
Imported Biodiesel (An-
nual Change) ............ 0 (N/A) 0 (+0) 31 (+31) 52 (+21) 74 (+22) 113 (+39) 0 (¥113) 
Imported Renewable 
Diesel (Annual Change) .................... 0 (N/A) 0 (+0) 53 (+53) 0 (¥53) 106 (+106) 43 (¥63) 144 (+101) 
Exported Biodiesel and 
Renewable Diesel (Annual Change) ...... 0 (N/A) 0 (+0) 0 (+0) 0 (+0) 0 (+0) 1 (+1) 0 (¥1) 
Total (Annual 
Change) ............. 0 (N/A) 0 (+0) 90 (+90) 53 (¥37) 180 (+127) 155 (¥25) 144 (¥11) 
aAll data from EMTS. EPA reviewed all conventional biodiesel and renewable diesel RINs retired for reasons other than demonstrating compli-
ance with the RFS standards and subtracted these RINs from the RIN generation totals for each category in the table above to calculate the vol-
ume in each year. 
bRFS required volumes for these years were not established until December 2015. 
Since 2011 the year-over-year changes 
in the volume of advanced biodiesel and 
renewable diesel used in the U.S. have varied greatly, from a low of negative 127 million gallons from 2016 to 2017 to a high of 779 million gallons from 2015 to 2016. These changes were likely influenced by multiple factors such as the cost of biodiesel feedstocks and petroleum diesel, the status of the biodiesel blenders tax credit, growth in marketing of biodiesel at high volume truck stops and centrally fueled fleet locations, demand for biodiesel and renewable diesel in other countries, biofuel policies in both the U.S. and foreign countries, and the volumes of renewable fuels (particularly advanced biofuels) required by the RFS. This historical information does not indicate that the maximum previously observed increase of 779 million gallons of advanced biodiesel and renewable diesel would be reasonable to expect from 2018 to 2019, nor does it indicate that the low (or negative) growth rates observed in other years would recur in 2019. Rather, these data illustrate both the magnitude of the increases in advanced biodiesel and renewable diesel in previous years and the significant variability in these increases. 
The historic data indicates that the 
biodiesel tax policy in the U.S. can have a significant impact on the volume of biodiesel and renewable diesel used in the U.S. in any given year. While the biodiesel blenders tax credit has applied in each year from 2010—2017, it has only been prospectively in effect during the calendar year in 2011, 2013 and 2016, while other years it has been applied retroactively. The biodiesel blenders tax credit expired at the end of 2009 and was re-instated in December 
2010 to apply retroactively in 2010 and extend through the end of 2011. Similarly, after expiring at the end of 2011, 2013, and 2014 the tax credit was re-instated in January 2013 (for 2012 and 2013), December 2014 (for 2014), December 2015 (for 2015 and 2016), and February 2018 (for 2017). Each of the years in which the biodiesel blenders tax credit was in effect during the calendar year (2013 and 2016) resulted in significant increases in the volume of advanced biodiesel and renewable diesel used in the U.S. over the previous year (653 million gallons and 779 million gallons respectively). However, following these large increases in 2013 and 2016, there was little to no growth in the use of advanced biodiesel and renewable diesel in the following years, only 33 million gallons from 2013 to 2015 and negative 127 million gallons from 2016 to 2017. This decrease from 2016 to 2017 happened despite the fact 
that the required volume of advanced biofuel increased from 3.61 in 2016 to 4.28 billion gallons in 2017. This pattern is likely the result of both accelerated production and/or importation of biodiesel and renewable diesel in the final few months of years during which the tax credit was available to take advantage of the expiring tax credit, as well as relatively lower volumes of biodiesel and renewable diesel production and import in 2014, 2015, and 2017 than would have occurred if the tax credit had been in place.
86 The historical data suggests that the 
supply of advanced biodiesel and renewable diesel could potentially increase from 2.33 billion gallons in 2017 to 2.8 billion gallons in 2019 (the projected volume needed to meet the advanced biofuel volume for 2019 after reducing the statutory advanced biofuel volume by the same amount as the cellulosic biofuel reduction). This would represent an average annual rate of growth of approximately 235 million gallons per year, slightly higher than the average increase in the volume of advanced biodiesel and renewable diesel used in the U.S. from 2011 through 2017 (218 million gallons per year) and significantly less the highest annual increase during this time (779 million gallons from 2015 to 2016). 
After reviewing the historical volume 
of advanced biodiesel and renewable diesel used in the U.S. and considering the possible impact of the expiration of the biodiesel tax credit (discussed above), EPA next considers other factors that may impact the production, import, and use of advanced biodiesel and renewable diesel in 2019. The production capacity of registered advanced biodiesel and renewable diesel production facilities is highly unlikely to limit the production of these fuels, as the total production capacity for biodiesel and renewable diesel at registered facilities in the U.S. (4.1 billion gallons) exceeds the volume of these fuels that are projected to be 
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87The production capacity of the sub-set of 
biodiesel and renewable diesel producers that 
generated RINs in 2017 is approximately 3.1 billion gallons. See ‘‘Biodiesel and Renewable Diesel Registered Capacity (May 2018)’’ Memorandum from Dallas Burkholder to EPA Docket EPA–HQ– OAR–2018–0167. 
88The March 2018 WASDE projects production of 
vegetable oils in 2017/18 in the World to be 197.78 million metric tons. This quantity of vegetable oil would be sufficient to produce approximately 56.5 billion gallons of biodiesel and renewable diesel. 89For example, corn oil is a co-product of corn 
grown primarily for feed or ethanol production, while soy and canola are primarily grown as livestock feed. 
90According to EIA data 6,230 million pounds of 
soy bean oil and 1,579 million pounds of corn oil were used to produce biodiesel in the U.S. in 2017. Other significant sources of feedstock were yellow grease (1,471 million pounds), canola oil (1,452 million pounds), and white grease (591 million pounds). Numbers from EIA’s March 2018 Monthly 
Biodiesel Production Report. 
91According to the March 2018 WASDE report, 
U.S. vegetable oil production in the 2016/2017 agricultural marketing year is estimated to be 11.43 million metric tons. According to the January 2013 WASDE report, U.S. vegetable oil production in the 2010/2011 agricultural marketing year was 9.76 million metric tons. 
92To calculate this volume, we have used a 
conversion of 7.7 pounds of feedstock per gallon of biodiesel. This is based on the expected conversion of soybean oil (http://extension.missouri.edu/p/ G1990), which is the largest source of feedstock used to produce advanced biodiesel and renewable diesel. Conversion rates for other types of vegetable oils used to produce biodiesel and renewable diesel are similar to those for soybean oil. 
93Distillers corn oil is non-food grade corn oil 
produced by ethanol production facilities. 
94For the purposes of this rule, EPA relied on 
WAEES modeling results submitted as comments 
by the National Biodiesel Board on the 2018 final rule (Kruse, J., ‘‘Implications of an Alternative Advanced and Biomass Based Diesel Volume Obligation for Global Agriculture and Biofuels’’, August 21, 2017, World Agricultural Economic and 
Continued needed to meet the advanced biofuel 
volume for 2019 after exercising the cellulosic waiver authority (2.8 billion gallons).
87Significant registered 
production also exists internationally. Similarly, the ability for the market to distribute and use advanced biodiesel and renewable diesel appears unlikely constrain the growth of these fuels to a volume lower than 2.8 billion gallons. The investments required to distribute and use this volume of biodiesel and renewable diesel are expected to be modest, as this volume is less than 200 million gallons greater than the volume of biodiesel and renewable diesel produced, imported, and used in the U.S. in 2016. 
Conversely, the availability of 
advanced feedstocks that can be used to produce advanced biodiesel and renewable diesel and the projected availability of imported advanced biodiesel and renewable diesel may limit the volume of these fuels available to the U.S. in 2019. We acknowledge that an increase in the required use of advanced biodiesel and renewable diesel could be realized through a diversion of advanced feedstocks from other uses, or a diversion of advanced biodiesel and renewable diesel from existing markets in other countries, and that volume of advanced biodiesel and renewable diesel and advanced feedstocks produced globally exceeds the volume projected to be required in 2019 (2.8 billion gallons of advanced biodiesel and renewable diesel and the corresponding volume of advanced feedstocks) by a significant margin.
88 
However, we perceive the net benefits associated with such increased advanced biofuel and renewable fuel volumes to be significantly less than the net benefits associated with the production of additional advanced biodiesel and renewable diesel from newly-available advanced feedstocks, due to the likelihood that parties that previously used advanced biofuel 
feedstocks will replace them with low cost palm or petroleum derived products. 
This is both because of the potential 
disruption and associated cost impacts to other industries resulting from feedstock switching, and the potential adverse effect on lifecycle GHG emissions associated with feedstocks for biofuel production that would have been used for other purposes and which must then be backfilled with other feedstocks. Similarly, increasing the supply of biodiesel and renewable diesel to the U.S. by diverting fuel that would otherwise have been used in other countries results in higher lifecycle GHG emissions than if the supply of these fuels was increased through additional biofuel production, especially if this diversion results in increased consumption of petroleum fuels in the countries that would have otherwise consumed the biodiesel or renewable diesel. By focusing our assessment of the potential growth in the attainable volume of biodiesel and renewable diesel on the expected growth in the production of advanced feedstocks (rather than the total supply of these feedstocks in 2018, which would include feedstocks currently being used for non-biofuel purposes), we are attempting to minimize the incentives for the RFS program to increase the supply of advanced biodiesel and renewable diesel through feedstock switching or diverting biodiesel and renewable diesel from foreign market to the U.S. 
Advanced biodiesel and renewable 
diesel feedstocks include both waste oils, fats, and greases; and oils from planted crops. While we believe a small increase in supply of waste oils, fats, and greases may be possible in 2019, we believe this increase is limited as most of these waste oils, fats, and greases that can be recovered economically are already being recovered and used in biodiesel and renewable diesel production or for other purposes. Most of the vegetable oil used to produce advanced biodiesel and renewable diesel that is sourced from planted crops comes from crops primarily grown for purposes other than providing feedstocks for biodiesel and renewable diesel, such as for livestock feed with the oil that is used as feedstock for renewable fuel production a co-product or by-product.
89This is true for 
soybeans and corn, which are the two largest sources of feedstock from planted crops used for biodiesel production in the U.S.
90We do not believe that the increased demand for 
soybean oil or corn oil caused by a higher 2019 advanced biofuel standard would result in an increase in soybean or corn prices large enough to induce significant changes in agricultural activity, at least for the changes in advanced biodiesel and renewable diesel feedstock demand that may be caused by this proposed 2019 standard. 
We believe the most reliable source 
for projecting the expected increase in vegetable oils in the U.S. is USDA’s World Agricultural Supply and Demand Estimates (WASDE). At the time of our assessment for this proposed rule, the most current version of the WASDE report only projects domestic vegetable oil production through 2018. Based on domestic vegetable oil production from 2011–2017 as reported by WASDE, the average annual increase in vegetable oil production in the U.S. was 0.278 million metric tons per year.
91 
Assuming a similar increase in domestic vegetable oil production from 2018 to 2019, this additional quantity of vegetable oils could be used to produce approximately 80 million additional gallons of advanced biodiesel or renewable diesel in 2019 relative to 2018.
92 
In addition to virgin vegetable oils, we 
also expect increasing volumes of distillers corn oil
93to be available for 
use in 2019. The WASDE report does not project distillers corn oil production, so EPA must use an alternative source to project the growth in the production of this feedstock. For this proposed rule EPA is using results from the World Agricultural Economic and Environmental Services (WAEES) model to project the growth in the production of distillers corn oil.
94In 
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Environmental Services (WAEES), EPA–HQ–OAR– 
2017–0091–3880). 
95Id. 
9682 FR 58512 (December 12, 2017). 97The March 2018 WASDE projects production of 
vegetable oils in 2017/18 in the U.S. and the World 
to be 11.64 and 197.78 million metric tons respectively. To convert projected vegetable oil production to potential biodiesel and renewable diesel production we have used a conversion of 7.7 pounds of feedstock per gallon of biodiesel. 
98These reasons include the demand for 
vegetable oil in the food, feed, and industrial markets both domestically and globally; constraints 
related to the production, import, distribution, and use of significantly higher volumes of biodiesel; and the fact that biodiesel and renewable diesel produced from much of the vegetable oil available globally would not qualify as an advanced biofuel under the RFS program. 99Bipartisan Budget Act of 2018, Public Law 115– 
123, 132 Stat. 64 §§ 40406, 40407, and 40415 
(2018). 
100‘‘Biodiesel from Argentina and Indonesia 
Injures U.S. Industry, says USITC,’’ Available online at: https://www.usitc.gov/press_ room/news_
release/2017/er1205ll876.htm. 
101See ‘‘EIA Biomass-Based Diesel Import Data’’ 
available in docket EPA–HQ–OAR–2018–0167. assessing the likely increase in the 
availability of distillers corn oil from 2018 to 2019, the authors of the WAEES model considered the impacts of an increasing adoption rate of distillers corn oil extraction technologies at domestic ethanol production facilities, as well as increased corn oil extraction rates enabled by advances in this technology. The WAEES model projects that production of distillers corn oil in 2018 will increase by 167 million pounds, from 2615 million pounds in agricultural marketing year 2017/2018 to 2,782 million pounds in agricultural marketing year 2018/2019. According to the WAEES model, this projected increase in the production of distillers corn oil, if devoted entirely to biofuel production, could be used to produce 
approximately 22 million additional gallons of advanced biodiesel or renewable diesel in 2019. We believe it is reasonable to use these estimates from the WAEES model for these purposes. 
While the vast majority of the increase 
in advanced biodiesel and renewable diesel feedstocks produced in the U.S. from 2018 to 2019 is expected to come from virgin vegetable oils and distillers corn oil, increases in the supply of other sources of advanced biodiesel and renewable diesel feedstocks, such as biogenic waste oils, fats, and greases, may also occur. These increases, however, are expected to be modest, as many of these feedstocks that can be recovered economically are already being used to produce biodiesel or renewable diesel, or in other markets. In fact, the WAEES model projects a decrease of 3 million gallons in the volume of biodiesel produced from feedstocks other than soybean oil, canola oil, and distillers corn oil from 2018 to 2019.
95In total, we expect that 
increases in feedstocks produced in the U.S. are sufficient to produce approximately 100 million more gallons of advanced biodiesel and renewable diesel in 2019 relative to 2018. In our 2018 final rule, we determined that 2.55 billion gallons of advanced biodiesel and renewable diesel were reasonably attainable in 2018,
96therefore our 
projection of the reasonably attainable volume of advanced biodiesel and renewable diesel in 2019 is 2.65 billion gallons. 
EPA’s projections of the growth of 
advanced feedstocks does not, however, suggest that the total supply of advanced biodiesel and renewable diesel to the U.S. in 2018 will be limited to 2.65 billion gallons. Rather, this is the 
volume of these fuels that we project could be supplied without diverting significant quantities of advanced feedstocks or biofuels from existing uses. The March 2018 WASDE reports that production of vegetable oil in the U.S. in the 2017/2018 market year (the latest year for which projections are available) will be sufficient to produce approximately 3.3 billion gallons of biodiesel and renewable diesel (including both advanced and conventional biofuels) if the entire volume of vegetable oil was used to produce these fuels. Additional advanced biodiesel and renewable diesel could be produced from waste fats, oils, and greases. The global production of vegetable oil projected in the 2017/2018 marketing year would be sufficient to produce approximately 56.5 billion gallons of biodiesel and renewable diesel (including both advanced and conventional biofuels).
97 
While it would not be reasonable to assume that all, or even a significant portion, of global vegetable oil production could be available to produce biodiesel or renewable diesel supplied to the U.S. for a number of reasons,
98the large global supply of 
vegetable oil strongly suggests that under the right market conditions 2.8 billion gallons of advanced biodiesel and renewable diesel is attainable in 2019. Reaching these levels, however, may result in the diversion of advanced feedstocks currently used in other markets and/or the import of biodiesel and renewable diesel from these feedstocks. 
Further, the supply of advanced 
biodiesel and renewable diesel to the U.S. in 2019 could be increased by approximately 150 million gallons if all of the exported volumes of these fuels were used domestically. Diverting this fuel to markets in the U.S. may be complicated, however, as doing so would likely require higher prices for these fuels in the U.S. (to divert the fuels from foreign markets that are presumably more profitable currently). It may also be more difficult and costly to distribute this additional volume of biodiesel and renewable diesel to domestic markets than the current foreign markets. Finally, reducing advanced biodiesel and renewable diesel exports may indirectly result in the decreased availability of imported volumes of these fuels, as other countries seek to replace volumes previously imported from the U.S. 
EPA next considered potential 
changes in the imports of advanced biodiesel and renewable diesel produced in other countries. In previous years, significant volumes of foreign produced advanced biodiesel and renewable diesel have been supplied to markets in the U.S. (see Table IV.B.2–1 above). These significant imports were likely the result of a strong U.S. demand for advanced biodiesel and renewable 
diesel, supported by the RFS standards, the LCFS in California, the biodiesel blenders tax credit, and the opportunity for imported biodiesel and renewable diesel to realize these incentives. 
The RFS requirements and 
California’s LCFS are expected to continue to provide an incentive for imports of advanced biodiesel and renewable diesel in 2019. Several other factors, however, may negatively impact the volume of these fuels imported in 2019. In February 2018 the biodiesel blenders tax credit, which had expired at the end of 2016, was retroactively reinstated for biodiesel blended in 2017 but was not extended to apply to biodiesel blended in 2018 or 2019.
99 
Perhaps more significantly, in December 2017 the U.S. International Trade Commission adopted tariffs on biodiesel imported from Argentina and Indonesia.
100According to data from 
EIA,101no biodiesel was imported from 
Argentina or Indonesia from September 2017—February 2018, after a preliminary decision to impose tariffs on biodiesel imported from these countries was announced in August 2017. Biodiesel imports from these countries were significant, accounting for over 550 million gallons in 2016 and approximately 290 million gallons in 2017. At this time, the ultimate impact these tariffs will have on overall imports of advanced biodiesel and renewable diesel to the U.S. remains uncertain. It is possible that imports of advanced biodiesel and renewable diesel from 
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102According to EIA data, total biodiesel imports 
from countries other than Argentina and Indonesia 
totaled 153 million gallons in 2016 and 103 million gallons in 2017. See ‘‘EIA Biomass-Based Diesel Import Data’’ available in docket EPA–HQ–OAR– 2018–0167. 
103According to data from EMTS, 954 million 
gallons of advanced biodiesel and renewable diesel were imported into the U.S. in 2016 and 854 million gallons of these fuels were imported in 2017. Note that imported volumes of biodiesel and renewable diesel from EMTS and EIA do not precisely match. The primary reason for this difference is that EIA data is sourced from EIA surveys, while the EMTS data is generated by the parties that produce and/or import biodiesel and renewable diesel into the U.S. For the purposes of this discussion we have cited the EIA data, as this data more easily allows us to quantify the fuel impacted by the recent tariffs (biodiesel imported from Argentina and Indonesia). 
104Note that this estimate assumes that the U.S. 
consumes all domestically produced biodiesel and renewable diesel, rather than exporting any of this fuel. Alternatively, if the U.S. continues to export approximately 150 million gallons of biodiesel per year in 2019 domestic production of advanced biodiesel and renewable diesel would have to increase by approximately 200 million gallons per year. 105In the 2018 final rule, EPA projected that 
advanced biodiesel and renewable diesel feedstocks would increase to allow production of approximately 150 million additional gallons of advanced biodiesel and renewable diesel in 2018. 82 FR 58511 (December 12, 2017). In this proposed rule we are projecting additional growth in advanced biodiesel and renewable diesel feedstocks to allow production of approximately 100 million additional gallons of advanced biodiesel and renewable diesel in 2019 (relative to the volume of advanced feedstocks projected for 2018). 
106See, e.g., Response to Comments Document for 
the 2014–2016 Rule, pages 628–631, available in docket EPA–HQ–OAR–2015–0111. other countries not impacted by these 
tariffs will increase to make up for all, or some portion of the biodiesel imported from Argentina and Indonesia in previous years. The volume of imported biodiesel in 2017 sourced from countries not impacted by the tariffs, however, is significantly less 
than the volume supplied by Argentina and Indonesia.
102It is possible, 
therefore, that the supply of imported advanced biodiesel and renewable diesel available in the U.S. in 2019 will decrease from the relatively high levels in recent years.
103 
Domestic production of advanced 
biodiesel and renewable diesel in 2016 and 2017 was approximately 1.85 billion gallons. Of this total, approximately 150 million gallons of domestically produced biodiesel was exported in 2016 and 2017. An additional 100 to150 million gallons of these fuels were imported from countries unaffected by the recent tariffs. If, by 2019, alternative sources of imported biodiesel and renewable diesel are identified and the imported volume of advanced biodiesel and renewable diesel returns to the levels observed in 2016 and 2017 (approximately 700 million gallons per year) domestic production would need to increase by approximately 125 million gallons per year in both 2018 and 2019 to reach a total advanced biodiesel and renewable diesel supply of 2.8 billion gallons by 2019.
104These increases appear 
attainable, as they are lower than the average annual increase of advanced biodiesel and renewable diesel production in the U.S. between 2011 and 2017 (134 million gallons per year). These increases are also approximately 
equal to the projected increases in advanced feedstock availability in 2017 and 2018.
105We therefore project that a 
volume of 2.8 billion gallons of advanced biodiesel and renewable diesel is attainable in 2019 if the imported volume of these fuels does not fall significantly below the volumes imported in 2016 and 2017. We note, however, that using this volume of advanced biodiesel and renewable diesel in the U.S. would likely result in the diversion of advanced biodiesel and renewable diesel and/or feedstocks used to produce these fuels, as advanced biodiesel and renewable diesel that is currently exported would instead be used in the U.S. and alternative sources for significant volumes of these fuels would need to be found. 
After a careful consideration of the 
factors discussed above, EPA has determined that 2.8 billion gallons of advanced biodiesel and renewable diesel projected needed to satisfy the implied statutory volume for non- cellulosic advanced biofuel in 2019 (4.5 billion gallons) are attainable. The total production capacity of registered biodiesel and renewable diesel producers is significantly higher than 2.8 billion gallons, even if only those facilities that generated RINs for advanced biodiesel and renewable diesel in 2017 are considered. This volume (2.8 billion gallons) is also not significantly higher than the total volume of biodiesel and renewable diesel supplied in 2016 (approximately 2.6 billion gallons), strongly suggesting that production capacity and the ability to distribute and use biodiesel and renewable diesel will not limit the supply of advanced biodiesel and renewable diesel to a volume below 2.8 billion gallons in 2018. Sufficient feedstocks are expected to be available to produce this volume of advanced 
biodiesel and renewable diesel in 2019, however doing so may result in some level of diversion of advanced feedstocks and/or advanced biodiesel and renewable diesel from existing uses. Achieving this level of advanced biodiesel and renewable diesel in 2019, however, will likely require finding alternative sources for biodiesel imports to replace the volume of biodiesel and renewable diesel that were supplied from Argentina and Indonesia in 2016 and 2017. Alternatively, obligated parties could rely on the significant volume of carryover advanced RINs projected to be available in 2019 (See Section II.B for a further discussion of carryover RINs). 
C. Proposed Volume Requirement for 
Advanced Biofuel 
In exercising the cellulosic waiver 
authority for 2017 and earlier, we determined it was appropriate to require a partial backfilling of missing cellulosic volumes with volumes of non-cellulosic advanced biofuel we determined to be reasonably attainable, notwithstanding the increase in costs associated with those decisions.
106For the 2018 
standards, in contrast, we placed a greater emphasis on cost considerations in the context of balancing the various considerations, ultimately concluding that the applicable volume requirement should be based on the maximum reduction permitted under the cellulosic waiver authority. We are proposing to take a similar approach for 2019. That is, while it may be possible that more than 4.88 billion gallons of advanced biofuel might be attainable in 2019, requiring additional volumes would lead to higher costs, feedstock switching and/or diversion of foreign advanced biofuels. We do not believe that it would be appropriate to set the advanced biofuel volume requirement higher than 4.88 billion gallons given that it could lead to these results. 
Based on the information presented 
above, we believe that 4.88 billion gallons of advanced biofuel is attainable in 2019. After a consideration of the projected volume of cellulosic biofuel and reasonably attainable volumes of imported sugarcane ethanol and other advanced biofuels, we determined that 2.8 billion gallons of advanced biodiesel and renewable diesel would be needed to reach 4.88 billion gallons of advanced biofuel. Based on a review of the factors relevant to the supply of advanced biodiesel and renewable diesel as discussed in Section IV.B.2 above, including historic production and import data, the production capacity of registered biodiesel and renewable diesel producers, and the availability of advanced feedstocks, we have determined that 2.8 billion gallons of BBD is attainable in 2019. 
However, we also acknowledge that 
2.8 billion gallons of BBD is 
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107For instance, see discussion in the final rules 
setting the 2013, 2014–2016, and 2017 standards: 78 
FR 49809 –49810, August 15, 2013; 80 FR 77434, December 14, 2015; 81 FR 89752—89753, December 12, 2016. 
108EPA also considered the availability of 
carryover RINs in determining whether reduced use of the cellulosic waiver authority would be warranted. For the reasons described in Section II.B, we do not believe this to be the case. 
109‘‘Market impacts of biofuels in 2019,’’ 
memorandum from David Korotney to docket EPA– HQ–OAR–2018–0167. In prior actions including the 2018 annual rule proposal, similar analyses indicated that the market was capable of both producing and consuming the required volume of renewable fuels, and that as a result there was no basis for finding an inadequate domestic supply of total renewable fuel. See 82 FR 34229 & n.82. Given the D.C. Circuit’s decision in ACE, however, the 
current assessment of demand-side constraints is no longer relevant for determining inadequate domestic supply. However, we believe consideration of the ways that the market could 
make this volume available may still be relevant to whether and how EPA exercises its waiver authorities, such as our consideration of whether the proposed volumes will cause severe economic harm. considerably higher than the 2.33 
billion gallons actually supplied in 2017 and the 2.55 billion gallons determined to be reasonably attainable in 2018. While 2.8 billion gallons would require an average growth in supply of 235 million gallons per year between 2017 and 2019, this is only slightly higher than the average annual growth rate in years 2011—2017. Nevertheless, there is some uncertainty regarding whether 2.8 billion gallons is attainable in 2019. This fact has led us to consider whether the use of carryover RINs might be appropriate. 
The carryover RIN bank has 
continued to grow over the past several years as described in Section II.B, and is currently at its largest historical level. It represents a source of RINs that could help obligated parties meet an advanced biofuel volume requirement of 4.88 billion gallons in 2019 if the market fails to supply sufficient advanced biofuels in 2019. If the market does choose to meet a volume requirement of 4.88 billion gallons in this way, it would be for the first time in the history of the RFS program. Although we did point to the carryover RIN bank in 2013, along with the potential for additional volumes of E85, as a means for meeting the statutory volume requirement of 16.55 billion gallons, in that case the concern was the portion of the standard that is not required to be advanced biofuel (e.g. conventional biofuel). 
Ultimately, the market supplied more advanced biofuel than it needed to meet the applicable volume requirement for advanced biofuel while falling short of the total renewable fuel volume requirement. 
Although we believe that the 2.8 
billion gallon volume is attainable, and any shortfalls could be met through the use of carryover RINs, we also solicit comment and supporting data and rationale on whether circumstances exist that would warrant further reductions in volumes through the exercise of the general waiver authority (e.g., due to severe economic harm). We 
recognize that identifying severe economic harm caused by the implementation of RFS requirements is a difficult and complex issue and one of intense interest to a number of stakeholders. We discussed in past notices, and in the most recent annual rulemaking for 2018, the type of information we generally think would be relevant to identifying severe economic harm. For example, in 2008, we examined modeling showing expected levels of production and price for both corn and ethanol with and 
without a waiver. We also provided quantitative estimates of the impact of a waiver on: Food expenditures for 
average and lowest quintile households; feeds costs for cattle, pigs, poultry and 
dairy; and gasoline prices and gasoline expenditures for average and lowest quintile households. 
It should be noted that by exercising 
the full cellulosic waiver authority for advanced biofuel, the implied statutory volume target for non-cellulosic advanced biofuel of 4.5 billion gallons in 2019 would be maintained. This represents an increase of 0.5 billion gallons from the 2018 volume requirements. 
D. Proposed Volume Requirement for 
Total Renewable Fuel 
As discussed in Section II.A.1, we 
believe that the cellulosic waiver provision is best interpreted to provide equal reductions in advanced biofuel and total renewable fuel. We have consistently articulated this interpretation.
107For the reasons we 
have previously articulated, we believe this interpretation is consistent with the statutory language and best effectuates the objectives of the statute. If EPA were to reduce the total renewable fuel volume requirement by a lesser amount than the advanced biofuel volume requirement, we would effectively increase the opportunity for conventional biofuels to participate in the RFS program beyond the implied statutory volume of 15 billion gallons. Applying an equal reduction of 8.12 billion gallons to both the statutory target for advanced biofuel and the statutory target for total renewable fuel would result in a total renewable fuel volume of 19.88 billion gallons as shown in Table IV.A–1.
108A 
memorandum to the docket provides a description of the ways in which the market could make this volume of total renewable fuel available.
109 This volume of total renewable fuel 
results in an implied volume of 15 
billion gallons of conventional fuel, which is the same as in the 2018 final rule. 
V. Impacts of 2019 Volumes on Costs 
In this section, EPA presents its 
assessment of the illustrative costs of 
the proposed 2019 RFS rule. It is important to note that these illustrative costs do not attempt to capture the full impacts of this proposed rule. We frame the analyses we have performed for this proposed rule as ‘‘illustrative’’ so as not to give the impression of comprehensive estimates. These estimates are provided for the purpose of showing how the cost to produce a gallon of a ‘‘representative’’ renewable fuel compares to the cost of petroleum fuel. There are a significant number of caveats that must be considered when interpreting these illustrative cost estimates. For example, there are many different feedstocks that could be used to produce biofuels, and there is a significant amount of heterogeneity in the costs associated with these different feedstocks and fuels. Some renewable fuels may be cost competitive with the petroleum fuel they replace; however, we do not have cost data on every type of feedstock and every type of fuel. Therefore, we do not attempt to capture this range of potential costs in our illustrative estimates. 
Illustrative cost estimates are 
provided below for the proposal discussed in Sections III and IV that reduces the cellulosic, advanced, and total renewable fuel volume requirements using the cellulosic waiver authority under CAA section 211(o)(7)(D)(i). For this proposal, we examine two different cases. In the first case, we provide illustrative cost estimates by comparing the proposed 2019 renewable fuel volumes to 2019 statutory volumes under CAA section 211(o)(7)(D)(i). In the second case, we examine the proposed 2019 renewable 
fuel volumes to the final 2018 renewable fuel volumes to estimate changes in the annual costs of the proposed 2019 RFS volumes in comparison to the 2018 volumes. 
A. Illustrative Costs Analysis of 
Exercising the Cellulosic Waiver Authority Compared to the 2019 Statutory Volumes Baseline 
In this section, EPA provides 
illustrative cost estimates that compare 
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110EPA projects that 580 million ethanol- 
equivalent gallons of CNG/LNG will be used as 
transportation fuel in 2019 based on EIA’s April 2018 Short Term Energy Outlook (STEO). To calculate this estimate, EPA used the Natural Gas Vehicle Use from the STEO Custom Table Builder (0.13 billion cubic feet/day in 2019). This projection includes all CNG/LNG used as transportation fuel from both renewable and non-renewable sources. EIA does not project the amount of CNG/LNG from biogas used as transportation fuel. To convert 
billion cubic feet/day to ethanol-equivalent gallons EPA used conversion factors of 946.5 BTU per cubic foot of natural gas (lower heating value, per calculations using ASTM D1945 and D3588) and 
77,000 BTU of natural gas per ethanol-equivalent gallon per § 80.1415(b)(5). 
111Details of the data and assumptions used can 
be found in a Memorandum available in the docket entitled ‘‘Cost Impacts of the Proposed 2019 Annual Renewable Fuel Standards’’, Memorandum from Michael Shelby, Dallas Burkholder, and Aaron Sobel available in docket EPA–HQ–OAR–2018– 0167. 
112For the purposes of the cost estimates in this 
section, EPA has not attempted to adjust the price 
of the petroleum fuels to account for the impact of the RFS program, since the changes in the renewable fuel volume are relatively modest. 
Rather, we have simply used the wholesale price projections for gasoline and diesel as reported in EIA’s April 2018 STEO. 
113For this table and all subsequent tables in this 
section, approximate costs in per gallon cost difference estimates are rounded to the cents place. 
114For this table and all subsequent tables in this 
section, approximate resulting costs (other than in per-gallon cost difference estimates) are rounded to two significant figures. 
115These volumes do not add to 93 million 
gallons due to rounding. the proposed 2019 cellulosic biofuel 
volume requirements to the 2019 cellulosic statutory volume that would be required absent the exercise of our cellulosic waiver authority under CAA section 211(o)(7)(D)(i). As described in Section III, we are proposing a cellulosic volume of 381 million gallons for 2019. The result is that we are using our cellulosic waiver authority to waive the statutory cellulosic volume of 8.5 billion gallons by 8.12 billion gallons. Estimating the cost savings from volumes that are not projected to be produced is inherently challenging. EPA has taken the relatively straightforward methodology of multiplying this waived volume of 8.12 billion gallons by the wholesale per-gallon costs of cellulosic biofuel production relative to the petroleum fuels they displace. 
While there may be growth in other 
cellulosic renewable fuel sources, we believe it is appropriate to use cellulosic ethanol produced from corn kernel fiber as the representative cellulosic renewable fuel. The majority of liquid cellulosic biofuel in 2019 is expected to be produced using this technology, and application of this technology in the future could result in significant incremental volumes of cellulosic biofuel. In addition, as explained in Section III, we believe that production of the major alternative cellulosic biofuel—CNG/LNG derived from 
biogas—is limited to approximately 630 million gallons due to a limitation in the number of vehicles capable of using this form of fuel.
110 
EPA uses a ‘‘bottom-up’’ engineering 
cost analysis to quantify the costs of 
producing a gallon of cellulosic ethanol derived from corn kernel fiber. There are multiple processes that could yield cellulosic ethanol from corn kernel fiber. EPA assumes a cellulosic ethanol production process that generates biofuel using distiller’s grains, a co- product of generating corn starch ethanol that is commonly dried and sold into the feed market as distillers dried grains with solubles (DDGS), as the renewable biomass feedstock. We assume an enzymatic hydrolysis process with cellulosic enzymes to break down the cellulosic components of the distiller’s grains. This process for generating cellulosic ethanol is similar to approaches currently used by industry to generate cellulosic ethanol at a commercial scale, and we believe these cost estimates are likely representative of the range of different technology options being developed to produce ethanol from corn kernel fiber. We then compare the per-gallon costs of the cellulosic ethanol to the petroleum fuels that would be replaced at the wholesale stage, since that is when the 
two are blended together. 
These cost estimates do not consider 
taxes, retail margins, or other costs or transfers that occur at or after the point of blending (transfers are payments within society and are not additional costs). We do not attempt to estimate potential cost savings related to avoided infrastructure costs (e.g., the cost 
savings of not having to provide pumps and storage tanks associated with higher-level ethanol blends). When estimating per-gallon costs, we consider the costs of gasoline on an energy- equivalent basis as compared to ethanol, since more ethanol gallons must be consumed to travel the same distance as on gasoline due to the ethanol’s lower energy content. 
Table V.A–1 below presents the 
cellulosic fuel cost savings with this proposed rule that are estimated using this approach.
111The per-gallon cost 
difference estimates for cellulosic ethanol ranges from $0.49–$2.65 per ethanol-equivalent gallon.
112Given that 
cellulosic ethanol production is just starting to become commercially available, the cost estimates have a significant range. Multiplying those per- gallon cost differences by the amount of cellulosic biofuel waived in this proposed rule results in approximately $4.0–$22 billion in cost savings. 
TABLE V.A–1—I LLUSTRATIVE COSTS OF EXERCISING THE CELLULOSIC WAIVER AUTHORITY COMPARED TO THE 2019 
STATUTORY VOLUMES BASELINE  
Cellulosic Volume Required (Million Ethanol-Equivalent Gallons) ................................................................ ...................................... 381 
Change in Required Cellulosic Biofuel from 2019 Statutory Volume (Million Ethanol-Equivalent Gallons) .......................... ............. (8,119) 
Cost Difference Between Cellulosic Corn Kernel Fiber Ethanol and Gasoline Per Gallon ($/Ethanol-Equivalent Gallons)113........ $0.49–$2.65 
Annual Change in Overall Costs (Million $)114................................................................................................................................... $(4,000)– 
$(22,000) 
B. Illustrative Costs Analysis of 
Exercising the Cellulosic Waiver Authority Compared to the 2018 RFS Volumes Baseline 
In this section, we provide illustrative 
cost estimates for EPA exercising its cellulosic waiver authority to reduce statutory cellulosic volumes for 2019 (with corresponding reductions to the advanced and total renewable fuel volumes) compared to the final 2018 RFS volumes. This results in an increase in cellulosic volumes for the 2019 RFS of 93 gallons (ethanol-equivalent) and an increase in the non-cellulosic advanced biofuel volumes for 2019 of 500 million gallons (ethanol- equivalent). 1. Cellulosic Biofuel 
We anticipate that the increase in 
proposed 2019 cellulosic biofuel volumes would be composed of 10 million gallons of liquid cellulosic biofuel and 84 million gallons of CNG/ LNG derived from landfill biogas.
115 
Based upon the methodology outlined above in V.A, we use corn kernel fiber 
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116Ibid. 117Henry Hub Spot price estimate for 2019. 
Energy Information Administration (EIA), Short Term Energy Outlook (STEO) available in docket 
EPA–HQ–OAR–2018–0167. as the representative liquid cellulosic 
biofuel to develop cost estimates of cellulosic ethanol. We estimate a cost difference between cellulosic corn fiber- derived ethanol and gasoline of $0.49– $2.65 on an ethanol-equivalent gallon basis. Next, the per-gallon costs of cellulosic renewable fuel are multiplied by the 10 million gallon increase between the proposed 2019 cellulosic volume and the final 2018 cellulosic RFS volume requirements to estimate the total costs from the increase in cellulosic ethanol. 
For CNG/LNG-derived cellulosic 
biogas, we provide estimates of the cost of displacing natural gas with CNG/LNG derived from landfill biogas to produce 84 million ethanol-equivalent gallons of cellulosic fuel. To estimate the cost of production of CNG/LNG derived from landfill gas (LFG), EPA uses Version 3.2 of the Landfill Gas Energy Cost Model, or LFG cost-Web. EPA ran the financial cost calculator for projects with a design flow rate of 1,000 and 10,000 cubic feet per minute with the suggested default data and a project start year of 2019. The costs estimated for this analysis exclude any pipeline costs to transport the high BTU gas, as well as any costs associated with compressing the gas to CNG/LNG. These costs are not expected to differ significantly between LFG or natural gas. In addition, the cost estimates excluded the gas collection and control system infrastructure at the landfill, as EPA expects that landfills that begin producing high BTU gas in 2019 are very likely to already have this infrastructure in place.
116 
To estimate the illustrative cost 
impacts of the change in CNG/LNG derived from LFG, we compared the cost of production of CNG/LNG derived from LFG in each case to the projected price for natural gas in 2019 in EIA’s April 2018 STEO.
117Finally, we 
converted these costs to an ethanol- equivalent gallon basis. The resulting cost estimates are shown in Table V.B.2–1. Adding the cost of cellulosic ethanol to the costs of CNG/LNG landfill gas, the total costs of the proposed 2019 cellulosic volume compared to 2018 RFS cellulosic volume range from $2.3–$32 million. 
2. Advanced Renewable Fuel 
EPA provides a range of illustrative 
cost estimates for the increases in the 
advanced standard of 500 million ethanol-equivalent gallons using two different advanced biofuels. In the first scenario, we assume that all the increase in advanced biofuel volumes is comprised of soybean oil BBD. In the second scenario, we assume that all the increase in the advanced volume is comprised of sugarcane ethanol from Brazil. 
Consistent with the analysis in 
previous annual RFS volume rules, a ‘‘bottom-up’’ engineering cost analysis is used that quantifies the costs of producing a gallon of soybean-based biodiesel and then compares that cost to the energy-equivalent gallon of petroleum-based diesel. We compare the cost of biodiesel and diesel fuel at the wholesale stage, since that is when the two are blended together and represents the approximate costs to society absent transfer payments and any additional infrastructure costs. On this basis, EPA estimates the costs of producing and transporting a gallon of biodiesel to the blender in the U.S. To estimate the illustrative costs of 
sugarcane ethanol, we compare the cost of sugarcane ethanol and gasoline at the wholesale stage, since that is when the two are blended together and represents the approximate costs to society absent transfer payments and any additional infrastructure costs (e.g., blender 
pumps). On this basis, EPA estimates the costs of producing and transporting a gallon of sugarcane ethanol to the blender in the U.S. More background information on the cost assessment described in this Section, including details of the data sources used and assumptions made for each of the scenarios, can be found in a Memorandum available in the docket.
118 
Table VI.B.2–1 below also presents 
estimates of per energy-equivalent gallon costs for producing: (1) Soybean biodiesel (in ethanol-equivalent gallons) and (2) Brazilian sugarcane ethanol, relative to the petroleum fuels they replace at the wholesale level. For each of the fuels, these per-gallon costs are then multiplied by the increase in the 2019 non-cellulosic advanced volume relative to the 2018 final advanced standard volume to obtain an overall cost increase of $380–$710 million. In addition, in Table V.B.2–1, we also present estimates of the total cost of this proposal relative to 2018 RFS fuel volumes. We add the increase in cost of the proposed 2019 cellulosic standard volume, $2.3–$32 million, with the additional costs of the increase in non- cellulosic advanced biofuel volumes resulting from the proposed 2019 advanced standard volume, $380–$710 million. The overall total costs of this proposal range from $380–$740 million. 
TABLE V.B.2–1—I LLUSTRATIVE COSTS OF EXERCISING THE CELLULOSIC WAIVER AUTHORITY COMPARED TO THE 2018 
RFS V OLUMES BASELINE  
Cellulosic Volume 
Corn Kernel Fiber Cellulosic Ethanol Costs: 
Cost Difference Between Cellulosic Corn Kernel Fiber Ethanol and Gasoline Per Gallon ($/Ethanol-Equivalent Gallons) ...... $0.49– $2.65 
Annual Increase in Overall Costs (Million $) ................................................................................... ............................................. 4.9–26 
CNG/LNG Derived from Biogas Costs: 
Cost Difference Between CNG/LNG Derived from Landfill Biogas and Natural Gas Per Gallon (/Ethanol-Equivalent Gallons) (0.03)–0. 08 
Annual Increase in Overall Costs (Million $) ................................................................................... ............................................. (2.6)–6.4 
Annual Increase in Costs with Cellulosic Volume ................................................................................ ...............................................
(Million $) .................................................................................................................... ......................................................................... 2.3–32 
Advanced Volume 
Soybean Biodiesel Scenario: 
Cost Difference Between Soybean Biodiesel and Petroleum Diesel Per Gallon (/Ethanol-Equivalent Gallons) ........................ 1.04–1.43 
Annual Increase in Overall Costs (Million $) ................................................................................... ............................................. 520–710 
Brazilian Sugarcane Ethanol Scenario: 
Cost Difference Between Sugarcane Ethanol and Gasoline Per Gallon (/Ethanol-Equivalent Gallons) ................................ .... 0.76–1.22 
Annual Increase in Overall Costs (Million $) ................................................................................... ............................................. 380–610 
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119RFS2 Regulatory Impact Analysis (RIA). U.S. 
EPA 2010, Renewable Fuel Standard Program 
(RFS2) Regulatory Impact Analysis. EPA–420–R– 10–006. February 2010. Docket EPA–HQ–OAR– 2009–0472–11332. 
120See CAA section 211(o)(2)(B)(v). TABLE V.B.2–1—I LLUSTRATIVE COSTS OF EXERCISING THE CELLULOSIC WAIVER AUTHORITY COMPARED TO THE 2018 
RFS V OLUMES BASELINE —Continued 
Annual Increase in Overall Costs with Non-Cellulosic Advanced Volume (Million $) ................................................ ........................ 380–710 
Cellulosic and Advanced Volumes 
Annual Increase in Overall Costs with Cellulosic and Advanced Volume ........................................................... ...............................
(Million $) .................................................................................................................... ......................................................................... 380–740 
The annual volume-setting process 
encourages consideration of the RFS 
program on a piecemeal (i.e., year-to- 
year) basis, which may not reflect the full, long-term costs and benefits of the program. For the purposes of this proposed rule, other than the estimates of costs of producing a ‘‘representative’’ renewable fuel compared to cost of petroleum fuel, EPA did not quantitatively assess other direct and indirect costs or benefits of changes in renewable fuel volumes. These direct and indirect costs and benefits may include infrastructure costs, investment, lifecycle GHG emissions and air quality impacts, and energy security benefits, which all are to some degree affected by the annual volumes. For example, we do not have a quantified estimate of the lifecycle GHG or energy security benefits for a single year (e.g., 2019). 
Also, there are impacts that are difficult to quantify, such as rural economic 
development and employment changes from more diversified fuel sources, that are not quantified in this rulemaking. While some of these impacts were analyzed in the 2010 final rulemaking that established the current RFS program,
119we have not analyzed these 
impacts for the 2019 volume requirements. 
VI. Biomass-Based Diesel Volume for 
2020 
In this section we discuss the 
proposed BBD applicable volume for 2020. We are proposing this volume in advance of those for other renewable fuel categories in light of the statutory requirement in CAA section 211(o)(2)(B)(ii) to establish the applicable volume of BBD for years after 2012 no later than 14 months before the applicable volume will apply. We are not at this time proposing the BBD percentage standards that would apply to obligated parties in 2020 but intend to do so in late 2019, after receiving EIA’s estimate of gasoline and diesel consumption for 2020. Although the BBD applicable volume sets a floor for required BBD use, because the BBD volume requirement is nested within both the advanced biofuel and the total renewable fuel volume requirements, any BBD produced beyond the mandated 2020 BBD volume can be used to satisfy both of these other applicable volume requirements. 
A. Statutory Requirements 
The statute establishes applicable 
volume targets for years through 2022 
for cellulosic biofuel, advanced biofuel, and total renewable fuel. For BBD, applicable volume targets are specified in the statute only through 2012. For years after those for which volumes are specified in the statute, EPA is required under CAA section 211(o)(2)(B)(ii) to determine the applicable volume of BBD, in coordination with the Secretary of Energy and the Secretary of Agriculture, based on a review of the implementation of the program during calendar years for which the statute specifies the volumes and an analysis of the following factors: 
1. The impact of the production and 
use of renewable fuels on the environment, including on air quality, climate change, conversion of wetlands, ecosystems, wildlife habitat, water quality, and water supply; 
2. The impact of renewable fuels on 
the energy security of the United States; 
3. The expected annual rate of future 
commercial production of renewable fuels, including advanced biofuels in each category (cellulosic biofuel and BBD); 
4. The impact of renewable fuels on 
the infrastructure of the United States, including deliverability of materials, goods, and products other than renewable fuel, and the sufficiency of infrastructure to deliver and use renewable fuel; 
5. The impact of the use of renewable 
fuels on the cost to consumers of transportation fuel and on the cost to transport goods; and 
6. The impact of the use of renewable 
fuels on other factors, including job creation, the price and supply of agricultural commodities, rural economic development, and food prices. 
The statute also specifies that the 
volume requirement for BBD cannot be less than the applicable volume specified in the statute for calendar year 2012, which is 1.0 billion gallons.
120 
The statute does not, however, establish any other numeric criteria, or provide any guidance on how the EPA should weigh the importance of the often competing factors and the overarching goals of the statute when the EPA sets the applicable volumes of BBD in years after those for which the statute specifies such volumes. In the period 2013–2022, the statute specifies increasing applicable volumes of cellulosic biofuel, advanced biofuel, and total renewable fuel, but provides no guidance, beyond the 1.0 billion gallon minimum, on the level at which BBD volumes should be set. 
In establishing the BBD and cellulosic 
standards as nested within the advanced biofuel standard, Congress clearly intended to support development of BBD and especially cellulosic biofuels, while also providing an incentive for the growth of other non-specified types of advanced biofuels. In general, the advanced biofuel standard provides an opportunity for other advanced biofuels (advanced biofuels that do not qualify as cellulosic biofuel or BBD) to compete with cellulosic biofuel and BBD to satisfy the advanced biofuel standard after the cellulosic biofuel and BBD standards have been met. 
B. Determination of the 2020 Applicable 
Volume of Biomass-Based Diesel 
One of the primary considerations in 
determining the BBD volume for 2020 is a review of the implementation of the program to date, as it affects BBD. This review is required by the CAA, and also provides insight into the capabilities of the industry to produce, import, export, and distribute BBD. It also helps us to understand what factors, beyond the BBD standard, may incentivize the production and import of BBD. Table VI.B.1–1 below shows, for 2011–2017, the number of BBD RINs generated, the number of RINs retired due to export, the number of RINs retired for reasons other than compliance with the annual BBD standards, the consequent number of available BBD RINs, and the BBD and 
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121Available BBD RINs Generated, Exported BBD 
RINs, and BBD RINs Retired for Non-Compliance 
Reasons information from EMTS. 
122The biodiesel tax credit was reauthorized in 
January 2013. It applied retroactively for 2012 and for the remainder of 2013. It was once again extended in December 2014 and applied retroactively to all of 2014 as well as to the remaining weeks of 2014. In December 2015 the biodiesel tax credit was authorized and applied retroactively for all of 2015 as well as through the end of 2016. In February 2018 the biodiesel tax credit was authorized and applied retroactively for all of 2017. 
123See 80 FR 77490–92, 77495 (December 14, 
2015). 124This is because when an obligated party retires 
a BBD RIN (D4) to help satisfy their BBD obligation, the nested nature of the BBD standard means that this RIN also counts towards satisfying their 
advanced and total renewable fuel obligations. Advanced RINs (D5) count towards both the advanced and total renewable fuel obligations, 
while conventional RINs (D6) count towards only the total renewable fuel obligation. 
125We would still expect D4 RINs to be valued 
at a slight premium to D5 and D6 RINs in this case (and D5 RINs at a slight premium to D6 RINs) to reflect the greater flexibility of the D4 RINs to be used towards the BBD, advanced biofuel, and total renewable fuel standard. This pricing has been observed over the past several years. advanced biofuel standards for 2011– 
2019. 
TABLE VI.B.1–1—B IOMASS -BASED DIESEL (D4) RIN G ENERATION AND ADVANCED BIOFUEL AND  
BIOMASS -BASED DIESEL STANDARDS IN 2011–2019 
[Million RINs or gallons]121 
BBD RINs 
generated Exported BBD 
(RINs) BBD RINs 
retired, non- 
compliance 
reasons Available 
BBD RINsa BBD standard 
(gallons) BBD standard 
(RINs) Advanced 
biofuel 
standard 
(RINs) 
2011 ............................. 1,692 72 98 1,522 800 1,200 1,350 
2012 ............................. 1,737 102 90 1,545 1,000 1,500 2,000 
2013 ............................. 2,739 124 101 2,514 1,280 1,920 2,750 
2014 ............................. 2,710 134 92 2,484 1,630 b2,490 2,670 
2015 ............................. 2,796 145 32 2,619 1,730 b2,655 2,880 
2016 ............................. 4,008 203 96 3,709 1,900 2,850 3,610 
2017 ............................. 3,849 244 35 3,570 2,000 3,000 4,280 
2018 ............................. N/A N/A N/A N/A 2,100 3,150 4,290 
2019 ............................. N/A N/A N/A N/A 2,100 3,150 4,880 
aAvailable 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. 
bEach gallon of biodiesel qualifies for 1.5 RINs due to its higher energy content per gallon than ethanol. Renewable diesel qualifies for be-
tween 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 how-ever, 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 es-tablished 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. 
In reviewing historical BBD RIN 
generation and use, we see that the 
number of RINs available for compliance purposes exceeded the volume required to meet the BBD standard in 2011, 2012, 2013, 2016 and 2017. Additional production and use of biodiesel was likely driven by a number of factors, including demand to satisfy the advanced biofuel and total renewable fuels standards, the biodiesel tax credit,
122and favorable blending 
economics. The number of RINs available in 2014 and 2015 was approximately equal to the number required for compliance in those years, as the standards for these years were finalized at the end of November 2015 and EPA’s intent at that time was to set the standards for 2014 and 2015 to reflect actual BBD use.
123In 2016, with 
RFS standards established prior to the beginning of the year and the blenders tax credit in place, available BBD RINs exceeded the volume required by the BBD standard by 859 million RINs (30 
percent). In 2017, the RFS standards were established prior to the beginning of the year, and the blenders tax credit was only applied retroactively; even without the certainty of a tax credit, the available BBD RINs exceeded the volume required by the BBD standard by 570 million RINs (19 percent). This indicates that in appropriate circumstances there is demand for BBD beyond the required volume of BBD. We also note that while EPA has consistently established the required volume in such a way as to allow non- BBD fuels to compete for market share in the advanced biofuel category, since 2016 the vast majority of non-cellulosic advanced biofuel used to satisfy the advanced biofuel obligations has been BBD. 
The prices paid for advanced biofuel 
and BBD RINs beginning in early 2013 through the March 2018 also support the conclusion that advanced biofuel and/or total renewable fuel standards provide a sufficient incentive for additional biodiesel volume beyond 
what is required by the BBD standard. Because the BBD standard is nested within the advanced biofuel and total renewable fuel standards, and therefore can help to satisfy three RVOs, we would expect the price of BBD RINs to exceed that of advanced and conventional renewable RINs.
124If, however, BBD RINs are being used (or 
are expected to be used) by obligated parties to satisfy their advanced biofuel obligations, above and beyond the BBD standard, we would expect the prices of advanced biofuel and BBD RINs to converge.
125Further, if BBD RINs are 
being used (or are expected to be used) to satisfy obligated parties’ total renewable fuel obligation, above and beyond their BBD and advanced biofuel requirements, we would expect the price for all three RIN types to converge. 
When examining RIN price data from 
2012 through March 2018, shown in Figure VI.B.2–1 below, we see that beginning in early 2013 and through March 2018 (the last month for which data are available) the advanced RIN price and BBD RIN prices were approximately equal. Similarly, from early 2013 through late 2016 the conventional renewable fuel and BBD RIN prices were approximately equal. This suggests that the advanced biofuel standard and/or total renewable fuel standard are capable of incentivizing increased BBD volumes beyond the BBD 
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126Although we did not issue a rule establishing 
the final 2013 standards until August of 2013, we 
believe that the market anticipated the final standards, based on EPA’s July 2011 proposal and the volume targets for advanced and total renewable fuel established in the statute. (76 FR 38844, 38843.) 127See 80 FR 33100 (2014–16 standards proposed 
June 10, 2015); 78 FR 71732 (2014 standards 
proposed Nov. 29, 2013). 
128EPA proposed a BBD standard of 1.28 billion 
gallons (1.92 billion RINs) for 2014 in our 
November 2013 proposed rule. The number of BBD RINs available in 2014 was 2.67 billion. EPA proposed a BBD standard of 1.70 billion gallons 
(2.55 billion RINs) for 2015 in our June 2015 proposed rule. The number of BBD RINs available in 2015 was 2.92 billion. 
12977 FR 59458, 59462. 
130594 million advanced ethanol RINs were 
generated in 2012. standard. The advanced biofuel 
standard has incentivized additional volumes of BBD since 2013, while the total standard had incentivized additional volumes of BBD from 2013 through 2016.
126While final standards 
were not in place throughout 2014 and most of 2015, EPA had issued proposed rules for both of these years.
127In each 
year, the market response was to supply volumes of BBD that exceeded the proposed BBD standard in order to help satisfy the proposed advanced and total biofuel standards.
128Additionally, the 
RIN prices in these years strongly suggests that obligated parties and other market participants anticipated the need for BBD RINs to meet their advanced and total biofuel obligations, and responded by purchasing advanced biofuel and BBD RINs at approximately equal prices. We do note, however, that in 2012 the BBD RIN price was significantly higher than both the advanced biofuel and conventional renewable fuel RIN prices. In 2012 the E10 blendwall had not yet been reached, and it was likely more cost effective for most obligated parties to satisfy the portion of the advanced biofuel requirement that exceeded the BBD and cellulosic biofuel requirements with advanced ethanol. 
In raising the 2013 BBD volume above 
the 1 billion gallon minimum mandated 
by Congress, the EPA sought to ‘‘create greater certainty for both producers of BBD and obligated parties’’ while also acknowledging that, ‘‘the potential for somewhat increased costs is appropriate in light of the additional certainty of GHG reductions and enhanced energy security provided by the advanced biofuel volume requirement of 2.75 
billion gallons.’’
129Unknown at that 
time was the degree to which the required volumes of advanced biofuel and total renewable fuel could incentivize volumes of BBD that exceeded the BBD standard. In 2012 the available supply of BBD RINs exceeded the required volume of BBD by a very small margin (1,545 million BBD RINs 
were made available for compliance towards meeting the BBD requirement of 1,500 million BBD RINs). The remainder of the 2.0 billion-gallon advanced biofuel requirement was satisfied with advanced ethanol, which was largely imported from Brazil.
130 
From 2012 to 2013 the statutory advanced biofuel requirement increased by 750 million gallons. If EPA had not 
increased the required volume of BBD for 2013, and the advanced biofuel standard had proved insufficient to increase the supply of BBD beyond the statutory minimum of 1.0 billion gallons, an additional 750 million gallons of non-BBD advanced biofuels beyond the BBD standard would have been needed to meet the advanced 
biofuel volume requirement. 
The only advanced biofuel other than 
BBD available in appreciable quantities 
in 2012 and 2013 was advanced ethanol, the vast majority of which was imported sugarcane ethanol. EPA had significant concerns as to whether or not the supply of advanced ethanol could increase this significantly (750 million gallons) in a single year. These concerns were heightened by the approaching E10 blendwall, which had the potential to increase the challenges associated with supplying increasing volumes of ethanol to the U.S. If neither BBD volumes nor advanced ethanol volumes increased sufficiently, EPA was concerned that some obligated parties 
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131‘‘BBD RIN Generation by Company 2012, 
2016, and 2017 CBI,’’ available in EPA docket EPA– 
HQ–OAR–2017–0167. 132Id. 
133See, e.g. Comments from National Biodiesel 
Board on the 2018 Annual Standards, available in 
EPA docket EPA–HQ–OAR–2017–0167. might be unable to acquire the advanced 
biofuel RINs necessary to demonstrate compliance with their RVOs in 2013. Therefore, as discussed above, EPA increased the volume requirement for BBD in 2013 to help create greater certainty for BBD producers (by ensuring demand for their product above the 1.0 billion gallon statutory minimum) and obligated parties (by ensuring that sufficient RINs would be available to satisfy their advanced biofuel RVOs). Since 2013, however, EPA has gained significant experience implementing the RFS program. As discussed above, RIN generation data has consistently demonstrated that the advanced biofuel volume requirement, and to a lesser degree the total renewable fuel volume requirement, are capable of incentivizing the supply of BBD above and beyond the BBD volume requirement. The RIN generation data 
also show that while EPA has consistently preserved the opportunity for fuels other that BBD to contribute towards satisfying the required volume of advanced biofuel, these other advanced biofuels have not been supplied in significant quantities since 2013. 
TABLE VI.B.1–2—O PPORTUNITY FOR AND RIN G ENERATION OF ‘‘OTHER ’’ ADVANCED BIOFUELS  
[Million RINs] 
Opportunity for 
‘‘other’’ 
advanced 
biofuelsa Available 
advanced (D5) 
RINs Available BBD 
(D4) RINs in 
excess of the 
BBD 
requirementb 
2011 ........................................................................................................................... .................. 150 225 322 
2012 ........................................................................................................................... .................. 500 597 45 
2013 ........................................................................................................................... .................. 829 552 594 
2014c............................................................................................................................... ............ 192 143 39 
2015c............................................................................................................................... ............ 162 147 24 
2016 ........................................................................................................................... .................. 530 97 903 
2017 ........................................................................................................................... .................. 969 144 570 
aThe required volume of ‘‘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 . 
bThe available BBD (D4) RINs in excess of the BBD requirement is calculated by subtracting the number of BBD RINs required each year 
from the number of BBD RINs available for compliance in that year. This number does not include carryover RINs. 
cThe 2014 and 2015 volume requirements were established in November 2015 and were set equal to the number of RINs projected to b e 
available for each year. 
In 2014 and 2015, EPA set the BBD 
and advanced standards at actual RIN 
generation, and thus the space between the advanced biofuel standard and the biodiesel standard was unlikely to provide an incentive for ‘‘other’’ advanced biofuels. EPA now has data on the amount of ‘‘other’’ advanced biofuels produced in 2016 and 2017 as shown in the table above. For 2016 and 2017, the gap between the BBD standard and the advanced biofuel provided an opportunity for ‘‘other’’ advanced biofuels to be generated to satisfy the advanced biofuel standard. While EPA allowed for up to 530 million and 969 million gallons of ‘‘other’’ advanced for 2016 and 2017 respectively, only 97 million and 144 million gallons of ‘‘other’’ advanced biofuels were generated. This is significantly less than the volumes of ‘‘other’’ advanced available in 2012–2013. Despite creating space within the advanced biofuel standard for ‘‘other’’ advanced, in recent years, that space has not been filled with significant volumes of ‘‘other’’ advanced and BBD continues to fill most of the gap between the BBD standard and the advanced standard. 
Thus, while the advanced biofuel 
standard is sufficient to drive biodiesel volume separate and apart from the BBD standard, there would not appear to be a compelling reason to increase the 
‘‘space’’ maintained for ‘‘other’’ advanced biofuel volumes. The overall volume of non-cellulosic advanced biofuel volume is proposed to increase by 500 million gallons for 2019. Increasing the BBD volume by the same amount would preserve the space already available for other advanced biofuels to compete. 
At the same time, the rationale for 
preserving the ‘‘space’’ for ‘‘other’’ advanced biofuels remains. We note that the BBD industry in the U.S. and abroad has matured since EPA first increased the required volume of BBD beyond the statutory minimum in 2013. To assess the maturity of the biodiesel industry, EPA compared information on BBD RIN generation by company in 2012 and 2017 (the most recent year for which complete RIN generation by company is available). In 2012, the annual average RIN generation per company producing BBD was about 11 million RINs (about 7.3 million gallons) with approximately 50 percent of companies producing less the 1 million gallons of BBD a year.
131 
The agency heard from multiple commenters during the 2012 and 2013 rulemakings that higher volume requirements for BBD would provide greater certainty for the emerging BBD industry and encourage further investment. Since that time, the BBD industry has matured in a number of critical areas, including growth in the size of companies, the consolidation of the industry, and more stable funding and access to capital. In 2012, the BBD industry was characterized by smaller companies with dispersed market share. By 2017, the average BBD RIN generation per company had climbed to almost 33 million RINs (22 million gallons) annually, a 3-fold increase. Only 33 percent of the companies produced less than 1 million gallons of BBD in 2017.
132 
We are conscious of public comments 
claiming that BBD volume requirements that are a significant portion of the advanced volume requirements effectively disincentivize the future development of other promising advanced biofuel pathways.
133A variety 
of different types of advanced biofuels, rather than a single type such as BBD, would increase energy security (e.g., by 
increasing the diversity of feedstock sources used to make biofuels, thereby 
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134All types of advanced biofuel, including BBD, 
must achieve lifecycle GHG reductions of at least 
50 percent. See CAA section 211(o)(1)(B)(i), (D). 
135‘‘Memorandum to docket: Draft Statutory 
Factors Assessment for the 2020 Biomass-Based Diesel (BBD) Applicable Volumes.’’ See Docket EPA–HQ–OAR–2018–0167. 136See CAA section 211(o)(2)(B)(i)(IV), (II). 
137While excess BBD production could also 
displace conventional renewable fuel under the total renewable standard, as long as the BBD applicable volume is lower than the advanced biofuel applicable volume our action in setting the BBD applicable volume is not expected to displace conventional renewable fuel under the total renewable standard, but rather other advanced biofuels. We acknowledge, however, that under certain market conditions excess volumes of BBD may also be used to displace conventional biofuels. 138Even though we are not proposing to set the 
2020 advanced biofuel volume requirement as part of this rulemaking, we expect that, as in the past, the 2020 advanced volume requirement will be higher than the 2020 BBD requirement, and, therefore, that the BBD volume requirement for 2020 would not be expected to impact the volume of BBD that is actually produced and imported during the 2020-time period. reducing the impacts associated with a 
shortfall in a particular type of feedstock) and increase the likelihood of the development of lower cost advanced biofuels that meet the same GHG reduction threshold as BBD.
134 
With the considerations discussed 
above in mind, as well as our analysis of the factors specified in the statute, we are proposing to set the applicable volume of BBD at 2.43 billion gallons for 2020. This increase, in conjunction with the statutory increase of 500 million gallons of non-cellulosic advanced biofuel in 2019, would continue to preserve a gap between the advanced biofuel volume and the sum of the cellulosic biofuel and BBD volumes. This would allow other advanced biofuels to continue to compete with excess volumes of BBD for market share under the advanced biofuel standard. We believe this volume sets the appropriate floor for BBD, and that the volume of advanced biodiesel and renewable diesel actually used in 2020 will be driven by the level of the advanced biofuel and total renewable fuel standards that the Agency will establish for 2020. It also recognizes that while maintaining an opportunity for other advanced biofuels is important, the vast majority of the advanced biofuel used to comply with the advanced biofuel standard in recent years has been BBD. Based on information now available from 2016 and 2017, despite providing a significant degree of space for ‘‘other’’ advanced biofuels, smaller volumes of ‘‘other’’ advanced have been utilized to meet the advanced standard. EPA believes that the BBD standard we are proposing to set today still provides sufficient incentive to producers of ‘‘other’’ advanced biofuels, while also acknowledging that the advanced standard has been met predominantly with biomass-based diesel. Our assessment of the required statutory factors, summarized in the next section 
and detailed in a memorandum to the docket (the ‘‘2020 BBD docket memorandum’’), supports our proposal.
135We request comment on the 
biomass-based diesel volume requirement for 2020. 
We believe this approach strikes the 
appropriate balance between providing a market environment where the development of other advanced biofuels is incentivized, while also maintaining support for the BBD industry. Based on 
our review of the data, and the nested nature of the BBD standard within the advanced standard, we conclude that the advanced standard continues to drive the ultimate volume of BBD supplied. However, given that BBD has been the predominant source of advanced biofuel in recent years and the 500 million gallon increase in non- cellulosic advanced biofuel we are proposing in this rule, we are proposing a volume of 2.43 billion gallons of BBD for 2020. Setting the BBD standard in this manner would preserve a considerable portion of the advanced biofuel volume that could be satisfied by either additional gallons of BBD or by other unspecified and potentially less costly types of qualifying advanced biofuels. 
C. Consideration of Statutory Factors 
Set Forth in CAA Section 211(o)(2)(B)(ii)(I)–(VI) for 2020 
The BBD volume requirement is 
nested within the advanced biofuel requirement, and the advanced biofuel requirement is, in turn, nested within the total renewable fuel volume requirement.
136This means that any 
BBD produced beyond the mandated BBD volume can be used to satisfy both these other applicable volume requirements. The result is that in considering the statutory factors we must consider the potential impacts of increasing or decreasing BBD in comparison to other advanced biofuels.
137For a given advanced 
biofuel standard, greater or lesser BBD volume requirements do not change the amount of advanced biofuel used to displace petroleum fuels; rather, increasing the BBD requirement may result in the displacement of other types of advanced biofuels that could have been used to meet the advanced biofuels volume requirement. EPA is proposing 
to increase the BBD volume for 2020 to 2.43 billion gallons from 2.1 billion gallons in 2019 based on our review of the statutory factors and the other considerations noted above and in the 2020 BBD Docket Memorandum. This increase, in conjunction with the statutory increase of 500 million gallons of non-cellulosic advanced biofuel in 2019, would preserve a gap for ‘‘other’’ advanced biofuels, that is the difference between the advanced biofuel volume and the sum of the cellulosic biofuel and BBD volumes. This would allow other advanced biofuels to continue to compete with excess volumes of BBD for market share under the advanced biofuel standard, while also supporting further growth in the BBD industry. 
Consistent with our approach in 
setting the final BBD volume requirement for 2019, EPA’s primary assessment of the statutory factors for the 2020 BBD applicable volume is that because the BBD requirement is nested within the advanced biofuel volume requirement, we expect that the 2020 advanced volume requirement, when set next year, will determine the level of BBD production and imports that occur in 2020.
138Therefore, EPA continues to 
believe that approximately the same overall volume of BBD would likely be supplied in 2020 even if we were to mandate a somewhat lower or higher BBD volume for 2020 in this final rule. Thus, we do not expect our 2020 BBD volume requirement to result in a difference in the factors we consider pursuant to CAA section 211(o)(2)(B)(ii)(I)–(VI). 
As an additional supplementary 
assessment, we have considered the potential impacts of selecting an applicable volume of BBD other than 2.43 billion gallons in 2020. Even if BBD volumes were to be impacted by the 2020 BBD standard (which as noted above we do not currently expect), setting a requirement higher or lower than 2.43 billion gallons in 2020 would only be expected to affect BBD volumes minimally, protecting to a greater or lesser degree BBD from competition with other potential advanced biofuels. In this supplementary assessment we have considered all of the statutory factors found in CAA section 211(o)(2)(B)(ii), and as described in the 2020 BBD docket memorandum, our assessment does not, based on available information, lead us to conclude that a higher or lower volume requirement for BBD than 2.43 billion gallons is more appropriate for 2020. 
Overall and as described in the 2020 
BBD docket memorandum, we have determined that both the primary assessment and the supplemental 
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139The 2019 volume requirement for BBD was 
established in the 2018 final rule. 
140See 75 FR 14670 (March 26, 2010). 141In some cases a gallon of renewable diesel 
generates either 1.5 or 1.6 RINs. 142A small refiner that meets the requirements of 
40 CFR 80.1442 may also be eligible for an 
exemption. assessment of the statutory factors 
specified in CAA section 211(o)(2)(B)(ii)(I)–(VI) for the year 2020 does not lead us to conclude that we should set the BBD standard at a level 
higher or lower than 2.43 billion gallons in 2020. 
VII. Percentage Standards for 2019 
The renewable fuel standards are 
expressed as volume percentages and 
are used by each obligated party to determine their Renewable Volume 
Obligations (RVOs). Since there are four separate standards under the RFS program, there are likewise four separate RVOs applicable to each obligated party. Each standard applies to the sum of all non-renewable gasoline and diesel produced or imported. The percentage standards are set so that if every obligated party meets the percentages by acquiring and retiring an appropriate number of RINs, then the amount of renewable fuel, cellulosic biofuel, BBD, and advanced biofuel used will meet the applicable volume requirements on a nationwide basis. 
Sections II through V provide our 
rationale and basis for the proposed volume requirements for 2019.
139The 
volumes used to determine the proposed percentage standards are shown in Table VII–1. 
TABLE VII–1—V OLUMES FOR USE IN DETERMINING THE PROPOSED 2019 A PPLICABLE PERCENTAGE STANDARDS  
Cellulosic biofuel ......................................................................... Million ethanol-equivalent gallons .. ............................................ 381 
Biomass-based diesel ................................................................. Billion gallons ........................... .................................................. 2.1 
Advanced biofuel ........................................................................ Billion ethanol-equivalent gallons ..... ......................................... 4.88 
Renewable fuel ........................................................................... Billion ethanol-equivalent gallons .... .......................................... 19.88 
For the purposes of converting these 
volumes into percentage standards, we 
generally use two decimal places to be consistent with the volume targets as given in the statute, and similarly two decimal places in the percentage standards. However, for cellulosic biofuel we use three decimal places in both the volume requirement and percentage standards to more precisely capture the smaller volume projections and the unique methodology that in some cases results in estimates of only a few million gallons for a single producer. 
A. Calculation of Percentage Standards 
To calculate the percentage standards, 
we are following the same methodology 
for 2019 as we have in all prior years. The formulas used to calculate the percentage standards applicable to producers and importers of gasoline and diesel are provided in 40 CFR 80.1405. The formulas rely on estimates of the volumes of gasoline and diesel fuel, for both highway and nonroad uses, which are projected to be used in the year in which the standards will apply. The projected gasoline and diesel volumes are provided by EIA, and include projections of ethanol and biodiesel used in transportation fuel. Since the percentage standards apply only to the non-renewable gasoline and diesel produced or imported, the volumes of renewable fuel are subtracted out of the EIA projections of gasoline and diesel. 
Transportation fuels other than 
gasoline or diesel, such as natural gas, propane, and electricity from fossil fuels, are not currently subject to the standards, and volumes of such fuels are not used in calculating the annual percentage standards. Since under the regulations the standards apply only to producers and importers of gasoline and diesel, these are the transportation fuels used to set the percentage standards, as well as to determine the annual volume obligations of an individual gasoline or diesel producer or importer under § 80.1407. 
As specified in the RFS2 final rule,
140 
the percentage standards are based on energy-equivalent gallons of renewable fuel, with the cellulosic biofuel, advanced biofuel, and total renewable fuel standards based on ethanol equivalence and the BBD standard based on biodiesel equivalence. However, all RIN generation is based on ethanol-equivalence. For example, the RFS regulations provide that production or import of a gallon of qualifying biodiesel will lead to the generation of 1.5 RINs. The formula specified in the regulations for calculation of the BBD percentage standard is based on biodiesel-equivalence, and thus assumes that all BBD used to satisfy the BBD standard is biodiesel and requires that the applicable volume requirement be multiplied by 1.5 in order to calculate a percentage standard that is on the same basis (i.e., ethanol-equivalent) as 
the other three standards. However, BBD often contains some renewable diesel, and a gallon of renewable diesel typically generates 1.7 RINs.
141In 
addition, there is often some renewable diesel in the conventional renewable fuel pool. As a result, the actual number of RINs generated by biodiesel and renewable diesel is used in the context of our assessing volumes for purposes of deriving the applicable volume requirements and associated percentage standards for advanced biofuel and total renewable fuel, and likewise in obligated parties’ determination of compliance with any of the applicable standards. While there is a difference in the treatment of biodiesel and renewable diesel in the context of determining the percentage standard for BBD versus determining the percentage standard for advanced biofuel and total renewable fuel, it is not a significant one given our approach to determining the BBD volume requirement. Our intent in setting the BBD applicable volume is to provide a level of guaranteed volume for BBD, but as described in Section VI.B, we do not expect the BBD standard to be binding in 2019. That is, we expect that actual supply of BBD, as well as supply of conventional biodiesel and renewable diesel, will be driven by the advanced biofuel and total renewable fuel standards. 
B. Small Refineries and Small Refiners 
In CAA section 211(o)(9), enacted as 
part of the Energy Policy Act of 2005, 
and amended by the Energy Independence and Security Act of 2007, Congress provided a temporary exemption to small refineries
142through 
December 31, 2010. Congress provided that small refineries could receive a temporary extension of the exemption beyond 2010 based either on the results of a required DOE study, or based on an EPA determination of ‘‘disproportionate economic hardship’’ on a case-by-case basis in response to small refinery petitions. In reviewing petitions, EPA, in consultation with the Department of Energy, evaluates whether the small refinery has demonstrated disproportionate economic hardship, 
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143To determine the 49-state values for gasoline 
and diesel, the amount of these fuels used in Alaska 
is subtracted from the totals provided by EIA because petroleum based fuels used in Alaska do not incur RFS obligations. The Alaska fractions are determined from the June 30, 2017 EIA State Energy Data System (SEDS), Energy Consumption Estimates. 144See ‘‘Calculation of proposed % standards for 
2019’’ in docket EPA–HQ–OAR–2018–0167. and may grant refineries exemptions 
upon such demonstration. 
EPA has granted exemptions pursuant 
to this process in the past. However, at 
this time no exemptions have been approved for 2019, and therefore we have calculated the percentage standards for 2019 without any adjustment for exempted volumes. EPA is maintaining its approach that any exemptions for 2019 that are granted after the final rule is released will not be reflected in the percentage standards 
that apply to all gasoline and diesel produced or imported in 2019. EPA is not soliciting comments on how small refinery exemptions are accounted for in 
the percentage standards formulas in 40 CFR 80.1405, and any such comments will be deemed beyond the scope of this rulemaking. 
C. Proposed Standards 
The formulas in 40 CFR 80.1405 for 
the calculation of the percentage standards require the specification of a 
total of 14 variables covering factors such as the renewable fuel volume requirements, projected gasoline and diesel demand for all states and territories where the RFS program applies, renewable fuels projected by EIA to be included in the gasoline and diesel demand, and exemptions for small refineries. The values of all the variables used for this final rule are shown in Table VII.C–1.
143 
TABLE VII.C–1—V ALUES FOR TERMS IN CALCULATION OF THE PROPOSED 2019 S TANDARDS144 
[Billion gallons] 
Term Description Value 
RFV CB............................ Required volume of cellulosic biofuel .............................................................. ....................................... 0.381 
RFV BBD .......................... Required volume of biomass-based diesel .............................................................. ............................... 2.10 
RFV AB............................ Required volume of advanced biofuel ................................................................ .................................... 4.88 
RFV RF............................ Required volume of renewable fuel .................................................................. ...................................... 19.88 
G .................................... Projected volume of gasoline .............................................................. .................................................... 143.76 
D .................................... Projected volume of diesel ................................................................ ...................................................... 56.46 
RG .................................. Projected volume of renewables in gasoline ................................................. ......................................... 14.74 
RD .................................. Projected volume of renewables in diesel ................................................... ........................................... 2.83 
GS .................................. Projected volume of gasoline for opt-in areas .............................................. .......................................... 0.00 
RGS ............................... Projected volume of renewables in gasoline for opt-in areas .................................. .............................. 0.00 
DS .................................. Projected volume of diesel for opt-in areas ................................................ ............................................ 0.00 
RDS ............................... Projected volume of renewables in diesel for opt-in areas .................................... ................................ 0.00 
GE .................................. Projected volume of gasoline for exempt small refineries ................................... ................................... 0.00 
DE .................................. Projected volume of diesel for exempt small refineries ..................................... ..................................... 0.00 
Projectedvolumes of gasoline and 
diesel, and the renewable fuels 
contained within them, were derived from the April 2018 version of EIA’s Short-Term Energy Outlook. 
Using the volumes shown in Table 
VII.C–1, we have calculated the proposed percentage standards for 2019 as shown in Table VII.C–2. 
TABLE VII.C–2—P ROPOSED  
PERCENTAGE STANDARDS FOR 2019 
Cellulosic biofuel ................... 0.209 
Biomass-based diesel .......... 1.72 
Advanced biofuel .................. 2.67 
Renewable fuel ..................... 10.88 
VIII. Public Participation 
We request comment on all aspects of 
this proposal. This section describes how you can participate in this process. 
A. How do I submit comments? 
We are opening a formal comment 
period by publishing this document. We 
will accept comments during the period indicated under the 
DATES section 
above. If you have an interest in the proposed standards, we encourage you to comment on any aspect of this 
rulemaking. We also request comment on specific topics identified throughout this proposal. 
Your comments will be most useful if 
you include appropriate and detailed supporting rationale, data, and analysis. Commenters are especially encouraged to provide specific suggestions for any changes that they believe need to be made. You should send all comments, except those containing proprietary information, to our Docket (see 
ADDRESSES section above) by the end of 
the comment period. 
You may submit comments 
electronically through the electronic public docket, www.regulations.gov, by 
mail to the address shown in 
ADDRESSES , or through hand delivery/ 
courier. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked ‘‘late.’’ EPA is not required to 
consider these late comments. If you wish to submit Confidential Business Information (CBI) or information that is 
otherwise protected by statute, please follow the instructions in Section VIII.B below. 
EPA will also hold a public hearing 
on this proposed rule. We will announce the public hearing date and location for this proposal in a supplemental Federal Register 
document. 
B. How should I submit CBI to the 
agency? 
Do not submit information that you 
consider to be CBI electronically through the electronic public docket, www.regulations.gov, or by email. Send 
or deliver information identified as CBI only to the following address: U.S. 
Environmental Protection Agency, Assessment and Standards Division, 2000 Traverwood Drive, Ann Arbor, MI 48105, Attention Docket ID EPA–HQ– OAR–2018–0167. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is 
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145‘‘Screening Analysis for the Proposed 
Renewable Fuel Standards for 2019,’’ memorandum 
from Dallas Burkholder, Nick Parsons, and Tia Sutton to EPA Air Docket EPA–HQ–OAR–2018– 0167. 
146For a further discussion of the ability of 
obligated parties to recover the cost of RINs see ‘‘Denial of Petitions for Rulemaking to Change the RFS Point of Obligation,’’ EPA–420–R–17–008, November 2017. CBI). Information so marked will not be 
disclosed except in accordance with procedures set forth in 40 CFR part 2. 
In addition to one complete version of 
the comments that include any information claimed as CBI, a copy of the comments that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. This non-CBI version of your comments may be submitted electronically, by mail, or through hand delivery/courier. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the 
FOR FURTHER  
INFORMATION CONTACT section. 
IX. Statutory and Executive Order Reviews 
A. Executive Order 12866: Regulatory 
Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review 
This action is an economically 
significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. Any changes made in response to OMB recommendations have been documented in the docket. The EPA prepared an analysis of illustrative costs associated with this action. This analysis is presented in Section V of this preamble. 
B. Executive Order 13771: Reducing 
Regulations and Controlling Regulatory Costs 
This action is expected to be an 
Executive Order 13771 regulatory action. Details on the estimated costs of this proposed rule can be found in 
EPA’s analysis of the illustrative costs associated with this action. This analysis is presented in Section V of this preamble. 
C. Paperwork Reduction Act (PRA) 
This action does not impose any new 
information collection burden under the 
PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control numbers 2060–0637 and 2060–0640. The proposed standards will not impose new or different reporting requirements on regulated parties than already exist for the RFS program. D. Regulatory Flexibility Act (RFA) 
I certify that this action will not have 
a significant economic impact on a 
substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the small entities subject to the rule. 
The small entities directly regulated 
by the RFS program are small refiners, which are defined at 13 CFR 121.201. We have evaluated the impacts of this proposed rule on small entities from two perspectives: As if the 2019 standards were a standalone action or if they are a part of the overall impacts of the RFS program as a whole. 
When evaluating the standards as if 
they were a standalone action separate 
and apart from the original rulemaking which established the RFS2 program, then the standards could be viewed as increasing the cellulosic biofuel volume by 93 million gallons and the advanced and total renewable fuel volumes required of obligated parties by 590 million gallons between 2018 and 2019. To evaluate the impacts of the volume requirements on small entities relative to 2018, EPA has conducted a screening analysis
145to assess whether it should 
make a finding that this action would not have a significant economic impact on a substantial number of small entities. Currently available information shows that the impact on small entities from implementation of this rule would not be significant. EPA has reviewed and assessed the available information, which shows that obligated parties, including small entities, are generally able to recover the cost of acquiring the RINs necessary for compliance with the RFS standards through higher sales prices of the petroleum products they sell than would be expected in the absence of the RFS program.
146This is 
true whether they acquire RINs by purchasing renewable fuels with attached RINs or purchase separated RINs. The costs of the RFS program are thus generally being passed on to consumers in the highly competitive 
marketplace. Even if we were to assume that the cost of acquiring RINs were not recovered by obligated parties, and we used the maximum values of the illustrative costs discussed in Section V of this preamble and the gasoline and diesel fuel volume projections and wholesale prices from the April 2018 version of EIA’s Short-Term Energy Outlook, and current wholesale fuel prices, a cost-to-sales ratio test shows that the costs to small entities of the RFS standards are far less than 1 percent of the value of their sales. 
While the screening analysis 
described above supports a certification that this rule would not have a significant economic impact on small refiners, we continue to believe that it is more appropriate to consider the standards as a part of ongoing implementation of the overall RFS program. When considered this way, the impacts of the RFS program as a whole on small entities were addressed in the RFS2 final rule (75 FR 14670, March 26, 2010), which was the rule that implemented the entire program as required by EISA 2007. As such, the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel process that took place prior to the 2010 rule was also for the entire RFS program and looked at impacts on small refiners through 2022. 
For the SBREFA process for the RFS2 
final rule, EPA conducted outreach, fact-finding, and analysis of the potential impacts of the program on small refiners, which are all described in the Final Regulatory Flexibility Analysis, located in the rulemaking docket (EPA–HQ–OAR–2005–0161). This analysis looked at impacts to all refiners, including small refiners, through the year 2022 and found that the program would not have a significant economic impact on a substantial number of small entities, and that this impact was expected to decrease over time, even as the standards increased. For gasoline and/or diesel small refiners subject to the standards, the analysis included a cost- to-sales ratio test, a ratio of the estimated annualized compliance costs to the value of sales per company. From this test, it was estimated that all 
directly regulated small entities would have compliance costs that are less than one percent of their sales over the life of the program (75 FR 14862, March 26, 2010). 
We have determined that this 
proposed rule would not impose any additional requirements on small entities beyond those already analyzed, since the impacts of this rule are not 
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147See CAA section 211(o)(9)(B). 
148EPA is currently evaluating 4 additional 2017 
petitions, bringing the total number of petitions for 
2017 to 33. greater or fundamentally different than 
those already considered in the analysis for the RFS2 final rule assuming full implementation of the RFS program. This rule proposes to increase the 2019 cellulosic biofuel volume requirement by 93 million gallons and the advanced and total renewable fuel volume requirements by 590 million gallons relative to the 2018 volume requirements, but those volumes remain significantly below the statutory volume targets analyzed in the RFS2 final rule. This exercise of EPA’s waiver authority reduces burdens on small entities, as compared to the burdens that would be imposed under the volumes specified in the Clean Air Act in the absence of waivers—which are the volumes that we assessed in the screening analysis that we prepared for implementation of the full program. Regarding the BBD standard, we are proposing to increase the volume requirement for 2020 by 330 million gallons relative to the 2019 volume requirement we finalized in the 2018 final rule. While this volume is an increase over the statutory minimum value of 1 billion gallons, the BBD standard is a nested standard within the advanced biofuel category, which we are significantly reducing from the statutory volume targets. As discussed in Section VI, we are proposing to set the 2020 BBD volume requirement at a level below what is anticipated will be produced and used to satisfy the reduced advanced biofuel requirement. The net result of the standards being proposed in this action is a reduction in burden as compared to implementation of the statutory volume targets as was assumed in the RFS2 final rule analysis. 
While the rule will not have a 
significant economic impact on a substantial number of small entities, there are compliance flexibilities in the program that can help to reduce impacts on small entities. These flexibilities include being able to comply through RIN trading rather than renewable fuel blending, 20 percent RIN rollover allowance (up to 20 percent of an obligated party’s RVO can be met using previous-year RINs), and deficit carry- forward (the ability to carry over a deficit from a given year into the following year, providing that the deficit is satisfied together with the next year’s RVO). In the RFS2 final rule, we discussed other potential small entity flexibilities that had been suggested by the SBREFA panel or through comments, but we did not adopt them, in part because we had serious concerns regarding our authority to do so. 
Additionally, we realize that there 
may be cases in which a small entity 
may be in a difficult financial situation and the level of assistance afforded by the program flexibilities is insufficient. For such circumstances, the program provides hardship relief provisions for small entities (small refiners), as well as for small refineries.
147As required by 
the statute, the RFS regulations include a hardship relief provision (at 40 CFR 80.1441(e)(2)) that allows for a small refinery to petition for an extension of its small refinery exemption at any time based on a showing that the refinery is experiencing a ‘‘disproportionate economic hardship.’’ EPA regulations provide similar relief to small refiners that are not eligible for small refinery relief (see 40 CFR 80.1442(h)). EPA has currently identified a total of 10 small refiners that own 12 refineries subject to the RFS program, all of which have been identified as being small refineries. 
EPA evaluates these petitions on a 
case-by-case basis and may approve such petitions if it finds that a disproportionate economic hardship exists. In evaluating such petitions, EPA consults with the U.S. Department of Energy, and takes the findings of DOE’s 2011 Small Refinery Study and other economic factors into consideration. EPA successfully implemented these provisions by evaluating petitions for exemption from 20 small refineries for the 2016 RFS standards (3 of which were owned by a small refiner) and 29 small refineries for the 2017 RFS standards (8 of which were owned by a small refiner).
148 
Given that this proposed rule would 
not impose additional requirements on small entities, would decrease burden via a reduction in required volumes as compared to statutory volume targets, would not change the compliance flexibilities currently offered to small entities under the RFS program (including the small refinery hardship provisions we continue to implement), and available information shows that the impact on small entities from implementation of this rule would not be significant viewed either from the perspective of it being a standalone action or a part of the overall RFS program, we have therefore concluded that this action would have no net regulatory burden for directly regulated small entities. 
E. Unfunded Mandates Reform Act 
(UMRA) 
This action does not contain an 
unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531–1538, and does not significantly or uniquely affect small governments. This action implements mandates specifically and explicitly set forth in CAA section 211(o) and we believe that this action represents the least costly, most cost-effective approach to achieve the statutory requirements. 
F. Executive Order 13132: Federalism 
This action does not have federalism 
implications. It will not have substantial 
direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. 
G. Executive Order 13175: Consultation 
and Coordination With Indian Tribal Governments 
This action does not have tribal 
implications as specified in Executive Order 13175. This proposed rule will be implemented at the Federal level and affects transportation fuel refiners, blenders, marketers, distributors, importers, exporters, and renewable fuel producers and importers. Tribal governments would be affected only to the extent they produce, purchase, and use regulated fuels. Thus, Executive Order 13175 does not apply to this action. 
H. Executive Order 13045: Protection of 
Children From Environmental Health Risks and Safety Risks 
The EPA interprets Executive Order 
13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of ‘‘covered regulatory action’’ in section 2–202 of the Executive Order. This action is not subject to Executive Order 13045 because it implements specific standards established by Congress in statutes (CAA section 211(o)) and does not concern an environmental health risk or safety risk. 
I. Executive Order 13211: Actions 
Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use 
This action is not a ‘‘significant 
energy action’’ because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. This action proposes the required renewable fuel content of the transportation fuel supply for 2019, consistent with the CAA and waiver authorities provided therein. The RFS program and this rule are designed to 
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achieve positive effects on the nation’s 
transportation fuel supply, by increasing energy independence and security and lowering lifecycle GHG emissions of transportation fuel. 
J. National Technology Transfer and 
Advancement Act (NTTAA) 
This rulemaking does not involve 
technical standards. 
K. Executive Order 12898: Federal 
Actions To Address Environmental Justice in Minority Populations and Low-Income Populations 
The EPA believes that this action does 
not have disproportionately high and adverse human health or environmental effects on minority populations, low income populations, and/or indigenous peoples, as specified in Executive Order 
12898 (59 FR 7629, February 16, 1994). This proposed rule does not affect the level of protection provided to human health or the environment by applicable air quality standards. This action does not relax the control measures on sources regulated by the RFS regulations and therefore will not cause emissions increases from these sources. X. Statutory Authority 
Statutory authority for this action 
comes from section 211 of the Clean Air Act, 42 U.S.C. 7545. Additional support for the procedural and compliance related aspects of this proposed rule comes from sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. 7414, 7542, and 7601(a). 
List of Subjects in 40 CFR Part 80 
Environmental protection, 
Administrative practice and procedure, 
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, Oil imports, Petroleum, Renewable fuel. 
Dated: June 26, 2018. 
E. Scott Pruitt, 
Administrator. 
For the reasons set forth in the 
preamble, EPA proposes to amend 40 
CFR part 80 as follows: 
PART 80—REGULATION OF FUELS 
AND FUEL ADDITIVES 
■1. The authority citation for part 80 
continues to read as follows: Authority: 42 U.S.C. 7414, 7521, 7542, 
7545, and 7601(a). 
Subpart M—Renewable Fuel Standard 
■2. Section 80.1405 is amended by 
adding new paragraph (a)(10) to read as 
follows: 
§ 80.1405 What are the Renewable Fuel 
Standards? 
(a) * * * 
(10) Renewable Fuel Standards for 
2019. 
(i) The value of the cellulosic biofuel 
standard for 2019 shall be 0.209 percent. 
(ii) The value of the biomass-based 
diesel standard for 2019 shall be 1.72 
percent. 
(iii) The value of the advanced biofuel 
standard for 2019 shall be 2.67 percent. 
(iv) The value of the renewable fuel 
standard for 2019 shall be 10.88 percent. 
* * * * * 
[FR Doc. 2018–14448 Filed 7–9–18; 8:45 am] 
BILLING CODE 6560–50–P 
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