MEMORANDUM

Subject: Calculation of ethanol export estimates for 2014

From: David Korotney, U.S. EPA, Office of Transportation and Air Quality

To: EPA Air Docket EPA-HQ-OAR-2015-0111

In the June 10, 2015 Notice of Proposed Rulemaking (NPRM) for the RFS standards that would 

apply in 2014, 2015, and 2016, we estimated the supply of 2014 RINs that would be available for 

compliance with the applicable standards.1 Available RINs would include those that were 

generated for renewable fuel produced or imported in 2014 as recorded in the EPA-Moderated 

Transaction System (EMTS), minus any RINs that have been retired for reasons other than 

compliance by obligated parties with 2014 RFS percentage standards or would be expected to be 

retired to cover exports of renewable fuels. However, we explained that the total number of 

RINs that would be expected to be retired to cover exports of renewable fuel in 2014 will only be 

recorded in EMTS after the compliance demonstration deadline for 2014 has passed. Since the 

compliance deadline for all 2014 RIN exports had not yet passed, we proposed estimating likely 

RIN retirements for renewable exports using renewable fuel export information from EIA. 

Ethanol export data reported by EIA is derived from surveys collected by the Census Bureau. 

These surveys distinguish between ethanol that is denatured and ethanol that is undenatured, with 

approximately 450 million gallons being described as denatured and approximately 350 million 

gallons being described as undenatured for 2014. In the NPRM we treated both categories of 

ethanol as having been part of total 2014 supply (i.e., as having generated RINs). Thus we 

calculated available RINs for 2014 by subtracting the exported volumes represented by both 

categories from the amount of RINs generated for domestic production or imports in 2014. We 

based this approach on the expectation that ethanol producers had an incentive to denature all 

ethanol for tax purposes, and thus would only sell undenatured ethanol if it was contractually 

designated for export. Given that most ethanol producers are located far from the coasts, we 

believed it was unlikely that ethanol producers were engaged in direct export of any significant 

quantity of undenatured ethanol, and as a result we treated the Census Bureau survey data as

being reliable for the total volume of exported ethanol but unreliable with respect to whether 

exported batches were denatured or undenatured.

At the public hearing on the proposed rule on June 25, 2015, public commenters indicated that 

they believed it was an error to treat the reported amounts of undenatured ethanol as being part 

of the 2014 supply of RINs.2 Based on a preliminary consultation with EIA, we believe that the 

Census Bureau survey data is likely to be more reliable than we previously believed with regards 

 

1 See discussion at 80 FR 33121-33122

2 See hearing transcript (docket reference EPA-OAR-HQ-2015-0111-1044) at 340-41 (testimony of Rhett Adams 

that 386 million gallons of undenatured ethanol should not have been deducted from total because they did not 

generate RINs and thus will not retire RINs); see also hearing transcript (docket reference EPA-OAR-HQ-2015-

0111-1043) at 35-36 (similar testimony from Geoff Cooper).
to whether exported batches were denatured or undenatured. This will be one of the issues on 

which we will consult EIA prior to the issuance of the final rulemaking.. 

Ethanol that is exported in undenatured form would not have generated RINs3, and thus should 

not have been subtracted from the total number of RINs generated for fuel ethanol in 2014 for 

purposes of calculating the available supply of RINs for 2014 in the proposal. EPA intends to

account for this and other information on the available supply of 2014 RINs in the determination 

of the appropriate volume requirements in the final rulemaking. 

 

3 See 40 CFR 80.1401, definition of "Renewable Fuel"