## Summary of Interagency Working Comments on Draft Language under EO

12866 and EO 13563 Interagency Review. Subject to Further Policy Review.

Interagency Comments on U.S. Environmental Protection Agency (EPA) draft proposed rule titled, “ Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and

Biomass

- Based Diesel Volume for 2017 ” RIN 2060

- AS22

1. Source of export data: With regards to historical ethanol export data, EPA explains that it estimated likely RIN retirements for renewable exports using renewable fuel export

information from EIA. Will EPA confirm that EIA is using official U.S. Census data? Specifically, is EPA accounting for the fuel ethanol exports and imports that are classified under two codes: 2207106010 (undenatured) and 2207200010 (denatured)?

Response: EPA uses EIA data for exports. It is our understanding that EIA uses data from the ITC, which includes both denatured and undenatured ethanol. However, this question should be directed to EIA to verify.

2. On page 46, the following link was provided in footnote 47: http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS

- Z00_mbblpd_w.htm However, on that page, no export data for fuel ethanol can be found. Possibly this link is more suitable: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M_EPOOXE_EEX_NUS

Z00_MBBL&f=M

Response: Footnote has been changed.

3. The commenter is concern ed that EPA is projecting future production of cellulosic biofuel production based on a range of two inputs

– historic production and industry’s own projections

-- that may not be reliable predictors of future production. The commenter would like to work with EPA to develop an approach estimating cellulosic ethanol volumes that represents our best joint attempts to calculate such projections and improve the accuracy in future rule

- makings. We recommend that this not change the current numbers in the rule but strongly urge that a process to develop an alternative methodology begin as soon as possible (and that our intention to do so be made public at the time of the release of the draft rule).

Response: EPA is open to a discussion with the commenter on approaches to projecting cellulosic biofuel production in the future. No changes made to the current draft

.

a. The commenter also recommends EPA seek comment on the process the agency used to determine the levels of “neutral aim and accuracy” and using the 25th percent ile of the projected production for companies that have demonstrated commercial

- scale production and using the 50 th percentile of the projected prod uction for companies that

have achieved consistent commercial

- scale production . It would be helpful if EPA could explain the reasoning for chosing these percentiles.

.

Response: We currently request comment on the methodology used to project volumes for 2015 and 2016, as well as the general methodology used to project future cellulosic production(including the choice of the 25 th and 50 th percentiles) in the last sentences of Sections IV.D and

IV.E. The reasoning for choosing these percentiles is ex plained in the text following Table IV.D

3.

4. Several commenters note that if the volumes proposed in the NPRM become final, it will trigger the mandatory reevaluation of the Advanced Biofuels volumes in 2016. The commenter s request that EPA clarify , in the proposed rule, the schedule and process for re

- assessing and determining the future volumes if the proposed Advanced Biofuels volumes become final, in order to increase business certainty and to assure readers that it is on the EPA radar

. It appears

t hat the trigger requirement would be to issue a rulemaking within one year under the “Modification Applicable Volumes” section of the statute.

Response: We believe that it would be premature to indicate in this proposal what EPA might

do in a future ru lemaking if the standards th at we finalize in November meet the applicable statutory triggers. We will consider discussing the reset rule in the final rule if the triggers are indeed met. In the meantime we will be prepared to answer questions about it as part of the rollout of the proposal.

a. Recognizing significant uncertainties in GHG emissions reductions calculations, the commenter also encourages EPA to take comment on whether modifying the equivalence value methodology used to determine RINs to co nsider GHG emission reductions would be likely to strengthen the potential GHG emissions benefits of the RFS. The commenter recognizes that prior rulemakings noted that the current equivalence value methodology was sufficient as there were distinct GHG th resholds for each renewable fuel category and thus a GHG reduction equivalence was not necessary. The commenter recommends that EPA take comment to determine if significant changes to the administration of the RFS and the biofuels marketplace in recent ye ars effect EPA’s previous conclusion.

Response: This program design issue is something that we have already evaluated in prior rulemakings and made a final decision on in the 2010 RFS2 rule. This proposal is to waive the statutory volumes and set the annual standards for 2014

- 16. Significant changes t o the administration of the RFS are not feasible in the timeframe requi red to finalize this rulemaking and so we are not reopening them in this proposal.

5. Through this rulemaking, EPA is proposing to modify the existing algal oil pathway to clarify that only biofuels produced from oil from algae grown photosynthetically qualify for the RFS program under this pathway. EPA is in the process of drafting a rule to propose a separate pathway for biofuels produced from non

- photosynthetic algae. This issu e appears to solely pertain to one company that is experimenting with the possibility of using sugarcane as the primary fuel source (an attempt to push their process into the cellulosic category). Even if the agency does not consider this pathway modifica tion to be controversial, the agency should consider whether including this item in the annual rule will be a distraction and only lead to additional scrutiny.Response: This modification is not intended to allow one company using sugarcane as the

prima ry fuel source into the cellulosic category. The purpose of this regulatory change is to clarify that EPA’s lifecycle analysis of algal oil assumed that the algae was grown photosynthetically and that other types of algal fuels must be further evaluated f or their greenhouse gas emissions. EPA considers the algae oil modification to be a necessary but minor clarification of an existing pathway. We do not believe this clarification to be controversial and therefore plan to keep it in the rule.

6. The commenter believes that the maximum achievable volume of advanced biofuel is likely to go up as the volumes required of conventional renewable fuel go down (in part due to their dependence on the same production infrastructure), the commenter encourages EPA to consider whether it might be possible to shift a portion of gallons into the advanced biofuel requirement to reflect Congress’ intent that the RFS would require great growth of advanced
biofuels, not conventional renewable fuel, after 20 15.

Table 1 below shows the statutory volumetric biofuels requirements (units in billion gallons).

2014 2015 2016

Cellulosic biofuel 1.75 3.0 4.25

Biomass

- based diesel ≥1.0 ≥1.0 ≥1.0

Advanced biofuel 3.75 5.5 7.25

Renewable fuel 18.15 20.5 22.25

a All values are ethanol

- equivalent on an energy content basis, except for Biomass

- based diesel (BBD) which is expressed in physical gallons.

Table 2 below shows the proposed RFS volumetric blending requirements. EPA is proposing

to rescind the cellulosic b iofuel standard for 2011, and, based on historical and near

- term capacity estimates; propose cellulosic biofuel volumes for all three years that are below the applicable volume specified in the Act. Relying on the Clean Air Act (CAA) statutory waiver

autho rities, the EPA is also proposing to reduce the applicable volumes of advanced biofuel and total renewable fuel for all three years (2014

- 2016) from the volumes prescribed in the Energy Security and Independence Act of 2007 (EISA 2007). In the proposed ru le EPA is also proposing growth in the applicable volume of biomass

- based diesel for 2014, 2015, 2016, and 2017.Table 2. Proposed Volume Requirements (units in billion gallons) a

2014 2015 2016 2017

Cellulosic biofuel (million gallons) 33 106 203

---

Biomass

- based diesel (billion gallons) 1.63 1.70 1.80 1.90

Advanced biofuel (billion gallons) 2.68 2.90 3.40

---

Renewable fuel (billion gallons) 15.93 16.30 17.40

---

a All values are ethanol

- equivalent on an energy content basis, except for Biomass

based diesel (BBD) which is expressed in physical gallons.

Response: The volume requirements that we are proposing for 2016 represent our

determination of the maximum achie vable volumes for advanced biofuel and total renewable

fuel. The maximum achievable volumes take into account both various constrai n ts on supply and the power of the market to respond to the standards that we set. While this determination included some j udgment, it represents the Agency's current best estimate of maximum of

a chievable volume. Once we receiv e comments from stakeholders in response to the proposal,

we will re

- evaluate the volume requirements for 2016.

7. Page 20. In the final paragraph on this page, EPA should substitute to the Federal Reporter citation for the Monroe Energy v. EPA case: Monroe Energy v. EPA, 750 3.d 909 (D.C. Cir. 2014), reh’g denied, 2014 U.S. App. LEXIS 13625 (D.C. Cir. July 16, 2014).

Response: We have made this chan ge.

8. Page 30. The final sentence in the last full paragraph reads: “It does not change the fact that the text adopted by Congress, whether viewed by itself for in the context of other fuel waiver provisions, is clearly ambiguous.” Because this looks li ke an oxymoron, EPA might strike the word “clearly.”

Response: We have made this change.

9. Page 31. In the last paragraph on page 31, the last sentence begins: “Although we are not generally responding to comments on the proposal . . . .” To avoid con fusion, this should read, “Although we are not generally responding to comments on the November 2013 proposal . . . .”

Response: We have updated sentence to read, “Although we are not generally responding to comments on the withdrawn 2014 RFS proposal...”

10. Pages 51

- 52. The presentation in EPA’s bar graphs in Figure II.D

- 1, D

- 2, and D

- 3 appears to make the recent “actual” and future “proposed” growth in renewable fuel use appear larger. Wesimply wonder if the design of the graph is intentional and is th ought t o be helpful to EPA’s

purposes.

Response: Graphs were intended only to make the year

- to

- year changes clear. We will consider suggestions for alternative designs that also make the year

- to

- year changes clear if they are provided.

11. Passim. The w ord “judgment” is spelled incorrectly on at least pages 16 and 52. EPA might search and replace the correct spelling throughout the document.

Response: According to Websters, both "judgment" and "judgement" are acceptable spellings

, though "judgment" is more common. The text has been modified thro ughout to ensure consistency.

12. Costs: The analysis of costs presented in the document is somewhat novel in that only costs incremental to the prior year’s program costs are considered. One implication of this methodology is that a regulatory program that imposed costly annual requirements that remained unchanged over time would be scored as having zero costs beyond the first year. With respect to the particulars of this draft proposed RFS rule, a non

- inc remental costing would yield significantly higher numbers that are presented in the document. For example, biomass

based diesel (BBD) is about $1.20 per gallon higher in the spot market than petroleum diesel (ULSD) ($3.16/gal vs. $1.95/gal) along the Gulf Coast. The rule requires 1.70 billion gallons of BBD in 2015 and 1.80 billion gallons of BBD in 2016, and probably much more to meet the advanced standard. The costs are clearly well in excess of the numbers presented in the

document.

a. Please send ove r the cost m emo mentioned in the preamble.

Response: The memo to the docket describing illustrative cost calculations has been sent to

OMB. This memo includes a discussion of choosing an appropriate baseline for assessing costs.

b. Consider incorporating costs and benefits more broadly (e.g. including GHG benefits and costs of distribution). EPA could also look at the relative costs of importing sugarcane ethanol versus lowering the standard for advanced biofuel (taking into account the potential for dome stic production of advanced biofuel).

Response: The memo to the docket includes a discussion of costs and benefits more broadly. While we did not attempt to calculate the GHG benefits

, we address the issue qualitatively. Further, our illustrative cost est imates simply attempt to assess the production cost differences and do not estimate any downstream or infrastructure costs.

We have not attempted to look at the relative cost of importing sugarcane ethanol versus lowering the advanced standard. The purp ose of the sugarcane ethanol cost scenario is to provide information on the potential costs of using sugarcane ethanol to meet the advanced

standard.c. The advanced mandate is expected to grow almost 20 percent in 2016 from 2015. For cellulosic, small but increasing volumes of cellulosic liquid renewable fuels from first generation cellulosic biofuel plants are expected to be blended into gasoline and diesel fuel in 2015 and 2016. The 2016 renewable fuel standards grow approximately 6 percent from 2015 expected volumes. The growth in the 2016 renewable fuel standards are expected to be accommodated by increased volumes of ethanol blended as E10 (as the gasoline pool grows), E85, and bio and renewable diesel blended into diesel fuel, and renewable natur al gas consumed in the transport sector. It is assumed

that the renewable fuel volumes were set at the value of renewable identification numbers (RINs) that will provide an incentive to enable E85 to be competitively marketed against E10 gasoline in addit ional to increased levels of blending of biodiesel into diesel fuel and heating oil. We believe this growth rate is aggressive but achievable from a biofuel production standpoint although it would be helpful to learn more from the agency concerning any po tential changes in costs and benefits when compared to the agency’s 2010 regulatory impact analysis.

Response: See above

13. The discussion in the cost section suggests that sugarcane ethanol displaces gasoline. In fact, sugarcane ethanol is more likely to substitute for other forms of ethanol in the U.S. motor fuel pool.

Response: The cost section is not intended to project which types of biofuels will be used to

meet the volume standards. These examples simply i llustrate the difference in production costs associated with using sugarcane or corn ethanol to displace gasoline and using soy BBD to displace diesel

.

14. p. 6 para 1. Commenter suggests revising the following two highlighted numbers: According to the Energy Information Administration (EIA), fuel ethanol production in the U.S. doubled in volume from approximately 6.6 billion gallons in 2007 to about 14.0 billion gallons in 2014. Growth in biodiesel production in the U.S. has increased more than two and a half times, from approximately 0.5 billion gallons in 2007 to 1.46 billion gallons in 2014. Today, nearly all of the approximately 138 billion gallons of gasoline used for transportation purposes contains 10 percent ethanol (E10).

a. B iod iesel production in 2014 is 1.2 billion gallons (PSA), 1.24 billion gallons (STEO), or 1.27 billion gallons (EIA

- 22M), NOT 1.46 billion gallons. This does not include renewable diesel because on p. 35 table II.A.5

- 1 has a note that says “1.63 billion gall ons of biodiesel and renewable diesel supplied in 2014.”

Response: The biodiesel production of importance to the RFS program is that which generates RINs. According to EMTS which tracks RIN generation, in 2014 there was 1.46 bill gal of

biodiesel + ren ewable diesel produced domestically that qualified as D4 (advanced). It does not represent biodiesel only, nor does it represent supply (domestic production + imports minus exports). We will modify the text to clarify that this number represents advanced biodiesel + renewable diesel domestic production.b. Gasoline for transportation use in 2014 was 3,257 million barr els or 136.8 billion gallons not 138 billion gallons.

Response: By "today" the text was referring to 2015. According to the May STEO, 2015 gasoline consumption is projected to be 138.7 bill gal. However, under the RFS program we subtract out Alaska consumption since Alaska is exempt, and we typically convert the resulti ng volumes to represent 100% E10 (no E0, E15, or E85). Based on these calculations, 2015 gasoline consumption would be 137.8 bill gal.

15. p. 14 Table I.A

- 3 has inconsistent numbers with Table V.B.3

- 1 on p. 99. Is it 1.63 or 1.67 bill gal

biomass

- based diesel in 2014?

Table I.A

- 3 Proposed Volume Requirements a

2014 2015 2016 Cellulosic biofuel (million gallons) 33 106 203

Biomass

- based diesel (billion gallons) 1.63 1.70 1.80 Advanced biofuel (billion gallons) 2.68 2.90 3.40 Renewable fuel (billion gallons) 15.93 16.30 17.40

a All values are ethanol

- equivalent on an energy content basis, except for BBD which

is actual.

Response: The discrepancy is explained in the paragraph immediately following Table III.C

1and in the footnote to Table V.B.3

- 1.

16. p. 15 p ara 1. In the interagency overview briefing , EPA indicated that the domestic production and imports would come from EMTS and that exports would come from EIA. Suggest introducing this concept in this section when it is introduced.

Therefore, in today's action we are proposing to base the applicable volume requirements for 2014 on actual renewable fuel use, as determined by data on the number of Renewable Identification Numbers (RINs) generated, minus the number of RINs retired to account for

ren ewable fuel export or for other purposes unrelated to demonstrating compliance with the

annual standards.

Response: Text was modified as requested.

Finally referenced on p. 46 para 2 but the source identified in footnote 47 was weekly imports & exports . We do not have biofuel exports available weekly. EPA should use

instead http://www.eia.gov/dnav/pet/pet_move_exp_dc_NUS

- Z00_mbbl_a.htm

.

Since the compliance deadline for a ll 2014 RIN exports has not yet passed, we are proposing to estimate likely RIN retirements for renewable exports using renewable fuel export informationfrom EIA. 47 If RINs retired for exports are recorded in EMTS prior to issuance of the final rule,

we w ill use EMTS data instead of EIA data in determining supply for 2014 in the final rule.

47 http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS

- Z00_mbblpd_w.htm

Response: Footnote was changed.

17. p. 17 para 1. EPA explain s biomass

- based diesel (BBD) production in terms of what was “required” and what the market actually “supplied.” Is the agency really discussing domestic

consu mption vs. exports? Please clarify.

For 20 13, EPA established an applicable volume of 1.28 billion gallons. The BBD standards in practice only establish the minimum volume required; substantially higher volumes have been used in past years to help satisfy the advanced biofuel standard. If BBD ou tcompetes other advanced biofuels in the marketplace as occurred in 2013, then the BBD standard serves as a floor and not a ceiling. Indeed, only 1.28 billion gallons of BBD were required in 2013, yet 1.55 billion gallons were supplied by the market. Fur thermore, the total renewable standard can provide an incentive for even more BBD and other advanced biofuels to be supplied than is actually required

, as also occurred in 2013: while the applicable advanced biofuel volume requirement was 2.75 billion etha nol

- equivalent gallons, the market actually supplied 3.02

billion ethanol

- equivalent gallons, and most of this was BBD.

Response: We added footnote to explain numbers : In 2013 1.55 billion gallons of BBD were supplied to the U.S. market. This reflects the sum of domestically produced BBD plus imported BBD minus domestically produced BBD that was exported. This number was developed using the EPA Moderated Transaction Sy stem (EMTS) data available at http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm (last accessed May 20, 2015)

18. p. 19. Table I.B.5

- 1 Commenter was able to replicate the 2014, 2015, and 2016 percentages for all except the renewable fuel total in 2016. The calculations are compared side

- by

- side below.

Table I.B.5

- 1 Proposed Percentage Standards

EPA’s calculations Commenter ’s calculations

2014 2015 2016 2014 2015 2016

Cellulosic biofuel 0.019% 0.059% 0.113% 0.019% 0.059% 0.113%

Biomass

- based

diesel 1.42% 1.42% 1.50% 1.42%

1.42% 1.50%

Advanced biofuel 1.52% 1.61% 1.89% 1.52% 1.62% 1.89%

Renewable fuel 9.02% 9.08% 9.67% 9.02% 9.08% 9.65%

Response: All % standards have been recalculated since OMB reviewed this draft to incorporate the most recent gasoline and diesel projections from EIA (STEO May 2015). We will provide the details of the calculations to OMB.19. p. 23

- 24 last sentence wrap. Not su re which “recent years” but the reduction in gasoline

consumption did not result in a corresponding decrease in the amount of ethanol in E10 because the percent of ethanol in gasoline increased over time.

The decrease in total gasoline consumption in rece nt years which resulted in a corresponding decrease in the amount of ethanol that can be consumed as E10 , the limited number and geographic distribution of retail stations that offer higher ethanol blends such as E15 and E85, the number of FFVs that have a ccess to E85, as well as other market factors, combine to place significant restrictions on the volume of ethanol that can be supplied to vehicles at the present

time.

Response: The highlighted text is referring to the maximum volume of ethanol that coul d, in theory, be consumed if all gasoline was E10. The text was modified to try and make this clearer.

20. p. 35 Table II.A.5

- 1. EPA states “ Based on EIA’s STEO March 2015”; however the commenter is

not able to f

igure out how it was calculated partially b ecause m aximum ethanol consumption is not defined by EPA. According to STEO March 2015, ethanol blended into gasoline is 0.88 MMBD or 13.29 billion gallons in 2015 and 0.87 MMBD or 13.35 billion gallons in 2016. Higher

ethanol blends are required for eth anol volumes to exceed these levels.

Table II.A.5

- 1 Additional Volumes Needed to Meet Statutory Targets for Total Renewable Fuel

(million ethanol

- equivalent gallons)

2015 2016 Statutory target for total renewable fuel 20,500 22,250

Maximum ethanol consumption as E10 a

- 13,780

- 13,690

Historical maximum biomass

- based diesel supply b

- 2,500

- 2,500

Additional volumes needed 4,220 6,060

a Based on EIA's Short

- Term Energy Outlook (STEO) from March 2015

b Represents the 1.63 billion gallons of biodiesel and renewable diesel supplied in

2014

Response: Maximum ethanol consumption as E10 means the volume of ethanol that could be consumed if all gasoline was E10, and there was no E0, E15, or E85. The two va lues in the table (13,780 and 13,690) were not taken directly from STEO, but instead were based on the total gasoline energy demand ( gasoline + ethanol) projected by STEO. In short, we used factors provided by EIA to convert projected volumes into project ed Btu, and then determine the volumes that would result if the projected Btu represented 100% E10. The table footnote was

modified to make this clearer.

21. p. 36 last sentences. No source is named but it’s assumed to be EIA as EIA’s imports data is the most complete. But the numbers quoted by EPA exceed EIA volumes.

a. In 2006 imports of Brazilian sugarcane ethanol were 10.78 million ba rrels or 453 million gallons not 560 million gallons.b. In 2014 imports of Brazilian ethanol were 1.27 million barrels or 53.4 million gallons

not 64 million gallons.

The highest volume of Brazilian sugarcane ethanol that has ever been imported was 560 million gallons in 2006, and in recent years ethanol impor ts have been considerably lower. In 2014, imports were only 64 million gallons

p. 51 footnote 50. Imports of ethanol from Brazil in 2013 were 7.67 million barrels or 323 million gallons NOT 435 million gallons

Response: When calculating total imports from Brazil, we include ethanol volumes that are imported through the Caribbean Basin Initiative which are presumed to have originated in Brazil. Thus we include volumes imported from Jamaica, Trinidad and Tobago, and Virgin Islands when using import data from EIA, as we did when providing the 2006 ethanol import volume. For 2013 and 2014 we used import information from EMTS, not EIA. F ootnote s were added to clarify.

22. p. 36, footnote 28. STEO does not present diesel consumption, only distillate. EPA needs to explain how calculated and what constitutes the 5 billion gallon difference between our

numbers.

2015 2016 4.09 4.14 MMBD per STEO 62.7 63.6 bill gal calculated 57.6 58.7 bill gal according to EPA

Based on EIA's March 2015 Short

- Term Energy Outlook, nationwide diesel consumption is projected to be 57.6 bill gal in 2015 and 58.7 bill gal in 2016

Response: The STEO report itself does not project diesel volumes, but the online interactive

table asso ciated with STEO does. The footnote was modified to clarify.

23. p. 39 para 3 and footnote 35. AEO2007 projected 0.82 MMBD or 12.57 billion gallons of ethanol in 2022 NOT 17.3 billion gallons. AEO2007 included E85 in its projections

– 0.0072

MMBD or 110. 4 million gallons in 2022. Ethanol’s share of the gasoline pool was 3% in 2005, projected to grow to 8% by 2030. Did EPA assume that the share would reach 5% in 2022 or

half of E10?

Moreover, it is highly unlikely that Congress expected the very high volumes that it specified in the statute to be reached only through the consumption of E10. At the time EISA was passed in 2007, EIA's Annual Energy Outlook for 2007 projected that 17.3 billion gallons of ethanol

could be consumed as E10 in 2022

. 35 However, 17.3 billion gallons is far less than the 35 billion gallons of renewable fuel other than BBD that Congress targeted for use in 2022. Thus, if the statutory targets were to be achieve d, 17.7 billion gallons of renewable fuel would need to beconsumed in 2022 either as higher level ethanol blends (E11

- E85), or as non

- ethanol fuels.

Such levels were far beyond the 2007 industry's abilities at that time, strongly suggesting that Congre ss expected the RFS program to compel the industry to make dramatic changes in a relatively short period of time.

35 Assumes that AEO2007's 2022 demand for gasoline energy was fulfilled entirely by E10

. AEO2007 however, projected that only about half of t he gasoline used in 2022 would be E10.

Response: The text is referring to the maximum volume of ethanol that could theoretically be consumed if all gasoline was E10, and there was no E0, E15, or E85. This theoretical maximum is derived in the same way a s described in the response to comment #20 above, with the only difference being that the projections from AEO were used instead of the projections from STEO.

We have modified the footnote to clarify.

24. p. 53, Figure II.D

- 4 is difficult to verify without seeing the data behind the chart, but 2008 (7%)
and 2009 (8%) appear too high in the graph. Please provide the supporting information.

STEO 3/15 data 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Ethanol Share of Finished Gasoline Consumption 0.025 0.029 0.039 0.048 0.070 0.080 0.093 0.096 0.097 0.097 0.098

Figure II.D

- 4

Ethanol Concentration of Gasoline

Source: EIA's Short Term Energy OutlookResponse: Sources of data is as follows:

Source Ethanol % Gasoline Ethanol

2005 STEO Dec 2009 3.01% Table 4a Table 8

2006 STEO Dec 2009 4.03% Table 4a Table 8

2007 STEO Dec 2009 5.04% Table 4a Table 8

2008 STEO Jan 2012 7.35% Table 4a Table 8

2009 STEO Jan 2012 8.39% Table 4a Table 8

2010 STEO July 2014 9.33% Table 4a Table 4a

2011 STEO March 2015 9.61% Table 4a Table 4a

2012 STEO March 2015 9.65% Table 4a Table 4a

2013 STEO March 2015 9.75% Table 4a Table 4a

2014 STEO March 2015 9.85% Table 4a Table 4a

25. p. 58, footnote 57, using AEO2014 Table 60, calculating the fraction of FFVs to total ga soline vehicles yields 9.3%, not 8.3%.

With regard to E85, according to EIA there will be about 17 million FFVs in the in

- use fleet in 2016 with a total consumption capacity of about 17 billion gallons of E85. 57

57 According to AEO2014, Table 60, total vehicle miles travelled by FFVs in 2016 will be about 8.3% of all gasoline

- powered vehicles , equivalent to about 11.4 bill gal of E10 or 16.8 bill gal of

E85.

Response: We have revi sed the numbers based on AEO2015, Table 42, and have updated the footnote to clarify that the calculation represents light

- duty gasoline vehicles

.

26. p. 68, para 1. Two problems with this sentence and footnote 71.

a. The product category says “Biomass

- Based Diesel” but this is biodiesel only (NO renewable diesel). EIA reports imports of renewable diesel under Other Renewable Diesel. BBD imports should be the sum of EIA’s reported imports of Biomass

- Based Diesel (biodiesel) and of Other Renewable Diesel and A ruba, Finland, and Singapore

should be added.

Response: The text has been c larified so that the imported volume referenced is all biomass

based diesel (not biodiesel only) and the data source is identified as EMTS, not EIA import data.

b. The citation in f

ootnote 71 appears to be wrong ; edits suggested below.Total domestic production of BBD was 1.45 billion gallons (2.19 billion RINs), while imports

resulted in an additional 0.34 billion gallons (0.55 billion RINs). 71

71 Countries contributing to BBD imports (million gallons) were Argentina=132, Australia= 1, Belgium=5, Canada= 45, Germany = 61, Indonesia=52, Netherlands = 8, Norway = 9, South Korea = 20, Panama=3, Spain = 4, Taiwan=1. U.S. Energy Information Administration (EIA).

Petroleum & Other Liquids Database; Annual import data for Biodiesel BBD (2013). See http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_EPOORDB_im0_mbbl_a.htm (last accessed April 6

, 2015).

Response: We have u pdated this footnote to correct the citation and include renewable diesel import volumes (“Other renewable diesel”). We have a lso added text discussing the difference between EIA’s import numbers for biodiesel and renewable di esel and EPA’s BBD import volumes (through EMTS).

27. p. 68, 1 st full paragraph: The texts of footnotes 72 and 73 are reversed and footnote 73 edits.

73 U.S. Energy Information Administration (EIA). Petroleum & Other Liquids Database. Annual export data for Biodiesel BBD (2013). See http://www.eia.gov/dnav/pet/pet_move_expc_a_EPOORDB_EEX_mbbl_a.htm (last accessed April 6, 2015).

Response: We have c orrected the footnotes

.

28. p. 68, para 2. EIA does not forecast gross exports of renewable fuels in STEO; done in terms of

net exports.

However, complete information on RINs that are retired to cover exports of renewable fuel is not available through EMTS until after the compliance demonstration deadline for a given calendar year has passed. Since compliance cannot occur until the standar ds are set, we propose to estimate such RIN retirement based on renewable fuel export information from the

EIA.

Response: We have c hanged the text to clarify that we are not relying on the STEO, but reported EIA data for biodiesel exports for 2014 only.

29. p. 69, para 2. The blending tax credit for biodiesel and renewable diesel was also a significant

factor in 2011 and 2013.

Based on the fact that the industry made more BBD available in 2011 and 2013 than volume requirements for those years, we conclude that the BBD standard is not the sole driver for the amount of BBD produced or imported into the United States. We believe that the advancedbiofuel and total renewable fuel standards are significant factors in the amount of biodiesel

produced and importe d into the United States.

Response: We have a dded a footnote to acknowledge the potential influence of the tax credit

.

30. p. 80 para 2 Would like to discuss with EPA as EPA was previously planning to issue standards for just 2014 in the annual rule, but now plans to issue standards for both 2015 and 2016.

EPA is proposing to use a slightly different methodology for projecting the available volume of cellulosic biofuel for each of the three years. Our approach to each of these years can broadly

be described as one that seeks to use actual production volumes where they are available (such as for all of 2014 and several months of 2015) and to project production volumes from likely production facilities for future months in which actual production volu mes are not available. In previous projections of cellulosic biofuel production EPA, as directed by the CAA, has considered information provided by EIA in making our projections. EPA received a letter from EIA on February 19, 2014 containing cellulosic b iofuel projections for 2014

, 83 but to date have not received any projections of cellulosic biofuel production for 2015. As discussed in more detail below EPA now has data, through EMTS, on the actual number of cellulosic RINs generated in 2014 and we are proposing to establish the 2014 cellulosic biofuel standard using this data rather than EIA’s projection. We anticipate that for the final rule EIA will provide EPA with projected production volumes of cellulosic biofuel in 2015 and 2016 and we intend to consider these projections in our final rule.

83 Letter from Adam Sieminski, EIA Administrator to Gina McCarthy, EPA Administrator February 19, 2014.

Response: EPA would be open to discussing this with EIA

.

31. p. 98, footnote 101, Specify which year of S EDS rather than "most recent," so numbers can be verified. For example, 2013 SEDS has been released in stages over 6 months.

101 To determine the 49

- state values for gasoline and diesel, the amounts of these fuels used in Alaska is subtracted from the totals provided by DOE. The Alaska fractions are determined from the most recent EIA State Energy Data System (SEDS), Energy Consump tion Estimates.

Response: Calculations of % standards will be provided to OMB, showing actual numbers used to represent exempt Alaska gasoline and diesel. Footnote has been updated to clarify that the SEDS report used was released on June 27, 2014.

32. p. 99, Table V.B.3

- 1. EIA’s calculations of the terms

– gasoline (G), diesel (D), ethanol (RG), and

biomass

- based diesel (RD) are shown below beside the EPA calculations. The yellow highlights

indicate the EPA numbers that are different.Table V.B.3

- 1

Val ues for Terms in Calculation of the Proposed Standards (billion gallons)

EPA’s calculations EIA’s calculations

Term 2014 2015 2016 2014 2015 2016

G 136.42 137.63 136.82 136.47 137.7 137.15

D 55.07 56.88 57.97 55.19 56.85 58.1

RG 13.39 13.40 13.31 13.47 13.47 13.35

RD 1.52 1.55 1.53 1.54 1.55 1.54

Response: A ll % standards have been recalculated since OMB reviewed this draft to incorporate the most recent gasoline and diesel projections from EIA (STEO May 2015). We will provide the details of the calculations to OMB.

33. The Small Business Administration’s (SBA) Office of Advocacy commented that EPA has not satisfied the requirements of the Regulatory Flexibility Act. SBA has reviewed the RFA compliance with the RFS2 proposal and final rule (t he SBREFA panel report, the Initial Regulatory Flexibility Analysis and the Final Regulatory Flexibility Analysis) and disagree that these documents satisfy the requirement that “whenever an agency is required by section 553 of this title [5], or any other law, to published general notice of proposed rulemaking for any proposed rule . . . the agency shall prepare and make available for public comment an initial regulatory flexibility analysis.” (5 U.S.C. 603(a)). Advocacy disagrees that the impacts of the RFS2 program “were already addressed in the RFS2 proposed rule.” The impacts of that rule were vastly different from the current market and regulatory environment. EPA has learned significantly more about how the market has responded to a scarcity of RIN s in the marketplace and inequities in the distribution of RINs for compliance, including the completion (and subsequent revision) of the DOE study on disproportionate effects on small entities. Small entities have complained to this office, OMB through E O 12866 meetings , and EPA about changes EPA has made to the small entity flexibilities envisioned in the RFS2 SBREFA panel, proposed rule and final rule. Based on these complaints, Advocacy believes there remains a disproportionate impact on small entities and that EPA should be conducting the required RFA analyses to understand that imp act and consider alternatives.

EPA has a statutory duty to consider the impacts on small entities. Although EPA is exercising significant discretion in this rule to devia te from the statutory levels, it does not consider the impacts on small entities and has not considered alternatives to minimize the impact on small entities. In the absence of a small entity analysis, or even a consideration of the cost and

benefits of t he program, in which EPA considers alternative renewable fuel levels or alternative standards for small entity waivers, Advocacy staff does not believe EPA has provided the information upon which to base either a section 605(b) certification or an initial regulatory flexibility analysis, short of a total waiver for small entities from the requirements of this rule. Therefore, Advocacy staff believe that EPA is required to conduct a SBREFA panel and prepare of the Initial Regulatory Flexibility Analysis pri or to promulgation of this proposed rule.

Response: The March 26, 2010 RFS2 rulemaking was a rule implementing the entire program required by EISA 2007, not just the 2010 volumes. As such, the SBREFA panel process that tookplace prior to the 2010 rule was also for the entire program. The 2010 rule provided delayed

compliance and the ability to petition for hardship relief, as well as flexibilities through RIN trading and deficit carryforward . As such, we believe that the p rogram already provided compliance flexibility to small entities; and, as stated in the preamble to this NPRM, we do not believe that the impacts of this proposal are fundamentally different from those of the RFS2 rule implementing the entire program. Als o, possible small entity flexibilities such as those suggested by the commenter (e.g., “alternative standards”) were considered and rejected in the March 26, 2010 final rule as contrary to EPA’s authority under the CAA; our statutory authority

to issue r elief to small entities has not changed since that time.

Furthermore, c onducting the SBREFA process for the entire program in the context of the 2010 rule was logical and appropriate, since it was implementing the program mandated by Congress, whereas the rulemakings to set the annual standards are just taking the mandated volumes and expressing them as annual percentage standards based on gasoline and diesel production volume. In this regard, this proposal is consistent with our past annual standard setting rules which were not subject to the SBREFA panel process. However, unlike past annual

rules , we are exercising our waiver authority to reduce the statutory volumes. This exercise only reduces any burdens on small entities, as compared to the bur dens that would be imposed

under the volumes established in the Act.

Finally, attempting to go through a SBREFA panel process in the context of annual RFS standards rulemakings would not be possible given the time constraints, and would further delay issu ance of the annual standards.

As a point of clarification, this comment refers to “the DOE study on disproportionate effects on small entities.” However, th e DOE study addressed impact on “small refineries.” The term “small refinery” is defined in EIS A to mean a small

- capacity refinery (those refineries with a crude throughput of no more than 75,000 barrels of crude per day). A “small refiner”, on the other hand, is defined by SBA’s size standards at 13 CFR 121.201 to be refiners with no more
than 1, 500 employees company

- wide. There may be some circumstances where these definitions overlap but it is not uncommon for a large refiner to own a small refinery.