EO12866_RFS 2014 Annual Rule 2060-AR76 NPRM FRN_20131114.docx

*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 1 of 112

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2013-0479; FRL-XXXX-X]

RIN 2060-AR76

2014 Standards For The Renewable Fuel Standard Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: Under section 211(o) of the Clean Air Act, the Environmental Protection Agency 

is required to set the renewable fuel percentage standards each November for the following year. 

Today’s action proposes the annual percentage standards for cellulosic biofuel, biomass-based 

diesel, advanced biofuel, and renewable fuels that would apply to all motor vehicle gasoline and 

diesel produced or imported in the year 2014. For cellulosic biofuel, the statute specifies that 

EPA is to project the volume of production and must base the cellulosic biofuel standard on 

projected available volume if it is less than the applicable volume set forth in the Act. Today 

EPA is proposing a cellulosic biofuel volume for 2014 that is below the applicable volume 

specified in the Act. The statute also provides EPA the discretion to adjust the volumes of 

advanced biofuel and total renewable fuel under certain conditions. Relying on its Clean Air Act 

waiver authorities, EPA is proposing to adjust the applicable volumes of advanced biofuel and 

total renewable fuel to address projected availability of qualifying renewable fuels and

limitations in the volume of ethanol that can be consumed in gasoline given practical constraints 

on the supply of higher ethanol blends to the vehicles that can use them and other limits on 

ethanol blend levels in gasoline. These adjustments are intended to put the program on a 

manageable trajectory while supporting growth in renewable fuels over time. Finally, the statute 

requires EPA to determine the applicable volume of biomass-based diesel to be used in setting 

annual percentage standards under the renewable fuel standard program for years after 2012. 

EPA is proposing the applicable volume of biomass-based diesel that would apply in 2014 and 

2015. EPA is requesting comment on a variety of alternative approaches and on a range of 

inputs and methodologies relevant for setting the applicable standards.

DATES: Comments must be received on or before [insert date 60 days after date of 

publication in the Federal Register]. 

Hearing: We intend to hold a hearing. Details of the location and date will be provided in a 

separate notice.

ADDRESSES: Submit your comments, identified by

Docket ID No. EPA-HQ-OAR-2013-0479, by one of the following methods:

• www.regulations.gov: Follow the on-line instructions for submitting comments.

• Email: a-and-r-docket@epa.gov.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 2 of 112

• Mail: Air and Radiation Docket and Information Center, Environmental Protection 

Agency, Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

• Hand Delivery: EPA Docket Center, EPA West Building, Room 3334, 1301 Constitution 

Ave., NW., Washington, DC 20460. Such deliveries are only accepted during the 

Docket’s normal hours of operation, and special arrangements should be made for 

deliveries of boxed information.

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2013-0479. EPA's policy 

is that all comments received will be included in the public docket without change and may be 

made available online at www.regulations.gov, including any personal information provided, 

unless the comment includes information claimed to be Confidential Business Information (CBI) 

or other information whose disclosure is restricted by statute. Do not submit information that 

you consider to be CBI or otherwise protected through www.regulations.gov or e-mail. The 

www.regulations.gov website is an “anonymous access” system, which means EPA will not 

know your identity or contact information unless you provide it in the body of your comment. If 

you send an e-mail comment directly to EPA without going through www.regulations.gov your 

e-mail address will be automatically captured and included as part of the comment that is placed 

in the public docket and made available on the Internet. If you submit an electronic comment, 

EPA recommends that you include your name and other contact information in the body of your 

comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to 

technical difficulties and cannot contact you for clarification, EPA may not be able to consider 

your comment. Electronic files should avoid the use of special characters, any form of 

encryption, and be free of any defects or viruses. For additional information about EPA’s public 

docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm. For 

additional instructions on submitting comments, go to Section I.B of the SUPPLEMENTARY 

INFORMATION section of this document.

Docket: All documents in the docket are listed in the www.regulations.gov index. Although 

listed in the index, some information is not publicly available, e.g., CBI or other information 

whose disclosure is restricted by statute. Certain other material, such as copyrighted material, 

will be publicly available only in hard copy. Publicly available docket materials are available 

either electronically in www.regulations.gov or in hard copy at the Air and Radiation Docket and 

Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW, 

Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 

through Friday, excluding legal holidays. The telephone number for the Public Reading Room is 

(202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

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; Fax number: 734-

214-4816; E-mail address: macallister.julia@epa.gov, or the public information line for the 

Office of Transportation and Air Quality; telephone number (734) 214-4333; E-mail address 

OTAQ@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 3 of 112

A. Does this Action Apply to Me?

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 and biodiesel. Potentially regulated categories include: 

Category NAICS1

Codes

SIC2

Codes

Examples of Potentially Regulated Entities

Industry

Industry 

Industry 

Industry 

Industry 

Industry

Industry

324110

325193

325199

424690

424710

424720

454319

2911

2869

2869

5169

5171

5172

5989

Petroleum Refineries

Ethyl alcohol manufacturing

Other basic organic chemical manufacturing

Chemical and allied products merchant wholesalers

Petroleum bulk stations and terminals

Petroleum and petroleum products merchant 

wholesalers

Other fuel dealers

1 North American Industry Classification System (NAICS)

2

Standard Industrial Classification (SIC) system code.

This table is not intended to be exhaustive, but rather provides a guide for readers 

regarding entities likely to be regulated by this proposed action. This table lists the types of 

entities that EPA is now aware could potentially be regulated by this proposed action. Other 

types of entities not listed in the table could also be regulated. To determine whether your 

activities would be regulated 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 preceding section. 

B. What Should I Consider as I Prepare My Comments for EPA?

1. Submitting CBI

Do not submit confidential business information (CBI) to EPA through 

www.regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to 

be CBI. For CBI information in a disk or CD ROM that you mail to EPA, 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 claimed as CBI. In addition to one complete version of the comment 

that includes information claimed as CBI, a copy of the comment that does not contain the 

information claimed as CBI must be submitted for inclusion in the public docket. Information so 

marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for Preparing Your Comments

When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying information (subject 

heading, Federal Register date and page number).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 4 of 112

• Follow directions - The agency may ask you to respond to specific questions or organize 

comments by referencing a Code of Federal Regulations (CFR) part or section number.

• Explain why you agree or disagree, suggest alternatives, and substitute language for your 

requested changes.

• Describe any assumptions and provide any technical information and/or data that you 

used.

• If you estimate potential costs or burdens, explain how you arrived at your estimate in 

sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns, and suggest alternatives.

• Explain your views as clearly as possible, avoiding the use of profanity or personal 

threats.

• Make sure to submit your comments by the comment period deadline identified.

Outline of this preamble

I. Executive Summary................................................................................................................ 7

A. Purpose of This Action ....................................................................................................... 8

B. Summary of Major Provisions in This Notice .................................................................. 10

1. Cellulosic Biofuel Volume for 2014............................................................................. 10

2. Biomass-Based Diesel Requirement in 2014 and 2015................................................ 13

3. Advanced Biofuel and Total Renewable Fuel in 2014 ................................................. 13

4. Proposed Annual Percentage Standards for 2014......................................................... 15

C. Volume Requirements for 2015 and Beyond.................................................................... 15

II. Proposed Cellulosic Biofuel Volume for 2014..................................................................... 17

A. Statutory Requirements..................................................................................................... 17

B. Cellulosic Biofuel Volume Assessment for 2014............................................................. 18

1. Potential Domestic Producers with Approved Pathways ............................................. 20

2. Potential Domestic Producers without Existing Pathways........................................... 27

3. Potential Foreign Sources of Cellulosic Biofuel........................................................... 29

4. Summary of Volume Projections for Individual Companies........................................ 31

C. Proposed Cellulosic Biofuel Volume for 2014................................................................. 34

D. Rescission of the 2011 Cellulosic Biofuel Standards....................................................... 41

III. Proposed National Volume Requirement for Biomass-Based Diesel in 2014 and 2015...... 42

A. Statutory Requirements..................................................................................................... 42

B. Compliance with 2013 Volume Requirement of 1.28 Billion Gallons............................. 43

C. Determination of Applicable Volume for 2014 and 2015 ................................................ 44

IV. Proposed National Volume Requirements for Advanced Biofuel and Total Renewable 

Fuel for 2014................................................................................................................................. 48

A. Statutory Authorities for Reducing Volumes to Address Biofuel Availability and the 

Ethanol Blendwall..................................................................................................................... 49

1. Cellulosic Waiver Authority......................................................................................... 50

2. General Waiver Authority............................................................................................. 51

3. Combining Authorities for Reductions in Advanced Biofuel and Total Renewable Fuel

55
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 5 of 112

B. Determination of Reductions in Total Renewable Fuel.................................................... 56

1. Estimating Ethanol Volumes that Could Reasonably Be Consumed ........................... 57

a. Projected Composition of 2014 Gasoline Supply..................................................... 57

b. Assessment of E85 Consumption ............................................................................. 58

c. Proposed Projection of E85 Consumption in 2014................................................... 63

d. Estimating Total Ethanol Consumption in 2014....................................................... 65

2. Estimating Availability of Non-Ethanol Renewable Fuel Volumes............................. 65

a. Non-Ethanol Cellulosic Biofuel................................................................................ 65

b. Biomass-Based Diesel .............................................................................................. 65

c. Non-Ethanol Advanced Biofuel................................................................................ 71

d. Non-Ethanol Non-Advanced Renewable Fuel.......................................................... 72

3. Treatment of Carryover RINs in 2014 .......................................................................... 72

4. Proposed Range for the Volume Requirement for Total Renewable Fuel ................... 74

C. Determination of Reductions in Advanced Biofuel.......................................................... 80

1. Available Volumes of Advanced Biofuel in 2014........................................................ 80

a. Cellulosic biofuel...................................................................................................... 80

b. Biomass-Based Diesel .............................................................................................. 81

c. Domestic Production of Other Advanced Biofuel .................................................... 81

d. Imported Sugarcane Ethanol..................................................................................... 81

e. Summary................................................................................................................... 86

2. Options for Determining Appropriate Reductions in Advanced Biofuel ..................... 87

a. Option 1: Advanced Biofuel Availability................................................................. 87

b. Option 2: Full Reduction in Cellulosic Biofuel ........................................................ 88

c. Option 3: Availability, Growth, and Limits on Ethanol Consumption.................... 89

D. Summary of Proposed Volume Requirements for 2014................................................... 92

E. Volume Requirements for 2015 and Beyond.................................................................... 95

V. Proposed Percentage Standards for 2014............................................................................. 99

A. Background....................................................................................................................... 99

B. Calculation of Standards................................................................................................... 99

1. How Are the Standards Calculated? ............................................................................. 99

2. Small Refineries and Small Refiners.......................................................................... 102

3. Proposed Standards..................................................................................................... 103

VI. Public Participation......................................................................................................... 105

A. How Do I Submit Comments?........................................................................................ 105

B. How Should I Submit CBI to the Agency?..................................................................... 105

VII. Statutory and Executive Order Reviews......................................................................... 107

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: 

Improving Regulation and Regulatory Review ...................................................................... 107

B. Paperwork Reduction Act............................................................................................... 107

C. Regulatory Flexibility Act .............................................................................................. 107

D. Unfunded Mandates Reform Act.................................................................................... 108

E. Executive Order 13132: Federalism ............................................................................... 108

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments

109

G. Executive Order 13045: Protection of Children from Environmental Health Risks and 

Safety Risks ............................................................................................................................ 109
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 6 of 112

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use....................................................................................... 109

I. National Technology Transfer and Advancement Act ................................................... 109

J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority 

Populations and Low-Income Populations ............................................................................. 110

VIII. Statutory Authority ......................................................................................................... 111
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 7 of 112

I. Executive Summary

The Renewable Fuel Standard (RFS) program began in 2006 pursuant to the requirements 

in Clean Air Act (CAA) section 211(o) which was 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), resulting in the publication of major 

revisions to the regulatory requirements on March 26, 20101. 

The national volumes of renewable fuel to be used under the RFS program each year 

(absent an adjustment or waiver by EPA) are specified in CAA section 211(o)(2). The volumes 

for 2014 are shown in Table I-1. Note that cellulosic biofuel and biomass-based diesel 

categories are nested within advanced biofuel, which is itself nested within the renewable fuel 

category.

Table I-1

Required Applicable Volumes in Billion Gallons (bill gal) in the Clean Air Act for 2014

Cellulosic biofuel 1.75a

Biomass-based diesel ≥1.0b

Advanced biofuel 3.75a

Renewable fuel 18.15a

a

Ethanol-equivalent volume

b Actual volume. The ethanol-equivalent volume 

would be 1.5 if biodiesel is used to meet this 

requirement.

Under the RFS program, EPA is required to determine and publish annual percentage 

standards for each compliance year by November 30 of the previous year. The percentage 

standards are calculated so as to ensure use in transportation fuel of the national “applicable 

volumes” of four types of biofuel (cellulosic biofuel, biomass-based diesel, advanced biofuel, 

and total renewable fuel) that are either set forth in the Clean Air Act or established by EPA in 

accordance with the Act’s requirements. The percentage standards are used by obligated parties 

(generally, producers and importers of transportation fuel) to calculate their individual 

compliance obligations. The percentage standards are applied to the volume of non-renewable 

transportation fuel that each obligated party produces or imports during the specified calendar 

year to determine the volumes of renewable fuel that must be used as transportation fuel, heating 

oil, or jet fuel. 

As required by statute, we are proposing to establish the volume for cellulosic biofuel 

based on projected availability of such fuel – which is below the statutory target for 2014. In 

addition, we have evaluated the availability of qualifying renewable fuels and factors that in 

some cases limit supplying those fuels to the vehicles and equipment that can consume them, 

including the set of factors referred to as the ethanol blendwall. Based on this evaluation we 

believe that adjustments to the volumes of advanced biofuel and total renewable fuel required 

under the statute are warranted for 2014 due to an inadequate domestic supply of these fuels (see 

 

1

75 FR 14670
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 8 of 112

Section IV.A for further detail). We are also proposing to maintain the same volume for 

biomass-based diesel for 2014 and 2015 as was adopted for 2013. The volumes that we are 

proposing for 2014, as well as the ranges on which we are seeking comment, are shown below. 

With the exception of the volume requirement for cellulosic biofuel, the proposed volumes 

correspond to the preferred approach described in today’s proposal, but we discuss and are 

seeking comment on alternative approaches as well.

Table I-2

Proposed 2014 Volume Requirementsa

Proposed Volume Projected Range

Cellulosic biofuel 17 mill gal 8 - 30 mill gal

Biomass-based diesel 1.28 bill gal 1.28 bill galb

Advanced biofuel 2.20 bill gal 2.00 - 2.51 bill gal

Renewable fuel 15.21 bill gal 15.00 - 15.52 bill gal

a All volumes are ethanol-equivalent, except for biomass-based diesel which is actual.

b EPA is requesting comment on alternative approaches and higher volumes.

Section II contains a detailed discussion of the basis for our proposed volume of cellulosic 

biofuel for 2014, Section III contains a detailed discussion of the basis for our proposed volume 

of biomass-based diesel for 2014 and 2015, and Section IV contains a detailed discussion of the 

basis for our proposed volumes, as well as alternative potential approaches on which we are 

requesting comment, for advanced biofuel and total renewable fuel for 2014.

In developing this proposal, we have been cognizant that Congress anticipated and 

intended the RFS program to promote substantial, sustained growth in biofuel production and 

consumption – beyond the levels that have been achieved to date. Although current gasoline 

demand and forecasts of future gasoline demand have decreased since EISA’s enactment in 

2007, EPA continues to support the objective of continued growth in renewable fuel production 

and consumption, as well as the central policy goals underlying the RFS program: reductions in 

greenhouse gas emissions, enhanced energy security, economic development, and technological 

innovation. The approach reflected in today’s proposal is consistent with those objectives and is 

intended to put the RFS program on a manageable trajectory while supporting continued growth 

in renewable fuels over time. As emphasized throughout the proposal, we are seeking comment 

and information on a variety of alternative approaches as well as ranges of inputs and 

methodologies relevant to setting these standards, and look forward to engagement with 

stakeholders on all aspects of the proposal.

A. Purpose of This Action

EPA is today proposing annual volume requirements for obligated parties for cellulosic 

biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel for 2014. Table I.A-1 

lists the statutory provisions and associated criteria relevant to determining the national 

applicable volumes used to set the applicable standards in today’s proposed rule.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 9 of 112

Table I.A-1

Statutory Provisions for Determination of Applicable Volumes

Applicable volumes Clean Air Act 

reference

Criteria provided in statute for determination 

of applicable volume

Cellulosic biofuel in 

2014

211(o)(7)(D)(i) Required volume must be lesser of volume 

specified in CAA 211(o)(2)(B)(i)(III) or 

EPA’s projected volume.

Biomass-based diesel in 

2014 and 2015

211(o)(2)(B)(ii) 

and (v)

Required volume for years after 2012 must 

be at least 1.0 bill gal, and must be based on 

a review of implementation of the program 

and an analysis of several factors.

Advanced biofuel in 

2014

211(o)(7)(D)(i) If applicable volume of cellulosic biofuel is 

reduced to the projected volume, EPA may 

reduce advanced biofuel and total renewable 

fuel by the same or lesser volume. No 

criteria specified.

211(o)(7)(A) EPA may waive any portion of the statutory 

volume requirements if implementation of 

those requirements would severely harm the 

economy or environment of a State, region, 

or the United States, or there is an inadequate 

domestic supply.

Total renewable fuel in 

2014

211(o)(7)(D)(i) If applicable volume of cellulosic biofuel is 

reduced to the projected volume, EPA may 

reduce advanced biofuel and total renewable 

fuel by the same or lesser volume. No 

criteria specified.

211(o)(7)(A) EPA may waive any portion of the statutory 

volume requirements if implementation of 

those requirements would severely harm the 

economy or environment of a State, region, 

or the United States, or there is an inadequate 

domestic supply.

Under the statute, 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 volume of production available during the year. In today's 

proposed rule, we present our analysis of cellulosic biofuel production and projected volume for 

2014. This analysis is based on our evaluation of individual producers’ production plans and 

progress to date following discussions with cellulosic biofuel producers, the Energy Information 

Administration (EIA), the Department of Agriculture (USDA), and the Department of Energy 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 10 of 112

(DOE), and includes an assessment of the probabilities associated with production schedules 

from each of these producers.

While CAA section 211(o)(2)(B) specifies the volumes of biomass-based diesel to be 

used in the RFS program through year 2012, it directs the EPA to establish the applicable 

volume of biomass-based diesel for years after 2012. The statute also lists the factors that must 

be considered in this determination. In today's action we are proposing volume requirements for 

biomass-based diesel for both 2014 and 2015.

There are two different authorities in the statute that permit EPA to reduce volumes of 

advanced biofuel and total renewable fuel below the volumes specified in the statute. When we 

lower the applicable volume of cellulosic biofuel below the volume specified in CAA 

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 can also reduce the 

applicable volumes of advanced biofuel or total renewable fuel under the general waiver 

authority provided at CAA 211(o)(7)(A) under certain conditions. Today's proposal uses a 

combination of these two authorities to reduce volumes of both advanced biofuel and total 

renewable fuel to address two important realities:

• Limitations in the volume of ethanol that can be consumed in gasoline given practical 

constraints on the supply of higher ethanol blends to the vehicles that can use them 

and other limits on ethanol blend levels in gasoline – a set of factors commonly 

referred to as the ethanol "blendwall"

• Limitations in the ability of the industry to produce sufficient volumes of qualifying 

renewable fuel

As described in detail in Section IV, today's action lays out a framework for determining the 

applicable volume requirements that addresses these two realities. We are proposing to use this 

framework to establish the volume requirements in 2014. As described in more detail in Section 

IV.E, we believe that this framework would also be appropriate for later years, subject to 

adjustments made in the course of the rulemaking process and taking into account the specific 

facts about the availability of renewable fuels at the time of the final rulemaking.

In today's proposed rule we have also provided the annual percentage standards (shown 

in Section I.B.4 below) that would apply to all producers and importers of gasoline and diesel in 

2014. The percentage standards, which establish the legal requirement for the obligated parties,

are based on the 2014 applicable volumes that we project for the four types of renewable fuel 

and a projection of volumes of gasoline and diesel consumption in 2014 from the Energy 

Information Administration (EIA). 

B. Summary of Major Provisions in This Notice

1. Cellulosic Biofuel Volume for 2014
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 11 of 112

The cellulosic biofuel industry continues to transition from research and development 

(R&D) and pilot scale to commercial scale facilities, leading to significant increases in 

production capacity. RIN generation from the first commercial scale cellulosic biofuel facility 

began in March 2013.2 A second facility began producing fuel in July 2013 with several others 

expected to follow in 2014. Based on information we have collected from these companies and 

discussions with EIA, we have identified five companies we expect to produce cellulosic biofuel 

in 2014. There are an additional three companies that may be in a position to produce cellulosic 

biofuel if additional pathways are approved by EPA. Each of the relevant facilities is listed in 

Table I.B.1-1 along with our estimate of their projected 2014 volume. Based on the information 

we have received from these companies, our conversations with other government agencies, and 

EPA's own engineering judgment we are projecting that 8 - 30 million ethanol-equivalent gallons 

of cellulosic biofuel will be available in 2014. This range does not account for the estimate that 

EIA is required to provide to EPA containing estimates of the volume of cellulosic biofuel 

projected to be sold or introduced into commerce in 2014. The projected range also does not 

include any volume from facilities that could use pathways which have not yet been approved. If 

production volumes from these facilities were included, we would project a production range of 

53 - 83 million ethanol-equivalent gallons.

As part of estimating the volume of cellulosic biofuel that would be made available in the 

U.S. in 2014, we researched all potential production sources by company and facility. This 

included sources that were still in the planning stages, those that were under construction, and 

those that are already producing some volume of cellulosic ethanol, cellulosic diesel, or some 

other type of cellulosic biofuel. Facilities primarily focused on research and development were 

not the focus of our assessment as production from these facilities represents very small volumes 

of cellulosic biofuel, and these facilities typically have not generated RINs for the fuel they have 

already produced. From this universe of potential cellulosic biofuel sources, we identified the 

subset that is expected to produce commercial volumes of qualifying cellulosic biofuel for use in 

2014. To arrive at a projected volume for each facility, we developed company specific 

projections based on discussions with cellulosic biofuel producers, EIA, USDA, and DOE, and 

on factors such as the current and expected state of funding, the status of the technology utilized, 

progress towards construction and production goals, and other significant factors that could 

potentially impact fuel production or the ability of the produced fuel to qualify for cellulosic 

biofuel Renewable Identification Numbers (RINs) in 2014. Further discussion of these factors 

can be found in Section II.B.

In our assessment we focused on domestic sources of cellulosic biofuel. At the time of 

this proposed rule no internationally-based cellulosic biofuel production facilities have registered 

under the RFS program and therefore no volume from international producers has been included 

in our projections for 2014. 

 

2 A RIN is unique number generated by the producer and assigned to each gallon of a qualifying renewable fuel 

under the RFS program, and is used by refiners and importers to demonstrate compliance with the volume 

requirements under the program.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 12 of 112

Table I.B.1-1

Projected Available Cellulosic Biofuel Plant Volumes in Million Gallons (mill gal) for 2014

Company Location Fuel type

Annual 

Production 

Capacity a

First 

Production 

Projected 2014 

available volumeb

Companies with Approved Pathways

Abengoa Hugoton, KS Ethanol 24 1Q 2014

c

0 – 18

DuPont Nevada, IA Ethanol 30 2H 2014

c

0 – 2

INEOS Bio Vero Beach, FL Ethanol 8 3Q 2013 2 – 5

KiOR Columbus, MS Gasoline and 

Diesel

11 March 2013 0 – 9

Poet Emmetsburg, IA Ethanol 25 1H 2014c0 – 6

Total for companies with approved pathways 8 - 30d

Other Potential Cellulosic Biofuel Producers

CNG/LNG 

Producers

Various CNG/LNG Various Various 35 – 54

Edeniq Various Ethanol Various 1H 2014c0 - 7

Ensyn Stanley, WI Heating Oil 3 2007 0 – 5

Total for both companies with approved pathways and those with proposed pathways 53 - 83d

a

Facilities are generally designed to process a given quantity of feedstock and volume capacities may vary 

depending on yield assumptions 

b

Volumes listed in million ethanol-equivalent gallons

c Start-up dates for these facilities are projections

d Total volumes are the result of Monte Carlo simulations rather than the sum of the low and high end of the range of 

projected available volume for each company. See Section II.C for more detail.

In projecting the actual volume of cellulosic biofuel that will be available for use in 2014, 

we have taken into account variation in expected start-up times, along with the facility 

production capacities, company production plans, the progress made in 2013, expected 

production distribution and a variety of other factors. We used this information to determine the 

most likely production ranges for each of the individual companies and a production probability 

distribution within the range. We then used a Monte Carlo simulation to aggregate the individual 

ranges into a production projection for the cellulosic biofuel industry as a whole in 2014. We 

believe this method results in a projected production range that better represents our expectations 

for cellulosic biofuel production in 2014 than simply adding the low and high end of the 

production ranges from each of the individual companies. Section II discusses in greater detail 

our projections of cellulosic biofuel in 2014 and the companies we expect to produce this 

volume. 

In response to a recent court decision, we are also proposing to rescind the cellulosic 

biofuel standards for 2011. In January 2013, the United States Court of Appeals for the District 

of Columbia Circuit issued a decision interpreting the statutory requirements for EPA’s 

cellulosic biofuel projections, in the context of considering a challenge to the 2012 cellulosic 

biofuel standard. The Court found that in establishing the applicable volume of cellulosic 

biofuel for 2012, EPA had used a methodology in which “the risk of overestimation [was] set 

deliberately to outweigh the risk of underestimation.” The Court held EPA’s action to be 

inconsistent with the statute because EPA had failed to apply a “neutral methodology” aimed at 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 13 of 112

providing a prediction of “what will actually happen,” as required by the statute. As a result of 

this ruling, the Court vacated the 2012 cellulosic biofuel standard. See API v. EPA, 706 F.3d 

474 (D.C. Cir. 2013). EPA later removed the 2012 cellulosic biofuel requirement from the 

regulations.3 Since we used essentially the same methodology to develop the 2011 cellulosic 

biofuel standard as we did to develop the 2012 standard, we believe it would be appropriate to 

rescind the 2011 cellulosic biofuel standard as well and accordingly are proposing to do so in 

today’s action. The money paid by obligated parties to purchase cellulosic waiver credits to 

comply with the 2011 cellulosic biofuel standard would be refunded if this action is finalized.4

2. Biomass-Based Diesel Requirement in 2014 and 2015

While section 211(o)(2)(B) specifies the volumes of biomass-based diesel through year 

2012, it directs the EPA to establish the applicable volume of biomass-based diesel for years 

after 2012. Moreover, the statute requires that we finalize these biomass-based diesel volume 

requirements no later than 14 months before the first year for which that volume requirement 

will apply. We did not propose a volume requirement for biomass-based diesel in the February 

7, 2013 Notice of Proposed Rulemaking because at that time we were still evaluating the 

potential market impacts of current production levels. In order to provide sufficient time for this 

evaluation, as well as the other analyses we are required to conduct, we delayed our proposal for 

the 2014 volume requirement for biomass-based diesel. 

In today's action we are proposing to maintain the applicable volume of 1.28 bill gallons 

for biomass-based diesel for both 2014 and 2015. As required by the statute when setting 

biomass-based diesel volume requirements for years after 2012, our proposal is based on a 

consideration of the factors specified in the statute, including biodiesel production, consumption, 

infrastructure, climate change, energy security, the agricultural sector, air quality, and others. 

Section III provides additional discussion of our assessment of the proposed volume of 1.28 bill 

gal of biomass-based diesel.

3. Advanced Biofuel and Total Renewable Fuel in 2014

Since the RFS2 program began in 2010, EPA has considered reductions in advanced 

biofuel and total renewable fuel authorized under the cellulosic waiver provisions of 

211(o)(7)(D)(i). In the past we have focused primarily on the availability of advanced biofuels 

in determining whether reductions in the required volume of cellulosic biofuel should be 

accompanied by reductions in the required volumes of advanced biofuel and total renewable fuel. 

The total volume of renewable fuel in the form of ethanol that could reasonably be available and 

supplied to vehicles as either E10 or higher ethanol blends given various constraints, was not a 

limiting factor for years prior to 2014. However, for 2014 and later years, the total volume of 

ethanol that can be consumed, and the total volume of non-ethanol renewable fuels that could 

reasonably be available, are together expected to be less than the volume requirements 

 

3

78 FR 49794 (August 15, 2013)

4

In 2011 obligated parties purchased 4,248,388 cellulosic biofuel waiver credits at a price of $1.13 per gallon-RIN 

for a total cost of $4,800,678.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 14 of 112

established in EISA for advanced biofuel and total renewable fuel. Therefore, we are proposing 

reductions in the volume requirements for these categories of renewable fuel to address these 

concerns.

We evaluated three potential approaches for reducing the applicable volume requirements 

for advanced biofuel and total renewable fuel. Each of these approaches would require use of a 

combination of the cellulosic and general waiver authorities at 211(o)(7)(D)(i) and 211(o)(7)(A), 

respectively, to address supply concerns associated with the blendwall. The three approaches 

differ primarily with regard to how the advanced biofuel requirement would be adjusted using 

these authorities. The first approach would lower the statutory volumes for advanced biofuels 

only to the extent that additional volumes are not projected to be available; the general waiver 

authority would be used to ensure that the total volume of renewable fuel would address supply 

concerns associated with the blendwall. The second approach would make reductions in 

advanced biofuel and total renewable fuel that are equal to the proposed reductions in cellulosic 

biofuel and would use the general waiver authority to make further reductions to the total 

renewable fuel requirement necessary to address the blendwall. 

The third approach that we evaluated, and the one that we are proposing today, includes 

both a consideration of the capability of the relevant industries to make qualifying renewable 

fuels available, either through domestic production or importation, and also the capability of the 

relevant industries to ensure that those renewable fuels are used as transportation fuel, heating 

oil, or jet fuel.5 The use of renewable fuels includes a consideration of the infrastructure 

available for distributing, blending, and dispensing renewable fuels, as well as appropriate 

vehicles in the fleet that can consume various renewable fuels, such as flex-fuel vehicles (FFVs). 

Our proposed framework for addressing both availability of qualifying renewable fuels and 

constraints on their consumption would make use of a combination of the cellulosic waiver 

authority at 211(o)(7)(D)(i) and the general waiver authority at 211(o)(7)(A). As described in 

detail in Section IV.A.2, we interpret the term "inadequate domestic supply" as it is used under 

the general waiver authority to include consideration of factors that affect consumption of 

renewable fuel. We believe the framework being proposed today best approximates the multiple 

goals that Congress intended in the RFS program, and we would intend this framework to apply 

not just to 2014, but to later years as well. However, we are soliciting comment on alternative 

approaches as well. We discuss the proposed framework and the alternative approaches in 

Section IV. 

We believe that our proposed framework for determining appropriate volumes of total 

renewable fuel and advanced biofuel would simultaneously address the ethanol blendwall and 

limitations in availability of qualifying renewable fuels. For total renewable fuel, we would 

project the volume of ethanol that could reasonably be consumed as E10 and higher ethanol 

blends, and would add to that the volume of all non-ethanol renewable fuels that could 

reasonably be expected to be available. For advanced biofuel, we would sum the ethanolequivalent volumes of the cellulosic biofuel requirement, the biomass-based diesel requirement, 

and the additional non-ethanol advanced biofuels that could reasonably be expected to be 

 

5 While the fuels that are subject to the percentage standards are currently only non-renewable gasoline and diesel, 

renewable fuels that are valid for compliance with the standards include those used as transportation fuel, heating 

oil, or jet fuel.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 15 of 112

available and be consumed. In this process we have projected ranges that encompass the most 

likely outcomes, and we propose several approaches to determining the most likely value for the 

final rule.

4. Proposed Annual Percentage Standards for 2014

The renewable fuel standards are expressed as a volume percentage and are used by each 

refiner, blender, or importer to determine their renewable fuel volume obligations. The 

applicable percentages are set so that if each regulated party meets the percentages, and if EIA 

projections of gasoline and diesel use for the coming year prove to be accurate, then the amount 

of renewable fuel, cellulosic biofuel, biomass-based diesel, and advanced biofuel actually used 

will meet the volumes required on a nationwide basis. 

Four separate percentage standards are required under the RFS program, corresponding to 

the four separate volume requirements shown in Table I-1. The specific formulas we use in 

calculating the renewable fuel percentage standards are contained in the regulations at 40 CFR 

§80.1405 and repeated in Section V.B.1. The percentage standards represent the ratio of 

renewable fuel volume to projected non-renewable gasoline and diesel volume. The projected 

volume of transportation gasoline and diesel used to calculate the standards in today's proposed 

rule was derived from EIA projections. The proposed standards for 2014 are shown in Table 

I.B.4-2. Detailed calculations can be found in Section V, including the projected 2014 gasoline 

and diesel volumes used.

Table I.B.4-2

Proposed Percentage Standards for 2014

Cellulosic biofuel 0.010 %

Biomass-based diesel 1.16 %

Advanced biofuel 1.33 %

Renewable fuel 9.20 %

C. Volume Requirements for 2015 and Beyond

As highlighted above, EPA continues to support the objective – reflected in the statute –

of continued growth in renewable fuel production and consumption, as well as the central goals 

of the RFS program: enhanced energy security and reductions in greenhouse gas emissions. We 

also recognize that issues concerning the availability of qualifying fuels and the consumption of 

ethanol will continue to be relevant in 2015 and beyond, particularly in light of projections that 

overall gasoline demand will continue to decline while the statutory volumes for renewable fuel 

volumes continue to increase. Our objective in this rulemaking is to develop a general approach 

for determining appropriate volume requirements that can be applied not only in 2014, but also 

for 2015 and beyond. As we consider comments received in response to this NPRM, our intent 

is to develop an approach that puts the RFS program on a manageable trajectory while 

supporting continued growth in renewable fuels over time. The proposed approach described in 

today's NPRM can and will account for new and improved data and changes in circumstances 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 16 of 112

over time, including the substantial efforts underway to increase the volume of biofuel produced 

and consumed in the United States. Many companies, often supported by various government 

programs, are continuing to invest in efforts ranging from research and development to the 

construction of commercial scale facilities resulting in the ongoing growth of next generation 

biofuels. Similar efforts on the part of both public and private sectors are growing the 

infrastructure to enable expansion in the use of gasoline fuel blends containing greater than 10 

percent ethanol. Under the right circumstances, there is substantial potential for continued 

growth in the use of ethanol and next generation biofuels, both in the near term and into the 

future. As both ethanol and non-ethanol renewable fuel volumes grow, the proposed 

methodology set forth in today’s proposed rule will incorporate this growth into the development 

of the standards for the following year, providing an ongoing incentive for growth of biofuels. 

We recognize that a number of challenges must be overcome to fully realize the potential that 

exists for increased production and consumption of renewable fuels in the United States. We 

also recognize that while the RFS program is a central element of our domestic biofuels policy, a 

range of other tools, programs, and actions have the potential to play an important 

complementary role. We request information and ideas on what actions could be taken by the 

variety of industry and other private stakeholders, as well by the government, to help overcome 

these challenges, continue to foster innovation, and minimize the need for adjustments in the 

statutory renewable fuel volume requirements in the future.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 17 of 112

II. Proposed Cellulosic Biofuel Volume for 2014

In order to project the volume of cellulosic biofuel production in 2014 for use in setting 

the applicable percentage standard, we considered information we received from EIA and 

information we collected from individual facilities that have the potential to produce qualifying 

volumes for consumption as transportation fuel, heating oil, or jet fuel in the U.S. in 2014. This 

section describes the volumes that we project will be produced or imported in 2014 as well as 

some of the uncertainties associated with those volumes. 

In the past several years the cellulosic biofuel industry has continued to progress. The 

first cellulosic biofuel RINs under the current RFS regulations were produced in 2012 at two 

small demonstration scale facilities. During 2013, the first commercial scale cellulosic biofuel 

facilities have successfully completed commissioning and began fuel production, and several 

more large scale commercial production facilities are expected to begin fuel production in 2014. 

Projected costs for the production of cellulosic biofuels continues to fall as a result of ongoing 

technology development and operating experience gained from many research and development 

and demonstration-scale facilities across the country. These important advances include higher 

biofuel yields per ton of feedstock as well as lower enzyme and catalyst costs. As a result of 

these advances, the projected capital costs and energy costs to produce a gallon of cellulosic 

biofuel have decreased. New feedstock supply chains, which will be necessary to provide the 

raw materials for anticipated commercial facilities, have been established, and in several cases 

companies have signed contracts to obtain significant quantities of feedstocks for their first 

commercial facilities. EPA has also approved new pathways to increase the variety of fuels for 

which cellulosic RINs can be generated and the feedstocks from which these fuels can be 

produced. These factors have combined to continue to reduce the perceived technical, financial, 

and regulatory risks associated with the cellulosic biofuel industry and place the cellulosic 

biofuel industry on firm ground for future growth.

Although the cellulosic biofuel industry faces many challenges and RIN-generating 

cellulosic biofuel production continues to be limited, the industry is growing incrementally, both 

in the United States and around the world.6 New facilities projected to be brought online in the 

United States in 2014 would increase the production capacity of the cellulosic industry by 

approximately 600 percent. The following section discusses the companies the EPA reviewed in 

the process of projecting cellulosic biofuel production for use as a transportation fuel in the 

United States in 2014. Information on these companies forms the basis for our projection that 

the volume of cellulosic biofuel produced in 2014 is likely to be in the range of 8 - 30 million 

gallons. EPA will continue to monitor the progress of these facilities, as well as any others of 

which we become aware that have the potential for cellulosic biofuel production in 2014, in 

order to have the most up to date information possible to set the cellulosic biofuel standard in the 

final rule.

A. Statutory Requirements

 

6 As of July 31, 2013, 215,044 RINs that can be used to fulfill the cellulosic biofuel standard (D3 and D7 RINS) 

have been generated.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 18 of 112

The volumes of renewable fuel to be used under the RFS program each year (absent an 

adjustment or waiver by EPA) are specified in CAA 211(o)(2). For 2014, the statute specifies a 

cellulosic biofuel volume requirement of 1.75 billion gallons. The statute requires that if EPA 

determines, based on EIA’s estimate, that the projected volume of cellulosic biofuel production 

for the following year is less than the applicable volume EPA is to reduce the applicable volume 

of cellulosic biofuel to the projected volume available during that calendar year. 

In addition, if EPA reduces the required volume of cellulosic biofuel below the level 

specified in the statute, the Act also indicates that we may reduce the applicable volumes of 

advanced biofuels and total renewable fuel by the same or a lesser volume. Our consideration of 

the 2014 volume requirements for advanced biofuels and total renewable fuel is presented in 

Section IV.

B. Cellulosic Biofuel Volume Assessment for 2014

In order to project cellulosic biofuel production for 2014, we have tracked the progress of 

several dozen potential cellulosic biofuel production facilities. As for the 2013 annual volumes, 

we have focused on facilities with the potential to produce commercial volumes of cellulosic 

biofuel rather than small R&D or pilot scale facilities as the larger commercial scale facilities are 

much more likely to generate RINs for the fuel they produce and the volumes they produce will 

have a far greater impact on the cellulosic biofuel standard for 2014. From this list of facilities 

we used publically available information, as well as information provided by DOE, EIA, and 

USDA, to make a preliminary determination of which facilities are the most likely candidates to 

produce cellulosic biofuel and generate cellulosic biofuel RINs in 2014. 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 the coming years. 

Information such as the funding status of these facilities, current status of the production 

technologies, announced construction and production ramp-up periods, and annual fuel 

production targets were all considered when we spoke with representatives of each company to 

discuss cellulosic biofuel target production levels for 2014. Throughout this process EPA has 

been in contact with EIA to discuss relevant information. 

For each company included in our 2014 volume projections EPA has established a range 

of potential production volume such that it is possible, but highly unlikely, that the actual 

production will be above or below the range.7 The low end of the range for each company is 

designed to represent the volume of fuel EPA believes each company is likely to produce if they 

are unable to begin fuel production on their expected start-up date and/or experience challenges 

that result in reduced production volumes or a longer than expected ramp-up period. Experience 

to date with cellulosic biofuel production facilities is that historically they have been unable to 

achieve announced start-up dates and production volumes in their first few years of expected 

production. To project a low end of the range of production volumes, therefore, we must 

consider the likely minimum volume of fuel new facilities are likely to produce if they 

experience similar delays and setbacks. The low end of the range for any facilities that have not 

 

7

For the purposes of the Monte Carlo simulation, discussed in more detail later, this range will be treated as 

representing the 90% confidence interval.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 19 of 112

yet begun producing cellulosic biofuel is set at zero in our assessment. This reflects the 

uncertainties related to these facilities’ start-up dates, the possibility that any remaining 

construction and commissioning timelines may be delayed, and the possibility that initial fuel 

volumes are likely to be small.

If a facility has already begun production any uncertainty related to its start-up date is no 

longer relevant and the remaining uncertainty primarily relates to the facility’s ability to achieve 

steady state production and target yields as it progresses towards production rates that reflect the 

facility’s nameplate capacity. For these facilities, production history is a significant factor in 

establishing the low end of the projected production range. It is important to note that the low 

end of the range does not represent a worst-case scenario. The worst-case scenario for any of 

these facilities is zero, as it is always possible that extreme circumstances or natural disasters 

may result in extended delays, project cancellation, or liquidation. While not denying this 

possibility for any of the facilities included in our projections, several have made sufficient 

progress that we believe a non-zero value for the low end of the range is appropriate. For these 

facilities we believe it is highly unlikely that the production volume will fail to exceed the low 

end of their projected production range in 2014. Further discussion on the basis for the low end 

of the projected production range for each facility is included in the company descriptions in the 

following sections.

To determine the high end of the range of expected production volumes for each 

company we considered a variety of factors, including company history, expected start-up date 

and ramp-up period, facility capacity, and others mentioned above. As a starting point, EPA 

calculated a production volume using the expected start-up date and facility capacity assuming 

our best-case scenario benchmark of a six-month straight-line ramp-up period. Any production 

volumes that exceeded this volume were not considered to be credible, even for the high end of 

the range of expected production volumes. If the production estimate EPA received from a 

company was lower than the volume calculated using the methodology above, EPA used the 

company production targets instead. In some cases these volumes were discounted further based 

on the history of these companies or EPA’s engineering judgment. More information on the 

process used to project the high end of the range of expected production volumes for each 

company can be found below. This process is similar to the process used in the 2013 standards 

Notice of Proposed Rulemaking (NPRM) to calculate the expected production for each company.

We believe our range of projected production volumes for each company represents the 

range of what is likely to actually happen for each company. A brief description can be found 

below for each of the companies we believe will produce cellulosic biofuel and make it 

commercially available in 2014. We will continue to gather more information to help inform our 

decision regarding the cellulosic biofuel volume to be required for 2014 in the final rule. In the 

sections that follow, we first discuss domestic cellulosic biofuel production facilities with an 

approved RIN generating pathway, followed by facilities with pathways that have been proposed 

or are currently being evaluated by EPA, and finally foreign cellulosic biofuel producers.

EPA has determined a range of potential production volumes for each company rather 

than a single value as a range better reflects the uncertainty associated with the production from 

each company. Additionally, there are a large number of companies that EPA must assess and 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 20 of 112

aggregate to produce a single national volume covering the entire cellulosic biofuel industry. 

We believe that our projected production volume for the cellulosic biofuel industry as a whole is 

more accurate if it is done in such a way as to reflect the uncertainty associated with each of the 

companies that contribute to the projection. As discussed in more detail in Section II.C below, 

EPA is using a Monte Carlo simulation as a tool to combine our production projections for each 

individual company to determine a reasonable range of cellulosic biofuel production in 2014 for 

the entire industry in a way that reflects the uncertainty across the full suite of facilities. This 

projected range provides a basis for public comment and helps to inform our ultimate decision on 

the single value for the final rule that best represents the projected volume of cellulosic that will 

be available in 2014. Alternative methods to combine our production projections are discussed 

further in Section IV.

1. Potential Domestic Producers with Approved Pathways

The companies and facilities discussed in this section all have the potential to produce 

cellulosic biofuel for use as transportation fuel, heating oil, or jet fuel in the United States in 

2014. Both INEOS Bio and KiOR began producing cellulosic biofuel at commercial-scale in 

2013. The remaining seven are in various stages of construction. All seven of these facilities 

project the successful completion of construction of commercial scale facilities and initial fuel 

production in 2014. The strong financial incentive provided by the cellulosic RINs, combined 

with the fact that all these facilities are located in the United States and intend to use approved 

pathways, give us a high degree of confidence that any fuel they produce will also generate 

corresponding cellulosic biofuel RINs.8

In order to generate RINs, each of these companies must register under the RFS program 

and comply with all applicable recordkeeping and reporting requirements. This includes using 

an approved RIN-generating pathway and verifying that their feedstocks meet the definition of 

renewable biomass. 

Abengoa

Abengoa, a large international biofuels company, has developed an enzymatic hydrolysis 

technology to convert corn stover and other agricultural waste feedstocks into ethanol. After 

successfully testing and refining their technology at a pilot scale facility in York, Nebraska as 

well as in a demonstration-scale facility in Salamanca, Spain, Abengoa is now working towards 

the completion of their first commercial scale cellulosic ethanol facility in Hugoton, Kansas. 

After successfully proving their technology at commercial scale in Hugoton, Abengoa currently 

plans to construct additional similar cellulosic ethanol production facilities, either on greenfield 

sites or co-locating these new facilities with their currently existing starch ethanol facilities 

around the United States.

 

8

In 2012, approximately 20,000 gallons of cellulosic biofuel produced in the US was exported to Brazil to be used 

for promotional purposes. We believe the circumstances surrounding this export of cellulosic biofuel were unique, 

including significant investment in the company that produced the fuel by Petrobras, and are unlikely to be repeated 

by the companies included in future years.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 21 of 112

Abengoa has contracts in place to provide the majority of feedstocks necessary for the

Hugoton facility for the next 10 years and successfully completed their first biomass harvest in 

the fall of 2011. Construction at this facility, which began in September 2011, is expected to 

take approximately two years and be completed in the fourth quarter of 2013. All of the major 

process equipment for this project has been purchased and all of the required permits for 

construction have been approved. Abengoa’s Hugoton facility is being partially funded by a 

$132 million Department of Energy (DOE) loan guarantee.

When completed, the Hugoton plant will be capable of processing 700 dry tons of corn 

stover per day, with an expected annual ethanol production capacity of approximately 24 million 

gallons. Abengoa plans to begin producing fuel at the facility in January 2014, shortly after 

completing construction in late 2013, and to be producing fuel at rates near the nameplate 

capacity by the end of the second quarter of 2014. They are currently projecting 17 – 20 million 

gallons of cellulosic ethanol production from this facility in 2014.9 This range of volumes is 

consistent with the 18 million gallons EPA would project if we assume production starts on 

January 1, 2014 and use the six-month ramp-up period as a benchmark best case scenario for 

new cellulosic biofuel production facilities. To date construction at the Abengoa facility has 

proceeded as expected and EPA has no reason to believe this facility is less likely to achieve 

their production targets than any other new first-of-a-kind cellulosic biofuel facility. EPA is 

therefore using 18 million gallons of cellulosic ethanol as the high end of the projected 

production range from Abengoa in todays proposed rule. For the low end of the production 

range, EPA is projecting a volume of 0 gallons, consistent with our projections for all facilities 

that have not yet begun producing commercial volumes of cellulosic biofuel. This significantly 

reduced volume reflects the fact that no commercial scale cellulosic biofuel facility has yet been 

able to achieve its target date for the first production of fuel. Any delay in the start-up date of 

this facility would have a significant negative impact on production in 2014 and may result in 

production being delayed until 2015. 

Cool Planet Biofuels

Cool Planet Biofuels has developed a process to convert a variety of forms of cellulosic 

biomass into a renewable gasoline product. Their process uses pressure and heat to convert the 

cellulosic biomass to a hydrocarbon stream in a biomass fractionator which is then upgraded 

using proprietary catalysts into a renewable gasoline product. Cool Planet Biofuels plans to 

deploy relatively small scale production units capable of producing 10 million gallons of fuel per 

year that can be located near readily available sources of cellulosic biomass. In December 2012 

Cool Planet Biofuels began producing fuel from their 400,000 gallon per year demonstration 

scale facility that is currently being used for testing purposes.

Cool Planet Biofuels plans to begin producing fuel at their first commercial scale unit, 

with a nameplate capacity of 10 million gallons per year by the end of 2014. The location of this 

facility has not yet been announced, and it is unclear whether Cool Planet Biofuels has raised 

sufficient funds for the construction of this facility. Cool Planet Biofuels claims that the very 

 

9 Email from Chris Standlee, Executive Vice President of Institutional Affairs, Abengoa to Dallas Burkholder, US 

EPA. Received June 26, 2013.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 22 of 112

short construction time they anticipate for their facility relative to cellulosic biofuel production 

facilities of similar size, which generally take at least two years to build, is made possible by 

their use of very little novel equipment. The majority of the facility is composed of units already 

used in commercial operation in other applications that will be purchased from vendors and 

assembled by Cool Planet Biofuels. The facility will be constructed on cargo container skids and 

then transported to the fuel production site. 

EPA believes that it may be possible for Cool Planet Biofuels to produce cellulosic 

biofuel from their first commercial scale production facility in 2014, but any production from 

this facility is highly uncertain. Historically the construction of cellulosic biofuel production 

facilities has taken multiple years, with delays to the initial construction schedules common. 

Cool Planet’s unique construction plan may allow for a reduced construction timeframe; 

however we do not believe it would be appropriate to rely on this in projecting available volumes 

of cellulosic biofuel in 2014. We have therefore not included any volume from Cool Planet 

Biofuels in our projection of the potentially available volume of cellulosic biofuel in 2014 in 

today’s proposal.

DuPont

DuPont has developed an enzymatic process to convert corn stover into cellulosic 

ethanol. DuPont has invested hundreds of millions of dollars to develop this technology and 

since 2009 has operated a small demonstration scale facility in Vonore, Tennessee. In addition 

to developing technology for converting cellulosic biomass to ethanol, DuPont has been working 

with corn producers, equipment manufacturers, and Iowa State University to develop expertise in 

the collection, transportation, and storage of the biomass feedstock for their cellulosic ethanol 

facilities. On March 29, 2013 DuPont signed an agreement with USDA to promote the 

sustainable harvesting of feedstocks for cellulosic biofuel facilities. 

On November 30, 2012 DuPont began the construction of their first commercial scale 

cellulosic ethanol facility in Nevada, Iowa. When completed, this facility will have a nameplate 

production capacity of 30 million gallons of cellulosic ethanol per year. DuPont currently plans 

to achieve mechanical completion at this facility in June 2014 and to begin production in the 

second half of 2014. They are currently projecting the production of approximately 3 million 

gallons of cellulosic ethanol from this facility in 2014; however they acknowledge that even 

slight delays in their expected construction timeline could have significant impacts on their fuel 

production in 2014. Using EPA’s best-case benchmark of a six month straight-line ramp-up 

period assuming a production startup date of October 1, 2014 would result in an expected 

production of approximately 2 million gallons in 2014. Due to the start-up date that is late in the 

year, however, even a relatively minor delay in the construction and commissioning timeline or 

unforeseen challenges in start-up would result in no production from this facility in 2014. We 

have projected a range or 0 – 2 million gallons of cellulosic biofuel from DuPont’s Nevada, Iowa 

facility in 2014.

Fiberight
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 23 of 112

Fiberight uses an enzymatic hydrolysis process to convert the biogenic portion of 

separated municipal solid waste (MSW) and other waste feedstocks into ethanol. They have 

successfully completed five years of development work on their technology at their small pilot 

plant in Lawrenceville, Virginia. In 2009 Fiberight purchased an idled corn ethanol plant in 

Blairstown, Iowa with the intention of making modifications to this facility to allow for the 

production of 6 million gallons of cellulosic ethanol per year from separated MSW and industrial 

waste streams. These modifications were scheduled to be completed in 2011, but difficulties in 

securing funding have resulted in construction at this facility being delayed. In January 2012 

Fiberight was offered a $25 million loan guarantee from USDA. Closing on this loan would 

provide substantially all of the remaining funds required for Fiberight to complete the required 

modifications at their Blairstown facility. Additional construction will be required at this facility 

before the production of cellulosic biofuel can begin, and the company expects that this 

construction will take approximately 6 months to complete. Additionally, Fiberight’s waste 

separation plan for this facility was approved in June 2012 allowing Fiberight to generate RINs 

for the cellulosic ethanol they produce using separated MSW as a feedstock. Because of the 

uncertainty surrounding Fiberight’s funding status, the lack of progress towards the completion 

of the modifications at their Blairstown, Iowa facility, and their history of production delays EPA 

is not including any volume from Fiberight in today’s proposal.

INEOS Bio

INEOS Bio has developed a process for producing cellulosic ethanol by first gasifying 

cellulosic feedstocks into a synthesis gas (syngas) and then using naturally occurring bacteria to 

ferment the syngas into ethanol. In January 2011, USDA announced a $75 million loan 

guarantee for the construction of INEOS Bio’s first commercial facility to be built in Vero 

Beach, Florida. This loan was closed in August 2011. This was in addition to the grant of up to 

$50 million INEOS Bio received from DOE in December 2009. At full capacity, this facility 

will be capable of producing 8 million gallons of cellulosic biofuel as well as 6 megawatts 

(gross) of renewable electricity from a variety of feedstocks including food and yard waste, 

agricultural residues, slash and pre-commercial thinnings, and tree residues from tree 

plantations.10 The facility also plans to use a limited quantity of separated MSW as a feedstock 

after initial start-up.

On February 9, 2011, INEOS Bio broke ground on this facility. INEOS Bio completed

construction on this facility in June 2012 and began full commissioning of the facility. In 

August 2012 INEOS Bio received approval from EPA for their yard waste separation plan and 

successfully registered their Vero Beach, FL facility under the RFS program. In October 2012 

the facility began producing renewable electricity. INEOS Bio entered the start-up phase of

cellulosic ethanol production in November 2012. During this phase the facility was not run 

continually, as facility modifications continued to be made; however, a small volume of 

cellulosic ethanol was successfully produced. On July 31, 2013, INEOS Bio announced they had 

begun producing cellulosic ethanol at commercial scale from their Vero Beach facility. INEOS 

Bio currently projects cellulosic ethanol production at this facility to be 4-5 million gallons in 

 

10 Both slash and pre-commercial thinnings and tree residue from tree plantations must come from non-federal 

forestland to qualify as a feedstock in the RFS program. Additionally slash and pre-commercial thinnings must 

come from land that is not ecologically sensitive forest land.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 24 of 112

2013. As this volume is less than what would be projected using our best-case ramp-up 

benchmark we believe it is an appropriate volume to represent the upper end of INEOS Bio’s 

potential production range for 2014. 

There is, however, significant uncertainty in the ability of this facility to achieve these 

production volumes in 2014. The facility has not yet reached production rates consistent with its 

projected production volume, and production ramp-up could take longer than expected. INEOS 

Bio also experienced several setbacks to production related to weather-caused power losses at 

the facility. While they are working to protect against these issues in the future by enabling the 

facility to operate in a self-sustaining mode, the possibility of future interruption due to serious 

weather events will still exist. For this proposed rule we are projecting a production range of 2 –

5 million gallons of cellulosic ethanol from INEOS Bio’s Vero Beach facility in 2014. The low 

end of the range accounts for the possibility of both an extended ramp-up period and 

interruptions to production continuing into 2014.

KiOR

KiOR is working to commercialize a technology capable of converting biomass to a 

biocrude using a process they call Biomass Fluid Catalytic Cracking (BFCC). BFCC uses a 

catalyst developed by KiOR in a process similar to Fluid Catalytic Cracking currently used in the 

petroleum industry. The first stage of this process produces a renewable crude oil which is then 

upgraded to produce primarily gasoline, diesel, and jet fuel as well as a small quantity of fuel oil, 

all of which are nearly identical to those produced from petroleum. 

KiOR’s first commercial scale facility is located in Columbus, Mississippi and is capable 

of producing approximately 11 million gallons of gasoline, diesel, and jet fuel per year. 

Construction on this facility began in May 2011 and was completed in September 2012. This 

facility is funded, in large part, with funds acquired through private equity raises and 

supplemented by KiOR’s $150 million IPO in June 2011. On March 17, 2013 KiOR generated 

their first cellulosic biofuel RINs from this facility. KiOR initially announced that they expected 

the start-up period at their Columbus facility to last 9-12 months, during which time they 

estimate fuel production will average 30%-50% of the facility capacity and production rates at or 

near nameplate capacity following. On August 8, 2013 KiOR reduced its production targets for 

2013 from 3 - 5 million gallons to 1 - 2 million gallons. KiOR has feedstock supply agreements 

in place to supply all of the required feedstock for their Columbus facility with slash and precommercial thinning. They also have off-take agreements with several companies for all of the 

fuel that will be produced. 

In today’s proposal we are projecting a production range of 0 – 9 million ethanolequivalent gallons in 2014 from KiOR’s Columbus, MS facility. The high end of our proposed 

production projection (5.5 million actual gallons or 9 million ethanol-equivalent gallons) has 

been calculated assuming this facility produces at an average rate of 50% of nameplate capacity 

throughout 2014. We believe this reduced volume is appropriate given the low production 

volumes KiOR has achieved to date and KiOR's statements, in an August 8, 2013 conference call 

discussing their second quarter performance, that they had not yet begun focusing on increasing 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 25 of 112

the efficiency and yields of the facility. The low end of the range (0 million gallons) reflects 

uncertainty surrounding KiOR’s future production levels.

LanzaTech

LanzaTech has developed a process for the production of ethanol from feedstock streams 

that contain carbon monoxide. The LanzaTech process can utilize industrial waste gas streams 

or syngas produced from the gasification of agricultural residues, woody biomass, or other 

cellulosic feedstocks.11 These gas streams are dispersed into a liquid medium where they are 

converted into ethanol or other chemicals by LanzaTech’s proprietary microbes. LanzaTech is 

currently using this technology at two demonstration scale facilities in China, producing ethanol 

from waste gasses at steel mills in partnership with Baosteel and Capital Steel.

On January 3, 2012 LanzaTech purchased the former Range Fuels facility in Soperton, 

Georgia. LanzaTech is currently in the process of assessing the equipment in place at this 

facility. After making any necessary modifications to the existing gasifiers they plan to install 

units to allow for the production of ethanol from syngas produced from the gasification of local 

woody biomass. LanzaTech believes the current production capacity of the gasifiers when used 

in combination with their ethanol producing microbes is approximately 4 – 6 million gallons per 

year, with the potential for further expansion to allow for the production of 20 – 30 million 

gallons per year at this site. At this point, however, LanzaTech is not projecting initial ethanol 

production from this facility until late 2014 or early 2015. EPA has therefore not included any

volume from LanzaTech in our cellulosic biofuel projections in this proposed rule.

Poet

Poet has developed an enzymatic hydrolysis process to convert cellulosic biomass into 

ethanol. Poet has been investing in the development of cellulosic ethanol technology for more 

than a decade and began producing small volumes of cellulosic ethanol at pilot scale at their 

plant in Scotland, South Dakota in late 2008. In January 2012, Poet formed a joint venture with 

Royal DSM of the Netherlands, called Poet-DSM Advanced Biofuels, to commercialize and 

license their cellulosic ethanol technology. 

The joint venture’s first commercial scale facility, called Project LIBERTY, will be 

located in Emmetsburg, Iowa. This facility is designed to process 770 dry tons of corn cobs, 

leaves, husks, and some stalk per day into cellulosic ethanol. The facility is projected to have an 

annual production of approximately 25 million gallons per year. In anticipation of the start-up 

of this facility, Poet constructed a 22-acre biomass storage facility and had its first commercial 

harvest in 2010, collecting 56,000 tons of biomass. 

Site prep work for Project LIBERTY began in the summer of 2011, and vertical 

construction of the facility began in the spring of 2012. Poet was awarded a $105 million loan 

 

11 RIN generation would be limited to fuels produced using approved sources of biomass such as agricultural 

residue, tree residue from a tree plantation, or slash and pre-commercial thinnings. LanzaTech would be required to 

meet all recordkeeping and reporting requirements to demonstrate the feedstock is renewable biomass sourced from 

land that meets all of the land use requirements of the RFS program.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 26 of 112

guarantee offer for this project from DOE in July 2011, but with the joint venture it decided to 

proceed without the loan guarantee. This project is expected to be completed in the first half of 

2014 and will be followed by a commissioning period before the plant begins cellulosic ethanol 

production. Poet currently projects that production from Project LIBERTY will be between 7 

and 12 million gallons of cellulosic ethanol in 2014. Using the six month best-case ramp-up 

period with production beginning on July 1, 2014 would result in a volume projection of 6 

million gallons from this facility. In today’s proposed rule, EPA is therefore setting the high end 

of Poet’s projected production range at 6 million gallons of cellulosic ethanol. The low end of 

the projected production range for Poet’s Project LIBERTY is 0 gallons in 2014. This number 

reflects the fact that any significant delay in the start-up date or difficulties encountered in the 

commissioning or start-up phases of production are likely to result in little to no production from 

this facility in 2014. While EPA has no reason to believe this facility will be any more prone to 

these types of challenges than any other commercial scale cellulosic biofuel production facility, 

our experience suggests that these types of delays are common and should be considered when 

projecting the low end of the range for production volume in 2014.

Sweetwater Energy

Sweetwater Energy has also developed a technology for converting cellulosic biomass, 

primarily agricultural residues and woody biomass, to cellulosic sugars. Sweetwater Energy uses 

a modular approach, building relatively small facilities near the source of feedstock and 

transporting the sugars they produce to a larger facility to be converted into renewable fuels or 

chemicals. They currently have two arrangements in place with corn ethanol facilities in the 

United States to provide cellulosic sugars in sufficient quantity for the production of 3.6 million 

gallons of cellulosic ethanol from each of these facilities. Both of Sweetwater Energy’s 

cellulosic sugar production modules are scheduled to begin production in the summer of 2014. If 

both these facilities begin producing sugars that are converted to cellulosic biofuel on July 1, 

2014, our best case scenario benchmark six month straight-line ramp-up period would project a 

volume of 2 million ethanol-equivalent gallons. At this time, however, cellulosic RINs would 

not be able to be generated for any fuel produced using Sweetwater Energy’s cellulosic sugars 

since the existing RFS registration regulations were not designed to allow the subdivision of 

processes between multiple facilities. Until this is resolved, fuel production processes of this 

type will not be able to generate RINs. We therefore have not included any volume from 

Sweetwater Energy in our projections of cellulosic biofuel for 2014.

Ensyn

Ensyn has developed a technology called Rapid Thermal Processing (RTP) that uses heat 

to thermally crack carbon based feedstocks into a liquid bio-oil product they call renewable fuel 

oil (RFO). This conversion takes place in less than two seconds and is similar to the fluid 

catalytic cracking (FCC) process used in many refineries. Ensyn is currently using this 

technology in two commercial facilities located in Wisconsin and Ontario, Canada to produce 

renewable chemicals, food additives, and heating oil. They estimate that they have up to 3 

million gallons of additional capacity at these two facilities that could be utilized if the fuel were 

eligible to generate RINs under the RFS program as home heating oil. This facility has a history 

of consistent production and we therefore believe this projection of 3 mill gal, or 5 million 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 27 of 112

ethanol-equivalent gallons, is an appropriate number to use as the high end of the projected 

range.

Until recently the RFS regulations required that to qualify as “heating oil” for which 

RINs may be generated the fuel must be #1 diesel fuel, #2 diesel fuel, or any non-petroleum 

diesel blend that is sold for use in furnaces, boilers, and similar applications and which is 

commonly or commercially known or sold as heating oil, fuel oil, and similar trade names, and 

that is not jet fuel, kerosene, or motor vehicle, nonroad, locomotive or marine diesel fuel 

(MVNRLM). On October 22, 2013, EPA finalized a rule to amend this definition to include:

A fuel oil that is used to heat interior spaces of homes or buildings to control 

ambient climate for human comfort. The fuel oil must be liquid at 60 degrees 

Fahrenheit and 1 atmosphere of pressure, and contain no more than 2.5% mass 

solids.12 

This amendment allows the RFO produced by Ensyn to qualify for RINs if it were used 

to heat buildings where people live, work, recreate, or conduct other activities and it meets the 

other required components of the proposed definition. However, even if the fuel produced using 

the RTP process meets the new definition, Ensyn still faces several challenges to generating 

cellulosic biofuel RINs. Ensyn must still secure approved sources of renewable feedstock for 

their existing production facilities, increase production at these facilities, and find customers

willing to make the modifications necessary to use Ensyn’s RFO as home heating oil. Any of 

these steps could result in delays in the increased production or qualifying use of RFO until 

2015. For this proposal EPA is projecting a range of production of 0 – 3 million gallons (0 – 5 

million ethanol-equivalent gallons) from Ensyn’s facilities in 2014. This volume has not been 

included in EPA’s primary projection of cellulosic biofuel projection for 2014 due to the 

outstanding issues mentioned above, but has been considered in our projection of all potentially 

available cellulosic biofuel, including companies without existing pathways for generating 

cellulosic biofuel RINs. In light of the recent amendments to the home heating oil definition, 

EPA will review this projection and make adjustments as necessary in the final rule.

2. Potential Domestic Producers without Existing Pathways

In addition to the facilities discussed above, there are a number of companies with the 

potential to produce cellulosic biofuel from domestic facilities in 2014 from pathways that have 

not been approved for RIN generation by EPA. Some of these pathways were addressed in a 

notice of proposed rulemaking published by EPA on June 14, 2013, while others are currently 

being evaluated by EPA. As the companies discussed in this section do not yet have approved 

RIN generating pathways for the fuels they plan to produce, there is additional uncertainty 

regarding RIN production from them in 2014.13 Nevertheless, if the pathways are approved by 

EPA these facilities represent a significant potential source of cellulosic biofuel. The ranges 

 

12 78 FR 62462.

13 At the time of this proposal, EPA has finalized changes to the home heating oil definition but has not yet 

completed our determination of whether or not the fuels discussed in this section meet all of the requirements to 

generate cellulosic biofuel RINs.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 28 of 112

projected for each company reflect only the uncertainty associated with production volumes, 

assuming pathway approval occurs.14 EPA will decide whether or not to include any volume 

from these pathways based on the status of these pathways and the progress made by the 

companies towards commercial cellulosic biofuel production at the time of the final rule.

Compressed Natural Gas (CNG) and Liquified Natural Gas (LNG) Producers

One of the new pathways proposed by EPA for the production of cellulosic biofuel is for 

the production of CNG or LNG from landfill biogas if used as a transportation fuel. The 

production potential for this type of cellulosic biofuel is very large with many landfills currently 

capturing biogas. The use of CNG and LNG as a transportation fuel in 2014 is expected to be 

approximately 700 million ethanol-equivalent gallons.15 To generate RINs for landfill biogas, 

however, companies must be able to demonstrate that any fuel for which they generate RINs is 

used as transportation fuel. This can be done by fueling vehicles with CNG/LNG onsite or 

through contractual mechanisms.

In this proposed rule, we are projecting a production range of 35-54 million ethanolequivalent gallons from landfill biogas in 2014. The high end of the range represents the actual 

peak capacity of all of the facilities that produced advanced RINs from landfill biogas while the 

low end represents the current production rate of advanced biofuel from landfill biogas. In the 

case of CNG and LNG from landfill biogas, we believe a different methodology for projecting 

the high end of the production range is appropriate as the uncertainties surrounding RIN 

generation are significantly different. The only change at issue in the proposal to approve this 

pathway for the generation of cellulosic biofuel RINs is a change in the type of RIN that is 

generated, allowing for the generation of cellulosic biofuel instead of advanced biofuel RINs 

based on new information of the composition of the feedstock. In this case production facilities 

already exist and are already capturing landfill biogas at or near their registered capacities. 

Similarly, the amount of CNG and LNG currently being used as transportation fuel far exceeds 

the combined production capacity of all of the registered facilities. RIN generation is therefore 

limited by the companies’ ability to demonstrate the use of the biogas as a transportation fuel.16 

As part of the registration process for the generation of advanced biofuel RINs, each of these 

facilities submitted documentation that included contracts with parties capable of using 

CNG/LNG as transportation fuel who had access to the same common carrier pipeline network 

as the biofuel producers. 

We believe the sum of the actual peak capacities of all of the facilities that produced 

advanced biofuel RINs from landfill biogas in 2013 is an appropriate volume to use for the high 

end of the projected production range. It is also the case, however, that these facilities would 

appear to have the capability to realize value from advanced RIN production if they were to 

produce at their facility capacity and are not currently doing so. There may be additional factors 

that EPA is unaware of at this time that is limiting production. To account for this, we are 

setting the low end of the range for the production of cellulosic RINs from CNG/LNG produced 

 

14 In projecting potential production volumes EPA has assumed that the pathways are all approved as of January 1, 

2014. Approval subsequent to that date would reduce potential volumes, depending on the producer at issue.

15 EIA Annual Energy Outlook 2013. Transportation Sector Energy Use by Mode and Type, Reference case. 

16 See CFR 80.1426 for requirements for generating RINs from biogas
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 29 of 112

from landfills equal to 35 million gallons, the current production rate when projected over a full 

year.

Edeniq

Edeniq has developed a proprietary process that would allow corn ethanol producers to 

generate cellulosic ethanol from corn kernel fiber at the producers’ existing production facilities. 

Their process involves the addition of the CellunatorTM, a proprietary milling technology 

designed to increase the uniformity of the feedstock particles, along with a unique combination 

of enzymes to convert the cellulosic material in the corn kernel into sugars and ultimately 

cellulosic ethanol. Edeniq claims that their technology would not only allow corn ethanol 

producers to produce cellulosic ethanol from low value feedstock already present in their facility, 

but also would increase the yields of ethanol produced from starch by 2-4%. Several commercial 

plants are currently using the Cellunator technology to increase their yields of ethanol from 

starch. Edeniq has been testing their technology, including both the Cellunator and the 

additional enzymes, at a demonstration scale facility in Visalia, California since June 2012 and 

announced in May 2013 that they had successfully completed a trial run at this facility with a 

continuous run time of greater than 1000 hours. 

Several plants are evaluating Edeniq’s proprietary system to produce cellulosic ethanol 

from corn kernel fiber. These evaluations have included commercial scale trials. If the pathway 

for the production of cellulosic ethanol from corn kernel fiber is approved, these facilities would 

be in position to begin generating cellulosic RINs shortly after approval. Other facilities 

currently using the Cellunator would only have to make minor modifications to their operations, 

including the addition of Edeniq’s suite of enzymes to produce cellulosic ethanol. Edeniq 

currently projects approximately 7 million gallons of cellulosic ethanol production using their 

technology in 2014 and has provided EPA with detailed information on the expected production 

volumes and dates of initial cellulosic ethanol production for facilities expected to utilize their 

technology. In today’s proposed rule, we have included a projected production volume of 0 – 7 

million gallons. The low end of this range reflects the fact that Edeniq’s technology has not yet 

been used to generate commercial scale volumes of cellulosic biofuel. The high end of the range 

reflects Edeniq’s own projections, which EPA has reviewed and believes are reasonable given 

the nature of Edeniq’s technology, the deals they currently have in place, and their experience 

with the installation and operation of the various components of their technology. This volume 

is also dependent on the finalization of EPA’s proposed rule clarifying that the definition of crop 

residue includes corn kernel fiber.

3. Potential Foreign Sources of Cellulosic Biofuel 

In addition to the potential sources of cellulosic biofuel located in the United States 

discussed above there are several foreign cellulosic biofuel companies that may produce 

cellulosic biofuel in 2014. All of these facilities utilize fuel production pathways that have been 

approved by EPA for cellulosic RIN generation provided eligible sources of renewable feedstock 

are used. These companies would therefore be eligible to register these facilities under the RFS 

program and generate RINs for any fuel imported into the United States. Currently, however, 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 30 of 112

none of these facilities have successfully completed the registration process for the RFS 

program. Further, demand for the cellulosic biofuels they produce is expected to be high in local 

markets. Production volumes from these foreign facilities have therefore not been included in 

our projection of potentially available volume for 2014. EPA plans to continue to monitor the 

progress of these foreign facilities and may include volumes from these facilities should their 

plans change in the future.

Beta Renewables

Beta Renewables has developed a biochemical technology to convert cellulosic biomass 

into cellulosic sugars, which can then be used in the production of fuels or chemicals. Their first 

commercial scale facility was built in Crescentino, Italy and began producing cellulosic ethanol 

in commercial quantities in June 2013. This facility uses Arundo donax and wheat straw as 

feedstocks and has an annual production capacity of 20 million gallons of ethanol per year. 

Ethanol produced at this facility would be eligible to generate cellulosic RINs if Beta 

Renewables registers its facility and imports the cellulosic ethanol into the United States for use 

as a transportation fuel. Beta Renewables is also planning to build a cellulosic ethanol 

production facility in North Carolina. This facility is not expected to begin ethanol production in 

2014, however, and has therefore not been included in our projection of available volume for 

2014.

Enerkem

Enerkem plans to use a thermochemical process to produce syngas from MSW and other 

waste materials and then catalytically convert the syngas to methanol. The methanol can then be 

sold directly or upgraded to ethanol or other chemical products. Their first commercial scale 

facility in Edmonton, Alberta, Canada is scheduled to complete construction and begin 

producing methanol in 2013 with ethanol production following in 2014. At full capacity this 

facility will be capable of producing 10 million gallons of cellulosic ethanol per year. Despite 

their relative close proximity to the United States, Enerkem has indicated to EPA that they do not 

intend to export cellulosic biofuel into the United States from their Edmonton facility. 

GranBio

GranBio began construction on its first commercial cellulosic ethanol production facility 

in São Miguel dos Campos, Brazil in December 2012. It is largely funded by a 300.3 million 

Reais loan from BNDES, Brazil’s national social and economic development bank. This facility, 

which will use technology licensed from Beta Renewables, will have a nameplate capacity of 22 

million gallons of ethanol per year and is scheduled to be completed in the first half of 2014. 

The feedstock for this facility will be excess bagasse not currently used to provide process heat 

or electricity at sugarcane ethanol production facilities.

Raizen

Raizen, a joint venture between Royal Dutch Shell and Cosan SA, is planning to build a 

10.5 million gallon per year cellulosic ethanol plant attached to their Costa Pinto sugarcane mill 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 31 of 112

in Piracicaba, Brazil. This facility will use a biochemical conversion technology developed by 

Iogen and Codexis to convert sugarcane bagasse to ethanol. The facility is currently scheduled 

to complete construction in the second half of 2014 and if successful will be the first of up to 8 

cellulosic ethanol production facilities built by Raizen in Brazil.

4. Summary of Volume Projections for Individual Companies

The information we have gathered on cellulosic biofuel producers, described above, 

allows us to project a range of production volumes for each facility in 2014. As in 2013, we 

have once again focused on commercial scale cellulosic biofuel production facilities. This focus 

is appropriate, as the volume of cellulosic biofuel produced from R&D and pilot scale facilities is 

quite small in relation to that expected from the commercial scale facilities for which we have 

projected volumes in 2014 and historically R&D and demonstration scale facilities have not 

generated RINs for any fuel they have produced.

In 2014 as many as twelve domestic cellulosic biofuel production facilities have the 

potential to produce fuel at commercial scale. Each of these facilities is discussed above, and the 

projected available volumes for each are summarized in Table II.B.4-1 below. Two of the 

companies that have the potential to produce cellulosic biofuel in 2014, INEOS Bio and KiOR, 

are currently producing cellulosic biofuel. The production of RIN generating fuel from the 

remaining 10 facilities is more uncertain as these facilities have either yet to complete 

construction or do not currently have a valid pathway for generating cellulosic RINs.

We have also identified four foreign facilities with the potential to produce cellulosic 

ethanol in 2014. At this point we do not believe any of these facilities are likely to export any of 

the fuel they produce to the United States. We will continue to monitor the status of these 

facilities and may include volume from them in our final rule if appropriate. We ask for 

comment on this analysis and are especially interested in data that would support cellulosic 

volume estimates.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 32 of 112

Table II.B.4-1

Projected Available Cellulosic Biofuel for 2014

Company 

Name Location Feedstock Fuel

Design

Capacity 

(MGY)a

First Production

2014 Projected

Available Volume

(ethanol-equivalent)

Domestic Facilities; Approved Pathways

Abengoa Hugoton, KS Corn Stover Ethanol 24 1

st Quarter 2014 0 – 18

CoolPlanet 

Biofuels

TBD TBD Gasoline 10 2

nd Half 2014 0

DuPont Nevada, IA Corn Stover Ethanol 30 2

nd Half 2014 0 – 2

Fiberight Blairstown, IA MSW Ethanol 6 Unknown 0

INEOS Bio Vero Beach, FL Vegetative Waste Ethanol 8 3

rd Quarter 2013 2 – 5

KiOR Columbus, MS Wood Waste Gasoline 

and Diesel

11 1

st Quarter 2013 0 – 5.5

(0 – 9)

LanzaTech Soperton, GA Wood Waste Ethanol 5 1

st Half 2015 0

Poet Emmetsburg, IA Corn Stover Ethanol 25 1

st Half 2014 0 – 6

Sweetwater 

Energy

Various Ag. Residue Ethanol 7 1

st Half 2014 0

Domestic Facilities; All Potential Producers

Ensyn Stanley, WI Wood Waste Heating 

Oil

3 2007 0 – 3

(0 – 5)

CNG/LNG 

Producers

Various Biogas from 

Landfills

CNG/ 

LNG

Various N/A 35 – 54

Edeniq Various Corn Kernel Fiber Ethanol Various 1

st Half 2014 0 – 7

Foreign Facilities

Beta 

Renewables

Crescentino, Italy Wheat straw, 

Arundo Donax

Ethanol 20 2Q 2013 0

Enerkem Edmonton, 

Alberta

Separated MSW Methanol, 

Ethanol

10 1

st Half 2014 0

GranBio São Miguel dos Bagasse Ethanol 22 1

st Half 2014 0
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 33 of 112

Campos, Brazil

Raizen Piracicaba, Brazil Bagasse Ethanol 10.5 2

nd Half 2014 0

a

Facilities are generally designed to process a given quantity of feedstock and volume capacities may vary depending on yield assumptions
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 34 of 112

C. Proposed Cellulosic Biofuel Volume for 2014

As discussed in the preceding sections we have used information from a variety of 

sources, including EIA, USDA, and the companies themselves, to determine a projected range of 

production of cellulosic biofuel for each company in 2014. These volumes are summarized in 

Table II.B.4-1 above. These volumes form the basis for our projection of cellulosic biofuel 

production in 2014. We do not believe, however, that a simple summation of the low end and 

high end of the projected production volumes for each company would result in an appropriate 

projected range of production volumes across the cellulosic biofuel industry. It is highly 

unlikely that every company will produce at or near the low end, or conversely the high end, of 

its range of projected production volumes. It is also the case that the production expectations 

within the projected ranges differ for facilities in different stages. The uncertainties associated 

with cellulosic biofuel production vary in both type and degree among facilities that have already 

begun production, those that are currently in or will soon be approaching the commissioning of 

their facilities, and those that are still undergoing significant construction operations. 

EPA is using a Monte Carlo simulation to account for the need to aggregate across 

several ranges, with different producers having different production probability distributions 

across their expected production range. As discussed above, the high and the low end of each 

range represents values such that it is possible but highly unlikely that volumes would be higher 

or lower than this range. EPA will therefore treat these individual ranges as representing the 

90% confidence interval of a distribution of possible volumes. In other words, the low end of the 

range for a producer would represent the 5th percentile and the high end of the range would 

represent the 95th percentile. This approach is consistent with EPA’s judgment that, while the 

ranges shown in Table II.B.4-1 are intended to encompass the vast majority of possible volumes, 

there remains a small possibility that volumes outside of those ranges are possible. We believe it 

is reasonable to treat these values as a 90% confidence interval for purposes of the Monte Carlo 

analysis, though we request comment on treating them as a different confidence interval such as 

80% or 95%.

For the purposes of the Monte Carlo analysis, EPA must also identify an uncertainty 

distribution for production for each facility. These distributions reflect our expectation for the 

most likely distribution of production volumes within the projected range when taking into 

account the many different uncertainties associated with the production volume from each 

facility. While each facility faces its own set of unique circumstances and challenges in 

producing cellulosic biofuels at commercial scale, many can be grouped into one of several 

general categories, the impact of which will vary with the progress achieved at that facility to 

date. One source of uncertainty in the projected production volume of a new cellulosic biofuel 

facility is related to the completion of the construction and commissioning phases of the facility. 

This includes uncertainty in the construction schedules, modifications to the design during the 

construction or commissioning phase, challenges encountered in scaling up the technology to 

commercial scale, unexpected delays or repairs due to weather events, or any of a number of 

other reasons. Delays of this type will result in a later than expected start-up date which may 

result in significantly decreased production volumes in 2014 or the start of production being 

delayed until 2015. The uncertainty related to delays in the completion of the construction of a 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 35 of 112

facility decreases the closer the project is to completion, and is entirely irrelevant to facilities that 

have already begun production.

A second source of uncertainty is that associated with the ramp-up phase of new 

facilities. Lower than expected product yields, feedstock supply and handling challenges, 

contamination of chemical or biological catalysts, and a number of other issues can cause 

reduced production during the ramp-up phase and/or a longer than expected ramp-up period 

before reaching production levels that correspond to the nameplate capacity of the facility. 

Facilities that face these types of challenges during the ramp-up phase of production are very 

likely to still achieve some level of production, but that level may vary depending on the severity 

and duration of the challenges they face. The closer a facility is to achieving production rates 

that correspond to the nameplate capacity of the facility, the less likely they are to see reductions 

in their expected production due to challenges in the ramp-up phase.

A third source of uncertainty is the ability of the facility to maintain consistent production 

at or near nameplate capacity after the ramp-up phase has been successfully completed. A 

number of factors including, but not limited to feedstock supply interruption, significant issues 

with feedstock quality, loss of power or other essential utilities at the facility, and interruptions in 

production due to accidents, operator error, or weather events could cause fuel production at a 

facility to decrease or cease altogether. While the uncertainty associated with these issues is 

never completely absent, it does decrease over time if a facility is able to consistently achieve 

production levels at or near nameplate capacity with few or no interruptions to production.

The degree to which these three sources of uncertainty impact expected production of 

cellulosic biofuel in 2014 varies greatly with the progress achieved by the facility to date. To 

represent this uncertainty for facilities expected to begin operations in different timeframes, we 

used three different standardized uncertainty distributions. The three standard curves that 

represent the expected production distributions from cellulosic biofuel production facilities are 

shown in Figure II.C-1 below. We request comment on how well these three curves represent 

the expected production distributions of the various cellulosic biofuel producers discussed above 

or if other curves may be more appropriate.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 36 of 112

Figure II.C-1

Standardized Distributions Used to Project Aggregate Cellulosic Biofuel Productiona

a

The skewed distribution is based on a Weibull distribution with a shape 

parameter of 0.5 and a scale parameter of 1.7.

As described more fully in Section IV.B.4, we believe that these three standardized distributions 

provide a mechanism for representing the regions within each projected volume range where the 

greatest likelihood of reasonably achievable volumes lie.

Facilities that have already begun producing cellulosic biofuel in 2012 or earlier and have 

at least a full year of production history do not face uncertainty associated with delays in the 

construction and commissioning of the facility. They may, however, face some uncertainty in 

their ramp-up schedule relative to the progress they have achieved to date, as well as the risk of 

unexpected shutdown or slowdown faced by all facilities. For facilities facing these uncertainties 

we expect that the most likely production volume is towards the middle of the range, with 

decreasing production probabilities as the high and low ends of the production ranges are 

approached. A normal curve is appropriate for this expected production distribution. In 2014, 

however, there are no commercial scale cellulosic biofuel production facilities that meet these 

criteria.

Facilities that began producing cellulosic biofuel in 2013 no longer face uncertainty due 

to potential delays in the completion of construction and the commissioning of the facility. 

There is, however, uncertainty regarding these facilities ramp-up schedules which can have a 

significant impact on the production volumes from these facilities. We believe that the expected 

production of these facilities would be best represented by a right-skewed or Weibull curve, with 

the most likely production volume near, but not at, the low end of the range and the production 

probabilities gradually towards the high end of the range.

Facilities not expected to begin producing cellulosic biofuel until 2014 face uncertainty 

associated with a delay in the completion in the construction and commissioning of the facility. 

Given this uncertainty, we believe that the most likely production volume is at the low end of the 

Likelihood of occurence

Volume of renewable fuel

Skewed

Normal

Half-normal
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 37 of 112

range with decreasing probability as the high end of the range is approached. To represent this 

asymmetrical uncertainty, we believe a half-normal curve is a reasonable representation of the 

expected production distribution from these facilities. 

The type of uncertainty distribution used to represent the expected production within the 

projected range for each company is shown in Table II.C-1.

Table II.C-1

Standard Distributions Used to Project Cellulosic Biofuel Production in 2014

Company Distribution Curve 5

th Percentile Volume 

(mill ethanolequivalent gal)

95th Percentile Volume 

(mill ethanolequivalent gal)

Abengoa Half-Normal 0 18

DuPont Half-Normal 0 2

INEOS Bio Right-Skewed 2 5

KiOR Right-Skewed 0 9

Poet Half-Normal 0 6

CNG/LNG Producers Normal 35 54

Edeniq Half-Normal 0 7

Ensyn Normal 0 5

To aggregate the production distributions for each of the companies into a single 

distribution representing cellulosic biofuel production across the entire industry, we performed 

two Monte Carlo simulations in which each of the distributions was randomly sampled in an 

iterative fashion. Each of the distributions was sampled 3000 times and the results of all the 

iterations were then summed to produce a distribution for cellulosic biofuel. For the uncertainty 

distributions where the low end of the projected range was zero it was possible for the Monte 

Carlo simulation to select a negative volume for these companies.17 Whenever negative volumes 

were selected in the Monte Carlo simulations these negative volumes were reset to zero. 

We generated two separate aggregate distributions to represent total cellulosic biofuel 

using the Monte Carlo process. Given the uncertainty surrounding the timing and approval of 

the proposed RIN-generating pathways that would be used by CNG/LNG producers, Edeniq, and 

Ensyn, the first aggregate distribution only included volumes from those facilities using RINgenerating pathways that have already been approved. The result of this Monte Carlo simulation 

forms the basis for the range of cellulosic biofuel production included in this proposal. 

 

17 Because the low end of each range represents the 5th percentile, negative volumes are selected approximately 5% 

of the time when the low end of the range is zero. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 38 of 112

Figure II.C-2

Results of Monte Carlo Simulation for Cellulosic Biofuel Production 

(Approved Pathways Only)

The second Monte Carlo simulation included volumes from all eight facilities for which we have 

projected a range of volumes in 2014. The results of this simulation would be more 

representative of the volume of cellulosic biofuel included in our final rule in the event that the 

proposed RIN-generating pathways discussed above are approved for RIN generation before the 

2014 applicable volumes are finalized. 

5th percentile = 8

95th percentile = 30

0%

5%

10%

15%

20%

25%

36101316202326303336404346505357606367 Percent of observations

Million gallons
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 39 of 112

Figure II.C-3

Results of Monte Carlo Simulation for Cellulosic Biofuel Production 

(All Potential Cellulosic Biofuel Producers)

In today’s NPRM we are proposing a volume for the 2014 cellulosic biofuel standard of 8 

- 30 million ethanol-equivalent gallons. This volume is expected to be comprised of 5 - 26 

million gallons of ethanol and 0 - 9 million ethanol-equivalent gallons of cellulosic 

hydrocarbons.18 The proposed range is derived from the 90% confidence interval of the Monte 

Carlo simulation that includes all the companies we expect to produce commercial volumes of 

cellulosic biofuel in 2014 using pathways in the current RFS regulations. As discussed in 

Section II.B, many factors have been taken into consideration in developing the individual 

company projections, such as the information from EIA, the current status of project funding, the 

status of the production facility, anticipated construction timelines, the anticipated start-up date 

and ramp-up schedule, feedstock supply, and many others. We have also used distribution 

curves weighted towards the low end of the expected production range for each company to 

account for the fact that previous projections of cellulosic biofuel production have exceeded 

actual production. We believe the range of volumes proposed (8 - 30 million ethanol-equivalent 

gallons) resulting from the Monte Carlo simulation is a reasonable representation of expected 

production in 2014 across the industry. 

Our proposed range reflects EPA’s best estimate of the range of cellulosic biofuel 

volumes that will actually be produced in 2014. In the final rule EPA will determine a single 

volume that represents EPA’s best estimate of the volume that will actually be produced in 

 

18 These volumes are also the result of our Monte Carlo simulation. Similar to the individual company production 

projections, the low and high ends of the ranges cannot be simply added together to calculate the high and low ends 

of our total cellulosic biofuel production projection in 2014. Cellulosic hydrocarbons include both cellulosic 

gasoline and cellulosic diesel.

5th percentie = 53

95th percentile = 83

0%

2%

4%

6%

8%

10%

12%

14%

16%

18% 42464953576064677175788286899397 100 104 108 111 Percent of observations

Million gallons
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 40 of 112

2014.19 EPA invites comment on the best approach to determine a single value from a range 

developed using the approach described above. For example, EPA could use the mean (average 

value), median (50th percentile), or mode (the volume that occurs most frequently). It may also 

be reasonable to use a value representing higher or lower values in the distribution, such as the 

25th or 75th percentile if there is reason to believe these would provide a more accurate projection 

of actual production in 2014.20 We have determined the volumes represented by each of these 

methods and presented the values in Tables II.C-2 and II.C-3 below. 

Table II.C-2

Potential Approaches to Determining the Final Cellulosic Biofuel Requirement

(Approved Pathways Only)a

(million ethanol-equivalent gallons)

Mean 17

50th percentile 16

Mode 16

25th percentile 12

75th percentile 21

aAll volumes are ethanol-equivalent gallons

Table II.C-3

Potential Approaches to Determining the Final Cellulosic Biofuel Requirement

(All Potential Cellulosic Biofuel Producers)a

(million ethanol-equivalent gallons)

Mean 67

50th percentile 67

Mode 67

25th percentile 61

75th percentile 73

aAll volumes are ethanol-equivalent gallons

In today's NPRM, we are proposing to use the mean value for the final volume requirement for 

cellulosic because we believe it best represents a neutral aim at the volumes that could 

reasonably be supplied. However, we request comment on whether one of the alternative values 

shown in Table II.C-2 would be more appropriate as the basis for the required volume of 

cellulosic biofuel in the final rule.

It is important to note that the final cellulosic biofuel standard for 2014 may be set at a 

volume outside the proposed range of 8 - 30 million ethanol-equivalent gallons. If EPA finalizes 

the pathways discussed in the recent proposed rulemaking21 before the applicable volume of 

cellulosic biofuel for 2014 is finalized, volumes of fuel from companies intending to utilize these 

pathways may be included in our projected available volume for 2014 as discussed above. 

Foreign producers of cellulosic biofuel who inform EPA of their intent to export the fuel they 

 

19 See API v. EPA, 706 F.3d 474 (D.C. Cir. 2013). 

20 This could be the case if there was reason to believe there was a systematic bias such that the ranges tended to 

over or under estimate the actual production volumes.

21 78 FR 36042 (June 14, 2013).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 41 of 112

produce to the United States may also be included. Finally, a variety of factors may affect our 

production projections for the companies considered in this proposal, including unexpected 

project modifications or cancellations or the inclusion of volumes of cellulosic biofuel from 

sources other than those listed above.

We will continue to monitor the progress of the cellulosic biofuel industry, in particular 

the progress of the companies which form the basis of our proposed 2014 volume projection. 

We expect that for the final rule there will be greater certainty on the appropriate volume of fuel 

that we can reasonably expect to be produced and made commercially available in 2014. We 

request comment on our analysis and estimates.22

D. Rescission of the 2011 Cellulosic Biofuel Standards

On January 25, 2013, the United States Court of Appeals for the District of Columbia 

Circuit issued its decision concerning a challenge to the 2012 cellulosic biofuel standard. The 

Court found that in establishing the applicable volume of cellulosic biofuel for 2012, EPA had 

used a methodology in which “the risk of overestimation [was] set deliberately to outweigh the 

risk of underestimation.” The Court held EPA’s action to be inconsistent with the statute 

because EPA had failed to apply a “neutral methodology” aimed at providing a prediction of 

“what will actually happen,” as required by the statute. As a result of this ruling, the Court 

vacated the 2012 cellulosic biofuel standard, and we removed the 2012 requirement from the 

regulations in a previous action. Industry had also challenged the 2011 cellulosic biofuel 

standard by, first, filing a petition for reconsideration of that standard, and then seeking judicial 

review of our denial of the petition for reconsideration. This matter was still pending at the time 

of the D.C. Circuit’s ruling on the 2012 cellulosic biofuel standard. Since we used essentially 

the same methodology to develop the 2011 cellulosic biofuel standard as we did to develop the 

2012 standard, we requested, and the Court granted, a partial voluntary remand to enable us to 

reconsider our denial of the petition for reconsideration of the 2011 cellulosic biofuel standard. 

Given the Court's ruling that the methodology EPA used in developing the 2012 cellulosic 

biofuel standard was flawed, we have decided to grant reconsideration of the 2011 cellulosic 

biofuel standard, and are today proposing to rescind the 2011 cellulosic biofuel standard. If this 

proposal is finalized, the money paid by obligated parties to purchase cellulosic waiver credits to 

comply with the 2011 cellulosic biofuel standard would be refunded.

 

22 Since EPA is proposing to reduce the applicable volume of cellulosic biofuel under section 211(o)(7)(D), EPA 

will be required to make available cellulosic biofuel credits. EPA will set the price for the cellulosic biofuel credits 

in the final rule, using the same approach to applying the criteria in section 211(o)(7)(D)(ii) that was used in setting 

the price for cellulosic biofuel credits for 2013. See 78 FR 49794.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 42 of 112

III. Proposed National Volume Requirement for Biomass-Based Diesel in 2014 and 2015

EPA set the national volume requirement for biomass-based diesel for 2013 at 1.28 bill 

gal of biomass-based diesel.23 This national volume is then used to determine the applicable 

percentage standard that determines the specific renewable volume obligations for refiners and 

importers. Subsequently, EPA received two Petitions for Reconsideration requesting that EPA 

reconsider the final rule setting the 2013 biomass-based diesel volume requirement at 1.28 bill 

gal.24 After review and consideration of the issues raised by petitioners, EPA denied both 

petitions.25

In today's action we are proposing an applicable volume of 1.28 bill gal biomass-based 

diesel for 2014 and 2015. In proposing the 2015 applicable volume of biomass-based diesel, we 

are not at this time proposing the percentage standards that would apply to obligated parties in 

2015. The percentage standards for 2015 will be proposed in a subsequent rulemaking as 

required by the statute once the requisite gasoline and diesel fuel volumes for 2015 are 

determined. 

A. Statutory Requirements

Section 211(o)(2)(B)(i) of the Clean Air Act specifies the applicable volumes of 

renewable fuel on which the annual percentage standards must be based, unless the applicable 

volumes are waived or adjusted by EPA in accordance with the Act.26 Applicable volumes are 

provided in the statute for years through 2022 for cellulosic biofuel, advanced biofuel, and total 

renewable fuel. For biomass-based diesel, applicable volumes are provided through 2012. For 

years after those specified in the statute (i.e. 2013+ for biomass-based diesel and 2023+ for all 

others), EPA is required under 211(o)(2)(B)(ii) to determine the applicable volume, 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 

applicable volumes and on analysis of the following factors:

• 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;

• The impact of renewable fuels on the energy security of the United States;

• The expected annual rate of future commercial production of renewable fuels, including 

advanced biofuels in each category (cellulosic biofuel and biomass-based diesel);

 

23 77 FR 59458 (September 27, 2012). .

24

 Letter dated November 20, 2012 to Honorable Lisa Jackson from Richard Moskowitz, American Fuel & 

Petrochemical Manufacturers, “Re: Petition for Reconsideration – Docket No. EPA-HQ-OAR-2010-0133. Letter 

dated November 26, 2012 to Honorable Lisa Jackson from Robert L. Greco, III, American Petroleum Institute, “Re: 

Request for Reconsideration of EPA’s Final Rulemaking “2013 biomass-Based Diesel Renewable Fuel Volume

25 78 FR 49411, August 14, 2013.

26 For example, EPA may waive a given standard in whole or in part following the provisions at CAA 211(o)(7).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 43 of 112

• 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;

• The impact of the use of renewable fuels on the cost to consumers of transportation fuel 

and on the cost to transport goods; and

• 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 applicable volume of biomass-based diesel cannot be less than 

the applicable volume for calendar year 2012, which is 1.0 bill gallons. The statute does not, 

however, establish any other numeric criteria or overarching goals for EPA to achieve in setting 

the applicable volumes in years after those specifically set forth in the provision.

Finally, the statute also specifies the timeframe within which these volumes must be 

promulgated: the applicable volumes must be established no later than 14 months before the first 

year for which such applicable volume will apply. We did not propose a 2014 volume for 

biomass-based diesel in the February 7, 2013 NPRM because at that time we were still 

evaluating the potential market impacts of current production levels. In order to provide 

sufficient time for this evaluation, we delayed our proposal for the 2014 volume requirement for 

biomass-based diesel. Consequently, today we are proposing volume requirements for both 2014 

and 2015.

B. Compliance with 2013 Volume Requirement of 1.28 Billion Gallons

In making a determination regarding the volume requirement for biomass-based diesel to 

propose for 2014 and 2015, we first investigated the recent historical and current circumstances

in the biodiesel market. According to data collected through the EPA-Moderated Transaction 

System (EMTS) production of biodiesel in 2012 exceeded 1.14 bill gal.27 This demonstrates that 

the industry was able to meet the applicable 2012 volume requirement of 1 bill gal. It also 

provides evidence that the industry will meet the 1.28 bill gal requirement in 2013. Additional 

volumes above 1.28 bill gal are possible in 2013, and may be used to help meet the advanced 

biofuel standard. Indeed current production rates in the biodiesel industry for the first seven 

months of 2013 were 25% above monthly production rates for the same time period in 2012 and 

are consistent with a total production volume of at least 1.6 bill gal for 2013.

28

 

 

27 Fuels and Fuel Additives 2012 EMTS Data, http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm (last accessed 

September 16, 2013).

28

 Fuels and Fuel Additives 2013 EMTS Data, http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm (last accessed 

September16, 2013).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 44 of 112

While annual production volume has been increasing, a review of EIA’s Monthly 

Biodiesel Production Reports29 since 2009 indicates that there has been some variability both in 

monthly production volume and in the number of facilities producing that volume. For example, 

there were significant biodiesel facility closures during the 2009 and 2010 calendar years. Since 

that time the overall number of biodiesel facilities in operation has stabilized and overall capacity 

in the biodiesel industry has remained stable from 2009-2012 at more than 2 bill gal. It is also 

clear that overall industry-wide utilization rates have increased during this time period from 25% 

in 2009 to approximately 46% in both 2011 and 2012. Thus it is clear that total production 

capacity at facilities already operating is above 1.28 bill gal. There are also indications that new 

or idle facilities have begun production in response to the 1.28 bill gal mandate for 2013. 

Specifically, EIA’s monthly reports indicate that nine additional producers have become 

operational in the U.S. since the rule for 2013 biomass-based diesel was finalized.30 The latest 

EIA monthly biodiesel report, available for July 2013, indicates that U.S. production was 128 

million gallons in July, and came from 111 biodiesel plants in 38 states with total operating 

capacity of 2.1 bill gal per year.31 As described in Section IV.B.2.b, total biodiesel production 

by the end of 2013 could be as high as 1.7 bill gal, and the facilities contributing to this 

production collectively have a capacity of well over 2 bill gal.

Further discussion of the factors we must consider in the context of the biomass-based 

diesel volume of 1.28 bill gallons for 2013 is contained in both the final rule adopting this level 

for 201332 and in EPA’s denial of two petitions requesting the Agency reconsider the 2013 

biomass-based diesel final rule.33 As discussed in that final rule, the assessment of these factors 

supported a volume of 1.28 bill gallons for 2013. As we would expect that the impacts of 1.28 

bill gal in 2014 and 2015 would not be materially different, we are not repeating the discussion 

of those analyses here. However, we specifically request data and analyses suggesting that the 

factors we considered in 2013 have changed significantly for 2014 or 2015.

C. Determination of Applicable Volume for 2014 and 2015

The biodiesel industry has clearly demonstrated that it can produce the volumes of 

biomass-based diesel up to the minimum required by the statute, and that 1.28 bill gal of 

biodiesel is readily attainable. We have no real concerns that a level of 1.28 bill gal will be 

 

29

 The U.S. Energy Information Administration as part of it responsibilities under section 1508 of the 2005 Energy 

Policy Act, amended its ICR and has began collecting and publishing biodiesel production information on a monthly 

basis including production of biodiesel in a given month, the number of plants operating and contributing to the 

monthly total volume by state, and their total operating capacity for the year. U.S. Energy Information 

Administration/Monthly Biodiesel Production Report, Form EIA-22m Monthly Biodiesel Production Survey.

U.S. Energy Information Administration, Monthly Biodiesel Production Report, For 2012 data collected showed that 

2012 production was 969 mil gallons, which was up from production 967 million gallons during 2011.

30 EIA data indicates that in December 2011, after the close of the comment period, 103 biodiesel plants existed with 

an operating capacity of 2.1 bill gal per year. In March 2012, 104 biodiesel plants were operational and the report 

indicates that for the first quarter of 2012 production was up 78% over the first quarter of 2011. As EPA finalized 

the 2013 volume mandates in September 2012 there were 105 biodiesel producers operating in the U.S. By late 

November 2012 that number had increased to 112. 

31 http://www.eia.gov/biofuels/biodiesel/production/ (last accessed September 16, 2013).

32 77 FR 59458 (September 27, 2012).

33 78 FR 49411, August 14, 2013. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 45 of 112

achieved effectively in 2013, and that once it is met this level of production and consumption can 

also be achieved in years after 2013. Production costs associated with 1.28 bill gal of biodiesel 

could be affected by various factors, including the expiration of the biodiesel tax credit and 

projected lower soy oil prices.

EPA’s evaluation of the applicable volume that we should set for biomass-based diesel 

takes into account the context of the larger advanced biofuel and total renewable fuel volume 

requirements. The biomass-based diesel standard is a subset of both the advanced biofuel and 

total renewable fuel standards, and biomass-based diesel volumes can be used to meet all three 

standards. As discussed in Section IV below, we are proposing to reduce the applicable volumes

of advanced biofuel and total renewable fuel. The reductions are designed to address several 

factors that affect achievement of the volume goals that Congress established in the statute for 

these categories of renewable fuel. These factors include limitations in production or 

importation of the necessary volumes, and factors that limit supplying those volumes to the 

vehicles that can consume them. These same factors impact our consideration of the biomassbased diesel volume requirement for 2014. For example, EPA considers the availability of 

feedstocks for production of biodiesel. 

More importantly, the production and use of biomass-based diesel can be supported by 

both the need to comply with the required volume for biomass-based diesel as well as the need to 

comply with the required volume for advanced biofuel or even the volume for total renewable 

fuel. This provides EPA additional flexibility in considering the appropriate national volume to 

set for the biomass-based diesel volume requirement, as this requirement is not the only 

mechanism in the RFS program that can support production and use of biomass-based diesel. 

For example, while the applicable volume that EPA sets for biomass-based diesel will ensure 

that at least that volume of biomass-based diesel would be produced and used, the advanced 

biofuel standard provides an alternative potential source of support for production and use of 

additional volumes of biomass-based diesel. It does this because obligated parties have 

discretion whether to choose biomass-based diesel or another advanced biofuel to satisfy their 

advanced biofuel obligation, and because the diesel pool can accommodate considerably more 

than 1.28 bill gal of biodiesel. EPA believes there is value in providing obligated parties 

increased flexibility in how they meet their required volume obligations in 2014. As discussed in 

Section IV, EPA is reducing the statutory volumes of advanced biofuel and total renewable fuel 

based on concerns of inadequate domestic supply of these renewable fuels. Providing obligated 

parties additional flexibility to address future supply circumstances is of increased importance 

under these circumstances. 

In setting the applicable volume for biomass-based diesel for 2013, EPA discussed 

various impacts of requiring volumes of biomass-based diesel in light of the relevant factors to 

be considered under CAA section 211(o)(2)(B)(ii).34 We believe this analysis continues to be 

appropriate, and supports the proposed applicable volume of biomass-based diesel for 2014. In 

considering all of these factors, we see no need to reduce the minimum biomass-based diesel 

volume requirement from 2013 levels. We have a high degree of confidence that this volume of 

1.28 bill gal could be achieved effectively without any real risk of production or supply 

problems. 

 

34 77 FR 59458 (September 27, 2012), especially Sections IV and V of the preamble.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 46 of 112

At the same time, as discussed above, the volume requirement for biomass-based diesel is 

nested within the advance biofuel standards that we are proposing to reduce in 2014. We believe 

that volumes of biomass-based diesel above 1.28 bill gal can, and likely will, be produced in 

2014 to meet the requirements of the advanced biofuel standard, though the degree to which this 

occurs will also depend on whether the biodiesel tax subsidy is extended beyond December 31, 

2013. We do not expect that there would be a significant difference between additional volumes 

of biomass-based diesel above 1.28 bill gal and other advanced biofuels, as far as the overall 

impact of those fuels in terms of the factors we are required to consider under section 

211(o)(2)(B)(ii). Any such differences would also be hard to quantify. At the same time, 

providing obligated parties the discretion to choose the method to comply with their advanced 

biofuel volume requirement most appropriate for their circumstances is likely to reflect the most 

effective or efficient way to achieve the advanced biofuel volume requirements given the market 

circumstances present in 2014. In addition, as noted above, providing obligated parties 

additional flexibility to address the 2014 supply circumstances is of increased importance under 

the circumstances surrounding supply and consumption as discussed in Section IV. Therefore 

we are not proposing to increase the volume of biomass-based diesel that will be required in 

2014 and 2015.35 

We invite comment on any different approaches that might be appropriate for balancing 

the factors noted above, including requiring an increase in the minimum volume of biomassbased diesel above 1.28 bill gal in both 2014 and 2015. As discussed above, volumes above 1.28 

bill gal should be available, whether to meet a minimum biomass-based diesel requirement or the

advanced biofuel requirement. Requiring a minimum volume of biomass-based diesel greater 

than 1.28 bill gal would place less emphasis on the benefits of preserving flexibility in how the 

required volume of advanced biofuel is achieved, and more emphasis on production of biomassbased diesel, without specific regard to the existence of a tax subsidy or to potential supplies of 

carryover biomass-based diesel RINs generated in 2013. We invite comment on all aspects of 

this issue, including information related to the statutory factors that we must consider as 

described in Section III.A. We also invite comment on the extent to which carryover biomassbased diesel RINs from 2013 would affect production levels of biomass-based diesel or other 

advanced biofuels in 2014, whether to meet the 1.28 bill gal biomass-based diesel volume or to 

achieve higher levels as a part of achieving the advanced biofuel requirement. We also seek 

comment on how EPA should take such information on biomass-based diesel carryover RINs

into account when setting these volume requirements and the degree to which those carryover 

RINs support the goal of maintaining flexibility in how obligated parties meet the advanced 

biofuel mandate.

 

In the overall context of the RFS program, the level of the biomass-based diesel 

applicable volume can be seen as the minimum amount of biomass-based diesel that is required, 

recognizing that additional volumes of biomass-based diesel may be used, along with other 

advanced biofuels, to satisfy the volume requirements for advanced biofuel and total renewable 

 

35 While the statute requires EPA to establish the applicable volume of cellulosic biofuel at projected production 

levels, this is not the case with respect to the applicable volume of biomass-based diesel. For biomass based-diesel, 

EPA may set the applicable volume at any level above 1 bill gal after consideration of the factors set forth in the 

statute and consultation with the Departments of Agriculture and Energy. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 47 of 112

fuel. Having considered the statutory factors, in the context of proposing the volume 

requirements for advanced biofuel and total renewable fuel, we believe the minimum required 

volume of biomass-based diesel should be set at the same level as 2013. This approach would 

also recognize that volumes of biomass-based diesel could be produced and consumed above the 

required volume level, and that obligated parties could well choose to use more biomass-based 

diesel than is required to satisfy their volume obligations for advanced and total renewable fuel. 

A volume requirement of 1.28 bill gal for biomass-based diesel in 2014 and 2015 would provide 

an assured minimum volume level for biomass-based diesel while also providing a clear 

opportunity for greater growth as part of the advanced biofuel category. Greater use of biomassbased diesel would be a recognized compliance path for the advanced and total renewable fuel 

volume obligations being proposed today. The proposed levels of those standards provide a 

significant opportunity for greater volumes of biomass-based diesel to be produced and used if 

the market chooses them. We request comment on this proposed approach to the biomass-based 

diesel volume requirement for 2014 and 2015.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 48 of 112

IV. Proposed National Volume Requirements for Advanced Biofuel and Total 

Renewable Fuel for 2014

As described in Section I, the national volumes of renewable fuel to be used under the 

RFS program each year are specified in CAA 211(o)(2). For 2014, the applicable volume of 

advanced biofuel is 3.75 bill gal and the applicable volume of total renewable fuel is 18.15 bill 

gal. However, two statutory provisions authorize EPA to reduce these volumes. EPA may 

reduce these volumes if it reduces the applicable volume for cellulosic biofuel, or if the criteria 

are met under the general waiver authority.36 We are proposing to exercise our discretion under 

these provisions to reduce the applicable volumes of advanced biofuel and total renewable fuel to 

address several factors that affect achievement of the volume goals that Congress established in 

the statute. These factors include limitations in production or importation of the necessary 

volumes, and factors that limit supplying those volumes to the vehicles that can consume them. 

Based on a detailed analysis of these limitations, we are proposing reductions in the statutory 

volumes of both advanced biofuel and total renewable fuel as shown below.

Table IV-1

Proposed Volumes for 2014 (billion gallons)

Statutory volume

Proposed volume

Range Mean

Advanced biofuel 3.75 2.00 - 2.51 2.20

Total renewable fuel 18.15 15.00 - 15.52 15.21

We are proposing to use a combination of the cellulosic biofuel waiver authority and the general 

waiver authority to ensure that the proposed volumes are reasonably achievable given limitations 

in the volume of ethanol that can be practically consumed in motor vehicles considering 

constraints on the supply of higher ethanol blends to the vehicles that can use them and other 

limits on ethanol blend levels approved for use in motor vehicles and the volume of non-ethanol 

renewable fuels that we expect would be reasonably achievable. To accomplish this, we are 

proposing an approach involving the following three steps:

• First, we would determine the total volume of ethanol that can reasonably be supplied 

to and consumed in the transportation sector as both E10 and higher ethanol blends 

such as E85. We would then add to this the volume of all non-ethanol biofuels that 

we expect could be reasonably available for meeting all four of the applicable volume 

requirements (cellulosic biofuel, biomass-based diesel, advanced biofuel, and total 

renewable fuel). This first step would determine the volume of renewable fuel that 

can adequately be produced and supplied to consumers in light of limitations on the 

consumption of ethanol (commonly referred to as the “ethanol blendwall”) and other 

relevant constraints, and would form the basis for the required volume of total 

renewable fuel as adjusted pursuant to EPA’s waiver authorities. 

 

36 See CAA section 211(o)(7)(D) and (A)
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 49 of 112

• Second, we would determine the volumes of all sources of advanced biofuel that 

could be reasonably achieved to ensure that the required volume of advanced biofuel 

be set no higher than the volume that is projected to be reasonably available. 

• Third, we would determine an appropriate volume of advanced biofuel at or below 

the projected available volume determined in the second step. This volume would 

include the required volume of cellulosic biofuels and biomass-based diesel, which 

are set separately, as well as any additional volumes of non-ethanol advanced biofuels 

projected to be reasonably achievable. This approach would account for the 

contribution of ethanol volumes in the advanced biofuel category to the supply 

concerns related to total renewable fuel, including considerations of both production 

and consumption. While ensuring that both advanced biofuel and non-advanced 

renewable fuels play a role in addressing the ethanol blendwall, it would also support

Congress's goal in the RFS program of continued growth in the advanced biofuel 

category as reflected in the volume requirements established in the statute. As 

discussed in detail in Section IV.C.2, we have examined several alternative 

approaches to this third step, but we believe this approach best accommodates the 

objectives of the RFS program, while accounting for the limitations in the ability to 

produce and consume renewable fuels. We request comment, however, on alternative 

approaches and on all aspects of the framework discussed in this section. 

We anticipate that the framework described in this section would apply not only to 2014, but to 

subsequent years as well. The specific estimates of volumes for each potential source of 

renewable fuel would be different in each future year, but the manner in which we aggregate 

those estimates to determine appropriate volume requirements would follow the overall approach 

described above. If circumstances differ substantially from those described here, or if further 

analysis suggests that our proposed approach is inadequate, we may consider the need for 

additional measures.

A. Statutory Authorities for Reducing Volumes to Address Biofuel Availability and 

the Ethanol Blendwall

In establishing the annual volume objectives in the statute, Congress intended that 

volumes of renewable fuel, advanced biofuel, and cellulosic biofuel increase every year through 

2022, and that volumes of biomass-based diesel be at least equal to the statutory volume for 

2012, while granting EPA discretion to increase the biomass-based diesel volume based on 

consideration of several specified factors. However, Congress recognized that circumstances 

could arise that might require a reduction in the volume objectives specified in the statute as 

evidenced by the different waiver provisions in CAA 211(o)(7). As described in more detail 

below, we believe that limitations in production or importation of qualifying renewable fuels, 

and factors that limit supplying those volumes to the vehicles that can consume them, both 

constitute circumstances that warrant a waiver under section 211(o)(7) as discussed below. With 

regard to the ethanol blendwall, a decrease in total gasoline consumption since EISA was 

enacted in 2007, coupled with limitations in the number and geographic distribution of retail 

stations that offer higher ethanol blends such as E85 and the number of FFVs that have access to 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 50 of 112

E85, as well as other market factors, combine to place significant restrictions on the volume of 

ethanol that can be supplied to and consumed in the transportation sector. Based on the types of 

renewable fuel that we project are likely to be available in 2014 and the volume that is likely to 

be non-ethanol, we believe that the ethanol blendwall represents a circumstance that warrants a 

reduction in the mandated volumes for 2014.

The statute provides two separate authorities that permit EPA to reduce volumes of 

advanced biofuel or total renewable fuel under certain conditions: the cellulosic waiver authority 

and the general waiver authority. Applying a combination of these two authorities is the most 

appropriate way to address limitations in production or importation of the necessary volumes, 

and factors that limit supplying those volumes to the vehicles that can consume them, including 

the ethanol blendwall. This section discusses both of these statutory authorities and the manner 

in which we believe they can be used together to set standards for 2014.

1. Cellulosic Waiver Authority

Under CAA section 211(o)(7)(D)(i), if EPA determines that the projected volume of 

cellulosic biofuel production for the following year is less than the applicable volume provided 

in the statute, then EPA must reduce the applicable volume of cellulosic biofuel to the projected 

volume available during that calendar year. Under such circumstances, EPA also has the 

discretion to reduce the applicable volumes of advanced biofuel and total renewable fuel by an 

amount not to exceed the reduction in cellulosic biofuel. 

Section 211(o)(7)(D)(i) provides that “[f]or any calendar year in which the Administrator 

makes such a reduction, the Administrator may also reduce the applicable volume of renewable 

fuel and advanced biofuels requirement established under paragraph (2)(B) by the same or a 

lesser volume.” Thus Congress authorized EPA to reduce the volume of total renewable fuel and 

advanced biofuel. As EPA has discussed before, this indicates a clear Congressional intention 

that under this provision EPA may reduce both the total renewable and advanced biofuel volume 

together, not one or the other. 

As described in the May 26, 2009 NPRM for the RFS regulations, we do not believe it 

would be appropriate to lower the advanced biofuel standard but not the total renewable 

standard, as doing so would allow conventional biofuels to effectively be used to meet the 

standards that Congress specifically set for advanced biofuels.37 EPA interprets this provision as 

authorizing EPA to reduce both total renewable fuel and advanced biofuel, by the same amounts, 

if EPA reduces the volume of cellulosic biofuel. Using this authority the reductions in total 

renewable fuel and advanced biofuel can be up to but no more than the amount of reduction in 

the cellulosic biofuel volume. Further discussion of this provision can be found in the final rule 

establishing the 2013 RFS standards.38

The statute does not provide any explicit criteria that must be met or factors that must be 

considered when making a determination as to whether and to what degree to reduce the 

 

37 See 74 FR 24914-15

38 78 FR 49794, August 15, 2013.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 51 of 112

advanced biofuel and total renewable fuel applicable volumes based on a reduction in cellulosic 

biofuel volumes under CAA section 211(o)(7)(D)(i). EPA can consider the criteria described in 

sections 211(o)(2)(B)(ii) and 211(o)(7)(A) in determining appropriate reductions in advanced 

biofuel and total renewable fuel under the cellulosic waiver authority at section 211(o)(7)(D)(ii), 

or any other factors that may be relevant. However, EPA must provide a reasoned explanation 

for any decision to reduce the advanced biofuel and total renewable fuel volume requirements 

under the cellulosic biofuel waiver authority.

2. General Waiver Authority

CAA 211(o)(7)(A) provides that EPA, in consultation with the Secretary of Agriculture 

(USDA) and the Secretary of Energy (DOE), may waive the applicable volume requirements of 

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 her own motion. Such a waiver must 

be based on a determination by the Administrator, after public notice and opportunity for 

comment, that: 

• Implementation of the requirement would severely harm the economy or the 

environment of a State, a region, or the United States; or 

• There is an inadequate domestic supply.

In today's NPRM, we are proposing to use the general waiver authority to waive the applicable 

volume requirements based on the statute's authorization for the Administrator to act on her own 

motion. We have initiated discussions with both USDA and DOE on the proposed approach to 

determining the applicable volume requirements that is described in this section.

Because this provision provides EPA the discretion to waive the volume requirements of 

the Act "in whole or in part," we interpret this section as granting authority to waive any or all of 

the four applicable volume requirements in appropriate circumstances. Thus, for example, 

unlike the cellulosic waiver authority, a reduction in total renewable fuel pursuant to the general 

waiver authority would not automatically result in the same reduction in advanced biofuel, and 

would not be limited by the reduction in cellulosic biofuel.

EPA has not previously interpreted or applied the waiver provision in CAA section 

211(o)(7)(A)(ii) related to "inadequate domestic supply."39 As explained in greater detail below, 

we believe that this ambiguous provision is reasonably and best interpreted to encompass the full 

range of constraints that could result in an inadequate supply of renewable fuel to the ultimate 

consumers, including fuel infrastructure and other constraints. This would include, for instance, 

factors affecting the ability to produce or import qualifying renewable fuels as well as factors 

affecting the ability to distribute, blend, dispense, and consume those renewable fuels.

The waiver provision at CAA 211(o)(7)(A)(ii) is ambiguous in several respects. First, it

does not specify what the general term "supply" refers to. The common understanding of this

 

39

 EPA has applied the waiver provision in section 211(o)(7)(A)(i) related to severe harm to the economy. See 77 

FR 70752 (November 27, 2012), 73 FR 47168 (August 13, 2008).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 52 of 112

term is an amount of a resource or product that is available for use by the person or place at 

issue.40 Hence the evaluation of the supply of renewable fuel, a product, is best understood in 

terms of the person or place using the product. In the RFS program, various parties interact 

across several industries to drive the ultimate use of renewable fuel by consumers of 

transportation fuel. For example, supplying renewable fuel to obligated parties and terminal 

blenders is one part of this process, while supplying renewable fuel to the ultimate consumer as 

part of transportation fuel is a different and later aspect of this process. This is clearly the case 

with respect to the renewable fuels ethanol and biodiesel, which are typically supplied to the 

obligated parties and terminals as a neat fuel, but in almost all cases are supplied to the consumer 

as a blend with conventional fuel (ethanol and gasoline or biodiesel and diesel). The waiver 

provision does not specify what product is at issue (for example, neat renewable fuel or blended 

renewable fuel with transportation fuel) or the person or place at issue (for example, obligated 

party or ultimate consumer), in determining whether there is an "inadequate domestic supply."

The waiver provision also does not specify what factors are relevant in determining the 

adequacy of the supply. Adequacy of the supply would logically be seen in terms of the parties 

who use the supply of renewable fuel. Adequacy of supply could affect various parties, 

including obligated parties, terminal operators, and consumers. Adequacy of supply with respect 

to the consumer might well involve consideration of factors different from those involved when 

considering adequacy of supply to the obligated parties. We believe that interpreting this waiver 

provision as authorizing EPA to consider the adequacy of supply of renewable fuel to all of the 

relevant parties, including the adequacy of supply to the ultimate consumer of transportation 

fuel, is consistent with the common understanding of the terms used in this waiver provision, 

especially in the context of a fuel program that is aimed at increasing the use of renewable fuel 

by consumers. In our view, this is the most reasonable and appropriate construction of this 

ambiguous language in light of the overall policy goals of the RFS program.

EPA has reviewed other fuel related provisions of the Clean Air Act with somewhat 

similar waiver provisions, and they highlight both the ambiguity of the RFS general waiver 

provision and the reasonableness of applying it broadly to include adequacy of supply to the 

ultimate consumer of transportation fuel. For example, CAA section 211(k)(6)(A)(ii) allows 

EPA to defer application of reformulated gasoline (RFG) requirements in a state that opts in to 

the RFG program if EPA determines that "there is insufficient domestic capacity to produce 

reformulated gasoline." A related RFG waiver provision concerning the application of RFG 

requirements in the Ozone Transport Region, section 211(k)(6)(B)(i) and (iii), provides for a 

waiver of RFG requirements based on "insufficient capacity to supply reformulated gasoline." 

For these RFG waiver provisions, Congress more clearly and explicitly indicated that the 

capacity to supply RFG could include consideration of factors beyond those concerning the 

capacity to produce RFG. In the language of the RFS general waiver provision, in comparison,

Congress used a single, broader and clearly ambiguous phrase - "inadequate domestic supply" -

without elaboration or clarification as to whether it refers solely to production capacity or also 

 

40

 For example, see http://oxforddictionaries.com/us/definition/american_english/supply (a stock of a resource from 

which a person or place can be provided with the necessary amount of that resource: "There were fears that the 

drought would limit the exhibition’s water supply.”); 

http://www.macmillandictionary.com/us/dictionary/american/supply ( “A limited oil supply has made gas prices 

rise.” and “Aquarium fish need a constant supply of oxygen.”).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 53 of 112

includes additional factors relevant to the ability to supply the fuel to various persons such as the

ultimate consumer. As in the RFG provision, however, the adequacy of supply referred to in the 

RFS general waiver provision can logically - and we believe should - be read to include factors 

beyond capacity to produce that impact the ability of consumers to use the fuel as a 

transportation fuel. 

CAA section 211(c)(4)(C)(ii) provides EPA with waiver authority to address "extreme 

and unusual fuel or fuel additive supply circumstances ... which prevent the distribution of an 

adequate supply of the fuel or fuel additive to consumers." The supply circumstances must be 

the result of a natural disaster, an Act of God, a pipeline or refinery equipment failure or another 

event that could not reasonably have been foreseen, and granting the waiver must be "in the 

public interest." In this case, Congress clearly specified that the adequacy of the supply is 

judged in terms of the availability of the fuel for use by the ultimate consumer, and includes 

consideration of the ability to distribute the required fuel or fuel additive to the ultimate 

consumer. Although the RFS waiver provision does not contain any such explicit clarification 

from Congress, its broad and ambiguous wording provides EPA the discretion to reasonably 

interpret the scope of the RFS waiver provision. EPA’s interpretation of the RFS waiver 

provision is consistent with the view, expressed more explicitly in the section 211(c) waiver, that 

the adequacy of the supply of a fuel or fuel additive can reasonably be judged in terms of 

availability for use by the consumer, and can include consideration of the capacity to distribute 

the product to the ultimate consumer. 

CAA section 211(m)(3)(C) allows EPA to delay the effective date of oxygenated gasoline 

requirements for certain carbon monoxide nonattainment areas if EPA finds "an inadequate 

domestic supply of, or distribution capacity for, oxygenated gasoline . . . or fuel additives"

needed to make oxygenated gasoline. Here, Congress chose to expressly differentiate between

"domestic supply" and "distribution capacity," indicating that each of these elements was to be 

considered separately. This would indicate that the term inadequate supply, although ambiguous 

for the reasons discussed above, could in appropriate circumstances be read as more limited in 

scope. In contrast to the RFS waiver provision, the section 211(m) waiver provision includes 

additional text that makes clear that EPA’s authority includes consideration of distribution 

capacity - reducing the ambiguity inherent in using just the general phrase "inadequate domestic 

supply." Presumably this avoids a situation where ambiguity would result in an overly narrow 

administrative interpretation. The oxygenated gasoline waiver provision is also instructive in 

that it clarifies that it applies separately to both finished oxygenated fuel and to oxygenated fuel 

blending components. That is, there could be an adequate supply of the oxygenate, such as 

ethanol, but not an adequate supply of the blended fuel which is sold to the consumer. The RFS 

waiver provision employs the phrase "inadequate domestic supply" without further specification

or clarification, thus providing EPA the discretion to determine whether the adequacy of the 

supply of renewable fuel can reasonably be judged in terms of availability for use by the ultimate 

consumer, including consideration of the capacity to distribute the product to the ultimate 

consumer. In contrast to the section 211(m) waiver provision, Congress arguably did not 

mandate that the RFS waiver provision be interpreted as providing authority to address problems 

affecting the supply of renewable fuel to the ultimate consumer. However, the RFS waiver 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 54 of 112

provision does provide EPA the discretion to adopt such an interpretation, resulting in a policy 

approach consistent with that required by the less ambiguous section 211(m) waiver provision.41

As the above review of various waiver provisions in Title II of the Clean Air Act makes 

clear, Congress has used the terms "supply" and "inadequate supply" in different waiver 

provisions. In the RFS general waiver provision, Congress spoke in general terms and did not 

address the scope of activities or persons or places that are the focus in determining the adequacy 

of supply. In other cases, Congress provided, to varying degrees, more explicit direction. 

Overall, the various waiver provisions lend support to the view that it is appropriate, where 

Congress has used just the ambiguous phrase "inadequate domestic supply" in the general waiver 

provision, to consider supply in terms of distribution and use by the ultimate consumer, and that 

the term "inadequate supply" of a fuel need not be read as referring to just the capacity to 

produce renewable fuel or the capacity to supply it to the obligated parties. 

We are aware that prior to final adoption of the Energy Independence and Security Act of 

2007, Congress had before it bills that would have provided for an EPA waiver in situations 

where there was "inadequate domestic supply or distribution capacity to meet the requirement."

42

 

EPA is not aware of any conference or committee reports, or other legislative history, explaining 

why Congress ultimately enacted the language in EISA in lieu of this alternative formulation. 

There is no discussion, for example, of whether Congress did or did not want EPA to consider 

distribution capacity, whether Congress believed the phrase "inadequate domestic supply" was 

sufficiently broad that a reference to distribution capacity would be unnecessary or superfluous, 

or whether Congress considered the alternative language as too limiting, since it might suggest 

that other types of constraints on delivering renewable fuel to the ultimate consumer should not 

be considered for purposes of granting a waiver.43 Given the lack of interpretive value typically 

given to a failure to adopt a legislative provision, and the lack of explanation in this case, we find 

the legislative history to be uninformative with regard to Congressional intent on this issue. It 

does not change the fact that the text adopted by Congress, whether viewed by itself or in the 

context of other fuel waiver provisions, is clearly ambiguous. 

We believe the term "inadequate domestic supply" should be interpreted to authorize 

EPA to consider the full range of constraints, including fuel infrastructure and other constraints, 

that could result in an inadequate supply of renewable fuels to consumers. Under this 

interpretation, we would not limit ourselves to consideration of the capacity to produce or import 

renewable fuels but would also consider practical and other constraints related to the fuel 

delivery infrastructure and their effect on the volume of qualifying renewable fuel that would be 

supplied to the ultimate consumer. 

 

41

 In CAA section 211(h)(5)(C)(ii), Congress authorized EPA to delay the effective date of certain changes to the 

federal requirements for Reid vapor pressure in summertime gasoline, if the changes would result in an "insufficient 

supply of gasoline" in the affected area. As with the RFS general waiver provision, Congress did not specify what 

considerations would warrant a determination of insufficient supply. EPA has not been called upon to apply this 

provision to date and has not interpreted it. 

42 H.R. 6 and S. 606 as reported by Senate Envt. & Public Works in Senate Report 109-74

43 There are, for example, legal constraints on the amount of certain renewable fuels that may be blended into 

transportation fuels. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 55 of 112

This interpretation is consistent with the provisions of section 211(o) and promotes 

Congress’s purposes in establishing the RFS program, which are to ensure that certain volumes 

of renewable fuel are used by the ultimate consumer as a replacement for the use of fossil based 

transportation fuel.44 The RFS program does not achieve the desired benefits unless renewable 

fuels are actually used to replace fossil based transportation fuels. For example, the greenhouse 

gas reductions and energy security benefits that Congress sought to promote through this 

program are realized only through the use by consumers of renewable fuels that reduce or 

replace fossil fuels present in transportation fuel. Imposing RFS volume requirements on 

obligated parties without consideration of the ability of the obligated parties and other parties to 

deliver the renewable fuel to the ultimate consumers, would achieve no such benefits and would 

fail to account for the complexities of the fuel system that delivers transportation fuel to 

consumers. We do not believe it would be appropriate to interpret the RFS general waiver 

provision more narrowly and limit EPA's consideration of factors related to the distribution and 

use of renewable fuels by the ultimate consumers of these fuels.

We invite comment on all aspects of our proposed interpretation of the waiver provision 

based on "inadequate domestic supply." Whether or not circumstances projected for 2014 justify 

a waiver on this basis is discussed in Sections IV.B and IV.C.

3. Combining Authorities for Reductions in Advanced Biofuel and Total Renewable 

Fuel

The two primary drivers that we have considered in today's NPRM for reductions in the 

required volumes are limitations in the availability of qualifying renewable fuels and factors that 

constrain supplying those volumes to the vehicles that can consume them. These two drivers are 

both relevant forms of inadequate domestic supply, which authorize reductions under the general 

waiver authority and can also justify reductions under the cellulosic biofuel waiver authority. 

We believe that reducing both total renewable and advanced biofuel are appropriate responses to 

these circumstances, and we propose to use a combination of the two waiver authorities 

discussed above to achieve this result as neither authority independently is sufficient to justify 

the necessary volume reductions. As discussed in Section II, EPA is proposing to reduce the 

applicable volume of cellulosic biofuel based on a projection of production for 2014. Given this 

reduction in the cellulosic biofuel volumes, EPA is also proposing to reduce the applicable 

volume of advanced biofuel using the cellulosic biofuel waiver authority in Section 

211(o)(7)(D)(i). We are proposing a larger reduction in total renewable fuel volume than in the 

advanced biofuel volume. In effect one part of the reduction in total renewable fuel would be 

based on both the general waiver authority and the cellulosic biofuel waiver authority, and the 

 

44

 See CAA section 211(o)(1)(I) (renewable fuel defined as “fuel ... used to replace or reduce the quantity of fossil 

fuel present in a transportation fuel”), section 211(o)(2)(A)(i) (EPA’s regulations must “ensure that transportation 

fuel sold or introduced into commerce in the United States ... contains at least the applicable volume of [renewable 

fuels]”). Also see CAA section 211(o)(1)(A), definition of “additional renewable fuel.” As one example, in the 

RFS program fuels with multiple end uses such as biogas or electricity are not considered a renewable fuel absent a 

demonstration that they will be used by the ultimate consumers as transportation fuel. As noted above, ethanol is 

almost always used as a renewable fuel in the form of E10 or higher, not as neat ethanol. The supply of neat 

ethanol, or biogas or electricity, does not by itself determine the supply of the fuel ethanol used as a transportation 

fuel. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 56 of 112

remainder of the reduction in total renewable fuel would be based solely on the general waiver 

authority. Below we discuss the basis for each of the proposed volume reductions. 

B. Determination of Reductions in Total Renewable Fuel

As a first step in our proposed framework for setting the applicable volumes for total 

renewable fuel and advanced biofuel, we would estimate the volume of ethanol that can 

reasonably be expected to be available and consumed and the volume of non-ethanol renewable 

fuel that can reasonably be expected to be available and consumed. Taken together, these two 

considerations provide the basis for the volume of total renewable fuel that we are proposing to 

require. Our objective is that the proposed requirement would reflect a realistic projected 

estimate of renewable fuel supply, based to the greatest extent possible on data and real world 

circumstances. 

For ethanol, the primary issue is the use of the fuel in the transportation sector, as the 

purpose of the RFS program is to ensure that renewable fuels are used to replace or reduce the 

use of fossil fuel based transportation fuel.45 For ethanol blends, there are legal constraints on 

the amount of ethanol that can be blended into gasoline and practical constraints on the volume 

of ethanol that can be consumed as transportation fuel, notwithstanding the ability to produce 

higher volumes. For non-ethanol renewable fuels, the primary issue is the availability of 

volumes of the renewable fuel, and much less so the ability to consume it in the transportation 

sector if it is available. For purposes of this proposal, we generally refer to the consumption 

concerns related to ethanol, and the availability concerns related to non-ethanol forms of 

renewable fuel, recognizing the primary concern that is raised for each of these types of 

renewable fuel.

With regard to consumption concerns related to ethanol, it is important to note that the 

overall pool of gasoline into which ethanol must be blended to achieve EISA’s statutory volume 

requirements is significantly smaller now than it was projected to be prior to enactment of EISA 

in 2007, which established both the revised RFS program requirements and the mandated 

significant increases in vehicle fuel economy standards. The total demand for gasoline has been 

decreasing over the intervening years due to the recent GHG and CAFE standards for vehicles, 

fuel prices, and broader factors affecting the economy. In the summer of 2006, when the 

reference case for EIA's Annual Energy Outlook 2007 (AEO2007) was developed, the projected 

2014 gasoline energy demand was 18.68 Quad Btu and could have absorbed 15.43 bill gal of 

ethanol as E10. By comparison, in the summer of 2012 when the AEO2013 reference case was 

developed, the projected 2014 gasoline energy demand was 15.94 Quad Btu and could absorb 

13.17 bill gal ethanol as E10. The difference between these two projections thus represents 

about 2.3 bill gal of ethanol. That is, the gasoline pool will be able to absorb about 2.3 bill gal 

less ethanol as E10 in 2014 than it would have been possible to absorb if the gasoline use 

projection in AEO2007 had been realized. If 15.43 bill gal of ethanol were to be consumed in 

2014, the gasoline energy demand projected in AEO2013 would require about 3.4 bill gal of E85 

 

45 Renewable fuels in heating oil and jet fuel are also valid under the RFS program, but ethanol is not used in these 

contexts. See CAA section 211(o)(1)(J) (the definition of renewable fuel), and CAA section 211(o)(2)(A) (the 

rulemaking authority related to ensuring renewable fuels are sold or introduced into commerce).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 57 of 112

if it is assumed that intermediate blends such as E15 do not penetrate the market to any 

significant extent. 

Table IV.B-1

Reduced Gasoline Demand in 2014

Motor gasoline

(Quad Btu)a

E85

(Quad Btu)a

Total energy

(Quad Btu)a

Equivalent E10 

volume (bill gal)c

AEO2007b18.67 0.004 18.68 154.30

AEO2013b15.84 0.097 15.94 131.67

Difference 22.63

a

Higher heating value

b Table 2 of EIA's Annual Energy Outlook, total delivered energy consumption for all sectors.

c Assumes conversion factors of 3.561 mill Btu per barrel for ethanol and 5.253 mill Btu per barrel for gasoline.

We recognize that EIA’s most current projections for motor fuel use are provided in the Shortterm Energy Outlook (STEO), which is updated monthly, rather than in the AEO2013 reference 

case that was prepared in the summer of 2012. EPA understands that the estimate of 2014 

transportation fuel use that EIA is required to provide to EPA for purposes of determining the 

applicable percentage standards will be based on the latest available STEO forecast rather than 

the Annual Energy Outlook. The forecast for 2014 gasoline use in the October 2013 STEO is 

about 1.5 percent higher that the AEO2013 reference case projection for 2014, while the implicit 

level of E85 use from the combined gasoline and ethanol forecasts in STEO is less than half of 

the AEO2013 E85 projection for 2014.

1. Estimating Ethanol Volumes that Could Reasonably Be Consumed

The total volume of ethanol that could reasonably be consumed is a function of three 

factors:

• The overall demand for gasoline

• The consumption of ethanol as E10, E15, and E85

• The presence of non-oxygenated gasoline (E0)

In this section, we provide our assessment of the likely distribution of ethanol in gasoline, with a 

particular emphasis on potential volumes of E85 that could reasonably be achievable. We 

discuss and request comment on the assumption that the overall pool of gasoline is comprised of 

E10 and E85 in 2014. 

a. Projected Composition of 2014 Gasoline Supply

For the purposes of this proposed rule, we have assumed that all gasoline-powered 

vehicles and FFVs would use either E10 or E85. EPA has taken a series of regulatory steps to 

enable E15 to be sold in the U.S. In 2010 and 2011, EPA issued partial waivers to enable use of 

E15 in model year 2001 and newer vehicles, and in June of 2011, EPA finalized regulations to 

prevent misfueling of vehicles, engines, and equipment not covered by the partial waiver 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 58 of 112

decisions. However, based on information currently available to the Agency, the volume of E15 

being supplied in the market to date has been very limited. Therefore, to simplify the 

calculations and the discussion, we have assumed that the volume of E15 that is consumed in 

2014 will be negligible, as there are currently very few retail stations offering E15. Any volumes 

of other intermediate blends, such as E30, are assumed to be sold through blender pumps into 

FFVs and are thus assumed to be part of the E85 volume consumed by FFVs. 

We have not assumed that any gasoline would be E0 in 2014, since E10 is commonly 

used in nonroad engines just as it is used in cars and trucks. However, it is possible that a limited 

amount of E0 will be consumed if refiners are willing to provide it. If so, it would likely appear 

in premium gasoline, gasoline sold at marinas, or possibly unleaded motor gasoline used in light 

aircraft that do not require leaded aviation gasoline. There are also several states that require 

unblended gasoline to be provided to terminals, though the intention of these requirements is to 

ensure that terminals have the option to blend ethanol into that gasoline. We are not aware of 

any data that would provide a direct estimate of the demand for E0, and given that any ongoing 

demand for E0 is likely to be small, we have not included it in our calculations of the total 

volume of ethanol that can be consumed in 2014. Nevertheless, we request information and data 

that would permit us to determine the volume of E0 used in the gasoline pool and the 

appropriateness of incorporating some estimate of E0 into the final standards.

Aside from the volume of E85 that could reasonably be consumed in 2014, discussed in 

more detail in the next section, the gasoline pool would be comprised of E10. We have assumed 

that gasoline contains 10.0% denatured ethanol. This is consistent with survey data collected by 

the Alliance of Automobile Manufacturers indicating that the average ethanol content of all 

gasoline containing at least 5vol% ethanol is about 9.74%. This estimate is based on the use of 

ASTM test method D-5599, which measures only the alcohol portion of the gasoline, not any 

denaturant that would have been included with the ethanol before it was blended into gasoline. 

Since the denaturant portion of ethanol is at least 2%, ethanol that is blended into gasoline 

contains less than 98% ethanol. When blended into gasoline, therefore, the E98 would result in a 

gasoline-ethanol blend containing no more than 9.8% pure ethanol, or 10.0% denatured ethanol. 

Since all RFS ethanol volumes and RINs are also calculated on a denatured ethanol basis, it is 

thus appropriate to assume 10.0 percent. We request comment, however, on the accuracy of this 

assessment, including information with regard to whether and to what extent there are real world 

constraints that limit the denatured ethanol content of E10 to a level lower than 10.0 percent, and 

if so, what the implications are with regard to the volume of ethanol that can reasonably be 

consumed in 2014.

For E85 volumes, we recognize that the ethanol content could range from 51% to 83% 

according to ASTM D-5798-13. In today's NPRM we have assumed that the ethanol content of 

E85 is 74% consistent with the average value used by EIA in its Annual Energy Outlook. As for 

E10, we are treating the ethanol content of E85 as representing denatured ethanol.

b. Assessment of E85 Consumption
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 59 of 112

For purposes of determining the total renewable fuel volume requirement for 2014,

consistent with the waiver authorities we are proposing to exercise in this action, we have 

assessed the volume of E85 that can reasonably be supplied to and consumed in the 

transportation sector, based on a variety of factors that limit supplying E85 in the transportation 

sector. Our assessment of the range of E85 volumes that can be reasonably consumed in 2014 

considers factors such as infrastructure and consumer acceptance limitations as well as the 

impact that the applicable standards could have on the relative price of E85 and E10. In 

projecting the likely range of E85 consumption in 2014, we are not mandating that this amount 

of E85 be produced and consumed. The industries involved will decide what actually occurs in 

the marketplace. Obligated parties can take actions to facilitate the sale of E85, to the extent 

they can and choose to do so, or they can obtain RINs from non-ethanol sources of renewable 

fuel such as excess biodiesel, renewable diesel, heating oil, and biogas. We expect that the 

parties involved will resolve this through their business decisions. Nevertheless, we 

acknowledge that the renewable fuel volumes established in this rulemaking will have an impact 

on the volume of E85 consumed in 2014. 

There are a variety of sources we have considered in developing our estimate of the 

volume of E85 that could reasonably be supplied in the transportation sector in 2014. To begin 

with, we investigated available sources of information on E85 production in 2012 and 2013. 

One report from EIA reported an E85 production volume of about 37 mill gal in 2012.46 This 

volume is based on EIA survey data from forms EIA-810 (Monthly Refinery Report) and EIA815 (Monthly Bulk Terminal and Blender Report). It likely underestimates actual E85 

consumption as these surveys do not capture other sources of E85 production, such as the 

following:

• E85 produced using reformulated gasoline (RFG) or reformulated gasoline 

blendstock (RBOB) as the petroleum component of the fuel

• E85 produced by refiners or blenders producing small quantities of E85

• E85 produced by parties such as ethanol production facilities

For the last category, we were able to estimate the potential volume of E85 produced in 2012 by 

ethanol facilities using data collected in the EPA-Moderated Transaction System (EMTS). 

Ethanol production facilities are in general prohibited from separating RINs from the ethanol that 

they produce. However, if an ethanol producer blends its ethanol into gasoline to make a 

transportation fuel, it can separate the RINs from the ethanol used in this blending. If they do 

produce transportation fuel, it is very likely to be E85 rather than E10. Therefore, we assumed 

that all RINs separated by ethanol producers represent ethanol blended as E85. Under this 

assumption, we determined that ethanol production facilities separated about 22 million RINs in 

2012, which would correspond to about 30 mill gal of E85. When combined with the 37 mill gal 

estimate from EIA for E85 produced by refineries and blenders, the total 2012 E85 production is 

estimated to be about 70 mill gal. 

At this time, available information regarding the volume of E85 production in 2013 is 

limited to the first half of the year. Using the same two sources of information described above -

EIA survey data for E85 production by refineries and blenders, and EMTS data to estimate E85 

 

46 EIA, "U.S. Refinery and Blender Net Production", April 29, 2013
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 60 of 112

production at ethanol facilities - we have estimated that total E85 production for the first half of 

2013 was about 36 mill gal. However, both of these data sources demonstrate a strongly 

increasing trend over this timeframe. If this trend continues through the end of 2013, total E85 

production could reach 100 mill gal in 2013. Furthermore, if this trend continued throughout 

2014, total E85 production would reach 240 mill gal in 2014.47 If this trend were further 

augmented to account for the rate of ongoing growth in both the number of retail stations 

offering E85 and in the number of FFVs in the fleet that would occur over the remainder of 2013 

and 2014, the projection for 2014 could be as high as 300 mill gal.48 We anticipate that better 

and more detailed information will be available - including through this notice and comment 

process - by the time we promulgate the final rule. We solicit comment and information on 2013 

consumption of E85 and its relevance to projecting reasonable levels of consumption in 2014. 

It should be noted that historical consumption of E85 represents a small fraction of the 

consumption capacity of the FFVs currently in use. Even counting only those FFVs which have 

reasonable access to stations offering E85, their total consumption capacity is at least 1 bill gal. 

The low historical consumption was most likely due to a combination of factors including 

limited access to retail stations offering E85, the reduced range of vehicles operating on E85, and 

the fact that E85 has historically been more expensive than E10 on an energy-content adjusted 

basis. A survey conducted by the National Association of Convenience Stores found that 71% of 

customers indicated that price was the most important factor in determining where they buy 

gasoline.49 We believe the volume of E85 that can and will be sold in the future is likely highly 

dependent on the price relationship between E10 and E85 and the availability of the fuel. 

While historically E85 has been more expensive than E10 on an energy-content adjusted 

basis, recent data collected by EIA suggests that at least in some parts of the country this price 

relationship between E10 and E85 may be changing. In a Today in Energy article published on 

September 19, 2013, EIA presented data showing that in a collection of Midwestern states E85 

retail prices were less than E10 retail prices on an energy-content adjusted basis in July 2013, the 

most recent month for which information was available.

50

 This change in price relationship 

between E10 and E85 coincides with reported increases in sales volumes of E85 in Iowa and 

Minnesota, two states in which E85 sales volumes are publically available.51 If the conditions 

that have led to this price relationship continue in the future E85 sales volumes are likely to 

continue to increase. 

Moreover, as more gasoline stations sell E85 and more FFVs are sold in the United States 

the potential market for E85 will continue to increase. Through 2013 the number of stations 

 

47 Korotney, David, "Extrapolation of E85 production in the first half of 2013 to the remainder of 2013 and through 

2014," memorandum to EPA docket EPA-HQ-OAR-2013-0479

48 Based on 25% annual growth in E85 consumption as described in memo entitled, "Application of one-in-four E85 

access methodology to 2014", Memorandum from David Korotney to EPA docket EPA-HQ-OAR-2013-0479.

49 2013 NACS Retail Fuels Report

50 ”E85 motor fuel is increasingly price-competitive with gasoline in parts of the Midwest.” Today in Energy. EIA, 

19 September 2013. <http://www.eia.gov/todayinenergy/detail.cfm?id=13031>. Study compared daily average 

observed E85 and regular gasoline prices at the same stations in the states of Iowa, Illinois, Indiana, Kentucky, 

Michigan, Minnesota, and Ohio.

51 See Table IV.B.1-2
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 61 of 112

selling E85 has been increasing at a rate of over 300 stations per year.52 The size of the FFV 

fleet also increased by approximately 1 million vehicles in 2013.53 If the recent pricing trends 

noted above persist and spread to other parts of the country the potential growth in E85 sales 

could be significant. Increasing E85 sales due to favorable pricing may also incentivize 

increasing growth rates in the number of stations selling E85 and the size of the FFV vehicle 

fleet. Such a scenario, however, is dependent on E85 being widely available at a price that is 

sufficiently lower than E10 to offset the lower energy content, increased refueling frequency 

requirements, and other factors. If the price relationship between E10 and E85 reverts to historic 

levels significant growth in E85 sales volumes is unlikely.

The price relationship between E85 and E10 depends on many factors, but three of the 

most significant are the prices of corn, crude oil, and RINs.54 Corn and crude oil are the primary 

contributors to the cost of production of the ethanol and gasoline, respectively, used in the 

United States. The RIN price functions as a mechanism to subsidize the price of ethanol sold as 

E85 until it is at or below price parity with gasoline on an energy-equivalent basis even if the 

relative prices of corn and oil would not otherwise support such a pricing structure. The net 

effect of a reduction in the price of ethanol is that the price of E85 should fall relative to the price 

of E10, since E85 contains more ethanol than E10. The significant rise in the price of D6 (nonadvanced) RINs and the subsequent drop in the retail price of E85 relative to E10 over the course 

of 201355 occurred at a time when corn and thus ethanol was relatively expensive, indicating that 

RINs are already functioning in this manner. The recent shift in E85 prices relative to E10 and 

the simultaneous increase in E85 sales suggest the importance of paying careful attention to more 

recent data concerning E85 prices and sales volumes when projecting E85 volumes in 2014. 

While the more recent data is available from such a short period of time that it limits the 

confidence in using it to make projections for 2014, it nevertheless provides a basis for expecting 

that directionally, the lower the price of E85 compared to the price of E10, the greater the 

likelihood that FFV owners will opt to purchase E85. In addition to the volumetric energy 

content of E85 compared to E10, the price difference may also need to accommodate the 

inconvenience of a greater frequency of refuelings for a vehicle operating on E85, the potentially 

the greater driving distance to a station offering E85, the unfamiliarity that FFV owners may 

have with E85 or their own vehicle's capabilities, and differences in the mix of vehicle types 

among FFVs compared to conventional (not flex fuel) vehicles. These factors may also vary 

from region to region across the U.S. based on state and local policies, making it challenging to 

develop correlations representing the nation as a whole. While we currently have insufficient 

data to allow us to correlate sales volumes of E85 with its price relative to gasoline on an energy 

basis for the nation as a whole, information from Minnesota indicates a moderately strong 

correlation between E85/E10 price differential and E85 sales volumes. To further aid our 

projections for the final rule, we request comment on the manner and extent to which RIN prices 

 

52 Memorandum from David Korotney to EPA docket EPA-HQ-OAR-2013-0479.

53 EIA Annual Energy Outlook 2013, Table 40. Increase in Ethanol-Flex Fuel Cars and Light Trucks from 2013 to 

2014. 

54Other factors, including Federal and State taxes, subsidies and distribution costs, and relative convenience costs 

may also affect the price relationship. It is therefore very difficult to accurately predict fuel prices.

55 ”E85 motor fuel is increasingly price-competitive with gasoline in parts of the Midwest.” Today in Energy. EIA, 

19 September 2013. <http://www.eia.gov/todayinenergy/detail.cfm?id=13031>. E85 prices have fallen steadily 

since the beginning of 2013 relative to E10 prices. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 62 of 112

are affecting gasoline and E85 prices for the nation as a whole, and any associated changes in 

E85 consumption.

EPA is not in a position to estimate E85 consumption based on data or modeling 

involving the price relationship between E10 and E85. Therefore, in addition to information on 

E85 consumption in 2012 and 2013 discussed above, we have considered other sources in 

developing our estimate of the volume of E85 that could reasonably be consumed. The 

following discussion presents the various sources and approaches used to inform our estimate.

To begin with, we considered that even without further reductions in the price of E85 

relative to the price of E10, higher E85 consumption in 2014 could reasonably be expected 

compared to 2012 and 2013 based on business-as-usual growth in the number of FFVs in-use 

and the number of retail stations offering E85. The combined effect of these two factors could 

raise the total E85 consumption volume from our 2013 estimate of about 100 mill gal to about 

125 mill gal in 2014 if the purchasing behavior of individual FFV owners remains constant.56 

In the March 2010 RFS final rule we presented a means for estimating the E85 

consumption capacity of FFVs based on historical market practices with diesel fuel.57 We 

defined “reasonable access” to E85 as a situation in which one out of every four service stations 

to which an FFV owner had access offered E85, such that an FFV owner could be considered to 

have a reasonable option of refueling on E85. All other FFVs would then be assumed not to 

have reasonable access to E85, and would therefore always refuel on gasoline (here presumed to 

be E10). Following this one-in-four access approach, we estimated that approximately 8.6% of 

FFVs would have access to E85 in 2014 based on projections of the number of retail stations 

likely to offer E85. Similarly, the total amount of energy58 consumed by all FFVs in 2014 would 

be about 9% of all the energy consumed by all light-duty vehicles and trucks. If the price of E85 

reflected only the energy difference between it and E10, the total volume of E85 consumed under 

this approach could be about 160 mill gal. If the price of E85 was lower than this level and as a 

result half of all FFV owners with access used E85, the total volume of E85 consumed could 

reach 640 mill gal. Details of these calculations can be found in a memorandum in the docket.59 

We have also considered other projections of E85 usage, recognizing the varying 

assumptions made in developing these projections as well as the differing purposes of the 

projections. For example, in their comments on the NPRM for the 2013 standards, the 

University of Illinois included an article from the February 13, 2013 issue of Farmdoc Daily in 

which E85 consumption in 2014 was assumed to be 300 mill gal if E85 prices were sufficiently 

low in comparison to E10 prices, though they did not quantify the prices needed to reach this 

E85 consumption level. 

 

56 This estimate is based on two years of growth in stations offering E85 and two years of growth in in-use FFVs. 

Growth factors are discussed further in a memo entitled, "Application of one-in-four E85 access methodology to 

2014", Memorandum from David Korotney to EPA docket EPA-HQ-OAR-2013-0479.

57 See discussion at 75 FR 14761, March 26, 2010

58 This estimate includes energy consumed from all fuel sources, including both E10 and E85.

59 "Application of one-in-four E85 access methodology to 2014," Memorandum from David Korotney to EPA 

docket EPA-HQ-OAR-2013-0479
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 63 of 112

Finally, in the context of EPA's response to requests for a waiver of the 2012 renewable 

fuel volume requirements due to drought, the Department of Energy provided its own analysis of 

the maximum volume of E85 that could be consumed based on a technical analysis of retail 

station throughput.60 Based on assumptions about E85 tank sizes at retail stations and the 

associated refill frequencies, DOE estimated that the maximum sales of E85 would be 600 mill 

gal.61 This DOE analysis focused on the potential throughput at E85 stations given certain 

underground tank refueling frequencies, and did not consider such things as vehicle refueling 

frequencies. DOE’s analysis also noted that to achieve its potential, E85 may need to be priced at 

a greater discount than it would be based on the energy content differential between E85 and gasoline 

alone to account for the more frequent refueling that E85 requires. We request comment on how 

DOE's analysis could be refined to better estimate potential E85 consumption.

c. Proposed Projection of E85 Consumption in 2014

Our goal for this proposal is to generate a realistic estimate of the amount of E85 that 

could reasonably be supplied to and consumed in the transportation sector in 2014 in light of the 

various circumstances involved with distribution and sale of E85. As with other volumes of 

renewable fuel, we believe that it is most appropriate to project a range of E85 volumes that 

reflects the volume that could reasonably be consumed in 2014. This projected range for E85 is 

used to determine a range for the total volume of ethanol that can be consumed, which is further 

combined with projected ranges for non-ethanol renewable fuels to determine a range for the 

total renewable fuel standard. For the final rule, we will determine a single value within the 

projected range that is our best estimate of a realistic projection of total renewable fuel in 2014 

for purposes of exercising the waiver authority. Once the applicable volume requirements are 

set, the parties in the market will determine whether our estimated volume of E85 is in fact 

consumed, or whether other renewable fuels are consumed instead of the volume of ethanol that 

we estimate could be consumed as E85. 

Based on our analysis of the available information described above, we are estimating a 

range of 100 - 300 mill gal of E85 consumption for 2014. We believe that this estimated range 

of E85 encompasses the most likely possibilities. Volumes below 100 mill gal are possible, but 

we believe that they are unlikely given that we expect such volumes to be reached in 2013 and 

the market conditions that resulted in these values to continue. Likewise volumes above 300 mill 

gal are possible, but we believe that they are unlikely. As described above, we believe that 300 

mill gal of E85 could be consumed in 2014 if the monthly trends from the first half of 2013 

continue unabated through both 2013 and 2014, and further increase due to growth in both retail 

stations offering E85 and FFVs in the fleet. E85 consumption above 300 mill gal in 2014 would 

require that these trends increase even further, and in a sustained fashion, through the end of 

2014. Therefore 300 mill gal is the highest value we would consider at this time as an upper end 

of the range of possible volumes of E85 for 2014. However, we acknowledge that the volume of 

 

60 "Department of Energy Analyses in Support of the EPA Evaluation of Waivers of the Renewable Fuel Standard", 

November 2012, EPA-HQ-OAR-2012-0632-2544.

61 In generating this estimate, DOE assumed that the number of retail stations offering E85 would be about 2,300. 

We estimate that the number of stations offering E85 will be closer to 3,300 in 2014, which would correspond to a 

maximum E85 throughput of about 860 mill gal. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 64 of 112

E85 sold into the market is likely also a function of the standard for total renewable fuel that we 

set. We request comment and data from the public that would help estimate the impact of 

lowering the volumetric requirements on the incentive to sell ethanol blends higher than E10. 

In light of current uncertainties and the limited information available at this time, we are 

proposing that the specific volume of E85 that we would use in determining total ethanol 

consumption for 2014 would be based on the mean value from the Monte Carlo analysis within 

the range of potential E85 volumes. As explained in Section IV.B.4 below, the Monte Carlo 

analysis for E85 is based on a half-normal distribution, consistent with our view that a reasonable 

level of E85 consumption is more likely to be towards the lower end of the proposed range. 

Based on this analysis, the mean value for E85 consumption would be about 180 mill gal. The 

mean provides a balance between the projected higher and lower volumes of E85 that could be 

reasonably achievable. While we believe that volumes of E85 at the high end of our proposed 

range are achievable and well within the capabilities of the existing vehicle and refueling 

infrastructure, basing the total renewable fuel volume on E85 volumes at the high end of what is 

achievable could present an increased risk of non-compliance for obligated parties if more E85 is 

called for than was projected in setting the percentage standards. This could occur, for example, 

if uncertainties in projected gasoline and diesel consumption for 2014 led to a requirement for 

more than 300 mill gal E85. By using the mean, we would reduce the likelihood of potential 

outcomes such as this.

The proposed mean volume of 180 mill gal for E85 is consistent with the recent upward 

trend in E85 production described above, where E85 is estimated to have been about 70 mill gal 

in 2012 and could reach and potentially exceed 100 mill gal in 2013. With regard to 2013, the 

increase is also consistent with available state-specific data on E85 production increases in the 

first two quarters.

Table IV.B.1.c-2

E85 Production in 2013 (mill gal)

First quarter Second quarter % change

Minnesota 1.9 3.0 +58%

Iowa 1.8 2.6 +44%

We request comment more generally on the range of E85 consumption that could 

reasonably be achieved under appropriate conditions in 2014, including the methodologies and 

approaches that would provide a projection of E85 that could reasonably be consumed in light of 

the various factors affecting the distribution and sale of E85. We reiterate our recognition that 

there is a short time period in which to achieve infrastructural and market changes that would 

affect E85 consumption in 2014 and that the approach to estimating E85 consumption described 

above, consistent with best available information, is appropriate. We request comment in 

particular on methodologies and approaches that would be appropriate in light of these 

considerations.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 65 of 112

d. Estimating Total Ethanol Consumption in 2014

To estimate the total volume of ethanol that could reasonably be consumed in 2014, we 

assumed that volumes of E0 and E15 would be essentially zero, that E85 consumption would be 

in the range of 100 - 300 mill gal and contain 74% denatured ethanol, and that all remaining 

gasoline would be E10 with a denatured ethanol content of 10%. We assumed that the total 

energy consumption for all gasoline-powered vehicles and engines would be 14.33 Quadrillion 

Btu62, and that this amount of total energy consumption is fixed regardless of the relative 

amounts of E10 and E85. Based on a denatured ethanol energy content of 77,000 Btu/gal and a 

gasoline (E0) energy content of 115,000 Btu/gal, we determined that an E85 consumption range 

of 100 - 300 mill gal would correspond to a total ethanol consumption volume of 12.95 - 13.09 

bill gal. This ethanol volume would include non-advanced ethanol such as that made from corn 

as well as advanced biofuels such as sugarcane ethanol or other domestically-produced advanced 

ethanol. 

2. Estimating Availability of Non-Ethanol Renewable Fuel Volumes

In addition to the volume of ethanol that could reasonably be consumed in 2014, the total 

volume of renewable fuel depends on the volume of non-ethanol renewable fuels that are 

projected to be available in 2014. These include both advanced and non-advanced non-ethanol 

renewable fuels of all types that could reasonably be supplied to meet all four standards.

a. Non-Ethanol Cellulosic Biofuel

The production of non-ethanol cellulosic biofuel in 2014 is projected to be between 0 and 

9 million ethanol-equivalent gallons. This volume could be significantly greater if additional 

pathways for the generation of cellulosic biofuel RINs are approved and additional volumes of 

heating oil generate cellulosic RINs. For more details on the potential production of non-ethanol 

cellulosic biofuels in 2014, and the companies expected to produce these fuels, see Section II. 

b. Biomass-Based Diesel

Obligated parties are required to fulfill a Renewable Volume Obligation (RVO) based on 

a national applicable volume for biomass-based diesel of 1.28 bill gal of biodiesel (1.92 bill 

ethanol-equivalent gallons) in 2013.63 As described in Section III, in today's NPRM we are 

proposing that the national applicable volume for biomass-based diesel remain the same for 

2014. However, this proposed requirement is not based exclusively on projected availability and 

 

62 EIA Annual Energy Outlook 2013, Table 37. Represents lower heating value. For determining the total volume 

of ethanol that can be consumed in 2014, AEO provides 2014 gasoline consumption projections in the required 

energy units. However, EIA's Short-Term Energy Outlook provides 2014 projections that are more recent, but in 

units of volume. EPA understands that the estimate of 2014 transportation fuel use that EIA is required to provide to 

EPA for purposes of determining the applicable percentage standards will be based on the latest available STEO 

forecast rather than the Annual Energy Outlook.

63 77 FR 59458, September 27, 2012 (establishing the national applicable volume for BBD)
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 66 of 112

we recognize that greater volumes could be available for purposes of satisfying the advanced 

biofuel and total renewable fuel volume requirements. 

There is a large amount of excess production capacity for biomass-based diesel, including 

at facilities that were in operation in 2012. While the total production capacity for all registered 

and unregistered biodiesel facilities is about 3.6 bill gal, the production capacity for only those 

facilities that produced some volume in 2012 is 2.4 bill gal, and the production capacity for 

facilities that utilized at least 20% of their individual production capacities in 2012 was about 1.6 

bill gal.64

Figure IV.B.2.b-1

Distribution of Capacity Utilization for Registered Parties that

Produced Some Biodiesel in 2012

While there is a large amount of excess production capacity, the degree to which it will 

be used to produce biodiesel in excess of 1.28 bill gal depends on a variety of factors. One of 

those factors is the federal tax credit for biodiesel that was most recently extended through the 

end of 2013 under the American Taxpayer Relief Act of 2012. Under this Act, parties that 

produce a mixture of biodiesel and diesel fuel can claim a $1.00-per-gallon credit against their

tax liability.

65

 This tax credit has enabled biodiesel to be more competitive with other advanced 

biofuels. However, as of this writing it is unclear if this tax credit will apply in 2014. Since 

many expect the tax credit to have a direct impact on the economic attractiveness of biodiesel, 

the fact that it does not yet apply in 2014 adds uncertainty to the volume of biodiesel above 1.28 

bill gal that may be produced and consumed in the U.S. As discussed further in Section IV.B.4-2 

below, we have assumed that the tax subsidy for biodiesel will not be extended past 2013. This 

is reflected in an upper end of the range for biomass-based diesel no higher than the volume that 

may be used in 2013, and through the use of a half-normal distribution in the context of the 

 

64 "Biodiesel plant list 2-6-13" in docket EPA-HQ-OAR-2013-0479

65 See Section 405. 

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

5 0

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Number of biodiesel producers

Fraction of production capacity actually used
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 67 of 112

Monte Carlo process. We request comment on the degree to which the presence of the biodiesel 

tax credit in 2014 would affect our projections of the volumes that could be reasonably available 

in 2014. To the extent we have new information on the status of the tax credit in 2014, EPA will

consider that information in the development of the final rule.

According to production data available through EMTS, the total volume of biomassbased diesel produced through August 2013 was 1,053 million gallons. Depending on how 

monthly production continues through the remainder of 2013, we would expect total 2013 

biodiesel production to be between 1.6 and 1.8 bill gal. A projection of 1.8 bill gal results from 

the assumption that the August production rate continues through the rest of 2013. If the trend in 

production follows the downward trend that occurred in 2012 in the September - December 

timeframe (representing, for example, potential seasonality of available feedstocks or demand), 

the total 2013 production would be 1.6 bill gal.

Figure IV.B.2.b-2

Projected Production of Biomass-Based Diesel in 2013

These 2013 biodiesel production volumes are occurring in the context of a $1/gal tax credit. 

While they provide a clear indication of the production capabilities of the industry, they do not 

provide an accurate indicator of the volumes that would be produced in the absence of the tax 

credit.

In the past some stakeholders have expressed concern that there may be limitations in 

biodiesel consumption that could be imposed by manufacturer warranties and cold-weather 

operation, and that this could impact use of biodiesel above 1.28 bill gal. However, we do not 

believe that this is the case for 2014. For instance, most diesel engines are warrantied by their 

manufacturer to B5. That is, the use of biodiesel in concentrations above 5vol% will void these 

warranties. While not a legal limitation on the use of biodiesel, it does present a practical 

0

20

40

60

80

100

120

140

160

180

200 Physical gallons (mill gal)

2012

2013
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 68 of 112

limitation. Assuming a total diesel consumption volume of about 56 bill gal for 2014

66, B5 for 

the diesel pool as a whole would correspond to a biodiesel volume of 2.8 bill gal. However, 

some diesel truck engines have been warrantied by their manufacturers to consume B20, starting 

in 2011.67 This could potentially raise the limit on biodiesel consumption even higher, assuming 

retailers would dedicate a pump exclusively to B20 for this pool of diesel fuel consumers. Since 

2.8 bill gal is significantly higher than the range of biodiesel volumes we are considering in this 

proposal, manufacturer warranties do not represent a limitation on biodiesel use in 2014.

Production of biodiesel in 2014 is likely to be impacted significantly by feedstock prices. 

Since their peak in August and September of 2012 during the height of uncertainty about the 

effects of the 2012 drought, prices of soybeans and soybean products have been trending

downward. The USDA World Agricultural Supply and Demand Estimates (WASDE) Report’s 

estimate68 of soybean prices for the 2012/2013 marketing year have declined from an August 

2012 range of $15-17 per bushel to a June 2013 estimate of $14.35 per bushel for the 2012/2013 

marketing year. WASDE’s June Outlook Report estimates that for the 2013/2014 marketing 

year (which includes the months of October through December 2013) soybean prices will range 

from $9.75 – $11.75 per bushel which is in line with the projections used by EPA in the 2013 

biomass-based diesel volume final rule.69 

At the same time, even biodiesel blends as low as B5 cannot be utilized year-round due to 

cold weather constraints. The cloud point for B5 soy methyl ester (SME) blended with No. 2 

diesel is estimated to be approximately 5 °F. Thus, the use of B5 is highly unlikely in any region 

where temperatures regularly drop below 5 °F. Assuming that biodiesel cannot be blended in 

such regions during any month where the 10% percentile temperature falls below 5 °F would 

result in a reduction of the 2014 biomass-based diesel volume by only about 3%. This would 

still permit more than 2 bill gal of biodiesel to be consumed in 2014. Thus, it appears that for 

2014, the ability to consume biodiesel in the vehicle fleet is not constrained by cold weather.

There are a variety of other sources that provide benchmarks for what volumes of 

biodiesel could be reasonably available in 2014 in excess of 1.28 bill gal. For instance, in the 

2013 standards final rule70, we assessed potential feedstocks for biodiesel production, concluding 

that excess soy oil and corn-oil could be used to produce an additional 200 mill gal of biodiesel 

in 2013 above the 1.28 bill gal requirement. For 2014 the additional biodiesel from these sources 

could be higher. According to USDA, domestic soybean production is expected to increase by 

13% in the 2013 soybean marketing year which extends through September 2014, in comparison 

 

66 EIA Annual Energy Outlook 2013, Table 11.

67 Very few engine models are warrantied by manufacturers to consume B20 have been sold in the U.S. As such, 

this volume of biodiesel was assumed to be negligible for purposes of this estimate.

68 See http://www.usda.gov/oce/commodity/wasde/index.htm (last accessed June 7, 2013); The WASDE report is 

a monthly report published by the U.S. Department of Agriculture (USDA) providing comprehensive forecast of 

supply and demand for major crops both for the US and globally. Throughout the growing season and afterwards, 

estimates are compared with new information on production and utilization, and historical revisions are made as 

necessary. It is widely considered to be the benchmark to which all other private and public agricultural forecasts 

are compared.

69 Compare Cf 77 FR 59458 at 59465 with the May 10, 2013 WASDE Report released on May 10, 2013, Table 518-

15. See http://www.usda.gov/oce/commodity/wasde/index.htm (last accessed June 7, 2013).

70 78 FR 49794, August 15, 2013.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 69 of 112

to the 2012 marketing year.71 If this occurs, then domestic production of soy oil could increase 

by about 240 mill gal. Regarding corn-oil, more than one third of the 320 mill gal total 

production was exported in 2012. These exports could be diverted to biodiesel production 

depending on relative prices and other factors. Taken together, the use of both additional soy oil 

production and the diversion of corn oil exported could bring the total biodiesel production 

volume to about 1.62 bill gal.

We continue to receive requests for approval of additional RIN-generating pathways for 

new feedstocks to expand the availability of feedstock types and for new production processes

to produce biodiesel.72 While the degree to which these new processes and feedstocks may be 

viable for the 2014 production year is uncertain, given their directional impacts on lowering cost 

and improving feedstock availability, we would expect that approval of such new pathways 

would add biodiesel production volume in 2014. For example, since the adoption of the final 

rule in March 2010, we have added canola and camelina oil as valid biodiesel feedstocks and 

analyzed the potential to produce up to 600 million gallons of biodiesel from these new 

feedstocks by 2022 through expanded crop production.73 These feedstocks were added in 

response to industry requests based on their intention to expand production of these feedstocks to 

support biodiesel production. Since canola and camelina are established crops that can be grown 

for biodiesel use today, some portion of these maximum volumes could be produced in 2014, 

adding to the volume of feedstock otherwise available for biodiesel production. 

We are aware of three other sources that provide potential benchmarks for biodiesel 

production volume in 2014. In 2011, IHS Global Insight estimated the potential for biodiesel 

production over the following decade.74 Under specified assumptions for crude oil price, crop 

yields, technology, and tax policies, this report concluded that it would be economically feasible 

to produce 1.54 bill gal biodiesel in the U.S. in calendar year 2014. This estimate assumed that 

the biodiesel tax credit would be extended beyond 2013, and did not examine a case in which the 

tax credit is not extended.

In their comments on the NPRM for the 2013 standards, the University of Illinois 

provided the results of an analysis of both production and consumption limitations for ethanol 

and biodiesel. They concluded that 1.7 bill gal of biodiesel could be available without 

overwhelming feedstock supplies, but provided little detail on the limits of feedstock supply. It 

also assumed the extension of the biodiesel tax credit. Darling International, Inc. also evaluated 

available feedstocks and concluded that 1.9 bill gal of biodiesel could be produced without 

diverting feedstocks from domestic food requirements. Their analysis, however, was silent with 

respect to whether it assumed the extension of the tax credit.

Finally, we note that there are also international sources of biodiesel that could be 

imported into the U.S. and which could be eligible to generate either D4 (biomass-based diesel) 

 

71 Pete Riley, "Grains and Oilseeds Outlook; 2013 Agricultural Outlook Forum," USDA/Farm Service Agency, 

February 22, 2013. 13% is assumed to apply only during the first 9 months of 2014.

72 For example, as of June 2013, EPA had 5 petitions for new biodiesel pathways under review and had approved 3 

additional petitions for new biodiesel pathways. 

73 See for example the final rules adding giant reed and napier grass feedstocks (74 FR 41703) and final rule adding 

camelina and energy cane as feedstocks and renewable gasoline and renewable gasoline pathways (74 FR 14190)

74 John R. Kruse, "Biodiesel Production Prospects for the Next Decade", March 11, 2011.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 70 of 112

or D6 (renewable fuel) RINs in 2014. While there is a significant volume of biodiesel that is 

produced around the globe, it is unclear how much could potentially be imported into the U.S. in 

2014 and accordingly we have not included these sources in our analysis of available supply.

Based on the discussion above, we have good reason to believe that the volume of 

biodiesel that can be produced in 2014 will be higher than the applicable volume requirement of 

1.28 bill gal. A summary of all of the sources we have considered is provided below.

Table IV.B.2.b-1

Projections of 2014 Biomass-Based Diesel Ordered from Lowest to Highest (million gallons)

Biomass-based diesel volume requirement 1,280

IHS Global Insight report 1,540

Extrapolated 2013 production 1,570

All registered biodiesel facilities that operated at least 20% of 

capacity in 2012 1,600

Additional soy oil production and diversion of exported corn 

oil to biodiesel production 1,620

University of Illinois estimate in their comments 1,700

Darling International, Inc. estimate in their comments 1,900

Production capacity of all registered biodiesel facilities that 

produced some biodiesel in 2012 2,400

As with E85, we believe that it would be most appropriate to project a range of possible 

biodiesel production volumes for 2014, using the values in Table IV.B.2.b-1 as a guide. As 

explained above, the volumes in the table above represent potential technical availability. We 

recognize that multiple factors would ultimately influence actual production volumes. For the 

purposes of this NPRM, we are estimating a range of 1.28 - 1.6 bill gal of biodiesel production 

for 2014. While it would not be below 1.28 bill gal, as that is the required volume, it could be 

above the high end of 1.6 bill gal. However we estimate that it would be unlikely to be above 

this value, especially if the federal tax credit is not extended beyond 2013. For instance, the 1.9 

bill gal estimate from Darling international, Inc. was based on extrapolating the historically high 

production rate from December 2011 into the future. The circumstances in December 2011 were 

unique: the tax credit for biodiesel was to expire at the end of that month, prompting a jump in 

production. Thus while it is possible that the production rate from December 2011 might be 

sustained in the future, we believe it is unlikely if the biodiesel tax credit is not extended past 

2013. Likewise the analysis provided by the University of Illinois which projected 1.7 bill gal 

biodiesel in 2014 assumed that the tax credit would be extended beyond 2013. A 2011 report 

prepared on behalf of the National Biodiesel Board indicated that the expiration of the tax credit 

at the end of 2010 caused a substantial reduction in biodiesel production in 2011 compared to 

2010.75

 

75 Urbanchuk, John, "Economic Impact of Removing the Biodiesel Tax Credit for 2010 and Implementation of 

RFS2 Targets Through 2015," Prepared by Cardno Entrix for the National Biodiesel Board, June 8, 2011 (revised).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 71 of 112

For the purposes of this NPRM, we have assumed that the biodiesel tax credit will not be 

extended beyond 2013. As a result, we believe that biodiesel production volumes in 2014 are 

more likely to be towards the lower end of our proposed range of 1.28 - 1.6 bill gal. To reflect 

this assumption, we have used a half-normal distribution to represent biomass-based diesel in the 

context of the Monte Carlo process described in Section IV.B.4 below. This distribution has a 

mean value of 1,405 mill gal for biodiesel. 

c. Non-Ethanol Advanced Biofuel

Non-ethanol advanced biofuel other than cellulosic biofuel and biomass-based diesel has 

a D code of 5, and could include biodiesel and renewable diesel that is co-processed with 

petroleum76, heating oil, biogas, jet fuel, naphtha, and LPG. In 2012, RINs were generated for 

only three of these fuel types, as summarized in the following table.

Table IV.B.2.c-1

Other Non-Ethanol Advanced Biofuel Produced in 2012

(million ethanol-equivalent gallons)

Heating oil 0.2

Biogas 2.9

Renewable diesel 20.5

Total 23.6

These volumes were produced domestically and there were no volumes of non-ethanol advanced 

biofuel imported into the U.S. in 2012. 

In order to estimate a range of possible volumes of other non-ethanol advanced biofuel 

for 2014, we examined the Production Outlook Reports that are required to be submitted by all 

registered renewable fuel producers under §80.1449.

Table IV.B.2.c-2

Projections from Production Outlook Reports for Other Non-Ethanol Advanced Biofuel 

Production in 2014 (million ethanol-equivalent gallons)

Biodiesel 0.2

Biogas 45.8

Naphtha 6.6

Renewable diesel 79.1

Total 131.7

Because biogas cannot be used in conventional gasoline or diesel vehicles, we investigated more 

closely whether the 45.8 mill gal shown in the above table was realistic for 2014. According to 

EPA's Landfill Methane Outreach Program, about 360 mill ethanol-equivalent gallons of biogas 

 

76 Biodiesel and renewable diesel that is co-processed with petroleum does not meet the requirements for biomass 

based diesel (D4 RIN), however it may qualify as an advanced biofuel (D5 RIN) 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 72 of 112

is currently being purified and injected into existing natural gas pipelines.77 Under §80.1426 this 

biogas can generate advanced biofuel RINs if it is demonstrated to have been used to fuel CNG 

vehicles and meets all other regulatory requirements. However, this amount of biogas is on the 

same order of magnitude as the total volume of CNG used in all CNG vehicles each year, which 

is about 420 mill ethanol-equivalent gallons78. While establishing contracts to ensure that all 

CNG vehicles are fueled with landfill biogas rather than fossil-based natural gas is highly 

unlikely to occur in the short term given the rapid expansion underway of CNG vehicles in the 

marketplace, we believe it is reasonable that some smaller portion of all CNG vehicles could be 

fueled with landfill biogas in 2014. Since the 45.8 mill ethanol-equivalent gallons of biogas 

from the Production Outlook Reports, shown in Table IV.B.2.c-2, represents about 11% of the 

annual CNG vehicle consumption, it is reasonable to expect that this volume could be used in 

2014 to fuel CNG vehicles and thus generate advanced biofuel RINs. We request comment, 

however, on whether this level of consumption can reasonably be achieved within the relevant 

time frame.

Therefore, based on the actual production in 2012 and the projected production for 2014, 

for this NPRM we have used a range of 24 - 132 mill gal to represent non-ethanol advanced 

biofuel with a D code of 5. While the actual volume could be above 132 mill gal, we believe this 

is unlikely as this volume is based on the projections made by the producers themselves in light 

of their assessment of their own capabilities and plans. Likewise, while the actual volume could 

be below 24 mill gal, we believe this is unlikely since the industry has demonstrated that it can 

produce at this level. For the final rule we will update this range based on more recent data on 

actual production in 2013 and more recent versions of the Production Outlook Reports.

d. Non-Ethanol Non-Advanced Renewable Fuel

To determine a range for the non-ethanol non-advanced renewable fuel volume, we used 

the same approach as for the non-ethanol advanced biofuel volume. That is, we used actual 2012 

production to represent the low end of the range and 2014 projections from Production Outlook 

Reports to represent the high end of the range. This approach resulted in a range of 1 - 25 mill 

gal, mostly representing production of biodiesel at facilities that have been grandfathered under 

§80.1403 and which may use feedstocks for which there is currently no valid RIN-generating 

pathway, such as sunflower or cottonseed oil. For the final rule we will update this range based 

on more recent data on actual production in 2013 and more recent versions of the Production 

Outlook Reports.

3. Treatment of Carryover RINs in 2014

In the final rule establishing the applicable standards for 2013, we estimated the volume 

of ethanol that would need to be consumed to meet the statutory volume requirements prior to 

 

77 Based on list of operational landfill gas (LFG) energy projects provided at http://www.epa.gov/lmop/projectscandidates/operational.html.

78 EIA's Short-Term Energy Outlook, Table 5a, released in September 2013. Projection of 0.093 bill cubic feet per 

day for 2014. Conversion factor is 0.96 thousand Btu per cubic foot.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 73 of 112

consideration of RINs carried over from 2012 in 2013.79 The total estimated volume of ethanol 

was 14.5 bill gal. If no ethanol blends higher than E10 were consumed in 2013, the total volume 

of E10 would be 131.1 bill gal (ignoring small amounts of E0) and the maximum volume of 

ethanol that could be consumed would thus be 13.1 bill gal. On the basis of these estimates, the 

volume of ethanol that is estimated to exceed the amount that could be consumed as E10 in 2013 

was 1.4 bill gal.

In addition to the option of using E85 and/or more non-ethanol renewable fuels, the 2013 

standards final rule also pointed to the substantial number of RINs carried over from 2012 into 

2013 that could be used in lieu of physical volumes. We determined that there would be about 

2.6 billion such carryover RINs available in 2013. If the 1.4 bill gal of ethanol that is in excess 

of that which can be consumed as E10 in 2013 is covered entirely by carryover RINs, then there 

would still be at least 1.2 billion RINs that could be carried over from 2013 and available for use 

in 2014. 

As described in the 2007 rulemaking establishing the RFS program80, carryover RINs are 

intended to provide flexibility in the face of a variety of circumstances that could limit the 

availability of RINs. More specifically, carryover RINs provide a mechanism for offsetting the 

negative effects of fluctuations in either supply of or demand for renewable fuels. The flexibility 

afforded by these carryover RINs was evidenced in the recent response of the market to the 

drought in 2012. The flexibility of these carryover RINs is also what we highlighted in the 2013 

standards final rulemaking as providing the opportunity for compliance despite potential 

constraints on physical ethanol consumption.

In the context of determining the appropriate volume requirements for 2014, as for 2013 

it would be appropriate to consider carryover RINs that may be available. However, we believe 

it is also important to the viability of the market that some reasonable amount of carryover RINs 

continue to be available. Carryover RINs act as a buffer, and allow the regulated parties to 

address unforeseen circumstances that could limit the availability of RINs, and to address 

renewable fuel supply circumstances that differ from those assumed in the process of generating 

the projected volume ranges discussed above. The provision for carryover RINs recognizes that 

Congress structured the RFS program to provide a degree of flexibility for the obligated parties. 

In 2013 preserving such a buffer was not a concern, since even if the 1.4 bill gal of ethanol that is 

estimated to be in excess of that which can be consumed as E10 in 2013 is covered entirely by 

carryover RINs, there would remain at least 1.2 billion additional, unused carryover RINs. For 

2014, however, if we accounted for all 1.2 billion carryover RINs in setting the applicable 

standards, obligated parties would be left with no flexibility for addressing other unforeseen 

circumstances. We believe that a standard-setting process that included an assumption that the 

carryover RIN balance would be reduced to zero would be contrary to the original intention of 

the provision for providing a degree of flexibility through carryover RINs. For this reason, we 

have not accounted for carryover RINs in our assessment of the reductions in the statutory 

volume requirements that would be appropriate in setting the RFS standards for 2014. For years 

after 2014, if circumstances differ substantially from those described here, we may again 

consider the existence of carryover RINs in the standard-setting process depending on the 

 

79 78 FR 49794, August 15, 2013.

80 72 FR 23900, May 1, 2007.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 74 of 112

number of carryover RINs expected to be available and projections of supply and consumption 

of renewable fuels. We request comment on whether and how to account for carryover RINs in 

setting the standards.

4. Proposed Range for the Volume Requirement for Total Renewable Fuel

As discussed in the preceding sections, we have estimated volume ranges for five 

different categories of renewable fuel as a step towards estimating the volume requirement for 

total renewable fuel for 2014. These ranges are summarized below.

Table IV.B.4-1

Volume Ranges for Estimating Total Renewable Fuel Volume for 2014 

(million ethanol-equivalent gallons)

Ethanol that can be consumed 12,954 - 13,087

Available volumes of non-ethanol cellulosic biofuel 0 - 9

Available volumes of biomass-based diesel 1,920 - 2,400a

Available volumes of non-ethanol advanced biofuel 24 - 132

Available volumes of non-ethanol non-advanced renewable fuel 1 - 25

a Represents a physical volume range of 1.28 - 1.6 bill gal

By aggregating these five categories, we can estimate the total volume of renewable fuel that 

represents both the volume of ethanol that could reasonably be consumed as E10 and higher 

ethanol blends, and the volume of all non-ethanol renewable fuels that could reasonably be 

available to meet the four applicable standards. We note that in practice these five categories are 

not independent from one another, since different types of renewable fuel will differ in terms of 

their cost and higher volumes of one type of renewable fuel will reduce the need for volumes 

from another category in the context of meeting the applicable volume requirements. However, 

since the ranges shown above are intended to encompass reasonably achievable volumes for each 

type of renewable fuel, we believe that they can be treated as independent for the purposes of the 

aggregation described below. 

In order to aggregate the ranges in Table IV.B.4-1 into a single range for total renewable 

fuel, we used a Monte Carlo analysis to account for the need to aggregate multiple ranges, each 

having different likely distributions of likelihood across their range. As discussed in the 

preceding sections, the high and the low end of each range represents values such that it is 

possible but unlikely that volumes would be outside of those ranges. We have therefore treated 

these individual ranges as representing the 90% confidence interval of a distribution of possible 

volumes. In other words, the low end of the range would represent the 5th percentile and the 

high end of the range would represent the 95th percentile. This approach is consistent with our 

judgment that, while the ranges shown in Table IV.B.4-1 are intended to encompass the vast 

majority of possible volumes, there remains a small possibility that volumes outside of those 

ranges are possible. We believe it is reasonable to treat these ranges as representing 90% 

confidence intervals for purposes of the Monte Carlo analysis, though we request comment on 

treating them as a different confidence interval such as 80% or 95%.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 75 of 112

As an alternative to a Monte Carlo process for aggregating the volumes in Table IV.B.4-

1, we could use a simple summation of the ranges (i.e. basing the low end of the range of total 

renewable fuel on the sum of the low ends of the ranges for each of the five different categories, 

and likewise for the high end of the range). However, we do not believe that such an approach 

would be appropriate. Doing so would tend to exaggerate the width of the range for the required 

volume of total renewable fuel as it is highly unlikely that 2014 volumes for each of these 

categories will simultaneously be at the extreme low or high end of the proposed ranges, and 

would also mischaracterize biofuel categories wherein one end of the range is expected to be 

more likely than the other. Nevertheless, we request comment on this or alternative methods to 

the Monte Carlo approach for aggregating the volumes shown in Table IV.B.4-1.

For the purposes of the Monte Carlo analysis, we are also proposing an appropriate shape 

to represent the applicable distribution of volumes within each range. The shape of the 

distribution of volumes is based on factors unique to each source of renewable fuel. We 

identified three standardized distributions that we can use to reasonably represent uncertainty in 

the distribution of volumes for each of the sources of renewable fuel under consideration.

Figure IV.B.4-1

Standardized Distributions Used to Aggregate Rangesa

a The skewed distribution is based on a Weibull distribution with a shape 

parameter of 0.5 and a scale parameter of 1.7.

These three standardized distributions provide a mechanism for representing the regions within 

each projected volume range where the greatest likelihood of reasonably achievable volumes 

may lie, based on considerations of the various sources of uncertainty unique to each source of 

renewable fuel. We recognize that the half-normal distribution would by definition include a 

mode of zero, and that this would imply that the greatest likelihood of occurrence is at the low 

end of the range. For sources of renewable fuel wherein the low end of the range is estimated to 

be zero, for instance for some cellulosic biofuel facilities as discussed in Section II.C, the use of 

the half-normal would appear to suggest that zero is the most likely result. However, in the 

Likelihood of occurence

Volume of renewable fuel

Skewed

Normal

Half-normal
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 76 of 112

context of the Monte Carlo process for combining volume ranges from different sources, we are 

proposing to use the mean rather than the mode as described more fully below. Nevertheless, 

other distributions might be reasonable to address concerns about the mode in the half-normal 

distribution. For instance, a gamma distribution could be used, or a Weibull distribution with 

greater skewness than that shown in the figure above. We request comment on the use of these 

alternative distributions.

In the case of biomass-based diesel, we are proposing that the applicable volume 

requirement for 2014 would be 1.28 bill gal. Since this volume would be required, there is no 

realistic likelihood that the actual volume will be below 1.28 bill gal. While production volumes 

of biomass-based diesel in 2013 are expected to substantially exceed the required volume of 1.28 

bill gal, this is likely driven in large part by the tax credit for biodiesel, currently scheduled to 

expire at the end of the year, on the price of D6 RINs which have increased since the beginning 

of 2013, and potentially other factors as well. Without the tax credit in place, demand for 

biodiesel substantially beyond the required volume is uncertain. Under the assumption that the 

biodiesel tax credit will not be extended beyond 2013, we believe that any additional incremental 

volumes above 1.28 bill gal would be progressively less likely than the required volume. This 

suggests that a half-normal distribution would be the most appropriate way to represent volumes 

of biomass-based diesel. With regard to non-ethanol cellulosic biofuel, we developed a 

distribution that was based on an aggregation of projected volume ranges for each cellulosic 

biofuel facility. See Section II.C for more discussion. For the total volume of ethanol that could 

reasonably be consumed, we chose a half-normal distribution representing ethanol in E10 and 

E85 because there is little historical information on how market prices for E85 might respond to 

higher RIN prices, nor on how FFV owners might respond to changes in the relative price of E85 

and E10. In the future it may be more appropriate to use a skewed or normal distribution for the 

total volume of ethanol to reflect a growing understanding of the impact that RIN prices have on 

the retail price of E85 and the impact that E85 prices have on consumer choice. For volumes of 

non-ethanol advanced biofuel and non-ethanol non-advanced renewable fuel, we chose normal 

distributions because we believe there is an equal likelihood that the volumes that could be made 

available would be on either the low end of the respective ranges or the high end of the 

respective ranges. We do not believe that actual historical volumes, which form the basis for the 

low end of the range in both cases, should also be used as justification for using skewed 

distributions. The distributions that we used for each of the five categories of renewable fuel are 

shown below.

Table IV.B.4-2

Standard Distribution Assumptions Used in Estimating Total Renewable Fuel Volume for 2014

Ethanol that could reasonably be consumed Half-normal

Available volumes of non-ethanol cellulosic biofuel Combineda

Available volumes of biomass-based diesel Half-normal

Available volumes of non-ethanol advanced biofuel Normal

Available volumes of non-ethanol non-advanced renewable fuel Normal

a As described in Section II.C, this distribution is a combination of the distributions for all 

facilities projected to produce non-ethanol cellulosic biofuel using the same Monte Carlo process.

Based on the estimated ranges and distributions, we used a Monte Carlo process to 

aggregate the five distributions into a single distribution representing total renewable fuel. The 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 77 of 112

Monte Carlo process randomly samples each of the five distributions in an iterative fashion. The 

results of all the iterations were then summed to produce a distribution for total renewable fuel. 

The figure below shows the resulting distribution after 3000 iterations. Details of the Monte 

Carlo process are provided in a memo to the docket.81

 

81 David Korotney, "Application of Monte Carlo process to the determination of proposed volume requirements for 

2014 standards NPRM," memorandum to EPA Air Docket EPA-HQ-OAR-2013-0479
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 78 of 112

Figure IV.B.4-2

Results of Monte Carlo Simulation for Total Renewable Fuel

We recognize that the Monte Carlo process is an approximation to the mathematical formula that 

would result if the probability density functions for each of the distributions shown in Figure 

IV.B.4-1 were combined mathematically using convolution. However, we believe that the 

additional complexity of such a process is not warranted given the uncertainty inherent in the 

volumes ranges and the assigned distributions. The Monte Carlo process for combining 

distributions provides a reasonably accurate result with a considerably simpler process. 

Based on this approach to aggregating the five ranges shown in Table IV.B.4-1, the 

volume of total renewable fuel that we are proposing for 2014 would fall within the range of 

15.00 - 15.52 bill gal.82 Given that the applicable volume in the statute is 18.15 bill gal, this 

range represents a reduction of 2.63 - 3.15 bill gal. Within the uncertainties discussed above for 

each of the components, a range of 15.00 - 15.52 bill gal represents a volume of renewable fuel 

that reasonably accounts for both limitations in the volume of ethanol that can be supplied and 

consumed as well as limitations in the availability of non-ethanol renewable fuels. 

 

82

 The numbers are expressed as two significant digits to reflect that the applicable volumes in the statute are 

expressed this way. 

5th percentile = 14,995

95th percentile = 15,515

0%

5%

10%

15%

20%

25% 14,887 14,961 15,035 15,109 15,184 15,258 15,332 15,406 15,480 15,555 15,629 15,703 15,777 15,851 15,926 16,000 16,074 16,148 16,222 16,297 Percent of observations

Million gallons
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 79 of 112

The distribution generated by the Monte Carlo process also provides a basis for 

determining a specific value within the range. We do not believe that using either the low end or 

high end of the proposed range would be appropriate as the basis for the applicable standard. 

While we believe that the upper end of the projected range is achievable, basing the total 

renewable fuel volume on this higher value could present an increased risk to obligated parties if, 

for example, uncertainties in projected gasoline and diesel consumption for 2014 lead to a 

requirement for more renewable fuel than is available or can be consumed. A value between the 

low and high ends, in contrast, would better account for cases in which the actual values for 

some of the input volumes fall at the high end of their respective ranges while the actual value of 

other input volumes fall at the low end of their ranges. Options for a value falling between the 

low and high ends of the range include the mean, the mode (highest frequency value) and the 

median (50th percentile). It may also be reasonable to use a value representing higher or lower 

values in the distribution, such as the 25th or 75th percentile. The table below shows the values 

for each of these approaches that correspond to the distribution in Figure IV.B.4-2.

Table IV.B.4-3

Potential Approaches to Determining the 

Total Renewable Fuel Volume Requirement

(million ethanol-equivalent gallons)

Mean 15,207

Mode 15,059

25th percentile 15,084

50th percentile 15,183

75th percentile 15,297

In today's NPRM, we are proposing to use the mean value for the volume requirement for total 

renewable fuel, which represents our best estimate of the average amount of renewable fuel 

volumes that could reasonably be supplied. However, we request comment on whether it would 

be more appropriate to utilize either the mode or median (50th percentile), or some other value in 

the appropriate range shown in Table IV.B.4-3 that best reflects renewable fuel volumes that 

could reasonably be supplied under this program.

As discussed throughout this section, there is considerable uncertainty in the estimates of 

some of the various components from which the required volume for total renewable fuel has 

been derived. There are many factors affecting supply, and they could lead to greater or lesser 

supply of renewable fuels than projected, such as higher or lower volumes of non-ethanol 

renewable fuel or advanced biofuels, higher or lower volumes of E85, the degree to which E0 is 

used, if any, and so on. Obligated parties also have significant flexibility to address compliance 

through a number of various approaches, such as the ability to use carryover RINs generated in 

2013, or to carry a compliance deficit into 2015. Our proposed approach for dealing with this 

uncertainty has been to develop ranges for the various components and utilize the Monte Carlo 

process for aggregating the components into a single range and mean value. These estimates will 

be refined for the final rule based on more up-to-date information and any new information 

received through the public comment process. We have used this approach to develop the best 

available volume projections using current information.

 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 80 of 112

 We understand that values lower or higher than the mean also could be used. For 

example, some parties may believe that a value lower than the mean should be used to provide 

greater confidence in the adequacy of supply, and avoid the risks associated with a volume 

reduction that is not sufficient to address the supply problems. From the perspective of 

production and use of renewable biofuels, in contrast, a higher value than the mean would avoid 

the risks associated with a volume reduction that is more than what is necessary to address the 

supply problems. As noted, our current view is that the best approach for resolving this 

uncertainty is to neither underestimate nor overestimate the market’s capacity to supply and 

consume renewable fuels. We request comment on our proposed approach and alternate 

approaches described here. 

C. Determination of Reductions in Advanced Biofuel

The second step in our proposed framework for setting the applicable volume standards 

would be to determine an appropriate reduction in advanced biofuel that accounts for the 

availability of advanced biofuels in light of the significant shortfall in cellulosic biofuel 

compared to the statutory volume, as well as the contribution of ethanol in this category to the 

supply concerns related to total renewable fuel. The proposed volume of advanced biofuel 

should also support the goals of the RFS program for continued growth in the advanced biofuel 

category as reflected in the increasing gap between the cellulosic biofuel and advanced biofuel 

volumes set by EISA. 

1. Available Volumes of Advanced Biofuel in 2014

Using a process similar to that for total renewable fuel in Section IV.B above, we 

determined the maximum volume of advanced biofuel that can reasonably be available in 2014. 

This volume defines the upper limit for any potential volume requirement we would set for 

advanced biofuels under the overall approach we are proposing. As described more fully in 

Section IV.A above, availability is one important factor to consider it determining the 

appropriate volume of advanced biofuel to require. However, as discussed in Section IV.C.2 

below, for 2014 additional considerations lead us to propose to set the advanced biofuel volume 

requirement at a level below the total available volume.

In this section we describe the estimation of reasonable ranges for four separate 

categories of advanced biofuel, including:

• Cellulosic biofuel

• Biomass-based diesel

• Domestic Production of Other Advanced Biofuel

• Imported Sugarcane Ethanol

a. Cellulosic biofuel
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 81 of 112

As discussed in Section II above, the production of cellulosic biofuel in 2014 is projected 

to be between 8 and 30 million ethanol-equivalent gallons. This range can be separated into 

ethanol and non-ethanol components as shown below.

Table IV.C.1.a-1

Projected Volumes of Cellulosic Biofuel for 2014

(million ethanol-equivalent gallons)

Ethanol 5 - 25

Non-ethanol 0 - 9

Total 8 - 30

The projected volume could be significantly greater if pathways for the generation of cellulosic 

biofuel RINs from landfill biogas and corn kernel fiber are approved and additional volumes of 

cellulosic heating oil are produced. For more details on the potential production of non-ethanol 

cellulosic biofuels in 2014, and the companies expected to produce these fuels, see Section II. 

b. Biomass-Based Diesel

The range of biomass-based diesel that we used in estimating the availability of advanced 

biofuel is the same as the range that we used in determining the proposed volume of total 

renewable fuel. Table IV.B.2.b-1 lists the sources that we used to conclude that there could be 

1.28 - 1.6 bill gal of biodiesel production in 2014. 

c. Domestic Production of Other Advanced Biofuel

In Section IV.B.2.c above we used 2012 production data and Production Outlook Reports 

to develop a range of 24 - 132 mill gal representing non-ethanol advanced biofuel with a D code 

of 5. These same sources were used to develop a range of ethanol advanced biofuel with a D 

code of 5.

In 2012, 28 mill gal of ethanol advanced biofuel (other than cellulosic ethanol) was 

produced in the U.S. Based on Production Outlook Reports, we project that domestic production

of such biofuel using some combination of sugarcane, grain sorghum, and separated food wastes 

could be as high as 142 mill gal. Based on these sources, for this NPRM we have used a range 

of 28 - 142 mill gal to represent domestic production of ethanol advanced biofuel with a D code 

of 5.

d. Imported Sugarcane Ethanol

Sugarcane ethanol qualifies as advanced biofuel, and historically the U.S. has imported 

substantial volumes of it. Imports from the last ten years are shown below. While ethanol 

imported into the US is not produced exclusively from sugarcane, it has historically been the 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 82 of 112

primary feedstock for ethanol imported into the U.S. and is expected to continue to be the 

primary feedstock of ethanol imported into the U.S. in future years. While the generation of 

advanced biofuel RINs from sugarcane ethanol is not limited to ethanol imported from Brazil, 

historically Brazil has been the source of the majority of ethanol imported into the United States. 

As such, this section focuses on the availability of sugarcane ethanol imported from Brazil.

Figure IV.C.1.d-1

Historical Imports of Ethanol into the U.S.

Source: EIA, "U.S. Imports by Country of Origin." 

As some stakeholders have noted before, imported volumes of ethanol have been highly variable. 

As a commodity traded on the world market, the market clearing price and quantity of Brazilian 

ethanol sold into the U.S. market fluctuates over time. Significant factors that can affect the price 

and quantity of ethanol imported into the U.S. include:

• Sugarcane harvest (both acres planted and yield)

• Worldwide market for sugar

• Worldwide demand for sugarcane ethanol

• Brazilian demand for ethanol, including the minimum ethanol content of gasoline as 

specified by the Brazilian government

• Potential for exporting corn-ethanol from the U.S. to Brazil

• Opportunities for sale of sugarcane ethanol in the U.S. which is a function of the RIN 

price for advanced biofuel, legal and practical constraints on the volume of ethanol 

that can be consumed, state Low Carbon Fuel Standards (LCFS) program demand, 

and the availability and price of competing advanced biofuels such as biodiesel

• Import and export tariffs

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Imported ethanol (mill gal)

From other countries

From Brazil and CBI

Average imports from 

Brazil is 223 mill gal
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 83 of 112

Production of sugarcane in Brazil in recent years has been lower than normally expected 

due to two factors. First, adverse weather conditions reduced production.83 For example, 

adverse weather conditions are estimated to have reduced cane production by about 4% in the 

2011/2012 marketing year.84 Thus, a return to more typical weather conditions, such as occurred 

in the 2012/2013 agricultural marketing year, in the timeframe that this rulemaking considers 

would by itself restore approximately 4% of production. Second, the general global economic 

downturn in recent years made obtaining credit more difficult in the Brazilian sugar cane 

industry, resulting in delayed replanting of existing fields. Normally sugarcane fields are 

replanted every five or six years to maximize yield. However, the lack of available credit caused 

some growers to delay the expense of this replanting, resulting in older fields losing 

production.85 It appears that credit conditions have eased and that more direct investment in 

sugar cane production and milling in Brazil is occurring. 

Some parties expected a more typical trend in sugarcane ethanol production for the 

2012/2013 through the 2014/2015 harvest years, with replanted fields boosting sugarcane 

production in existing plantations and, in response to increased worldwide demand, a growth in 

the acres planted with sugarcane. Increased production is supported by the Brazilian government 

which announced in February 2012 support for a plan to invest over $8 billion annually to boost 

cane and ethanol production.86 Private investment in Brazil may also be increasing. For 

example, Usina de Acucar Santa Terezinha, a Brazilian ethanol producer, last year announced 

plans to invest almost $300 million in a new mill and sugarcane plantation.87 Such information 

suggests that sugarcane and ethanol production in the 2013/14 and 2014/15 harvest years could 

be higher than production in 2011 and 2012.

Brazil’s sugarcane ethanol production serves both its domestic market as well as the 

export market. The government of Brazil sets a minimum ethanol concentration for its gasoline. 

In 2011, the Brazilian government lowered this concentration to 20%, reflecting in part the 

decrease in domestic ethanol production. However, given the more optimistic production 

outlook, Brazil raised the minimum ethanol concentration to 25% effective May 1, 2013.88 The 

25% concentration rate is the highest allowed by law in Brazil. The ability of the Brazilian 

government to reset the minimum ethanol content introduces some uncertainty in projecting 

future Brazilian demand. However, historically, adjustments have been infrequent, relatively 

small in degree (a few percent), and largely influenced by the price of ethanol (high prices 

leading to a reduction in the minimum). Indeed, as evidenced by the reduction to a 20% 

 

83 Gain Report BR110016, October 3, 2011, USDA Agricultural Service. See 

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Sugar%20Semiannual_Sao%20Paulo%20ATO_Brazil_10-3-2011.pdf 

84 The sugar marketing year in Brazil’s center-south sugar-producing region, where the large majority of production 

occurs, runs from May through April.

85 On the margin, the high sugar prices may have also encouraged some growers to divert their crop from ethanol 

production to sugar production. But most cane growers do not have this flexibility with sugarcane mills designed 

for fixed amounts of refined sugar or ethanol so high sugar prices was likely a contributing factor but not a major 

cause of reduced sugarcane ethanol production in Brazil.

86 See http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8987702

87 See http://www.bloomberg.com/news/2012-03-08/santa-terezinha-invests-283-million-in-brazil-ethanolprojects.html

88 Platts, "Brazil to raise ethanol mix in gasoline to 25% from 20% May 1," 

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8194390
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 84 of 112

blending rate in 2011, the Brazilian government considers the likely supply of sugarcane ethanol 

to support its domestic needs in setting the minimum ethanol content of its blended fuel.

The Iowa State/CARD model projects that Brazil will produce roughly 8.7 bill gal of 

ethanol in 2014. Non-fuel use and Brazilian ethanol exports to countries other than the U.S. is 

estimated to be around 500 million gallons, which leaves roughly 8.2 bill gal for Brazilian 

consumption and for exports to the U.S. If the minimum blending rate for ethanol in motor 

vehicles in Brazil is set at 25% (the current rate), Iowa State estimates that Brazil will consume 

roughly 5.9 bill gal of ethanol. At a 20% minimum blend rate, ethanol demand in Brazil would 

be roughly 5.2 bill gal. Therefore, even with the 25% minimum blending requirement for 

ethanol in vehicles, Brazil should have up to 2.8 bill gal available for a wide variety of domestic 

uses as well as the potential to export ethanol to the U.S.89 Thus, assuming that the 25% 

blending rate remains in effect through 2014 (including both the 2013/14 sugarcane season 

which ends in May 2014 and the subsequent 2014/15 sugarcane season), the analyses referenced 

below suggest that more than enough ethanol should be available assuming normal weather 

patterns to support both the Brazilian domestic demand as well as export to the U.S. in 2014.

The historical volumes of sugarcane ethanol imports into the U.S. from Brazil are 

indicative of Brazilian production and export capacity, and thus provide several benchmarks for 

the volume that could potentially be imported into the U.S. in 2014. For instance, the average 

import volume over the last ten years is 223 mill gal, while the maximum volume was 560 mill 

gal in 2006. In 2010 Brazil had its largest ethanol production volume in recent history, and in 

that same year it exported 490 mill gal to the U.S. Finally, the largest total export volume from 

Brazil to all other countries was 1.35 bill gal in 2008.

There are several other sources providing estimates of what import volumes of Brazilian 

sugarcane ethanol may be possible in 2014. In an addendum to its Annual Energy Outlook 2013, 

EIA included an estimate of sugarcane ethanol imports of 719 mill gal for 2014.90 In their 

comments on the 2013 standards NPRM, the Brazilian Ministry of Mines and Energy indicated 

that Brazil could achieve exports of 800 mill gal to the U.S. in 2014. A recent report from Iowa 

State University indicated that total ethanol imports could be 310 - 820 mill gal in 2014, 

depending on whether the biodiesel tax credit remains in effect.91 

The Food and Agricultural Policy Research Institute (FAPRI) publishes several different 

documents that also provide some benchmarks. The 2012 World Agricultural Outlook projected 

that total net exports of ethanol from Brazil could be 1,259 mill gal in 2014,92 while their Biofuel 

Baseline projects that total ethanol imports into the U.S. could reach 496 mill gal in 2014.93 

 

89 Personal Communication with Dr. Bruce Babcock, Iowa State, June 27, 2013 

90 "AEO2013 - Addendum on Ethanol Trade Balance.pdf" document submitted to docket EPA-HQ-OAR-2013-

0479.

91 Bruce A. Babcock et al, "Biofuel Taxes, Subsidies, and Mandates: Impacts on US and Brazilian Markets," Staff 

Report 13-SR 108, May 22, 2013.

92 FAPRI-ISU 2012 World Agricultural Outlook, "Ethanol Trade"

93 FAPRI-MU Biofuel Baseline, March 2013. FAPRI-MU Report #02-13. Values for the 2013/2014 agricultural 

year were averaged with those from the 2014/2015 agricultural year assuming that the year begins in September and 

ends in August.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 85 of 112

Based on the discussion above, we have compiled a list of benchmarks that we believe 

can be used to estimate a range of import volumes for Brazilian sugarcane ethanol.

Table IV.C.1.d-1

Projections of 2014 Imported Sugarcane Ethanol Ordered from Lowest to Highest 

(million gallons)

Average import volumes from 2003 - 2012 223

ISU Staff Report - biodiesel tax credit in place 310

Ethanol exported from Brazil to the U.S. when ethanol 

production was at its historical maximum (2010) 490

FAPRI Biofuel Baseline 496

Production Outlook Reports 510

Historical maximum ethanol imported into the U.S. from 

Brazil (2006) 560

AEO2013 719

Projection from Brazilian Ministry of Mines and Energy 800

ISU Staff Report - biodiesel tax credit not in place 820

FAPRI 2012 World Agricultural Outlook - total Brazilian 

exports in 2014 1,259

Historical maximum ethanol exported from Brazil (2008) 1,350

For the purposes of this NPRM, we estimate, based on a review of the benchmarks shown 

in the table above, that a range of 300 - 800 mill gal of Brazilian sugarcane ethanol could be 

available for import to the U.S. in 2014. We do not believe that it would be appropriate to use 

either the highest or lowest values in the table since they are unlikely to reasonably represent the 

market circumstances in 2014.

While the volumes of sugarcane ethanol imported into the U.S. in 2012 were about 500 

mill gal, and in 2013 could reach a similar level, we believe it is reasonable to use 300 mill gal as 

the low end of the range for 2014. There has been significant variability in sugarcane ethanol 

imports in the past, so volumes below 500 mill gal are possible depending on market factors and 

relevant public policies in both countries. While volumes above 800 mill gal are possible, we 

believe that they are unlikely given that the Brazilian agency responsible for projections of 

exports indicated that 800 mill gal would be achievable in 2014, and 800 mill gal would be a 

substantially higher import volume of Brazilian sugarcane ethanol than in any previous year. 

We have used a projected range of 300 - 800 mill gal for imported sugarcane ethanol in 

our estimate of the total volume of advanced biofuel that could be available in 2014. However, 

as described in Section IV.C.2 below, we are not proposing to use only availability in the 

determination of the applicable volume requirement for advanced biofuel. Thus the proposed 

volume requirement for advanced biofuel would not require the use of 300 - 800 mill gal of 

sugarcane ethanol, and the actual volume of sugarcane ethanol that is imported will be highly 

dependent upon competition in the U.S. market with other advanced biofuels that could be 

available.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 86 of 112

e. Summary

As discussed in the preceding sections, we have estimated volume ranges for six different 

categories of advanced biofuel as a step towards estimating the availability of advanced biofuel 

for 2014. We also identified which of the three standardized curves shown in Figure IV.B.4-1 

would be most appropriate for each category. A discussion of the standardized distributions for 

cellulosic biofuel, biomass-based diesel, and domestic non-ethanol advanced biofuel are 

provided in Section IV.B.4 above. For volumes of ethanol advanced biofuel, we chose a normal 

distribution because we believe there is an equal likelihood that the volumes that could be made 

available would be on either the low end of the range or the high end of the range. A normal 

distribution for ethanol advanced biofuel is also consistent with our approach to non-ethanol 

advanced biofuel, as both ranges were developed from the same sources. For volumes of 

imported sugarcane ethanol, the most recent historical data on actual imports suggests that the 

middle of the range 300 - 800 mill gal is likely, and this suggests that a normal distribution is 

more reasonable than a skewed distribution. The advanced biofuel ranges and the assumed 

standardized distributions are summarized below.

Table IV.C.1.e-1

Volume Ranges for Estimating Advanced Biofuel Availability for 2014 

(million ethanol-equivalent gallons)

Available volumes of non-ethanol cellulosic 

biofuel 0 - 9 Skewed

Available volumes of ethanol cellulosic 

biofuel 5 - 25 Combinationa

Available volumes of biomass-based diesel 1,920 - 2,400b Half-normal

Available volumes of domestic non-ethanol 

advanced biofuel 24 - 132 Normal

Available volumes of domestic ethanol 

advanced biofuel 28 - 142 Normal

Available volumes of imported sugarcane 

ethanol 300 - 800 Normal

a As described in Section II.C, this distribution is a combination of the distributions for all 

facilities projected to produce non-ethanol cellulosic biofuel.

b Represents a physical volume range of 1.28 - 1.6 bill gal

As for the total renewable fuel volume, the high and the low end of each range represents 

values such that it is possible but unlikely that volumes would be higher or lower than this range. 

EPA therefore treated each individual range in Table IV.C.1.e-1 as representing the 90% 

confidence interval of the applicable standardized distribution. We then used a Monte Carlo 

process in which each of the six distributions were randomly sampled in an iterative fashion. 

The results of all the iterations were then summed to produce a distribution for advanced. The 

figure below shows the resulting distribution after 3000 iterations.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 87 of 112

Figure IV.C.1.e-1

Results of Monte Carlo Simulation for Advanced Biofuel Availability

Based on this approach to aggregating the six ranges shown in Table IV.C.1.e-1, we 

believe that available volumes of advanced biofuel are likely to fall within the range of 2.49 -

3.23 bill gal. Given that the volume requirement in the statute is 3.75 bill gal, this range of 

availability represents a reduction of 0.52 - 1.26 bill gal. 

2. Options for Determining Appropriate Reductions in Advanced Biofuel

While projected availability defines the upper limit of the volume requirement we would 

set for advanced biofuel, we have also considered two other factors: the contribution of ethanol 

in the advanced category to the supply concerns discussed above with respect to total renewable 

fuel, and the RFS program's goal of growth in the advanced biofuel category. Below we discuss 

three approaches that could be taken to determine an appropriate volume of advanced biofuel for 

2014. We believe that Option 3 best addresses the dual concerns of constraints on ethanol 

supply and consumption and limited availability of advanced biofuels while also effectuating 

Congress’s intention that the volume requirement for advanced biofuel continues to grow.

a. Option 1: Advanced Biofuel Availability

The RFS volume requirements that Congress established in CAA 211(o)(2)(B) increase 

steadily between 2009 and 2022. Over this period, the amount of total renewable fuel which is 

not advanced biofuel (largely corn starch based ethanol) was intended by Congress to grow 

slowly up to 15.0 bill gal in 2015, and then stay at that level for subsequent years. Cellulosic 

biofuel was intended to grow very dramatically, from 0.5 bill gal in 2012 to 16.0 bill gal in 2022. 

Non-cellulosic advanced biofuel was expected to grow steadily every year, increasing from 1.5 

bill gal in 2012 to 5.0 bill gal in 2022. This anticipated growth of the advanced biofuel category 

5th percentile = 2,493

95th percentile = 3,225

0%

2%

4%

6%

8%

10%

12%

14%

16%

18% 2,116 2,206 2,296 2,387 2,477 2,567 2,658 2,748 2,838 2,929 3,019 3,109 3,199 3,290 3,380 3,470 3,561 3,651 3,741 3,832 Percent of observations

Million gallons
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 88 of 112

is also evident from its increasing role as a component of the applicable volume of total 

renewable fuel, growing from 5.4% in 2009, to 20.7% in 2014, and 61.1% in 2022. Advanced 

biofuel must meet a GHG reduction threshold of 50%, compared to a 20% threshold for nonadvanced renewable fuel.94

 Thus, increased substitution of advanced biofuels for fossil fuels 

would result in lower lifecycle GHG emissions from transportation fuels.

 

In previous rulemakings where we considered reductions in the applicable annual volume 

of advanced biofuel following a reduction in the statutory volume for cellulosic biofuel, we 

focused on the availability of advanced biofuel (and in some cases available carryover RINs) 

when making determinations as to whether a reduction in advanced biofuel volumes was 

warranted. Using availability to set the applicable volume of advanced biofuel for 2014 and 

beyond would be consistent with past practice, and would reflect placing sole emphasis on its 

availability and the growth in advanced biofuels that results. However, the approach we used in 

previous annual rulemakings was based on the circumstances in previous years. In particular, 

supply concerns related to the legal constraints on the amount of ethanol that can be blended into 

gasoline and practical constraints on the volume of ethanol that can be consumed were not a 

limiting factor in previous years and so were not discussed as a potential basis for determining 

volumes. As discussed in Section IV.B.1 above, constraints on ethanol consumption are a 

limiting factor in 2014. 

Moreover, using availability as the sole basis for determining advanced biofuel volumes 

would ignore the impact that ethanol within the advanced biofuel category have on the supply 

concerns related to constraints on ethanol consumption in blends higher than E10. While the 

available volume of advanced biofuel would be predominantly non-ethanol, a substantial volume 

would be ethanol.

95

 For an advanced biofuel availability of 2.49 - 3.23 bill gal (see Figure 

IV.C.1.e-1), the fraction that is ethanol ranges from an average of about 18% at the low end of 

the range to an average of about 25% at the high end of the range. Since any advanced biofuel 

that is ethanol contributes to the concerns related to total ethanol consumption, it is appropriate 

to consider reductions in the required volume of advanced biofuel beyond the 0.52 - 1.26 bill gal 

reduction needed to ensure that the volume required is available. 

For these reasons, we invite comment on the Option 1 approach but are not proposing it.

b. Option 2: Full Reduction in Cellulosic Biofuel

Under the cellulosic waiver authority we have the discretion to reduce advanced biofuel 

by up to the same amount that we reduce cellulosic biofuel. Thus, a second option would be to 

reduce the advanced biofuel volume by the same amount that we reduce the cellulosic biofuel 

volume. Our proposed cellulosic biofuel volume requirement of 8 - 30 mill gal for 2014 

corresponds to a reduction of 1,720 - 1,742 mill gal in comparison to the statutory volume of 

1,750 mill gal. This is approximately twice the size of the reduction in advanced biofuel that 

 

94 Renewable fuels grandfathered under the provisions of §80.1403 are not required to meet any GHG threshold.

95 While production volumes of ethanol that can qualify as an advanced biofuel, both domestically and 

internationally are significant, consumption of this fuel will be constrained
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 89 of 112

would result from accounting for availability alone, as in Option 1, and would result in an 

advanced biofuel volume requirement of 2,008 - 2,030 mill gal. 

A reduction of 1,720 - 1,742 mill gal in the advanced biofuel requirement would allow 

for overall growth in non-cellulosic advanced biofuel, consistent with overall levels of noncellulosic advanced biofuels that Congress specified for 2014 in 211(o)(2)(B). The table below 

shows that this approach would ensure that the required volume of non-cellulosic advanced 

biofuel - comprised of biomass-based diesel and other advanced biofuel - that would be needed 

to meet the requirements would remain at 2.0 bill gal, the same volume that would have been 

needed to meet the statutory level of 3.75 bill gal of advanced biofuel if 1.75 bill gal of cellulosic 

biofuel were available.96

Table IV.C.2.b-1

Impact on Other Advanced Biofuel of Reducing the Advanced Biofuel Requirement by an 

Amount Equal to the Reduction in Cellulosic Biofuel (million ethanol-equivalent gallons)

Required volumes without a 

reduction in cellulosic biofuel 

or advanced biofuel

Required volumes with a 

reduction in advanced biofuel 

equal to reduction in cellulosic

Cellulosic biofuel 1,750 17

Biomass-based diesela1,920 1,920

Other advanced biofuelb80 80

Total advanced biofuel 3,750 2,017

a

 Represents a physical volume of 1.28 bill gal biodiesel.

b

 Can include biomass-based diesel with a D code of 4 that is in excess of that required to meet the biomass-based 

diesel requirement of 1.28 bill gal, as well as any other forms of advanced biofuel with a D code of 5 such as 

renewable diesel, heating oil, biogas, and imported sugarcane ethanol. 

This approach to setting the advanced biofuel volume requirement would minimize the 

impact of the advanced biofuel category on the supply problems associated with constraints on 

ethanol consumption. However this approach would ignore the availability of non-cellulosic 

advanced biofuel to fill the shortfall in cellulosic biofuel. It would reduce the market 

opportunities for other advanced biofuels (as compared to the other options), and thereby hinder 

the development of advanced biofuels that might otherwise help to meet the broader energy 

security and GHG reduction goals of Congress for the RFS program. Finally, as discussed 

below, this approach would result in greater reductions in advanced biofuel than are needed to 

account for the contribution of ethanol advanced biofuels to the blendwall. For these reasons, we 

invite comment on this approach but are not proposing it.

c. Option 3: Availability, Growth, and Limits on Ethanol Consumption

Neither Option 1 nor Option 2 address all the factors we believe are important in the 

determination of the applicable advanced biofuel volume requirement. For instance, under 

Option 1 (using just availability to determine the appropriate volume of advanced biofuel), the 

 

96 The 2.0 bill gal is composed of the proposed volume of biomass-based diesel, 1.92 bill gallons ethanol equivalent, 

and the remaining volume of non-cellulosic advanced biofuel, 0.08 bill gallons.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 90 of 112

significant impacts of constraints on ethanol consumption and the factors leading to a reduction 

in the total volume of renewable fuel would not be reflected at all in our determination of the 

advanced biofuel requirement. On the other hand, under Option 2 (reducing the advanced 

biofuel requirement by the same amount that we reduce cellulosic biofuel), would impose 

unnecessary constraints on non-ethanol advanced biofuels even though they do not contribute to 

the constraints on the volume of ethanol that can reasonably be consumed. 

For these reasons we are proposing a third option that would address these issues by first 

summing the applicable volume requirements for cellulosic biofuel and biomass-based diesel, 

and then adding available volumes of non-ethanol advanced biofuel, including any biodiesel in 

excess of the 1.28 bill gal requirement as well as other available non-ethanol advanced biofuels 

such as renewable diesel, heating oil, and biogas. Under this approach, we consider only nonethanol sources of advanced biofuel as these fuels are not limited by their ability to be consumed 

as are ethanol blends. This approach would help to ensure that the advanced biofuel requirement 

would include all available volumes of advanced biofuel which do not contribute to the supply 

concerns related to constraints on ethanol consumption. It would also provide for additional 

growth in volumes of advanced biofuel that would otherwise be lost due to the shortfall in 

cellulosic biofuel. Once the advanced biofuel volume requirement was set, the market would 

determine which advanced biofuels would be produced and sold to meet the advanced biofuel 

requirement, including whether they would be ethanol or non-ethanol. Thus under this approach 

we would not be mandating or determining what renewable fuels would in fact be produced and 

sold. 

We once again used a Monte Carlo approach to aggregate the ranges for cellulosic 

biofuel, biomass-based diesel, and non-ethanol advanced biofuel. The ranges and standardized 

distributions we used in this process are shown in Table IV.C.2.c-1, and the resulting distribution 

for advanced biofuel is shown in Figure IV.C.2.c-1.

Table IV.C.2.c-1

Proposed Volume Ranges for Estimating Advanced Biofuel Requirement for 2014 

(million ethanol-equivalent gallons)

Proposed requirement for cellulosic biofuel 8 - 30 Combineda

Proposed requirement for biomass-based 

diesel 1,920b

n/a

Available volumes of excess biomass-based 

diesel 0 - 480c Half-normal

Available volumes of domestic non-ethanol 

advanced biofuel 24 - 132 Normal

a As described in Section II.C, this distribution is a combination of the distributions for all facilities 

projected to produce cellulosic biofuel.

b Represents a physical volume of 1.28 bill gal

c

 Represents a physical volume range of 0 - 320 mill gal
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 91 of 112

Figure IV.C.2.c-1

Results of Monte Carlo Simulation for Advanced Biofuel Requirement

5th percentile = 2,004

95th percentile = 2,507

0%

5%

10%

15%

20%

25% 1,928 1,999 2,071 2,142 2,213 2,285 2,356 2,428 2,499 2,571 2,642 2,714 2,785 2,856 2,928 2,999 3,071 3,142 3,214 3,285 Percent of observations

Million gallons
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 92 of 112

For the reasons discussed above, we propose that the advanced biofuel volume 

requirement would be set based on the Option 3 approach, within the range of 2.00 - 2.51 bill 

gal. Given that the volume requirement in the statute is 3.75 bill gal, this proposed range of 

advanced biofuel would represent a reduction of 1.24 - 1.75 bill gal. In comparison, the 

reduction in cellulosic biofuel that we are proposing in today's NPRM is 1.72 - 1.74 bill gal, and 

the reduction in total renewable fuel that we are proposing is 2.63 - 3.15 bill gal. The Option 3 

approach to setting the advanced biofuel volume requirement would generate a volume that falls 

approximately midway between Options 1 and 2 for 2014.

The approach we are proposing in today's NPRM is based upon and fully consistent with

the authorities provided in the statute for waiving volumes. The proposed reductions in the 

volumes of advanced biofuel and total renewable fuel derive from our determination that the 

industry and market will be unable to supply sufficient volumes in 2014 to meet the statutory 

mandates, either because of projected limitations in production and importation of qualifying 

renewable fuels, or projected limitations in the available infrastructure to ensure that those fuels 

are supplied to and consumed in the transportation sector. All of these limitations represent 

forms of inadequate supply and are permissible bases for exercising both the general waiver 

authority and the cellulosic waiver authority.

As for the required volume of total renewable fuel, there are a variety of ways in which a 

specific value within the proposed range can be chosen for the volume of advanced biofuel that 

we require in the final rule. The table below shows the values that correspond to the distribution 

in Figure IV.C.2.c-1 using several possible approaches.

Table IV.C.2.c-2

Potential Approaches to Determining the 

Final Advanced Biofuel Volume Requirement

(million ethanol-equivalent gallons)

Mean 2,202

Mode 2,099

25th percentile 2,086

50th percentile 2,178

75th percentile 2,289

In today's NPRM we are proposing to use the mean value of 2,202 mill gal for the volume 

requirement for advanced biofuel because we believe it best represents a neutral aim at advanced 

biofuel volumes that could reasonably be supplied. However, we request comment on whether 

one of the alternative values shown in Table IV.C.2.c-2, or some other approach, would be more 

appropriate as the basis for the required volume of advanced biofuel in the final rule.

D. Summary of Proposed Volume Requirements for 2014

For the reasons discussed above, we are proposing the volumes of total renewable fuel 

and advanced biofuel as shown below.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 93 of 112

Table IV.D-1

Proposed Volumes for 2014 (billion gallons)

Statutory volume

Proposed volume

Range Mean

Advanced biofuel 3.75 2.00 - 2.51 2.20

Total renewable fuel 18.15 15.00 - 15.52 15.21

For the final rule, we may revise the ranges based on additional information that becomes 

available after publication of this NPRM. This information could include more recent 

Production Outlook Report required under §80.1449, production and consumption data for 2013, 

and information from stakeholders. 

With regard to the mean, we request comment on whether it is the most appropriate way 

to determine the volume within each of the ranges that we would require in the final rule, or 

whether instead one of the alternatives shown in Tables IV.B.4-3 or IV.C.2.c-2, or some other 

approach, would be more appropriate. Nevertheless, as described above, we do not believe that 

using either the low end or high end of the proposed ranges would be appropriate as the basis for 

the applicable standards. A value between the low and high ends would better account for cases 

in which the actual values for some of the input volumes fall at the high end of their respective 

ranges while the actual value of other input volumes fall at the low end of their ranges. 

We note that the two ranges shown in Table IV.D-1 were not independently derived and 

thus cannot be treated independently from one another in the determination of the appropriate 

volumes to finalize. Many of the same ranges of biofuel availability that were used in estimating 

the range of total renewable fuel were also used in estimating the range of advanced biofuel. 

This fact can be seen in the distribution of results from the Monte Carlo process, which shows a 

distinct correlation between total renewable fuel and advanced biofuel.

Figure IV.D-1

Results of Monte Carlo Process for Both Total Renewable Fuel and Advanced Biofuel
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 94 of 112

Because of this correlation, decisions for both total renewable fuel and advanced biofuel need to 

take this relationship into account. For example, it would not be appropriate to finalize a volume 

for total renewable fuel that is at the high end of its proposed range, while also finalizing a 

volume for advanced biofuel that is at the low end of its proposed range. Doing so would result 

in a demand for renewable fuels that either could not be filled with available volumes or could 

not reasonably be consumed.

The ranges that we are proposing for advanced biofuel and total renewable fuel determine 

the range of non-advanced renewable fuel that would be needed. The majority of non-advanced 

renewable fuel is ethanol made from corn starch, though as discussed in Section IV.B.2.d we 

would also expect some non-ethanol renewable fuel as well, in the range of 1 - 25 mill gal.

Taking this non-ethanol renewable fuel into account, we used the results of the Monte Carlo 

process that generated the ranges shown in Table IV.D-1 to determine that the volume of cornethanol that would be needed would be 12.94 - 13.07 bill gal. This range represents an increase 

in comparison to 2012 corn-ethanol consumption, which was about 12.5 bill gal.97 While this 

range represents a reduction in comparison to the statutory volumes for 2014, it nonetheless 

represents an increase relative to projected 2013 corn-ethanol consumption of about 12.3 bill 

gal.98 For comparison, this reduction in corn-ethanol volume for 2014 is about 90% of the size 

of the proposed reduction in advanced biofuel. Thus under our proposed approach, both nonadvanced renewable fuels and advanced biofuels are contributing to the necessary reductions 

needed to attain renewable fuel volumes that can reasonably be supplied and consumed. We 

request comment on our proposed approach and on alternative approaches that may be applied to 

 

97 EIA Monthly Energy Review for June 2013, Table 10.3. Corn-ethanol exports were about 740 mill gal in 2012 

based on EIA Exports By Destination.

98 EIA AEO2013, Table17. Assumes corn-ethanol exports of 885 mill gal per EIA.

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

14,800 15,000 15,200 15,400 15,600 15,800 16,000

Advanced biofuel (mill gal)

Total renewable fuel (mill gal)

Proposed range

Proposed range

Boundary encompassing 

90% of observations
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 95 of 112

determine how best to allocate adjustments needed to address the constraints of both the ethanol 

blendwall and limitations in the availability of non-ethanol biofuels.

E. Volume Requirements for 2015 and Beyond

In enacting the RFS program, Congress anticipated and intended to promote substantial, 

sustained growth in biofuel production and consumption – beyond the levels that have been 

achieved to date – though it did so in the context of forecasts of continually growing 

transportation fuel consumption. As explained in Section IV.B, gasoline demand has declined in 

the years since EISA was enacted in 2007 and is projected to continue to do so. As a result, the 

gasoline pool will be able to absorb about 2.3 bill gal less ethanol as E10 in 2014 than it would 

have been possible to absorb if the gasoline use projection in AEO2007 had been realized. 

While we recognize this change in circumstances, we continue to support the objective of 

continued growth in renewable fuel production and consumption, as well as the central policy 

goals underlying the RFS program: reductions in greenhouse gas emissions, enhanced energy 

security, economic development, and technological innovation. We recognize that the issues 

concerning availability of qualifying renewable fuels and the consumption of ethanol that are 

discussed above with respect to the 2014 RFS standards will continue to be relevant in 2015 and 

beyond. Our objective in this rulemaking is to develop a general approach for determining 

appropriate volume requirements that can be applied not only to 2014, but also for 2015 and 

beyond. Any such approach would, of course, fully consider comments received in response to 

this NPRM and would account for new and improved data and changes in relevant circumstances 

over time. As we have underscored throughout this proposal, we look forward to engagement 

with stakeholders on all relevant aspects of the proposed approach.

We believe that the general approach reflected in today’s proposal is consistent with the 

goals of the underlying statute and will put the RFS program on a manageable trajectory while 

supporting continued growth in renewable fuels over time. In future years, we would expect to 

use the most recently available information to update the analyses used to project volumes in 

each of these areas:

• Volume of ethanol that could be consumed, including reasonably achievable growth in 

capacity to consume higher ethanol blends such as E15 and E85

• Available volumes of cellulosic biofuel

• Available volumes of biomass-based diesel

• Available volumes of advanced biofuel

• Available volumes of non-advanced renewable fuel

• Amount of carryover RINs

In addition to these factors, the approach we are proposing today would also account for changes 

in circumstances over time, including the substantial efforts underway to increase the volume of 

biofuel produced and consumed in the United States. Many companies are continuing to invest 

in efforts ranging from research and development to the construction of commercial scale 

facilities to increase the production potential of next generation biofuels. Many of these projects 

have received financial support from government agencies: 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 96 of 112

• DOE’s ARPA-E program, which aims to advance high-potential, high-impact energy 

technologies that are too early for private sector investment, and DOE’s Integrated 

Biorefinery Program, which provides grants and works in partnership with industry to 

develop, build, operate, and validate integrated biorefineries at various scales at 

locations across the country.99 DOE invests more than $200 million annually on 

technology development aimed at enabling cost-competitive advanced biofuels, 

including cellulosic ethanol, renewable gasoline, diesel, and aviation fuel. DOE has 

also awarded over $1 billion since 2007 for 27 integrated biorefinery projects 

intended to de-risk first-of-a-kind technologies at pilot, demonstration, and 

commercial scale. 

• USDA’s Biorefinery Assistance Program, which provides loan guarantees for the 

development and construction of commercial scale biorefineries is another 

example.100 Many of these new projects are focused on producing non-ethanol fuels, 

including bio-based hydrocarbons (gasoline, diesel, and jet fuel), gaseous fuels (CNG 

and LNG), or more energy-dense alcohols such as butanol. 

• President Obama's directive to USDA, DOE, and the Navy to collaborate with the 

private sector to spur a “drop-in” biofuels industry to meet the transportation needs of 

the Department of Defense (DOD) and the private sector. This multi-agency effort 

potentially establishes the federal government as an early market adopter of these 

biofuels, demonstrating their potential bankability for commercial markets. DOD 

made four $5M, 18-month phase 1 awards in June 2013. Successful projects will be 

selected to go on to Phase II construction to be jointly supported by the three agencies 

in the beginning of fiscal year 2015.

In addition to these efforts at other agencies, EPA is currently evaluating a number of new 

pathways to allow these fuels to generate RINs under the RFS program if the applicable 

feedstock, fuel type, and greenhouse gas reduction requirements are met. As these new fuels and 

fuel volumes come online, the proposed methodology will automatically incorporate them into 

the development of the standards for the following year.

Simultaneously, efforts are underway to increase the availability, awareness, and 

acceptance of gasoline fuel blends containing greater than 10 percent ethanol as expanded 

consumption of this fuel could play a role in the future. For instance, EPA has taken a series of 

regulatory steps to enable E15 to be sold in the U.S. In 2010 and 2011, EPA issued partial 

waivers to enable use of E15 in model year 2001 and newer vehicles, and in June of 2011, EPA 

finalized regulations to prevent misfueling of vehicles, engines, and equipment not covered by 

the partial waiver decisions. Other federal and state agencies have also taken steps to help foster 

the inclusion of E15 in the marketplace. We recognize that there remain a number of obstacles 

 

99 For more information on these programs visit their websites at: http://arpa-e.energy.gov/ and 

http://www1.eere.energy.gov/bioenergy/integrated_biorefineries.html

100 On October 21st USDA announced that an additional $181 million would be available through the Biorefinery 

Assistance Program. For more information visit the program’s website at: and 

http://www.rurdev.usda.gov/BCP_Biorefinery.html
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 97 of 112

to increased E15 consumption. We request comment on what actions, on the part of government 

as well as industry and other stakeholders, could be taken to overcome these obstacles and to 

enable E15 consumption to increase. 

With regard to E85, the portion of the estimated 11.5 million FFV fleet (in 2013) 101

having reasonable access to the existing E85 retail infrastructure (approximately 3,000 stations 

nationwide) represents a potential market of over 1 bill gal of E85 consumption.102 While there 

are many factors that may contribute to a customer’s choice of which fuel to purchase, a recent 

study by the National Association of Convenience Stores found that for 71% of customers, price 

was the most important factor in their decision on where to purchase their fuel.103 Historically, 

E85 has been more expensive than E10 on an energy-content adjusted basis which has likely 

been a key factor in the low sales volumes. Recent data collected by EIA suggests that at least in 

some parts of the country the price relationship between E10 and E85 may be changing. In a 

Today in Energy article published on September 19, 2013, EIA presented data showing that in a 

collection of Midwestern states E85 retail prices were less than E10 retail prices on an energycontent adjusted basis in July 2013, the most recent month for which information was 

available.104 This change in price relationship between E10 and E85 coincides with reported 

increases in sales volumes of E85 in Iowa and Minnesota, two states in which E85 sales volumes 

are publically available.105 If the conditions that have led to this price relationship continue in 

the future, E85 sales volumes are likely to continue to increase.

In addition to the potential for increased consumption of E85 when considering the 

existing infrastructure and vehicle fleet, there is also substantial opportunity to increase ethanol 

consumption in higher level ethanol blends through growth in the FFV fleet and E85 

infrastructure. The number of stations offering E85 is currently increasing at a rate of 

approximately 300 new stations per year.106 In 2012 USDA announced a goal to help retail 

station owners install as many as 10,000 ethanol blender pumps by 2017.107 Growth Energy has 

a “Blend Your Own Ethanol” program to encourage the installation of ethanol blender 

pumps. These efforts, combined with the potential for these higher level ethanol blends to 

decrease consumer fuel costs in the future under appropriate market circumstances, could lead to 

a significant increase in the amount of ethanol than can be consumed as a transportation fuel in 

the United States in future years. As a benchmark, if every FFV currently in the fleet had access 

to E85 and chose to use it exclusively, the total consumption of these vehicles would be 

approximately 8 bill gal per year. The size of the FFV vehicle fleet also continues to increase, 

and is expected to grow by approximately 1 million vehicles from 2013 to 2014, with sales 

recently in excess of 2 million vehicles per year.108 109 EPA’s recently proposed credit for 

 

101 EIA Annual Energy Outlook 2013, Table 40. Sum of Ethanol-Flex Fuel ICE Cars and Light Trucks

102 Memorandum from David Korotney to EPA docket EPA-HQ-OAR-2013-0479.

103 2013 NACS Retail Fuels Report

104 ”E85 motor fuel is increasingly price-competitive with gasoline in parts of the Midwest.” Today in Energy. EIA, 

19 September 2013. <http://www.eia.gov/todayinenergy/detail.cfm?id=13031>. Study compared daily average 

observed E85 and regular gasoline prices at the same stations in the states of Iowa, Illinois, Indiana, Kentucky, 

Michigan, Minnesota, and Ohio.

105 See Table IV.B.1-2

106 Memorandum from David Korotney to EPA docket EPA-HQ-OAR-2013-0479.

107 http://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2012/05/0141.xml

108 EIA Alternative Fuel Vehicle Data Report. Released May 4, 2012.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 98 of 112

vehicle manufacturers under the light-duty greenhouse gas standards could help encourage the 

continuation such sales into the future.110 Ongoing growth in the size of the FFV fleet and the 

number of E85 pumps could be accelerated by increases in demand from customers for E85 fuel, 

which has the potential to support a rapid growth in E85 infrastructure. Under the proposed 

framework for the 2014 standards, any such growth in capacity for ethanol consumption would 

continuously be reflected in the standards set for the following year.

At the same time, we recognize that a number of challenges must be overcome in order to 

fully realize the potential for higher levels of production and consumption of higher-level ethanol 

blends and of renewable fuels generally in the United States. We also recognize that, while the 

RFS program is a central element of our domestic biofuels policy, a range of other tools, 

programs, and actions have the potential to play an important complementary role. We request 

comment on what actions could be taken by various industry and other private stakeholders, as 

well by the government, to help overcome these challenges and to minimize the need for 

adjustments in the statutory renewable fuel volume requirements in the future.

 

109 EIA Annual Energy Outlook 2013, Table 40. Increase in Ethanol-Flex Fuel Cars and Light Trucks from 2013 to 

2014.

110 Draft Guidance Letter, CD-13-XX (LD), "E85 Flexible Fuel Vehicle Weighting Factor for Model Year 2016-

2019 Vehicles" http://epa.gov/otaq/regs/ld-hwy/greenhouse/ld-ghg.htm#action
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 99 of 112

V. Proposed Percentage Standards for 2014

A. Background 

The renewable fuel standards are expressed as volume percentages and are used by each 

refiner or importer to determine their RVO. Since there are four separate standards under the RFS2 

program, there are likewise four separate RVOs applicable to each obligated party. Each standard 

applies to the sum of all gasoline and diesel produced or imported. The applicable percentage 

standards are set so that if every obligated party meets the percentages, then the amount of 

renewable fuel, cellulosic biofuel, biomass-based diesel, and advanced biofuel used will meet the 

volumes required on a nationwide basis. 

As discussed in Section II.C, we are proposing a required volume of cellulosic biofuel for 

2014 of 17 million ethanol-equivalent gallons. The volume we select for the final rule will be 

used as the basis for setting the percentage standard for cellulosic biofuel for 2014. We are also 

proposing to reduce the advanced biofuel and total renewable fuel volumes. The biomass-based 

diesel volume for 2014 has been proposed to be maintained at 1.28 billion gallons. The volumes 

to be used to determine the four proposed percentage standards are shown in Table V.A-1. 

Table V.A-1

Proposed Volumes for Use in Setting the Applicable Percentage Standards for 2014a

Cellulosic biofuel 17 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.20 bill gal

Renewable fuel 15.21 bill gal

a Due to the manner in which the percentage standards are 

calculated, all volumes are given in terms of ethanolequivalent except for biomass-based diesel which is given 

in terms of physical volume

As with previous years’ renewable fuels standards determination, the formulas used in 

deriving the annual standards are based in part on estimates of the volumes of gasoline and diesel 

fuel, for both highway and nonroad uses, that are projected to be used in the year in which the 

standards will apply. Producers of other transportation fuels, such as natural gas, propane, and 

electricity from fossil fuels, are not subject to the standards, and volumes of such fuels are not 

used in calculating the annual standards. Since the standards apply to producers and importers of 

gasoline and diesel, these are the transportation fuels used to set the standards, and then again to 

determine the annual volume obligations of an individual gasoline or diesel producer or importer.

B. Calculation of Standards

1. How Are the Standards Calculated?

The following formulas are used to calculate the four percentage standards applicable to 

producers and importers of gasoline and diesel (see §80.1405): 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 100 of 112

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%CB,i

CB,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV 1.5

Std 100%

BBD,i 

BBD,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%AB,i

AB,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%RF,i

RF,i

Where

StdCB,i = The cellulosic biofuel standard for year i, in percent.

StdBBD,i = The biomass-based diesel standard (ethanol-equivalent basis) for year i, in percent.

StdAB,i = The advanced biofuel standard for year i, in percent.

StdRF,i = The renewable fuel standard for year i, in percent.

RFVCB,i = Annual volume of cellulosic biofuel required by section 211(o) of the Clean Air 

Act for year i, in gallons.

RFVBBD,i = Annual volume of biomass-based diesel required by section 211(o) of the Clean 

Air Act for year i, in gallons.

RFVAB,i = Annual volume of advanced biofuel required by section 211(o) of the Clean Air 

Act for year i, in gallons.

RFVRF,i = Annual volume of renewable fuel required by section 211(o) of the Clean Air Act 

for year i, in gallons.

Gi = Amount of gasoline projected to be used in the 48 contiguous states and Hawaii, in 

year i, in gallons. 

Di = Amount of diesel projected to be used in the 48 contiguous states and Hawaii, in 

year i, in gallons. This value excludes diesel used in ocean-going vessels.

RGi = Amount of renewable fuel blended into gasoline that is projected to be consumed 

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

RDi = Amount of renewable fuel blended into diesel that is projected to be consumed in 

the 48 contiguous states and Hawaii, in year i, in gallons.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 101 of 112

GSi = Amount of gasoline projected to be used in Alaska or a U.S. territory in year i if 

the state or territory opts-in, in gallons.

RGSi = Amount of renewable fuel blended into gasoline that is projected to be consumed 

in Alaska or a U.S. territory in year i if the state or territory opts-in, in gallons.

DSi = Amount of diesel projected to be used in Alaska or a U.S. territory in year i if the 

state or territory opts-in, in gallons.

RDSi = Amount of renewable fuel blended into diesel that is projected to be consumed in 

Alaska or a U.S. territory in year i if the state or territory opts-in, in gallons.

GEi = Amount of gasoline projected to be produced by exempt small refineries and 

small refiners in year i, in gallons, in any year they are exempt per §§80.1441 and 

80.1442, respectively. For 2014, this value is zero. See further discussion in 

Section V.B.2 below.

DEi = Amount of diesel projected to be produced by exempt small refineries and small 

refiners in year i, in gallons, in any year they are exempt per §§80.1441 and 

80.1442, respectively. For 2014, this value is zero. See further discussion in 

Section V.B.2 below.

The four separate renewable fuel standards for 2014 are based on the gasoline and diesel 

consumption volumes projected by EIA. The Act requires EPA to base the standards on an EIA 

estimate of the amount of gasoline and diesel that will be sold or introduced into commerce for 

that year. The projected volumes of gasoline and diesel that will be used to calculate the final 

2014 percentage standards will be provided to EPA by EIA. To estimate the gasoline and diesel 

projected volumes for the purposes of this proposal, we have used EIA's Short-Term Energy 

Outlook (STEO)111 for the gasoline projection and EIA's Annual Energy Outlook 2013 Early 

Release112 for the diesel projection. Gasoline and diesel volumes are adjusted to account for 

renewable fuel contained in the EIA projections. The projected volumes of ethanol and biodiesel 

used to calculate the final percentage standards will be provided to EPA by EIA. To estimate the 

ethanol and biodiesel projected volumes for the purposes of this proposal, we have used the 

values113 for ethanol and biodiesel provided in the STEO. Using the most recent available EIA 

data for purposes of this proposal allows us to provide the affected industries with a reasonable 

estimate of the standards for planning purposes.

 

111 Energy Information Administration/Short-Term Energy Outlook – September 2013, Table 4a, “U.S. Crude Oil 

and Liquid Fuels Supply, Consumption, and Inventories.”

112 Energy Information Administration/Annual Energy Outlook 2013, April 2013, “Energy Consumption by Sector 

and Source, United States, Reference case; Transportation Distillate Fuel Oil.” 

113 Energy Information Administration/Short-Term Energy Outlook – September 2013, Table 8, “U.S. Renewable 

Energy Consumption (Quadrillion Btu).”
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 102 of 112

2. Small Refineries and Small Refiners

In CAA section 211(o)(9), enacted as part of the Energy Policy Act of 2005, Congress 

provided a temporary exemption to small refineries (those refineries with a crude throughput of 

no more than 75,000 barrels of crude per day) through December 31, 2010. In our initial 

rulemaking to implement the new RFS program,

114 we exercised our discretion under section 

211(o)(3)(B) and extended this temporary exemption to the few remaining small refiners that 

met the Small Business Administration’s (SBA) definition of a small business (1,500 employees 

or less company-wide) but did not meet the statutory small refinery definition as noted above.115 

Because EISA did not alter the small refinery exemption in any way, the RFS2 program 

regulations maintained the exemptions for gasoline and diesel produced by small refineries and 

small refiners through 2010 (unless the exemption was waived).116

Congress provided two ways that small refineries could receive a temporary extension of 

the exemption beyond 2010. One was based on the results of a study conducted by the 

Department of Energy (DOE) to determine whether small refineries would face a 

disproportionate economic hardship under the RFS program. In March of 2011, DOE evaluated 

the impacts of the RFS program on small entities and concluded that some small refineries would 

suffer a disproportionate hardship.117 The other way that small refineries could receive a 

temporary extension is based on EPA determination of disproportionate economic hardship on a 

case-by-case basis in response to refiner petitions.

118

 EPA has granted some exemptions 

pursuant to this process, as recently as 2013. However, at this time, no exemptions have been 

approved for 2014. Therefore, for this proposal we have calculated the 2014 standards without a 

small refinery/small refiner adjustment.

However, if an individual small refinery or small refiner requests an exemption and is 

approved prior to issuance of the final rule, the final standards will be adjusted to account for the 

exempted volumes of gasoline and diesel. Any requests for exemptions that are approved after 

the release of the final 2014 RFS standards will not affect the 2014 standards. As stated in the 

final rule establishing the 2011 standards, “EPA believes the Act is best interpreted to require 

issuance of a single annual standard in November that is applicable in the following calendar 

year, thereby providing advance notice and certainty to obligated parties regarding their 

regulatory requirements. Periodic revisions to the standards to reflect waivers issued to small 

refineries or refiners would be inconsistent with the statutory text, and would introduce an 

undesirable level of uncertainty for obligated parties.” Thus, after the 2014 standards are 

finalized, any additional exemptions for small refineries or small refiners that are issued will not 

affect those 2014 standards.

 

114 72 FR 23900, May 1, 2007.

115 40 CFR §§ 80.1141, 80.1142.

116 See 40 CFR §§ 80.1441, 80.1442.

117 "Small Refinery Exemption Study: An Investigation into Disproportionate Economic Hardship," U.S. 

Department of Energy, March 2011.

118 40 CFR §§ 80.1441(e)(2), 80.1442(h).
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 103 of 112

3. Proposed Standards

As specified in the March 26, 2010 RFS2 final rule,

119 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 biomass-based diesel 

standard based on biodiesel equivalence. However, all RIN generation is based on ethanolequivalence. For example, the RFS2 regulations provide that production or import of a gallon of 

qualifying biodiesel will lead to the generation of 1.5 RINs. In order to ensure that demand for 

1.28 billion physical gallons of biomass-based diesel will be created in 2014, the calculation of 

the biomass-based diesel standard provides that the required volume be multiplied by 1.5. The 

net result is a biomass-based diesel gallon being worth 1.0 gallon toward the biomass-based 

diesel standard, but worth 1.5 gallons toward the other standards.

The levels of the percentage standards would be reduced if Alaska or a U.S. territory 

chooses to participate in the RFS2 program, as gasoline and diesel produced in or imported into 

that state or territory would then be subject to the standard. Neither Alaska nor any U.S. territory 

has chosen to participate in the RFS2 program at this time, and thus the value of the related terms 

in the calculation of the standards is zero.

Note that because the gasoline and diesel volumes estimated by EIA include renewable 

fuel use, we must subtract the total renewable fuel volumes from the total gasoline and diesel 

volumes to get total non-renewable gasoline and diesel volumes. The values of the variables 

described above are shown in Table V.B.3-1.120 Terms not included in this table have a value of 

zero.

Table V.B.3-1

Values for Terms in Calculation of the Standards121 (bill gal)

Term Value

RFVCB,2014 0.017

RFVBBD,2014 1.28

RFVAB,2014 2.20

RFVRF,2014 15.21

G2014 132.65

D2014 47.12

RG2014 13.12

RD2014 1.38

 

119 75 FR 14716, March 26, 2010.

120 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 Consumption Estimates.

121 U.S. Gasoline (October 2013 STEO)=8.67 MMbbl/day; U.S. Ethanol (October 2013 STEO)=0.858 MMBD 

calculated as 1.115 QBtu; U.S. Transportation Distillate (AEO2013)=6.55 QBtu; U.S. Biodiesel (October 2013 

STEO)=0.09 MMBD calculated as 0.176 QBtu; U.S. Diesel Ocean-going vessels (AEO2013)= 52.429TBtu; Alaska 

(SEDS 2011): AK Gasoline=6.321 MMbbl, AK Ethanol=0.733 MMbbl; AK Diesel=7.621 MMbbl, AK 

Biodiesel=0, AK Ocean-going vessels estimated at 4.5% of U.S. vessel bunkering and applied to the U.S. oceangoing vessel volume. 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 104 of 112

Using the volumes shown in Table V.B.3-1, we have calculated the proposed percentage 

standards for 2014 as shown in Table V.B.3-2.

Table V.B.3-2

Proposed Percentage Standards for 2014

Cellulosic biofuel 0.010%

Biomass-based diesel 1.16%

Advanced biofuel 1.33%

Renewable fuel 9.20%
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 105 of 112

VI. 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 Air Docket (see ADDRESSES section 

above) by the end of the comment period.

You may submit comments electronically, by mail, 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 VI.B below.

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 e-mail. 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-2013-0479. 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 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. 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 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 106 of 112

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.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 107 of 112

VII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 

13563: Improving Regulation and Regulatory Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a 

"significant regulatory action” because it raises novel legal or policy issues arising out of legal 

mandates, the President’s priorities, or the principles set forth in the Executive Order. 

Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for 

review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any 

changes made in response to OMB recommendations have been documented in the docket for 

this action.

The economic impacts of the RFS2 program on regulated parties, including the impacts 

of the volumes of renewable fuel specified in the statute, were analyzed in the RFS2 final rule 

promulgated on March 26, 2010 (75 FR 14670). With the exception of biomass-based diesel, 

this action proposes standards applicable in 2013 that would be reduced from those analyzed in 

the RFS2 final rule. The impacts of the proposed 2014 and 2015 volumes of biomass-based 

diesel were addressed in the final rule establishing the 2013 volume requirement of 1.28 bill gal 

(77 FR 59458).

B. Paperwork Reduction Act

There are no new information collection requirements associated with the standards in 

this notice of proposed rulemaking. The standards being proposed today would not impose new 

or different reporting requirements on regulated parties. The existing information collection 

requests (ICR) that apply to the RFS program are sufficient to address the reporting requirements 

in the regulations.

An agency may not conduct or sponsor, and a person is not required to respond to, a 

collection of information unless it displays a currently valid OMB control number. The OMB 

control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. 

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedures Act or any other statute unless the agency 

certifies that the rule will not have a significant economic impact on a substantial number of 

small entities. Small entities include small businesses, small organizations, and small 

governmental jurisdictions.

For purposes of assessing the impacts of today's proposed rule on small entities, small 

entity is defined as: (1) a small business as defined by the Small Business Administration’s 
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 108 of 112

(SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government 

of a city, county, town, school district or special district with a population of less than 50,000; 

and (3) a small organization that is any not-for-profit enterprise which is independently owned 

and operated and is not dominant in its field.

After considering the economic impacts of today’s proposed rule on small entities, we 

certify that this proposed action will not have a significant economic impact on a substantial 

number of small entities. This rule proposes that the annual volume requirement for cellulosic 

biofuel for 2014 would be reduced from the statutory volume of 1.75 bill gal. We are also 

proposing to reduce the annual volume requirements for advanced biofuel and total renewable 

fuel. The impacts of the RFS2 program on small entities were already addressed in the RFS2 

final rule promulgated on March 26, 2010 (75 FR 14670), and this proposed rule will not impose 

any additional requirements on small entities beyond those already analyzed. However, we 

continue to be interested in the potential impacts of the proposed rule on small entities and 

welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

This proposed action contains no Federal mandates under the provisions of Title II of the 

Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or tribal 

governments or the private sector. This action implements mandate(s) specifically and explicitly 

set forth by the Congress in Clean Air Act section 211(o) without the exercise of any policy 

discretion by EPA. Therefore, this action is not subject to the requirements of sections 202 or 

205 of the UMRA.

This action is also not subject to the requirements of section 203 of UMRA because it 

contains no regulatory requirements that might significantly or uniquely affect small 

governments. This proposed rule only applies to gasoline, diesel, and renewable fuel producers, 

importers, distributors and marketers and merely proposes the 2014 annual standards for the RFS 

program.

E. 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, as 

specified in Executive Order 13132. This action proposes the 2014 annual standards for the RFS 

program and only applies to gasoline, diesel, and renewable fuel producers, importers, 

distributors and marketers. Thus, Executive Order 13132 does not apply to this rule. 

In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between EPA and State and local governments, EPA specifically solicits 

comment on this proposed rule from State and local officials.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 109 of 112

F. Executive Order 13175: Consultation and Coordination with Indian Tribal 

Governments

This proposed action does not have tribal implications, as specified in Executive Order 

13175 (65 FR 67249, November 9, 2000). 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 purchase and use regulated fuels. Thus, Executive Order 13175 does not 

apply to this action.

EPA specifically solicits additional comment on this proposed action from tribal officials. 

G. Executive Order 13045: Protection of Children from Environmental Health Risks 

and Safety Risks

EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying only to those 

regulatory actions that concern health or safety risks, such that the analysis required under 

section 5-501 of the EO has the potential to influence the regulation. This proposed action is not 

subject to EO 13045 because it does not establish an environmental standard intended to mitigate 

health or safety risks and because it implements specific standards established by Congress in 

statutes (section 211(o) of the Clean Air Act). 

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use

This action is not a “significant energy action” as defined in Executive Order 13211, 

“Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” 

(66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. This action simply proposes the annual standards for 

renewable fuel under the RFS program for 2014.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(‘‘NTTAA’’), Public Law 104–113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary 

consensus standards in its regulatory activities unless to do so would be inconsistent with 

applicable law or otherwise impractical. Voluntary consensus standards are technical standards 

(e.g., materials specifications, test methods, sampling procedures, and business practices) that are 

developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations when the Agency decides not to use available and 

applicable voluntary consensus standards.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 110 of 112

This proposed rulemaking does not involve technical standards. Therefore, EPA is not 

considering the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the greatest 

extent practicable and permitted by law, to make environmental justice part of their mission by 

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States. 

EPA has determined that this proposed rule will not have disproportionately high and 

adverse human health or environmental effects on minority or low-income populations because it 

does not affect the level of protection provided to human health or the environment. 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.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 111 of 112

VIII. 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 today’s 

proposal, come from sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. sections 

7414, 7542, and 7601(a).

List of Subjects in 40 CFR Part 80

Administrative practice and procedure, Air pollution control, Diesel fuel, Environmental 

protection, Fuel additives, Gasoline, Imports, Oil imports, Petroleum, Renewable Fuel.

Dated: 

Gina McCarthy,

Administrator.
*** EO12866 Review - Revised version - Do Not Cite, Quote, or Release During Review ***

Page 112 of 112

For the reasons set forth in the preamble, 40 CFR part 80 is amended 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, 7542, 7545, and 7601(a).

2. Section 80.1405 is amended by adding paragraph (a)(5) to read as follows:

§ 80.1405 What are the Renewable Fuel Standards?

(a) * * *

(5) Renewable Fuel Standards for 2014.

(i) The value of the cellulosic biofuel standard for 2014 shall be 0.010 percent.

(ii) The value of the biomass-based diesel standard for 2014 shall be 1.16 percent.

(iii) The value of the advanced biofuel standard for 2014 shall be 1.33 percent.

(iv) The value of the renewable fuel standard for 2014 shall be 9.20 percent.