Interaction with Tailoring Rule

 Would it be appropriate for EPA to address in the proposed rule, how this rule interfaces with the Tailoring Rule? Regulated categories and entities affected by this action include production, distribution and sale of transportation fuels, and the industr ies identified within the table on page 8. It is understood that the table is not intended to be exhaustive but rather to provide the reader with a guide for regulated entities. All regulated “categories” in the table are industrial sources, and the focu s of this proposed rule is transportation fuels. At least one of the industrial source categories in the Table on page 8 of this proposed rule is also listed in Table 1 of the Deferral for CO2 Emissions from Bioenergy and Other Biogenic Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs (See the July 20, 2011 deferral posted at this website: http://www.gpo.gov/fdsys/pkg/FR

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- 17 256.pdf).

o Would it be possible that a regulated industry could have greenhouse gas emissions exempted under one regulation and regulated, or subject to the accounting framework under another regulation? Would the Scientific Advisory Board draft report s that focus on CO2 Accounting for Emissions from Biogenic Sources be useful in sorting through this issue? ( http://yosemite.epa.gov/s ab/sabproduct.nsf/0/2f9b572c712ac52e8525783100704886! OpenDocument&TableRow=2.2#2

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o If the Tailoring Rule accounting decisions are to be made in 2014, how will EPA reconcile the decisions made on RFS to reflect these policies? One commenter suggested de laying the pathway decisions on the RFS rule until the Tailoring Rule accounting policy has been finalized.

EPA Response: This action proposes new qualifying pathways for the RFS program by analyzing their lifecycle GHG emissions (LCA). Our LCA appro ach in this pro posal is based on the specific statutory requirements for the RFS program, and follows the same LCA methodologies relied upon in previous RFS rulemakings (which also went through notice and comment rulemaking). The proposed regulations refe renced by the commenter address stat ionary source permitting under a different part of the Clean Air Act. The emissions accounting issues EPA is exploring in the PSD deferral rulemaking arise in the context of a regulatory program with a statutory foundat ion that is very different from the RFS provisions at issue in this rulemaking.

This RFS proposal does not raise issues with respect to the proposed PSD deferral rule, as the LCA methodology used in this proposal is the same as we have used in prior RF S rulemakings. This proposal does not change the context for the PSD deferral rule. This RFS proposal uses the same methodology as the prior RFS rulemakings, and the methodology is based on implementing the requirements of the specific statutory provisio ns involved with the RFS program.

We understand the issues about which the commenter is inquiring, and the relevant offices within EPA have been and will continue to coordinate on topics related to accounting of biogenic emissions. Within EPA’s Offic e of Air and Radiation, the Office of Transportation and Air Quality (OTAQ), which has responsibility for implementing the RFS program, has worked closely with the three offices that have been examining issues related to biogenic emissions and the PSD prog ram: the Office of Atmospheric Programs (OAP), the Office of Air Quality Planning and Standards (OAQPS), and the Office of GeneralCounsel (OGC). Staff from all relevant offices have worked together to analyze applicable programmatic

and legal re quirements and to identify and discuss relevant scientific and technical concepts. OTAQ has been involved in discussions related to the Draft Accounting Framework for Biogenic CO2 Emissions From Stationary Sources, along with the associated Science Advisory Board ( SAB) peer review process, and OTAQ staff regularly provide information on activities underway within the RFS program to counterparts in OAP. This coordination is ongoing.

Given the status of the deferral rule and the as yet unresolved questions regarding how biogenic CO2 emissions should be addressed considering the relevant portions of the Clean Air Act, it is premature to consider how any future decisions by EPA in the context of the PSD program might differ from what is required by statute for the RFS program. For purposes of this NPRM, the relevant legal and regulatory requirements, and the accounting approach EPA developed for lifecycle emissions, stem from 211 (o) of the Act. For these reasons there is also no reason to delay this RFS rulemaking.

On page 19 it is stated that “EPA thus determined that all of the fuel generated from the biogenic portion of separated MSW would be considered cellulosic biofuel [when assigning RIN]”. This statement does not seem to be consistent with the Tailoring Rul e concerning the exemption of biogenic CO2 emissions.

EPA Response: The quotation from page 19 of the NPRM refers to a determination that was part of the March 2010 RFS Final Rule and not a decision made as part of this NPRM. The quote does not address LCA, but instead concerns a simplifying assumption EPA m ade for practical reasons concerning the type of renewable biomass found in separated MSW.

Under the Tailoring Rule Deferral mentioned above, the emissions of “CO2 from the combustion of biogas collected from biological decomposition of waste in landfi lls, wastewater treatment or manure management processes” are all being evaluated under the deferral. The concern is that the RFS program would allocate RINs to a source that is fully or partially regulated under the biogenic portion of the Tailoring Rule . In this scenario, EPA would be endorsing the GHG emission benefits with RINs under RFS and possibly regulating the GHG emissions from biogenic sources under the Tailoring Rule.

o What interactions will the RFS rule have with the offset provisions of the Tailoring rule? On page 21 it states , “EPA is proposing that biofuel made from the following cellulosic feedstocks will be able to generate applicable cellulosic RINs for 100% of the volume produced: crop residue; slash; pre

- commercial thinnings and tree residue; annual cover crops; switchgrass; and miscanthus.” All of these feedstocks (crop residue, slash, pre

commercial thinnings and tree residue, annual cover crops, switchgrass, miscanthus, napiergrass, giant reed, energy cane, etc.) along with many others are being discussed under the Tailoring Rule Deferral. Comment suggests that EPA lay out the interactions between the rules, particularly the interactions between RIN and offset markets, as it may be confusing to affected entities when 100% of RIN s under RFS are allocated and point source GHG emissions are discounted via the Tailoring rule.

EPA Response: The feedstocks listed are already eligible to generate cellulosic RINs, as described in the March 2010 RFS Final Rule. In fact, one of the major goals of the RFS program was to incentivize production of biofuels from these cellulosic feedstocks. This NPRM does not change that. The only change being proposed is a clarification about whether all of a biofuel produced from the feedstock suchas swi tchgrass can qualify as cellulosic biofuel or only the portion that derives directly from cellulose,

hemicelluloses and lignin. The quoted text refers to this question.

The issue we are addressing here is a technical question related to how the renewabl e fuel is categorized (i.e., which of the four categories of renewable fuel is this fuel categorized as), and does not concern the LCA for the biofuel. See our response above for more information regarding this proposal and EPA’s PSD proposal, which implements different provisions of the Clean Air Act.