1320 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2010–0133; FRL–9614–4] 

RIN 2060–AQ76 

Regulation of Fuels and Fuel 

Additives: 2012 Renewable Fuel 

Standards 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: Under the Clean Air Act 

Section 211(o), the Environmental 

Protection Agency is required to set the 

renewable fuel standards each 

November for the following year. In 

general the standards are designed to 

ensure that the applicable volumes of 

renewable fuel specified in the statue 

are used. However, the statute specifies 

that EPA is to project the volume of 

cellulosic biofuel production for the 

upcoming year and must base the 

cellulosic biofuel standard on that 

projected volume if it is less than the 

applicable volume set forth in the Act. 

EPA is today finalizing a projected 

cellulosic biofuel volume for 2012 and 

annual percentage standards for 

cellulosic biofuel, biomass-based diesel, 

advanced biofuel, and renewable fuels 

that will apply to all gasoline and diesel 

produced or imported for domestic use 

in year 2012. In the NPRM we also 

proposed an applicable volume of 1.28 

billion gallons for biomass-based diesel 

for 2013. The statute specifies that the 

minimum volume of biomass-based 

diesel for years 2013 and beyond must 

be at least 1.0 billion gallons. We are 

continuing to evaluate the many 

comments on the NPRM from 

stakeholders, and will issue a final rule 

setting the applicable biomass-based 

diesel volume for calendar year 2013 as 

expeditiously as practicable. This action 

also presents a number of changes to the 

RFS2 regulations that are designed to 

clarify existing provisions and to 

address several unique circumstances 

that have come to light since the RFS2 

program became effective on July 1, 

2010. Finally, today’s rule also makes a 

minor amendment to the gasoline 

benzene regulations regarding inclusion 

of transferred blendstocks in a refinery’s 

early benzene credit generation 

calculations. 

DATES: This final rule is effective on 

January 9, 2012. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

No. EPA–HQ–OAR–2010–0133. 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; Email address: 

macallister.julia@epa.gov, or 

Assessment and Standards Division 

Hotline; telephone number (734) 214– 

4636; Email address 

OTAQPUBLICWEB@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

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 SIC 2 Codes Examples of potentially regulated entities 

Industry ..................... 324110 2911 Petroleum Refineries. 

Industry ..................... 325193 2869 Ethyl alcohol manufacturing. 

Industry ..................... 325199 2869 Other basic organic chemical manufacturing. 

Industry ..................... 424690 5169 Chemical and allied products merchant wholesalers. 

Industry ..................... 424710 5171 Petroleum bulk stations and terminals. 

Industry ..................... 424720 5172 Petroleum and petroleum products merchant wholesalers. 

Industry ..................... 454319 5989 Other fuel dealers. 

1 North American Industry Classification System (NAICS). 

2Standard 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 final action. This table 

lists the types of entities that EPA is 

now aware could potentially be 

regulated by this final action. Other 

types of entities not listed in the table 

could also be regulated. To determine 

whether your activities will be regulated 

by this final action, you should carefully 

examine the applicability criteria in 40 

CFR part 80. If you have any questions 

regarding the applicability of this final 

action to a particular entity, consult the 

person listed in the preceding section. 

Outline of This Preamble 

I. Executive Summary 

A. Standards for 2012 

1. Assessment of 2012 Cellulosic Biofuel 

Volume 

2. Advanced Biofuel and Total Renewable 

Fuel in 2012 

3. Percentage Standards for 2012 

4. Historical Renewable Fuel Production 

B. Regulatory Changes 

C. 2012 Price for Cellulosic Biofuel Waiver 

Credits 

D. Assessment of the Domestic Aggregate 

Compliance Approach 

E. Assessment of the Canadian Aggregate 

Compliance Approach 

II. Projection of Cellulosic Volume and 

Assessment of Biomass-Based Diesel and 

Advanced Biofuel for 2012 

A. Statutory Requirements 

B. Cellulosic Biofuel Volume Assessment 

1. Existing Cellulosic Biofuel Facilities 

2. Potential New Facilities in 2012 

3. Imports of Cellulosic Biofuel 

4. Projections From the Energy Information 

Administration 

5. Comments on the Proposed Rule 

6. Summary of Volume Projections 

C. Advanced Biofuel and Total Renewable 

Fuel in 2012 

D. Biomass-Based Diesel in 2012 


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1 75 FR 14670. 2 76 FR 38844. 

III. Final Percentage Standards for 2012 

A. Background 

B. Calculation of Standards 

1. How are the standards calculated? 

2. Small Refineries and Small Refiners 

3. Final Percentage Standards 

IV. Changes to RFS2 Regulations 

A. Summary of Amendments 

B. Technical Justification for Equivalence 

Value Application 

C. Changes to Definitions of Terms 

1. Definition of Annual Cover Crop 

2. Definition of ‘‘Naphtha’’ 

D. Technical Amendments Related to RIN 

Generation and Separation 

1. RIN Separation Limit for Obligated 

Parties 

2. RIN Retirement Provision for Error 

Correction 

3. Production Outlook Reports Submission 

Deadline 

4. Attest Procedures 

E. Technical Amendments Related to 

Registration & Recordkeeping 

1. Construction Discontinuance & 

Completion Documentation 

2. Third-Party Engineering Reviews 

3. Foreign Ethanol Producers 

F. Additional Amendments and 

Clarifications 

1. Third-Party Engineering Review 

Addendum 

2. RIN Generation for Fuel Imported From 

a Registered Foreign Producer 

3. Bond Posting 

4. Prohibition Against Repeat Generation of 

RINs 

5. Acceptance of Separated Yard Waste and 

Food Waste Separation Plans 

6. Transferred Blendstocks in Early 

Benzene Credit Generation Calculations 

V. Annual Administrative Announcements 

A. 2011 Price for Cellulosic Biofuel Waiver 

Credits 

B. Assessment of the Domestic Aggregate 

Compliance Approach 

C. Assessment of the Canadian Aggregate 

Compliance Approach 

VI. Comments Outside the Scope of This 

Rulemaking 

VII. Public Participation 

VIII. Statutory And Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

K. Congressional Review Act 

IX. Statutory Authority 

I. Executive Summary 

The Renewable Fuel Standard (RFS) 

program began in 2006 pursuant to the 

requirements in Clean Air Act (CAA) 

section 211(o) which were added 

through the Energy Policy Act of 2005 

(EPAct). The statutory requirements for 

the RFS program were subsequently 

modified through the Energy 

Independence and Security Act of 2007 

(EISA), resulting in the promulgation of 

revised regulatory requirements on 

March 26, 2010.1 The transition from 

the RFS1 requirements of EPAct to the 

RFS2 requirements of EISA generally 

occurred on July 1, 2010. 

Under RFS2, EPA is required to 

determine and publish the applicable 

annual percentage standards for each 

compliance year by November 30 of the 

previous year. As part of this effort, EPA 

must 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. When we lower 

the applicable volume of cellulosic 

biofuel in this manner, we are also 

authorized to lower the applicable 

volumes of advanced biofuel and/or 

total renewable fuel by the same or a 

lesser amount. Since these evaluations 

are based on evolving information about 

emerging segments of the biofuels 

industry, and may result in the 

applicable volumes differing from those 

in the statute, we believe that it is 

appropriate to establish the applicable 

volumes through a notice-and-comment 

rulemaking process. Today’s notice 

provides our final evaluation of the 

projected production of cellulosic 

biofuel for 2012, our evaluation of 

whether to lower the applicable 

volumes of advanced biofuel and total 

renewable fuel, and the final percentage 

standards for compliance year 2012. We 

are finalizing a cellulosic biofuel 

requirement of 10.45 mill ethanolequivalent gallons for 2012, and are not 

reducing the advanced biofuel or total 

renewable fuel requirements below the 

levels specified in the statute. For future 

years, EPA will continue to evaluate 

whether it is appropriate to adjust the 

volume of advanced and total renewable 

fuel, if EPA adjusts the volume of 

cellulosic biofuel. In making such 

determinations, EPA will consider all 

relevant factors. The evaluations that 

led to these 2012 volume requirements 

were based on our evaluation of 

individual producers’ production plans 

and progress, a consideration of 

comments received in response to our 

notice of proposed rulemaking 

published on July 1, 2011,2 the estimate 

of projected biofuel volumes that the 

Energy Information Administration 

(EIA) is required to provide to EPA by 

October 31, and other information that 

became available. 

Today’s final rule does not include an 

assessment of the environmental 

impacts of the percentage standards we 

are setting for 2012. All of the impacts 

of the RFS2 program were addressed in 

the RFS2 final rule published on March 

26, 2010, including impacts of the 

biofuel standards specified in the 

statute. Today’s rulemaking simply sets 

the standards for 2012 whose impacts 

were already analyzed previously. 

Today’s notice also finalizes a number 

of changes to the RFS2 regulations. 

These changes are designed to reduce 

confusion among regulated parties and 

streamline implementation by clarifying 

certain terms and phrases and 

addressing unique circumstances that 

came to light after the RFS2 program 

went into effect on July 1, 2010. 

Additionally, this notice also makes a 

minor amendment to the gasoline 

benzene regulations regarding inclusion 

of transferred blendstocks in a refinery’s 

early benzene credit generation 

calculations. Further discussion of all of 

these changes can be found in Section 

IV. 

Finally, in today’s rulemaking we are 

announcing the price for cellulosic 

biofuel waiver credits that will be 

available for compliance with the 2012 

cellulosic biofuel requirement, and are 

also announcing the results of our 

annual assessment of the aggregate 

compliance approach for U.S. crops and 

crop residue. These announcements are 

provided in Section V. 

EPA is required to determine the 

applicable volume of biomass-based 

diesel (BBD) that will be required in 

2013 and beyond based on 

consideration of a variety of factors, and 

promulgate regulations establishing the 

volumes. The statute specifies that the 

volume of biomass-based diesel for 

years 2013 and beyond must be at least 

1 billion gallons. In the NPRM we 

proposed an applicable volume of 1.28 

bill gallons for BBD for 2013. We are 

continuing to evaluate the many 

comments on the NPRM from 

stakeholders as well as fulfilling other 

analytical requirements. In determining 


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the BBD applicable volume, the statute 

requires an analysis of the impact of the 

BBD volume on a variety of factors such 

as the impact of BBD on energy security, 

transportation fuel costs, job creation, 

water quality, and other factors. EPA 

intends to gather additional information 

to enhance our analysis of these factors 

including consideration of costs and 

benefits consistent with the provisions 

of E.O. 13563, to ensure an 

appropriately balanced decision. For 

these reasons, we are not finalizing an 

applicable volume for 2013 BBD in 

today’s rulemaking. We recognize that 

the statute calls for EPA to promulgate 

the applicable volume of BBD for 2013 

no later than 14 months before that year. 

We do intend to issue a final 

determination setting the applicable 

BBD volume for calendar year 2013 as 

expeditiously as practicable. 

A. Standards for 2012 

1. Assessment of 2012 Cellulosic Biofuel 

Volume 

To estimate the volume of cellulosic 

biofuel that can be made available in the 

U.S. in 2012, 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 work with no 

intention of marketing any fuel 

produced were not considered for this 

assessment. From this universe of 

potential cellulosic biofuel sources we 

identified the subset that had a 

possibility of producing some volume of 

qualifying cellulosic biofuel for use as 

transportation fuel in 2012. 

In today’s final rule we specify the 

projected available volume for 2012 that 

forms the basis for the percentage 

standard for cellulosic biofuel. To arrive 

at this final volume, we took into 

consideration additional factors such as 

the current and expected state of 

funding, the status of the technology, 

progress towards construction and 

production goals, and other significant 

factors that could potentially impact 

fuel production or the ability of the 

produced fuel to generate cellulosic 

Renewable Identification Numbers 

(RINs). We also considered projections 

of cellulosic biofuel provided by the 

EIA. Further discussion of these factors 

can be found in Section II.B. 

In our assessment we focused on 

domestic sources of cellulosic biofuel. 

While imports of cellulosic biofuels are 

possible and could be eligible to 

generate RINs, we believe this is 

unlikely due to local demand for 

cellulosic biofuels in the countries in 

which they are produced as well as the 

cost associated with transporting these 

fuels to the U.S. Of the domestic 

sources, we estimated that six facilities 

can make volumes of cellulosic biofuel 

available for transportation use in the 

U.S. in 2012. These facilities are listed 

in Table I.A.1–1 along with our estimate 

of the projected 2012 volume for each. 

TABLE I.A.1–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL PLANT VOLUMES FOR 2012 

Company Location Fuel type 

Projected 

available 

volume 

(million ethanolequivalent gallons) 

American Process Inc ........................................................... Alpena, MI ............................. Ethanol .................................. 0 .5 

Fiberight ................................................................................. Blairstown, IA ........................ Ethanol .................................. 2 .0 

INEOS Bio ............................................................................. Vero Beach, FL ..................... Ethanol .................................. 3 .0 

KiOR ...................................................................................... Columbus, MS ....................... Gasoline, Diesel .................... 4 .8 

KL Energy Corp ..................................................................... Upton, WY ............................. Ethanol .................................. 0 .1 

ZeaChem ............................................................................... Boardman, OR ...................... Ethanol .................................. 0 .05 

Total ................................................................................ ................................................ ................................................ 10 .45 

Each of the facilities listed in the 

Table I.A.1–1 are at different points in 

their progress towards the production of 

commercial volumes of cellulosic 

biofuel. KL Energy Corp. is the only 

facility in the United States currently 

generating cellulosic biofuel RINs. 

American Process Inc., Fiberight, and 

ZeaChem all anticipate completing 

construction on their production 

facilities in late 2011 or early 2012 and 

plan to begin producing biofuel soon 

after their facilities are complete. INEOS 

Bio and KiOR are targeting April 2012 

and mid 2012 for the start-up of their 

respective cellulosic biofuel production 

facilities. The variation in these 

expected start-up times, along with the 

facility production capacities, company 

production plans, and a variety of other 

factors have all been taken into account 

in projecting the available volume of 

cellulosic biofuel from each these 

facilities. 

2. Advanced Biofuel and Total 

Renewable Fuel in 2012 

The statute indicates that we may 

reduce the applicable volume of 

advanced biofuel and total renewable 

fuel if we determine that the projected 

volume of cellulosic biofuel production 

for 2012 falls short of the statutory 

volume of 500 million gallons. As 

shown in Table I.A.1–1, we have 

determined that this is the case. 

Therefore, we also must evaluate the 

need to lower the applicable volumes 

for advanced biofuel and total 

renewable fuel. 

To address the need to lower the 

advanced biofuel standard, we first 

consider whether it appears likely that 

the biomass-based diesel volume of 1.0 

billion gallons specified in the statute 

can be met in 2012. As discussed in 

Section II.E, we believe that the 1.0 

billion gallon standard can indeed be 

met. Since biodiesel has an Equivalence 

Value of 1.5, 1.0 billion physical gallons 

of biodiesel would provide 1.5 billion 

ethanol-equivalent gallons that can be 

counted towards the advanced biofuel 

standard of 2.0 billion gallons. Of the 

remaining 0.5 bill gallons, 10.45 mill 

gallons will be met with cellulosic 

biofuel. Based on our analysis as 

described in Section II.C, we believe 

that there will be sufficient volumes of 

other advanced biofuels, such as 

imported sugarcane ethanol, additional 

biodiesel, or renewable diesel, such that 

the applicable volume for advanced 

biofuel can remain at the statutory level 

of 2.0 billion gallons. In addition, as 

discussed in Section II.C, we believe 

there will be sufficient volumes to 

satisfy the 15.2 billion gallon applicable 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1323 

3Letter from Howard K. Gruenspecht, Acting 

Administrator, Energy Information Administration, 

to Lisa P. Jackson, Administrator, EPA. October 19, 

2011. 

4 ‘‘Small Refinery Exemption Study: An 

Investigation into Disproportionate Economic 

Hardship,’’ U.S. Department of Energy, March 2011. 

volume of total renewable fuel specified 

in the Act, so the 2012 total renewable 

fuel percentage standard is based on 

that volume. 

3. Percentage Standards for 2012 

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 are accurate, then the amount 

of renewable fuel, cellulosic biofuel, 

biomass-based diesel, and advanced 

biofuel used will meet the volumes 

required on a nationwide basis. 

To calculate the percentage standard 

for cellulosic biofuel for 2012, we have 

used the projected annual volume of 

10.45 million ethanol-equivalent gallons 

(representing 8.65 million physical 

gallons). The applicable volumes for 

biomass-based diesel, advanced biofuel, 

and total renewable fuel for 2012 will be 

those specified in the statute. These 

volumes are shown in Table I.A.3–1. 

TABLE I.A.3–1—FINAL VOLUMES FOR 2012 

Actual volume Ethanol equivalent 

volume a

Cellulosic biofuel ............................................................. 8.65 mill gal .................................................................... 10.45 mill gal. 

Biomass-based diesel .................................................... 1.0 bill gal ....................................................................... 1.5 bill gal. 

Advanced biofuel ............................................................ 1.3–1.5 b bill gal ............................................................. 2.0 bill gal. 

Renewable fuel ............................................................... 14.5–14.7 b bill gal ......................................................... 15.2 bill gal. 

aBiodiesel and cellulosic diesel have equivalence values of 1.5 and 1.7 ethanol equivalent gallons respectively. As a result, ethanol-equivalent 

volumes are larger than actual volumes for cellulosic biofuel and biomass-based diesel. b Range depends on the equivalence values of advanced biofuels other than cellulosic biofuel and biomass-based diesel. 

Four separate standards are required 

under the RFS2 program, corresponding 

to the four separate volume 

requirements shown in Table I.A.3–1. 

The specific formulas we use to 

calculate the renewable fuel percentage 

standards are contained in the 

regulations at § 80.1405 and repeated in 

Section III.B.1. The percentage 

standards represent the ratio of 

renewable fuel volume to projected nonrenewable gasoline and diesel volume. 

The projected volume of transportation 

gasoline and diesel used to calculate the 

standards in today’s final rule was 

provided by EIA.3

In March 2011, DOE evaluated the 

impacts of the RFS program on small 

entities and concluded that some small 

refineries would suffer a 

disproportionate economic hardship if 

required to participate in the program.4

As a result, we are required to exempt 

these few refineries from being obligated 

parties for a minimum of two years 

(2011 and 2012), and must also exempt 

their gasoline and diesel volumes from 

the calculation of the annual percentage 

standards. In addition, EPA has 

approved a number of individual small 

refinery petitions submitted pursuant to 

40 CFR § 80.1441(e)(2) since publication 

of the proposed rule, and has also 

adjusted the final 2012 percentage 

standards to reflect the exemption of 

these small refineries from being RFS 

obligated parties in 2012. The final 

standards for 2012 are shown in Table 

I.A.3–2 and include the adjustment for 

exempt small refineries (which 

constitute about 3.6% of the gasoline 

pool and 4.5% of the diesel pool). 

Detailed calculations can be found in 

Section III. 

TABLE I.A.3–2—FINAL PERCENTAGE

STANDARDS FOR 2012 

Cellulosic biofuel ........................... 0.006% 

Biomass-based diesel .................. 0.91 

Advanced biofuel .......................... 1.21 

Renewable fuel ............................. 9.23 

4. Historical Renewable Fuel Production 

To provide a comparison to the 2012 

volume requirements shown in Table 

I.A.3–1, we determined the actual 

annual production volumes for the four 

RFS categories of renewable fuel. Since 

data on 2011 production is currently 

incomplete, we have shown the 

production volumes for the full year 

beginning in July 2010 and ending in 

June 2011. July 2010 also marks the start 

of the RFS2 program when data 

collection began with the EPAModerated Transaction System (EMTS) 

on production of renewable fuel and 

generation of RINs. 

TABLE I.A.4–1—PRODUCTION OF RENEWABLE FUEL FROM JULY 2010–JUNE 2011 a

Actual volume Ethanol equivalent 

volume a

Cellulosic biofuel ............................................................. 0 mill gal ......................................................................... 0 mill gal. 

Biomass-based diesel .................................................... 0.43 b bill gal .................................................................. 0.64 b bill gal. 

Advanced biofuel ............................................................ 0.47 bill gal ..................................................................... 0.70 bill gal. 

Renewable fuel ............................................................... 14.05 bill gal .................................................................. 14.29 bill gal. 

aExcept for biomass-based diesel, data derived from the EPA-Moderated Transaction System (EMTS) at http://www.epa.gov/otaq/fuels/rfsdata/

index.htm. b Due to ongoing investigations of biodiesel RIN generation, these values have been derived from Census Bureau data on fats and oils at 

http://www.census.gov/manufacturing/cir/historical_data/m311k/index.html. 


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5One waiver credit would apply to one gallon of 

an obligated party’s cellulosic biofuel Renewable 

Volume Obligation (RVO). 

B. Regulatory Changes 

In today’s action we are also finalizing 

a number of changes to the RFS2 

regulations. These changes are intended 

to: 

• Clarify certain provisions because 

we have learned that there is some 

confusion among some regulated parties 

• Clarify the application of certain 

provisions to unique circumstances 

• Provide greater specificity in the 

definition of certain terms 

• Correct regulatory language that 

inadvertently misrepresented our intent 

Today’s rule also makes a minor 

amendment to the gasoline benzene 

regulations regarding inclusion of 

transferred blendstocks in a refinery’s 

early benzene credit generation 

calculations. A detailed discussion of 

these regulatory changes is provided in 

Section IV. 

C. 2012 Price for Cellulosic Biofuel 

Waiver Credits 

Since we are reducing the required 

volume of cellulosic biofuel for 2012 

below the applicable volume specified 

in the statute, EPA is required to offer 

biofuel waiver credits to obligated 

parties that can be purchased in lieu of 

acquiring cellulosic biofuel RINs.5

These waiver credits are not allowed to 

be traded or banked for future use, are 

only allowed to be used to meet the 

2012 cellulosic biofuel standard, and 

cannot be applied to deficits carried 

over from 2011. Moreover, unlike 

cellulosic biofuel RINs, waiver credits 

may not be used to meet either the 

advanced biofuel standard or the total 

renewable fuel standard. For the 2012 

compliance period, we are making 

cellulosic biofuel waiver credits 

available to obligated parties for end-ofyear compliance should they need them 

at a price of $0.78 per credit. Further 

discussion is provided in Section VI.A. 

D. Assessment of the Domestic 

Aggregate Compliance Approach 

As part of the RFS2 regulations, EPA 

established an aggregate compliance 

approach for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land. This 

compliance approach relieved such 

producers (and importers of such fuel) 

of the individual recordkeeping and 

reporting requirements otherwise 

required of producers and importers to 

verify that feedstocks used in the 

production of RIN-qualifying renewable 

fuel meet the definition of renewable 

biomass. EPA determined that 402 

million acres of U.S. agricultural land 

was available in 2007 (the year of EISA 

enactment) for production of crops and 

crop residue that would meet the 

definition of renewable biomass, and 

determined that as long as this total 

number of acres is not exceeded, it is 

unlikely that new land has been devoted 

to crop production based on historical 

trends and economic considerations. We 

indicated that we would conduct an 

annual evaluation of total U.S. acreage 

that is cropland, pastureland, or 

conservation reserve program land, and 

that if the value exceed 402 million 

acres, producers using domesticallygrown crops or crop residue to produce 

renewable fuel would be subject to 

individual recordkeeping and reporting 

to verify that their feedstocks meet the 

definition of renewable biomass. 

The RFS2 regulations provide that 

EPA will make a finding concerning 

whether the 2007 baseline amount of 

U.S. agricultural land has been 

exceeded in a given year and will 

publish this finding in the Federal 

Register by November 30 of the same 

year. Based on data provided by the 

USDA, we have estimated that U.S. 

agricultural land reached 392 million 

acres in 2011, and thus did not exceed 

the 2007 baseline acreage. 

We also stated in the preamble to the 

final RFS2 rule that if, at any point, EPA 

finds that the total agricultural land is 

greater than 397 million acres, EPA will 

conduct further investigations to 

evaluate validity of the domestic 

aggregate compliance approach. The 

total acreage estimate of 392 million 

acres does not exceed the trigger point 

for further investigation; therefore EPA 

does not plan to conduct further 

investigations into this matter. 

Additional discussion on this matter 

can be found in Section V.B of this 

preamble. 

E. Assessment of the Canadian 

Aggregate Compliance Approach 

On September 29, 2011, EPA 

approved the use of an aggregate 

compliance approach to renewable 

biomass verification for planted crops 

and crop residue grown in Canada. On 

March 15, 2011, EPA issued a notice of 

receipt of and solicited public comment 

on a petition for EPA to authorize the 

use of an aggregate approach for 

compliance with the Renewable Fuel 

Standard renewable biomass 

requirements, submitted by the 

Government of Canada. The petition 

requested that EPA determine that an 

aggregate compliance approach will 

provide reasonable assurance that 

planted crops and crop residue from 

Canada meet the definition of renewable 

biomass. 

The Government of Canada utilized 

several types of land use data to 

demonstrate that the land included in 

their 124 million acre baseline is 

cropland, pastureland or land 

equivalent to U.S. Conservation Reserve 

Program land that was cleared or 

cultivated prior to December 19, 2007, 

and was actively managed or fallow and 

nonforested on that date (and is 

therefore RFS2 qualifying land). The 

total agricultural land in Canada in 2011 

is estimated at 121 million acres. This 

data was presented to EPA in a report 

titled: Changes to the Renewable Fuel 

Standard Program Aggregate 

Compliance for Canadian Crops and 

Crop Residues: Data Analysis and 

Justification Report 2011. This report 

has been docketed at EPA–HQ–OAR– 

2010–0133. The total acreage estimate of 

121 million acres does not exceed the 

trigger point for further investigation; 

therefore EPA does not plan to conduct 

further investigations into this matter. 

Additional discussion on this matter 

can be found in Section V.B of this 

preamble. 

II. Projection of Cellulosic Volume and 

Assessment of Biomass-Based Diesel 

and Advanced Biofuel for 2012 

In order to project production volume 

of cellulosic biofuel in 2012 for use in 

setting the percentage standard, we 

collected information on 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 

2012. This section describes the 

projected available volume of cellulosic 

biofuel in 2012 as well as some of the 

uncertainties associated with those 

volumes. Section III describes the 

derivation of the percentage standards 

that will apply to obligated parties in 

2012. 

The 2012 volume projections in 

today’s final rule were based on several 

sources of information: 

• An estimate from EIA of the 

volumes of transportation fuel, biomassbased diesel, and cellulosic biofuel that 

they project will be sold or introduced 

into commerce in the U.S. in 2012. 

• Progress that the cellulosic biofuel 

industry is making in 2011 

• Our own assessment of the 

cellulosic biofuel industry’s projected 

volumes for 2012 

• Comments in response to the NPRM 

In addition to the sources of 

information listed above EPA had also 

intended to consider the Production 

Outlook Reports that are required under 

§ 80.1449 for all registered renewable 


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6So long as the required volume is below the 

volume specified in the statute, such that cellulosic 

biofuel waiver credits are available. 

fuel producers and importers. These 

Production Outlook Reports were not as 

useful as EPA had hoped in helping to 

provide information on the intentions of 

cellulosic biofuel producers in 2012 as 

very few had registered under the RFS 

program and they were thus not 

required to submit a report. EPA expects 

that in future years as more cellulosic 

biofuel producers register under the RFS 

program these reports will become of 

greater value in helping to determine 

the appropriate projected available 

volume of cellulosic biofuel. 

In directing EPA to project cellulosic 

biofuel production for purposes of 

setting the annual cellulosic biofuel 

standard, Congress did not specify what 

degree of certainty should be reflected 

in the projections. However, in response 

to the NPRM, some commenters cited 

Executive Order 13563 which states that 

regulations must in general ‘‘promote 

predictability and reduce uncertainty.’’ 

We agree that this must be a goal in the 

process of determining the appropriate 

cellulosic biofuel requirement for 2012. 

The greatest certainty is achieved when 

the level of the standard is firmly 

established before it becomes 

applicable, and all regulated parties can 

have confidence regarding that 

standard. Doing this ensures that 

obligated parties know what their 

obligations will be so that they can 

begin efforts to meet those obligations, 

and biofuel producers know what 

baseline demand for their product will 

be so that they can secure financing and 

ramp up production with confidence. 

In contrast to statements made by 

several obligated parties, meeting the 

dual goals of predictability and reducing 

uncertainty does not require EPA to 

specify an applicable volume for 

cellulosic biofuel that is as low as 

possible, or based only on demonstrated 

(as opposed to reasonably anticipated) 

production. Due to the availability of 

cellulosic waiver credits, obligated 

parties always have the means to 

comply with the cellulosic biofuel 

standard that we set,6 and at a cost that 

is predictable. There is, therefore, no 

uncertainty with regard to the level of 

their obligations or the means available 

to achieve it. 

Moreover, Executive Order 13563 also 

states that regulations must in general 

promote ‘‘economic growth, innovation, 

competitiveness, and job creation,’’ 

while ‘‘taking into account benefits and 

costs, both quantitative and qualitative.’’ 

While the cellulosic biofuel standard 

that we set should be within the range 

of what can be attained based on 

projected domestic production and 

import potential, the standard that we 

set helps drive the production of 

volumes that will be made available. 

This is consistent with comments 

submitted by the Biotechnology 

Industry Organization and the 

Renewable Fuels Association. Thus 

while any standard we set for cellulosic 

biofuel standard for 2012 will have 

some uncertainty in terms of actual 

attainment, our intention is to balance 

such uncertainty with the objective of 

promoting growth in the industry. Our 

final projected available volume of 8.65 

million gallons of cellulosic biofuel 

(10.45 million ethanol-equivalent 

gallons) for 2012 reflects these 

considerations. 

A. Statutory Requirements 

The volumes of renewable fuel to be 

used under the RFS2 program each year 

(absent an adjustment or waiver by EPA) 

are specified in CAA 211(o)(2). These 

volumes for 2012 are shown in Table 

II.A–1. 

TABLE II.A–1—REQUIRED VOLUMES IN THE CLEAN AIR ACT FOR 2012 

[Bill gal] 

Actual volume Ethanol equivalent 

volume 

Cellulosic biofuel .............................................................................................................................. a 0.5 0.5 

Biomass-based diesel ...................................................................................................................... 1.0 1.5 

Advanced biofuel ............................................................................................................................. a 2.0 2.0 

Renewable fuel ................................................................................................................................ a 15.2 15.2 

aThese values assume that the biofuels would be ethanol. If any portion of the biofuels used to meet these applicable volumes has a volumetric energy content greater than that for ethanol, these values will be lower. 

By November 30 of each year, the EPA 

is required under CAA 211(o) to 

determine and publish in the Federal 

Register the renewable fuel percentage 

standards for the following year. These 

standards are to be based in part on 

transportation fuel volumes estimated 

by the EIA for the following year. The 

calculation of the percentage standards 

is based on the formulas in § 80.1405(c) 

which express the required volumes of 

renewable fuel as a volume percentage 

of gasoline and diesel sold or 

introduced into commerce in the 48 

contiguous states plus Hawaii. 

The statute requires that if EPA 

determines that the projected volume of 

cellulosic biofuel production for the 

following year is less than the 

applicable volume shown in Table II.A– 

1, then 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 volume of advanced biofuels 

and total renewable fuel by the same or 

a lesser volume. 

B. Cellulosic Biofuel Volume 

Assessment 

In order to project cellulosic biofuel 

production for 2012, EPA has tracked 

the progress of over 100 biofuel 

production facilities. From this list of 

facilities we used publically available 

information, as well as information 

provided by DOE and USDA, to make a 

preliminary determination of which 

facilities are the most likely candidates 

to produce cellulosic biofuel and make 

it commercially available in 2012. Each 

of these companies was investigated 

further in order to determine the current 

status of their facilities and their likely 

cellulosic biofuel production volumes 

for the coming years. Information such 

as the funding status of these facilities, 

announced construction and production 

ramp up periods, and annual fuel 

production targets were taken into 

account. We also considered each 

company’s history of meeting milestone 

targets and production goals where 


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7 75 FR 76790, December 9, 2010. 

applicable. Our projection of the volume 

of cellulosic biofuel production in 2012 

is based on this information as well as 

our own assessment of the likelihood of 

these facilities successfully producing 

cellulosic biofuel in the volumes 

indicated. A brief description of each of 

the companies we believe can produce 

cellulosic biofuel and make it 

commercially available in 2012 can be 

found below. 

1. Existing Cellulosic Biofuel Facilities 

The rule that established the required 

2011 cellulosic biofuel volume 

identified five production facilities that 

we projected would produce cellulosic 

biofuel and make the fuel commercially 

available in 2011. Each of these 

production facilities are now 

structurally complete, however they are 

in various stages of biofuel production. 

All of these facilities have either 

produced some volume of cellulosic 

biofuel in 2011, or are on schedule to do 

so later in the year. Only KL Energy and 

Range Fuels, however, have completed 

registration of cellulosic biofuel 

production facilities under the RFS2 

program and as such they are currently 

the only facilities of the five listed here 

currently eligible to generate cellulosic 

biofuel RINs. For more background 

information on each of these facilities 

see the 2011 standards rule.7

DuPont Danisco Cellulosic Ethanol 

(DDCE) successfully started up their 

small demonstration facility in Vonore, 

Tennessee in late 2010. This facility has 

a maximum production capacity of 

250,000 gallons of ethanol per year and 

uses an enzymatic hydrolysis process to 

convert corn cobs into ethanol. In 

conversations with EPA in July 2011 

DDCE indicated that this facility was 

currently producing ethanol at 

approximately half the nameplate 

capacity, corresponding to a volume of 

125,000 gallons per year. The focus of 

this facility, however, remains gathering 

information to help successfully design 

and operate DDCE’s first commercial 

scale facility. All the cellulosic ethanol 

currently produced at this facility is 

used for testing purposes or given away. 

No RINs are currently generated for this 

ethanol and it is not available for 

purchase by obligated parties. DDCE has 

indicated that they have no plans to 

generate RINs or sell ethanol produced 

at their facility in Vonore in 2012. No 

volume of cellulosic ethanol has 

therefore been included in the 

projections of available cellulosic 

biofuel for 2012. 

Fiberight uses an enzymatic 

hydrolysis process to convert the 

biogenic portion of separated municipal 

solid waste (MSW) into ethanol. 

Construction on the first stage of 

Fiberight’s Blairstown, Iowa facility was 

completed in the summer of 2010. The 

production capacity of the first stage of 

this project is 2 million gallons of 

ethanol per year. Fiberight had planned 

to begin production of cellulosic biofuel 

from this facility in late 2010 but poor 

economic conditions, due in part to low 

cellulosic RIN values in 2010, caused 

them to postpone fuel production. 

Fiberight had also planned to begin 

construction on an expansion of this 

facility in late 2010 that would increase 

the production potential to 6 million 

gallons of ethanol per year, but were 

unable to secure funding to carry out the 

construction as planned. They have 

since secured funding and began 

construction on the expansion of their 

Blairstown facility in April 2011. 

Fiberight anticipates that they will begin 

fuel production in early 2012 and will 

ramp up production at this facility 

throughout 2012. EPA projects the 

production of 2 million gallons of 

cellulosic ethanol from this facility in 

2012. 

KiOR continues to produce a small 

volume of renewable crude from 

agricultural residue at their 

demonstration facility in Houston, 

Texas using a technology they call 

Biomass Catalytic Cracking (BCC). This 

technology uses heat and a proprietary 

catalyst to convert biomass to a 

renewable crude with a relatively low 

oxygen content. The renewable crude is 

then upgraded to produce renewable 

gasoline and diesel, as well as a small 

quantity of fuel oil. While KiOR plans 

to continue to operate their Houston 

facility in 2012 its main purpose will be 

to provide small quantities of fuel for 

testing purposes and to provide data for 

the optimization of KiOR’s first 

commercial facility. In conversations 

with EPA KiOR has indicated that it is 

unlikely that any significant volume of 

fuel from this facility will be sold 

commercially. EPA has therefore not 

included any volume from KiOR’s 

Houston facility in our projected 

available volumes for 2012. 

KL Energy has developed a process to 

convert cellulose and hemicellulose into 

cellulosic sugars using a thermalmechanical pretreatment process 

followed by an enzymatic hydrolysis. It 

had initially planned to used woody 

biomass as their feedstock for cellulosic 

biofuel production; however its 

production process is versatile enough 

to allow for a wide variety of cellulosic 

feedstocks to be used. In August 2010 

KL Energy announced a joint 

development agreement with Petrobras 

America Inc. As part of the agreement 

Petrobras has invested $11 million to 

modify KL Energy’s facility in Upton, 

Wyoming to allow it to process bagasse 

and other waste products. If successful, 

Petrobras and KL Energy plan to work 

together to integrate the technology into 

currently existing ethanol production 

facilities in Brazil. The modifications to 

KL Energy’s facility were completed 

earlier this year. KL Energy is currently 

producing small volumes of cellulosic 

ethanol and plans to continue to do so 

throughout 2012. In August 2011 KL 

Energy successfully registered its 

cellulosic biofuel production facility 

under the RFS program making it 

eligible to generate RINs for biofuel 

produced from this facility. KL Energy 

has indicated to EPA its intent to 

generate RINs for the fuel it produces 

and to sell it commercially in the United 

States. EPA projects that 100,000 gallons 

of cellulosic ethanol will be available 

from this facility in 2012. 

Range Fuels began production of 

methanol at their Soperton, Georgia 

facility in the third quarter of 2010. This 

facility uses a thermochemical 

technology to produce syngas 

(consisting of mostly hydrogen and 

carbon monoxide) from a woody 

biomass feedstock. The syngas is then 

converted into fuel with the aid of a 

chemical catalyst developed by Range. 

Range has developed the capability to 

produce both methanol and ethanol, 

depending on the catalyst used. In 

January 2011, after producing a small 

volume of ethanol from this facility and 

proving this capability, Range Fuels 

shut down the Soperton facility in order 

to work through technical difficulties 

they had been experiencing. No timeline 

has been given for the restart of this 

facility and fuel production from this 

facility in 2012 appears unlikely. No 

cellulosic fuel production from Range 

Fuels has been included in EPA’s 2012 

projected available volume. 

2. Potential New Facilities in 2012 

In the proposed rule EPA discussed 

five new cellulosic biofuel production 

facilities that had plans to begin 

commercial production at some point in 

2012. These facilities were at various 

stages in the construction process, and 

as such had various degrees of 

uncertainty associated with any 

projected 2012 commercial production. 

Three of these facilities, those being 

developed by INEOS Bio, KiOR, and 

ZeaChem, have made significant 

progress towards completion and are 

expected to produce and market 

cellulosic biofuel in 2012. Two of the 

companies mentioned in the proposed 

rule, Fulcrum Bioenergy and Terrabon, 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1327 

are no longer on a schedule to produce 

cellulosic biofuel in 2012. Finally, EPA 

has become aware of a sixth company, 

American Process Inc., which is 

developing a cellulosic biofuel project 

that is likely to produce and market 

some volume of cellulosic biofuel in 

2012. The following section provides 

updated information on each of the 

companies discussed in the proposed 

rule, as well as a summary of the project 

being developed by American Process 

Inc. 

Fulcrum Bioenergy is planning to 

build a facility capable of producing 

10.5 million gallons of cellulosic 

ethanol and 16 megawatts of renewable 

electricity per year. It has developed a 

thermochemical technology to produce 

ethanol from separated MSW via syngas 

using a chemical catalyst. In November 

2010 Fulcrum announced that it had 

received a term sheet for an $80 million 

loan guarantee from DOE and was 

entering into the final phase of the loan 

guarantee program. Prior to that 

Fulcrum had announced that it had 

signed long term feedstock supply 

contracts for this facility as well as 

engineering, procurement, and 

construction contracts. In January 2011 

Fulcrum announced it had closed on a 

$75 million Series C financing that 

would provide the remaining necessary 

capital for the construction of its first 

commercial production facility pending 

the closing of its DOE loan guarantee. 

The loan guarantee, however, has yet to 

be finalized. As a result the start of the 

construction of this facility, originally 

planned for the second quarter of 2011, 

is now expected to begin in late 2011. 

EPA has not included any volume of 

cellulosic biofuel from Fulcrum 

Bioenergy’s facility in our 2012 

projected available volume because of 

this delay. 

INEOS Bio has developed a process 

for producing cellulosic ethanol by first 

gasifying feedstock material into a 

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 was in addition to 

the grant of up to $50 million INEOS 

Bio received from DOE in January 2010. 

This facility will be capable of 

producing 8 million gallons of cellulosic 

biofuel as well as 6 megawatts of 

renewable electricity from a variety of 

feedstocks including yard, agricultural, 

and wood waste, as well as separated 

MSW. On February 9, 2011 INEOS Bio 

broke ground on this facility. Since 

February significant progress has been 

made and INEOS Bio remains on target 

to complete construction on this facility 

in April 2012. Commercial production 

of cellulosic ethanol is expected to 

begin soon after construction is 

complete. Three million gallons of 

cellulosic ethanol from this facility has 

been included in EPA’s projected 

available volume for 2012. 

After successful operation of their 

demonstration plant in Houston, Texas 

KiOR began construction on its first 

commercial scale facility in May 2011. 

This facility, located in Columbus, 

Mississippi, will convert biomass to a 

low oxygen biocrude using a process 

KiOR calls Biomass Catalytic Cracking 

(BCC). BCC uses a catalyst developed by 

KiOR in a process similar to Fluid 

Catalytic Cracking currently used in the 

petroleum industry. KiOR’s Columbus 

facility will also be capable of upgrading 

this biocrude into finished gasoline and 

diesel as well as a small quantity of fuel 

oil. KiOR plans to finish construction on 

this facility in the first half of 2012 and 

begin commercial production early in 

the third quarter of 2012. KiOR has also 

announced plans to construct several 

more commercial scale biofuel 

production facilities in Mississippi and 

across the southeastern United States. It 

is unlikely any of these additional 

facilities will begin production of 

biofuel in 2012. EPA has included 3 

million gallons of cellulosic biofuel (4.8 

million ethanol equivalent gallons) from 

KiOR’s Columbus facility in our 

projected available volume for 2012. 

Terrabon completed construction of a 

small demonstration scale facility for 

the conversion of MSW and other waste 

materials into gasoline in 2010 and are 

currently developing plans for their first 

commercial scale facility. Terrabon 

utilizes a unique production process 

that can be used to produce gasoline, 

diesel, or jet fuel. Feedstock is first 

fermented into carboxylic acids by a 

variety of micro organisms. These 

carboxylic acids are then neutralized to 

form carboxylate salts that are 

dewatered, dried, and thermally 

converted to ketones. Finally, the 

ketones are hydrogenated to form 

alcohols which can then be refined into 

gasoline, diesel, or jet fuel. Terrabon 

had hoped to begin producing cellulosic 

biofuel at their first commercial scale 

facility some time in 2012, however 

difficulties in securing the necessary 

funding have delayed the expected start 

up of their first commercial scale facility 

to 2013. EPA has not included any 

volume of cellulosic biofuel from 

Terrabon in our 2012 projected available 

volume. 

ZeaChem has begun construction on a 

small demonstration scale facility in 

Boardman, Oregon capable of producing 

250,000 gallons of cellulosic ethanol per 

year. Its production process uses a 

combination of biochemical and 

thermochemical technologies to 

produce ethanol and other renewable 

chemicals from cellulosic materials. The 

feedstock is first fractionated into two 

separate streams containing cellulosic 

sugars and lignin. The cellulosic sugars 

are fermented into ethyl acetate using a 

naturally occurring acetogen, which can 

then be hydrogenated into ethanol. The 

hydrogen necessary for this process is 

produced by gasifying the lignin stream 

from the cellulosic biomass. ZeaChem’s 

process is flexible and is capable of 

producing a wide range of renewable 

chemical and fuel molecules in addition 

to ethanol. ZeaChem received a grant of 

up to $25 million from DOE in January 

2010 for the construction of their 

demonstration facility. Since then 

ZeaChem has made significant progress 

on its demonstration facility and 

currently plans to begin production of 

cellulosic ethanol from this facility in 

early 2012. It has indicated to EPA, 

however, that it is highly unlikely to 

achieve full production capacity at this 

facility in its first year of production 

and has suggested that the production of 

50,000 gallons of cellulosic ethanol from 

this facility in 2012 is a more realistic 

expectation. Despite this small volume, 

ZeaChem does intend to generate RINs 

for the fuel that they produce and to 

market it commercially. Based on this 

information EPA has included 0.05 

million gallons of cellulosic ethanol in 

our projected available volume for 2012. 

American Process Inc. (API) is 

developing a project in Alpena, 

Michigan capable of producing up to 

900,000 gallons of cellulosic ethanol per 

year from woody biomass. This facility 

will use a technology developed by API 

called GreenPower+TM. This technology 

extracts the hemicelluloses portion of 

woody biomass using hot water and 

hydrolyzes it into cellulosic sugars. 

These cellulosic sugars are then 

converted to ethanol or other alcohols, 

while the remaining portion of the 

woody biomass, containing mostly 

cellulose and lignin, is processed into 

wood paneling at a co-located facility. 

At larger scale facilities API anticipates 

burning the residual biomass in a boiler 

to produce renewable steam and 

electricity as well as cellulosic biofuel. 

In January 2010 API received a grant 

from DOE for up to $18 million for the 

construction of their demonstration 

facility. Construction of the Alpena, 

Michigan facility began in March 2011 

and API anticipates beginning the 

production of cellulosic ethanol at this 

site early in 2012. API was not 


tkelley on DSK3SPTVN1PROD with RULES3
1328 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

8Letter from Howard K. Gruenspecht, EIA Acting 

Administrator, to Lisa Jackson, EPA Administrator, 

October 19, 2011. 

discussed as a potential producer of 

cellulosic biofuels in 2012 in our 

proposed rule due to uncertainty about 

its ability to generate RINs with the 

intended feedstock and production 

process. EPA anticipates these issues 

will be resolved. Cellulosic biofuel 

produced at API’s facility will therefore 

likely be eligible for cellulosic RINs. For 

our 2012 projected available volume of 

cellulosic biofuels we have included 

500,000 gallons of cellulosic ethanol 

from this facility. This volume 

represents the low end of API’s 

production target for that year due to the 

uncertainties associated with the start 

up of a new industrial facility utilizing 

a technology unproven at industrial 

scale. 

Another potential source of cellulosic 

biofuel in 2012 is the application of a 

technology being developed by EdeniQ. 

EdeniQ is developing a suite of enzymes 

capable of breaking down cellulose into 

simple sugars that can then be 

fermented into ethanol. Rather than 

build its own production facilities 

EdeniQ plans to license its enzymes to 

existing corn ethanol facilities. Such 

licensing would be accompanied by the 

Cellunator, an advanced milling device 

EdeniQ has developed to reduce the 

particle size of corn kernels to enable 

greater conversion of starch to ethanol 

as well as the conversion of cellulose to 

simple sugars. EdeniQ claims that its 

technology would allow corn ethanol 

facilities to increase ethanol production 

by 1–2% by converting the cellulosic 

portion of the corn kernel into ethanol. 

EdeniQ is also working to increase the 

effectiveness of its enzymes in order to 

enable ethanol production increases of 

3–4% from the cellulose in the corn 

kernel in the future. EdeniQ plans to 

begin commercial trials of its technology 

in the second half of 2011. This 

technology has the potential to be 

implemented rapidly and produce 

significant amounts of cellulosic ethanol 

in 2012 as it requires relatively small 

capital additions to already existing 

corn ethanol facilities. While this 

technology is promising, there is 

currently no pathway in the RFS2 

regulations for the generation of 

cellulosic biofuel RINs using the 

cellulosic portion of the corn kernel as 

a feedstock. Moreover, EdeniQ has not 

announced any agreements with corn 

ethanol producers to install this 

technology to enable the production of 

cellulosic ethanol. For these reasons, 

EPA has not included any cellulosic 

ethanol production from EdeniQ’s 

technology in our 2012 projections. 

In addition to the facilities mentioned 

above, EPA is also aware of three 

companies planning to begin the 

production of cellulosic biofuels in 

early 2013. Coskata, Enerkem, and Poet 

are planning on completing 

construction on their first commercial 

scale cellulosic biofuel facilities in late 

2012 or early 2013 and producing 

commercial volumes of biofuels in 2013. 

While all of these facilities continue to 

make progress towards commercial 

production of cellulosic biofuel in 2013 

it is highly unlikely that any of these 

facilities will be capable of producing 

cellulosic biofuels by the end of 2012. 

EPA has therefore not included any 

volume of cellulosic biofuel from these 

facilities in our projected available 

volume for 2012. These facilities, along 

with several other commercial cellulosic 

biofuel facilities planning to begin 

production in 2013, notably the first 

commercial scale facilities from 

Abengoa and Mascoma, indicate that the 

potential exists for the rapid expansion 

of production volumes in future years. 

3. Imports of Cellulosic Biofuel 

While domestically produced 

cellulosic biofuels are the most likely 

source of cellulosic biofuel available in 

the United States, producers and/or 

importers of cellulosic biofuel produced 

in other countries may also generate 

RINs and participate in the RFS2 

program. While the RFS2 program does 

provide a financial incentive for 

companies to import cellulosic biofuels 

into the United States, the combination 

of local demand, financial incentives 

from other governments, and 

transportation costs for the cellulosic 

biofuel has resulted in no cellulosic 

biofuel being imported to the United 

States thus far. EPA believes this 

situation is likely to continue in the 

near future. Additionally, the majority 

of internationally based cellulosic 

biofuel facilities that currently exist or 

plan to complete construction by the 

end of 2012 are small research and 

development or pilot facilities not 

designed for the commercial production 

of fuel. 

Two notable exceptions, both located 

in Canada, are Enerkem and Iogen. 

Enerkem has a currently existing 

commercial production facility in 

Westbury, Quebec and is expecting to 

complete construction on a second 

facility in Edmonton, Alberta in late 

2011. Iogen has a small demonstration 

facility in Ottawa and is currently 

exploring the possibility of building its 

first commercial facility near Prince 

Albert, Saskatchewan. The large 

expected production volumes and 

relatively small distance this fuel would 

have to be transported to reach the 

United States make these facilities the 

most likely candidates to import 

cellulosic biofuel into the United States. 

In conversations with EPA, however, 

both companies indicated that they had 

no current intentions of importing fuel 

from their Canadian production 

facilities into the United States. On 

September 1, 2010 the government of 

Canada finalized regulations requiring 

all gasoline sold in Canada to have a 

renewable content of 5% and all diesel 

fuel and heating oil to have a renewable 

content of 2%. These regulations will 

further increase local demand for any 

cellulosic biofuel produced from these 

two facilities and decrease the 

likelihood of any of this fuel being 

exported to the United States. For these 

reasons we have not included any 

cellulosic biofuel production from 

foreign facilities in our projections of 

cellulosic biofuel availability in 2012. 

4. Projections From the Energy 

Information Administration 

Section 211(o)(3)(A) of the Clean Air 

Act requires EIA to ‘‘* * * provide to 

the Administrator of the Environmental 

Protection Agency an estimate, with 

respect to the following calendar year, 

of the volumes of transportation fuel, 

biomass-based diesel, and cellulosic 

biofuel projected to be sold or 

introduced into commerce in the United 

States.’’ EIA provided these estimates to 

us on October 19, 2011.8 With regard to 

cellulosic biofuel, the EIA estimated 

that the available volume in 2012 would 

be 6.9 million gallons based on its 

assessment of the utilization of 

production capacity. A summary of the 

commercial scale plants they considered 

and associated production volumes is 

shown below in Table II.B.4. In addition 

to the facilities listed in this table EIA 

also projects that three pilot-scale 

facilities, those owned by American 

Process (Alpena, MI), KL Process Design 

(Upton, WY) and ZeaChem (Boardman, 

OR) will produce an additional 0.2 

million gallons of cellulosic biofuel and 

make it available for sale in the U.S. in 

2012. 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1329 

TABLE II.B.4—COMMERCIAL-SCALE CELLULOSIC BIOFUEL PLANTS EXPECTED TO GENERATE CELLULOSIC BIOFUEL RINS

IN 2012 

Year online Company Location Product 

Nameplate capacity (million 

gallons) 

Projected 

utilization 

(%) 

Projected production (million 

gallons) 

2011/12 .................. Fiberight, LLC .................. Blairstown, IA ................... Ethanol ........ 6.4 25 1.6 

2012 ....................... INP Bioenergy a ............... Vero Beach, FL ............... Ethanol ........ 8.0 25 2.0 

2012 ....................... KiOR ................................ Columbus, MS ................. Liquids ......... 12.2 25 3.1 

Total ................ .......................................... .......................................... ..................... 26.6 25% 6.7 

aEPA refers to INEOS New Planet (INP) Bioenergy as INEOS Bio throughout this rule. 

EIA’s projections of cellulosic biofuel 

production in 2012 are very similar to 

EPA’s projections discussed above and 

summarized in Section II.B.6 below. 

The lists of companies that EIA and EPA 

expect to generate cellulosic biofuel 

RINS in 2012 are the same. There are, 

however, several small differences in 

the volumes of cellulosic biofuel 

expected to be produced at some of the 

production facilities listed. EPA has 

slightly higher projections of cellulosic 

biofuel production for Fiberight (2 

million gallons vs. 1.59 million gallons), 

INEOS Bio (3 million gallons vs. 2 

million gallons), and American Process 

Inc. (0.5 million gallons vs. less than 0.2 

million gallons). These slight variations 

are a result of different methodologies 

used by EIA and EPA to project biofuel 

production in future years. Both 

Fiberight and INEOS Bio are 

commercial scale facilities that plan to 

begin production in 2012. As a result, 

EIA has used a standard utilization 

factor of 25% (used for the first year of 

production for all commercial scale 

facilities) along with the nameplate 

capacity of these facilities to project 

their production volumes for 2012. EPA 

believes it is more appropriate to 

consider the timing of the anticipated 

start up of these facilities within 2012. 

Facilities planning to begin production 

early in the year should not have the 

same expected utilization factor as those 

planning to begin production near the 

end of the year. Both Fiberight and 

INEOS Bio plan to complete 

construction and begin the production 

of fuel in early 2012, and therefore EPA 

has projected production volumes from 

these facilities that are equivalent to 

2012 utilization rates of slightly higher 

than 25% in comparison to their full, 

long-term production potential. 

EIA’s projected production volume for 

American Process Inc. assumes a 

utilization factor of 10%, consistent 

with the factor that EIA uses for all 

demonstration scale facilities. While 

this may be reasonable in many cases as 

the purpose of most pilot plants is not 

to produce fuel for commercial scale, 

American Process Inc. has 

communicated to EPA that it plans to 

produce volumes approaching its 

facility’s nameplate capacity in their 

first year. While EPA believes this is 

unlikely due to the challenges of 

starting up a facility utilizing a 

technology that has not been proven at 

commercial scale, we believe a volume 

corresponding to a utilization rate 

higher than 10%, but at the low end of 

American Process Inc.’s target 

production range is appropriate. While 

the production volumes of the other 

companies listed in EIA and EPA’s 

projected available volume tables are 

not identical, the differences are small 

and their impact on the overall volume 

projection is negligible. 

There is also a slight variation in the 

nameplate capacities for two of the 

listed facilities, Fiberight and KiOR. 

This is once again the result of differing 

methods for determining the nameplate 

capacities used by EIA and EPA. EIA 

used publically available information to 

calculate the nameplate capacities for 

these two facilities. The Fiberight plant 

is a converted corn ethanol facility that 

had a production capacity of 25.5 

million gallons per year. Fiberight 

announced they expected to be able 

produce cellulosic ethanol at 25% of the 

original capacity and these numbers 

formed the basis for EIA’s nameplate 

capacity. Similarly for KiOR EIA’s 

nameplate capacity was based on the 

number of tons the facility could 

process per day and the expected yield. 

EPA’s nameplate capacities, conversely, 

are based on conversations with each of 

these companies. EPA does not believe 

these slight differences in nameplate 

capacities have a significant impact on 

the cellulosic biofuel volume 

projections made by EPA and EIA. 

While the cellulosic biofuel volume 

projections for 2012 provided by EIA are 

not identical to those being finalized in 

this rule EPA believes that they are 

similar enough to support the volumes 

we are finalizing. Where differences 

exist they are primarily due to EPA’s 

consideration of facility specific 

situations rather than use of uniform 

utilization factors. As discussed above, 

EPA believes this is appropriate, and 

that wherever possible these facility 

specific factors should be taken into 

account. CAA 211(o)(7)(D) vests the 

authority for making the projection with 

EPA, since it provides that the 

projection is ‘‘determined by the 

Administrator based on the estimate 

provided [by EIA].’’ If Congress 

intended that EPA simply adopt EIA’s 

projection without an independent 

evaluation, it would not have specified 

that the projection is ‘‘determined by 

the [EPA] Administrator’’. Although the 

statute provides that our determination 

must be ‘‘based on the estimate 

provided’’ by EIA, we believe that our 

consideration of EIA’s estimate in 

deriving our own projection as 

described above satisfies this statutory 

requirement. 

5. Comments on the Proposed Rule 

EPA received comments on our 

proposed rule recommending various 

methodologies or suggested volumes for 

the final rule. Several parties supported 

our projected volumes and emphasized 

the importance of maintaining a 

consistent policy supporting growth in 

the cellulosic biofuel industry. Other 

comments we received recommended 

that the volume we set for cellulosic 

biofuel be based only on the 

demonstrated production rates of 

facilities that have been in production 

for at least three months. EPA believes 

this approach is inconsistent with the 

requirement that the mandated volume 

of cellulosic biofuel be based on the 

projected, not demonstrated, volume for 

any given year. Using the approach 

recommended by the commenters 

would effectively project no market 

growth from the end of 2011 through 

2012, and would lead to no 2012 market 

demand for additional cellulosic biofuel 

capacity that comes on line during the 

course of 2012, hindering industry 

growth. As a result, the incentives for 

the cellulosic biofuels industry to grow, 

which are one of the primary purposes 


tkelley on DSK3SPTVN1PROD with RULES3
1330 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

of the RFS program and which are 

consistent with Executive Order 13563, 

would be compromised. 

Several other commenters claimed 

that cellulosic biofuel technology was 

not yet capable of producing the 

volumes of fuel indicated in our 

proposal and that the proposed range of 

cellulosic biofuels was too high. 

Chevron suggested that EPA finalize the 

lower end of the proposed range (3.55 

million ethanol-equivalent gallons). 

After reassessing the state of the 

cellulosic biofuel industry and tracking 

the progress being made towards the 

production of cellulosic biofuels at 

commercial scale facilities, EPA 

believes the industry is capable of 

exceeding the lower end of the range of 

projected volume from our proposed 

rule. In order to provide the appropriate 

economic conditions for the cellulosic 

biofuel industry to grow in accordance 

with the objectives of the statute, it is 

important that these fuels, once 

produced, have a viable market. EPA 

believes that setting the 2012 standard 

for cellulosic biofuels at the low end of 

the proposed range, or some lower 

volume, could potentially result in a 

depressed market for cellulosic biofuel 

and would discourage cellulosic biofuel 

producers from producing quantities of 

fuel in 2012 that are actually attainable. 

Alternatively, we also received 

comments requesting that EPA finalize 

the high end of the proposed volume 

(15.7 ethanol-equivalent gallons). While 

this approach would provide a strong 

incentive for potential cellulosic biofuel 

producers to maximize their production 

of fuel, EPA does not believe it would 

be consistent with the requirement that 

the volume mandate be based on the 

projected production volume. As 

discussed above, several companies 

have experienced delays in their 

construction plans since the proposed 

rule has been published, and others 

have lowered their production targets or 

indicated that they no longer intend to 

generate RINs for the cellulosic biofuel 

they produce. While it is possible that 

one or more of the companies for whom 

we have included volumes in our 2012 

projection may produce a greater 

volume of fuel than we currently 

anticipate, EPA does not believe it 

would be appropriate to rely on such 

speculation in setting the applicable 

volume of cellulosic biofuel for 2012. 

We believe that the 2012 cellulosic 

biofuel applicable volume of 8.65 

million gallons (10.45 million ethanolequivalent gallons) finalized in this rule 

is a reasonable projection of the volume 

of cellulosic biofuel that will be 

produced and made available for RFS 

compliance in 2012. While this volume 

is slightly higher than the volume 

projected by EIA we believe this is 

appropriate based on the consideration 

of company specific factors such as 

when in the year the companies 

anticipate the start of fuel production 

and production targets shared with EPA. 

The difference in the methodologies 

used for EIA and EPA’s projections is 

discussed in further detail in Section 

II.B.4. 

The Consumers Energy Alliance, in 

addition to suggesting that the range of 

cellulosic biofuel production in our 

proposed rule was too high, also 

requested that EPA perform a costbenefit analysis to determine the 

implications of our proposed standards. 

The Clean Air Act clearly states that in 

the event that the projected volume of 

cellulosic biofuel production for the 

following year is less than the 

applicable volume shown in Table II.A– 

1, EPA is to reduce the applicable 

volume of cellulosic biofuel to the 

projected volume available during that 

calendar year. Since the mandated 

volume for any given year is to be based 

solely on the projected volume available 

for that year, a cost-benefit analysis is 

not necessary. 

Two cellulosic biofuel companies, 

American Process Inc. and ZeaChem, 

commented on the volume of cellulosic 

biofuels they expect to produce in 2012 

and requested that EPA’s projections of 

available volumes of cellulosic biofuel 

be adjusted accordingly. After 

consideration of these comments and 

additional information provided by 

these two companies EPA agrees that 

the adjustments they suggested are 

appropriate. As a result a volume of 

500,000 gallons of cellulosic ethanol 

from American Process Inc., a volume 

representing the lower end of their 

production target for 2012, has been 

included in our projected available 

volume. The volume of fuel projected 

from ZeaChem’s facility has been 

changed to 50,000 gallons of cellulosic 

ethanol in 2012 to more accurately 

reflect their current expectations for 

their facility. 

Finally, EPA received several 

comments from obligated parties 

requesting that in any year in which 

actual annual production of cellulosic 

biofuel falls below the applicable 

volume used to set the annual standard, 

that EPA use its waiver authority to 

waive a volume of cellulosic biofuel 

equal to the shortfall in February of the 

following year, prior to the February 28 

deadline for submission of compliance 

demonstration reports by obligated 

parties. This approach, these 

commenters argued, would ensure that 

their obligations match the number of 

cellulosic biofuel RINs that are available 

in the market. These comments deal 

with EPA’s general waiver authority 

under CAA 211(o)(7)(A), and thus are 

not directly related to the annual 

standard setting process or the waiver 

authority that is specific to cellulosic 

biofuel under 211(o)(7)(D). At this time 

EPA has received no petitions for a 

waiver of the 2011 cellulosic biofuel 

volume under 211(o)(7)(A) due to 

inadequate domestic supply, and thus 

we are not considering at this time 

whether and how any portion of the 

2011 cellulosic biofuel applicable 

volume should be waived. 

6. Summary of Volume Projections 

The information EPA has gathered on 

the potential cellulosic biofuel 

producers in 2012, described above, 

allows us to project facility-specific 

volumes of cellulosic biofuel production 

for 2012. This information is 

summarized in Table II.B.6–1 below. 

TABLE II—B.6–1—CELLULOSIC BIOFUEL 2012 PROJECTED AVAILABLE VOLUME

Company name Location Feedstock Fuel Capacity 

(MGY) 

Earliest 

production 

2012 Projected available volume 

(MG) 

Ethanol 

equivalent 

gallons (MG) 

American Process Inc.Alpena, MI ......... Waste Wood ...... Ethanol .............. 0 .9 Early 2012 ......... 0 .5 0 .5 

Fiberight ............. Blairstown, IA .... MSW .................. Ethanol .............. 6 Early 2012 ......... 2 .0 2 .0 

INEOS Bio a ....... Vero Beach, FL Ag Residue, 

MSW.

Ethanol .............. 8 May 2012 ........... 3 .0 3 .0 

KiOR .................. Columbus, MS ... Pulp Wood ......... Gasoline, Diesel 10 Mid 2012 ............ 3 .0 4 .8 

KL Energy .......... Upton, WY ......... Bagasse ............. Ethanol .............. 1 .5 Online ................ 0 .1 0 .1 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1331 

TABLE II—B.6–1—CELLULOSIC BIOFUEL 2012 PROJECTED AVAILABLE VOLUME—Continued 

Company name Location Feedstock Fuel Capacity 

(MGY) 

Earliest 

production 

2012 Projected available volume 

(MG) 

Ethanol 

equivalent 

gallons (MG) 

ZeaChem ........... Boardman, OR .. Planted Trees .... Ethanol .............. 0 .25 Early 2012 ......... 0 .05 0 .05 

Total ............ ............................ ............................ ............................ ...................... ............................ 8 .65 10 .45 

aThis facility is listed as INP Bioenergy in EIA’s projections. 

While the production volumes in 

Table II.B.6–1 have some uncertainty, 

we believe that a total volume of 8.65 

million gallons (10.45 million ethanolequivalent gallons) is reasonably 

attainable. By basing the 2012 cellulosic 

biofuel standard on the reasonably 

attainable volumes rather than proven 

production volumes, we aim to avoid a 

scenario in which cellulosic biofuel 

production exceeds the mandated 

volume; no mechanism exists for this 

standard to be raised should cellulosic 

biofuel production exceed the 2011 

standard. Such a scenario would result 

in weak demand for cellulosic biofuels 

and RINs. Moreover, the standard that 

we set determines in large part the 

volumes of cellulosic biofuel that will 

be produced. We believe that the intent 

of Congress in establishing steadily 

increasing applicable volumes of 

cellulosic biofuel in the RFS program 

through EISA was to provide a reliable 

market for these fuels and in so doing 

to spur growth in the cellulosic biofuels 

industry. EPA believes the projected 

available volume finalized in this rule 

best reflects these intentions. 

Based on our assessment of the 

potential production capabilities of 

individual companies as described 

above, EPA is finalizing the cellulosic 

biofuel standard for 2012 at 10.45 

million ethanol-equivalent gallons of 

cellulosic biofuel. This number 

represents the volume of RIN-generating 

cellulosic biofuel that we believe can be 

made available for use as transportation 

fuel, heating oil, or jet fuel in 2012. It 

incorporates reductions from the annual 

production capacity of each facility 

based on when fuel production can 

begin and assumptions regarding a 

ramp-up period to full production. We 

believe that a production volume of 

10.45 million ethanol-equivalent gallons 

is reasonably attainable despite the 

uncertainties. Moreover, by setting the 

standard for cellulosic biofuel based on 

the volumes that are reasonably 

attainable, we are providing incentives 

for producers to overcome uncertainties 

and greater opportunities for funding 

based on an established demand. 

There are also a variety of factors that 

could lead to production volumes 

greater than those listed in Table II.B.6– 

1 and make up for potential shortfalls 

elsewhere. For instance: 

• For each of the facilities listed, we 

are projecting that their production will 

be some volume less than the capacity 

of their facility. It is possible, however, 

that these companies could produce a 

greater volume of fuel than they are 

currently anticipating or has been 

projected by EPA. 

• It is possible that companies that 

are currently targeting 2013 for 

commercial production may produce 

cellulosic biofuel ahead of schedule and 

generate RINs in 2012. None of this 

volume was included in our projection 

for 2012. 

• A high demand for cellulosic 

biofuels may be sufficient to cause 

companies to import fuel into the 

United States, even if they currently 

have no plans to do so. As described in 

Section II.B.3 above, there are several 

foreign producers that are either 

producing cellulosic biofuel now, or 

could potentially produce some 

cellulosic biofuel volume in 2012. 

Finally, we note that if the actual 

volume of cellulosic biofuel RINs that 

are available in 2012 falls short of the 

10.45 million gallon RINs used to derive 

the 2012 cellulosic biofuel standard, 

obligated parties have other recourses: 

• Purchase cellulosic biofuel waiver 

credits from the EPA (see further 

discussion in Section V.A) 

• Carry over a deficit from 2012 into 

2013 according to § 80.1427(b) under 

certain conditions 

C. Advanced Biofuel and Total 

Renewable Fuel in 2012 

Under CAA 211(o)(7)(D)(i), EPA has 

the discretion to reduce the applicable 

volumes of advanced biofuel and total 

renewable fuel in the event that the 

projected volume of cellulosic biofuel 

production is determined to be below 

the applicable volume specified in the 

statute. As described in Section II.B 

above, we are indeed projecting the 

volume of cellulosic biofuel production 

for 2012 at significantly below the 

statutory applicable volume of 500 

million gallons. Because cellulosic 

biofuel is used to satisfy the cellulosic 

biofuel standard, the advanced biofuel 

standard, and the total renewable fuel 

standard, any reductions in the 

applicable volume of cellulosic biofuel 

will also affect the means through 

which obligated parties comply with the 

advanced biofuel standard and the total 

renewable fuel standard. Therefore, we 

have considered whether and to what 

degree to lower the advanced biofuel 

and total renewable fuel applicable 

volumes for 2012. 

If the required volume of cellulosic 

biofuel for a given year is less than the 

volume specified in the statute, it is 

important to evaluate whether there 

would be sufficient volume of advanced 

biofuels to satisfy the applicable volume 

of advanced biofuel volume set forth in 

the statute. Even with a reduced volume 

of cellulosic biofuel, other advanced 

biofuels, such as biomass-based diesel, 

sugarcane ethanol, or other biofuels, 

may be available in sufficient volumes 

to make up for the shortfall in cellulosic 

biofuel. 

Several commenters stated their belief 

that the applicable volume of advanced 

biofuel should always be lowered 

concurrently, and to the same degree, 

that the applicable volume of cellulosic 

biofuel is lowered from the levels set 

forth in the statute. Since we are 

finalizing a cellulosic biofuel applicable 

volume today that is approximately 490 

million gallons below the 500 mill gal 

applicable volume specified in the 

statute, this approach would lead to a 

reduction in the advanced biofuel 

standard of 490 million gallons as well, 

from 2,000 mill gallons to 1,510 mill 

gallons. However, as described in the 

NPRM, we believe that it would not be 

consistent with the energy security and 

greenhouse gas reduction goals of the 

statute to reduce the applicable volume 

of advanced biofuel set forth in the 

statute if there are sufficient volumes of 

advanced biofuels available, even if 

those volumes do not include the 

amount of cellulosic biofuel that 

Congress may have desired. Our 

authority to lower the advanced biofuel 

and/or total renewable fuel applicable 


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1332 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

9 ‘‘Monthly U.S. Imports of Fuel Ethanol,’’ EIA, 

released 3/30/2011. 

10Lundell, Drake, ‘‘Brazilian Ethanol Export 

Surge to End; U.S. Customs Loophole Closed Oct. 

1,’’ Ethanol and Biodiesel News, Issue 45, 

November 4, 2008. 

11Monthly U.S. Imports of Fuel Ethanol, Energy 

Information Administration, Release Date 9/29/ 

2011. 

12Portal Brasil, Energy Matrix for Ethanol, http:// 

www.brasil.gov.br/sobre/economy/energy-matrix/ 

ethanol/br_model1?set_language=en. 

13Table 11 of AEO2011, Report Number DOE/ 

EIA–0383(2011). http://www.eia.doe.gov/forecasts/ 

aeo/tables_ref.cfm. 

14Table ‘‘Ethanol Trade’’, Commodity Outlook/ 

Biofuels, FAPRI–ISU 2011 World Agricultural 

Outlook. http://www.fapri.iastate.edu/outlook/ 

2011/. 

volumes is discretionary, and in general 

we believe that actions to lower these 

volumes should only be taken if 

insufficient volumes of qualifying 

biofuel can be made available, based on 

such circumstances as insufficient 

production capacity, insufficient 

feedstocks, competing markets, 

constrained infrastructure, or the like. 

As discussed below, we project that 

sufficient volumes of advanced biofuel 

can be made available in 2012 such that 

the 2.0 bill gallon advanced biofuel 

requirement need not be reduced. 

If we were to maintain the advanced 

biofuel, biomass-based diesel, and total 

renewable fuel volume requirements at 

the levels specified in the statute, while 

also lowering the cellulosic biofuel 

standard to 10.45 million ethanolequivalent gallons, then 1,510 million 

gallons of the 2.0 billion gallon 

advanced biofuel mandate would be 

satisfied automatically through the 

satisfaction of the cellulosic and 

biomass based diesel standards. An 

additional 490 million ethanolequivalent gallons of additional 

advanced biofuels would be needed. See 

Table II.C–1. 

TABLE II—C–1—PROJECTED FUEL MIX IN 2012 ASSUMING NO CHANGE IN ADVANCED BIOFUEL OR TOTAL RENEWABLE

FUEL VOLUME REQUIREMENTS

[Mill gallons] 

Ethanol-equivalent volume Physical volume 

Total renewable fuel ............................................................................................ 15,200 14,535–14,698 

Conventional renewable fuel a ............................................................................. 13,200 13,200 

Total advanced biofuel ........................................................................................ 2,000 1,335–1,498

Cellulosic biofuel .................................................................................................. 10.45 8.65 

Biomass-based diesel .......................................................................................... 1,500 1,000 

Other advanced biofuel b ..................................................................................... 490 c 326–490 

aPredominantly corn-starch ethanol. 

b Rounded to nearest million gallons for simplicity. 

cPhysical volume is a range because other advanced biofuel may be ethanol, biodiesel, or some combination of the two. 

The most likely sources of additional 

advanced biofuel would be imported 

sugarcane ethanol and additional 

biomass-based diesel, though there may 

also be some volumes of other types of 

advanced biofuel available as discussed 

below. To determine if there are likely 

to be sufficient volumes of these 

biofuels to meet the need for 490 

million gallons of other advanced 

biofuel, we first examined historical 

data on ethanol imports and projections 

from EIA and USDA for 2012. Brazilian 

imports have made up a sizeable portion 

of total ethanol imported into the U.S. 

in the past, and these volumes were 

predominantly produced from 

sugarcane. Ethanol imports averaged 

about 380 million gallons per year over 

the last five years, and reached an alltime high of 730 million gallons in 

2006.9 However, ethanol imports were 

significantly lower in 2010 than in 

previous years, and continue to be low 

in the first half of 2011. This decline in 

imports may be related to the cessation 

of the duty drawback that became 

effective on October 1, 2008, to changes 

in world sugar prices, and increases in 

demand within Brazil.10 Several 

commenters cited these lower import 

volumes in the last two years as 

evidence that importation of sugarcane 

ethanol will be low in 2012 as well. 

However, we believe that the broader 

view of historical data on sugarcane 

ethanol imports supports our view that 

Brazil has significant export potential 

under the appropriate economic 

circumstances. Monthly ethanol imports 

in June and July of 2011 were 

significantly higher than during any of 

the previous 16 months, at 3 and 13 

million gallons, respectively.11

Moreover, Brazil continues to be second 

worldwide in the production of ethanol, 

producing a total of 6.9 bill gallons in 

2009.12 By establishing an increased 

U.S. demand for 490 million gallons of 

other advanced biofuel in 2012, we 

would be enhancing the export market 

for Brazilian sugarcane ethanol. This 

could increase the percentage of ethanol 

produced from sugarcane (as opposed to 

sugar production), and lead to higher 

volumes of sugarcane ethanol exported 

to the U.S. Insofar as there is 

insufficient availability of domestically 

produced advanced biofuel to meet the 

need for 490 mill gallons, the price of 

advanced biofuel RINs would likely 

increase, providing the incentive for 

Brazil to export more sugarcane ethanol 

into the U.S. California’s Low Carbon 

Fuel Standard also went into effect in 

2010, and may result in some refiners 

importing additional volumes of 

sugarcane ethanol from Brazil into 

California in 2012. These same volumes 

would count towards the federal RFS2 

program as well. 

Projections from other sources also 

suggest that a large portion of the 490 

million gallons of advanced biofuel 

needed could be supplied by imported 

sugarcane ethanol. For instance, in its 

Annual Energy Outlook 2011, EIA 

projects ethanol imports of 

approximately 300 million gallons for 

2012.13 In addition, the university-based 

Food and Agricultural Policy Research 

Institute (FAPRI) released its 2011 U.S. 

and World Agricultural Outlook report 

in which it projects 2012 ethanol 

imports of 728 million gallons.14 This is 

a substantial increase compared to 

FAPRI’s previous projection of 317 mill 

gallons as cited in our NPRM. While 

other sources suggest that total 

Brazillian exports of sugarcane ethanol 

decreased in 2011 and may decrease in 

2012, the higher RIN prices associated 

with the advanced biofuel mandate 

would be expected to create an 

incentive for a greater proportion of 

Brazillian exports to be imported into 

the U.S. For instance, according to the 

FAPRI report, the increase in imports 

into the U.S. would be concurrent with 

reductions in imports into other 

countries rather than an increase in 

exports of sugarcane ethanol from 

Brazil. 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1333 

15RFS2 EMTS Informational Data, updated on 

August 18, 2011. http://www.epa.gov/otaq/fuels/ 

renewablefuels/compliancehelp/rfsdata.htm. 16Table ES1 of Electric Power Industry 2009: 

Year in Review. Available online: http:// 

www.eia.doe.gov/cneaf/electricity/epa/epayir.pdf. 17Table 36 of AEO2011, Report Number DOE/ 

EIA–0383(2011). Number based on the conversion 

that 1 megawatt hour is equivalent to 3.41 million 

BTU http://www.eia.doe.gov/forecasts/aeo/ 

tables_ref.cfm. 

18Total energy demand for light-duty vehicles, 

motorcycles, and nonroad per AEO 2011 Tables 10, 

45, and 46. 

19 In reality, there may be some areas where 

gasoline without ethanol endures, but there will 

also be some E85 and potentially other gasolineethanol blends as well. We have used a scenario 

consisting of 100% E10 for this exercise. 

20From Table II.C–1, sum of ethanol-equivalent 

gallons of conventional renewable fuel, cellulosic 

biofuel, and other advanced biofuel. 

We also examined the potential for 

excess biodiesel to help meet the need 

for 490 million gallons of advanced 

biofuel. The applicable volume of 

biomass based diesel established in the 

statute for 2012 is 1.0 billion gallons 

(which corresponds to 1.5 billion 

ethanol-equivalent gallons). As 

discussed more fully in Section II.D 

below, we believe that the biodiesel 

industry has the potential for producing 

volumes above 1.0 billion gallons if 

demand for such volume exists. 

There are also other potential sources 

of advanced biofuels. Based on RIN 

generation reports collected via the 

EPA–Moderated Transaction System 

(EMTS), 32 million ethanol-equivalent 

gallons of advanced biofuel with a D 

code of 5 were produced in the first half 

of 2011.15 Extrapolated to the end of the 

year, it would be reasonable to expect a 

total of over 60 million ethanolequivalent gallons of such advanced 

biofuel to be produced in 2011. 

Production Outlook Reports also 

provided some insight into producers’ 

expectations for 2012. For 2012, 

producers of advanced biofuel projected 

that they would produce about 80 

million ethanol-equivalent gallons, 

composed of some combination of 

ethanol, renewable diesel, and heating 

oil. 

Another potential source of advanced 

biofuels is electricity generated from 

renewable biomass that is used as a 

transportation fuel. EIA data indicates 

that in 2009, the most recent year for 

which data is available, 36.05 million 

megawatt-hours of electricity was 

generated from wood and wood derived 

fuels, and an additional 18.4 million 

megawatt-hours was generated from 

other biomass in the United States.16

This is significantly more than the 6.8 

million megawatt-hours of electricity 

used in the transportation sector in 

2009,17 equivalent to about 300 mill 

ethanol-equivalent gallons. While not 

all the feedstocks used to generate the 

electricity included in these totals 

would meet the RFS2’s renewable 

biomass definition, this remains a very 

large potential source of advanced 

biofuel RINs. 

Currently, there are no valid pathways 

in Table 1 to § 80.1426 for the 

generation of RINs representing 

electricity used as transportation fuel. 

However, several companies have 

approached EPA with requests for such 

a pathway, and investigations are 

underway. It is possible that one or 

more new pathways for electricity may 

be available for use in 2012. 

In addition to verifying that the 

feedstocks used to generate renewable 

electricity meet the renewable biomass 

definition, producers would also be 

required to document that the electricity 

they produce is used as a transportation 

fuel in order to be eligible to generate 

RINs. Until recently there were very few 

vehicles capable of using electricity as 

a transportation fuel, limited mainly to 

electric trains and trolley cars. Expected 

increases in the number of vehicles with 

this capability, such as electric vehicles 

and plug in hybrids, has the potential to 

dramatically increase the degree to 

which electricity is able to be used as a 

transportation fuel. Verifying that the 

renewable electricity produced is used 

as a transportation fuel would still 

remain a challenge, however the 

potential for capitalizing on the RIN 

value, without the necessity of making 

major changes in the areas of fuel 

production, distribution, or end use, 

may be a large enough incentive to 

overcome this challenge. While the 

uncertainties associated with the 

generation of advanced biofuel RINs 

representing renewable electricity used 

as transportation fuel prevent EPA from 

making a quantitative projection for 

2012, such RINs may nevertheless play 

a role in meeting the advanced biofuel 

standard. 

In light of the potential volumes of 

imported sugarcane ethanol, excess 

biodiesel, and other sources of advanced 

biofuel, we continue to believe that 

there will likely be sufficient volumes of 

advanced biofuels to meet the need for 

490 million ethanol-equivalent gallons. 

As a result, the applicable volume of 

advanced biofuel set forth in the statute 

need not be lowered. A number of 

commenters on the NPRM agreed with 

this assessment. However, several 

commenters raised a concern about the 

ethanol blendwall, saying that the 

volume of ethanol that can be legally 

and practically consumed in 2012 is a 

limiting factor in how much advanced 

biofuel can be consumed. We disagree. 

Based on gasoline energy demand 

projections from EIA,18 a total of about 

14.3 bill gallons of ethanol could be 

consumed in 2012 if all gasoline 

contained 10% ethanol.19 Under the 

requirements of the RFS program, 

however, the total volume of ethanol 

that would need to be consumed to meet 

the RFS standards would be no more 

than 13.7 bill gallons in 2012.20 This 

assumes an extreme case in which all 

renewable fuel that is not advanced 

biofuel is assumed to be ethanol, and all 

advanced biofuel other than biomassbased diesel is also assumed to be 

ethanol. 

It is possible that more ethanol may 

be produced/imported in 2012 than is 

necessary to meet the RFS requirements, 

and such circumstances could 

accelerate the arrival of the blendwall. 

However, this would only occur if 

market forces favored the consumption 

of higher volumes of ethanol, and we 

cannot make reliable predictions of such 

market forces. Since the applicable 

standards are set before a given 

compliance year begins, obligated 

parties should be coordinating with 

producers, distributors, and blenders of 

the various forms of ethanol (e.g. 

cellulosic ethanol, corn-ethanol, 

sugarcane ethanol) to ensure that all 

RFS standards are met by the end of the 

compliance period. 

Based on our assessment of the 

availability of volumes of advanced 

biofuel beyond those required to meet 

the cellulosic biofuel and biomass-based 

diesel standards, we do not believe that 

the advanced biofuel standard need be 

lowered below the 2.0 billion gallon 

level specified in the Act. Thus, we are 

not reducing the applicable volume of 

advanced biofuel for 2012. 

A number of parties that commented 

on the NPRM requested that the 

applicable volume for total renewable 

fuel in 2012 be reduced. However, all 

such commenters tied the reduction in 

total renewable fuel to a reduction in 

the advanced biofuel standard. Since we 

are not lowering the advanced biofuel 

standard for 2012, and there are 

expected to be sufficient volumes of 

corn-ethanol to meet the need for 13.2 

bill gallons of conventional renewable 

fuel (see Table II.C–1), we do not believe 

that there is a need to lower the total 

renewable fuel standard. 

D. Biomass-Based Diesel in 2012 

Unlike for cellulosic biofuel, the 

statute does not require EPA to project 

available volumes of biomass-based 


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21Consists of approximately 209 mill gallons as 

recorded through EMTS for volume produced under 

the RFS2 regulations in July through December, and 

approximately 171 mill gallons as recorded through 

RIN generation reports submitted by producers for 

volume produced under the RFS1 regulations in 

January through June. 

22See question 6.7 in EPA’s ‘‘Questions and 

Answers on Changes to the Renewable Fuel 

Standard Program (RFS2)’’, http://www.epa.gov/ 

otaq/fuels/renewablefuels/compliancehelp/rfs2- 

aq.htm#6. 

23Figures taken from National Biodiesel Board’s 

Member Plant List as of August 22, 2011. Some 

plants did not report production capacity. http:// 

biodiesel.org/buyingbiodiesel/plants/showall.aspx. 

24Based on construction times for new plants 

listed in Biodiesel Magazine from July 2006 through 

May 2009. 

diesel for years up through 2012 and to 

base the standard on the projected 

available volume. Instead, the standard 

for 2012 is to be based on the statutory 

applicable volume of 1.0 bill gallons. 

However, the statute does include 

waiver provisions that allow for 

lowering the applicable volume of 

biomass-based diesel under certain 

circumstances. Moreover, as described 

more fully in Section II.C above, we 

must determine whether the required 

volumes of advanced biofuel and/or 

total renewable fuel should be reduced 

if we reduce the required volume of 

cellulosic biofuel. Since biomass-based 

diesel is also an advanced biofuel, the 

amount of biomass-based diesel that is 

consumed in 2012 directly affects our 

consideration of adjustments to the 

volumetric requirements for advanced 

biofuel and total renewable fuel. We 

therefore investigated whether the 

applicable volume of 1.0 bill gallons for 

biomass-based diesel is achievable in 

2012, and whether additional volumes 

are also feasible. 

We examined recent production rates, 

production capacity of the industry, and 

projections for future production from a 

variety of sources. Although there are 

several different fuel types that can 

qualify as biomass-based diesel, 

biodiesel is by far the predominant type. 

Thus, our assessment focused primarily 

on biodiesel, though we also 

investigated potential volumes of 

renewable diesel. 

According to information from the 

EPA–Moderated Transaction System 

(EMTS) and RIN generation reports 

submitted to EPA from producers, we 

estimate that the volume of biomassbased diesel produced in 2010 was 

about 380 mill gallons.21 A number of 

commenters pointed to this low volume 

as an indication that the volume 

requirements of 800 mill gallons in 2011 

and 1.0 bill gallons in 2012 are not 

achievable. However, many of the 

activities of the biodiesel industry in 

2010 were due to unique circumstances 

that may not apply in 2012. It is likely 

that a contributing factor to the lower 

production volumes in 2010 was the 

expiration of the biodiesel tax credit at 

the end of 2009 and its absence 

throughout 2010, and the fact that the 

RFS program effectively created a 

demand for about 345 mill gallons in 

2010.22 A more comprehensive view of 

historical biodiesel production levels 

strongly indicates that the U.S. biodiesel 

industry has produced higher volumes 

when demand for it existed, and that as 

a result the industry has the capability 

to produce greater volumes than it did 

in 2010 under the appropriate 

circumstances. This point is illustrated 

in Figure II.D–1 below. 

The biodiesel industry’s production 

potential supports the view that it can 

more than satisfy the applicable volume 

of biomass based diesel specified in the 

statute for 2012. As of August, 2011, the 

aggregate production capacity of 

biodiesel plants in the U.S. was 

estimated at 2.4 billion gallons per year 

across 148 facilities.23 We expect the 

time and reinvestment required to ramp 

up production at existing facilities to be 

less than the time required to build and 

begin production at new plants, which 

takes about a year on average.24 Thus, 

restarting idled plants will not be a 

hindrance to meeting the applicable 

volumes for biomass-based diesel in 

2011 or 2012. A higher mandate for 

biomass-based diesel will increase 

demand for biodiesel with associated 

increases in RIN prices. This in turn 


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25U.S. Census Bureau, Fats and Oils, Production, 

Consumption, and Stocks, Survey M311K. http:// 

www.census.gov/manufacturing/cir/historical_data/ 

m311k/index.html. Assumes 7.68 lb/gal conversion. 

26USDA Agricultural Projections to 2020, LongTerm Projections Report OCE–2011–1, February 

2011. See Table 24. Assumes 7.68 lb/gal. 

27Soybean Oil and Biodiesel Usage Projections 

and Balance Sheet, updated 2/18/2011. A version 

made available on 8/1/2011 shows similar volumes 

of soybean oil for biodiesel use, but does not 

provide information about non-soy oil sources of 

biodiesel. http://www.extension.iastate.edu/agdm/ 

crops/outlook/soybeanbalancesheet.pdf. Values 

cited are for the ‘‘High’’ case. 

28Short-Term Energy Outlook, August 2011. 

Table 8. 

29Project status updates are available via the 

Syntroleum Web site, http://dynamicfuelsllc.com/ 

wp-news/. 

will create the incentive for biodiesel 

producers to put idled capacity into 

production. 

Additionally, information from the 

U.S. Census Bureau indicates that 

monthly production volumes of 

biodiesel have increased steadily in the 

first half of 2011, reaching about 78 mill 

gallons by July.25 See Figure II.D–2. 

Over the seven months shown in this 

figure, biodiesel production increased 

by an average of about 16% each month. 

This trend demonstrates that the 

industry is responding to the higher 

demand created by the 800 mill gal 

biomass-based diesel volume 

requirement under the RFS program in 

2011. Biodiesel production will only 

need to increase at a more modest rate 

of about 3% each month after July in 

order for the total 2011 production 

volume to reach 800 mill gallons. 

Moreover, further increases in monthly 

production volumes would not be 

necessary after December 2011 for the 

industry to reach a total production 

volume of 1.0 bill gallons in 2012. We 

believe, therefore, that the 1.0 bill gallon 

requirement for biomass-based diesel in 

2012 can be met. Moreover, given the 

increases in monthly production 

volumes that occurred in the first half 

of 2011 and the significant amount of 

underutilized production capacity that 

exists within the biodiesel industry, 

there is also reason to believe that 

monthly production volumes will 

increases after July 2011 at a rate that is 

more than needed to meet the statutory 

biomass-based diesel volume 

requirements, providing additional 

volumes that can be used to meet the 

advanced biofuel standard. 

Projections from other sources 

provide additional support to our 

conclusions that 1.0 bill gal biomassbased diesel can be produced in 2012. 

For instance, the U.S. Department of 

Agriculture projects that over 400 mill 

gallons of biodiesel will be produced 

from soybean oil in 2012, and adds that 

‘‘Although some other first-use 

vegetable oils are also used to produce 

biodiesel, most of the remaining 

biodiesel production needed to reach 

the 1-billion-gallon mandate of the 2007 

Energy Act uses animal fats or recycled 

vegetable oil as the feedstock.’’ 26 This 

projection is further supported by the 

Agricultural Marketing Resource Center 

at Iowa State University, which projects 

that soy-oil biodiesel production may 

reach as high as 470 mill gallons and 

that non-soy biodiesel may reach as 

high as 460 mill gallons.27 Both of these 

sources project more growth in non-soy 

oil feedstock volumes than soy oil. 

Finally, EIA projects that the total 

volume of biodiesel in 2012 would be 

about 830 mill gallons.28 While all of 

these projections suggest that volumes 

of biodiesel may fall short of 1.0 bill 

gallons, they do not take into account 

the increase in monthly production 

volumes as noted above, nor sources of 

renewable diesel that will also be 

available. For instance, Dynamic Fuels 

has constructed one plant in Geismar, 

Louisiana that started production of 

renewable diesel in November, 2010.29

In the final RFS2 rule, we projected that 


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1336 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

30For such a product to qualify for biomass-based 

diesel, however, it cannot be co-processed with 

petroleum feedstock. This might limit its potential 

for refinery-based production of qualifying product. 

31Biodiesel Magazine, November 17, 2010. 

http://www.biodieselmagazine.com/articles/4568/ 

chicago-area-terminal-soon-to-offer-biodiesel. 

32Report to the Legislature, Annual Report on 

Biodiesel, Minnesota Department of Agriculture, 

January 15, 2011. http://www.mda.state.mn.us/en/ 

news/government/∼/media/Files/news/govrelations/ 

legrpt-biodiesel2011.ashx. 

33http://www.tankterminals.com/ 

news_detail.php?id=1284. 

annual renewable diesel production 

could reach 150 mill gallons based on 

feedstock availability. Renewable diesel 

can also be produced at existing 

refineries with little modification to 

processing equipment.30 Thus, we 

currently believe that the total 

production volume of biomass-based 

diesel can readily reach 1.0 bill gal in 

2012. 

We also reviewed information 

submitted by registered producers of 

biomass-based diesel under the 

requirements of § 80.1449 for 

Production Outlook Reports. Of the 65 

facilities that submitted a report, the 

total projected 2012 volume of biomassbased diesel was 937 mill gallons. We 

believe that this projection is indicative 

of the industry’s expectation that the 

applicable volume requirement for 2012 

will be 1.0 bill gallons and its intention 

to meet that requirement. Moreover, the 

projection provided in these reports 

likely underestimates the actual 

expectations and capabilities of the 

industry, since the number of facilities 

that submitted a report is far less than 

the total number of facilities capable of 

producing biodiesel and renewable 

diesel. 

In additional to production capacity 

and projections of 2012 production 

volume, we also investigated feedstocks 

used to produce biomass-based diesel. 

We believe that there will be sufficient 

sources of qualifying renewable biomass 

to more than meet the needs of the 

biodiesel industry in 2012. The largest 

sources of feedstock for biodiesel in 

2012 are expected to be soy oil, canola 

oil, rendered fats, and corn oil extracted 

during production of fuel ethanol. In 

response to the NPRM, the National 

Biodiesel Board (NBB) cited historically 

high soybean production rates for 2011 

as evidence that there will be ample 

volumes of soybean oil available for 

biodiesel production. Likewise, the 

Renewable Energy Group (REG) 

provided information on significant 

increases in the availability of inedible 

corn oil from ethanol producers that it 

believes will occur in the next 1–2 

years. 

While commenters did not provide 

any information suggesting that the 

applicable volume of 1.0 bill gallons 

cannot be reached, some raised 

concerns about impacts on other 

industries and feedstock price. For 

instance, the American Trucking 

Association (ATA) stated that feedstocks 

will need to be diverted from other uses 

in order to meet the 1.0 bill gallon 

requirement, and the American 

Cleaning Institute (ACI) provided 

information about how such a diversion 

could affect the oleochemical industry. 

We address concerns about price in 

more detail below in our discussion of 

ATA’s request for a waiver of the 2012 

applicable volume of 1.0 bill gallons. 

While we agree that the total volume 

of animal fats is largely inelastic and is 

unlikely to grow significantly due to the 

presence of the increasing market for 

biomass-based diesel, we also agree 

with the statement from ACI that ‘‘there 

is nothing in EISA or the proposed rule 

that limits the amount of animal fats 

that can be used to meet the mandate.’’ 

Under the statutory definition of 

renewable biomass, valid feedstocks 

include animal waste material and 

animal byproducts. We believe that 

animal fats fall into these categories, 

and as a result we do not have the 

authority to exclude or limit volumes of 

animal fats that are used for production 

of biomass-based diesel. Such wastes 

could potentially be considered 

‘‘biogenic waste oils/fats/greases’’ or 

‘‘non-cellulosic portions of separated 

food waste’’ under the RIN-generating 

pathways listed in Table 1 to § 80.1426, 

and could thus be eligible for the 

production of RIN-generating biofuel. 

In response to the NPRM, we received 

comments both in support of and 

opposed to our proposal to maintain the 

statute’s applicable volume of 1.0 bill 

gallons for biomass-based diesel in 

2012. In general, producers of biodiesel 

and crop-based feedstocks were 

supportive, citing the sufficiency of 

available feedstocks and production 

capacity. Several supporters indicated 

that historically low biodiesel 

production volumes are not an 

appropriate reference point on which to 

base the capabilities of the industry for 

the future, since the higher biomassbased diesel mandates established by 

Congress for 2011 and 2012 are 

expected to drive production volumes 

more than any other factor. 

Parties opposed to maintaining the 

statutory applicable volume of 1.0 bill 

gallons for 2012 were primarily 

obligated parties, as well as 

representatives of diesel trucking 

companies and the oleochemical 

industry. To a large degree, these 

commenters pointed to historical 

biodiesel production levels in support 

of their belief that 1.0 bill gallons in 

2012 is not achievable. As described 

above, we do not agree with this 

conclusion. 

One party opposed to maintaining the 

1.0 bill gal requirement for 2012 also 

raised concerns about infrastructure. We 

acknowledge that the required 

expansion of the biodiesel handling 

capacity at terminals will represent a 

challenge to industry. However, as 

discussed in the NPRM, we continue to 

believe that there will be sufficient 

biomass-based diesel distribution 

infrastructure in place to support the 

use of 1.0 bill gal biodiesel in 2012. For 

instance, NBB stated in their comments 

that in most markets, terminals can treat 

5% biodiesel blends as a fungible 

commodity like diesel fuel and that they 

believe that many terminals may be 

storing B5 blends. To the extent 

terminals store a finished B5 blend, it 

would obviate the need for much of the 

segregated biodiesel storage and 

blending capability that is assumed in 

our infrastructure analysis. The Iowa 

Biodiesel Board stated that claims that 

industry cannot accommodate the 

distribution of the target gallons are 

baseless and cited various examples of 

recent biodiesel blending initiatives at 

Iowa terminals. 

Industry activities are currently 

progressing to ramp up biodiesel 

consumption from the approximately 

380 mill gallons estimated to be used in 

the U.S. in 2010 to the volumes that will 

be needed in 2011 to meet the biomassbased diesel volume requirement. For 

example, Kinder Morgan and the 

Renewable Energy Group opened a 

substantial biodiesel distribution facility 

to serve the Chicago area in December 

of 2010.31 Magellan also recently 

announced that it plans to complete its 

biodiesel blending facility in Sioux Falls 

Minnesota in 2011.32 In June of this 

year, Sunoco Logistics and Sprague 

Energy opened a new terminal facility to 

supply biodiesel blended transportation 

fuel and heating fuel to New Jersey.33

These new terminal facilities employ 

segregated biodiesel storage and 

blending capability. Just as there has 

been considerable biodiesel production 

capacity idled due to lack of demand 

which will be brought back on line as 

biodiesel volumes ramp up, we believe 

that there may also be substantial idled 

biodiesel distribution assets that could 

be brought back into service. It seems 

reasonable to assume that at least some 

of the distribution assets used 

previously to deliver biodiesel 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1337 

manufactured at now idled production 

plants would still be available. 

Of the parties that requested a 

reduction in the applicable volume of 

1.0 bill gallons for 2012, the American 

Trucking Association (ATA) and 

Chevron explicitly invoked the waiver 

mechanism provided at 211(o)(7)(E). 

The full text of this statutory provision 

is shown below: 

(E) BIOMASS-BASED DIESEL.— 

(i) MARKET EVALUATION.—The 

Administrator, in consultation with the 

Secretary of Energy and the Secretary of 

Agriculture, shall periodically evaluate the 

impact of the biomass-based diesel 

requirements established under this 

paragraph on the price of diesel fuel. 

(ii) WAIVER.—If the Administrator 

determines that there is a significant 

renewable feedstock disruption or other 

market circumstances that would make the 

price of biomass-based diesel fuel increase 

significantly, the Administrator, in 

consultation with the Secretary of Energy and 

the Secretary of Agriculture, shall issue an 

order to reduce, for up to a 60-day period, the 

quantity of biomass-based diesel required 

under subparagraph (A) by an appropriate 

quantity that does not exceed 15 percent of 

the applicable annual requirement for 

biomass-based diesel. For any calendar year 

in which the Administrator makes a 

reduction under this subparagraph, 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. 

(iii) EXTENSIONS.—If the Administrator 

determines that the feedstock disruption or 

circumstances described in clause (ii) is 

continuing beyond the 60-day period 

prescribed in clause (ii) or this clause, the 

Administrator, in consultation with the 

Secretary of Energy and the Secretary of 

Agriculture, may issue an order to reduce, for 

up to an additional 60-day period, the 

quantity of biomass-based diesel required 

under subparagraph (A) by an appropriate 

quantity that does not exceed an additional 

15 percent of the applicable annual 

requirement for biomass-based diesel. 

The waiver authority provided in 

paragraph 211(o)(7)(E)(ii) is based on an 

EPA determination that there ‘‘is’’ a 

feedstock disruption or other market 

circumstance that would make the price 

of biomass-based diesel rise 

significantly. The authority to extend a 

temporary waiver in paragraph (iii) is 

based on an EPA determination that 

such disruption or circumstance ‘‘is 

continuing.’’ Thus, we believe that any 

waiver of the 2012 biomass-based diesel 

requirements under this statutory 

provision must be based on an 

evaluation of feedstock conditions or 

other circumstances that exist currently 

and ‘‘would make’’ the price of biomass 

based diesel rise significantly in 2012. If 

Congress had intended that we project 

future market circumstances that might 

lead to significant prices increases, it 

could have used ‘‘will be’’ in place of 

‘‘is’’ in paragraph 211(o)(7)(E)(ii). Thus, 

we believe that any waiver of the 

biomass-based diesel requirements for 

2012 must be based on a current 

evaluation of the market, rather than a 

projected one. 

We do not believe that the 

information provided by Chevron and 

ATA warrants a waiver of the 2012 

biomass-based diesel volume at this 

time. While ATA provided some 

information on the relative price of 

biodiesel and conventional diesel, it did 

not demonstrate how this price 

difference represented a price increase 

as required under the statute. Also, they 

did not cite any particular renewable 

feedstock disruption or other market 

circumstance to demonstrate how the 

difference in price between 

conventional diesel fuel and biomassbased diesel meets the statutory 

criterion for a significant increase in the 

price of biomass-based diesel. 

Both Chevron and ATA cite an 

expected expiration of the biodiesel tax 

credit at the end of 2011 as a reason that 

prices will increase significantly. EPA 

has not determined whether the 

expiration of a tax credit should be 

considered a ‘‘market circumstance’’ 

within the meaning of CAA 

211(o)(7)(E)(ii), and is making no 

determination regarding that matter at 

this time. Whether or not such a 

development would be a ‘‘market 

circumstance,’’ it is clear that it is not 

an existing circumstance, and 

conjecture that the tax credit may not be 

continued in the future does not provide 

an appropriate basis for a waiver under 

211(o)(7)(E)(ii). Apart from possible 

consideration under the statutory 

waiver provisions, however, we note 

that the applicable volumes set by 

Congress must be met regardless of the 

status of Federal or state tax credits, 

subsidies, incentives, and the like. 

One commenter requested a costbenefit analysis in the context of 

determining the appropriate volume for 

biomass-based diesel in 2012. Under the 

statute, we are to set the percentage 

standard for biomass-based diesel for 

2012 based on the applicable volume of 

1.0 bill gallons specifically set forth in 

the statute in CAA 211(o)(2)(B)(IV). 

While the statute does provide limited 

mechanisms for waiving all or a portion 

of any annual biomass-based diesel 

standard in 2012 under CAA 211(o)(7), 

the statute does not require a costbenefit analysis either in setting a 

standard based on the statutory 

applicable volume or in considering 

whether or not to issue a waiver. For 

instance, under 211(o)(7)(A), waivers 

can be granted based on an EPA finding 

of severe harm to the economy or 

environment of a state, region, or the 

United States, or inadequate domestic 

supply. Under 211(o)(7)(E) waivers can 

be granted based on a significant 

renewable feedstock disruption or other 

market circumstance that would make 

the price of biomass-based diesel fuel 

increase significantly. Neither of these 

statutory provisions provides for a 

comparison of the costs associated with 

meeting the biomass-based diesel 

standard to the benefits of meeting that 

standard. Therefore, we do not believe 

that cost-benefit analyses are necessary 

or appropriate in the context of 

considering the 2012 biomass-based 

diesel volume of 1.0 bill gallons. 

Based on our review of the production 

potential of the biodiesel industry, 

projections from several sources, and 

our assessment of available feedstocks, 

we believe that the 1.0 billion gallons 

needed to satisfy the applicable volume 

of biomass-based diesel specified in the 

statute can be produced in 2012, and 

that more than 1.0 bill gallons of 

production is possible. Moreover, we do 

not believe that waiving a portion of the 

2012 biomass-based diesel volume of 

1.0 bill gallons under the provisions of 

211(o)(7)(E) is appropriate at this time. 

III. Final Percentage Standards for 2012 

A. Background 

The renewable fuel standards are 

expressed as a volume percentage, and 

are used by each refiner, blender or 

importer to determine their renewable 

volume obligations (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 for use in the U.S. 

The applicable percentage standards are 

set so that if each regulated 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.B.6, we are 

finalizing a required volume of 

cellulosic biofuel for 2012 of 8.65 

million gallons (10.45 million ethanol 

equivalent gallons). The advanced 

biofuel and total renewable fuel 

volumes will not be reduced below the 

applicable volumes specified in the 

statute. The final 2012 volumes used to 

determine the four percentage standards 

are shown in Table III.A–1. 


tkelley on DSK3SPTVN1PROD with RULES3
1338 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

TABLE III.A–1—FINAL VOLUMES FOR 2012 

Actual volume Ethanol equivalent 

volume 

Cellulosic biofuel ............................................................. 8.65 mill gal .................................................................... 10.45 mill gal. 

Biomass-based diesel .................................................... 1.0 bill gal ....................................................................... 1.5 bill gal. 

Advanced biofuel ............................................................ 2.0 bill gal ....................................................................... 2.0 bill gal. 

Renewable fuel ............................................................... 15.2 bill gal .................................................................... 15.2 bill gal. 

The formulas used in deriving the 

annual renewable fuel standards are 

based in part on estimates of the 

volumes of gasoline and diesel fuel, for 

both highway and nonroad uses, that 

will 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): 

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. 

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. 

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 = The 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. 

DEi = The 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. 


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34Letter, Howard K. Gruenspecht, Acting 

Administrator, U.S. Energy Information 

Administration, to Lisa P. Jackson, Administrator, 

U.S. Environmental Protection Agency, October 19, 

2011. 

35Table 8 ‘‘U.S. Renewable Energy Supply and 

Consumption,’’ Short Term Energy Outlook, U.S. 

Energy Information Administration, October 2011. 

36 DOE report ‘‘EPACT 2005 Section 1501 Small 

Refineries Exemption Study’’, (January, 2009). 

The four separate renewable fuel 

standards for 2012 are based in part 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. 

EIA estimates 8.85 million barrels per 

day of gasoline (∼136 billion gallons) 

and 3.36 million barrels per day of 

transportation diesel (∼ 52 billion 

gallons) will be sold or introduced into 

commerce in 2012.34 Because diesel 

used in ocean-going vessels is excluded 

from the RFS2 program, that amount 

must be subtracted from the total 

projected transportation diesel value. 

EIA estimates approximately 26,000 

barrels per day of transportation diesel 

will be used in ocean-going vessels in 

2012, resulting in approximately 3.334 

million barrels per day (51.11 billion 

gallons) projected for all other 

transportation uses in 2012. 

The gasoline and diesel volumes are 

adjusted to account for renewable fuel 

volumes—ethanol (estimated by EIA) 

and biodiesel (based on EIA’s ShortTerm Energy Outlook (STEO)). For 

2012, these values are 0.87 million 

barrels per day (∼13 billion gallons) and 

0.119 quadrillion Btu 35 (∼ 0.9 billion 

gallons), respectively. 

In addition, because Alaska does not 

participate in the RFS2 program, the 

gasoline and diesel volumes must be 

further reduced by Alaska’s projected 

share of transportation fuels. 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. Just as 

with its corresponding gasoline and 

diesel volumes, renewable fuels used in 

Alaska are not included in the 

renewable fuel volumes that are 

subtracted from the total gasoline and 

diesel volume estimates. Section 211(o) 

of the Clean Air Act requires that the 

renewable fuel be consumed in the 

contiguous 48 states, and any other state 

or territory that opts-in to the program 

(as Hawaii has done). However, because 

renewable fuel produced in Alaska is 

unlikely to be transported to the 

contiguous 48 states or to Hawaii, 

including Alaska’s renewable fuel 

volumes in the calculation of the 

standard would not serve the purpose 

intended by section 211(o) of the Clean 

Air Act of ensuring that the statutorily 

required renewable fuel volumes are 

consumed in the 48 contiguous states 

and any state or territory that opts-in. 

The 2012 Alaska fractions of U.S. 

consumption are determined from the 

most recent (2009) EIA State Energy 

Data System (SEDS) estimates, assuming 

fairly constant Alaska to U.S. year-toyear ratios. We used Table CT1 ‘‘Energy 

Consumption Estimates for Major 

Energy Sources in Physical Units, 1960– 

2009, Alaska’’ to get total gasoline and 

ethanol consumption for Alaska for 

2009. We coupled this data with total 

U.S. estimates from Table C2 ‘‘Energy 

Consumption Estimates for Major 

Energy Sources in Physical Units, 2009’’ 

to determine the corresponding Alaska 

fractions. The gasoline fraction is 

approximately 0.2%. Ethanol use in 

Alaska is estimated at 8.4% of its 

gasoline consumption (based on the 

data in Table CT1), or approximately 

0.2% of national ethanol consumption. 

Because only transportation diesel fuel 

is subject to the RFS program, we need 

more specific data than that used to 

calculate the gasoline and ethanol 

fractions. We used data from Table C8 

‘‘Transportation Sector Energy 

Consumption Estimates, 2009’’ to 

calculate the Alaska transportation 

distillate fuel oil fraction, 0.8%. 

Biodiesel use is assumed to be zero. The 

Alaska and U.S. data just described are 

shown in Table III.B–1. 

TABLE III.B–1—ALASKA AND U.S. DATA

Alaska U.S. 

Alaska 

fractionx

(in percent) 

Motor Gasoline .......................................... 6725 Mbbl a ............................................... 3283.7 MMbbl b ......................................... 0.2 

Fuel Ethanol .............................................. 565 Mbbl a ................................................. 262.8 MMbbl b ........................................... 0.2 

Transportation Distillate ............................ 46.1 tBtu c ................................................. 5528.3 tBtu c ............................................. 0.8 

aSource: EIA State Energy Data System, Table CT1 ‘‘Energy Consumption Estimates for Major Energy Sources in Physical Units, 1960–2009, 

Alaska’’. bSource: EIA State Energy Data System, Table C2 ‘‘Energy Consumption Estimates for Major Energy Sources in Physical Units, 2009’’. cSource: EIA State Energy Data System, Table C8 ‘‘Transportation Sector Energy Consumption Estimates, 2009’’. 

x Calculated value. 

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 

RFS1, 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. Because EISA 

did not alter the small refinery 

exemption in any way, the RFS2 

program regulations exempted gasoline 

and diesel produced by small refineries 

and small refiners in 2010 from the 

renewable fuels standard (unless the 

exemption was waived), see 40 CFR 

80.1141. 

Under the RFS program, Congress 

provided two ways that small refineries 

can receive a temporary extension of the 

exemption beyond 2010. One is based 

on the results of a study conducted by 

the Department of Energy (DOE) to 

determine if small refineries would face 

a disproportionate economic hardship 

under the RFS program. The other is 

based on EPA determination of 

disproportionate economic hardship on 

a case-by-case basis in response to 

refiner petitions. 

In January 2009, DOE issued a study 

which did not find that small refineries 

would face a disproportionate economic 

hardship under the RFS program.36 The 

conclusions were based in part on the 

expected robust availability of RINs and 


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1340 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

37 ‘‘Small Refinery Exemption Study: An 

Investigation into Disproportionate Economic 

Hardship,’’ U.S. Department of Energy, March 2011. 

38Since the standards are applied on an annual 

basis, the exemptions are likewise on an annual 

basis even though the determination of which 

refineries would receive an extension to their 

exemption did not occur until after January 1, 2011. 39See 75 FR 76805, December 9, 2010. 40 75 FR 14716, March 26, 2010. 

EPA’s ability to grant relief on a case-bycase basis. As a result, beginning in 

2011 small refiners and small refineries 

were required to participate in the RFS 

program as obligated parties, and there 

was no small refiner/refinery volume 

adjustment to the 2011 standard as there 

was for the 2010 standard. 

Following the release of DOE’s 2009 

small refinery study, Congress directed 

DOE to complete a reassessment and 

issue a revised report. DOE recently reevaluated the impacts of the RFS 

program on small entities and 

concluded that 21 small refineries 

would suffer a disproportionate 

hardship if required to participate in the 

program.37 As a result, these refineries 

will be exempt from being obligated 

parties for a minimum of two additional 

years, 2011 and 2012.38 In 2009, the 

gasoline produced by refineries 

identified in the DOE report as well as 

those refineries exempted through the 

petition process constituted 

approximately 3.6% of total US 

gasoline, and 4.5% of total US diesel. 

Applying these percentages to the 2012 

projections of gasoline and diesel 

volumes yields exempt small refinery 

gasoline volume of 4.87 billion gallons 

and diesel volume of 2.28 billion 

gallons. 

CAA section 211(o) requires that the 

small refinery adjustment also account 

for renewable fuels used during the 

prior year by small refineries that are 

exempt and do not participate in the 

RFS2 program. Accounting for this 

volume of renewable fuel would reduce 

the total volume of renewable fuel use 

required of others, and thus 

directionally would reduce the 

percentage standard. However, as we 

discussed in RFS1, the amount of 

renewable fuel that would qualify, i.e., 

that was used by exempt small 

refineries but not used as part of the 

RFS program, is expected to be very 

small. In fact, these volumes would not 

significantly change the resulting 

percentage standards. Whatever 

renewable fuels small refineries blend 

will be reflected as RINs available in the 

market; thus there is no need for a 

separate accounting of their renewable 

fuel use in the equations used to 

determine the standards. Thus we 

assign a value of zero to small refinery 

renewable fuel use. 

The 2012 standards reflect the 

exemption of these refineries. In 

addition, and separate from the DOE 

determination, EPA may extend the 

exemption for individual small 

refineries on a case-by-case basis if they 

demonstrate disproportionate economic 

hardship. 

In the NPRM, we stated that ‘‘requests 

for exemptions that are approved after 

the release of the final 2012 RFS 

standards will not affect the 2012 

standards.’’ This position is unchanged 

from that set in the final rule 

establishing the 2011 standards.39 At 

that time, we stated, ‘‘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.’’ However, a few 

commenters took issue with this 

approach. Specifically, these 

commenters maintain that EPA did not 

provide notice and comment 

opportunities regarding the extensions 

of the small refinery exemptions for the 

current compliance period (2011), and 

that EPA cannot grant such extensions 

(mid-year) without modifying the 

standards because such authority is not 

provided in the statute. In addition, 

these commenters extend the 

application of their comments to any 

extensions of exemptions that may 

occur after issuance of the final 2012 

standards. Commenters suggested 

requiring petitions to be submitted in 

time to be considered in the annual 

standard-setting process. One 

commenter also suggested that the 

volumes waived in 2011 as a result of 

the small refiner waivers be ‘‘made up’’ 

in setting the 2012 standards. EPA 

understands the desire of the 

commenters to have the annual required 

volumes of renewable fuels realized. 

However, while the statute requires EPA 

to publish the standards for the 

following year by November 30 of the 

preceding year, there is no provision for 

changing the percentage standards once 

they are set outside of the waiver 

provisions of CAA 211(o)(7). In 

addition, we are not required to ensure 

that the biofuel volumes in the statute 

are precisely met. We are required to 

use the specified volumes to set the 

percentage standards, but there are no 

provisions for ensuring that the 

percentage standards actually result in 

the specified volumes actually being 

consumed. This outcome is evidenced 

by the fact that we use projections of 

gasoline and diesel volume for the next 

year which might turn out to be too high 

or too low. Insofar as those projections 

are wrong, the percentage standards will 

not produce a demand for biofuels that 

exactly corresponds to the volumes in 

the statute. Thus Congress allowed for 

some imprecision to exist in the actual 

volumes of renewable fuel that are 

consumed as a result of the percentage 

standards that we set each November, 

and did not provide a means for 

correcting the percentage standards after 

November to ensure that the applicable 

volumes of renewable fuel are exactly 

met in a given compliance year. 

3. Final Percentage Standards 

As finalized in the March 26, 2010 

RFS2 rule, the standards are expressed 

in terms of energy-equivalent gallons of 

renewable fuel, with the cellulosic 

biofuel, advanced biofuel, and total 

renewable fuel standards based on 

ethanol equivalence and the biomassbased diesel standard based on biodiesel 

equivalence. However, all RIN 

generation is based on ethanolequivalence. More specifically, the 

RFS2 regulations provide that 

production or import of a gallon of 

biodiesel will lead to the generation of 

1.5 RINs. In order to ensure that demand 

for 1.0 billion physical gallons of 

biomass-based diesel will be created in 

2012, the calculation of the biomassbased 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 gallons toward 

the biomass-based diesel standard, but 

worth 1.5 gallons toward the other 

standards.40

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 the terms for projected 

volumes of gasoline and diesel use 

include gasoline and diesel that has 

been blended with renewable fuel. 

Because the gasoline and diesel volumes 

estimated by EIA include renewable fuel 

use, we must subtract the total 

renewable fuel volume from the total 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1341 

gasoline and diesel volume to get total 

non-renewable gasoline and diesel 

volumes, as discussed earlier. The 

values of the variables described above 

are shown in Table III.B.3–2. Terms not 

included in this table have a value of 

zero. 

TABLE III.B.3–2—VALUES FOR TERMS

IN CALCULATION OF THE STANDARDS

[Bill gal] 

Term Value 

RFVCB,2012 ................................. 0.01045 

RFVBBD,2012 .............................. 1.0 

RFVAB,2012 ................................ 2.0 

RFVRF,2012 ................................. 15.20 

G2012 ......................................... 135.39 

D2012 .......................................... 50.68 

GE2012 ....................................... 4.87 

DE2012 ....................................... 2.28 

RG2012 ....................................... 13.31 

RD2012 ....................................... 0.93 

Using the volumes shown in Table 

III.B.3–2, we have calculated the 

percentage standards for 2012 as shown 

in Table III.B.3–3. 

TABLE III.B.3–3—FINAL PERCENTAGE

STANDARDS FOR 2012 

Cellulosic biofuel ........................... 0.006% 

Biomass-based diesel .................. 0.91% 

Advanced biofuel .......................... 1.21% 

Renewable fuel ............................. 9.23% 

IV. Changes to RFS2 Regulations 

As the RFS2 program got underway in 

the second half of 2010, we discovered 

that a number of regulatory provisions 

were causing confusion among 

regulated parties. In some cases the 

confusion was due to a lack of 

specificity in terms, while in others it 

was due to unique circumstances that 

were not sufficiently addressed in the 

RFS2 regulations. A few amendments 

are being finalized in order to correct 

these problems and to amend regulatory 

language that inadvertently 

misrepresented our intent as reflected in 

the preamble to the final RFS2 

regulations. In addition, as we have 

worked with regulated parties to ensure 

that the RFS program is operating as 

intended, we identified areas in the 

regulations that could benefit from 

streamlining. We also identified one 

provision in the gasoline benzene 

regulations that misrepresented our 

intent as stated in the preamble. As a 

result, we are finalizing a number of 

amendments to the RFS regulations, and 

one amendment to the gasoline benzene 

regulations, in 40 CFR Part 80. 

A. Summary of Amendments 

Below is a table listing the provisions 

that we are amending in today’s action. 

We have provided additional 

explanation for several of these 

amendments in Sections IV.B through 

IV.F below. 

TABLE IV.A–1—SUMMARY OF TECHNICAL AMENDMENTS

Section Description 

80.1275(d)(3) ............................................................................ Removed to allow for the inclusion of transferred blendstocks in the calculation of 

benzene early credits. 

80.1401 ..................................................................................... Amended definition of ‘‘annual cover crop’’ to clarify that the crop has no existing 

market to which it can be sold except for its use as feedstock for the production of renewable fuel. 

80.1401 ..................................................................................... Amended definition of ‘‘naphtha’’ to clarify that it applies to hydrocarbons only, 

must be commonly or commercially known as naphtha, and is used for producing gasoline. 

80.1405(a), (b), and (d) ............................................................ Amended to state the standards for 2012 and the date of the annual standards 

calculation. 

80.1405(c) ................................................................................ Amended terms ‘‘GEi’’ and ‘‘DEi’’ to reference the amount of gasoline and/or diesel produced by small refineries and small refiners that are exempt pursuant to 

§§ 80.1441 and 80.1442. 

80.1415(c)(2) ............................................................................ Amended to state the specific requirements needed for technical justifications for 

applications for Equivalence Values. 

80.1426(f)(1) ............................................................................. Corrected typographical error in cross reference to paragraph (f)(6) of § 80.1426. 

80.1426(f)(5)(ii) ......................................................................... Amended requirements so that the separated yard waste plans and separated 

food waste plans need not be approved by EPA, but instead only need to be 

accepted by EPA under the registration provisions. 

80.1429(b)(2) ............................................................................ Amended to clarify that ‘‘fossil-based’’ diesel fuel is different from renewable diesel fuel. 

80.1429(b)(9) ............................................................................ Amended to include RIN separation limitations on parties whose non-export 

RVOs are solely related to imports of gasoline and diesel or the use of 

blendstocks to produce gasoline or diesel. 

80.1449(a) ................................................................................ Amended Production Outlook Report due date; added allowance for unregistered 

renewable fuel producers and importers to submit Production Outlook Reports. 

80.1450(d)(1)–(d)(3) ................................................................. Amended to add more specificity on when updates, addenda, or resubmittals are 

required for engineering reviews and to include references to foreign ethanol 

producers. 

80.1451(a)(1)(xi) ....................................................................... Amended to clarify that this section references RFS1 RINs retired for compliance. 

80.1452(b)(2) ............................................................................ Corrected typographical error. 

80.1452(b)(4) ............................................................................ Amended to clarify that a RIN-generating importer must submit to EMTS the EPA 

facility registration number of the facility at which the renewable fuel producer 

or foreign ethanol producer produced the batch. 

§ 80.1452(b)(5) ......................................................................... Amended to clarify that for imports of renewable fuel, the RIN-generator must 

submit to EMTS the EPA facility registration number of the importer that imported the batch. 

80.1460(b)(6) ............................................................................ Adds the existing prohibition against generating a RIN for fuel for which RINs 

have previously been generated. 

80.1464(a)(2)(iii), (a)(2)(iv), (b)(2)(iii), (b)(2)(iv), (c)(1)(iii), and 

(c)(1)(iv).

Added to clarify that auditors must verify that product transfer documents for RIN 

transactions contain the required information for obligated parties/exporters 

and for renewable fuel producers/importers. 


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1342 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

TABLE IV.A–1—SUMMARY OF TECHNICAL AMENDMENTS—Continued 

Section Description 

80.1464(a)(2)(i), (a)(3)(ii), (b)(2)(i), (b)(3)(ii) ............................ Amended to clarify that auditors must validate RIN separations for obligated parties/exporters and for renewable fuel producers/importers; amended to correct 

typographical error. 

80.1465(h)(2); 80.1466(h)(2); and 80.1467(e)(1), (e)(2), and 

(g)(2).

Amended to remove the option of using an alternative commitment in lieu of paying a bond and to clarify the amount of bond a foreign entity must post. 

There are also two changes to Table 

1 to § 80.1426 that we proposed in the 

July 1, 2011 NPRM that we are not 

finalizing in today’s action, but which 

instead will be finalized in a separate 

action. The first change would amend 

the table to include ID letters for each 

pathway to facilitate references to 

specific pathways. The second change 

would add ‘‘rapeseed’’ to the existing 

pathway that currently allows canola oil 

to be used as a valid feedstock in the 

production of biodiesel. These two 

changes are being finalized in a separate 

action in order to ensure that multiple 

changes to Table 1 to § 80.1426 that are 

made sequentially do not inadvertently 

result in later changes over-writing 

earlier changes. 

B. Technical Justification for 

Equivalence Value Application 

A producer or importer of renewable 

fuels is required to submit an 

equivalence value (EV) application in 

accordance with § 80.1415(c) for any 

renewable fuel that does not have an EV 

listed in § 80.1415(b). In addition, a 

producer or importer could apply for an 

alternative EV if the producer or 

importer has reason to believe that a 

different EV than that listed in 

§ 80.1415(b) is warranted. Section 

80.1415(c) provides the calculation 

equation for the EV of the renewable 

fuel and the requirements for the 

technical justification to be submitted in 

the EV application. 

We have received many inquires from 

producers and importers of renewable 

fuels requesting clarification of the 

specific requirements for the technical 

justification listed in § 80.1415(c). In 

addition, based on the many EV 

applications we have evaluated, we 

have found that we needed to request 

additional information from producers 

and importers to better understand the 

composition of the renewable fuel they 

produced, such as intermediate steps 

and energy inputs in production 

process, sources of renewable and nonrenewable feedstock, and so forth, to 

better evaluate and assign the correct EV 

to the producer or importer’s renewable 

fuel. 

Therefore, we are finalizing in this 

rulemaking amendments to 

§ 80.1415(c)(2) to clarify the current 

requirements and to include additional 

requirements for the technical 

justification to be submitted in the EV 

application. The final amendments to 

§ 80.1415(c)(2) include: 

—A calculation for the requested 

equivalence value according to the 

equation in § 80.1415(c)(1), including 

supporting documentation for the 

energy content (EC) of the renewable 

fuel such as a certificate of analysis 

from a laboratory that verifies the 

lower heating value in Btu per gallon 

of the renewable fuel produced. 

—For each feedstock, component or 

additive used to make the renewable 

fuel, provide a description, the 

percent input and identify whether or 

not it is renewable biomass or is 

derived from renewable biomass. 

—For each feedstock that could 

independently qualify as a renewable 

fuel, state whether or not RINs have 

been previously generated for the 

feedstock. 

—A description of renewable fuel and 

the production process, including a 

block diagram that shows quantities 

of all inputs and outputs required at 

each step of the production process 

for the production of one batch of 

renewable fuel. 

We received no adverse comments on 

our proposed changes to § 80.1415(c)(2), 

and so are finalizing the changes as 

proposed. 

C. Changes to Definitions of Terms 

1. Definition of Annual Cover Crop 

As explained in the preamble of the 

RFS2 final rulemaking, EPA extended 

modeling for cellulosic biofuel made 

from corn stover and biodiesel/ 

renewable diesel made from waste oils/ 

fats/greases to certain fuels made from 

annual cover crops, based on the 

expectation that cultivation of annual 

cover crops, as defined in § 80.1401, 

will have little impact on the 

agricultural commodity markets and 

therefore little or no land use impact 

associated with them. Therefore, certain 

fuels (as specified in Table 1 to 

§ 80.1426) derived from annual cover 

crop feedstocks qualify for D-codes 

under the advanced biofuel, biomassbased diesel, and cellulosic renewable 

fuel categories. 

Section 80.1401 of the final RFS2 rule 

defines ‘‘annual cover crop.’’ We 

proposed to amend the definition of 

annual cover crop in order to more 

clearly define those feedstocks that meet 

the intent of including cover crops in 

several pathways in Table 1 to 

§ 80.1426. 

As explained in the proposal, in order 

to extend our modeling to cover crops, 

we used the rationale that annual cover 

crops would have no indirect land use 

impact since they are planted on land 

otherwise used for crop production. 

Direct greenhouse gas emissions would 

only be associated with growing, 

harvesting and transporting the cover 

crop, and then processing into biofuel. 

(See 75 FR 14794 col. 3.) These direct 

impacts could include requiring the 

farmer to use more commercial fertilizer 

in compensation for removing cover 

crops that would have been plowed into 

the field, or in decreasing yield of food 

crops. However, our determination that 

cover crops qualified for D-codes under 

the advanced biofuel, biomass-based 

diesel, and cellulosic renewable fuel 

categories was based on the fact that 

they did not have any indirect impacts. 

Thus, we assumed that no additional 

land would be required to plant annual 

cover crops, that cover crops would not 

displace primary crop production, and 

that the use of the cover crop as a 

feedstock for renewable fuels would not 

have secondary impacts on other 

agricultural commodity markets. This 

implies that annual cover crops would 

not be planted and harvested for the 

purpose of being sold to existing 

markets. If a cover crop already had an 

existing market, then the increased use 

of cover crops as feedstocks for 

renewable fuel production could 

potentially impact the existing markets. 

Therefore, we proposed to amend the 

current definition for ‘‘annual cover 

crop’’ to clarify that for purposes of the 

RFS program the term only includes 

crops that have no existing market to 

which they can be sold except for the 

use of the feedstock for renewable fuel. 

This will ensure that no unintended 

land use or significant indirect effects 

result from the use of annual cover 


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crops as feedstocks for renewable fuel 

production. 

Several parties commented against 

this change, stating that it is too 

restrictive and thus would prevent some 

crops they considered cover crops from 

qualifying as eligible feedstock under 

the RFS2 program. While this change 

clarifies that crops having existing 

market impacts would not qualify as 

cover crops, such exclusion is 

consistent with the basis for including 

the cover crop provision. EPA 

determined that crops with no market 

value could be planted on land without 

any expected impact on other crops and 

thus no expected indirect land use 

impact. This amendment clarifies that 

only crops with no market impact can 

qualify as cover crops and is consistent 

with the underlying analysis. However, 

even if a crop does not qualify under 

this revised cover crop definition, that 

does not prevent it from being included 

as an eligible feedstock under the RFS2 

program. As stated in the proposal, EPA 

recognizes that there may be additional 

fuel pathways requiring lifecycle 

greenhouse gas (GHG) assessments and 

the assignment of appropriate RIN D– 

Codes, including those using feedstocks 

that do not meet the proposed amended 

definition of annual cover crop. For 

further guidance on the process for 

requesting EPA evaluation of new fuel 

pathways, please refer to the following 

sites: 

http://www.epa.gov/otaq/fuels/ 

renewablefuels/compliancehelp/rfs2- 

lca-pathways.htm 

http://www.epa.gov/otaq/fuels/ 

renewablefuels/compliancehelp/lcapetition-instructions.htm#1 

2. Definition of ‘‘Naphtha’’ 

In the RFS2 final rule, we included 

several RIN-generating pathways in 

Table 1 to § 80.1426 for naphtha made 

from renewable biomass. We also 

provided a definition of naphtha in 

§ 80.1401. However, the definition we 

finalized was overly broad and did not 

adequately represent our intent to limit 

naphtha to gasoline blendstocks. As a 

result, some biofuel producers have 

expressed interest in interpreting the 

term ‘‘naphtha’’ to include materials 

that, while falling within the boiling 

range of gasoline, are not used as a 

blendstock to produce gasoline. 

To remedy this situation, we 

proposed to revise the definition of 

naphtha to also specify that it applies 

only to blendstocks which are 

composed of only hydrocarbons, are 

commonly or commercially known as 

naphtha, and are used to produce 

gasoline. We received no adverse 

comments on this proposal, and so are 

finalizing it as proposed. 

D. Technical Amendments Related to 

RIN Generation and Separation 

1. RIN Separation Limit for Obligated 

Parties 

We proposed to amend section 

§ 80.1429(b)(9) to limit the amount of 

RINs a company who is an obligated 

party solely by virtue of importation of 

obligated fuel can separate to meet their 

Renewable Volume Obligation (RVO). 

This proposal was designed to prevent 

abuse of the obligated party RIN 

separation provision by a company that 

imports a relatively small amount of an 

obligated volume, but then separates a 

large amount of RINs. It was also 

designed to help prevent hoarding of 

RINs by parties that do not need them 

for compliance purposes, and to 

generally increase the liquidity of RINs. 

EPA structured the original RFS1 

separation regulations around 

facilitating compliance by obligated 

parties who must acquire RINs to meet 

their RVOs. This change is consistent 

with the original design and also 

ensures that importers can separate 

enough RINs to meet their obligations. 

Overall, commenters were against this 

amendment with many companies 

indicating that they are currently taking 

advantage of the ability to separate all 

RINs in their possession if they are an 

obligated party solely related to their 

gasoline and/or diesel imports, and that 

they wish to continue to do so. 

One commenter opposed this change, 

stating that the RIN life limitation 

would prevent hoarding. EPA does not 

agree with this; the life of a RIN 

prevents use for compliance after a 

designated amount of time, see 

§ 80.1447(a)(6), this does not provide an 

adequate mechanism to prevent 

hoarding of RINs. 

Several commenters stated that the 

carryover provisions prevent RIN 

hoarding. EPA does not agree; the 

carryover provisions, § 80.1428(a)(5), 

refer only to the ratio of assigned RINs 

to volumes of renewable fuel owned at 

the end of a quarter. There is no limit 

on the amount of separated RINs that a 

party may own at the end of a quarter. 

Several commenters stated that 

market liquidity would decrease if 

obligated importers could not separate 

all RINs that they own. They also stated 

that RINs will be held by fewer 

obligated parties. We believe that 

market liquidity would not be 

decreased; RIN separation would still 

occur according to § 80.1429 and 

obligated parties would still have access 

to the separated RINs needed for 

compliance. In fact, to the extent that 

the provision prevents RIN hoarding, as 

intended, it should increase RIN 

liquidity. EPA has determined that this 

will not change or limit who can 

participate in the RFS program or 

become an obligated party; it will only 

limit the number of RINs that certain 

importers can separate. In addition, 

these obligated importers and any other 

RIN owning party can separate RINs 

without being subject to the limitation 

in § 80.1429(b)(9) for any of the reasons 

outlined in § 80.1429(b)(2)–(b)(5) and 

(b)(8). 

One commenter was concerned about 

how an obligated importer would know 

how many RINs they could separate for 

‘‘receipt of fuel by an obligated party’’ 

noting that they will not know their 

exact RVO until the end of the 

compliance year. EPA believes that 

obligated importers should separate 

RINs on the basis of ‘‘receipt of fuel by 

an obligated party’’ only to the extent 

necessary to meet their existing 

obligation. 

One commenter felt that the proposed 

amendment would limit the actual 

capacity of an importer to introduce a 

volume of renewable fuel into the 

marketplace. EPA does not agree with 

this statement and believes that limiting 

RIN separation using the reason ‘‘receipt 

of fuel by an obligated party’’ would not 

reduce the amount of renewable fuel 

that is in demand and may be sold. 

One commenter requested 

confirmation of the following statement: 

‘‘this change would, in no way, limit the 

right of a company to separate RINs 

from renewable fuel if that entity is 

acting as a blender and blending 

renewable fuel into transportation, 

heating fuel or jet fuel.’’ EPA confirms 

the previous statement with one 

clarification. Amended § 80.1429 

applies ‘‘except as provided in 

paragraphs (b)(2) through (b)(5) and 

(b)(8).’’ Since the obligation for blenders 

to separate RINs for renewable fuel that 

they blend to produce a transportation 

fuel, heating oil or jet fuel appears in 

(b)(2), the limitations in (b)(9) are not 

applicable to RIN separations pursuant 

to that provision. We clarify, however, 

that (b)(2) applies to blending ‘‘to 

produce’’ a transportation fuel, heating 

oil or jet fuel. For example, blending 

biodiesel at a rate of 5% into motor 

vehicle diesel fuel would produce a 

transportation fuel. 

One commenter indicated that this 

method of separation helped companies 

that did not want to be involved with 

the RFS program; allowing obligated 

importers to transfer renewable fuel 

without RINs and not violating the 

quarterly check outlined in 


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§ 80.1428(a)(5). EPA notes that all 

parties have the ability to separate up to 

2.5 RINs per gallon pursuant to 

§ 80.1429. This amendment, which will 

limit obligated importers’ ability to 

separate RINs, would not change this 

feature. This provision could facilitate 

the transfer of fuel with separated RINs 

to parties not wishing to receive RINs. 

Also, small blenders have the ability to 

delegate all RIN related responsibilities 

to the party directly upstream as long as 

they are blending less than 125,000 

gallons of renewable fuel per year 

(§ 80.1440). In addition to separating up 

to their RVO, obligated importers and 

any other RIN owning party can 

separate for any of the reasons outlined 

in § 80.1429(b)(2)–(b)(5) and (b)(8) 

without being subject to the limitation 

in (b)(9). 

One commenter argued that the 

ability to separate as an obligated 

importer allowed them more flexibility 

with RIN transfer dates. EPA believes 

that this implies that the party uses its 

ability to separate to avoid the 

requirement in § 80.1428(a)(3) ‘‘an 

assigned RIN cannot be transferred to 

another person without simultaneously 

transferring a volume of renewable fuel 

to that same person.’’ The commenter 

indicated that a reason for becoming an 

obligated importer is to be able to 

separate all RINs and avoid the 

previously referenced regulatory 

requirement. This also allows them to 

remain in compliance with the EMTS 

transaction reporting time frames laid 

out on § 80.1452(c). EPA believes that 

transfer date and the ability to transfer 

separated RINs without renewable fuel 

are not relevant to this amendment. The 

commenter’s use of the provision is 

counter to how the program was set up 

to ensure the distribution of RINs and 

could be used not only to slow the 

transfer of RINs downstream to the 

blender or final user of the renewable 

fuel, but also allow hoarding. The 

commenter also stated that there is no 

requirement to report physical fuel 

inventory and number of assigned RINs 

(§ 80.1428(a)(5)). EPA has determined 

that this statement is not accurate 

pursuant to § 80.1451. Currently, 

§ 80.1451(c)(2)(xiv), requires the volume 

of renewable fuel owned at the end of 

the quarter. This volume must meet the 

requirements of § 80.1428(a)(5). 

EPA believes that while commenters 

were mainly against the amendment, 

specific arguments presented supported 

EPAs reason for the amendment. For the 

reasons stated above, we are finalizing 

the regulatory changes as proposed. 

2. RIN Retirement Provision for Error 

Correction 

As we stated in the proposal, in some 

instances, renewable fuel producers or 

importers may improperly generate 

RINs in EMTS as a result of calculation 

errors, meter malfunctions or clerical 

errors. Pursuant to § 80.1431(a), 

improperly generated RINs are invalid, 

and cannot be used to achieve 

compliance with any Renewable 

Volume Obligations (RVOs). 

EPA sought comment on the 

possibility of amending § 80.1431 to 

provide the regulated community with 

limited flexibility to allow certain RINs 

that were improperly generated to 

nevertheless be transferred and used for 

compliance, provided the RIN-generator 

retires equivalent RINs (the same 

quantity and fuel category (D-code) of 

RINs with the same RIN year) in order 

to make the market whole. 

We sought comment on whether EPA 

should amend the regulations to include 

the flexibility for EPA to allow 

improperly generated RINs to be used 

for compliance, whether the conditions 

set forth in the proposal were 

appropriate, and whether there are 

additional or alternative conditions that 

should be imposed if the flexibility were 

to be granted. We proposed that the 

following general limitations should 

apply to any flexibility to allow 

improperly generated RINs to be 

transferred and used for compliance: (1) 

The RINs must have been improperly 

generated as a result of an inadvertent 

error, (2) the improperly generated RINs 

must have the correct D code, (3) the 

RIN generator must correct the 

information submitted to EMTS and 

retire an equivalent number and type of 

any excess RINs that were generated as 

a result of the error within a fixed time 

period of 60 days, (4) the flexibility to 

allow improperly generated RINs to be 

used for compliance would only apply 

if the number of excess RINs generated 

for a particular batch exceeds the 

number of RINs that should have been 

generated by no more than two percent, 

and (5) the flexibility to allow 

improperly generated RINs to be used 

for compliance should be limited to a 

certain number of times per year per 

RIN generator. 

We received several comments in 

support of providing EPA with some 

sort of flexibility to allow improperly 

generated RINs to be used for 

compliance, and a few comments that 

did not support EPA providing any 

flexibility of this type. Supporters of the 

flexibility believe that this flexibility is 

necessary for good faith RIN generators 

who have made inadvertent mistakes. 

They argue that the flexibility will avoid 

time spent by both EPA and regulated 

parties tracking invalidly generated 

RINs to their current owner when 

equivalent RINs could be retired to 

make the system whole. Commenters 

believe EPA’s time is better spent 

investigating more egregious violations. 

Many supporters of the flexibility, 

however, believe that, given the 

proposed limitations, the proposed 

flexibility would be too narrow. 

Commenters believe that EPA should 

take into consideration the totality of 

the circumstances, including the 

number of RINs/percent of the batch 

that are invalid, the frequency of 

improper generation on the part of the 

producer and indications of good faith 

mistake when determining whether to 

allow the flexibility for improperly 

generated RINs to be used for 

compliance, rather than imposing strict 

limitations on the use of the flexibility. 

EPA believes that providing this type 

of flexibility will reduce disruptions to 

the RIN market while continuing to 

apply appropriate pressure on parties 

that generate, transfer and use RINs to 

comply with the regulations. However, 

EPA disagrees with the commenters that 

advocated that the flexibility should be 

unlimited. EPA believes that by limiting 

the use of this flexibility, RIN generators 

are provided an incentive to implement 

and utilize measures and controls to 

ensure the validly of information sent to 

EMTS in a more timely manner. 

Therefore, in today’s rule in 80.1431(c) 

and (d), EPA is finalizing an approach 

that provides flexibility to RIN 

generators to retire equivalent RINs in 

situations where they have overgenerated RINs on a batch due a broken 

meter, an inadvertent temperature 

correction error, or an inadvertent 

administrative error. This flexibility 

may only be used under certain 

conditions, though, in order to mitigate 

harm to the RIN market, as specified in 

the regulations and discussed in detail 

below. 

Some commenters supported the 

proposed 60-day time allowance for a 

RIN generator to correct RIN generation 

information submitted to EMTS. The 

commenters believe 60 days is sufficient 

to identify and correct inadvertent 

mistakes, and the time limit provides an 

incentive for the regulated community 

to regularly verify that RINs have been 

correctly generated. On the other hand, 

another commenter thought that the 

correction period should be longer than 

60 days. One commenter suggested 18 

months for RIN generators to notify EPA 

of improperly generated RINs at which 

point EPA would determine whether to 

allow those invalid RINs to be used for 


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compliance. The commenter believed 

this would allow invalid RINs to be 

discovered during the attest audit 

conducted each year concerning the 

renewable fuel producer’s compliance 

records. 

Additionally, commenters generally 

disagreed with EPA’s proposal to limit 

the flexibility to situations where the 

number of excess RINs generated for a 

particular batch exceeds the number of 

RINs that should have been generated 

by no more than 2%. Commenters 

argued that a simple typing error in any 

digit can easily result in an overgeneration that far exceeds 2%. One 

commenter suggested that the number of 

RINs eligible for the flexibility be 

limited to no more than 2% of a specific 

RVO category (e.g. Cellulosic Biofuel, 

Advanced Biofuel, etc.) for any given 

year. Another suggested that there is no 

reason to limit the flexibility this way, 

and that EPA should maintain 

discretion to determine when invalid 

RINs can be used for compliance, 

regardless of what percentage of the RIN 

batch is invalid. The commenter states 

that there is no reasonable equitable 

basis for limiting the availability of the 

flexibility to situations involving an 

error of no more than 2%, since there 

can be significant variability in the size 

of renewable fuel batches; for example, 

2% of a large batch could consist of 

more RINs than an entire batch for a 

smaller facility. 

In today’s final rule, EPA did not limit 

the ability to use the flexibility to a 

certain number of RINs or percentage of 

a batch as proposed because we agree 

with commenters’ suggestion that a 

simple typing or meter error may result 

in a large number of excess RINs just as 

easily as it could result in an error that 

constitutes only a small number of RINs. 

EPA’s decision to eliminate the two 

percent limitation may result in more 

regulated parties taking advantage of the 

flexibility created by this rule. 

Nevertheless, EPA is limiting the use of 

the flexibility to situations in which RIN 

generators who improperly overgenerated RINs on a batch fit certain 

criteria, including taking remedial 

action to retire equivalent RINs within 

30 days of the original invalid RIN 

generation submission in EMTS, as 

specified in 80.1431(c)(7). EPA believes 

that it is appropriate to require RIN 

generators to correct the information 

submitted to EMTS within 30 days to 

encourage the regulated community to 

take prompt corrective action, which 

will aid in maintaining market integrity. 

EPA believes that limiting the amount of 

time that RIN generators are afforded to 

avail themselves of this flexibility is 

necessary to provide an incentive to RIN 

generators to conduct timely internal 

inspections of their RIN generation 

activities in order to ensure that RINs 

are properly generated and the accuracy 

of RIN information in EMTS. 

We also sought comment on the 

possibility of establishing a limit on the 

number of times this flexibility could be 

requested within a compliance period 

by a given RIN generator. We stated that 

we believe such a limitation could 

encourage RIN generators to take 

appropriate measures to avoid 

generating invalid RINs, and limit the 

possibility that RIN generators would 

intentionally generate invalid RINs to 

take advantage of short term RIN price 

spikes. Some commenters argued that 

there should not be a limit on the 

number of times a RIN generator can 

request EPA allow them to use the 

flexibility, but that if a particular 

company regularly generates RINs 

improperly, that company should be 

penalized on a case-by-case basis, taking 

into account whether the error was truly 

a mistake made in good faith. 

EPA disagrees with commenters’ 

belief that RIN generators should have 

unlimited access to these flexibilities. 

EPA believes that the flexibility should 

be limited to a set number (namely, five) 

of improperly generated batches per 

year and is finalizing regulations to that 

effect in 80.1431(c)(6). By limiting the 

number of times a RIN generator may 

utilize the flexibility to retire equivalent 

RINs, the regulations will encourage 

RIN generators to implement robust 

measures and controls to prevent errors 

from occurring, knowing that the 

flexibility is only available to them for 

five batches each compliance year. 

Additionally, limiting the number of 

batches to which this flexibility can be 

applied restricts the ability of RIN 

generators that might otherwise 

intentionally generate invalid RINs to 

take advantage of short term RIN price 

spikes. 

Finally, EPA is finalizing a provision 

informing the regulated community that 

EPA intends to publicly post 

information concerning RIN generators 

utilizing this flexibility in 

80.1431(c)(7)(B). By posting this 

information, EPA is assisting obligated 

and other regulated parties in their due 

diligence to ensure compliance with all 

RFS2 regulations. EPA believes that 

posting information concerning the use 

of this flexibility will incentivize proper 

RIN generation in the future. 

Further, EPA may remove improperly 

generated RINs from EMTS if the RIN 

generator has failed to properly meet the 

remedial action requirements stated in 

the regulations, as specified in 

80.1431(d). EPA believes this will 

prevent invalid RINs that do not meet 

the requirements in 80.1431(c) from 

propagating through the market and 

being used for compliance purposes, 

thus preventing additional violations. 

While EPA is aware that the proposal 

did not include the ability to remove 

improperly generated RINs, EPA 

believes this ability is a logical 

outgrowth from the comments that EPA 

should spend more time investigating 

egregious violations. This provision will 

allow EPA to quickly remove from the 

market those RINs reported by the RIN 

generator to be invalid due to reasons in 

80.1431(c)(2), thus affording EPA more 

time to spend investigating egregious 

violations. 

Finally, a number of commenters 

noted that good faith purchasers and the 

ultimate users of the RINs, the obligated 

parties, should not be subject to a 

violation for unwittingly buying and/or 

retiring invalid RINs for compliance. 

EPA disagrees, and believes that the 

‘‘buyer beware’’ aspect of the RIN 

trading program is one of the 

cornerstones of the program. It provides 

an important incentive for the regulated 

community to comply with the 

regulations and mandates due diligence 

on the part of all RIN buyers. It 

encourages self-policing on the part of 

RIN generators, owners and users in 

order to keep the program functioning 

smoothly. EPA is not making any 

changes to the liability sections of RFS2 

as a result of these comments and 

although today’s rule will allow 

obligated parties to use some invalid 

RINs for compliance, the obligated 

parties and any intermediary party are 

still liable for buying and/or transferring 

invalid RINs. 

3. Production Outlook Reports 

Submission Deadline 

In the final RFS2 regulations, in 

§ 80.1449(a), EPA set the annual 

deadline for submitting Production 

Outlook Reports as March 31 of each 

year. However, EPA has determined 

that, in order for the information 

contained in the Production Outlook 

Reports to be most useful when setting 

the RFS2 volume requirements and 

associated percentage standards for the 

following calendar year, the reports 

should contain the most accurate 

projections possible. Since the accuracy 

of projections tends to increase the 

closer those projections are made to the 

following calendar year, we proposed 

that the March 31 deadline should be 

moved to June 1. This revised deadline 

would still allow the information 

contained in the Production Outlook 

Reports to be used in the development 


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1346 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

of the final rulemaking setting the 

standards for the following year. 

We received one comment on the 

proposed Production Outlook Reports 

deadline of June 1 that suggested August 

31, or as late as possible that still 

ensures the information is useful in the 

development of the final RFS standards 

for the following year. EPA believes, 

however, that if the deadline is set later 

in the year, there would be insufficient 

opportunity for EPA to quality check the 

incoming data prior to incorporating it 

into the analysis for developing the 

RFS2 volume requirements and 

associate percentage standards for the 

following calendar year. EPA strives to 

make the most accurate projections 

possible, so without time to check the 

data quality, there could be inaccuracies 

in the volume requirements that lead to 

market disruption. 

Another commenter suggested that 

having the Production Outlook Reports 

deadline immediately after the May 31 

attest engagement deadline would place 

a significant burden on regulated parties 

at that time, and suggests a deadline of 

June 30 for the Production Outlook 

Reports. EPA believes that it is not a 

significant burden for regulated parties 

to submit the Production Outlook 

Report at the same time as the attest 

engagement report, especially 

considering the attest audit and report 

are typically conducted by independent 

third-party auditors, rather than the 

regulated parties themselves. 

For the reasons stated above, EPA 

believes that the proposed June 1 

deadline for Production Outlook 

Reports is reasonable and should not be 

moved to later in the year. Therefore, 

EPA is finalizing the June 1 deadline for 

Production Outlook Reports. 

4. Attest Procedures 

In the final RFS2 regulations, EPA 

required in § 80.1464(c)(1)(i) and 

(c)(2)(ii) that RIN owners conduct attest 

procedures for RIN transaction and RIN 

activity reports that involve RIN 

separations. This requirement was 

intended to be included in the attest 

procedures for obligated parties and 

exporters as well as for renewable fuel 

producers and RIN-generating 

importers, in order to confirm that RINs 

are being properly separated by all 

parties participating in the RIN market. 

Thus, we proposed amendments to 

§ 80.1464(a)(2)(i) and (a)(3)(ii) for 

obligated parties and exporters as well 

as to § 80.1464(b)(2)(i) and (3)(ii) for 

renewable fuel producers and RINgenerating importers to include attest 

procedures concerning verification of 

RIN separation. 

Additionally, in the final RFS2 

regulations, EPA required in § 80.1464 

that auditors of RIN generation reports 

verify that product transfer documents 

(PTDs) include the required 

information. EPA believes it would be 

beneficial for auditors to verify the 

required information is present on PTDs 

for RIN transactions for all parties, 

including obligated parties, renewable 

fuel producers and importers and RIN 

owners. Thus, we proposed 

amendments to § 80.1464(a)(2), (b)(2) 

and (c)(1) to require auditors to verify 

that the PTDs for a representative 

sample of RINs sold and purchased 

contains the information required in 

§ 80.1453. 

We received one comment that stated 

that the attestation procedures should 

be comparable for all reporting activities 

of all regulated parties. EPA believes, 

however, that the proposed regulatory 

changes to the attest engagement 

procedures apply consistently to all 

regulated parties in that all parties are 

responsible for ensuring that RINs that 

they separate, purchase or use for 

compliance have been properly 

separated and that they have associated 

PTDs with all of the required 

information. Another commenter states 

that obligated parties should not be 

required to audit RIN separation 

activities in addition to RIN purchases. 

Again, EPA feels this additional check 

on RIN separation activities will ensure 

that the RINs are properly separated and 

that renewable fuel is actually being 

blended for use as transportation fuel, 

heating oil or jet fuel. Therefore, EPA is 

finalizing the amendments to the attest 

engagement procedures as proposed. 

E. Technical Amendments Related to 

Registration & Recordkeeping 

1. Construction Discontinuance & 

Completion Documentation 

The registration requirements in 

§ 80.1450(b)(1)(vi) state that for facilities 

claiming the exemption described in 

§ 80.1403(c) or (d), evidence must be 

submitted demonstrating the date that 

construction commenced. However, the 

registration requirements do not 

explicitly require the submission of 

evidence demonstrating that they meet 

the other requirements described in 

§ 80.1403(c)(1) and (2) or (d)(1), (2) and 

(3). 

In order to verify that facilities which 

claim to qualify for an exemption under 

§ 80.1403(c) or (d) in fact meet all of the 

qualification requirements for such an 

exemption, we proposed to amend 

§ 80.1450(b)(1)(vi) to include 

requirements that the owner or operator 

of facilities claiming exemption under 

§ 80.1403(c) submit evidence 

demonstrating that construction was not 

discontinued for a period of 18 months 

after construction began, and that 

construction was completed by 

December 19, 2010. Similarly, we 

proposed that for facilities claiming the 

exemption under § 80.1403(d), evidence 

be submitted demonstrating that 

construction was not discontinued for a 

period of 18 months after construction 

began and that construction was 

completed within 36 months of the 

commenced construction date. 

We received comments that EPA 

should not adopt these proposed 

amendments because the requirements 

would be overly burdensome and 

unnecessary due to the fact that the 

majority of all facilities that have 

claimed the exemption under § 80.1403 

have already been registered and 

therefore these amended requirements 

would have no effect on these facility’s 

registration. Secondly, the commenter 

stated that the proposed requirement to 

submit evidence that construction was 

not discontinued for a period of 18 

months is unreasonable because it is 

unclear how a facility could prove a 

lack of construction activity. Thirdly, 

the commenter stated that the proposed 

amendment to submit evidence that 

construction was timely completed was 

unnecessary because a facility’s 

operation activity such as production of 

fuel was enough to serve as evidence 

that construction was completed. The 

commenter suggested that EPA only 

request evidence to demonstrate that 

these requirements are met from 

facilities that EPA believes did not 

rightly claim the exemption under 

§ 80.1403. 

In order to fully assess the concerns 

raised by the commenters, EPA has 

decided to investigate this issue in more 

detail and analyze some additional 

options. Therefore, at this time, EPA is 

not taking final action with respect to 

this proposed amendment. 

2. Third-Party Engineering Reviews 

The regulations stipulate that 

producers of renewable fuels and 

foreign ethanol producers are required 

to update their registration information, 

and submit an updated independent 

third-party engineering review, every 3 

years after their initial registration in 

accordance with § 80.1450(d)(3). We 

have received many inquiries regarding 

the start date that EPA uses to determine 

the 3 year period after which the 

producer must submit an updated 

independent third party engineering 

review (such as the registration 

acceptance date, the third-party 

professional engineer’s signature date 


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on the engineering review report, or the 

due date for engineering reviews. 

Given the lack of clarity in the current 

regulations, we proposed amendments 

to specify the time frame for submission 

of updated independent third-party 

engineering reviews which included a 

simplified method that would group 

producers according to the calendar 

year they were or will be registered, and 

set a fixed time frame for registration 

updates for each group. We proposed to 

amend § 80.1450(d)(3) to stipulate that 

for all producers of renewable fuel and 

foreign ethanol producers for which 

registration was accepted by EPA in 

calendar year 2010, that the updated 

registration information and 

independent third-party engineering 

review would be submitted to EPA 

within the three months prior to January 

1, 2014, and within three months prior 

to January 1 of every third calendar year 

thereafter. For all producers of 

renewable fuel and foreign ethanol 

producers registered in any calendar 

year after 2010, the updated registration 

information and independent thirdparty engineering review would be 

submitted to EPA within three months 

prior to January 1 of every third 

calendar year after the first year the 

producer’s registration was accepted by 

EPA. For example, a producer registered 

in 2011 would be required to submit an 

updated independent third-party 

engineering review by January 1, 2015, 

and by January 1 every three calendar 

years thereafter. 

We received comments that supported 

the adoption of the proposed 

amendments for a simplified method of 

grouping producers according to the 

calendar year that they were or will be 

registered to determine the due date for 

submission of the updated registration 

information and independent thirdparty engineering review. The 

commenter suggested that we provide a 

clear method to determine the due date 

for individual facilities to further help 

with the compliance of this 

requirement. We agree with the 

commenter that providing more clarity 

and guidance would help facilities 

comply with this requirement. 

Therefore, in the near future and well 

before the due date for any updated 

engineering reviews, we plan to compile 

and publish a guidance document that 

will provide the date in which each 

facility’s registration was accepted, the 

calendar year in which each facility will 

be grouped, and the corresponding 

triennial due dates for the updated 

engineering review for each calendar 

year group. This guidance document 

will be published on the RFS public 

Web site. Parties must also comply with 

all other applicable requirements in 40 

CFR Part 80, Subpart M. This guidance 

does not, in any way, alter the 

requirements of the renewable fuel 

program regulations, and does not 

establish or change legal rights or 

obligations. 

In addition, we are removing from the 

final rule the proposed 3 months 

allowance period prior to triennial due 

date. The reason we included a 3 

months allowance was to ensure that 

the updated engineering reviews were 

not submitted so early as to not provide 

appropriately updated information as of 

the three-year submission deadline. We 

believed at the time of the proposal that 

the inclusion of the 3 month window 

would ensure that facilities conduct 

their engineering review closer to the 

end of the 3 year period, which we 

assumed would provide the most up-todate information. However, now we 

believe that the inclusion of this 3 

month period is unnecessary since the 

owners or operators of a facility can 

determine for themselves when it is 

appropriate to coordinate and conduct 

the engineering review for their facility 

and that the regulatory requirement for 

‘‘updated’’ engineering reviews provide 

sufficient clarity that the information 

submitted to EPA must reflect the up-todate information. 

Therefore, we are finalizing in this 

rulemaking the proposed simplified 

method to group facilities based on the 

calendar year in which their facility’s 

registration was accepted by EPA with 

the due date for the updated registration 

and independent third party 

engineering review to be submitted to 

EPA by January 31st of every 3 calendar 

years, starting from the acceptance date 

of the facility’s initial registration. We 

are allowing the engineering reviews to 

be submitted at the end of January due 

to possible scheduling concerns during 

the holiday season. 

3. Foreign Ethanol Producers 

We proposed that the amendments to 

the registration requirements in 

§ 80.1450 also apply to foreign ethanol 

producers. As defined in § 80.1401, 

foreign ethanol producers are foreign 

producers that produce ethanol for use 

in transportation fuel, heating oil or jet 

fuel but who do not add denaturant to 

their product. Therefore, foreign ethanol 

producers do not technically produce 

‘‘renewable fuel’’ as defined in our 

regulations. As discussed in the 

preamble to the Direct Final Rule 

published on May 1, 2010 (see 75 FR 

26032), the result of the amendments 

made in the Direct Final Rule is to 

require foreign ethanol facilities that 

produce ethanol that ultimately 

becomes part of a renewable fuel for 

which RINs are generated to provide 

EPA the same registration information 

as foreign renewable fuel facilities that 

export their product to the United 

States. In both cases the required 

registration information is important for 

enforcement purposes, including 

verifying the use of renewable biomass 

as feedstock and the assignment of 

appropriate D codes. Therefore, we 

believe amendments to the registration 

requirements that we make in this final 

rule should also be applicable to foreign 

ethanol producers for the same reasons. 

We did not receive comments on this 

proposed change, so we are finalizing 

the amendment as proposed. 

F. Additional Amendments and 

Clarifications 

1. Third-Party Engineering Review 

Addendum 

We have received many inquires as to 

whether an addendum to the existing 

independent third-party engineering 

review is sufficient to meet the 

requirement that all producers of 

renewable fuel and foreign ethanol 

producers submit an updated 

independent third-party engineering 

review if they make changes to their 

facility that will qualify the renewable 

fuel that is produced for a renewable 

fuel category or D code that is not 

already reflected in the producer’s 

registration information. In some 

circumstances the majority of the 

information verified in the existing 

independent third-party engineering 

review would remain the same, and 

duplicating the entire effort does not 

appear necessary. We believe the 

concept of allowing the submission of 

an addendum in lieu of a updated 

independent third-party engineering 

review is reasonable and therefore we 

are finalizing to amend the requirements 

in § 80.1450(d)(1) to state that a 

producer of renewable fuel or foreign 

ethanol producer may submit an 

addendum to the existing independent 

third-party engineering review on file 

with EPA provided the addendum 

meets all the requirements in 

§ 80.1450(b)(2) and verifies for EPA the 

most up-to-date information at the 

producer’s existing facility. The updated 

independent third-party engineering 

review or addendum shall be submitted 

at least 60 days prior to producing the 

new type of renewable fuel and must 

meet all the same requirements 

stipulated in § 80.1450(b)(2) for the 

independent third-party engineering 

review, including a new site visit 

conducted by the third party to verify 

any changes to the facility that allows it 


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to produce a different renewable fuel 

that is not currently reflected in their 

registration on file with EPA. 

2. RIN Generation for Fuel Imported 

From a Registered Foreign Producer 

In RFS2, EPA finalized provisions 

allowing importers to generate RINs for 

renewable fuel imported from a foreign 

producer only under certain 

circumstances. The importer may only 

generate RINs for fuel imported from a 

foreign renewable fuel producer or 

foreign ethanol producer if that 

producer is registered with EPA and has 

received EPA company and facility 

identification numbers pursuant to 

§ 80.1450. Pursuant to § 80.1426(c)(4), 

the importer is prohibited from 

generating RINs for fuel imported from 

a foreign producer that is not registered 

with EPA. In the proposed rulemaking, 

EPA proposed to clarify that when an 

importer is generating RINs for fuel 

imported from a registered foreign 

renewable fuel producer or foreign 

ethanol producer, the importer must 

submit to EPA via EMTS the importer’s 

company identification number, the 

facility identification number of the 

import facility where the batch was 

imported, and the facility identification 

number for the foreign renewable fuel or 

ethanol producer that produced the 

batch of fuel for which the importer is 

generating RINs. EPA did not receive 

comments on these clarifications, and is 

therefore finalizing them as proposed in 

§ 80.1452(b)(4) and (5). 

3. Bond Posting 

We proposed to amend paragraphs 

(e)(1), (e)(2) and (g)(2) of § 80.1467 to 

make them consistent with 

§ 80.1467(g)(1). These proposed 

amendments were intended to clarify 

that the amount of the posted bond must 

cover the number of gallon RINs that are 

sold and/or transferred, and also those 

RINs held and/or obtained by the 

foreign entity, including those held and/ 

or obtained to comply with a foreign 

importer’s RVO requirements. We also 

proposed to amend §§ 80.1465–80.1467 

by striking §§ 80.1465(h)(2)(iii), 

80.1466(h)(2)(iii) and 80.1467(e)(2)(iii), 

which allowed entities to make 

alternative commitments in lieu of 

posting bonds. EPA believes that this 

method is vague, unnecessary, and 

unenforceable. 

One commenter at the hearing is 

against the removal of the regulation 

allowing foreign producers to make 

alternative commitments as it may 

discourage foreign renewable fuel 

producers from entering the U.S. 

market. EPA disagrees as no foreign 

producer has used an alternative 

commitment to date, and most foreign 

renewable fuel producers do not post 

bonds and instead rely on the renewable 

fuel importers to generate RINs for 

renewable fuel that is imported. For 

those reasons and the reasons described 

above, we are finalizing the proposed 

changes to the bond posting regulations 

as proposed. 

4. Prohibition Against Repeat 

Generation of RINs 

We are finalizing our proposal to add 

a new paragraph (b)(6) to the prohibited 

acts of § 80.1460 to specify in this 

section of the regulations that RINs may 

not be generated for any fuel for which 

RINs have previously been generated. 

Pursuant to § 80.1401, a RIN is a unique 

number generated to represent a volume 

of renewable fuel. If more than one RIN 

is generated for a particular volume, the 

RIN will no longer be unique, and is 

therefore improperly generated and 

cannot be used to demonstrate 

compliance with the renewable volume 

obligations. While generating RINs for a 

particular volume of fuel for which RINs 

have already been generated is already 

prohibited, we are amending the 

regulations to include this prohibition 

in § 80.1460 for clarity. 

5. Acceptance of Separated Yard Waste 

and Food Waste Separation Plans 

We proposed to amend 

§ 80.1426(f)(5)(ii)(A) to remove the 

requirement that the separated yard 

waste plan and separated food waste 

plan must be approved by EPA, and 

instead only require that these two 

plans be submitted and accepted by 

EPA under the registration procedures 

specified in § 80.1450(b)(1)(vii). The 

details and information required to be 

submitted in the separated yard waste 

plan and separated food waste plan are 

not overly burdensome or complex, and 

therefore we believe it does not warrant 

a specific EPA approval, but that EPA 

acceptance of these plans through the 

registration procedures is sufficient. 

We received comments that supported 

the adoption of this amendment for 

separated food waste plan and separated 

yard waste plan. We also received 

comments suggesting that we also adopt 

this amendment for the separated MSW 

plan. The commenter stated that 

although the separated MSW plan 

requires somewhat more information 

than the separated yard and food waste 

plans, the same logic applies in that the 

separated MSW plan will also be subject 

to EPA review as part of the producer’s 

registration process and therefore 

requiring a separate duplicate approval 

for the separated MSW plan is not 

necessary. 

First, we would like to clarify that 

there is not a duplicate approval process 

for the separated MSW plan that serves 

as a separate additional requirement for 

the producer’s registration. Similar to 

the proposed acceptance process for the 

producer’s separated yard and food 

waste plan, the approval process for the 

producer’s separated MSW plan will 

equally serve as verification of 

compliance as part of the producer’s 

registration. Secondly, we disagree with 

the commenter that the separated MSW 

plan only requires somewhat more 

information than the separated yard and 

food waste plans, and that the same 

logic applies in terms of the review 

process. For the separated MSW plan, 

producers are required to provide 

ongoing verification that there is 

separation of recyclable paper, 

cardboard, plastics, rubber, textiles, 

metals, and glass wastes to the extent 

reasonably practicable, including: The 

extent and nature of the recycling that 

occurred prior to receipt of the waste 

material, identification of available 

recycling technology and practices that 

are appropriate for removing recycling 

materials from the waste stream, and 

identification of the technology or 

practices selected for implementation, 

including an explanation for such 

selection, and reasons why other 

technologies or practices were not 

implemented. In addition, producers are 

also required to provide contracts 

relevant to materials recycled from 

municipal waste streams and 

certification that recycling is conducted 

in a manner consistent with goals and 

requirements of applicable State and 

local laws relating to recycling and 

waste management as part of their 

registration process. For the separated 

yard and food waste plan, the producers 

are only required to provide ongoing 

verification that the separated yard 

waste or food waste was kept separate 

since generation from other waste 

materials, and for food waste, contain 

only incidental amounts of other 

components. We believe the information 

submitted in the separated MSW plan 

will be considerably more complex than 

information submitted in the separated 

yard and food waste plans, and 

therefore, will require EPA conduct a 

much more comprehensive review and 

also consider many additional factors to 

ensure that the producer has met the all 

the requirements stipulated. Based on 

the factors discussed, we believe that it 

is not reasonable to apply the same 

proposed acceptance process for 

separated yard and food waste plan to 

the separated MSW plan. 


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41Early credit generation periods were July 1, 

2007 through December 31, 2007, and calendar 

years 2008, 2009 and 2010. 

42Refineries produce gasoline by combining 

several different blendstocks produced by various 

refinery processing units. Reformate is a blendstock 

which contains approximately 80% of all benzene 

found in gasoline, per the MSAT2 regulatory impact 

analysis. 

43More information on wholesale gasoline prices 

can be found on the Department of Energy’s (DOE), 

Energy Information Administration’s (EIA) Web site 

at: http://www.eia.gov/dnav/pet/hist/LeafHandler.

ashx?n=PET&s=EMA_EPM0_PBR_NUS_DPG&f=M. 

44See U.S. Department of Labor, Bureau of Labor 

Statistics (BLS), Consumer Price Index Web site at: 

http://www.bls.gov/cpi/. 

Therefore, we are finalizing in this 

rulemaking only for separated yard 

waste plan and separated food waste 

plan to amend the requirement that the 

plans must be approved by EPA, and 

instead only require that the plans will 

be accepted by EPA under the 

registration procedures specified in 

§ 80.1450(b)(1)(vii). 

6. Transferred Blendstocks in Early 

Benzene Credit Generation Calculations 

Today’s rule also finalizes one minor 

correction to the gasoline benzene 

regulations which would clarify how 

refiners should account for transferred 

blendstocks in their early benzene credit 

generation calculations. Under current 

rules, refineries which generated early 

benzene credits are required to reduce 

gasoline benzene during an early credit 

generation period by at least 10% 

compared to the refinery’s benzene 

baseline, and are also required to make 

specific operational changes and/or 

improvements in benzene control 

technology to reduce gasoline benzene 

levels.41 Refineries which reduce their 

gasoline benzene by at least 10%, in 

part by transferring reformate to another 

refinery, could also generate early 

benzene credits, provided the transferee 

refinery treated the reformate in specific 

benzene-reduction processing units.42

See 72 FR 8486–87 (Feb. 26, 2007). 

However, the gasoline benzene 

regulations also contain an additional 

provision that requires all blendstock 

streams transferred to, from or between 

refineries to be excluded from a 

refinery’s early credit generation 

calculations (except for reformate as 

described previously). This led to an 

inconsistent comparison of a refinery’s 

benzene during an early credit 

generation period with a refinery’s 

benzene baseline (which included 

blendstocks transferred to the refinery), 

which was not EPA’s intent. 

As described in the preamble of the 

gasoline benzene final rule, EPA 

intended that refineries not be allowed 

to generate early benzene credits 

exclusively through blendstock trading, 

without making any other qualifying 

reductions (see 72 FR 8487), but that 

refineries could generate early benzene 

credits in part through qualifying 

reductions and ‘‘in part’’ through other 

means such as blendstock transfers (see 

72 FR 8496–97). However, the current 

regulations do not allow this approach, 

and this inconsistency has caused 

confusion among refiners about how to 

calculate the amount of early credits 

generated. Refiners have generally 

followed the approach set out in the 

preamble (as EPA in fact intended), and 

included all blendstocks transferred to a 

refinery in the refinery’s early credit 

generation calculations. Refiners 

typically keep records on transferred 

blendstocks for 1–2 years, and thus do 

not have sufficient data to exclude 

transferred blendstocks from their early 

credit generation calculations. 

EPA recently became aware of this 

inconsistency and is amending the 

regulations to make them consistent 

with EPA’s intent as described in the 

preamble. This rule amends the gasoline 

benzene regulations at 40 CFR 

80.1275(d)(3) by deleting that provision. 

This will allow a refinery to include 

blendstocks transferred to the refinery 

in the refinery’s early benzene credit 

generation calculations (all other 

conditions, including treatment which 

removes benzene in transferred 

reformate streams still applying, of 

course). Consistent with EPA’s original 

intent, today’s rule also allows a 

refinery to include transferred 

blendstocks in past early credit 

generation calculations, provided the 

refinery met all of the other 

requirements for generating early 

benzene credits. EPA is finalizing this 

change to include transferred 

blendstocks in past early credit 

generation calculation not only because 

this was EPA’s intent at the time of the 

benzene gasoline rulemaking, but 

because some refiners have reasonably 

relied upon that stated intent in 

devising their compliance strategies. 

All of the comments received on this 

change to the regulations were in 

support of this change. Commenters 

generally noted that the change was 

needed in order to align the language in 

the regulations with the intent stated in 

the preamble. 

V. Annual Administrative 

Announcements 

In the RFS2 final rule, we stated our 

intent to make two announcements each 

year: 

• Set the price for cellulosic biofuel 

waiver credits that will be made 

available to obligated parties in the 

event that we reduce the volume of 

cellulosic biofuel below the applicable 

volume specified in the Clean Air Act 

(CAA), and 

• Announce the results of our annual 

assessment of the aggregate compliance 

approach for U.S. planted crops and 

crop residue. 

The biofuel waiver credit price being 

announced today was calculated in 

accordance with the specifications in 

§ 80.1456(d). Since the manner in which 

EPA calculates the waiver credit price is 

precisely set forth in EPA regulations 

(which were issued through a noticeand-comment process), and since some 

of the variables necessary to compute 

the price have only recently become 

available, EPA did not propose a waiver 

credit price for comment. Similarly, 

because EPA’s assessment of the 

aggregate compliance approach 

announced today was conducted using 

data sources, methodology, and criteria 

that were identified and explained in 

the preamble to the RFS2 final rule, it 

was not necessary to present a 

preliminary annual assessment for 

comment in the NPRM. 

A. 2011 Price for Cellulosic Biofuel 

Waiver Credits 

Section 211(o)(7)(D) of the CAA 

requires that whenever EPA sets the 

applicable volume of cellulosic biofuel 

at a level lower than that specified in 

the Act, EPA is to provide a number of 

cellulosic credits for sale that is no more 

than the EPA-determined applicable 

volume. Congress also specified the 

formula for calculating the price for 

such waiver credits: Adjusted for 

inflation, the credits must be offered at 

the price of the higher of 25 cents per 

gallon or the amount by which $3.00 per 

gallon exceeds the average wholesale 

price of a gallon of gasoline in the 

United States.43 The inflation 

adjustment is for years after 2008. EPA 

regulations provide that the inflation 

adjustment is calculated by comparing 

the most recent Consumer Price Index 

for All Urban Consumers (CPI–U) for the 

‘‘All Items’’ expenditure category as 

provided by the Bureau of Labor 

Statistics that is available at the time 

EPA sets the cellulosic biofuel standard 

to the comparable value that was 

reported soonest after December 31, 

2008.44

In contrast to its directions to EPA for 

setting the price of a cellulosic biofuel 

waiver credit, Congress afforded the 

Agency considerable flexibility in 

designing regulations specifying the 

permissible uses of the credits. The 

CAA states that EPA regulations ‘‘shall 


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45See memo to docket number EPA–HQ–OAR– 

2010–0133 from Scott Christian, on the subject of 

‘‘Calculating the price for cellulosic biofuel waiver 

credits,’’ dated September 30, 2011. 

46 75 FR 14726–14728. 

include such provisions, including 

limiting the credits’ uses and useful life, 

as the Administrator deems appropriate 

to assist market liquidity and 

transparency, to provide appropriate 

certainty for regulated entities and 

renewable fuel producers, and to limit 

any potential misuse of cellulosic 

biofuel credits to reduce the use of other 

renewable fuels, and for such other 

purposes as the Administrator 

determines will help achieve the goals 

of this subsection.’’ The final RFS2 

regulations provide a detailed 

discussion of how we designed the 

provisions for cellulosic biofuel waiver 

credits in keeping with the statutory 

language. In short, 2012 cellulosic 

biofuel waiver credits (or ’’waiver 

credits’’) are only available for the 2012 

compliance year. Waiver credits will 

only be made available to obligated 

parties, and they are nontransferable 

and nonrefundable. Further, obligated 

parties may only purchase waiver 

credits up to the level of their cellulosic 

biofuel RVO less the number of 

cellulosic biofuel RINs that they own. A 

company owning cellulosic biofuel RINs 

and cellulosic waiver credits may use 

both types of credits if desired to meet 

their RVOs, but unlike RINs, waiver 

credits may not be carried over for use 

in the next calendar year. Obligated 

parties may not use waiver credits to 

meet a prior year deficit obligation. 

Finally, unlike cellulosic biofuel RINs 

which may also be used to meet an 

obligated party’s advanced and total 

renewable fuel obligations, waiver 

credits may only be used to meet a 

cellulosic biofuel RVO. An obligated 

party will still need to additionally and 

separately acquire RINs to meet their 

advanced biofuel and total renewable 

fuel obligations. 

For the 2012 compliance period, since 

the applicable volume of cellulosic 

biofuel used to set the annual cellulosic 

biofuel standard is lower than the 

volume for 2012 specified in the CAA, 

we are making cellulosic waiver credits 

available to obligated parties for end-ofyear compliance should they need them 

at a price of $0.78 per credit. To 

calculate this price, EPA first 

determined the average wholesale 

(refinery gate) price of gasoline using 

the most recent 12 months of data 

available from the EIA Web site on 

September 30, 2011. Based on this data, 

we calculated an average price of 

gasoline for the period July 2010 to June 

2011 of $2.44. In accordance with the 

Act, we then calculated the difference of 

the inflation-adjusted value of $3.00, or 

$3.22, and $2.44, which yielded $0.78. 

Next, we compared the value of $0.78 to 

the inflation-adjusted value of $0.25, or 

$0.27. The Act requires EPA to use the 

greater of these two values as the price 

for cellulosic biofuel waiver credits. 

The derivation of this value is more 

fully explained in a memorandum 

submitted to the docket for this 

rulemaking,45 and a more complete 

description of the statutory 

requirements and their application can 

be found in the RFS2 final rule.46 The 

price for the 2013 compliance period, if 

necessary, will be set when we 

announce the 2013 cellulosic biofuel 

standard. 

B. Assessment of the Domestic 

Aggregate Compliance Approach 

The RFS2 regulations contain a 

provision for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land that relieves 

them of the individual recordkeeping 

and reporting requirements concerning 

the specific land from which their 

feedstocks were harvested. To enable 

this approach, EPA established a 

baseline number of acres for U.S. 

agricultural land in 2007 (the year of 

EISA enactment) and determined that as 

long as this baseline number of acres 

was not exceeded, it was unlikely that 

new land outside of the 2007 baseline 

would be devoted to crop production 

based on historical trends and economic 

considerations. We therefore provided 

that renewable fuel producers using 

planted crops or crop residue from the 

U.S. as feedstock in renewable fuel 

production need not comply with the 

individual recordkeeping and reporting 

requirements related to documenting 

that their feedstocks are renewable 

biomass, unless EPA determines 

through one of its annual evaluations 

that the 2007 baseline acreage of 

agricultural land has been exceeded. 

In the final RFS2 regulations, EPA 

committed to make an annual finding 

concerning whether the 2007 baseline 

amount of U.S. agricultural land has 

been exceeded in a given year and 

publish this finding in the Federal 

Register by November 30 of the same 

year. If the baseline is found to have 

been exceeded, then producers using 

U.S. planted crops and crop residue as 

feedstocks for renewable fuel 

production would be required to 

comply with individual recordkeeping 

and reporting requirements to verify 

that their feedstocks are renewable 

biomass. 

Based on data provided by the USDA 

Farm Service Agency (FSA) and Natural 

Resources Conservation Service (NRCS), 

we have estimated that U.S. agricultural 

land reached approximately 392 million 

acres in 2011, and thus did not exceed 

the 2007 baseline acreage. This acreage 

estimate is based on the same 

methodology used to set the 2007 

baseline acreage for U.S. agricultural 

land in the RFS2 final rulemaking. 

Specifically, we started with FSA crop 

history data for 2011, from which we 

derived a total estimated acreage of 392 

million acres. We then subtracted the 

amount of land estimated to be 

participating in the Grasslands Reserve 

Program (GRP) and Wetlands Reserve 

Program (WRP) by the end of Fiscal 

Year 2011, 275,000 acres, to yield an 

estimate of approximately 392 million 

acres of U.S. agricultural land in 2011. 

The USDA data used to make this 

calculation can be found in the docket 

to this rule. 

C. Assessment of the Canadian 

Aggregate Compliance Approach 

On March 15, 2011, EPA issued a 

notice of receipt of and solicited public 

comment on a petition for EPA to 

authorize the use of an aggregate 

approach for compliance with the 

Renewable Fuel Standard renewable 

biomass requirements, submitted by the 

Government of Canada. The petition 

requested that EPA determine that an 

aggregate compliance approach will 

provide reasonable assurance that 

planted crops and crop residue from 

Canada meet the definition of renewable 

biomass. After through consideration of 

the petition, all supporting 

documentation provided and the public 

comments received, EPA determined 

that the criteria for approval of the 

petition were satisfied and approved the 

use of an aggregate compliance 

approach to renewable biomass 

verification for planted crops and crop 

residue grown in Canada. 

The Government of Canada utilized 

several types of land use data to 

demonstrate that the land included in 

their 124 million acre baseline is 

cropland, pastureland or land 

equivalent to U.S. Conservation Reserve 

Program land that was cleared or 

cultivated prior to December 19, 2007, 

and was actively managed or fallow and 

nonforested on that date (and is 

therefore RFS2 qualifying land). The 

total agricultural land in Canada in 2011 

is estimated at 121 million acres. This 

total agricultural land area includes 95.6 

million acres of cropland and summer 

fallow, 15.6 million acres of pastureland 

and 9.8 million acres of agricultural 

land under conservation practices. This 


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acreage estimate is based on the same 

methodology used to set the 2007 

baseline acreage for Canadian 

agricultural land in the RFS2 response 

to petition. The data used to make this 

calculation can be found in the docket 

to this rule. 

VI. Comments Outside the Scope of 

This Rulemaking 

In their comments responding to the 

NPRM, a number of parties used the 

opportunity to raise concerns that were 

not directly related to the issues and 

provisions we were addressing in the 

NPRM, such as the proposed standards 

for 2012, the applicable volume of 

biomass-based diesel for 2013, and the 

various proposed changes to the 

regulations designed to clarify intent 

and streamline implementation. Neither 

did these comments address setting the 

price for cellulosic biofuel credits or 

EPA’s annual evaluation of the U.S. 

aggregate compliance approach for 

renewable biomass. In some cases, 

commenters requested EPA action in 

some other area, such as the following: 

• Request for EPA to implement a 

more robust biofuel quality assurance 

program 

• Request for EPA to mandate that 

50% of all vehicles be E100 capable by 

2017 

• Request for EPA to encourage 

legislation that allows corn ethanol to be 

categorized as advanced biofuel 

• Request for EPA to pursue changes 

to the statute that would make valid 

renewable fuels feedstock-neutral. 

In other cases, commenters raised 

issues related to other areas not 

addressed in our NPRM, such as the 

following: 

• Other state and federal fuel 

regulations 

• Retail dispensing requirements and 

misfueling of E15 in non-flexible fueled 

vehicles 

• Need for continuing federal 

incentives for biofuels, such as tax 

subsidies 

• Relative energy security 

implications of imported petroleum 

versus imported biofuels 

• Delayed RINs 

• Definition of heating oil. 

While we are taking these comments 

under consideration as we continue to 

implement the RFS2 program, these 

comments are outside the scope of 

today’s action. In some cases, they are 

also outside our authority. Thus, we are 

not providing substantive responses to 

them at this time. 

We also received comments in a 

number of other areas that, while 

outside the scope of this rulemaking, we 

believe would benefit from a response to 

clarify our position and/or intentions. 

These issues are addressed below. 

One commenter provided a copy of a 

copyrighted report, ‘‘Energy Life-Cycle 

Assessment Of Soybean Biodiesel 

Revisited’’. Similarly, both Monsanto 

and RFA provided comments on the 

lifecycle GHG impacts of corn ethanol, 

indicating that it should be a higher 

GHG reduction than what was 

calculated by EPA as part of the RFS2 

final rule and that we should reevaluate 

corn ethanol lifecycle emissions based 

on new studies that are available. 

Another commenter requested that we 

investigate the GHG impacts of the 

oleochemical industry increasing the 

use of palm oil as a feedstock as animal 

fats are increasingly diverted to the 

production of biofuels. We will consider 

the information and analyses provided 

as part of any future updates to our 

lifecycle evaluations of these biofuels. 

Another commenter urged EPA to 

quickly certify additional feedstocks for 

cellulosic biofuels under the RFS. We 

are moving forward responding to a 

series of petitions requesting EPA 

approval of other pathways, including 

both feedstock-specific pathways (e.g., 

palm oil and sorghum) and company- or 

process-specific pathways. A discussion 

of the process involved and a list of the 

current pathways we are currently 

evaluating can be found at: http:// 

www.epa.gov/otaq/fuels/ 

renewablefuels/compliancehelp/rfs2- 

lca-pathways.htm. 

We appreciate that multiple 

stakeholders are highly interested in the 

timeline on which EPA is conducting 

these analyses. We note that the analysis 

required for the RFS fuel pathway 

determinations as required under CAA 

211(o) are comprehensive in nature, and 

EPA is committed to ensuring they are 

conducted in an appropriately rigorous 

fashion. 

Some commenters noted that 

regulated parties are having difficulty 

complying with the requirement that the 

RIN transfer date in EMTS and on 

product transfer documents (PTDs) be 

the actual title transfer date. Some of 

these commenters requested EPA 

enforcement discretion to allow biofuel 

producers and first purchasers to update 

their electronic systems in order to be in 

compliance with the title transfer date 

regulatory requirement. Two 

commenters specified that this 

enforcement discretion should be issued 

for six months in order to provide these 

companies with sufficient time to 

update their systems. EPA believes that 

the proposed enforcement discretion 

would likely introduce confusion for 

anyone who attempts to review and 

match transactions with records. 

In contrast, several commenters 

requested that EPA reconsider its 

position that the RIN transfer date 

reported to EMTS and identified on 

PTDs must be the actual title transfer 

date. One commenter requested that 

EPA allow invoice dates to be used in 

lieu of title transfer dates as title transfer 

does not usually coincide with customer 

payments and ultimately place a burden 

on the selling company’s cash flow. 

While we understand that some parties 

would prefer to use a date other than the 

true title transfer date for purposes of 

EMTS reporting and PTDs, we believe 

this would violate the clear language 

and intent of the regulations. 

One commenter requested that EPA 

provide adjustment mechanisms to 

allow corrections in EMTS after noting 

that EMTS is a ‘‘forward looking’’ 

system, meaning that EMTS transactions 

cannot be modified once submitted. 

EPA is looking at several ways and has 

updated the RFS2 remedial action Web 

page since the comment period closed. 

EPA will continually update its 

guidance for regulated parties to correct 

violations that true mistakes on the 

following Web page: http:// 

www.epa.gov/otaq/fuels/ 

renewablefuels/compliancehelp/ 

rfs2remedialactions.htm. 

Additionally, in this rule, EPA is 

finalizing a regulation amendment 

giving EPA discretion to allow invalidly 

generated RINs to be used for 

compliance purposes on a case-by-case 

basis (see Section IV). 

Several commenters requested that 

EPA edit Q&As 7.8 and 10.6 as they 

conflict with the regulations. EPA will 

review and make edits to the RFS2 

Q&As in order to ensure agreement with 

the regulations as appropriate at a later 

date. 

VII. Public Participation 

Many interested parties participated 

in the rulemaking process that 

culminates with this final rule. This 

process provided opportunity for 

submitting written public comments 

following the proposal that we 

published on July 1, 2011 (76 FR 

38844), and we considered these 

comments in developing the final rule. 

Public comments and EPA responses are 

discussed throughout this preamble. 

VIII. 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 


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1352 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

47See ‘‘Agency Information Collection Activities; 

Submission to OMB for Review and Approval; 

Comment Request; Production Outlook Reports for 

Un-Registered Renewable Fuel Producers (New 

Collection),’’ 76 FR 6781 (February 8, 2011). The 

document identification number for this notice is 

EPA–HQ–OAR–2005–0161–3221. The document 

identification number for the supporting statement 

is EPA–HQ–OAR–2005–0161–3222. 

‘‘significant regulatory action’’ because 

it raises novel legal or policy issues. 

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 required volumes of 

renewable fuel, were already addressed 

in the RFS2 final rule promulgated on 

March 26, 2010 (75 FR 14670). This 

action finalizes the percentage standards 

applicable in 2012 based on the 

volumes that were analyzed in the RFS2 

final rule. This action is also finalizing 

technical amendments to the RFS2 

regulations that have been determined 

to have no adverse economic impact on 

regulated parties since they generally 

clarify existing requirements. 

B. Paperwork Reduction Act 

This action does not impose any new 

information collection burden. While 

there are three regulatory amendments 

in today’s rule that affect the 

recordkeeping and reporting burdens for 

regulated parties, we believe that the 

information collections already 

approved for the RFS2 program’s 

general recordkeeping and reporting 

requirements, or the information 

collection already under review, would 

also cover the these technical 

amendments. 

The regulatory changes are listed in 

Table VIII.B–1. 

TABLE VIII.B–1—TECHNICAL AMENDMENTS AFFECTING RECORDKEEPING AND REPORTING

Section Description 

80.1449(a) ................................................................................................ Amended Production Outlook Report due date; added allowance for 

unregistered renewable fuel producers and importers to submit Production Outlook Reports. 

80.1450(b)(1)(vi) ....................................................................................... Amended to require submission of additional evidence as part of registration to verify eligibility for exemptions in § 80.1403(c) or (d). 

80.1450(d)(1)–(d)(3) ................................................................................. Amended to add more specificity on when updates, addenda, or resubmittals are required for engineering reviews and to include references to foreign ethanol producers. 

With regard to Production Outlook 

Reports, the change in due date is not 

expected to have any impact on the 

reporting burden. In addition, EPA 

recently prepared an Information 

Collection Request (ICR) document to 

permit the submission of voluntary 

Production Outlook Reports by 

domestic and foreign renewable fuels 

producers. The parties affected by the 

ICR are not regulated parties under the 

RFS2 program. The ICR has been 

submitted for approval to OMB under 

the Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. and may be identified by 

EPA ICR number 2409.01. Documents 

related to the ICR have been placed in 

docket number EPA–HQ–OAR–2005– 

0161, which is accessible at http:// 

www.regulations.gov. 

On October 14, 2010, EPA published 

a notice in the Federal Register 

announcing our intent to submit the 

proposed ICR for voluntary Production 

Outlook Reports to OMB for approval. 

(See 75 FR 63173). The 60-day comment 

period closed on December 14, 2010. No 

comments were received. On February 

8, 2011, EPA published a Federal 

Register notice announcing submission 

of the ICR to OMB. Additional 

comments were solicited via an 

additional comment period through 

March 10, 2011.47

The Office of Management and Budget 

(OMB) has previously approved the 

information collection requirements 

contained in the existing regulations at 

40 CFR Part 80, Subpart M under the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. This would 

include the following approved 

information collections (with OMB 

control numbers and expiration dates 

listed in parenthesis): ‘‘Renewable Fuels 

Standard Program: Petition and 

Registration’’ (OMB Control Number 

2060–0367, expires March 31, 2013); 

‘‘Renewable Fuels Standard (RFS2)’’ 

(OMB Control Number 2060–0640, 

expires July 31, 2013); ‘‘Regulations of 

Fuels and Fuel Additives: 2011 

Renewable Fuels Standard—Petition for 

International Aggregate Compliance 

Approach’’ OMB Control Number 2060– 

0655, expires February 28, 2014). 

Detailed and searchable information 

about these and other approved 

collections may be viewed on the Office 

of Management and Budget (OMB) 

Paperwork Reduction Act Web site, 

which is accessible at http:// 

www.reginfo.gov/public/do/PRAMain. 

With regard to the technical 

amendments in § 80.1450, we believe 

that these information collections 

already approved for the RFS2 

program’s general recordkeeping and 

reporting requirements would also cover 

the amendments in today’s final rule. 

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 Procedure 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 rule on small entities, small 

entity is defined as: (1) A small business 

as defined by the Small Business 

Administration’s (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 final rule on small 

entities, we certify that this action will 

not have a significant economic impact 

on a substantial number of small 

entities. The impacts of the RFS2 

program on small entities that are 

directly regulated under the RFS2 

program were already addressed in the 

RFS2 final rule promulgated on March 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1353 

26, 2010 (75 FR 14670). This rule 

simply: 

• Reduces the applicable volume of 

cellulosic biofuels in 2012 based on our 

projection of 2012 production levels. 

• Establishes percentage standards for 

2012 based either on this production 

projection (for cellulosic biofuels) or 

statutory levels (for advanced biofuels, 

biomass-based diesel, and total 

renewable fuel). 

• Makes minor technical amendments 

to the regulations. 

Therefore, this action will not impose 

any additional requirements on small 

entities beyond those which have 

already been evaluated. 

D. Unfunded Mandates Reform Act 

This rule does not contain a Federal 

mandate that may result in expenditures 

of $100 million or more for State, local, 

and tribal governments, in the aggregate, 

or the private sector in any one year. 

This rule simply: 

• Reduces the applicable volume of 

cellulosic biofuels in 2012 based on our 

projection of 2012 production levels. 

• Establishes percentage standards for 

2012 based either on this production 

projection (for cellulosic biofuels) or 

statutory levels (for advanced biofuels, 

biomass-based diesel, and total 

renewable fuel). 

• Makes minor technical amendments 

to the regulations. 

Thus, this action is not subject to the 

requirements of sections 202 or 205 of 

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. 

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 only 

applies to gasoline, diesel, and 

renewable fuel producers, importers, 

distributors and marketers and makes 

relatively minor corrections and 

modifications to the RFS2 regulations. A 

summary of the concerns raised, and 

EPA’s response to those concerns, is 

provided in this preamble. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications, as specified in Executive 

Order 13175 (65 FR 67249, November 9, 

2000). This rule will be implemented at 

the Federal level and impose 

compliance costs only on 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. 

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 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. 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This rule 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 finalizes the annual 

standards for cellulosic biofuels for 

2012 and clarifying changes and minor 

technical amendments to the 

regulations. 

I. National Technology Transfer 

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. 

This action does not involve technical 

standards. Therefore, EPA did not 

consider 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 low-income 

populations in the United States. 

EPA has determined that this final 

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 RFS2 regulations and 

therefore will not cause emissions 

increases from these sources. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report, which includes a 

copy of the rule, to each House of the 

Congress and to the Comptroller General 

of the United States. EPA will submit a 

report containing this rule and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is not a ‘‘major rule’’ as 

defined by 5 U.S.C. 804(2). Therefore, 

this rule will be effective on the date of 

publication. 

IX. Statutory Authority 

Statutory authority for the rule 

finalized today can be found in section 

211 of the Clean Air Act, 42 U.S.C. 

7545. Additional support for the 

procedural and compliance related 

aspects of today’s rule, including the 

recordkeeping requirements, come from 

sections 114, 208, and 301(a) of the 


tkelley on DSK3SPTVN1PROD with RULES3
1354 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

Clean Air Act, 42 U.S.C. 7414, 7542, and 

7601(a). 

List of Subjects in 40 CFR Part 80 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Confidential 

business information, Diesel fuel, Fuel 

additives, Gasoline, Imports, Labeling, 

Motor vehicle pollution, Penalties, 

Petroleum, Reporting and recordkeeping 

requirements. 

Dated: December 22, 2011. 

Lisa P. Jackson, 

Administrator. 

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). 

§ 80.1275 [Amended] 

■ 2. In § 80.1275, remove paragraph 

(d)(3). 

■ 3. Section 80.1401 is amended by 

revising the definitions of ‘‘Annual 

cover crop’’ and ‘‘Naphtha’’ to read as 

follows: 

§ 80.1401 Definitions. 

* * * * * 

Annual cover crop means an annual 

crop, planted as a rotation between 

primary planted crops, or between trees 

and vines in orchards and vineyards, 

typically to protect soil from erosion 

and to improve the soil between periods 

of regular crops. An annual cover crop 

has no existing market to which it can 

be sold except for its use as feedstock 

for the production of renewable fuel. 

* * * * * 

Naphtha means a blendstock falling 

within the boiling range of gasoline 

which is composed of only 

hydrocarbons, is commonly or 

commercially known as naphtha, and is 

used to produce gasoline. 

* * * * * 

■ 4. Section 80.1405 is revised to read 

as follows: 

§ 80.1405 What are the Renewable Fuel 

Standards? 

(a) (1) Renewable Fuel Standards for 

2010. 

(i) The value of the cellulosic biofuel 

standard for 2010 shall be 0.004 percent. 

(ii) The value of the biomass-based 

diesel standard for 2010 shall be 1.10 

percent. 

(iii) The value of the advanced biofuel 

standard for 2010 shall be 0.61 percent. 

(iv) The value of the renewable fuel 

standard for 2010 shall be 8.25 percent. 

(2) Renewable Fuel Standards for 

2011. 

(i) The value of the cellulosic biofuel 

standard for 2011 shall be 0.003 percent. 

(ii) The value of the biomass-based 

diesel standard for 2011 shall be 0.69 

percent. 

(iii) The value of the advanced biofuel 

standard for 2011 shall be 0.78 percent. 

(iv) The value of the renewable fuel 

standard for 2011 shall be 8.01 percent. 

(3) Renewable Fuel Standards for 

2012. 

(i) The value of the cellulosic biofuel 

standard for 2012 shall be 0.006 percent. 

(ii) The value of the biomass-based 

diesel standard for 2012 shall be 0.91 

percent. 

(iii) The value of the advanced biofuel 

standard for 2012 shall be 1.21 percent. 

(iv) The value of the renewable fuel 

standard for 2012 shall be 9.23 percent. 

(b) EPA will calculate the value of the 

annual standards and publish these 

values in the Federal Register by 

November 30 of the year preceding the 

compliance period. 

(c) EPA will calculate the annual 

renewable fuel percentage standards 

using the following equations: 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1355 

Where: 

StdCB,i = The cellulosic biofuel standard for 

year i, in percent. 

StdBBD,i= The biomass-based diesel standard 

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 42 U.S.C. 7545(o)(2)(B) for 

year i, or volume as adjusted pursuant to 

42 U.S.C. 7545(o)(7)(D), in gallons. 

RFVBBD,i= Annual volume of biomass-based 

diesel required by 42 U.S.C. 7545 

(o)(2)(B) for year i, in gallons. 

RFVAB,i= Annual volume of advanced biofuel 

required by 42 U.S.C. 7545(o)(2)(B) for 

year i, in gallons. 

RFVRF,i= Annual volume of renewable fuel 

required by 42 U.S.C. 7545(o)(2)(B) 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. 

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. 

GSi= Amount of gasoline projected to be used 

in Alaska or a U.S. territory, in year i, if 

the state or territory has opted-in or optsin, 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 has opted-in or optsin, 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= The 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. 

DEi= The amount of diesel fuel 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. 

(d) (1) The 2010 price for cellulosic 

biofuel waiver credits is $1.56 per 

waiver credit. 

(2) The 2011 price for cellulosic 

biofuel waiver credits is $1.13 per 

waiver credit. 

(3) The 2012 price for cellulosic 

biofuel waiver credits is $0.78 per 

waiver credit. 

■ 5. Section 80.1415 is amended by 

revising paragraph (c)(2) to read as 

follows: 

§ 80.1415 How are equivalence values 

assigned to renewable fuel? 

* * * * * 

(c) * * * 

(2) The application for an equivalence 

value shall include a technical 

justification that includes all the 

following: 

(i) A calculation for the requested 

equivalence value according to the 

equation in paragraph (c)(1) of this 

section, including supporting 

documentation for the value of EC used 

in the calculation such as a certificate of 

analysis from a laboratory that verifies 

the lower heating value in Btu per 

gallon of the renewable fuel produced. 

(ii) For each feedstock, component, or 

additive that is used to make the 

renewable fuel, provide a description, 

the percent input, and identify whether 

or not it is renewable biomass or is 

derived from renewable biomass. 

(iii) For each feedstock that also 

qualifies as a renewable fuel, state 

whether or not RINs have been 

previously generated for such feedstock. 

(iv) A description of the renewable 

fuel and the production process, 

including a block diagram that shows all 

inputs and outputs at each step of the 

production process with a sample 

quantity of all inputs and outputs for 

one batch of renewable fuel produced. 

* * * * * 

■ 6. Section 80.1426 is amended as 

follows: 

■ a. By revising paragraph (f)(1). 

■ b. By revising paragraph (f)(5)(ii). 

§ 80.1426 How are RINs generated and 

assigned to batches of renewable fuel by 

renewable fuel producers or importers? 

* * * * * 

(f) * * * 

(1) Applicable pathways. D codes 

shall be used in RINs generated by 

producers or importers of renewable 

fuel according to the pathways listed in 

Table 1 to this section, paragraph (f)(6) 

of this section, or as approved by the 

Administrator. In choosing an 

appropriate D code, producers and 

importers may disregard any incidental, 

de minimis feedstock contaminants that 

are impractical to remove and are 

related to customary feedstock 

production and transport. Tables 1 and 

2 to this section do not apply to, and 

impose no requirements with respect to, 

volumes of fuel for which RINs are 

generated pursuant to paragraph (f)(6) of 

this section. 

* * * * * 

(5) * * * 

(ii) (A) A feedstock qualifies under 

paragraph (f)(5)(i)(A) or (f)(5)(i)(B) of 

this section only if it is collected 

according to a plan submitted to and 

accepted by U.S. EPA under the 

registration procedures specified in 

§ 80.1450(b)(1)(vii). 

(B) A feedstock qualifies under 

paragraph (f)(5)(i)(C) of this section only 

if it is collected according to a plan 

submitted to and approved by U.S. EPA. 

* * * * * 

■ 7. Section 80.1429 is amended by 

revising paragraphs (b)(2) and (b)(9) 

introductory text to read as follows: 

§ 80.1429 Requirements for separating 

RINs from volumes of renewable fuel. 

* * * * * 

(b) * * * 

(2) Except as provided in paragraph 

(b)(6) of this section, any party that 

owns a volume of renewable fuel must 

separate any RINs that have been 

assigned to that volume once the 

volume is blended with gasoline or 

fossil-based diesel to produce a 

transportation fuel, heating oil, or jet 

fuel. A party may separate up to 2.5 

RINs per gallon of blended renewable 

fuel. 

* * * * * 

(9) Except as provided in paragraphs 

(b)(2) through (b)(5) and (b)(8) of this 

section, parties whose non-export 

renewable volume obligations are solely 

related to either the importation of 

products listed in § 80.1407(c) or 

§ 80.1407(e) or to the addition of 

blendstocks into a volume of finished 

gasoline, finished diesel fuel, RBOB, or 

CBOB, can only separate RINs from 

volumes of renewable fuel if the number 

of gallon-RINs separated in a calendar 

year is less than or equal to a limit set 

as follows: 

* * * * * 

■ 8. Section 80.1431 is amended by 

adding a new paragraph (c) to read as 

follows: 

§ 80.1431 Treatment of invalid RINs. 

* * * * * 

(c) Notwithstanding paragraph (b) of 

this section, improperly generated RINs 

may be used for compliance provided 

that all of the following conditions and 

requirements are satisfied and the 

renewable fuel producer or importer 

who improperly generated the RINs 

demonstrates that the conditions and 

requirements are satisfied through the 

reporting and recordkeeping 

requirements set forth below, that: 

(1) The number of RINs generated for 

a batch exceeds the number of RINs that 

should have been properly generated. 

(2) The RINs were improperly 

generated as a result of a broken meter, 


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an inadvertent temperature correction 

error, or an inadvertent administrative 

error. 

(3) The renewable fuel producer or 

importer had in place at the time the 

RINs were improperly generated a 

quality assurance/quality control plan 

designed to ensure that process 

measuring equipment such as meters 

and temperature probes are properly 

maintained and to prevent inadvertent 

administrative errors. 

(4) The renewable fuel producer or 

importer has taken any appropriate 

additional steps to prevent similar 

violations from occurring in the future. 

(5) The improperly generated RINs 

have been transferred to another party. 

(6) The renewable fuel producer or 

importer has not improperly generated 

RINs for the reasons described in 

paragraph (c)(2) of this section on more 

than five batches during any calendar 

year. 

(7) All of the following remedial 

actions have been implemented within 

30 days of the EMTS submission date of 

the improper RIN generation: 

(i) The renewable fuel producer or 

importer retires an equal number of 

valid RINs with the same D Code and 

RIN year as the properly generated RINs, 

using an EMTS retire code of 110. 

(ii) The renewable fuel producer or 

importer reports all the following 

information to EPA via EMTS, which 

EPA may make publicly available: 

(A) Company name. 

(B) Company ID. 

(C) Facility name. 

(D) Facility ID. 

(E) The date the renewable fuel was 

produced. 

(F) The date the RINs were originally 

generated. 

(G) The number of RINs generated. 

(H) The number of RINs improperly 

generated. 

(I) RIN year. 

(J) D codes of generated RINs. 

(K) Batch numbers. 

(L) EMTS Transaction ID of the 

original generation. 

(M) An explanation of how the 

violation occurred, and why the 

improperly generated RINs meet the 

criteria in paragraph (c)(2) of this 

section. 

(N) Steps taken to prevent similar 

violations from occurring in the future. 

(O) Information under paragraphs 

(c)(3), (c)(4), and (c)(5) of this section. 

(P) Any additional information the 

Administrator may require. 

(8) The renewable fuel producer or 

importer maintains all records relating 

to the improper RIN generation and the 

associated remedial actions taken, 

including but not limited to any of the 

following: 

(i) All information regarding the 

generation of invalid RINs, including 

information that is sufficient to 

demonstrate that the improperly 

generated RINs meet the criteria in 

paragraph (c)(2) of this section. 

(ii) Documents demonstrating that the 

renewable fuel producer or importer has 

implemented the quality control/quality 

assurance plan required in paragraph 

(c)(3) of this section, and has taken all 

appropriate additional steps to prevent 

similar violations from occurring in the 

future. 

(iii) All correspondence with EPA. 

(iv) All EMTS transactions 

(Generation, Buy, Sell and Retire). 

(v) All Product Transfer Documents 

(PTDs). 

(d) If EPA determines that a 

renewable fuel producer improperly 

generated RINs but did not meet the 

requirements set forth in paragraph (c) 

of this section, then the requirements of 

paragraph (b) of this section apply from 

the moment that the invalid RINs were 

generated in EMTS. Once the RIN 

generator has identified improperly 

generated RINs to EPA, then EPA may 

remove these improperly generated 

RINs from EMTS. 

■ 9. Section 80.1449 is amended by 

revising paragraph (a) introductory text 

to read as follows: 

§ 80.1449 What are the Production Outlook 

Report requirements? 

(a) By June 1 of each year (September 

1 for the report due in 2010), a 

registered renewable fuel producer or 

importer must submit and an 

unregistered renewable fuel producer 

may submit all of the following 

information for each of its facilities, as 

applicable, to EPA: 

* * * * * 

■ 10. Section 80.1450 is amended by 

revising paragraphs (d)(1) through (d)(3) 

to read as follows: 

§ 80.1450 What are the registration 

requirements under the RFS program? 

* * * * * 

(d) * * * 

(1) Any producer of renewable fuel, 

and any foreign ethanol producer who 

makes changes to his facility that will 

allow him to produce renewable fuel, as 

defined in § 80.1401 that is not reflected 

in the producer’s registration 

information on file with EPA must 

update his registration information and 

submit a copy of an updated 

independent third-party engineering 

review on file with EPA at least 60 days 

prior to producing the new type of 

renewable fuel. The producer may also 

submit an addendum to the 

independent third-party engineering 

review on file with EPA provided the 

addendum meets all the requirements in 

paragraph (b)(2) of this section and 

verifies for EPA the most up-to-date 

information at the producer’s existing 

facility. 

(2) Any producer of renewable fuel 

and any foreign ethanol producer who 

makes any other changes to a facility 

that will affect the producer’s 

registration information but will not 

affect the renewable fuel category for 

which the producer is registered per 

paragraph (b) of this section must 

update his registration information 7 

days prior to the change. 

(3) All producers of renewable fuel 

and foreign ethanol producers must 

update registration information and 

submit an updated independent thirdparty engineering review according to 

the schedule in paragraph (d)(3)(i) or 

(d)(3)(ii) of this section, and including 

the information specified in paragraph 

(d)(3)(iii) of this section: 

(i) For all producers of renewable fuel 

and foreign ethanol producers registered 

in calendar year 2010, the updated 

registration information and 

independent third-party engineering 

review shall be submitted to EPA by 

January 31, 2013, and by January 31 of 

every third calendar year thereafter; or 

(ii) For all producers of renewable 

fuel and foreign ethanol producers 

registered in any calendar year after 

2010, the updated registration 

information and independent thirdparty engineering review shall be 

submitted to EPA by January 31 of every 

third calendar year after the first year of 

registration. 

(iii) In addition to conducting the 

engineering review and written report 

and verification required by paragraph 

(b)(2) of this section, the updated 

independent third-party engineering 

review shall include a detailed review 

of the renewable fuel producer’s 

calculations used to determine VRIN of 

a representative sample of batches of 

each type of renewable fuel produced 

since the last registration. The 

representative sample shall be selected 

in accordance with the sample size 

guidelines set forth at § 80.127. 

* * * * * 

■ 11. Section 80.1451 is amended by 

revising paragraph (a)(1)(xi) to read as 

follows: 

§ 80.1451 What are the reporting 

requirements under the RFS program? 

(a) * * * 

(1) * * * 

(xi) A list of all RINs generated prior 

to July 1, 2010 that were retired for 

compliance in the reporting period. 

* * * * * 


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Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 1357 

■ 12. Section 80.1452 is amended 

revising paragraphs (b)(2), (b)(4), and 

(b)(5) to read as follows: 

§ 80.1452 What are the requirements 

related to the EPA Moderated Transaction 

System (EMTS)? 

* * * * * 

(b) * * * 

(2) The EPA company registration 

number of the renewable fuel producer 

or foreign ethanol producer, as 

applicable. 

* * * * * 

(4) The EPA facility registration 

number of the facility at which the 

renewable fuel producer or foreign 

ethanol producer produced the batch, as 

applicable. 

(5) The EPA facility registration 

number of the importer that imported 

the batch, if applicable. 

* * * * * 

■ 13. Section 80.1460 is amended by 

adding a new paragraph (b)(6) to read as 

follows: 

§ 80.1460 What acts are prohibited under 

the RFS program? 

* * * * * 

(b) * * * 

(6) Generate a RIN for fuel for which 

RINs have previously been generated. 

* * * * * 

■ 14. Section 80.1464 is amended as 

follows: 

■ a. By revising paragraph (a)(2) heading 

and paragraph (a)(2)(i). 

■ b. By adding paragraphs (a)(2)(iii) and 

(a)(2)(iv). 

■ c. By revising paragraph (a)(3)(ii). 

■ d. By revising paragraph (b)(2) 

heading and paragraph (b)(2)(i). 

■ e. By adding paragraphs (b)(2)(iii) and 

(b)(2)(iv). 

■ f. By revising paragraph (b)(3)(ii). 

■ g. By revising paragraph (c)(1) 

heading. 

■ h. By adding paragraphs (c)(1)(iii) and 

(c)(1)(iv). 

§ 80.1464 What are the attest engagement 

requirements under the RFS program? 

* * * * * 

(a) * * * 

(2) RIN transaction reports and 

product transfer documents. 

(i) Obtain and read copies of a 

representative sample, selected in 

accordance with the guidelines in 

§ 80.127, of each RIN transaction type 

(RINs purchased, RINs sold, RINs 

retired, RINs separated, RINs reinstated) 

included in the RIN transaction reports 

required under § 80.1451(a)(2) for the 

compliance year. 

* * * * * 

(iii) Verify that the product transfer 

documents for the representative 

samples under paragraph (a)(2)(i) of this 

section of RINs sold and the RINs 

purchased contain the applicable 

information required under § 80.1453 

and report as a finding any product 

transfer document that does not contain 

the required information. 

(iv) Verify the accuracy of the 

information contained in the product 

transfer documents reviewed pursuant 

to paragraph (a)(2)(iii) of this section 

and report as a finding any exceptions. 

(3) * * * 

(ii) Obtain the database, spreadsheet, 

or other documentation used to generate 

the information in the RIN activity 

reports; compare the RIN transaction 

samples reviewed under paragraph 

(a)(2) of this section with the 

corresponding entries in the database or 

spreadsheet and report as a finding any 

discrepancies; compute the total 

number of current-year and prior-year 

RINs owned at the start and end of each 

quarter, purchased, separated, sold, 

retired and reinstated, and for parties 

that reported RIN activity for RINs 

assigned to a volume of renewable fuel, 

the volume and type of renewable fuel 

(as defined in § 80.1401) owned at the 

end of each quarter; as represented in 

these documents; and state whether this 

information agrees with the party’s 

reports to EPA. 

(b) * * * 

(2) RIN transaction reports and 

product transfer documents. 

(i) Obtain and read copies of a 

representative sample, selected in 

accordance with the guidelines in 

§ 80.127, of each transaction type (RINs 

purchased, RINs sold, RINs retired, RINs 

separated, RINs reinstated) included in 

the RIN transaction reports required 

under § 80.1451(b)(2) for the compliance 

year. 

* * * * * 

(iii) Verify that the product transfer 

documents for the representative 

samples under paragraph (b)(2)(i) of this 

section of RINs sold and the RINs 

purchased contain the applicable 

information required under § 80.1453 

and report as a finding any product 

transfer document that does not contain 

the required information. 

(iv) Verify the accuracy of the 

information contained in the product 

transfer documents reviewed pursuant 

to paragraph (b)(2)(iii) of this section 

and report as a finding any exceptions. 

(3) * * * 

(ii) Obtain the database, spreadsheet, 

or other documentation used to generate 

the information in the RIN activity 

reports; compare the RIN transaction 

samples reviewed under paragraph 

(b)(2) of this section with the 

corresponding entries in the database or 

spreadsheet and report as a finding any 

discrepancies; report the total number of 

each RIN generated during each quarter 

and compute and report the total 

number of current-year and prior-year 

RINs owned at the start and end of each 

quarter, purchased, separated, sold, 

retired and reinstated, and for parties 

that reported RIN activity for RINs 

assigned to a volume of renewable fuel, 

the volume of renewable fuel owned at 

the end of each quarter, as represented 

in these documents; and state whether 

this information agrees with the party’s 

reports to EPA. 

* * * * * 

(c) * * * 

(1) RIN transaction reports and 

product transfer documents. 

* * * * * 

(iii) Verify that the product transfer 

documents for the representative 

samples under paragraph (c)(1)(i) of this 

section of RINs sold and RINs 

purchased contain the applicable 

information required under § 80.1453 

and report as a finding any product 

transfer document that does not contain 

the required information. 

(iv) Verify the accuracy of the 

information contained in the product 

transfer documents reviewed pursuant 

to paragraph (c)(1)(iii) of this section 

and report as a finding any exceptions. 

* * * * * 

■ 15. Section 80.1465 is amended by 

revising paragraph (h)(2) to read as 

follows: 

§ 80.1465 What are the additional 

requirements under this subpart for foreign 

small refiners, foreign small refineries, and 

importers of RFS–FRFUEL? 

* * * * * 

(h) * * * 

(2) Bonds shall be posted by any of 

the following methods: 

(i) Paying the amount of the bond to 

the Treasurer of the United States. 

(ii) Obtaining a bond in the proper 

amount from a third party surety agent 

that is payable to satisfy United States 

administrative or judicial judgments 

against the foreign refiner, provided 

EPA agrees in advance as to the third 

party and the nature of the surety 

agreement. 

* * * * * 

■ 16. Section 80.1466 is amended by 

revising paragraph (h)(2) to read as 

follows: 

§ 80.1466 What are the additional 

requirements under this subpart for RINgenerating foreign producers and importers 

of renewable fuels for which RINs have 

been generated by the foreign producer? 

* * * * * 


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1358 Federal Register / Vol. 77, No. 5 / Monday, January 9, 2012 / Rules and Regulations 

(h) * * * 

(2) Bonds shall be posted by any of 

the following methods: 

(i) Paying the amount of the bond to 

the Treasurer of the United States. 

(ii) Obtaining a bond in the proper 

amount from a third party surety agent 

that is payable to satisfy United States 

administrative or judicial judgments 

against the foreign producer, provided 

EPA agrees in advance as to the third 

party and the nature of the surety 

agreement. 

* * * * * 

■ 17. Section 80.1467 is amended by 

revising paragraphs (e)(1), (e)(2), and 

(g)(2) to read as follows: 

§ 80.1467 What are the additional 

requirements under this subpart for a 

foreign RIN owner? 

* * * * * 

(e) * * * 

(1) The foreign entity shall post a 

bond of the amount calculated using the 

following equation: 

Bond = G * $ 0.01 

Where: 

Bond = Amount of the bond in U.S. dollars. 

G = The total of the number of gallon-RINs 

the foreign entity expects to obtain, sell, 

transfer or hold during the first calendar 

year that the foreign entity is a RIN 

owner, plus the number of gallon-RINs 

the foreign entity expects to obtain, sell, 

transfer or hold during the next four 

calendar years. After the first calendar 

year, the bond amount shall be based on 

the actual number of gallon-RINs 

obtained, sold, or transferred so far 

during the current calendar year plus the 

number of gallon-RINs obtained, sold, or 

transferred during the four calendar 

years immediately preceding the current 

calendar year. For any year for which 

there were fewer than four preceding 

years in which the foreign entity 

obtained, sold, or transferred RINs, the 

bond shall be based on the total of the 

number of gallon-RINs sold or 

transferred so far during the current 

calendar year plus the number of gallonRINs obtained, sold, or transferred 

during any immediately preceding 

calendar years in which the foreign 

entity owned RINs, plus the number of 

gallon-RINs the foreign entity expects to 

obtain, sell or transfer during subsequent 

calendar years, the total number of years 

not to exceed four calendar years in 

addition to the current calendar year. 

(2) Bonds shall be posted by any of 

the following methods: 

(i) Paying the amount of the bond to 

the Treasurer of the United States. 

(ii) Obtaining a bond in the proper 

amount from a third party surety agent 

that is payable to satisfy United States 

administrative or judicial judgments 

against the foreign RIN owner, provided 

EPA agrees in advance as to the third 

party and the nature of the surety 

agreement. 

* * * * * 

(g) * * * 

(2) Any RIN that is obtained, sold, 

transferred, or held that is in excess of 

the number for which the bond 

requirements of this section have been 

satisfied is an invalid RIN under 

§ 80.1431. 

* * * * * 

[FR Doc. 2011–33451 Filed 1–6–12; 8:45 am] 

BILLING CODE 6560–50–P 


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