EO12866_RFS 2014-2015-2016 Annual Rule 2060-AS22 NPRM FRN_20150527.docx

*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 1 of 122

6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2015-0111; FRL-9927-28-OAR]

[RIN 2060-AS22]

Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and BiomassBased Diesel Volume for 2017

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

(EPA) is required to set renewable fuel percentage standards every year. This action proposes 

annual percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and 

total renewable fuel that apply to all motor vehicle gasoline and diesel produced or imported in 

the years 2014, 2015, and 2016. The EPA is establishing a cellulosic biofuel volume for all three 

years that is below the applicable volume specified in the Act, and is also proposing to rescind 

the cellulosic biofuel standard for 2011. Relying on statutory waiver authorities, the EPA is 

proposing to adjust the applicable volumes of advanced biofuel and total renewable fuel for all 

three years. The 2015 and 2016 proposed standards are expected to spur further progress in 

overcoming current constraints in renewable fuel distribution infrastructure, which in turn is 

expected to lead to substantial growth over time in the production and use of higher-level ethanol 

blends and other qualifying renewable fuels. In this action, we are also proposing the applicable 

volume of biomass-based diesel for 2014, 2015, 2016, and 2017. Finally, we are proposing 

compliance and attest reporting deadlines for the years 2013, 2014, and 2015, as well as 

proposing regulatory amendments to clarify the scope of the existing algal biofuel pathway.

DATES: Comments must be received on or before July 27, 2015. 

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2015-

0111, to the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online 

instructions for submitting comments. Once submitted, comments cannot be edited or 

withdrawn. The EPA may publish any comment received to its public docket. Do not submit 

electronically any information you consider to be Confidential Business Information (CBI) or 

other information whose disclosure is restricted by statute. If you need to include CBI as part of 

your comment, please visit http://www.epa.gov/dockets/comments.html for instructions. 

Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The 

written comment is considered the official comment and should include discussion of all points 

you wish to make.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 2 of 122

For additional submission methods, the full EPA public comment policy, and general guidance 

on making effective comments, please visit http://www.epa.gov/dockets/comments.html.

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; email address: 

macallister.julia@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, biodiesel, renewable diesel, and biogas. Potentially regulated categories 

include: 

Category NAICS1

Codes

SIC2

Codes

Examples of Potentially Regulated Entities

Industry

Industry 

Industry 

Industry 

Industry 

Industry

Industry

Industry

324110

325193

325199

424690

424710

424720

221210

454319

2911

2869

2869

5169

5171

5172

4925

5989

Petroleum Refineries

Ethyl alcohol manufacturing

Other basic organic chemical manufacturing

Chemical and allied products merchant wholesalers

Petroleum bulk stations and terminals

Petroleum and petroleum products merchant 

wholesalers

Manufactured gas production and distribution

Other fuel dealers

1 North American Industry Classification System (NAICS)

2 Standard Industrial Classification (SIC) system code.

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

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

EPA is now aware could potentially be regulated by this action. Other types of entities not listed 

in the table could also be regulated. To determine whether your activities would be regulated by 

this action, you should carefully examine the applicability criteria in 40 CFR part 80. If you 

have any questions regarding the applicability of this action to a particular entity, consult the 

person listed in the FOR FURTHER INFORMATION CONTACT section. 

Outline of this preamble

I. Executive Summary

A. Purpose of This Action
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 3 of 122

B. Summary of Major Provisions in This Action

1. Proposed Approach to Setting Standards for 2014, 2015, and 2016

2. Advanced Biofuel and Total Renewable Fuel

3. Biomass-Based Diesel

4. Cellulosic Biofuel

5. Annual Percentage Standards

6. Response to Requests for a Waiver of the 2014 Standards

7. Proposed Changes to Regulations

C. Authority for Late Action and Applicability of the Standards

D. Outlook for 2017 and Beyond

II. Proposed Advanced Biofuel and Total Renewable Fuel Volumes for 2014 - 2016

A. Statutory Authorities for Reducing Volumes to Address Renewable Fuel Availability and 

the E10 Blendwall

1. Cellulosic Waiver Authority

2. General Waiver Authority

3. Assessment of Past Versus Future Supply

4. Combining Authorities for Reductions in Total Renewable Fuel

5. Inability of the Market to Reach Statutory Volumes

B. Overview of Approach to Determining Volume Requirements

1. Fulfilling Congressional Intent to Increase Use of Renewable Fuels

2. RFS Program Mechanisms and Their Role in Supporting Growth in Renewable Fuel 

Use

3. Current and Future Shortfalls in Supply

C. Proposed Volume Requirements

1. 2014

2. 2015

3. 2016

D. Market Response to Proposed Volume Requirements for 2016

1. E10 Blendwall

2. Volume Scenarios

E. Treatment of Carryover RINs

F. Impacts of Proposed Standards on Costs

III. Proposed Biomass-Based Diesel Volumes for 2014 -2017

A. Statutory Requirements.

B. BBD Production and Compliance in Previous Years

C. Applicable Volume of Biomass-Based Diesel for 2014

D. Determination of Applicable Volume of Biomass-Based Diesel for 2015 – 2017

1. Implication of Nested Standards

2. Biomass-Based Diesel as a Fraction of Advanced Biofuel

3. Ensuring Growth in Biomass-Based Diesel and Other Advanced Biofuel

4. Proposed Volumes for 2015 – 2017

E. Consideration of Statutory Factors for 2014-2017

1. Primary and Supplementary Statutory Factors Assessment for 2015-2017 BiomassBased Diesel Applicable Volumes

2. Assessment for 2014 Biomass-Based Diesel Applicable Volume

IV. Proposed Cellulosic Biofuel Volume for 2014-2016
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 4 of 122

A. Statutory Requirements

B. Cellulosic Biofuel Industry Assessment

1. Potential Domestic Producers

2. Potential Foreign Sources of Cellulosic Biofuel

3. Summary of Volume Projections for Individual Companies

C. Cellulosic Biofuel Volume for 2014

D. Cellulosic Biofuel Volume for 2015

E. Cellulosic Biofuel Volume for 2016

F. Rescission of the 2011 Cellulosic Biofuel Standards

V. Percentage Standards

A. Background

B. Calculation of Standards

1. How Are the Standards Calculated?

2. Small Refineries and Small Refiners

3. Proposed Standards

VI. Proposed Amendments to Regulations

A. Proposed Changes to the Algal Biofuel Pathways

B. Annual Compliance Reporting and Attest Engagement Deadlines under the RFS Program

VII. Public Participation

A. How Do I Submit Comments?

B. How Should I Submit CBI to the Agency?

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 (PRA)

C. Regulatory Flexibility Act (RFA)

D. Unfunded Mandates Reform Act (UMRA)

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 and Advancement Act (NTTAA)

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

Populations, and Low-Income Populations

IX. Statutory Authority
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 5 of 122

I. Executive Summary

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

in Clean Air Act (CAA) section 211(o) that 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 publication of major 

revisions to the regulatory requirements on March 26, 2010.1,2 Since the initial promulgation of 

the RFS program regulations in 2007, domestic production and use of renewable fuel volumes in 

the U.S. has increased substantially. According to the Energy Information Administration (EIA), 

fuel ethanol production in the U.S. doubled in volume from approximately 6.5 billion gallons in 

2007 to about 14.3 billion gallons in 2014.3 Growth in biodiesel and renewable diesel 

production in the U.S. has increased more than two and a half times, from approximately 0.5 

billion gallons in 2007 to 1.46 billion gallons in 2014.4 Today, nearly all of the approximately 

138 billion gallons of gasoline used for transportation purposes contains 10 percent ethanol 

(E10).

The fundamental objective of the RFS provisions under the Clean Air Act is clear: to 

increase the use of renewable fuels in the U.S. transportation system every year through at least 

2022. These fuels include corn starch ethanol, the predominant biofuel in use to date, but 

Congress envisioned the majority of growth over time to come from advanced biofuels as the 

non-advanced (conventional) volumes remain constant starting in 2015 while the advanced 

volumes continue to grow. Advanced biofuels are required to have lower greenhouse gas (GHG) 

emissions on a lifecycle basis than conventional biofuels. Increased use of renewable fuels 

means less use of fossil fuels, which results in lower GHG emissions over time as advanced 

biofuel production and use becomes more commonplace. By aiming to diversify the country’s 

fuel supply, Congress also intended to increase the nation’s energy security. Renewable fuels 

represent an opportunity for the U.S. to move away from fossil fuels towards a set of lower GHG 

transportation fuels, and a chance for a still-developing low GHG technology sector to grow. 

The law establishes annual volume targets,5and requires EPA to translate those volume 

targets (or alternative volume requirements established by EPA in accordance with statutory 

waiver authorities) into compliance obligations that refiners and importers must meet every year. 

Over the past few years, we have seen analysis concluding that the ambitious statutory targets in 

the Clean Air Act exceed real world conditions.6 Despite significant efforts by the U.S. 

Departments of Agriculture (USDA) and Energy (DOE) to promote the use of renewable fuels, 

real-world limitations, such as the slower than expected development of the cellulosic biofuel 

industry, less growth in gasoline use than was expected when Congress enacted these provisions 

 

1 75 FR 14670, March 26, 2010.

2 A full description of the statutory basis of the RFS program and EPA's actions to develop and implement the

regulatory program are provided in a memorandum to the docket. See, "Statutory basis of the RFS program and 

development of the regulatory program," memorandum from Madison Le to EPA docket EPA-HQ-OAR-2015-0111.

3 EIA's Monthly Energy Review, April 2015, Table 10.3.

4 2007 volume represents biodiesel only, from EIA's Monthly Energy Review, April 2015, Table 10.4. 2014 volume 

represents biodiesel and renewable diesel domestic production from EMTS.

5 CAA 211(o)(2)(B)

6 See, for example, "Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel 

Policy (2011)," National Research Council.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 6 of 122

in 2007, and constraints in supplying certain biofuels to consumers, have made the timeline laid 

out by Congress extremely difficult to achieve. These challenges remain, even as we recognize 

the success of the program over the past decade in boosting renewable fuel use, and the recent 

significant signs of progress towards development of increasing volumes of advanced, lowemitting GHG fuels, including cellulosic biofuels and “drop-in” biofuels (those that are made 

from renewable sources but are otherwise essentially indistinguishable from the fossil-based 

fuels they displace).

And so the challenge EPA faces in developing this proposal is increasing renewable fuels 

over time to address climate change and increase energy security while also accounting for the 

real-world limitations that have slowed progress towards such goals, and that have made the 

volume targets established by Congress for 2014, 2015, and 2016 effectively beyond reach. This

proposal attempts to find an approach that achieves these objectives. 

We believe that the RFS program can drive renewable fuel use, and that it is appropriate 

to consider the ability of the market to respond to the standards we set when we assess the 

amount of renewable fuel consumption that can be achieved. While we are proposing to use the 

tools Congress provided to make adjustments to the law’s volume targets in recognition of the 

constraints that exist today, we are proposing standards for 2015 and 2016 that will drive growth 

in renewable fuels, particularly those fuels that are required to achieve the lowest lifecycle GHG 

emissions. We believe that over time use of both higher ethanol blends and non-ethanol biofuels 

can and will increase, consistent with Congress’ intent in enacting EPAct and EISA. In our 

view, while Congress recognized that supply challenges may exist as evidenced by the various 

waiver provisions, it did not intend growth in the renewable fuels market to be ultimately 

constrainedprevented by limitations that may exist in supplying renewable fuels,those 

challenges, including such constraints as the "E10 blendwall"7or demand for gasoline or diesel. 

The fact that Congress chose to mandate increasing and substantial amounts of renewable fuel 

clearly signals that it intended the RFS program to create incentives to increase renewable fuel 

supplies and overcome limitations in the market. The standards we are proposing are forwardleaning and reflect those incentives.

The proposed volume requirements would push the fuels sector to produce and blend 

more renewable fuels in 2015 and 2016 in a manner that is consistent with the goals Congress 

envisioned. The proposed volumes are less than the statutory targets for 2015 and 2016 but

higher than what the market would produce and use in the absence of such market-driving 

standards. The 2015 and 2016 standards are expected to spur further progress in overcoming 

current constraints and lead to continued growth in the production and use of higher ethanol 

blends and other qualifying renewable fuels. In this regard the proposed standards are intended 

to fulfill the spirit and intent of Congress and provide guidance to market participants. Once 

finalized, this rule would put renewable fuel production and use on a path of steady, ambitious 

growth. 

This proposal comes during a period of transition for the RFS program. In the program’s 

early years, compliance with the advanced biofuel and total renewable volume requirements 

 

7 The “E10 blendwall” represents the volume of ethanol that can be consumed domestically if all gasoline contains 

10% ethanol and there are no higher-level ethanol blends consumed such as E15 or E85.

Commented [OMB1]: Or “inadequate supply is”

Response: Text was modified to tie Congressional intent to the 

waiver provisions.

Commented [OMB2]: Meaning of this sentence is difficult to 

determine

Response: Text modified to clarify.

Commented [OMB3]: Not really so for 2015

Response: Text was modified 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 7 of 122

could be readily achieved in large part by blending increasing amounts of ethanol into gasoline 

and biodiesel into diesel fuel. As the program progresses, however, significantly increasing 

renewable fuel volumes will require pushing beyond current constraints on blending more 

ethanol into gasoline and will require sustained growth in the development and use of advanced, 

non-ethanol renewable fuels, including drop-in renewable fuels. This proposed rule 

acknowledges this transition by proposing volume requirements based not only on the volumes 

of renewable fuels that have already been achieved in 2014 and the first part of 2015, but also on 

the additional volumes that can be supplied later in 2015 and in 2016 as the market addresses 

infrastructure and other constraints. Our proposal includes volumes of renewable fuel that will 

require either ethanol use at levels significantly beyond the level of the E10 blendwall, or 

significantly greater use of non-ethanol renewable fuels than has occurred to date, depending on 

how the market responds to the standards we set. The standards we are proposing for 2015 and 

2016 in particular would drive growth in renewable fuels by providing appropriate incentives to 

overcome current constraints and challenges to further the goals of Congress in establishing the 

RFS program. The approach we propose taking for 2015 and 2016 is forward-looking and 

consistent with the purpose of the statute to significantly increase the amount of renewable fuel 

used as transportation fuel over time, particularly renewable fuels with the lowest lifecycle GHG 

emissions, in the transportation fuel supply. 

Since the amount of renewable fuel that can be produced and imported is larger than the 

volume that can be consumed due to overall demand for transportation fuel and constraints on 

supply to vehicles and engines, there is necessarily competition among biofuels for retail 

consumption in the United States. In this proposed rule we have worked to achieve an 

appropriate and reasonable balance between setting volume requirements that would provide 

support for biofuels that are more established, while also providing opportunities under those 

volume requirements for emerging biofuels. The approach we have used to determine the 

proposed volumes is consistent with Congressional intent in establishing the RFS program in that 

it provides an opportunity for a diverse array of renewable fuel types to be used for compliance. 

Competition is good for obligated parties and consumers, as it permits the market to determine 

the most efficient, lowest cost, best performing fuels for meeting the increasingly higher volume 

requirements anticipated year to year under the program. However, it is also important to 

provide support to existing successful biofuels and to provide incentives for those fuels, 

especially advanced biofuels, that produce the greatest reductions in greenhouse gases. As 

discussed in Section III, we are proposing that the specific volume requirement for biomassbased diesel (BBD) should be increased over 2013 levels through 2017 to provide additional 

support for that industry in a way that furthers the statutory goal of increasing the use of 

renewable fuel and reducing lifecycle GHGs. At the same time, the increase in the required 

BBD volume that we are proposing still leaves a substantial volume under the advanced biofuel 

standard open for competition among all qualifying advanced biofuels.

We recognize that our delay in issuing standards for 2014 and 2015 has created additional 

uncertainty in the marketplace, and that such uncertainty works contrary to the purpose of the 

statute. . We are committed to returning our standard-setting process to the statutory schedule, to 

provide the certainty that will allow the biofuels sector and the RFS program to succeed. The 

first step in providing this certainty is finalizing the volume requirements for 2014, 2015, and 

2016 by November 30, 2015. For 2014, the compliance year is now over, and any standard EPA 

Commented [OMB4]: We do not understand EPA to be making 

a statement that any uncertainty created by the RFS rule would be

contrary to the statute in light of the various other market 

uncertainties. 

Response: Uncertainty at issue is only that created by the delay in 

establishing the standard. Certainly this particular source of 

uncertainty is contrary to what Congress intended. Text was 

modified to clarify.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 8 of 122

sets for 2014 can no longer influence renewable fuel production or use in that year. This is a 

significant change in circumstances from those at the time of the November 2013 proposal for 

volume requirements that would have applied in 2014. Therefore, we are issuing this new 

proposal for 2014 that reflects late issuance of the rule and those volumes of renewable fuel that 

were actually used in 2014. Details regarding how we calculated such “actual” volumes used in 

2014 for purposes of this proposal are discussed in Section II.C.1 below. For 2015, our proposed 

approach combines a consideration of those volumes of renewable fuel that were actually used in 

the past with a forward-leaning approach for the future that is intended to promote renewable 

fuel use. For 2016, our approach to determining the volumes to propose is, as discussed, 

forward-leaning and consistent with the statute’s intent to promote growth in renewable fuel use 

over time. 

This proposal represents EPA's commitment to continued support for steady growth in 

renewable fuel use. However, we recognize that the RFS standards are only one element among 

many that factor into the success of renewable fuel development and use over time. The 

standards that EPA sets each year are an important part of the overall picture, but this program is 

complemented and supported by programs managed by the U.S. Departments of Agriculture 

(USDA) and Energy (DOE), as well as myriad efforts and initiatives at the regional and local 

level and within the private sector. DOE has invested considerable resources to help deploy the 

advanced technologies needed to achieve the statutory aims of lower carbon fuels, and DOE has 

leveraged several billion dollars more in private support for development of advanced renewable 

fuels. USDA’s Biorefinery Assistance Program has provided loan guarantees for the 

development and construction of commercial scale biorefineries with a number of the new 

projects focused on producing fuels other than ethanol. Greater GHG benefits are expected to be 

realized as the production and use of advanced biofuels accelerates, and the volume requirements 

that we are proposing support this goal. 

A. Purpose of This Action

The national volume targets of renewable fuel that are intended to be achieved under the 

RFS program each year (absent an adjustment or waiver by EPA) are specified in CAA section 

211(o)(2). The statutory volumes for 2014, 2015, and 2016 are shown in Table I.A-1. The 

cellulosic biofuel and BBD categories are nested within the advanced biofuel category, which is 

itself nested within the total renewable fuel category. This means, for example, that each gallon 

of cellulosic biofuel or BBD that is used to satisfy the individual volume requirements for those 

fuel types can also be used to satisfy the requirements for advanced biofuel and renewable fuel.

Commented [OMB5]: Please include appropriate section 

number.

Response: Section reference added.

Commented [OMB6]: Given the importance of the blendwall in 

determining the 2016 volumes, perhaps provide specific references 

to policies that promote E85 pumps and other infrastructure?

Suggest mentioning some of the efforts of USDA and DOE to 

improve the GHG performance of conventional ethanol.

Response: If USDA and DOE will provide short descriptions of 

such efforts, we can include them.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 9 of 122

Table I.A-1

Applicable Volumes Specified in the Clean Air Act (billion ethanol-equivalent gallons)a

2014 2015 2016

Cellulosic biofuel 1.75 3.0 4.25

Biomass-based diesel ≥1.0 ≥1.0 ≥1.0

Advanced biofuel 3.75 5.5 7.25

Renewable fuel 18.15 20.5 22.25

a All values are ethanol-equivalent on an energy content basis, except values for BBD 

which are given in actual gallons.

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

standards for each compliance year. The percentage standards are calculated so as to ensure use 

in transportation fuel of the national “applicable volumes” of the four types of biofuel (cellulosic 

biofuel, BBD, advanced biofuel, and total renewable fuel) that are either set forth in the Clean 

Air Act or established by EPA in accordance with the Act’s requirements. The percentage 

standards are used by obligated parties (generally, producers and importers of gasoline and diesel 

fuel) to calculate their individual compliance obligations. Each of the four percentage standards 

is applied to the volume of non-renewable gasoline and diesel that each obligated party produces 

or imports during the specified calendar year to determine their individual volume obligations 

with respect to the four renewable fuel types. 

EPA is proposing annual applicable volume requirements for cellulosic biofuel, advanced 

biofuel, and total renewable fuel for 2014, 2015, and 2016, and for BBD for 2014, 2015, 2016, 

and 2017. Table I.A-2 lists the statutory provisions and associated criteria relevant to 

determining the national applicable volumes used to set the percentage standards in this proposed 

rule.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 10 of 122

Table I.A-2

Statutory Provisions for Determination of Applicable Volumes

Applicable volumes Clean Air Act 

reference

Criteria provided in statute for determination 

of applicable volume

Cellulosic biofuel 211(o)(7)(D)(i)

211(o)(7)(A)

Required volume must be lesser of volume 

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

EPA’s projected volume in coordination with 

other federal agencies.

EPA may waive the statutory volume in 

whole or in part if implementation would 

severely harm the economy or environment 

of a State, region, or the United States, or if 

there is an inadequate domestic supply.

Biomass-based diesel8211(o)(2)(B)(ii) 

and (v)

211(o)(7)(A)

Required volume for years after 2012 must 

be at least 1.0 billion gallons, and must be 

based on a review of implementation of the 

program, coordination with other federal 

agencies, and an analysis of specified factors.

EPA may waive the statutory volume in 

whole or in part if implementation would 

severely harm the economy or environment 

of a State, region, or the United States, or if 

there is an inadequate domestic supply.

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

reduced below the statutory volume to the 

projected volume, EPA may reduce the 

advanced biofuel and total renewable fuel 

volumes in CAA 211(o)(2)(B)(i)(I) and (II) 

by the same or lesser volume. No criteria 

specified.

211(o)(7)(A) EPA may waive the statutory volume in 

whole or in part if implementation would 

severely harm the economy or environment 

of a State, region, or the United States, or if 

there is an inadequate domestic supply.

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

reduced below the statutory volume to the 

projected volume, EPA may reduce the 

advanced biofuel and total renewable fuel 

volumes in CAA 211(o)(2)(B)(i)(I) and (II) 

 

8 Section 211(o)(7)(E) also authorizes EPA to issue a temporary waiver of applicable volumes of BBD where EPA 

determines that there is a significant feedstock disruption or other market circumstance that would make the price of 

BBD fuel increase significantly.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 11 of 122

by the same or lesser volume. No criteria 

specified.

211(o)(7)(A) EPA may waive the statutory volume in 

whole or in part if implementation would 

severely harm the economy or environment 

of a State, region, or the United States, or if 

there is an inadequate domestic supply.

In November 2013, we proposed standards for cellulosic biofuel, BBD, advanced biofuel, 

and total renewable fuel for calendar year 2014.9 We received over 340,000 comments 

representing widely diverging views on such topics as opportunities and constraints associated 

with the E10 blendwall, the ability of the market to respond to forward-leaning standards, the 

permissible interpretation of statutory waiver authorities, and the intent of Congress. By 

November 2014 it had become clear that projecting volume growth into the future was not an 

appropriate way to set standardsIn December 2014, we published a Federal Register notice in 

which we noted the substantial number of comments and the concerns of commenters, and 

stating that EPA had been evaluating the issues raised in light of the purposes of the statute and 

the Administration's commitment to the goals of the statute to increase the use of renewable 

fuels.10 We further indicated in that notice that finalization of the 2014 standards rule had been 

significantly delayed and that, due to this delay and given ongoing consideration of the issues 

presented by the commenters, EPA would not be in a position to finalize the 2014 RFS standards 

before the end of 2014. We concluded that the approach in the November 2013 proposal, 

projecting volume growth into the-then future, was not an appropriate way to set standards in late 

2014, for a year that was largely over. Since the approach we proposed in November 2013 

would need to be substantially modified to reflect the delay in issuing the rule and actual 

renewable fuel use during the earlier part of 2014, we released a Federal Register notice in 

December 2014, indicatingthe action indicated that we intended to finalize the 2014 standards in 

2015.11

Not only is 2014 over, but this proposal is being released well into 2015. We believe that 

the standards we set should take these facts into account as we make an effort to return to the 

annual standard-setting schedule in the statute. Therefore, we plan on finalizing the applicable 

standards for 2014, 2015, and 2016 by November of this year. Moreover, the terms of a 

proposed consent decree to resolve pending litigation concerning EPA’s failure to establish 

standards for 2014 and 2015 by the statutory deadline include a requirement for EPA to 

promulgate final standards for 2014 and 2015 by November 30, 2015.12 By re-proposing the 

2014 standards along with a proposal for the 2015 and 2016 standards, we are not only able to 

formulate a proposal for public comment that takes into account the fact that 2014 is over and the 

specific approach described in the November 2013 Notice of Proposed Rulemaking (NPRM) is 

no longer applicable, but we can also coordinate the proposed treatment of 2014 with the 

proposed treatment of 2015 wherein part of the year has likewise already passed. We are 

 

9 78 FR 71732, November 29, 2013.

10 79 FR 73007, December 9, 2014.

11 79 FR 73007, December 9, 2014.

12 See American Fuel and Petrochemical Manuf. et al v. EPA (No. 15-cv-394, D.D.C.)

Commented [OMB7]: Does the paragraph reference the content 

of the December 2014 FR notice, which is footnoted? 

Response: The last sentence in the paragraph references the content 

of the December 2014 FR notice, which is footnoted.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 12 of 122

therefore withdrawing the November 2013 NPRM; this proposal replaces and supersedes that 

earlier proposal. While the many comments we received on the November 2013 NPRM 

informed the development of this proposal, we do not intend to specifically respond to comments 

on the prior proposal, and we encourage members of the public to submit new comments that are 

tailored to this new proposal. Given the substantial task before the Agency to issue a final rule 

applicable to three calendar years by November 30, 2015, we encourage commenters to submit 

concise comments, and not to re-submit comments submitted on the withdrawn proposal except 

to the extent that they have determined them to be relevant under this proposal.

As shown in Table I.A-2, the statutory authorities that provide direction to EPA for how 

to modify or set the applicable standards differ for the four categories of renewable fuel. Under 

the statute, EPA must annually determine the projected volume of cellulosic biofuel production 

for the following year. If the projected volume of cellulosic biofuel production is less than the 

applicable volume specified in section 211(o)(2)(B)(i)(III) of the statute, EPA must lower the 

applicable volume used to set the annual cellulosic biofuel percentage standard to the projected 

volume of production during the year. In Section IV of this proposed rule, we present our 

analysis of cellulosic biofuel production and proposed volumes for 2014, 2015, and 2016. This 

analysis is based on our evaluation of producers’ production plans and progress to date following 

discussions with cellulosic biofuel producers.

With regard to BBD, CAA section 211(o)(2)(B) specifies the applicable volumes of BBD 

to be used in the RFS program only through year 2012. For subsequent years the statute sets a 

minimum volume of 1 billion gallons, and directs EPA to set the required volume after 

consideration of a number of factors. In Section III of this preamble we discuss our proposed 

volume requirements for BBD for 2014, 2015, 2016, and 2017.

Regarding advanced biofuel and total renewable fuel, Congress provided several 

mechanisms through which those volumes could be reduced if necessary. If we lower the 

applicable volume of cellulosic biofuel below the volume specified in CAA 211(o)(2)(B)(i)(III), 

we also have the authority to reduce the applicable volumes of advanced biofuel and total 

renewable fuel by the same or a lesser amount. We may also reduce the applicable volumes of

any of the four renewable fuel types under the general waiver authority provided at CAA 

211(o)(7)(A) if EPA finds that implementation of the statutory volumes would severely harm the 

economy or environment of a State, region, or the United States, or if there is inadequate 

domestic supply. Section II of this proposed rule describes our intended use of both the 

cellulosic waiver authority and the general waiver authority to reduce volumes of advanced 

biofuel and total renewable fuel to address three important realities:

• Substantial limitations in the supply of cellulosic biofuel, 

• Insufficient supply of other advanced biofuel to offset the shortfall in cellulosic 

biofuel, and 

• Practical and legal constraints on the supply of ethanol blends to the vehicles that 

can use them (in the form of E10, E15, and higher level ethanol blends), driven in 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 13 of 122

part by lower gasoline consumption than was expected in 2007 when the target 

statutory volumes were established.

We believe these realities justify the exercise of the authority Congress provided us to waive the 

statutory volumes. At the same time, we believe our exercise of the waiver authorities should be 

consistent with the objectives of the statute to grow renewable fuel use over time. We are 

proposing to use the waiver authorities to derive applicable volumes that reflect the maximum 

volumes that can reasonably be expected to be produced and consumed. Thus, while the 

standards that we set must be achievable, we believe that they must also reflect the power of the 

market to respond to the standards we set to drive positive change in renewable fuel production 

and use. 

We are proposing to exercise our authority to reduce volumes of advanced biofuel and 

total renewable fuel only to the extent necessary to remove the inadequacy in supply. That is, 

our objective in exercising the general waiver authority is to set the volume requirements at the 

boundary between an adequate domestic supply and an inadequate domestic supply.13 One way 

of expressing this objective is to say we are seeking to determine the maximum volumes of 

renewable fuel that can be expected to be achieved in light of supply constraints. This is a very 

challenging task not only in light of the myriad complexities of the fuels market and how 

individual aspects of the industry might change in the future, but also because we cannot 

precisely predict how the market will respond to the volume-driving provisions of the RFS 

program. Thus the determination of the maximum achievable volumes is one that we believe 

necessarily involves considerable exercise of judgment. To this end, we are proposing 

“maximum achievable” volumes of advanced biofuel and total renewable fuel in this package 

that reflect our judgment as to where the boundary between adequate domestic supply and 

inadequate domestic supply might fall, particularly for 2015 and 2016.

On the basis of the authorities provided in the statute, we have evaluated the supply of 

qualifying advanced biofuel and total renewable fuels in light of the three limitations described 

above and other relevant factors. Based on this evaluation, and after consultation with the 

Departments of Agriculture and Energy, we believe that adjustments to the statutory volumes of 

advanced biofuel and total renewable fuel are warranted for 2014, 2015, and 2016. The 

proposed volumes for advanced biofuel and total renewable fuel for 2015 and 2016 would lead 

to growth in supply beyond 2014 based on the expectation that the market can and will respond 

to the standards we set. Similarly, we are proposing growth in the required volume of BBD in 

such a way that both the biodiesel market and other advanced biofuels would grow.14 The 

volumes that we are proposing for 2014, 2015, and 2016 are shown below. 

 

13 As discussed in Section II.A, EPA has considerable discretion in exercising the cellulosic waiver authority, and is 

not constrained to consider any particular factor or list of factors in doing so. Nevertheless, EPA is proposing to 

base its exercise of the cellulosic waiver authority on the same general considerations justifying its use of the 

general waiver authority - availability of renewable fuel and the legal and practical constraints on their supply to 

vehicles and other qualifying uses. We invite comment on this approach.

14 In addition to the volume requirements shown in Table I.A-3 for 2014, 2015, and 2016 for all four categories of 

renewable fuel, this action also proposes a volume requirement of 1.9 billion gallons for BBD in 2017.

Commented [OMB8]: Or something like “when the relevant 

sections of the CAA were drafted,” if accurate.

Response: Text was modified.

Commented [OMB9]: Is the cellulosic waiver included in this 

statement?

Response: This statement is intended to refer primarily to the 

advanced and total standards. Text changed to clarify.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 14 of 122

Table I.A-3

Proposed Volume Requirementsa

2014 2015 2016

Cellulosic biofuel (million gallons) 33 106 206

Biomass-based diesel (billion gallons) 1.63 1.70 1.80

Advanced biofuel (billion gallons) 2.68 2.90 3.40

Renewable fuel (billion gallons) 15.93 16.30 17.40

a All values are ethanol-equivalent on an energy content basis, except for BBD which is biodieselequivalent.

B. Summary of Major Provisions in This Action

This section briefly summarizes the major provisions of this proposal. We are proposing 

applicable volume requirements for cellulosic biofuel, BBD, advanced biofuel, and total 

renewable fuel for 2014, 2015, and 2016, as well as the applicable volume requirement for BBD 

for 2017. The following sub-section summarizes our approach to determining the proposed 

requirements. This action also includes a proposed response to several requests we received in 

2013 for a waiver of the 2014 standards. We are also proposing an amendment to the regulations 

designed to clarify the scope of the algal biofuel pathway. Finally, we are proposing new 

deadlines for annual compliance reporting and attest reporting for the 2013, 2014 and 2015 

compliance years.

1. Proposed Approach to Setting Standards for 2014, 2015, and 2016

Because 2014 has passed, the final rule cannot alter the volumes of renewable fuel 

produced and consumed during 2014. We believe it is appropriate, therefore, that the standards 

we establish for 2014 reflect the actual supply in 2014. Similarly, this rulemaking can only have 

a partial impact on the volumes of renewable fuel produced and consumed in 2015. Although 

we believe that the standards we set for advanced biofuel and total renewable fuel must be 

ambitious to be consistent with the intent of Congress in establishing the RFS program, we also 

recognize that the standards we set cannot affect the past. Therefore, in this action we are 

proposing to base the applicable volume requirements for 2014 on actual renewable fuel use, as 

determined by data on the number of Renewable Identification Numbers (RINs) generated from 

the EPA-Moderated Transaction System (EMTS), minus the number of RINs retired to account 

for renewable fuel export as reported by the Energy Information Administration (EIA) or retired 

for other purposes unrelated to demonstrating compliance with the annual standards as reported 

through EMTS.15 While this approach would result in exactly the number of 2014 RINs 

available for compliance that would be needed for compliance with the 2014 standards, we 

recognize that it does not guarantee that every individual obligated party will have the exact 

number of 2014 RINs needed for compliance with its individual RVOs. Thus there may be some 

 

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

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

requirements under the program. RINs may be retired for a number of reasons, including to account for renewable 

fuel spills or to correct for RIN generation errors. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 15 of 122

costs associated with the reallocation of 2014 RINs to those obligated parties that need them. 

However, such disproportionate RIN holdings can occur in any year. We do not believe it would 

be appropriate to exercise our waiver authority to reduce the 2014 standards below the number of 

2014 RINs available for compliance. Rather, we believe that we should rely on the market to 

sort out the distribution of RINs among obligated parties.

Similarly for 2015, we are proposing to account for the fact that the final standards will 

be limited in their ability to affect supply prior to the final rule. For 2016, our proposed volume 

requirements are based on the expectation that the entire calendar year will be available for 

obligated parties and the fuels markets to plan for and come into compliance.

We are proposing the same approach to assessing past supply in the standard-setting 

process for all four renewable fuel categories. However, we are proposing that projections of 

supply for months after issuance of the NPRM would be determined differently for the four 

renewable fuel categories. For advanced biofuel and total renewable fuel, assessment of future 

supply would simultaneously reflect the statute's purpose to drive growth in renewable fuels, 

while also accounting for constraints in the market that make the volumes specified in the statute 

beyond reach, as described more fully in Section II. For the BBD standard, growth would be 

based on an analysis of a set of factors stipulated in CAA 211(o)(2)(B)(ii), as described in more 

detail in Section III. Finally, as described in Section IV, the applicable volume of cellulosic 

biofuel would be based on a projection of production that reflects a neutral aim at accuracy as 

required by the United States Court of Appeals for the District of Columbia Circuit in API v. 

EPA, 706 F.3d 474 (January 25, 2013). 

2. Advanced Biofuel and Total Renewable Fuel

Since the EISA-amended RFS program began in 2010, we have reduced the applicable 

volume of cellulosic biofuel each year in the context of our annual RFS standards rulemakings to 

the projected production levels, and we have considered whether to also reduce the advanced 

biofuel and total renewable fuel statutory volumes pursuant to the waiver authority in section 

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

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

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

The total volume of renewable fuel in the form of ethanol that could realistically be supplied to 

vehicles as either E10 or higher ethanol blends given various constraints was not a limiting factor 

in the standard-setting process in prior years. Furthermore, the availability of non-cellulosic 

advanced biofuels was determined to be sufficient to overcome the shortfall in cellulosic biofuel. 

However, for 2014 and later years, neither of these two factors remains true, and as a result we 

are proposing reductions for these categories of renewable fuel for 2014, 2015, and 2016 using 

the waiver authorities provided in CAA 211(o)(7).

Our determination in this proposal that the required volumes of advanced biofuel and 

total renewable fuel should be reduced from the statutory targets is based on a consideration of 

the ability of the market to supply such fuels through domestic production or import and the 

Commented [OMB10]: Would like to discus further. 

Response: We can discuss.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 16 of 122

ability of available renewable fuels to be used as transportation fuel, heating oil, or jet fuel.16 For 

example, the potential use of renewable fuels as transportation fuel, heating oil, or jet fuel 

depends in part on the infrastructure available for distributing, blending, and dispensing 

renewable fuels, as well as the vehicles in the fleet capable of consuming various renewable 

fuels. As described in more detail in Section II.A, we believe that the availability of qualifying 

renewable fuels and constraints on their supply to vehicles that can use them are valid 

considerations under both the cellulosic waiver authority under section 211(o)(7)(D)(i) and the 

general waiver authority under section 211(o)(7)(A). We are proposing to use the waiver 

authorities in a limited way that reflects our understanding of how to reconcile real marketplace 

constraints with Congress’ intent to promote growth in renewable fuel use over time.

We have projected applicable volumes for advanced biofuel and total renewable fuel for 

2015 and 2016 that would result in significant volume growth over the levels supplied in 

previous years, and which in our judgment are as ambitious as can reasonably be justified. The 

proposed volume requirements for 2015 and 2016 reflect the growth rates in both categories of 

renewable fuel that can be attained under a program explicitly designed to be “market-driving,” 

and that would not be expected to occur in the absence of those volume requirements. 

3. Biomass-Based Diesel

A key issue before the Agency in considering the appropriate biomass-based diesel 

(BBD) applicable volume is the extent to which a portion of the advanced biofuel volume 

requirement should be set aside exclusively for BBD. In EISA, Congress chose to set aside a 

portion of the advanced biofuel standard for BBD, but only through 2012. Beyond 2012 

Congress stipulated that EPA, in coordination with other agencies, was to establish the BBD 

volume taking into consideration the history of the program and various specified factors, 

providing that the required volume could not be less than 1.0 billion gallons. For 2013, EPA 

established an applicable volume of 1.28 billion gallons. The BBD standards in practice only 

establish the minimum volume required; substantially higher volumes have been used in past 

years to help satisfy the advanced biofuel standard. If BBD outcompetes other advanced 

biofuels in the marketplace as occurred in 2013, then the BBD standard serves as a floor and not 

a ceiling. Indeed, only 1.28 billion gallons of BBD were required in 2013, yet 1.55 billion 

gallons were supplied by the market.17 Furthermore, the total renewable standard can provide an 

incentive for even more BBD and other advanced biofuels to be supplied than is actually 

required, as also occurred in 2013: while the applicable advanced biofuel volume requirement 

was 2.75 billion ethanol-equivalent gallons, the market actually supplied 3.02 billion ethanolequivalent gallons, and most of this was BBD.

 

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

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

oil, or jet fuel.

17 In 2013 1.55 billion gallons of BBD were supplied to the U.S. market. This reflects the sum of domestically 

produced BBD plus imported BBD minus domestically produced BBD that was exported. This number was 

developed using the EPA Moderated Transaction System (EMTS) data available at 

http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm (last accessed May 20, 2015)
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 17 of 122

To preserve the important role that BBD plays in the RFS program, as well as to ensure 

that higher volume requirements for advanced biofuel can be reached, we believe that it would 

be appropriate to increase the BBD volume requirement for each year in the 2015 to 2017 time 

period. However, we also believe that it is of ongoing importance that opportunities for other 

types of advanced biofuel be expanded, such as renewable diesel co-processed with petroleum, 

renewable gasoline blendstocks, and heating oil, as well as others that are under development. 

Thus, based on a review of the implementation of the program to date and all the factors required 

under the statute, we are not only proposing to set the 2014 BBD volume requirement at the 

actual volume of 1.63 billion gallons, but we are also proposing increases in the applicable 

volume of BBD to 1.7, 1.8, and 1.9 billion gallons for the years 2015, 2016, and 2017, 

respectively. We believe that these increases would support the overall goals of the program 

while also maintaining the incentive for development and growth in production of other 

advanced biofuels. We believe establishing the volumes at these levels will encourage BBD 

producers to manufacture higher volumes of fuel that will contribute to the advanced biofuel and 

total renewable fuel requirements, while also leaving considerable opportunity within the 

advanced biofuel mandate for investment in and production of other types of advanced biofuel 

with comparable or potentially superior environmental or other benefits. 

4. Cellulosic Biofuel

The cellulosic biofuel industry continues to transition from research and development 

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

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

began in March 2013. Cellulosic biofuel production increased substantially in 2014, with over 

33 million gallons in that year. Last year also saw the grand openings of multiple new large 

commercial scale cellulosic ethanol facilities, and a significant number of cellulosic biofuel RINs 

generated using cellulosic biogas through a new pathway approved by EPA in 2014. For 2014 

we are proposing a cellulosic biofuel standard of 33 million gallons, consistent with the total 

number for RINs generated in 2014 that may be used toward satisfying an obligated party’s 

cellulosic biofuel obligation (both cellulosic biofuel (D3) and cellulosic diesel (D7) RINs.) We 

are also proposing a cellulosic biofuel standard of 106 million ethanol-equivalent gallons for 

2015 and 206 million ethanol-equivalent gallons in 2016 based on the information we have 

received regarding individual facilities’ capacities, production start dates and biofuel production 

plans, as well as input from other government agencies, and EPA's own engineering judgment.

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

U.S. in 2015 and 2016, we researched all potential production sources by company and facility. 

This included sources that were still in the planning stages, facilities that are under construction, 

facilities that are in the commissioning or start-up phases, and facilities that are already 

producing some volume of cellulosic biofuel. Facilities primarily focused on research and 

development were not the focus of our assessment, as production from these facilities represents 

very small volumes of cellulosic biofuel, and these facilities typically have not generated RINs 

for the fuel they have produced. From this universe of potential cellulosic biofuel sources, we 

identified the subset that is expected to produce commercial volumes of qualifying cellulosic 

biofuel for use as transportation fuel, heating oil, or jet fuel by the end of 2016. To arrive at 

Commented [OMB11]: Provide examples of which advanced 

biofuels EPA has in mind? Presumably cellulosic is not included 

because it already has its own requirement.

Response: Examples included.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 18 of 122

projected volumes, we collected relevant information on each facility. We then developed 

projected production ranges based on factors such as the current and expected state of funding, 

the status of the technology being used, progress towards construction and production goals, 

facility registration status, production volumes achieved, and other significant factors that could 

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

biofuel RINs. We also used this information to group these companies based on production 

history and to select a value within the aggregated projected production ranges that we believe 

best represents the most likely production volumes from each group for each year. Further 

discussion of these factors and the way they were used to determine our proposed cellulosic 

biofuel projections for 2014, 2015, and 2016 can be found in Section IV.

5. Annual Percentage Standards

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

refiner and importer of fossil-based gasoline or diesel to determine their renewable fuel volume 

obligations. The percentage standards are set so that if each obligated party meets the standards, 

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

the amount of renewable fuel, cellulosic biofuel, BBD, and advanced biofuel actually used will 

meet the volumes required on a nationwide basis. 

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

the four separate renewable fuel categories shown in Table I.A-1. The specific formulas we use 

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

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

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

transportation gasoline and diesel used to calculate the proposed percentage standards was 

derived from EIA projections. The proposed standards for 2014, 2015, and 2016 are shown in 

Table I.B.5-1. Detailed calculations can be found in Section V, including the projected gasoline 

and diesel volumes used.

Table I.B.5-1

Proposed Percentage Standards

2014 2015 2016

Cellulosic biofuel 0.019% 0.059% 0.114%

Biomass-based diesel 1.42% 1.41% 1.49%

Advanced biofuel 1.52% 1.61% 1.88%

Renewable fuel 9.02% 9.04% 9.63%

6. Response to Requests for a Waiver of the 2014 Standards

Concurrently with the November 29, 2013 proposal for 2014 RFS standards, we also 

published a separate Federal Register Notice18 indicating that the American Petroleum Institute 

 

18 78 FR 71732 (November 29, 2013) and 78 FR 71607 (November 19, 2013), respectively.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 19 of 122

(API) and the American Fuel & Petrochemical Manufacturers (AFPM) had submitted a joint 

petition requesting a partial waiver of the 2014 applicable RFS volumes, and that several 

individual refining companies had also submitted similar petitions. We noted that any additional 

similar requests would also be docketed and considered together with requests already received. 

EPA has subsequently received additional waiver petitions, including those submitted by nine 

Governors.19

The petitions generally asserted that for 2014 there is an inadequate domestic supply of 

renewable fuel and therefore RINs, due both to E10 blendwall constraints, and limitations on the 

supply of higher level ethanol blends, and of non-ethanol renewable fuels. Certain of the 

petitioners argued that this inadequate supply of renewable fuel (and RINs) will lead to an 

inadequate supply of gasoline and diesel, because refiners and importers, faced with a shortage 

of RINs, will reduce their production of gasoline and diesel for the domestic market. They 

argued that this will in turn severely harm the economy.

As calendar year 2014 has passed, we believe it is appropriate to set the applicable 

volume requirements at the volumes that were actually supplied in 2014. We do not believe that 

use of 2014 renewable fuel volumes severely harmed the economy, and we believe that it is 

straightforward to conclude that there was an adequate supply of the volumes of renewable fuel 

that were actually used in 2014. Therefore, we do not believe that adequate justification exists 

for setting the 2014 volume requirements at levels below those actually supplied. We propose 

that our final action in this rulemaking will resolve the extent to which waivers are appropriate 

for 2014 and, therefore, will identify the scope of relief that should be accorded petitioners. 

7. Proposed Changes to Regulations

In addition to proposing the aforementioned volume requirements and associated 

percentage standards, we are also proposing amendments to the RFS requirements to address two 

issues. First, we are proposing changes with respect to the existing algal oil pathway to clarify 

that only biofuels produced from oil from algae grown photosynthetically qualify for the RFS 

program under this pathway. We are aware of several companies that plan to produce biofuels 

from algae that use non-photosynthetic types of metabolism. Companies wishing to produce 

biofuels from algae grown with a non-photosynthetic stage of growth must apply to EPA for 

approval of their pathway pursuant to 40 CFR 80.1416. Since EPA assumed that algae would be 

grown photosynthetically when it evaluated the lifecycle greenhouse gas emissions associated 

with the existing algal oil pathway, we are clarifying the regulatory description of the pathway to 

align with EPA’s technical assessment and interpretation of the scope of this pathway. 

We are also proposing to revise the annual compliance reporting deadlines for obligated 

parties and renewable fuel exporters, and the attest engagement reporting deadlines for obligated 

parties, RIN-generating renewable fuel producers and importers, other parties holding RINs, 

 

19 EPA has received, to date, waiver petitions from Governors Deal (GA), Fallin (OK), Perry (TX), Otter (ID), 

LePage (ME), Martinez (NM), McCrory (NC), Herbert (UT), and Haley (SC). In addition to the waiver petition 

from API/AFPM, EPA has also received waiver petitions from the following companies: Delek, ExxonMobil, Holly 

Frontier, Lion Oil Petroleum, Marathon Oil, NCRA, PBF Holding Company, Phillips 66, and Tesoro. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 20 of 122

renewable fuel exporters, and independent third-party auditors for the 2013, 2014 and 2015 

compliance years. The proposed deadlines would vary for each of these parties depending on the 

applicable compliance period, and some parties would be required to submit partial annual 

reports representing a portion of the 2014 compliance year. A detailed description of our 

proposed changes to reporting deadlines can be found in Section VI.B.

C. C. Authority for Late Action and Applicability of the Standards

Under CAA 211(o)(3)(B)(i), EPA must determine and publish the annual percentage 

standards by November 30 of the preceding year., and it must establish applicable volumes for 

biomass-based diesel 14 months in advance of the compliance year. EPA did not meet thisthe

statutory deadline for the 2014 or the 2015 annual compliance yearspercentage standards, nor the 

2014, 2015, and 2016 biomass-based diesel applicable volumes. Nevertheless, we are proposing 

that the percentage standards established through this rulemaking would apply to all gasoline and 

diesel produced or imported in calendar years 2014, 2015, or 2016 as applicable. 

We acknowledge that this rule is being proposed later than the statutory deadline of 

November 30, 2013 for the 2014 standards, and later than November 30, 2014 for the 2015 

standards.deadlines noted above. However, this delay does not deprive EPA of authority to issue

applicable volumes and standards for these calendar years. The United States Court of Appeals 

for the District of Columbia Circuit recently upheld the 2013 RFS standards even though they 

were issued more than eight months after statutory deadline. Monroe Energy v. EPA,750 F.3.d 

909 (D.C. Cir. 2014). The court noted that it had resolved the question of EPA’s authority to 

issue RFS standards after the statutory deadline for issuing the annual RFS standards in NPRM v. 

EPA, 630 F.3d 145 (D.C. Cir. 2010). In that case, the court explained that courts have declined 

to treat a statutory direction that an agency “shall” act within a specified time period as a 

jurisdictional limit that precludes action later. Id. at 154 (citing Barnhart v. Peabody Coal, 537 

U.S. 149, 158 (2003)). Moreover, the court noted that the statute here requires that EPA 

regulations “ensure” that transportation fuel sold or introduced into commerce "on an annual 

average basis, contains at least the volumes of renewable fuel" that are required pursuant to the 

statute. Id. at 152-153. This statutory directive requires EPA action, even if late. Therefore 

EPA believes it has authority to issue RFS standards for calendar years 2014 and 2015, and 

biomass-based diesel applicable volumes for 2014-2016, notwithstanding EPA’s delay. 

EPA proposes to exercise its authority to issue standards forapplicable to past time 

periods in a reasonable way. Thus, for 2014, EPA is proposing to establish renewable fuel 

obligations that reflect actual renewable fuel used as transportation fuel, heating oil, or jet fuel 

during that time period, and the proposed compliance deadline for 2014 allows time for obligated 

parties to complete necessary transactions. For 2015 we are similarly proposing to take into 

account actual renewable fuel use during the time that has already passed in 2015. Renewable 

fuel producers generated RINs throughout 2014, and have also been generating 2015 RINs since 

the beginning of the calendar year. To varying degrees, obligated parties have been acquiring 

RINs since the beginning of 2014 in anticipation of the publication of the applicable final 

volume requirements and standards. While we acknowledge the uncertainty that the market has 

experienced due to the delay in setting applicable standards, we are proposing, our proposal to 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 21 of 122

setdetermine the applicable volumes of renewable fuel below the statutory levelsrequirements to 

account for past production for both 2014 and 2015. As a result, we believe means that there 

will be an adequate quantity of RINs that can be used for compliance with available to satisfy 

those portions of the proposed 2014 and 2015 standards.requirements.20 In addition, there are a 

number of program flexibilities that will facilitate compliance. There is also a considerable bank 

of carryover RINs that can be used to comply with up to 20% of the 2014 RVOs, and to the 

extent it is not used, that bank of carryover RINs can be rolled forward to assist in compliance 

with 2015 and 2016 requirements. We acknowledge that there is a theoretical possibility that 

parties that accumulate RINs through their own blending activities could decide to bank the 

maximum quantity of RINs for their own future use or for future sale, and that if this practice 

were widespread that there could be a shortfall in available RINs for parties who do not engage 

in renewable fuel blending activities themselves and have not entered into sufficient contracts 

with blenders or other parties to acquire sufficient RINs. Such practices are possibilities in any 

competitive marketplace, and we believe that obligated parties have had sufficient experience 

with the RFS program to have taken precautionary measures to avoid such results and to be 

prepared to comply with applicable standards potentially as high as the statute requires. Even 

where they have not done so, and find compliance with a given year’s standards infeasible, they 

may avail themselves of the option of carrying a compliance deficit forward for that compliance 

year to the next. In sum, we believe that EPA’s proposed approach to establishing required 

volumes in this rule for past time periods is is authorized and reasonable, and that obligated 

parties can and should be required to demonstrate compliance with those standards despite 

EPA’sthough late issuance of applicable standards.

D. Outlook for 2017 and Beyond

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

potential for greater use of renewable fuels in the United States. We also recognize that the RFS 

program plays a central role in creating the incentives for realizing that potential. The standards 

being proposed would require that significant progress is made in overcoming those challenges. 

We expect future standards to both reflect and anticipate progress of the industry and market in 

providing for continued expansion in the supply of renewable fuels. 

We believe that the supply of renewable fuels can continue to increase in the coming 

years despite the constraints associated with shortfalls in cellulosic biofuel production and other 

advanced biofuels, and constraints associated with supplying renewable fuels to the vehicles and 

engines that can use them. As described in Section II.B, we believe that the market is capable of 

responding to ambitious standards by expanding infrastructure and modifying fuel pricing to 

provide incentives for the production and use of renewable fuels. While we do not believe that 

the statutory volumes can be reached within the next several years, the market is capable of 

attaining volumes significantly higher than in the past. 

 

20 Furthermore, although EPA is late in establishing applicable volumes for biomass-based diesel for 2015 and 2016, 

we are proposing to set the applicable volumes of BBD for these years at levels below what we anticipate can 

actually be produced and used for compliance with the advanced biofuel requirements. Therefore, there should be a 

more than adequate supply of BBD RINs for compliance with the standards proposed. 

Commented [OMB12]: The forward guidance is an important 

part of the proposed rule because capital investments that increase 

the consumption of renewable fuels depend on expectations of future 

profitability, and therefore partly on expectations of future standards. 

Several statements in the draft text in this section indicate EPA’s 

intention to increase the volume of renewable fuels over time. The 

proposed edits instead indicate an intention to increase the share of 

renewable fuels over time. The distinction between volumes and 

share is not as important in the year of the proposed standards (e.g., 

2015 or 2016) because the volumes are converted to shares. 

However, this is an important distinction for 2017 and beyond. The 

reason is that future gasoline consumption depends on many factors 

and is highly uncertain; there may be future surprises to fuel 

consumption compared to current EIA projections, as there have 

been in the past. Given the blendwall considerations that are 

discussed at length in the proposed standards, if there are 

consumption surprises—either upward or downward—the EPA may 

want to change the growth rates of the volumes. For example, if 

gasoline consumption is unexpectedly low, maintaining the growth 

rates of volumes could become extremely costly, in which case it 

may be desirable to slow the growth rate of the volumes. The 

process of doing so would create uncertainty in the market as to 

what the new path would look like, thereby delaying capital 

investments and slowing the overall progress of the program. On the 

other hand, if the stated intention is to increase the share of 

renewable fuels, the same growth rate in the share of renewable fuels 

could be maintained even in the event of a surprising consumption 

drop. Therefore, using shares rather than growth rates would prevent 

uncertainty about future gasoline consumption from generating 

additional uncertainty about the standards. Suggest including 

discussion of percentage methodology in here or some other 

appropriate place in the document.

Response: A percentage or share-based approach to setting 

standards would represent a fundamental change to the program. 

We do not believe that an annual rulemaking is the appropriate 

venue to propose such a change.

Commented [OMB13]: Only the 2016 standards represent 

significant progress over what would have happened anyway 

because 2014 has already happened and by the time the rule is 

finalized 2015 will be nearly over.

Response: Text was deleted.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 22 of 122

In future years, we would expect to use the most up-to-date information available to 

project the growth that can realistically be achieved considering the ability of the RFS program 

to spur growth in the volume of ethanol, biodiesel, and other renewable fuels that can be supplied 

and consumed by vehicles. In particular we will focus on the emergence of advanced biofuels 

including cellulosic biofuel. Many companies are continuing to invest in efforts ranging from 

research and development to the construction of commercial-scale facilities to increase the 

production potential of next generation biofuels. We will continue to evaluate new pathways 

especially for advanced biofuels and respond to petitions, expanding the availability of 

feedstocks, production technologies, and fuel types eligible under the RFS program.

In addition to ongoing efforts to evaluate new pathways for advanced biofuel production, 

we are aware that other actions can also play a role in helping overcome challenges that limit the 

potential for increased volumes of renewable fuels. Such actions could potentially include 

amendments to program regulations that would help enable and potentially accelerate growth in 

renewable fuel volumes over time. We are currently considering ideas and various options for 

such actions. The details of such actions are beyond the scope of this current rulemaking, but we 

will continue to engage interested stakeholders as we move forward.

There are also other approaches to determining volume requirements for future years that 

could potentially help to ensure growth in supply of renewable fuel. For instance, our proposed 

approach to determining the volume requirements for advanced biofuel and total renewable fuel 

in 2015 and 2016 is one of determining the maximum achievable supply by acknowledging 

constraints on supply to consumers resulting from the E10 blendwall, limitations in production 

and import capabilities, and the ability of the market to respond to the standards we set. As 

described in Section II.D.2, there are a variety of ways that the market could respond to our 

proposed standards with widely varying levels of E85.

However, we recognize that since the majority of renewable fuel today is currently 

consumed as 10 percent ethanol blends, changes in demand for gasoline can have a significant 

impact on the ability of the marketplace to blend fixed volumes of renewable fuels. As such, 

when considering standards for 2017 and beyond there could be advantages to an approach for 

determining volume requirements that first considers the growth in the share of the fuel pool that 

can reasonably be expected to be comprised of renewable fuel over time. In this way, reductions 

in gasoline demand would be reflected in corresponding decreases in mandated renewable fuel 

volumes and vice versa. The distinction between volumes and renewable share (share of the 

market, expressed as a percentage) is not important once the annual standards are established 

because the volumes are converted to shares (percentage standards) and changes in gasoline and 

diesel fuel volume then automatically lead to corresponding changes in renewable fuel volumes. 

However, this could be explicitly considered in the context of evaluating potential future 

renewable fuel volume requirements. Future gasoline consumption depends on many factors and 

is highly uncertain; there may be unanticipated changes in fuel consumption compared to current 

EIA projections, as there have been in the past. If there are consumption changes - either upward 

or downward – EPA could consider reflecting those changes more explicitly when setting future 

standards. For example, if EPA were to adopt an outlook for future years based on a growth rate 

for the renewable share of the fuel pool, it would be easier to maintain such a growth rate—
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 23 of 122

rather than maintaining an outlook for specific volumes-- if gasoline consumption becomes 

unexpectedly low.

Under the current proposed methodology EPA takes such changes in gasoline and diesel 

use into account on an annual basis in the process of proposing and finalizing the volumes used 

in setting the annual percentage standards, and determining if maximum achievable levels are 

less than the statutory applicable volumes. As such, we have taken market share into account 

under our proposal, but could do so somewhat differently going forward. We recognize that 

projections of expected future growth in renewable fuels can be expressed in terms of either 

absolute volumes or as a share of the transportation fuel pool, and stakeholders may see 

advantages in the latter. Since there may be interest in this way of approaching the 

determination of volume requirements, we expect there may be additional conversation on this 

issue in the future.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 24 of 122

II. Proposed Advanced Biofuel and Total Renewable Fuel Volumes for 2014 - 2016

The national volume targets of advanced biofuel and total renewable fuel to be used

under the RFS program each year are specified in CAA section 211(o)(2). However, two 

statutory provisions authorize EPA to reduce these volumes under certain circumstances. EPA 

may reduce these volumes to the extent that we reduce the applicable volume for cellulosic 

biofuel, or if the criteria are met under the general waiver authority.21 We have evaluated the 

capabilities of the market and have determined that the volumes for advanced biofuel and total 

renewable fuel specified in the statute cannot be achieved in 2014 - 2016. As a result we are 

proposing to exercise our discretion under these statutory provisions to reduce the applicable 

volumes of advanced biofuel and total renewable fuel to address limitations in production or 

importation of these fuels, and factors that limit supplying them to vehicles that can consume 

them. 

While we are proposing to use our waiver authorities under the law to reduce applicable 

volumes from the statutory levels, the proposed volume requirements are nevertheless intended 

to drive significant growth in renewable fuel use beyond what would occur in the absence of 

such requirements. The proposed volume requirements are intended to be market-driving while 

staying within the limits of feasibility. The net impact of these proposed volume requirements is 

that the necessary volumes of both advanced biofuel and conventional (non-advanced) renewable 

fuel would increase over levels used in the past. The volumes that we are proposing are shown 

below.

Table II-1

Proposed Volume Requirements (billion gallons)

2014 2015 2016

Advanced biofuel 2.68 2.90 3.40

Total renewable fuel 15.93 16.30 17.40

A. Statutory Authorities for Reducing Volumes to Address Renewable Fuel 

Availability and the E10 Blendwall

Congress specified increasing annual volume objectives in the statute for total renewable 

fuel, advanced biofuel, and cellulosic biofuel for every year through 2022, and for biomass-based 

diesel (BBD) through 2012, and authorized EPA to set volume objectives for subsequent years 

after consideration of several specified factors. However, Congress recognized that 

circumstances could arise that might require a reduction in the volume objectives specified in the 

statute as evidenced by the waiver provisions in CAA 211(o)(7). As described below, we 

believe that limitations in production or importation of qualifying renewable fuels, and factors 

that limit supplying those fuels to the vehicles that can consume them, both constitute 

circumstances that warrant a waiver under section 211(o)(7). The decrease in total gasoline 

consumption in recent years which resulted in a corresponding and proportional decrease in the 

 

21 See CAA section 211(o)(7)(D) and (A).
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 25 of 122

maximum amount of ethanol that can be consumed if all gasoline was E10, the limited number 

and geographic distribution of retail stations that offer higher ethanol blends such as E15 and 

E85, the number of FFVs that have access to E85, as well as other market factors, combine to 

place significant restrictions on the volume of ethanol that can be supplied to vehicles at the 

present time. Based on our assessment of the maximum amount of renewable fuel that can be 

supplied in 2014, 2015 and 2016 in light of these constraints, we believe that circumstances exist 

that warrant a reduction in the statutory applicable volumes of advanced biofuel and total 

renewable fuel for 2014, 2015 and 2016.

EPA is proposing to use two separate and complementary legal authorities to set required 

volumes of advanced biofuel and total renewable fuel to levels below the volume objectives 

described in the statute: the cellulosic waiver authority under CAA section 211(o)(7)(D)(i), and 

the general waiver authority under CAA section 211(o)(7)(A). This section discusses both of 

these statutory authorities and briefly describes our proposed use of the authorities to determine 

appropriate reductions in advanced biofuel and total renewable fuel in comparison to the 

statutory volumes. 

As described in Section I, EPA has withdrawn its November 29, 2013 proposed rule to 

establish 2014 RFS standards, and is re-proposing standards for 2014 that reflect consideration of 

actual renewable fuel use during 2014. Since the current proposal is substantially different than 

the previous one, we are generally not providing at this time, and do not intend to provide at the 

time of our final action on this proposal, a response to comments that were submitted in response 

to our earlier proposal. However, since this proposal envisions interpretation and use of RFS 

waiver authorities in essentially the same manner as proposed in the withdrawn NPRM, and 

since we received a substantial number of comments on that NPRM related to how the waiver 

authorities should be interpreted and used, we are providing a general response to the major 

comments we have received from stakeholders on these issues – either in direct response to our 

November 29, 2013 NPRM or in subsequent dialogue. We have not attempted to respond to all 

comments on these issues, but instead hope to advance stakeholders’ ability to meaningfully

comment on this proposal by discussing our consideration to date of the most common 

comments we have received on these issues. 

1. Cellulosic Waiver Authority

Under CAA section 211(o)(7)(D)(i), if EPA determines that the projected volume of 

cellulosic biofuel production for the following year is less than the applicable volume provided 

in the statute, then EPA must reduce the applicable volume of cellulosic biofuel to the projected 

volume available during that calendar year. 

Section 211(o)(7)(D)(i) also provides that “[f]or any calendar year in which the 

Administrator makes such a reduction, the Administrator may also reduce the applicable volume 

of renewable fuel and advanced biofuels requirement established under paragraph (2)(B) by the 

same or a lesser volume.” Using this authority, the reductions in total renewable fuel and 

advanced biofuel can be less than or equal to, but no more than, the amount of reduction in the 

cellulosic biofuel volume. In prior actions EPA has interpreted this provision as authorizing 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 26 of 122

EPA to reduce both total renewable fuel and advanced biofuel, by the same amount, if EPA 

reduces the volume of cellulosic biofuel.22 

The cellulosic waiver provision was recently discussed by the United States Court of 

Appeals for the District of Columbia Circuit, in the context of its review of EPA’s 2013 annual 

RFS rule. As the Court explained, 

[T]he Clean Air Act provides that if EPA reduces the cellulosic biofuel 

requirement, as it did here, then it “may also reduce” the advanced biofuel and 

total renewable fuel quotas “by the same or a lesser volume.” 42 U.S.C. 

7545(o)(7)(D)(i). There is no requirement to reduce these latter quotas, nor does 

the statute prescribe any factors that EPA must consider in making its decision. 

See id. In the absence of any express or implied statutory directive to consider 

particular factors, EPA reasonably concluded that it enjoys broad discretion 

regarding whether and in what circumstances to reduce the advanced biofuel and 

total renewable fuel volumes under the cellulosic biofuel waiver provision. 

Monroe v. EPA, 750 F.3d 909, 915 (DC Cir. 2014). 

Monroe v. EPA, 750 F.3d 909, 915 (DC Cir. 2014). For the 2013 RFS rule, the Court 

determined that EPA had reasonably declined to use the cellulosic waiver authority to 

reduce the advanced and total renewable fuel statutory applicable volumes by analyzing 

“the availability of renewable fuels that would qualify as advanced biofuel and renewable 

fuel, the ability of those fuels to be consumed, and carryover RINs from 2012.” Id. at 

916. 

Some stakeholders have suggested that EPA may only exercise the cellulosic waiver 

authority in circumstances described in Section 211(o)(7)(A) (that is, where there is inadequate 

domestic supply or severe harm to the environment or economy), or that it must in considering 

use of the cellulosic waiver authority consider the factors specified in Section 211(o)(2)(B)(ii) 

that are required considerations when EPA sets applicable volumes for years in which the statute 

does not do so. Contrary to these comments, the D.C. Circuit found in Monroe that the statute 

does not prescribe any factors that EPA must consider in making its decision; EPA has broad 

discretion under Section 211(o)(7)(D)(i) to determine when and under what circumstances to 

reduce the advanced and total renewable fuel volumes when it reduces the statutory applicable 

volume of cellulosic biofuel. 

In general, we do not believe that it would be consistent with the energy security and 

greenhouse gas reduction goals of the statute to reduce the applicable volumes of renewable fuel 

set forth in the statute absent a substantial justification for doing so. When using the cellulosic 

waiver authority, we believe that there would be a substantial justification in circumstances 

where qualifying renewable fuels either are not available, or legal and practical constraints limit 

their supply to vehicles and other qualifying uses. In addition we may on a case-by-case basis 

consider additional factors on our own initiative, if we determine that such factors may present 

substantial justification for reducing the statutory volumes, or additional justification for not 

reducing them, and we will also consider all comments on the matter. Factors considered by 

 

22

 See 74 FR 24914-15, and 78 FR 49794, August 15, 2013.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 27 of 122

EPA in exercising the cellulosic waiver authority may include those specified in Section 

211(o)(2)(B)(ii), or other factors that EPA deems relevant in the context of the statutory 

objectives and program structure. We will identify and evaluate any such factors on a case-bycase basis. For this proposed rulemaking, we have identified the availability of renewable fuels 

and the legal and practical constraints on their supply to vehicles and other qualifying uses as the 

factors that justify the proposed exercise of our cellulosic waiver authority. We solicit comment 

on other relevant factors, and whether the relevant factors would justify reducing advanced and 

renewable fuel volumes by different amounts. 

As discussed in Section IV, we are proposing to reduce the applicable volume of 

cellulosic biofuel for 2014, 2015 and 2016. We are also proposing to use our cellulosic waiver 

authority under section 211(o)(7)(D)(i) to reduce the applicable volumes of advanced biofuel and 

total renewable fuel for these years as a first step in determining the volume requirements to 

propose. TheOur proposed justification for doing so is a limitation in the availability of 

qualifying advanced biofuel and constraints on the ability to supply qualifying renewable fuels to 

the vehicles that use them. We have considered the possible role of carryover RINs in avoiding 

the need to reduce the statutory applicable volumes, as we did in setting the 2013 RFS standards, 

but have decided that the availability of carryover RINs should not preclude reducing the 

applicable volumes for the reasons described in Section II.F. We are proposing to use the 

cellulosic waiver authority to reduce the advanced biofuel volume to the level of available 

supply, and are also proposing to use this authority to reduce total renewable volumes by the 

same amount. However, doing so is, we believe, insufficient to address all the supply limitations 

applicable to total renewable fuel. Therefore, we are proposing to use the general waiver 

authority as supplemental authority for the reductions in advanced biofuel and as the sole 

authority for further reductions in total renewable fuel volumes.23

2. General Waiver Authority

CAA 211(o)(7)(A) provides that EPA, in consultation with the Secretary of Agriculture 

(USDA) and the Secretary of Energy (DOE), may waive the applicable volume requirements of 

the Act in whole or in part based on a petition by one or more States, by any person subject to the 

requirements of the Act, or by the EPA Administrator on her own motion. Such a waiver must 

be based on a determination by the Administrator, after public notice and opportunity for 

comment, that: 

• Implementation of the requirement would severely harm the economy or the 

environment of a State, a region, or the United States; or 

• There is an inadequate domestic supply.

 

23 Assuming EPA finalizes a volume reduction for the advanced biofuels that is no larger than the final reduction in 

the applicable volume of cellulosic biofuel, EPA could rely on only the cellulosic waiver authority for its final action 

with respect to advanced biofuel. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 28 of 122

We are proposing to use the general waiver authority based on the statute's authorization for the 

Administrator to act on her own motion on a finding of inadequate domestic supply.24 We 

propose to use this authority in a supplemental fashion with respect to the volumes we propose 

waiving using the cellulosic waiver authority, and as the sole authority for an additional

increment of volume reduction for total renewable fuel. 

Because the general waiver provision provides EPA the discretion to waive the volume 

requirements of the Act "in whole or in part," we interpret this section as granting EPA authority 

to waive any or all of the four applicable volume requirements in appropriate circumstances. 

Thus, for example, unlike the cellulosic waiver authority, a reduction in total renewable fuel 

pursuant to the general waiver authority is not limited by the reduction in cellulosic biofuel. 

EPA has had only limited opportunity to date to interpret and apply the waiver provision 

in CAA section 211(o)(7)(A)(ii) related to "inadequate domestic supply," and has never before 

done so in the context of deriving an appropriate annual RFS standard. As explained in greater 

detail below, we believe that this ambiguous provision is reasonably and best interpreted to 

encompass the full range of constraints that could result in an inadequate supply of renewable 

fuel to the ultimate consumers, including fuel infrastructure and other constraints. This would 

include, for instance, factors affecting the ability to produce or import qualifying renewable fuels 

as well as factors affecting the ability to distribute, blend, dispense, and consume those 

renewable fuels in vehicles. 

The waiver provision at CAA 211(o)(7)(A)(ii) is ambiguous in several respects. First, it 

does not specify what the general term "supply" refers to. The common understanding of this

term is an amount of a resource or product that is available for use by the person or place at 

issue.25 Hence the evaluation of the supply of renewable fuel, a product, is best understood in 

terms of the person or place using the product. In the RFS program, various parties interact 

across several industries to make renewable fuel available for use by the ultimate consumers as 

transportation fuel. Supplying renewable fuel to obligated parties and terminal blenders is one 

part of this process, while supplying renewable fuel to the ultimate consumer as part of their 

transportation fuel is a different and later aspect of this process. For example, the renewable 

fuels ethanol and biodiesel are typically supplied to obligated parties or blenders as a neat fuel, 

but in almost all cases are supplied to the consumer as a blend with conventional fuel (ethanol 

blended in gasoline or biodiesel blended in diesel). The waiver provision does not specify what 

product is at issue (for example, neat renewable fuel or renewable fuel that is blended with 

transportation fuel) or the person or place at issue (for example, obligated party, blender or 

ultimate consumer), in determining whether there is an "inadequate domestic supply."

 

24 We note that there are also pending requests pursuant to CAA 211(o)(7(A) from a number of parties for EPA to 

exercise its waiver authorities to reduce applicable volumes for 2014. While the Administrator is acting on her own 

motion, she also proposes that to resolve those petitions through and/or consistent with the final rule establishing 

2014 volume requirements. 

25

 For example, see http://oxforddictionaries.com/us/definition/american_english/supply (a stock of a resource from 

which a person or place can be provided with the necessary amount of that resource: "There were fears that the 

drought would limit the exhibition’s water supply.”); 

http://www.macmillandictionary.com/us/dictionary/american/supply ( “A limited oil supply has made gas prices 

rise.” and “Aquarium fish need a constant supply of oxygen.”). 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 29 of 122

The waiver provision also does not specify what factors are relevant in determining the 

adequacy of the supply. Adequacy of the supply would logically be understood in terms of the 

parties who use the supply of renewable fuel. Adequacy of supply could affect various parties, 

including obligated parties, blenders, and consumers. Adequacy of supply with respect to the 

consumer might well involve consideration of factors different from those involved when 

considering adequacy of supply to the obligated parties. We believe that interpreting this waiver 

provision as authorizing EPA to consider the adequacy of supply of renewable fuel to all of the 

relevant parties, including the adequacy of supply to the ultimate consumer of renewable fuel 

blended into transportation fuel, is consistent with the common understanding of the terms used 

in this waiver provision, especially in the context of a fuel program that is aimed at increasing 

the use of renewable fuel by consumers. In our view, this is the most reasonable and appropriate 

construction of this ambiguous language in light of the overall policy goals of the RFS program.

EPA has reviewed other fuel related provisions of the Clean Air Act with somewhat 

similar waiver provisions, and they highlight both the ambiguity of the RFS general waiver 

provision and the reasonableness of applying it broadly to include adequacy of supply to the 

ultimate consumer of transportation fuel. For example, CAA section 211(k)(6) contains 

provisions allowing EPA to defer the application of reformulated gasoline (RFG) in states 

seeking to opt-in to the program. There are two categories of states that may opt-in: those with 

nonattainment classifications indicating a more serious and/or longstanding air quality problem 

(leading to classification as a Marginal, Moderate, Serious or Severe nonattainment area) and 

those that do not have such serious concerns, but which are nevertheless within the “ozone 

transport region” established by CAA section 184(a). For the states with more serious problems 

that seek to opt-in to the RFS program, section 211(k)(6)(A)(ii) allows EPA to defer application 

of RFG requirements if EPA determines that "there is insufficient domestic capacity to produce

reformulated gasoline." (Emphasis added.) However, for states with less serious ozone 

nonattainment concerns that are part of the ozone transport region, EPA may defer application of 

RFG requirements if EPA finds that there is "insufficient capacity to supply reformulated 

gasoline." (Emphasis added.) We believe Congress likely intended the “capacity to supply” 

RFG as being broader in scope than the “capacity to produce” RFG. This is consistent with the 

common understanding of the word “supply’ noted above as the amount of a resource or product 

that is available for use by the person or place at issue. Thus, while a source can have a 

“capacity to produce,” regardless of whether it has a market for its product, the concept of 

“supply” does not occur in isolation, but in reference to the person intending to make use of the 

product. The term “capacity to supply” would therefore be expected to include consideration of 

the infrastructure needed to deliver RFG to vehicles in the state within the ozone transport region 

that is seeking to opt in to the program. This distinction in the context of CAA section 211(k)(6) 

is logical, since Congress can be expected to have put a higher premium on use of RFG in states 

with the more serious ozone nonattainment issues, thereby constraining EPA discretion to defer 

RFG requirements to the limited situation where there is “insufficient capacity to produce” RFG. 

For states with less serious problems, it would be logical for Congress to have provided EPA 

with somewhat more latitude to defer application of RFG, and Congress referred to this broader 

set of circumstances as situations where there is an “insufficient capacity to supply” RFG. The 

language of the RFS general waiver provision, in comparison, involves use of a single 

ambiguous phrase, "inadequate domestic supply," without elaboration or clarification as to 

whether it refers solely to production capacity or also includes additional factors relevant to the 

Commented [OMB14]: Please clarify.

Response: Language added to clarify.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 30 of 122

ability to supply the fuel to various persons such as the ultimate consumer. As in the RFG 

provision, however, the adequacy of supply referred to in the RFS general waiver provision can 

logically - and we believe should - be read to include factors beyond capacity to produce that 

impact the ability of consumers to use the fuel as a transportation fuel.26 This would be 

consistent with Congress’s apparent intent in using the term “supply” in the context of the RFG 

provision.

CAA section 211(c)(4)(C)(ii) provides EPA with waiver authority to address "extreme 

and unusual fuel or fuel additive supply circumstances ... which prevent the distribution of an 

adequate supply of the fuel or fuel additive to consumers." The supply circumstances must be 

the result of a natural disaster, an Act of God, a pipeline or refinery equipment failure or another 

event that could not reasonably have been foreseen, and granting the waiver must be "in the 

public interest." In this case, Congress clearly specified that the adequacy of the supply is 

judged in terms of the availability of the fuel or fuel additive to the ultimate consumer, and 

includes consideration of the ability to distribute the required fuel or fuel additive to the ultimate 

consumer. Although the RFS waiver provision does not contain any such explicit clarification 

from Congress, its broad and ambiguous wording provides EPA the discretion to reasonably 

interpret the scope of the RFS waiver provision as relating to supply of renewable fuel (in neat or 

blended form) to the ultimate consumer. 

CAA section 211(m)(3)(C) allows EPA to delay the effective date of oxygenated gasoline 

requirements for certain carbon monoxide nonattainment areas if EPA finds "an inadequate 

domestic supply of, or distribution capacity for, oxygenated gasoline .... or fuel additives" needed 

to make oxygenated gasoline. Here, Congress chose to expressly differentiate between

"domestic supply" and "distribution capacity," indicating that each of these elements was to be 

considered separately. This would indicate that the term inadequate supply, although ambiguous 

for the reasons discussed above, could in appropriate circumstances be read as more limited in 

scope. In contrast to the RFS waiver provision, the section 211(m) waiver provision includes 

additional text that makes clear that EPA’s authority includes consideration of distribution 

capacity - reducing the ambiguity inherent in using just the general phrase "inadequate domestic 

supply." Presumably this avoids a situation where ambiguity would result in an overly narrow 

administrative interpretation. The oxygenated gasoline waiver provision is also instructive in 

 

26 The reasons why we believe the statute should be interpreted in this way can be illustrated by examining the 

differences between the RFG opt-in situation and the RFS program. Limiting EPA’s consideration to “capacity to 

produce” in the context of deferring RFG implementation in a state with serious air quality concerns is not likely to 

cause implementation problems because: (1) infrastructure upgrades necessary to shift from use of conventional 

gasoline to RFG are relatively modest, (2) the statute provides for up to one year between EPA’s receipt of an optin request and the effective date of a rule requiring use of RFG, allowing time for the needed infrastructure 

upgrades, and (3) opt-ins typically occur one state at a time, allowing available infrastructure expansion resources to 

be focused in a relatively small geographic area. In contrast allowing RFS waivers only where there is insufficient 

“capacity to produce” renewable fuel would be extremely problematic because: (1) the ethanol industry has the 

ability to produce far more ethanol than can currently be consumed in the U.S., (2) ethanol is already being supplied 

at E10 levels, and any further growth in ethanol use requires the time consuming installation of costly new E15 or 

E85 pumps and tanks, (3) the number of vehicles that can use higher ethanol bends is limited, (4) the statute 

envisions only one month between establishment of annual standards and the start of a compliance year, allowing 

limited time for infrastructure enhancements, and (5) the RFS is a nationwide program, and infrastructure 

improvements would be needed throughout the country at the same time to increase the nation’s ability to consume 

renewable fuels at levels corresponding with production capacity. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 31 of 122

that it clarifies that it applies separately to both finished oxygenated fuel and to oxygenated fuel 

blending components. That is, there could be an adequate supply of the oxygenate, such as 

ethanol, but not an adequate supply of the blended fuel which is sold to the consumer. The RFS 

waiver provision employs the phrase "inadequate domestic supply" without further specification

or clarification, thus providing EPA the discretion to determine whether the adequacy of the 

supply of renewable fuel can reasonably be judged in terms of availability for use by the ultimate 

consumer, including consideration of the capacity to distribute the product to the ultimate 

consumer. In contrast to the section 211(m) waiver provision, Congress arguably did not 

mandate that the RFS waiver provision be interpreted as providing authority to address problems 

affecting the supply of renewable fuel to the ultimate consumer. However, given the ambiguity 

of the RFS provision, we believe that it does provide EPA the discretion to adopt such an 

interpretation, resulting in a policy approach consistent with that required by the less ambiguous 

section 211(m) waiver provision.27

As the above review of various waiver provisions in Title II of the Clean Air Act makes 

clear, Congress has used the terms "supply" and "inadequate supply" in different waiver 

provisions. In the RFS general waiver provision, Congress spoke in general terms and did not 

address the scope of activities or persons or places that are the focus in determining the adequacy 

of supply. In other cases, Congress provided, to varying degrees, more explicit direction. 

Overall, the various waiver provisions lend support to the view that it is permissible, where 

Congress has used just the ambiguous phrase "inadequate domestic supply" in the general waiver 

provision, to consider supply in terms of distribution and use by the ultimate consumer, and that 

the term "inadequate supply" of a fuel need not be read as referring to just the capacity to 

produce renewable fuel or the capacity to supply it to obligated parties and blenders. 

We are aware that prior to final adoption of the Energy Independence and Security Act of

2007, Congress had before it bills that would have provided for an EPA waiver in situations 

where there was "inadequate domestic supply or distribution capacity to meet the requirement."28 

EPA is not aware of any conference or committee reports, or other legislative history, explaining 

why Congress ultimately enacted the language in EISA in lieu of this alternative formulation. 

There is no discussion, for example, of whether Congress did or did not want EPA to consider 

distribution capacity, whether Congress believed the phrase "inadequate domestic supply" was 

sufficiently broad that a reference to distribution capacity would be unnecessary or superfluous, 

or whether Congress considered the alternative language as too limiting, since it might suggest 

that constraints other than “distribution capacity” on delivering renewable fuel to the ultimate 

consumer should not be considered for purposes of granting a waiver.29 Given the lack of 

interpretive value typically given to a failure to adopt a legislative provision, and the lack of 

explanation in this case, we find the legislative history to be uninformative with regard to 

 

27

 In CAA section 211(h)(5)(C)(ii), Congress authorized EPA to delay the effective date of certain changes to the 

federal requirements for Reid vapor pressure in summertime gasoline, if the changes would result in an "insufficient 

supply of gasoline" in the affected area. As with the RFS general waiver provision, Congress did not specify what 

considerations would warrant a determination of insufficient supply. EPA has not been called upon to apply this 

provision to date and has not interpreted it. 

28 H.R. 6 and S. 606 as reported by Senate Envt. & Public Works in Senate Report 109-74

29 There are, for example, legal constraints on the amount of certain renewable fuels that may be blended into 

transportation fuels. These are discussed in Section II.D.1 for ethanol.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 32 of 122

Congressional intent on this issue. It does not change the fact that the text adopted by Congress, 

whether viewed by itself or in the context of other fuel waiver provisions, is ambiguous. 

We believe that it is permissible under the statute to interpret the term "inadequate 

domestic supply" to authorize EPA to consider the full range of constraints, including legal, fuel 

infrastructure and other constraints, that could result in an inadequate supply of renewable fuels 

to consumers. Under this interpretation, we would not limit ourselves to consideration of the 

capacity to produce or import renewable fuels but would also consider practical and legal 

constraints affecting the volume of qualifying renewable fuel supplied to the ultimate consumer. 

We believe that our proposed interpretation is consistent with the language of section 

211(o), and Congressional intent in enacting the program. It is evident from section 211(o) that 

Congress’s intent was not simply to increase production of renewable fuel, but rather to provide 

that certain volumes of renewable fuel be used by the ultimate consumer as a replacement for the 

use of fossil based transportation fuel. The very definition of “renewable fuel” requires that the 

fuel be “used to replace or reduce the quantity of fossil fuel present in a transportation fuel.” 

CAA section 211(o)(1)(I); see also CAA 211(o)(1)(A) (definition of “additional renewable 

fuel”). The RFS program does not achieve the desired benefits of the program unless renewable 

fuels are actually used to replace fossil based transportation fuels in the United States.30 For 

example, the greenhouse gas reductions and energy security benefits that Congress sought to 

promote through this program are realized only through the use by consumers of renewable fuels 

that reduce or replace fossil fuels present in transportation fuel. Imposing RFS volume 

requirements on obligated parties without consideration of the ability of the obligated parties and 

other parties to deliver the renewable fuel to the ultimate consumers would achieve no such 

benefits and would fail to account for the complexities of the fuel system that delivers 

transportation fuel to consumers. We do not believe it would be appropriate to interpret the RFS 

general waiver provision in such a narrow way and limit EPA's consideration of the distribution 

and use of renewable fuels by the ultimate consumers of these fuels. 

As described in more detail in Section II.A.5 below, although at least for 2014 and 

possibly 2015 and 2016, there is no shortage of ethanol and other types of renewable fuel that 

could be used to satisfy the statutory applicable volume of total renewable fuel, there are 

practical and legal constraints on the ability of ethanol to be delivered to and used as 

transportation fuel by vehicles. Legal requirements limit ethanol content of most gasoline to 

10% (which is delivered as E10), but for subsets of vehicles allow up to either 15% ethanol (for 

2001 and newer light-duty vehicles) or up to 85% ethanol (for flex fuel vehicles).31 In addition 

there are marketplace and infrastructure constraints that limit the use of higher level (>10%) 

ethanol blends. These considerations prevent the fuel market from supplying vehicles the 

volumes of ethanol needed to meet the statutory level of total renewable fuel, and as such they 

create an inadequate domestic supply of renewable fuel that can actually be delivered to 

 

30 For this reason, EPA’s implementing regulations require that fuels with multiple possible end uses, such as biogas 

or electricity, are not considered to be renewable fuels absent a demonstration that they will be used by the ultimate 

consumers as transportation fuel. For instance, see 40 CFR 80.1426(f)(10)(i)(C) and (f)(10)(ii)(C). Similarly, our 

regulations require the retirement of RINs representing renewable fuel that is exported as they are not supplied as 

transportation fuel in the U.S.

31 See, e.g., EPA partial waiver decisions at 75 Fed. Reg. 68,094 (Nov. 4, 2010) and 76 Fed. Reg. 4662 (Jan. 26, 

2011).

Commented [OMB15]: Are the legal constraints explained 

anywhere?

Response: Text has been edited.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 33 of 122

consumers and used as transportation fuel. EPA has evaluated this situation, and in this 

proposed rule is using the general waiver authority, together with our cellulosic waiver authority, 

to address this inadequate domestic supply situation. 

We proposed the same interpretation of our general waiver authority in the November, 

2013 NPRM for the 2014 RFS standards (which we are withdrawing in light of this re-proposal 

of 2014 standards) and we received many comments addressing our proposed interpretation. 

Although we are not generally responding to comments on the withdrawn 2014 RFS proposal, to 

aid the public in their evaluation of this proposal we discuss below the most common themes of 

comments received and our current assessment of them. 

A number of stakeholders disagreed that a review of other CAA waiver authorities 

supports the conclusion that the term “inadequate domestic supply” is ambiguous, and that it can 

be interpreted to include consideration of infrastructure and other constraints related to the 

delivery and use of renewable fuel by vehicles. Most such stakeholders focused on section 

211(m)(3)(C)(i), which provides for a waiver of the requirement to use oxygenated gasoline in 

certain carbon monoxide nonattainment areas where there is “an inadequate domestic supply of, 

or distribution capacity for, oxygenated gasoline.” They argued that this provision demonstrates 

that infrastructure considerations are distinct from supply, and that Congress would have used 

similar language in section 211(o)(7)(A) if it intended EPA to consider infrastructure and other 

constraints as a basis for an RFS waiver. These stakeholders asserted that there can be no 

inadequate domestic supply if there is sufficient qualifying renewable fuel produced and 

available for purchase by obligated parties and, consequently, that any difficulty that obligated 

parties may experience in delivering renewable fuels to consumers is irrelevant under CAA 

section 211(o)(7)(A). However, EPA believes that these stakeholders’ analysis has merit only 

when sections 211(m)(3)(C)(i) and 211(o)(7)(A) are viewed in isolation, and that their argument 

is not persuasive when all of the CAA provisions containing similar waiver provisions are 

considered. For example, as discussed above, in section 211(k)(6) Congress used the term 

“capacity to produce” in one RFG waiver context for opt-in states and “capacity to supply” in 

another context. This suggests that the term “supply’ does not unambiguously mean the same 

thing as “produce,” as these commenters argue. The term “supply” can mean something 

different, and logically does in the context of section 211(k)(6) where the two waiver provisions 

at issue use these different terms and apply in different contexts, to states with considerably 

different levels of air quality concern. The different ways that the term “supply” is used in the 

various CAA provisions indicates that in section 211(o)(7)(A), where the term is used in 

isolation, the word “supply” is ambiguous and may reasonably be interpreted consistent with the 

Act’s objectives. 

Some stakeholders have asserted that interpreting the general waiver authority to allow 

consideration of all constraints on the use of ethanol by the ultimate consumer would amount to 

focusing on “demand” rather than “supply” and would, therefore, be impermissible under the 

Act. EPA does not agree that a broad consideration of such factors as physical limitations in 

infrastructure (e.g., availability of E15 and E85 pumps), legal barriers to use of renewable fuel, 

or ability of vehicles to use renewable fuel at varying concentrations, represent consideration of 

‘demand’ rather than “supply.’ These factors operate as practical and legal limits to how much 

renewable fuel can be distributed to and used by consumers, and therefore clearly relate to how 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 34 of 122

much renewable fuel can be “supplied” to them. Although there may be some element of 

consumer preference reflected in the historic growth patterns of renewable fuel infrastructure and 

the current status of the infrastructure, it is nevertheless the case as of today that there are a 

limited number of fueling stations selling high-ethanol blends, and as a result, the number of 

stations operates as a constraint on how much ethanol can be delivered. Similarly, only flex fuel 

vehicles (FFVs) can legally use fuel with ethanol concentrations greater than 15 percent. The 

population of FFVs has grown considerably in recent years, but is still only a small fraction of 

the passenger vehicle fleet and there is an even smaller number of FFVs that have ready access 

to an E85 retail outlet. As a result, the number of FFVs with access to E85 also operates as a 

constraint on how much ethanol can be delivered. These constraints limit the supply of ethanol 

to vehicles in the 2014-2016 time period and, we believe, are appropriately considered in 

evaluating the need for an RFS waiver under section 211(o)(7)(A).

 Some stakeholders have stated that even if the term “inadequate domestic supply,” were 

ambiguous, EPA’s proposed interpretation is not reasonable because it would either reward 

obligated parties for their intransigence in planning to supply the volumes set forth in the statute, 

or because EPA’s interpretation would effectively enshrine the status quo, and would prevent the 

growth in renewable fuel use that Congress sought to achieve in establishing the program. We 

agree that obligated parties have had years to plan for the E10 blendwall and that there clearly 

are steps that obligated parties could take to increase investments needed to increase renewable 

fuel use above current levels, as we have noted in prior actions.32 We also note, however, that 

biofuel producers could also have taken appropriate measures, and that nothing precludes biofuel 

producers from independently marketing E85 or increasing the production of non-ethanol 

renewable fuels. EPA agrees that its approach to interpreting the term ‘inadequate domestic 

supply’ should be consistent with the objectives of the statute to grow renewable fuel use over 

time by placing appropriate pressure on all stakeholders to act within their powers to increase 

renewable fuel production and use, while also providing the relief to obligated parties that was 

intended through the statutory waiver authorities to address supply difficulties that cannot be 

remedied in the time period over which a waiver would apply. We believe that the approach we 

have proposed today provides an appropriate balance, and that the proposed applicable volumes 

are ambitious yet achievable, as described in Section II.D. 

3. Assessment of Past Versus Future Supply

In the context of a forward-looking annual RFS standards rulemaking issued consistent 

with the statutory schedule, we propose that the evaluation of “supply” for purposes of 

determining whether ‘inadequate domestic supply” exists pursuant to section 211(o)(7)A)(ii), 

should involve an assessment of the maximum renewable fuel volumes that can reasonably be 

expected to be produced and consumed, and a comparison of those volumes to statutory 

volumes. This is the approach to the assessment of “supply” that we are proposing today for 

purposes of the 2016 RFS standards. However, the factual situation is different for 2014, since 

neither this proposed rule nor the final rule we expect to issue later in 2015 can influence the 

volumes of renewable fuel produced and consumed in the past. Accordingly, our assessment of 

the “supply” available for RFS compliance during 2014 must necessarily focus on the number of 

 

32 See, for instance, 77 FR 70773 (November 27, 2012), column 1.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 35 of 122

RINs generated in 2014 that are available for compliance with the applicable standards. To set 

the volume requirements at a higher level would require either noncompliance, which EPA 

deems an unreasonable approach, or the drawdown of the bank of carryover RINs. Although the 

availability of carryover RINs is a relevant consideration in determining the extent to which a 

waiver is justified, see Monroe 750 F.3d at 917, we believe that carryover RINs serve an 

important function under the program, including providing a means of compliance when natural 

disasters cause unexpected supply limitations, and that in the current circumstances EPA should 

not set the annual standards for 2014-2016 at levels that would clearly necessitate a reduction in 

the current bank of carryover RINs. See Section II.F for further discussion of our consideration 

of carryover RINs in this proposal. 

For 2015, the situation is essentially a hybrid of the fact patterns for 2014 and 2016. A 

number of months have passed prior to issuance of this NPRM, and during those months this 

rulemaking could not influence renewable fuel use. Accordingly, this proposal accounts for 

actual renewable fuel use in the earlier part of 2015, and projects renewable fuel use only for 

future months. We are therefore proposing to use the same approach towards projecting 

renewable fuel growth in the latter part of 2015 as we are using for 2016. 

4. Combining Authorities for Reductions in Total Renewable Fuel

EPA is today proposing reductions in the applicable volumes of advanced biofuel and 

total renewable fuel based on limitations in the availability of qualifying renewable fuels and 

factors that constrain supplying available volumes to the vehicles that can consume them. These 

two factors are both relevant forms of inadequate domestic supply, which authorize reductions 

under the general waiver authority and also justify reductions under the cellulosic waiver 

authority. We believe that reducing both total renewable and advanced biofuel are appropriate 

responses to these circumstances. We are proposing to use both the cellulosic biofuel waiver 

authority and the general waiver authority to reduce the statutory volumes for both advanced 

biofuel and total renewable fuel by 2.6 billion gallons in 2015 and 3.85 billion gallons in 2016. 

These two authorities are exercised individually, in a complementary fashion, and each justify 

our action. In addition, as the volume reduction required for total renewable fuel is greater than 

that needed for advanced biofuel, we are proposing to use the general waiver authority 

exclusively as the basis for further reducing the applicable volume of total renewable fuel by 1.6 

billion gallons in 2015 and 1.0 billion gallons in 2016. 

5. Inability of the Market to Reach Statutory Volumes

In order to use the general waiver authority in CAA 211(o)(7)(A) to reduce the applicable 

volumes of advanced biofuel and total renewable fuel, we must make a determination that there 

is either "inadequate domestic supply" or that implementation of the statutory volumes would 

severely harm the economy or environment of a State, a region or the United States. This section 

summarizes our proposed determination that there is an inadequate domestic supply of advanced 

biofuel and total renewable fuel in the time period 2014-2016, and thus that the statutory volume 

targets are not achievable.

Commented [OMB16]: If this were a final rule rather than an 

NPRM, producers and other market participants could respond to the 

incentives created by the 2015 volumes. But because this is an 

NPRM, and given the recent history of RFS rulemaking, there 

remains considerable uncertainty about what the final 2015 

standards will be. In fact this uncertainty is stated in section II.B.3 

below. This uncertainty could work either way—market participants 

may think that the EPA could reduce volumes between proposal and 

final, or they may think that EPA will increase volumes. Overall, the 

uncertainty reduces the ability of the NPRM to influence 2015 

production and other compliance decisions. This uncertainty would 

increase RIN banking and translate to higher RIN prices and 

compliance costs. The uncertainty would also delay investments in 

infrastructure. Therefore, doesn’t this statement expose EPA to 

criticism that the market participants do not have adequate lead 

time?

Response: Implicit within our approach to determining the volume 

requirements for 2015 is the fact that we cannot change or influence 

past production. This is the foundation for our approach to all of 

2014 and to that portion of 2015 which lies behind us. Thus there 

will be no leadtime issue for 2015.

Commented [OMB17]: Why this split between cellulosic and 

advanced?

Response: The cellulosic waiver authority alone does not provide 

sufficient room for both advanced and total to be reduced to the full 

extent that we believe they need to be reduced. We have interpreted 

the cellulosic waiver authority as requiring equal reductions in 

advanced and total. However, we need greater reductions in total 

than advanced. The additional increment of reduction in the total 

standard can be justified through use of the general waiver authority. 

. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 36 of 122

As described in Section II.C.1 below, actual supply of renewable fuel in 2014 was 2.22 

billion gallons below the applicable volume target in the statute (15.93 versus 18.15 billion 

gallons). Since the requirements we establish for 2014 cannot change what occurred in the past, 

our assessment of the “supply” available for RFS compliance during 2014 must necessarily focus 

on actual renewable fuel use, which we propose to be based on the volume of RINs actually 

generated in 2014 and available for use in complying with the applicable standards.33 While we 

could also consider the availability of carryover RINs in assessing supply (as we did in the 

context of establishing the 2013 RFS annual standards), we have determined that in the current 

circumstances it would be imprudent and contrary to the long term objectives of the program to 

assess supply, and then set corresponding renewable fuel volume requirements, at levels that 

would necessitate a significant reduction in the current bank of carryover RINs. Further 

discussion of our evaluation of carryover RINs is presented in Section II.F.34 Since we have 

determined that actual 2014 advanced biofuel and total renewable fuel use was less than the 

statutory applicable volume targets, we believe we are authorized to use the general waiver 

authority to address the “inadequate domestic supply” in 2014. 

The statute sets targets of 20.5 billion gallons of renewable fuel in 2015 and 22.25 billion 

gallons of renewable fuel in 2016. We have determined that these volumes cannot be achieved 

under even the most optimistic assumptions given current circumstances. To make this 

determination, we first assumed that every gallon of gasoline would contain 10% ethanol, and 

also assumed production and use of BBD volumes at the highest historical level, which occurred 

in 2014. When these supplies of renewable fuel are taken into account, a significant additional 

volume of renewable fuel would still be needed for the statutory volume targets to be met.

Table II.A.5-1

Additional Volumes Needed to Meet Statutory Targets for Total Renewable Fuel

(million ethanol-equivalent gallons)

2015 2016

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

Maximum ethanol consumption as E10a- 13,780 - 13,690

Historical maximum biomass-based diesel supplyb-2,500 - 2,500

Additional volumes needed 4,220 6,060

a Derived from projected gasoline energy demand from EIA's Short-Term Energy Outlook (STEO) 

from May 2015

b Represents the 1.63 billion gallons of biodiesel and renewable diesel supplied in 2014

Based on the current and near-future capabilities of the industry, we expect that only a 

relatively small portion of the additional volumes needed would come from non-ethanol 

cellulosic biofuel, non-ethanol advanced biofuels other than BBD, and non-ethanol conventional 

 

33 RINs available for use in complying with the standards represent ethanol-equivalent gallons actually used. Some 

RINs generated in 2014 may not be available for compliance purposes if they are retired for exports, spills, 

invalidity, or similar circumstances.

34 Although we do not believe that carryover RINs should be relied on to set a higher volume requirement for 2014 

than is reflected by actual 2014 renewable fuel use, we note that even if the entire estimated bank of 1.8 billion 

carryover RINs were used for 2014 compliance, a waiver from statutory applicable volumes would still be required 

for 2014. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 37 of 122

renewable fuels. In total these sources could account for several hundred million gallons, as 

demonstrated by supply of these sources in 2013 and 2014.35 The more likely sources of 

additional renewable fuel that could fulfill the need for 4.22 billion gallons in 2015 or 6.06 

billion gallons in 2016 are BBD in addition to the 1.63 billion gallons supplied in 2014, or 

ethanol consumed as higher ethanol blends such as E15 and E85. In either case, more than 70% 

of those additional ethanol-equivalent volumes would need to be advanced biofuel in order to 

meet the statutory volume requirement for advanced biofuel.36 

If all of the additional volumes needed were biodiesel, the industry would need to supply 

a total of about 4.5 billion gallons in 2015 and 5.7 billion physical gallons in 2016. There 

currently exists only about 2.8 billion gallons of registered biodiesel production capacity in the 

U.S., though total production capacity considering unregistered facilities may be as high as 3.6 

billion gallons. In addition to expanding the registered production capacity, the industry would 

need to restart all idled facilities, secure sufficient feedstocks including diverting them from 

current uses, implement significantly expanded distribution, blending, and retail sales 

infrastructure, and establish new contracts for distribution and sales. Based on current market 

circumstances, including the biodiesel sector’s current production capacity and broader 

infrastructure limitations, we do not believe that an expansion in production and use of this 

magnitude is possible in 2015 or 2016. Just as importantly, volumes on the order of 4.5 billion 

gallons in 2015 and 5.7 billion physical gallons in 2016 are far in excess of what could actually 

be consumed in this short timeframe. This volume of BBD would constitute about 8% of the 

diesel pool in 2015 and 10% in 2016.37 Although most medium and heavy-duty engine 

manufacturers warrant the use of blends up to B20 in their more recent models, some light-duty 

engine manufacturers do not, and the majority of highway and nonroad diesel engines in use 

today are warranted for no more than 5% biodiesel. Also, biodiesel concentrations in the winter 

months are sometimes kept to lower levels by engine owners due to cold weather operability and 

storage concerns. The National Biodiesel Board has extensive efforts underway working with 

the vehicle and engine manufacturers to continue to expand product offerings capable of 

operating on B20, working with their membership to improve fuel quality, expanding 

infrastructure to address cold temperature issues, and working with dealers and technicians to 

clear away obstacles standing in the way of expanding biodiesel acceptance in the marketplace.38 

There are also efforts to increase the use of biodiesel in heating oil. These will continue to bear 

fruit, allowing the biodiesel volume to continue to rise over time, but not to the levels that would 

be needed in 2015 and 2016 if the additional volumes shown in Table II.A.5-1 were met with 

biodiesel. 

Alternatively, if all of the additional volumes were ethanol, the U.S. would need to 

consume volumes of E85 far higher, in our estimation, than the market is capable of supplying: 

in 2015 the required volume of E85 would need to be about 6.4 billion gallons, while in 2016 it 

 

35 Non-ethanol supply other than BBD was 238 mill gal in 2013 and 175 mill gal in 2014. Details of actual supply 

in 2013 and 2014 can be found in the docket.

36 Assumes that all ethanol consumed as E10 in Table II.A.5-1 is conventional (non-advanced).

37 Based on EIA's May 2015 Short-Term Energy Outlook (online interactive table), nationwide diesel consumption 

is projected to be 57.5 bill gal in 2015 and 58.9 bill gal in 2016.

38 "NBB Technical Update for EPA, April 30, 2015" in docket EPA-HQ-OAR-2015-0111.

Commented [OMB18]: This does not make sense. Did it mean 

to say “not to these levels...” (i.e., cut “at”)?

Response: Typo corrected.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 38 of 122

would need to be about 9.2 billion gallons.39,40 These volumes are 30 - 50 times higher than 

actual E85 consumption in 2014, and would require many of those FFVs that do not have an E85 

retail outlet anywhere close by to use it.41 Moreover, a majority of this additional ethanol would 

need to be advanced, and currently the only substantial source of advanced ethanol is imported 

sugarcane ethanol from Brazil which has recently increased its own ethanol use requirements. In 

order to meet the statutory volume requirement for advanced biofuel, the U.S. would need to 

import at least 3.0 billion gallons in 2015 and 4.7 billion gallons in 2016.42 Such volumes would 

be on the order of ten times higher than actual annual imports in the past. The highest volume of 

Brazilian sugarcane ethanol that has ever been imported was 560680 million gallons in 2006, and 

in recent years ethanol imports have been considerably lower.43 In 2014, imports were only 64 

million gallons.44 While production of sugarcane ethanol in Brazil has increased, demand for 

ethanol in Brazil has also increased. For instance, Brazil recently increased the required ethanol 

content of gasoline from 25% to 27.5%.45 As a result, we believe that exports of 3.0 - 4.7 billion 

gallons from Brazil to the U.S. in the 2015 - 2016 timeframe are infeasible. 

The additional volume of 4.22 billion gallons in 2015 or 6.06 billion gallons in 2016 

could also be satisfied through production and use of a combination of BBD and E85. However,

even in this case the volumes are untenable. Figure II.A.5-1 shows the range of possibilities for 

both 2015 and 2016. 

 

 

39 In general when discussing efforts to increase the use of ethanol beyond the blendwall we focus on the volume of 

E85 that is consumed, since volumes of E15 are likely to be small in 2016. See additional discussion of this issue in 

Section II.D.1 below.

40 Due to relative ethanol content and the fact that E85 displaces some E10, each gallon of ethanol above the E10 

blendwall requires the use of 1.51 gallons of E85.

41 Further discussion of the E10 blendwall can be found in Section II.D.1.

42 The balance of the additional volumes needed, as shown in Table II.A.5-1, would most likely be corn-ethanol.

43 Ethanol import data from EIA, representing imports directly from Brazil and indirectly through the Caribbean 

Basin Inititative.Initiative (CBI) and the Central America Free Trade Agreement (CAFTA). 

http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epooxe_im0_mbbl_m.htm

44 Based on import data from EMTS.

45 "Brazil Hikes Ethanol Blend in Gasoline to 27%," DownstreamBusiness.com, March 12, 2015.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 39 of 122

Figure II.A.5-1

Volumes of Biodiesel Versus E85 That Must Be Supplied

In Order to Meet Statutory Volume Targets

We recognize that the market could potentially reach higher total volumes than those reached in 

2014 by using a combination of biodiesel and E85. Even so, we believe that the market could 

not reach the volumes specified in the statute. For instance, one possible combination for 2016 

would be 4.5 billion gallons of E85 and 3.7 billion gallons of biodiesel. While both of these 

volumes are considerably less than the maximums that would be required if the market supplied 

only one or the other, nevertheless both levels appear to be beyond the reach of the market under 

current circumstances. Based on this assessment, we do not believe that the statutory volumes 

for advanced biofuel and total renewable fuel can be met in 2015 or 2016. 

B. Overview of Approach to Determining Volume Requirements

Although the statute does not require that EPA issue a waiver of the statutory applicable 

volumes when EPA determines that there is an inadequate domestic supply of renewable fuel, we 

are in fact proposing to do so.46 However, we are proposing to exercise that authority only to the 

extent necessary to remove the inadequacy in supply. That is, our objective in exercising the 

general waiver authority is to set the volume requirements at the boundary between an adequate 

domestic supply and an "inadequate domestic supply."47 One way of expressing this objective is 

to say we are seeking to determine the maximum volumes of renewable fuel that are achievable 

in light of supply constraints. This is a very challenging task not only in light of the myriad 

complexities of the fuels market and how individual aspects of the industry might change in the 

future, but also the fact that we cannot precisely predict how the market will respond to the 

 

46 211(o)(7)(A) says, "The Administrator...may waive the requirements..." [emphasis added]

47 As discussed in Section II.A, EPA has considerable discretion in exercising the cellulosic waiver authority, and is 

not constrained to consider any particular factor or list of factors in doing so. Nevertheless, EPA is proposing to 

base its exercise of the cellulosic waiver authority on the same general considerations justifying its use of the 

general waiver authority - availability of renewable fuel and the legal and practical constraints on their supply to 

vehicles and other qualifying uses. We invite comment on this approach.

0

1,000

2,000

3,000

4,000

5,000

6,000

0 2,000 4,000 6,000 8,000 10,000 Non-ethanol renewable fuel (mill gal biodiesel-equivalent)

E85 (mill gal)
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 40 of 122

volume-driving provisions of the RFS program. Thus the determination of the maximum 

achievable volumes is one that we believe necessarily involves considerable exercise of 

judgment. To this end, we are proposing “maximum achievable” volumes of advanced biofuel 

and total renewable fuel in this package that reflect our judgment as to where the intersection 

between adequate domestic supply and inadequate domestic supply might fall. There are a 

number of indications, described below, that the volumes we are proposing today represent a 

reasonable estimate of the maximum volumes achievable. 

In the November 2013 NPRM we projected achievable volumes by following an 

approach wherein we first projected future volumes for each of the various components of the 

renewable fuel pool and then combined them using a statistical approach to arrive at overall 

totals. By considering each possible source of renewable fuel in isolation, we had intended to 

reduce the generation of the proposed standards to a collection of more easily estimated 

components. We acknowledged that each source of renewable fuel was not independent from 

other sources under the influence of the RFS program, but we nevertheless treated them as such. 

However, because the projected volume of each individual source was uncertain, there needed to 

be flexibility in the proposed volume requirements so that excesses of one source could 

compensate for potential shortfalls in another source. To account for this fact, and also for the 

fact that the uncertainty associated with each individual source was compounded when those 

sources were added together, we targeted the mean of the projected range of potentially 

achievable volumes rather than some higher value as the basis for the proposed volume 

requirements. 

After further consideration, we believe that the approach we took in the November 2013 

NPRM underestimated achievable volumes and did not fully account for the potential of the 

market to respond to the standards that we set. We have determined that considering each 

potential source of renewable fuel in isolation, adding those sources together, and then using the 

mean of the resulting range was more suited to taking a neutral aim at accuracy of supply, rather 

than estimating the maximum volumes that can be achieved from a responsive market as 

implicitly required by the statute. The applicable volumes established by Congress in the statute 

were very ambitious, and even in cases where we have determined that the statutory volumes 

cannot be met we are under an obligation to set volume requirements that are achievable but still 

ambitious. Therefore, for this proposal we have found it more straightforward and more in 

keeping with the statute's goals to estimate the total maximum achievable volumes for both 

advanced biofuel and total renewable fuel based on the market potential for overcoming the 

various constraints at play. In this process was have considered the contributions from 

individual sources of renewable fuel, including E15 and E85, in the aggregate rather than 

individually, and in the context of a market that is responsive to the standards that we set. 

Section II.A above lays out the rationale and justification for exercising our waiver 

authority under the Clean Air Act’s relevant provisions. In determining the specific volumes to 

propose, we have considered not only the current circumstances and limitations in the ability to 

supply renewable fuels to the consumer, but also historic renewable fuel growth patterns and 

maximum supplies, the intent of Congress to use the RFS program to drive growth in renewable 

fuel use, and our assessment (based on years of regulating the fuel production and distribution 

industry) of the ability of the RFS program to effect changes that will result in growth. As a 

Commented [OMB19]: The meaning of this phrase is unclear.

Response: Text was modified to clarify.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 41 of 122

result, our proposed approach envisions growth in supply beyond historical levels as envisioned 

by the statute. This section provides an overview of our approach to determining the proposed 

volume requirements.

1. Fulfilling Congressional Intent to Increase Use of Renewable Fuels 

Although there is scant legislative history for the Energy Independence and Security Act 

(EISA) to confirm the facts that were considered by Congress at the time of enactment, we 

believe that when Congress specified the renewable fuel volume targets that the RFS program 

was to attain, that it likely was with the understanding that the growth reflected in the statutory 

tables of applicable volumes would be beyond any previously demonstrated ability of the 

industry to produce, distribute, and consume renewable fuels. For example, the annual average 

growth reflected in the statutory volumes for the time period between 2009 and 2022 is 1.6 

billion gallons per year for advanced biofuel and 1.9 billion gallons per year for total renewable 

fuel. However, in the period 2001 to 2007 leading up to enactment of EISA, annual average 

growth rates were lower: 0.8 billion gallons per year for ethanol, which was not advanced 

biofuel, and 0.07 billion gallons per year for biodiesel. The supply of other renewable fuels 

during this timeframe was essentially zero. In other words, Congress set targets that envisioned 

growth at a pace that far exceeded historical growth and prioritized that growth as occurring 

principally in advanced biofuels (contrary to historical growth patterns). It is apparent, therefore, 

that Congress intended to require changes that would be unlikely to occur absent the new 

program. 

Moreover, it is highly unlikely that Congress expected the very high volumes that it 

specified in the statute to be reached only through the consumption of E10; indeed the statute 

does not explicitly require the use of ethanol at all. At the time EISA was passed in 2007, EIA's 

Annual Energy Outlook for 2007 projected that 17.3 billion gallons of ethanol is the maximum 

that could be consumed in 2022 if all gasoline contained E10 and there was no E0, E15, or 

E85.48 However, 17.3 billion gallons is far less than the 35 billion gallons of renewable fuel 

other than BBD that Congress targeted for use in 2022. Thus, if the statutory targets were to be 

achieved, 17.7 billion gallons of renewable fuel would need to be consumed in 2022 either as 

higher level ethanol blends (E11 - E85), or as non-ethanol fuels. Such levels were far beyond the 

industry's abilities at the time of EISA’s enactment, strongly suggesting that Congress expected 

the RFS program to compel the industry to make dramatic changes in a relatively short period of 

time.

Congress did not explicitly indicate, in EISA or in any other document associated with it, 

the sort of changes that may have been expected to occur to reach 36 billion gallons by 2022. 

Instead, there was an implicit assumption that the market would respond appropriately to 

overcome those obstacles to significant growth that might exist. Today we know that the 

 

48 Assumes that AEO2007's 2022 demand for gasoline energy was fulfilled entirely by E10. AEO2007 however, 

projected that considerably less gasoline used in 2022 would be E10. We have converted the projected 2022 

gasoline energy demand into an equivalent volume of E10 to determine the maximum volume of ethanol that could 

have been consumed in 2022, based on the AEO2007, if all gasoline was E10.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 42 of 122

changes needed to significantly expand renewable fuel use fall into a select number of areas, 

including:

• Increased production and/or importation of ethanol, primarily advanced ethanol

• Increased use of E15 in model year 2001 and later vehicles

• Increased use of E85 or other higher level ethanol blends in flex-fuel vehicles 

(FFVs)

• Increased production and/or importation of non-ethanol biofuels (e.g., biodiesel, 

renewable diesel, renewable gasoline, and butanol) for use in conventional

vehicles and engines

• Increased use of biogas in CNG vehicles

• Increased use of renewable jet fuel and heating oil

• Increased use of non-food based feedstocks

• Co-development of new technology vehicles and engines optimized for new fuels

In the near term we expect that increases in E85 and biodiesel will dominate efforts to increase 

the use of renewable fuel, with smaller roles played by other avenues (e.g., increased E15 use). 

In the longer term, sustained ambitious volume requirements are necessary to provide the 

certainty of a guaranteed future market that is needed by investors; the development of new 

technology won't occur unless there is clear profit potential, and it requires multiple years to 

build new production, distribution, and consumption capacity. We believe that the approach we 

take to setting the standards must be consistent with Congress' clear goal of compelling the 

industry to make dramatic changes to increase renewable fuel use. To this end, the approach 

presented in this action makes use of the statutory waiver authorities only to the degree necessary 

to ensure that the resulting volumes of advanced biofuel and total renewable fuel are within 

reach of the market.

We believe that over time use of both higher level ethanol blends and non-ethanol 

biofuels can and will increase, consistent with Congress’ intent in enacting EPAct and EISA. As 

stated above, while Congress provided waiver authority to account for supply challenges, we do 

not believe that Congress intended the renewable fuels market to be ultimately constrained by the 

E10 blendwall or any other particular limitation that may exist in supplying renewable fuels. 

The fact that Congress set volume targets reflecting increasing and substantial amounts of 

renewable fuel use clearly signals that it intended the RFS program to create incentives to 

increase renewable fuel supplies and overcome supply limitations. Notwithstanding these facts, 

Congress also authorized EPA to adjust statutory volumes as necessary to reflect situations 

where only partial progress had been made towards eliminating supply limitations, as well as to 

address situations involving unexpected severe economic or environmental harm resulting from 

program implementation. 

2. RFS Program Mechanisms and Their Role in Supporting Growth in Renewable 

Fuel Use

Congress charged EPA with implementing a program whose explicit goal is increased 

renewable fuel use over time, and EPA, in developing an implementation framework, sought to 

Commented [OMB20]: Defer to EPA on what is intended 

Response: Some changes made to text to clarify.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 43 of 122

achieve this goal in a fashion that maximizes flexibility and the power of the marketplace, while 

at the same time recognizing the complex and disaggregated structure of the fuel production and 

distribution systems. EPA created a system whereby renewable fuel producers generate RINs for 

each gallon of renewable fuel produced. These RINs, under certain conditions, can be separated 

from the renewable fuel and bought and sold by registered parties. They are ultimately used by 

obligated parties as a means of demonstrating compliance with their renewable volume 

obligations. In establishing a compliance approach based on RINs, EPA sought to encourage 

efficient, market-based solutions to the challenges associated with increasing the production, 

distribution, and consumption of renewable fuels.

The RIN system is the mechanism established by EPA for obligated parties to 

demonstrate compliance with the standards, and is designed to provide obligated parties 

flexibility in the means they use to demonstrate compliance. The RFS program, acting through 

the mechanism of the RIN system, operates to provide an incentive for renewable fuel producers 

to increase the production of renewable fuels by, in effect, increasing the price blenders and 

obligated parties are willing to pay for renewable fuels. Under the RFS program, renewable fuel 

producers sell not only the fuels they produce, such as ethanol or biodiesel, but also the RINs 

that are “assigned” to the renewable fuel. As the demand for RINs increases, the willingness of 

the market to pay for renewable fuels and the RINs assigned to them also increases. When 

working efficiently, this system allows renewable fuel producers to continue to profitably market 

renewable fuel at times that would otherwise result in negative margins, such as when the price 

of feedstock or other inputs are unusually high, the price of the petroleum fuels that renewable 

fuels replace is unusually low, or when market demand for renewable fuel is low. In this way the 

RFS program, through the RIN system, also assists renewable fuel producers seeking to finance 

the construction of new facilities, especially facilities capable of producing cellulosic or 

advanced biofuels, by providing certainty that there will be a market for increasing volumes of 

renewable fuels.

The RIN system should also incentivize the development of the renewable fuel 

distribution infrastructure by helping to decrease the net cost of renewable fuels. As mentioned, 

when fuel blenders or obligated parties purchase renewable fuel directly from renewable fuel 

producers this fuel generally comes with an assigned RIN. When a fuel blender blends the 

renewable fuel with petroleum-based fuel to create finished transportation fuel, the blender is 

able to separate and sell the RIN that was previously assigned to the renewable fuel. Whatever 

price the fuel blender or obligated party receives for the RIN can be thought of as reducing the 

net purchase price of the renewable fuel. For example, if a fuel blender purchases a gallon of 

ethanol with an attached RIN for $1.50 and, after blending the ethanol to create transportation 

fuel, sells the RIN for $0.50, the blender has effectively paid $1.00 for the gallon of ethanol 

without the RIN. The higher the price received for the RIN, the lower the effective cost of the 

renewable fuel. Higher RIN prices therefore enable fuel blenders to market finished fuels that 

contain renewable fuel components at lower prices by allowing them to purchase renewable fuels 

for a lower effective price. A fuel blender can choose not to reduce the price of the blended fuel 

and keep the value associated with the RIN as profit, or they can attempt to increase their market 

share by passing along the lower effective purchase price of the renewable fuel to the customers 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 44 of 122

in the price of their fuel blends.49 By increasing the potential profitability of blending renewable 

fuels, higher RIN prices can incentivize the build out of the infrastructure necessary to blend and 

distribute renewable fuel blends as parties seek to enter or expand their position within this 

market.50

Finally, the RFS program, operating through the RIN system should increase the 

consumption of renewable fuels by ultimately decreasing the cost of renewable fuel blends to 

consumers relative to the cost of fuel blends that do not contain renewable fuels. RIN prices can 

be used by blenders to decrease the effective cost of renewable fuel used to create transportation 

fuel. As more market participants enter the renewable fuel blending and distribution 

marketplace, and consumers learn to accurately compare the cost of E10 and other higher-level 

ethanol blends, over some period of time the competition among renewable fuel blenders and 

distributors should result in a greater portion of the reduced effective cost of renewable fuel 

blends enabled by the sale of the RIN to be passed on to fuel consumers. Transportation fuel that 

contains renewable fuels should then reflect these cost reductions relative to transportation fuel 

containing lower volumes of renewable fuel (or no renewable fuel) in proportion to their 

renewable fuel content; transportation fuel containing a greater percentage of renewable fuels 

should be priced lower than transportation fuel containing a lesser percentage of renewable fuel. 

Motivated by the lower fuel prices for transportation fuel containing greater renewable fuel 

content (such as E85) relative to fuels containing less renewable fuel (such as E10), consumers 

will then choose to purchase increasing volumes of renewable fuel. If the price discount for 

renewable fuels is great enough for a long enough period of time, they may also be motivated to 

purchase vehicles capable of utilizing fuels containing higher percentages of renewable fuels, 

such as flexible fuel vehicles.

While economic theory and the illustration in the preceding paragraphs support the idea 

that RINs can serve as a mechanism to increase the production, distribution, and consumption of 

renewable fuels, it is important to note that this is dependent on the marketplace working 

efficiently. In reality, there is a timing component associated with each of the steps outlined 

above. Renewable fuel producers and investors must see a sustained, profitable market for 

renewable fuels before they will be willing to invest in the construction of additional fuel 

production capacity, which may take years to construct and bring online. Fuel blenders and 

distributors must see sustained profit opportunities before they are willing to invest in new 

infrastructure to increase their capacity to blend and distribute renewable fuels. Market 

competition must increase before fuel blenders and distributors are willing to pass along the 

reduced effective price of renewable fuel to consumers. New fueling infrastructure may need to 

be built to facilitate the sales of fuels containing an increasing percentage of renewable fuel. 

Consumers will need to learn to be able to identify value in fuel blends containing higher 

proportions of renewable fuels, as well as their vehicle’s ability to handle these fuel blends and 

where they are available for purchase.

 

49 In competitive markets, such as the market for E10, fuel blenders must reflect the lower effective prices of 

renewable fuel (ethanol) in the price of the E10. For emerging markets, such as E85, there may be greater 

opportunities for fuel blenders to withhold profit due to a lack of market competition until such a time as other 

parties enter the E85 market.

50 For further background information on EPA’s understanding of the RIN and renewable fuel market dynamics see 

"A Preliminary Assessment of RIN Market Dynamics, RIN Prices, and Their Effect," Dallas Burkholder, Office of 

Transportation and Air Quality, US EPA. May 14, 2015.

Commented [OMB21]: Greater competition among suppliers is 

necessary but not sufficient to increase pass-through. For example, 

there could be a large number of suppliers but if consumers choose 

E85 because of actual or perceived environmental benefits, rather 

than by comparing the cost of a gallon of E10 vs. E85, suppliers 

would have little incentive to pass through RIN prices to E85 prices. 

The text inserted here is consistent with the last sentence in the 

paragraph, which makes nearly the same point.

Response: We agree. Text added as suggested.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 45 of 122

This suggests that while the RFS program established by EPA can be effective at 

increasing the renewable content of transportation fuels over time, it likely cannot substantially 

increase the available supply of renewable fuels to consumers to the volumes envisioned by 

Congress in the short term. The program, as Congress clearly indicated, is intended to grow over 

a period of years. EPA remains committed to promoting renewable fuel production and use in 

the United States, and we believe the RFS program will be effective in achieving this end. Due 

to the current state of the renewable fuel production, distribution, and consumption marketplace, 

we believe the required volumes of renewable fuel must be reduced below the statutory levels in 

the immediate near term. An approach that provides volume targets that balances aggressive 

growth with marketplace realities is necessary, is consistent with the statute and Congressional 

intent, and is the intended outcome of this proposed action.

3. Current and Future Shortfalls in Supply

In 2013 and 2014, the market supplied less renewable fuel to the domestic transportation

sector than the statutory targets for those years. While the standards for 2013 were not finalized 

until August 15, 2013 and the standards for 2014 have not yet been finalized, we do not believe 

that these delays are the only reasons that actual supply fell short of the statutory volumes. 

Shortfalls in production and import capability of non-ethanol renewable fuels and constraints on 

the supply of ethanol to vehicles were also significant factors in not meeting the statutory volume 

targets, and we expect these factors to continue in 2015 and beyond.

Supplies of BBD and advanced biofuel in 2013 exceeded the statutory requirements for 

these two categories of renewable fuel by a wide margin. In addition, there was a record high of 

about 250 million ethanol-equivalent gallons of non-advanced biodiesel and renewable diesel 

imported in 2013. However, supply of total renewable fuel fell far short of the statutory target 

of 16.55 billion gallons, reaching only 15.54 billion gallons. The most likely source of

additional renewable fuel that could have made it possible to reach a total of 16.55 billion 

gallons was corn-ethanol. Consuming an additional 1 billion gallons of ethanol would have 

required consumption of E85 to increase to more than 1.5 billion gallons.51 The fact that the 

market only achieved about 130 million gallons of E85 in 2013 despite substantial increases in 

the production and import of non-ethanol blends and the substantial draw-down in the bank of 

carryover RINs indicates that E85 consumption was constrained.52 We believe these constraints 

included those related to infrastructure (e.g., availability of E85 at retail and the number of FFVs 

in the fleet) and poor pricing of E85 relative to E10 that fails to overcome the lower energy 

content of E85 and any inclinations that FFV owners may have to opt to use gasoline.53 

 

51 E85 is assumed to contain 74% ethanol, consistent with the concentration assumed by EIA. Each gallon of E85 

displaces some E10. The net result of these two factors is that every gallon of ethanol that must be consumed above 

the E10 blendwall requires 1.51 gallons of E85.

52 Because the applicable volume requirement for total renewable fuel in 2013 was 16.55 bill gal, but actual supply 

was only 15.54 bill gal, there was a shortfall of about 1 bill RINs needed for compliance.

53 For a further discussion of the ability of the RFS program, acting through the RIN system, to impact E85 

infrastructure and pricing as well as the limitations of the RFS program see Section II.B.2.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 46 of 122

A similar situation existed in 2014, except that both the advanced biofuel and total 

renewable fuel volumes supplied fell short of the statutory volume targets. We recognize that the 

market may have been influenced by the proposed volume requirements for 2014 specified in the 

November 2013 Notice of Proposed Rulemaking (NPRM) which included proposed reductions 

from the statutory levels.54 However, there are reasons to believe that the November 2013 

NPRM was not the only factor resulting in actual supply falling short of the statutory volumes. 

Not only did we request comment on volume requirements higher than those we proposed, but 

there was an inherent possibility that we might finalize the statutory volumes for 2014. Indeed, 

we received over 340,000 comments on the November 2013 NPRM, many of which requested 

that we set the 2014 volume requirements at the statutory levels. We believe that obligated 

parties would likely act prudently to minimize the risk that they would be out of compliance 

regardless of the outcome in the final rule. The fact that total demand for gasoline was about the 

same in 2014 as it was in 2013 suggests that the E10 blendwall also played a role in limiting the 

supply of renewable fuel. Thus the facts suggest that factors other than the NPRM were 

principally responsible for renewable fuel use being considerably below the statutory volume 

levels. In particular, we believe these factors include insufficient production and import of nonethanol renewable fuels, and constraints on the supply of ethanol to vehicles that can consume it. 

Our view that factors other than the November 2013 NPRM were responsible for 

renewable fuel use being considerably below the statutory volume levels in 2014 is also 

supported by the fact that the supply of advanced biofuel was insufficient to fill the gap created 

by the shortfall in cellulosic biofuel. Under the statute, cellulosic biofuel was intended to fill 

1.75 billion gallons out of the 3.75 billion gallons advanced biofuel applicable volume target. In 

reality, cellulosic biofuel was only 0.03 billion gallons. The market did increase the supply of 

other advanced biofuel, but those increases were insufficient to reach the statutory volume target. 

Specifically, the market supplied 1.63 billion gallons (2.5 billion ethanol-equivalent gallons) of 

BBD but only 143 million gallons of other advanced biofuel. We expect the gap created by the 

shortfall in cellulosic biofuel to widen further in 2015 and 2016 as the statutory volume targets 

quickly increase but the supply potential of the market increases at a slower rate.

Supply of ethanol in higher level ethanol blends, primarily E15 and E85, also fell far 

short of what would have been needed to reach the statutory volumes of total renewable fuel in 

2014. While the total volume of ethanol that could in theory have been consumed in 2014 in the 

form of E15 and E85 was about 26 billion gallons55 based on the consumption capacity of 

vehicles that are legally permitted to use these fuels, constraints such as those imposed by 

blending and dispensing infrastructure and poor pricing relative to E10 resulted in only about 

100 - 200 million gallons of ethanol actually being consumed as E15 and E85 in 2014.56 Use of 

E15 in 2014 was limited by the very small number of stations choosing to market it, which 

numbered less than 100 by the end of 2014 out of a total of more than 150,000 stations 

nationwide. Similarly, the number of retail stations offering E85 was about 3,000 by the end of 

 

54 78 FR 71732, November 29, 2013.

55 26 bill gal estimate assumes that FFVs in the fleet in 2014 had a cumulative consumption capacity of about 13 

billion gallons of E85, that E85 would average 74% ethanol, and that model year 2001 and later conventional 

vehicles had a cumulative consumption capacity of about 110 billion gallons of E15 which would contain 15% 

ethanol.

56 Low actual consumption compared to consumption capacity may also be a function of vehicle warranties which 

do not explicitly permit the use of E15.

Commented [OMB22]: This argument implies that greater 

uncertainty in the final volumes raises production, and has a positive 

effect on production. But the same uncertainty may also delay 

investments in infrastructure or production facilities. Suggest 

deleting this paragraph as the main point can be made without it 

(i.e., the relevance of the blendwall in 2013 and 2014), and without 

creating the false impression that the EPA’s can further its goal of 

increasing volumes by creating uncertainty.

Response: We do not believe that the entire paragraph should be 

deleted, but we have made some text changes to make it clear that 

we do not expect, and were not intending to imply, that greater 

uncertainty increases production.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 47 of 122

2014, representing only about 2% of stations nationwide.57 There were about 14 million FFVs in 

the fleet in 2014, representing about 6% of all light-duty cars and trucks. However, with only 

about 2% of retail stations offering E85, only a minority of those FFVs had an E85 refueling 

station nearby. The relative pricing of E15 and E85 compared to E10 at the retail level also 

likely played a role in sales of these higher level ethanol blends falling far below the available 

consumption capacity; while some retailers passed savings associated with high ethanol RIN 

value along to consumers, increasing demand for higher level ethanol blends, this was not typical 

across the nationwide market.58

Since 2013, the number of FFVs in the fleet and the number of retail stations offering 

E15 and E85 have grown, and we believe that this growth has been influenced in part by the RFS 

program. However, this growth has been very modest. Similarly, growth in the ability of the 

market to supply advanced biofuel other than cellulosic biofuel and BBD has also been modest. 

Current indications are that growth in all of these areas will continue, and the capability exists 

for growth to accelerate. However, growth is very unlikely to reach a level that would enable the 

statutory volume targets to be met in the near term. As a result, we believe that there will 

continue to be constraints on the total volume of renewable fuel that can be consumed in 2015 

and 2016.

C. Proposed Volume Requirements

The purpose of the RFS program is to ensure that renewable fuels are increasingly used 

to replace or reduce the use of fossil-fuel based transportation fuel. Ethanol is currently the most 

widely used renewable fuel for this purpose, with biodiesel being the second most common 

renewable fuel and other fuels making up a significantly smaller portion of the pool. For nonethanol renewable fuels, the primary supply constraint at present is the projected shortfall in 

domestic production or importation of qualifying volumes. For ethanol blends, there are both 

legal and practical constraints on the amount of ethanol that can be supplied to the vehicles that 

can use it, notwithstanding the considerable volumes that can be produced and/or imported. 

Gasoline-powered vehicles and engines have for many years been designed and warranted to use 

gasoline with ethanol up to 10%, and only blends up to 10% ethanol have historically been legal 

for use. There are, however, two other avenues through which gasoline with higher 

concentrations of ethanol can be used. In 2010 and 2011, EPA granted partial waivers that 

together allow 2001 and later model year light-duty motor vehicles to use gasoline containing up 

to 15% ethanol.59 While such fuels are legal, retail service stations have been slow to offer them. 

In addition, manufacturers have been increasingly warranting their new vehicles to operate on 

E15 and have for some time also been designing and marketing FFVs capable of operating on 

 

57 Source: DOE's Alternative Fuels Data Center.

58 The largest nationwide average discount for E85 relative to gasoline reported in the Department of Energy’s 

quarterly Clean Cities Alternative Fuel Price Report in 2014 was 13.8% (October 2014; the average gasoline price 

was $3.34 per gallon and the average E85 price was $2.88 per gallon). The Energy Information Administration 

estimates that E85 contains 74% ethanol on average, requiring a discount of approximately 22% per gallon for E85 

relative to gasoline for E85 to priced equal to gasoline on a dollar per BTU basis. Price discounts for E85 relative to 

gasoline were higher or lower for individual regions, states, and stations.

59 75 Fed. Reg. 68,094 (Nov. 4, 2010) (First E15 Partial Waiver Decision); 76 Fed. Reg. 4662 (Jan. 26, 2011) 

(Second E15 Partial Waiver Decision).
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 48 of 122

denatured ethanol concentrations as high as 85%. These vehicles represent about 7% of the inuse fleet in 2015. However, like the use of E15 in 2001 and later model year vehicles, use of 

E85 in FFVs has been limited in part by the relatively small number of retail stations offering it.

While there are constraints on expansion of renewable fuel use, markets have a 

demonstrated ability to overcome constraints with the appropriate policy drivers in place, as 

discussed in Section II.B.2 above. We believe that the RFS program can drive renewable fuel 

use, and that it is appropriate to consider the potential of the market to respond to the standards 

we set when we assess the amount of renewable fuel consumption that can be achieved. Thus, 

we are proposing volume requirements for advanced biofuel and total renewable fuel that take 

into account both the constraints on supply and the ability of the RFS program to drive 

consumption.

1. 2014

Since 2014 has passed, we are proposing to base the applicable volume requirements for 

that year on the number of RINs supplied in 2014 that are expected to be available for use in 

complying with the standards. These RINs would include those that were generated for 

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

System (EMTS), minus any RINs that have already been retired for non-compliance reasons or 

would be expected to be retired to cover exports of renewable fuels.60 RINs that have already 

been retired for non-compliance purposes include those retired to correct for invalidly generated 

RINs, volumes for renewable fuel that was spilled after RIN generation, etc. These RINs are 

recorded in EMTS on an ongoing basis. However, the total number of RINs that would be 

expected to be retired to cover exports of renewable fuel in 2014 will only be recorded in EMTS 

after the compliance demonstration deadline for 2014 has passed. Since the compliance deadline 

for all 2014 RIN exports has not yet passed, we are proposing to estimate likely RIN retirements 

for renewable exports using renewable fuel export information from EIA.61 If RINs retired for 

exports are recorded in EMTS prior to issuance of the final rule, we will use EMTS data instead 

of EIA data in determining supply for 2014 in the final rule.

Actual supply in 2014 is shown in Table II.C.1-1 below. Further details are provided in a 

memorandum to the docket.62 Since EIA does not distinguish exports by D code, we assumed 

based on past practice that all ethanol exports represent D6 ethanol, and all biodiesel exports 

represent D4 BBD. We expect that any errors introduced by this assumption will be very small.

 

60 Although we estimate that there are approximately 1.8 billion carryover RINs available, we are proposing not to 

count those RINs as part of the “supply” for 2014 or later years, for the reasons described in Section II.F. 

61 http://www.eia.gov/dnav/pet/pet_move_expc_a_EPOORDB_EEX_mbbl_m.htm

62 "Summary of data on 2014 RIN Generation and Consumption," memorandum from David Korotney to EPA 

docket EPA-HQ-OAR-2015-0111.

Commented [OMB23]: Can EPA provide some information 

that would show that the EIA data provide good estimates of the 

exports? For example, in years prior to 2013 how do exports as 

captured in EMTS compare with EIA exports? This information 

would also help support the assertion about small errors in the next 

paragraph.

Response: Staff will attempt to do this comparison following 

resolution of other textual changes in this document.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 49 of 122

Table II.C.1-1

2014 Actual Supply (million RINs)

D code Domestic 

production Imports Exports Net supplya

3 & 7 33 0 0 33

4 2,131 496 124 2,502

5 79 64 0 143

6 13,759 336 846 13,250

All advanced biofuel

(D3+D4+D5+D7) 2,243 560 124 2,679

All Renewable fuel

(D3+D4+D5+D6+D7) 16,002 896 970 15,929

a Totals may not add up due to rounding.

Based on these volumes, we are proposing the applicable volume requirements for advanced 

biofuel and total renewable fuel for 2014, as shown in Table II.C.1-2 below. Discussion of the 

proposed cellulosic biofuel and BBD volume requirements for 2014 can be found in Sections 

IV.C and III.C, respectively.

Table II.C.1-2

Proposed Volume Requirements for 2014 (billion gallons)

Advanced biofuel 2.68

Renewable fuel 15.93

2. 2015

Despite the fact that this proposal is being released well into 2015, we believe that the 

market can achieve growth this year in comparison to the volumes that were supplied in 2014 

(though the rate of growth will not be as high as compared to a scenario under which the market 

is given the full lead time envisioned by the statute). To this end, we are proposing that the 

volume requirement for advanced biofuel in 2015 be 2.90 billion gallons. The market has 

already demonstrated that this level is achievable, having reached 2.92 billion gallons in 2013. 

Nevertheless, it would be a significant increase from actual supply in 2014 of 2.68 billion gallons 

and would recognize the lower volumes already supplied to date in 2015. The primary reason 

that 2014 advanced biofuel volumes were below 2013 volumes is that imports of sugarcane 

ethanol were 435 million gallons in 2013 but only 64 million gallons in 2014.63 If this reduction 

had not occurred in 2014, total advanced biofuel volumes could have been above 3.00 billion 

gallons. Therefore, we believe that 2.90 billion gallons of advanced biofuel is within reach of 

the market in 2015, despite late issuance of this proposal. While it would require the market to 

supply more advanced biofuel in 2015 than was actually supplied in 2014, supplies that increase 

annually is exactly what Congress expected the RFS program to compel. Indeed, an examination 

of the volumes of advanced biofuel set forth in the Clean Air Act shows that Congress intended 

 

63 Based on import data from EMTS.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 50 of 122

that the rate of growth accelerate every single year between 2009 and 2015, though cellulosic 

biofuel represents the majority of this growth. 

A 2015 volume requirement of 2.90 billion gallons for advanced biofuel would be a 

substantial reduction from the statutory volume target of 5.50 billion gallons. As discussed in 

Section II.A.4, we believe that a reduction from the statutory volumes is necessary given the 

limitations on production and import capabilities and constraints imposed by the ability of 

vehicles and engines to use renewable fuels, particularly ethanol. Growth in advanced biofuel 

supply from 2014 to 2015 would be about 220 million gallons, substantially less than the growth 

in the statutory volume target of 1,750 million gallons. However, growth of 220 million gallons 

from 2014 to 2015 would require the market to respond to the standard we set by supplying more 

advanced biofuel than would be expected absent the RFS program, and to do so in substantially 

less than a full calendar year. Indeed without the RFS program, actual supply in 2015 may be no 

different than it was in 2014. Nevertheless, we believe that 2.90 billion gallons of advanced 

biofuel is possible given the potential for higher volumes of domestic and imported advanced 

biofuels, including biodiesel and sugarcane ethanol, among others, and would achieve both the 

intent of Congress to drive the market forward and also acknowledge the clear limitations on 

supply that exist. We believe that 2.90 billion gallons represents the maximum amount of 

advanced biofuel that can be supplied in 2015.

Similarly, for total renewable fuel, we are proposing a reduction in the 2015 statutory 

volume target of 20.50 billion gallons to 16.30 billion gallons. While the statutory volume target 

for total renewable fuel cannot be achieved in 2015 as discussed in Section II.A.4, we believe 

that some growth can be expected in 2015 as the annual volume requirement we set in the RFS 

program drives expansion in production and import capabilities and infrastructure, and 

incentivizes more favorable pricing of renewable fuels in the marketplace. Much of the increase 

from 2014 of about 370 million gallons would result from the increase in the advanced biofuel 

standard of 2.90 billion gallons discussed above, with the remainder resulting from growth in the 

use of conventional renewable fuel such as corn ethanol. We believe that the market has already 

demonstrated that this increment of growth is possible. For instance, growth in total renewable 

fuel in 2014 was 390 million gallons, and in 2013 it was even higher, despite the fact that in both 

years the gasoline pool was essentially saturated with ethanol.

64

 Thus, growth of 370 million 

gallons is within reach of a responsive market even though 2015 is partially over.

We request comment on our proposal for 2.90 billion gallons of advanced biofuel and 

16.30 billion gallons of total renewable fuel for 2015. Specifically, we request comment on 

whether these proposed volumes appropriately reflect constraints on supply resulting from the 

E10 blendwall and limitations in production and import capabilities, as well as the ability of the 

market to respond to the standards we set in the time available. Since we recognize that these 

proposed volumes represent our proposed judgment as to the maximum amount of renewable 

fuel that can be supplied in 2015, and commenters may have information that supports a different 

assessment, we request comment on whether higher or lower volume requirements for advanced 

biofuel and total renewable fuel for 2015 would be more appropriate. For example, some 

commenters may view the market as unable to overcome barriers such as significant availability 

 

64 According to EIA's Short-Term Energy Outlook (May 2015), pool-wide ethanol content was about 9.75% in 2013 

and 9.85% in 2014.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 51 of 122

of E85 to consumers in the 2015 timeframe or significantly higher volumes of BBD than were 

supplied in 2014, and would therefore suggest applicable volumes for 2015 closer to what we are 

proposing for 2014. Other commenters may be more optimistic about the ability of the market to 

respond to this NPRM and the final rule in the time period remaining in 2015, and may suggest 

that once we have exercised our authority to waive volumes of advanced biofuel and total 

renewable fuel under the cellulosic waiver authority, additional volume waivers under the 

general waiver authority for total renewable fuel for 2015 are unnecessary. Finally, while we 

believe that growth in advanced biofuel should be a priority in light of the lifecycle greenhouse 

gas emissions reductions goals of the statute, and have reflected this view in our proposed 

volume requirements, we also request comment on whether a different relative growth in 

advanced biofuel and conventional renewable fuel would be appropriate. 

3. 2016

We intend to finalize the volume requirements for 2016 by November 30 of this year, in 

accordance with the schedule set forth in the statute. As a result, obligated parties and other 

stakeholders in the marketplace will have the full compliance year to respond to the standards 

that we set for 2016, unlike for 2015 when they will only have part of the year to respond to the 

standards. We believe, therefore, that the supply of renewable fuels to vehicles can grow more 

dramatically in 2016 than in 2015. Moreover, as for the 2015 proposal, we believe that this 

growth should emphasize advanced biofuels, as Congress envisioned that all renewable fuel 

growth after 2014 would arise from growth in advanced biofuel as opposed to conventional 

fuels. Advanced biofuels are required to have substantially greater GHG benefits than 

conventional renewable fuel. As a program designed not only to increase the nation's energy 

security position but also contribute to efforts to reduce impacts of climate change, we believe 

that a focus on growth in advanced biofuel is appropriate. However, we also acknowledge that 

the volume of non-advanced biofuel production and use that has been achieved to date falls short 

of the volumes that Congress envisioned. Therefore we believe it is appropriate to provide for 

the continued growth of conventional renewable fuels at this time as well. 

We are proposing that the advanced biofuel volume requirement would grow by 500 

million gallons in 2016, as compared to 2015, while the remainder (the non-advanced portion) of 

the total renewable fuel requirement would grow by 600 million gallons in the same timeframe. 

As a result, the 2016 advanced biofuel and total renewable fuel requirements would be 3.40 

billion gallons and 17.40 billion gallons, respectively. The corresponding amount of 

conventional renewable fuel that would be needed would be 14.0 billion gallons. These 

proposed volumes for both advanced biofuel and total renewable fuel represent substantial 

reductions from the volumes specified in the statute for 2016. While we do expect the market to 

respond to the standards we set to drive changes in production and consumption infrastructure as 

well as more favorable relative pricing, we do not have confidence that those changes could 

occur fast enough to attain volumes larger than we are proposing for 2016. 

While the reductions in the statutory volumes that we are proposing are substantial, the 

volume requirements that we are proposing for 2016 would nevertheless be significantly larger 

than any previous volume requirements. The market would need to respond by increasing 

Commented [OMB24]: The newest conventional corn starch 

ethanol plants reduce greenhouse gas emissions by 48%. 

Response: Text was modified to more explicitly point to the 

statutory requirements. We do not believe that deleting all 

references to conventional renewable fuel is appropriate as the 

statements we make are factually accurate. More importantly, our 

focus on advanced biofuels is an important part of the Agency's 

policy goals.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 52 of 122

domestic production and/or imports of renewable fuel, by significantly expanding the 

infrastructure for distributing and consuming that renewable fuel, and by improving the relative 

pricing of renewable fuels and conventional transportation fuels at the retail level to ensure that 

they are attractive to consumers. As described more fully in the next section, we believe that the 

market has the capability of doing this in 2016 and thus reaching the volumes that we are 

proposing.

We request comment on our proposal for 3.40 billion gallons of advanced biofuel and 

17.40 billion gallons of total renewable fuel for 2016; in particular we request comment on 

whether these proposed 2016 volumes appropriately reflect constraints on supply resulting from 

the E10 blendwall and limitations in production and import capabilities, as well as the ability of 

the market to respond to the standards we set in the time available. Our intent is to set volumes 

at the maximum level that in our judgment can be supplied to consumers, and we request 

comment on whether higher or lower volume requirements for advanced biofuel and total 

renewable fuel for 2016 would be more appropriate. As for 2015, we request comment on 

whether volumes closer to those we are proposing for 2014 would be more appropriate for 2016, 

or alternatively whether it would be appropriate to only waive volumes of advanced biofuel and 

total renewable fuel under the cellulosic waiver authority for 2016 without waiving volumes of 

advanced biofuel or total renewable fuel under the general waiver authority. Finally, while we 

believe that growth in advanced biofuel should be a priority and have reflected this view in our 

proposed volume requirements, we also request comment on whether a different relative growth 

in advanced biofuel and conventional renewable fuel would be appropriate. 

D. Market Response to Proposed Volume Requirements for 2016

In recognition of the fact that the various constraints on supply that exist today were not 

as significant in years past, the volumes of advanced biofuel and total renewable fuel that we are 

proposing for 2016 would require increases from 2014 levels that, while substantial, are less than 

the increases that actually occurred in 2013. Moreover, as shown in Figures II.D-1, II.D-2, and 

II.D-3, the volume requirements in 2015 and 2016 would follow an upward trend consistent with 

that from 2012 - 2014, extending the market activities that produced increases in past years to the 

near future. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 53 of 122

Figure II.D-1

Proposed Growth in Advanced Biofuel65

Figure II.D-2

Proposed Growth in Total Renewable Fuel

 

65 As described in Section II.C.2, 2014 advanced biofuel volumes were below 2013 volumes primarily because 

imports of sugarcane ethanol were 435 million gallons in 2013 but only 64 million gallons in 2014. BBD volumes 

were slightly higher in 2014 than they were in 2013.

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015 2016 Million RINs

Actual

Proposed

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

2012 2013 2014 2015 2016 Million RINs

Actual

Proposed

Commented [OMB25]: The scale of the next three figures is 

highly misleading.

Response: The scale is meant to make the differences between 

columns easier to see.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 54 of 122

Figure II.D-3

Proposed Growth in Conventional Renewable Fuel

We believe the required volumes being proposed for advanced biofuel and total 

renewable fuel for 2015 and 2016 reflect the maximum volumes that can reasonably be expected 

to be produced and consumed for those years. While we acknowledge that there is considerable 

judgment involved in identifying the appropriate volumes, we note that each increment is 

increasingly difficult for the market to accommodate. For instance, the use of ethanol in gasoline 

increased dramatically between 2000 and 2009, but by 2010 nearly all gasoline contained 

ethanol. Additional volumes of ethanol use in 2010 and thereafter increased much more slowly 

as the market approached the E10 blendwall.

12,000

12,500

13,000

13,500

14,000

2012 2013 2014 2015 2016 Million RINs

Actual

Proposed
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 55 of 122

Figure II.D-4

Ethanol Concentration of Gasoline

Source: EIA's Short Term Energy Outlook

This trend suggests that increases in renewable fuel use after 2014 will require more dramatic 

efforts than in the past. Implementation of the RFS program to date has led to ethanol use that is 

essentially at the E10 blendwall today. Any further growth in ethanol volumes must entail the 

use of higher-ethanol blends such as E15 and E85. As the volume requirements we are 

proposing for 2016 represent significant increases from 2014, we believe it would be 

unreasonable to expect the market to supply more than the proposed volumes.

In order to demonstrate that the volume requirements that we are proposing are 

achievable, we investigated a number of scenarios involving different types and sources of 

renewable fuel. Each of these scenarios differs in terms of the volumes of higher ethanol blends 

that would be supplied and the relative volumes of such fuels as BBD, imported sugarcane 

ethanol, corn-ethanol, renewable diesel, and other non-ethanol renewable fuel. While we cannot 

predict precisely how the market would respond to the standards we are proposing, the fact that 

at least some of the scenarios fall within the reasonably expected capabilities of the market 

demonstrates that the volume requirements we are proposing are achievable.

Section II.D.1 below describes the E10 blendwall, while Section II.D.2 uses estimates of 

ethanol volumes associated with the E10 blendwall as the basis for a number of volume 

scenarios that include possible volumes of E85 use and the associated need for other renewable 

fuels to meet the proposed volume requirements. While we have focused this discussion on our 

proposal for volumes for 2016, a similar pattern would exist with respect to our proposal for 

2015 volumes.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

E10 blendwall
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 56 of 122

1. E10 Blendwall

In 2007 when Congress enacted the Energy Independence and Security Act with 

provisions for the current RFS program, the gasoline pool was composed of about half E10 and 

half E0. Today it is almost entirely E10. While the E0 pool has been shrinking, the pools of 

E10, E15, and higher level ethanol blends up to E85 have been increasing. In the context of 

determining the total volume of ethanol that can be supplied to vehicles in 2016, all of these 

gasoline-ethanol blends could potentially play a role. 

For 2016, the portion of the statutory applicable volume for total renewable fuel that may 

be satisfied with non-advanced biofuel (e.g., conventional renewable fuel, which is primarily 

ethanol) is 15.0 billion, and this amount is 67% of the total renewable fuel volume target of 

22.25 billion gallons specified by the statute for 2016.66 However, the ability of the market to 

use ethanol in 2016 is constrained by the E10 blendwall, the volume of ethanol that could be 

used if all gasoline contained 10% ethanol and there were no higher level ethanol blends. The 

amount of ethanol associated with the E10 blendwall is driven by the total demand for gasoline, 

and thus ethanol consumption will tend to increase if gasoline consumption increases and ethanol 

consumption will tend to decrease if gasoline consumption decreases. However, gasoline 

consumption is in fact declining. Prior to EISA’s passage, EIA in its AEO 2007 projected that 

U.S. gasoline consumption would rise to about 159 billion gallons in 2016.67 Instead, gasoline 

consumption has declined considerably, and EIA now predicts that approximately 137 billion 

gallons of gasoline will be consumed in 2016.68 If all of the gasoline currently projected to be 

consumed contained 10% ethanol, a total of 13.7 billion gallons of ethanol would be used. For 

the RFS program, the decline in gasoline consumption has meant that the E10 blendwall has 

become constraining sooner and at a lower overall volume of ethanol than was expected in 2007. 

The trend of declining gasoline consumption is projected to continue for a number of reasons, 

including the increasingly stringent GHG and fuel economy standards set by EPA and NHTSA 

for on-road vehicles. 

In the face of declining gasoline consumption, using greater volumes of ethanol beyond 

the E10 blendwall is a function of several factors, some legal, and some market-driven. The 

ability to go beyond the E10 blendwall is a function of actions taken by various fuel market 

participants, including obligated parties, renewable fuel producers, distributors and marketers, 

gasoline and diesel retailers, and consumers. In this regard, the market has significant potential 

flexibility and opportunities, and we believe that it can respond to the standards we set to drive 

the use of higher ethanol blends, the E10 blendwall notwithstanding.

Another constraint on the volume of ethanol that can be consumed is the demand for E0. 

While there will undoubtedly be some volumes of E0 in 2016, we expect such volumes to be 

lower than they were in the past as the market strives to expand consumption of ethanol under 

the influence of the RFS program. The primary context in which E0 might continue to be used is 

 

66 Notably, by 2015 no more than 15 billion gallons of non-advanced biofuel may be used for compliance with RFS 

standards. The statute requires that advanced biofuel account for all the growth in renewable fuels used to comply 

with RFS standards beyond 2015.

67 EIA’s Annual Energy Outlook 2007: http://www.eia.gov/forecasts/archive/aeo07/pdf/0383(2007).pdf. 

68 EIA’s May 2015 Short-Term Energy Outlook (STEO).
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 57 of 122

in recreational marine engines or other small nonroad engines. As described in a memorandum 

to the docket, we expect that the use of E0 rather than E10 would only reduce the total volume of 

ethanol that can be consumed by about 13 million gallons out of the 13.69 billion gallons we 

estimated above.69 We have recently been made aware of E0 being marketed in some locations, 

such as Florida where recreational marine is a significant market, and in parts of the Midwest 

such as Iowa where concerns over ethanol's impact on other small engines may be at play. 

Nevertheless, we anticipate such E0 marketing to remain fairly limited given the widening use of 

ethanol overall. As a result, we do not anticipate the volume of E0 having a significant impact 

on ethanol consumption in 2016, particularly in light of the offsetting effect of E15 volumes as 

described below. Therefore, we have omitted from the scenarios described below the small 

expected impact of E0 use on total ethanol consumption.

Efforts to increase the use of ethanol beyond the blendwall is primarily a function of the 

volume of E85 that is consumed, since volumes of E15 are likely to continue to be small in 2016. 

Over the last several years, EPA has taken a series of regulatory steps to enable E15 to be sold in 

the U.S. In 2010 and 2011, EPA issued partial waivers to enable use of E15 in model year 2001 

and newer motor vehicles, and in June of 2011, EPA finalized regulations to prevent misfueling 

of vehicles, engines, and equipment not covered by the partial waiver decisions. However, 

growth in the number of retail stations offering E15 has been slow – currently there are only 

about 100 stations offering it. Even if this number grows more quickly in 2015 and 2016 than it 

did previously, such increases would probably not increase total ethanol consumption by more 

than 5 - 10 million gallons in comparison to the use of ethanol in E10.70 In the context of the 

offsetting effect of E0 volumes on ethanol use that is described above, therefore, we have 

omitted this small impact on total ethanol consumption from the scenarios described below. 

However, in discussing the volume of E85 that might need to be consumed to meet the volume 

requirements we are proposing today, we acknowledge that there may also be some E15.

We have assumed that E10 contains 10.0% denatured ethanol. This is consistent with 

survey data collected by the Alliance of Automobile Manufacturers – indicating that the average 

ethanol content of all gasoline containing at least 5% ethanol is about 9.74%. This estimate is 

based on the use of ASTM International (ASTM) test method D-5599, which measures only the 

alcohol portion of the gasoline, not any denaturant that would have been included with the 

ethanol before it was blended into gasoline. Since the denaturant portion of ethanol is at least 

2%, ethanol that is blended into gasoline contains no more than 98% ethanol. When blended into 

gasoline, therefore, the E98 would result in a gasoline-ethanol blend containing no more than 

9.8% pure ethanol, or 10.0% denatured ethanol. Since all RFS ethanol volumes and RINs are 

also calculated on a denatured ethanol basis, it is thus appropriate to assume 10.0 percent 

denatured ethanol. Similarly, all references to "ethanol" in this NPRM mean denatured ethanol.

2. Volume Scenarios

 

69 "Estimating E0 Volume Sold in the U.S. at marinas", memorandum from Lester Wyborny to EPA docket EPAHQ-OAR-2015-0111

70 "Projection of potential E15 consumption and its impacts on total ethanol consumption", memorandum from 

David Korotney to EPA Air Docket EPA-HQ-OAR-2015-0111.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 58 of 122

The transportation fuel market is dynamic and complex, and the RFS program is only one 

of many factors that determine the relative types and amounts of renewable fuel that will be 

used. Thus, while we set the applicable volume requirements for advanced biofuel and total 

renewable fuel, we cannot precisely predict how the market will choose to meet those 

requirements. We can, however, delineate a range of possibilities, and doing so provides a 

means for judging whether the proposed volume requirements are attainable.

For our proposed 2016 total renewable fuel volume requirement of 17.40 billion gallons, 

there would be about 0.84 billion ethanol-equivalent gallons needed beyond that supplied by 

E10, the proposed BBD volume requirement of 1.8 billion actual gallons (equivalent to 2.7 

billion D4 RINs as described in Section III.D.4), and that portion of the cellulosic biofuel volume 

which we would expect to be derived from non-ethanol biofuel (see Section IV.E).

Table II.D.2-1

Breakdown of Renewable Fuel Use in 2016 Based on Proposed Volumes

(billion ethanol-equivalent gallons)

Total renewable fuel 17.40

Ethanol consumed as E10a-13.69

Non-ethanol cellulosic biofuel -0.17

Biomass-based dieselb-2.70

Additional renewable fuel that must be used 0.84

a

Includes all sources of ethanol (cellulosic, advanced, and 

conventional)

b Represents 1.80 billion physical gallons.

The E10 blendwall and limitations in production capabilities for non-ethanol biofuels are the 

primary factors that constrain renewable fuel supply. Other factors include the relative pricing of 

renewable fuels and conventional (fossil-based) fuels, engine warranty limitations on the use of 

biodiesel for the current in-use fleet, and the need for distribution system improvements. All of 

these factors could play a role in determining how the market chooses to supply the additional 

0.84 billion gallons needed as shown in Table II.D.2-1. The options available to the market to 

fulfill the need for 0.84 billion gallons of renewable fuel include the following:

• Increase the production and use of BBD above the proposed standard of 1.80 

billion gallons

• Increase import and use of sugarcane ethanol and/or domestic production of cornethanol, which would result in a corresponding increase in E85

• Increase production and/or imports of conventional (D6) biodiesel and renewable 

diesel

• Increase the production of other non-ethanol advanced biofuels, such as heating 

oil, jet fuel, naphtha, butanol, and renewable fuels coprocessed with petroleum

In determining the amounts of each type of renewable fuel, the market would also need to satisfy 

the proposed advanced biofuel standard of 3.40 billion gallons. 

To illustrate the possible outcomes, we evaluated a number of scenarios with varying 

levels of E85, imported sugarcane ethanol, advanced biodiesel and other non-ethanol advanced 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 59 of 122

biofuels, and imported conventional biodiesel (likely to be made from palm oil). In doing so we 

sought to capture the range of possibilities for each individual source. For imported 

conventional biodiesel we examined volumes up to and slightly higher than the level that was 

actually imported in 2014 – 225 million gallons.71 The range of other non-ethanol advanced 

biofuels is based on the range of volumes achieved over the last several years. Each of the rows 

in Table II.D.2-2 represent a scenario in which the proposed total renewable fuel and advanced 

biofuel volume requirements would be satisfied.

 

71 Actual imports of conventional non-ethanol renewable fuels in 2014 were 53 million gallons of biodiesel and 151 

million gallons of renewable diesel. They have been represented here in biodiesel-equivalents for simplicity.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 60 of 122

Table II.D.2-2

Volume Scenarios Illustrating Possible Compliance with 3.40 Bill Gal 

Advanced BiofuelaBiofuel and 17.40 Bill Gal Total Renewable Fuel (million gallons)a,b

E85

Total 

ethanolethanolc

Average ethanol 

content of all 

gasolinec

Biomass-Based 

diesel (D4)d

Sugarcane 

ethanol (D5)

Other non-ethanol 

advanced (D5)

PalmConventional

biodiesel (D6)

100 13,760 10.05% 1,997 102 100 250

100 13,760 10.05% 2,030 102 50 250

100 13,760 10.05% 2,063 102 0 250

100 13,760 10.05% 2,131 0 0 182

200 13,826 10.10% 1,952 168 100 250

200 13,826 10.10% 1,986 168 50 250

200 13,826 10.10% 2,019 168 0 250

200 13,826 10.10% 2,065 0 100 138

400 13,959 10.19% 1,898 301 50 250

400 13,959 10.19% 1,989 113 100 125

400 13,959 10.19% 2,056 113 0 125

400 13,959 10.19% 2,098 0 50 50

600 14,091 10.28% 1,800 433 64 250

600 14,091 10.28% 1,901 245 100 125

600 14,091 10.28% 2,026 58 100 0

600 14,091 10.28% 2,093 58 0 0

a Assumes that the cellulosic biofuel proposed standard for 2016 is 206 mill gal, of which 33 mill gal is assumed to be ethanol for the purposes of these 

scenarios and the remainder is primarily biogas.

b Biomass-based diesel and palm biodiesel are given as biodiesel-equivalent volumes. Others are given as ethanol-equivalent volumes. Biodieselequivalent volumes can be converted to ethanol-equivalent volumes by multiplying by 1.5.

c RepresentsFor the range of total ethanol shown in this table, the nationwide poolwide average ethanol content. would range from 10.05% to 10.28%. 

The majority of gasoline will contain 10% ethanol, and some gasoline will contain higher levels of ethanol such as E15 or E85.

d

Includes supply from both domestic producers as well as imports.

Commented [OMB26]: For comparison with Figure II.D-4 

above, please add a column showing the ethanol concentration in 

gasoline for each scenario. This information is central to conveying 

to the public the amount of pressure that these scenarios place on the 

blendwall.

Response: Footnote added.

Deleted Cells
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 61 of 122

The scenarios in the table above are clearly not the only ways that the market could 

choose to meet the total renewable fuel and advanced biofuel volume requirements that we are 

proposing today, but they are illustrative of many ways that it could play out. While we are not 

in a position to predict how the market would respond to the volume requirements we are 

proposing today, we believe that the range of possibilities for E85, BBD, and other sources is a 

clear indication that the standards we are proposing are achievable.

With regard to E85, according to EIA there will be about 16 million FFVs in the in-use 

fleet in 2016 with a total consumption capacity of about 14 billion gallons of E85.72 While only 

about 2% of retail stations nationwide currently offer E85, the fraction of FFVs with access to 

E85 is higher than 2% since the vast majority of vehicles are within reasonable range of more 

than one retail station on typical trips. If only 5% of all FFVs had a retail station nearby that 

offered E85, they could consume 800 million gallons of E85 in 2016 under favorable consumer 

pricing conditions. We recognize that the market would need to compel E85 prices to be 

increasingly favorable relative to E10 in order to provide the incentive for FFV owners to 

purchase E85, but this is exactly how a fully functional market will react to standards designed to 

drive growth in renewable fuel as Congress intended. Thus we believe it is possible for the 

market to reach volumes perhaps as high as 600 million gallons under favorable pricing 

conditions (i.e., where consumers believe they are obtaining an economic advantage through 

purchase of E85). 

We also believe that it is possible for the market to exceed 1.8 billion gallons of BBD in 

2016. As of 2013, the total production capacity for all registered and unregistered biodiesel 

facilities was about 3.6 billion gallons,73 substantially more than the actual domestic production 

in 2014 of 1.46 billion gallons.74 More than 2.7 billion gallons of this production capacity has 

already been registered under the RFS program. Moreover, the U.S. imported several hundred 

million gallons of biodiesel and renewable diesel in 2014. The combined volumes of soybean 

oil, corn oil, and waste oils produced annually is far more than would be needed to produce 2.1 

billion gallons of biodiesel. It is possible that the market could divert additional feedstocks from 

food and other domestic uses or exports to the production of biodiesel. For instance, in 2014 

exports of soy oil were 250 million gallons and exports of rendered fats and greases was 440 

million gallons.75,76 

As Table II.D.2-2 illustrates, the proposed standards could result in the consumption of as 

much as 2.3 billion gallons of D4 and D6 biodiesel and renewable diesel, representing an 

increase of about 600 million gallons over the historical high. While this would be a substantial 

increase, we believe that it is possible. A portion of this increase is likely to be renewable diesel 

which is indistinguishable from conventional diesel fuel and thus would experience no 

impediments related to cold temperatures or manufacturer warranties; in both 2013 and 2014, the 

 

72 According to AEO2015, Table 42, total vehicle miles travelled by FFVs in 2016 will be about 7.95% of all lightduty gasoline-powered vehicles, equivalent to about 10.9 bill gal of E10 or 13.9 bill gal of E85.

73

 A complete list of biodiesel plants and their capacities as of 2-6-13 has been placed in the docket. We are not 

aware of significant changes to the industry profile since this list was compiled.

74 1.46 bill gal represents total domestic production of both D4 biodiesel and renewable diesel.

75 USDA Economic Research Service, Oil Crops Yearbook, Table 5, "Soybean oil: Supply, disappearance, and 

price", updated 3/30/2015. Assumes 7.68 lb/gal.

76 Render Magazine, April 2015. Table 2. Assumes 7.68 lb/gal.

Commented [OMB27]: Writing “obtaining a bargain” suggests 

that E85 must be somewhat under-priced relative to E10 on an 

energy-equivalent basis. That needn’t be the case to cause a lot of 

consumption.

Response: Text modified.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 62 of 122

market supplied about 300 million gallons of renewable diesel. Even if there were no renewable 

diesel, 2.3 billion gallons of biodiesel would represent less than 4% of the nationwide pool of 

diesel fuel in 2016. Because essentially all engine manufacturer warranties permit up to 5% 

biodiesel to be used in their engines, and most medium and heavy-duty engine manufacturers 

warrant the use of blends up to B20 in their more recent models77, the use of biodiesel in 4% of 

the overall diesel pool should be possible from a consumption viewpoint. For instance, most 

diesel fuel could contain 5% biodiesel while still allowing some diesel fuel to contain no 

biodiesel to accommodate that used in northern states during the coldest months of the year. 

Also, B20 could be used in a number of centrally-fuelled fleets composed of newer engines 

without violating manufacturer warranties, and additional volumes of biodiesel could be used in 

heating oil. It is reasonable to expect that the infrastructure that already exists to distribute and 

blend such fuels could be expanded to accommodate this additional volume in the time available.

While the scenarios in Table II.D.2-2 are intended to demonstrate the flexibility that the 

market has to respond to the volumes we are proposing, and indeed many additional scenarios 

could be generated, we do not believe that all scenarios are equally likely. Certainly some are 

more likely than others. However, we are not in a position to identify those that are most likely 

and we are not in a position to predict what will actually occur. In particular, those scenarios that 

represent reliance on one source without taking advantage of supply from other sources are, we 

believe, least likely to occur. 

The market can be expected to choose the lowest cost path to compliance, but regulated 

parties may also respond to the standards we set with investments in production, distribution, and 

consumption infrastructure that is focused on longer term growth. Such investments could result 

in the selection of higher cost options in the near term, but would enable lower costs in the 

longer term. Other activities that result in more favorable pricing between renewable fuels and 

fossil-based fuels will also play a role in determining the actual mix of types and amounts of 

biofuels used to meet the final standards, and such activities cannot be predicted. Because of 

these complexities in market dynamics, we do not believe it would be appropriate to identify a 

specific scenario from Table II.D.2-2 as being most representative of how the market will 

respond to the proposed volume requirements. 

Further, it would be inappropriate to construct new scenarios based on the highest 

volumes in each category that are shown in Table II.D.2-2 in order to argue for higher volume 

requirements than we have proposed. Doing so would presume that the specific volumes for 

each type of renewable fuel, and thus the underlying scenarios, are all equally likely or equally 

achievable. We have more confidence in the ability of the market to achieve 3.40 billion gallons 

of advanced biofuel through some combination of different types of renewable fuel than we have 

in the ability of the market to achieve a specific level of, say, BBD. Thus, for instance, while the 

highest BBD volume shown in Table II.D.2-2 is 2,131 million gallons, we are not able to say 

whether this specific level of BBD is one that the market could be expected to achieve in 2016, 

notwithstanding our belief that such volumes are theoretically possible as described earlier. The 

same is true for the highest level of E85 shown in Table II.D.2-2 of 600 million gallons, or the 

highest level of sugarcane ethanol of 433 million gallons. In addition, the consumption of each 

fuel in Table II.D.2-2 is not independent of the consumption of the other fuels in the table. For 

 

77 "OEM Support," fact sheet from National Biodiesel Board, August 2014.

Commented [OMB28]: The rest of the paragraph appears to 

assume that the consumption of each fuel is independent of the 

consumption of the other fuels. This is the case for biodiesel.

Response: Text changed as suggested.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 63 of 122

example, greater BBD production reduces the likelihood of large imports of palm biodiesel 

because these two fuels compete against one another. The probability that the upper limits of all 

sources shown in Table II.D.2-2 could be achieved simultaneously is extremely unlikely.

The range of options available to the market to attain compliance with the proposed 

volume requirements provide us with confidence that they are achievable. Nevertheless, we 

recognize that to the extent that the proposed waivers rely on a finding of "inadequate domestic 

supply", our objective is to set the volume requirements as precisely as possible at the 

intersection between an "inadequate supply" and supply that is adequate. Given the complexities 

of the fuels market, this is a very challenging task, and one that necessarily involves considerable 

judgment. Based on our assessment of both the current capabilities of the industry and the power 

of the market to respond to ambitious volume requirements, we believe that our proposed 

volumes are the best possible estimate of the intersection between "inadequate supply" and 

supply that is adequate. 

Because the standards that we are proposing would compel the market to supply higher 

volumes than would occur in the absence of an RFS program and indeed higher volumes than are 

currently being supplied, RIN prices are likely to be higher than historical levels. RIN price 

increases are an expected market response to an increased renewable fuel mandate that is 

pushing volumes beyond levels that the market would otherwise use. Furthermore, high RIN 

prices help to promote growth in renewable fuel supply. For instance, higher RIN prices would 

likely increase the incentive to import renewable fuels. Both ethanol and biodiesel/renewable 

diesel worldwide could be diverted from their current markets given a sufficiently high RIN 

price. High RIN prices can also provide the potential for reductions in the retail selling prices of 

E85 and E15 if distributors, blenders, and retailers pass the value of those RINs to end users. 

Finally, sustained high RIN prices create the incentives needed to spur investment in new 

technologies and production capacity, a critical need if the market is going to continue expanding 

in future years according to Congress' intentions.

Given the variability in potential compliance scenarios that exists, we believe that 

regulated parties have the ability to meet the proposed standards for 2016. Stakeholders have the 

ability to overcome market barriers to expanded use of renewable fuels, making the standards we 

are proposing today attainable. Potential actions that stakeholders can take include:

• Working with vehicle manufacturers to increase the number of FFVs in the fleet

• Increasing the number of retail stations offering E15 and E85 through direct 

installation of new equipment or providing grants to retail owners, and locating 

those stations offering E15/E85 closest to higher populations of vehicles than can 

use those fuels

• Developing contractual mechanisms to ensure favorable pricing of E15 and E85 at 

retail compared to E10 to boost sales volumes

• Increased production and/or imports of non-ethanol renewable fuels (e.g., greater 

production of drop-in biofuels)

• Expanded co-production of non-ethanol renewable fuels with petroleum at new 

and existing facilities

Commented [OMB29]: Consider cutting or de-emphasizing this 

example about increased imports.

Response: The reason for deleting this text isn't clear. Text 

modified.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 64 of 122

Finally, the RFS program contains two other provisions that provide additional flexibility 

to obligated parties in the event that they choose not to invest in increasing the supply of 

renewable fuels. The first is the option to carry a deficit into 2017. This option would provide 

the industry additional time to increase supply. The second available flexibility is carryover 

RINs, discussed in more detail in Section II.F. 

E. Treatment of Carryover RINs

Neither the statute nor EPA regulations specify how or whether EPA should consider the 

availability of carryover RINs in exercising its waiver authorities either in the standard-setting 

context or in response to petitions for a waiver during a compliance year. As described in the 

2007 rulemaking establishing the RFS regulatory program,78 carryover RINs are intended to 

provide flexibility in the face of a variety of circumstances that could limit the availability of 

RINs, including weather-related damage to renewable fuel feedstocks and other circumstances 

affecting the supply of renewable fuel that is needed to meet the standards. In the 2010 – 2012 

time period, obligated parties collectively surpassed the RFS renewable fuel blending 

requirements, and were able to accumulate 2.6 billion carryover RINs.

The potential role of carryover RINs in minimizing waivers of the statutory applicable 

volume targets was first addressed in the context of the rule establishing RFS standards for 2013. 

In the context of that rulemaking, we estimated that 14.5 billion gallons of ethanol would be 

needed to meet the total statutory total renewable fuel volume target of 16.55 billion gallons, 

assuming that no BBD was produced above the 1.28 billion gallons required by the BBD 

standard. We also determined that the total amount of ethanol the market could absorb as E10 in 

2013 was 13.1 billion gallons, leaving a potential gap of 1.4 billion gallons. We then described 

how BBD production in excess of the BBD standard, increased production of other non-ethanol 

renewable fuels, and use of E85 could contribute to the needed gallons. We also pointed out that 

about 2.6 billion carryover RINs would be available in 2013, which was more than enough to 

cover the potential gap of 1.4 billion gallons if other approaches to compliance were not realized. 

We decided, therefore, that a waiver of the statutory applicable volume of total renewable fuel 

was not needed in 2013. 79 Our approach was challenged in court, and upheld in Monroe Energy 

v. EPA.

80

We are not now in a position to confidently assess the volume of carryover RINs 

currently available, since obligated parties and exporters have not yet submitted their compliance

demonstrations for 2013. However, based on the number of RINs generated in 2013 and 

available data on renewable fuel exports and RIN retirements in 2013, we estimate that 800 

million carryover RINs will need to be used for compliance with the 2013 RFS standards. This 

will reduce the bank of carryover RINs to approximately 1.8 billion RINs. For purposes of our 

proposed volume requirements for 2014, 2015, and 2016, we considered whether some specific 

number of carryover RINs below the current level of 1.8 billion would be sufficient for the 

critical compliance flexibility, market liquidity, and program buffer functions served by 

 

78 72 FR 23900, May 1, 2007.

79 78 FR 49794, August 15, 2013.

80 Monroe Energy v. EPA, 750 F.3d 909 (D.C. Cir. 2014). 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 65 of 122

carryover RINs, such that we could effectively require some use of carryover RINs by setting 

applicable volume requirements at levels higher than could be achieved through actual renewable 

fuel blending and use in these years.

We believe, however, that it would be prudent, and would advance the long-term 

objectives of the Act, not to set standards for 2014, 2015, and 2016 so as to intentionally draw 

down the current bank of carryover RINs. We believe that the availability of this full volume of 

carryover RINs will be important for both obligated parties and the RFS program itself in 

addressing significant future uncertainties and challenges, particularly since compliance with the 

proposed advanced and total renewable fuel standards is expected to require significant progress 

in growing and sustaining production of advanced biofuels and using ethanol in quantities that 

exceed the E10 blendwall.81

Although the issue in this proposed rulemaking is whether to waive statutory applicable 

volumes in the context of establishing new standards, we note that the availability of carryover 

RINs is an important factor in deciding whether to waive standards already in effect. Each year, 

obligated parties make significant efforts to comply with RFS requirements, and participants in 

the renewable fuels market make significant efforts to supply the renewable fuels needed for 

compliance. Changing those requirements during the compliance year to address unforeseen 

supply disruptions or for other reasons would be disruptive to businesses and therefore to the 

long-term objectives of the RFS program to provide incentives to industry to increase the 

production and use of renewable fuels. Preserving the current bank of carryover RINs at this time 

will reduce the risk that waivers may be needed after the 2014, 2015 and 2016 standards are in 

place to address unforeseen circumstances. 82

In addition, the RIN system was developed in part to implement the statutory requirement 

for obligated parties to earn “credits” for overcompliance that could be used in another year or 

sold to others. The RFS standards are a mandate with serious ramifications to obligated parties 

that fail to comply. As intended by Congress, carryover RINs help provide compliance 

flexibility. We appreciate that obligated parties make individual decisions about whether and 

how many RINs to acquire for their compliance management purposes, and that a decision by 

EPA to effectively “draw down” their bank of carryover RINs in calculating future volume 

requirements may decrease their compliance flexibility, increase their risk of noncompliance, 

and affect their incentives to build-up carryover RIN balances. We understand that obligated 

parties in many instances acquire RINs for carryover to provide just that kind of flexibility, and 

that assuming use of carryover RINs in setting the RFS standards may in the future discourage 

that kind of responsible behavior.

 

81 As previously explained in this action, the “E10 blendwall” is the volume of ethanol that can be consumed 

domestically as E10. We expect that compliance with the total renewable fuel volume requirements will require 

more ethanol use than is possible through widespread use of E10.

82 The statute and EPA’s regulations provide another means of compliance flexibility – obligated parties may carry 

forward a compliance deficit for one year. But the statute and regulations also require that any deficit be paid back in 

the following year and that the standards applicable in the following year be met. Given that our proposed standards 

increase year to year, it may be increasingly difficult for an obligated party to both repay a deficit and meet higher 

standards in the same year. Thus, this provision does not replace carryover RINs as an important compliance tool to 

address increasingly challenging requirements and unforeseen circumstances.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 66 of 122

Finally, we appreciate that with the increasing renewable fuel volume targets established 

in the Act for the future, combined with the projected decreasing use of gasoline and diesel fuel 

resulting from more stringent vehicle emission and mileage requirements, the ability of obligated 

parties to increase the bank of carryover RINs through additional overcompliance in the future 

will be much more difficult. Therefore, any draw-down in the bank of carryover RINs required 

through setting volume requirements at levels higher than can be achieved through actual 

renewable fuel use could not likely be reversed in the future. Given the importance of carryover 

RINs noted above, this consideration suggests that a deliberate draw-down of the RIN bank 

would not be prudent.

For all of the reasons noted above, EPA is not proposing to set renewable fuel volume 

requirements at levels that would envision the draw-down in the bank of carryover RINs. We 

welcome comments on this analysis and thoughts on how EPA should consider carryover RINs 

in establishing renewable fuel volume requirements for 2014, 2015, and 2016.

F. Impacts of Proposed Standards on Costs

In the following sections we provide cost estimates for three illustrative scenarios – one, 

if the entire change in the advanced standards is met with soybean oil BBD; two, if the entire 

change in the advanced standards is met with sugarcane ethanol from Brazil; and three, if the 

entire change in the conventional standards (i.e., non-advanced) is met with corn ethanol. While 

a variety of biofuels could help fulfill the advanced standard beyond soybean oil BBD and 

sugarcane ethanol from Brazil, these two biofuels have been most widely used in the past. We 

believe these scenarios provide illustrative costs of meeting the proposed standards. For this 

analysis, we estimate the per gallon costs of producing biodiesel, sugarcane ethanol and corn 

ethanol relative to the petroleum fuel they replace at the wholesale level, then multiply these per 

gallon costs by the applicable volumes established in this rule for the advanced and total 

renewable fuel categories. More background information on this section, including details of the 

data sources used and assumptions made for each of the scenarios, can be found in a 

memorandum submitted to the docket.83

A number of different scenarios could be considered the “baseline” for the assessment of 

the costs of this rule. For the purposes of showing illustrative overall costs of this rulemaking, 

we are proposing to use the preceding year’s standard as the baseline (e.g., the baseline for the 

2016 advanced standard is the proposed applicable 2015 advanced standard, etc), an approach 

consistent with past practices. 

The 2014 standards were not finalized in 2014 so it is difficult to estimate what their 

costs may have been. Market participants may have anticipated a final 2014 standard would 

require higher levels of biofuels than the market would provide in the absence of the standard, 

which would contribute to the positive RIN prices witnessed in 2014. In contrast, the 2014 

standards being proposed in this rulemaking represent reductions in both the advanced and 

conventional volumes compared to the 2013 standards, suggesting a reduction in costs for this 

 

83 "Illustrative Costs Impact of the Proposed Annual RFS2 Standards, 2014-2017," Memorandum from Michael 

Shelby to EPA Air Docket EPA-HQ-OAR-2015-0111.

Commented [OMB30]: Suggest adding a few caveats to these 

calculations. They do not account for the fact that the marginal cost 

of producing the renewable fuels increases with cumulative 

production—i.e., supply curves are upward sloping. Also the 

calculations do not account for any infrastructure investments. 

Addressing both of these factors would increase the estimated costs. 

It would be difficult to account for them in the NPRM, but it should 

be acknowledged that these estimates are very rough.

Response: We do in fact include estimations of upward price 

pressure on soybean oil and corn feedstocks in the soy oil BBD and 

corn ethanol scenario’s respectively. Please see the memo to the 

docket for detail on this. Given the short time frame for conducting 

this analysis, we did not estimate infrastructure costs. We added text 

to the Preamble stating that we are not assessing infrastructure costs.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 67 of 122

proposed 2014 rule compared to the 2013 standards. Finally, the 2014 standards being proposed 

in this rulemaking are based on actual production levels in 2014, suggesting that the 2014 

standards we are proposing are what would have happened in the marketplace absent a 

rulemaking. Given the complexity of this issue, we have not attempted to estimate the costs of 

the 2014 standards. Therefore, we only provide illustrative costs for the 2015 and 2016 advanced 

biofuel standards and total renewable fuel standards.

Because we are focusing on the wholesale level in each of the three scenarios, these 

comparisons do not consider taxes, retail margins, and any other costs or transfers that occur at 

or after the point of blending (i.e., transfers are payments within society and not additional 

costs). Further, we do not attempt to estimate potential costs related to infrastructure expansion 

with increased biofuel volumes. In addition, because more ethanol gallons must be consumed to 

go the same distance as gasoline and more biomass-based diesel must be consumed to go the 

same distance as petroleum diesel due to each of the biofuels’ lesser energy content, we consider 

the costs of ethanol and biomass-based diesel on an energy equivalent basis to their petroleum 

replacements (i.e., per energy equivalent gallon (EEG)).

For our first scenario, we consider the costs of soybean-based biodiesel to meet the entire 

change in the advanced standards. The proposed 2014 standard is being set at the actual level of 

advanced biofuels produced in 2014, 2.68 billion gallons. The total advanced biofuel volumes 

are being proposed for 2015 at 2.90 billion gallons and 3.40 billion gallons in 2016. Comparing 

the difference in costs between biomass-based diesel and petroleum-based diesel, we estimate a 

cost difference that ranges from $1.48 to $1.56/EEG in 2015 and from $1.45 to $2.09/EEG in 

2016. Multiplying the per gallon cost estimates by the volume of fuel displaced by the advanced 

standard, on an energy equivalent basis, results in an overall annual cost of $218 to $229 million 

in 2015 and $483 to $697 million in 2016. 

For our second scenario, we provide illustrative estimates of what the potential costs 

might be if all additional volumes used to meet the 2015 and 2016 advanced biofuel standards 

above the previous year’s advanced biofuel standard are met with imported Brazilian sugarcane 

ethanol. Comparing the difference in costs between sugarcane ethanol and the wholesale 

gasoline price on a per gallon basis, we estimate cost differences that range from $1.04 to 

$2.80/EEG in 2015 and from $0.85 to $2.61/EEG in 2016. Taking the difference in per gallon 

costs for sugarcane ethanol and the wholesale gasoline price and multiplying that by the volume 

of petroleum displaced on an energy equivalent basis from the advanced standard results in an 

overall estimated annual cost of $228 to $615 million for 2015 and $424 to $1,303 million for 

2016.

Commented [OMB31]: Would like to see EPA’s cost memo to 

the document and discuss further. Find it hard to say that the 2014 

standards are a no-cost standard or cost savings rule. We agree that 

the issues are complex and depending on the baseline chosen, the 

costs and benefit estimates will vary.

We suggest adding 2014 as the baseline cost estimate for both 2015 

and 2016 as it would seem to represent what the market would have 

done absent the standards. 

Response: The Memo to the Docket on the cost analysis features a 

discussion of our choice of a baseline, which was discussed with 

OMB on multiple occasions. 

Commented [OMB32]: Why is there a range of estimates rather 

than a point estimate? What source of uncertainty does this range 

reflect? Please explain the rationale.

Response: We include a range of estimates in an attempt to capture 

uncertainty with feedstock and production costs. Please see the 

memo to the docket for more information on the ranges. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 68 of 122

For the third scenario, we assess the difference in cost associated with a change in the 

implied volumes available for conventional (i.e., non-advanced) biofuels for 2015 and 2016. We 

provide illustrative estimates of what the potential costs might be if corn ethanol is used to meet 

the entire conventional renewable fuel volumes. The implied 2014 volume allowance for 

conventional renewable fuel is 13.25 billion gallons, 13.40 billion gallons in 2015, and 14.00 

billion gallons in 2016. If corn ethanol is used to meet the difference between the implied 2014 

to 2015 and 2015 to 2016 conventional renewable fuel volume increases, an increase of 150 

million gallons of corn ethanol would be required in 2015 and 600 million gallons in 2016. 

Comparing the difference in costs between corn ethanol and the wholesale gasoline price, we 

estimate cost differences that range from $0.81 to $0.92/EEG in 2015 and from $0.58 to 

$0.90/EEG in 2016. Taking the difference in per gallon costs between the corn ethanol and the 

wholesale gasoline price estimates and multiplying that by the volume of petroleum displaced on 

an energy equivalent basis by the conventional standard results in an overall estimated annual 

cost of $122 to $138 million for 2015 and $348 to $541 million for 2016. 

An alternative way of looking at the illustrative costs in 2016, given the fact that this is a 

three year rule and the 2015 standards may change, is to consider a volume change relative to the 

2014 proposed standard. The cost estimate for meeting the 2016 standard would range from 

$695 to $1,003 million if the entire advanced standard were to be met with soybean-based diesel. 

The cost estimates would range from $610 to $1,877 million if the entire advanced standard were 

met with sugarcane ethanol. The cost estimate for meeting the entire conventional standard in 

2016 with corn ethanol would range from $435 to $676 million. 

The short time frame provided for the annual renewable fuel rule process does not allow 

sufficient time for EPA to conduct a comprehensive analysis of the benefits of the 2015 and 2016 

standards and the statute does not require it. Moreover, as discussed in the proposed rule 

establishing the 1.28 billion gallon requirement for BBD in 2013, the costs and benefits of the 

RFS program as a whole are best assessed when the program is fully mature in 2022.84 We 

continue to believe that this is the case, as the annual standard-setting process encourages 

consideration of the program on a piecemeal (i.e., year to year) basis, which may not reflect the 

long-term economic effects of the program. Therefore, for the purpose of this annual 

rulemaking, we have not quantified benefits for the 2015 and 2016 proposed standards. We do 

not have a quantified estimate of the GHG impacts for the single year (e.g., 2015, 2016). When 

the RFS program is fully phased in, the program will result in considerable volumes of 

renewable fuels that will reduce GHG emissions in comparison to the fossil fuels which they 

replace. EPA estimated greenhouse gas, energy security and air quality impacts and benefits for 

the 2010 Proposed RFS Rule for 2022. 

 

84 77 FR 59477, September 27, 2012.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 69 of 122

III. Proposed Biomass-Based Diesel Volumes for 2014 -2017

In this section we discuss the proposed biomass-based diesel (BBD) applicable volumes 

for 2014 through 2017. It is important to note that the BBD volume requirement is nested within 

both the advanced biofuel and the total renewable fuel volume requirements; so that any 

“excess” BBD produced beyond the mandated BBD volume can be used to satisfy both these 

other applicable volume requirements. Therefore, in assessing what is the appropriate applicable 

BBD volume for 2014-2017, it is important to consider not only the volume for BBD, which 

effectively guarantees a minimum amount that will be produced, but also the advanced biofuel 

and total renewable fuel volume requirements, which historically have played a significant role 

in determining demand for BBD as well.

In proposing an applicable volume for 2017 we are addressing the volume requirement 

but not the percent standards, in order to satisfy a statutory requirement that when EPA sets the 

applicable volumes in the absence of a statutory volume target, that we do so no later than 14 

months before the first year for which such applicable volume will apply.85 Since the statute 

does not specify a BBD volume target for 2017, we plan to finalize the applicable volume by this 

November. Since the statute includes applicable volume targets for advanced biofuel, total 

renewable fuel and cellulosic biofuel for 2017, we are not required to establish 2017 applicable 

volumes for them at this time. We believe it is prudent to delay establishing such volume 

targets until the statutory deadline of November 30, 2016, to enable EPA to use the most up-todate information prior to the start of the calendar year. 

A. Statutory Requirements.

The statute establishes applicable volume targets for years through 2022 for cellulosic 

biofuel, advanced biofuel, and total renewable fuel. For BBD, applicable volume targets are 

specified in the statute only through 2012. For years after those for which applicable volumes 

are specified in the statute, EPA is required under CAA section 211(o)(2)(B)(ii) to determine the 

applicable volume, in coordination with the Secretary of Energy and the Secretary of 

Agriculture, based on a review of the implementation of the program during calendar years for 

which the statute specifies the applicable volumes and an analysis of the following factors:

1. The impact of the production and use of renewable fuels on the environment, 

including on air quality, climate change, conversion of wetlands, ecosystems, 

wildlife habitat, water quality, and water supply;

2. The impact of renewable fuels on the energy security of the United States;

3. The expected annual rate of future commercial production of renewable fuels, 

including advanced biofuels in each category (cellulosic biofuel and BBD);

4. The impact of renewable fuels on the infrastructure of the United States, including 

deliverability of materials, goods, and products other than renewable fuel, and the 

sufficiency of infrastructure to deliver and use renewable fuel;

5. The impact of the use of renewable fuels on the cost to consumers of 

transportation fuel and on the cost to transport goods; and

 

85 CAA 211(o)(2)(B)(ii)

Commented [OMB33]: Imports of biomass-based diesel (BBD) 

became a significant contributor to the BBD and undifferentiated 

non-cellulosic advanced fuels requirements in 2013. That year, there 

was a very large increase in biodiesel imports from Argentina and 

Indonesia, but rising imports from Europe and Canada also 

contributed. For the first time, large imports of NesteOil renewable 

diesel also appeared in the market. The risk we see is that imported 

BBD, especially biodiesel from Argentina, can become an even 

larger contributor fulfilling the same requirements as domesticallyproduced biodiesel and renewable diesel. 

With the likelihood of increasing BBD imports, we would like to get 

a better understanding of how foreign supplies of biodiesel and 

renewable diesel are factored into EPA's determination of applicable 

volumes of BBD for 2015-17. While EPA includes imports in their 

analysis for setting the BBD requirements, import volumes are not 

broken out from total production, i.e., domestic production and 

imports are aggregated. Specifically, we would like to know if the 

BBD volume requirements set by EPA will accommodate growth for 

both domestic and foreign production or will domestic production be 

pushed out? Furthermore, we would like to know what sources 

were used to track 2012-14 and project 2015-17 biodiesel and 

renewable diesel imports.

Response: We have not tried to estimate the projected volumes of 

imported BBD as this will depend on a number of unknown factors 

including the production volumes in other countries, demand for 

BBD by countries other than the US and the relative prices of 

imported versus domestically produced BBD. We note, however, 

that in previous years the demand for BBD in the US exceeded the 

level required to comply with the BBD volume requirements in 

those years and also that BBD production was exported (e.g., 188 

million gallons in 2013). These factors along with the fact that the 

BBD required volume is increasing each year suggest that market for 

both domestic and imported BBD is robust and will continue to 

grow.

In general we use EMTS data for all historical volumes, including 

imports. In cases wherein EMTS cannot provide relevant data (e.g. 

exports for 2013 and 2014) we use EIA data.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 70 of 122

6. The impact of the use of renewable fuels on other factors, including job creation, 

the price and supply of agricultural commodities, rural economic development, 

and food prices.

The statute also specifies that the applicable volume for BBD cannot be less than the applicable 

volume for calendar year 2012, which is 1.0 billion gallons. The statute does not, however, 

establish any other numeric criteria, or provide any guidance on how the EPA should weigh the 

importance of the often competing factors, and the overarching goals of the statute when the 

EPA sets the applicable volumes in years after those for which the statute specifies applicable 

volumes. In the period 2013-2022, the statute specifies increasing applicable volumes of 

cellulosic biofuel, advanced biofuel, and total renewable fuel, but provides no guidance on the 

extent to which BBD volumes should grow.

B. BBD Production and Compliance in Previous Years

Due to the delayed issuance of the major regulatory revisions necessary to implement 

changes enacted through the Energy Independence and Security Act of 2007, EPA established a 

2010 BBD standard that reflected volume requirements for both 2009 and 2010, and allowed 

RINs generated as early as 2008 to be used for compliance with that standard. Given the 

complexity associated with the 2010 BBD standard, we begin our review of implementation of 

the program with the 2011 compliance year. Reviewing the implementation of the BBD 

standards in previous years is required by the CAA, and also provides insight into the capabilities 

of the BBD industry to produce and import fuel. It also helps us to understand what factors, 

beyond the BBD standard, may incentivize the production and import of BBD. The number of 

BBD RINs generated, along with the number of RINs retired for reasons other than compliance 

with the annual BBD standards, are shown in Table III.B-1 below.

Table III.B-1

Biomass-Based RIN Generation and Standards in 2011-2013 (million gallons)86

BBD 

RINs 

Generated

Exported 

BBD 

(RINs)

BBD RINs Retired, 

Non-Compliance 

Reasons

Available 

BBD RINs

BBD 

Standard 

(Gallons)

BBD 

Standard 

(RINs)87

2011 1,692 110 97 1,484 800 1,200

2012 1,737 193 80 1,465 1,000 1,500

2013 2,739 295 94 2,350 1,280 1,920

In reviewing historical BBD RIN generation and use we see that the number of RINs available 

for compliance purposes exceeded the BBD standard by a significant margin in 2011 and 2013. 

Additional demand for biodiesel may have been driven by a number of factors, including 

demand to satisfy the advanced biofuel and total renewable fuels standards, the biodiesel tax 

 

86 Net BBD RINs Generated and BBD RINs Retired for Non-Compliance Reasons information from EMTS. 

Biodiesel Export information from EIA 

(http://www.eia.gov/dnav/pet/pet_move_expc_a_EPOORDB_EEX_mbbl_a.htm)

87 Each gallon of biodiesel generates 1.5 RINs due to its higher energy content per gallon than ethanol. Renewable 

diesel generates between 1.5 and 1.7 RINs per gallon.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 71 of 122

credit, and favorable blending economics. In 2012 the available BBD RINs were slightly less 

than the BBD standard. There are many reasons this may have been the case, including the lapse 

of the biodiesel tax credit at the end of 2011.88

While total BBD volume produced and imported in 2013 was 1.79 billion gallons (2.74 

billion BBD RINs), it is also instructive to review the data on volumes that were produced 

domestically, imported, exported, and retired for reasons other than compliance. Total domestic 

production of BBD was 1.45 billion gallons (2.19 billion RINs), while imports resulted in an 

additional 0.34 billion gallons (0.55 billion RINs).89 This volume was not entirely available for 

compliance purposes, however, since some of the BBD produced domestically was exported and 

some RINs had to be retired for purposes other than compliance. Based on EIA export data, we 

estimate that 0.196 billion gallons (0.295 billion RINs) of BBD was exported in 2013.90 A 

corresponding number of BBD RINs will eventually be retired by exporters, as required by the 

RFS regulations, and therefore are not available for use by refiners and importers in satisfying 

their 2013 obligations.91 Additionally, 0.094 billion BBD RINs were retired for reasons other 

than compliance, such as volume error corrections, contaminated or spoiled fuel, or fuel used for 

purposes other than transportation fuel, heating oil, or jet fuel. Based on this information, the 

actual amount of BBD available for compliance in 2013 totaled 2.36 billion RINs, representing 

approximately 1.55 billion gallons of BBD. This is 430 million more BBD RINs than were 

required for compliance with the BBD standard in 2013.

C. Applicable Volume of Biomass-Based Diesel for 2014

For 2014 we are proposing to base the applicable volume requirements on the number of 

RINs supplied in 2014. We propose to define supply for 2014 as the number of BBD RINs that 

were available for compliance in 2014. Supply would thus include RINs that were generated for 

renewable fuel produced or imported in 2014 as recorded in the EMTS, minus any RINs that 

have already been retired or would be expected to be retired to cover exports of renewable fuels 

or for any purpose other than compliance. RINs that have already been retired for such 

circumstances as RINs being invalid, spills, corrected and replaced RINs, etc. are recorded in 

 

88 The biodiesel tax credit was reauthorized in January 2013. It applied retroactively for 2012 and for the remainder 

of 2013. It was once again extended in December 2014 through the end of 2014.

89 “Summary of data on 2013 RIN generation and consumption”, memorandum from David Korotney to EPA Air 

Docket EPA-HQ-OAR-2015-0111.

According to the U.S. Energy Information Administration (EIA), Annual import data for BBD (Biodiesel and 

Renewable diesel countries contributing to BBD imports (million gallons) were Argentina=132, Aruba = 6, 

Australia= 1, Belgium=5, Canada= 45, Finland = 36, Germany = 61, Indonesia=52, Netherlands = 8, Norway = 9, 

South Korea = 20, Panama=3, Singapore = 164, Spain = 4, Taiwan=1. (See 

http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_EPOORDB_im0_mbbl_a.htm and 

http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_EPOORDO_im0_mbbl_a.htm (last accessed April 6, 

2015).

Note that not all of the imported volumes generated BBD (D4) RINs. Some of this volume may have generated 

Renewable Fuel (D6) RINs or no RINs at all. 

90 U.S. Energy Information Administration (EIA). Annual export data for Biodiesel (2013). See 

http://www.eia.gov/dnav/pet/pet_move_expc_a_EPOORDB_EEX_mbbl_a.htm (last accessed April 6, 2015).

91 EMTS includes data on RINs retired for export, but the values are incomplete as of this writing since the 2013 

compliance deadline has not yet passed.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 72 of 122

EMTS on an ongoing basis. However, complete information on RINs that are retired to cover 

exports of renewable fuel is not available through EMTS until after the compliance 

demonstration deadline for a given calendar year has passed. Since compliance cannot occur 

until the standards are set, we propose to use biodiesel export information from EIA in 2014 to 

estimate the number of 2014 BBD RINs that will be retired to satisfy obligations associated with 

exported BBD.

Actual supply of BBD in 2014 is shown in Table III.C-1 below. Further details are 

provided in a memorandum to the docket.92 Since EIA does not distinguish exports by D code, 

we assumed that all biodiesel exports represent D4 BBD. We expect that any errors introduced 

by this assumption will be very small.

Table III.C-1

2014 Actual Supply of Biomass-Based Diesel

Domestic 

production and 

imports

Exports

BBD RINs Retired, 

Non-Compliance 

Reasons

Net supply

Million RINs 2,709 124 82 2,502

Million gallons 1,763 83 48 1,631

While the actual physical volume of D4 BBD supplied in 2014 was 1.63 billion gallons, we have 

used a physical volume of 1.67 billion gallons as the 2014 volume requirement because the 

formula for calculating the BBD percentage standard in 40 CFR 80.1405(c) includes a factor of 

1.5, presuming that all BBD is biodiesel. In reality, a significant portion of BBD in 2014 was 

renewable diesel (328 million gallons), which generally has an equivalence value of 1.7 rather 

than 1.5. The use of a physical volume of 1.67 billion gallons ensures that the applicable 

percentage standard for BBD accounts for the higher equivalence value of the volume of 

renewable diesel produced and imported in 2014 and results in a requirement for 2.50 billion 

RINs, consistent with supply.

D. Determination of Applicable Volume of Biomass-Based Diesel for 2015 – 2017

The statute requires that, in determining the applicable volume of BBD, we review the 

implementation of the program in previous years. Based on the fact that the industry made more 

BBD available in 2011 and 2013 than volume requirements for those years, we conclude that the 

BBD standard is not the sole driver for the amount of BBD produced or imported into the United 

States.93 We believe that the advanced biofuel and total renewable fuel standards are significant 

factors in the amount of biodiesel produced and imported into the United States. We also believe 

that the advanced and/or total renewable fuel standards can continue to drive BBD supply in 

2015 – 2017. As described in more detail in Section II.C, we are proposing volumes of advanced 

biofuel and total renewable fuel for 2015-2016 that require substantial growth beyond the 

 

92

"Summary of data on 2014 RIN Generation and Consumption," memorandum from David Korotney to EPA 

docket EPA-HQ-OAR-2015-0111.

93 The blenders tax credit for biodiesel likely also incentivized additional biodiesel blending in these years
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 73 of 122

volumes supplied in 2014. We expect that the advanced biofuel and total renewable fuel 

standards will continue to provide incentives for BBD supply that exceeds the BBD standard.

However, we recognize that in addition to being a component of advanced biofuel and 

total renewable fuel, Congress also intended that BBD have its own specific standard. Given 

that the statute requires annual increases in advanced biofuel through 2022, it may be appropriate 

for BBD to play an increasing role in supplying advanced biofuels to the market, especially in 

light of the fact that BBD does not contribute to the E10 blendwall. This proposal seeks to 

balance the goals of supporting the BBD industry and incentivizing the production of non-BBD 

advanced biofuels by providing a guaranteed, increasing market for BBD and allowing all 

advanced biofuels to compete for market share within the advanced biofuel category. In doing 

so we have considered the ability of the advanced biofuel and total renewable fuel standards to 

incentivize an increasing supply of BBD, the implementation of the RFS program to date, and 

the statutory factors listed in CAA 211(o)(2)(B) (discussed in further detail in Section III.E 

below).

1. Implication of Nested Standards

The BBD standard is nested within the advanced biofuel and total renewable fuel 

standards. This means that when an obligated party retires a BBD RIN (D4) to satisfy their 

obligation, this RIN also counts towards meeting their advanced biofuel and total renewable fuel 

obligations. It also means that obligated parties may use BBD RINs in excess of their BBD 

obligations to satisfy their advanced biofuel and total renewable fuel obligations. Higher 

advanced biofuel and total renewable fuel standards, therefore, can create demand for BBD if 

there is an insufficient supply of other advanced or conventional renewable fuels to satisfy the 

standards, or if BBD RINs can be acquired at or below the price of other advanced or 

conventional biofuel RINs.

In reviewing the implementation of the RFS program to date, it is apparent that the 

advanced and/or total renewable fuel requirements were in fact helping to provide a market for 

volumes of biodiesel above the BBD standard. Table III.D.1-1 below shows the number of BBD 

RINs generated and available for use towards demonstrating compliance94 in each year from 

2011 – 2013. As can be seen from the table, in 2011 and 2013 the number of BBD RINs 

available for use exceeds the BBD standard. In 2013 the number of advanced RINs generated 

from fuels other than BBD is not large enough to satisfy the implied standard for “other 

advanced” biofuel (advanced biofuel that is not BBD or cellulosic biofuel). In fact, the amount 

by which the available BBD RINs exceed the BBD standard (421 million RINs) is slightly larger 

than the amount by which the non-BBD RINs fall short of the “other advanced” biofuel implied 

standard (285 million RINs). This supports the theory that the advanced biofuel standard

provided an incentive to support BBD production and import into the United States in excess of 

the BBD standard.

 

94 RINs available for use is number of RINs generated minus the number of RINs retired (or that we anticipate will 

be retired) for any reason other than a demonstration of annual compliance, such as RINs retired for exported 

biofuel, volume error corrections, enforcement actions, fuel used in applications other than transportation fuel, 

heating oil, or jet fuel, etc.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 74 of 122

Table III.D.1-1

Biomass-Based Diesel and Advanced Biofuel RIN Generation and Standards (million gallons)

Available BBD 

RINs

BBD Standard 

(RINs)

Available NonBiodiesel 

Advanced Biofuel

“Other” Advanced 

Biofuel 

Requirement

2011 1,484 1,200 225 150

2012 1,465 1,500 597 500

2013 2,360 1,920 552 830

The prices paid for advanced biofuel and BBD RINs also support the theory that 

advanced biofuel and/or total renewable fuel standards provided sufficient incentive for 

additional biodiesel production and import. Because the BBD standard is nested within the 

advanced biofuel and total renewable fuel standards, we would expect the price of BBD RINs to 

exceed that of advanced and renewable RINs. If, however, BBD RINs are being used by 

obligated parties to satisfy their advanced biofuel and/or total renewable fuel obligations, above 

and beyond the BBD standard, we would expect the price of renewable fuel, advanced biofuel, 

and BBD RINs to converge. When examining RIN prices data from 2011 through 2014, shown 

in Figure III.D.1-1 below, we see that until January 2013 there is a consistent price differential 

between the price of BBD and the relatively cheaper advanced biofuel and renewable fuel RINs. 

Beginning in 2013 the price of BBD RINs and advanced biofuel RINs converge, and remain at a 

similar price throughout 2014. This is more evidence that suggests that the advanced biofuel 

standard and/or total renewable fuel standard is capable of incentivizing increased production 

and importation of BBD beyond the BBD standard, and that it in fact operated in this manner in 

2013 and 2014.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 75 of 122

Figure III.D.1-1

RIN Prices: July 2011 – July 2014

Image from ICCT. Available online: http://www.theicct.org/blogs/staff/does-biodiesel-really-need-tax-credit

2. Biomass-Based Diesel as a Fraction of Advanced Biofuel

Another implication of the fact that the BBD standard is nested within the advanced 

biofuel standard is that, for any given advanced biofuel standard, the higher the BBD standard is, 

the lower the opportunity for other non-BBD fuels to compete for market share within the 

context of the advanced biofuel standard. The statutory volumes of renewable fuel established 

by Congress in CAA section 211(o)(2)(B) allow for an opportunity for other advanced biofuels 

(advanced biofuels that do not qualify as cellulosic biofuel or BBD) to be used to satisfy the 

advanced biofuel standard after the cellulosic biofuel and BBD standards have been met. This 

unspecified advanced biofuel volume starts at 0.25 billion gallons in 2013 and grows to 3.5 

billion gallons in 2022. It is, however, heavily dependent on EPA actions. Increasing the BBD 

standard above 1 billion gallons, as we did in 2013, reduces the potential market for other 

advanced biofuels to contribute towards meeting the advanced biofuel standard. Conversely, 

reducing the cellulosic biofuel standard while simultaneously maintaining the advanced biofuel 

standard (or reducing it by a lesser amount), as we have done each year since 2010, increases the 

potential market for other advanced biofuels.

Both BBD and other advanced biofuels achieve estimated greenhouse gas reductions of at 

least 50% relative to the petroleum fuels they replace. Increasing the guaranteed market for 

BBD, rather than allowing excess BBD to compete for market share with other advanced 

biofuels within the advanced biofuel standard, would likely reduce competition and thus result in 

increased costs associated with the RFS program with no additional GHG reductions. It will also 

have a negative impact on investment in the development and deployment of other advanced 

Commented [OMB34]: It is unclear how this sentence logically 

follows the previous sentence. Suggest deleting “therefore” and 

possibly the previous sentence, which doesn’t seem necessary to the 

main thrust of the paragraph.

Response: Edits incorporated.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 76 of 122

biofuels, as these fuels will have a lower potential market if the BBD standard is increased. The 

long term success of the RFS program will depend on the growth in a variety of advanced 

biofuels. The standards we set today must therefore provide an incentive for the ongoing 

research, development, and commercialization of a variety of types of advanced biofuels beyond 

just BBD. We note again, however, that allowing for a greater use of other advanced biofuels by 

setting a lower BBD standard does not limit the amount of BBD that may be used towards 

satisfying the advanced biofuel standard. If BBD can be supplied at a lower cost than other 

advanced biofuels it can – and we expect would – be used to satisfy the majority or even all of 

the unspecified volume of advanced biofuels. Allowing for a larger portion of the advanced 

biofuel standard to be unspecified, by setting a lower BBD standard, maintains an incentive for 

the development and deployment of other advanced biofuels, while at the same time allowing a 

level of competition that can reduce compliance costs while also allowing growth in the supply 

of BBD and maintaining the greenhouse gas emissions reductions achieved by the use of 

advanced biofuels in the RFS program. We believe these are important considerations in 

determining the required BBD volumes in the 2015-2017 time period, as well as in future years.

3. Ensuring Growth in Biomass-Based Diesel and Other Advanced Biofuel

While the ability of the advanced and total renewable fuel standards to incentivize 

increasing production of BBD and the desire to allow other advanced biofuels to compete with 

BBD for market share under the advanced standard suggest that a flat or even decreasing BBD 

volume requirement may be the optimal solution, these are not the only considerations. Despite 

many of these same issues being present in 2013, EPA decided to increase the BBD standard in 

2013 to 1.28 billion gallons. EPA’s decision to establish the higher 1.28 billion gallon BBD 

volume for 2013 was made against the backdrop of the BBD industry having increased 

production from about 400 million gallons in 2010 to over 1 billion gallons in 2011.95 At that 

time, we were not confident in the ability of other advanced biofuels to be able to supply all the 

necessary volume of advanced biofuel needed to offset the shortfall in cellulosic biofuel and to 

meet the statutory volume target of 2.75 billion gallons for advanced biofuel. EPA was also not 

completely confident in the ability of the BBD industry to further increase production without an 

increased BBD standard. While BBD production had performed well in 2011 and the early part 

of 2012, the biodiesel industry had gone through a period of instability in 2009 and 2010.96 

During the development of the 2013 standards rulemaking, we were also concerned that 

the cellulosic biofuel standard, also nested within the advanced biofuel requirement, was lagging 

significantly behind the 1 billion gallon statutory volume target. The shortfall in cellulosic 

biofuel volume meant that either other sources of advanced biofuel would be necessary to fulfill 

the specified volumes in the statute for the advanced biofuel standard, or EPA would need to 

waive a portion of the advanced biofuel standard. It is in this context that EPA determined that 

raising the BBD requirement to 1.28 billion gallons was appropriate. Most importantly, an 

applicable volume requirement of 1.28 billion gallons was expected to encourage continued 

investment and innovation in the BBD industry, providing necessary assurances to the industry 

 

95 77 FR 59461 col. 1, September 27, 2012. 

96 Regulations of Fuels and Fuel Additives: 2013 BBD Renewable Fuel Volume; Proposed Rule. 77 Fed. Reg. 

59458, 59460-59461. http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm (last accessed May 20, 2014).
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 77 of 122

to increase production for 2013 while also serving the long term goal of the RFS statute to 

increase volumes of advanced biofuels over time.97 

There are also advantages to increasing the BBD standard in order to help provide 

stability to the BBD industry. This industry is currently the single largest contributor to the 

advanced biofuel pool, one that to date has been largely responsible for providing the growth in 

advanced biofuels envisioned by Congress. Nevertheless, there has been variability in the 

number of biodiesel facilities in production over the last few years, as well as the percent 

utilization of individual facilities, both of which contribute uncertainty in the rate of production 

in the near future, and which can be mitigated to some degree with an increase in the BBD 

applicable volume. Increasing the BBD standard should help to provide market conditions that 

allow these BBD production facilities to operate with greater certainty. This result would be 

consistent with the goals of the Act to increase the production and use of renewable fuels.

4. Proposed Volumes for 2015 – 2017

With these considerations in mind, as well as our analysis of the factors specified in the 

statute and described below, and in coordination with the Departments of Agriculture and 

Energy, we are proposing to increase the applicable volume of BBD to 1.70 billion gallons for 

2015, and to further increase the BBD volume requirement by 0.1 billion gallons in 2016 and 

2017, respectively. We believe this proposal strikes the appropriate balance between providing a 

market environment where other advanced biofuels can compete, and achieving the benefits 

associated with increasing the required volume of BBD. Given our proposed volumes for 

advanced biofuel in these years, setting the BBD standard in this manner continues to allow a 

considerable portion of the advanced biofuel volume to be satisfied by either additional gallons 

of BBD or by other unspecified types of qualifying advanced biofuels (see Table III.D.4-1 

below). While we have not yet determined the applicable volume of advanced biofuel for 2017, 

we anticipate the continued growth in the advanced biofuel standard such that the advanced 

biofuel standard will provide an incentive for both increasing volumes of BBD and other 

advanced biofuels. We believe maintaining this unspecified or other advanced biofuel volume 

will provide the incentive for development and growth in other types of advanced biofuels. At 

the same time, allowing the portion of the advanced biofuel volume requirement that is dedicated 

to BBD to increase concurrently with the increase in the overall advanced biofuel volume 

requirement will contribute to market certainty for both the BBD industry and the renewable 

fuels program in general.

 

97 77 FR 59458, 59462 and 59483.

Commented [OMB35]: I don’t understand this argument, or the 

following sentence about uncertainty. Doesn’t the fact that the 

biodiesel industry is larger than other advance biofuel industries 

suggest that the biodiesel industry needs less support from the RFS, 

and not more? Shouldn’t this industry be ready to compete with 

other advanced fuels? There is always uncertainty about future 

production and utilization rates, and in fact there should be 

uncertainty if the advanced biofuel market is competitive. Setting the 

standard above 1 billion simply protects BBD from competition, 

without an obvious benefit to consumers and overall compliance 

costs.

Response: Consistent with the standards set in 2011, 2012 and 

2013, EPA has set BBD requirements above the statutory minimum 

of 1.0 bill gal to provide assurance of demand for the BBD 

producers. We note that in each of these years, the actual use of 

BBD used in the RFS program exceeded these required amounts as a 

preferred compliance fuel, suggesting that the BBD standard did not 

protect BBD from competition.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 78 of 122

Table III.D.4-1

Proposed Biomass-Based Diesel, Cellulosic Biofuel, and Advanced Biofuel Standards: 2015-

2017 (billion gallons)

BBD (Gallons) BBD (RINs) Cellulosic 

Biofuel

Advanced 

Biofuel

Unspecified 

Advanced

2015 1.70 2.55 0.11 2.90 0.24

2016 1.80 2.70 0.20 3.40 0.50

2017 1.90 2.85 TBD TBD TBD

In proposing these standards for BBD for 2015 – 2017 EPA has taken into account the 

statutory requirements found in CAA section 211(o)(2)(B)(ii), including coordination with the 

Departments of Energy and Agriculture, review of the implementation of the renewable fuels 

program to date, and analysis of the statutory factors specified in CAA section 

211(o)(2)(B)(ii)(I)-(VI). Of particular relevance in our review of the implementation of the 

renewable fuels program to date were the circumstances and context that led us to increase the 

BBD standard from 1.0 billion gallons in 2012 to 1.28 billion gallons for 2013, and the biofuel 

industry’s successful performance in 2013. We have also reviewed the statutory factors in the 

context that the BBD volume requirement is nested within the advanced biofuels and total 

renewable fuels volume requirements. This discussion of the statutory factors is found in Section 

III.E., below.

In deciding to propose an applicable volume of 1.70 billion gallons of BBD for 2015, 

with annual increases of 0.10 billion gallons for 2016 and 2017, we considered not only the 

short-term impacts, but also the potential long-term impacts of our action on the RFS program. 

We took into account the competitive impact such an increase in the BBD set-aside would likely 

have on other advanced biofuel producers already in the marketplace as well as on potential new 

market entrants. This increase in the BBD set-aside through 2017 should result in a requirement 

for unspecified advanced biofuel sufficient to provide opportunity for continued investment in 

and growth of advanced biofuels other than BBD. 

Raising the guaranteed BBD volume beyond the proposed volumes to a volume that 

approaches the maximum possible supply of BBD could result in a less competitive advanced 

biofuels market, increasing RIN prices, and a less efficient market-driven renewable fuels 

program. Our decision today to propose increasing the BBD volume in 2015 – 2017 by 100 

million gallons per year would not be expected to lead to such adverse result. We believe that the 

proposed increases for 2015 – 2017 will both contribute to market stability for the renewable 

fuels program and continue to promote a growing and competitive advanced biofuels 

marketplace, one which encourages the growth and development of diverse biofuels along with 

additional volumes of BBD beyond the volumes required by the BBD standard. We request 

comment on our proposal for increasing the BBD applicable volumes in 2015–2017 and whether 

higher or lower volume requirements for BBD for 2015-2017 would be more appropriate. 

 E. Consideration of Statutory Factors for 2014-2017
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 79 of 122

In this section we discuss our considerations of the statutory factors set forth in CAA 

section 211(o)(2)(B)(ii)(I)-(VI). As discussed earlier in Section III.D.1, the BBD volume 

requirement is nested within both the advanced biofuel and the total renewable fuel volume 

requirements; so that any BBD produced beyond the mandated BBD volume can be used to 

satisfy both these other applicable volume requirements. The result is that in considering the 

statutory factors when setting the biomass-based standard we must consider the potential impacts 

of increasing BBD in comparison to other advanced biofuels98, not to diesel fuel. Greater or 

lesser applicable volumes of BBD do not change the amount of advanced biofuel used to 

displace petroleum fuels; rather, increasing the BBD applicable volume may result in the

displacement of other types of advanced biofuels that could have been used to meet the advanced 

biofuels volume requirement. 

1. Primary and Supplementary Statutory Factors Assessment for 2015-2017 

Biomass-Based Diesel Applicable Volumes

EPA’s primary assessment of the statutory factors for years 2015 through 2016 is that 

because the proposed advanced biofuel volume requirements for 2015-2016 reflect the 

maximum volumes of all advanced biofuels (including BBD) that can reasonably be expected to 

be produced and consumed, and because the BBD requirement is nested within the advanced 

biofuel volume requirement, we expect that the advanced biofuel volume requirement will 

determine the level of BBD production and import; the same volume of BBD will be produced 

and imported regardless of the BBD applicable volumes that we require for 2015-2016. This 

assessment is based in part on our review of implementation of the RFS program to date, as 

discussed in Sections III. B and D. Since our decision on the BBD applicable volumes for 2015-

2016 is not expected to impact the volume of BBD produced and imported during this time 

period, we do not expect our decision to result in a difference in any of the factors we are 

required to evaluate pursuant to CAA section 211(o)(2)(B)(ii)(I)-(VI), with the exception, that in 

considering statutory factor 211(o)(2)(B)(ii)(III), we believe that our decision on the level of the 

nested BBD volume requirement can have an impact on the future development and marketing of 

non-BBD advanced biofuels and can also be seen as sending a supportive or non-supportive 

signal to potential investors in BBD. 

Similarly for 2017, even though we are proposing only the 2017 BBD requirement at this 

time and not the 2017 advanced biofuel requirement, we believe this same primary assessment is 

appropriate since, as in previous years, the 2017 advanced biofuel requirement will be set to 

reflect the maximum volumes of all advanced biofuels (including BBD) that can reasonably be 

expected to be produced and consumed for 2017, and it is the advanced standard that can be 

expected to drive BBD production and use. 

As an additional supplementary assessment, we have considered the potential impacts of 

modifying the applicable volume of BBD from the proposed levels of 1.70 billion gallons in 

2015, 1.80 billion gallons in 2016, and 1.90 billion gallons in 2017, based on the assumption that 

 

98 While BBD can be used to satisfy the total renewable fuel requirement we anticipate that it will be used to satisfy 

the advanced biofuel volume requirement in 2015-2017. See Table II.D.2-2, “Volume Scenarios Illustrating Possible 

Compliance with 3.40 Bill Gal Advanced Biofuelaand 17.40 Bill Gal Bill Gal Total Renewable Fuel”.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 80 of 122

in guaranteeing BBD volumes at any given level there could be greater use of BBD and a 

corresponding decrease in the use of other types of advanced biofuels for years 2015-2017. 

However, setting a higher or lower BBD volume requirement than the levels proposed would 

only be expected to impact BBD volumes on the margin, protecting to varying degrees this 

advanced biofuel from being outcompeted by other advanced biofuels. This assessment analyzes 

all of the statutory factors, and is described in a memorandum to the docket.99 Overall, the 

supplemental assessment does not appear, based on available information, to provide a good 

reasoreason for setting a higher or lower nested standard for BBD than 1.70 billion gallons in 

2015, 1.80 billion gallons in 2016, and 1.90 billion gallons in 2017. . 

2. Assessment for 2014 Biomass-Based Diesel Applicable Volume 

Given the fact that the 2014 compliance year has passed, we believe that our action in 

setting the 2014 BBD volume requirement will result in no real-world impacts, including no 

impacts with respect to the factors listed under CAA section 211(o)(2)(B)(ii)(I)-(VI). For 

example, there is no longer any ability for other advanced biofuels to compete with BBD for a 

greater share of the advanced biofuel pool in 2014, so there would be no marginal benefit in 

terms of incentivizing production of such fuels in setting a lower volume requirement than the 

volume of BBD that was actually produced and imported and available for compliance in 2014. 

Setting the applicable volume at a higher level would require a draw-down in the bank of 

carryover RINs, which EPA does not consider prudent for the reasons discussed in Section II.E. 

of this preamble. In light of these considerations, we propose to establish the 2014 applicable 

volume as equal to the volume actually produced and imported, which is available for 

compliance. 

 

99 "Memorandum to docket: Statutory Factors Assessment for 2015-2017 BBD Applicable Volumes" EPA-HQOAR-2015-0111.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 81 of 122

IV. Proposed Cellulosic Biofuel Volume for 2014-2016

In the past several years the cellulosic biofuel industry has made significant progress 

towards commercial scale production. Quad County Corn Processors produced the first 

cellulosic biofuel RINs from corn kernel fiber at a corn ethanol plant in 2014. In addition, in 

2014 two large scale cellulosic ethanol facilities owned and operated by the experienced biofuel 

production companies Abengoa and Poet completed construction. EPA also determined that 

compressed natural gas (CNG) and liquefied natural gas (LNG) produced from biogas from 

landfills, municipal waste-water treatment facility digesters, agricultural digesters, and separated 

municipal solid waste (MSW) digesters is eligible to generate cellulosic RINs. This 

determination lead to a significant increase in cellulosic RIN generation, as fuel that previously 

had been qualified to generate advanced biofuel RINs began to be used to generate cellulosic 

RINs. Efforts continue to be made at facilities across the country to reduce both capital costs and 

production costs associated with cellulosic biofuel production through technology advances and 

the development of best practices gained through operating experience. EPA also continues to 

support the ongoing development of cellulosic biofuels through actions such as the evaluation of 

new pathways with the potential to generate cellulosic biofuel RINs.100 This section describes 

the available supply of cellulosic biofuel RINs in 2014, the volumes that we project will be 

produced or imported in 2015 and 2016, and some of the uncertainties associated with those 

volumes.

In order to project the volume of cellulosic biofuel production in 2015 and 2016 we 

considered data reported to EPA through the EPA Moderated Transaction System (EMTS) and 

information we collected regarding individual facilities that have produced or have the potential 

to produce qualifying volumes for consumption as transportation fuel, heating oil, or jet fuel in 

the U.S. in 2014, 2015, or 2016. New cellulosic biofuel production facilities projected to be 

brought online in the United States over the next few years would significantly increase the 

production capacity of the cellulosic industry. Operational experience gained at the first few 

commercial scale cellulosic biofuel production facilities should also lead to increasing 

production of cellulosic biofuel from existing production facilities. The following section 

discusses the companies the EPA reviewed in the process of projecting qualifying cellulosic 

biofuel production in the United States in 2015 and 2016. Information on these companies forms 

the basis for our production projections of cellulosic biofuel that will be produced for use as 

transportation fuel, heating oil, or jet fuel in the United States in these years (see Table IV-1 

below). We request comment on the projected volumes of cellulosic biofuel production for each 

of these years, as well as the methodology used to project these volumes.

 

100 Additionally, on April 3rd, 2015 EPA published a direct final rule modifying the process by which the cellulosic 

waiver credit prices are established, and indicating the prices for these credits in 2014 and 2015 using the regulations 

modified by this rule (80 FR 18136, April 3, 2015)
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 82 of 122

Table IV-1

Proposed Cellulosic Biofuel Standards

Year Volume (million gallons)

2014 33

2015 106

2016 206

A. Statutory Requirements

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

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

cellulosic biofuel specified in the statute for 2014, 2015, and 2016 are shown in Table IV.A-1 

below. The statute provides that if EPA determines, based on EIA’s estimate, that the projected 

volume of cellulosic biofuel production in a given year is less than the statutory volume, then 

EPA is to reduce the applicable volume of cellulosic biofuel to the projected volume available 

during that calendar year.101

Table IV.A-1

Statutory Volumes of Cellulosic Biofuel

Year Volume (million gallons)

2014 1,750

2015 3,000

2016 4,250

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

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

advanced biofuels and total renewable fuel by the same or a lesser volume, and we are required 

to make cellulosic waiver credits available. Our consideration of the 2014, 2015, and 2016 

volume requirements for advanced biofuels and total renewable fuel is presented in Section II. 

B. Cellulosic Biofuel Industry Assessment

In order to project cellulosic biofuel production for 2015 and 2016 we have tracked the 

progress of several dozen potential cellulosic biofuel production facilities. As we did in 

establishing the 2013 annual volumes, we have focused on facilities with the potential to produce 

commercial volumes of cellulosic biofuel rather than small R&D or pilot-scale facilities. We did 

so because the larger commercial-scale facilities are much more likely to generate RINs for the 

fuel they produce and the volumes they produce will have a far greater impact on the cellulosic 

biofuel standards for 2015 – 2016. From this list of facilities we used information from EMTS 

 

101 On January 25, 2013, the United States Court of Appeals for the District of Columbia Circuit issued its decision 

concerning a challenge to the 2012 cellulosic biofuel standard. In this decision the Court stated that in projecting 

potentially available volumes of cellulosic biofuel EPA must apply a “neutral methodology” aimed at providing a 

prediction of “what will actually happen,” as required by the statute. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 83 of 122

and publically available information, and information provided by representatives of potential 

cellulosic biofuel producers, to make a determination of which facilities are the most likely 

candidates to produce cellulosic biofuel and generate cellulosic biofuel RINs in 2015 and 2016. 

Each of these companies was investigated further in order to determine the current status of its 

facilities and its likely cellulosic biofuel production and RIN generation volumes for 2015 and 

2016. Both in our discussions with representatives of each company102 and as part of our 

internal evaluation process we gathered and analyzed information including, but not limited to, 

the funding status of these facilities, current status of the production technologies, anticipated 

construction and production ramp-up periods, facility registration status, and annual fuel 

production and RIN generation targets.

EPA is proposing to use a slightly different methodology for projecting the available 

volume of cellulosic biofuel for each of the three years. Our approach to each of these years can 

broadly be described as one that seeks to use actual production volumes where they are available 

(such as for all of 2014 and several months of 2015) and to project production volumes from 

likely production facilities for future months in which actual production volumes are not 

available. In previous projections of cellulosic biofuel production EPA, as directed by the CAA, 

has considered information provided by EIA in making our projections. EPA received a letter 

from EIA on February 19, 2014 containing cellulosic biofuel projections for 2014,103 but to date 

have not received any projections of cellulosic biofuel production for 2015 or 2016. As 

discussed in more detail below EPA now has data, through EMTS, on the actual number of 

cellulosic RINs generated in 2014 and we are proposing to establish the 2014 cellulosic biofuel 

standard using this data rather than EIA’s projection from early 2014. We anticipate that for the 

final rule EIA will provide EPA with projected production volumes of cellulosic biofuel in 2015 

and 2016 and we intend to consider these projections in our final rule.

Our approach for each of the three years is discussed in more detail in Sections IV.D –

IV.F below. The remainder of this Section discusses the current status of the companies and 

facilities EPA expects may be in a position to produce commercial scale volumes of cellulosic 

biofuel by the end of 2016. This information forms the basis for our proposed standards for 

cellulosic biofuel for 2014, 2015, and 2016.

1. Potential Domestic Producers

There are a number of companies and facilities104 located in the United States that have 

either already begun producing cellulosic biofuel for use as transportation fuel, heating oil, or jet 

fuel at a commercial scale, or are anticipated to be in a position to do so by the end of 2016. The 

financial incentive provided by cellulosic biofuel RINs, combined with the fact that all these 

facilities intend to produce fuel for domestic consumption using approved pathways, gives us a 

 

102 In determining appropriate volumes for CNG/LNG producers we did not contact individual producers but rather 

relied primarily on discussions with industry associations, and information on likely production facilities that are 

already registered under the RFS program. In some cases where further information was needed we did speak with 

individual companies.

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

104 The volume projection from CNG/LNG producers does not represent production from a single company or 

facility, but rather a group of facilities utilizing the same production technology
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 84 of 122

high degree of confidence that cellulosic biofuel RINs will be generated for any fuel produced. 

In order to generate RINs, each of these facilities must be registered under the RFS program and 

comply with all the regulatory requirements. This includes using an approved RIN-generating 

pathway and verifying that their feedstocks meet the definition of renewable biomass. Many of 

the companies and facilities have already successfully completed facility registration, and several 

have successfully generated RINs. A brief description of each of the companies that EPA 

believes may produce commercial scale volumes of RIN generating cellulosic biofuel by the end 

of 2016 can be found in a memorandum to the docket for this proposed rule.105 These 

descriptions are based on a review of the publicly available information and information 

provided to EPA in conversations with company representatives. The key data for each of these 

companies used in our projection of the potentially available volume of cellulosic biofuel in 2015 

and 2016 is summarized in Table IV.B.3-1 below.

2. Potential Foreign Sources of Cellulosic Biofuel 

In addition to the potential sources of cellulosic biofuel located in the United States, there 

are several foreign cellulosic biofuel companies that may produce cellulosic biofuel in 2015 or 

2016. These include facilities owned and operated by Beta Renewables, Enerkem, GranBio, and 

Raizen. All of these facilities use fuel production pathways that have been approved by EPA for 

cellulosic RIN generation provided eligible sources of renewable feedstock are used. These 

companies would therefore be eligible to register these facilities under the RFS program and 

generate RINs for any qualifying fuel imported into the United States. While these facilities may 

be able to generate RINs for any volumes of cellulosic biofuel they import into the United States, 

demand for the cellulosic biofuels they produce is expected to be high in local markets. EPA is 

charged with projecting the volume of cellulosic biofuel that will be produced or imported into 

the United States. Based on information available to EPA at the time of this proposed 

rulemaking, including the lack of cellulosic biofuel imports to date, we do not believe cellulosic 

biofuel will be imported into the United States from foreign cellulosic biofuel production 

facilities other than the Ensyn facility in Ontario, Canada. As such, production volumes from 

foreign facilities (with the exception of Ensyn) have not been included in our projection of 

potentially available volume for 2014-2016. EPA plans to continue to monitor the progress of 

foreign cellulosic biofuel facilities and may include volumes from foreign facilities in future 

rulemakings if appropriate and supported by new information.

3. Summary of Volume Projections for Individual Companies

The information we have gathered on cellulosic biofuel producers, described above, 

along with the data collected through EMTS forms the basis for our projected volumes of 

cellulosic biofuel production for each facility in 2015 and 2016. As in 2013, we have focused on 

commercial scale cellulosic biofuel production facilities. This focus is appropriate, as the 

volume of cellulosic biofuel produced from R&D and pilot scale facilities is quite small in 

 

105 “Cellulosic Biofuel Producer Company Descriptions”, memorandum from Dallas Burkholder to EPA Air Docket 

EPA-HQ-OAR-2015-0111
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 85 of 122

relation to that expected from the commercial scale facilities. R&D and demonstration scale 

facilities have also generally not generated RINs for any fuel they have produced.

By 2016 there are a number of cellulosic biofuel production facilities that have the 

potential to produce fuel at commercial scale. Each of these facilities is discussed in a 

memorandum to the docket106, and the relevant information used to project a likely production 

range for each company is summarized in Table IV.B.3-1 below.107 We will continue to monitor 

the status of these facilities and will update this information for the final rule.108 If we receive 

information that suggests facilities not currently included in this table, either foreign or domestic, 

may produce commercial-scale volumes of cellulosic biofuel for use as transportation fuel, 

heating oil, or jet fuel in the United States by 2016 we will include them in our projections for 

our final rule as appropriate. We will also remove facilities from our projections if new 

information suggests they will not produce cellulosic by 2016.

 

106 “Cellulosic Biofuel Producer Company Descriptions”, memorandum from Dallas Burkholder to EPA Air Docket 

EPA-HQ-OAR-2015-0111

107 For the purpose of the preamble discussion we have grouped together all facilities expected to produce cellulosic 

CNG/LNG. The individual facilities included in our assessment are listed in “Assessment of Cellulosic Biofuel 

Production from Biogas (2015-2016)”, memorandum from Dallas Burkholder to EPA Air Docket EPA-HQ-OAR2015-0111.

108 Given timing constraints for issuing a final rule, EPA does not anticipate providing an opportunity for comment 

on any updated data. Commenters may therefore wish to focus their comments both on the types of data we are 

proposing be used, as well as EPA’s proposed approach for using the data.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 86 of 122

Table IV.B.3-1

Projected Producers of Cellulosic Biofuel by 2016

Company 

Name Location Feedstock Fuel

Facility

Capacity 

(MGY)

109

Construction 

Start Date First 

Production110

Abengoa Hugoton, KS Corn Stover Ethanol 25 September 2011 April 2015

Cool Planet Alexandria, LA Wood Waste Gasoline 1 2Q 2015 Late 2016

CNG/LNG 

Producers111

Various Biogas CNG/ 

LNG

Various N/A August 2014

DuPont Nevada, IA Corn Stover Ethanol 30 November 2012 3Q 2015

Edeniq Various Corn Kernel Fiber Ethanol Various Various 2

nd Half 2015

Ensyn Renfrew, ON Wood Waste Heating 

Oil

3 N/A 2014

INEOS Bio Vero Beach, FL Vegetative Waste Ethanol 8 February 2011 2Q 2015

Poet Emmetsburg, IA Corn Stover Ethanol 24 March 2012 3Q 2015

QCCP Galva, IA Cork Kernel Fiber Ethanol 2 Late 2013 October 2014

 

109 The Facility Capacity is generally equal to the nameplate capacity provided to EPA by company representatives or found in publicly available information. If 

the facility has completed registration and the total permitted capacity is lower than the nameplate capacity then this lower volume is used as the facility capacity. 

For companies generating RINs for CNG/LNG derived from biogas the Facility Capacity is equal to the lower of the annualized rate of production of CNG/LNG 

from the facility or the sum of the volume of contracts in place for the sale of CNG/LNG for use as transportation fuel (reported as the actual peak capacity for 

these producers).

110 Where a quarter is listed for the first production date EPA has assumed production begins in the middle month of the quarter (i.e. August for the 3rd quarter) 

for the purposes of projecting volumes

111 For more information on these facilities see “Assessment of Cellulosic Biofuel Production from Biogas (2015-2016)”, memorandum from Dallas Burkholder 

to EPA Air Docket EPA-HQ-OAR-2015-0111.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 87 of 122

C. Cellulosic Biofuel Volume for 2014

EPA is charged with projecting the available volume of cellulosic biofuel for each year, 

and to reduce the applicable volume of cellulosic biofuel to the level projected to be available for 

years in which the projected available volume falls below the cellulosic biofuel applicable 

volume target specified in the CAA 211(o)(2). EPA believes that for any historical time period, 

the required projection is best calculated as the sum of the cellulosic biofuel RINs (D3) and the 

cellulosic diesel RINs (D7) generated, adjusted for RINs that are retired for purposes other than 

compliance with the annual standards. EPA publishes the number of cellulosic biofuel and 

cellulosic diesel RINs generated on a month by month basis on our website.112 The number of 

cellulosic biofuel and cellulosic diesel RINs generated for each month of 2014 can be found in 

Table IV.C-1 below. From this total, we subtract the number of cellulosic biofuel and cellulosic 

diesel RINs retired for reasons other than compliance with the annual standards, as these RINs 

are not available to obligated parties.113 In calculating the number of cellulosic biofuel RINs 

available for compliance with the annual standards for 2014 we have assumed that there were no 

exports of cellulosic biofuel.114 EPA proposes to establish the cellulosic biofuel requirement for 

2014 at 33 million gallons. We believe this number, calculated by subtracting the total number 

of cellulosic biofuel RINs (D3 and D7) retired for reasons other than compliance with the annual 

standards from the total number of cellulosic biofuel RINs generated in 2014 (D3 and D7), 

represents the total available supply of cellulosic biofuel RINs for 2014.

 

112 http://www.epa.gov/otaq/fuels/rfsdata/index.htm

113 In 2014 Cellulosic Biofuel and Cellulosic Diesel RINs were retired for Remedial Actions and Invalid RINs

114 The vast majority of cellulosic biofuel RINs generated in 2014 (approximately 32 or the 33 million RINs) were 

for CNG or LNG. These fuels require verification that the CNG/LNG was used as transportation fuel in the United 

States in order for RINs to be generated.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 88 of 122

Table IV.C-1

Cellulosic Biofuel RIN Generation in 2014115

Cellulosic Biofuel (D3) Cellulosic Diesel (D7)

January 2014 58,415 0

February 2014 7,072 0

March 2014 6,624 472

April 2014 643 10,950

May 2014 0 0

June 2014 0 0

July 2014 4,156 1,248

August 2014 3,492,106 5,532

September 2014 7,555,432 17,073

October 2014 7,047,762 24,030

November 2014 6,325,080 0

December 2014 8,863,270 0

Total 33,360,560 59,305

RINs retired for reasons 

other than compliance 

with the annual standards

346,318 4,997

RINs Available 33,014,242 54,308

Available Cellulosic RINs 

(D3 and D7)

33,068,550

D. Cellulosic Biofuel Volume for 2015

To project the volume of cellulosic biofuel in 2015, EPA has relied on a combination of 

production information reported to EPA through EMTS for months in which we have data 

available and facility or company specific estimates of likely production for months for which 

EMTS data is not available. For months in which information on the production of cellulosic 

biofuel is available we have used the methodology discussed in Section IV.C, subtracting the 

number of RINs retired for reasons other than compliance in 2015 from the total number of RINs 

produced in 2015 that are eligible to be used towards satisfying the cellulosic biofuel standard 

(D3 and D7 RINs). We have again assumed that no cellulosic biofuel was exported in the first 

three months of 2015. This data is shown in Table IV.D-1 below. 

 

115 All numbers from EPA website: http://www.epa.gov/otaq/fuels/rfsdata/index.htm. Accessed February 9, 2015.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 89 of 122

Table IV.D-1

Cellulosic Biofuel RIN Generation in Early 2015

Cellulosic Biofuel (D3) Cellulosic Diesel (D7)

January 2015 4,076,744 0

February 2015 7,935,446 0

March 2015 7,799,749 0

Total 19,811,939 0

RINs retired for reasons 

other than compliance

76,942 0

RINs Available 19,734,997 0

Total Available Cellulosic 

RINs (D3 and D7)

19,734,997

For months in which information is unavailable EPA has updated our projection 

methodology from the methodology used in previous rulemakings and our proposed rule for 

2014. Our projection methodology starts with estimating a range of potential production 

volumes for each company for the portion of 2015 where production data is not available.116 

EPA has established a range of potential production volumes for each company such that it is 

possible, but unlikely, that the actual production will be above or below the range. We believe 

that it is more appropriate to project a range of potential production volumes rather than a single 

point estimate due to the highly uncertain and variable nature of biofuel production at cellulosic 

biofuel facilities, especially those in the early stages of production. The projected production 

ranges for each facility are used to generate a single point estimate for the total production of 

cellulosic biofuel from all companies in 2015 for the months in which actual production volumes 

through EMTS are not available. 

In establishing a range for each company, we began by determining an appropriate low 

end of the range. The low end of the range for each company is designed to represent the 

volume of fuel EPA believes each company would produce if they are unable to begin fuel 

production on their expected start-up date and/or if they experience challenges that result in 

reduced production volumes or a longer than expected ramp-up period. In this proposal EPA has 

set the low end of the production range for each company based on the volume of RINgenerating cellulosic biofuel the company has produced in the most recent 12 months for which 

data is available.117 Because we are not attempting to determine a low end of a likely production 

range for a full year, but rather only the months in 2015 for which data is not available, this 

number is then multiplied by a scaling factor118 to appropriately scale this annual production 

volume for use as the low end of the range over the number of months of 2015 for which actual 

production data is unavailable. 

 

116 For the purposes of projecting RIN generation from CNG/LNG projections were made for parent companies, 

generally representing multiple companies. For more detail see “Assessment of Cellulosic Biofuel Production from 

Biogas (2015-2016)”, memorandum from Dallas Burkholder to EPA Air Docket EPA-HQ-OAR-2015-0111 

117 For the final rule we intend to update this information and use the data available for the most recent 12 months at 

the time of the final rule

118 The scaling factor is 0.75; equal to the 9 months for which production data is being projected divided by 12.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 90 of 122

This approach provides us with an objective methodology for calculating the low end of 

the potential production range for each company that we believe is appropriate in light of the 

history of start-up delays and missed production targets in the cellulosic biofuel industry. If a 

company has not yet begun producing RIN-generating volumes of cellulosic biofuel, our 

experience suggests that they may experience challenges in progressing toward commercial-scale 

production that would result in the delay of the production of cellulosic biofuel. We 

acknowledge that in the majority of cases cellulosic companies that have begun producing fuel 

and are currently in the start-up and ramp-up phases of production will increase their production 

of cellulosic biofuel from one year to the next as they work towards production rates at or near 

the facility capacity. Fuel production by these companies may, however, be interrupted, either 

intentionally or unexpectedly, and these interruptions may hinder the ability of these companies 

to increase biofuel production year over year. We will account for the likelihood of increasing 

production in developing the high end of each company’s production range. Finally, there may 

be cases in which information is available that suggests a company is unlikely to meet the 

production volumes achieved in the previous 12 months for which data is available, due to 

technical, financial, or legal difficulties. We do not believe this is the case with any of the 

companies projected to produce cellulosic biofuel in 2015.

It is important to note that the low end of the range does not necessarily represent a 

worst-case scenario. The worst-case scenario for any of these facilities for the months in which 

we are projecting production is no production, as it is always possible that extreme 

circumstances or natural disasters may result in extended delays, facility damages, or liquidation. 

While not denying such a possibility, we nevertheless believe it is generally appropriate to use 

the production over the previous 12 months as the low end of the range, with exceptions made 

where available information indicates that such production may be unlikely. In situations where 

a company has not produced any cellulosic biofuel in the previous 12 months, we believe it is 

appropriate to use zero as the low end of the projected production range given the many 

uncertainties and challenges associated with the commissioning and start-up of a new cellulosic 

biofuel production facility we have observed to date.

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

company we considered a variety of factors, including the expected start-up date and ramp-up 

period, facility capacity, and fuel off-take agreements. As a starting point, EPA calculated a 

production volume using the expected start-up date, facility capacity, and a benchmark of a sixmonth straight-line ramp-up period representing an optimistic ramp-up scenario.119

 We then 

compared the volume calculated using this methodology to the company’s own expectations for 

the period in which we are projecting production where they were available. We are proposing 

that any company projection that exceeds our benchmark volume not be used for developing the 

high end of the range of expected production volumes. If the production estimate EPA received 

from a company was lower than the volume calculated using the projected start-up date, facility 

 

119 We did not assume a six-month straight-line ramp-up period in determining the high end of the projected 

production range for CNG/LNG producers. This is because these facilities generally have a history of CNG/LNG 

production prior to producing RINs, and therefore do not face many of the start-up and scale-up challenges that 

impact new facilities. For further information on the methodology used to project cellulosic RIN generation from 

CNG/LNG producers see “Assessment of Cellulosic Biofuel Production from Biogas (2015-2016)”, memorandum 

from Dallas Burkholder to EPA Air Docket EPA-HQ-OAR-2015-0111.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 91 of 122

capacity, and six month straight-line ramp-up period, EPA used the company production targets 

instead. While we understand that many of these company projections represent the company’s 

actual expectations for production, rather than a goal or high end of an expected production 

range, we do not believe it would be appropriate to ignore the history of the cellulosic biofuel 

industry. In previous years EPA has gathered information, including volume production 

projections, from companies with the potential to produce cellulosic biofuel. Each of these 

companies supported these projections with successful pilot- and demonstration-scale facilities 

as well as other supporting documentation. In each of these cases the companies were unable to 

meet their own volume projections, and in many cases were unable to produce any RINgenerating cellulosic biofuel. 

The inability of cellulosic biofuel producers in previous years to achieve their projection 

production targets does not provide a sufficient basis for completely discounting production of 

cellulosic biofuel in future years, either for these same facilities that were previously unable to 

achieve their target projections or from new facilities expected to start-up in 2015 or 2016. Each 

of these companies is an individual case, with their own production technologies, construction 

and operations staffs, and financial situations, and we do not believe it is appropriate to dismiss 

all future potential cellulosic biofuel production because of the failure of several facilities to 

successfully operate at commercial scale. We do believe it strongly suggests that we should 

view the individual company projections as something other than the most likely outcomes. In 

order to take a “neutral aim at accuracy” in projecting cellulosic biofuel production volumes, as 

directed by the United States Court of Appeals for the DC Circuit, we have decided to treat these 

company projections as the high end of a potential production range unless this volume exceeds 

the volume calculated using our six-month straight-line ramp-up period methodology, suggesting 

that these company projections are unreasonably high. We will continue to monitor the progress 

and experience of the cellulosic biofuel industry and may adjust our approach as appropriate in 

light of additional experience.

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

range of what is likely to actually happen for each company. A brief overview of each of the 

companies we believe will produce cellulosic biofuel and make it commercially available in 

2015 can be found in a memorandum to the docket120. In the case of cellulosic biofuel produced 

from CNG/LNG we have discussed the production potential from these facilities as a group 

rather than individually. EPA believes it is appropriate to discuss these facilities as a group since 

they are utilizing a proven production technology and face many of the same challenges related 

to demonstrating that the fuel they produce is used as transportation fuel and therefore eligible to 

generate RINs under the RFS program.121

After establishing a projected production range for each facility (or group of facilities for 

CNG/LNG producers), we must then determine a method for using these projected production 

ranges to project the volume of cellulosic biofuel most likely to be produced by the cellulosic 

biofuel industry as a whole in 2015. As discussed above, the high and the low end of the range 

 

120 “Cellulosic Biofuel Producer Company Descriptions”, memorandum from Dallas Burkholder to EPA Air Docket 

EPA-HQ-OAR-2015-0111

121 For individual company information see “Cellulosic Biofuel Individual Company Projections for 2014 – 2016 

(CBI)”, memorandum from Dallas Burkholder to EPA Air Docket EPA-HQ-OAR-2015-0111.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 92 of 122

for each company represents values such that it is possible but unlikely that actual volumes 

would fall outside of those ranges. At present, data does not exist to allow EPA to develop a 

unique production probability distribution for each company based on the available information. 

Even if EPA were able to undertake such a task there is no evidence that the distributions we 

developed would necessarily be more accurate than a standardized distribution curve as the 

cellulosic biofuel industry is still in its infancy and there is a high degree of uncertainty 

associated with many of the factors that will impact production at each individual facility. This 

is supported by the poor accuracy of the individual company estimates in previous years, which 

were made by individuals with significant technical expertise and knowledge of each individual 

company and technology.

Rather than attempting to develop a unique probability distribution curve that represents 

likely cellulosic biofuel production for each company, EPA has instead separated the list of 

potential cellulosic biofuel producers into two groups; those who have already achieved 

consistent commercial-scale production and those who have not. We believe grouping the 

potential cellulosic biofuel producers using the criteria of whether or not they have achieved 

consistent commercial-scale production is appropriate for the purposes of projecting a likely 

production volume. While each of these groupings contains a diverse set of companies with their 

own production technologies and challenges, we believe there is sufficient commonality in the 

challenges related to the funding, construction, commissioning, and start-up of commercial-scale 

cellulosic biofuel facilities to justify aggregating these company projections into a single group 

for the purposes of projecting the most likely production volume of cellulosic biofuel. The 

challenges new production facilities face are also significantly different than those of facilities 

ramping up production volumes to the facility capacity and maintaining consistent production. 

After separating the companies into these two groups we then summed the low and high ends of 

each of the ranges for each individual company (or group of companies for CNG/LNG 

producers) within the group to calculate an aggregate projected production range for each group 

of companies. The ranges for each group of companies are shown in Tables IV.D-2 and IV.D-3 

below. 

Table IV.D-2

2015 Production Ranges for Companies without Consistent Commercial Scale Production

(million gallons)

Low End of the Rangea High End of the Rangea

Abengoa 0 12

CNG/LNG Producers 

(New Facilities)

0 37

CoolPlanet 0 0

DuPont 0 5

Edeniq 0 1

Ineos BIO 0 4

Poet 0 4

Total 0 63

aRounded to the nearest million gallons
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 93 of 122

Table IV.D-3

2015 Production Ranges for Companies with Consistent Commercial Scale Production

(million gallons)

Low End of the Rangea High End of the Rangea

CNG/LNG Producers 

(Currently generating RINs)

X

b

88

Ensyn X

b

1

Quad County Corn 

Processors

X

b

2

Total 49c91

aRounded to the nearest million gallons

bThe low end of the range for each individual company is based on actual 

production volumes and is therefore withheld to protect information claimed to 

be confidential business information

cThis number includes all cellulosic biofuel and cellulosic diesel RINs generated 

in the previous 12 months, as well as all advanced biofuel RINs generated for 

CNG/LNG derived from biogas prior to August 18, 2014 and within the last 12 

months

Because the cellulosic biofuel industry is still in its infancy and it is therefore not possible 

to predict with any degree of certainty the precise production volume each individual company 

will achieve, we believe that it would not be appropriate to choose a specific value within the 

projected range for each individual company/source. We believe it is more appropriate to 

identify a specific value within the aggregated ranges from Tables IV.D-2 and IV.D-3 that best 

reflects the likely production volume for each group of companies. For companies that have not 

yet achieved consistent commercial-scale production (Table IV.D-2) we are proposing to use the 

25th percentile of the projected production range. We believe this volume is appropriate as, in 

addition to the uncertainties listed above, there is also significant technology risk as these 

facilities attempt to operate their technologies at commercial scale. In the early years of the 

cellulosic biofuel industry several companies, including Cello Energy, Range Fuels, and KiOR 

experienced significant technical difficulties in scaling up their technologies and were able to 

produce little, if any, volumes of cellulosic biofuels. It is necessary to consider this history when 

projecting production volumes from companies who have not yet achieved consistent production 

at commercial scale.122 

For the group of companies that have achieved consistent commercial-scale production 

(Table IV.D-3) we are proposing to use the mid-point (50th percentile) of the projected range. 

We believe that this point accounts for the uncertainty related to the scale-up of production from 

the volume produced in the previous 12 months (through March 2015) as well as other 

uncertainties related to the generation of RINs such as documenting that the fuel is used as 

transportation fuel, heating oil, or jet fuel. This is not to say that we anticipate that each of these 

 

122 While “new” CNG/LNG facilities may not face the same challenges related to start-up and scale-up there is still a 

significant amount of uncertainty related to RIN generation from facilities that have not yet begun generating RINs. 

RIN generation from these facilities may be delayed or reduced if they are unable to verify that all or a portion of the 

CNG/LNG they produce is used as transportation fuel, or if they decide to sell the CNG/LNG they produce into nontransportation markets. These uncertainties can significantly impact the number of RINs generated by a CNG/LNG 

producer, and we therefore believe that projecting projection from these “new” facilities at the 25th percentile of the 

range is appropriate.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 94 of 122

facilities within each group will produce at the 25th or 50th percentile, but rather that as a group 

the 25th and 50th percentile, respectively, are realistic projections for each group of companies. 

We believe this methodology accounts for the fact that some individual company may be able to 

deliver the volume of cellulosic biofuel they expect and produce at or near the high end of the 

range, while others may experience difficulty transitioning to commercial production and 

produce closer to the low end of the range. The result of applying this methodology is shown in 

Table IV.D-4 below.

Table IV.D-4

Projected Volume of Cellulosic Biofuel in 2015 for Months Without Production Data

(million gallons)a

Low End of 

the Rangeb

High End of 

the Rangeb

Percentile Projected 

Volumeb

Companies without consistent 

commercial-scale production

0 63 25th 16

Companies with consistent 

commercial-scale production

49 91 50th 70

Total N/A N/A N/A 86

aThe projections in this table are for April 2015 – December 2015. The low end of the range is equal to the number 

of RINs produced by the companies over the most recent 12 months for which data is available multiplied by a 

factor of 0.75 (since it is only a projection for 9 months of the year). The high end of the range is based on projected 

production for the final 9 months of 2015.

bRounded to the nearest million gallons

EPA anticipates that if the same methodology is used in future years that as cellulosic 

biofuel companies successfully achieve commercial scale production, application of this 

methodology will appropriately generate increasing volume projections, both for the individual 

companies and for the industry as a whole. This will happen in two ways. First, as companies 

successfully produce cellulosic biofuel the low end of the range (which is based on the most 

recent 12 months of production for which data is available) will increase. Second, we would use 

the 50th percentile value, rather than the 25th percentile, for all companies who have achieved 

consistent commercial-scale production. If merited by the available data, we will also consider 

using a higher (or lower) percentile for both new facilities and facilities that have already 

achieved consistent commercial-scale production. We will consider comments on this matter, 

and after establishing percentile values for use in this rulemaking we expect we will annually 

review the percentile values and adjust them as appropriate, taking into account the success of 

past projections, to ensure that our methodology produces a production projection that takes a 

neutral aim at accuracy. As new pathways for the production of cellulosic biofuel are approved, 

we will also consider volumes produced using these pathways in our projections. 

The final step in projecting the potentially available volume of cellulosic biofuel in 2015 

is to combine the volumes of cellulosic biofuel actually produced in months for which data is 

available with the projected production volumes for the remaining months of 2015. This is 

shown in Table IV.D-5 below. For 2015 we are proposing a cellulosic biofuel standard of 106 

million gallons. We request comment on the methodology used to project cellulosic biofuel 

volumes in 2015, as well as the general methodology used to project future cellulosic biofuel 

production.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 95 of 122

Table IV.D-5

Projected Available Cellulosic Biofuel in 2015

Cellulosic Biofuel Production 

(Jan. 2015 – March 2015)

20 Million Gallons

Projected Cellulosic Biofuel Production 

(April 2015 – December 2015)

86 Million Gallons

Projected Available Volume of 

Cellulosic Biofuel in 2015

106 Million Gallons

E. Cellulosic Biofuel Volume for 2016

To project the volume of potentially available cellulosic biofuel in 2016 we are proposing 

to use a methodology very similar to the one proposed for projecting cellulosic biofuel 

production in 2015 for months in which actual production data was not available. For 2016 we 

separated the list of potential producers of cellulosic biofuel into two groups according to 

whether or not the facilities have already begun producing commercial-scale volumes of 

cellulosic biofuel or who are expected to do so by July 1, 2015 (See Table IV.E-1 and Table 

IV.E-2).123 We next defined a range of likely production volumes for each group of potential 

cellulosic biofuel producers. The low end of the range for each group of producers is intended to 

reflect actual production data. Rather than simply use the most recent 12 months for which 

information is currently available for each company, however, we are proposing to project what 

that data will be at the time of our final rule. We used zero as the low end of the aggregated 

projected production range for 2016 for facilities expected to begin producing fuel after July 1, 

2015 (Table IV.E-1). We used our projected production volume for 2015 (106 million gallons) 

as the low end of the aggregated range for facilities expected to be producing commercial-scale 

volumes of cellulosic biofuel on or before July 1, 2015 (Table IV.E-2). This is consistent with 

the approach we used to project volumes for 2015 where we set the low end of the range for each 

group of companies at the volume produced over the preceding 12 months, as we believe very 

little of the volume produced in 2015 will come from facilities starting up after July 1, 2015 and 

the vast majority of cellulosic biofuel production in 2016 will come from facilities that begin 

before this date. We also believe this will align our proposed rule more closely with the final 

rule than would be the case if we based our proposal only on the data from the most recent 12 

months of data available to EPA at this time. For our final rule, we intend to update the low end 

of the projected production range for each company using data from the most recent 12 months 

for which data is available.

To calculate the high end of the projected production range for each group of companies 

we considered each company individually (with the exception of the CNG/LNG producers) and 

used the same methodology in 2016 as for the months in 2015 for which actual past production 

 

123 We are projecting that facilities that begin producing commercial-scale volumes by July 2015 will achieve 

consistent production by the end of 2015. This is consistent with the approach used to project volumes for 2015 

where we separated companies into two groups based on whether or not they have achieved consistent commercialscale production. For the final rule we intend to assess whether or not the facilities in our projected volumes have 

achieved consistent commercial-scale production and will re-categorize them as necessary.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 96 of 122

data was not available (this methodology is covered in further detail in Section IV.D above). 

The high end of the range for each company within each group was added together to calculate 

the high end of the projected production range for that group.

After defining likely production ranges for each group of companies we projected a likely 

production volume from each group of companies for 2016. We projected a total production 

volume from the companies that we do not anticipate will begin commercial-scale production by 

July 1, 2015 using the 25th percentile of the projected production range (Table IV.E-1). For the 

companies that have already achieved consistent commercial-scale production or anticipate 

starting commercial-scale production by July 1, 2015, we used the 50th percentile of the

aggregate projected production range (Table IV.E-2). This is consistent with the approach we 

used for projecting volumes in 2015, which is discussed in more detail in the preceding section. 

We intend to re-evaluate our categorization of the companies for the final rule using the most up 

to date information available.

Table IV.E-1

2016 Production Ranges for Companies with Start-Up Dates After July 1, 2015

(million gallons)

Low End of the Rangea High End of the Rangea

CNG/LNG Producers 

(New Facilities)

0 120

CoolPlanet 0 0

DuPont 0 29

Edeniq 0 14

Poet 0 20

Aggregate Range 0 183

Projected Production 

(25th Percentile of Range)

46

a Rounded to the nearest million gallons

Table IV.E-2

2016 Production Ranges for Companies with Consistent Commercial Scale Production or StartUp Dates Before July 1, 2015 (million gallons)

Low End of the Rangea High End of the Rangea

Abengoa N/A 19

CNG/LNG Producers 

(Existing Facilities)

N/A 185

Ensyn N/A 3

Ineos BIO N/A 6

Quad County Corn Processors N/A 2

Aggregate Range 106 215

Projected Production 

(50th Percentile of Range)

161

a Rounded to the nearest million gallons
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 97 of 122

The final step in projecting the potentially available volume of cellulosic biofuel in 2016 

is to combine the volumes of cellulosic biofuel projected to be produced from each of the two 

groups discussed above (shown in Table IV.E-3 below). For 2016 we are proposing a cellulosic 

biofuel volume requirement of 204 million gallons. For our final rule we will use the most 

recent production data and company information available to update our projections. We request 

comment on the methodology and data used to project cellulosic biofuel volumes in 2016.

Table IV.E-3

Projected Volume of Cellulosic Biofuel in 2016

(million gallons)

Low End of 

the Rangea

High End of 

the Rangea

Percentile Projected 

Volumea

Companies beginning production 

after July 1, 2015

0 183 25th 46

Companies beginning production 

before July 1, 2015

106 215 50th 161

Total N/A N/A N/A 206

aVolumes rounded to the nearest million gallons

F. Rescission of the 2011 Cellulosic Biofuel Standards

On January 25, 2013, the United States Court of Appeals for the District of Columbia 

Circuit issued its decision concerning a challenge to the 2012 cellulosic biofuel standard.124 The 

Court found that in establishing the applicable volume of cellulosic biofuel for 2012, EPA had 

used a methodology in which “the risk of overestimation [was] set deliberately to outweigh the 

risk of underestimation.” The Court held EPA’s action to be inconsistent with the statute because 

EPA had failed to apply a “neutral methodology” aimed at providing a prediction of “what will 

actually happen,” as required by the statute. As a result of this ruling, the Court vacated the 2012 

cellulosic biofuel standard, and we removed the 2012 requirement from the regulations in a 

previous action. Industry had also challenged the 2011 cellulosic biofuel standard by, first, filing 

a petition for reconsideration of that standard, and then seeking judicial review of our denial of 

the petition for reconsideration. This matter was still pending at the time of the D.C. Circuit’s 

ruling on the 2012 cellulosic biofuel standard. Since we used essentially the same methodology 

to develop the 2011 cellulosic biofuel standard as we did to develop the 2012 standard, we 

requested, and the Court granted, a partial voluntary remand to enable us to reconsider our denial 

of the petition for reconsideration of the 2011 cellulosic biofuel standard. Given the Court's 

ruling that the methodology EPA used in developing the 2012 cellulosic biofuel standard was 

flawed, we are proposing to rescind the 2011 cellulosic biofuel applicable standard and refund 

the money paid by obligated parties to purchase cellulosic waiver credits to comply with the 

standard.

 

124 API v. EPA, 706 F 3d 474 (D.C. Cir. January 25, 2013).
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 98 of 122

V. Percentage Standards

A. Background

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

obligated party to determine their Renewable Volume Obligations (RVO). Since there are four 

separate standards under the RFS program, there are likewise four separate RVOs applicable to 

each obligated party. Each standard applies to the sum of all gasoline and diesel produced or 

imported. The percentage standards are set so that if every obligated party meets the percentages, 

then the amount of renewable fuel, cellulosic biofuel, biomass-based diesel (BBD), and 

advanced biofuel used will meet the applicable volumes established in this rule on a nationwide 

basis.

Sections II, III, and IV provide our rationale and basis for the proposed volumes for 

advanced biofuel and total renewable fuel, BBD, and cellulosic biofuel, respectively. The 

volumes to be used to determine the four proposed percentage standards are shown in Table 

V.A-1.

Table V.A-1

Proposed Volumes for Use in Setting the Applicable Percentage Standards

2014 2015 2016

Cellulosic biofuel (million gallons) 33 106 206

Biomass-based diesel (billion gallons)a1.63 1.70 1.80

Advanced biofuel (billion gallons) 2.68 2.90 3.40

Renewable fuel (billion gallons) 15.93 16.30 17.40

a Represents physical volume.

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 40 CFR 80.1405): 

Gi  RGi  GSi  RGSi  GEi  Di  RDi  DSi  RDSi  DEi

 

( ) ( ) ( ) ( )

RFV Std 100%CB,i

CB,i

Gi  RGi  GSi  RGSi  GEi  Di  RDi  DSi  RDSi  DEi



 

( ) ( ) ( ) ( )

RFV 1.5

Std 100%

BBD,i 

BBD,i

Gi  RGi  GSi  RGSi  GEi  Di  RDi  DSi  RDSi  DEi

 

( ) ( ) ( ) ( )

RFV Std 100%AB, i

AB, i

Gi  RGi  GSi  RGSi  GEi  Di  RDi  DSi  RDSi  DEi

 

( ) ( ) ( ) ( )

RFV Std 100%RF, i

RF, i
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 99 of 122

Where

StdCB,i = The cellulosic biofuel standard for year i, in percent.

StdBBD,i = The biomass-based diesel standard (ethanol-equivalent basis) for year i, in 

percent.

StdAB,i = The advanced biofuel standard for year i, in percent.

StdRF,i = The renewable fuel standard for year i, in percent.

RFVCB,i = Annual volume of cellulosic biofuel required by section 211(o) of the Clean Air 

Act for year i, in gallons.

RFVBBD,i = Annual volume of biomass-based diesel required by section 211(o) of the Clean 

Air Act for year i, in gallons.

RFVAB,i = Annual volume of advanced biofuel required by section 211(o) of the Clean Air 

Act for year i, in gallons.

RFVRF,i = Annual volume of renewable fuel required by section 211(o) of the Clean Air Act 

for year i, in gallons.

Gi = Amount of gasoline projected to be used in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

Di = Amount of diesel projected to be used in the 48 contiguous states and Hawaii, in

year i, in gallons. This value excludes diesel used in ocean-going vessels.

RGi = Amount of renewable fuel blended into gasoline that is projected to be consumed 

in the 48 contiguous states and Hawaii, in year i, in gallons.

RDi = Amount of renewable fuel blended into diesel that is projected to be consumed in 

the 48 contiguous states and Hawaii, in year i, in gallons.

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.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 100 of 122

RDSi = Amount of renewable fuel blended into diesel that is projected to be consumed in 

Alaska or a U.S. territory in year i if the state or territory opts-in, in gallons.

GEi = Amount of gasoline projected to be produced by exempt small refineries and 

small refiners in year i, in gallons, in any year they are exempt per §§80.1441 and 

80.1442, respectively.

DEi = Amount of diesel projected to be produced by exempt small refineries and small 

refiners in year i, in gallons, in any year they are exempt per §§80.1441 and 

80.1442, respectively.

The formulas used in deriving the annual percentage standards rely on estimates of the 

volumes of gasoline and diesel fuel, for both highway and nonroad uses, that are projected to be 

used in the year in which the standards will apply.125 The projected gasoline and diesel volumes 

obtained from EIA include ethanol and biodiesel used in transportation fuel, which are subtracted 

out as indicated in the equations above. Production of other transportation fuels, such as natural 

gas, propane, and electricity from fossil fuels, is not currently subject to the standards, and 

volumes of such fuels are not used in calculating the annual standards. Since under the 

regulations the standards apply only to producers and importers of gasoline and diesel, these are 

the transportation fuels used to set the standards, as well as to determine the annual volume 

obligations of an individual gasoline or diesel producer or importer.

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 refineries126 through December 31, 2010. Congress 

provided that small refineries could receive a temporary extension of the exemption beyond 2010 

based on an EPA determination of disproportionate economic hardship on a case-by-case basis in 

response to refiner petitions. EPA has granted some exemptions pursuant to this process in the 

past, and has granted exemptions for three small refineries for 2014. The proposed applicable 

percentage standards for 2014 reflect the fact that the gasoline and diesel volumes associated 

with these three small refineries has been exempted. However, at this time, no exemptions have 

been approved for 2015 or 2016, and we have calculated the percentage standards for these years 

without a small refinery/small refiner adjustment. Any requests for exemptions for 2014, 2015 or 

2016 that are approved prior to the final rule will be reflected in the relevant standards in the 

final rule, as provided in the formulas described in the preceding section. Any requests for 

exemption that are approved after the release of the final 2014, 2015, and 2016 standards will not 

affect those standards.

 

125 Monthly values from EIA's May 2015 Short-Term Energy Outlook (STEO) were used to project gasoline and 

diesel volumes for this proposal.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 101 of 122

3. Proposed Standards

As specified in the RFS2 proposed rule,127 the percentage standards are based on energyequivalent gallons of renewable fuel, with the cellulosic biofuel, advanced biofuel, and total 

renewable fuel standards based on ethanol equivalence and the BBD standard based on biodiesel 

equivalence. However, all RIN generation is based on ethanol-equivalence. For example, the 

RFS regulations provide that production or import of a gallon of qualifying biodiesel will lead to 

the generation of 1.5 RINs. In order to ensure that demand for the required physical volume of 

BBD will be created in each year, the calculation of the BBD standard provides that the 

applicable physical volume be multiplied by 1.5. The net result is a BBD gallon being worth 1.0 

gallon toward the BBD standard, but worth 1.5 gallons toward the other standards.

The levels of the percentage standards would be reduced if Alaska or a U.S. territory 

chooses to participate in the RFS 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 RFS program at this time, and thus the value of the related terms 

in the calculation of the standards is zero.

Note that because the gasoline and diesel volumes estimated by EIA include renewable 

fuel use, we must subtract the total renewable fuel volumes from the total gasoline and diesel 

volumes to get total non-renewable gasoline and diesel volumes. The values of the variables 

described above are shown in Table V.B.3-1.128

 

127 75 FR 14716, March 26, 2010.

128 To determine the 49-state values for gasoline and diesel, the amounts of these fuels used in Alaska is subtracted 

from the totals provided by DOE. The Alaska fractions are determined from the June 27, 2014 EIA State Energy 

Data System (SEDS), Energy Consumption Estimates.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 102 of 122

Table V.B.3-1

Values for Terms in Calculation of the Proposed Standards129 (billion gallons)

Term 2014 2015 2016

RFVCB 0.033 0.106 0.203206

RFVBBD 1.67a1.70 1.80

RFVAB 2.68 2.90 3.40

RFVRF 15.93 16.30 17.40

G 136.49 138.37 137.58

D 55.21 56.77 58.13

RG 13.43 13.36 13.46

RD 1.54 1.44 1.53

GS 0 0 0

RGS 0 0 0

DS 0 0 0

RDS 0 0 0

GE 0.01 0.00 0.00

DE 0.04 0.00 0.00

a Represents the biodiesel-equivalent volume of actual 2014 supply, which was 

2.50 bill D4 RINs. Actual physical volume was 1.63 billion physical gallons, 

composed of 1.35 bill gal of biodiesel and 0.28 bill gal renewable diesel.

Although the Act specifies that EIA provide EPA with gasoline and diesel demand for the 

following year “no later than October 31”, we believe it is appropriate to use EIA demand 

projections that are more recent than October 31 for a given year when such projections are 

available.130 For this proposed rule, we have used gasoline, diesel, and renewable fuel 

consumption estimates available in the most recent version of EIA's Short-Term Energy Outlook. 

For the final rule we will use projections provided by EIA as required by the statute.

Using the volumes shown in Table V.B.3-1, we have calculated the proposed percentage 

standards for 2014, 2015, and 2016 as shown in Table V.B.3-2.

 

129 Details of volumes and calculations are available in the docket.

130 The use of post-October 31 data for previous years was addressed in our 2013 Cellulosic Biofuel Standard 

rulemaking.130 As stated in that rulemaking, “...we believe it is appropriate to rely on EIA’s most recent reports of 

actual gasoline and diesel consumption... Doing so allows a more accurate assessment of a percentage standard that 

will help to ensure that the volume of cellulosic biofuel we have determined should be used for compliance...will in 

fact be required.”
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 103 of 122

Table V.B.3-2

Proposed Percentage Standards

2014 2015 2016

Cellulosic biofuel 0.019% 0.059% 0.114%

Biomass-based diesel 1.42% 1.41%a1.49%

Advanced biofuel 1.52% 1.61% 1.88%

Renewable fuel 9.02% 9.04% 9.63%

a Although the proposed BBD volume requirement for 2015 is higher than it is 

for 2014, projected volumes of gasoline and diesel are also higher in 2015 than 

they were for 2014. The result is that the percentage standard, rounded to two 

decimal places, is the same for both years.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 104 of 122

VI. Proposed Amendments to Regulations

We are proposing several revisions to the RFS regulations, which are described below. 

The first proposed revision relates to the definition of terms in Table 1 to 40 CFR 80.1426, 

which describes approved biofuel production pathways. The second set of revisions would 

address annual compliance reporting and associated attest reporting deadlines. We request 

comment on all aspects of these proposed amendments.

A. Proposed Changes to the Algal Biofuel Pathways

In the March 2010 RFS rule (75 FR 14670), EPA established two pathways for biofuels 

derived from algae to generate D-Code 4 (Biomass-Based Diesel) or 5 (Advanced) RINs. The 

pathways approved in the March 2010 RFS rule assumed that algae would be grown 

photosynthetically (i.e., using predominantly sunlight and CO2 as inputs) and harvested for their 

oil.131 Biofuel produced with algae grown through other means is likely to have different 

lifecycle GHG emissions impacts. The EPA has recently received an inquiry regarding 

production of biofuel from algae grown non-photosynthetically, and we believe it would be 

appropriate to clarify that the algal oil pathways adopted as part of the March 2010 RFS rule do 

not apply to such algae. Therefore, we are proposing to replace “algal oil” as a feedstock in 

Table 1 to 40 CFR 80.1426 with “oil from algae grown photosynthetically.” We are also 

proposing to add a new definition for “algae grown photosynthetically” to 40 CFR 80.1401. We 

do not anticipate this definition will impact current renewable fuel production under the existing 

pathway. Companies wishing to produce biofuels from algae grown with a non-photosynthetic 

stage of growth must apply to EPA for approval of their pathway pursuant to 40 CFR 80.1416. 

We invite comment on these proposed changes.132

We also note that any companies wishing to produce fuel using genetically modified 

algae must conform to all other appropriate EPA regulations. For example, EPA’s Office of 

Pollution Prevention and Toxics (OPPT) Biotechnology Program regulates the use of new 

genetically-engineered microorganisms (including bacteria, fungi, algae, viruses, protozoa, etc.) 

that are used in the production of biofuels under Section 5 of the Toxic Substances Control Act 

(TSCA).133

B. Annual Compliance Reporting and Attest Engagement Deadlines under the RFS 

Program

This section addresses regulatory changes to the annual compliance reporting and 

associated attest reporting deadlines for the 2013, 2014, and 2015 compliance periods. There are 

a number of reporting deadline changes proposed in this section. We have tried to provide a 

 

131 See 75 FR 14696 (March 26, 2010).

132 EPA is not proposing a regulatory definition of “algae.” Any comments related to the definition of ‘algae” will be 

considered beyond the scope of this rulemaking.

133 Microbial Products of Biotechnology; Final Regulation Under the Toxic Substances Control Act; Final Rule. 62 

FR 17910 (April 11, 1997).
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 105 of 122

reasonable amount of time between the 2013, 2014, and 2015 annual compliance reporting 

deadlines and the respective attest engagement reporting deadlines to help ensure that obligated 

parties have adequate time for compliance decisions between compliance year demonstrations 

and that attest auditors have adequate time to plan and complete their review of annual 

compliance reports. For obligated parties, we have proposed four months between the 2013 

annual compliance and attest engagement reporting deadlines and six months for the 2014 and 

2015 compliance years. We believe that this is an adequate amount of time for attest auditors to 

plan and compliance attest engagements, and it should be noted that under the existing

regulations that there is typically only two months between the annual compliance reporting 

deadlines and the deadline for attest engagement reports. It should also be noted that we are 

proposing more time for the 2013, 2014, and 2015 compliance years to accommodate the ability 

for attest auditors to review multiple compliance years concurrently and in recognition of the 

several reporting tracks that we are proposing to establish. However, we seek comments on 

whether we should allow more time between the reporting of annual compliance and attest 

engagement reports to accommodate reasonable execution of the attest engagement 

requirements.

For the 2013 RFS compliance year, the EPA is proposing to establish the deadline for the 

2013 RFS annual compliance reports required under §80.1451(a) to be no later than January 31, 

2016. Previously, the EPA issued a direct final rulemaking on August 8, 2014 to extend the 

annual compliance and attest engagement reporting deadlines for the 2013 compliance year for 

all regulated entities under the RFS program. In that direct final rule, which became effective on 

September 29, 2014, we extended the annual compliance and attest engagement reporting 

deadlines for the 2013 compliance period until 30 days and 90 days, respectively, following 

publication of the final rule establishing the 2014 renewable fuel percentage standards for 

cellulosic biofuel, BBD, advanced biofuel and total renewable fuel (“2014 volume rule”) in the 

Federal Register. We extended the deadlines because we were concerned that uncertainty 

involving renewable fuel production levels in 2014 would make it challenging if not impossible 

for obligated parties to reasonably project the number of RINs needed to appropriately comply 

with their 2013 RVOs. Additionally, we extended the deadlines for all regulated entities because 

we wanted to keep the extension simple and did not want to create a separate set of reporting 

deadlines for certain regulated parties just for the 2013 compliance period. Although, we 

previously stated that the annual compliance deadline for the 2013 compliance period would be 

set at 30 days following publication of the 2014 volume rule in the Federal Register, we are 

proposing a fixed deadline of January 31, 2016. We are confident, based on the schedule 

established for completing the final rule associated with this proposal, that a deadline of January 

31, 2016 would be at least 30 days from publication of the final rule. 

In regard to the reporting deadlines for the 2014 RFS compliance year, the Agency

The RFS regulations establish deadlines for parties with renewable volume obligations 

(obligated parties and renewable fuel exporters) to submit annual compliance demonstration 

reports to the EPA, and later deadlines for the same parties to submit associated attest 

engagement reports. A number of other regulated parties, including RIN-generating renewable 

fuel producers, RIN-generating renewable fuel importers, other parties owning RINs and 3rd

party auditors, are also required to submit annual attest engagement reports according to a 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 106 of 122

schedule specified in the regulations. As a result of the delay in issuing the RFS annual rules for 

2014 and 2015, the EPA is proposing to amend certain reporting deadlines applicable to the 

2013, 2014 and 2015 compliance years. 

1. Obligated Parties and Renewable Fuel Exporters. 

a. Background.

Under existing RFS regulations (40 CFR 80.1451(a) and 80.1464(d)), obligated parties 

and renewable fuel exporters must submit compliance demonstration reports for each calendar 

year by March 31 of the following year, and associated attest engagements by June 1 of the 

following year. The EPA has recognized that it is important for obligated parties preparing a 

compliance demonstration report for a given calendar year to have an understanding of their RFS 

obligations for the next compliance year.134. Therefore, in light of the delay in issuing the 2014 

RFS annual standards, the EPA previously amended the regulations to provide that the annual 

compliance demonstration reports for obligated parties and exporters for the 2013 compliance 

year would not be due until 30 days after publication in the Federal Register of the 2014 RFS 

percentage standards. 40 CFR 80.1451(a)(1)(xiv). Similarly, the EPA extended the deadline for 

attest engagement reports for 2013 compliance demonstrations to 90 days after publication in the 

Federal Register of the 2014 RFS percentage standards. 40 CFR 80.1464(g). Because the EPA 

has not yet issued the 2014 RFS standards, 2013 compliance demonstration reports and 

associated attest engagement reports from obligated parties and renewable fuel exporters are not 

yet due.

Although the EPA has not yet issued a final 2014 RFS annual rule, and the generallyapplicable March 31 deadline for compliance demonstration reports for the 2014 compliance 

year has now passed, the EPA has not adopted amendments to the regulations applicable to 2014 

compliance demonstration and attest engagement reporting as it did with respect to the 2013 

compliance year. Instead the EPA issued an Enviroflash on March 17, 2015 to clarify that 

obligated parties are not required to submit compliance demonstration reports (or associated 

attest engagements) for the 2014 standardscompliance year until the EPA issues a final rule 

establishing the final 2014 RFS standards and sets (in that action) a compliance demonstration 

deadline for those standards. Indeadlines for 2014 compliance demonstrations and associated 

attest engagements for obligated parties. We noted in the Enviroflash our interpretation of the 

current regulatory deadlines as being inoperative for obligated parties for the 2014 compliance 

year because final 2014 RFS standards have not been established and it is therefore impossible 

for obligated parties to assess and demonstrate their compliance with the applicable standards. 

However, in that same Enviroflash we clarified that exporters of renewable fuel were required to 

submit annual compliance reports by the March 31, 2015 deadline (regardless of whether the 

compliance reports were partial (to report an exporter’s name, registration number, and 

renewable volume obligation (ERVO)) or full (name, registration number, ERVO, as well as 

RINs retired to satisfy the ERVO and any cellulosic waiver credits used) and corresponding 

attest engagement reports by June 1, 2015 for partial or full annual compliance reports. The 

Enviroflash stated that attest engagements with respect to full compliance reports were due 90 

days after issuance of the 2014 final rule, consistent with the attest engagement deadline 

 

134 78 FR 49823, August 15, 2013
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 107 of 122

specified for the 2013 compliance year that was specified in 80.1464(g). the situation is different 

are based on renewable fuel export volume, not on the RFS percentage standards. Therefore we 

stated in the Enviroflash that renewable fuel exporters must comply with the operative deadlines 

in the regulations for 2014 reporting, although precise obligations may differ depending on the 

portion of the year during which exports occurred, in light of regulatory amendments related to 

the deadline for exporter RIN retirements that were adopted in the July 18, 2014 RFS Quality 

Assurance Plan rule.135 The details are explained in the March 17 Enviroflash.

b. Proposal.

The Agency now believes that setting a firm calendar date that still provides adequate 

time for obligated parties and exporters of renewable fuel to complete the annual for 2013 

compliance and attest engagement reports is a better method than preferable to the current 

approach of tying the deadlinedeadlines for 2013 reporting to the issuancedate of publication of 

the final2014 annual rule in the Federal Register. The EPA seeks to establish reporting deadlines 

for three calendar years, and establishing the 2014 renewable fuel percentage standards for 

cellulosic biofuel, BBD, advanced biofuel and total renewable fuel. Therefore, today wefirm 

deadlines for 2013 reporting will allow the EPA to sequence and time reports for subsequent 

years in a reasonable manner that reduces uncertainty. 

i. Obligated Parties. 

We are proposing that compliance demonstration reports for obligated parties, be 

submitted no later than January 31, 2016 for the 2013 compliance year, June 1, 2016 for the 2014 

compliance year, annual compliance reports shall be submitted no later than June 1, 2016. 

Additionally, given the annual compliance deadlines for obligated parties for 2013 and 2014 

have been extended, the Agency understands that it is necessary to extend the annual compliance 

deadlineand December 1, 2016 for the 2015 compliance year. Therefore,Associated attest 

engagement reports would be due no later than June 1, 2016 for the 2013 compliance year, 

December 1, 2016 for the 2014 compliance year, and June 1, 2017 for the 2015 compliance year, 

we are proposing. We believe that this sequencing of reports, and the time allowed between them 

will allow obligated parties shallto proceed in a logical and orderly fashion to submit annual 

compliance reports no later than December 1, 2016.required reports, with sufficient intervening 

time so as not to pose an unreasonable burden. 

For exporters of renewable fuel, forii. Exporters. 

For exporters of renewable fuel, we are proposing the same amendments to 2013 

compliance year reporting deadlines as for obligated parties – annual compliance demonstration 

reports would be due no later than January 31, 2016, and associated attest engagement reports 

would be due no later than June 1, 2016. For 2014, the issue is more complex. For the 2014 

compliance period from January 1, 2014 through September 16, 2014, partial annual compliance 

reports containing an exporter’s name, registration number, and renewable volume obligation 

(ERVO) for that period were required to be submitted no later than March 31, 2015 as currently 

proscribed in the regulations under §80.1451(a)(1). Additionally, we are proposing that for 

 

135 79 FR 42078.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 108 of 122

exporters of renewable fuel, for136 For the 2014 compliance period from January 1, 2014 through 

September 16, 2014, we are proposing that full annual compliance reports containing an 

exporter’s name, registration number, ERVO, as well as RINs retired to satisfy the ERVO and 

any cellulosic waiver credits used for that period shall be submitted no later than January 31, 

2016. We are also reiterating , and that for exporters of renewable fuel, forassociated attest 

engagements be due no later than June 1, 2016. For the 20142015 compliance period from 

September 17, 2014 through December 31, 2014year, full compliance reports containing an 

exporter’s name, registration number, ERVO, as well as RINs retired to satisfy the ERVO and 

any cellulosic waiver credits used for that period were due will be due on March 31, 2015 as 

currently proscribed in the regulations under2016, as required by existing §80.1451(a)(1). ), and 

associated attest engagements will be due by June 1, 2016 as required by §80.1464(d).

2. Other Parties

a. Background

Following issuance of the March 17, 2015 Enviroflash to clarify the RFS annual 

compliance deadlineaddress reporting deadlines for obligated parties and renewable fuel 

exporters for the 2014 compliance periodyear, the Agency received comments from attest 

engagement auditors concerning the June 1, 2015 attest engagement deadline for RIN-generating 

renewable fuel producers, RIN-generating renewable fuel importers, other parties holding RINs, 

and renewable fuel exporters.independent third-party auditors. The auditors stated that it is 

impractical for them to perform the 2014 compliance year attestations before completing the 

2013 compliance year attestations. The auditors explained that they generally rely on the 

beginning balance of RINs based on attest procedures performed in the previous year. They 

assertasserted that if they have not attested to the ending balance of RINs for the 2013 

compliance year, they cannot effectively attest to the beginning balance of RINs for the 2014 

compliance year.

The auditors also cited other reasons for why the 2013 and 2014 compliance year 

attestations should be revised. The auditors stated that there is confusion and uncertainty in 

industry about whether the June 1, 2015 deadline still applies to RIN-generating renewable fuel 

producers, RIN-generating renewable fuel importers, other parties holding RINs, and renewable 

fuel exportersindependent third-party auditors because they were not explicitly mentioned in the 

March 17, 2015 Enviroflash and because the Agency previously issued a blanketbroader attest 

extension related to reporting deadlines for the 2013 compliance year and thus, any subsequent 

communication by the Agency would be expected to address all regulated parties. Since many

non-obligated parties have not yet completed their 2013 compliance year attestations because 

they are not required to do so, they do not have any expectation that the attestations for the 2014 

compliance year are due June 1, 2015.

 

136 We are not amending the regulations as they pertain to exporters of renewable fuel for the 2014 compliance 

period from September 17, 2014 through December 31, 2014. We reiterate that under current regulations at 

§80.1451(a)(1), reports containing an exporter’s name, registration number, ERVO, as well as RINs retired to 

satisfy the ERVO and any cellulosic waiver credits used for that period were due March 31, 2015. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 109 of 122

In 2014, the EPA changed the annual reporting deadline for all 40 CFR Part 80 fuel 

programs from February 28 to March 31 and the attest deadline from May 31 to June 1. This is 

the first year that these new deadlines are in effect. The effects of the shorter time period 

between the annual reporting deadline and the deadline for attest engagement reports are 

exacerbated this year by the confusion surrounding the June 1, 2015 attest reporting deadline for 

RIN-generating renewable fuel producers, RIN-generating renewable fuel importers, other 

parties holding RINs, and renewable fuel exporters.and independent third-party auditors .

Auditors need a reasonable amount of time to plan and execute any type of assurance 

engagement. The planning phase involves the evaluation of independence, execution of 

engagement letters, and scheduling of resources. 

In light of these issues, auditors have expressed serious concerns about the industry’s 

ability to complete all ofconfusion surrounding the attestationsreporting deadlines for the 2014 

compliance year for RIN-generating renewable fuel producers, RIN-generating renewable fuel 

importers, other parties holding RINs, and renewable fuel exporters by June 1, 2015.independent 

third-party auditors, the EPA’s Assistant Administrator for Air and Radiation sought a no action 

assurance from the Assistant Administrator for the Office of Enforcement and Compliance 

Assurance regarding enforcement of the 2014 reporting deadlines for these parties. In response, 

the Office of Enforcement and Compliance Assurance issued a conditional no action assurance 

on May 21, 2015 that provides, in part, as follows:

Therefore, inthe EPA will exercise its enforcement discretion not to 

pursue enforcement actions against a RIN-generating renewable fuel producer 

(domestic and foreign), a RIN-generating importer, any other party owning RINs, 

and an independent third-party auditor solely for violations of the 2014 attest 

engagement reporting deadline at 40 C.F.R. § 80.1464(d). This No Action 

Assurance does not apply to the June 1, 2015 deadline for exporters of fuel to 

submit their reports for the 2014 compliance year, nor does it extend to any other 

RFS-related requirement.137 Furthermore, as applied to an individual regulated 

party, this No Action Assurance is conditioned upon the regulated party 

complying with all other RFS requirements applicable to it. This No Action 

Assurance will remain in effect until either (1) 11:59 PM EST, January 30, 2016, 

or (2) the effective date of a final rule addressing the 2014 attest engagement 

deadlines, whichever occurs earlier. 

b. Proposal

In this action, we are proposing a new attest engagement reporting deadline for the 2013 

compliance period for RIN-generating renewable fuel producers (domestic and foreign),, RINgenerating renewable fuel importers, and other parties owning RINs of no later than January 31, 

2016. We Additionally, we are also proposing a newthe same attest engagement reporting 

deadline of January 31, 2016 for the 2013 compliance period for obligatedthese parties and 

exporters of renewable fuel of no later thanfor independent third-party auditors for the 2014 

 

137 The EPA provided guidance regarding the 2014 attest engagement reporting deadlines for renewable fuel 

exporters in its March 17, 2015 Enviroflash. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 110 of 122

compliance year. 138 With respect to the 2015 compliance year, the EPA is not proposing to 

amend the current regulations; attest engagement reports for these parties for the 2015 

compliance year are due on June 1, 2016. 

Additionally, we are also addressing the attest engagement reporting deadlines for the 

2014 compliance year. We are proposing that the new attest engagement reporting deadline for 

the 2014 compliance period for RIN-generating renewable fuel producers (domestic and 

foreign), RIN-generating importers of renewable fuel, and other parties owning RINs be no later 

than January 31, 2016. For obligated parties, for the 2014 compliance year, we are proposing that 

the new attest engagement reporting deadline be no later than December 1, 2016. Additionally, 

given the proposed extension for the 2014 compliance year, we are proposing that for obligated 

parties, for the 2015 compliance year, that the new attest engagement reporting deadline be no 

later than June 1, 2017. 

We are reiterating that for exporters of renewable fuel, for the 2014 compliance period 

from January 1, 2014 through September 16, 2014, the attest engagement reporting deadline for 

partial reports for that period is no later than June 1, 2015 as currently proscribed in the 

regulations under §80.1464(d). For exporters of renewable fuel, for the 2014 compliance period 

from January 1, 2014 through September 16, 2014, we are proposing that the new attest 

engagement reporting deadline for full reports for that period be no later than June 1, 2016. We 

are also reiterating that for exporters of renewable fuel, for the 2014 compliance period from 

September 17, 2014 through December 31, 2014, the attest engagement reporting deadline for 

full reports for that period is no later than June 1, 2015 as currently proscribed in the regulations 

under §80.1464(d).

Regarding independent third-party auditors, we permitted some independent third-party 

auditors to begin compliance with the final RFS Quality Assurance Program requirements before 

the January 1, 2015 effective date for the Q-RIN program. These independent third-party 

auditors were allowed to participate in the Q-RIN program beginning September 16, 2014 and 

would have been required to report RIN verification activities to EPA by March 31, 2015. Since 

the information collection request was not approved prior to the March 31, 2015 deadline, EPA 

has allowed independent third-party auditors that adopted the Q-RIN program early to report 

RIN verification activities to EPA with the first quarter 2015 reports due June 1, 2015. 

Therefore, since independent third-party auditor annual attest requirements are dependent upon 

the submission of the RIN verification reports to EPA, EPA is proposing that for independent 

third-party auditors, for the 2014 compliance year, the attest engagement reporting deadline be 

 

138 Regarding independent third-party auditors, we permitted some independent third-party auditors to begin 

compliance with the final RFS Quality Assurance Program requirements before the January 1, 2015 effective date 

for the Q-RIN program. These independent third-party auditors were allowed to participate in the Q-RIN program 

beginning September 16, 2014 and would have been required to report RIN verification activities to the EPA by 

March 31, 2015. Since the information collection request was not approved prior to the March 31, 2015 deadline, 

the EPA has allowed independent third-party auditors that adopted the Q-RIN program early to report RIN 

verification activities to the EPA with the first quarter 2015 reports due June 1, 2015. Therefore, since independent 

third-party auditor annual attest requirements are dependent upon the submission of the RIN verification reports to 

the EPA, the EPA is proposing that for independent third-party auditors, for the 2014 compliance year, the attest 

engagement reporting deadline be no later than January 31, 2016.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 111 of 122

no later than January 31, 2016. EPA expects that for the 2015 compliance year, RIN verification 

reports and annual attest engagement reports will be submitted in accordance with the prescribed 

schedule.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 112 of 122

VII. Public Participation

We request comment on all aspects of this proposal. This section describes how you can 

participate in this process.

A. How Do I Submit Comments?

We are opening a formal comment period by publishing this document. We will accept 

comments during the period indicated under the DATES section above. If you have an interest 

in the proposed standards, we encourage you to comment on any aspect of this rulemaking. We 

also request comment on specific topics identified throughout this proposal. 

Your comments will be most useful if you include appropriate and detailed supporting 

rationale, data, and analysis. Commenters are especially encouraged to provide specific 

suggestions for any changes that they believe need to be made. You should send all comments, 

except those containing proprietary information, to our Air Docket (see ADDRESSES section 

above) by the end of the comment period.

You may submit comments electronically, by mail, or through hand delivery/courier. To 

ensure proper receipt by EPA, identify the appropriate docket identification number in the 

subject line on the first page of your comment. Please ensure that your comments are submitted 

within the specified comment period. Comments received after the close of the comment period 

will be marked “late.” EPA is not required to consider these late comments. If you wish to 

submit Confidential Business Information (CBI) or information that is otherwise protected by 

statute, please follow the instructions in Section VII.B below.

B. How Should I Submit CBI to the Agency?

Do not submit information that you consider to be CBI electronically through the 

electronic public docket, www.regulations.gov, or by e-mail. Send or deliver information 

identified as CBI only to the following address: U.S. Environmental Protection Agency, 

Assessment and Standards Division, 2000 Traverwood Drive, Ann Arbor, MI, 48105, Attention

Docket ID EPA-HQ-OAR-2013-0479. You may claim information that you submit to EPA as 

CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD 

ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within 

the disk or CD ROM the specific information that is CBI). Information so marked will not be 

disclosed except in accordance with procedures set forth in 40 CFR part 2.

In addition to one complete version of the comments that include any information 

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

must be submitted for inclusion in the public docket. This non-CBI version of your comments 

may be submitted electronically, by mail, or through hand delivery/courier. If you submit the 

copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM 

clearly that it does not contain CBI. Information not marked as CBI will be included in the 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 113 of 122

public docket without prior notice. If you have any questions about CBI or the procedures for 

claiming CBI, please consult the person identified in the FOR FURTHER INFORMATION 

CONTACT section.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 114 of 122

VIII. Statutory and Executive Order Reviews

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

13563: Improving Regulation and Regulatory Review

This action is an economically significant regulatory action that was submitted to the 

Office of Management and Budget (OMB) for review. Any changes made in response to OMB 

recommendations have been documented in the docket. The EPA prepared an analysis of the 

potential costs and benefits associated with this action. This analysis is presented in Sections II.G 

and III.E of this preamble.

B. Paperwork Reduction Act (PRA)

This action does not impose any new information collection burden under the PRA. OMB 

has previously approved the information collection activities contained in the existing 

regulations and has assigned OMB control numbers 2060-0637 and 2060-0640. The proposed 

standards would not impose new or different reporting requirements on regulated parties than 

already exist for the RFS program.

C. Regulatory Flexibility Act (RFA)

I certify that this action will not have a significant economic impact on a substantial 

number of small entities under the RFA. In making this determination, the impact of concern is 

any significant adverse economic impact on small entities. An agency may certify that a rule will 

not have a significant economic impact on a substantial number of small entities if the rule 

relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the 

small entities subject to the rule. The impacts of the RFS2 program on small entities were 

already addressed in the RFS2 proposed rule promulgated on March 26, 2010 (75 FR 14670). 

This proposed rule will not impose any additional requirements on small entities beyond those 

already analyzed. Moreover, this rule proposes to reduce the 2014, 2015, and 2016 volume 

requirement for cellulosic biofuel, advanced biofuel, and total renewable fuel from the statutory 

volumes. We have therefore concluded that this action will have no net regulatory burden for all 

directly regulated small entities. The small entities directly regulated by the RFS program are 

small refiners, which are defined at 13 CFR 121.201 as refiners with 1,500 employees or less 

company-wide. 

EPA has conducted a screening analysis to assess whether it should make a finding that 

there would be no significant economic impact on a substantial number of small entities. We 

discuss this analysis below. The impacts of the RFS program on small entities were already 

addressed in the March 26, 2010 RFS2 rulemaking (75 FR 14670), which was a rule that 

implemented the entire program required by the Energy Independence and Security Act of 2007 

(EISA 2007). As such, the Small Business Regulatory Enforcement Fairness Act (SBREFA) 

panel process that took place prior to the 2010 rule was also for the entire RFS program and 

looked at impacts on small refiners through 2022. 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 115 of 122

For the SBREFA process for the March 26, 2010 RFS2 rulemaking, EPA conducted 

outreach, fact-finding, and analysis of the potential impacts of the program on small refiners 

which are all described in the Final Regulatory Flexibility Analysis, located in the rulemaking 

docket (EPA–HQ–OAR–2005–0161). This analysis looked at impacts to all refiners, including 

small refiners, through the year 2022 and found that the program would not have a significant 

economic impact on a substantial number of small entities, and that this impact was expected to 

decrease over time, even as the standards increased. The analysis included a cost-to-sales ratio 

test, a ratio of the estimated annualized compliance costs to the value of sales per company, for 

gasoline and/or diesel small refiners subject to the standards. From this test, it was estimated that 

all small entities would have compliance costs that are less than one percent of their sales over 

the life of the program (75 FR 14862).

This proposed rule would not impose any additional requirements on small entities 

beyond those already analyzed, since the impacts of this proposed rule are not greater or 

fundamentally different than those already considered in the analysis for the March 26, 2010 rule 

assuming full implementation of the RFS program. As shown above in Tables I.A-1 and I.A-3 

(and discussed further in Sections II and IV), this rule proposes to establish the 2014, 2015, and 

2016 volume requirements for cellulosic biofuel, advanced biofuel, and total renewable fuel at 

levels significantly below the statutory volume targets. This exercise of EPA’s waiver 

authorities reduces burdens on small entities, as compared to the burdens that would be imposed 

under the volumes specified in the Clean Air Act in the absence of waivers. Regarding the 

biomass-based diesel standard, we are proposing to increase the volume requirements for 2014-

2016 over the statutory minimum value of 1 billion gallons. However, this is a nested standard 

within the advanced biofuel category, for which we are proposing significant reductions from the 

statutory volume targets. As discussed in Section III, we are setting the biomass-based diesel 

volume requirement at a level below what is anticipated will be produced and used to satisfy the 

reduced advanced biofuel requirement. The net result of our proposed actions are a reduction in 

burden as compared to implementation of the statutory volume targets, as was assumed in the 

March 26, 2010 analysis. Furthermore, available information shows that the impact on small 

entities from implementation of this rule will not be significant. Using the maximum values of 

the illustrative costs discussed in Section II.F., the gasoline and diesel fuel volume projections in 

Table V.B.3-1, and current wholesale fuel prices, a simple cost-to-sales ratio test shows that the 

costs to small entities of the RFS standards remain less than 1% of the value of their sales.

The program also includes compliance flexibilities that can reduce impacts on small 

entities. These flexibilities include RIN trading, 20% RIN rollover allowance (up to 20% of an 

obligated party’s RVO can be met using previous-year RINs), and deficit carryforward (the 

ability to carry over a deficit from a given year into the following year, providing that the deficit 

is satisfied together with the next year’s RVO). In the March 26, 2010 final rule, we discussed 

other potential small entity flexibilities that had been suggested by the SBREFA panel or through 

comments, but we did not adopt them since they are inconsistent with EPA’s authority under the 

CAA (see 75 FR 14737). Our statutory authority to issue relief to small entities has not changed 
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 116 of 122

since that time. Additionally, as specified by the statute, the RFS regulations (at 40 CFR 

80.1441(e)(2)) allow for a small refinery139 to petition for case-by-case hardship relief. 

Given that this proposed rule would not impose additional requirements on small entities, 

would decrease burden via a reduction in required volumes as compared to statutory volume 

targets, and would not change the compliance flexibilities currently offered to small entities 

under the RFS program, we have therefore concluded that this action would not have a 

significant impact on a substantial number of directly regulated small entities. 

D. Unfunded Mandates Reform Act (UMRA)

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 

1531–1538, and does not significantly or uniquely affect small governments. The action 

implements mandates specifically and explicitly set forth in CAA section 211(o) without the 

exercise of any policy discretion by the EPA.

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.

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

Governments

This action does not have tribal implications as specified in Executive Order 13175. This 

proposed rule will be implemented at the Federal level and affects transportation fuel refiners, 

blenders, marketers, distributors, importers, exporters, and renewable fuel producers and 

importers. Tribal governments would be affected only to the extent they produce, 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

The EPA interprets Executive Order 13045 as applying only to those regulatory actions 

that concern environmental health or safety risks that the EPA has reason to believe may 

disproportionately affect children, per the definition of “covered regulatory action” in section 2-

202 of the Executive Order. This action is not subject to Executive Order 13045 because it 

implements specific standards established by Congress in statutes (CAA section 211(o)).

 

139 A small refinery, as defined by the statute, is a refinery with an average daily crude throughput of 75,000 barrels 

or less. As this is a facility-based definition, not company-based as SBA’s small refiner definition is, it follows that 

not all small refiners’ facilities meet the definition of a small refinery.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 117 of 122

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

Energy Supply, Distribution, or Use

This action is not a “significant energy action” because it is not likely to have a 

significant adverse effect on the supply, distribution, or use of energy. This action simply 

proposes the annual standards for renewable fuel under the RFS program for 2014, 2015, and 

2016.

I. National Technology Transfer and Advancement Act (NTTAA)

This rulemaking does not involve technical standards.

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

Minority Populations, and Low-Income Populations

The EPA believes that this action will not have potential disproportionately high and 

adverse human health or environmental effects on minority, low-income, or indigenous 

populations. This proposed rule does not affect the level of protection provided to human health 

or the environment by applicable air quality standards. This action does not relax the control 

measures on sources regulated by the RFS regulations and therefore will not cause emissions 

increases from these sources.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 118 of 122

IX. Statutory Authority

Statutory authority for this action comes from section 211 of the Clean Air Act, 42 

U.S.C. 7545. Additional support for the procedural and compliance related aspects of this 

proposed rule come from sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. sections 

7414, 7542, and 7601(a).

List of Subjects in 40 CFR Part 80

Environmental protection, Environmental protection, Administrative practice and procedure, Air 

pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, Oil imports, Petroleum, 

Renewable fuel.

Dated: _____________________.

___________________________

Gina McCarthy,

Administrator.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 119 of 122

For the reasons set forth in the preamble, title 40, chapter I of the Code of Federal Regulations is 

proposed to be 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).

Subpart M – [Amended]

2. Section 80.1401 is amended by adding in alphabetical order the definition for “Algae 

grown photosynthetically” to read as follows:

§ 80.1401 Definitions.

* * * * *

Algae grown photosynthetically are algae that are grown such that their energy and carbon are 

predominantly derived from photosynthesis.

* * * * *

3. Section 80.1405 is amended by:

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

b. Adding new paragraphs (a)(5), (a)(6), and (a)(7).

The additions read as follows:

§ 80.1405 What are the Renewable Fuel Standards?

(a) * * *

(5) Renewable Fuel Standards for 2014.

(i) The value of the cellulosic biofuel standard for 2014 shall be 0.019 percent.

(ii) The value of the biomass-based diesel standard for 2014 shall be 1.42 percent.

(iii) The value of the advanced biofuel standard for 2014 shall be 1.52 percent.

(iv) The value of the renewable fuel standard for 2014 shall be 9.02 percent.

(6) Renewable Fuel Standards for 2015.
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 120 of 122

(i) The value of the cellulosic biofuel standard for 2015 shall be 0.059 percent.

(ii) The value of the biomass-based diesel standard for 2015 shall be 1.41 percent.

(iii) The value of the advanced biofuel standard for 2015 shall be 1.61 percent.

(iv) The value of the renewable fuel standard for 2015 shall be 9.04 percent.

(7) Renewable Fuel Standards for 2016.

(i) The value of the cellulosic biofuel standard for 2016 shall be 0.114 percent.

(ii) The value of the biomass-based diesel standard for 2016 shall be 1.49 percent.

(iii) The value of the advanced biofuel standard for 2016 shall be 1.88 percent.

(iv) The value of the renewable fuel standard for 2016 shall be 9.63 percent.

* * * * *

4. Section 80.1426 is amended by revising rows F and H of Table 1 to §80.1426 to read as 

follows:

§ 80.1426 How are RINs generated and assigned to batches of renewable fuel by 

renewable fuel producers or importers?

* * * * *

(f) * * *

(1) * * *

Table 1 to §80.1426—Applicable D Codes for Each Fuel Pathway for Use in Generating 

RINs

Fuel type Feedstock Production process 

requirements

D-Code

* * * * * * *

F Biodiesel, 

renewable 

diesel, jet fuel 

and heating oil

Soy bean oil;

Oil from annual covercrops;

Oil from algae grown 

photosynthetically;

Biogenic waste oils/fats/greases;

Non-food grade corn oil;

Camelina sativa oil; 

One of the following:

Trans-Esterification 

Hydrotreating

Excluding processes that 

co-process renewable 

biomass and petroleum

4

* * * * * * *
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 121 of 122

H Biodiesel,

renewable 

diesel, jet fuel 

and heating oil

Soy bean oil;

Oil from annual covercrops;

Oil from algae grown 

photosynthetically;

Biogenic waste oils/fats/greases;

Non-food grade corn oil;

Camelina sativa oil; 

One of the following:

Trans-Esterification

Hydrotreating

Includes only processes 

that co-process renewable 

biomass and petroleum

5

* * * * * * *

* * * * *

5. Section 80.1451 is amended by revising paragraph (a)(1)(xiv) to read as follows:

§ 80.1451 What are the reporting requirements under the RFS program? 

(a) * * * 

(1) * * * 

(xiv)(A) For the 2013 compliance year, annual compliance reports shall be submitted no later 

than January 31, 2016.

(B) For obligated parties, for the 2014 compliance year, annual compliance reports shall be 

submitted no later June 1, 2016.

(C) For exporters of renewable fuel, for the 2014 compliance period from January 1, 2014, 

through September 16, 2014, full annual compliance reports (containing the information 

specified in § 80.1451(a)(1)(i), (a)(1)(ii), (a)(1)(vi), (a)(1)(viii), and (a)(1)(x)) for that period 

shall be submitted no later than January 31, 2016.

(D) For obligated parties, for the 2015 compliance year, annual compliance reports shall be 

submitted no later than December 1, 2016.

* * * * *

6. Section 80.1464 is amended by:

a. Revising paragraph (g).

b. Adding new paragraph (i)(3).

The addition and revision read as follows:

§80.1464 What are the attest engagement requirements under the RFS program?

* * * * *
*** EO 12866 Review - Revised Version - Not Not Cite, Quote, or Release During Review ***

Page 122 of 122

(g)(1) For obligated parties and exporters of renewable fuel, for the 2013 compliance year, 

reports required under this section shall be submitted to the EPA no later than June 1, 2016. 

(2) For RIN-generating renewable fuel producers (domestic and foreign),, RIN-generating 

importers of renewable fuel, and other parties owning RINs, for the 2013 compliance year, 

reports required under this section shall be submitted to the EPA no later than January 31, 2016.

(3) For obligated parties, for the 2014 compliance year, reports required under this section shall 

be submitted to the EPA no later than December 1, 2016. 

(4) For exporters of renewable fuel, for the 2014 compliance period from January 1, 2014, 

through September 16, 2014, full reports for that period required under this section shall be 

submitted no later than June 1, 2016.

(5) For RIN-generating renewable fuel producers (domestic and foreign),, RIN-generating 

importers of renewable fuel, and other parties owning RINs, for the 2014 compliance year, 

reports required under this section shall be submitted to the EPA no later than January 31, 2016.

(6) For obligated parties, for the 2015 compliance year, reports required under this section shall 

be submitted to the EPA no later than June 1, 2017.

* * * * *

(i) * * *

(3) Reporting requirements. For the 2014 compliance yearyears, reports required under this 

paragraph (i) shall be submitted to the EPA no later than January 31, 2016. For the 2015 

compliance year and each subsequent year, reports required under this paragraph (i) shall be 

submitted pursuant to paragraph (d) of this section.