Vol. 80 Monday, 

No. 239 December 14, 2015 

Part II 

Environmental Protection Agency 

40 CFR Part 80 

Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 

and Biomass-Based Diesel Volume for 2017; Final Rule 

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77420 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2015–0111; FRL–9939–72– 

OAR] 

RIN 2060–AS22 

Renewable Fuel Standard Program: 

Standards for 2014, 2015, and 2016 and 

Biomass-Based Diesel Volume for 

2017 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final 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 establishes the 

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 

rescinding the cellulosic biofuel 

standard for 2011. Relying on statutory 

waiver authorities, the EPA is adjusting 

the applicable volumes of advanced 

biofuel and total renewable fuel for all 

three years. The 2016 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 renewable 

fuels. In this action, we are also 

establishing the applicable volume of 

biomass-based diesel for 2017. Finally, 

we are setting the compliance and attest 

reporting deadlines for the years 2013, 

2014, and 2015, as well as finalizing 

regulatory amendments to clarify the 

scope of the existing algal biofuel 

pathway. 

DATES: This final rule is effective on 

February 12, 2016. 

ADDRESSES: The EPA has established a 

docket for this action under Docket ID 

No. EPA–HQ–OAR–2015–0111. All 

documents in the docket are listed on 

the http://www.regulations.gov Web 

site. Although listed in the index, some 

information is not publicly available, 

e.g., CBI or other information whose 

disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, is not placed in 

the electronic docket and will be 

publicly available only in hard copy 

form. Publicly available docket 

materials are available electronically 

through http://www.regulations.gov. 

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: 

General Information 

Does this Action Apply to Me? Entities 

potentially affected by this final 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 SIC 2 Codes Examples of potentially regulated entities 

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

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

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

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

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

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

Industry ............................................ 221210 4925 Manufactured gas production and distribution. 

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

1 North American Industry Classification System (NAICS). 

2Standard Industrial Classification (SIC) system code. 

This table is not intended to be 

exhaustive, but rather provides a guide 

for readers regarding entities likely to be 

regulated by this 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 

entity is 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. 

Table of Contents 

I. Executive Summary 

A. Purpose of This Action 

B. Summary of Major Provisions in This 

Action 

1. Final 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. Changes to Regulations 

8. Assessment of Aggregate Compliance 

Approach 

C. Authority for Late Action and 

Applicability of the Standards 

D. Outlook for 2017 and Beyond 

II. Advanced Biofuel and Total Renewable 

Fuel Volumes for 2014–2016 

A. Fulfilling Congressional Intent To 

Increase Use of Renewable Fuels 

B. Statutory Authorities for Reducing 

Volume Targets 

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 to Reach Statutory Volumes 

6. Inability to Reach Volumes Using Only 

the Cellulosic Waiver Authority 

C. 2014 Advanced Biofuel and Total 

Renewable Fuel Volume Requirements 

D. 2015 Advanced Biofuel and Total 

Renewable Fuel Volume Requirements 

E. Total Renewable Fuel Volume 

Requirement for 2016 

1. Renewable Fuel Market Challenges and 

Opportunities 

2. Projecting Ethanol Supply 

i. Ethanol Supply as E10 in 2016 

ii. The Impact of RIN Prices on E85 Retail 

Prices 

iii. Ethanol Supply as E85 in 2016 

iv. E0 Demand in 2016 

v. Ethanol Supply as E15 in 2016 

vi. Total Ethanol Supply in 2016 

3. Biodiesel and Renewable Diesel 

i. Feedstock Availability 

ii. Biodiesel and Renewable Diesel 

Production Capacity 

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1 75 FR 14670, March 26, 2010. 

2A 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. 

3EIA’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. 

iii. Biodiesel and Renewable Diesel Import 

Capacity 

iv. Biodiesel and Renewable Diesel 

Distribution Capacity 

v. Biodiesel and Renewable Diesel Retail 

Infrastructure Capacity 

vi. Biodiesel and Renewable Diesel 

Consumption Capacity 

vii. Biodiesel and Renewable Diesel 

Consumer Response 

viii. Projected Supply of Biodiesel and 

Renewable Diesel in 2016 

4. Projecting the Supply of Other 

Renewable Fuels 

5. Total Renewable Fuel Supply in 2016 

F. Advanced Biofuel Volume Requirement 

for 2016 

G. Market Responses to the 2016 Advanced 

Biofuel and Total Renewable Fuel 

Volume Requirements 

H. Treatment of Carryover RINs 

1. Summary of Public Comments 

2. Updated Projection of Carryover RIN 

Volume 

3. EPA’s Decision and Response to 

Comments 

i. Importance of Carryover RINs 

ii. Role of Carryover RINs Under the 

Waiver Authorities 

iii. Extent to Which the Current Bank of 

Carryover RINs Could Be Drawn Down 

Without Compromising the Beneficial 

Buffer They Provide 

iv. Whether Carryover RINs Will Be Used 

To Avoid Needed Investments 

v. Response to Other Comments 

4. Summary 

I. Impacts of Final Standards on Costs 

III. Final Biomass-Based Diesel Volumes for 

2014–2017 

A. Statutory Requirements 

B. BBD Production and Compliance 

Through 2013 

C. BBD Volumes 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. Final BBD Volume for 2015 

5. Final Volumes for 2016–2017 

E. Consideration of Statutory Factors for 

2014–2017 

1. Assessment for 2014 and 2015 BiomassBased Diesel Applicable Volume 

2. Primary and Supplementary Statutory 

Factors Assessment for 2016 and 2017 

Biomass-Based Diesel Applicable 

Volumes 

IV. Final Cellulosic Biofuel Volume for 2014– 

2016 

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. Projection From the Energy Information 

Administration 

D. Cellulosic Biofuel Volume for 2014 

E. Cellulosic Biofuel Volume for 2015 

F. Cellulosic Biofuel Volume for 2016 

G. 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. Final Standards 

VI. Amendments to Regulations 

A. Changes to the Algal Biofuel Pathways 

B. Annual Compliance Reporting and 

Attest Engagement Deadlines Under the 

RFS Program 

VII. Assessment of Aggregate Compliance 

A. Assessment of the Domestic Aggregate 

Compliance Approach 

B. Assessment of the Canadian Aggregate 

Compliance Approach 

VIII. Public Participation 

IX. 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 

K. Congressional Review Act (CRA) 

X. Statutory Authority 

I. Executive Summary 

The Renewable Fuel Standard (RFS) 

program began in 2006 pursuant to the 

requirements in Clean Air Act (CAA) 

section 211(o) 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 EISA’s stated goals include 

moving the United States toward 

‘‘greater energy independence and 

security, to increase the production of 

clean renewable fuels.’’ Since the initial 

promulgation of the RFS program 

regulations in 2007, domestic 

production and use of renewable fuel in 

the U.S. has increased substantially. 

According to the Energy Information 

Administration (EIA), fuel ethanol 

production in the U.S. more than 

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 

139 billion gallons of gasoline used for 

transportation purposes contains 10 

percent ethanol (E10). 

The fundamental objective of the RFS 

provisions under the CAA is clear: To 

increase the use of renewable fuels in 

the U.S. transportation system every 

year through at least 2022 in order to 

reduce greenhouse gases (GHGs) and 

increase energy security. Further, 

renewable fuels from facilities that 

commenced construction after 2007 

must be better performing in terms of 

their greenhouse gas emissions, as 

compared on a lifecycle basis, to the 

petroleum based fuels they are 

replacing. Cellulosic biofuels are 

required to have 60 percent or greater 

greenhouse gas (GHG) emissions 

benefits on a lifecycle basis than the 

petroleum based fuels they replace; 

advanced biofuels (including biomassbased diesel) must have a 50 percent or 

greater benefit; and conventional 

biofuels (other than grandfathered 

facilities) must have a 20 percent or 

better benefit. Increased use of 

renewable fuels means less use of fossil 

fuels, which generally results in lower 

GHG emissions over time, especially 

when 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. These lower 

GHG renewable fuels include corn 

starch ethanol, the predominant 

renewable fuel 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 

in the statutory volume tables starting in 

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5 In this document we follow the common 

practice of using the term ‘‘conventional’’ 

renewable fuel to mean any renewable fuel that is 

not an advanced biofuel. 6CAA section 211(o)(2)(B). 

7See 80 FR 33100. 

8We are also setting the BBD volume requirement 

for 2017 in this final rule. Under the statute, it was 

required to be set by November 1, 2015. 

9See Docket Item No. EPA–HQ–OAR–2015– 

0111–1219. 

2015 while the advanced volumes 

continue to grow.5

The statute includes annual volume 

targets,6 and 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. In this action, 

EPA is establishing the 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. We are also 

establishing the applicable volume of 

biomass-based diesel for 2017. 

In the June 10, 2015 notice of 

proposed rulemaking (NPRM), we 

proposed standards based on an 

approach that sought to achieve the 

Congressional intent of increasing 

renewable fuel use over time in order to 

address climate change and increase 

energy security, while at the same time 

accounting for the real-world challenges 

that have slowed progress toward such 

goals.7 Those challenges have made the 

volume targets established by Congress 

for 2014, 2015, and 2016 beyond reach. 

In the NPRM we proposed to use waiver 

mechanisms that Congress provided to 

allow for the volume targets to be 

reduced if necessary. The proposed 

volume requirements were lower than 

the statutory targets but set at a level 

that we believed would spur growth in 

renewable fuel use, consistent with 

Congressional intent. 

In this action, we are finalizing 

standards that make use of the statute’s 

waiver provisions. The final standards 

differ from the proposed standards 

based on new information, 

consideration of public comments, and 

corrected calculations. Details of these 

changes are provided below. By 

finalizing the percentage standards for 

2016 by November 30, 2015, we are 

returning to the statutory timeline for 

issuing standards under the RFS 

program.8

We received a substantial number of 

comments on our proposed use of the 

statute’s waiver authorities, with 

commenters both supporting and 

opposing our approach. In addition to 

comments on our proposed use of 

waiver authorities, we received 

comments on multiple other areas of the 

proposal, including our proposed 

treatment of carryover RINs, our 

proposed approach to determining the 

volume requirements, and other areas. 

We address these comments in this 

preamble as well as in a response-tocomment (RTC) document, which can 

be found in the docket for this action. 

While we are using the statutory 

waiver authorities in establishing final 

2014, 2015, and 2016 standards for 

cellulosic biofuel, advanced biofuel, and 

total renewable fuel, as we proposed to 

do, the volumes we are finalizing differ 

from the proposed volumes in order to 

reflect updated and corrected 

information, and to provide year-to-year 

growth consistent with the statute’s 

intent. Key corrections and updates 

include: 

• Updating our assessment of 

volumes of renewable fuel that can be 

blended at various concentrations into 

petroleum fuel and our calculation of all 

of the percentage standards to take into 

account changes in EIA’s projected 

gasoline and diesel demand for 2016. 

• Correcting an error in determining 

actual volumes of ethanol supplied in 

2014. EPA acknowledged this error in 

July 2015 by placing a memo in the 

docket.9 Correcting the error leads to a 

higher 2014 total renewable fuel volume 

requirement than the level in the NPRM. 

• Accounting for higher than 

expected supply of biodiesel and 

renewable diesel in 2015, providing a 

basis for expecting similar growth in 

biodiesel and renewable diesel volumes 

in 2016. 

For 2016, we are finalizing volume 

requirements that are significantly 

higher than proposed, and that 

represent significant growth compared 

to actual renewable fuel use in 2015. 

While some stakeholders commented 

that reductions from the statutory 

targets would lead to a stagnation in 

growth, we disagree with this view. We 

proposed a 2016 volume requirement 

for total renewable fuel that was 1.1 

billion gallons greater than the proposed 

2015 volume requirement—a significant 

level of growth in one year. Our final 

2016 volume requirements are also 

ambitious, with substantial growth in all 

four categories relative to 2015. We are 

also setting a final volume requirement 

for BBD for 2017 that continues the 

growth in that category of renewable 

fuel. The final volume requirements are 

shown in Table I–1 below. 

TABLE I–1—FINAL VOLUME REQUIREMENTS a

2014 2015 2016 2017 

Cellulosic biofuel (million gallons) ............................................................. 33 123 230 n/a 

Biomass-based diesel (billion gallons) ...................................................... 1 .63 1 .73 1 .90 2.00 

Advanced biofuel (billion gallons) .............................................................. 2 .67 2 .88 3 .61 n/a 

Renewable fuel (billion gallons) ................................................................. 16 .28 16 .93 18 .11 n/a 

aAll values are ethanol-equivalent on an energy content basis, except for BBD which is biodiesel-equivalent. 

Our decision to finalize volumes for 

total renewable fuel that rely on 

exercising the general waiver authority 

is based on the same fundamental 

reasoning we relied upon in the June 10, 

2015 proposal. Despite significant 

increases in renewable fuel use in the 

United States, real-world constraints, 

such as the slower than expected 

development of the cellulosic biofuel 

industry and constraints in the 

marketplace needed to supply certain 

biofuels to consumers, have made the 

timeline laid out by Congress 

impossible to achieve. These challenges 

remain, even as we recognize the 

success of the RFS program over the 

past decade in boosting renewable fuel 

use, and the recent signs of progress 

towards development of increasing 

volumes of advanced, low GHG-emitting 

fuels, including cellulosic biofuels. 

We believe that the RFS program can 

and will drive renewable fuel use and, 

indeed, we have considered the ability 

of the market to respond to the 

standards we set when we assessed the 

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10The ‘‘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. 

11See, for example, the supporting documents ‘‘A 

Preliminary Assessment of RIN Market Dynamics, 

RIN Prices, and Their Effects,’’ ‘‘An Assessment of 

the Impact of RIN Prices on the Retail Price of E85,’’ 

and ‘‘Correlating E85 consumption volumes with 

E85 price’’. These documents discuss the expected 

impacts of the price of RINs on the transportation 

fuels and renewable fuels marketplace, the potential 

for the RFS program to incentivize additional 

production and use of renewable fuels, and the 

observed impacts of the RFS on the fuels market 

over the past several years. 

amount of renewable fuel that can be 

supplied. Therefore, while this final 

rule applies the tools Congress provided 

to make adjustments to the statutory 

volume targets in recognition of the 

constraints that exist today, we believe 

the standards we are finalizing today 

will drive growth in renewable fuels, 

particularly advanced biofuels which 

achieve the lowest lifecycle GHG 

emissions. In our view, while Congress 

recognized that supply challenges may 

exist as evidenced by the waiver 

provisions, it did not intend growth in 

the renewable fuels market to be 

stopped by those challenges, including 

those associated with the ‘‘E10 

blendwall.’’ 10 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 

constraints in the market. The standards 

we are finalizing will provide those 

incentives. 

The final volume requirements will 

push the fuels sector to produce and 

blend more renewable fuels in 2016 in 

a manner that is consistent with the 

goals Congress envisioned. The final 

volumes are less than the statutory 

targets for 2016 but higher than what the 

market would produce and use in the 

absence of such market-driving 

standards. The 2016 standards are 

expected to spur further progress in 

overcoming current challenges and lead 

to continued growth in the production 

and use of qualifying renewable fuels, 

including higher-level ethanol blends. 

In this regard the final standards are 

intended to fulfill the spirit and intent 

of Congress and provide guidance to 

market participants. 

Various commenters in the biofuels 

industry disagreed with our assessment 

that the approach described in the 

NPRM, in which we proposed to reduce 

the statutory targets using the available 

waiver authorities, would nevertheless 

support growth in renewable fuels. We 

address these comments throughout this 

document and the response to 

comments (RTC) document. We 

emphasize, however, that our 

fundamental goal is to implement the 

RFS program in such a way as to 

promote growth of renewable fuel use 

over time. We have conducted 

significant technical analysis, both in 

the proposed rule and in this final rule, 

to better understand and characterize 

the renewable fuels market and the RFS 

program, all in an effort to implement 

the program on a schedule that matches 

as nearly as possible that set forth in the 

statute.11 We believe the approach taken 

in this final rule—in which we use the 

general waiver authority only to the 

extent necessary in light of real world 

constraints to make the requirements 

reasonably achievable, and we use the 

cellulosic waiver authority for advanced 

biofuel in a manner that allows 

advanced biofuel to significantly 

backfill for missing volumes of 

cellulosic biofuel—will achieve that 

goal. 

The RFS program can be thought of as 

a market forcing policy. The objective of 

the program is to introduce increasing 

volumes of renewable fuels, with a 

focus on cellulosic and other advanced 

renewable fuels, into the marketplace. 

Congress made the decision that this is 

an appropriate policy objective, and put 

in place a program to achieve that 

policy goal. A key issue in 

implementing any program designed to 

advance new technologies and increase 

use of existing technologies, however, is 

the question of lead time. Technologies 

are typically phased in over time—in 

many cases over many years—to allow 

for the development of the technology 

and the steady growth in penetration of 

that technology into the marketplace. 

New technologies do not typically start 

at 90 or 100 percent penetration rates; 

they can take time to overcome 

investment, technical, and market 

hurdles to their development, 

deployment and use. The greater the 

number and type of these challenges, 

the longer the lead time must be to 

achieve the desired policy goal. In 

establishing the RFS program, Congress 

not only recognized that biofuels would 

need to phase in over time, and thus 

established a ramp-up of renewable fuel 

volume targets over time, but also 

established provisions in the law 

allowing EPA to waive in whole or in 

part implementation of those targets 

under certain circumstances. Our 

exercising of those waiver authorities is 

not an attempt to undermine program 

growth, as some commenters argue, but 

rather a recognition of real world 

constraints that necessitate an adaptive 

approach to managing the program. 

Growth will, and must, continue under 

the law, but Congress recognized that in 

some cases, driving the introduction of 

a new technology requires an 

acknowledgment that new technologies 

can in some cases require longer lead 

times to achieve success. Trying to force 

growth at rates that prove infeasible 

would only undermine the certainty in 

the RFS program that is needed to 

sustain long-term growth. 

As stated in the NPRM, this final rule 

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 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 ethanol and 

biodiesel use and will require sustained 

growth in the development and use of 

advanced, non-ethanol renewable fuels, 

including drop-in renewable fuels. This 

final rule acknowledges this transition 

by finalizing volume requirements 

based not only on the volumes of 

renewable fuels that have already been 

achieved in 2014 and the months in 

2015 leading up to this final action, but 

also on the volumes that can be 

supplied in 2016 as the market 

addresses infrastructure and other 

constraints. Our final rule 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, such as 

biodiesel and renewable diesel, than has 

occurred to date, depending on how the 

market responds to the standards we set. 

The standards we are finalizing are 

consistent with the purpose of the 

statute: to significantly increase the 

amount of renewable fuel used in the 

supply of transportation fuel over time, 

particularly renewable fuels with the 

lowest lifecycle GHG emissions. 

Since the amount of renewable fuel 

that can be produced and imported is 

larger than the volume that can be 

consumed due to limited demand for 

transportation fuel and constraints on 

supply of renewable fuels to vehicles 

and engines, there is necessarily 

competition among biofuels for retail 

consumption in the United States. In 

setting the biomass-based diesel volume 

requirement we have worked to achieve 

an appropriate and reasonable balance 

between setting a volume requirement 

that would provide support for the 

established BBD industry, while also 

providing opportunities under the 

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advanced biofuel volume requirement to 

incentivize continued development and 

production of emerging biofuels. The 

approach we have used to determine the 

final 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 

market participants, including 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 over time 

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, which produce the 

greatest reductions in GHGs. To this 

end, as discussed in Section III, we are 

finalizing specific volume requirements 

for biomass-based diesel (BBD) through 

2017. 

As indicated in the NPRM, in 

establishing the standards for 2014, we 

must acknowledge that the compliance 

year has passed and any standard EPA 

sets for 2014 can no longer influence 

renewable fuel production or use in that 

year. Therefore, we are issuing a final 

rule for 2014 that reflects those volumes 

of renewable fuel that were actually 

supplied in 2014. Details regarding how 

we calculated the final ‘‘actual’’ 

volumes used in 2014 are discussed in 

Section II.C below. 

With regard to 2015, the proposed 

volume requirements were based in part 

on actual volumes supplied in the first 

part of the year, and in part based on a 

determination of growth that was 

possible (and which could be 

incentivized through the NPRM) in the 

balance of the year. Actual data on 

supply after release of the June 10, 2015 

NPRM indicates that the market 

responded to the NPRM by increasing 

supply in comparison to the period 

prior to the release of the NPRM. The 

final standards for 2015 have been set 

based on updated production and 

consumption data available as of 

issuance of this final rule, and a 

projection of what is expected to be 

produced and used through the end of 

2015, taking into account the inability of 

the market to respond to this final 

action in light of the little time 

remaining in the year. 

For 2016, our approach is to set final 

volumes that take into account both the 

constraints in the supplies that exist, 

and the ability of the RFS program to 

incentivize growth. Where appropriate 

we also take into consideration other 

factors such as the impact of the BBD 

standard on incentivizing the 

production and use of other advanced 

biofuels, and the benefits provided by 

advanced biofuels in backfilling some of 

the volume that Congress envisioned 

would be provided in 2016 by cellulosic 

biofuels. 

This final rule represents EPA’s 

commitment and continued support for 

steady growth in renewable fuel use. 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 of 

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 has leveraged several billion dollars 

more in private support for 

development of advanced renewable 

fuels. USDA’s Biofuel Infrastructure 

Partnership program will provide $100 

million in grants for the expansion of 

renewable fuel infrastructure, and their 

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 

finalizing 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 total renewable fuel. 

TABLE I.A–1—APPLICABLE VOLUMES SPECIFIED IN THE CLEAN AIR ACT

[Billion 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 

aAll 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 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 set forth in the statute 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. The individual volume 

obligations determine the number of 

RINs of each renewable fuel type that 

each obligated party must acquire and 

retire to demonstrate compliance. 

Today EPA is establishing the 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, 

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12Section 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. 

13See 78 FR 71732 (November 29, 2013) and 79 

FR 73007 (December 9, 2014). 

14See American Fuel and Petrochemical Manuf. 

et al. v. EPA (No. 15–cv–394, D.D.C.). The consent 

decree also requires that EPA respond by November 

30, 2015 to the plaintiffs’ petition seeking a waiver 

in part of the 2014 statutory volume targets. 

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 final rule. 

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) ................................ Required volume must be lesser of volume specified in CAA section 

211(o)(2)(B)(i)(III) or EPA’s projected volume in coordination with 

other federal agencies. 

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. 

Biomass-based diesel 12 ................. 211(o)(2)(B)(ii) and (v) ................... 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. 

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. 

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 section 

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 section 

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. 

By re-proposing the 2014 standards 

along with a proposed rule for the 2015 

and 2016 standards, we were not only 

able to formulate a proposed rule for 

public comment that takes into account 

the fact that 2014 is over, but we were 

also able to coordinate the treatment of 

2014 with the treatment of 2015, where 

part of the year has likewise already 

passed. We therefore withdrew the 

November 29, 2013, NPRM,13 and the 

June 10, 2015, NPRM replaced and 

superseded that earlier proposed rule. 

The timing of this final rule is being 

issued consistent with terms of a final 

consent decree entered into by the EPA 

on April 10, 2015. This consent decree 

resolves pending litigation concerning 

EPA’s failure to establish standards for 

2014 and 2015 by the statutory 

deadlines and includes a requirement 

for EPA to promulgate final standards 

for 2014 and 2015 by November 30, 

2015.14

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 final rule, we 

present our analysis of cellulosic biofuel 

production and the final applicable 

volumes for 2014, 2015, and 2016. This 

analysis is based on an assessment of 

actual cellulosic biofuel supply in 2014 

and parts of 2015, estimates from EIA, 

an evaluation of producers’ production 

plans and progress to date following 

discussions with cellulosic biofuel 

producers, and review of comments we 

received in response to the NPRM. 

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 review of the renewable 

fuels program, consultation with USDA 

and DOE as well as consideration of a 

number of factors. In Section III of this 

preamble we discuss our assessment of 

statutory and other relevant factors and 

our final volume requirements for BBD 

for 2014, 2015, 2016, and 2017. We are 

finalizing growth in the required 

volume of BBD in such a way that both 

the BBD market and other advanced 

biofuels will grow. 

Regarding advanced biofuel and total 

renewable fuel, Congress provided 

several mechanisms through which 

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15As discussed in Section II.B.1, 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. 

16A 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. 

17Other compliance flexibilities also exist, 

including use of carryover RINs and the ability for 

parties that do not have a 2013 compliance deficit 

to carry a 2014 deficit forward into 2015. 

those volumes could be reduced if 

necessary. If we lower the applicable 

volume of cellulosic biofuel below the 

volume specified in CAA section 

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 refer to this as the 

‘‘cellulosic waiver authority.’’ We may 

also reduce the applicable volumes of 

any of the four renewable fuel types 

under the ‘‘general waiver authority’’ 

provided at CAA section 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 final rule describes our use of 

the cellulosic waiver authority to reduce 

volumes of advanced biofuel and total 

renewable fuel and the general waiver 

authority to further reduce volumes of 

total renewable fuel. Exercise of our 

waiver authorities is necessary to 

address important realities, including: 

• 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 ability of the market to supply 

renewable fuels to the vehicles that can 

use them. 

We believe these realities justify the 

exercise of the authorities Congress 

provided us to waive the statutory 

volumes. At the same time, we are 

mindful that the primary objective of 

the statute is to increase renewable fuel 

use over time. For the total renewable 

fuel requirement in this rule, we are 

using the waiver authorities only to the 

extent necessary to derive applicable 

volumes that reflect the maximum 

supply that can reasonably be expected 

to be produced and consumed by a 

market that is responsive to the RFS 

standards. 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 

final total renewable fuel volume 

requirement is one that we believe 

necessarily involves considerable 

exercise of judgment. Based on our 

assessment of available renewable fuel 

supply, and after consultation with the 

Departments of Agriculture and Energy, 

we believe that adjustments to the 

statutory targets for total renewable fuel 

are warranted for 2014, 2015, and 2016. 

While the final volume requirements for 

2014 and 2015 are either equal to actual 

supply or (for 2015) a projection from 

actual supply, the volume requirement 

for 2016 will lead to growth in supply 

beyond the levels achieved in the past, 

based on the expectation that the market 

can and will respond to the standards 

we set. 

For the advanced biofuel volume 

requirements, we are using the 

cellulosic waiver authority to derive a 

volume requirement for 2014 that is 

based on actual supply; a volume 

requirement for 2015 that is based on 

actual supply during months for which 

data are available, and a projection from 

those levels for the remaining months in 

the year; and a volume requirement for 

2016 that is reasonably attainable and 

which to a significant extent will result 

in backfilling the shortfall in cellulosic 

biofuel volumes with other advanced 

biofuels that also provide substantial 

GHG emission reductions.15

B. Summary of Major Provisions in This 

Action 

This section briefly summarizes the 

major provisions of this final rule. We 

are establishing 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. This 

action also includes a final response to 

several requests we received in 2013 for 

a waiver of the 2014 standards. We are 

also finalizing an amendment to the 

regulations designed to clarify the scope 

of the algal biofuel pathway. Finally, we 

are establishing new deadlines for 

annual compliance reporting and attest 

reporting for the 2013, 2014 and 2015 

compliance years. 

1. Final Approach to Setting Standards 

for 2014, 2015, and 2016 

Because 2014 has passed, this 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 of renewable fuel in 

2014. 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 

final standards we set cannot affect the 

past. Therefore, in this action we are 

basing 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 Census 

Bureau, or retired for other purposes 

unrelated to demonstrating compliance 

with the annual standards as reported 

through EMTS.16 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 cost associated 

with the reallocation of 2014 RINs to 

those obligated parties that need them. 

However, such variations in RIN 

holdings between obligated parties 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 that were generated and are 

available for compliance. Rather, we 

believe that we should rely on the 

market to sort out the distribution of 

RINs among obligated parties as was the 

intent in establishing the RIN trading 

mechanism. We are revising the 

deadline for obligated parties to 

demonstrate compliance with the RFS 

standards to afford obligated parties 

additional time to engage in transactions 

to acquire the RINs they need for 

compliance.17

For the 2015 standards, we proposed 

volume requirements in the June 10, 

2015 NPRM that projected growth in 

renewable fuel use over the calendar 

year, even though the proposed volume 

requirements were issued mid-way 

through the year. The market appears to 

have responded to the proposal as 

monthly supply after the NPRM was 

about 5% higher than monthly supply 

before the NPRM. We believe that the 

final rule, however, will be issued too 

late in the year to have any further effect 

on supply in 2015. Therefore, in 

deriving the final 2015 volume 

requirements we used the data on actual 

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18While the fuels that are subject to the 

percentage standards are currently only nonrenewable gasoline and diesel, renewable fuels that 

are valid for compliance with the standards include 

those used as transportation fuel, heating oil, or jet 

fuel. 

19The 2015 BBD standard is based on actual data 

for the first 9 months of 2015 and a projection for 

the latter part of the year for which data on actual 

use is not available. 

supply that is available to us (through 

September 2015), along with a 

projection of supply for the remaining 

months of 2015 based on actual supply 

in the months for which we have data 

and historical trends regarding seasonal 

renewable fuel supply. In other words, 

the 2015 volume requirements are based 

on a combination of actual volumes 

supplied and an extrapolation of likely 

volumes for the remainder of the year 

that assumes that our final standards are 

issued too late in the year to have 

further influence on the renewable fuel 

supply. 

For 2016, our final volume 

requirements are issued on the statutory 

schedule, allowing the full compliance 

year for obligated parties and the market 

to react to the standards we set. 

Therefore, we assume that the standards 

can influence greater renewable fuel use 

than would be the case in the absence 

of the standards. For advanced biofuel 

and total renewable fuel, our assessment 

of 2016 supply simultaneously reflects 

the statute’s purpose to drive growth in 

renewable fuels, while also accounting 

for constraints in the market that make 

the volume targets specified in the 

statute beyond reach, as described more 

fully in Section II. Our determination 

regarding the BBD volume requirement 

has been based on consultation with 

USDA and DOE and an analysis of a set 

of factors stipulated in CAA section 

211(o)(2)(B)(ii), as described in more 

detail in Section III. Finally, as 

described in Section IV, the cellulosic 

biofuel volume requirement is based on 

a projection of production in 2016 that 

reflects a neutral aim at accuracy. 

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 determined that reductions in the 

statutory targets for advanced biofuel 

and total renewable fuel were not 

necessary. However, for 2014 and later 

years this is not the case. For 2014, this 

final rulemaking is too late to influence 

the market, and renewable fuel supply 

must necessarily be determined based 

on historical data. This is also largely 

the case for 2015, though we have 

included a projection for the latter part 

of the year for which data on actual use 

is not available. For both of these years, 

the supply of advanced and total 

renewable fuels was insufficient to 

satisfy the statutory targets. 

For 2016 we have determined that the 

volume of ethanol in the form of E10 or 

higher ethanol blends that can be 

supplied to vehicles, together with the 

volume of non-ethanol renewable fuels 

that can be supplied to vehicles, is 

insufficient to attain the statutory targets 

for both total renewable fuel and 

advanced biofuel. As a result, we are 

using the waiver authorities provided in 

CAA section 211(o)(7) to set lower 

volume requirements for these 

renewable fuel categories in 2016. We 

expect future standards to both reflect 

and anticipate progress of the industry 

and market in providing for continued 

expansion of the supply of renewable 

fuels. 

Our determination in this final rule 

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; 

the ability of available renewable fuels 

to be used as transportation fuel, heating 

oil, or jet fuel; and the ability of the 

standards to bring about market changes 

in the time available.18 Increasing 

renewable fuel supply requires all 

aspects of the market to be in place to 

support those increased volumes. Yet 

the renewable fuel marketplace is very 

complex, and includes such diverse 

elements as feedstock (e.g. corn, 

soybeans) production and transport, 

renewable fuel production and import 

facilities, distribution capacity (e.g., 

pipeline, rail, barge, and tank truck), 

terminal storage, facilities at terminals 

to blend renewable fuel into gasoline 

and diesel, vehicles/engines designed to 

use renewable fuel, and consumer fuel 

consumption. Compounding this 

complexity is the fact that these 

elements are typically under the control 

of different entities, making coordinated 

investment decisions more difficult. A 

constraint anywhere in this system can 

lead to shortfalls in renewable fuel 

supply in comparison to the statutory 

targets. As described in more detail in 

Section II.B, 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 using the waiver authorities in a 

limited way that reflects our 

understanding of how to reconcile real 

marketplace constraints with Congress’ 

intent to cause growth in renewable fuel 

use over time. 

We have established applicable 

volumes for advanced biofuel and total 

renewable fuel for 2016 that would 

result in significant volume growth over 

the levels supplied in previous years. 

Moreover, the 2016 volume requirement 

for total renewable fuel is, in our 

judgment, as ambitious as can 

reasonably be justified, and reflects the 

growth rates that can be attained under 

a program explicitly designed to compel 

the market to respond. The advanced 

biofuel volume requirement is set at a 

level that will allow reasonably 

attainable volumes of advanced biofuel 

to backfill for missing cellulosic biofuel 

volumes. 

3. Biomass-Based Diesel 

As for advanced and total renewable 

fuel in 2014 and 2015, we believe that 

it is appropriate to establish the 2014 

and 2015 volume requirements of BBD 

to reflect actual supply (including a 

projection for the latter part of 2015 that 

is primarily based on supply in the 

earlier part of the year for which data is 

available). For 2016 and 2017, to 

preserve the important role that BBD 

plays in the RFS program, as well as to 

support the volume requirements for 

advanced biofuel, we believe that it is 

appropriate to increase the BBD volume 

requirement for each year. However, we 

also believe that it is of ongoing 

importance that opportunities for other 

types of advanced biofuel, such as 

renewable diesel co-processed with 

petroleum, renewable gasoline 

blendstocks, and renewable heating oil, 

as well as others that are under 

development be incentivized and 

expanded. 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 finalizing 

the 2014 and 2015 BBD volume 

requirement at the actual volumes of 

1.63 and 1.73 billion gallons,19

respectively, but we are also finalizing 

increases in the applicable volume of 

BBD to 1.9 and 2.0 billion gallons for 

years 2016 and 2017, respectively. We 

believe that these increases support the 

overall goals of the program while also 

maintaining the incentive for 

development and growth in production 

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20See 79 FR 42128 (July 18, 2014). 21 78 FR 71732 (November 29, 2013) and 78 FR 

71607 (November 19, 2013), respectively. 

22EPA has received, to date, waiver petitions 

from Governors Deal (GA), Fallin (OK), Perry (TX), 

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 

growth in production of other types of 

advanced biofuel with comparable or 

potentially superior environmental or 

other attributes. 

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. This volume included a 

significant number of cellulosic biofuel 

RINs generated for cellulosic CNG/LNG 

from biogas through a new pathway 

approved by EPA in 2014.20 For 2014 

we are finalizing 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 

finalizing a cellulosic biofuel standard 

of 123 million ethanol-equivalent 

gallons for 2015 and 230 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 will be made 

available in the U.S. in 2015 and 2016, 

we researched all potential production 

sources by company and facility. This 

included sources still in the planning 

stages, facilities under construction, 

facilities in the commissioning or startup phases, and facilities already 

producing some volume of cellulosic 

biofuel. Facilities primarily focused on 

R&D 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 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. EPA also received a 

projection of liquid cellulosic biofuel 

production in 2016 from EIA, which 

helped form the basis of our production 

for these types of cellulosic biofuels. 

Further discussion of these factors and 

the way they were used to determine 

our final 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 producer 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 

final percentage standards was provided 

by EIA. The final percentage 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—FINAL PERCENTAGE STANDARDS

2014 

(%) 

2015 

(%) 

2016 

(%) 

Cellulosic biofuel .................................................................................................................... 0 .019 0 .069 0 .128 

Biomass-based diesel ............................................................................................................ 1 .41 1 .49 1 .59 

Advanced biofuel ................................................................................................................... 1 .51 1 .62 2 .01 

Renewable fuel ...................................................................................................................... 9 .19 9 .52 10 .10 

6. Response to Requests for a Waiver of 

the 2014 Standards 

Concurrently with the November 29, 

2013, proposed rule for 2014 RFS 

standards, we also published a separate 

Federal Register Notice 21 indicating 

that the American Petroleum Institute 

(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 eight 

Governors.22

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Otter (ID), LePage (ME), Martinez (NM), 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. 

The petitions generally asserted that 

for 2014 there is an inadequate domestic 

supply of renewable fuel and therefore 

RINs, due both to the E10 blendwall and 

constraints on the supply of higher-level 

ethanol blends, and of non-ethanol 

renewable fuels. Many 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. For total 

renewable fuel, cellulosic biofuel and 

advanced biofuels, this approach results 

in volume requirements as close to the 

statutory volume targets as possible 

absent using the availability of carryover 

RINs as a justification for setting higher 

requirements. We considered that 

option, but, as described in detail in 

Section II.H., we do not interpret 

carryover RINs to be part of the 

‘‘supply’’ of renewable fuel for purposes 

of assessing whether an inadequate 

domestic supply exists to justify a 

waiver under section 211(o)(7)(A) and, 

although they are a relevant 

consideration in determining whether or 

not we should exercise our discretion to 

grant a waiver under either the general 

waiver authority or the cellulosic waiver 

authority, we have determined that the 

current bank of carryover RINs serves 

important program functions, and that 

the requirements for 2014–2016 should 

not be intentionally set at levels that 

would require a draw-down in the 

current bank of carryover RINs. We also 

considered, given the late nature of this 

rulemaking with respect to 2014, the 

possibility of setting the 2014 

requirements at the levels originally 

proposed in November 2013, as 

suggested by some obligated party 

commenters that asserted that they used 

those proposed levels for planning 

purposes. However, we do not believe it 

would have been reasonable for 

obligated parties to assume that the 

November 2013 proposed volumes 

would be finalized unchanged. The 

statutory volume targets for cellulosic 

biofuel, advanced biofuel and total 

renewable fuel, as well as NPRM 

preamble statements for these fuels and 

biomass-based diesel, clearly provided 

notice to obligated parties that the final 

volume requirements could be 

substantially different than proposed. 

Nevertheless, we have extended the 

2014 compliance demonstration 

deadline to allow such parties 

additional time to acquire the RINs 

needed for compliance. In light of all of 

these considerations, we have 

determined that it is appropriate to 

establish volume requirements for 2014 

that reflect actual renewable fuel supply 

in that year. 

To the extent that EPA’s independent 

action to reduce statutory volumes 

satisfies the petition requests, those 

requests are now moot and EPA is 

taking no further action with respect to 

them. EPA is denying the waiver 

petitions to the extent they seek 

differing reductions in applicable 

volumes than are set forth in this final 

rule. We believe it is unnecessary to 

evaluate concerns raised by certain 

petitioners that implementation of the 

statutory applicable volumes would 

cause severe economic harm, since such 

concerns were predicated on underlying 

concerns of inadequate domestic supply 

and such supply concerns are directly 

addressed by this final rule. 

7. Changes to Regulations 

In addition to finalizing the 

aforementioned volume requirements 

and associated percentage standards, we 

are also finalizing amendments to the 

RFS requirements to address two issues. 

First, we are finalizing changes with 

respect to the previously-approved algal 

oil pathways in Table 1 to 40 CFR 

80.1426 to clarify that only biofuels 

produced from oil from algae grown 

photosynthetically qualify for the RFS 

program under the algal oil pathways in 

Table 1 to 40 CFR 80.1426. Since EPA 

assumed that algae would be grown 

photosynthetically when it evaluated 

the lifecycle greenhouse gas emissions 

associated with the existing algal oil 

pathways, we are clarifying the 

regulatory description of these pathways 

to align with EPA’s technical 

assessment and interpretation of the 

scope of the pathways. 

We are aware of 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. 

EPA has not conducted a full lifecycle 

GHG analysis of emissions associated 

with biofuel produced using nonphotosynthetic algae. Such analysis 

would need to be completed in order to 

determine whether fuels produced using 

these microorganisms meet the lifecycle 

GHG threshold for advanced biofuels. 

We are also finalizing revisions to 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, renewable fuel exporters, 

and independent third-party auditors 

for the 2013, 2014, and 2015 compliance 

years. The deadlines vary for each of 

these parties depending on the 

applicable compliance period, and some 

parties will be required to submit partial 

annual reports representing a portion of 

the 2014 compliance year. A detailed 

description of our changes to reporting 

deadlines can be found in Section VI.B. 

8. Assessment of Aggregate Compliance 

Approach 

By November 30 of each year we are 

required to assess the status of the 

aggregate compliance approach to landuse restrictions under the definition of 

renewable biomass for both the U.S. and 

Canada. In today’s action we are 

providing the final announcements for 

these administrative actions. 

As part of the RFS regulations, EPA 

established an aggregate compliance 

approach for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land. This 

compliance approach relieved such 

producers (and importers of such fuel) 

of the individual recordkeeping and 

reporting requirements otherwise 

required of producers and importers to 

verify that such feedstocks used in the 

production of renewable fuel meet the 

definition of renewable biomass. EPA 

determined that 402 million acres of 

U.S. agricultural land was available in 

2007 (the year of EISA enactment) for 

production of crops and crop residue 

that would meet the definition of 

renewable biomass, and determined that 

as long as this total number of acres is 

not exceeded, it is unlikely that new 

land has been devoted to crop 

production based on historical trends 

and economic considerations. We 

indicated that we would conduct an 

annual evaluation of total U.S. acreage 

that is cropland, pastureland, or 

conservation reserve program land, and 

that if the value exceed 402 million 

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acres, producers using domestically 

grown crops or crop residue to produce 

renewable fuel would be subject to 

individual recordkeeping and reporting 

to verify that their feedstocks meet the 

definition of renewable biomass. As 

described in Section VII.A, based on 

data provided by the USDA, we have 

estimated that U.S. agricultural land did 

not exceed the 2007 baseline acreage in 

2013, 2014, or 2015. This assessment 

means that the aggregate compliance 

provision can continue to be used in the 

U.S. for calendar years 2014, 2015, and 

2016. 

On September 29, 2011, EPA 

approved the use of a similar aggregate 

compliance approach for planted crops 

and crop residue grown in Canada. The 

Government of Canada utilized several 

types of land use data to demonstrate 

that the land included in their 124 

million acre baseline is cropland, 

pastureland or land equivalent to U.S. 

Conservation Reserve Program land that 

was cleared or cultivated prior to 

December 19, 2007, and was actively 

managed or fallow and non-forested on 

that date (and is therefore RFS2 

qualifying land). As described in 

Section VII.B, based on data provided 

by Canada, we have estimated that 

Canadian agricultural land did not 

exceed the 2007 baseline acreage in 

2013, 2014, or 2015. This assessment 

means that the aggregate compliance 

provision can continue to be used in 

Canada for calendar years 2014, 2015, 

and 2016. 

C. Authority for Late Action and 

Applicability of the Standards 

Under CAA section 211(o)(3)(B)(i), 

EPA must determine and publish the 

annual percentage standards by 

November 30 of the preceding year, and 

under CAA section 211(o)(3)(B)(ii) it 

must establish applicable volumes for 

biomass-based diesel 14 months in 

advance of the corresponding 

compliance year. EPA did not meet 

these statutory deadlines for the 2014 

and 2015 percentage standards, or for 

the BBD applicable volumes established 

in this rule. Nevertheless, the 

percentage standards established 

through this rulemaking will apply to 

all gasoline and diesel produced or 

imported in calendar years 2014, 2015, 

or 2016 as applicable, and the 2017 

applicable volume will form the basis 

for the BBD percentage standard that is 

required by statute to be established by 

November 30, 2016, that will apply to 

all biodiesel produced or imported in 

2017. 

We acknowledge that this rule is 

being finalized later than the statutory 

deadlines noted above. However, the 

statute requires that EPA established 

percentage standards applicable to each 

calendar year, and applicable volumes 

for BBD, and we do not believe we are 

relieved of these obligations by missing 

the statutory deadlines. Moreover, 

parties have been producing and using 

renewable fuels, and generating and 

acquiring RINs for compliance even in 

the absence of the annual standards 

being in place, with the expectation that 

the requirements would ultimately be 

finalized. We believe it is important not 

to upset these reasonable expectations, 

both for the parties involved and for the 

long-term integrity of the RFS program. 

The 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 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 BBD applicable volumes for 

2014–2017, notwithstanding EPA’s 

delay. 

EPA is exercising its authority to issue 

standards applicable to past time 

periods in a reasonable way. Thus, for 

2014, EPA is establishing renewable fuel 

obligations that reflect actual renewable 

fuel used as transportation fuel, heating 

oil, or jet fuel during that time period, 

and the final August 1, 2016 compliance 

deadline for 2014 (which is two months 

later than proposed) will allow time for 

obligated parties to complete necessary 

transactions to meet obligations. For 

2015 we are similarly taking into 

account actual renewable fuel use 

during the time that has already passed 

in 2015, and establishing an extended 

compliance demonstration deadline of 

December 1, 2016—a full year after 

signature of today’s rule, and 11 months 

after the close of the 2015 compliance 

period. 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 

final volume requirements and 

standards. While we acknowledge the 

uncertainty that the market has 

experienced due to the delay, our final 

rule bases the applicable volume 

requirements for 2014 and 2015 on an 

assessment of past production. As a 

result, there will be an adequate 

quantity of RINs available to satisfy 

those portions of the final requirements. 

In addition, there are a number of 

program flexibilities that will facilitate 

compliance. There is a bank of carryover 

RINs that will make the RIN market 

more fluid, and facilitate the acquisition 

of RINs that can be used to comply with 

the 2014 RVOs. That same 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 year, and in any 

competitive marketplace, and we 

believe that obligated parties have had 

sufficient experience with the RFS 

program to have learned to take 

appropriate precautionary measures to 

avoid such results. 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. 

Some commenters asserted that BBD 

volume requirements for 2014 and 2015 

should be set at the level proposed in 

November, 2013, rather than levels 

actually supplied in those years. Some 

commenters suggested that all 2014 

volume requirements should be set 

equal to those proposed in 2013. As 

described in Section III, EPA disagrees 

with these commenters that obligated 

parties lacked notice that EPA could set 

final volume requirements for these 

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years higher than proposed in 2013, or 

that setting the requirements to reflect 

actual supply would pose an 

unreasonable burden on obligated 

parties, particularly in light of the 

nested nature of the standards. 

Sufficient RINs were generated in these 

years to allow compliance, and 

carryover RINs, deficit carryforwards 

and delayed compliance demonstration 

deadlines are all in place to facilitate 

compliance. In sum, we believe that 

EPA’s final approach is authorized and 

reasonable, though late. 

D. Outlook for 2017 and Beyond 

We recognize the important public 

policy goals at the heart of the RFS 

program, and we acknowledge 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 finalized 

today 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, and we intend to set 

standards in future years that continue 

to capitalize on the market’s ability to 

respond to those standards with 

expansions in production and 

infrastructure. 

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.E, we believe that the market is 

capable of responding to ambitious 

standards by expanding all segments of 

the market needed to increase 

renewable fuel supply and modify fuel 

pricing to provide incentives for the 

production and use of renewable fuels. 

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 as we have for the 2016 

volumes in this rule. In particular we 

will focus on the emergence of 

advanced biofuels including cellulosic 

biofuel consistent with the statute. 

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. 

We also intend to take additional 

steps to facilitate the development and 

use of advanced biofuels. In particular, 

we will be initiating action to allow the 

production of renewable fuels to occur 

in steps at more than one facility. Partial 

conversion of a renewable feedstock 

into a so-called ‘‘biointermediate’’ at 

remote facilities for subsequent final 

processing into renewable biofuel at the 

primary production facility has been 

identified by several industry members 

as an important option to reduce the 

cost and enhance the availability of 

cellulosic and other advanced biofuels. 

However, under the existing RFS 

regulations, renewable fuels must 

generally be produced from renewable 

feedstocks at a single facility in order to 

be eligible to generate RINs. We are 

currently working on a rulemaking that 

would propose amendments to the RFS 

program to allow for more favorable 

treatment of such biointermediates. We 

believe a rulemaking is necessary to 

provide clarity for stakeholders and for 

proper compliance and enforcement 

oversight. 

We believe that the use of 

biointermediates to produce renewable 

fuels holds considerable promise for the 

future growth in production of the 

cellulosic and advanced biofuels 

required under the RFS program. While 

near-term production may be modest, 

significant potential for further growth 

in the long-term exists, as these 

technologies can lower the cost of 

utilizing cellulosic and other feedstocks 

for the production of renewable fuels by 

reducing the storage and transportation 

costs associated with cellulosic biomass 

and taking advantage of existing ethanol 

and petroleum refinery assets to convert 

the biomass to renewable fuel. This 

makes biointermediates a critical 

component of the growth of the RFS 

program in the future and in particular 

the growth of cellulosic biofuel 

volumes. 

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 

improving incentives provided by the 

RFS program to overcome challenges 

that limit the potential for increased 

volumes of renewable fuels. A number 

of commenters provided ideas in this 

regard, including suggestions that EPA 

take regulatory action to modify the 

administration of the cellulosic waiver 

credit (CWC) program to better provide 

stronger support for actual volume 

purchases, and to change the RFS 

program’s point of obligation from its 

current focus on producers and 

importers of gasoline and diesel. Both of 

these issues are beyond the scope of this 

rulemaking. However, we will continue 

to actively monitor the functioning of 

the market, assess all relevant data, and 

review our options as necessary. 

II. 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 through 2022 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 

pursuant to CAA section 211(o)(7)(D), or 

if the criteria are met for use of the 

general waiver authority under CAA 

section 211(o)(7)(A). We have evaluated 

the capabilities of the market and have 

concluded that the volumes for 

advanced biofuel and total renewable 

fuel specified in the statute cannot be 

achieved in 2014, 2015, or 2016. As a 

result we are exercising our discretion 

under these statutory provisions to 

reduce the applicable volumes of 

advanced biofuel and total renewable 

fuel to reflect the fact that this final rule 

cannot have an impact on renewable 

fuel use in the past, and to address 

constraints on the supply of renewable 

fuels in the future that are driven by 

both limitations in production or 

importation of these fuels and factors 

that limit supplying them to vehicles 

that can consume them. 

While we are using our waiver 

authorities under the law to reduce 

applicable volumes from the statutory 

levels, we are setting the final volume 

requirements at levels that are intended 

to drive significant growth in renewable 

fuel use beyond what would occur in 

the absence of such requirements, as 

Congress intended. The final volume 

requirements recognize the ability of the 

market to respond to the standards we 

set while staying within the limits of 

feasibility. The net impact of these final 

volume requirements is that the 

necessary volumes of both advanced 

biofuel and conventional (nonadvanced) renewable fuel would 

significantly increase over levels used in 

the past. The volumes that we are 

finalizing today are shown below. 

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23Based on data from the Energy Information 

Administration. 

24Assumes 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. 

25Congress specified that a minimum of 1 billion 

gallons of the 2022 total would be biomass-based 

diesel, but did not otherwise specify what specific 

fuel types would comprise the total. For example, 

although Congress envisioned substantial growth in 

cellulosic biofuels, that fuel category is defined by 

reference to the feedstock used and the GHG 

reductions obtained; finished cellulosic biofuels 

could include such diverse products as ethanol, 

renewable gasoline, naphtha, compressed natural 

gas, or electricity. 

TABLE II–1—FINAL VOLUME REQUIREMENTS

[Billion gallons] 

2014 2015 2016 

Advanced biofuel ......................................................................................................................... 2.67 2.88 3.61 

Total renewable fuel .................................................................................................................... 16.28 16.93 18.11 

A. 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 well 

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 supply growth rates were far 

lower: 0.8 billion gallons per year for 

ethanol (what has to date been the 

principal non-advanced renewable fuel 

under the RFS program), and 0.07 

billion gallons per year for biodiesel (the 

principal advanced biofuel to date 

under the RFS program).23 The supply 

of other renewable fuels during this 

timeframe was close to 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). 

Congressional intent is evident in the 

fact that the non-advanced volumes 

remain at a constant 15 billion gallons 

in the statutory volume tables starting in 

2015 while the advanced volumes 

continue to grow through 2022 to a total 

of 21 billion gallon. It is apparent, 

therefore, that Congress intended 

changes in the extent and pace of 

growth of renewable fuel use 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 (AEO 2007) projected 

that 17.3 billion gallons of ethanol was 

the maximum that could be consumed 

in 2022 if all gasoline contained E10 

and there was no E0, E15, or E85.24

Furthermore, the AEO 2007 did not 

reflect the fuel economy standards that 

were also enacted in EISA, which has 

further reduced the amount of gasoline 

consumed based on more strict vehicle 

fuel economy and efficiency standards. 

However, 17.3 billion gallons is far less 

than the 36 billion gallons of renewable 

fuel that Congress targeted for use in 

2022.25 Thus, if the statutory targets for 

2022 were to be achieved, 18.7 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 drive substantial market 

changes in a relatively short period of 

time. 

Some commenters stated that EPA 

would be acting in a manner 

inconsistent with Congressional intent 

to increase renewable fuel use if we 

finalized volumes below the statutory 

volume targets. These commenters 

believed Congress set these targets at a 

level that would help incentivize 

investments such as building out new 

and existing capacity, installing storage/ 

distribution infrastructure and 

advancing technology—all of which 

would help to increase volumes and 

achieve the targets within the specified 

timeframe in the statute. We agree that 

Congress set ambitious volume targets 

as a mechanism to push renewable fuel 

volume growth under the RFS program. 

However, Congress also provided EPA 

with waiver authority, in part to address 

the situation where supply of renewable 

fuel does not match these ambitious 

target levels. As a result we disagree 

with commenters who asserted that any 

EPA action to lower applicable volumes 

is not aligned with Congressional intent. 

The final volume requirements are set 

consistent with the Congressionallyestablished waiver authorities. The 

volumes required by this rule are 

ambitious and to attain them will 

require new investments and a 

responsive market. 

Congress did not explicitly indicate, 

in EISA or in any other document 

associated with the legislation, the sort 

of changes that may have been expected 

to occur to reach 36 billion gallons by 

2022. Today we know that possible 

approaches to significantly expand 

renewable fuel use fall into a number of 

areas, such as: 

• 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 cellulosic and 

other non-food based feedstocks, and 

• Co-development of new technology 

vehicles and engines optimized for new 

fuels. 

Some commenters stated that the 

changes in these areas (which were also 

noted in the NPRM) cannot help to 

achieve growth in renewable fuel use 

within the timeframe necessary to help 

meet the 2015 and 2016 volumes 

requirements. Commenters further 

stated that some of these ideas should 

not be supported at all, such as 

increasing imports of biofuels because 

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doing so would be inconsistent with 

Congressional intent to increase energy 

security through domestic biofuels. We 

agree with commenters that we will not 

see dramatic changes in every area we 

highlighted in the timeframe necessary 

to increase renewable fuel supply 

through 2016, but we believe that 

developments in some of these areas 

have been and will continue to occur, 

and that such changes will contribute to 

attaining the volumes finalized in this 

rule. We disagree with commenters that 

supporting imports of biofuels is 

inconsistent with Congressional intent. 

The statute does not discriminate 

between domestically-produced and 

imported biofuels and an increased 

diversity of fuels, including those 

imported from a variety of countries, 

helps improve energy security. For 

further discussion of imports, see 

Sections II.E.3.iii and II.F. 

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 renewable fuels (e.g., 

increased E15 use and other nonethanol renewable fuels such as 

naphtha). 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 ambitiously 

increasing the use of renewable fuel 

over time. To this end, the approach 

presented in this action makes use of 

the statutory waiver authorities only to 

the degree necessary. 

We believe that over time use of both 

higher level ethanol blends and nonethanol 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 and 

other challenges, we do not believe that 

Congress intended that the E10 

blendwall or any other particular 

limitation would present a barrier to the 

expansion of 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. 

B. Statutory Authorities for Reducing 

Volume Targets 

Congress specified increasing annual 

volume targets 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 requirements for 

subsequent years after consideration of 

several specified factors. However, 

Congress recognized that circumstances 

could arise that might require a 

reduction in the volume targets 

specified in the statute as evidenced by 

the waiver provisions in CAA section 

211(o)(7). As described below, we 

believe that limitations in production 

and importation of cellulosic biofuels 

provide EPA with authority to waive 

volumes of cellulosic biofuel, total 

renewable fuel, and advanced biofuel 

volumes pursuant to section 

211(o)(7)(D). In addition, limitations in 

the production and importation of 

qualifying renewable fuels, along with 

factors that limit supplying those fuels 

to the vehicles that can consume them 

constitute circumstances that warrant a 

waiver of the total renewable fuel 

requirement under section 211(o)(7)(A). 

With regard to ethanol, a number of 

market factors combine to place 

significant restrictions on the continued 

growth in the volume of ethanol that 

can be supplied to vehicles at the 

present time. The maximum amount of 

ethanol that can be consumed if all 

gasoline was E10, the limited number 

and limited geographic distribution of 

retail stations that offer higher ethanol 

blends such as E15 and E85, and the 

limited number of FFVs that have access 

to E85. Additionally, available 

information indicates that biodiesel also 

faces marketplace constraints in the rate 

at which it can grow, not only in the 

past (e.g., 2013 when despite rapid 

growth it was still insufficient to 

achieve the total and advanced 

standards) but also in the future. These 

constraints on the availability of 

biodiesel to U.S. consumers include a 

combination of competing uses for 

feedstocks, international competition for 

biodiesel, the inconsistent nature of the 

biodiesel tax credit, limited investments 

to ensure quantity and quality of 

biodiesel product, limited infrastructure 

to distribute and blend biodiesel, and 

the limited ability of the market to 

consume biodiesel. 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 total renewable fuel and 

advanced biofuel for 2014, 2015 and 

2016. 

EPA is separately using two 

complementary legal authorities to set 

required volumes of advanced biofuel 

and total renewable fuel at levels below 

the volume targets provided 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 how we 

have used them to determine 

appropriate reductions in advanced 

biofuel and total renewable fuel in 

comparison to the statutory volumes. 

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. We refer to this 

provision as the agency’s ‘‘cellulosic 

wavier authority’’ under the statute. 

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 

EPA to reduce both total renewable fuel 

and advanced biofuel, by the same 

amount, if EPA reduces the volume of 

cellulosic biofuel. 

The cellulosic waiver provision was 

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 

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26EPA had proposed to use both the cellulosic 

waiver authority and the general waiver authority 

as a basis for reducing the advanced biofuel 

applicable volume. However, such an approach is 

unnecessary given that the reductions in advanced 

biofuel volumes in 2014, 2015 and 2016 are less 

than the reductions in cellulosic biofuel applicable 

volumes in those years. Thus, for the final rule, EPA 

is relying only on the cellulosic waiver authority in 

section 211(o)(7)(D) as a basis for its reductions in 

the advanced biofuel applicable volumes. 

27We 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. However, we have 

determined that the current volume of the carryover 

RIN bank is needed as a program buffer to ensure 

flexibility to address unforeseen circumstances, and 

provide RIN market liquidity, and so should not be 

used as a basis for setting volume requirements 

higher than can be achieved through renewable fuel 

production and use. For further discussion of our 

assessment of the use of carryover RINs, see Section 

II.H. 

28The volume reduction for advanced biofuels is 

not larger than the final reduction in the applicable 

volume of cellulosic biofuel, thus, EPA could rely 

on the cellulosic waiver authority alone for its final 

action with respect to advanced biofuel. 

29See, e.g., Comments from Growth Energy, RFA, 

POET, Novozymes, The Andersons, ACORE. 

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 

(D.C. 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 commented that 

EPA may only exercise the cellulosic 

waiver authority to reduce total and 

advanced volumes 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 to exercise 

our discretion to lower volumes of total 

and advanced renewable fuels in 

circumstances where there is inadequate 

projected production or import of 

potentially qualifying renewable fuels, 

or where constraints exist that limit the 

ability of those biofuels to be used for 

purposes specified in the Act (i.e., in 

transportation fuel, heating oil or jet 

fuel). In particular, we believe that the 

cellulosic waiver authority is 

appropriately used to provide adequate 

lead time and a sufficient ramp-up 

period for non-cellulosic biofuels to be 

produced and constraints on their use 

for qualifying purposes eliminated, so 

they can fill the gap presented by a 

shortfall in cellulosic biofuels. As 

discussed in Section IV, we are reducing 

the applicable volume of cellulosic 

biofuel for 2014, 2015, and 2016, and 

thus are authorized to reduce the 

required volumes of advanced biofuel 

and total biofuel by the same or a lesser 

amount under the provisions of section 

211(o)(7)(D)(i).26 For this rulemaking, 

we have ascertained the availability of 

other advanced biofuel to satisfy some 

of the cellulosic biofuel volume 

shortfall, taking into consideration the 

constraints (including distribution and 

infrastructure constraints) that limit the 

use of non-cellulosic advanced biofuels 

to completely fill the cellulosic volume 

shortfall and are exercising our 

cellulosic waiver authority to reduce the 

advanced biofuel applicable volume to 

a level we have determined to be 

reasonably attainable.27

We are also using this authority to 

reduce total renewable volumes by the 

same amount. In past actions we have 

interpreted the cellulosic waiver 

authority as requiring equal reductions 

in advanced and total renewable fuel, 

based on concerns that EPA waiver 

decisions should not allow nonadvanced biofuels to backfill volumes 

intended by Congress to be satisfied by 

advanced biofuels. In addition to this 

consideration, the equal reduction in 

total renewable fuel is justifiable under 

the cellulosic waiver authority based on 

an assessment of volumes that can be 

produced and imported, and 

consideration of the extent to which 

those volumes can be distributed and 

used as specified in the Act. However, 

this level of reduction is insufficient to 

address all of the supply limitations 

associated with total renewable fuel. 

Therefore, we are also using the general 

waiver authority as justification for 

further reductions in total renewable 

fuel volumes, as discussed in the next 

section.28

Some commenters argued that to the 

extent volume reductions are needed at 

all, EPA could rely solely on the 

cellulosic waiver authority to provide 

such reductions.29 These commenters 

suggested that a reduction of the total 

renewable fuel and advanced biofuel 

volumes by the full amount of the 

waiver of cellulosic biofuel targets 

would result in volumes that are 

‘‘reasonably achievable,’’ and that 

consequently additional reductions 

under the general waiver authority 

would be unnecessary. However, 

commenters’ interpretation of a 

‘‘reasonably achievable’’ volume 

assumed that a large number of 

carryover RINs would be used, and 

largely ignored the practical and legal 

constraints on the consumption of 

renewable fuel. As discussed in Section 

II.E, we have determined that we should 

not set standards for the 2014–2016 time 

period so as to intentionally draw down 

the current bank of carryover RINs. We 

also present a detailed discussion of the 

constraints on renewable fuel supply in 

this and subsequent sections. 

Additionally, we believe that a 

reduction of the advanced biofuel 

volume by the full amount of the waiver 

of cellulosic biofuels is not necessary; 

higher advanced volumes can be 

attained by substituting other advanced 

biofuels for the shortfall in cellulosic 

biofuel, and moreover requiring their 

use at higher levels furthers the GHG 

reduction objectives of the Act. What 

commenters suggested would result in 

increased volumes of conventional 

renewable fuel, and decreased volumes 

of advanced fuels as compared to the 

levels EPA is finalizing today. Given the 

superior GHG performance of advanced 

biofuels, and the important role of the 

current volume of carryover RINs to RFS 

program operation, EPA does not 

believe that the commenters’ suggested 

approach would be either an 

appropriate exercise of its waiver 

authorities or be in the best interest of 

the RFS program. 

2. General Waiver Authority 

CAA section 211(o)(7)(A) provides 

that EPA, in consultation with the 

Secretary of Agriculture (USDA) and the 

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30We note that there are also pending requests 

pursuant to CAA section 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 

resolves those petitions through and/or consistent 

with this final rule establishing 2014 volume 

requirements. 

31Some commenters referred to EPA’s 2010 RFS2 

rule, 75 at 14698, where we stated that ‘‘. . . it is 

ultimately the availability of qualifying renewable 

fuel, as determined in party by the number of RINs 

in the marketplace, that will determine the extent 

to which EPA should issue a waiver of RFS 

requirements on the basic of inadequate domestic 

supply,’’ as indicating that EPA had previously 

determined that carryover RINs must be counted as 

part of ‘‘supply.’’ We disagree. The quoted language 

makes no explicit reference to carryover RINs, and 

the content indicates that the point of passage was 

to explain that it is in the interest of biofuel 

producers to generate RINs for all qualifying biofuel 

to avoid or minimize the possibity that EPA would 

grant waivers. The commenter attempts to make too 

much of this generally-worded sentence; it does not 

specify in what way the EPA will consider the 

‘‘RINs in the marketplace’’ as ‘‘part’’ of its 

assessment of the availability of renewable fuels. 

Indeed, contrary to the commenters’ suggestion, the 

focus on the ‘‘availability of renewable fuels’’ in 

this sentence could suggest that only those RINs in 

the marketplace representing liquid volumes used 

in the compliance year (and not carryover RINs 

representing historic volumes) should be taken into 

considertion. In any case, this sentence is entirely 

consistent with the approach we are taking today 

to interpret ‘‘supply’’ to refer to the volume of 

biofuels that is available and which can be expected 

to satify all of the definitional requirements to be 

renewable fuel (including ultimate use as 

transportation fuel, heating oil or jet fuel). To the 

extent we find inadequate supply of such fuels, we 

then determine whether or not we should exercise 

our discretion to issue a waiver, and we explicitly 

consider the availability of carryover RINs as part 

of that assessment. To extent the interpretation of 

general waiver authority we are asserting in this 

final rule appears inconsistent with our statement 

in 2010, or inconsistent with any other past 

statement made at a time when we were not 

actually exercising the authority, we intend for the 

interpretation we are clearly setting forth today to 

be clarification/modification of such prior 

statements. 

32For example, see http://oxford

dictionaries.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.’’). 

33For this reason, EPA’s implementing 

regulations specify that RINs may not be generated 

for biofuels with multiple possible end uses, such 

as biogas or electricity, absent a demonstration that 

they will be used by the ultimate consumers as 

transportation fuel. See 40 CFR 80.1426(f)(10)(ii)(B), 

(f)(11)(i)(B) and (f)(11)(ii)(B). Similarly, although 

RINs are generated upon production for biofuels 

like denatured ethanol that do not have uses other 

than as transportation fuel, our regulations require 

the retirement of RINs for any volumes of such fuels 

that are exported, since exported biofuels are not 

used as transportation fuel in the U.S. See 72 FR 

23909 col 2–3; 40 CFR 80.1430. See also 

§§ 80.1460(c)(2), and 80.1460(g), specifying that use 

of RINs representing fuel used for non-qualifying 

purposes for compliance with RVOs is a prohibited 

act. 

Secretary of Energy (DOE), may waive 

the applicable volume specified in the 

Act in whole or in part based on a 

petition by one or more States, by any 

person subject to the requirements of 

the Act, or by the EPA Administrator on 

her own motion. Such a waiver must be 

based on a determination by the 

Administrator, after public notice and 

opportunity for comment, that: 

• Implementation of the requirement 

would severely harm the economy or 

the environment of a State, a region, or 

the United States; or 

• There is an inadequate domestic 

supply. 

In today’s final action, we are using 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.30 As required by statute, we 

have consulted with both USDA and 

DOE in taking this action. We are using 

this authority to provide an additional 

increment of volume reduction for total 

renewable fuel beyond the reduction 

accomplished through the use of the 

cellulosic waiver authority. 

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 to 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,’’has never before done 

so in the context of deriving an 

appropriate annual RFS standard.31 As 

explained in greater detail below, we 

believe that this undefined 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 section 

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.32 Hence the evaluation of 

the supply of renewable transportation 

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 transportation fuel 

available for use by the ultimate 

consumers in transportation fuel. 

Supplying biofuel 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 biofuels 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 biofuel 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.’’ 

We believe that our 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 

biofuel, but rather to provide that 

certain volumes of biofuel be used by 

the ultimate consumer as a replacement 

for the use of fossil-based fuel in the 

United States. 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)(J). In addition the definition of 

‘‘additional renewable fuel’’ specifies 

that it is fuel that is ‘‘used to replace or 

reduce the quantity of fossil fuel present 

in home heating oil or jet fuel.’’ CAA 

section 211(o)(1)(A.). Thus, there is no 

‘‘renewable fuel’’ and the RFS program 

does not achieve the desired benefits of 

the program unless biofuels like ethanol 

and biodiesel are actually used to 

replace fossil-based transportation fuels, 

heating oil or jet fuel in the United 

States.33 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, heating oil or jet fuel in the United 

States. Imposing RFS volume 

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requirements on obligated parties 

without consideration of the ability of 

the obligated parties and other parties to 

deliver the biofuel to the ultimate 

consumers would achieve no such 

benefits and would fail to account for 

the complexities of the fuel system that 

delivers qualifying fuels to consumers. 

We do not believe it would be 

appropriate to interpret the RFS general 

waiver provision in such a narrow way. 

We are thus interpreting ‘‘inadequate 

domestic supply’’ in light of the 

definitions of ‘‘renewable fuel’’ and 

‘‘additional renewable fuel’’ and the 

requirements of CAA section 

211(o)(2)(A)(i) that requires that the fuel 

be ‘‘used to replace or reduce the 

quantity of fossil fuel present in a 

transportation fuel’’ or in ‘‘home heating 

oil or jet fuel’’ in the United States. 

In determining whether ‘‘supply’’ is 

adequate, we believe that we should 

consider only those volumes of biofuel 

that are expected to satisfy all of the 

relevant statutory definitions and 

requirements. There are two principal 

components to the definition of 

renewable fuel and additional 

renewable fuel: That it be made from 

renewable biomass and that it be used 

in transportation fuel. CAA section 

211(o)(1)(J); CAA section 211(o)(1)(A). 

Ignoring the extent to which a fuel can 

actually be used in transportation fuel 

(or in heating oil or jet fuel) in the 

inadequate domestic supply inquiry 

would involve ignoring a critical 

element of the definition, and begs the 

question of whether in assessing 

‘‘supply’’ EPA should also ignore the 

renewable biomass component of the 

definition of renewable fuel or other 

requirements specified in the Act such 

as the requirement that transportation 

fuel containing renewable fuel be used 

in the United States and that subcategories of renewable fuel achieve 

specified levels of GHG reduction. We 

believe that ignoring any component of 

the definition of renewable fuel or the 

other provisions of the Act that affect 

the types of renewable fuels that qualify 

under the Act would be inconsistent 

with the objective of the waiver 

provision, which is to determine if 

sufficient qualifying fuels are present. 

For example, if there was abundant 

production of biofuel that was not made 

from renewable biomass (and therefore 

did not qualify as renewable fuel under 

the Act), but insufficient volumes of fuel 

that was made from renewable biomass 

and met other requirements, we believe 

that EPA would be authorized to grant 

a waiver on the basis of inadequate 

domestic supply since compliance 

would not be possible notwithstanding 

the abundance of non-qualifying 

biofuel. This situation is directly 

comparable to the one we are 

experiencing at present where an 

abundance of biofuels are produced that 

cannot actually be used in 

transportation fuel, heating oil or jet fuel 

in the United States. The biofuels that 

cannot actually be used for qualifying 

uses, due to constraints discussed in 

Sections II.E and II.F, are not 

‘‘renewable fuels’’ and, we believe, are 

appropriately excluded from our 

assessment of ‘‘supply.’’ 

The waiver provision also does not 

specify what factors are relevant in 

determining the adequacy of the supply. 

Adequacy of the supply would logically 

be understood in terms of the parties 

who use the supply of renewable 

qualifying fuels. Adequacy of supply 

could affect various parties, including 

obligated parties, blenders, and 

consumers. Adequacy of the renewable 

fuel supply with respect to the 

consumer might well involve 

consideration of factors different from 

those involved when considering 

adequacy of the upstream supply of 

biofuels to the obligated parties. We 

believe that interpreting this waiver 

provision as authorizing EPA to 

consider the adequacy of supply of 

renewable fuel to the ultimate consumer 

appropriately allows consideration of 

upstream supply constraints to all of the 

relevant parties, including the adequacy 

of supply of biofuels to obligated parties 

and blenders, as well as the ability to 

deliver qualifying renewable fuels to the 

consumer. This is particularly 

appropriate in the context of a fuel 

program that is aimed at increasing the 

use of renewable fuel by consumers in 

transportation fuel, heating oil or jet 

fuel. 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 authorities, 

and they highlight both the ambiguity of 

the RFS general waiver authority and 

the reasonableness of applying it 

broadly to include adequacy of supply 

to the ultimate consumer of qualifying 

fuels. For example, CAA section 

211(k)(6) provides EPA with authority 

for 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 optin: 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 optin 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’’ carries with it an implication 

that there is a 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 ability to supply 

the renewable fuel in transportation 

fuel, heating oil or jet fuel to the 

ultimate consumer. As in the RFG 

provision, however, the adequacy of 

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34The 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 opt-in 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 distributed and 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. An 

analogous situation applies for biodiesel as 

discussed in section II.E.3. 

35 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. 

36H.R. 6 and S. 606 as reported by Senate Envt. 

& Public Works in Senate Report 109–74. 

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 for a qualifying purpose.34 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. The RFS waiver provision 

does not contain any such explicit 

clarification from Congress, thus 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 to the ultimate 

consumer. 

CAA section 211(m)(3)(C) allows EPA 

to delay the effective date of oxygenated 

gasoline requirements for certain carbon 

monoxide nonattainment areas if EPA 

finds ‘‘an inadequate domestic supply 

of, or distribution capacity for, 

oxygenated gasoline . . . or fuel 

additives’’ needed to make oxygenated 

gasoline. Here, Congress chose to 

expressly differentiate between 

‘‘domestic supply’’ and ‘‘distribution 

capacity,’’ indicating that each of these 

elements was to be considered 

separately. This would indicate that the 

term inadequate supply, although 

ambiguous for the reasons discussed 

above, could in appropriate 

circumstances be read as more limited 

in scope. In contrast to the RFS waiver 

provision, the section 211(m) waiver 

provision includes additional text that 

makes clear that EPA’s authority 

includes consideration of distribution 

capacity—reducing the ambiguity 

inherent in using just the general phrase 

‘‘inadequate domestic supply.’’ 

Presumably this avoids a situation 

where ambiguity would result in an 

overly narrow administrative 

interpretation. The oxygenated gasoline 

waiver provision is also instructive in 

that it clarifies that it applies separately 

to both finished oxygenated fuel and to 

oxygenated fuel blending components. 

That is, there could be an adequate 

supply of the oxygenate, such as 

ethanol, but not an adequate supply of 

the blended fuel which is sold to the 

consumer. The RFS waiver provision 

employs the phrase ‘‘inadequate 

domestic supply’’ without further 

specification or clarification, thus 

providing EPA the discretion to 

determine whether the adequacy of the 

supply of renewable fuel can reasonably 

be judged in terms of availability for use 

by the ultimate consumer, including 

consideration of the capacity to 

distribute the product to the ultimate 

consumer. In contrast to the section 

211(m) waiver provision, Congress 

arguably did not mandate that the RFS 

waiver provision be interpreted as 

providing authority to address problems 

affecting the supply of renewable fuel to 

the ultimate consumer. However, 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.35

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 of renewable 

transportation fuel, heating oil and jet 

fuel in the United States 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 biofuels or the capacity to 

supply biofuels to obligated parties and 

blenders. 

We are aware, as a number of 

commenters pointed out, that prior to 

final adoption of the Energy 

Independence and Security Act of 2007, 

Congress had before it bills that would 

have provided for a waiver in situations 

where there was ‘‘inadequate domestic 

supply or distribution capacity to meet 

the requirement.’’ 36 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 or the definition of 

renewable fuel sufficiently clear 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 

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77438 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

37There 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.E.1. 

38See, e.g., EPA partial waiver decisions at 75 FR 

68094 (Nov. 4, 2010) and 76 FR 4662 (Jan. 26, 

2011). 

waiver.37 Given the lack of interpretive 

value typically given to a failure to 

adopt a legislative provision, and the 

lack of explanation in this case, we find 

the legislative history to be 

uninformative with regard to 

Congressional intent on this issue. It 

does not change the fact that the text 

adopted by Congress, whether viewed 

by itself or in the context of other fuel 

waiver provisions, is 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 

qualifying renewable fuels to consumers 

in the United States in the form of 

transportation fuel, heating oil or jet 

fuel. Under this interpretation, we do 

not limit ourselves to consideration of 

the capacity to produce or import 

biofuels but also consider practical and 

legal constraints affecting the volume of 

qualifying renewable fuel supplied to 

the ultimate consumer in the United 

States. 

As described in more detail in Section 

II.E. below, although at least for 2014 

and possibly 2015 and 2016, there is 

sufficient capacity to produce and 

import biofuels such as ethanol to meet 

the statutory applicable volume of total 

renewable fuel, there are practical and 

legal constraints on the ability of 

sufficient volumes to be delivered to 

and used in transportation fuel by 

vehicles in the United States, or in jet 

fuel or heating oil. 10% ethanol blends 

(E10) can legally be used in all gasoline 

vehicles, but only some subsets of 

vehicles and nonroad equipment can 

legally use up to either 15% ethanol (for 

2001 and newer light-duty vehicles, 

which represent about 85% of the in-use 

fleet) or up to 85% ethanol (for flex fuel 

vehicles, which represent about 6% of 

all light-duty cars and trucks).38

Similarly, according to ASTM standards 

diesel fuel blends up to 5% biodiesel 

(B5) are simply considered to be diesel 

fuel, but only a subset of diesel vehicles 

and engines have been designed and 

warranted to use higher concentrations. 

In addition there are marketplace and 

infrastructure constraints, including 

access to limited numbers of retail fuel 

pumps, that limit the use of higher level 

(>10%) ethanol blends. These 

considerations prevent the fuel market 

from supplying vehicles and engines 

with the volumes of qualifying ethanol 

and other renewable fuels needed to 

meet the statutory level of total 

renewable fuel, and as such they result 

in an inadequate domestic supply of 

qualifying renewable fuel, since 

insufficient renewable fuel can actually 

be delivered to consumers and used in 

transportation fuel, heating oil or jet fuel 

in the United States. We have evaluated 

this situation, and in this final rule are 

using the general waiver authority to 

address this inadequate domestic 

supply situation. 

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 to and use of 

renewable fuel by vehicles. They argued 

that inadequate domestic supply 

unambiguously refers to the production 

capacity of biofuels that could become 

renewable fuel if put to qualifying uses. 

Commenters also 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 biofuels 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, these 

stakeholders’ analysis is clearly not 

persuasive when sections 

211(m)(3)(C)(i) and 211(o)(7)(A) are 

considered together with all of the CAA 

provisions containing similar waiver 

provisions. 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) 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 biofuel can be 

distributed to and used by consumers in 

the United States, and therefore clearly 

relate to how much biofuel can be 

‘‘supplied’’ to them as renewable fuel. 

Although there may be some element of 

consumer preference (i.e., demand) 

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 

(approximately 3,000 retail stations), 

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 final 

interpretation is not reasonable because 

it would either reward obligated parties 

for their intransigence in planning to 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77439 

39See, for instance, 77 FR 70773 (November 27, 

2012), column 1. 

40We projected that our NPRM would incentivize 

some growth in renewable fuel use during the latter 

half of 2015, and available data indicates that 

indeed the monthly average supply after the NPRM 

was released was about 5% higher than the monthly 

average supply in the first half of the year. 

41 In the final rule we are only using our 

cellulosic waiver authority to make the initial 

reduction in the total renewable fuel volume, but 

note that this reduction could also be justified 

under the general waiver authority due to 

inadequate domestic supply. 

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, and 

note in Section II.B.5.39 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. The regulatory structure created 

in the RFS1 program places the 

responsibility on producers and 

importers to ensure that transportation 

fuel sold or introduced into commerce 

contains the required volumes of 

renewable fuel, but does not require 

obligated parties to take specific actions 

other than acquiring RINs. 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 spheres of influence to 

increase biofuel production and use of 

renewable fuels, 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 our final action 

appropriately reflects these concepts. 

3. Assessment of Past Versus Future 

Supply 

EPA is taking somewhat different 

approaches for its assessment of 

renewable fuel supply for past time 

periods covered by this rule as 

compared to future time periods. For 

2014 and most of 2015, our assessment 

of the ‘‘supply’’ available for RFS 

compliance must necessarily focus on 

the number of RINs actually generated 

that are available for compliance with 

the applicable standards because this 

final rule cannot influence the volumes 

of renewable fuel produced and 

consumed in the past. 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 the current bank of carryover RINs 

serves an important function under the 

program, including providing a means 

of compliance in the event of natural 

disasters and other unforeseen 

circumstances, and that in the present 

circumstances EPA should not set the 

annual standards at levels that would 

clearly necessitate a reduction in the 

current bank of carryover RINs. See 

Section II.H for further discussion of our 

consideration of carryover RINs in this 

final rule. 

For 2014, we have set the volume 

requirements for renewable fuel as equal 

to the number of RINs generated that are 

available for compliance. With respect 

to 2015, because this final rule is being 

signed at the end of November, it cannot 

influence renewable fuel use during 

prior months, and, given lead-time 

considerations cannot reasonably be 

expected to influence renewable fuel 

use in the remaining month of the year. 

Accordingly, we have assessed the 

supply of total renewable fuel in 2015 

by determining the number of RINs 

generated and available for compliance 

in the part of 2015 for which data are 

available and projecting that renewable 

fuel will be used at the same rate for the 

remainder of the year.40

In the context of a forward-looking 

annual RFS standards rulemaking 

issued consistent with the statutory 

schedule, such as for 2016 in this rule, 

we believe that the evaluation of 

‘‘supply’’ for purposes of determining 

the appropriate volume reduction of 

total renewable fuel under section 

211(o)(7)(A) should compare the 

statutory targets, and the ability of the 

market to both produce and consume 

renewable fuels, in the context of a 

market that is responsive to the 

standards that we set. In the context of 

this assessment, while we have 

examined the circumstances and issues 

related to individual sources of 

renewable fuel, our determination of the 

final volume requirements is based on 

an assessment of overall volumes that 

can be achieved given the interactions 

that occur between individual sources 

under the influence of the standards we 

set. 

4. Combining Authorities for Reductions 

in Total Renewable Fuel 

EPA is reducing the applicable 

volumes of total renewable fuel for 

2014, 2015 and 2016 using two separate 

authorities. We are making initial 

reductions in total renewable fuel for 

these years that are equal to the volume 

reductions in advanced biofuel, using 

the cellulosic waiver authority.41 We are 

also further reducing total renewable 

fuel volumes based on a determination 

of inadequate domestic supply, 

including consideration of both the 

limitations in the production and 

import of biofuels and factors that 

constrain supplying available volumes 

for the qualifying uses (as transportation 

fuel, heating oil or jet fuel) specified in 

the Act. These considerations are 

relevant to an assessment of inadequate 

domestic supply. We believe that using 

the general waiver authority to reduce 

the applicable volumes of total 

renewable biofuel in these years is an 

appropriate response to these 

circumstances. We are using the 

cellulosic biofuel waiver authority to 

reduce the statutory volumes for total 

renewable fuel by an initial increment 

of 1.08 billion gallons in 2014, 2.62 

billion gallons in 2015 and 3.64 billion 

gallons in 2016. In addition, as the 

volume reduction required to address 

supply limitations for total renewable 

fuel is greater than can be achieved 

using the cellulosic waiver authority, 

we are using the general waiver 

authority exclusively as the basis for 

further reducing the applicable volume 

of total renewable fuel by an additional 

0.79 billion gallons in 2014, 0.95 billion 

gallons in 2015 and 0.50 billion gallons 

in 2016. 

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77440 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

42BBD includes both advanced biodiesel and 

advanced renewable diesel. 

TABLE II.B.4–1—FINAL TOTAL VOLUME REQUIREMENTS

[Billion gallons] 

2014 2015 2016 

Statutory Applicable Volumes .................................................................................................... 18.15 20 .5 22.25 

Initial Use of Cellulosic Waiver Authorities ................................................................................ 17.07 17 .88 18.61 

Use of General Waiver Authority ............................................................................................... 16.28 16 .93 18.11 

5. Inability To Reach Statutory Volumes 

In order to use the general waiver 

authority in CAA section 211(o)(7)(A) to 

reduce the applicable volumes of 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 determination that 

there is an inadequate domestic supply 

of total renewable fuel in the time 

period 2014–2016, and thus that the 

statutory volume targets are not 

achievable with volumes supplied in 

these three years. Additionally, this 

determination that the statutory volume 

targets are not achievable with volumes 

supplied also supports our use of the 

cellulosic waiver authority under CAA 

section 211(o)(7)(D) to reduce the 

applicable volumes of advanced and 

total renewable fuel. 

As described in Section II.C below, 

actual supply of renewable fuel in 2014, 

determined by an assessment of RINs 

generated minus RINs retired for noncompliance reasons such as exports of 

renewable fuel or spills, was below the 

applicable volume targets in the statute. 

For total renewable fuel, actual supply 

was 1.87 billion gallons below the 

statutory volume target of 18.15 billion 

gallons, while for advanced biofuel, 

actual supply was 1.08 billion gallons 

below the statutory volume target of 

3.75 billion gallons. As we noted in the 

NPRM, the requirements we establish at 

this time for 2014 cannot change what 

occurred in the past, and as a result our 

assessment of the ‘‘supply’’ available for 

RFS compliance during 2014 must 

necessarily focus on actual renewable 

fuel use. While many stakeholders 

agreed with this position, some did not. 

Those that disagreed generally pointed 

to the bank of carryover RINs as 

additional ‘‘supply’’ that could be used 

to increase the 2014 standards above 

actual wet gallon supply in 2014, or to 

the fact that renewable fuel volumes 

that were exported in 2014 would have 

been available for compliance purposes 

if EPA had set the 2014 standards by the 

statutory deadline of November 30, 

2013. As described in Section II.H, we 

do not believe it would be appropriate 

to intentionally reduce the current bank 

of carryover RINs to increase the 

applicable 2014 volume requirements 

above the supply of wet gallons to 

consumers in 2014. Regarding exports of 

renewable fuels, many of those volumes 

were produced specifically for the 

purpose of export rather than being 

produced for general domestic 

distribution. Stakeholders who 

suggested that they would have been 

used for compliance purposes provided 

no evidence that they would have been 

available for compliance given export 

agreements and/or contracts. 

Furthermore, as discussed in Section 

II.E.1, legal and practical constraints on 

the domestic use of renewable fuel are 

operating in the 2014–2016 time period 

to limit renewable fuels that have been 

produced from actually being supplied 

to consumers. Finally, regardless of any 

possibility that they could have been 

used if EPA had acted by the statutory 

deadline to establish RFS requirements 

for 2014, it is undisputed that RINs 

representing fuel exported in 2014 are 

not currently available for compliance, 

and it is the current circumstances that 

are relevant in determining what the 

applicable volume requirements for 

2014 should be. Thus, we do not believe 

that these arguments warrant an 

increase in the applicable 2014 volume 

requirements above the volume of wet 

gallons actually supplied to consumers 

in 2014. In sum, we have determined 

that there was a 1.87 billion gallon 

shortfall in the supply of total 

renewable fuel in 2014, and that a 

waiver of the 2014 statutory target for 

total renewable fuel is therefore 

warranted pursuant to section 

211(o)(7)(A) on the basis of inadequate 

domestic supply. In addition, we 

believe the same set of facts support a 

waiver of the total renewable fuel 

applicable volume using the cellulosic 

waiver authority in section 211(o)(7)(D), 

and we are also asserting that waiver 

authority in support of 1.08 billion 

gallons of this volume reduction (which 

is equal to the reduction in the 

advanced biofuel volume using the 

cellulosic waiver authority, as described 

below). 

Because this final rulemaking is being 

released after almost all of 2015 has 

passed, the factual situation for 2015 is 

essentially the same as it is for 2014: the 

requirements we establish at this time 

for 2015 cannot change what occurred 

in the past, and in addition it is being 

issued too late to influence the fuels 

market in the remaining month of the 

year. Therefore, our assessment of the 

‘‘supply’’ available for RFS compliance 

during 2015 is based on actual 

renewable fuel use for the months for 

which data are available, together with 

a projection for the remainder of the 

year. In sum, we have concluded that 

the statutory volumes for 2015 cannot 

be met with available supply, and that 

a waiver is justified. 

The statute sets a target of 22.25 

billion gallons of total renewable fuel in 

2016. We have determined that this 

volume cannot be achieved under even 

the most optimistic assumptions given 

current and near-future 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 42

volumes at the highest annual 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.B.5–1—ADDITIONAL VOLUMES

NEEDED IN 2016 TO MEET STATUTORY TARGET FOR TOTAL RENEWABLE FUEL

[Million ethanol-equivalent gallons] 

Statutory target for total renewable fuel .................................... 22,250 

Maximum ethanol consumption as 

E10 a .......................................... ¥14,000 

Historical maximum biomassbased diesel supply b ................ ¥2,490 

Additional volumes needed .......... 5,760 

a Derived from projected gasoline energy 

demand from EIA’s Short-Term Energy Outlook (STEO) from October 2015. b Represents the 1.63 billion gallons of biodiesel and renewable diesel supplied in 2014. 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77441 

43 Details of actual supply in 2013, 2014, and 

2015 can be found in the docket. 44Based on EIA’s October 2015 Short-Term 

Energy Outlook (online interactive table), 

nationwide diesel consumption is projected to be 

56.3 bill gal in 2015 and 57.7 bill gal in 2016. 

45While some stakeholders provided information 

on when certain manufacturers began permitting 

the use of biodiesel blends higher than B5 in their 

engines, stakeholders provided no data on which 

models or model years were affected, nor did any 

stakeholder provide an analysis of the fraction of 

the current in-use fleet whose warranties 

specifically permit the use of B5 versus higher 

blend levels. Based on the fact that engine 

manufacturers have only been warranting their new 

engines for B20 for the last five years or so, and 

heavy-duty engines typically have a long lifespan, 

a significant fraction of the in-use fleet must be 

warranted for no more than B5. See further 

discussion of this issue in Section II.E.3. 

46 ‘‘NBB Technical Update for EPA, April 30, 

2015’’ in docket EPA–HQ–OAR–2015–0111. See 

also comments submitted by NBB in response to the 

June 10, 2015 NPRM. 

47 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 by 

comparison. See additional discussion of this issue 

in Section II.E.2.iv below. 

48 Due to relative ethanol content (74% versus 

10%) 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. 

49Further discussion of E85 can be found in 

Section II.E.2.v. 

50See further discussion of E85 in Section II.E.2.v 

and further discussion of biodiesel in II.E.3. 

51Assumes that all ethanol consumed as E10 in 

Table II.B.5–1 is conventional (non-advanced). 

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 renewable fuels; nonethanol supply other than BBD was 237 

million gallons in 2013, 165 million 

gallons in 2014, and 323 million gallons 

in 2015. In total these sources could 

account for several hundred million 

gallons, as demonstrated by supply of 

these sources in previous years.43 Aside 

from these relatively small sources, 

renewable fuel that could fulfill the 

need for 5.76 billion gallons in 2016 

would be ethanol or BBD. As discussed 

below, we do not believe that these fuels 

could be produced and used in 

sufficient quantities to attain this 

volume. 

If all of the additional volumes 

needed were biodiesel, the industry 

would need to supply a total of about 

5.5 billion physical gallons in 2016. As 

described more fully in Section II.D, 

actual supply of biodiesel through the 

end of 2015 is expected to be about 1.73 

billion gallons. While this final rule will 

be released before 2016, we nevertheless 

do not believe that the market could 

supply 5.5 billion gallons of biodiesel in 

2016; as described more fully in Section 

II.E.3 below, the constraints on biodiesel 

supply are such that 5.5 billion gallons 

is beyond reach. For instance, there 

currently exist only about 2.7 billion 

gallons of registered biodiesel 

production capacity in the U.S. 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. 

Just as importantly, biodiesel volumes 

on the order of 5.5 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 10% of the 

diesel pool in 2016.44 Although most 

medium and heavy-duty engine 

manufacturers now warrant the use of 

blends up to B20 in their more recent 

models, the largest of these 

manufacturers does not, and neither do 

some light-duty engine manufacturers. 

Furthermore, much of the in-use fleet is 

made up of highway and nonroad diesel 

engines that were produced in the past 

and are warranted for no more than 5% 

biodiesel.45 Also, as pointed out by 

CountryMark Cooperative Holding 

Corporation, biodiesel concentrations in 

the winter months are sometimes kept 

to lower levels by engine owners due to 

cold weather operability and storage 

concerns, and some parties avoid selling 

biodiesel at all during winter months. 

Constraints on the use of biodiesel at 

concentrations above 5% due to engine 

warranty limitations, plus resistance on 

the part of some parties to using 

biodiesel in winter months, means that 

a nationwide average of 10% biodiesel 

in the diesel pool, for an entire calendar 

year, is not reasonably achievable in 

2016. We acknowledge that 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.46 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 2016 if 

5.5 billion gallons of biodiesel were to 

be required. 

Alternatively, if all of the additional 

volumes shown in Table II.B.5–1 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 2016 it would 

need to be about 8.7 billion gallons.47 48

These volumes are about 60 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 (due to the fact 

that only 2% of retail stations currently 

offer E85) to use it.49

The additional volume of 5.76 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. For instance, one possible 

combination for 2016 would be 4.4 

billion gallons of E85 and 3.6 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, 

both levels are beyond the reach of the 

market under current circumstances.50

Based on this assessment, we do not 

believe that the statutory volumes for 

advanced biofuel and total renewable 

fuel can be met in 2016. 

In response to the NPRM, some 

parties said that EPA had not 

sufficiently described why the statutory 

target for advanced biofuel cannot be 

reached in 2016. In the NPRM we did 

point out that more than 70% of the 

additional ethanol-equivalent volumes 

that would be needed to reach the 

statutory targets would need to be 

advanced biofuel, and discussed the 

impracticability of attaining those 

volumes. After a consideration of 

comments received, we have 

determined that for our final volume 

requirements for 2016, about 80% of the 

5.76 billion gallons of additional 

volumes would need to be advanced 

biofuel in order to reach the statutory 

target of 7.25 billion gallons of advanced 

biofuel.51 However, we agree that it is 

appropriate to elaborate on the 

limitations in the supply of advanced 

biofuel that have led us to conclude that 

the statutory target for advanced biofuel 

cannot be reached in 2016. A more 

detailed discussion of constraints on 

supply of advanced biofuel can be 

found in Section II.F. 

The RINs available for meeting the 

advanced biofuel standard include all 

cellulosic biofuel RINs, all biomassbased diesel RINs, and all advanced 

biofuel RINs. Cellulosic biofuel that is 

expected to be available, including all 

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52The total ethanol-equivalent volume of 

advanced biofuel other than imported sugarcane 

ethanol was 87 mill gal in 2013, 79 mill gal in 2014, 

and projected to be 53 mill gal in 2015. We expect 

some growth in the industries providing these fuels, 

such that supply is likely to be somewhat higher in 

2016 than it was in the recent past. 

53 (4.07 bill gal needed ¥ 1.5 bill gal sugarcane 

ethanol)/1.5 = 1.71 bill gal biodiesel + 1.9 bill gal 

BBD requirement = 3.6 bill gal biodiesel needed. 

The 1.5 factor used in this equation represents the 

equivalence value of biodiesel. 

54 ‘‘Global ethanol consumption 2006–2012,’’ 

docket EPA–HQ–OAR–2015–0111. 

55See ‘‘Registered biodiesel production capacity 

as of 8–24–15’’ in EPA docket EPA–HQ–OAR– 

2015–0111. 

56Supply of biodiesel and renewable diesel in 

2015 is projected to be 1.8 bill gal. The current 

infrastructure is sufficient to manage this level, and 

is likely to be capable of managing volumes above 

2.0 bill gal. However, 3.6 bill gal of biodiesel is far 

larger than the current infrastructure is prepared to 

manage. 

57We note that if an obligated party could not be 

attain compliance in 2016, it could carry a deficit 

into 2017 if it did not carry a deficit into 2016, and 

that deficit would need to be satisfied in 2017 along 

with the 2017 requirements. However, establishing 

the 2016 total renewable fuel volume requirement 

at the statutory volume target would result in 

massive deficits among many parties, and would 

likely only defer for one year the need for a 

substantial waiver of the total renewable fuel 

volume requirements. Accordingly, we do not 

believe that the flexibility offered by deficit 

carryovers is a valid basis for setting the 2016 

volume requirements at the statutory targets. 

biogas, is accounted for within the 

context of the determination of the 

cellulosic biofuel standard as discussed 

in Section IV. While there are some 

opportunities for moderate growth 

through the end of 2016 in such 

advanced biofuels as domesticallyproduced ethanol, heating oil, naphtha, 

and renewable diesel, it is possible that 

only about a hundred million gallons 

will be available from these sources.52

Thus the primary sources of advanced 

biofuel that are in a position to help 

meet the advanced biofuel standard are 

imported sugarcane ethanol and 

biomass-based diesel. 

The statutory target for advanced 

biofuel in 2016 is 7.25 billion gallons. 

After accounting for cellulosic biofuel, 

the BBD volume requirement, and 

potential other domestically-produced 

advanced biofuels, the total volume of 

advanced biofuel that would be needed 

to meet the statutory target of 7.25 

billion gallons is 4.07 billion gallons. 

TABLE II.B.5–2—ADDITIONAL VOLUMES

NEEDED TO MEET STATUTORY TARGETS FOR ADVANCED BIOFUEL IN

2016 

[Million ethanol-equivalent gallons] 

Statutory target for advanced 

biofuel ........................................ 7,250 

Requirement for cellulosic biofuel 230 

Requirement for biomass-based 

diesel ......................................... a 2,850 

Potential other advanced (ethanol 

and non-ethanol) ....................... 100 

Additional volumes needed .......... 4,070 

a Represents 1.9 bill gal of biodiesel. 

We do not believe that 4.07 billion 

gallons of additional advanced biofuel 

can be supplied in 2016, even if the 

burden of meeting this requirement 

were shared between biomass-based 

diesel and imports of sugarcane ethanol. 

For instance, if sugarcane ethanol 

imports reached 1.5 billion gallons in 

2016, the total volume of BBD would 

need to be 3.6 billion gallons.53 We do 

not believe that either of these levels is 

achievable in 2016. Notwithstanding 

UNICA’s comments to the contrary as 

discussed in Section II.F, imports of 

sugarcane ethanol have been highly 

variable in the past and appear to be 

highly dependent on factors others than 

the RFS program. Moreover, as 

explained in the NPRM, the highest 

volume of sugarcane ethanol that has 

ever been imported to the U.S. was 680 

million gallons in 2006, and since that 

time international demand has 

increased substantially.54 Similarly, we 

do not believe that 3.6 billion gallons of 

BBD are possible in 2016. The total 

amount of domestic biodiesel 

production capacity in the U.S. that is 

registered under the RFS program is 

about 2.7 billion gallons.55 Not only 

would the market need to supply 900 

million gallons more than existing 

registered capacity, but substantial 

feedstocks would need to be diverted 

from the current uses to the production 

of biodiesel. Even if some portion of the 

increase were supplied from imports, 

the total volume of biodiesel supplied to 

diesel engines would more than double 

in comparison to that supplied in 2014, 

requiring that distribution, blending, 

storage, and dispensing routes would 

need to be expanded in an extremely 

short period.56 We do not believe that 

this is possible in 2016. As a result, we 

do not believe that the statutory target 

for advanced biofuel can be met in 

2016.57

In response to the NPRM, a number of 

stakeholders placed the blame for the 

market’s inability to meet the statutory 

targets on both the EPA for not meeting 

the statutory deadlines for setting 

standards and obligated parties for not 

investing sufficiently in the required 

infrastructure. While we agree that the 

delay in setting standards has created 

some uncertainty and could have led to 

a slowdown in investment in both 

production capacity and infrastructure 

for blending and dispensing renewable 

transportation fuels, we do not believe 

that the statutory targets could have 

been met in 2014, 2015, and 2016 if 

only EPA had established the applicable 

standards on the statutory schedule. 

Stakeholders who took the position that 

the statutory targets were achievable in 

2014 and 2015 generally based that 

position on the potential for a 

substantial draw-down in the bank of 

carryover RINs. As described in the 

NPRM and in Section II.H, we believe 

that it would be inappropriate to 

intentionally drawn down the current 

bank of carryover RINs in order to raise 

the applicable volume requirements 

above the levels that could be met with 

RINs generated for actual renewable fuel 

supplied in 2014, 2015, and 2016. Many 

of these same stakeholders also argued 

that the statutory targets could be met if 

the EPA merely set the standards at the 

statutory levels. They argued, in 

essence, that the market’s ability to 

respond to the standards EPA sets is 

effectively unlimited and that the 

market will rise to meet the expectations 

placed upon it. As described in Section 

II.E.1, we believe that the market is in 

fact limited in its ability to respond to 

the standards that EPA sets for 2016. 

Setting the volume requirements at the 

statutory targets would not compel the 

market to respond with sufficient 

changes in production levels, 

infrastructure, and fuel pricing at retail 

to result in the statutory volumes 

actually being consumed in 2016, but 

would instead lead to noncompliance 

and/or additional petitions for a waiver 

of the standards. 

Many stakeholders also decried 

obligated parties’ failure to invest in the 

infrastructure needed to permit 

expanded use of higher ethanol blends 

such as E15 and E85. They argued that 

EPA should not reward obligated parties 

for their recalcitrance by reducing the 

applicable volume requirements below 

the statutory targets. In taking these 

positions, stakeholders cited both the 

statutory requirement that obligations be 

placed on ‘‘refineries, blenders, and 

importers, as appropriate’’ and EPA’s 

regulations which (with limited 

exceptions) further narrow the 

applicability of the obligations to 

producers and importers of gasoline and 

diesel. Suggestions in the NPRM that 

renewable fuel producers could 

contribute to efforts to expand 

infrastructure were generally met by 

these commenters with references to the 

statutory language and their belief that 

all responsibility for investing in 

expanded infrastructure rests on 

obligated parties. 

We agree that the statutory language, 

in combination with the regulatory 

structure, generally places the 

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58See third column of page 33129 of the June 10, 

2015 NPRM. 

responsibility on producers and 

importers of gasoline and diesel to 

ensure that transportation fuel sold or 

introduced into commerce contains the 

required volumes of renewable fuel. 

Obligated parties have a variety of 

options available to them, both to 

increase volumes in the near term (i.e. 

through the period being addressed by 

this final rule) and the longer term. The 

standards that we are establishing today 

reflect both the responsibility placed on 

obligated parties as well as the shortterm activities available to them, and we 

expect obligated parties to be taking 

actions now that will help to increase 

renewable fuel volumes in future years. 

However, this general responsibility 

does not require obligated parties to take 

actions specific to E15 and/or E85 

infrastructure, as the RFS program does 

not require ethanol specifically. 

Moreover, we do not believe the statute 

should be interpreted to require that 

refiners and importers change the nature 

of their businesses so as to comply with 

RFS requirements, as this would be a 

far-reaching result that Congress can be 

expected to have clearly specified if it 

was intended. For example, to the 

extent that commenters imply that 

refiners should be required to build or 

purchase renewable fuel production 

facilities, take ownership of retail 

stations, produce or sell cars capable of 

using high-ethanol blends, or plant 

cropland to provide feedstock for 

increased renewable fuel production, 

we would disagree. Rather, if other 

parties engaged in these activities fail to 

adjust those activities to allow the 

statutory volume targets to be met, we 

believe the result is an inadequate 

domestic supply of renewable fuel that 

justifies granting a waiver pursuant to 

section 211(o)(7)(A). The primary role 

that obligated parties play in the RFS 

program is to acquire RINs, and it is this 

demand for RINs that in turn drives 

demand for renewable fuel and which 

should stimulate other parties to 

increase their activities to supply it. 

Nevertheless, there are actions that 

obligated parties can take that are more 

directly related to their roles as 

importers and refiners, such as investing 

in or otherwise influencing business 

practices in such a way as to promote 

increases in renewable fuel use. We 

noted several ways in which this could 

happen in the NPRM.58 In response, 

obligated parties described why the 

suggestions were not practical or would 

not provide any benefits for 2016. We 

disagree. There are actions that 

obligated parties can take in the nearterm to increase renewable fuel use and 

which are consistent with their current 

businesses. These could include 

modifying their requirements for 

branded retail stations to make it easier 

to offer and advertise sales of E15, E85, 

and biodiesel, creating a consortium to 

pool funds for investment in 

infrastructure at retail, and coprocessing 

renewable biomass with fossil fuel in 

their existing facilities to produce a fuel 

that is partly renewable. These are 

certainly not the only options available 

to obligated parties, and we expect them 

to make ongoing efforts to further the 

goals of the RFS program. It would also 

be in the interests of renewable fuel 

producers to take similar, related, and/ 

or complementary steps to increase the 

ability of the marketplace to supply 

their products to the vehicles and 

engines that can use them, 

notwithstanding the fact that the legal 

and regulatory responsibility for the 

purchase of RINs rests upon obligated 

parties. 

6. Inability To Reach Volumes Using 

Only the Cellulosic Waiver Authority 

In the NPRM we proposed that for 

each of years 2014, 2015, and 2016 we 

would reduce both the advanced biofuel 

and total renewable fuel volumes by the 

same amount using the cellulosic 

waiver authority, and then further 

reduce the total renewable fuel volumes 

using just the general waiver authority. 

However, we requested comment on 

whether it would be appropriate in the 

final rule to use the cellulosic waiver 

authority alone. In response to the 

NPRM, a number of parties agreed that 

some reductions from the statutory 

targets are warranted, but, they 

suggested that reductions under the 

cellulosic waiver authority would be 

sufficient, and that the market would be 

capable of meeting the applicable 

volume requirements using this 

approach with the use of carryover RINs 

to meet any shortfalls in actual 

renewable fuel supply. Stakeholders 

who suggested this approach included 

Growth Energy and the Renewable Fuels 

Association, among others. 

We continue to believe that the 

applicable standards should be based on 

available information on actual 

renewable fuel supplied in 2014 and 

2015, as described more fully in 

Sections II.C and II.D below. Today’s 

rule cannot influence renewable fuel 

use in either year. Furthermore, we do 

not believe it would be appropriate to 

intentionally draw down the bank of 

carryover RINs as a means for increasing 

the applicable volume requirements for 

2014, 2015, and 2016 beyond the actual 

renewable fuel supply, since we believe 

that the current bank of carryover RINs 

provides important program benefits, as 

discussed in Section II.H. Even if we 

were to use the availability of carryover 

RINs as a basis for setting the standards 

for 2014 and 2015 at the statutory 

targets instead of setting them at actual 

renewable fuel supply, then, assuming 

we entered the 2014 compliance year 

with 1.74 billion carryover RINs, the 

amount of carryover RINs available for 

2016 would only be on the order of 0.1 

billion RINs. This would be insufficient 

to maintain the statutory volumes for 

2016 contrary to the commenter’s 

claims. Since the appropriate volume 

reductions in total renewable fuel (to 

levels representing actual renewable 

fuel supply) can only be achieved 

through the use of the general waiver 

authority, we continue to believe that it 

would be inappropriate to use only the 

cellulosic waiver authority. 

With regard to 2016 specifically, 

stakeholders that supported the use of 

the cellulosic waiver authority alone 

differed in whether the advanced 

biofuel and total renewable fuel 

requirements ought to be reduced by the 

full amount permitted under the 

cellulosic waiver authority, or instead 

only the amount needed to bring the 

advanced biofuel volume requirement to 

a level consistent with projected supply. 

Those supporting the former view 

pointed out that advanced biofuels in 

excess of the advanced biofuel standard 

can be used to meet the non-advanced 

portion of the total renewable fuel 

standards. While we agree that this is 

the case, explicitly and intentionally 

establishing a volume requirement for 

advanced biofuel that is below the level 

that we believe is reasonably attainable 

would be inconsistent with the goals of 

the RFS program. Since advanced 

biofuels have significantly superior 

GHG reduction performance, we believe 

we should structure our decision so as 

to promote the production and use of 

advanced biofuel volumes that can be 

reasonably supplied. Therefore, our 

assessment of the use of the cellulosic 

waiver authority alone focused on a case 

in which advanced biofuel and total 

renewable fuel are both reduced only to 

the degree necessary to yield an 

appropriate volume of advanced biofuel 

(i.e., both are reduced by a lesser 

amount than the reduction in cellulosic 

biofuel). Furthermore, for the reasons 

described in Section II.H, the scenario 

does not envision a draw-down in the 

bank of carryover RINs. 

Using the advanced biofuel volume 

requirement of 3.61 billion gallons that 

we have determined to be reasonably 

attainable in 2016, and which we are 

finalizing today, represents a volume 

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59 It is also possible that the use of E15 could rise 

to help provide a means for consuming 15.0 bill gal 

of ethanol. However, as described in Section 

II.E.2.v, it is highly unlikely that increases in E15 

could rise high enough to significantly reduce the 

amount of E85 needed. 

60As discussed in a memorandum to the docket, 

400 mill gal of E85 in 2016 would likely require 

significant and unprecedented reductions in the 

retail price of E85 compared to E10 and increases 

in the number of service stations offering E85. See 

‘‘Correlating E85 consumption volumes with E85 

price,’’ memorandum from David Korotney to 

docket EPA–HQ–OAR–2015–0111. See also further 

discussion of E85 in Section II.E.2.iii. 

reduction of 3.64 billion gallons in 

comparison to the statutory target of 

7.25 billion gallons. A corresponding 

reduction in the statutory target for total 

renewable fuel would result in a total 

volume of 18.6 billion gallons. 

TABLE II.B.6–1—HYPOTHETICAL 2016 

VOLUME REQUIREMENTS USING

ONLY THE CELLULOSIC WAIVER AUTHORITY

[Billion gallons] 

Advanced biofuel: 

Volume Requirement ................ 3.61 

Statutory Target ........................ 7.25 

Reduction .................................. 3.64 

Total renewable fuel: 

Volume Requirement ................ 18.61 

Statutory Target ........................ 22.25 

Reduction .................................. 3.64 

Using only the cellulosic waiver 

authority, the need for non-advanced 

(conventional) renewable fuel would be 

15.0 billion gallons (18.61¥3.61). If 

only ethanol was used in 2016 to supply 

this volume of conventional renewable, 

more than 1.6 billion gallons of E85 

would be required.59 This level is in 

excess of what we believe is possible in 

2016 under even the most optimistic 

assumptions as described more fully in 

Section II.E.2.iii. Accounting for 

expected 2016 volumes of cellulosic 

ethanol and other advanced ethanol 

would make it even more difficult for 15 

billion gallons of conventional ethanol 

to be used. 

Under a hypothetical scenario 

wherein reductions were made only 

under the cellulosic waiver authority, 

the required volumes of non-ethanol 

renewable fuel would be in excess of the 

levels we believe can be achieved in 

2016. Even in the unlikely event that 

E85 volumes reached 400 million 

gallons,60 a very high but perhaps 

possible level, there would need to be 

385 million ethanol-equivalent gallons 

of non-ethanol supplied, equivalent to 

about 250 million gallons of biodiesel 

(the predominant source of non-ethanol 

renewable fuel, which in this case could 

be either advanced biofuel or 

conventional renewable fuel). 

TABLE II.B.6–2—INABILITY UNDER

EVEN HIGHLY UNLIKELY SUPPLY

CONDITIONS TO MEET AN 18.61 BILLION GALLON REQUIREMENT FOR

TOTAL RENEWABLE FUEL IN 2016 

[Million gallons] 

E10 ............................................... a 139,688 

E85 ............................................... b 400 

Total ethanol ................................. 14,265 

Non-ethanol cellulosic biofuel ....... 210 

Advanced and conventional biodiesel and renewable diesel ..... c 3,750 

Total renewable fuel ..................... 18,225 

Shortfall in comparison to the 

18.61 bill gal needed under the 

cellulosic waiver authority ......... 385 

aThis level is less than the amount of ethanol that can be used as E10 in all 2016 gasoline, because some of that gasoline is used 

in this scenario to make E85. bAssumed to contain 74% denatured ethanol. c Represents 2.5 billion gallons, the maximum supply that is reasonably achievable as 

described in Section II.E.3. 

When added to the 2.5 billion gallons 

of biodiesel and renewable diesel (3.75 

billion RINs) that, as discussed in 

Section II.E.3, is the maximum we 

believe can reasonably be achieved in 

2016, the total volume of 2.75 billion 

gallons of biodiesel and renewable 

diesel is beyond the reach of a 

responsive market. Attaining a total of 

2.75 billion gallons of biodiesel and 

renewable diesel in 2016 would require 

that all of the idled registered biodiesel 

capacity in the U.S. be brought into 

production at the beginning of 2016, 

with the attendant hiring of workers, 

arranging for feedstock purchases 

including diverting many feedstocks 

from existing uses, and arranging routes 

for distribution, blending, and sale of 

the finished product. In combination 

with other challenges as described in 

Section II.E.3, it is highly unlikely that 

2.75 billion gallons of biodiesel supply 

could be achieved in 2016. Especially 

when combined with the fact that 400 

million gallons of E85 is highly 

unlikely, we do not believe that this 

scenario is tenable. 

A number of stakeholders said that 

using the cellulosic waiver authority 

alone would ensure that 15 billion 

gallons of corn-ethanol would be used 

in the U.S. in 2016. Although the 

implied requirement for conventional 

renewable fuel would be 15 billion 

gallons under this scenario, domestic 

use of corn-ethanol would be essentially 

no different than it would be under the 

volume requirements we are finalizing 

today using both the cellulosic waiver 

authority and the general waiver 

authority. This is due to the fact that the 

legal and practical constraints on the 

supply of ethanol to consumers are not 

likely to be relieved to a greater extent 

with higher standards than they are 

with the standards we are adopting 

today, as described more fully in 

Section II.E.2 below. While the supply 

of renewable fuel, including ethanol, 

can increase over time under the 

influence of the standards we set, the 

volume requirements for 2016 would 

not be achievable if only the cellulosic 

waiver authority were used. Thus we 

believe that using the cellulosic waiver 

authority alone would provide no 

practical advantage to the corn-ethanol 

industry, but instead would simply lead 

to a draw-down in the bank of carryover 

RINs and/or noncompliance. 

C. 2014 Advanced Biofuel and Total 

Renewable Fuel Volume Requirements 

In the NPRM, we proposed to base the 

applicable volume requirements for 

2014 on the number of RINs supplied in 

2014 that are expected to be available 

for use in complying with the standards. 

We based this approach on the notion 

that the standards we set cannot affect 

actual supply of renewable fuel in 2014, 

and that consequently the only result of 

setting a higher standard would be to 

require a draw-down in the bank of 

carryover RINs, which we explained 

would not be in the best interests of the 

program. 

While many stakeholders agreed with 

our proposed approach, some did not. 

The primary objection was that 

carryover RINs should be counted as 

part of the ‘‘supply’’ available for 

compliance with the 2014 standards 

and, therefore, that the 2014 statutory 

volume targets cannot or should not be 

waived so long as the existing supply of 

RINs in 2014 that are available for 

compliance plus carryover RINs is 

sufficient to attain the statutory targets. 

As described in Section II.H below, we 

continue to believe that it would be 

imprudent and contrary to the long term 

objectives of the program to 

intentionally set renewable fuel volume 

requirements at a level higher than the 

estimated supply of renewable fuel 

based on an intentional draw down of 

the current bank of carryover RINs to 

achieve compliance. The statute does 

not define the term ‘‘supply,’’ and it is 

logical to interpret the term to mean the 

supply of actual renewable fuel to the 

vehicles that can use it. However, in 

assessing whether this supply is 

‘‘inadequate,’’ and whether EPA should 

use its discretion to waive the statutory 

targets, it is appropriate to consider the 

extent to which the available bank of 

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61The statute provides that EPA ‘‘may’’ waive the 

statutory volume targets if it finds inadequate 

domestic supply or other conditions justifying a 

waiver under CAA section 211(o)(7)(A). Thus, 

exercise of the waiver authority is discretionary. 

62For the same reasons, EPA has not assumed a 

draw-down in the current bank of carryover RINs 

in deciding the extent to which it should exercise 

its discretion under CAA section 211(o)(7)(D) to 

reduce the statutory targets for advanced biofuel 

and total renewable fuel. 

carryover RINs can be drawn down 

without negatively impacting program 

operation.61 Thus, we do not interpret 

carryover RINs to be part of the 

‘‘supply’’ referenced in the term 

‘‘inadequate domestic supply,’’ but we 

do consider them as a factor that may 

influence our discretion regarding 

whether or not to issue a waiver when 

we have found that an inadequate 

supply of renewable fuel exists. 

However, as described in detail in 

Section II.H, we have assessed the 

number of carryover RINs available at 

the current time, and have determined 

that this bank of carryover RINs should 

not be intentionally drawn down by 

setting volume requirements at a level 

higher than the supply of renewable fuel 

in the 2014–2016 time period. In other 

words, for purposes of this rule, we 

have determined that the availability of 

carryover RINs does not provide a good 

basis for EPA to either decline to 

exercise its discretion to reduce 

volumes under the general waiver 

authority in CAA section 211(o)(7)(A), 

or to use that authority in a manner that 

would result in volume requirements for 

total renewable fuel at a level higher 

than the supply of renewable fuel in 

2014.62

A secondary objection to setting the 

2014 volume requirements at the level 

of actual supply focused on our 

proposed calculation of the number of 

RINs generated in 2014 that would 

actually be available for compliance 

with the standards. Specifically, some 

parties argued that all RINs generated in 

2014 should be counted as being 

available for compliance regardless of 

whether some were retired for purposes 

other than compliance with the annual 

percentage standards by obligated 

parties. In addition to exports, such 

‘‘non-compliance’’ RIN retirements 

could occur for a variety of reasons, 

such as: 

• Spills 

• Contaminated or spoiled fuel 

• Enforcement obligation 

• Fuel not used as transportation fuel, 

heating oil, or jet fuel 

• Improperly generated or otherwise 

invalid RINs 

• Volume corrections 

• RINs generated by foreign producers 

for volumes exported to other 

countries 

Parties taking this position argued that, 

had the 2014 standards been in place by 

the statutory deadline of November 30, 

2013, at least some of the RINs retired 

for non-compliance reasons would 

instead have been used for compliance 

purposes. We disagree. The earlier 

issuance of 2014 standards would not 

have changed events such as spills, 

improperly generated RINs, or 

enforcement obligations, and is very 

unlikely to have resulted in fuel being 

used in transportation fuel, heating oil, 

or jet fuel rather than for some nonqualifying use. It is theoretically 

possible that qualifying renewable fuel 

that was exported in 2014 might instead 

have been used in the U.S. had the 

applicable standards been in place and 

had been at a level that discouraged 

exports. However, even if this were so, 

it would nevertheless be inappropriate 

to identify exported renewable fuel as 

being available for compliance since the 

standards that we set now cannot cause 

a change in 2014 exports. If we were to 

include exported renewable fuel in the 

volume available for compliance with 

the 2014 standards, obligated parties 

would be forced to draw down the bank 

of carryover RINs to account for those 

exports. As described above and in 

Section II.H, we do not believe this 

would be appropriate. 

Some stakeholders who argued for the 

consideration of carryover RINs in 

setting the 2014 standards did so 

recognizing that 2014 supply of 

renewable fuel would be unaffected, but 

said that doing so might actually 

increase supply in 2015 or 2016 above 

levels that would occur otherwise. More 

specifically, these stakeholders 

expressed concern that obligated parties 

would respond to increasing volume 

requirements in 2015 and 2016 by using 

carryover RINs rather than entering into 

contracts or other arrangements to 

increase the actual supply of renewable 

fuel. Given the value of carryover RINs 

to obligated parties as a compliance 

flexibility tool that is available to 

address unforeseen RIN shortfalls such 

as those that may be caused by natural 

disasters and other supply problems, 

and considering that obligated parties 

are likely to consider that increasing 

RFS requirements in the future could 

make compliance more difficult in 

coming years, we do not believe it is 

likely that obligated parties would 

intentionally draw down their carryover 

RIN banks as an alternative to 

purchasing RINs generated from 

increasing supplies of renewable fuel. 

As described further below, we are 

setting the applicable volume 

requirements for 2014, 2015, and 2016 

at levels that we believe can be supplied 

by actual gallons of renewable fuel used 

in those years, without the need for 

carryover RINs. 

In the NPRM, we explained that the 

total number of RINs that will 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. As 

described in Section VI.B, we are 

amending the current rules in this 

action to specify March 1, 2016 as the 

deadline for renewable fuel exporters to 

demonstrate compliance with those 

2014 RVOs not already satisfied. Since 

we recognized in the NPRM that the 

compliance deadline for all 2014 RIN 

exports would not have passed by the 

time we issued the final 2014 standards, 

we proposed to estimate likely RIN 

retirements for renewable fuel exports 

by using renewable fuel export 

information from EIA. Ethanol export 

data reported by EIA is derived from 

surveys collected by the Census Bureau. 

These surveys distinguish between 

ethanol that is denatured and ethanol 

that is undenatured, with approximately 

460 million gallons being described as 

denatured and approximately 350 

million gallons being described as 

undenatured for 2014. In the NPRM we 

assumed that all 810 million gallons of 

ethanol exported in 2014 had been 

denatured in the United States. We 

based this approach on the expectation 

that ethanol producers had an incentive 

to denature all ethanol for tax purposes, 

and thus would only sell undenatured 

ethanol if it was contractually 

designated for export. Because 

denatured ethanol meets the regulatory 

definition of renewable fuel, we 

assumed that RINs had been generated 

for this entire volume, and that an equal 

number of RINs would need to be 

retired by the exporters of this 

renewable fuel. RINs retired for 

exported renewable fuel are not 

available for use by obligated parties in 

complying with their 2014 obligations. 

Thus we calculated the supply of 

renewable fuel for 2014 by subtracting 

the exported volumes represented by 

both categories of ethanol from the 

amount of RINs generated for domestic 

production or imports of renewable fuel 

in 2014. 

In response to the NPRM, some 

stakeholders indicated that they 

believed we had erred in assuming that 

all exported ethanol was denatured in 

the U.S., and had RINs generated for it 

prior to export. Based on these 

comments and further investigation into 

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63Because exporters of renewable fuel can 

separate RINs immediately from fuels that are 

exported, this estimate is unlikely to change by the 

time that they submit their compliance 

demonstrations for 2014. 

64EIA uses the data collected by Census on 

exports. 

65 ‘‘Comparison of export data between EMTS and 

ITC for 2015,’’ docket EPA–HQ–OAR–2015–0111. 

the manner in which the Census Bureau 

data are collected, we believe that the 

Census Bureau survey data are likely to 

be more reliable than we previously 

believed with regards to whether 

exported batches were denatured or 

undenatured. That is, we believe the 

Census Bureau data provides the best 

information available on the amount of 

denatured versus undenatured ethanol 

that was exported in 2014. Therefore, 

the volume of undenatured ethanol the 

Census Bureau reported as exported in 

2014 should not be subtracted from the 

total number of RINs generated for fuel 

ethanol in 2014 for purposes of 

calculating the available supply of 

renewable fuel for 2014. We have made 

this correction to the calculation of 2014 

supply by only subtracting the 

approximately 460 million gallons of 

exported denatured ethanol from those 

generated in 2014, rather than the full 

volume of about 810 million gallons of 

denatured and undenatured ethanol 

exported. 

Several stakeholders raised a similar 

issue with respect to biodiesel exports, 

contending that producers never 

generated RINs for some biodiesel that 

was exported, and thus all biodiesel 

exports should not have been subtracted 

from the number of biodiesel RINs 

generated in 2014 in assessing the 2014 

domestic supply of biodiesel. These 

parties based their argument on 

comparisons between EIA export data 

and biodiesel RINs separated from 

biodiesel intended for export as 

recorded in EMTS for previous years. As 

pointed out by these stakeholders, a 

comparison of data from EMTS and EIA 

for 2011 through 2013 does appear to 

suggest incongruous measurements of 

biodiesel exports. 

TABLE II.C–1—BIODIESEL EXPORTS

[Million gallons] 

2011 2012 2013 

EMTS (based on RINs separated from exported biodiesel) ....................................................... 15 46 106 

EIA ............................................................................................................................................... 73 128 196 

Difference ..................................................................................................................................... 58 82 91 

As a preliminary matter, we note that 

the discrepancy between EMTS data on 

biodiesel RINs separated for biodiesel 

intended for export and EIA data on 

biodiesel exports is much smaller for 

2014 than it was for previous years—the 

difference is only 10 million gallons.63

However, we do not believe that these 

discrepancies between EIA and EMTS 

data can credibly be used to suggest that 

EPA’s approach to assessing biodiesel 

supply in 2014 was flawed. Since 

exporters can receive biodiesel without 

assigned RINs and can retire RINs to 

address exports of renewable fuel using 

RINs acquired on the open RIN market, 

the EMTS data on the number of RINs 

separated from biodiesel as shown in 

the table above is likely to 

underestimate the actual number of 

RINs retired for exports. We also note 

that almost all biodiesel that is 

produced in the U.S. qualifies for RIN 

generation, unlike the situation for 

ethanol where RINs may be generated 

for denatured ethanol, but not for 

undenatured ethanol. Finally, since 

October of 2014 renewable fuel 

exporters have been required to retire 

RINs for all exported renewable fuel 

within 30 days of the exportation. As a 

result, we were able to compare RINs 

retired for exports that occurred in 2015 

(not merely RINs separated from 

exported renewable fuel) to renewable 

fuel exports as reported by the 

International Trade Commission (ITC).64

We determined that exports as recorded 

in EMTS are nearly identical to exports 

as recorded by ITC.65 In sum, we 

conclude that it is reasonable to assume 

that RINs were generated and then 

retired for essentially all of the exported 

biodiesel, and that it continues to be 

appropriate to use unmodified export 

volume data from EIA in estimating RIN 

supply in 2014. 

Finally, some parties argued that their 

operations for 2014 vis-a-vis acquisition 

of RINs were based on the standards 

that were proposed in the November 29, 

2013 NPRM, and that it would be 

inappropriate for EPA to set applicable 

percentage standards for advanced 

biofuel and total renewable fuel for 2014 

that are more stringent than those 

proposed in November 2013. We 

disagree. First, the statutory table of 

applicable volumes has long provided 

notice to obligated parties that EPA 

could establish requirements at least 

that high, and many commenters on the 

November 2013 NPRM urged EPA to set 

standards that would require use of 

those volumes. In addition, it is well 

understood that requirements in a final 

rule can differ significantly from those 

that are proposed. Also, the November 

2013 NPRM explicitly provided both a 

range of possible volume requirements 

for advanced biofuel and total 

renewable fuel as well as an indication 

that the final volume requirements 

could include a modification of those 

ranges. For example: 

‘‘However, we request comment on whether 

it would be more appropriate to utilize either 

the mode or median (50th percentile), or 

some other value in the appropriate range 

shown in Table IV.B.4–3 that best reflects 

renewable fuel volumes that could 

reasonably be supplied under this program.’’ 

(78 FR 71770) 

‘‘However, we request comment on whether 

one of the alternative values shown in Table 

IV.C.2.c–2, or some other approach, would be 

more appropriate as the basis for the required 

volume of advanced biofuel in the final 

rule.’’ (78 FR 71777) 

‘‘With regard to the mean, we request 

comment on whether it is the most 

appropriate way to determine the volume 

within each of the ranges that we would 

require in the final rule, or whether instead 

one of the alternatives shown in Tables 

IV.B.4–3 or IV.C.2.c–2, or some other 

approach, would be more appropriate.’’ (78 

FR 71777) 

While we proposed volumes 

representing the mean within the 

ranges, we also took comment on 

alternative approaches to selecting final 

values from within those ranges. More 

importantly, we are setting the 

applicable volume requirements for 

2014 at levels consistent with the 

number of RINs generated in 2014 that 

are available for compliance. While it is 

true that the 2014 RINs available for 

compliance may not currently be 

distributed among obligated parties 

according to their individual 

compliance obligations, they are 

nevertheless available for compliance, 

and obligated parties can buy and sell 

RINs in order to ensure compliance. 

This process is exactly how the RIN 

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66Although the deficit carry-forward provision 

would not be available for parties who carried 

forward a deficit from 2013, such parties have 

known well in advance that they would be required 

to satisfy both their 2013 and 2014 obligations in 

2014, so should have planned early to acquire a 

sufficient volume of RINs to cover all contingencies 

regarding possible 2014 requirements. Any excess 

2014 RINs purchased could be banked for use in 

complying with 2015 requirements. 

67http://www.eia.gov/dnav/pet/pet_move_expc_

a_EPOORDB_EEX_mbbl_m.htm. 

68 ‘‘2014 RIN Supply,’’ docket EPA–HQ–OAR– 

2015–0111. 

system was designed to operate when 

originally established in 2007. Obligated 

parties have had since at least the time 

of publication of the June 10, 2015 

NPRM to understand with greater 

certainty their likely obligations under 

today’s final rule, and this period 

should have been sufficient for 

obligated parties to ready themselves for 

compliance. To the extent individual 

obligated parties may still have 

difficulty acquiring sufficient RINs for 

compliance, they can avail themselves 

of the deficit carry-forward provision in 

the regulations.66 In addition, we note 

that the availability of carryover RINs 

should help to render the RIN market 

fluid. Finally, we note that we have 

extended the compliance demonstration 

deadline for obligated parties for the 

2013 standards by one month, and the 

compliance demonstration deadline for 

the 2014 standards by two months, as 

compared to the proposed dates. These 

extensions will allow obligated parties 

additional time to engage in needed RIN 

transactions to come into compliance 

with 2014 requirements. 

The total number of RINs generated in 

2014 that are available for compliance 

includes 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. As described in the 

NPRM, the total number of RINs 

actually 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 have based our estimate of 

RIN retirements for renewable exports 

on renewable fuel export information 

from EIA.67

Actual supply in 2014 is shown in 

Table II.C–2 below. Further details are 

provided in a memorandum to the 

docket.68 Since EIA does not distinguish 

exports by D code, we assumed that all 

ethanol exports represent D6 ethanol, 

and all biodiesel exports represent D4 

BBD, since the vast majority of ethanol 

available for export was produced from 

corn and the vast majority of biodiesel 

available for export was produced to 

meet the requirements of advanced 

biofuel. As a result, we expect that any 

errors introduced by these assumptions 

will be very small. 

TABLE II.C–2—2014 ACTUAL SUPPLY

[Million RINs] 

D code a Domestic 

production c Imports c Adjustments b c Exports Net supply 

3 & 7 .............................................................................. 33 0 0 0 33 

4 ..................................................................................... 2,214 496 92 126 2,492 

5 ..................................................................................... 79 64 0 0 143 

6 ..................................................................................... 14,017 336 287 457 13,609 

All advanced biofuel (D3+D4+D5+D7) .......................... 2,326 560 92 126 2,669 

All Renewable fuel (D3+D4+D5+D6+D7) ...................... 16,344 897 380 582 16,278 

a D3 and D7 represent cellulosic biofuel. D4 represents biomass-based diesel. D5 represents advanced biofuel that is not cellulosic biofuel or 

biomass-based diesel. D6 represents non-advanced (conventional) renewable fuel. bAs described earlier in this section, adjustments represent spills, enforcement obligations, etc. 

cValues in this table differ from those in the NPRM due to ongoing retrospective corrections that are made to data recorded in EMTS. 

Based on these volumes, we are setting 

the applicable volume requirements for 

advanced biofuel and total renewable 

fuel for 2014, as shown in Table II.C– 

3 below. Additional discussion of the 

final cellulosic biofuel and BBD volume 

requirements for 2014 can be found in 

Sections IV.D and III.C, respectively. 

TABLE II.C–3—FINAL VOLUME

REQUIREMENTS FOR 2014 

[Billion gallons] 

Advanced biofuel .......................... 2.67 

Total renewable fuel ..................... 16.28 

D. 2015 Advanced Biofuel and Total 

Renewable Fuel Volume Requirements 

In the NPRM, we said that we 

expected that the market could achieve 

some growth in 2015 in comparison to 

2014 volumes despite the fact that the 

proposal was being released well into 

2015. Our proposed volumes for 2015 

represented moderate growth in 

supplies of both advanced biofuel and 

total renewable fuel deemed possible 

based on annual growth in previous 

years, but tempered by the fact that the 

market would not have the lead-time 

envisioned by the statute. Although the 

proposed volumes could not be 

construed as requirements, we believed 

that they would provide signals to the 

market concerning the levels that EPA 

believed were achievable, and that the 

market would respond to these signals. 

In fact this appears to have been the 

case, as monthly supply in the months 

following release of the NPRM was 

higher than monthly supply prior to the 

NPRM. 

This final rule is being released after 

11 months of the year has passed. As 

was the case for 2014, the final 

standards that we set for 2015 cannot 

affect supply that occurred over the 

previous 11 months, and there is 

insufficient lead time available to 

impact renewable fuel use in the 

remaining one month. Thus we believe 

that the basic approach we have taken 

in this final rule to establishing 2014 

requirements should also be applied to 

2015, with differences only to account 

for there being an incomplete data set 

for 2015. The more general issues (e.g., 

consideration of carryover RINs, 

determination of export volumes, etc.) 

that were raised by stakeholders for the 

determination of the 2014 volume 

requirements, and our assessment of 

those issues, also apply to 2015. As for 

2014, the final volume requirements for 

2015 for advanced biofuel and total 

renewable fuel effectively represent 

what the market actually achieved (for 

months for which data are available) 

and a projection of supply based on 

historical information for the remaining 

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69We determined that using records from EMTS 

on 2015 RINs retired for exports would provide an 

inaccurate estimate of actual 2015 RINs retired for 

export in specific months. Exporters can record 

their RIN retirements at any time within the 30 days 

following an export of renewable fuel. As a result, 

exports that occurred in August 2015 may be 

recorded in EMTS in August or September, and 

exports that occurred in September 2015 may be 

recorded in EMTS in September or October. Given 

this, we believe that the Census Bureau data on 

exports provided a more accurate estimate of 

exports in specific months. 

70 ‘‘Projection of annual renewable fuel supply in 

2015,’’ memorandum from David Korotney to 

docket EPA–HQ–OAR–2015–0111. 

months where data were not yet 

available. 

While this final rule is being released 

after 11 months of the year has passed, 

the data for determining actual supply 

was only available for the first 8 to 9 

months of the year. EMTS data on RIN 

generation and various adjustments for 

RINs that cannot be used for obligated 

party compliance was available through 

September, while data on renewable 

fuel exports from the Census Bureau 

was available through August.69 In order 

to determine total supply for 2015, it 

was necessary to estimate supply for the 

remaining months of the year using the 

data on actual supply that is available 

for 2015 and supply trends from 2013 

and 2014. These supply trends were 

used to identify seasonal variations in 

supply that allowed us to project supply 

in those months in 2015 for which 

actual supply data are not available. 

Details of this assessment are provided 

in the docket, and are summarized 

below.70

TABLE II.D–1—PROJECTED SUPPLY FOR 2015 

[Million ethanol-equivalent gallons] 

RINs 

generated Adjustments Exports Net supply 

Advanced biofuel ............................................................................................. 3,121 92 145 2,884

Total renewable fuel ........................................................................................ 17,815 379 504 16,931 

In the NPRM we requested comment 

on whether the volume requirements 

that we were proposing for 2015 

appropriately reflected challenges 

associated with the marketplace 

increasing renewable fuel supply in 

response to the rulemaking in the time 

available. Parties that believed we 

should set the applicable volume 

requirements for 2014 at the statutory 

targets typically said the same for the 

2015 volume requirements, arguing that 

carryover RINs could meet any shortfall 

in the supply of renewable fuel. Others 

agreed that the proposed 2015 volume 

requirements were reasonable and 

pointed to the fact that the situation for 

2015 was essentially the same as for 

2014 in that the standards would be set 

after most of the year had passed and 

beyond a date where the final rule could 

influence renewable fuel use. 

In general, it is our assessment that 

comments provided by stakeholders did 

not include any compelling arguments 

or information that would lead us to 

believe that the final volume 

requirements for 2015 should be set 

higher than actual supply (including a 

projection of actual supply for months 

where data are not available). While 

some stakeholders expressed a belief 

that higher standards can influence 

market dynamics in 2015, we do not 

believe that this is the case given that 

this final rule is being released after 11 

months of the year has passed. The only 

possible basis for setting the final 

volume requirements higher than actual 

supply would be the availability of 

carryover RINs, which as described in 

Section II.H we believe should not be 

intentionally drawn down in the context 

of standard-setting at this time. 

Some obligated parties argued that the 

final percentage standards for 2015 

should be set at the proposed levels 

since they were using the proposed 

percentage standards to guide their 

acquisition of RINs in the second half of 

the year. These parties made a similar 

argument regarding the 2014 percentage 

standards. However, all regulated 

parties were aware that the final 

standards could differ from those we 

proposed based on comments we 

received, new information that became 

available, and new or different EPA 

analysis. Moreover, the statutory 

volume targets (which a number of 

commenters argued should be the basis 

for the final 2014 standards) provided 

notice of the maximum volumes that 

EPA could require in finalizing the rule. 

As with 2014, we are using the 

cellulosic waiver authority as the basis 

for reductions in advanced biofuel, and 

for an equal reduction in the total 

renewable fuel volume requirement. For 

total renewable fuel, we are also using 

the general waiver authority, based on a 

determination of inadequate domestic 

supply, to provide an additional 

increment of volume reduction to result 

in a volume requirement equal to our 

assessment of RINs generated in 2015 

that will be available for compliance. 

TABLE II.D.2—FINAL VOLUME

REQUIREMENTS FOR 2015 

[Billion gallons] 

Advanced biofuel .......................... 2.88 

Renewable fuel ............................. 16.93 

E. Total Renewable Fuel Volume 

Requirement for 2016 

The proposed 2016 volume 

requirement of 17.40 billion gallons was 

intended to represent the total supply of 

renewable fuel for use in transportation 

fuel in the United States, including both 

domestic production and imports of 

renewable fuel, in light of a policy that 

is intended to induce significant change. 

In determining the proposed 2016 

volume requirements, we targeted 

substantial growth compared to 2014 

and 2015, consistent with the fact that 

they are being set prospectively, on the 

schedule contemplated by Congress, 

and therefore can be expected to 

influence the increased production and 

use of renewable fuels in 2016. 

Responses to the proposed 2016 

volume requirement for total renewable 

fuel were mixed. Some stakeholders, 

such as The American Council on 

Renewable Energy and Trestle Energy, 

indicated that the proposed volumes 

appeared to be reasonable given the 

challenges associated with increasing 

supply. Stakeholders who were 

obligated parties, petroleum marketers 

and retailers, livestock owners, or 

engine owners typically said that the 

proposed volumes were too high. These 

stakeholders typically pointed to 

expected high costs, adverse impacts on 

vehicles or engines, or a general 

inability of the market to supply the 

proposed volumes. Many treated the 

constraints associated with the E10 

blendwall as representing a firm barrier 

that could not or should not be crossed. 

In contrast, renewable fuel producers 

and farmers generally believed the 

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71Section 211(o)(7)(A) says, ‘‘The Administrator 

. . . may waive the requirements . . .’’ [emphasis 

added]. 

72As discussed in Section II.B.1, 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. 

proposed volumes to be too low. These 

stakeholders typically pointed to 

production capacity and available 

feedstocks to support their views, and 

often argued that the power of the 

market to respond to the standards EPA 

sets is essentially unlimited in its ability 

to overcome any potential constraints 

on supply. 

In general, we did not find arguments 

for reducing the volume requirements 

below the proposed levels compelling. 

Our response to comments associated 

with the E10 blendwall, demand for E0, 

and the use of higher ethanol blends 

such as E15 and E85 are discussed in 

more detail in Section II.E.2 below. In 

short, stakeholders provided no 

compelling evidence that a nationwide 

average ethanol concentration in 

gasoline cannot exceed 10.0% in 2016. 

Moreover, the RFS program will not 

force consumers to use E15 in engines 

where compatibility may be a concern, 

such as nonroad engines or vehicles 

manufactured before 2001, as some 

commenters suggested. The flexibility 

inherent in the program will also 

continue to permit the use of E0 if there 

is demand for it, addressing concerns 

about misfueling with higher ethanol 

blends. Further discussion of these 

issues can be found in the Response to 

Comments document. 

While we do not believe that the total 

renewable fuel volume requirement for 

2016 should be reduced below the 

proposed level, we continue to believe 

that challenges associated with growth 

in the supply of renewable fuels 

precludes attainment of the statutory 

volumes in 2016. Constraints including 

but not limited to the E10 blendwall, are 

real and can only be partially overcome 

by a responsive market in the near term. 

We acknowledged in the NPRM that the 

market would need to respond by 

increasing domestic production and/or 

imports of those biofuels that have 

fewer marketplace constraints, by 

expanding the infrastructure for 

distributing and consuming 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. However, we 

also stated our belief in the NPRM that 

the market is not unlimited in its ability 

to respond to the standards we set, 

particularly over the relevant timeframe. 

Thus while there can be significant 

growth in renewable fuel supply from 

2015 levels in 2016, we continue to 

believe that the statutory target for total 

renewable fuel cannot be reached in 

2016. 

In making a determination to exercise 

our authority to waive volumes, our 

objective is to exercise the general 

waiver authority only to the extent 

necessary to address the inadequacy in 

supply.71 72 As explained in the NPRM, 

we are seeking to determine the 

‘‘maximum’’ volumes of renewable fuel 

that are reasonably achievable in light of 

supply constraints. To clarify, we are 

not aiming to identify the absolute 

maximum domestic supply that could 

be available in an ideal or unrealistic 

situation, or a level that might be 

anticipated under conditions that are 

possible, but unlikely to occur. Rather, 

we are attempting to identify what we 

think is the most likely maximum 

volume that can be made available 

under real world conditions, taking into 

account the ability of the standards we 

set to cause a market response and 

result in increases in the supply of 

renewable fuels. 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 is 

one that we believe is not given to 

precise measurement and necessarily 

involves considerable exercise of 

judgment. To this end, we are setting 

achievable volumes of total renewable 

fuel in this package that reflect our best 

judgment as to the domestic supply of 

renewable fuels in 2016. There are a 

number of indications, described below, 

that the volumes we are finalizing today 

represent a reasonable estimate of this 

level. 

In the NPRM we explained that our 

approach to determining the applicable 

volumes of total renewable fuel 

included estimating the market 

potential for overcoming the various 

constraints at play. This approach was 

based on consideration of the potential 

future contributions from sources of 

renewable fuel, including ethanol, 

biodiesel and renewable diesel, and 

other types of renewable fuels, in the 

aggregate rather than individually, and 

in the context of a market that is 

responsive to the standards that we set. 

We explained that we believed this 

approach to be more straightforward 

and more likely to provide a correct 

projection of the available domestic 

supply of renewable fuels in 2016 than 

the proposed approach we described in 

the November 29, 2013 proposal for the 

2014 standards. 

In response to the NPRM, many 

parties presented alternative suggestions 

for volume requirements for total 

renewable fuel in 2016, either higher or 

lower than the 17.40 billion gallons that 

we proposed, and generally based these 

suggestions on an approach more akin 

to that used in our November 29, 2013 

proposal. That is, they made their own 

estimates of the achievable levels of 

various types of renewable fuels that 

could be produced or renewable fuel 

blends that could be consumed and 

used these estimates as the basis for 

suggesting higher or lower volume 

requirements. We recognize that an 

assessment of the contribution that 

individual sources can make to the total 

can be valuable in demonstrating both 

the achievability of the volume 

requirements and the extent to which 

they represent the supply of renewable 

fuels in 2016. In the November 2013 

proposal we took a very granular 

approach to assessing the potential 

supply of renewable fuels by assessing 

the potential for growth of individual 

renewable fuels, quantifying the 

uncertainty around each assessment, 

and using a Monte Carlo simulation to 

assimilate the individual assessments. 

In our June 2015 proposal we took a 

much more holistic approach to 

assessing renewable fuel supply, 

recognizing that the individual 

components of the supply are 

interconnected and do not operate in 

isolation. We received many comments 

suggesting that the holistic approach 

was too broad, that the methodology 

EPA used in deriving the volume 

requirements was not sufficiently clear, 

and that EPA should more closely 

evaluate potential for growth in the use 

of individual fuel types as part of its 

analysis. We continue to believe that 

because of the complexities of the fuels 

market, the structure of the standards, 

and the inherent difficulties associated 

with predicting which of the many 

possible scenarios the market will 

choose to meet any given standard, a 

very granular approach is not likely to 

produce an accurate representation of 

the maximum volume that can 

reasonably be achieved. At the same 

time, we recognize the value in better 

identifying the information on which 

our technical judgements are based in 

making an overall assessment of the 

volume of renewable fuel that can be 

supplied in 2016. 

For the final rule, therefore, we are 

individually analyzing the potential for 

growth in broad categories of renewable 

fuel: Ethanol, biodiesel, and other types 

of renewable fuels. We believe that 

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77450 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

these assessments have helped us to 

better estimate the most likely 

maximum achievable volume of 

renewable fuel that can be supplied in 

2016 and, as described below, the 

revised approach, together with 

technical corrections, has led to a final 

volume for total renewable fuel that is 

somewhat larger than the volume in our 

proposed rule. The following sections 

discuss the state of the renewable fuel 

market in general, our evaluation of the 

supply of broad categories of renewable 

fuel in 2016, and our conclusions 

regarding the most likely maximum 

achievable supply of renewable fuel in 

2016. 

1. Renewable Fuel Market Challenges 

and Opportunities 

The fuels marketplace in the United 

States is large, diverse, and complex, 

made up of many different players with 

different, and often competing, interests. 

Substantial growth in the renewable fuel 

volumes beyond current levels in 2016 

and beyond will require action by many 

different parts of the fuel market, and a 

constraint in any one part of the market 

can limit the growth in renewable fuel 

supply. Whether the primary constraint 

is in the technology development and 

commercialization stage, as has been the 

case with cellulosic biofuels, or instead 

related to the infrastructure build out 

and fuel consumption, as is recently the 

case with ethanol in the United States, 

the end result is that these constraints 

limit the available supply of renewable 

fuel. 

The constraints on supply to vehicles 

and engines range from legal limitations 

on the ethanol concentration that can be 

used in different types of gasolinepowered vehicles to market-based 

constraints associated with production, 

distribution, and use of renewable fuels 

and the ability for these fuels to 

compete with traditional petroleumbased fuels. A list of the many factors 

that affect the growth of renewable fuel 

supply in the United States in 2016 and 

beyond is shown in Table II.E.1–1 

below. 

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Table II.E.l-1 

Factors That Affect the Supply of Renewable Fuel 

• Feedstock availability 

o For existing feedstocks 

• Increases in production 

• Diversion from food and other uses, including renegotiation of existing contracts 

• Expansion of distribution and storage infrastructure 

o For new feedstocks 

• Research and development of new feedstocks 

• Development of new harvesting equipment and practices 

• Development of new distribution and storage infrastructure 

• Contracts to enable reliable delivery 

• Renewable fuel production 

o Technology research and development 

o Commercialization of new technology 

o Investment in new and expanded production facilities 

o Restarting idle facilities 

• Renewable fuel imports 

o Investment in new and expanded production facilities abroad 

o Diversion from domestic and other foreign markets 

• Renegotiation of existing contracts 

• Satisfying competing mandates and incentives abroad 

• Changes in currency valuation domestically and abroad 

o Expansion of foreign distribution and export capacity 

o Expansion of U.S. import capacity and distribution from ports 
77452 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

None of the market components listed 

in Table II.E.1–1 are in and of 

themselves an insurmountable barrier to 

growth of renewable fuels. Rather, they 

are challenges that can be overcome in 

a responsive marketplace given enough 

time and in many cases with 

considerable investment. In this regard 

the key question is not whether 

renewable fuel volumes can increase, 

but rather how quickly. Moreover, the 

speed with which the market can engage 

in actions to overcome these constraints 

is a function of whether and how 

effectively parties involved in the many 

diverse aspects of the renewable fuel 

marketplace respond to the incentives 

provided by the RFS and other programs 

designed to incentivize renewable fuel 

use. 

To a certain degree, the RFS standards 

themselves can help provide certainty 

and help drive the necessary 

investments up and down the supply 

chain by creating expectation for what 

overall demand will be. However, the 

RFS standards are still limited in this 

regard in that they are issued on an 

annual basis immediately prior to the 

compliance year (thus offering little 

lead-time) and provide only an indirect 

signal to the various components of the 

marketplace. In order for volumes of 

many of the renewable fuels to grow it 

requires a rather complicated series of 

investments decisions and actions by a 

wide range of independent businesses 

in the marketplace, often by companies 

that are in direct competition with one 

another. This can make it difficult for 

the market to increase supply quickly. 

The significant fluctuations in the price 

of oil since 2010 further complicates the 

investment decisions necessary to 

enable further growth in the supply of 

renewable fuels. 

Fuels that are or have been more 

easily integrated into the marketplace 

(e.g., ethanol at 10 volume percent or 

renewable diesel that is fungible with 

diesel fuel) face fewer challenges to 

overcome to increase their supply and 

thus have generally been more attractive 

to investors than those that might 

require new and unique changes to the 

fuel distribution infrastructure and/or 

vehicle fleet. The greater market 

certainty associated with these more 

easily integrated fuels has allowed them 

to increase relatively quickly. This is 

consistent with our past experience 

under the RFS program where we saw 

rapid growth in E10 ethanol blends, low 

level biodiesel blends, and more 

recently CNG/LNG derived from biogas. 

However, introducing new types of 

biofuels and higher biofuel 

concentrations into the marketplace 

requires new production technology, 

new vehicles, new retail and 

distribution system infrastructure, and/ 

or new retail-level incentives, and thus 

have been slower to expand. 

Also, the signal from the RFS 

standard is for the general categories of 

cellulosic biofuel, biomass-based diesel, 

advanced biofuel, and total renewable 

fuels. The standards are not specific to 

a fuel type (e.g., ethanol, biodiesel, 

renewable diesel, biobutanol, biogas, 

etc.), feedstock (e.g., corn, soy oil, wood 


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73Although EPA did not waive any renewable 

fuel requirements in 2013, EPA estimates that 

obligated parties will only be able to achieve 

compliance through substantial reliance on 

carryover RINs. 

chips), or technology (e.g., biochemical 

vs thermochemical). This is a strength of 

the RFS program, as it lets the market, 

rather than EPA, decide which fuel hold 

the most promise for future growth. As 

a result, however, the market is still left 

to determine which fuels to invest in, 

requiring action by multiple parties 

involved in fuel supply to ensure 

growth. We believe that the market can 

and will make these decisions, 

particularly as the picture as to which 

fuels and technologies hold the greatest 

potential for growth becomes clearer, 

but it will take time. 

In addition to the market needing 

time to sort out its investment decisions, 

it should also be emphasized that it 

takes time for the market to implement 

investment decisions it has already 

made. Each market segment has a 

certain degree of implementation time 

associated with it. For instance, 

diverting relatively small amounts of 

feedstocks from existing uses could 

potentially occur in a matter of weeks in 

some cases and months in others, 

whereas diverting larger amounts or 

bringing some new feedstocks to market 

(e.g., energy crops such as switchgrass) 

could require years. Restarting existing 

biofuel production facilities could 

likewise occur relatively quickly, while 

developing a new renewable fuel 

production technology (e.g., cellulosic 

ethanol) takes years, and once 

developed it takes years more to 

produce commercial volumes of 

renewable fuel from them. Displacing 

some fuels with others in distribution 

and storage can often occur in a matter 

of weeks, but adding new distribution 

and storage capacity can take months or 

years. Using compatible fuels in the 

existing fleet of vehicles can occur 

almost seamlessly, but developing and 

expanding a new fleet of purpose-built 

vehicles will take years. Since this final 

rulemaking establishes standards for 

2016 that will apply to gasoline and 

diesel fuel produced just one month 

from the signature of this rule, we do 

not believe that there is sufficient time 

for the 2016 standards to lead to 

dramatic changes in renewable fuel 

supply that are not already underway. 

But we do believe that the 2016 

standards can drive some growth in the 

near term while setting the stage for 

greater growth in the longer term. As a 

result, the best opportunity for market 

growth is likely to be for those fuels 

where the market is already taking 

action to address any relevant 

constraints listed in Table II.E.1–1 

above. 

Cellulosic biofuel provides an 

example. Growth in cellulosic biofuel 

volumes and their contribution to the 

advanced biofuel standard has been 

limited, and certainly less than Congress 

envisioned, since the outset of the RFS 

program due to challenges related to 

technology development and 

commercialization. Despite a number of 

years and billions of dollars spent in 

research and development of cellulosic 

biofuel technologies, and several 

attempts at commercializing these 

technologies, deriving liquid fuels from 

cellulosic feedstocks has lagged well 

behind not only the statutory targets, 

but also our annual projections. These 

technologies are just now beginning to 

introduce significant volumes of liquid 

cellulosic biofuels to the market as 

described in Section IV. In contrast, 

more rapid growth has occurred with 

CNG/LNG derived from biogas, which 

was recategorized as a cellulosic biofuel 

in 2014. Biogas did not face the same 

renewable fuel production challenges as 

liquid biofuels, and since it could also 

utilize the existing natural gas 

distribution, vehicle, and refueling 

infrastructure use of cellulosic CNG/

LNG derived from biogas as 

transportation fuel has increased rapidly 

since 2014. The inclusion of cellulosic 

biogas in our projections has allowed 

total cellulosic biofuel volumes to grow 

rapidly through 2015 and into 2016. 

However, even this significant and short 

term growth will become limited as 

cellulosic biogas will soon face 

constraints associated with sufficient 

consumption capacity since the fleet of 

natural gas vehicles that use CNG/LNG 

derived from biogas as a transportation 

fuel is currently limited, and it will 

likely take time for it to grow. 

Even with the RFS standards in place 

to drive growth, the market itself still 

has considerable uncertainty in terms of 

how it will respond to those standards 

and whether and to what degree it can 

overcome the various constraints within 

the next year. These facts make it 

challenging for the Agency to project the 

supply of renewable fuel in 2016, as we 

cannot predict with precision the 

progress that can be made for every 

component in the market for all the 

different fuels, or for the renewable fuel 

supply as a whole. Every existing and 

potential renewable fuel is impacted by 

a number of factors that may limit the 

renewable fuel’s growth potential over 

the coming year. If EPA were to 

establish standards that cannot be 

achieved it would likely result in a 

significant increase in renewable fuel 

and RIN prices, and obligated parties 

would be forced into RIN deficits or 

even non-compliance. This could serve 

to erode the certainty and stability for 

renewable fuel volume growth that the 

RFS standards are intended to provide. 

At the same time, there are also reasons 

for optimism that significant progress 

can be made in overcoming some of the 

constraints on renewable fuel use in the 

coming year. We do not think it would 

be appropriate to ignore either the 

potential for growth, or potential 

challenges on growth, in making our 

assessment of potential volumes. 

Because the RFS program allows for a 

variety of different paths to contribute to 

overall compliance with the standards, 

significant growth overall is possible in 

the coming year even if there is less 

certainty that individual paths might be 

able to grow significantly. 

In the NPRM we discussed the fact 

that renewable fuel supply in 2013 73

and 2014 fell short of the statutory 

targets, and that we believed that the 

constraints on supply that contributed 

to those shortfalls were very likely to 

continue in 2015 and 2016. Indeed 

supply in the first half of 2015 has also 

fallen short of what would be required 

on an annualized basis to meet the 

statutory targets, though it was larger 

than supply in 2014. In response, many 

stakeholders suggested that the only 

reason the statutory targets were not 

reached in 2013 and 2014 was because 

EPA missed the statutory deadlines for 

setting RFS standards for those years. 

They also cited the November 29, 2013 

NPRM as establishing an expectation 

among regulated parties that EPA would 

not require the statutory targets to be 

met in 2014 and 2015, and that the 

market merely responded in the manner 

of a self-fulfilling prophecy. 

In providing these comments, these 

stakeholders took the view that the 

market is essentially unlimited in its 

ability to respond to the standards that 

EPA sets. That is, if EPA were to 

establish the applicable volume 

requirements at the statutory targets and 

by the statutory deadlines, the market 

would be able to meet those volume 

requirements. We disagree. The 

constraints discussed above, and in 

greater detail in the following sections, 

are both real and are expected to 

continue for at least the next several 

years, even as volumes produced and 

used are expected to grow. Our 

investigations clearly demonstrate that 

the market is not unlimited in its ability 

to respond to the standards that we set. 

A review of the market response to 

the RFS standards in 2013 demonstrates 

that constraints on supply are real. In 

2013 EPA had never used its waiver 

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77454 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

74Public Law 112–240. 

75We have considered the possibility that the 

market did not fully respond to the 2013 RFS 

standards despite the availability of the biodiesel 

tax credit in 2013 because of the availability of 

carryover RINs. We believe that the benefit to 

obligated parties of maintaining their banks of 

carryover RINs in 2013—especially in light of everincreasing RFS volume requirements in future years 

and uncertainty regarding how EPA may interpret 

its waiver authorities—would have led obligated 

parties to strongly favor use of 2013 RINs over 

banked carryover RINs. We also considered the 

more limited corn stocks available for much of 2013 

due to the 2012 drought. However, we note that 

ethanol exports were still occurring in 2013 even 

though ethanol imports increased substantially 

during this period. Thus, we do not believe that the 

availability of 2013 carryover RINs nor the historic 

2012 drought in the United States undermines our 

conclusion that the renewable fuel market was 

constrained in 2013. 

authorities to lower the statutory 

advanced and total renewable fuel 

volumes, and had not proposed to do so 

in its NPRM for the 2013 standards 

published on February 7, 2013. The 

market could have reasonably 

anticipated that EPA would maintain 

the statutory applicable volumes for 

calendar year 2013. Indeed, EPA’s final 

rule, published in August of 2013, 

maintained the proposed approach, and 

set percentage standards requiring the 

use of the statutory applicable volumes 

of advanced and total renewable fuel. 

Furthermore, unlike some other years 

when the biodiesel tax credit has been 

enacted late in a calendar year, and 

made retroactive to fuel produced in 

that year, in 2013 the tax credit was 

enacted in January 2013 and, therefore, 

was in place to incentivize the 

production of biodiesel throughout the 

calendar year.74 Thus, in 2013, both tax 

policy and RFS signals were in place to 

incentivize large growth in renewable 

fuel use. As shown in the figures below, 

there was no sudden increase in supply 

after the 2013 standards were released 

on August 15, 2013, consistent with the 

indications that the market expected 

EPA to finalize standards requiring use 

of the statutory applicable volumes. 

There was a moderate increase in the 

supply of BBD at the end of 2013, which 

we believe reflected both market 

anticipation of the expiration of the 

biodiesel tax credit at the end of 2013 

and the end of the 2013 RFS compliance 

year. Supply of ethanol (the 

predominate source of D6 RINs) was 

essentially no different after August 

than it was before, and the supply of D5 

RINs actually decreased after August. In 

short, the market had an opportunity to 

increase supply in order to reach the 

applicable 2013 standards, but did not 

do so in the timeframe that was 

available.75 We believe this indicates 

that the market was operating at a peak 

level, and was constrained from 

accomplishing more. 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77455 

Some stakeholders said that the 

volume requirements for 2014, 2015, 

and 2016 that we proposed in the June 

2015 NPRM reflected EPA’s view that 

the various constraints represent 

absolute barriers to the expanded use of 


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Figure II.E.l-1 

Monthl Su 1 ofD4 RINs in 2013 

350,000,000 

300,000,000 

250,000,000 

200,000,000 

150,000,000 

100,000,000 

l I. I I 

LUf~ Sta naar'!ls I 

[are fi naliztjd I v 

_/ rl_ J_, I 

--""' - " I 

I 

~ I 

- I 

I 

50,000,000 I 

I 

0 

Figure II.E.l-2 

Monthl Su 1 ofD5 RINs in 2013 

120,000,000 

100,000,000 

80,000,000 

60,000,000 

40,000,000 

20,000,000 

0 

Figure II.E.l-3 

Monthly Supply ofD6 RINs in 2013 

1,400,000,000 

I 

1,200,000,000 

1,000,000,000 - I -............ / 

..... ....--~I I 

..........,.. I 

800,000,000 

600,000,000 

i I 

20~3 sta~dar . s I 

are fi~alizE d I 

400,000,000 - I I 

I 

200,000,000 I 

I 

0 I 
77456 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

ethanol specifically or renewable fuel in 

general. This was not the view we 

expressed in the NPRM and it is not our 

view now. Instead, these constraints 

mean that increasing the supply of 

renewable fuel will require time, and 

that the statutory volumes cannot be 

met according to the schedule reflected 

in the statute. As stated in the NPRM, 

we do believe that markets have a 

demonstrated ability to overcome some 

constraints with the appropriate policy 

drivers in place given sufficient time, 

and that the RFS program can drive 

renewable fuel use. However, the 

market’s ability to overcome constraints 

is not unlimited, nor do we think 

change can be instantaneous, and thus 

it is appropriate to consider both 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, and the limitations 

in that potential in 2016. Thus, we are 

setting the total renewable fuel volume 

requirement for 2016 at a level that 

takes into account both the constraints 

on supply and the ability of the RFS 

program to incentivize RFS stakeholders 

to overcome those constraints. 

The following sections discuss in 

further detail our assessment of broad 

categories of renewable fuel expected to 

contribute to the total supply of 

renewable fuel in 2016. We also discuss 

the particular constraints that we expect 

will be relevant in projecting the supply 

of these renewable fuels in 2016. 

2. Projecting Ethanol Supply 

Ethanol is the most widely produced 

and consumed biofuel, both 

domestically and globally. Since the 

beginning of the RFS program, the total 

volume of renewable fuel produced and 

consumed in the United States has 

grown substantially each year, primarily 

due to the increased production and use 

of corn ethanol. Prior to 2013 the 

primary constraints to the supply of 

ethanol were the amount of ethanol that 

could be produced and imported into 

the United States, and the ability of the 

market to distribute the ethanol across 

the country. Virtually all existing retail 

infrastructure and vehicles were 

compatible with gasoline containing up 

to 10% ethanol, and therefore the 

ethanol supply grew with the 

production capacity of the domestic 

ethanol industry and the rapid build-out 

of the ethanol distribution and terminal 

blending capacity to supply E10. A 

combination of factors, including the 

demand certainty provided by the RFS 

and the ability to profitably market 

ethanol in E10 blends due to relatively 

high gasoline prices, relatively low corn 

prices, and the blenders tax credit 

(available through 2011), provided the 

economic incentive for the investment 

that led to rapid increases in ethanol 

production and distribution capacity, 

dramatically increasing the total supply 

of ethanol to vehicles. 

However, as the gasoline market 

became saturated with E10 in 2013 and 

2014, the constraints on the supply of 

ethanol began to change. The supply of 

ethanol depends on the overall demand 

for gasoline as well as the percentage of 

ethanol blended into gasoline. In order 

for the supply of ethanol to increase it 

now needs to be sold in higher level 

blends, such as E15 or E85. These fuels 

are not compatible with much of the 

existing retail infrastructure and cannot 

be used in all vehicles and engines. The 

low number of retail stations selling 

these higher level ethanol blends, along 

with poor price advantages for these 

higher level blends compared to E10, a 

limited number of FFVs, and ineffective 

marketing of these fuels represent the 

biggest challenges to the continued 

growth of the supply of ethanol as a 

transportation fuel in the United States. 

As can be seen in Figure II.E.2–1 below, 

the rate of growth in the use of ethanol 

as a percentage of the motor gasoline 

market decreased dramatically as it 

approached an average concentration of 

10% nationwide. 


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76Source: DOE’s Alternative Fuels Data Center. 77E85 would need to be priced at least 22% 

below E10 to be equivalent on a cost per mile basis. 

Instead, E85 price discounts have been less than 

18% for the last several years according to 

E85prices.com. 

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. The number of retail stations 

offering E85 was about 3,000 by the end 

of 2014, representing only about 2% of 

stations nationwide.76 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. 

Additionally, with E85 almost always 

priced higher than E10 on a cost per 

mile basis, only a fraction of the FFV 

owners with access to a refueling station 

offering E85 chose to purchase this 

fuel.77 These constraints are unlikely to 

change significantly in 2016, though we 

do expect some growth in each of these 

areas under the influence of the 

standards we set under the RFS 

program, and as a result of a recent 

USDA program that will provide $100 

million to develop infrastructure for 

higher ethanol blends, as discussed in 

Section II.E.2.v. 

While the price of the RIN that is 

generated and assigned to a gallon of 

ethanol theoretically should allow E85 

to be priced at a level to encourage 

consumers to purchase these fuel blends 

when available (cheaper than E10 on a 

per mile basis), data that EPA has 

reviewed suggest this is unlikely in 

2016. In the sections that follow we first 

discuss the data supporting our 

conclusion that the RIN is currently an 

inefficient mechanism for reducing the 

price for higher level ethanol blends at 

retail, and therefore unlikely to be able 

to significantly impact the supply of 

ethanol in the United States in 2016. We 

then discuss in detail our projected 

supply of E0 (which impacts the supply 

of ethanol by reducing the gasoline pool 

into which ethanol can be blended), 

E10, E15, and E85. We note that 

throughout this discussion we do not 

differentiate between ethanol produced 

from corn, sugarcane, or any other 

feedstock. This is because we believe 

that the supply of ethanol in 2016 will 

not be limited by the amount or types 

of ethanol produced, but rather by other 

constraints as discussed below. 

Therefore, in projecting the ethanol 

supply for the purpose of setting the 

total renewable fuel volume 

requirement, the feedstocks used to 

produce the ethanol and any particular 

constraints related to these individual 

feedstocks are not relevant 

considerations. 

i. Ethanol Supply as E10 in 2016 

Based on comments received in 

response to the NPRM, it is clear that 

the E10 blendwall is viewed differently 

by different stakeholders. Some 

stakeholders, most notably refiners, 

expressed the belief that the constraints 

on sales of higher ethanol blends such 

as E15 and E85 are so substantial, and 

the time available to address those 

constraints for 2016 is so limited, that 

exceeding a pool-wide ethanol content 

of 10% is either unattainable or could 

occur only at great cost with 

corresponding increases in fuel prices 

and disruption to fuel supplies. Other 

stakeholders, primarily ethanol 

proponents, instead argued that 

substantially higher volumes of E15 

and/or E85 can be reached in 2016 with 

available infrastructure, despite 

insufficient efforts in the past to expand 

infrastructure for E15 and E85. These 

stakeholders generally argued that 

higher standards would result in higher 

RIN prices, which in turn would result 

in greater price discounting for E15 and 

E85 in comparison to E10 and thus 

higher sales of those higher level 

ethanol blends. They further argued that 

higher RIN prices, even if significant, 

would not result in higher fuel prices to 

consumers. 

Our view of the E10 blendwall falls 

between these two viewpoints. We 

believe that there are real constraints on 

the ability of the market to exceed a 

pool-wide ethanol content of 10%. 

However, these constraints do not have 

the same significance at all levels above 

10% ethanol. Instead, for the state of 

infrastructure that can be available in 

2016, the constraints represent a 

continuum of mild resistance to growth 

at the first increments above 10% 

ethanol and evolve to significant 

obstacles at higher levels of ethanol. 

This gradual nature of the impacts of the 

constraints is due to the fact that small 

increases in ethanol volumes above 10% 

are likely to be possible with changes in 

RIN prices, while larger increases are 

only possible with changes to 

infrastructure that cannot occur as 

quickly. The transition from mild 

resistance to significant obstacles occurs 

by degrees rather than all at once, and 

overcoming the constraints will likely 

require different solutions over different 

time periods. It is difficult to identify 

the precise boundary between volumes 

that can be achieved with mild 

difficulty in 2016 and those that likely 

cannot realistically be achieved over the 

next year. Ultimately the market will 

determine the extent to which 

compliance with the annual standards is 

achieved through the use of greater 

volumes of ethanol or other, nonethanol renewable fuels. 

The volume requirements that we are 

setting today, particularly for 2016, are 

intended to result in pressure on the 

market to exceed the E10 blendwall, but 

we do not believe the 2016 standards 

are capable of overcoming all 

constraints. Whether the market will 

respond to the standards we set by 

increasing the use of E15–E85 is 

unclear, as it 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. Nevertheless, 

the standards we are setting 

acknowledge that opportunities exist to 

exceed the E10 blendwall as described 

more fully in Section II.G below. 

Many stakeholders, regardless of their 

views on whether the E10 blendwall can 

or should be a consideration in the 

determination of applicable volume 

requirements, made the implicit 

assumption in their comments that the 

total volume of ethanol that would be 

used was identical to the volume of 

non-advanced (i.e., conventional) 

renewable fuel that would be necessary. 

Not only is this assumption incorrect, 

but it oversimplifies the true nature of 

the standards and the process of 

determining appropriate levels for those 

standards. While the portion of the 2016 

cellulosic biofuel standard that we 

expect to be ethanol is only 20 million 

gallons, significantly larger volumes of 

ethanol may be used to meet the 

advanced biofuel volume requirement. 

As discussed in Section II.F, total 

volumes of advanced ethanol can 

reasonably be expected to reach 200 

hundred million gallons. It is also likely 

that a portion of the conventional 

renewable fuel pool will be non-ethanol 

as evidenced by production and imports 

of conventional biodiesel and renewable 

diesel in the past. 

The amount of ethanol associated 

with the E10 blendwall (the volume of 

ethanol that could be consumed if all 

gasoline was E10) is driven by the total 

demand for gasoline, and thus, if all 

other considerations are equal, ethanol 

consumption will tend to increase if 

gasoline consumption increases and 

ethanol consumption will tend to 

decrease if gasoline consumption 

decreases. In the NPRM we used a 

projection of 2016 gasoline demand 

from the May, 2015 version of EIA’s 

Short-Term Energy Outlook (STEO), as 

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77458 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

78We received 2015 and 2016 transportation fuel 

demand projections from EIA’s Adam Sieminski on 

September 16, 2015, which included gasoline 

demand projections from the September 2015 

STEO. However, we believe it is more appropriate 

to use gasoline demand projections from the more 

recent October 2015 STEO. Using the most up to 

date EIA data on projected gasoline and diesel 

demand allows our assessment of 2016 supply, and 

calculation of percentage standards, to be as 

accurate as possible. 

79 ‘‘Analysis of historical errors in projections of 

gasoline and distillate demand from EIA,’’ David 

Korotney, memorandum to EPA docket EPA–HQ– 

OAR–2015–0111. 

80This is the case for years when the RFS 

standards are binding, or causing the market to 

consume renewable fuels in volumes beyond what 

they would otherwise choose to use, such as 2013. 

In years prior to 2013 where the RFS standard for 

total renewable fuel were not binding, the RINs 

generally reflect transaction costs. 

81 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. 

this was the most recent version 

available at that time. For this final rule 

we have used the October, 2015 version 

of the STEO, again because it is the most 

recent data available.78 As shown in the 

table below, projected 2016 gasoline 

demand increased by about 1.4% 

between May and October, most likely 

driven by lower crude oil prices. 

TABLE II.E.2.i–1—PROJECTED 2016 GASOLINE DEMAND AND THE E10 BLENDWALL

May, 2015 October, 2015 Difference 

Demand for gasoline energy (Quad Btu) .................................................................................... 16.617 16.852 +0.235 

Equivalent volume of E10 (bill gal) .............................................................................................. 138,045 140,004 +1,959 

E10 Blendwall (bill gal) ................................................................................................................ 13,805 14,000 +195 

Source: Calculated from volume projections in EIA’s Short-Term Energy Outlook for the indicated months, which can be found at http://www.

eia.gov/forecasts/steo/outlook.cfm. Assumes 3.558 mill Btu/barrel for denatured ethanol and 5.222 mill Btu/barrel for gasoline without ethanol. 

In response to our proposed intention 

to use gasoline projections from EIA, 

several stakeholders indicated that EIA’s 

projections of gasoline demand have 

historically tended to be lower than 

actual demand. They requested that we 

make an adjustment to EIA’s projections 

to ensure that they are as accurate as 

possible. We investigated this issue and 

determined that by and large EIA’s 

projections of gasoline demand have 

not, in fact, been lower than actual 

demand. As described in a 

memorandum to the docket, projected 

gasoline demand has more often been 

higher than actual demand, though the 

errors in demand projections were 

highly variable.79 Even so, we do not 

believe it would be appropriate for EPA 

to make adjustments to EIA projections 

to account for potential over- or 

underestimation of projected gasoline 

demand. EIA staff are the experts in the 

analyses required for these particular 

projections, and EPA does not have the 

data or expertise necessary to suggest 

changes to them. 

ii. The Impact of RIN Prices on E85 

Retail Prices 

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 achieve compliance. The 

RFS program, acting through the 

mechanism of the RIN system, also 

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.80 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 

based on the obligations applicable to 

producers and importers of gasoline and 

diesel, 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 and other inputs to 

renewable fuel production 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 above, 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 when they sell 

the separated 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 compared to the 

petroleum fuel it displaces (and the 

higher the price of the petroleum fuel or 

blendstock necessary for the obligated 

party to recoup the cost of the RIN). 

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 sales 

volumes and market share by passing 

along the lower effective purchase price 

of the renewable fuel to the customers 

in the price of their fuel blends.81 If the 

blender retains all, or a significant 

portion, of the RIN value, the ability for 

the RIN to impact the retail prices and 

sales volumes of E85 (or other 

renewable fuels) will be reduced. By 

increasing the potential profitability of 

blending renewable fuels, however, 

higher RIN prices can incentivize the 

build out of the infrastructure necessary 

to blend and distribute renewable fuel 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77459 

82For 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 

Effects,’’ Dallas Burkholder, Office of 

Transportation and Air Quality, US EPA. May 14, 

2015, EPA Air Docket EPA–HQ–OAR–2015–0111. 

83Babcock, Bruce A. and Sebastien Pouliot. 

Feasibility and Cost of Increasing US Ethanol 

Consumption Beyond E10. Card Policy Briefs, 

January 2014. 14–PB 17. 84 ‘‘An Assessment of the Impact of RIN Prices on 

the Retail Price of E85,’’ Dallas Burkholder, Office 

of Transportation and Air Quality, US EPA. 

November 2015. EPA Air Docket EPA–HQ–OAR– 

2015–0111. 85 Knittel, Christopher R., Ben S. Meiselman, and 

James H. Stock. The Passthrough of RIN Prices to 

Wholesale and Retail Fuels Under the Renewable 

Fuel Standard. Working Paper 21343. NBER 

Working Paper Series. Available online <http://

www.nber.org/papers/w21343.pdf> 86Because E85 contains approximately 22% less 

energy per gallon than E10, economic theory would 

suggest that minimal volumes of E85 would be sold 

when the price discount for E85 relative to E10 was 

less than 22% and that sharply increasing sales 

volumes would occur when the price discount 

exceeds 22%. For more information on the observed 

relationship between E85 retail pricing and E85 

sales volumes, see ‘‘Correlating E85 consumption 

volumes with E85 price,’’ memorandum from David 

Korotney to EPA Docket EPA–HQ–OAR–2015– 

0111. 

blends as parties seek to enter or expand 

their position within this market.82

Finally, the RFS program, operating 

through the RIN system should also 

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. Retail prices for 

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 

who own flexible fuel vehicles (FFVs) 

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, more consumers may also be 

motivated to purchase vehicles capable 

of utilizing fuels containing higher 

percentages of renewable fuels, such as 

FFVs. 

Several commenters pointed to the 

ability of RIN prices to reduce the price 

of fuels containing higher 

concentrations of renewable fuels, such 

as E85, as a primary justification for 

establishing a higher total renewable 

fuel standard. They claimed that if EPA 

established a higher standard than 

proposed, RIN prices would rise, retail 

prices for E85 would fall relative to 

those for gasoline, and consequently 

consumers would purchase greater 

volumes of E85. In effect, these 

comments said, the RIN mechanism 

would ensure that greater volumes of 

renewable fuel would be consumed, the 

renewable fuels market would expand, 

and sufficient RINs would be generated 

to meet the higher standards. Some 

commenters also noted that since EPA 

agreed that higher RIN prices would not 

be expected to impact E10 prices there 

would be no economic harm in setting 

a higher total renewable fuel standard, 

and that this action was necessary in 

order to drive renewable fuel 

consumption beyond the E10 blendwall. 

In contrast, other commenters claimed 

that higher RIN prices would not have 

the desired effect of increasing the 

consumption of renewable fuels, at least 

not in the short term, and that high RIN 

prices could have adverse economic 

impacts, including higher diesel fuel 

prices, as EPA has already 

acknowledged. 

If higher RIN prices, which would 

likely result from a higher total 

renewable fuel standard, are to lead to 

substantial increases in E85 

consumption, two independent events 

must occur. First, the higher RIN prices 

must lead to lower E85 retail prices. If 

this does not happen consumers would 

have no incentive to purchase 

additional volumes of E85 as a result of 

higher RIN prices. Second, FFV owners 

must respond to these lower prices by 

purchasing E85 instead of E10 when 

E85 is available. Authors such as 

Babcock and Pouliot, who have written 

about the ability for RINs to drive 

significant increases in E85 sales 

volumes, optimistically assume that RIN 

prices are passed through to E85 prices 

and that consumers are highly 

responsive to E85 prices.83

EPA examined available data in an 

attempt to determine whether or not 

higher RIN prices resulted in lower E85 

prices at retail, and whether lower E85 

retail prices lead to substantial increases 

in E85 sales, as economic theory would 

suggest would be the case when FFV 

owners receive better value for 

purchasing E85 rather than E10. Our 

analysis suggests that the market was 

not sufficiently responsive to higher RIN 

prices to drive large increases in E85 

sales volumes in the period of time at 

question. For instance, we found that 

between January 2013 and July 2015 

only 44% of the RIN value was passed 

on to E85 customers in the form of 

lower E85 retail prices.84 Recent work 

by other parties has reached similar 

conclusions.85 We also found that while 

sales volumes of E85 did increase as the 

price discount for E85 relative to E10 

increased, these sales increases were 

both less dramatic than many have 

assumed, and perhaps more 

importantly, did not increase sharply 

when the price discount exceeded 

energy parity, as others, including 

Babcock and Pouliot have assumed.86

While we did not investigate all factors 

that might slow retail response to 

changing RIN prices, our observations 

lead us to conclude that if EPA were to 

increase the total renewable fuel volume 

requirement significantly, we would 

expect to see sharply higher RIN prices, 

but sales volumes of E85 would be 

expected to see only modest increases 

that would be insufficient to enable the 

market to reach the statutory targets. 

While economic theory and the 

illustrations above 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 result is 

dependent on the marketplace working 

both efficiently and quickly. 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 all 

of the reduced effective price of 

renewable fuel (in essence, the value of 

RINs) to consumers at retail. New 

fueling infrastructure will need to be 

built to facilitate the growth in sales of 

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77460 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

87We have assumed that the ethanol content of 

E85 is 74% on average, consistent with the 

approach taken by EIA. One gallon of E85 would 

replace 0.79 gallon of E10 due to the energy content 

difference. Ethanol content of one gallon of E85 

would be 0.74 gal, while ethanol content of 0.79 gal 

of E10 would be 0.079 gal. 0.74/0.079 = 9.4. 

88See EIA–810 form, Part 5, where refiners and 

blenders indicate production of ‘‘Finished motor 

gasoline, Conventional, Greater than ED55’’, 

http://www.eia.gov/survey/form/eia_810/form.pdf, 

and EIA–819 form, Part 6, where ethanol producers 

report ‘‘Blending to produce finished motor fuel,’’ 

‘‘Conventional, Greater than Ed55,’’ http://www.eia.

gov/survey/form/eia_819/form.pdf. 

89As further evidence for the underestimate of 

E85 production at ethanol production facilities, we 

note that the reported E85 production in 2009 was 

¥(minus)228 thousand barrels, strongly suggesting 

that the accounting involved is not based on E85 

volumes alone. 

90 ‘‘Estimating E85 Consumption in 2013 and 

2014,’’ Dallas Burkholder, Office of Transportation 

and Air Quality, US EPA. November 2015. EPA Air 

Docket EPA–HQ–OAR–2015–0111. 

91 ‘‘USDA grant program—Biofuel Infrastructure 

Partnership’’, docket EPA–HQ–OAR–2015–0111. 

92 ‘‘BIP Awards by State,’’ docket EPA–HQ–OAR– 

2015–0111. It is unclear how many of the 515 new 

tanks will be used for E15 versus E85, nor how 

many of the additional 1,486 stations will offer E15, 

E85, or both. 

fuels containing an increasing 

percentage of renewable fuel. And as 

exposure to renewable fuels increases, it 

will take some time for consumers to 

learn 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. 

This suggests that while the RFS 

program can be effective at increasing 

the renewable content of transportation 

fuels over time, it likely cannot 

substantially increase the available 

supply of renewable transportation fuels 

to consumers in the United States 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. Market 

participants require long term certainty 

in EPA’s approach to establishing 

renewable fuel standards to allow them 

to effectively plan for the most efficient 

and least costly ways to provide the 

needed fuels and comply with the 

standards. 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 acknowledges supply 

constraints when determining the 

appropriate volume requirements is 

necessary, is consistent with the statute 

and Congressional intent, and is the 

intended outcome of this action. 

iii. Ethanol Supply as E85 in 2016 

While the use of one gallon of E15 can 

increase the amount of ethanol used by 

about 50% in comparison to an energyequivalent gallon of E10, the use of one 

gallon of E85 can increase the amount 

of ethanol over that in an energyequivalent gallon of E10 by about a 

factor of nine.87 As a result, many 

stakeholders focused on the potential 

for increases in sales of E85 to quickly 

and significantly increase total ethanol 

consumption. Stakeholders who 

believed that our proposed volume 

requirements were too high similarly 

focused on E85 as being an impractical 

means of exceeding the E10 blendwall. 

All stakeholders agreed that actual 

sales of E85 in the past have been low. 

A number of parties referenced E85 

estimates made using EIA data of about 

77 million gallons in 2014. This 

estimate was based on data collected 

from two sources: Refiners and 

blenders, and ethanol production 

facilities.88 After further investigation, 

however, we believe that this estimate is 

lower than actual E85 use. EIA’s Bulk 

Terminal and Blender Report is 

administered only to entities with at 

least 50,000 barrels of product storage 

capacity, so production at terminals, 

ethanol production facilities, or 

blenders that do not meet this threshold 

is not reported to EIA. EIA also does not 

collect information on E85 produced 

using reformulated gasoline or natural 

gasoline as the petroleum based 

component.89 We believe that E85 

produced using these petroleum 

blendstocks represents a significant 

portion of the total E85 produced in 

2014. When considering the E85 

production volumes reported to EIA in 

2014 in light of the potential for 

production of E85 not covered by EIA’s 

surveys, we believe that actual E85 sales 

were closer to about 150 million gallons 

in 2014. Details of our analysis can be 

found in a memorandum to the 

docket.90

Although 150 million gallons is about 

twice as high as the estimate discussed 

above based on EIA data, it still does not 

indicate an overall preference among 

FFV owners for E85 when E85 has been 

available. Indeed, based on other 

comments received it is clear that the 

experience at retail has been mixed. 

Some retailers, such as 3G Energy, 

found that E85 sales were good and they 

were able to make a profit from selling 

it. Others, such as U.S. Ethanol, found 

E85 sales to be very poor and have 

consequently converted E85 tanks to 

other uses. Other retailers, including 

some in the Midwest, have recently 

made decisions to market E0 in lieu of 

E85 due to greater relative consumer 

interest in E0 in the current economic 

climate. There was no consistent trend 

among comments provided by parties 

attempting to sell E85 on the 

attractiveness of the product to FFV 

owners. 

Most stakeholders agreed that one 

important factor in low historical sales 

of E85 is the small number of retail 

stations offering it. According to DOE’s 

Alternative Fuels Data Center, the 

number of E85 stations reached 2,941 in 

August of 2015. While the growth in 

E85 stations was substantial in late 2010 

and early 2011—equivalent to about 400 

new stations per year—since then 

growth in the number of E85 stations 

has been considerably slower at about 

120 per year. Most recently growth may 

have plateaued due to the lower price of 

crude oil, reducing the attractiveness of 

E85 to consumers and thus the 

willingness of retailers to invest to make 

it available at their stations. 

A number of stakeholders cited a 

recent grant program sponsored by 

USDA that is designed to provide a total 

of $100 million for updated and 

expanded infrastructure at retail for 

higher level ethanol blends.91 This is an 

important program that not only 

demonstrates the U.S. commitment to 

expanding the use of renewable fuels, 

but helps to boost private investment in 

infrastructure by providing matching 

funds. It is expected to increase the 

number of stations offering higher level 

ethanol blends by 1,486, and to increase 

the number of underground tanks that 

can hold higher level ethanol blends by 

515.92 While the infrastructure changes 

are required to be completed by the end 

of 2016, there are also opportunities for 

extensions of up to two additional years. 

The program supports both E15 and E85 

deployment. It is unclear how many 

new E15 and E85 stations would result 

from this USDA program in 2016. If E85 

stations were installed in 2016 at a rate 

that rivaled the dramatic increases seen 

in 2010–2011, about 400 new E85 

stations could be added in 2016. This 

would bring the total number of stations 

to about 3,300. However, it is not 

possible to make a precise projection at 

this time of the impacts of this grant 

program on the number of E85 stations 

that will be in operation in 2016. 

Even if the number of E85 stations did 

reach 3,300 in 2016, it would represent 

an increase of only 12% in comparison 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77461 

93 ‘‘An Assessment of the Impact of RIN Prices on 

the Retail Price of E85,’’ Dallas Burkholder, Office 

of Transportation and Air Quality, U.S. EPA. 

November 2015. EPA Air Docket EPA–HQ–OAR– 

2015–0111. 

94Babcock, Bruce and Sebastien Pouliot. How 

Much Ethanol Can Be Consumed in E85? Card 

Policy Briefs, September 2015. 15–BP 54. 

to those in operation as of August, 2015. 

It is reasonable to assume that a 12% 

increase in the number of E85 stations 

would result in overall sales of E85 

increasing by 12%, all other things 

being equal. However, many 

stakeholders pointed to the power of 

high-priced RINs to motivate consumers 

to use more E85 and argued that larger 

growth was possible from the impact of 

high-priced RINs than from the growth 

in the number of E85 stations. More 

specifically, many ethanol proponents 

claimed that increasing the volume 

requirements above the levels proposed 

in the NPRM, even up to the statutory 

targets, would increase RIN prices, 

which in turn would translate into a 

larger retail price discount for E85 in 

comparison to gasoline. This larger 

price discount would make E85 more 

attractive to FFV owners, and thus sales 

of E85 would increase beyond a level 

that is merely proportional to the 

number of E85 stations. 

As discussed in more detail in Section 

II.E.2.ii, we agree generally that the 

market could theoretically be expected 

to work in this way in response to 

higher standards. However, we have 

investigated the specific mechanisms 

involved and have concluded that the 

process is far more constrained in the 

immediate future than most ethanol 

proponents believe it to be. These 

constraints, discussed further below, 

make it inappropriate to estimate total 

potential E85 consumption based on the 

consumption capacity of all FFVs, or 

even just those FFVs with reasonable 

access to E85. It is similarly 

inappropriate to assume that the E85 

throughput at a given retail station can 

be the same as typical throughput rates 

for E10. Such estimates demonstrate 

what is physically possible, not what is 

likely to occur given the way that the 

market actually operates under the 

influence of high RIN prices as 

evidenced by the limited growth in 2013 

despite the standards that were in place. 

Based on an analysis of available data, 

we have determined that at this point in 

the market’s development, the 

constraints on the ability of applicable 

standards to drive increased 

consumption of E85 in 2016 are 

twofold: 

• Higher RIN prices are not likely to 

produce dollar-for-dollar equivalent 

reductions in E85 retail prices under 

current circumstances wherein the 

number of E85 stations is too few to 

compel competition between them. 

• Reductions in E85 retail prices are 

associated with only moderate increases 

in E85 sales to FFV owners. 

As discussed in a memorandum to the 

docket, we found that only a minority 

of the value of RINs has been passed on 

to FFV owners in the past in the form 

of lower E85 retail prices.93 This effect 

appears to be due to the fact that there 

is often little incentive for wholesalers 

to pass the full value of the RIN on to 

retailers in the form of lower E85 prices, 

and/or retailers can maximize their 

overall profits by retaining much of the 

value of the RIN that they do receive 

rather than passing that value on to 

customers in an effort to increase sales 

of E85. 

We have also found that greater E85 

price discounts relative to gasoline have 

not been associated with the substantial 

increases in E85 sales volumes that 

would be needed to reach the total E85 

consumption levels that some 

stakeholders said are possible. Based on 

an analysis of E85 consumption in five 

states (including the frequently cited 

E85 consumption data from Minnesota) 

and the E85 price reductions relative to 

gasoline in those states, as shown in 

Figure II.E.2.iii–1 below, we estimate 

that increasing the E85 price reduction 

from the 2014 nationwide average of 

17.5% to 30% would have increased 

total 2014 E85 consumption to about 

200 million gallons, an increase of only 

33%. A recent paper published by 

Babcock and Pouliot estimated similar 

sales volumes for these price reductions, 

projecting that consumers would 

consume about 250 million gallons of 

E85 if it was priced at parity on a costper-mile basis with E10 (approximately 

22% lower on a price-per gallon 

basis).94

It is possible that significant increases in 

the number of retail stations offering 

E85 could help to increase E85 

consumption. It is also possible that the 

relationship between E85 consumption 

and prices in the five states analyzed is 

not indicative of consumer responses in 

other states, but instead the consumer 

responses in other states could be more 

dramatic. We examined the potential 

impacts of these factors and determined 

that collectively it may be possible for 


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95 ‘‘Correlating E85 consumption volumes with 

E85 price,’’ memorandum from David Korotney to 

EPA Docket EPA–HQ–OAR–2015–0111. 

96 ‘‘States that require ethanol-free gasoline,’’ 

docket EPA–HQ–OAR–2015–0111. 

97 ‘‘NONROAD estimate of fuel use in recreational 

marine,’’ docket EPA–HQ–OAR–2015–0111. 98 ‘‘Estimating E0 use in recreational marine 

engines,’’ memorandum from David Korotney to 

docket EPA–HQ–OAR–2015–0111. 

nationwide E85 consumption to reach 

as high as 400 million gallons in 2016. 

This volume could only occur if all 

relevant factors were extremely 

favorable, and we do not consider this 

to be a likely outcome in 2016. Further 

discussion of these analyses can be 

found in a memorandum to the 

docket.95

Our observations and analysis lead us 

to conclude that if EPA were to 

dramatically increase the total 

renewable fuel volume requirement for 

2016 above the level we proposed, in 

the near term we would expect to see 

sharply higher RIN prices, but this 

would not translate into dramatically 

higher E85 sales volumes in the near 

term. However, sustained higher RIN 

prices would, over the longer term, be 

expected to provide greater incentive for 

the market to expand infrastructure. 

iv. E0 Demand in 2016 

One of the ways that the RFS program 

can increase the supply of renewable 

fuels in the United States is by 

incentivizing the market to continue to 

transition from E0 (gasoline containing 

no ethanol) to E10 and other higher 

level ethanol blends. While the RFS 

program provides a significant incentive 

for this transition, the continued 

availability of E0 in certain markets is 

also something that we believe we must 

consider in determining the supply of 

ethanol in 2016. E0 continues to be 

marketed in many parts of the country, 

often at a significant cost premium to 

E10, including in the Midwest where 

ethanol is most readily available at the 

lowest cost. In the NPRM we discussed 

the potential for ongoing use of E0 

through 2016 and into the future. We 

anticipated that E0 use would remain 

fairly limited and would tend to 

decrease over time given the widening 

use of ethanol overall. We also 

highlighted one particular market 

segment, recreational marine engines, 

that we believed would be particularly 

difficult to transition from E0. While 

most nonroad engines in use today can 

operate on E10, recreational marine 

engines are a potentially special 

subcategory. Because such engines are 

used in a water environment there is a 

greater potential for water 

contamination of the fuel. For gasoline 

that contains ethanol, the ethanol-water 

mixture may then separate from the 

gasoline and cause engine damage. As a 

result, some recreational marine engine 

owners seek out E0. We believe that we 

should take into consideration the 

ongoing preference for some E0 in this 

context. 

In the NPRM we discussed our 

investigation into the volumes of E0 that 

are in demand by owners of recreational 

marine engines. We expressed our view 

that it is most likely that any 

recreational marine engines refueled at 

retail service stations would use only 

E10 since E0 is rarely offered at retail. 

Moreover, only a small minority of 

recreational marine engines refuel at 

marinas where E0 is more likely to be 

available. Based on this assessment, we 

estimated that about 124 million gallons 

of E0 would be consumed by 

recreational marine engines in 2016. We 

estimated that the impact of this volume 

of E0 used in such applications on the 

total supply of renewable fuel in 2016 

would be very low, and would likely be 

offset by the small expected use of E15. 

As a result, we omitted E0 and E15 from 

the scenarios described in Table II.D.2– 

2 of the NPRM. 

Stakeholders that commented on this 

topic generally agreed that E0 will 

continue to exist, but argued that our 

estimates of the likely volumes of E0 

were too low. For instance, in their joint 

comments on the NPRM, the American 

Petroleum Institute and the American 

Fuel and Petrochemical Manufacturers 

(API/AFPM) suggested that there is 

ongoing demand for E0 at a level of at 

least 3% of the total gasoline pool. This 

would be the equivalent of about 4 

billion gallons of E0, considerably 

higher than the 124 million gallons we 

estimated in the NPRM. They based this 

position on data from EIA on the supply 

of non-ethanol conventional gasoline 

from refineries, importers, and blenders, 

corrected to account for exports and 

stock changes. We investigated the EIA 

data on which the API/AFPM comments 

were based, and concluded that it is not 

an appropriate basis for determining the 

amount of E0 actually sold at retail, and 

thus cannot be used to estimate likely 

E0 sales. While the EIA data at issue 

does take into account the production of 

E10 by large terminals from E0 supplied 

by refiners, it does not account for E10 

produced downstream at smaller 

facilities, truck blending, and blending 

at retail. Given that there are a number 

of states that require the supply of E0 at 

the wholesale level explicitly to permit 

downstream blending with ethanol, the 

estimates of E0 supply referenced by 

API/AFPM that were generated from 

EIA gasoline supply data overestimate 

the potential demand for E0 at retail.96

In response to the NPRM, a number of 

organizations disagreed with our 

assessment of the potential volume of 

E0 consumed by recreational marine 

engines. Several stakeholders pointed to 

EPA’s own NONROAD model as 

providing much higher estimates of total 

gasoline consumption by these engines. 

We agree that total gasoline 

consumption by recreational marine 

engines is substantial—about 1.55 

billion gallons according to a recent 

estimate from the EPA’s NONROAD 

model.97 However, we disagree that all 

of this volume is E0, and no 

stakeholders provided any data on 

actual consumption of E0 by 

recreational marine engines. Instead, 

stakeholders pointed to anecdotal 

evidence that owners of recreational 

marine engines preferentially seek out 

E0. One stakeholder referenced data 

purporting to show that states with the 

greatest number of retail stations 

offering E0 tend to also be states with 

the greatest number of registered boats. 

After reviewing these data we 

concluded that a weak correlation does 

exist, but that it nevertheless provides 

no straightforward mechanism to 

quantitatively determine the volume of 

E0 consumed by recreational marine 

engines. Notably, the same data suggest 

that not all marinas may offer E0. As 

described in a memorandum to the 

docket, we considered several different 

approaches to estimating the volume of 

E0 consumed by recreational marine 

engines.98

Based on the information provided by 

stakeholders and our own analyses, we 

believe that the volume of E0 consumed 

by recreational marine engines or 

otherwise demanded by the marketplace 

could be as high as several hundred 

million gallons in 2016. As a result, we 

have included some estimates of E0 in 

the volumes scenarios described in 

Section II.G below. Those scenarios 

demonstrate that our final volume 

requirements can be met even in cases 

where some volume of E0 remains in 

the marketplace. 

v. Ethanol Supply as E15 in 2016 

In the NPRM, we discussed the fact 

that E15 is approved for use in model 

year 2001 and newer motor vehicles, but 

that we expected the volume of E15 

used in 2016 to be low. We based this 

assessment on the fact that the number 

of retail stations offering it at the time 

of the NPRM was only about 100 out of 

the approximately 152,000 retail 

stations in the U.S. We estimated that, 

at most, the use of E15 in 2016 would 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77463 

99 ‘‘Stations registered to offer E15,’’ docket EPA– 

HQ–OAR–2015–0111. 100 K. Moriarty and J. Yanowitz, ‘‘E15 and 

Infrastructure,’’ National Renewable Energy 

Laboratory, May 2015. Attachment 3 of comments 

submitted by the Renewable Fuels Association. 101Stillwater Associates, ‘‘Infrastructure Changes 

and Cost to Increase RFS Ethanol Volumes through 

Increased E15 and E85 Sales in 2016,’’ July 27, 

2015. Submitted with comments provided by 

Growth Energy. 

increase total ethanol consumption by 

only about 10 million gallons. Since this 

volume was far lower than the volume 

requirements under consideration, and 

its impact in our analysis would likely 

be offset by the small expected use of 

E0, we omitted E0 and E15 from the 

scenarios described in Table II.D.2–2 of 

the NPRM. 

While some stakeholders agreed with 

our assessment, others said that we had 

significantly underestimated the volume 

of E15 that could be consumed in 2016, 

and that doing so biased our proposed 

volume requirements low. These 

stakeholders, including the American 

Coalition for Ethanol and Growth 

Energy among others, pointed to both 

the large number of vehicles that are 

legally permitted to use E15 and 

opportunities for expanding the number 

of retail stations that offer E15. 

The number of vehicles that are 

legally permitted to use E15 is large. 

Model year 2001 and later vehicles 

comprise about 85% of the current inuse fleet, or about 195 million vehicles. 

These vehicles have a total annual 

gasoline consumption capacity of more 

than 120 billion gallons, so changing 

their fuel consumption type from E10 to 

E15 could increase total ethanol 

consumption by more than 6 billion 

gallons. However, as pointed out by 

several stakeholders, being legally 

permitted by EPA to operate on E15 for 

emission compliance purposes under 

the CAA does not necessarily enable 

expanded use of E15. These 

stakeholders highlighted that the 

operator’s manuals and manufacturer 

warranties for vehicles manufactured 

before 2012 make no mention of E15 

because E15 did not exist at the time 

that those vehicles were manufactured. 

Manufacturers have been increasingly 

citing E15 as an acceptable fuel in 

owner’s manuals for various models 

since 2012, but as of today these 

statements are not universal for all 

makes and models. Whether these facts 

would cause some vehicle owners to 

avoid E15 is not clear. This situation is 

similar to the historical situation with 

E10. E10 has been permitted under the 

CAA to be used in all highway vehicles 

and nonroad engines for many years. 

Nevertheless, it took years for the 

vehicle manufacturers, especially the 

nonroad engine manufacturers, to 

warrant the use of E10 in their products. 

Regardless, we do not believe that the 

number of vehicles that are legally 

permitted to use E15, or the number of 

2001 or later model year vehicle owners 

who would choose to use it, are the 

predominant factors in determining the 

volume of E15 that is likely to be 

consumed in 2016. Instead, it is the 

number of retail stations offering E15 in 

2016 that is more likely to determine 

how much E15 is actually consumed. In 

the time since E15 was approved for 

use, the number of retail stations 

registered to offer E15 has only grown 

to about 120, or about 0.1% of all retail 

stations, based on information collected 

by the RFG Survey Association.99 Based 

on comments received from retail 

station owners, this low number of retail 

stations offering E15 is most likely due 

to liability concerns. We stated our 

belief in the NPRM that the number of 

retail stations offering E15 is unlikely to 

increase dramatically by the end of 

2016. The recently announced Biofuel 

Infrastructure Partnership (BIP) program 

managed by USDA is expected to 

increase the number of underground 

storage tanks that can hold higher level 

ethanol blends by 515 tanks, and to 

increase the number of stations offering 

higher level ethanol blends by 1,486 

stations. However, it is not clear at 

present how many of these new tanks or 

stations offering higher level ethanol 

blends will expand E15 rather than or 

in addition to E85, nor how many will 

be operational in 2016 versus 

subsequent years. At this time, we 

continue to believe that the number of 

retail stations likely to offer E15 in 2016 

is unlikely to increase fast enough to 

provide a significant increase in total 

ethanol consumption in 2016. 

Some stakeholders said that the small 

number of retail stations currently 

offering E15 is not relevant when 

making estimates of potential E15 sales 

for 2016. They claimed that the 

equipment at most retail stations is 

already compatible with E15, and 

typically cited two studies as the basis 

for claiming that the number of stations 

offering E15 could expand significantly 

in 2016: one by the National Renewable 

Energy Laboratory (NREL), and another 

by Stillwater Associates.100 101 These 

stakeholders argued that the number of 

retail stations offering E15 could expand 

by many thousands by the end of 2016 

if EPA were to create the appropriate 

incentives by setting the applicable 

volume requirements much higher than 

proposed. 

In evaluating the potential for 

expansion of E15 offerings at retail, we 

think it is important to consider the 

views of those whose business entails 

making determinations about which 

fuels to offer at retail. This perspective 

was provided by the Petroleum 

Marketers Association of America, the 

Society of Independent Gasoline 

Marketers of America, and the National 

Association of Convenience Stores. 

These stakeholders made it clear that 

retailers will in general offer any fuel 

that has the potential for generating 

profit. However, in the specific case of 

E15, there are liability concerns that 

make it less likely to be offered. 

It may be the case that much of the 

equipment at many retail stations is 

compatible with E15, as argued in the 

NREL and Stillwater studies. But 

stakeholders arguing that there is greater 

E15 potential than we assumed in the 

NPRM oversimplify the situation. In 

their comments, stakeholders 

representing retail like those mentioned 

above clarified that compatibility with 

E15 is not the same as being approved 

for E15 use. Recently-amended EPA 

regulations require that parties storing 

ethanol in underground tanks in 

concentrations greater than 10 percent 

demonstrate compatibility of their tanks 

with the fuel, through either a 

certification or listing of underground 

storage tank system equipment or 

components by a nationally recognized, 

independent testing laboratory for use 

with the fuel, written approval by the 

equipment or component manufacturer, 

or some other method that is 

determined by the agency implementing 

the new requirements to be no less 

protective of human health and the 

environment. The use of any equipment 

to offer E15 that does not satisfy these 

requirements, even if that equipment is 

technically compatible with E15, would 

pose potential liability for the retailer, 

including concerns related to liability 

for equipment damage. Few retailers 

would be willing to assume such 

liability, according to comments 

submitted by their national associations. 

This issue is of particular concern for 

underground storage tanks and 

associated hardware, as the 

documentation for their design and the 

types of materials used, and even their 

installation dates, is often unavailable. 

Insofar as equipment can be verified 

as being compatible with E15 and is 

approved as such by a testing laboratory 

such as Underwriter’s Laboratory, many 

retailers are still left with significant 

concerns about liability for misfueling. 

Notwithstanding EPA regulations that 

require pump labeling, a misfueling 

mitigation plan, surveys, product 

transfer documents, and approval of 

equipment configurations, retailer 

associations indicated that many retail 

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102 ‘‘USDA announces state finalists for the 

Biofuel Infrastructure Partnership,’’ docket EPA– 

HQ–OAR–2015–0111. 

103Per-station annual gasoline throughput is 

about 916 thousand gallons. If a retail station offers 

both E10 and E15 at equivalent pricing on an energy 

basis, the annual sales of each would be 458 

thousand gallons. For 700 stations, total E15 sales 

would be 320 mill gal, which would displace about 

315 mill gal E10. 15% × 320 ¥ 10% × 315 = 17. 

104A 22% reduction in the price of E85 relative 

to the price of E10 would ensure that the price of 

the two fuels are equivalent on the basis of energy 

content. 

stations owners are nevertheless 

concerned about litigation liability for 

misfueling, either for vehicles 

manufactured before 2001 or for 

nonroad engines. This concern creates a 

disincentive for many retailers to offer 

E15. While such disincentives are not 

insurmountable, they do represent a 

constraint that we must take into 

consideration. 

Apart from retail stations that may 

already have equipment that could be 

used to offer E15, some stakeholders 

pointed to the potential for new 

equipment to be installed at retail, citing 

a number of companies which have 

plans for adding E15 dispensing 

capabilities to retail stations. However, 

even if all planned installations 

sponsored by these companies occurred 

by the end of 2016, they would only 

expand the number of retail stations 

offering E15 by a few hundred based on 

information provided by stakeholders in 

their comments. The matching funds 

provided by the USDA BIP program 

described above may be leveraged by 

these stakeholders to allow these 

increases in E15 retail outlets and even 

more to materialize.102 However, it is 

not clear how many additional stations 

will be able to offer E15 as a result of 

the BIP program in 2016 specifically, 

since the program provides for 

extensions of the equipment installation 

timelines into 2018. Even if most of the 

retail stations that have been targeted by 

the BIP program were upgraded to offer 

E15 and this occurred by the end of 

2016, they would not all offer E15 for 

all of 2016. Instead, there would be a 

ramp up of stations offering E15 

throughout 2016. Effectively, then, an 

average of only about 700 might be 

offering E15 for all of 2016. Since actual 

experience with E15 sales is so limited, 

we cannot conduct a detailed analysis of 

potential E15 volumes as we did for 

E85. However, we can make an estimate 

based on historical gasoline retail 

station throughout. If all of these retail 

stations also offered E10, and the fuel 

throughput was the same for both E10 

and E15 at each retail station, the total 

increase in ethanol consumption due to 

increased use of E15 would be about 17 

million gallons in 2016.103

We do not believe, based on past 

experience, that the core concerns 

retailers have with liability over 

equipment compatibility and misfueling 

would change if the RFS volume 

requirements were increased 

significantly. Therefore, setting higher 

volume requirements would be unlikely 

to result in dramatic increases in the 

number of additional retail stations 

offering E15 in 2016 beyond those that 

may be upgraded through USDA’s BIP 

program. As a result, we do not believe 

that the E15 expansion can occur on the 

scale and timeframe that ethanol 

proponents believe it can. However, we 

do believe that retail infrastructure can 

and will change to offer more E15. To 

the degree that E15 is used, the volume 

of E85 that might be needed to reach a 

given volume of ethanol supply above 

the E10 blendwall would be less. 

Therefore, in the scenarios described in 

Section II.G below, we note that E15 

could be used in addition to E85 to 

result in ethanol use above the E10 

blendwall. 

vi. Total Ethanol Supply in 2016 

The total volume of ethanol that can 

be supplied in 2016 is a function of the 

respective volumes of E10, E15, and E85 

that we believe can be supplied, while 

accounting for some E0. Assuming that 

the total demand for gasoline energy is 

independent of the amounts of each of 

these types of fuel (16.85 Quadrillion 

Btu based on the October, 2015 version 

of EIA’s Short-Term Energy Outlook), 

estimating the volumes of E0, E15, and 

E85 that will be supplied provides an 

estimate of the remaining portion of the 

gasoline fuel pool which is E10. 

As discussed earlier, we continue to 

believe that the volumes of E0 that are 

both in demand and needed to address 

potential water contamination in 

recreational marine engines will be very 

small in comparison to total gasoline 

demand. While information provided by 

stakeholders was not sufficient to 

permit us to precisely estimate E0 

volumes, we investigated several 

different approaches in a memorandum 

to the docket that resulted in a range of 

about 100–300 million gallons. For the 

purposes of estimating total ethanol 

supply, we have assumed an E0 supply 

of 200 million gallons. Actual volumes 

of E0 used in recreational marine 

engines in 2016 may be higher or lower 

than this level, but we do not expect 

them to be significantly different than 

200 million gallons. This would 

effectively reduce the total supply of 

ethanol by 20 million gallons relative to 

a scenario where all gasoline contained 

at least 10% ethanol. 

Similarly, we continue to believe that 

supply of E15 will be very small in 

2016. As described earlier, the primary 

limitation in E15 supply is the small 

number of retail stations offering it. 

While the number of E15 stations can 

grow significantly in 2016, we do not 

believe that it can reach the many 

thousands that some stakeholders said 

was possible given that the total number 

of such stations is about 120 currently 

and stakeholders representing retail 

service stations have cited potential 

liability as an ongoing concern. For the 

purposes of estimating total ethanol 

supply, it might be possible that total 

E15 supply in 2016 could reach 320 

million gallons, based on an estimate of 

an average of about 700 stations offering 

E15 in 2016 as described in Section 

II.E.2.v. Actual volumes of E15 in 2016 

may be higher or lower than this level, 

but 320 million gallons represents our 

best estimate of the most likely 

maximum volumes that can be 

reasonably be attained by a market 

responsive to the RFS. This would 

effectively increase the total supply of 

ethanol by 17 million gallons relative to 

a scenario where the volumes assumed 

here to be used as E15 are instead used 

as E10. 

Finally, our detailed analysis of E85 

has led us to conclude that the very 

large volumes suggested by some 

stakeholders are out of reach of the 

market in 2016, given the various 

constraints. Even if the number of 

stations offering E85 continues to grow 

and the price of E85 continues to fall 

relative to E10, it is highly unlikely that 

E85 volumes in 2016 can exceed several 

hundred million gallons. For the 

purposes of estimating total ethanol 

supply, we have estimated that total E85 

supply in 2016 will reach 200 million 

gallons, based on an estimate of growth 

in the number of E85 stations to about 

3,200 and an E85 price discount of 22% 

relative to E10.104 Actual volumes of 

E85 in 2016 may be higher or lower than 

this level, but 200 million gallons 

represents our best estimate of the most 

likely maximum volumes that can be 

attained by a market responsive to the 

RFS standards. This amounts to an 

increase in ethanol supply of about 132 

million gallons relative to a scenario 

where the volumes assumed here to be 

used as E85 are instead used as E10. 

Based on these estimates of E0, E15, 

and E85 supply, we have determined 

that 139.33 billion gallons of E10 would 

be supplied in order to ensure that the 

full gasoline pool provides the 16.85 

Quadrillion Btu that EIA has projected 

will be in demand in 2016. The 

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combined contributions from E10, E15, 

and E85 would produce a total ethanol 

supply in 2016 of 14.13 billion gallons, 

equivalent to a poolwide average 

ethanol content of about 10.09%. This 

volume of ethanol would be composed 

of cellulosic ethanol, advanced ethanol 

such as imported sugarcane ethanol, 

and conventional ethanol such as that 

produced from corn starch. 

TABLE II.E.2.vi–1—GASOLINE VOLUMES USED TO DETERMINE ETHANOL SUPPLY IN 2016 

Fuel volume 

(mill gal) 

Ethanol 

volume 

(mill gal) 

Energy 

(quad Btu) 

E0 ............................................................................................................................................. 200 0 0.03 

E10 ........................................................................................................................................... 139,325 13,932 16.77 

E15 ........................................................................................................................................... 320 48 0.04 

E85 ........................................................................................................................................... 200 148 0.02 

Total .................................................................................................................................. 140,045 14,128 16.85 

We recognize that the market may not 

necessarily respond to the final volume 

requirements for 2016 to produce the 

volumes of E0, E10, E15 and E85 noted 

in Table II.E.2.vi–1. However, we 

believe these volumes are reasonable 

estimates for use in deriving the final 

total renewable fuel volume 

requirement for 2016. 

3. Biodiesel and Renewable Diesel 

While the market constraints on 

ethanol supply are readily identifiable 

as being primarily in the areas of 

refueling infrastructure and ethanol 

consumption, it is more difficult to 

identify and assess the market 

components that limit potential growth 

in the use of biodiesel in 2016. 

Nevertheless, a review of the historical 

supply volumes of biodiesel and 

renewable diesel, particularly in 2013, 

indicates that the growth in supply of 

these fuels for use in transportation fuel 

in the United States has constraints. 

In 2013 there were two very strong 

incentives for the increased production, 

import, and use of biodiesel and 

renewable diesel in the United States. 

For the first time in the history of the 

RFS program, the total renewable fuel 

standard could not be satisfied by using 

the minimum amount of biodiesel and 

renewable diesel required by the BBD 

volume requirement and blending 

ethanol as E10. Due to the challenges 

associated with expanding ethanol 

consumption through increased sales 

volumes of E15 and E85 mentioned 

above, there was a strong demand for 

non-ethanol fuels. RIN prices for all 

types of RINs rose as obligated parties 

sought to meet their RFS obligations. In 

addition to the incentives provided by 

the RFS requirements and resulting high 

RIN prices, the biodiesel blender’s tax 

credit was in place throughout 2013, 

providing a strong economic incentive 

for biodiesel growth. With these strong 

incentives in place, the supply of 

biodiesel and renewable diesel used in 

transportation fuel in the United States 

increased significantly in 2013 (see 

Figure II.E.3–1 below). 

Despite these large increases in the 

supply of biodiesel and renewable 

diesel, the number of RINs available to 

meet the obligated parties’ renewable 

volume obligations fell short of the 

required volume by about 820 million 

RINs. This provides a strong indication 

that the biodiesel and renewable diesel 

supply in 2013 was limited; if this were 

not so then we would have expected 

that the strong demand for RINs in 2013 

combined with the availability of the 


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105The world’s biggest biodiesel producers in 

2014, by country. Statista, Accessed 9/22/2015 

http://www.statista.com/statistics/271472/

biodiesel-production-in-selected-countries/. 

106We note that a significant portion of the global 

biodiesel production uses palm oil as a feedstock, 

which is not a qualifying feedstock in the RFS 

program. This this production volume is not 

directly comparable with 6.8 billion gallons of 

qualifying biodiesel feedstock identified in the LCM 

International study. 

biodiesel blenders tax credit would have 

resulted in sufficient production, 

import, and use of biodiesel and 

renewable diesel to satisfy the 2013 RFS 

volume requirements. The situation in 

2014 and 2015 is more ambiguous, since 

there were no final RFS standards in 

place during 2014 and the first 11 

months of 2015 and the availability of 

the biodiesel blenders tax credit for 

these years has been very uncertain. 

Nevertheless, we believe the growth in 

biodiesel and renewable diesel supplies 

in 2014 and 2015, together with the 

market performance in 2013, indicates 

that while there is significant 

opportunities for growth in the supply 

of biodiesel and renewable diesel, 

supply will be constrained in some way 

in 2016. The sections that follow 

discuss the many different factors that 

may constrain the supply of biodiesel 

and renewable diesel in 2016. 

i. Feedstock Availability 

Biodiesel and renewable diesel are 

produced from biogenic oils, fats, and 

greases. These can be oils, fats, and 

greases that are produced as by-products 

and collected from other industries, oils, 

fats, and greases recovered from waste 

streams, or virgin vegetable oils. 

Increasing the feedstock available for 

biodiesel and renewable diesel can be 

done both by diverting feedstocks from 

other existing uses, increasing the 

recovery rate of potential feedstocks 

from waste streams, or increasing the 

global supply of vegetable oils through 

greater oil crop cultivation and yields. 

Several stakeholders claimed that the 

level of biodiesel feedstock supply that 

could be available in 2016 combined 

with the biodiesel and renewable diesel 

production capacity that already exists 

warrant an increase in the required 

volumes of advanced biofuel and total 

renewable fuel compared to those we 

proposed in the NPRM. For instance, 

the National Biodiesel Board (NBB), in 

support of their claim that up to 3.4 

billion gallons of biodiesel could be 

available in 2016, submitted a study by 

LMC International entitled ‘‘Current and 

Future Supply of Biodiesel Feedstocks.’’ 

This study concluded that feedstock 

availability is not a limiting factor for 

increasing BBD volumes; there is 

increased availability of qualifying 

waste fats, greases, and inedible corn 

oil, as well as soy, canola and other 

vegetable oils. According to the study, 

in 2015 there is enough qualifying 

feedstock for 6.8 billion gallons of 

biodiesel globally, and by 2020, there is 

likely to be sufficient feedstock to 

support at least 8.5 billion gallons of 

biodiesel. 

The LMC International study did not 

specifically provide estimates of 

feedstock available for use in the U.S. in 

2016, making it difficult to determine 

how the study might affect our 

determination of applicable volume 

requirements for 2016. Moreover, we 

believe the LMC International study 

contains an erroneous assumption 

which contributes to an overestimation 

of feedstock availability. When 

estimating availability the study 

considers the maximum theoretical 

amount of oil that could be extracted 

from an oilseed, or ‘‘oil in seed’’, versus 

the amount of oil that is actually 

expected to be extracted/produced. In 

reality some amount of the soybean 

supply is not crushed to produce oil but 

instead is fed directly to livestock, while 

in other instances the soybean is 

crushed and oil is extracted but the oil 

is added to feed and thus does not enter 

the oil market. Adding additional soy 

bean crushing capacity is possible, but 

would require a strong market signal 

and take time to construct and bring 

online. It is unlikely that significant 

new soy bean oil crushing capacity 

could be brought online in time to 

impact the feedstock available for 

biodiesel and renewable diesel 

production in 2016. These assumptions 

result in oil supply estimates that are in 

some cases significantly higher than 

USDA estimates. For example, LMC 

International’s estimates of U.S. soybean 

oil production is more than 80 percent 

greater than that reported by USDA– 

WASDE for recent years. 

The LCM International study also did 

not attempt to project the quantity of 

feedstock that would actually be 

available for biodiesel and renewable 

diesel production in light of the demand 

for these feedstocks from other 

industries. Currently there is significant 

competing demand for the feedstocks 

that can be used to produce biodiesel 

and renewable diesel from the food, 

livestock feed and oleochemical 

industries. Existing feedstock supplies 

are typically already under contract 

and/or already set up for certain 

distribution pathways to end use. These 

can and do change over time, but they 

cannot reasonably be expected to do so 

immediately. Furthermore, even when 

feedstocks are moved into biodiesel and 

renewable diesel production, it often 

means a shifting around of feedstocks, 

rather than an overall growth in total 

feedstock production. The existing 

competing demand for these feedstocks 

does not go away. If, for example, soy 

oil feedstocks are drawn away from food 

use to biodiesel use in response to the 

recent FDA regulations (as discussed 

below), it may result in other oil that 

was being used to produce biodiesel, 

such as palm or canola oil, now shifting 

to food use. 

Finally, the LMC study did not take 

into consideration the volumes of 

feedstocks already devoted to biodiesel 

and renewable diesel production in the 

U.S. and abroad. For perspective, 

according to Statista, 2014 production of 

biodiesel from the top 15 producing 

countries was 6.8 billion gallons.105

This indicates that a considerable 

amount of the available global feedstock 

estimated by LMC is already being used 

for biofuel production, and that much of 

that biofuel is being used in countries 

outside the U.S. In essence, the study 

provides a hypothetical upper limit of 

BBD oil supply worldwide, not an 

assessment of the feedstocks available to 

be used to produce biodiesel and 

renewable diesel for consumption in the 

United States in 2016.106

The American Soybean Association 

similarly provided information on 

higher potential volumes of biodiesel 

feedstock in 2016. They pointed out that 

demand for U.S. soybean oil for food 

use began to decline following the U.S. 

Food and Drug Administration’s (FDA) 

action in 2003 to require food 

manufacturers to include trans-fats on 

nutrition labels. They stated that the 

likely continued displacement of 

additional soy oil from food use would 

make additional soy oil available for 

biodiesel feedstock. We acknowledge 

the trend of declining soybean oil use in 

food, and believe it will continue as a 

result of a June 2015 FDA determination 

requiring the elimination by 2018 of all 

partially hydrogenated oil in food use. 

To the extent that soy oil is being 

phased down for food purposes, some 

supply of soy oil will likely become 

available for other uses, such as 

biodiesel production. However, the 

impact on biodiesel production volumes 

is not likely to be substantial, 

particularly for 2016, for two reasons. 

First, the FDA action will not be 

complete until 2018. Second, as 

mentioned above, the removal of some 

soy oil from food will likely be offset by 

an increase in the use of other oils in 

food, with a corresponding reduction in 

the availability of those other oils for 

use in making biodiesel. As a result 

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there may be no net impact on biodiesel 

feedstock supply but rather just a 

shifting of oils used for different 

purpose. 

We also received comments 

challenging the availability of additional 

biodiesel feedstocks and thus the 

opportunity for increased BBD 

production. The International Council 

on Clean Transportation and the Union 

of Concerned Scientists submitted a 

study ‘‘Projections of U.S. Production of 

Biodiesel Feedstock’’ by Professor 

Brorsen at the University of Oklahoma. 

Professor Brorsen considered all the 

major sources of U.S. biodiesel 

feedstock and developed projections of 

their availability through 2019. The 

conclusion of the study is that the 

potential to expand biodiesel 

production from the feedstocks in the 

U.S. is quite limited without 

substantially increasing feedstock 

prices. The study estimated that the U.S. 

agricultural sector can increase 

production of fats/oils beyond 2014 

levels by 30 million gallons in 2015, 29 

million gallons for 2016, and 25 million 

gallons in 2017. Thus, according to the 

study, higher volumes of biodiesel in 

2016 beyond the approximately 30 

million gallons from the U.S. 

agricultural sector would have to come 

from diverting existing feedstocks from 

current uses, increasing the supply of 

recovered waste feedstocks, or 

increasing imports of feedstock or 

finished biodiesel or renewable diesel, 

which the study did not address. 

We acknowledge that the world 

supply of oils, fats, and greases that are 

suitable feedstocks for biodiesel and 

renewable diesel production has grown 

and can continue to grow over time. 

Nevertheless, diverting biodiesel and 

renewable diesel feedstocks from 

current uses and increasing total 

feedstock availability will take time. We 

believe that this supply can continue to 

grow as more oilseed crops are planted, 

productivity from existing crops 

increases, and recovery rates of waste, 

fats, oils, and greases adds to the total 

available supply. The recent 

development and commercialization of 

the non-food grade corn oil extracted 

from distillers dried grains at ethanol 

plants has also added to the total supply 

of biodiesel and renewable feedstocks. 

At the same time, all biodiesel 

feedstocks are not created equal. They 

have different markets and require 

different product handling and process 

steps, techniques, and conditions to 

maintain necessary product quality. As 

individual production facilities are 

designed to operate on the sources of 

feedstock available in their local area, 

growth in other types of feedstocks, 

even if they have access to it and have 

production capacity to handle it, does 

not necessarily allow them to simply 

increase production. 

As the volume of feedstocks expands, 

the infrastructure for storing the 

feedstock and distributing it to biodiesel 

and renewable diesel production 

facilities will also need to expand. This 

will require changes to a number of 

industries depending on the feedstock, 

potentially including rail cars, barges, 

trucks, and oil storage facilities. If 

supply of biodiesel and renewable 

diesel feedstocks are being sourced 

internationally, it would also involve 

expansion of import and export 

facilities. 

It is also worth highlighting that over 

time the opportunity for continued 

growth in the feedstocks currently used 

to produce biodiesel and renewable 

diesel may begin to plateau, and the 

volumes of these fuels along with it 

unless there is a breakthrough in the 

development of new feedstocks. The 

bump up in supply brought about by 

large increases in palm oil production, 

corn oil extraction, and the increased 

recovery of waste fats, oils, and greases 

is limited, and may soon near its 

practical limit. There has been 

considerable research and development 

for many years in the potential for algal 

bio-oils and other new oilseed crops 

that could be grown on marginal lands 

that could serve as a feedstock for 

biodiesel and renewable diesel. 

However, the promise of large volumes 

of algal bio-oils and alternative oilseed 

crops remains in the future, well beyond 

the timeframe of the 2016 standards, 

and near term feedstock supply 

increases are likely to be incremental. 

ii. Biodiesel and Renewable Diesel 

Production Capacity 

As highlighted in the NPRM, the total 

capacity of all registered biodiesel and 

renewable diesel production facilities in 

the United States currently exceeds 2.7 

billion gallons. In addition to the 

domestic production capacity, there is 

also significant registered capacity 

overseas. Historically domestic 

biodiesel production rates have been 

well short of the production capacity, 

with facility utilization rates often less 

than 50%. The reason for this is that the 

capital cost associated with biodiesel 

production is a relatively small portion 

of the cost of biodiesel, allowing 

facilities to build excess capacity to 

allow for expansion later as the market 

develops and grows. The economies of 

scale associated with biodiesel facilities 

are also fairly low relative to other types 

of renewable fuel, allowing biodiesel 

production facilities operating at low 

utilization rates or very small biodiesel 

facilities to be economically viable by 

taking advantage of low priced local 

feedstock supplies. 

The situation is quite different 

however, for renewable diesel, where 

the hydrotreating necessary to convert 

the oil into diesel fuel requires 

considerably more capital, economies of 

scale require facilities to be relatively 

large, and the size and complexity of the 

facilities require much more time for 

financing, design, construction, and 

commissioning. This helps explain why 

renewable diesel production facilities 

are far fewer in number, have much 

larger production capacities on average, 

and why the volume of renewable diesel 

production has grown more slowly. 

NBB in their comments pointed to the 

currently existing and registered 

production capacity as evidence to 

support its projection of how much 

biodiesel and renewable diesel could be 

supplied in 2016. However, while there 

is certainly potential to increase 

utilization of the existing production 

facilities it is uncertain what steps 

would have to be taken to increase 

production rates at these facilities. 

There is therefore uncertainty associated 

with the ability for an appreciable 

number of registered biodiesel and 

renewable diesel production facilities to 

simultaneously increase production 

rates given the constraints raised 

elsewhere in this section. Furthermore, 

different facilities are designed to 

handle different feedstocks (e.g., 

facilities processing waste fats oils and 

greases require different pre-processing 

steps and different feedstocks produce 

fuels with different cold weather 

performance, necessitating different 

mitigating actions), and often process 

feedstocks sourced locally, so increasing 

volumes of other types of feedstocks, or 

feedstocks in other locations does not 

mean excess production capacity can 

immediately be utilized. Consequently, 

while we do not believe biodiesel and 

renewable diesel production capacity 

will likely be a constraining factor in 

biodiesel and renewable diesel 

production in 2016, reaching the 3.4 

billion gallons suggested by NBB would 

likely require the addition of new 

production capacity. 

iii. Biodiesel and Renewable Diesel 

Import Capacity 

Another important market component 

in assessing biodiesel and renewable 

diesel supply is the potential for 

imported volumes and the diversion of 

biodiesel and renewable diesel exports 

to domestic uses. In addition to the 

approximately 500 million gallons 

imported into the U.S. in 2014, there 

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77468 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

were about 80 million gallons exported 

from the United States to overseas 

markets in 2014. While 2015 is not yet 

over, similar trends have been 

experienced in 2015. Given the right 

incentives, it might be possible to 

redirect a portion of the biodiesel 

consumed in foreign countries to use in 

the U.S. in 2016. However, the amount 

of biodiesel and renewable diesel that 

can be imported into the United States 

is difficult to predict, as the incentives 

to import biodiesel and renewable 

diesel to the U.S. are a function not only 

of the RFS and other U.S. policies and 

economic drivers, but also those in the 

other countries around the world. These 

policies and economic drivers are not 

fixed, and change on a continual basis. 

Over the years there has been significant 

variation in both the imports and 

exports of biodiesel and renewable 

diesel as a result of varying policies and 

relative economic policies (See Figure 

II.E.3.iii–1 below). This includes a 

period from 2004 to 2008 when 

biodiesel and renewable diesel imports 

and exports were both simultaneously 

large due to the so-called ‘‘splash and 

dash’’ practices of importing biodiesel 

to the U.S., blending it with a small 

volume of petroleum based diesel to get 

the U.S. biodiesel blenders tax credit, 

and then exporting it to Europe where 

it received additional tax benefits. 

Because of biodiesel demand in other 

countries and potential biodiesel 

distribution constraints in the United 

States, maintaining or increasing import 

volumes of biodiesel and/or renewable 

diesel while at the same time decreasing 

export volumes may not be feasible in 

2016. For example, as discussed above, 

the combination of the RFS mandate 

and the biodiesel blender’s tax credit 

provided very large economic incentives 

for the use of biodiesel in the U.S. in 

2013. Yet despite this incentive, 

biodiesel exports were also at historic 

highs. Furthermore, a portion of the 

reported imports and exports is simply 

trade across the border with Canada. 

The exported biodiesel satisfies 

biodiesel mandates in Canada, while 

also helping to minimize biodiesel 

transportation costs in situations where 

the available supply for markets near 

the border happens to lie in the other 

country. Thus, on an annual basis we 

experience both exports to Canada and 

imports from Canada simply due to 

market constraints related to biodiesel 

distribution. 

Nevertheless, as evidenced in 2015 

we have clearly been experiencing some 

upward growth in imports of biodiesel 

and renewable diesel. Much of the 

increase in biodiesel imports in 2015 

has been from grandfathered facilities 

that are exempt from the 20% lifecycle 

GHG reduction requirement. Fuel from 

these facilities qualifies for D6 RINs that 

can be used to satisfy the total 

renewable fuel standard. 

In order for foreign biodiesel and 

renewable diesel producer to increase 

their imports into the U.S., they will 

need to either increase their total 

production (which may require building 

new production capacity), or divert 

exports from domestic use and/or other 

foreign markets currently relying on 

these volumes to meet their own 

requirements. If the former, it may 

require the expansion of foreign 

distribution and export capacity which 

will take some time to put in place. If 

the latter, it will require a number of 

changes, including: 

• A clear economic advantage (e.g., 

higher prices) for exports to be directed 

to the U.S. relative to other destinations, 

• Time to renegotiate existing 

contracts and commitments, 

• Certainty that economic and 

political conditions won’t change that 

ultimately undermine such a decision, 

• Time to expand available U.S. 

import terminal facilities, including not 

only tankage, loading, and offloading 

infrastructure, but also the rail and truck 

fleet necessary to transport the fuel from 

the import terminal to new markets. 

All of this can and is expected to occur 

over time, however the degree to which 

this can be accomplished in the coming 

year is uncertain. 

To demonstrate the uncertainty 

associated with increasing biodiesel and 

renewable imports it is instructive to 

consider the case of imports from 

Argentina in recent years. Several 

stakeholders expressed concern that 

Argentina would significantly increase 

exports of biodiesel to the U.S. in 2016, 

and that this potential for increased 

imports must be accounted for in the 

determination of the applicable 2016 


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107There have also been imports of biodiesel from 

other countries, but by and large such biodiesel did 

not qualify as advanced biofuel. 

108While it is possible that the full impact of 

EPA’s approval of the alternative biomass tracking 

program for Argentina is not yet reflected in the 

data (i.e., that it will take longer for the effects to 

be seen), we note that there are elements of the 

approved tracking program that are considerably 

more exacting than the pre-existing renewable 

biomass verification process, so we are not 

persuaded that EPA’s approval will in fact lead to 

an increase in Argentinean biodiesel imports. 

volume requirements.107 This concern 

was based on the facts that pre-existing 

opportunities for export to European 

countries had recently been closed off, 

and the EPA had recently approved an 

alternative biomass tracking program for 

Argentina which commenters assumed 

would make it easier for Argentinean 

biodiesel producers to document that 

their product complies with the land 

use provisions associated with the RFS 

definition of renewable biomass. Some 

stakeholders suggested that imports of 

Argentinean biodiesel could be as high 

as several hundred million gallons in 

2016. Our review of the available 

information, including that submitted 

by other stakeholders, does not support 

this view. For instance, the approval of 

the alternative biomass tracking 

program for Argentina was not followed 

by a sudden increase in imports to the 

U.S. as shown below. In fact, imports 

actually declined compared to months 

immediately preceding that approval.108


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50 

45 

40 

35 

15 

10 

5 

0 1'1'1 1'1'1 ... ... 0 0 

~ s:: ~ .. ... ..... :t 

Figure II.E.3.iii-2 

Im orts of Biodiesel from Ar entina 

1'1'1 1'1'1 1'1'1 1'1'1 ..,. ... ... ... ... ... 0 0 0 0 0 

~ ~ ~ ~ ~ > ~ Q. "" s:: ... ~ 0 <II 

:t z ..... 

I 

Argentina's 1 

Alternative 1 

Renewable Biomass__..., 

Tracking Program is 

approved 

..,. ..,. ..,. ..,. ..,. U'l ... ... ... ... ... ... 0 0 0 0 0 0 

~ ~ ~ ~ ~ ~ > ~ Q. "" s:: ... ... ~ 0 <II :t :t z ..... 

Source: Energy Information Administration 

U'l U'l U'l ... ... ... 0 0 0 

~ ~ ~ > ... ... ~ :t :t 
77470 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

109 ‘‘Brazil Proposes Raising Biodiesel Mandate 

To B10,’’ docket EPA–HQ–OAR–2015–0111. 

110 ‘‘Argentina’s biodiesel output to drop 30% in 

2015—Industry group,’’ docket EPA–HQ–OAR– 

2015–0111. 

111 ‘‘Argentina changes biodiesel export tax— 

Biofuels Digest,’’ docket EPA–HQ–OAR–2015– 

0111. 

112 ‘‘Biodiesel Cloud Point and Cold Weather 

Issues,’’ NC State University & A&T State University 

Cooperative Extension, December 9, 2010. 

113 ‘‘Biodiesel Cold Weather Blending Study,’’ 

Cold Flow Blending Consortium. 

114 ‘‘Petroleum Diesel Fuel and Biodiesel 

Technical Cold Weather Issues,’’ Minnesota 

Department of Agriculture, Report to Legislature, 

February 15, 2009. 

115List of biodiesel distributers from 

Biodiesel.org Web site (http://biodiesel.org/usingbiodiesel/finding-biodiesel/locate-distributors-inthe-us/distributors-map). Accessed 10/8/15. 

116Number of terminals from the American Fuel 

and Petrochemical Manufacturer’s (AFPM) Web 

site, ‘‘AFPM Industry 101, Fuels Facts’’, (http://

education.afpm.org/refining/fuels-facts/). Accessed 

10/28/15. Number of bulk plants from the 

Regulatory Impact Analysis for the Heavy-Duty 

Engine and Vehicle Standards and Highway Diesel 

Fuel Sulfur Control Requirements, EPA420–R–00– 

026, December 2000. 

117Sapp, Meghan. ‘‘Colonial Pipeline to Start B5 

Transportation in Georgia.’’ Biofuels Digest. March 

19, 2013. Available online: http://www.biofuels

digest.com/bdigest/2013/03/19/colonial-pipeline-tostart-b5-transportation-in-georgia/. 

Additionally, the annualized volume 

of imported Argentinean biodiesel for 

2015, based on data collected through 

July, is 94 million gallons. This level is 

far less that the potential volumes 

projected by the National Biodiesel 

Board and several others. Brazil has also 

just recently proposed increasing its 

biodiesel mandate from 7% to 8% in 

2016, which may provide another 

attractive destination for exports of 

Argentinean biodiesel.109 There are also 

indications that Argentina’s production 

of biodiesel in 2015 will be significantly 

reduced compared to prior years.110

Finally, Argentina has changed the 

applicable tax on exported biodiesel 

several times since the beginning of 

2015, highlighting the uncertainty 

associated with projecting potential 

future imports into the U.S.111 Based on 

these facts, we believe that the volume 

of biodiesel and renewable diesel 

imported from Argentina in 2016 is 

likely to be far less than the several 

hundred million gallons suggested by 

some commenters. 

iv. Biodiesel and Renewable Diesel 

Distribution Capacity 

While biodiesel and renewable diesel 

are similar in that they are both diesel 

fuel replacements produced from the 

same types of feedstocks, there are 

significant differences in their fuel 

properties that result in differences in 

the way the two fuels are distributed 

and consumed. Biodiesel is an 

oxygenated fuel rather than a pure 

hydrocarbon. It cannot currently be 

distributed through most pipelines due 

to contamination concerns with jet fuel, 

and often requires specialized storage 

facilities to prevent the fuel from gelling 

in cold temperatures. A number of 

studies have investigated the impacts of 

cold temperatures on storage, blending, 

distribution, and use of biodiesel, along 

with potential mitigation 

strategies.112 113 114 Renewable diesel, in 

contrast, is a pure hydrocarbon fuel that 

is nearly indistinguishable from 

petroleum based diesel. As a result, 

there are fewer constraints on its growth 

with respect to distribution capacity. 

Comments we received from 

stakeholders on biodiesel supply 

challenges related to biodiesel 

distribution, storage, or use due to cold 

temperatures reveal differing opinions 

on the degree to which this may be a 

constraint on the growth of biodiesel 

and renewable diesel. The National 

Biodiesel Board stated that there are no 

constraints related to the distribution of 

biodiesel and renewable diesel because 

options such as heated storage tanks and 

the use of biodiesel produced from 

feedstocks with better cold temperature 

properties are available to address the 

issue. They pointed specifically to some 

states which require the use of biodiesel 

year-round. Others, such as 

CountryMark, indicated that they or 

their members stop blending biodiesel 

in the winter months. These comments 

suggest that the constraints on biodiesel 

supply due to cold temperatures may 

not be as pronounced as suggested in 

the NPRM, but that they continue to 

exist. Furthermore, the existence of 

methods for addressing potential 

challenges related to the cold 

temperature issues associated with 

biodiesel does not mean that these 

solutions can be employed nationwide 

in 2016. Since the market will 

determine the specific types and 

amounts of renewable fuels to use to 

meet the applicable volume 

requirements, investments and actions 

needed to address cold weather issues 

will certainly be a consideration for 

some parties, and their hesitancy to 

blend biodiesel in winter months may 

constrain the total supply of biodiesel in 

2016. 

Another factor potentially 

constraining the supply of biodiesel is 

the number of terminals and bulk plants 

that currently distribute biodiesel. At 

present there are about 600 distribution 

facilities reported as selling biodiesel 

either in pure form or blended form.115

Our review of these locations indicates 

that the vast majority of them are what 

we refer to as bulk plants. These are not 

the major gasoline and diesel 

distribution terminals, but rather much 

smaller terminals that receive diesel fuel 

mostly by truck from the major 

terminals. These 600 facilities are a 

small subset of the 1400 terminals and 

approximately 9000 bulk plants 

nationwide.116 This small subset, 

however, appears to be concentrated in 

most of the population centers of the 

country, in addition to the Midwest. As 

a result, as the market continues to 

expand, it may require greater 

investment per volume of biodiesel 

supplied, as the new biodiesel 

distribution facilities will generally 

have access to smaller markets than the 

existing facilities, or face competition 

from existing distribution facilities. 

Transportation of biodiesel to and 

from the terminals and bulk plants is 

also an important consideration. There 

are two aspects to the distribution 

infrastructure of importance here; the 

distribution of biodiesel in pure/near 

pure form from biodiesel production or 

import facilities to terminals and bulk 

plants, and the distribution from the 

terminals/bulk plants in blended form 

to retail stations. As mentioned above, 

the unique properties of biodiesel have 

precluded blends from being 

transported in common carrier pipelines 

either in pure form (B100) or in blended 

form (such as B5 or B20). NBB has been 

working with the pipeline industry for 

many years in an effort to enable 

biodiesel blends to be transported by 

pipeline, as the ability to transport 

biodiesel by pipeline would quickly 

open new markets in farther ranging 

locations. In 2013 a major pipeline 

approved the transport of low level 

biodiesel blends (B5) in limited pipeline 

segments that do not carry jet fuel.117

While an important step, the pipeline 

segments that have been approved to 

ship biodiesel blends only serve a small 

portion of the U.S. market. 

In lieu of pipeline transport, biodiesel 

currently relies primarily on rail car, 

barge, and especially tanker truck fleets 

for distribution from production and 

import facilities to blending terminals 

and bulk plants. Due to the unique 

properties of biodiesel, such transport 

typically has required the use of heated/ 

insulated tanks, especially in winter to 

keep the product from gelling or 

freezing. This requirement for 

specialized equipment increases the 

cost of biodiesel distribution and further 

limits the speed at which biodiesel 

distribution can grow. Increasing 

biodiesel distribution capacity is not 

simply a matter of shifting barge/rail/

truck infrastructure from other 

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118http://biodiesel.org/using-biodiesel/findingbiodiesel/retail-locations/biodiesel-retailer-listings. 

119B20+ Station counts are from the Department 

of Energy Alternative Fuels Data Center Station 

Locator. Includes public, private, government, and 

utility owned stations. 

120 Information from Love’s Web site: http://www.

loves.com/locateus/fuelpricesearch.aspx# 

(Accessed 10/8/15). 

121The largest heavy-duty diesel vehicle 

manufacturer in the U.S., Daimler, comprising 

roughly 40% of the market still does not warrant 

its engines for the use of biodiesel in concentrations 

greater than 5%. 

122The vast majority of diesel fuel in the U.S. is 

consumed by heavy-duty vehicles and nonroad 

diesel engines. Only a very minor portion is 

consumed by light-duty diesel passenger vehicles. 

competing uses, as it may require 

specialized and/or purpose built 

equipment. The result of this has been 

that in order to respond as quickly as 

possible to market demand, biodiesel 

distribution has often instead been met 

using the existing non-specialized 

tanker truck fleets where the haul 

distance is limited—limiting the time 

the fuel is exposed to cold temperatures. 

While the use of the existing tanker 

trucks expands the volume of biodiesel 

that can be transported, it also limits the 

distribution of biodiesel to a smaller 

geographic area near production and 

distribution facilities. This then 

translates into the need for more and 

disparately located production facilities 

and import terminals. Once blended 

with diesel fuel at the bulk plant, 

further distribution concerns are 

typically minimized by shorter 

transportation distances between the 

bulk plants and retail stations and lower 

biodiesel blend ratios that have fewer 

cold weather limitations. 

The net result is that the expansion of 

terminals and bulk plants selling 

biodiesel and biodiesel blends, and the 

distribution infrastructure necessary to 

transport biodiesel to and from these 

facilities, is a significant challenge 

facing the rapid expansion of biodiesel. 

This is an area in which the biodiesel 

industry has made steady progress over 

time, and we anticipate that this steady 

progress can and will continue into the 

future, particularly with the ongoing 

incentive for biodiesel growth provided 

by the RFS standards. As with many of 

these potential supply constraints, 

however, increasing the biodiesel 

distribution capacity will require time, 

limiting the potential growth in 2016. 

v. Biodiesel and Renewable Diesel 

Retail Infrastructure Capacity 

For renewable diesel, we do not 

expect that refueling infrastructure (e.g. 

refueling stations selling biodiesel 

blends) will be a significant limiting 

factor in 2016 due to its similarity to 

petroleum based diesel and the 

relatively small volumes expected to be 

supplied in the United States. The 

situation is different, however, for 

biodiesel. Biodiesel is typically 

distributed in blended form with diesel 

fuel as varying blends from B2 up to 

B20. Biodiesel blends up to and 

including B20 can be sold using existing 

retail infrastructure, and generally does 

not require any upgrades or 

modifications at the retail level. 

Expanding the number of refueling 

stations offering biodiesel blends is 

therefore constrained less by the retail 

facilities themselves, and more by the 

lack of nearby wholesale distribution 

networks that can provide the biodiesel 

blends to retail. 

EPA is currently unaware of reliable 

data on the number of retail stations that 

offer biodiesel blends nationwide. The 

Web site Biodiesel.org shows the names 

and locations of 1090 stations that 

currently offer biodiesel blends.118

Based on the amount of biodiesel sold 

in the United States in recent years, 

however, we think this is a significant 

underestimate. This is likely due to the 

fact that diesel fuel that contains 5% or 

less biodiesel can be sold without 

special labeling. It is probable that many 

station selling biodiesel blends of 5% or 

lower are therefore not included in this 

count. Nevertheless, the relatively low 

number of terminals and bulk plants 

offering biodiesel is a strong indication 

that biodiesel blends are not available at 

retail stations nationwide. Biodiesel 

blends greater than B5 are still only 

available in a very small fraction of 

possible refueling locations. Of the 

approximately 4,800 truck stops 

nationwide, and the approximately 

50,000 diesel retail stations, only 717 

stations offer biodiesel in blends of B20 

of greater.119 While the number of 

refueling stations offering higher level 

biodiesel blends is relatively small, the 

fact that diesel sales volumes in the 

United States are dominated by truck 

stops and the very large centrally fueled 

fleets, suggests that expanding the 

refueling infrastructure for these 

biodiesel blends will be relatively 

straightforward as production and 

distribution allow. The biggest 

challenge may be the reluctance of 

retailers and fleets to switch to biodiesel 

blends due to concerns over fuel 

quality, vehicle warranties, liability, or 

other factors. 

There is some indication that the 

number of refueling stations willing or 

able to market biodiesel may become a 

factor that constrains the growth of 

biodiesel supply in the United States, 

either in 2016 or in future years. A 

number of retail locations that market 

diesel fuel are only offering biodiesel 

blends that exceed 5% (B5), which is 

the maximum amount of biodiesel for 

which many diesel vehicles are 

warranted. For example, the LOVES 

truck stop chain is a major retailers of 

biodiesel. A recent review of their Web 

site indicated that 221 of their 354 

stations were selling B15.120 This is 

despite the fact that many of the 

newer,121 and especially the older 

heavy-duty diesel truck engines were 

only designed and warranted for 

biodiesel blends up to B5. Similarly, in 

the state of Illinois nearly all sales of 

biodiesel blends are reported to be at 

B11 in order to benefit from the state tax 

subsidy, despite the fact that not all 

vehicles and engines have been 

designed and warranted for its use. The 

fact that some retailers are only offering 

biodiesel blends that are not approved 

for use in the engines of many of their 

customers may suggest that the rate at 

which the number of refueling stations 

offering biodiesel blends can be 

increased could be a significant 

constraining factor to the supply of 

biodiesel in 2016. Were more retail 

outlets willing and able to dispense 

biodiesel, then, increasing volumes of 

biodiesel could be distributed at 

concentrations of B5 or less without 

raising any warranty concerns. 

vi. Biodiesel and Renewable Diesel 

Consumption Capacity 

Virtually all diesel vehicles and 

engines now in the in-use fleet have 

now been warranted for the use of B5 

blends. In fact both FTC and ASTM 

specification for diesel fuel (16 CFR part 

306 and ASTM D975 respectively) 

allows for biodiesel concentrations of 

up to five volume percent (B5) to be 

sold as diesel fuel, with no separate 

labeling required at the pump. Biodiesel 

blends of up to 5% are therefore 

indistinguishable in this regard. In 

addition, NBB claims that nearly all 

manufacturers now warrant at least one 

of their current offerings for use with 

B20 blends. This is a significant factor 

in assessing the potential supply of 

biodiesel to vehicles in future years and 

has been a main focus of NBB’s 

technical and outreach efforts for many 

years, and one of their true success 

stories. Using biodiesel blends above B5 

in diesel engines may require changes in 

design, calibration, and/or maintenance 

practices.122

Even in instances where 

manufacturers warrant their engines to 

operate on B20 blends, they may have 

additional requirements to ensure the 

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123Although as stated above, some public 

retailers are choosing to sell only B11 or B20 blends 

and allowing the consumer the option of either 

going elsewhere or purchasing fuel for which their 

engines are not warranted. 

124Such warranties apply to the engines, not the 

fuels, as pointed out by the National Biodiesel 

Board. Nevertheless, the engine warranties are 

contingent upon the use of approved fuels. 

125Sales data received directly from the OEM. 

126As noted above, FTC and ASTM specifications 

allow for biodiesel concentrations of up to five 

volume percent (B5) to be sold as diesel fuel, with 

no separate labeling required at the pump. 

127 ‘‘Non-Ethanol Potential for RFS Compliance,’’ 

Stratus Advisors, July 16, 2015. Submitted by 

Growth Energy. 

128EPA is not aware of any comprehensive 

analysis of the diesel engine/vehicle warranties for 

the in use fleet with respect to biodiesel blends. 

EPA did not have the time or resources to conduct 

a detailed evaluation of warranty constraints over 

the range of engines and model years currently in 

service for purposes of this rulemaking. EPA 

encourages stakeholders to gather this type of 

information to inform future annual RFS rules. 

quality of the biodiesel fuel being used 

and that additional engine maintenance 

will be performed. These requirements 

may make the use of biodiesel blends 

containing greater than 5% biodiesel 

challenging, while technically possible. 

For instance, Detroit Diesel, a large 

diesel engine manufacturer, 

implemented a formal, multifaceted B20 

approval process for fleets seeking to 

use B20. The process involved an 

evaluation of biodiesel producers and 

marketers that are to provide biodiesel 

to the fleet in question, an assessment 

of biodiesel Certificate of Analysis for 

B100 and B20 blends (or fuel samples as 

needed), as well as a review of 

preventative maintenance practices at 

dispensing locations, including bulk 

tank cleaning intervals, dispensing 

filtration, water handling, and volume 

of fuel consumed at each location. In the 

B20 fleet approval process, Detroit 

Diesel also considered the particular 

vehicle application to ensure that fleet 

vehicles were not parked for too long as 

well as an assessment of the 

preventative maintenance intervals for 

engines to ensure that they are in-line 

with Detroit Diesel’s published 

guidelines. Even in situations where 

approval to use B20 was granted, the 

approval did not provide blanket 

coverage for a geographically dispersed 

fleet; that is, a fleet that operated across 

several states was required to submit 

separate applications for each biodiesel 

producer, marketer, and dispenser 

supporting the fleet. Fleet operators that 

successfully completed the B20 

approval process received a Statement 

of Warranty from Detroit Diesel’s 

Director of Quality and were permitted 

to operate the fleet using B20. 

Ultimately Detroit Diesel cancelled the 

B20 fleet approval process citing 

biodiesel quality concerns. 

Given the long life of diesel engines 

and the number of new engines not 

warranted for biodiesel blends above 

B5, turning over a significant portion of 

the fleet to engines designed and 

warranted for B20 is still many years off 

into the future. This means that in the 

near term the opportunity to sell B20 

exclusively to vehicles warranted to run 

on these blends will likely be limited to 

centrally fueled fleets.123 Increasing the 

supply of biodiesel, however, is not 

necessarily dependent on selling higher 

level biodiesel blends, as there is 

significant opportunity for expanding 

the use of biodiesel in lower level 

blends and for non-road applications. If 

the diesel pool contained 5% biodiesel 

nationwide consumption of biodiesel 

would reach approximately 2.9 billion 

gallons in 2016. Furthermore, in 

addition to their successful efforts with 

diesel vehicles and engines, NBB has 

had a significant market outreach effort 

to expand the use of biodiesel into 

heating oil applications (referred to as 

bioheat). While still a relatively small 

outlet for biodiesel consumption 

compared to diesel fuel, it is a growing 

market that affords significant 

additional opportunity for growth. 

We received a number of comments 

on the NPRM related to the degree to 

which engine warranties may constrain 

biodiesel use in 2016; however no 

stakeholder provided any analyses 

demonstrating the fraction of in-use 

engines which are warranted for more 

than B5.124 Instead, most biodiesel 

proponents stated only that most diesel 

engines being sold today are warranted 

for B20. Such warranties have not 

always existed, and the degree to which 

new diesel engines support B20 and 

higher blends may be over-stated. 

Detroit Diesel produces the engines for 

approximately 30% of the Class 8 trucks 

sold in the United States and currently 

does not support the use of biodiesel 

blends greater than B5 in their 

engines.125 Thus, it is clear that some 

portion of the in-use fleet of diesel 

engine warranties do not approve the 

use of biodiesel blends greater than 

B5.126 These engines represent a 

potential constraint on use of biodiesel, 

though we cannot quantify the level of 

constraint. Comments submitted by 

Growth Energy support this fact: 

‘‘. . . the transportation fleet and heating 

oil equipment pools still contain significant 

percentages that are not warranted or deemed 

compatible with levels of biodiesel above 

5%.’’ 127

The National Biodiesel Board argued 

that regardless of whether 

manufacturers place limits on the use of 

biodiesel blends as a condition of 

honoring their engine warranties, many 

of these diesel engines can still safely 

use higher biodiesel blends than those 

cited in those warranties. Thus, said 

NBB, ‘‘. . . the formally OEM 

recommended biodiesel level should 

not be construed or used as any sort of 

limitation for biodiesel volumes.’’ We 

disagree, and believe that the OEM 

recommended biodiesel levels can have 

a significant impact on owner’s 

willingness to use biodiesel blends. 

Despite anecdotal evidence regarding 

behavior of some diesel vehicle 

operators, it would be inappropriate for 

EPA to assume that diesel truck owners 

in general will knowingly use biodiesel 

blends at concentrations that exceed the 

limits cited in their engine warranties. 

It would be more prudent for EPA to 

assume that engine manufacturers are in 

the best position to judge which 

biodiesel blends are appropriate for use 

in their engines, and that engine owners 

will view their engine warranties in the 

same way. Evidence that some truck 

owners ignore the recommended limits 

on biodiesel concentrations when 

refueling their truck is not, we believe, 

a reasonable basis for assuming that 

engine warranties place no constraints 

on the use of higher biodiesel blends for 

the in-use truck fleet as a whole. 

Similarly, we do not believe that older 

engines with expired warranties can be 

assumed to have no constraints on 

biodiesel concentrations. Not only were 

older engines more likely to have been 

designed to operate on B5 or lower, but 

engine warranties continue to provide 

indications to truck owners of 

acceptable biodiesel concentrations 

even after they expire. Owner’s manuals 

for those engines may also cite limits on 

biodiesel concentrations, and owner’s 

manuals do not expire.128

vii. Biodiesel and Renewable Diesel 

Consumer Response 

Consumer response to the availability 

of renewable diesel and low level 

biodiesel blends (B5 or less) has been 

generally positive, and this does not 

appear to be a significant impediment to 

growth in biodiesel and renewable 

diesel use. Because of its similarity to 

petroleum diesel, consumers who 

purchase renewable diesel are unlikely 

to notice any difference between 

renewable diesel and petroleum derived 

diesel fuel. Similarly, biodiesel blends 

up to B5 are unlikely to be noticed by 

consumers, especially since, as 

mentioned above, they may be sold 

without specific labeling. Consumer 

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response to biodiesel blends is also 

likely aided by the fact that despite 

biodiesel having roughly 10 percent less 

energy content than diesel fuel, when 

blended at 5 percent the fuel economy 

impact of B5 relative to petroleum 

derived diesel is a decrease of only 

0.5%, an imperceptible difference. 

Consumer response has been further 

aided by the lower prices that many 

wholesalers and retailers have been 

willing to provide to the consumers for 

the use of biodiesel blends. The 

economic incentives provided by the tax 

credit and the RIN have made it possible 

for some retailers to realize additional 

profits while selling biodiesel blends, 

while in many cases offering these 

blends at a lower price per gallon than 

diesel fuel that has not been blended 

with biodiesel. 

viii. Projected Supply of Biodiesel and 

Renewable Diesel in 2016 

Due to the large number of market 

segments where actions and 

investments may be needed to support 

the continued growth of biodiesel 

blends, it is difficult to isolate the 

specific constraint or group of 

constraints that will be the limiting 

factor or factors to the supply of 

biodiesel and renewable diesel in the 

United States in 2016. Not only are 

many of the potential constraints interrelated, but they are likely to vary over 

time. The challenges in identifying a 

single factor limiting the growth in the 

supply of biodiesel and renewable 

diesel in 2016 does not mean, however, 

that there are no constraints to the 

growth in supply. 

A logical starting point in developing 

a projection of the available supply of 

biodiesel and renewable diesel in 2016 

is a review of the volumes of these fuels 

supplied in previous years. In 

examining the data, both the absolute 

volumes of the supply of biodiesel and 

renewable diesel in previous years, as 

well as the rates of growth between 

years are relevant considerations. The 

volumes of biodiesel and renewable 

diesel (including both D4 and D6 

biodiesel and renewable diesel) 

supplied each year from 2011 through 

2015 are shown below. 

One way to use the historical data to 

project the available supply of biodiesel 

and renewable diesel in 2016 would be 

to start with the volume expected to be 

supplied in 2015 (1.84 billion gallons), 

the most recent year for which actual 

supply data are available and also the 

year with the largest supply of biodiesel 

and renewable diesel, and then assess 

how much the supply can be expected 

to increase in 2016 in light of the 

constraints discussed above. We could 

assume, for example, that past growth in 

the year or years leading up to 2015 

reflects the rate at which biodiesel and 

renewable diesel constraints can 

reasonably be expected to be addressed 

and alleviated in the future. If this were 

the case, we could use either the largest 

observed annual supply increase (689 

million gallons from 2012 to 2013) or 

the average supply increase (212 million 

gallons from 2011 to 2015) to calculate 

how much biodiesel and renewable 

diesel volumes could increase over 2015 

levels in 2016. This would result in a 

projected supply of 2.53 billion gallons 

of biodiesel and renewable diesel if we 

used the highest observed annual 

growth rate, or 2.06 billion gallons of 

biodiesel and renewable diesel in 2016 

if we used the average annual growth 

rate. 

We recognize that the highest annual 

growth rate achieved in the past (or the 

average annual growth rate in the past) 

does not necessarily indicate the growth 

rate that can be achieved in the future. 

In the past biodiesel was available in 

fewer markets, allowing new 

investments to be targeted to have a 

maximum impact on volume. However, 

as the market becomes more saturated 

and biodiesel becomes available in an 

increasing number of markets, 

additional investments may tend to 

have less of an impact on volume, 

limiting the potential large increases in 

supply year over year. Much of the 

growth in biodiesel and renewable 

diesel supply in the past was enabled by 

addressing the existing constraints in 

ways that required relatively less 

investment than the challenges 

currently facing the market. In 2013 

additional feedstock was available to be 

recovered from waste streams and there 

was still significant opportunity to 

distribute additional biodiesel blends 

containing 5% biodiesel or less. Future 

supply increases will likely require 

diverting potential biodiesel and 

renewable diesel feedstocks from 


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existing uses, revising production 

facilities to handle larger volumes of 

different feedstocks, potentially 

distributing the biodiesel to new 

terminal or bulk plants, and/or using 

biodiesel in blends greater than 5%. 

Thus, it may require greater investment 

for growth rates of biodiesel and 

renewable diesel in 2016 to equal the 

growth rate that occurred in 2013. 

However, any such conclusion would 

need to be tempered by the 

consideration of the extent to which 

legal and market forces were in place to 

drive future growth. This is especially 

true since the year with the historic 

maximum rate of growth was 2013—a 

year in which both tax incentives and 

RFS incentives were in place to 

incentivize growth. We believe the 

incentives provided by the standards in 

this final rule will be sufficient to 

enable this growth to occur, despite 

these challenges. However, to avoid 

volumes of biodiesel and renewable 

diesel from plateauing in the longer 

term, developments such as significant 

gains in oilseed productivity, the 

development of new oilseed crops, the 

approval from engine manufacturers to 

use B20 blends in all or nearly all diesel 

engines, and investments in renewable 

diesel production capacity may be 

necessary. 

We received many comments on our 

NPRM that offered projections of the 

available biodiesel and renewable diesel 

supply in 2016. It was not always clear 

from reading the comments if the 

volume projections they offered 

represent their projection of the total 

supply of biodiesel and renewable 

diesel, as is relevant for determining the 

total renewable fuel supply in 2016, or 

if they represent a sub-set of the total 

biodiesel and renewable diesel 

availability (such as only BBD and not 

conventional biodiesel, only biodiesel 

and not renewable diesel, or the level at 

which they requested the BBD standard 

be set). Nevertheless, we have reviewed 

these comments and considered the 

volume projections offered and the 

supporting data provided in 

determining the supply of biodiesel and 

renewable diesel in the United States in 

2016. 

The National Biodiesel Board 

suggested that the volume of advanced 

biodiesel supplied to help meet the 

advanced biofuel volume requirement 

should be at least 2.7 billion gallons in 

2016, based on the highest rate of D4 

RIN generation achieved in a single 

month. They effectively assumed that 

the rate of RIN generation that occurred 

in December 2013 (220 million gallons) 

could be duplicated over a 12-month 

period, and that all of this product 

could be distributed and used in the 

United States in 2016. They stated that 

an additional 370–720 million gallons of 

biodiesel (550–1,080 million RINs) 

could be supplied from imported 

biodiesel. We disagree that these 

volumes can be supplied in 2016. We 

believe that using the highest 

production in a single month from the 

historical record is not a reasonable 

basis for projecting possible future 

supply over the course of an entire year 

for a number of reasons. Such an 

approach does not take into account the 

factors, described below, that allowed 

for that maximum single month 

production, including the expiring 

blenders tax credit and the inability to 

sustain that production level yearround. In addition, production 

inventories can be grown over a onemonth time period in a manner that 

masks constraints in the fuel delivery 

infrastructure. As evidence, we note that 

the highest D4 RIN generation level in 

a single month (220 million gallons in 

December 2013) occurred immediately 

before one of the lowest monthly D4 

RIN generation level that has occurred 

in the last several years (88 million 

gallons in January 2014). The average of 

those two months is the equivalent of 

about 1.85 billion gallons over the 

course of a year. 

Moreover, the highest monthly D4 

RIN generation level cited by the 

National Biodiesel Board included 

imports which have been highly 

variable and cannot be projected with 

reasonable certainty based on historical 

supply. The fact that the month used by 

NBB to project that 2.7 billion gallons of 

BBD could be supplied already includes 

a significant amount of imported 

volumes makes their estimate of 

additional imports particularly 

uncertain. The portion of the 1.85 

billion gallon annual average RIN 

generation rate derived from 

annualizing December 2013 and January 

2014 volumes that can be attributed to 

domestic production is 1.43 billion 

gallons, and even this number should be 

considered high because it does not 

account for exports of biodiesel and 

RINs retired because they were invalid 

or were otherwise not available for 

compliance. As a result of these factors, 

the actual demonstrated domestic 

supply (domestic production plus 

imports, less exports and corrections) of 

biodiesel and renewable diesel does not 

support an available supply of 3.1–3.4 

billion gallons per year, as suggested by 

NBB. 

In addition to the comments from 

NBB, we also received a number of 

other comments suggesting a higher 

supply of biodiesel may be available in 

2016 than in previous years. Many 

commenters, such as the American 

Council on Renewable Energy, the 

American Soybean Association, the 

National Renders Association, John 

Deere, several state soybean 

associations, and others suggested that 

the BBD standard should require the use 

of at least 2 billion gallons in 2016. 

Other commenters, including Archer 

Daniels Midland, the California 

Biodiesel Alliance, Imperium 

Renewables, and others suggested that 

the BBD standard should require the use 

of 2.4 billion gallons in 2016. Since they 

were focused on the BBD standard, 

these numbers do not necessarily 

represent the commenters’ views of the 

available supply of biodiesel and 

renewable diesel in 2016, but we believe 

they give a good indication of their 

views on the available supply. We also 

note that they are much more in line 

with the available supply volumes that 

we estimate below based on an 

extrapolation of growth rates from 

previous years. 

Given the widely divergent comments 

and available data on the potential 

supply of biodiesel feedstocks, it is clear 

that there is a great deal of uncertainty 

in the degree to which those feedstock 

supplies can grow in 2016. A focus on 

potentially available feedstock supplies 

is insufficient as this is not the only 

factor to consider in assessing the 

potential volumes of biodiesel and 

renewable diesel in 2016. Neither 

biodiesel production capacity, nor the 

supply of oils, fats, and greases around 

the world, has ever been the sole 

constraint on biodiesel and renewable 

diesel supply to the U.S. Indeed, as 

discussed above, there are a number of 

constraints, ranging from competing 

demand for biodiesel and renewable 

diesel feedstocks to biodiesel and 

renewable diesel distribution 

infrastructure and engine compatibility, 

that we believe will constrain the 

supply of biodiesel and renewable 

diesel supply in 2016. 

These constraints do not represent 

insurmountable barriers, but they do 

take time to overcome. The market has 

been making efforts to overcome these 

constraints in recent years as 

demonstrated by the fact that biodiesel 

and renewable diesel consumption in 

the U.S. has been steadily increasing. 

We agree with the biofuels industry that 

more opportunity for ongoing growth 

still exists, but we do believe that the 

constraints listed above will continue to 

be a factor in the rate of growth for 2016, 

but we also believe that existing 

biodiesel and renewable diesel 

production capacity should not be the 

basis for projecting achievable volumes 

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in 2016. Instead, we believe that the 

ongoing constraints listed above mean 

that the opportunity for growth 2016 is 

of a similar magnitude to that which we 

have experienced in recent years. For 

2016 we are projecting the supply of 

biodiesel and renewable diesel for use 

in the United States could reasonably be 

as much as 2.5 billion gallons. We 

believe this value represents the 

maximum reasonably achievable 

volume of biodiesel and renewable 

diesel that can be supplied to the United 

States in 2016. 

This volume of biodiesel and 

renewable diesel is approximately equal 

to the projected volume using the 

highest observed annual growth rate 

(2.53 billion gallons), and far higher 

than the projected volume using the 

average growth rate between 2011 and 

2015 (2.06 billion gallons). We believe 

this is appropriate considering both the 

demonstrated ability of the market to 

respond to incentives for increased 

production, import, and use of biodiesel 

and renewable diesel, as demonstrated 

in 2013, and also the potential 

constraints to the continued growth of 

biodiesel and renewable diesel 

discussed above. These constraints, 

particularly the availability of qualifying 

feedstocks to processing facilities that 

can utilize them in light of competing 

demand for these feedstocks and the 

distribution infrastructure needed to 

increase the use of biodiesel and 

renewable diesel, may be more 

challenging to overcome in the future, 

but we believe growth in 2016 can still 

approach the record growth experienced 

in 2013. In 2013 increasing available 

supplies of feedstock, through means 

such as greater corn oil production rates 

at ethanol plants and increased recovery 

of waste fats and oils, and increasing 

biodiesel and renewable diesel 

distribution by adding biodiesel 

blending capacity at terminals and/or 

bulk plants in areas with large local 

demand for diesel fuel, were both 

relatively simple. For 2016 the RFS 

standard will necessitate similar and 

potentially even larger investments and 

actions to grow biodiesel and renewable 

diesel supply. 

We recognize that the market may not 

necessarily respond to the final total 

renewable standard by supplying 

exactly 2.5 billion gallons of biodiesel 

and renewable diesel to the 

transportation fuels market in the 

United States, but may instead supply a 

slightly lower or higher volume of 

biodiesel and renewable diesel with 

corresponding changes in the supply of 

other types of renewable fuel. As a 

result, we believe there is less 

uncertainty with respect to achievability 

of the total volume requirement than 

there is concerning the projected 2.5 

billion gallons of biodiesel and 

renewable diesel that we have used in 

deriving the final total renewable fuel 

volume requirement. 

4. Projecting the Supply of Other 

Renewable Fuels 

The RINs available for meeting the 

total renewable fuel standard include 

not only ethanol, biodiesel, and 

renewable diesel, but also RINs 

generated for a number of other 

renewable fuels. While the potential for 

each of these fuels is small relative to 

those covered above, the volumes must 

still be considered in assessing the total 

supply of renewable fuel in 2016. One 

such fuel is CNG/LNG derived from 

biogas when used as a transportation 

fuel. The potential for this fuel in 2016 

is approximately 210 million gallons. 

This projection is discussed in more 

detail in Section IV, as this fuel 

generally qualifies as a cellulosic 

biofuel. 

There also are some opportunities for 

moderate growth through the end of 

2016 in a variety of other fuel types. 

Currently, the RFS regulations provide a 

RIN generating pathway for heating oil, 

naphtha, jet fuel, LPG, liquefied natural 

gas, renewable gasoline, butanol, and 

electricity. To date only heating oil, 

naphtha, and butanol have been 

produced to generate RINs, reaching a 

projected annual high of 23 mill gal 

based on data through September, 2015. 

Since these sources have not grown 

significantly over the last several years, 

we believe that the supply of other nonethanol renewable fuels can reach about 

25 million gallons in 2016. 

5. Total Renewable Fuel Supply in 2016 

The total volume of renewable fuel 

that can be supplied in 2016 is the 

combination of the estimated supply of 

each of the biofuel types described 

above: ethanol, biodiesel and renewable 

diesel, and other biofuels such as 

biogas, naphtha, and heating oil. Most of 

these biofuel types can be produced as 

either advanced biofuel or as 

conventional (D6) renewable fuel, 

depending on the feedstock and 

production process used. Our estimate 

of the supply of total renewable fuel 

shown in the table below includes 

contributions from both advanced 

biofuels and conventional renewable 

fuels. 

TABLE II.E.5–1—VOLUMES USED TO DETERMINE TOTAL RENEWABLE FUEL SUPPLY IN 2016 

Volume 

(million gallons) Million RINs 

Ethanol ............................................................................................................................................. 14,128 14,128 

Biodiesel and renewable diesel ....................................................................................................... 2,500 3,750 

Biogas .............................................................................................................................................. 210 210 

Other non-ethanol renewable fuels ................................................................................................. 25 25 

Total .......................................................................................................................................... 16,861 18,113 

Based on this analysis, we are 

establishing a total renewable fuel 

volume requirement of 18.11 billion 

gallons for 2016. However, we note that 

the contributions from individual 

sources that are shown in Table II.E.5– 

1 were developed only for the purpose 

of determining a final volume 

requirement for 2016; they do not 

represent EPA’s projection of precisely 

how the market will respond to the 

standards we set. We continue to 

believe, as we noted in the NPRM, that 

any estimate we make regarding 

particular fuel types is uncertain, but 

that overall the final volume 

requirement is attainable. The 

contributions from individual sources 

that we have used are illustrative of one 

way in which the volume requirement 

for total renewable fuel could be met. 

Actual market responses could vary 

widely, as described more fully in 

Section II.G. 

The volumes of total renewable fuel 

that we are establishing for 2016 reflect 

our assessment of the maximum 

volumes that can reasonably be 

achieved, taking into account both the 

constraints on supply discussed 

previously and our judgment regarding 

the ability of the standards we set to 

result in marketplace changes in 2016. 

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129Our approach in identifying ‘‘reasonably 

attainable’’ volumes of advanced biofuels using the 

cellulosic waiver authority is different than our 

approach under the general waiver authority of 

identifying the ‘‘maximum reasonably achievable 

supply’’. In exercising the cellulosic waiver 

authority in this rulemaking, we are not required, 

and do not intend, to necessarily identify the most 

likely ‘‘maximum’’ volumes of advanced biofuels 

that can be used in 2016. Although we generally 

seek in establishing the advanced biofuel volume 

requirement to require that available advanced 

biofuels backfill for shortfalls in cellulosic biofuels 

in 2016, our inquiry is not intended to be as 

exacting. 

130This includes both advanced and conventional 

biodiesel and renewable diesel. 

131 In certain situations, advanced ethanol can 

also be produced from sorghum and food wastes. 

As shown in Figure II.E.5–1, the volume 

requirements for 2016 would follow an 

upward trend consistent with that from 

previous years. 

F. Advanced Biofuel Volume 

Requirement for 2016 

As described in Section II.B above, we 

are reducing volumes of total renewable 

fuel under both the cellulosic and the 

general waiver authority, and we are 

reducing volumes of advanced biofuel 

under the cellulosic waiver authority 

only. As noted in Section II.B, EPA has 

broad discretion in utilizing the 

cellulosic waiver authority, since 

Congress did not specify the 

circumstances under which it may or 

should be utilized nor the factors to 

consider in determining appropriate 

volume reductions. We are cognizant of 

the fact that increases in the statutory 

volume targets after 2015 are only in 

advanced biofuel, and that advanced 

biofuel provides relatively large GHG 

reductions in comparison to 

conventional renewable fuel. In light of 

these facts, our intention in utilizing the 

cellulosic waiver authority for 2016 is to 

place an emphasis on setting the 2016 

advanced biofuel volume requirement at 

a level that is reasonably attainable 

taking into account uncertainties related 

to such factors as production, import, 

distribution and consumption 

constraints associated with these 

fuels.129

As described earlier, we are 

establishing a total renewable fuel 

volume requirement of 18.11 billion 

gallons for 2016. Our assessment of total 

renewable fuel is based on an estimate 

of 14.13 billion gallons of ethanol and 

2.50 billion gallons of biodiesel and 

renewable diesel, in addition to smaller 

volumes of biogas and other types of 

renewable fuel.130 Given that advanced 

biofuels are a subset of total renewable 

fuel, the 2016 volume requirement for 

advanced biofuels reflects our 

assessment of the portion of total 

ethanol and biodiesel, as well as other 

renewable fuels, that should be required 

as an advanced biofuel. 

With regard to ethanol, the primary 

source of advanced biofuel is imported 

sugarcane ethanol.131 As described in 

the NPRM, the supply of imported 

sugarcane ethanol continues to be 

highly uncertain and there is little 

indication that this uncertainty will 

change in 2016. For instance, both total 

ethanol imports and imports of 

Brazilian sugarcane ethanol have varied 

significantly since 2004, as shown in 

Figure II.F–1. 


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132 ‘‘Ethanol acts as lone bright spot amid China 

commodity gloom—Reuters,’’ docket EPA–HQ– 

OAR–2015–0111. 

133 ‘‘Brazil Hikes Ethanol Blend in Gasoline to 

27%,’’ DownstreamBusiness.com, March 12, 2015. 

The Brazilian Sugarcane Industry 

Association (UNICA) provided 

comments suggesting that 2 billion 

gallons of sugarcane ethanol could be 

supplied to the U.S. in 2016. After 

further investigation, we do not believe 

that this level of import is reasonably 

achievable in 2016. To begin with, 

exports of 2 billion gallons from Brazil 

to the U.S. would be significantly higher 

than total exports to all countries in all 

previous years, as shown below. 

In recent years, ethanol exports from 

Brazil to countries other than the U.S. 

averaged more than 300 million gallons 

each year. Brazil has recently increased 

ethanol exports to China and has also 

increased its own ethanol use 

requirements.132 133 If this were to 

continue in 2016, total exports from 

Brazil would need to reach 2.4 billion 

gallons in order to supply 2 billion 

gallons to the U.S. We do not believe 

that the information that UNICA 

provided supports this extremely high 

level of exports. 

Although UNICA cites a variety of 

factors that can affect ethanol exports 

and which are beyond the control of 

Brazilian mills and the EPA, it 

nevertheless based its estimate of 

potential exports to the U.S. solely on a 

combination of Brazilian ethanol 

production capacity and opportunities 

created by the RFS program itself. We 

believe that UNICA has underestimated 

the uncertainty associated with other 

market factors, including the E10 

blendwall in the U.S., changes in 

domestic demand for ethanol in Brazil, 

and competing world demand for sugar. 

With regard to sugar, it is true that 

Brazilian production has been declining 

for the last several years. However, 

between 2005 and 2015, Brazilian 

production of sugar has increased just as 

often as it has decreased, demonstrating 

that there is uncertainty with regard to 

worldwide demand for sugar. We 


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134 ‘‘Gasoline Demand in Brazil: an empirical 

analysis,’’ Thaı ́s Machada de Matos Vilela, 

Pontifical Catholic University of Rio de Janeiro, 

Figure 2. 

135 ‘‘Brazilian sugarcane production and 

petroleum consumption,’’ docket EPA–HQ–OAR– 

2015–0111. 

136Between 2010 and 2014, circle trade 

represented about 21% of all ethanol imports and 

exports between the U.S. and Brazil. See ‘‘Analysis 

of circle trade between the US and Brazil,’’ docket 

EPA–HQ–OAR–2015–0111. 

137Ethanol import data from EIA, representing 

imports directly from Brazil and indirectly through 

the Caribbean Basin 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. 

138Based on import data from EMTS. 

139Notably, in response to the February 7, 2013 

NPRM, UNICA projected that Brazil could supply 

800 mill gal of sugarcane to the U.S. in 2014. 

140 ‘‘Status Review of California’s Low Carbon 

Fuel Standard,’’ Institute of Transportation Studies, 

University of California Davis, April 2015. 

believe it would be imprudent to 

assume that the downward trend in 

sugar production in recent years will 

continue in 2016. 

More importantly, while production 

of sugarcane has increased moderately 

in Brazil over the last several years, total 

gasoline consumption in Brazil also 

continues to climb.134 This reduces the 

potential for substantial increases in 

exports of ethanol in 2016, as ethanol 

serves as a critical source of fuel supply 

in Brazil to offset shortages in 

petroleum. In fact, total consumption of 

petroleum in Brazil has increased at a 

rate of about 4.9% over the last several 

years, while the rate of sugarcane 

production has only grown at a rate of 

about 2.2%.135

Several stakeholders also pointed to 

the potential for so-called ‘‘circle trade’’ 

between the U.S. and Brazil as a reason 

to either reduce the applicable volume 

requirement for advanced biofuel in 

such a way as to limit imports of 

sugarcane ethanol, and/or to increase 

the required volume of BBD. In this 

circle trade, corn-based ethanol is 

exported from the U.S. to Brazil at the 

same time that sugarcane ethanol is 

exported from Brazil to the U.S. This 

has undoubtedly occurred in the past, 

though the circle trade volumes have 

represented only 21% of all ethanol 

imports and exports between the two 

countries that occurred between 2010 

and 2014.136 However, there has been a 

high degree of variability in sugarcane 

ethanol imports into the U.S., and also 

a high degree of variability in the export 

of corn ethanol to Brazil. In some years 

the U.S. exported more ethanol to Brazil 

than Brazil exported to the U.S., while 

in other years the opposite occurred. 

This indicates that there are a wide 

variety of factors driving imports and 

exports of ethanol, and ‘‘circle trade’’ 

does not appear to have been the major 

one in the past. Nevertheless, to the 

degree that circle trade increased in 

response to higher RFS volume 

requirements for advanced biofuel, the 

GHG benefits associated with the 

advanced biofuel volume requirement 

would be reduced. 

As stated in the NPRM, the highest 

volume of Brazilian sugarcane ethanol 

that has ever been imported was 680 

million gallons in 2006; in 2013 imports 

reached 435 million gallons.137

However, in 2014 imports were only 64 

million gallons, and the projected 

annual level of imports for 2015 is about 

55 million gallons.138 139 Some 

sugarcane ethanol will likely be 

imported in 2016 in order to meet the 

requirements of California’s Low Carbon 

Fuel Standard (LCFS), and all such 

imported sugarcane ethanol will qualify 

to meet the RFS standards. However, 

sugarcane ethanol volumes have also 

fallen off in recent years under 

California’s program.140 Given our 

assessment of UNICA’s estimate of 

volumes it can export to the U.S. in 

2016 as described previously, and our 

assessment of uncertainty in import 

volumes as evidenced by the highly 

variable historical supply, there is no 

indication (apart from UNICA’s 

comments, discussed above) that 

imports of sugarcane ethanol in 2016 

will be markedly different from historic 

levels. While the historical average level 

of ethanol imports over the last ten 

years is about 300 million gallons, the 

low levels of imports seen in 2014 and 

2015 suggest that such volumes may not 

be available in 2016. Accordingly, for 

the purposes of determining the 

reasonably attainable volume of 

advanced biofuels, we believe it is 

reasonable to assume that a somewhat 

lower level of imports will occur than 

the historic average over the last ten 

years. Thus we estimate that about 200 

million gallons of sugarcane ethanol 

will be available in 2016 for the 

purposes of determining the advanced 

biofuel volume requirement for 2016. 

However, actual imports of sugarcane 

ethanol could be higher or lower than 

this level as shown in the scenarios for 

how the market could respond in 

Section II.G. 

With regard to advanced biodiesel 

and renewable diesel, past experience 

suggests that a high percentage of the 

supply of biodiesel and renewable 

diesel to the United States qualifies as 

advanced biofuel. In previous years 

biodiesel and renewable diesel 

produced in the United States has been 

almost exclusively advanced biofuel. It 

is also likely that some advanced 

biodiesel will be imported in 2016, as 

discussed in Section II.E.3.iii, however 

we believe that the volume of biodiesel 

imported from Argentina in 2016 is 

likely to be less than the several 

hundred million gallons suggested by 

some commenters (see Section II.E.3.iii 

for more detail on biodiesel and 

renewable diesel imports). Imports of 

conventional (D6) biodiesel and 

renewable diesel, however, have also 

increased in recent years, and are likely 

to continue to contribute to the supply 

of renewable fuel in the United States in 

2016. By including a high percentage of 

the 2.5 billion gallon projected total 

supply of biodiesel and renewable 

diesel in the advanced biofuel category, 

consistent with past experience, we are 

incentivizing increased production and 

import of biodiesel and renewable 

diesel that is produced from feedstocks 

that qualify for advanced biofuel RINs 

in 2016, rather than conventional 

renewable fuel RINs, enhancing the 

GHG benefits of the RFS program. 

The discussion of the many 

constraints on total biodiesel supply in 

Section II.E.3 above is also relevant in 

the determination of reasonably 

attainable volumes of advanced 

biodiesel. In this context, we believe 

that out of the total of 2.5 billion gallons 

of biodiesel and renewable diesel that 

we have determined can reasonably be 

assumed for purposes of establishing the 

total renewable fuel volume 

requirement, that 2.1 billion gallons 

could be advanced biofuel. While we 

expect domestically produced biodiesel 

and renewable diesel to remain the 

primary source of biodiesel and 

renewable diesel supplied to the United 

States in 2016, the potential constraints 

related to the distribution and use of 

biodiesel, discussed in Section II.E.3 

above, may lead to an increasing 

demand for renewable diesel, which 

faces fewer potential constraints related 

to distribution and use than biodiesel. 

Much of the renewable diesel produced 

globally would qualify as conventional, 

rather than advanced biofuel, and we 

therefore expect that conventional 

renewable diesel will continue to be an 

important source of renewable fuel used 

in the United States in 2016. The 

volume of advanced biodiesel and 

renewable diesel which we are 

assuming for purposes of deriving the 

advanced biofuel standard for 2016 (2.1 

billion gallons) would represent an 

increase of about 370 million gallons 

from that supplied in 2015, which is 

greater than the annual increase that 

occurred in the previous two years (91 

million gallons from 2013 to 2014 and 

104 million gallons from 2014 to 2015) 

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but less than the highest annual increase 

that occurred in 2013 (about 560 million 

gallons from 2012 to 2013). This 

projected increase in the available 

volume of advanced biodiesel and 

renewable diesel accounts for the 

expected increased availability of 

feedstocks, such as soy oil, distillers 

corn oil, and waste oils, fats, and 

greases, that we expect will be available 

to biodiesel and renewable producers in 

2016 (see Section II.E.3.i for a further 

discussion of feedstock availability). It 

also represents a significant increase 

from the highest levels of advanced 

biodiesel and renewable diesel supplied 

to date. We find this volume to be 

reasonably attainable for the reasons 

discussed in Section II.E.3. 

Due to the nested nature of the 

standards, all cellulosic biofuel qualifies 

to help meet the advanced biofuel 

volume requirement. As described in 

Section II.E.4, we have also estimated 

that about 25 million gallons of 

advanced biofuel other than ethanol, 

biodiesel, and renewable diesel can be 

supplied in 2016. We estimate that the 

combination of all these sources results 

in a reasonably attainable volume of 

advanced biofuel for 2016 of 3.61 billion 

gallons. This is the volume requirement 

that we are establishing for advanced 

biofuel for 2016. We note that the 

volumes actually used to satisfy this 

requirement may be different than those 

listed in Table II.F–1 below. 

TABLE II.F–1—VOLUMES USED TO DETERMINE ADVANCED BIOFUEL SUPPLY IN 2016 

Volume 

(million 

gallons) 

Million 

RINs 

Cellulosic biofuel ....... 230 230 

Biodiesel and renewable diesel ............. 2,100 3,150 

Imported sugarcane 

ethanol .................. 200 200 

TABLE II.F–1—VOLUMES USED TO DETERMINE ADVANCED BIOFUEL SUPPLY IN 2016—Continued 

Volume 

(million 

gallons) 

Million 

RINs 

Other non-ethanol ..... 25 25 

Total ...................... 2,555 3,605 

The volume of advanced biofuel that 

we are establishing for 2016 will require 

increases from current levels that are 

substantial yet attainable, taking into 

account the constraints on supply 

discussed previously, our judgment 

regarding the ability of the standards we 

set to result in marketplace changes, and 

the various uncertainties we have 

described. Figure II.F–3 shows that the 

advanced biofuel volume requirement 

for 2016 will be significantly higher 

than the actual supply of advanced 

biofuel in previous years. 

G. Market Responses to the 2016 

Advanced Biofuel and Total Renewable 

Fuel Volume Requirements 

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, 

as the RFS standards we set generally 

allow use of multiple fuel types for 

compliance. We can, however, delineate 

a range of possibilities, and doing so 

provides a means of demonstrating that 

the final volume requirements are 

attainable through multiple possible 

paths. 

For our final 2016 total renewable fuel 

volume requirement of 18.11 billion 

gallons, there would be 1.05 billion 

ethanol-equivalent gallons needed 

beyond that supplied by E10, the BBD 

volume requirement of 1.9 billion 

physical gallons (equivalent to 2.85 

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 nonethanol biofuel (see Section IV.F). 


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141Although obligated parties could draw down 

the bank of carryover RINs as an alternative means 

of compliance, as discussed elsewhere we believe 

that the incentives for obligated parties to retain 

their carryover RINs is sufficiently large that they 

will preferentially acquire and retire current-year 

RINs for compliance. 

142We have determined in the context of deriving 

the advanced biofuel standard that 2.2 billion 

gallons are reasonably attainable. However, the 

market could operate such that larger volumes are 

made available. 

TABLE II.G–1—BREAKDOWN OF RENEWABLE FUEL USE IN 2016 BASED

ON FINAL VOLUMES

[Billion ethanol-equivalent gallons] 

Total renewable fuel ..................... 18.11 

Ethanol consumed as E10 a ......... ¥14.00 

Non-ethanol cellulosic biofuel ....... ¥0.21 

Biomass-based diesel b ................ ¥2.85 

Additional renewable fuel that 

must be used ............................ 1.05 

a Includes all sources of ethanol (cellulosic, 

advanced, and conventional). b Represents the 1.90 billion physical gallons that is the minimum required under the 

BBD standard. 

All of the constraints discussed in 

Section II.E.1 could play a role in 

determining how the market chooses to 

supply the additional 1.05 billion 

gallons needed. The options available to 

the market to fulfill the need for 1.05 

billion gallons of renewable fuel include 

the following: 141

• Increase the production and use of 

BBD above the final standard of 1.90 

billion gallons 142

• Increase import and use of sugarcane 

ethanol and/or domestic production 

and use of corn-ethanol, which would 

require a corresponding increase in 

E15 and/or E85 

• Increase production and/or imports of 

conventional (D6) biodiesel and 

renewable diesel 

• Increase the production of other nonethanol biofuels, such as renewable 

heating oil, jet fuel, naphtha, butanol, 

and renewable fuels coprocessed with 

petroleum 

In determining the amounts of each type 

of renewable fuel used to meet the total 

renewable fuel volume requirement, the 

market would also need to satisfy the 

final advanced biofuel standard of 3.61 

billion gallons. 

To illustrate the possible outcomes, 

we evaluated a number of scenarios 

with varying levels of E85/E15, E0, 

imported sugarcane ethanol, advanced 

biodiesel and renewable diesel, and 

conventional biodiesel and renewable 

diesel (likely to be made from palm oil). 

In doing so we sought to capture the 

range of possibilities for each individual 

source, based both on levels achieved in 

the past and how the market might 

respond to the final standards in 2016. 

Each of the rows in Table II.G–2 

represent a scenario in which the final 

total renewable fuel and advanced 

biofuel volume requirements would be 

satisfied. While we cannot predict 

precisely how the market will respond 

to the standards we are setting, we 

believe that the market will respond, 

and will likely do so within the range 

of options shown in the table below. 

The flexibility afforded the market 

through the RFS program helps to make 

the standards we are finalizing today 

reasonably achievable. 

TABLE II.G–2—VOLUME SCENARIOS ILLUSTRATING POSSIBLE COMPLIANCE WITH 3.61 BILL GAL ADVANCED BIOFUEL AND

18.11 BILL GAL TOTAL RENEWABLE FUEL

[Million gallons] a b

E85 c E0 Total ethanol d Sugarcane 

ethanol 

Total 

biodiesel e

Minimum 

volume of 

advanced 

biodiesel e

200 ....................................................................................... 100 14,122 100 2,502 2,170 

200 ....................................................................................... 100 14,122 300 2,502 2,037 

200 ....................................................................................... 300 14,102 0 2,516 2,237 

200 ....................................................................................... 300 14,102 100 2,516 2,170 

200 ....................................................................................... 300 14,102 300 2,516 2,037 

200 ....................................................................................... 300 14,102 495 2,516 1,907 

400 ....................................................................................... 100 14,255 0 2,414 2,237 

400 ....................................................................................... 100 14,255 100 2,414 2,170 

400 ....................................................................................... 100 14,255 300 2,414 2,037 

400 ....................................................................................... 100 14,255 495 2,414 1,907 

400 ....................................................................................... 300 14,234 100 2,427 2,170 

400 ....................................................................................... 300 14,234 300 2,427 2,037 

aAssumes for the purposes of these scenarios that supply of other non-ethanol advanced biofuel (heating oil, naphtha, etc.) is 25 mill gal, and 

that the cellulosic biofuel final standard for 2016 is 230 mill gal, of which 20 mill gal is ethanol and the remainder is primarily biogas. bBiomass-based diesel, conventional biodiesel, and total biodiesel are given as biodiesel-equivalent volumes, though some portion may be renewable diesel. Other categories are given as ethanol-equivalent volumes. Biodiesel-equivalent volumes can be converted to ethanol-equivalent 

volumes by multiplying by 1.5. cSome higher ethanol blend volume here represented as E85 may alternatively be E15 (1 gal of E85 could be replaced with 12.8 gallons of 

E15) dFor the range of total ethanol shown in this table, the nationwide pool-wide average ethanol content would range from 10.07% to 10.18%. 

The majority of gasoline will contain 10% ethanol, and some gasoline will contain higher levels of ethanol such as E15 or E85. In comparison, 

the pool-wide average ethanol content in 2014 and 2015 (projected) was 9.97% and 10.01%, respectively. When the increase in ethanol use is 

combined with substantial increases in non-ethanol renewable fuels, the 2016 volume requirements are significantly higher than both 2014 and 

2015. e Includes supply from both domestic producers as well as imports. 

The scenarios in the table above are 

not the only ways that the market could 

choose to meet the total renewable fuel 

and advanced biofuel volume 

requirements that we are finalizing 

today. Indeed, other combinations are 

possible, with volumes higher than the 

highest levels we have shown above or, 

in some cases, lower than the lowest 

levels we have shown. The scenarios 

above (and similar scenarios presented 

in the NPRM) cannot be treated as EPA’s 

views on the only, or even most likely, 

ways that the market may respond to the 

final volume requirements for 2016, 

contrary to the views of some 

stakeholders who commented on the 

NPRM. Instead, the scenarios are merely 

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143According to AEO2015, Table 42, total vehicle 

miles travelled by FFVs in 2016 will be about 

7.95% of all light-duty gasoline-powered vehicles, 

equivalent to about 10.9 bill gal of E10 or 13.9 bill 

gal of E85. 

144We acknowledge that the USDA program will 

increase the number of retail stations offering E15, 

potentially significantly. However, as described in 

Section II.E.2.iv, the impact on total ethanol supply 

in 2016 from increased use of E15 is likely to be 

considerably smaller than the impact on total 

ethanol supply from the use of E85. Thus some 

portion of the volumes of E85 shown in Table II.G– 

2 may instead be ethanol-equivalent volumes of 

E15. 

145 ‘‘Correlating E85 consumption volumes with 

E85 price,’’ memorandum from David Korotney to 

EPA Docket EPA–HQ–OAR–2015–0111. 

illustrative of the various ways that it 

could play out. Our purpose in 

generating the list of scenarios above is 

only to illustrate a range of possibilities 

which demonstrate that the standards 

we are finalizing today are achievable 

despite the considerable increases 

relative to 2015. 

Stakeholders who believed that the 

volume requirements we proposed in 

the NPRM were too high often described 

them as unprecedented or overly 

aggressive, implicitly treating the 

various legal and practical constraints to 

increased renewable fuel use as a barrier 

that cannot or should not be crossed. 

Some stakeholders said that any 

scenario in which a particular category 

of renewable fuel exceeded historical 

maximums or previously demonstrated 

production levels cannot be considered 

to be achievable. Based on this premise, 

such stakeholders dismissed all 

scenarios in the NPRM as being 

unachievable. 

As described earlier, while we 

acknowledge that constraints on growth 

in renewable fuel supply are real, we do 

not believe that they create absolute 

barriers to growth in renewable fuel 

supply. Instead, the current constraints 

on growth in supply mean that each 

additional supply increment is likely to 

be more difficult to achieve than 

previous increments, and likely require 

more time to overcome than past 

constraints. The market most certainly 

can and will respond to the standards 

that we set by increasing supply, as has 

been demonstrated on other occasions. 

Growth in the biofuels market is also the 

primary objective of the statute, as we 

acknowledge throughout this action. 

However, the market is not unlimited in 

its ability to respond, and for this reason 

we have found it necessary to reduce 

the required volumes below the 

statutory targets. 

The scenarios that we provided in the 

NPRM, and somewhat different 

scenarios presented above that reflect 

the final volume requirements, 

demonstrate that the market has various 

ways in which it could respond. The 

market can be expected to choose the 

lowest cost path to compliance for 2016, 

but some parties may choose paths that 

are intended to result in lower costs in 

the long term despite generating higher 

costs in the near term. For instance, 

regulated parties may respond to the 

standards we set with investments in 

production, distribution, and 

consumption infrastructure that is 

focused on longer term growth. 

All of the volume levels in the 

scenarios shown above are within reach 

of a responsive market, though they may 

not all be equally likely. Below we 

discuss several of them to demonstrate 

that the final volume requirements for 

2016 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 E85.143 However, since 

only about 2% of retail stations 

nationwide currently offer E85, only a 

minority of FFVs have easy access to 

E85. Under more favorable E85 pricing 

that could result from higher RIN prices, 

E85 sales volumes higher than those 

achieved in 2014 (about 150 million 

gallons) are certainly achievable. As 

described in Section II.E.2.iii we believe 

that 200 million gallons is the most 

likely maximum achievable volume of 

E85 in 2016. Even with some growth in 

the number of retail stations offering 

E85, however, E85 sales are unlikely to 

grow dramatically in 2016 due to the 

weak observed consumer response to 

E85 combined with the limited ability of 

the RIN mechanism under current 

conditions to reduce the retail price of 

E85 relative to E10 as described in 

Section II.E.2.ii. USDA’s Biofuels 

Infrastructure Partnership grant 

program, an important program to 

expand ethanol retail infrastructure, 

could increase the number of E85 retail 

stations by perhaps as much as 400 in 

2016 as discussed above, but such 

growth would still have a relatively 

small impact on total ethanol use.144 As 

described in Section II.E.2.iii, under 

highly favorable though much less 

likely conditions related to growth in 

the number of E85 retail stations, retail 

pricing, and consumer response to that 

pricing, it is possible that E85 volumes 

as high as 400 million gallons could be 

reached in 2016.145 Thus we have 

included scenarios in Table II.G–2 that 

include E85 volumes as high as 400 

million gallons. Higher volumes of E85 

sales in 2016 are very unlikely, but are 

possible if the market can overcome 

constraints associated with E85 pricing 

at retail and consumer responses to 

those prices. 

As Table II.G–2 illustrates, the final 

standards could result in the 

consumption of as much as 2.5 billion 

gallons of biodiesel and renewable 

diesel, representing an increase of more 

than 600 million gallons over the 

projected 2015 supply of all D4 and D6 

biodiesel and renewable diesel. While 

this would be a substantial increase, we 

believe that it is possible for the market 

to reach this level as discussed as in 

Section II.E.3. 2.5 billion gallons of 

biodiesel would represent about 4% of 

the nationwide pool of diesel fuel in 

2016. Most diesel fuel could contain 5% 

biodiesel while still allowing some 

diesel fuel to contain no biodiesel to 

accommodate areas of the country 

where the distribution infrastructure is 

not yet established, as well as that used 

in northern states during the coldest 

months of the year. Also, B20 could be 

used in a number of centrally-fueled 

fleets composed of newer engines 

without violating manufacturer 

warranties, and additional volumes of 

biodiesel could be used in heating oil. 

In light of these additional volumes, it 

is possible that 2.5 billion gallons could 

be supplied in 2016. 

We note that it would be 

inappropriate to construct a new 

scenario based on the highest volumes 

in each category that are shown in Table 

II.G–2 in order to argue for higher 

volume requirements than we are 

establishing today. Doing so would 

result in summing of values that we 

have determined are higher than the 

most likely maximum achievable 

volumes of the different fuel categories, 

resulting in a total volume that we 

believe would be extremely unlikely to 

be achievable. We have more confidence 

in the ability of the market to achieve 

18.11 billion gallons of total renewable 

fuel 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, 

biodiesel. Thus, for instance, while the 

highest biodiesel volume shown in 

Table II.G–2 is about 2.5 billion gallons, 

the market could choose a different 

level of total biodiesel and renewable 

diesel, offsetting the volumes with other 

fuels. The same is true for the highest 

level of E85 shown in Table II.G–2 of 

400 million gallons, or the highest level 

of sugarcane ethanol of about 500 

million gallons. In addition, the 

consumption of each fuel in Table II.G– 

2 is not independent of the 

consumption of the other fuels in the 

table. For example, greater domestic 

biodiesel production reduces the 

likelihood of large imports of biodiesel 

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146For the bank of carryover RINs to be preserved 

from one year to the next, individual carryover RINs 

are used for compliance before they expire and are 

essentially replaced with a newer vintage RIN that 

is then held for use in the next year. For example, 

if the volume of the RIN bank is unchanged from 

2013 to 2014, then all of the approximately 1.74 

billion vintage 2013 carryover RINs must be used 

for compliance in 2014, or they will expire. 

However, the same volume of 2014 RINs can then 

be ‘‘banked’’ for use in the next year. 

147As noted elsewhere, we do not believe that the 

collective bank of carryover RINs will be drawn 

down to achieve compliance with 2014, 2015, and 

2016 standards, since carryover RINs from one year 

will likely be rolled over into new carryover RINs 

for the next; we are describing here the size of the 

collective RIN bank, RINs that could theoretically 

be used for compliance purposes with 2014, 2015 

and 2016 standards, though we do not believe that 

they will be. 

148 ‘‘Estimating Carryover RINs Available for Use 

in 2014,’’ Dallas Burkholder, Office of 

Transportation and Air Quality, U.S. EPA. 

November 2015. EPA Air Docket EPA–HQ–OAR– 

2015–0111. 

because these two fuels compete against 

one another for access to feedstocks that 

can be used to make biodiesel in 2016 

and for available distribution 

infrastructure and market share. The 

probability that the upper limits of all 

sources shown in Table II.G–2 could be 

achieved simultaneously is extremely 

unlikely. 

As noted in the NPRM, the volume 

requirements that we are establishing 

today will likely result in RIN prices 

that are higher than historical levels. 

RIN price increases are an expected 

market response to a renewable fuel 

volume requirement that is higher than 

that in previous years and which is 

expected to require effort on the part of 

producers, distributors, blenders, and 

retailers to overcome constraints. While 

the RIN market mechanism provides 

incentives for the market to increase 

supply both in the near and long term, 

as stated earlier the RIN market 

mechanism is not without limitation, 

and the renewable fuel supply cannot be 

expected to increase proportionally at 

any RIN price. Particularly in the near 

term (specifically 2016), we do not 

believe that significantly higher RIN 

prices would likely compel the market 

to supply substantially higher volumes 

than we are finalizing today. 

H. Treatment of Carryover RINs 

We explained in the NPRM that we 

cannot precisely assess the volume of 

carryover RINs available for use in 

complying with the 2014, 2015, and 

2016 standards, but that we estimated 

that approximately 1.8 billion would 

remain after compliance with the 2013 

RFS standards. We proposed that the 

current bank of carryover RINs should 

be preserved as a compliance ‘‘buffer’’ 

and not intentionally drawn down by 

setting volume requirements at a level 

that is higher than can be satisfied 

through the production and use of 

physical gallons of fuel.146 Many 

stakeholders provided comment on the 

topic of how EPA should consider 

carryover RINs as part of the standardsetting process. After considering these 

comments, we have decided for this 

rulemaking to treat carryover RINs in 

the manner proposed and not establish 

volume requirements that would be 

expected to require obligated parties to 

draw down the current bank of 

carryover RINs so as to achieve 

compliance. 

1. Summary of Public Comments 

Comments on this issue generally 

expressed two opposing points of view. 

Many commenters, including many 

obligated parties, contended that EPA 

should not assume a draw-down in the 

bank of carryover RINs in determining 

the appropriate level of volume 

requirements. On the other hand, other 

commenters including many renewable 

fuel providers urged EPA to rely on 

carryover RINs to push the standards 

higher than the levels of projected 

physical volumes and so minimize the 

extent to which statutory applicable 

volumes are reduced. 

Representatives of obligated parties 

were nearly uniform in supporting 

EPA’s proposal to not assume a drawdown in the current bank of carryover 

RINs in setting the 2014, 2015, and 2016 

advanced biofuel and total renewable 

fuel standards. Virtually all of these 

commenters agreed that maintaining the 

bank of carryover RIN would provide 

them with needed compliance 

flexibility to address unforeseen events 

such as operational problems, market 

dislocations, supply limitations, or 

fraudulent RINs. Several commenters 

noted that if EPA were to rely on the use 

of carryover RINs to push for higher 

standards than reflected by actual 

renewable fuel supply, it would remove 

a flexibility that Congress had intended 

for obligated parties. Several 

commenters also noted that obligated 

parties vary in their ability to acquire 

RINs, with the result being that some 

obligated parties have a substantial 

number of carryover RINs, while others 

have few or none. They argued that 

setting the volume requirements with 

the expectation that all or a substantial 

number of carryover RINs would be 

used would make compliance even 

more difficult than it would otherwise 

be for those who must rely largely or 

totally on RIN purchases rather than on 

acquiring RINs through blending 

activities. Several commenters also 

argued that maintaining the bank of 

carryover RINs allows for better market 

trading liquidity and a cushion against 

future program uncertainty. They noted 

the importance of a relatively stable, 

liquid RIN market for achieving 

compliance with volume requirements, 

particularly where new and expanded 

avenues of supply are still being 

developed and built. In their view, 

carryover RINs have been important to 

maintaining a functioning market, and 

they cautioned EPA against reducing 

that pool at all or too much and thereby 

risking severe market disruption in the 

event of a drought or other unforeseen 

difficulties. 

Commenters from the renewable fuel 

industry, on the other hand, urged EPA 

to assume a draw-down in the bank of 

carryover RINs in determining whether 

and to what extent to waive statutory 

volumes. They noted that EPA 

considered the availability of carryover 

RINs in previous decisions not to waive 

statutory volumes, and argued that 

EPA’s proposed approach was 

inconsistent with this past practice. 

They pointed out that in order to 

comply with the statute’s purpose to 

encourage growth in the use of 

renewable fuel in the transportation fuel 

supply, carryover RINs should be 

considered available for minimizing the 

extent to which statutory volume 

requirements are reduced. Some of these 

commenters further argued that the 

carryover RINs clearly are part of the 

renewable fuel ‘‘supply’’ available for 

compliance purposes, and therefore 

EPA must count them in determining 

whether there is an ‘‘inadequate 

domestic supply’’ for purposes of 

justifying use of the general waiver 

authority. 

2. Updated Projection of Carryover RIN 

Volume 

In the NPRM, EPA assessed the size 

of the RIN bank at approximately 1.8 

billion carryover RINs. However, we 

have updated our assessment, and now 

believe that 1.74 billion is the maximum 

that might be available for possible use 

in complying with the standards for 

2014, 2015 and 2016.147 There is 

considerable uncertainty surrounding 

this number since there has not been a 

compliance demonstration since 2013 

(for the 2012 RFS standards). As 

described in a memorandum to the 

docket, the 1.74 billion carryover RIN 

maximum value will effectively be 

reduced to an uncertain degree to satisfy 

deficit carry-forwards from 2012.148 In 

addition, there have been enforcement 

actions in past years that have resulted 

in the retirement of RINs that were 

fraudulently generated and were 

therefore invalid, and parties who relied 

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149 72 FR 23900, May 1, 2007. 150See CAA section 211(o)(5)(D). 

on those invalid RINs for compliance 

were required to acquire valid 

substitutes to true up their past 

compliance demonstrations. Future 

enforcement actions could have similar 

results, and require that obligated 

parties settle past enforcement-related 

obligations in addition to the 2014–2016 

standards, thereby creating greater 

demand for RINs than what EPA has 

determined represents the maximum 

reasonably achievable in this time 

period. The result of such enforcement 

actions, therefore, could be an effective 

reduction in the size of the collective 

bank of carryover RINs to a level further 

below 1.74 billion RINs. 

3. EPA’s Decision and Response to 

Comments 

EPA has decided to maintain the 

proposed approach, and not set the 

volume requirements in the final rule 

with the intention or expectation of 

drawing down the current bank of 

carryover RINs. While we have not 

assumed an intentional drawdown in 

the overall bank of carryover RINs 

owned by obligated parties collectively 

in establishing the volume standards for 

2014, 2015, and 2016, we understand 

that some obligated parties may choose 

to sell or use all or part of their 

individual banks of carryover RINs 

during this time period. To the extent 

that they do so, other obligated parties 

would be in a position to bank carryover 

RINs by using available renewable fuel 

or purchasing RINs representing such 

fuel, with the expected net result being 

no effective change in the size of the 

overall bank of carryover RINs that is 

owned collectively by obligated parties. 

In finalizing this approach, we 

carefully considered the many 

comments received, including on the 

role of carryover RINs under our waiver 

authorities and the policy implications 

of our decision. Our responses to major 

comments are summarized here, with 

additional detailed responses in the 

Response to Comments document in the 

docket. 

i. Importance of Carryover RINs 

We agree with the many commenters 

who noted the importance of carryover 

RINs to individual compliance 

flexibility and operability of the 

program as whole. We believe that 

carryover RINs are extremely important 

in providing obligated parties 

compliance flexibility in the face of 

substantial uncertainties in the 

transportation fuel marketplace, and in 

providing a liquid and well-functioning 

RIN market upon which success of the 

entire program depends. As described in 

the 2007 rulemaking establishing the 

RFS regulatory program,149 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. Commenters have drawn 

our attention to operational problems, 

market dislocations, and fraudulent 

RINs as other types of unforeseen 

circumstances for which the availability 

of carryover RINs is important. 

Obligated parties make individual 

decisions about whether and how many 

RINs to acquire for their compliance 

management purposes, and a decision 

by EPA to effectively require the ‘‘draw 

down’’ of all or a substantial volume of 

individual carryover RIN banks by 

setting higher future volume 

requirements than can be satisfied with 

actual renewable fuel use would 

decrease their compliance options and 

increase their risk of noncompliance. 

An intentional drawdown of the 

carryover RIN bank under current 

circumstances would likely have longterm effects on the RFS program, as 

increasing standards are expected to 

make compliance more challenging and 

reduce the ability to generate new 

carryover RINs. 

An adequate RIN bank also serves to 

make the RIN market liquid and to 

avoid the possible need for frequent 

standards adjustments. Just as the 

economy as a whole functions best 

when individuals and businesses 

prudently plan for unforeseen events by 

maintaining inventories and reserve 

money accounts, we believe that the 

RFS program will not function properly 

unless sufficient carryover RINs are held 

in reserve for potential use by the RIN 

holders themselves, or for possible sale 

to others that may not have established 

their own carryover RIN reserves. Were 

there to be no RINs in reserve, then even 

minor disruptions causing shortfalls in 

renewable fuel production or 

distribution, or higher than expected 

transportation fuel demand (requiring 

greater volumes of renewable fuel to 

comply with the percentage standards 

that apply to all volumes of 

transportation fuel, including the 

unexpected volumes) could lead to the 

need for a new waiver of the standards, 

undermining the market certainty so 

critical to the long term success of the 

RFS program. Furthermore, many 

obligated parties lack the ability to 

generate certain types of RINs. With a 

functioning liquid RIN market this is 

not a problem because we expect that 

these obligated parties will be able to 

comply by securing these RINs on the 

open market. However, a significant 

drawdown of the carryover RIN bank 

leading to a scarcity of RINs may stop 

the market from functioning in an 

efficient manner, even where the market 

overall could satisfy the standards. For 

all of these reasons, the collective 

carryover RIN bank provides a needed 

programmatic buffer that both facilitates 

individual compliance and provides for 

smooth overall functioning of the 

program. (Here and elsewhere we use 

the term ‘‘buffer’’ as shorthand reference 

to all of the benefits that are provided 

by a sufficient bank of carryover RINs.) 

The importance of carryover RINs to 

the RFS program and to obligated 

parties can be illustrated by comparing 

them to either currency or inventory, as 

they can be seen as functioning in both 

roles in the RFS program. First, 

carryover RINs, like all RINs, are a form 

of ‘‘currency’’ that can be traded and 

that ultimately are used to settle 

compliance accounts at the close of each 

RFS compliance year. Individual banks 

of carryover RINs can be analogized to 

a typical individual bank account in 

which money is deposited and 

withdrawn. It is commonly understood 

that in managing both personal and 

business finances, that a reserve fund 

should be maintained to cover 

unforeseen circumstances. Thus, it is 

generally considered unwise to budget 

spending every dollar that is earned in 

a paycheck, since unforeseen events 

such as illness, injury, or a downturn in 

business could impact future earnings, 

and it is prudent to assume that such an 

event will occur in the future and to 

plan for them. This type of planning is 

particularly important in situations 

where credit is either unavailable or 

restricted, since in such circumstances 

there may be very limited alternatives to 

a reserve account. The RFS compliance 

system is structured to provide only 

limited ‘‘credit’’ for compliance 

obligations. Parties may defer 

compliance for one calendar year, but 

are required to pay back the deficit in 

the next compliance year while also 

meeting the next year’s requirements.150

Parties may also seek forgiveness of 

their RFS debt by petitioning EPA 

pursuant to CAA section 211(o)(7)(A) 

for a waiver to account for ‘‘inadequate 

domestic supply’’ or severe economic or 

environmental harm, but there is no 

guarantee that such waivers will be 

provided, or that they will be granted in 

time to provide the relief needed, and 

since such waivers are only available to 

address widespread concerns. They are 

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77484 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

151For example, the marketwide carryover 

inventory of corn from one crop year to the next is 

roughly 9–10% of annual harvest. EIA. ‘‘Weekly 

U.S. Ending Stocks of Fuel Ethanol.’’ October 21, 

2015 (available at http://www.eia.gov/dnav/pet/

hist/LeafHandler.ashx?n=PET&s=W_EPOOXE_

SAE_NUS_MBBL&f=W); EIA. ‘‘Weekly U.S. 

Oxygenate Plant Production of Fuel Ethanol.’’ 

October 21, 2015 (available at http://www.eia.gov/ 

dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_

EPOOXE_YOP_NUS_MBBLD&f=W). Similarly, the 

average amount of ethanol in inventory at any given 

time is approximately 5–6% of annual production. 

USDA. ‘‘Grain Stocks.’’ September 30, 2015 

(available at http://usda.mannlib.cornell.edu/usda/ 

current/GraiStoc/GraiStoc-09-30-2015.pdf); USDA. 

‘‘Crop Production Annual Summary.’’ January 12, 

2015 (available at http://usda.mannlib.cornell.edu/ 

usda/current/CropProdSu/CropProdSu-01-12-2015_

revision.pdf). 

not likely to be available to address 

individual circumstances. Thus, we 

believe that there are very good reasons 

for the program to allow for the market 

as a whole to have a reasonable number 

of carryover RINs available, and there 

are incentives for individual parties to 

seek to establish and retain a reserve 

bank of carryover RINs that can be used 

to address expected market downturns 

as well as unforeseen circumstances that 

may hinder or prevent compliance. 

Furthermore, just as the economy as a 

whole is stronger and more resilient 

when many individuals have significant 

monetary savings, we believe the RFS 

program, too, is stronger and more 

resilient to market swings and 

unforeseen events when obligated 

parties, collectively, have a sufficient 

bank of carryover RINs. Excessive 

savings are generally not positive for an 

economy, since they suggest that 

investments in future growth are not 

being made; however, insufficient 

savings run the risk of a market collapse 

in the face of economic downturns. An 

appropriate amount of savings is the 

desired goal. In our judgement, 

maintaining the current volume of 

carryover RINs will provide an 

appropriate collective savings account 

for the RFS program to provide benefits 

similar to desired collective savings in 

the economy. 

We also believe the carryover RIN 

bank for the RFS program can be 

analogized to the working inventory that 

any business needs to operate. In the 

case of businesses, these are the raw 

materials, parts, or cash on hand needed 

to keep production going for the next 

day, the next week, or the next several 

months until new supplies can be 

delivered during normal operations and 

to allow for potential disruptions in 

supply of necessary materials. Failure to 

maintain an adequate working inventory 

of supplies could shut down operations, 

cause contracts to go unfulfilled, and 

create a lack of confidence in the 

business by would-be purchasers of 

their products that could ultimately lead 

to business failure. This is why 

successful businesses maintain 

inventories of supplies that they will 

need to maintain continuous 

production, and to account for 

unexpected disruptions in supply.151

This phenomenon, known as 

convenience yield, is also why they 

typically maintain multiple sources of 

supply, rather than relying on just one. 

Maintaining an inventory and 

alternative sources is particularly 

important in situations where product 

supply is limited, unreliable, or 

uncertain, since the inventory allows 

continued operations despite these 

circumstances. While in theory the 

working inventories can be drawn 

down, and might need to be when 

circumstances dictate, these working 

inventories are not drawn down in the 

course of normal business operations 

and instead are maintained year after 

year to serve their intended purpose. We 

believe we are in this same situation for 

the existing bank of carryover RINs. 

Although the RFS program is structured 

such that compliance with the 

percentage standards is determined on 

an annual average (rather than a pergallon) basis, it is nevertheless logical 

and prudent for obligated parties to 

view RINs as an essential ingredient of 

their product, and to attempt to match 

their RIN holdings to production 

volumes on an ongoing basis. The 

availability of carryover RINs can help 

provide needed assurance to obligated 

parties during the compliance year that 

they will eventually be able to comply 

with the RFS standards, while still 

planning to do so through the 

acquisition of current-year RINs. While 

individual obligated parties may not 

have a bank of carryover RINs at 

present, the access to carryover RINs in 

the marketplace from other sources can 

serve the same function. 

ii. Role of Carryover RINs Under the 

Waiver Authorities 

Some commenters disagreed with the 

proposed approach, suggesting that 

carryover RINs must be considered as 

part of ‘‘supply’’ in determining if there 

is an ‘‘inadequate domestic supply’’ 

justifying a waiver pursuant to CAA 

section 211(o)(7)(A). We disagree with 

these comments. As noted in Section 

II.B., the term ‘‘inadequate domestic 

supply’’ is not defined in the statute. 

Similarly, CAA section 211(o)(5), which 

provides the statutory basis for the 

carryover RIN regulatory provisions, 

requires that EPA establish a credit 

program as part of its RFS regulations, 

and that the credits be valid to show 

compliance for 12 months as of the date 

of generation, but is silent on the 

relationship of these credits to the 

‘‘inadequate domestic supply’’ reference 

in section 211(o)(7)(A). Therefore, EPA 

finds no guidance in the text of these 

key statutory provisions on whether or 

not carryover RINs should be deemed 

part of the ‘‘supply’’ referenced in CAA 

section 211(o)(7)(A). In light of the 

statute’s silence on this matter, it is 

appropriate for EPA to interpret the 

term so as to best fulfill the statute’s 

objectives, including the general 

objective that the program runs 

efficiently. 

We believe that the word ‘‘supply’’ in 

the phrase ‘‘inadequate domestic 

supply’’ can logically be read to refer 

only to actual renewable fuel (and not 

carryover RINs), since the focus of the 

entire RFS program is on increasing the 

amount of renewable fuel used in the 

transportation sector. Commenters 

suggested that the word ‘‘supply’’ could 

perhaps be interpreted to include both 

renewable fuel and carryover RINs on 

the grounds that all such RINs can be 

used for compliance purposes. 

However, it is clear that the result of 

this latter interpretation would be a 

complete drawdown in the collective 

bank of carryover RINs in a relatively 

short time period. In any year where 

actual renewable fuel supply was below 

the statutory levels and there was a 

balance of carryover RINs, reducing if 

not eliminating that balance would be a 

condition of exercising the general 

waiver authority. Because we firmly 

believe that maintaining a significant 

bank of carryover RINs provides a 

substantial benefit to the RFS program, 

as described above, in our judgment it 

best serves the interests of the program 

to interpret the term ‘‘supply’’ in the 

term ‘‘inadequate domestic supply’’ to 

include only actual renewable fuel, and 

not carryover RINs. 

Although we do not believe that 

carryover RINs should be considered as 

part of the ‘‘supply’’ of renewable fuel 

in the context of a finding of 

‘‘inadequate domestic supply’’ under 

the general waiver authority, we do 

believe that the availability of carryover 

RINs is an important factor for EPA to 

consider in determining whether or not 

to use the general waiver authority, just 

as it is when EPA considers using its 

cellulosic waiver authority (as upheld in 

the Monroe case). Thus, while we do not 

take carryover RINs into consideration 

in determining whether we can exercise 

the general waiver authority, we do take 

them into consideration in determining 

whether we should exercise either the 

general waiver authority or the 

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152 In some years, the situation could fall between 

these extremes, where EPA may exercise its 

discretion in a manner that assumes a somewhat 

enlarged bank of carryover RINs would be drawn 

down to a limited degree. 

153 Monroe at 12. The court also quoted with 

approval EPA’s explanation that ‘‘carryover RINs 

are a valid compliance mechanism’’ and a means 

for obligated parties to ‘‘protect [] against any 

potential supply shortfalls that could limit the 

availability of RINs.’’ Id. (emphasis added by the 

court). 

154At the same time, as discussed elsewhere in 

this section, we do not agree with commenters who 

view our past actions as requiring that we always 

rely on the availability of carryover RINs as 

justification for avoiding waivers. 

155See 77 FR 70752, 70759 (November 27, 2012). 

156See 78 FR 49821 (August 15, 2013). 

157As noted earlier, stocks of ethanol have 

averaged approximately 5–6 percent of annual 

production, and corn stocks, which vary by season, 

have rarely fallen below 9–10 percent of the annual 

harvest. 

cellulosic waiver authority. The exercise 

of these waiver authorities is 

discretionary and with an 

overabundance of carryover RINs, EPA 

could decide not to waive the statutory 

volume targets, even where the supply 

of actual renewable fuel may be 

inadequate to allow compliance, since 

the carryover RINs would allow 

compliance and a drawdown in the 

carryover RIN bank would not result in 

a loss of the important ‘‘buffer’’ function 

provided by a sufficient bank of 

carryover RINs. However, when the size 

of the bank of carryover RINs is limited, 

EPA could reasonably decide to exercise 

its waiver authorities to match the RFS 

requirements to the volume of the 

renewable fuel supply in the year in 

question, with the intention of 

preserving the limited bank of carryover 

RINs for the overall benefit of the 

program.152 That is the present 

situation; in light of the projected 

limited size of the current bank of 

carryover RINs, we have determined 

that the volume requirements for total 

renewable fuel should be set at the level 

of projected supply of renewable fuels, 

and not at higher levels that would be 

expected to require a drawdown in the 

overall bank of carryover RINs. 

Similarly, in exercising the cellulosic 

waiver authority, we are not setting the 

volume requirements for advanced 

biofuel with the intention or expectation 

of requiring a draw-down in the bank of 

carryover RINs. We believe that 

preserving the current collective bank of 

carryover RINs is appropriate to provide 

a program buffer that facilitates the 

effective operation of the RFS program, 

and that a draw-down of this collective 

bank of carryover RINs should be 

avoided in setting the volume 

requirements for 2014–2016. 

We do not agree with those 

commenters who asserted that carryover 

RINs may never be a consideration in 

determining whether and by how much 

to reduce statutory volume 

requirements. In evaluating EPA’s 

decision not to use the cellulosic waiver 

authority in 2013 to reduce advanced 

and total renewable fuel volumes, the 

D.C. Circuit in Monroe ruled that EPA 

reasonably concluded that the 

availability of carryover RINs was 

‘‘certainly relevant’’ to its decision.153

We also considered the availability of 

carryover RINs in our decision not to 

exercise the general waiver authority in 

responding to petitions seeking a waiver 

of RFS requirements based on the 2012 

drought.154

Similarly, were EPA to receive a 

request to waive already-established 

standards during the compliance year, 

we believe that it would be appropriate 

for EPA to take into consideration the 

substantially different context involved. 

Although the situation is not presently 

before us, we believe that there could be 

a strong case for avoiding granting a 

waiver during the course of a 

compliance year if a waiver can be 

avoided through the use of carryover 

RINs. We would need to consider in that 

context whether it would be appropriate 

to revise an established standard in the 

midst of the compliance year if there is 

a compliance mechanism available to 

avert that result. Indeed, EPA believes 

that one benefit of preserving carryover 

RINs when setting standards in the first 

instance, is precisely so that they may 

be available to address unforeseen 

circumstances such as a downturn in 

wet gallon supply during the 

compliance year. EPA will evaluate all 

such actions on a case-by-case basis. 

iii. Extent to Which the Current Bank of 

Carryover RINs Could Be Drawn Down 

Without Compromising the Beneficial 

Buffer They Provide 

As discussed above, we believe that 

an appropriate bank of carryover RINs 

serves an important program function, 

but we also believe that in 

circumstances where there is an 

overabundance of carryover RINs, that 

EPA can and should consider their 

availability as a possible approach to 

avoid or minimize waivers of the 

statutory volume targets. In establishing 

the RFS regulatory program, we 

considered both the beneficial program 

impacts of carryover RINs (e.g., 

compliance flexibility, liquidity in the 

RIN trading market, etc.) and the 

potential that a substantial volume of 

carryover RINs could undermine the 

legitimate need of biofuel producers for 

assurance that the products they 

produce will actually be sold and used 

during a given compliance year, which 

could occur if obligated parties 

preferentially satisfy their obligations 

with carryover RINs. Balancing these 

considerations, and taking into account 

the statutory provision that credits 

should only be valid to show 

compliance for 12 months after the date 

of generation, EPA specified by 

regulation that obligated parties may 

only satisfy 20 percent of their RVO in 

a given year with carryover RINs. This 

20 percent value therefore sets a cap on 

the possible use of carryover RINs that 

increases in absolute terms over time as 

the volume of renewable fuel required 

through the RFS program grows. In the 

initial years of the RFS program, 

obligated parties were able to steadily 

build up an inventory of carryover RINs, 

as market demand for ethanol exceeded 

the RFS standards. However the 

absolute size of the carryover RIN bank 

has been decreasing in recent years, as 

compliance requirements have become 

more challenging, and the ability to 

over-comply and create carryover RINs 

has become increasingly difficult. 

For example, we estimated that 3.5 

billion excess RINs were generated in 

2011—almost 500 million more than the 

3.02 billion carryover RINs that could be 

used in 2012 as a result of the 20 

percent cap.155 For 2013, we estimated 

that 2.67 billion 2012 carryover RINs 

were available for compliance.156 This 

represented 16 percent of that year’s 

16.55 billion gallon total renewable fuel 

applicable volume. After compliance 

with the 2013 standards, we estimate 

that the carryover RIN bank will include 

at most 1.74 billion RINs and probably 

something less than that as discussed 

above. If we use the availability of 

carryover RINs as a basis for setting the 

standards for 2014 and 2015 to the 

statutory volumes as some commenters 

suggest, instead of setting them at actual 

renewable fuel supply, then, assuming 

we entered the 2014 compliance year 

with 1.74 billion carryover RINs, the 

amount of carryover RINs available for 

2016 would only be on the order of 0.1 

billion RINs, insufficient to maintain the 

statutory volumes for 2016 and 

insufficient to provide the benefits of a 

program buffer as described in this 

section. If instead we do not require a 

drawdown in 2014 and 2015, then 

potentially 1.74 billion carryover RINs 

would still be available for 2016, 

representing just 8 percent of the 

statutory volume of 22.25 billion gallons 

and 10 percent of the 18.1 billion gallon 

total renewable volume requirement 

finalized today.157 We believe that we 

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77486 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

158Although EPA has set the volume 

requirements for total renewable fuel in today’s rule 

based on a determination of volumes we believe 

represent the maximum levels that are reasonably 

achievable, we acknowledge that this determination 

is difficult, and that it involves a considerable 

amount of judgement. If EPA has erred in assuming 

too much is possible, the collective bank of 

carryover RINs would be available to obligated 

parties to facilitate compliance. This can be seen as 

an additional potential benefit of retaining an 

adequate bank of carryover RINs. 

159See Figure III.D.1–1. 160See ‘‘A Preliminary Assessment of RIN Market 

Dynamics, RIN Prices, and Their Effects,’’ Dallas 

Burkholder, Office of Transportation and Air 

Quality, U.S. EPA. May 14, 2015, EPA Air Docket 

EPA–HQ–OAR–2015–0111. 

161See Section III.B of this preamble. 

162We recognize that carryover RINs are held 

unevenly and that discussion of the collective 

behavior of obligated parties in the face of the 2013 

RFS mandates greatly oversimplifies the dynamics 

likely at work. Nevertheless, we believe the 

experience provides useful information regarding 

market response as a whole to a situation with both 

ambitious RFS requirements and significant 

availability of carryover RINs. 

should not intentionally set the RFS 

standards for 2014–2016 so as to 

intentionally draw down this bank of 

carryover RINs.158 This is not 

inconsistent with prior decisions, as 

some commenters have argued, since 

the bank of carryover RINs is 

substantially less, both in absolute 

numbers and as a percentage of the 

applicable standards, than was the case 

in prior actions when we noted the 

availability of carryover RINs as a factor 

in deciding not to waive statutory 

volume targets. We recognize that the 

volume of carryover RINs that should be 

preserved for programmatic purposes is 

not given to a precise determination, 

and is largely a matter of judgement. At 

this time, given the information 

presently available to us, we believe it 

best not to set the RFS standards for 

2014–2016 so as to intentionally draw 

down the current carryover RIN bank in 

whole or in part. We expect to evaluate 

this issue each year in our annual 

standards rulemakings, and to learn 

from experience in implementing the 

program, particularly once compliance 

for 2013, 2014, 2015, and 2016 has been 

established. 

iv. Whether Carryover RINs Will Be 

Used To Avoid Needed Investments 

Some commenters felt that the 

availability of carryover RINs could 

result in obligated parties complying 

through retirement of carryover RINs 

rather than investing in infrastructure or 

other long-term efforts to increase 

biofuel supply. As noted above, we 

recognize the potential that too large a 

volume of carryover RINs could 

undermine the legitimate need of 

biofuel producers for assurance that the 

products they produce will actually be 

sold and used during a given 

compliance year, but we believe the 

current size of the carryover RIN bank 

is not sufficiently large to result in such 

problems. While we recognize that 

individual obligated parties may choose 

to comply in part through retiring 

carryover RINs (up to the 20 percent 

cap), we believe that, considering the 

importance of carryover RINs in 

providing compliance flexibility, 

obligated parties as a whole are unlikely 

to deplete the collective bank of 

carryover RINs simply to delay making 

investments in new infrastructure to 

increase the production and distribution 

of renewable fuel. Our thesis is 

supported by empirical evidence from 

2013. 

EPA acknowledged in setting the 2013 

standards that 14.5 billion gallons of 

ethanol would be needed to meet the 

total statutory renewable fuel volume of 

16.55 billion gallons, assuming that no 

biomass-based diesel was produced 

above the 1.28 billion gallons required 

by the biomass-based diesel standard. 

We also determined that 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 

biomass-based diesel production in 

excess of the biomass-based diesel 

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, 

since there were multiple approaches to 

compliance available in the 

marketplace. Following signature of the 

final rule, there was a dramatic increase 

in RIN prices, as parties bid them up in 

an attempt to acquire sufficient RINs for 

compliance.159 We believe in general 

that high RIN prices provide an 

incentive to the renewable fuels market 

to increase renewable fuel production 

and import, as well as an incentive to 

invest in the infrastructure necessary to 

enable higher volumes of renewable 

fuels to be consumed.160 This appears to 

have occurred in 2013, notwithstanding 

the availability of carryover RINs. For 

example, E85 sales volumes increased 

significantly relative to previous years, 

although due to infrastructure 

limitations the increase in E85 

consumption was still relatively small 

in absolute terms. Instead, the market 

turned to biodiesel and renewable 

diesel; these fuels were used at record 

levels, far exceeding the biomass-based 

diesel standard, and even exceeding the 

volumes required to satisfy the 

advanced biofuel standard.161 Excess 

biodiesel was used to fulfill a 

substantial portion of the shortfall in 

conventional biofuel necessary to meet 

the total renewable fuel standard. Not 

only did RIN prices spike, but they also 

all converged to the RIN prices for D4 

BBD, indicating that obligated parties 

were willing to pay advanced biofuel 

and BBD prices for as many RINs as 

could be supplied rather than rely on 

carryover D6 RINs. Had obligated 

parties collectively acted in 2013 so as 

to delay the investments necessary to 

expand the infrastructure to produce 

and consume additional volumes of 

biofuel they would have blended 

ethanol as E10, blended the minimum 

biodiesel volume required to meet the 

BBD and advanced biofuel standards, 

and used carryover RINs to satisfy the 

balance of their obligations. Although 

we estimate that 800 million carryover 

RINs will ultimately be used for 2013 

compliance, this is far short of the 1.4 

billion RINs that could have been used 

had obligated parties placed little value 

on their retention and collectively 

drawn them down as an alternative to 

investing in the biofuel supply.162 We 

believe the experience in 2013 supports 

our assessment that obligated parties as 

a whole are unlikely to draw down the 

current bank of carryover RINs (which 

is substantially smaller than it was in 

2013) as an alternative to buying RINs 

representing current-year production. 

v. Response to Other Comments 

Some parties argued that we should 

not assume a draw-down in the bank of 

carryover RINs in setting the total 

renewable fuel volume requirements 

because obligated parties vary in their 

ability to acquire RINs, with the result 

being that some obligated parties have a 

substantial number of carryover RINs, 

while others have few or none. They 

argued that setting the volume 

requirements with the expectation that 

all or a substantial number of carryover 

RINs would be used would make 

compliance even more difficult than it 

would otherwise be for those who must 

rely largely or totally on RIN purchases 

rather than on acquiring RINs through 

blending activities. We acknowledge 

this argument and believe that our 

approach will make the RIN market 

more fluid and facilitate compliance by 

parties that choose to comply with RFS 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77487 

163Because the 2015 proposal was out part way 

through the year, it is possible that market 

participants anticipated standards at least as high 

as those proposed. 

requirements by purchasing separated 

RINs. 

Some parties argued that setting the 

annual standards so as to intentionally 

draw down the carryover RIN bank 

would likely raise RIN prices to a higher 

degree than the proposed approach and 

provide increased incentive for 

expansion of production and delivery 

infrastructure of renewable fuels. While 

we acknowledge that higher RIN prices 

would likely occur from the suggested 

approach, we do not believe, for the 

reasons set forth in section II.E of this 

preamble, that there is an unlimited 

ability for higher RIN prices to result in 

increased biofuel supply. We believe we 

have set the total renewable fuel volume 

requirements today at the maximum 

reasonably achievable levels, taking into 

account the ability of the market to 

respond to higher standards. 

Furthermore, even if the commenter 

were correct, any benefits associated 

with increased biofuel supply in the 

short term would need to be balanced 

against the harmful effects of depletion 

of the bank of carryover RINs and 

instability of the RIN market it would 

cause. Given the importance we place 

on an adequate RIN bank to provide a 

needed compliance buffer, as discussed 

above, we do not choose to exercise our 

discretion under the general waiver 

authority to set volumes that require 

depletion of the bank of carryover RINs. 

Some parties argued that our 

approach to carryover RINs in this rule 

is inconsistent with past practice, and 

therefore arbitrary. We disagree. While 

it is true that a consideration of the 

availability of carryover RINs factored 

into our decisions not to exercise 

statutory waiver authorities in the rule 

establishing 2013 RFS standards (where 

the issue arose in the context of 

deciding whether to use the cellulosic 

waiver authority), and in our decision to 

deny waiver requests based on the 2012 

drought (where we considered whether 

to exercise the general waiver authority 

on the basis of claims of severe harm to 

the economy), the factual backgrounds 

for those decisions were vastly different 

than the situation today. In those cases 

there was an overabundance of 

carryover RINs. As noted above, the size 

of the carryover RIN bank is currently 

substantially lower, both in absolute 

terms and as a percentage of the 2016 

total renewable fuel volume 

requirement finalized today. 

Furthermore, the program is currently 

facing very considerable challenges that 

will require new and relatively costly 

approaches to increasing renewable fuel 

supplies; we believe, therefore, that the 

need for a programmatic buffer is even 

more critical under current 

circumstances than in the past. 

4. Summary 

For all of these reasons, we have 

determined that under current 

circumstances, carryover RINs should 

not be counted on to avoid or minimize 

the need to reduce the 2014, 2015, and 

2016 statutory volume targets. However, 

we note that we may or may not take a 

similar approach in future years; we 

will assess the situation on a case-bycase basis going forward, and take into 

account any lessons learned from 

implementing the rules applicable to 

2014, 2015 and 2016. 

I. Impacts of Final Standards on Costs 

In this section we provide illustrative 

cost estimates for the final standards. By 

‘‘illustrative costs,’’ EPA means that the 

cost estimates provided are not meant to 

be precise measures, nor do they 

attempt to capture the full impacts of 

the rule. These estimates are provided 

solely for the purpose of showing how 

the cost to produce a gallon of a 

‘‘representative’’ renewable fuel 

compares to the cost of petroleum fuel. 

There are a significant number of 

caveats that must be considered when 

interpreting these cost estimates. First, 

as discussed by commenters, there are a 

number of different feedstocks that 

could be used to produce advanced 

fuels, and there is a significant amount 

of heterogeneity in the costs associated 

with these different feedstocks and 

fuels. Some fuels may be cost 

competitive with the petroleum fuel 

they replace; however we do not have 

cost data on every type of feedstock and 

every type of fuel. Therefore, we do not 

attempt to capture this range of 

potential costs in our illustrative 

estimates. 

Second, given time constraints 

associated with providing estimates for 

several annual standards in this rule, 

EPA did not quantitatively assess other 

direct and indirect costs or benefits of 

increased biofuel volumes such as 

infrastructure costs, investment, GHG 

reduction benefits, air quality impacts, 

or energy security benefits, which all are 

to some degree affected by the rule. 

While some of these impacts were 

analyzed in the 2010 final rulemaking 

which established the current RFS 

program, we have not fully analyzed 

these impacts for the 2014, 2015, and 

2016 volume requirements being 

established today. We have framed the 

analyses we have performed for this 

final rule as ‘‘illustrative’’ so as not to 

give the impression of comprehensive 

estimates. 

Third, a number of different scenarios 

could be considered the ‘‘baseline’’ for 

the assessment of the costs of this rule. 

One scenario would be the statutory 

volumes in which case this final rule 

would be reducing volumes, and 

reducing costs. For the purposes of 

showing illustrative overall costs of this 

rulemaking, we use the preceding year’s 

standard as the baseline (e.g., the 

baseline for the 2016 advanced standard 

is the final 2015 advanced standard, 

etc.), an approach consistent with past 

practices. 

Fourth, the 2014 standards were not 

finalized prior to 2014 so it is difficult 

to estimate what their costs may have 

been. Market participants may have 

anticipated a higher final 2014 standard 

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 final 

2014 standards represent reductions in 

both the advanced and conventional 

volumes compared to the 2013 

standards, suggesting a reduction in 

costs for this final 2014 rule compared 

to the 2013 standards. Finally, the final 

2014 standards are based on actual 

production levels in 2014, possibly 

suggesting that the 2014 standards we 

are finalizing are what would have 

happened in the marketplace absent a 

rulemaking. Viewed in this way, the 

standards would impose no cost. Given 

the complexity of this issue, we have 

not attempted to estimate the costs of 

the 2014 standards. This issue 

associated with estimating costs for the 

2014 standards also arises with the 2015 

standards to a degree. The final 

standards for 2015 are being set late in 

the 2015 calendar year, so it is not clear 

how much extra renewable fuels (and 

thus costs) the standards are requiring 

above what the marketplace would have 

supplied absent them.163 In any case, 

we provide illustrative costs for the 

2015 advanced biofuel standards and 

total renewable fuel standards in 

addition to those for 2016. 

EPA is providing 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 total renewable fuel volumes that 

can be satisfied with conventional 

biofuels (i.e., non-advanced) is met with 

corn ethanol. While a variety of biofuels 

could help fulfill the advanced standard 

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77488 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

164 ‘‘Illustrative Costs Impact of the Final Annual 

RFS2 Standards, 2014–2017,’’ Memorandum from 

Michael Shell and Michael Shelby to EPA Air 

Docket EPA–HQ–OAR–2015–0111. 165 77 FR 59477, September 27, 2012. 

beyond soybean oil BBD and sugarcane 

ethanol from Brazil, these two biofuels 

have been most widely used in the past. 

The same is true for corn ethanol vis-avis the non-advanced component of the 

total renewable fuel standard. We 

believe these scenarios provide 

illustrative costs of meeting the final 

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 (for biodiesel and 

sugarcane ethanol) and non-advanced 

component of the total renewable fuel 

(for corn ethanol) 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.164

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 are not 

additional costs). Further, as mentioned 

above 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 illustrative cost scenario, 

we consider the costs of soybean-based 

biodiesel to meet the entire change in 

the advanced standards. The final 2014 

standard is being set at the actual level 

of advanced biofuels produced in 2014, 

2.67 billion gallons. The advanced 

biofuel volumes are being finalized for 

2015 at 2.88 billion gallons and for 2016 

at 3.61 billion gallons. Comparing the 

difference in costs between biomassbased diesel and petroleum-based 

diesel, we estimate a cost difference that 

ranges from $1.45 to $1.71/EEG in 2015 

and from $1.00 to $2.46/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 $203 to $240 

million in 2015 and $480 to $1,182 

million in 2016. 

For our second illustrative cost 

scenario, we provide 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 $0.89 to $2.05/EEG in 2015 

and from $0.91 to $2.07/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 $186 to $431 

million for 2015 and $656 to $1,493 

million for 2016. 

For the third illustrative cost 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 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 13.61 

billion gallons, 14.05 billion gallons in 

2015, and 14.50 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 440 million gallons of corn 

ethanol would be required in 2015 and 

450 million gallons in 2016. Comparing 

the difference in costs between corn 

ethanol and the wholesale gasoline 

price, we estimate a cost difference of 

$0.96 in 2015 and cost differences that 

range from $1.01 to $1.33/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 $424 million for 2015 and 

$453 to $597 million for 2016. 

An alternative way of looking at the 

illustrative costs in 2016, given the fact 

that this is a three year rule, is to 

consider a volume change relative to the 

2014 proposed standard. The cost 

estimate for meeting the 2016 standard 

would range from $620 to $1,526 

million if the entire advanced standard 

were to be met with soybean-based 

diesel. The cost estimates would range 

from $847 to $1,929 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 $895 to $1,181 

million. 

While it would be instructive to show 

not only the costs but also the potential 

benefits of the standards being finalized 

and understanding both would be an 

important consideration in any future 

reassessment of the RFS program, the 

short timeframe 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 final 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 and beyond.165 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 final 

standards. As noted, this approach 

pertains to this and other annual 

rulemakings, not to potential future 

assessments of the program. 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 GHG, 

energy security, and air quality impacts 

and benefits for the 2010 RFS2 final rule 

for 2022. 

EPA received numerous comments 

related to the costs of the proposed 

2014, 2015, and 2016 renewable fuel 

volumes. One commenter believes that 

EPA overestimated the cost of 

additional biodiesel volumes. They 

claimed that ‘‘the program has resulted 

in providing the public with an 

alternative fuel source at a lower cost,’’ 

and provided documentation of a 

testimony in which a diesel fuel 

provider claims to use biodiesel because 

it’s cheaper than diesel. The commenter 

further states that the price of the RIN 

offers discounts to the biofuel producer. 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77489 

166PFL Market Daily, Progressive Fuels Limited. 

http://www.progressivefuelslimited.com/Web_Data/

pfldaily.pdf. 

Per gallon, wholesale biodiesel prices 

have been and continue to be more 

expensive than petroleum diesel. For 

example, on October 22, 2015, the front 

month futures price for B100 Soy 

Methyl Ester (SME) Chicago is $2.32/

gallon, while the front month futures 

price for New York Harbor (NYH) UltraLow Sulfur Diesel (ULSD) is $1.47/

gallon.166

Regarding the RIN discount, EPA 

acknowledges that biofuel producers 

may receive discounts due to RIN 

values. However, the discount a 

producer may receive due to RIN 

payment is not a cost, or a benefit; it is 

a transfer. In our cost methodology, we 

attempt to calculate the real resource 

costs associated with using biofuels in 

comparison to the fossil fuels that they 

replace. We did not attempt to capture 

transfers as a result of RIN prices and 

tax credits, which we acknowledge have 

distributional impacts. We simply 

evaluated the cost to consumers by 

considering per energy equivalent 

gallon difference in wholesale costs of 

biofuels against their petroleum 

alternative given projected market 

prices. 

Multiple commenters expressed 

concern over the fact that EPA did not 

perform a full incremental cost-benefit 

analysis for the annual renewable fuel 

volumes. API commented that EPA 

should provide a ‘‘complete assessment 

of the rule’s costs on obligated parties, 

consumers, and other affected parties, 

along with a comparison of those costs 

with the rule’s benefits.’’ As EPA has 

previously stated, the annual 

rulemaking schedule for setting 

renewable fuel volumes does not allow 

sufficient time to conduct a 

comprehensive benefit-cost analysis. 

For the 2010 RFS2 final rule, EPA 

performed a full benefit-cost analysis for 

2022, when the program fully matures. 

For this rulemaking, EPA performed the 

illustrative cost analysis described 

above in an attempt to capture some of 

the impacts of the rule qualitatively. 

Another commenter acknowledged 

EPA’s 2010 benefit-cost analysis and the 

time constraint facing the agency in 

propagating annual standards, but 

called on EPA to complete an 

incremental analysis of the full impacts 

of this rule. 

We agree that performing an 

incremental cost-benefit analysis would 

be helpful to an extent, but we continue 

to believe that assessing the program as 

a whole, over its maturity, is most 

appropriate. 

III. Final Biomass-Based Diesel 

Volumes for 2014–2017 

In this section we discuss the final 

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 finalizing the applicable 

BBD volume for 2014–2017, we 

considered not only the volume for the 

BBD standard, which effectively 

guarantees a minimum amount, 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 finalizing an applicable BBD 

volume requirement for 2017, we are 

establishing the volume requirement but 

not the percent standard. 

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 volumes are 

specified in the statute, EPA is required 

under CAA section 211(o)(2)(B)(ii) to 

determine the applicable volume of 

BBD, 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 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 

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 

volume requirement 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 of 

BBD in years after those for which the 

statute specifies such 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, beyond the 1.0 billion gallon 

minimum, on the level at which BBD 

volumes should be set. 

B. BBD Production and Compliance 

Through 2013 

Due to the delayed issuance of the 

major regulatory revisions necessary to 

implement changes to the RFS program 

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. This review is 

required by the CAA, and also provides 

insight into the capabilities of the 

industry to produce, import, export, and 

distribute BBD. 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. 

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77490 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

167Net 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.) 

168Each 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. 

169The 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 and applied 

retroactively to all of 2014 as well as to the 

remaining weeks of 2014. 

170 ‘‘2013 RIN Supply’’, EPA Docket EPA–HQ– 

OAR–2015–0111. 

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. 

171U.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 October 

27, 2015). 

172EMTS 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. 

173Our focus on RINs generated in 2014 is 

consistent with our general approach to carryover 

RINs for this rulemaking, as described in Section 

II.H. 

174 ‘‘2014 RIN Supply,’’ EPA docket EPA–HQ– 

OAR–2015–0111. 

175From 2011 through 2015 only 12 million 

gallons of conventional (D6) biodiesel and 

renewable diesel was produced in the United 

States. We believe it is unlikely that foreignproduced conventional (D6) biodiesel and 

renewable diesel was imported into the United 

States and consequently exported, especially as the 

biodiesel blenders tax credit has not applied to fuel 

produced outside the U.S. for use as a fuel outside 

the U.S. since 2008. 

TABLE III.B–1—BIOMASS-BASED RIN GENERATION AND STANDARDS IN 2011–2013 

[Million gallons] 167

BBD RINs 

generated 

Exported BBD 

(RINs) 

BBD RINs 

retired, noncompliance 

reasons 

Available BBD 

RINs 

BBD standard 

(gallons) 

BBD standard 

(RINs) 168

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 

volume required to meet the BBD 

standard in 2011 and 2013. Additional 

production and use of biodiesel was 

likely driven by a number of factors, 

including demand to satisfy the 

advanced biofuel and total renewable 

fuels standards, the biodiesel tax 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 temporary 

lapse of the biodiesel tax credit at the 

end of 2011.169

While the total number of BBD RINs 

generated in 2013 was 2.74 billion 

(representing 1.79 billion gallons of 

BBD), 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).170 However, this volume 

was not entirely available for 

compliance purposes, 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 were 

exported in 2013.171 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.172 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. BBD Volumes for 2014 

As we did for advanced and total 

renewable fuel in 2014 and 2015, we 

believe that it is appropriate to establish 

the 2014 and 2015 volume requirements 

of BBD to reflect actual supply 

(including a projection for the latter part 

of 2015 that is primarily based on 

supply in the earlier part of the year for 

which data is available). Therefore, we 

are finalizing a BBD applicable volume 

requirement of 1.63 billion gallons for 

2014, which represents our estimate of 

actual BBD supply in 2014. We define 

supply for 2014 as the number of BBD 

RINs generated in 2014 that were 

available for compliance.173 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 with the RFS 

percentage standards. RINs that have 

already been retired for such 

circumstances as RINs being invalid, 

spills, corrected and replaced RINs, etc. 

are recorded in EMTS on an ongoing 

basis. However, complete information 

on RINs that are retired to cover exports 

of renewable fuel and foreign generated 

renewable fuel that is exported to 

another country is not available through 

EMTS until after the 2014 compliance 

demonstration deadline. Since 

compliance cannot occur until the 

standards are set, we are using biodiesel 

export information from EIA for 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 and the 

projected actual supply for 2015 is 

shown in Table III.C–1 below. Further 

details are provided in a memorandum 

to the docket.174 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.175

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176While 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 in 

calculating the percentage standard for 2014 

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 2.49 billion RINs, consistent 

with supply. 

177 78 FR 71732, 71734. 

178 78 FR 71732, 71752. 

179 ‘‘RIN Prices in 2015 (January–October)’’ 

memorandum from Dallas Burkholder to docket 

EPA–HQ–OAR–2015–0111. 

TABLE III.C–1—SUPPLY OF BIOMASS-BASED DIESEL IN 2014 AND 2015 

2014 

Domestic 

production and 

imports 

Exports 

BBD RINs 

retired, noncompliance 

reasons 

Net supply 

Million RINs ...................................................................................................... 2,709 124 82 2,490 

Million gallons .................................................................................................. 1,763 83 48 176 1,630 

Projected Actual 2015 

Million RINs ...................................................................................................... 2,888 145 92 2,650 

Million gallons .................................................................................................. 1,880 97 54 1,730 

Some commenters suggested the EPA 

was prohibited from increasing the 

biomass-based diesel standard above 

1.28 billion for the 2014 through 2016 

time period because obligated parties 

did not have notice of EPA’s intention 

to increase the biomass-based diesel 

standard above this amount at the times 

EPA missed the statutory deadlines for 

establishing applicable BBD volume 

requirements for these years. We do not 

agree with these commenters and 

believe that obligated parties were on 

notice that the BBD volume 

requirements for these years could be 

higher than 1.28 billion gallons. First, 

while in the November 2013 NPRM we 

proposed 2014 and 2015 BBD volume 

requirements of 1.28 million gallons, we 

also requested comment on alternative 

approaches and higher volumes.177 We 

noted in the NPRM that total biodiesel 

production by the end of 2013 could be 

as high as 1.7 billion gallons and that 

the facilities contributing to this 

production collectively had a capacity 

of well over 2 billion gallons.178 Thus, 

stakeholders were certainly on notice by 

November 2013 that a final BBD volume 

requirement greater than 1.28 billion 

gallons was possible and could be used 

in deriving the final 2014 and 2015 BBD 

standards. Furthermore, they were 

provided with notice of the precise (for 

2014) or approximate (for 2015) volume 

requirements being finalized today 

through the June 10, 2015 NPRM. Thus, 

we believe that parties had adequate 

notice that 2014 and 2015 BBD volume 

requirements as high as those in today’s 

rule could be finalized. And, although 

our proposal for 2016 was also issued 

late, obligated parties will have had 

approximately six months from the date 

of the June 2015 NPRM before the start 

of the compliance year, plus 12 months 

during the compliance year, plus three 

months after the close of the compliance 

year to plan for compliance and acquire 

necessary RINs. Finally, to provide 

those parties who may need additional 

time to engage in RIN trading to obtain 

the right number and balance of RINs 

for 2014 and 2015 compliance, EPA is 

providing very extensive extensions of 

the normal compliance demonstration 

deadlines. For 2014, the deadline in 

today’s rule is August 1, 2016, two 

months later than proposed and a full 8 

months after signature of this rule. For 

2015 the compliance demonstration 

deadline is December 1, 2016, or 12 

months from signature of this rule. 

Since compliance can be achieved 

through acquisition of RINs in the 

marketplace, and does not require 

capital investments or actual renewable 

fuel blending, we believe that this 

amount of lead time for parties to come 

into compliance is adequate and 

reasonable. 

These same industry commenters 

suggested that because EPA was late in 

issuing its final BBD applicable volume 

rules, some obligated parties might have 

relied on the proposed 1.28 billion 

gallon applicable volume requirement 

for 2014 and 2015, and would now face 

difficulty in meeting higher volume 

obligations. Although they did not 

identify any parties in this situation, 

there was one obligated party who 

asserted in separate comments that they 

had in fact relied on the November 2013 

NPRM in planning 2014 compliance for 

all four of the renewable fuel standards, 

and requesting that in fairness EPA not 

now impose a higher obligation for that 

year. In reply we reiterate that parties 

were on notice through the November 

2013 NPRM that EPA could finalize 

higher volume requirements than 

proposed. Indeed, it is the nature of 

proposed rules that EPA review 

comments and consider changes, so our 

doing so should not come as a surprise 

to anyone. In addition, the tables of 

applicable volumes in the statute have 

long provided notice with respect to 

advanced biofuel, total renewable fuel 

and cellulosic biofuel that volume 

requirements could be as high for those 

fuels as are specified there. We believe 

that once this commenter complies with 

the 2014 advanced biofuel and total 

renewable fuel volume requirements 

regarding which such extensive notice 

was available, that compliance with the 

2014 BBD volume requirement will 

likely either be satisfied, or easily 

satisfied. Even if the party needs to 

adjust the types of advanced biofuel 

RINs they own to acquire sufficient BBD 

RINs to comply with the BBD standard, 

they will be able to sell the non-BBD 

advanced RINs for a nearly identical 

price to the BBD RINs they will need to 

purchase.179 And as noted above, EPA 

is extending the compliance 

demonstration deadline for 2014 beyond 

what we proposed, allowing this party 

and any other similarly situated party 

sufficient time to engage in the needed 

RIN transactions. 

Even if an obligated party faced 

compliance challenges for 2014, CAA 

section 211(o)(2)(5)(A)–(D) provides two 

additional compliance flexibility 

options that an obligated party may 

utilize if they are unable to meet any of 

the 2014 standards, including their 2014 

BBD volume obligation with RINs 

generated in 2014. First, to the extent 

that any shortfall of BBD RINs might 

exist, an obligated party could utilize 

carryover BBD RINs (D4) to meet their 

compliance obligation. As we discussed 

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180 ‘‘Estimating Carryover RINs Available for Use 

in 2014,’’ memorandum from Dallas Burkholder to 

docket EPA–HQ–OAR–2015–0111. 

181The blenders tax credit for biodiesel likely 

also incentivized additional biodiesel blending in 

these years. 

182RINs 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. 

in Section II.H, carryover RINs were 

intended to provide flexibility for 

obligated parties in complying with the 

RFS standards in a variety of 

circumstances. Certainly, if an obligated 

party experiences a shortfall in 

complying with the BBD 2014 volume 

standard it would be an appropriate use 

of carryover RINs to meet compliance 

obligations. Based on available data in 

the EMTS system 180, we estimate that 

there are nearly 600 million carryover 

BBD RINs available for use in 2014. This 

number of BBD carryover RINs should 

be available for purchase on the RIN 

market (since if they are not used in 

2014 they will expire), and together 

with available RINs generated in 2014 

make up a substantial RIN pool from 

which obligated parties may acquire 

needed RINs. However, if an obligated 

party was either unable to purchase the 

necessary carryover RINs or current-year 

RINs to meet its compliance obligation, 

they could alternatively use the carryforward deficit provision of CAA 

section 211(o)(2)(5)(D) to carry forward 

the deficit for one year on the condition 

that it be met the following year 

(assuming they did not carry a deficit 

into 2014). 

We recognize that the same number of 

BBD RINs will likely be retired for 

compliance with the 2014 RFS 

standards whether we set the BBD 

volume requirement at 1.28 versus 1.63 

billion RINs, because complying with 

the 2014 advanced and total renewable 

fuel standards will require retirement of 

1.63 billion BBD RINs. However, in light 

of this fact, the ease with which RINs 

may be traded, as well as the availability 

of carryover RINs and the deficit carryforward option, we are not persuaded 

that any obligated party will have more 

difficulty complying with a 1.63 billion 

gallon BBD volume requirement as 

compared to a 1.28 billion gallon BBD 

volume requirement. Therefore, we do 

not believe that sufficient justification 

has been presented by commenters for 

EPA to deviate from the proposed 

approach of setting the 2014 BBD 

volume requirement as equal to the 

actual 2014 BBD supply. In addition, we 

believe that lowering the proposed 2014 

BBD volume requirement would send a 

potentially chilling message to investors 

in the BBD industry that would be 

contrary to the objectives of the CAA to 

incentivize the growth of renewable fuel 

volumes. 

For all of these reasons, we believe 

that it is reasonable and appropriate to 

establish the 2014 BBD applicable 

volume requirement as equal to 1.63 

billion gallons, the volume actually 

produced and imported in 2014 and 

which is available for compliance. This 

is consistent with the approach we are 

taking to establishing the total 

renewable fuel, advanced biofuel, and 

cellulosic biofuel standards in 2014. 

Since we are establishing the 

requirement for a time period that has 

already passed, and setting the 

requirement equal to the available 

supply of 2014 BBD RINs, we believe 

that our action will result in no impacts 

with respect to the factors listed under 

CAA section 211(o)(2)(B)(ii)(I)–(VI). 

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.181 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 volume in 2015–2017. As 

described in more detail in Sections II.E 

and II.F, we are finalizing volumes of 

advanced biofuel and total renewable 

fuel for 2016 that require growth beyond 

the volumes supplied in 2014 and 2015 

and this will continue to provide 

incentives for BBD volumes that exceed 

the BBD volume requirement. 

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 a specific and increasing role in 

supplying advanced biofuels to the 

market. While we generally believe that 

the advanced and total volume 

requirements are sufficient to 

incentivize continued growth in the 

production and consumption of BBD in 

most years, circumstances may arise 

that result in unfavorable market 

conditions for the production and 

consumption of BBD, as was the case in 

2012. We believe there is value in 

providing some degree of certainty to 

BBD producers that there will be a 

market for the fuel they produce for 

circumstances such as this. Therefore, 

this final rule seeks to balance the goals 

of supporting the BBD industry and 

incentivizing the production of nonBBD advanced biofuels by providing a 

guaranteed, increasing market for BBD, 

while at the same time providing room 

under the advanced standard for other 

types of advanced biofuels, and thus 

incentivizing their growth as well. We 

have considered the ability of the 

advanced biofuel and total renewable 

fuel standards to incentivize an 

increasing volume of BBD, the 

implementation of the RFS program to 

date, and the statutory factors listed in 

CAA section 211(o)(2)(B) (discussed in 

further detail in Section III.E below). We 

have also consulted with USDA and 

DOE in establishing the final 

requirements. 

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 BBD 

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, create demand 

for BBD, especially 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 grow the 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 

compliance 182 in each year from 2011– 

2013. Similar data for 2014 is shown in 

Table III.C–1. As can be seen from these 

tables, in 2011 and 2013 the number of 

BBD RINs available for use exceeded the 

volumes required to satisfy the BBD 

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183This is because when an obligated party retires 

a BBD RIN to help satisfy their BBD obligation, the 

nested nature of the BBD standard means that this 

RIN also counts towards satisfying their advanced 

and total renewable fuel obligations. Advanced 

RINs count towards both the advanced and total 

renewable fuel obligations, while conventional 

RINs (D6) count towards only the total renewable 

fuel obligation. 

184Although we did not issue a rule establishing 

the final 2013 standards until August of 2013, we 

believe that the market anticipated the final 

standards, based on EPA’s July 2011 proposal and 

the volume targets for advanced and total renewable 

fuel established in the statute. (76 FR 38844, 

38843). 

standard. Similarly the quantity of BBD 

RINs in 2014 far exceeded the 1.28 

billion gallons volume requirement 

(1.92 billion BBD RINs) for BBD that 

EPA proposed in November 2013. In 

2013 the number of advanced RINs 

generated from fuels other than BBD 

was not large enough to satisfy the 

implied standard for ‘‘other advanced’’ 

biofuel (advanced biofuel needed to 

satisfy the advanced biofuel standard 

after the BBD and cellulosic biofuel 

standards are met), and additional 

volumes of BBD filled the gap. In fact, 

the amount by which the available BBD 

RINs exceeded the 1.28 billion gallon 

BBD volume requirement (421 million 

RINs) was larger than the amount by 

which the non-BBD RINs fell short of 

satisfying the ‘‘other advanced’’ biofuel 

implied standard (285 million RINs), 

helping to fill a shortfall in meeting the 

total renewable fuel standard. Thus the 

advanced biofuel and total renewable 

fuel standards provided an incentive to 

support a BBD volume in the United 

States in excess of that required to 

satisfy the BBD standard. 

In 2012 the available BBD RINs were 

slightly less than the BBD standard, 

despite the continued opportunity for 

BBD to contribute towards satisfying the 

advanced and total renewable fuel 

volume requirements. There are a 

number of reasons this may have been 

the case. The drought in 2012 resulted 

in reduced production of soy beans and 

other oilseed crops that provide 

feedstocks for the BBD industry. 

Compounding this effect was the lower 

corn harvest in 2012, which increased 

the demand for soy beans and other fats 

and oils in the animal feed market. The 

biodiesel tax credit, which had been in 

place since the end of 2010, expired at 

the end of 2011. Finally, and perhaps 

most significantly, the E10 blendwall 

had not yet been reached in 2012. This 

meant that meeting the advanced 

biofuel requirements through the use of 

advanced ethanol, primarily sugar cane 

ethanol, in E10 blends, rather than 

additional volumes of BBD was still a 

viable option. Indeed, in 2012 over 600 

million RINs were generated for 

advanced ethanol. While we believe 

these circumstances are unlikely to be 

repeated in future years, this does 

demonstrate that the BBD standard can 

still have an impact despite the ability 

in some years for the advanced and total 

renewable fuel volume requirements to 

incentivize additional biodiesel and 

renewable diesel volumes beyond the 

BBD standard. 

TABLE III–D.1–1—BIOMASS-BASED DIESEL AND ADVANCED BIOFUEL RIN GENERATION AND STANDARDS

[Million gallons] 

Available BBD 

(RINs) 

BBD standard 

(RINs) 

Available 

non-biodiesel 

advanced 

biofuel 

‘‘Other’’ 

advanced 

biofuel 

allowed 

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 beginning in early 2013 

through 2015 also support the 

conclusion that advanced biofuel and/or 

total renewable fuel standards provide a 

sufficient incentive for additional 

biodiesel volume beyond what is 

required by the BBD standard. 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 conventional renewable 

RINs.183 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 prices of conventional 

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 

other advanced biofuel and 

conventional renewable fuel RINs. 

Beginning in 2013 the price of BBD 

RINs and other advanced biofuel RINs 

converge, and remain at a similar price 

throughout 2015. This is more evidence 

that suggests that the advanced biofuel 

standard and/or total renewable fuel 

standard is capable of incentivizing 

increased BBD volumes beyond the BBD 

standard, and that it in fact operated in 

this manner in 2013.184

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2. Biomass-Based Diesel as a Fraction of 

Advanced Biofuel 

In establishing the BBD and cellulosic 

standards as nested within the advanced 

biofuel standard, Congress clearly 

intended to support development of 

BBD and cellulosic biofuels, while also 

providing an incentive for the growth of 

other non-specified types of advanced 

biofuels. That is, the advanced biofuel 

standard provides 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. Indeed, since Congress 

specifically directed growth in BBD 

only through 2012, leaving development 

of volume targets for BBD to EPA for 

later years while also specifying 

substantial growth in the cellulosic and 

general advanced categories, we believe 

that Congress clearly intended for EPA 

to evaluate in setting BBD volume 

requirements after 2012 the appropriate 

rate of participation of BBD within the 

advanced biofuel standard. 

The unspecified advanced biofuel 

volume in the statutory tables in CAA 

section 211(o)(2)B)(i) starts at 0.25 

billion gallons in 2013 and grows to 3.5 

billion gallons in 2022. The actual size 

of the unspecified volume of advanced 

biofuel in any given year is, however, 

heavily dependent on EPA actions. 

Increasing the BBD standard above 1 

billion gallons, as we did in 2013, 

reduced the potential market for other 

advanced biofuels to contribute towards 

meeting the advanced biofuel standard 

in that year. 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 all advanced 

biofuels, including BBD. While each 

year’s volume requirements are 

established in consideration of the 

volumes of various types of biofuels 

expected to be reasonably attainable in 

that year, we are also cognizant that the 

annual standards send messages to the 

market that can influence the direction 

of research and investment. 

When viewed in a long-term 

perspective, BBD can be seen as 

competing for research and 

development dollars with other types of 

advanced biofuels for participation as 

advanced biofuels in the RFS program. 

In addition to the long-term impact of 

our action in establishing the BBD 

volume requirements, there is also the 

potential for short-term impacts during 

the compliance years in question. 

Although we are setting the advanced 

standard at a level that reflects growth 

in volumes that is reasonably attainable, 

we are not setting the standard at the 

maximum theoretical level that reflects 

the highest potential for domestic 

production plus import. As described in 

Section II.F, there is substantial 

uncertainty, especially regarding import 

volumes, that cautions against such an 

approach. Therefore, by setting the BBD 

volume requirement at a level lower 

than the advanced biofuel volume 

requirement (and lower than the 

expected production of BBD to satisfy 

the advanced biofuel requirement), we 

are allowing the potential for some 

competition between BBD and other 

advanced biofuels (including imported 

advanced biofuels) to satisfy the 

advanced biofuel volume standard. We 

believe that this competition will also 

help to encourage, over the long term, 

the development and production of a 

variety of advanced biofuels. However, 

in the short term it could also result in 

lower cost advanced biofuels. 

BBD, like all non-cellulosic advanced 

biofuels, must, by definition, achieve 

lifecycle greenhouse gas reductions of at 

least 50% relative to the petroleum fuels 

it displaces. Thus, the environmental 

benefits of BBD are comparable to those 

of other non-cellulosic advanced 

biofuels. Increasing the portion of the 

advanced standard that comprises a 

guaranteed market for BBD would over 

time likely reduce competition among 

advanced biofuels and could disincentivize research and development of 

advanced biofuels that are potentially 

more economical or environmentally 

preferable (including for non-GHG 


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185 77 FR 59461 col. 1, September 27, 2012. 

186Regulations of Fuels and Fuel Additives: 2013 

BBD Renewable Fuel Volume; Final Rule. 77 FR 

59458, 59460–59461. http://www2.epa.gov/

renewable-fuel-standard-program/regulations-andvolume-standards-under-renewable-fuel-standard 

(last accessed October 22, 2015). 

187 77 FR 59458, 59462 and 59483. 

188EIA’s Monthly Biodiesel Production Reports 

since 2009 indicate that there were significant 

biodiesel facility closures during the 2009 and 2010 

calendar years. Throughout 2013 the number of 

biodiesel plants operating fluctuated between 110– 

116 and at the end of 2013, EIA’s monthly 

production report, noted there were 115 plants 

operational. During 2014 the number of operating 

biodiesel plants in the U.S. was lower than in 2013, 

fluctuating between 89–100 facilities, finishing up 

the year at 99 operating biodiesel plants. Overall 

industry-wide utilization rates increased during the 

2009–2013 period from 25% in 2009 to 

approximate 46% in 2011 and 2012 and to more 

than 60% in 2013 and 2014. These data suggest a 

stabilizing trend in the industry, but with some 

continued fluctuations. See http://www.eia.gov/

biofuels/biodiesel/production/ for copies of 

monthly reports (last accessed October 22, 2015). 

189 ‘‘Projection of annual renewable fuel supply in 

2015,’’ memorandum from David Korotney to 

docket EPA–HQ–OAR–2015–0111. 

190Some commenters suggested that EPA should 

set the 2015 final BBD volume requirement at 1.28 

billion gallons, for the same reasons they asserted 

that the 2014 volume requirement should be set at 

Continued 

related reasons) than BBD. Having a 

more limited assortment of biofuels 

participate in the RFS program would 

also reduce the potential energy security 

benefits of the program, since energy 

security is enhanced through fuel 

diversity. Thus, we believe that the long 

term success of the RFS program, as 

envisioned by Congress, is best served 

by growth in a variety of advanced 

biofuels. We intend, therefore that the 

standards we set today provide a signal 

to the market to move forward with 

research, development, and 

commercialization of a variety of types 

of advanced biofuels beyond just BBD. 

We received comments that the 

consideration of competition within the 

advanced biofuel pool between BBD and 

other advanced biofuels, and the 

potential for lower compliance costs 

cited in our proposed rule, are not 

included in the list of factors in 42 

U.S.C. 7545(o)(2)(B)(ii)(V) that EPA is to 

consider in establishing the volume 

requirement for BBD. EPA respectfully 

disagrees. Three of the factors specified 

in the statute are indeed related to the 

considerations discussed above. The 

‘‘impact of the use of renewable fuels on 

the cost to consumers of transportation 

fuel and on the cost to transport goods’’ 

referenced in CAA section 

211(o)(2)(B)(ii)(V) is relevant, since we 

believe a diverse advanced biofuel pool 

will potentially result in decreased costs 

associated with the use of advanced 

biofuels and, consequently, decreased 

costs to consumers. Similarly, the 

‘‘impact of the production and use of 

renewable fuels on the environment’’ 

referenced in CAA section 

211(o)(2)(B)(ii)((I) is relevant, since we 

believe that incentivizing research and 

development in a variety of advanced 

biofuels could lead to the development 

of biofuels that have more benign effects 

on the environment than those that are 

currently available. As noted above, 

‘‘the impact of renewable fuels on the 

energy security of the United States’’ 

referenced in CAA section 

211(o)(2)(B)(ii)(II) is relevant, since we 

believe that incentivizing the 

development of a diverse array of 

biofuels will increase energy security 

Finally, we note that the list of factors 

specified in the statute is not exclusive; 

that is EPA is not precluded from 

considering additional factors that 

advance the statutory objectives when it 

sets applicable volumes for years not 

specified in the statute. 

3. Ensuring Growth in Biomass-Based 

Diesel and Other Advanced Biofuel 

While a single-minded focus on the 

ability of the advanced and total 

renewable fuel standards to incentivize 

increasing production of advanced 

biofuels other than BBD would suggest 

that a flat or even decreasing BBD 

volume requirement may be the optimal 

solution, this is not the only 

consideration. 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 this higher BBD 

volume for 2013 was made against the 

backdrop of the BBD industry having 

increased production from about 400 

million gallons in 2010 to about 1 

billion gallons in 2011.185 EPA was 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 2010.186

During the development of the 2013 

standards rulemaking, we were also 

concerned that production of cellulosic 

biofuel, also nested within the advanced 

biofuel requirement, was lagging 

significantly behind the 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 advanced 

biofuel, or that EPA would need to 

waive a portion of the advanced biofuel 

volume target. It is in this context that 

we 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 to increase production for 2013 

while also serving the long term goal of 

the RFS statute to increase volumes of 

advanced biofuels over time.187

Although the BBD industry has 

performed well in 2013 and in 

subsequent years, we believe that 

continued appropriate increases in the 

BBD volume requirement will help 

provide stability to the BBD industry 

and encourage continued growth. 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.188 Increasing the BBD volume 

requirement should help to provide 

market conditions that allow these BBD 

production facilities to operate with 

greater certainty. This result is 

consistent with the goals of the Act to 

increase the production and use of 

advanced biofuels. 

4. Final BBD Volume for 2015 

In the June 10, 2015 NPRM we 

proposed a 1.7 billion gallon BBD 

volume requirement for 2015, 

anticipating that the growth over actual 

levels observed in the first part of the 

year was possible despite late issuance 

of the proposal. The market responded 

as we anticipated and, indeed, slightly 

exceeded our expectations. During the 

first nine months of 2015 for which data 

are now available, 2.05 billion BBD 

RINs, representing 1.34 billion gallons 

of biodiesel and renewable diesel, were 

generated. When this rate of production 

is extrapolated to the end of the year, 

and taking into account the heightened 

end-of-year production we expect, based 

on past experience, as well as expected 

RIN corrections and retirements due to 

exports, we now estimate an actual BBD 

volume of 1.73 billion gallons for 

2015.189 We do not anticipate that this 

final rule can influence the market in 

any way for the remaining month of 

2015. Therefore, we are finalizing a 1.73 

billion gallon volume requirement for 

2015.190

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that level. We disagree, for the same reasons noted 

earlier with respect to the 2014 BBD requirement. 

191For a further discussion of EPA’s assessment 

of BBD feedstock availability, production capacity, 

and fuel distribution limitations see ‘‘Memorandum 

to docket: Final Statutory Factors Assessment for 

2016–2017 BBD Applicable Volumes’’ EPA–HQ– 

OAR–2015–0111. 

192See Section II.G for a list of potential 

compliance scenarios. 

193The reduction in ethanol imports was likely 

due to a combination of factors including poor 

5. Final Volumes for 2016–2017 

With the considerations discussed in 

sections III.D.1–3 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 

finalizing the applicable volume of BBD 

at 1.9 billion gallons for 2016 and 2.0 

billion gallons for 2017. These volumes 

are higher than the 1.8 and 1.9 billion 

gallons proposed for 2016 and 2017, and 

reflect the fact that we are finalizing an 

increase in the advanced biofuel 

requirement for 2016, from the 3.4 

billion gallons we proposed, to 3.61 

billion gallons in the final rule. We have 

decided to dedicate a portion of this 

increase to BBD, and leave the 

remainder as unspecified advanced 

biofuel, and thus available for any 

advanced biofuel to fill, for the same 

reasons reflected in the proposal and 

this final rule for establishing the BBD 

volume requirements: To provide 

additional support for the BBD industry 

while allowing room within the 

advanced biofuel volume requirement 

for the participation of non-BBD 

advanced fuels. 

We believe this final rule strikes the 

appropriate balance between providing 

a market environment where the 

development of other advanced biofuels 

is incentivized, while also realizing the 

benefits associated with increasing the 

required volume of BBD. Given our final 

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 

total advanced biofuel for 2017, we 

anticipate the continued growth in the 

advanced biofuel standard such that the 

advanced 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. 

TABLE III–D.5–1—FINAL BIOMASS-BASED DIESEL, CELLULOSIC BIOFUEL, AND ADVANCED BIOFUEL STANDARDS: 2015– 

2017 

BBD 

(billion gallons) 

BBD 

(billion RINs) 

Cellulosic 

biofuel 

(billion RINs) 

Advanced 

biofuel 

(billion RINs) 

Unspecified 

advanced 

(billion RINs) 

2015 ..................................................................................... 1.73 2.65 0.123 2.88 0.107 

2016 ..................................................................................... 1.90 2.85 0.230 3.61 0.530 

2017 ..................................................................................... 2.00 3.00 TBD TBD TBD 

EPA received comments on our 

proposed rule providing data suggesting 

that sufficient BBD feedstocks, 

production facilities, and fuel 

distribution infrastructure existed to 

produce, import, and consume volumes 

of BBD in 2016–2017 that exceed the 

volume requirements established in this 

rule.191 Some commenters specifically 

cited the potential for large volumes of 

imported BBD to displace domestically 

produced BBD if the BBD volume 

requirements were not increased. These 

commenters argued that EPA should 

increase the BBD standard in 2016–2017 

in light of the fact that the potential 

volume of BBD exceeds the proposed 

BBD volume requirements for each of 

these years. EPA agrees with the 

commenters that the potential available 

volume of BBD in 2016 and 2017 

exceeds the BBD volume requirements 

we are finalizing in this rule, and have 

considered multiple scenarios where 

additional volumes of BBD are used to 

comply with the advanced and total 

renewable fuel standards.192 As 

discussed above, however, we do not 

believe it is in the best interest of the 

RFS program to set the BBD volume 

requirement at the maximum available 

volume of BBD. Doing so would reduce 

the opportunity for other advanced 

biofuels to compete for market share 

within the context of the advanced 

biofuel standard, and would send 

market signals that would hinder the 

long term development of these fuels. 

Our review of the history of the RFS 

program strongly suggests that the 

advanced and total renewable fuel 

standards can provide sufficient 

incentives for the production and use of 

increased volumes of BBD beyond levels 

required to satisfy the BBD standard. 

EPA also received comments stating 

that increasing the BBD volume 

requirement to reflect actual BBD 

available volumes would have the 

advantage of helping to ensure that 

BBD, rather than imported sugar cane 

ethanol, would be used to satisfy the 

advanced standard. The commenters 

claimed that this was preferable because 

BBD does not contribute to the 

renewable fuel consumption challenges 

associated with the E10 blendwall, and 

because BBD is generally produced in 

the United States, while sugar cane 

ethanol is almost exclusively an 

imported product. They claimed that 

requiring additional volumes of a 

domestic product rather than an 

imported one would have positive 

impacts on the economy of the United 

States and aid rural economic 

development, and that these benefits 

justified a higher BBD standard. 

EPA acknowledges that if we were to 

increase the BBD volume standard we 

would increase the guaranteed market 

for BBD, and reduce the likelihood that 

significant volumes of sugar cane 

ethanol would be imported to satisfy the 

advanced and total renewable fuels 

standards. We do not agree, however, 

that this is a necessary step to promote 

the viability and growth of the BBD 

industry. In reviewing the history of the 

program, as shown above, EPA notes 

that BBD production, import, and 

consumption has been strong and 

increasing each year since 2011. In 

particular, we note that in 2013 BBD 

volumes rose sharply, and ethanol 

imports simultaneously fell and have 

stayed low.193

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sugar cane harvests, increased demand for sugar 

cane ethanol in the countries where it was 

produced, increased competition for sugar cane 

ethanol imports from other countries, and 

challenges relating to increasing the consumption of 

ethanol beyond E10 in the U.S. See ethanol import 

volumes, as reported by EIA, at: http://www.eia.gov/ 

dnav/pet/pet_move_impcus_a2_nus_epooxe_im0_

mbbl_a.htm. 

194While excess BBD production could also 

displace conventional biofuel under the total 

renewable standard, as long as the BBD applicable 

volume is lower than the advanced biofuel 

applicable volume our action in setting the BBD 

applicable volume is not expected to displace 

conventional biofuels under the total renewable 

standard, but rather other advanced biofuels. See 

Table II.G–2, ‘‘Volume Scenarios Illustrating 

Possible Compliance with 3.61 Bill Gal Advanced 

Biofuel and 18.11 Bill Gal Bill Gal Total Renewable 

Fuel’’. 

The data EPA has presented in the 

preceding sections strongly suggests that 

despite the ongoing potential for 

competition from sugar cane ethanol 

and biodiesel imports, the BBD 

industry, supported by the advanced 

and total renewable fuel standards, has 

achieved and can continue to achieve 

production volumes beyond levels 

needed to satisfy the BBD volume 

requirement. Given the constraints on 

ethanol use associated with the E10 

blendwall even if sugar cane ethanol 

imports were to increase, it is still likely 

that there would be a strong market for 

BBD to help satisfy the total renewable 

fuel requirements. Finally, in light of 

the broad programmatic objective of the 

RFS program to increase the content of 

biofuels in U.S. transportation fuel, we 

believe that it would be 

counterproductive to design the 

standards in such a way as to 

intentionally discourage or 

disincentivize the import of foreign 

biofuels. 

In finalizing these standards for BBD 

for 2014–2017 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 finalize the applicable 

volume of 1.9 billion gallons of BBD for 

2016, with an additional 100 million 

gallon increase for 2017 to 2.0 billion 

gallons, 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 impacts 

such an increase in the BBD volume 

requirement 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 volumes through 2017 should 

result in ongoing investment and growth 

for BBD, while also providing for 

continued investment and growth in 

other advanced biofuels. 

Raising the guaranteed BBD volume 

beyond the volumes in this rule so that 

it approaches the maximum possible 

volume 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 finalize 

the BBD volumes for 2016–2017 at 1.90 

and 2.0 billion gallons per year 

respectively, would not be expected to 

lead to such an adverse result. We 

believe that the final BBD volume 

increases for 2016–2017 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. 

E. Consideration of Statutory Factors for 

2014–2017 

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 

the advanced biofuel requirement and 

the advanced biofuel requirement is, in 

turn, nested within the total renewable 

fuel volume requirement. This means 

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 we 

must consider the potential impacts of 

increasing BBD in comparison to other 

advanced biofuels.194 For a given 

advanced biofuel standard, 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. Assessment for 2014 and 2015 

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 than was actually 

produced and available for compliance 

would require a draw-down in the bank 

of carryover RINs, which EPA does not 

consider prudent for the reasons 

discussed in Section II.H of this 

preamble. In light of these 

considerations, we are finalizing the 

2014 applicable volume for BBD as 

equal to the volume actually produced 

and imported, which is available for 

compliance. We believe this approach is 

also appropriate for the 2015 BBD 

standard. While there is still one month 

remaining in 2015, we believe it is 

similarly appropriate to set the biomassbased diesel standard for 2015 at the 

level of BBD that we project will 

actually be produced and imported and 

available for compliance in 2015 given 

that the primary benefits of allowing for 

opportunity for non-BBD fuels in the 

context of the advanced biofuel 

standard is not applicable for the 11 

months of 2015 that have passed, and 

this rule is being issued too late to 

significantly influence production and 

use of BBD and advanced biofuel in the 

remainder of 2015. 

2. Primary and Supplementary Statutory 

Factors Assessment for 2016 and 2017 

Biomass-Based Diesel Applicable 

Volumes 

EPA’s primary assessment of the 

statutory factors for 2016 is that because 

the final advanced biofuel volume 

requirement for 2016 reflects the 

advanced biofuel volumes (including 

BBD) that can be reasonably attained, 

and because the BBD requirement is 

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195 ‘‘Memorandum to docket: Final Statutory 

Factors Assessment for 2016–2017 BBD Applicable 

Volumes’’. 

nested within the advanced biofuel 

volume requirement, we expect that the 

2016 advanced volume requirement will 

largely determine the level of BBD 

production and imports; the same 

volume of BBD will likely be produced 

and imported regardless of the BBD 

volume that we require for 2016. 

This assessment is based, in part, on 

our review of the RFS program 

implementation to date, as discussed in 

Sections III.B and III.D. Since our 

decision on the BBD volume 

requirement for 2016 is not expected to 

impact the volume of BBD which is 

produced and imported during this time 

period, we do not expect our decision 

to result in a difference in the factors we 

are required to consider pursuant to 

CAA section 211(o)(2)(B)(ii)(I)–(VI). 

However, we note that our principal 

approach of setting BBD volume 

requirements at a higher level in 2016, 

while still at a volume level lower than 

anticipated overall production and 

consumption of BBD, is consistent with 

our evaluation of statutory factors in 

sections 211(o)(2)(B)(ii) (I), (II) and (III), 

since we believe that our decision on 

the BBD volume requirement can have 

a positive impact on the future 

development and marketing of other 

advanced biofuels and can also result in 

potential environmental and energy 

security benefits, while still sending a 

supportive signal to potential BBD 

investors, consistent with the objectives 

of the Act to support the continued 

growth in production and use of 

renewable fuels. 

Similarly for 2017, even though we 

are finalizing only the 2017 BBD volume 

requirement at this time and not the 

2017 advanced biofuel requirement, we 

believe this same primary assessment is 

appropriate since we anticipate that the 

2017 advanced biofuel requirement will 

be set to reflect ambitious but 

reasonably attainable volumes in the use 

of all advanced biofuels and that the 

advanced biofuel volume standard will 

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 final 

levels of 1.90 billion gallons in 2016, 

and 2.0 billion gallons in 2017, based on 

the assumption that 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. 

However, setting a higher or lower BBD 

volume requirement than the final 

levels 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. In this 

supplementary assessment we have 

considered the statutory factors found in 

CAA section 211(2)(B)(ii), and as 

described in a memorandum to the 

docket,195 our final assessment does not 

appear, based on available information, 

to provide a good reason for setting a 

higher or lower volume standard for 

BBD than 1.90 billion gallons in 2016, 

and 2.0 billion gallons in 2017. 

The EPA received numerous 

comments pertaining to the 

consideration of the statutory factors for 

the 2016–2017 BBD volume 

requirement. Following are responses to 

a number of key issues raised by NBB. 

Additional comments and EPA 

responses can be found in the Response 

to Comment document that 

accompanies this final rule. 

NBB stated that we improperly based 

our consideration of the statutory factors 

on a comparison of BBD to other 

advanced biofuels, rather than to diesel 

fuel. They asserted that BBD would not 

compete with other advanced biofuels 

because EPA proposed to set the 

advanced biofuel volume at maximally 

achievable levels, and that no 

competition would be present if all 

available advanced biofuels had to be 

used. They suggested that setting the 

BBD standard at a higher level than 

proposed would actually result in BBD 

competing against diesel fuel, and 

therefore, EPA should analyze the 

impacts of displacing diesel fuel with 

BBD. We disagree. In setting the 

advanced biofuel volume requirement, 

we have assumed reasonably attainable 

volumes in BBD and other advanced 

biofuels. After determining that it is in 

the interest of the program, as described 

in Sections III.D.1–D.3, to set the BBD 

volume requirement at a level below 

anticipated BBD production and 

imports, so as to provide continued 

incentives for research and development 

of alternative advanced biofuels, it is 

apparent that excess BBD above the BBD 

volume requirement will compete with 

other advanced biofuels, rather than 

diesel. The only way for EPA’s action on 

the BBD volume requirement to result in 

a direct displacement of petroleumbased fuels, rather than other advanced 

biofuels, would be if the BBD volume 

requirement were set larger than the 

total renewable fuel requirement. 

However, since BBD is a type of 

advanced biofuel, and advanced biofuel 

is a type of renewable fuel, the BBD 

volume requirement could never be 

larger than the advanced requirement 

and the advanced biofuel requirement 

could never be larger than the total 

renewable fuel requirement. Thus, EPA 

continues to believe that it is 

appropriate to evaluate the impact of its 

action in setting the BBD volume 

requirements by evaluating the impact 

of using BBD as compared to other 

advanced biofuels to determine what 

increment of the advanced biofuel 

standard that is not guaranteed to BBD. 

NBB also asserted that our analysis of 

the desirability of setting the BBD 

volume requirement in a manner that 

would promote the development and 

use of a diverse array of advanced 

biofuels is prohibited by statute. We 

disagree with these comments and 

continue to believe that the statutory 

volumes of renewable fuel established 

by Congress in CAA section 211(o)(2)(B) 

provide 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. Ensuring that a diversity 

of renewable biofuels are produced is 

consistent with CAA section 

211(o)(2)(A)(i),which requires that the 

EPA ‘‘ensure that transportation fuel 

sold, or introduced into commerce in 

the United States . . . contains at least 

the applicable volume of renewable 

fuel, advanced biofuels, cellulosic 

biofuel, and biomass-based diesel . . .’’. 

Because the BBD standard is nested 

within the advanced biofuel and total 

renewable fuel standards, 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. To the extent that 

obligated parties are required to achieve 

compliance with the overall advanced 

biofuel standard using higher volumes 

of BBD D4 RINs, they forgo the use of 

other biofuels considered advanced 

biofuels to meet the advanced biofuel 

requirement. Therefore, the higher the 

BBD volume standard is, the lower the 

opportunity for other non-BBD 

advanced biofuels to compete for market 

share within the context of the 

advanced biofuel standard. When 

viewed in a long-term perspective, BBD 

can be seen as competing for research 

and development dollars with other 

types of advanced biofuels for 

participation as advanced biofuels in 

the RFS program. 

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196 ‘‘EIA projections of transportation fuel for 

2015 and 2016’’, letter from Adam Sieminski, EIA 

Administrator to Gina McCarthy, EPA 

Administrator September 16, 2015. 

197On 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.’’ API v. 

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

Finally, NBB stated that the EPA 

previously found statutory factors 

supported greater annual increases in 

BBD volume requirement for 2013 and 

the statutory factors analysis developed 

to justify the 2016 and 2017 BBD 

volume requirements contradicts the 

analysis EPA put forward in 2013. We 

disagree. As in 2013, we have 

determined that incremental increases 

in the 2016 and 2017 BBD volume 

requirement are appropriate to provide 

continued support to the BBD industry. 

We did this in 2013, acknowledging the 

important role the industry thus far had 

played in providing advanced biofuels 

to the marketplace, and in furthering the 

GHG reduction objectives of the statute. 

We did not in 2013, and are not today, 

setting the BBD volume requirement at 

the maximum potential production 

volume of BBD. 

IV. Final 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 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 

are eligible to generate cellulosic RINs. 

This determination led to a significant 

increase in cellulosic RIN generation 

beginning in late 2014, as fuel that 

previously had been qualified to 

generate advanced biofuel RINs could 

now 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. 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 these volumes projections. 

In this rule we are finalizing the 

proposed approach of using a slightly 

different methodology to determine the 

projected 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 the first nine months of 2015) 

and to project production volumes from 

likely production facilities for future 

months in which actual production 

volumes are not available. In order to 

project the volume of cellulosic biofuel 

production in 2015 and 2016 we 

considered the Energy Information 

Administration’s projections of 

cellulosic biofuel production,196 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 2015 or 2016. New 

cellulosic biofuel production facilities 

projected to be brought online in the 

United States over the next few years 

are expected to continue to 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 as they 

ramp up to production rates at or near 

their nameplate capacity over the next 

few years. The following section 

discusses the companies 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). 

TABLE IV–1—FINAL CELLULOSIC

BIOFUEL STANDARDS

Year Volume 

(million gallons) 

2014 .............................. a 33 

2015 .............................. 123 

2016 .............................. 230 

a Based on the number of cellulosic biofuel 

RINs generated in 2014 minus RINs retired for 

reasons other than compliance with the RFS 

standard. We assumed no exports of cellulosic 

biofuel (data from EMTS). 

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.197

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 scale 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. The 

volume of cellulosic biofuel produced 

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198 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. 

199The 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. 

200 ‘‘Cellulosic Biofuel Producer Company 

Descriptions (November 2015)’’, memorandum from 

Dallas Burkholder to EPA Air Docket EPA–HQ– 

OAR–2015–0111. 

201 ‘‘Cellulosic Biofuel Producer Company 

Descriptions (November 2015)’’, memorandum from 

Dallas Burkholder to EPA Air Docket EPA–HQ– 

OAR–2015–0111. 

202For the purpose of the preamble discussion we 

have grouped together all facilities expected to 

from R&D and pilot scale facilities is 

quite small in 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 in the 

past as their focus is on developing and 

demonstrating the technology, not 

producing commercial volumes. 

From this list of commercial scale 

facilities we used information from 

EMTS and publically available 

information, and information provided 

by representatives of potential cellulosic 

biofuel producers, to make a 

determination of which facilities are 

most likely 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 

company 198 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. 

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 final standards for 

cellulosic biofuel for the final three 

months of 2015, and all of 2016. 

1. Potential Domestic Producers 

There are a number of companies and 

facilities 199 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 on 

a commercial scale for domestic 

consumption using approved pathways, 

gives us a 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 some 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 final 

rule.200 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 the 

remainder of 2015 or 2016. These 

include facilities owned and operated 

by Beta Renewables, Enerkem, Ensyn, 

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. For the purposes of this final rule 

we have considered all of the companies 

who have registered foreign facilities 

under the RFS program to be potential 

sources of cellulosic biofuel in the 

remainder of 2015 and 2016. We believe 

that due to the strong demand for 

cellulosic biofuel in local markets, the 

significant technical challenges 

associated with the operation of 

cellulosic biofuel facilities, and the time 

necessary for potential foreign cellulosic 

biofuel producers to register under the 

RFS program and arrange for the 

importation of cellulosic biofuel to the 

United States, cellulosic biofuel imports 

from facilities not currently registered to 

generate cellulosic biofuel RINs are 

highly unlikely in 2015 and 2016. We 

have therefore only considered foreign 

cellulosic biofuel production from 

facilities that are currently registered in 

our projection of available volume of 

cellulosic biofuel in 2015 and 2016. 

Two foreign facilities that have 

registered as cellulosic biofuel 

producers have already generated 

cellulosic biofuel RINs for fuel exported 

to the United States; projected volumes 

from each of these facilities are included 

in our projection of available volumes 

for 2015 and 2016. One facility has 

registered as a cellulosic biofuel 

producer, but has not yet generated any 

cellulosic RINs. EPA contacted 

representatives of this facility and 

received confirmation that they 

intended to export cellulosic biofuel to 

the United States in 2016. EPA has 

therefore included potential volumes 

from this facility in our 2016 volume 

production projections. 

3. Summary of Volume Projections for 

Individual Companies 

The information we have gathered on 

cellulosic biofuel producers, described 

above, along with the production 

estimates from EIA and data collected 

through EMTS, forms the basis for our 

projected volumes of cellulosic biofuel 

production for each facility in 2015 and 

2016. As discussed above, we have 

focused on commercial scale cellulosic 

biofuel production facilities. 

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 docket,201 and the relevant 

information used to project a likely 

production range for each company is 

summarized in Table IV.B.3–1 below.202

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produce cellulosic CNG/LNG. The individual 

facilities included in our assessment are listed in 

‘‘November 2015 Assessment of Cellulosic Biofuel 

Production from Biogas (2015–2016)’’, 

memorandum from Dallas Burkholder to EPA Air 

Docket EPA–HQ–OAR–2015–0111. 

203The 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). 

204Where 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. 

205For more information on these facilities see 

‘‘November 2015 Assessment of Cellulosic Biofuel 

Production from Biogas (2015–2016)’’, 

memorandum from Dallas Burkholder to EPA Air 

Docket EPA–HQ–OAR–2015–0111. 

206Letter from Adam Sieminski, EIA 

Administrator to Gina McCarthy, EPA 

Administrator September 16, 2015. 

TABLE IV.B.3—PROJECTED PRODUCERS OF CELLULOSIC BIOFUEL BY 2016 

Company name Location Feedstock Fuel 

Facility 

capacity 

(MGY) 203

Construction start 

date First production 204

Abengoa .................. Hugoton, KS .......... Corn Stover ........... Ethanol ............ 25 ................ September 2011 .... 4Q 2015. 

Cool Planet ............. Alexandria, LA ....... Wood Waste .......... Gasoline .......... 1 .................. 2Q 2015 ................. Late 2016. 

CNG/LNG Producers 205Various ................... Biogas .................... CNG/LNG ........ Various ........ N/A ......................... August 2014. 

DuPont .................... Nevada, IA ............. Corn Stover ........... Ethanol ............ 30 ................ November 2012 ..... 4Q 2015. 

Edeniq ..................... Various ................... Corn Kernel Fiber .. Ethanol ............ Various ........ Various ................... Various. 

Ensyn ...................... Renfrew, ON .......... Wood Waste .......... Heating Oil ...... 3 .................. N/A ......................... 2014. 

GranBio ................... Sa ̃o Miguel dos 

Campos, Brazil.

Sugarcane bagasse Ethanol ............ 21 ................ Mid 2012 ................ September 2014. 

INEOS Bio .............. Vero Beach, FL ...... Vegetative Waste .. Ethanol ............ 8 .................. February 2011 ....... 1Q 2016.

Poet ......................... Emmetsburg, IA ..... Corn Stover ........... Ethanol ............ 24 ................ March 2012 ............ 4Q 2015. 

QCCP ...................... Galva, IA ................ Corn Kernel Fiber .. Ethanol ............ 2 .................. Late 2013 ............... October 2014. 

C. Projection From the Energy 

Information Administration 

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

Act requires EIA to ‘‘. . . provide to the 

Administrator of the Environmental 

Protection Agency an estimate, with 

respect to the following calendar year, 

of the volumes of transportation fuel, 

biomass-based diesel, and cellulosic 

biofuel projected to be sold or 

introduced into commerce in the United 

States.’’ EIA provided these estimates to 

us on September 16, 2015.206 With 

regard to cellulosic biofuel, the EIA 

estimated that the available volume in 

2015 would be 3 million gallons and in 

2016 would be 10 million gallons. A 

summary of the commercial scale plants 

they considered is shown below in 

Table IV.C–1. 

TABLE IV.C–1—LIST OF CELLULOSIC BIOFUEL PLANTS CONSIDERED IN EIA’S PROJECTIONS

Year online Company Location Product 

2013 ............ INEOS Bio ...................................................................... Vero Beach, FL .............................................................. Ethanol. 

2014 ............ Quad County .................................................................. Galva, IA ......................................................................... Ethanol. 

2015 ............ Abengoa ......................................................................... Hugoton, KS ................................................................... Ethanol. 

2015 ............ POET .............................................................................. Emmetsburg, IA .............................................................. Ethanol. 

2016 ............ DuPont ............................................................................ Nevada, IA ...................................................................... Ethanol. 

EIA indicated in their letter that they 

did not include estimates for cellulosic 

biofuel produced from biogas from 

landfills, municipal wastewater 

treatment facilities, separated MSW 

digesters, or agricultural digesters or 

those producing renewable heating oil, 

which represent approximately 90% of 

our projected cellulosic biofuel volume 

for 2016. When limiting the scope of our 

projection to the companies assessed by 

EIA, we note that while our volume 

projections are not identical, they are 

very similar. EPA projects 

approximately 4 million gallons of 

liquid cellulosic biofuel will be 

produced in 2015 (approximately 2 

million gallons has been produced 

through September 2015, and we project 

an additional 2 million gallons will be 

produced through the end of 2015). This 

projection includes renewable heating 

oil (up to 1 million gallons) which was 

not considered in EIA’s projection. For 

2016 EPA projects 23 million gallons of 

liquid cellulosic biofuel will be 

produced. Of this 23 million gallons, up 

to 3 million gallons is expected to come 

from renewable heating oil, and up to 2 

million gallons is expected to come 

from imported cellulosic biofuel. 

Neither of these sources are included in 

EIA’s projection. EIA did not provide 

detail on the basis of their projections 

other than the list of expected producers 

shown above, so we cannot say 

precisely why EPA and EIA’s 

projections differ. We further note that 

if we used EIA’s projections for liquid 

cellulosic biofuel production without 

modification to reflect other data and 

our judgement the impact on the 

cellulosic biofuel standard overall for 

2016 would be less than 5%. 

D. 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 section 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 

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207http://www2.epa.gov/fuels-registrationreporting-and-compliance-help/2014-renewablefuel-standard-data. 208 In 2014 Cellulosic Biofuel and Cellulosic 

Diesel RINs were retired for Remedial Actions and 

Invalid RINs. 

209The 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. 

210All numbers from EPA Web site: http://www.

epa.gov/otaq/fuels/rfsdata/index.htm. Accessed 

February 9, 2015. 

biofuel and cellulosic diesel RINs 

generated on a month-by-month basis 

on our Web site.207 The number of 

cellulosic biofuel and cellulosic diesel 

RINs generated for each month of 2014 

can be found in Table IV.D–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.208 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.209 In this 

final rule, we are establishing 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. 

TABLE IV.D–1—CELLULOSIC BIOFUEL RIN GENERATION IN 2014 210

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 .................................................. 348,973 4,997 

RINs Available ................................................................................................................................................. 33,011,587 54,308 

Available Cellulosic RINs (D3 and D7) ........................................................................................................... 33,065,895 

E. 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.D, 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). Since the time of the NPRM, 

data have become available for 

cellulosic RIN generations in April– 

September of 2015. This data has been 

used in our projection of available 

cellulosic biofuel volume for this final 

rule. We have again assumed that no 

cellulosic biofuel was exported in the 

first nine months of 2015. Data on the 

number of cellulosic biofuel RINs 

generated and retired for purposes other 

than compliance with the 2015 RVO 

from January 2015 through September 

2015 are shown in Table IV.E–1 below. 

TABLE IV.E–1—CELLULOSIC BIOFUEL RIN GENERATION AND RETIREMENTS

[January 2015–September 2015] 

Cellulosic 

biofuel 

(D3) 

Cellulosic 

diesel 

(D7) 

January 2015 ................................................................................................................................................... 4,108,477 0 

February 2015 ................................................................................................................................................. 7,950,318 0 

March 2015 ...................................................................................................................................................... 7,803,420 0 

April 2015 ......................................................................................................................................................... 7,831,248 0 

May 2015 ......................................................................................................................................................... 9,341,048 173,731 

June 2015 ........................................................................................................................................................ 12,506,549 0 

July 2015 ......................................................................................................................................................... 12,999,815 0 

August 2015 ..................................................................................................................................................... 13,805,608 53,303 

September 2015 .............................................................................................................................................. 12,316,744 0 

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211For the purposes of projecting RIN generation 

from CNG/LNG projections were made for parent 

companies, generally representing multiple 

facilities. For more detail see ‘‘November 2015 

Assessment of Cellulosic Biofuel Production from 

Biogas (2015–2016)’’, memorandum from Dallas 

Burkholder to EPA Air Docket EPA–HQ–OAR– 

2015–0111. 

212The scaling factor is 0.25; equal to the 3 

months for which production data is being 

projected divided by 12. 

213We 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 

Continued 

TABLE IV.E–1—CELLULOSIC BIOFUEL RIN GENERATION AND RETIREMENTS—Continued 

[January 2015–September 2015] 

Cellulosic 

biofuel 

(D3) 

Cellulosic 

diesel 

(D7) 

Total .......................................................................................................................................................... 88,663,227 227,034 

RINs retired for reasons other than compliance ............................................................................................. 716,177 22,702 

RINs Available ................................................................................................................................................. 87,947,050 204,332 

Total Available Cellulosic RINs (D3 and D7) ........................................................................................... 88,151,382 

For months in which information is 

unavailable EPA has generally used the 

projection methodology described in the 

proposed rule, with one change based 

on comments received on the NPRM. 

Consistent with our proposed rule, 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.211 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 (October–December 2015). 

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 final 

rule EPA has set the low end of the 

production range for each company 

based on the volume of RIN-generating 

cellulosic biofuel the company has 

produced in the most recent 12 months 

for which data is available. 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 are not available, 

this number is then multiplied by a 

scaling factor 212 to appropriately scale 

this annual production volume for use 

as the low end of the range over the last 

three of months of 2015 for which actual 

production data is unavailable. 

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. Several 

commenters also noted low market 

prices for cellulosic biofuel as an 

additional reason that fuel production 

may be reduced or suspended until such 

a time as the market for the fuel 

produced improves. 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 facility closures. 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 offtake 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.213 We then compared the 

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77504 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

generation from CNG/LNG producers see 

‘‘November 2015 Assessment of Cellulosic Biofuel 

Production from Biogas (2015–2016)’’, 

memorandum from Dallas Burkholder to EPA Air 

Docket EPA–HQ–OAR–2015–0111. 

214 ‘‘Cellulosic Biofuel Producer Company 

Descriptions (November 2015)’’, memorandum from 

Dallas Burkholder to EPA Air Docket EPA–HQ– 

OAR–2015–0111. 

215For individual company information see 

‘‘November 2015 Cellulosic Biofuel Individual 

Company Projections for 2014–2016 (CBI)’’, 

memorandum from Dallas Burkholder to EPA Air 

Docket EPA–HQ–OAR–2015–0111. 

volume calculated using this 

methodology to the company’s own 

expectations for the period in which we 

are projecting production where they 

were available. In cases where the 

company projection for any given year 

exceeds our benchmark volume we used 

the benchmark volume, rather than the 

company estimate, as the high end of 

the range for that company. If the 

production estimate EPA received from 

a company was lower than the volume 

calculated using the projected start-up 

date, facility capacity, and six month 

straight-line ramp-up period, EPA used 

the company production targets instead. 

EPA received comments from biofuels 

producers stating that production 

projections we receive from companies 

should be used as the basis for the mean 

value of any projected production range. 

They argue that EPA should defer to the 

technical expertise of the cellulosic 

biofuel manufacturers who provide 

these projections, and that it is 

inappropriate to base the low end of the 

range on previous production data. EPA 

understands that the volume projections 

provided by companies included in our 

projection are intended to represent the 

companies’ expectations for production, 

rather than the high end of a potential 

production range. We also acknowledge 

the technical expertise of these 

companies and the significant amount 

of investment that has gone into the 

development of these biofuel 

production processes as they have 

progressed from R&D through 

demonstration and pilot scale in 

preparation for the first commercial 

scale facilities. While acknowledging 

these facts, we do not believe it would 

be appropriate to ignore the history of 

the cellulosic biofuel industry. Each 

year since 2010, 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 D.C. 

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 rampup 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. 

EPA also received comments claiming 

that the proposed cellulosic biofuel 

volumes were unreasonably high. These 

commenters generally claimed that in 

light of the inability of cellulosic biofuel 

companies to achieve their projected 

production volumes, start-up dates, and 

ramp-up schedules in previous years the 

only reasonable basis for projecting 

future production volumes was 

historical production data. They 

suggested that EPA should project 

future production volumes based solely 

on available cellulosic RIN generation 

data from previous months. EPA 

believes this would be inconsistent with 

our charge to project available cellulosic 

biofuel volume by taking a neutral aim 

at accuracy. Adopting such an approach 

would effectively mean ignoring the 

potential for facilities that have not 

generated RINs during the historical 

time period used for the basis of our 

future projection to contribute 

significant volumes in the future. This 

would not only be inconsistent with our 

expectations for an industry that has 

shown substantial growth over the last 

several years, but also with 

congressional intent to provide 

incentives for the rapid expansion of the 

cellulosic biofuel industry. Most 

importantly, a comparison of the results 

of the method suggested by these 

commenters for the cellulosic biofuel 

standard in 2015 (90 million ethanolequivalent gallons) and those proposed 

by EPA (106 million ethanol-equivalent 

gallons) to the volume that would be 

expected to be produced in 2015 using 

a conservative extrapolation of the 

monthly average cellulosic biofuel RIN 

generation observed in the first nine 

months of 2015 over the remaining three 

months (118 million gallons) shows this 

suggested method to be inappropriately 

conservative. 

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 or 2016 can be found 

in a memorandum to the docket.214 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.215

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 for each company 

represents values such that it is possible 

but unlikely that actual volumes would 

fall outside of those ranges. At present, 

data do not exist to allow EPA to 

develop a unique production probability 

distribution for each company based on 

the available information, as some 

commenters suggested. 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 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77505 

216For more information see ‘‘November 2015 

Assessment of Cellulosic Biofuel Production from 

Biogas (2015–2016)’’, memorandum from Dallas 

Burkholder to EPA Air Docket EPA–HQ–OAR– 

2015–0111. Using these percentile values and the 

ranges from the NPRM results in a production 

projection much closer to the actual production of 

cellulosic biofuel in 2015. 

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 several 

groups with similar characteristics and 

projected the likely production from 

each of these groups. In our proposed 

rule we separated all of the potential 

cellulosic biofuel producers into two 

groups; those who have already 

achieved consistent commercial-scale 

production and those who have not. 

EPA received comments on our 

proposed rule that biogas producers 

should be treated differently than liquid 

biofuel producers since there was very 

little technology risk associated with the 

production and collection of biogas. We 

believe these comments are valid, and 

that the available data support using a 

percentile value to projected production 

from biogas facilities that differs from 

the value used for liquid biofuel 

producers. For this final rule we have 

used the 50th and 75th percentile values 

within the projected ranges to project 

likely cellulosic biofuel production from 

new and consistently producing 

facilities producing CNG/LNG from 

biogas.216

We continue to believe that 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 four groups (liquid cellulosic 

biofuel producers with and without 

consistent production and biogas 

producers with and without consistent 

production) 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.E–2 through IV.E–4 below. 

TABLE IV.E–2—2015 PRODUCTION RANGES FOR LIQUID CELLULOSIC BIOFUEL PRODUCERS WITHOUT CONSISTENT

COMMERCIAL SCALE PRODUCTION

[Million gallons] 

Low end of the 

range 

High end of 

the range 

Abengoa ................................................................................................................................................................... 0 1 

CoolPlanet ............................................................................................................................................................... 0 0 

DuPont ..................................................................................................................................................................... 0 1 

Poet .......................................................................................................................................................................... 0 1 

Total .................................................................................................................................................................. a 0 a 3 

a Rounded to the nearest million gallons. 

TABLE IV.E–3—2015 PRODUCTION RANGES FOR LIQUID CELLULOSIC BIOFUEL PRODUCERS WITH CONSISTENT

COMMERCIAL SCALE PRODUCTION

[Million gallons] 

Low end of the range High end of the range 

Ensyn ....................................................... bX 0.5 

Quad County Corn Processors ............... bX 0.5 

Total .................................................. a 0 a 1 

a Rounded 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. 

TABLE IV.E–4—2015 PRODUCTION RANGES FOR CNG/LNG PRODUCED FROM BIOGAS

[Million gallons] 

Low end of the range a High end of the range a

CNG/LNG Producers (New Facilities) ............................................. 0 0 

CNG/LNG Producers (Currently generating RINs) ......................... 27 35 

a Rounded to the nearest million gallons. 

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77506 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

217While ‘‘new’’ CNG/LNG facilities may not face 

the same challenges related to start-up and scaleup there is 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 non-transportation 

markets. These uncertainties can significantly 

impact the number of RINs generated by a CNG/

LNG producer, and we therefore believe that 

projecting production from these ‘‘new’’ facilities at 

the 50th percentile of the range is appropriate. 

218 ‘‘November 2015 Assessment of Cellulosic 

Biofuel Production from Biogas (2015–2016)’’, 

memorandum from Dallas Burkholder to EPA Air 

Docket EPA–HQ–OAR–2015–0111. 

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.E–2 and IV.E–4 that best 

reflects the likely production volume for 

each group of companies. For liquid 

cellulosic biofuel producers that have 

not yet achieved consistent commercialscale production (Table IV.E–2) we are 

finalizing the use of the 25th percentile 

of the projected production range. This 

does not mean, as some commenters 

suggested, that we expect these facilities 

to operate at 25% of their nameplate, 

but rather that we expect that this group 

of facilities will produce a volume of 

cellulosic biofuel at the 25th percentile 

of the projected range. We note again 

that the high end of the range for each 

company, which were used to calculate 

the high end of the range for the group 

of companies, is significantly lower than 

the nameplate capacity of each facility, 

in some cases dramatically so, based on 

the expected start-up date of the facility. 

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. More recently, 

facilities owned and operated by 

Abengoa and Poet-DSM have also 

experienced unexpected challenges that 

resulted in commercial scale production 

being delayed. It is necessary to 

consider this history when projecting 

production volumes from companies 

who have not yet achieved consistent 

production at commercial scale.217

For the group of liquid cellulosic 

biofuel producers that have achieved 

consistent commercial-scale production 

(Table IV.E–3) we are projecting the 

available volume produced by these 

facilities at 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 

September 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. As stated above, this does 

not mean that we anticipate that each of 

these facilities within each group will 

produce at the 50th percentile of the 

projected range over the final 3 months 

of 2015, but rather that as a group the 

50th percentile is a realistic projections 

for this 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 challenges and 

produce closer to the low end of the 

range. 

Finally, EPA has projected production 

for companies generating cellulosic 

biofuel RINs from biogas at the 50th 

percentile for those facilities that have 

not yet generated cellulosic biofuel RINs 

and at the 75th percentile for those 

facilities that have achieved consistent 

commercial scale production. In our 

proposed rule we projected volumes 

from these facilities at the 25th and 50th 

percentile of the projected production 

ranges respectively, consistent with the 

way we projected likely production 

from liquid cellulosic biofuel producers. 

We received comments that our 

methodology under-estimated the 

potential for the generation of cellulosic 

RINs from biogas, with some 

commenters claiming that the mature 

state of the technology required to 

produce and/or collect biogas and clean 

it to pipeline quality justified a using a 

higher percentile to projected 

production from these facilities. In our 

proposed rule EPA noted the differences 

in the status of the technologies used to 

produce liquid cellulosic biofuels and 

cellulosic biofuel from biogas. We 

nevertheless proposed to use the same 

percentiles for both liquid cellulosic 

biofuels and cellulosic biofuel from 

biogas due to uncertainties related to the 

ability of the biogas production facilities 

to demonstrate the use of the biogas as 

transportation fuel and a lack of RIN 

generation data to compare to previous 

projections on the part of many of the 

biogas facilities. After reviewing the fuel 

production and RIN generation history 

of these facilities, and with these 

comments in mind, EPA has decided to 

use higher percentile values to project 

likely production from cellulosic biogas 

producers as compared to liquid 

cellulosic biofuel producers.218 The 

projected volume of cellulosic RINS 

generated for CNG/LNG from biogas are 

shown in Table IV.E–5 below. 

TABLE IV.E–5—PROJECTED VOLUME OF CELLULOSIC BIOFUEL IN 2015 FOR MONTHS WITHOUT PRODUCTION DATA

[Million gallons] a

Low end of the 

range 

High end of 

the range Percentile Projected volume b

Liquid Cellulosic Biofuel Producers Without Consistent Commercial Scale 

Production .................................................................................................... 0 3 25th 1 

Liquid Cellulosic Biofuel Producers With Consistent Commercial Scale Production .......................................................................................................... 0.5 1 50th 1 

CNG/LNG Produced From Biogas Without Consistent Commercial Scale 

Production .................................................................................................... 0 0 50th 0 

CNG/LNG Produced From Biogas With Consistent Commercial Scale Production .......................................................................................................... 27 35 75th 33 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77507 

219We disagree with commenters who stated that 

EPA should anticipate the approval of new 

pathways and include production from these 

pathways in our projections. Assuming the 

approval of new pathways, and the subsequent 

registration and production from new facilities 

using these pathways, is highly uncertain and 

inconsistent with our attempt at neutral projections, 

particularly for pathways that have not yet been 

proposed. 

TABLE IV.E–5—PROJECTED VOLUME OF CELLULOSIC BIOFUEL IN 2015 FOR MONTHS WITHOUT PRODUCTION DATA— 

Continued 

[Million gallons] a

Low end of the 

range 

High end of 

the range Percentile Projected volume b

Total .......................................................................................................... N/A N/A N/A 35 

aThe projections in this table are for October 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 0.25 (since it is only a projection for 3 months of 

the year). The high end of the range is based on projected production for the final 3 months of 2015. b Rounded to the nearest million gallons. 

As noted in our proposed rule, 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 are available) 

will increase. Second, we would use the 

higher percentile values 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. 

As new pathways for the production of 

cellulosic biofuel are approved, we will 

also consider volumes produced using 

these pathways in our projections.219

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.E–6 below. For 2015 we are finalizing 

a cellulosic biofuel standard of 123 

million gallons. 

TABLE IV.E–6—PROJECTED AVAILABLE CELLULOSIC BIOFUEL IN 2015 

Cellulosic Biofuel Production (January 2015–September 2015) ............................................................................................. 88 Million Gallons. 

Projected Cellulosic Biofuel Production (October 2015–December 2015) ............................................................................. 35 Million Gallons. 

Projected Available Volume of Cellulosic Biofuel in 2015 ...................................................................................................... 123 Million Gallons. 

F. Cellulosic Biofuel Volume for 2016 

To project the volume of potentially 

available cellulosic biofuel in 2016 we 

are using a methodology very similar to 

the methodology used for projecting 

cellulosic biofuel production in 2015 for 

months in which actual production data 

are not available. The only difference is 

that in 2016 a scaling factor is not used 

in calculating the low end of the 

projected ranges, as we are projecting 

production over the entire year rather 

than for only 3 months. For 2016 we 

separated the list of potential producers 

of cellulosic biofuel into four groups 

according to whether they are producing 

liquid cellulosic biofuel or CNG/LNG 

from biogas and the production history 

of the facilities (See Table IV.F–1 

through Table IV.F–3). 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 

reflects actual production data over the 

last 12 months for which data is 

available. This is the same approach 

used to establish the low end of the 

range for each of the potential cellulosic 

biofuel producers in 2015. 

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 data was not 

available (this methodology is covered 

in further detail in Section IV.E 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 used the same percentile values to 

projected a production volume within 

the established ranges 2016 as we did in 

2015; the 50th and 25th percentiles 

respectively for liquid cellulosic biofuel 

producers with and without a history of 

consistent cellulosic biofuel production, 

and the 75th and 50th percentiles 

respectively for producers of CNG/LNG 

from biogas with and without a history 

of consistent commercial scale 

production. These percentile values are 

discussed in more detail in Section IV.E 

above. 

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77508 Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 

220API v. EPA, 706 F 3d 474 (D.C. Cir. January 

25, 2013). 

TABLE IV.F–1—2016 PRODUCTION RANGES FOR LIQUID CELLULOSIC BIOFUEL PRODUCERS WITHOUT CONSISTENT

COMMERCIAL SCALE PRODUCTION

[Million gallons] 

Low end of the 

range a

High end of 

the range a

Abengoa ................................................................................................................................................................... 0 22 

CoolPlanet ............................................................................................................................................................... 0 0 

DuPont ..................................................................................................................................................................... 0 26 

Edeniq ...................................................................................................................................................................... 0 5 

GranBio .................................................................................................................................................................... 0 2 

Ineos Bio .................................................................................................................................................................. 0 6 

Poet .......................................................................................................................................................................... 0 15 

Aggregate Range ..................................................................................................................................................... 0 76 

Projected Production (25th Percentile of Range) .................................................................................................... 19 

a Rounded to the nearest million gallons. 

TABLE IV.F–2—2016 PRODUCTION RANGES FOR LIQUID CELLULOSIC BIOFUEL PRODUCERS WITH CONSISTENT

COMMERCIAL SCALE PRODUCTION

[Million gallons] 

Low end of the 

Range a

High end of 

the Range a

Ensyn ....................................................................................................................................................................... bX 3 

Quad County Corn Processors ............................................................................................................................... bX 2 

Aggregate Range ..................................................................................................................................................... 2 5 

Projected Production (50th Percentile of Range) .................................................................................................... 4 

a Rounded 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. 

TABLE IV.F–3—2016 PRODUCTION RANGES FOR CNG/LNG PRODUCED FROM BIOGAS

[Million gallons] 

Low end of the 

range a

High end of 

the range a

CNG/LNG Producers (New Facilities) ..................................................................................................................... 0 63 

CNG/LNG Producers (Currently generating RINs) ................................................................................................. 107 197 

a Rounded to the nearest million gallons. 

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 four groups discussed above (shown 

in Table IV.F–4 below). For 2016 we are 

finalizing a cellulosic biofuel volume 

requirement of 230 million gallons. 

TABLE IV.F–4—PROJECTED VOLUME OF CELLULOSIC BIOFUEL IN 2016 

[Million gallons] 

Low end of the 

range a

High end of 

the range a Percentile Projected volume a

Liquid Cellulosic Biofuel Producers; New Facilities ......................................... 0 76 25th 19 

Liquid Cellulosic Biofuel Producer; Consistent Production ............................. 2 5 50th 4 

CNG/LNG Producers; New Facilities ............................................................... 0 63 50th 32 

CNG/LNG Producers; Consistent Production .................................................. 107 197 75th 175 

Total .......................................................................................................... N/A N/A N/A 230 

aVolumes rounded to the nearest million gallons. 

G. 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.220 The Court 

found that in establishing the applicable 

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Federal Register / Vol. 80, No. 239 / Monday, December 14, 2015 / Rules and Regulations 77509 

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 

rescinding the 2011 cellulosic biofuel 

applicable standard and will refund the 

money paid by obligated parties to 

purchase cellulosic waiver credits to 

comply with the standard. The only 

comments received on this issue were 

supportive of this action. 

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 final volumes 

for advanced biofuel and total 

renewable fuel, BBD, and cellulosic 

biofuel, respectively. The volumes to be 

used to determine the four final 

percentage standards are shown in 

Table V.A–1. 

TABLE V.A–1—FINAL VOLUMES FOR USE IN SETTING THE APPLICABLE PERCENTAGE STANDARDS

2014 2015 2016 

Cellulosic biofuel (million gallons) ............................................................................................... 33 123 230 

Biomass-based diesel (billion gallons) a ...................................................................................... 1.63 1.73 1.90 

Advanced biofuel (billion gallons) ................................................................................................ 2.67 2.88 3.61 

Renewable fuel (billion gallons) ................................................................................................... 16.28 16.93 18.11 

a Represents physical volume. 

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221A small refinery, as defined by the statute, is 

a refinery with an average daily crude throughput 

of 75,000 barrels or less (see 40 CFR 80.1441). As 

this is a facility-based definition, not companybased as SBA’s small refiner definition is, it follows 

that not all small refiners’ facilities meet the 

definition of a small refinery. A small refiner that 

meets the parameters of 40 CFR 80.1442 may also 

be eligible for an exemption. 

222For 2011 and 2012 13 small refineries were 

granted an extension to the statutory exemption 

based on the findings of a Department of Energy 

investigation into the disproportionate economic 

hardship experienced by small refineries. 

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): 

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. 

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, which are projected to be 

used in the year in which the standards 

will apply. The projected gasoline and 

diesel volumes provided by 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, 

and amended by the Energy 

Independence and Security Act of 2007, 

Congress provided a temporary 

exemption to small refineries 221

through December 31, 2010. Congress 

provided that small refineries could 

receive a temporary extension of the 

exemption based on an EPA 

determination of ‘‘disproportionate 

economic hardship’’ on a case-by-case 

basis in response to small refinery 

petitions.222

EPA, in consultation with the 

Department of Energy, evaluates the 

structural impacts petitioning refineries 

would likely face in achieving 


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223 Lion Oil Company v. EPA, 792 F.3d 978; 2015 

U.S. App. LEXIS 11725 (8th Cir. 2015); Monroe 

Energy, LLC v. EPA, 750 F.3d 909; 409 U.S. App. 

DC 413 (D.C. Cir. 2014). 

224EPA has also found in its recent analyses of 

the RIN market that in a competitive market typical 

of the gasoline and diesel marketplace, the cost of 

RFS compliance (RINs) is passed along to 

consumers and recovered by refiners through the 

prices of the gasoline blendstocks they sell. 

Consequentially, not only are the costs of the RFS 

program automatically normalized across the 

industry based on production volume, but these 

costs are passed on to consumers. 

225See 75 FR 76804 (December 9, 2010). 

226 75 FR 14716, March 26, 2010. 

227To 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 24, 2015 EIA State Energy Data System (SEDS), 

Energy Consumption Estimates. 

228 Details of volumes and calculations are 

available in the docket. 

compliance with the RFS requirements 

and how compliance would affect their 

ability to remain competitive and 

profitable. A disproportionate economic 

hardship exists where a refinery faces a 

high cost of compliance relative to the 

industry average and where compliance 

would significantly impair its 

operations. The U.S. Courts of Appeal 

for the Eighth and D.C. Circuits 223 have 

upheld this approach, finding it 

reasonable for DOE and EPA to 

conclude that the relative costs of 

compliance alone cannot demonstrate 

disproportionate economic hardship 

because all refineries face a direct cost 

associated with participation in the RFS 

program.224

EPA has granted some exemptions 

pursuant to this process in the past, and 

has granted exemptions for three small 

refineries for 2014. The final applicable 

percentage standards for 2014 reflect the 

fact that the gasoline and diesel volumes 

associated with these three small 

refineries have been exempted, as 

provided in the formulas described in 

the preceding section. However, at this 

time, no exemptions have been 

approved for 2015 or 2016, and 

therefore we have calculated the 

percentage standards for these years 

without an adjustment for exempted 

volumes. As stated in the final rule 

establishing the 2011 standards, ‘‘EPA 

believes the Act is best interpreted to 

require issuance of a single annual 

standard in November that is applicable 

in the following calendar year, thereby 

providing advance notice and certainty 

to obligated parties regarding their 

regulatory requirements. Periodic 

revisions to the standards to reflect 

waivers issued to small refineries or 

refiners would be inconsistent with the 

statutory text, and would introduce an 

undesirable level of uncertainty for 

obligated parties.’’ 225 Thus, any 

additional exemptions for small 

refineries that are issued after today will 

not affect the 2014, 2015, or 2016 

standards. 

3. Final Standards 

As specified in the RFS2 final rule,226

the percentage standards are based on 

energy-equivalent gallons of renewable 

fuel, with the cellulosic biofuel, 

advanced biofuel, and total renewable 

fuel standards based on ethanol 

equivalence and the 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. 

The values of the variables described 

above are shown in Table V.B.3–1.227

TABLE V.B.3–1—VALUES FOR TERMS IN CALCULATION OF THE FINAL STANDARDS 228

[Billion gallons] 

Term 2014 2015 2016 

RFVCB .......................................................................................................................................... 0.033 0.123 0.230 

RFVBBD ........................................................................................................................................ a 1.66 b 1.77 1.90 

RFVAB .......................................................................................................................................... 2.67 2.88 3.61 

RFVRF .......................................................................................................................................... 16.28 16.93 18.11 

G .................................................................................................................................................. 136.48 139.38 139.96 

D .................................................................................................................................................. 55.67 54.05 55.26 

RG ................................................................................................................................................ 13.42 13.81 13.85 

RD ................................................................................................................................................ 1.55 1.76 2.05 

GS ................................................................................................................................................ 0.00 0.00 0.00 

RGS ............................................................................................................................................. 0.00 0.00 0.00 

DS ................................................................................................................................................ 0.00 0.00 0.00 

RDS ............................................................................................................................................. 0.00 0.00 0.00 

GE ................................................................................................................................................ 0.01 0.00 0.00 

DE ................................................................................................................................................ 0.03 0.00 0.00 

a Represents the biodiesel-equivalent volume of actual 2014 supply, which was 2.49 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. b Represents the biodiesel-equivalent volume of actual 2015 supply, which was 2.65 bill D4 RINs. Actual physical volume was 1.73 billion 

physical gallons, composed of 1.45 bill gal of biodiesel and 0.28 bill gal renewable diesel. 

Using the volumes shown in Table 

V.B.3–1, we have calculated the final 

percentage standards for 2014, 2015, 

and 2016 as shown in Table V.B.3–2. 

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229See 75 FR 14696 (March 26, 2010). 

TABLE V.B.3–2—FINAL PERCENTAGE STANDARDS

2014 

(%) 

2015 

(%) 

2016 

(%) 

Cellulosic biofuel .......................................................................................................................... 0.019 0.069 0.128 

Biomass-based diesel .................................................................................................................. 1.41 1.49 1.59 

Advanced biofuel ......................................................................................................................... 1.51 1.62 2.01 

Renewable fuel ............................................................................................................................ 9.19 9.52 10.10 

VI. Amendments to Regulations 

We are finalizing several revisions to 

the RFS regulations, which are 

described below. The first 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 

addresses annual compliance reporting 

and associated attest reporting 

deadlines. 

A. Changes to the Algal Biofuel 

Pathways 

In the March 2010 RFS rule (75 FR 

14670), EPA established two pathways 

for biofuels derived from algal oil to 

generate D-Code 4 (Biomass-Based 

Diesel) or 5 (Advanced) RINs. The 

analyses supporting 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.229

Biofuel produced with algae grown 

through other means is likely to have 

different lifecycle GHG emissions 

impacts. EPA proposed and is now 

finalizing changes to our regulations 

that clarify that the existing algal oil 

pathways adopted as part of the March 

2010 RFS rule apply only to oil from 

algae grown photosynthetically. 

Specifically, we are finalizing the 

proposed replacement of ‘‘algal oil’’ as 

a feedstock in Table 1 to 40 CFR 80.1426 

with ‘‘oil from algae grown 

photosynthetically.’’ We are also 

finalizing the proposed definition for 

‘‘algae grown photosynthetically’’ to 40 

CFR 80.1401. EPA did not propose or 

seek comment on adding a regulatory 

definition of ‘‘algae.’’ 

EPA received several comments in 

support of these clarifications. EPA also 

received several comments that 

suggested these clarifications were not 

necessary and urged the agency to 

clarify a number of issues related to the 

production of algal biofuel using 

different pathway configurations. 

Comments also requested the agency 

expand the interpretation of algae to 

include all autotrophic microorganisms. 

These issues are beyond the scope of 

this rulemaking, which is limited to the 

proposed regulatory amendments 

discussed above that clarify the existing 

algal oil pathways. 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. 

B. Annual Compliance Reporting and 

Attest Engagement Deadlines Under the 

RFS Program 

Based on the comments received and 

the discussion below, the EPA is 

finalizing the annual compliance 

reporting and attest engagement 

deadlines described in Table VI.B–1. In 

summary, the EPA is modifying for 

purposes of the final rule the proposed 

changes to the 2013 compliance 

reporting deadline for obligated parties 

and exporters, and the 2014 and 2015 

compliance reporting deadlines for 

obligated parties. The EPA is also 

modifying for purposes of the final rule 

the proposed changes to the 2013 attest 

engagement reporting deadline for RIN 

generators, the 2014 attest engagement 

reporting deadline for RIN generators 

and third-party auditors, and the 2015 

attest engagement reporting deadline for 

obligated parties. The EPA is finalizing 

all other compliance and attest 

engagement reporting deadlines. 

Commenters on the proposed due 

dates for the 2013, 2014, and 2015 RFS 

annual compliance and attest 

engagement reports generally supported 

the EPA’s approach to staggering the 

deadlines between compliance years. 

However, as one commenter noted, the 

time between the deadline for 2015 RFS 

attest engagement reports for obligated 

parties conflicts with 2016 RFS annual 

compliance and attest reporting 

deadlines for obligated parties. The 

commenter argued that obligated parties 

rely upon the results of the prior 

compliance year’s attest engagement 

reports to correct vital information that 

is needed to accurately determine an 

obligated party’s RVO and RIN balance. 

Since the proposed deadlines for 2015 

attest engagement reporting occurred 

after the 2016 annual compliance 

reporting deadline, obligated parties 

would have been unable to utilize the 

2015 attest engagement report to ensure 

timely, accurate 2016 annual 

compliance reports. The result of this 

conflict would have been the 

unnecessary resubmission of 2016 

annual compliance reports by obligated 

parties to address issues identified in 

the 2015 attest engagement reports. 

Additionally, certified public 

accountants (CPAs) and certified 

internal auditors (CIAs) would not have 

been able to rely upon the 2015 attest 

engagement report for the 2016 attest 

engagement procedures since the 

proposed deadlines for 2015 and 2016 

attest engagements reports were the 

same. The commenter noted that six 

months was too much time between the 

2014 and 2015 annual compliance 

reporting deadlines for obligated parties. 

(It should be noted that the proposed 

2014 and 2015 RFS annual compliance 

deadlines for obligated parties was only 

five months apart, not six months.) 

While we recognize the concerns 

raised, due to constraints on the EPA’s 

reporting systems and staff, we are 

unable to accommodate a faster annual 

compliance reporting schedule. 

Additionally, we have concerns that 

obligated parties may have difficulty 

complying with a more compressed RFS 

reporting schedule. Obligated parties 

have several other EPA fuel program 

registration and reporting requirements 

that become effective in 2016 and 2017. 

These requirements were primarily 

finalized in the Tier 3 rulemaking and 

include the registration of all oxygenate 

blenders (e.g., terminals), the 

submission of applications for test 

methods under the Performance Based 

Analytical Test Method Approach 

program, and compliance with the new 

Tier 3 gasoline sulfur standards. 

Concerning obligated parties’ attest 

engagement reporting deadlines, we 

believe we can move forward the 2015 

RFS attest engagement reporting 

deadline for obligated parties to more 

appropriately sequence 2015 and 2016 

annual compliance and attest 

engagement reporting deadlines. 

However, we recognize that there is a 

limited number of CPAs and CIAs that 

conduct most of the attest engagement 

reporting across all of EPA’s fuels 

programs for obligated parties. We are 

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concerned that these CPAs and CIAs 

would become overburdened if we 

compressed the attest engagement 

reporting deadlines too much. Although 

we value the timely submission of 

information, we believe compressing the 

2013 and 2014 attest engagement 

reporting deadlines would 

unnecessarily increase compliance costs 

for many obligated parties. 

The EPA is also finalizing an 

adjustment to the proposed 2013 

compliance and attest reporting 

deadlines to accommodate the 60-day 

effective date provision of the 

Congressional Review Act (CRA). As 

discussed further in Section IX.K in the 

final rule, this action is deemed a 

‘‘major rule’’ as defined by 5 U.S.C 

804(2) and therefore subject to the 60- 

day effective date provision of the CRA. 

This CRA provision impacts our 

proposed dates for the 2013 compliance 

deadline and attest engagement 

reporting deadline. Therefore, for the 

2013 compliance year, we are finalizing 

the compliance deadline and attest 

engagement reporting deadline for 

obligated parties and exporters to be 

March 1, 2016 or 60 days from 

publication in the Federal Register of a 

final rule establishing standards for 

2014, whichever date is later. 

Although these changes are necessary 

due to the CRA provision, we believe 

this extension will provide obligated 

parties additional time to consider the 

impact of the final 2014 standards on 

the manner in which they should 

comply with 2013 requirements, and to 

engage in RIN trading transactions for 

purposes of their 2013 compliance 

demonstration that will best position 

them for compliance with 2014 

requirements. Additional detail can 

located in Table VI.B–1 below and 

Section 9.2 in the Response to Comment 

document. 

We have also decided to provide an 

additional two-month extension, 

beyond that which was proposed, for 

the 2014 obligated party compliance 

demonstration deadline, The final 

deadline is August 1, 2016. We received 

comment suggesting that some parties 

may have placed undue reliance in their 

planning for 2014 compliance on 

proposed levels from November, 2013. 

Although we believe such parties had 

adequate notice that the final standards 

could be higher than proposed, as noted 

elsewhere in this preamble, we believe 

that extending the 2014 compliance 

demonstration deadline will make it 

easier for them to come into 

compliance. For example, extending the 

2014 obligated party compliance 

deadline by an additional two months 

will allow additional time for such 

parties to engage in necessary RIN 

transactions. Together with the 

additional time provided for the 2013 

compliance demonstration (which could 

help certain parties better position 

themselves for 2014 compliance), and 

the fact that compliance can be achieved 

through acquisition of RINs, without the 

need for capital investments or actual 

renewable fuel blending, we believe that 

the final 2014 compliance 

demonstration deadline is reasonable. 

For obligated parties, we are also 

finalizing the 2013 and 2014 attest 

engagement reporting deadlines as 

proposed. However, we are changing the 

2015 attest engagement reporting 

deadline for obligated parties from June 

1, 2017 to March 1, 2017. We believe 

this helps address comments concerned 

with having the 2015 and 2016 RFS 

attest engagement reporting deadlines 

fall on the same day and should allow 

obligated parties some time to adjust 

2016 annual compliance reports based 

on issues identified in the 2015 attest 

engagement report. 

For RIN generators we are changing 

the 2013 and 2014 attest engagement 

reporting deadlines from January 31, 

2016 to March 1, 2016. We are also 

changing the 2014 attest engagement 

reporting deadline for independent 

third-party auditors from January 31, 

2016 to March 1, 2016. These changes 

are a result of the 60-day effective date 

provision of the CRA discussed above. 

We are finalizing all other annual 

compliance and attest engagement 

reporting deadlines for 2013, 2014, and 

2015 for other responsible parties as 

proposed. The revised annual 

compliance and attest reporting 

deadlines for all regulated party 

categories for the 2013, 2014, and 2015 

compliance years are shown below in 

Table VI.B–1. For the 2016 and 

subsequent compliance years, the 

deadlines will be back on track with 

annual compliance demonstration 

reports due March 31 and attest 

engagement reports due June 1 of the 

year following the compliance year. 

TABLE VI.B–1—ANNUAL COMPLIANCE AND ATTEST ENGAGEMENT REPORTING DEADLINES BY REGULATED PARTY

CATEGORY FOR THE 2013, 2014, AND 2015 COMPLIANCE YEARS 230

Regulated party category Revised annual compliance deadline Revised attest engagement reporting deadline 

2013 Compliance Year 

RIN-generating renewable fuel producers and 

importers; other parties owning RINs.

N/A. ................................................................... March 1, 2016. 

Independent third-party auditors ....................... N/A .................................................................... N/A 

Renewable fuel exporters .................................. March 1, 2016 .................................................. June 1, 2016. 

Obligated parties ............................................... March 1, 2016 .................................................. June 1, 2016. 

2014 Compliance Year 

RIN-generating renewable fuel producers and 

importers; other parties owning RINs.

N/A .................................................................... March 1, 2016. 

Independent third-party auditors ....................... N/A .................................................................... March 1, 2016. 

Renewable fuel exporters .................................. Partial report: March 31, 2015 ......................... Partial report: June 1, 2015. 

January–September 16, 2014 .................... Full report: March 1, 2016 ................................ Full report: June 1, 2016. 

September 17–December 31, 2014 ........... March 31, 2015 ................................................ June 1, 2015. 

Obligated parties ............................................... August 1, 2016 ................................................. December 1, 2016. 

2015 Compliance Year 

RIN-generating renewable fuel producers and 

importers; other parties owning RINs.

N/A .................................................................... June 1, 2016. 

Independent third-party auditors ....................... N/A .................................................................... June 1, 2016. 

Renewable fuel exporters .................................. March 31, 2016 ................................................ June 1, 2016. 

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230For all March 1, 2016 dates listed in this table, 

the actual regulatory deadline is either March 1, 

2016 or 60 days from publication in the Federal 

Register of this final rule, whichever date is later. 

TABLE VI.B–1—ANNUAL COMPLIANCE AND ATTEST ENGAGEMENT REPORTING DEADLINES BY REGULATED PARTY

CATEGORY FOR THE 2013, 2014, AND 2015 COMPLIANCE YEARS 230—Continued 

Regulated party category Revised annual compliance deadline Revised attest engagement reporting deadline 

Obligated parties ............................................... December 1, 2016 ............................................ March 1, 2017. 

VII. Assessment of Aggregate 

Compliance 

A. Assessment of the Domestic 

Aggregate Compliance Approach 

The RFS2 regulations contain a 

provision for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land that relieves 

them of the individual recordkeeping 

and reporting requirements concerning 

the specific land from which their 

feedstocks were harvested. To enable 

this approach, EPA established a 

baseline number of acres for U.S. 

agricultural land in 2007 (the year of 

EISA enactment) and determined that as 

long as this baseline number of acres 

was not exceeded, it was unlikely that 

new land outside of the 2007 baseline 

would be devoted to crop production 

based on historical trends and economic 

considerations. We therefore provided 

that renewable fuel producers using 

planted crops or crop residue from the 

U.S. as feedstock in renewable fuel 

production need not comply with the 

individual recordkeeping and reporting 

requirements related to documenting 

that their feedstocks are renewable 

biomass, unless EPA determines 

through one of its annual evaluations 

that the 2007 baseline acreage of 402 

million acres agricultural land has been 

exceeded. 

In the final RFS2 regulations, EPA 

committed to make an annual finding 

concerning whether the 2007 baseline 

amount of U.S. agricultural land has 

been exceeded in a given year. If the 

baseline is found to have been 

exceeded, then producers using U.S. 

planted crops and crop residue as 

feedstocks for renewable fuel 

production would be required to 

comply with individual recordkeeping 

and reporting requirements to verify 

that their feedstocks are renewable 

biomass. 

The Aggregate Compliance 

methodology provided for the exclusion 

of acreage enrolled in the Grassland 

Reserve Program (GRP) and the 

Wetlands Reserve Program (WRP) from 

the estimated total U.S. agricultural 

land. However, the 2014 Farm Bill has 

terminated the GRP and WRP as of 2013 

and USDA established the Agriculture 

Conservation Easement Program (ACEP) 

with wetlands and land easement 

components. The ACEP provides 

financial and technical assistance to 

help conserve agricultural lands and 

wetlands and their related benefits. 

Under the Agricultural Land Easements 

component, USDA helps Indian tribes, 

state and local governments and nongovernmental organizations protect 

working agricultural lands and limit 

non-agricultural uses of the land. Under 

the Wetlands Reserve Easements 

component, USDA helps to restore, 

protect and enhance enrolled wetlands. 

The WRP was a voluntary program that 

offered landowners the opportunity to 

protect, restore, and enhance wetlands 

on their property. The GRP was a 

voluntary conservation program the 

emphasized support for working grazing 

operations, enhancement of plant and 

animal biodiversity, and protection of 

grassland under threat of conversion to 

other uses. 

USDA and EPA concur that the 

ACEP–WRE and ACEP–ALE represent a 

continuation in basic objectives and 

goals of the original WRP and GRP, 

although the ACEP–ALE is a bit more 

expansive that the GRP with respect to 

eligible land. Therefore it was assumed 

in this rulemaking that acreage enrolled 

in the easement programs would 

represent a reasonable proxy of WRP 

and GRP acreage. Both Agencies have 

committed to conduct a more detailed 

analysis of the new programs for the 

2017 RFS Annual Volume Regulation. 

Based on data provided by the USDA 

Farm Service Agency (FSA) and Natural 

Resources Conservation Service (NRCS), 

we have estimated that U.S. agricultural 

land reached approximately 380 million 

acres in 2013, and thus did not exceed 

the 2007 baseline acreage. This acreage 

estimate is based on the same 

methodology used to set the 2007 

baseline acreage for U.S. agricultural 

land in the RFS2 final rulemaking. 

Specifically, we started with FSA crop 

history data for 2013, from which we 

derived a total estimated acreage of 

379,717,296 acres. We then subtracted 

the amount of land estimated to be 

participating in the Grasslands Reserve 

Program (GRP) and Wetlands Reserve 

Program (WRP) by the end of Fiscal 

Year 2013, 144,619 acres, to yield an 

estimate of approximately 380 million 

acres of U.S. agricultural land in 2013. 

Note that these programs were still in 

place in 2013. The USDA data used to 

make this derivation can be found in the 

docket to this rule. 

Similarly, we have estimated that U.S. 

agricultural land reached approximately 

378 million acres in 2014, and thus did 

not exceed the 2007 baseline acreage. 

This acreage estimate is based on the 

same methodology used to set the 2007 

baseline acreage for U.S. agricultural 

land in the RFS2 final rulemaking, with 

GRP and WRP data substitution as noted 

above. Specifically, we started with FSA 

crop history data for 2014, from which 

we derived a total estimated acreage of 

377,829,781 acres. We then subtracted 

the amount of land estimated to be 

participating in the Agriculture Land 

Easement (ACEP–ALE) and Wetlands 

Reserve (ACEP–WRE) by the end of 

Fiscal Year 2014, 143,834 acres, to yield 

an estimate of approximately 378 

million acres of U.S. agricultural land in 

2014. The USDA data used to make this 

derivation can be found in the docket to 

this rule. 

Finally, we have estimated that U.S. 

agricultural land reached approximately 

379 million acres in 2015, and thus did 

not exceed the 2007 baseline acreage. 

This acreage estimate is based on the 

same methodology used to set the 2007 

baseline acreage for U.S. agricultural 

land in the RFS2 final rulemaking, with 

GRP and WRP data substitution as noted 

above. Specifically, we started with FSA 

crop history data for 2015, from which 

we derived a total estimated acreage of 

379,236,620 acres. We then subtracted 

the Agriculture Land Easement (ACEP– 

ALE) and Wetlands Reserve (ACEP– 

WRE) enrolled acres by the end of Fiscal 

Year 2015, 84,133 acres, to yield an 

estimate of approximately 379 million 

acres of U.S. agricultural land in 2015. 

The USDA data used to make this 

estimation can be found in the docket to 

this rule. 

B. Assessment of the Canadian 

Aggregate Compliance Approach 

On March 15, 2011, EPA issued a 

notice of receipt of and solicited public 

comment on a petition for EPA to 

authorize the use of an aggregate 

approach for compliance with the 

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Renewable Fuel Standard renewable 

biomass requirements, submitted by the 

Government of Canada. The petition 

requested that EPA determine that an 

aggregate compliance approach will 

provide reasonable assurance that 

planted crops and crop residue from 

Canada meet the definition of renewable 

biomass. After thorough consideration 

of the petition, all supporting 

documentation provided and the public 

comments received, EPA determined 

that the criteria for approval of the 

petition were satisfied and approved the 

use of an aggregate compliance 

approach to renewable biomass 

verification for planted crops and crop 

residue grown in Canada. 

The Government of Canada utilized 

several types of land use data to 

demonstrate that the land included in 

their 124 million acre baseline is 

cropland, pastureland or land 

equivalent to U.S. Conservation Reserve 

Program land that was cleared or 

cultivated prior to December 19, 2007, 

and was actively managed or fallow and 

non-forested on that date (and is 

therefore RFS2 qualifying land). The 

total agricultural land in Canada in 2013 

is estimated at 119.8 million acres. This 

total agricultural land area includes 96.3 

million acres of cropland and summer 

fallow, 13.7 million acres of pastureland 

and 9.8 million acres of agricultural 

land under conservation practices. This 

acreage estimate is based on the same 

methodology used to set the 2007 

baseline acreage for Canadian 

agricultural land in the RFS2 response 

to petition. The trigger point for further 

evaluation of the data for subsequent 

years, provided by Canada, is 121 

million acres. The data used to make 

this calculation can be found in the 

docket to this rule. 

The total agricultural land in Canada 

in 2014 is estimated at 119.5 million 

acres. This total agricultural land area 

includes 96 million acres of cropland 

and summer fallow, 13.7 million acres 

of pastureland and 9.8 million acres of 

agricultural land under conservation 

practices. This acreage estimate is based 

on the same methodology used to set the 

2007 baseline acreage for Canadian 

agricultural land in the RFS2 response 

to petition. The data used to make this 

calculation can be found in the docket 

to this rule. 

The total agricultural land in Canada 

in 2015 is estimated at 118.6 million 

acres. This total agricultural land area 

includes 94.9 million acres of cropland 

and summer fallow, 13.9 million acres 

of pastureland and 9.8 million acres of 

agricultural land under conservation 

practices. This acreage estimate is based 

on the same methodology used to set the 

2007 baseline acreage for Canadian 

agricultural land in the RFS2 response 

to petition. The data used to make this 

calculation can be found in the docket 

to this rule. 

VIII. Public Participation 

Many interested parties participated 

in the rulemaking process that 

culminates with this final rule. This 

process provided opportunity for 

submitting written public comments 

following the proposal that we 

published on June 10, 2015 (80 FR 

33100), and we also held a public 

hearing on June 25, 2015, at which 

many parties provided both verbal and 

written testimony. All comments 

received, both verbal and written, are 

available in EPA docket EPA–HQ–OAR– 

2015–0111 and we considered these 

comments in developing the final rule. 

Public comments and EPA responses are 

discussed throughout this preamble and 

in the accompanying RTC document, 

which is available in the docket for this 

action. 

IX. 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 associated with this action. This 

analysis is presented in Section II.I 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 final 

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 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. The impacts of the RFS 

program as a whole on small entities 

were 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. 

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 directly 

regulated small entities would have 

compliance costs that are less than one 

percent of their sales over the life of the 

program (75 FR 14862). 

We have determined that this final 

rule will not impose any additional 

requirements on small entities beyond 

those already analyzed, since the 

impacts of this final 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–1 and I.A–1 

(and discussed further in Sections II and 

IV), this rule finalizes 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 

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231For a further discussion of the ability of 

obligated parties to recover the cost of RINs see ‘‘A 

Preliminary Assessment of RIN Market Dynamics, 

RIN Prices, and Their Effects,’’ Dallas Burkholder, 

Office of Transportation and Air Quality, US EPA. 

May 14, 2015, EPA Air Docket EPA–HQ–OAR– 

2015–0111. 

232 Knittel, Christopher R., Ben S. Meiselman, and 

James H. Stock. ‘‘The Passthrough of RIN Prices to 

Wholesale and Retail Fuels Under the Renewable 

Fuel Standard.’’ Working Paper 21343. NBER 

Working Paper Series. Available online http://www.

nber.org/papers/w21343.pdf. 

233See CAA section 211(o)(9)(B). 

234A 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. 

would be imposed under the volumes 

specified in the Clean Air Act in the 

absence of waivers—which are the 

volumes that we assessed in the 

screening analysis that we prepared for 

implementation of the full program. 

Regarding the biomass-based diesel 

standard, we are finalizing an increase 

in 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 

finalizing 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 the 

standards being finalized in this action 

is a reduction in burden as compared to 

implementation of the statutory volume 

targets, as was assumed in the March 26, 

2010, analysis. 

For this final rule, EPA has conducted 

a screening analysis to assess whether it 

should make a finding that this action 

would not have a significant economic 

impact on a substantial number of small 

entities. Currently-available information 

shows that the impact on small entities 

from implementation of this rule will 

not be significant. EPA has reviewed 

and assessed the available information, 

which suggests that obligated parties, 

including small entities, are generally 

able to recover the purchase cost of the 

RINs necessary for compliance through 

higher sales prices of the petroleum 

products they sell than would be 

expected in the absence of the RFS 

program.231 232 Even if we were to 

assume that the cost of RINs were not 

recovered by obligated parties, and we 

used the maximum values of the 

illustrative costs discussed in Section 

II.I, the gasoline and diesel fuel volume 

projections from the October 2015 

version of EIA’s Short-Term Energy 

Outlook, and current wholesale fuel 

prices, a cost-to-sales ratio test shows 

that the costs to small entities of the 

RFS standards are less than 1% of the 

value of their sales. 

While the rule will not have a 

significant economic impact on a 

substantial number of small entities, 

there are compliance flexibilities in the 

program that can help to reduce impacts 

on small entities. These flexibilities 

include being able to comply through 

RIN trading rather than renewable fuel 

blending, 20% RIN rollover allowance 

(up to 20% of an obligated party’s RVO 

can be met using previous-year RINs), 

and deficit carry forward (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, in part because we had 

serious concerns regarding our authority 

to do so. 

Additionally, as we realize that there 

may be cases in which a small entity 

experiences hardship beyond the level 

of assistance afforded by the program 

flexibilities, the program provides 

hardship relief provisions for small 

entities (small refiners), as well as for 

small refineries.233 As required by the 

statute, the RFS regulations include a 

hardship relief provision (at 40 CFR 

80.1441(e)(2)) which allows for a small 

refinery 234 to petition for an extension 

of its small refinery exemption at any 

time based on a showing that 

compliance with the requirements of the 

RFS program would result in the 

refinery experiencing a 

‘‘disproportionate economic hardship.’’ 

EPA regulations provide similar relief to 

small refiners that are not eligible for 

small refinery relief. A small refiner 

may petition for a small refiner 

exemption based on a similar showing 

that compliance with the requirements 

of the RFS program would result in the 

refiner experiencing a ‘‘disproportionate 

economic hardship’’ (see 40 CFR 

80.1442(h)). EPA evaluates these 

petitions on a case-by-case basis and 

may approve such petitions if it finds 

that a disproportionate economic 

hardship exists. In evaluating such 

petitions, EPA consults with the U.S. 

Department of Energy, and takes the 

findings of DOE’s 2011 Small Refinery 

Study and other economic factors into 

consideration. For the 2013 RFS 

standards, the EPA successfully 

implemented these provisions by 

evaluating 16 petitions for exemptions 

from small refineries (one was later 

withdrawn). 

Given that this final rule would not 

impose additional requirements on 

small entities, would decrease burden 

via a reduction in required volumes as 

compared to statutory volume targets, 

would not change the compliance 

flexibilities currently offered to small 

entities under the RFS program 

(including the small refinery hardship 

provisions we continue to successfully 

implement), and available information 

shows that the impact on small entities 

from implementation of this rule will 

not be significant, we have therefore 

concluded that this action would have 

no net regulatory burden for directly 

regulated small entities. 

D. Unfunded Mandates Reform Act 

(UMRA) 

This action contains a federal 

mandate under UMRA, 2 U.S.C. 1531– 

1538, that may result in expenditures of 

$100 million or more for state, local and 

tribal governments, in the aggregate, or 

the private sector in any one year. 

Accordingly, the EPA has prepared a 

written statement required under 

section 202 of UMRA. The statement is 

included in the docket for this action, 

and discussed above in Section II.I. This 

action implements mandates 

specifically and explicitly set forth in 

CAA section 211(o) and, as described in 

Section II.I, we believe that this action 

represents the least costly, most costeffective approach to achieve the 

statutory requirements of the rule. 

This action is not subject to the 

requirements of section 203 of UMRA 

because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. 

E. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the states, on the 

relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. 

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 final 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 

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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)) and does 

not concern an environmental health 

risk or safety risk. 

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 establishes the required 

renewable fuel content of the 

transportation fuel supply for 2014, 

2015, and 2016, consistent with the 

CAA and waiver authorities provided 

therein. The RFS program and this rule 

are designed to achieve positive effects 

on the nation’s transportation fuel 

supply, by increasing energy 

independence and lowering lifecycle 

greenhouse gas emissions of 

transportation fuel. 

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, lowincome, or indigenous populations. This 

final 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. 

K. Congressional Review Act (CRA) 

This action is subject to the CRA, and 

the EPA will submit a rule report to 

each House of the Congress and to the 

Comptroller General of the United 

States. This action is a ‘‘major rule’’ as 

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

X. 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 final rule come 

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

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

7601(a). 

List of Subjects in 40 CFR Part 80 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Diesel fuel, Fuel 

additives, Gasoline, Imports, Oil 

imports, Petroleum, Renewable fuel. 

Dated: November 30, 2015. 

Gina McCarthy, 

Administrator. 

For the reasons set forth in the 

preamble, EPA amends 40 CFR part 80 

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, 7521, 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); and 

■ b. Adding paragraphs (a)(5) through 

(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 1.41 

percent. 

(iii) The value of the advanced biofuel 

standard for 2014 shall be 1.51 percent. 

(iv) The value of the renewable fuel 

standard for 2014 shall be 9.19 percent. 

(6) Renewable Fuel Standards for 

2015. 

(i) The value of the cellulosic biofuel 

standard for 2015 shall be 0.069 percent. 

(ii) The value of the biomass-based 

diesel standard for 2015 shall be 1.49 

percent. 

(iii) The value of the advanced biofuel 

standard for 2015 shall be 1.62 percent. 

(iv) The value of the renewable fuel 

standard for 2015 shall be 9.52 percent. 

(7) Renewable Fuel Standards for 

2016. 

(i) The value of the cellulosic biofuel 

standard for 2016 shall be 0.128 percent. 

(ii) The value of the biomass-based 

diesel standard for 2016 shall be 1.59 

percent. 

(iii) The value of the advanced biofuel 

standard for 2016 shall be 2.01 percent. 

(iv) The value of the renewable fuel 

standard for 2016 shall be 10.10 percent. 

* * * * * 

■ 4. Section 80.1426, paragraph (f)(1) is 

amended by revising entries F and H in 

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) * * * 

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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: TransEsterification Hydrotreating Excluding processes that co-process renewable biomass and petroleum. 4 

* * * * * * * 

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: TransEsterification 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 March 1, 2016 

or 60 days from publication in the 

Federal Register of a final rule 

establishing 2014 RFS standards, 

whichever date is later. 

(B) For obligated parties, for the 2014 

compliance year, annual compliance 

reports shall be submitted no later 

August 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 

paragraphs (a)(1)(i), (ii), (vi), (viii), and 

(x) of this section) for that period shall 

be submitted no later than March 1, 

2016 or 60 days from publication in the 

Federal Register of a final rule 

establishing 2014 RFS standards, 

whichever date is later. 

(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); and 

■ b. Adding paragraph (i)(3). 

The addition and revision read as 

follows: 

§ 80.1464 What are the attest engagement 

requirements under the RFS program? 

* * * * * 

(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, 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 March 1, 2016 or 60 days from 

publication in the Federal Register of a 

final rule establishing 2014 RFS 

standards, whichever date is later. 

(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, 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 March 1, 2016 or 60 days from 

publication in the Federal Register of a 

final rule establishing 2014 RFS 

standards, whichever date is later. 

(6) For obligated parties, for the 2015 

compliance year, reports required under 

this section shall be submitted to the 

EPA no later than March 1, 2017. 

* * * * * 

(i) * * * 

(3) Reporting requirements. For the 

2014 compliance year, reports required 

under this paragraph (i) shall be 

submitted to the EPA no later than 

March 1, 2016 or 60 days from 

publication in the Federal Register of a 

final rule establishing 2014 RFS 

standards, whichever date is later. 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. 

[FR Doc. 2015–30893 Filed 12–11–15; 8:45 am] 

BILLING CODE 6560–50–P 

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