June 14, 2013 

Via Electronic Submission and Certified Mail 

Environmental Protection Agency 

Air and Radiation Docket and Information Center 

Environmental Protection Agency 

Mailcode: 2822T 

1200 Pennsylvania A venue, NW 

Washington, D.C. 20460 

a-and-r-docket@epa.gov

RE: Regulation of Fuels and Fuel Additives: Renewable Fuel Standards: 

 Docket ID No. EPA-HQ-OAR-2012-0546

 In its April 7, 2013 comments on the United States Environmental Protection Agency’s 

(“EPA”) 2013 volume mandate for the renewable fuel standard, Monroe Energy, LLC 

(“Monroe”) adopted the comments of the American Fuel and Petrochemical Manufacturers 

(AFPM). One of AFPM’s comments on the proposed rule related to the timing of its issuance 

and the resultant lack of lead time for obligated parties to comply. [AFPM Comments at pages 

15-16 (attached)]. AFPM suggested that to address the delay in promulgating the 2013 volume 

mandate and the lack of lead time for industry, EPA should “reduce the 2013 requirements to 

reflect the number of days the rule will be late in being finalized”. (Id. at pg. 15). 

 Monroe Energy also would like to suggest other possible approaches to address the 

impact of an unprecedented price spike in RINs combined with much shorter than expected 

notice of compliance obligation levels. First, EPA should grant obligated parties additional time 

to comply with the 2013 volume mandate once finalized. The additional lead time could be in 

the form of a waiver of 40 CFR 80.1427(b), which prevents a refiner from carrying a deficit two 

years in a row or a straight extension of time commensurate with the delay in the issuance of the 

final rule. For example, if the final rule is issued in September, obligated parties could be given 

an additional ten months to comply with the rule. 

 Second, EPA should waive the carryover cap on RINs. Section 80.1427(a)(5) limits the 

number of 2012 RINs that can be used for compliance with the 2013 RVO. This provision 

prevents refiners from using more than 20% 2012 RINs for compliance with its 2013 RVO. By 

waiving the cap, EPA would provide greater flexibility to obligated parties to find and apply 

RINs for compliance without any risk of hoarding because the life of the 2012 RINs will expire 

at the end of 2013. 
- 2 - 

 The spike in the price of RINs has had the unintended effect of creating regulatory 

winners and losers within the refining industry. The winners are those vertically integrated 

refiners that can themselves blend or that bought ethanol or biodiesel plants (and have RINs that 

they can sell or trade); and small refiners and small refineries that are able to avoid the 

devastating impact of the increased cost of compliance by securing hardship relief. The losers 

are those refiners, like Monroe Energy, that are much smaller operators than the integrated 

refiners, must purchase virtually all RINs needed for compliance, and yet do not qualify for 

small refiner hardship relief. 

Monroe competes with all refiners, and cannot unilaterally pass an inflated RIN 

compliance cost on to consumers through an increased price at the pump when competitors have 

not incurred the same cost and are not passing it along. 

 EPA should do everything in its power to reduce the burden on those refiners that are 

disproportionately shouldering the impact of the spike in the price of RINs by: (1) reducing the 

2013 volume mandate; (2) extending the timeframe for compliance; and (3) waiving the cap to 

allow refiners greater flexibility in achieving compliance. 

 We appreciate your consideration of Monroe Energy’s additional thoughts on the timing 

of the rule and lead time for obligated parties to comply. Please contact me if you have any 

questions. 

Respectfully submitted, 

Frank A. Pici 

Chief Financial & Administrative Officer 

cc: David Korotney 

Korotney.david@Epa.gov

 Julia MacAllister 

Macallister.julia@Epa.gov
American 

Fuel & Petrochemical 

Manufacturers 

Richard Moskowitz

General Counsel 

1667 K Street, NW 

Suite 700 

Washington, DC 

20006 

202.457.0480 office 

202.552.8457 direct 

202.457.0486 fax 

Rmoskowitz@afpm.org 

April 8, 2013 

COMMENTS OF THE 

AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS 

Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards

Docket ID No. EPA-HQ-OAR-2012-0546

 The American Fuel & Petrochemical Manufacturers (AFPM)1 submits these comments in 

response to the Environmental Protection Agency’s (EPA or Agency) proposed rule entitled 

Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards.

2

 As manufacturers of 

liquid transportation fuels, AFPM and its members are directly regulated by the Proposed Rule. 

AFPM members are injured by EPA’s proposal, which could increase emissions of certain 

pollutants, alter perceptions of individual members’ trademarks, and require modifications to 

fuel distribution systems. AFPM members also are impacted on a competitive basis, as EPA’s 

regulations implementing various biofuel mandates impact the demand for transportation fuels 

they produce and distribute. 

 The Energy Independence and Security Act of 2007 (EISA) provides EPA with “tools” to 

adjust the volumes of renewable fuels in response to market conditions. Notwithstanding the 

incompatibility of mid-level ethanol blends with existing vehicles and fuel delivery infrastructure 

and the lack of availability of drop-in cellulosic biofuels, EPA has refused to utilize the 

flexibility provided under the law to reduce the amount of ethanol that will be mandated under 

the RFS. 

This proposal is taking place at a critical time for the Renewable Fuel Standard (RFS). 

As the mandated annual biofuel volumes continue to increase in an environment of declining 

gasoline demand, ethanol will soon exceed the 10% compatibility limit of the overwhelming 

majority of vehicles and fuel retail infrastructure in the U.S. This is being referred to as the “E10 

blendwall.” The E10 blendwall is approaching and its early impacts already are being reflected 

                                                           

1

 AFPM is a trade association representing high-tech American manufacturers of virtually the entire U.S. supply of 

gasoline, diesel, jet fuel, other fuels and home heating oil, as well as the petrochemicals used as building blocks for 

thousands of products vital to everyday life. 

2

 78 Federal Register 9282 (February 7, 2013) (hereinafter the “Proposed Rule”). 
American Fuel & Petrochemical Manufacturers 

Docket No. EPA-HQ-OAR-2012-0546 

April 8, 2013 

                                                           

in the exponential increase in RIN prices and volatility. Some obligated parties are finding it 

impractical to acquire sufficient RINs to cover their production or import of gasoline and diesel. 

Both 2014 and 2015 likely will present circumstances that result in many obligated parties being 

unable to acquire enough RINs to meet their RFS obligations at current production levels. Sales 

of E85 will be too little to help largely because consumers have rejected this alternative fuel.3

 In 

addition, E15 has significant vehicle and refueling infrastructure compatibility problems and will 

not be available on a widespread basis. To respond to these changed circumstances, EPA must 

promulgate the 2013 Renewable Fuel Standards at levels that recognize the significant reduction 

in gasoline demand and the technological limits on the amount of ethanol that may be blended 

into the gasoline pool. AFPM proposes that EPA take all necessary steps to ensure that the total 

renewable fuel standards for 2013 be reduced to avoid a requirement to blend ethanol in 

quantities that exceed ten percent of the nation’s gasoline pool. While AFPM believes that EPA 

should waive the entire RFS, at a minimum, the Agency must reduce the advanced and total RFS 

volume so that the quantity of ethanol mandated is less than 10% of gasoline demand.4

Corn ethanol RIN prices have increased dramatically and this added cost will 

disadvantage consumers and make the U.S. less competitive in the world gasoline and diesel 

markets. Moreover, in the face of the E10 blendwall obligated parties that cannot acquire 

sufficient RINs have four options: (1) limit production of gasoline and diesel, (2) export 

gasoline and diesel, (3) use banked RINs (although many obligated parties do not have banked 

RINs in sufficient quantities to meet their obligations), or (4) carry the deficit forward one year 

(into an even worse situation the following year where the mandates are even higher and where a 

party that carries forward a deficit must clear the deficit and meet its RVO in full in the second 

year). These realities combined with the impacts of the drought on corn prices constitute severe 

economic harm unforeseen by the Congress when the RFS was enacted. 

AFPM believes that the RFS is broken and EPA should waive the entire mandate for 

2013 and 2014 to ensure that Congress has adequate time to address the changed assumptions 

and unintended consequences caused by the RFS mandates. A recent study by NERA Economic 

Consulting calculates severe economic harm for the U.S. as a result of the blendwall.5

 This 

severe economic harm is sufficient to trigger EPA’s authority to waive the RFS requirements in 

the amount necessary to avoid promulgating a mandate that forces the economy to crash into the 

E10 blendwall. This authority, in combination with EPA’s ability to reduce the advanced and 

total volumes commensurate with the reduction in cellulosic biofuel volumes, provides the 

Agency with the ability to avoid the severe impact of the E10 blendwall. 

3 See discussion at Section A.2, infra. 

4

 Letter dated October 18, 2012 from EIA to EPA, (estimating gasoline demand of 133.984 billion gallons). Note a 

more recent estimate appears in the EIA Short Term Annual Energy Outlook (March 12, 2013) (estimating gasoline 

demand at 8.7 million barrels per day or 133.37 billion gallons in 2013). 

5

 See NERA Economic Consulting, Economic Impacts Resulting from Implementation of RFS2 Program (October 

2012). 

2
American Fuel & Petrochemical Manufacturers 

Docket No. EPA-HQ-OAR-2012-0546 

April 8, 2013 

                                                           

 Against this backdrop, AFPM is concerned with the following aspects of the Proposed 

Rule: 

• The failure to appropriately consider the E10 blendwall. 

• The rejection of the Court of Appeals’ admonition in API v. EPA to use realistic estimates 

of cellulosic biofuel production in the proposed 2013 cellulosic biofuel RFS. 

• The refusal to adjust downward the advanced biofuel and total renewable fuel volumes 

for 2013 to account for the shortfall in cellulosic biofuel production. 

• The incorrect application of the statutory criteria used to establish the biomass-based 

diesel RFS for 2013 and the Agency’s failure to respond to AFPM’s petition for 

reconsideration to correct the deficiencies in this standard. 

• The disregard of the Clean Air Act (CAA) deadline to finalize all four standards by 

November 30, 2012 and the decision to retroactively apply these standards. 

• The delay in proposing the 2014 biomass-based diesel mandated volumes under the RFS 

and the resultant retroactive impact of such delay. 

 

 We address each of these issues in detail, below. 

A. The Fast-Approaching Blendwall is a Wake-up Call that EPA must Heed. 

Five years after the enactment of the RFS, we face a crisis that Congress did not 

anticipate when it passed the Energy Independence and Security Act of 2007 (EISA). For 

several years, AFPM has warned that the ethanol blendwall will interfere with the 

implementation of the RFS. These warnings were largely ignored and as a result of changed 

circumstances the problems created by the ethanol blendwall are now upon us. 

The fast-approaching E10 blendwall – the practical limit on the amount of ethanol that 

may be blended into the gasoline supply was not anticipated at the time of enactment. The fact 

that the E10 blendwall has become an issue in connection with the establishment of the 2013 

RFS is largely the result of changed circumstances in the gasoline market. At the time EISA was 

being debated in Congress, the nation consumed 142 billion gallons of gasoline and demand was 

expected to grow to 150 billion gallons by 2013. Today, as the result of an economic slowdown 

in 2008 and the use of more fuel-efficient automobiles, our nation consumes approximately 134 

billion gallons of gasoline – an eleven percent reduction in the amount of gasoline that was 

anticipated at the time EISA was enacted in 2007.6

 Had market expectations in 2007 held true, 

6 See U.S. Energy Information Administration, “EIA Frequently Asked Questions: How much gasoline does the 

United States consume,” accessed at http://www.eia.gov/tools/faqs/faq.cfm?id=23&t=10; EIA Annual Energy 

Outlook 2007, DOE/EIA-0383, p. 80 (February 2007), http://www.eia.gov/oiaf/archive/aeo07/pdf/0383(2007).pdf. 

See also http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbbl_a.htm. 

3
American Fuel & Petrochemical Manufacturers 

Docket No. EPA-HQ-OAR-2012-0546 

April 8, 2013 

we would not be facing the E10 blendwall this year. Indeed, if cellulosic biofuel producers 

succeeded in producing adequate quantities of so-called drop in fuels that were completely 

fungible with the existing slate of transportation fuels, rather than cellulosic ethanol that has 

compatibility issues with the existing fleet and fuel distribution infrastructure, the E10 blendwall 

may have been avoided in the long term, as well. 

The E10 blendwall is not a story woven by obligated parties, but rather a very real 

problem that is confirmed by a documented RIN market imbalance. The following graph 

illustrates the market’s reaction to the approaching blendwall and the significant shortage of 

RINs available for compliance with the RFS. 

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

1/26/20103/26/20105/26/20107/26/20109/26/2010

11/26/2010

1/26/20113/26/20115/26/20117/26/20119/26/2011

11/26/2011

1/26/20123/26/20125/26/20127/26/20129/26/2012

11/26/2012

1/26/2013

Daily Ethanol RIN Credits

(as of 3/14/2013)

2010 RIN

2011 RIN

2012 RIN

2013 RIN

Source: OPIS

BiofuelsUpdate

The graph clearly illustrates that when the blendwall was not at issue (pre-2013), ethanol RIN 

prices were typically priced below 4 cents per RIN. This changed at the end of 2012, when it 

became obvious that there was not enough gasoline available to accommodate the blending of 

the required amount of ethanol. This anticipated scarcity resulted in a meteoric rise in ethanol 

RIN prices. This rise was fueled by EPA’s Proposed Rule, which showed that EPA was not 

prepared to use the tools at its disposal to address the blendwall. 

EPA has certain tools to address some of these unintended consequences that have 

produced a significant market imbalance. EPA has the ability to reduce the cellulosic biofuel 

RFS to reflect historic production levels and to reduce the advanced and total renewable fuel 

mandates by an equivalent amount. EPA also has the ability to issue a waiver of the 2013 RFS 

standards that will ensure that ethanol remains below 10 percent of the gasoline supply based on 

4
American Fuel & Petrochemical Manufacturers 

Docket No. EPA-HQ-OAR-2012-0546 

April 8, 2013 

severe economic harm or inadequate domestic supply.7 Such harm is clearly evident in the 

significant increase in the price and volatility of ethanol RINs since late 2012. The dramatic runup in the price of ethanol RINs will have an impact on the cost of producing transportation fuels. 

Moreover, high RIN prices create an economic incentive for some obligated parties (who are 

importers) to divert planned imports of gasoline to other nations to avoid having to purchase 

RINs and other obligated parties to reduce the amount of gasoline and diesel they produce for the 

United States, which could have an impact on the available supply of transportation fuels.8 

These market conditions necessitate EPA sending a strong signal that it will do what is necessary 

to avoid crossing the E10 blendwall. 

Proponents of using additional amounts of ethanol have argued that E15 and E85 are 

viable options for avoiding the blendwall. These alternatives, however, will not work in today’s 

market. 

1. E15 is Not a Realistic Solution to the Blendwall. Although EPA issued a 

partial waiver to allow E15 to enter the marketplace, due to vehicle and refueling infrastructure 

compatibility issues, E15 will not solve the blendwall problem. EPA concluded that E15 will not 

damage the emissions control systems of vehicles produced after 2001; however, subsequent 

data confirms that E15 will damage other engine components and virtually all of the automobile 

manufacturers have warned against the use of E15 in the vast majority of vehicles on the road. 

As such, the threat of potential liability from selling E15 stands as a real-world obstacle to the 

use of this mid-level blend. 

Even if EPA could somehow overcome the potential liabilities from gasoline 

engine damage that will be caused by E15, the vast majority of existing fuel storage and 

dispensing systems are not compatible with blends exceeding E10. Moreover, this equipment is 

not “certified” to handle E15.9

 This certification is necessary for individual dealers and 

distributors to comply with existing regulations governing the storage and dispensing of motor 

fuels. Underwriter Laboratories will not recertify this existing equipment, creating state and 

local legal hurdles to the ability of retail service stations to carry this fuel. This means that the 

introduction of E15 would require independently-owned service stations to replace their storage 

and dispensing systems. The decision to replace this infrastructure is beyond the control of the 

obligated parties and likely will not occur, due to the potential vehicle liabilities discussed above, 

the potential for misfueling, and the substantial capital investment needed to carry E15. We 

note that obligated parties own approximately five percent of the retail fueling stations in the 

                                                           

7 See 42 U.S.C. § 7545(o). We discuss the issue of severe economic harm in more detail below. With respect to 

inadequate domestic supply, we note that EPA expects the RFS to force the import of 666 million gallons of 

sugarcane ethanol from Brazil to help meet the Advanced Biofuel requirements. See Proposed Rule at 9298 – 9300. 

This need to import Brazilian sugarcane ethanol runs counter to EISA’s stated purpose of furthering U.S. energy 

independence and stands as an acknowledgement of inadequate domestic supply. 

8 See NERA Economic Consulting, Economic Impacts Resulting from Implementation of RFS2 Program (October 

2012) (quantifying the severe economic harm that would be caused by the E10 blendwall). 

9

 The Petroleum Marketers Association of America reports that of the 700,000 gasoline dispensers in use, less than 

5,000 have been certified for E15 and more than 3,000 miles of underground piping systems have not been certified 

as safe for E15 as well. See Letter from Dan Gilligan to Wall Street Journal, (March 20, 2013). 

5
American Fuel & Petrochemical Manufacturers 

Docket No. EPA-HQ-OAR-2012-0546 

April 8, 2013 

United States; independent marketers examine the costs and benefits of replacing their refueling 

infrastructure. 

2. E85 Use is Too Small to Overcome the Blendwall. The ethanol producers 

and EPA also point to the potential to sell E85 as a means to comply with the 2013 RFS. This 

solution also is inadequate to overcome the blendwall problem. E85 will damage vehicles that 

are not specially designed to handle high level ethanol blends. There are approximately 11 

million flexible fuel vehicles (FFVs) in the United States – this represents only 5% of the 223 

million passenger vehicles in the U.S.10 While E85 is dispensed at limited locations in the 

United States, consumers have rejected its use based primarily on poor fuel economy and higher 

costs. In fact, consumers with FFVs and reasonable access to E85 fill up with E85 less than 4% 

of the time.11 This means that E85 represents less than 0.2% of the gasoline sold in the United 

States and cannot be used to overcome the blendwall. 

B. 2013 Cellulosic Biofuel RFS 

EPA proposes to establish a cellulosic biofuel mandate of 14 million ethanol-equivalent 

gallons for calendar year 2013. While this amount represents a significant reduction from the 

statutory volume of 1.0 billion gallons, it exceeds the Energy Information Administration’s 

(EIA) original projection of 9.6 million gallons (and its more recent projection of 5.0 million 

gallons) and continues the Agency’s aspirational pattern of promulgating a cellulosic biofuel 

mandate that is disconnected from market realities.12 As such, this aspect of the Proposed Rule 

would be arbitrary, capricious and an abuse of EPA’s discretion. 

AFPM is concerned that EPA is following the same flawed process used to promulgate 

the 2011 and 2012 standards. The table below contains a representative comparison between 

EIA and EPA cellulosic biofuel outlooks for 2011 through 2013 and actual production data for 

2011 and 2012. The table focuses on the three cellulosic producers EPA analyzed in the 

Proposed Rule along with EPA’s mistaken assumptions for the two prior years. 

                                                           

10 See U.S. Energy Information Administration (2012). Annual Energy Outlook 2012, Table 58, available at 

http://www.eia.gov/forecasts/aeo/data.cfm 

11 See 75 Federal Register 14670, 14762 (May 26, 2010). 

12 Proposed Rule at 9293. 

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American Fuel & Petrochemical Manufacturers 

Docket No. EPA-HQ-OAR-2012-0546 

April 8, 2013 

                                                           

2011 Firebright LLC KioR INP BioEnergy

Range 

Fuels

EIA utilization 46% 25%

EPA utilization in final rule 47% 100% 75%

EIA volume (million gallons) 2.8 1.0

EPA volume (million gallons) in final rule 2.8 0.2 3.0

Actual production (million gallons) 0.0 0.0 0.0 0.0

2012 Firebright LLC KioR INP BioEnergy

EIA utilization 25% 25% 25%

EPA utilization in final rule 33% 30% 38%

EIA volume (million gallons) 1.6 2.0 3.1

EPA volume (million gallons) in final rule 2.0 3.0 3.0

Actual production (million gallons) 0.0 0.001024 0.0

2013 Firebright LLC KioR INP BioEnergy

EIA utilization 50% 50%

EPA utilization in proposed rule 73% 75%

EIA volume (million gallons) 5.5 4.0

EPA volume (million gallons) in proposed rule 8.0 6.0

In establishing the 2011 cellulosic biofuel RFS of 6.0 million ethanol-equivalent gallons, 

EPA relied upon the parochial representations of cellulosic biofuel producers whose facilities 

had not yet begun to produce cellulosic fuel.13 In doing so, EPA promulgated a standard that 

exceeded EIA’s projections of 3.94 million gallons for 2011.14 This methodology proved to be a 

failure and actual domestic production in 2011 was zero gallons. In 2012, EPA ignored the lack 

of actual production in 2011 and repeated its erroneous methodology in establishing the 

cellulosic biofuel volumetric standard. Although EPA knew from its own data that no cellulosic 

biofuels were being produced, the Agency increased the 2012 mandate by almost 75 percent and 

promulgated a cellulosic biofuel RFS of 10.45 million ethanol-equivalent gallons for 2012.15 

This standard was determined to be arbitrary and capricious and was vacated by the U.S. Court 

of Appeals for the District of Columbia Circuit. 

In setting the 2013 proposed standards EPA again chose to increase the utilization of the 

two cellulosic plants beyond EIA’s outlook. EPA’s expectation that the plants would be fully 

operational in 1Q 2013, has not materialized as of this date. Perhaps, more importantly, on 

February 26, 2013, EIA revised downward its 2013 cellulosic biofuel projections.16 EIA 

now expects approximately 5 million gallons of cellulosic biofuels to be produced in 2013. This 

new estimate amounts to only 36 percent of the EPA proposed cellulosic biofuel volumetric 

standard. Given the insignificant amount of cellulosic biofuels production that has occurred so 

13 75 Federal Register 76790 (December 9, 2010). 

14 See Letter from Richard Newell to Lisa Jackson, EPA-HQ-OAR-0133-0099 (October 20, 2010). 

15 77 Federal Register at 1320 (January 9, 2012). 

16 See U.S. Energy Information Administration, Today In Energy (February 26, 2013) accessed March 3, 2013: 

http://www.eia.gov/todayinenergy/detail.cfm?id=10131. 

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far this year, EPA’s proposal is not a realistic assessment of the amount of cellulosic biofuel that 

will be available in 2013.17 

1. Court Decision. AFPM is troubled by the timing, substance, and rationale that 

the Agency used in proposing the 2013 cellulosic biofuel volumetric standard. For several years 

AFPM’s complaints that the cellulosic mandate is far too aggressive, was not in compliance with 

the CAA, and penalizes obligated parties have fallen on deaf ears. As such, we were encouraged 

by the U.S. Court of Appeals decision in API v. EPA,

18 which vacated the 2012 cellulosic biofuel 

standard due to the Agency’s unrealistic projections for cellulosic biofuel production. 

Specifically, the court instructed EPA to abandon its role in “promoting growth” in cellulosic 

biofuel production and to embrace a prediction “that aims at accuracy, not at deliberately 

indulging a greater risk of overshooting than undershooting.”19 

Unfortunately, the Proposed Rule continues to suffer from the very same bias that 

the court found to be unlawful. EPA did not alter the methodology used to predict the amount of 

cellulosic biofuel that will be produced in 2013. The proposed 2013 cellulosic biofuel 

production estimates are two orders of magnitude greater than the historical production numbers, 

exceed EIA’s production estimates, and continue the Agency’s unrealistic reliance upon the 

subjective predictions of individual cellulosic biofuel producers. 

On January 25, 2013, the U.S. Court of Appeals vacated the 2012 cellulosic 

biofuel standard and criticized the Agency’s methodology for predicting the amount of cellulosic 

biofuel that will be produced in the coming year. Less than one week following the court’s 

decision, the Administrator signed the Proposed Rule. There is no indication that EPA altered 

the methodology used to establish the 2013 cellulosic biofuel production estimates in any 

material way from the methodology the Agency used in establishing the cellulosic biofuel 

mandates for 2011 and 2012. Indeed, with the exception of a passing reference to the court 

decision, the preamble to the Proposed Rule contains no discussion of the changes EPA made to 

its methodology following the court’s decision.20 The Agency’s failure to alter its methodology 

in accordance with Court of Appeals’ decision renders the 2013 cellulosic biofuel proposal 

legally infirm. EPA cannot ignore this controlling judicial decision and continue to base the 

regulatory volume for 2013 on a flawed methodology that was rejected by the court. 

2. 2013 Cellulosic Biofuel Production Projection is Inaccurate. EPA utilized the 

same methodology to predict the 2013 cellulosic biofuel production as it did for 2011 and 2012. 

Given the historical inaccuracy of this approach, we are surprised that the Agency continues to 

                                                           

17 EPA’s EMTS data show zero cellulosic biofuel production in 2013; EMTS last accessed on April 2, 2013. 

18 See API v. EPA, Case No. 12-1139 (decided January 25, 2013). 

19 Id. at 11. 

20 See Proposed Rule at 9294 (noting that the court did not require EPA to use EIA’s actual estimate, but failing to 

discuss any change to the Agency’s methodology for predicting cellulosic biofuel volumes). 

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rely upon this mistaken methodology. EPA continues to believe cellulosic biofuel forecasts from 

parties who have utterly failed to make a reasonable forecast for three straight years. 

Section 211(o) describes the appropriate methodology EPA must utilize in 

establishing the cellulosic biofuel mandate for the coming year: 

Not later than October 31 of each calendar years 2005 through 

2021, the Administrator of the Energy Information Administration 

shall 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.21 

* * * * 

Not later than November 30 of each of calendar years 2005 

through 2021, based on the estimate provided under subparagraph 

(A), the Administrator of the Environmental Protection Agency 

shall determine and publish in the Federal Register, with respect to 

the following calendar year, the renewable fuel obligation that 

ensures that the requirements of paragraph (2) are met.22 

* * * * 

For the purpose of making the determinations in clause (ii), for 

each calendar year, the applicable volume of cellulosic biofuel 

established by the Administrator shall be based on the assumption 

that the Administrator will not need to issue a waiver for such 

years under paragraph (7)(D).23 

The Renewable Fuel Standard (RFS) clearly specifies EIA’s cellulosic biofuel 

production estimates as the starting point in any analysis. EPA is instructed to establish a 

cellulosic biofuel mandate that is “based on” EIA’s estimate and that would not require the 

issuance of waivers. Given that EIA has historically overestimated the amount of cellulosic fuel 

that will be produced, we think it is imminently reasonable, and even statutorily compelled, that 

the EPA Administrator should revise that estimate downward to account for the historical 

challenges and delays that cellulosic biofuel producers have experienced and that render their 

estimates inaccurate. Yet, EPA consistently revises EIA’s estimate upward, ignoring historical 

precedent and virtually guaranteeing a cellulosic biofuel shortfall in the marketplace that unfairly 

21 42 U.S.C. § 7545(o)(3)(A). 

22 42 U.S.C. § 7545 (o)(3)(B)(i) (emphasis added). 

23 42 U.S.C. § 7545 (o)(2)(B)(iv). 

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penalizes obligated parties. The Court of Appeals recently took issue with the consequences of 

this approach: 

Apart from their role as captive consumers, the refiners are in no 

position to ensure, or even contribute to, growth in the cellulosic 

biofuel industry. ‘Do a good job, cellulosic fuel producers. If you 

fail, we’ll fine your customers.’ Given this asymmetry in 

incentives, EPA’s projection is not ‘technology-forcing’ in the 

same sense as other innovation-minded regulations that we have 

upheld.24 

EIA originally estimated that there will be 9.6 million gallons of cellulosic biofuel 

produced in 2013. It has lowered that estimate to 5 million gallons and acknowledged that its 

estimates have proven to be too optimistic as volumes have been below expectations. In the 

Proposed Rule, EPA has chosen to reject EIA’s estimate; however, instead of lowering the 

estimate to reflect historical realities and avoid the issuance of waivers, EPA again raised EIA’s 

estimate based on interviews with cellulosic biofuel producers whose motivation is to persuade 

EPA to expand the mandate for their product. This methodology has repeatedly failed to 

produce an accurate estimate and most recently resulted in a cellulosic biofuel mandate that was 

vacated by the court. 

EPA’s inflated estimate is based primarily on interviews with individual 

companies that have indicated their commercial cellulosic biofuel production facilities will come 

on line in the future.

25 The 2012 rule based the cellulosic mandate on planned production from 6 

plants.26 The production did not materialize, and the company owning one of the plants has 

recently filed for bankruptcy. Of those six plants, two are the basis for the 2013 cellulosic 

volumes in the proposed rule. Even if they begin reliable commercial production, EPA continues 

to make a critical error in assuming that a start-up plant using new technologies or applying 

known technologies in new ways will operate at or near its full capacity.27 EPA’s predictive 

methodology is flawed and virtually guarantees that the 2013 cellulosic mandate will not be met. 

3. Cellulosic RIN Carryover. We also note that since there were zero cellulosic 

gallons produced in 2011 and only 1,741 cellulosic biofuel Renewable Identification Numbers 

(RINs) available in the marketplace for all of 2012, there is at best a de minimis (i.e., 1,741 

                                                           

24 API v. EPA, Slip Op. at 12. 

25 See Proposed Rule at 9290. We note that these same cellulosic biofuel producers previously indicated that they 

would produce cellulosic biofuel in 2011 and 2012, which were the primary drivers underlying EPA’s inaccurate 

estimates in the prior two years. See 77 Federal Register 1327 (January 9, 2012) and 75 Federal Register 76797 

(December 9, 2010). 

26 See 77 Federal Register 1327, 1330-1331 (January 9, 2012). 

27 See Proposed Rule at 9294 (table shows planned startups in first quarter, with available volumes at levels 

implying full capacity production for much of the remaining year). 

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RINs) “carryover” of excess cellulosic biofuel RINs that could be used for compliance with the 

2013 cellulosic biofuel mandate.28 

4. A Realistic Cellulosic Biofuel Standard. Based on the data in the EPA Moderated 

Transaction System (EMTS), EPA is aware that no cellulosic biofuel was produced in 2011 and 

very little was produced in 2012. EMTS data show zero cellulosic biofuel production in 2013 to 

date. These facts suggest caution when promulgating the regulatory volume for 2013. The 

Agency’s mistakes in setting overly aggressive cellulosic biofuel standards have consequences. 

Refiners should not be required to meet a mandate to blend cellulosic biofuels, when the 

domestic supply is either non-existent or inadequate. 

No harm will be caused if EPA establishes a conservative, realistic cellulosic 

biofuel standard and domestic production exceeds the Agency’s mandate.29 Any excess 

cellulosic biofuel RINs could be used to meet the advanced biofuel standard. The statutory 

volume for advanced biofuels is larger than the sum of cellulosic biofuels and biomass-based 

diesel. Congress intended competition between excess cellulosic biofuel RINs, excess biomassbased diesel RINs and other qualifying renewable biofuels. In fact, excess cellulosic biofuel 

RINs also can be used for compliance with the total renewable fuel obligation. 

There are three options for EPA to consider in its effort to set a realistic cellulosic 

biofuel standard for 2013 based upon historic production:30

1. EPA could set the 2013 cellulosic biofuel obligation at 0 gallons. In 2012, total 

cellulosic biofuel production was 21,093 gallons, out of which 20,069 gallons 

were exported. These are very small volumes corresponding to a cellulosic RFS 

percentage standard of less than 0.00002%. 

2. The Agency could set the 2013 cellulosic biofuel obligation at 4,092 gallons, 

which represents the annualized average production of the last three months of 

2012. This methodology would conform to S. 25131 and H.R. 550, which would 

                                                           

28 In 2012, there were 1,741 RINs that may be available for use in 2013. See 2012 EMTS data at: 

http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm. 

29 AFPM believes that the RFS is broken and EPA should waive the entire mandate for 2013 and 2014 to ensure that 

Congress has adequate time to address the changed assumptions and unintended consequences caused by the RFS 

mandates. Establishing a realistic cellulosic biofuel standard is required by statute; however, even a complete 

waiver of this mandate, would not be enough to abate the short term crisis caused by the E10 blendwall. EPA 

should exercise its authority to reduce the total renewable fuel volumes to ensure that the E10 blendwall is not 

breached. 

30 See EPA Moderated Transaction System – 2012 RFS2 Data, accessed on April 3, 2013 at: 

http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm 

31 http://thomas.loc.gov/cgi-bin/query/z?c113:S.251.IS: 

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establish a cellulosic volumetric standard based on the average monthly volume in 

the prior year.32 

3. EPA could set the cellulosic volumetric standard at 21,093 gallons, which 

represents the total amount of cellulosic biofuel recorded in EMTS in 2012. 

Considering historical production, the proposed 10.45 million gallon cellulosic biofuel mandate 

is unrealistic and contrary to EPA’s statutory authorization. 

C. Adjustment of Advanced Biofuel and Total Renewable Fuel Volumes 

EPA should reduce the regulatory volume for advanced biofuels and total renewable fuels 

mandates in 2013 to reflect the very large reduction in the cellulosic biofuel mandate, as well as 

the vehicle and retail fuel distribution infrastructure constraints (i.e., blendwall).33

1. Cellulosic Biofuel Shortfall. AFPM urges EPA to adjust the advanced biofuel 

and total renewable fuel volumes for 2013 to account for the shortfall in cellulosic biofuel 

production and the realities of the ethanol blendwall. The Agency understands the nested nature 

of the RFS and correctly points out the following: 

Since cellulosic biofuel is also used to satisfy the advanced biofuel 

standard and the total renewable fuel standard, any reductions in 

the applicable volume of cellulosic biofuel will also affect the 

means through which obligated parties comply with these two 

other standards.34 

While both biodiesel and sugarcane ethanol might be used to meet the advanced 

biofuels mandate, EPA correctly points out that the most likely source of advanced biofuels is 

imported sugarcane ethanol. 

EPA estimates that if biodiesel production in 2013 does not exceed 

1.28 bill gallons, and domestic production of other advanced 

biofuels is about 150 mill gallons, imports of sugarcane ethanol 

                                                           

32 http://thomas.loc.gov/cgi-bin/query/z?c113:H.R.550.IH: 

33 AFPM believes that the RFS is broken and EPA should waive the entire mandate for 2013 and 2014 to ensure that 

Congress has adequate time to address the changed assumptions and unintended consequences caused by the RFS 

mandates. Reducing the advanced biofuel mandate by an amount equal to the reduction in the cellulosic biofuel 

standard, would not be enough to abate the short term crisis caused by the E10 blendwall and EPA should exercise 

its authority to reduce the total renewable fuel volumes to ensure that the E10 blendwall is not breached. 

34 Proposed Rule at 9295. 

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from Brazil would need to reach 666 mill gal in order for the 2.744 

bill gal advanced biofuel requirement to be met.35 

We believe that the market might choose sugarcane ethanol over additional supplies of biodiesel, 

given the cost differences between these two fuels, but note that the Proposed Rule does not set 

forth this critical economic analysis for public comment.36 If this occurs, EPA’s stated need to 

be consistent with the energy security and greenhouse gas reduction goals of the RFS will be 

undermined, as additional imported sugarcane ethanol is required and increases in global GHG 

emissions from additional transportation of corn ethanol exports and sugarcane ethanol imports 

(i.e., fuel shuffling). Given the Agency’s desire to maintain these RFS goals, its failure to reduce 

the advanced biofuel and total renewable fuel requirements in the face of an inadequate supply of 

cellulosic biofuels is inconsistent with its stated environmental goals. Moreover, further 

incentivizing imported sugarcane ethanol will exacerbate the E10 blendwall problem. 

The proposed advanced biofuel standard also includes a 28% annual increase in 

biomass based diesel mandate. EPA failed to correctly apply the statutory criteria in setting this 

limit and has not fully discussed the challenges of producing the mandated 1.28 billion gallons in 

2013, points which have been raised in AFPM’s petition for reconsideration. In its rationale, 

EPA cites biodiesel nameplate capacity of 2.1 billion gallons, which includes idled plants. Idled 

plants may be brought back on line, but given the time required and the very late effective date 

of this rule, it is unlikely that such additional production will occur in time to meet the 2013 

advanced biofuels mandate. While the National Biodiesel Board will comment on that industry’s 

ability to produce virtually any amount of biodiesel mandated under the RFS, such 

representations should be scrutinized given incidents of RIN fraud, high feedstock costs, the 

drought, and consumers’ general reluctance to embrace a fuel that costs more, has a lower energy 

content, poor cold weather performance and inconsistent quality. Moreover, given the high cost 

of biodiesel relative to other alternatives, EPA’s assumption that the demand for biodiesel will 

exceed the RFS mandated volume is not realistic. 

2. Vehicle and Retail Fuel Infrastructure Constraints. EPA proposes to reduce the 

cellulosic biofuel requirement from the statutory level of 1.0 billion gallons in 2013 to 14 million 

ethanol-equivalent gallons. The proposed reduction of the cellulosic biofuel standard for 2013 

by almost 1.0 billion gallons should trigger a corresponding reduction in the advanced biofuels 

standard for 2013. As such, the Agency should not promulgate 2.75 billion gallons for the 

advanced biofuels volumetric standard in 2013 (the statutory level). 

Adding the EPA’s projection of: (1) 616 million gallons of sugarcane ethanol; (2) 

49 million gallons of other advanced ethanol (which may be as high as 150 million gallons if 

other advanced biofuels do not materialize); and (3) 6 million gallons of cellulosic ethanol to the 

13.8 billion gallons of conventional biofuels required to fulfill the total renewable mandate of 

16.55 billion gallons of ethanol equivalent, results in 10.9% of the gasoline volumetric 

                                                           

35 Proposed Rule at 9298. 

36 We also raise concerns with EPA’s sugarcane ethanol pathway, discussed in Section H, infra. 

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demand.37 EPA knows that the vast majority of U.S. vehicles and retail fuel delivery 

infrastructure to-date are approved for E10 fuel. Proposing a 2013 RFS standard that “crosses” 

the 10% blendwall is problematic and could result in significant fuel supply disruptions in the 

U.S. While AFPM believes that EPA should waive the entire RFS, at a minimum the Agency 

must reduce the advanced and total RFS volume so that ethanol is less than 10% of the 133.37 

billion gallons of gasoline demand.38 

Similarly, EPA should reduce the total renewable fuel volume for 2013 to reflect 

a lower requirement for conventional biofuels. Recently, EIA projected only 13.0 billion gallons 

of ethanol consumption in 2013.39 This is 0.8 billion gallons less than the implicit 13.8 billion 

gallons of conventional biofuels requirement for 2013. EPA should reduce the total renewable 

fuel volumetric standard for 2013 from 16.55 billion gallons to 14.75 billion gallons to reflect 

EIA’s projection and to account for the reduction in cellulosic biofuels and technological limits 

on ethanol consumption to ensure that the E10 blendwall is not exceeded.40 

D. 2013 Biomass-Based Diesel Standard 

The Proposed Rule contains a brief discussion of the biomass-based diesel volumes for 

2013 in the context of EPA’s assessment of available volumes of advanced biofuel. EPA 

mentions that it had finalized a biomass-based diesel volume of 1.28 billion gallons for 2013;41

however, the Agency fails to mention that this final rule is the subject of a petition for 

reconsideration and a petition for review filed in the U.S. Court of Appeals for the DC Circuit.42 

AFPM’s petition for reconsideration was based upon new information that the Agency did not 

consider in promulgating the 2013 biomass-based diesel standard. Included in AFPM’s petition 

for reconsideration is information on the environmental impacts; energy security; cost to 

consumers; the drought; RIN fraud; and erroneous estimates of job creation. 

37 (13.8 + 0.666 +0.049+0.006)/133.37 = 10.9%. See EIA letter to EPA (October 18, 2012) (estimating gasoline 

demand of 133.984 billion gallons). Note a more recent estimate appears in the EIA Short Term Annual Energy 

Outlook (March 12, 2013) (estimating gasoline demand at 8.7 million barrels per day or 133.37 billion gallons in 

2013). 

38 Letter dated October 18, 2012 from EIA to EPA. 

39 Energy Information Administration, Short-Term Energy Outlook, Table 8 (February 12, 2013). 

40 AFPM believes that the RFS is broken and EPA should waive the entire mandate for 2013 and 2014 to ensure that 

Congress has adequate time to address the changed assumptions and unintended consequences caused by the RFS 

mandates. Reducing the advanced and total RVOs mandate by an amount equal to the reduction in the cellulosic 

biofuel standard is insufficient to abate the short term crisis caused by the E10 blendwall and EPA should exercise 

its authority to reduce the RVOs to ensure that the E10 blendwall is not breached. 

41 77 Federal Register 59458 (September 27, 2012). 

 

42 We note that more than 4 months after filing our petition for reconsideration, EPA has failed to post the petition 

to the docket. Accordingly, we attach another copy as Exhibit A hereto. 

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 Given the Proposed Rule’s discussion of the 2013 biomass-based diesel mandate and the 

prospects for increasing production of this alternative fuel, we are disappointed that EPA has not 

yet issued a decision on AFPM’s petition for reconsideration and failed to even mention it in the 

preamble to the Proposed Rule. The failure to discuss the issues raised in AFPM’s petition 

amounts to the continuation of the Agency’s consideration of only those factors that could result 

in an increased biofuel mandate, while ignoring facts and circumstances that could result in a 

shortfall in production, significant increases in costs to consumers of transportation fuels, and 

adverse environmental impacts. The EPA should reconsider the 2013 mandate and amend the 

September 2012 rulemaking to reduce the 2013 biomass-based diesel mandate to a realistic 

amount, such as 1 billion gallons. 

E. Failure to Timely Propose 2013 RFS Volumes and Potential Retroactive 

Application of 2013 Standards 

Congress mandated that EPA publish the renewable fuel volume obligations for each year 

by November 30 of the preceding year.43 EISA requires at least 31 days between the publication 

of each year’s standards and the date that volume obligations begin to accrue under those 

standards. EPA failed to carry out this statutory directive. The Agency did not issue a proposed 

or final rule for the 2013 volume obligations during 2012 in direct violation of the lead time 

provisions of the statute. It is illegal and unfair that EPA has continually missed these 

legislatively-established deadlines and then forces obligated parties to retroactively comply. 

 If EPA proceeds with this delayed rulemaking, it would result in the accrual of legal 

obligations before the effective date of the final rule, as obligations are created with each gallon 

of gasoline and diesel produced for domestic consumption after January 1, 2013. By imposing 

obligations on transactions occurring before the rule takes effect, EPA will be engaging in 

retroactive rulemaking. A rule that imposes new obligations on production and importation that 

has already occurred is clearly retroactive and illegal. The fact that obligated parties have until 

February 2014 to obtain RINs for compliance with the obligations for 2013 does not cure the 

retroactivity problem. 

EPA has recognized the importance of minimum lead time in the RFS2 program. The 

Agency has announced that “for future standards, we intend to issue a proposed rule by summer 

and a final rule by November 30 of each year in order to determine the appropriate standards 

applicable in the following year.”44 EPA believes that a notice-and-comment rulemaking for 

each year’s standards is “appropriate” given “the implications of these standards and the 

necessary judgment that can’t be reduced to a formula akin to the RFS1 regulations.”45 

43 See 42 U.S.C. § 7545(o)(2)(B)(i). 

44 75 Federal Register 14670, 14675 (March 26, 2010). 

45 Id. at 14675. 

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The procedure for the 2013 RFS standards should not be repeated for the 2014 standards. 

AFPM expects the Agency to issue a NPRM this summer for the 2014 standards and promulgate 

a final rule by November 30, 2013. 

EPA’s missed statutory deadline undermines the basic rulemaking process established by 

the Administrative Procedure Act. The familiar sequence is notice, comment, promulgation of a 

rule, and judicial review. For an administrative agency to delay the final rule for RFS 

obligations for 2013 and to than apply it retroactively to January 1, 2013 subverts the rulemaking 

process. In this case, the Administration lost the opportunity to collect public comments on a 

proposal during 2012 in order to promulgate an improved rule for 2013 compliance prior to 

January 1, 2013. 

The Agency does not have unbounded discretion to determine the regulatory levels of the 

RFS to apply for 2013 in a final regulation promulgated well after January 1, 2013. AFPM 

strongly opposes any attempt by EPA to impose retroactive regulatory RFS requirements. EPA 

also should continue to apply the 2012 RVO, as revised by the court’s decision, until an adjusted 

final rule is promulgated.46 To address the delay in promulgating the RVOs, EPA should reduce 

the 2013 requirements to reflect the number of days the rule will be late in being finalized. 

F. 2014 Biomass-Based Diesel Standard 

EISA requires EPA to promulgate the volume for biomass-based diesel for 2014 no later 

than 14 months before January 1, 2014. The Proposed Rule does not include a proposed volume 

for biomass-based diesel for 2014 and instead indicates that the Agency will issue a separate 

proposal at a later date. We note that the Agency did not publish the biomass-based diesel 

volume for 2013 until September 2012, providing the industry with less than four months lead 

time. AFPM is concerned that the Agency continues to ignore this important statutory deadline. 

Based on the substance of AFPM’s petition for reconsideration of the 2013 biomass-based diesel 

volumetric requirements and the missed statutory deadline, EPA should propose expeditiously a 

2014 biomass-based diesel RVO of no more than 1.0 billion gallons. 

G. Procedurally, EPA Has Failed to Use the Most Recent EIA Data Available in 

Establishing These Proposed Standards. 

 EIA issued its early release of AEO2013 on December 5, 2012. Since EPA will not issue 

the final rule on 2013 Renewable Fuel Standard until sometime in May or later, it has plenty of 

time to consider the more recent forecast that EIA has made available. 

46 AFPM believes that the RFS is broken and EPA should waive the entire mandate for 2013 and 2014 to ensure that 

Congress has adequate time to address the changed assumptions and unintended consequences caused by the RFS 

mandates. Reducing the RVOs by 40 percent to reflect the delay in promulgating the 2013 requirements would help 

ensure that the E10 blendwall is not breached in the 2013-2014 timeframe. 

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H. Sugarcane Ethanol Imports 

 EPA may waive RFS requirements when domestic biofuel supplies are insufficient to 

satisfy the mandate. By leaving the advanced biofuel standard at the statutory volume, EPA is 

creating an incentive to import sugarcane ethanol (at least 666 million gallons) into the U.S. from 

Brazil, contrary to EISA’s purpose of furthering U.S. energy independence. At the same time, 

Brazil is replacing these volumes by importing U.S. corn ethanol or gasoline. This real world 

fuel shuffling was not considered when EPA approved the sugarcane ethanol pathway. In 

addition to waiving the imported volumes due to insufficient domestic production, EPA needs to 

delay any increases in the advanced biofuel volumes until it has reexamined whether the entire 

Brazilian sugarcane ethanol pathway actually achieves sufficient GHG emissions reductions. 

CONCLUSION

AFPM members are dedicated to working cooperatively at all levels to ensure an 

adequate supply of clean, reliable and affordable transportation fuels. AFPM members are 

focused on building a better tomorrow for the American people, continuing our efforts to 

improve the environment at the same time we manufacture vital products to strengthen our 

economy and improve the lives of families. We stand ready to work with the Administration to 

ensure a stable and effective fuels policy that utilizes a diversity of resources to improve our 

national security, benefits consumers and protects our environment. 

EISA provides EPA with “tools” to adjust the volumes of renewable fuels under certain 

circumstances. Given the incompatibility of mid-level ethanol blends with existing vehicles and 

retail fuel distribution infrastructure (E10 blendwall) and the small amount of cellulosic biofuel 

production, EPA should utilize the flexibility provided by the law to lower the annual volumetric 

targets, including the 2013 RVOs. 

In promulgating a final rule implementing the 2013 renewable fuel standards, EPA must 

address the following issues: 

• Waive the RFS mandates in their entirety, as the RFS was built on assumptions that 

are no longer valid and the law is producing absurd results. At a minimum, EPA 

should adjust the advanced and total RFS volumetric standards to ensure that the E10 

blendwall is not breached. 

 

• Promulgate a cellulosic biofuel volumetric standard that accurately reflects the 

reduced level of cellulosic biofuels that will be available in the U.S. market and 

appropriately considers the U.S. Court of Appeals recent decision, requiring EPA to 

change the methodology it uses to predict cellulosic biofuel production for the 

coming year. This will require a critical look at the current state of cellulosic biofuel 

production and recognition that it will be at least five months into the compliance 

year before the rule will be finalized and an acknowledgement that virtually no 

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cellulosic biofuel has been produced in 2013. AFPM recommends a cellulosic 

biofuel standard of zero based on EPA’s EMTS data. 

• Promulgate standards with reduced advanced biofuel and total renewable fuel 

mandates that properly reflect the reduced amount of cellulosic biofuels that will be 

available in 2013. The failure to make this corresponding adjustment will increase 

the cost of complying with the RFS, increase the amount of biofuels imported into the 

United States, and increase global GHG emissions as a result of ethanol fuel 

shuffling. 

• As soon as practicable, reduce the 2013 biomass-based diesel standard to one billion 

gallons and respond to AFPM’s petition for reconsideration based on new 

information that became available after the close of the comment period.47 

• Reduce the 2013 volumetric standards to reflect the number of days the rule will be 

late in being finalized. 

• Promulgate standards for 2014 that address the blendwall by November 30, 2013 and 

correct what has evolved into a pattern of illegal retroactive rulemaking, as a result of 

missed statutory deadlines for establishing annual requirements under the RFS. 

• Suspend the 2013 advanced biofuel standard due to (1) inadequate domestic supply 

and (2) until a complete reevaluation of the Brazilian sugarcane ethanol pathway 

establishes that sufficient GHG emissions reductions are achieved. 

 

If you have any questions concerning these comments, please contact the undersigned or 

Tim Hogan at (202) 457-0480. 

 Respectfully submitted, 

 

 Richard Moskowitz 

Attachment 

 

47 AFPM’s petition for reconsideration is attached hereto as Exhibit A. 

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19

EXHIBIT A 

AFPM Petition for Reconsideration 
American 

Fuel & Petrochemical 

Manufacturers 

1667 K Street, NW 

Suite 700 

Washington, DC 

20006 

202.457.0480 office 

202.552.8457 direct 

202.457.0486 fax 

Rmoskowitz@afpm.org 

Richard Moskowitz

General Counsel 

 November 20, 2012 

The Honorable Lisa Jackson 

Administrator 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue 

Washington, DC 

RE: Petition for Reconsideration – Docket No. EPA-HQ-OAR-2010-0133 

Dear Administrator Jackson: 

Pursuant to Section 307(d)(7)(B) of the Clean Air Act, the American Fuel & Petrochemical 

Manufacturers (“AFPM”),1 petitions the Administrator of the U.S. Environmental Protection 

Agency (“Agency” or “EPA”) to reconsider its final rule entitled Regulation of Fuels and Fuel 

Additives: 2013 Biomass-Based Diesel Renewable Fuel Volume.

2

 

The objections raised in this Petition for Reconsideration were either impracticable to raise 

during the public comment period or arose after the close of the public comment period, and they 

are of central relevance to the outcome of the Final Rule. The Administrator must therefore 

“convene a proceeding for reconsideration of the rule and provide the same procedural rights as 

would have been afforded had the information been available at the time the rule was 

proposed.”3

AFPM submits this Petition based on new facts that are material to EPA’s application of the 

statutory criteria the agency must apply in establishing the applicable volume of biomass-based 

diesel to be used under the renewable fuel standard for 2013. 

BACKGROUND 

The federal Renewable Fuel Standard (“RFS”) requires EPA to promulgate a rule establishing a 

specific amount of biomass-based diesel for 2013. For 2012 and beyond, Congress provided a 

floor of 1.0 billion gallons that was intended to provide an insurance policy to the existing 

 

1

 AFPM is a national trade association of more than 400 companies. Its members include virtually all U.S. refiners 

and petrochemical manufacturers. AFPM members supply consumers with a wide variety of products and services 

used daily in their homes and businesses. These products include gasoline, diesel fuel, home heating oil, jet fuel, 

lubricants and the chemicals that serve as “building blocks” in making diverse products, such as plastics, clothing, 

medicine and computers. 

2

 77 Federal Register 59458 (September 27, 2012) (hereinafter the “Final Rule”). 

3

 42 U.S.C. § 7607(d)(7)(B). 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 2 

biodiesel industry in the form of a guaranteed market for their product. Beyond 2012, EPA was 

given the discretionary authority to increase the biomass-based diesel mandate beyond a billion 

gallons, based on its evaluation of six criteria specifically enumerated in the RFS. As 

demonstrated below, the facts critical to the analyses and application of the statutory criteria 

have materially changed since the close of the comment period and warrant a reconsideration of 

the Final Rule. 

DISCUSSION 

A. The Administrator’s Discretion to Increase the Biomass Based Diesel Requirements 

Under the RFS is Framed by the Application of Six Specific Statutory Criteria 

In determining the biomass based diesel requirements for 2013, Congress instructed EPA to 

establish a minimum requirement of 1.0 billion gallons.

4

 Congress gave the Administrator the 

discretion to promulgate a rule that goes beyond the 1.0 billion gallon statutory floor, based on 

its consideration of the following six factors: (1) environmental impact; (2) impact upon energy 

security; (3) expected rate of commercial production of renewable fuels; (4) impact upon fuel 

delivery infrastructure; (5) cost to consumers; and (6) other factors such as job creation, price 

and supply of agricultural commodities, rural development, and food prices.5

The application of these criteria to the Administrator’s decision requires a fact-based 

analysis. As demonstrated below, the facts underlying EPA’s analysis for several of the 

enumerated statutory factors have changed significantly and warrant reconsideration of the 

Administrator’s decision to promulgate a biomass-based diesel mandate in excess of 1.0 billion 

gallons. 

Before addressing the changed circumstances that warrant reconsideration of the 

Administrator’s decision, it is important to understand the rationale underlying the statutory 

framework created for biomass-based diesel. At the time that the Energy Independence and 

Security Act of 2007 (“EISA 2007”)was under debate, the National Biodiesel Board (“NBB”) 

asked other industries to join them in supporting a specific carve-out for biodiesel that would 

ensure the viability of its existing brick and mortar facilities.6

 At least one consumer group who 

historically opposes government fuel mandates joined the NBB in supporting a 1.0 billion gallon 

carve-out that was intended to be an insurance policy to protect existing biodiesel facilities. At 

the time, the NBB represented that going forward biodiesel would be able to compete with 

petroleum-based diesel fuel and supported the inclusion of statutory criteria designed to prevent 

an increase in the biodiesel mandate if it would result in an increase in diesel fuel costs. 

 

4

See 42 U.S.C. § 7545(o)(2)(B)(iv). 

5

See 42 U.S.C. § 7545(o)(2)(B)(ii). 

6

 There were other elements of this compromise, such as the preemption of state biodiesel mandates, that were not 

included in the final legislation. 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 3 

Biomass-based diesel qualifies under the advanced biofuel category of the RFS and therefore 

should compete with other advanced biofuels to ensure the goals of the RFS are met in the most 

cost effective manner. The biomass-based diesel mandate is a dedicated carve-out from the 

advanced biofuel category and increasing it creates a disincentive for investments in other 

advanced renewable fuels that may overcome some of the performance limitations associated 

with biodiesel. As such, the increase of the biomass based diesel mandate should be approached 

very cautiously as the EPA is essentially selecting winners and losers without a clear 

understanding of the impacts upon the capital investment in future fuels. The 2.75 billion gallon 

Advanced Biofuel Mandate provides more than enough incentive to grow the biodiesel industry, 

provided that the biodiesel industry can live up to the promises it made at the time EISA 2007 

was enacted. If the industry cannot meet these expectations, then other advanced biofuels should 

be used to meet consumers’ needs in the most cost effective manner possible. The six statutory 

criteria are designed to force EPA to consider these variables. 

B. New Information Critical to the Administrator’s Analysis Compels Reconsideration of 

the Final Rule 

The public comment period for the rulemaking that is the subject of this Petition closed on 

August 11, 2011.7

 During the time between the conclusion of the public comment period and the 

promulgation of the Final Rule, several facts changed that significantly impact the statutory 

criteria enumerated above. We believe that these facts compel the promulgation of a lower 

biomass-based diesel volumetric requirement for 2013. 

1. The Drought 

 

The Agency could not have anticipated the drought our Nation is experiencing when the 

comment period closed in August 2011. This drought has led to a dramatic reduction in corn and 

soybean supplies, which has increased livestock and food production costs. The drought has 

made it very difficult for these industries to plan and remain profitable and has led to multiple 

waiver requests of the ethanol requirements under the RFS. Soybean crops, the primary 

feedstock for biodiesel production, have been similarly impacted and the Administrator’s 

discretionary decision to increase the biomass-based diesel component of the RFS mandates 

warrants reconsideration. 

Millions of tons of soybean oil meal are used annually by animal producers. The large 

increase in soybean oil meal price means hundreds of millions of dollars in increased production 

costs for these industries. This financial hardship will be exacerbated by the discretionary 28 

percent increase in the requirement for biomass-based diesel. This new fact is directly relevant 

to the statutory criteria Congress created to inform EPA’s decision of appropriate biomass-based 

diesel quantities. At several points in the preamble to the Final Rule, EPA acknowledged that 

 

7

See 76 Federal Register 38844 (July 1, 2011) (hereinafter the “Proposed Rule”). 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 4 

the drought will have an impact upon the supply and price of agricultural commodities; however, 

EPA stopped short of considering its impact in establishing the biomass-based diesel volumetric 

requirement for 2013: 

 

Cost estimates do not account for projections in recent trends in 

crop yields and grain prices resulting from drought conditions that 

are occurring in many areas of the country.8

 

* * * * 

It should be noted that the projections in Table III.B-1 do not 

account for recent trends in crop yields and grain prices resulting 

from drought conditions that are occurring in many areas of the 

country. Given the wide range of feedstocks from which biodiesel 

can be produced, the ultimate impact of these drought conditions 

on the mix of biodiesel feedstocks in 2013 is difficult to predict at 

this time.9

The agency states that it “cannot predict the exact impact that these increases in soybean and 

soybean oil prices will have on food prices in general;” however, that is exactly what Congress 

requires of the agency before it decides to increase the mandate for biomass-based diesel.10 

Setting the biomass-based diesel mandate at 1.0 billion gallons for 2013, the statutory 

minimum, allows fair competition between the biofuels and livestock/food industries for soybean 

supplies. The Administration should not favor soybean biodiesel producers at the expense of the 

livestock/food industries and the U.S. consumer. The price impacts on agricultural commodities 

and the current drought are sufficient justification for the Administration to reconsider the 

renewable fuel volume for biomass-based diesel in 2013. 

The preamble to the final rule also contains a discussion of the price of soy oil in 2013 

and estimates that its price will be $0.45 per pound under the mandate instead of $0.42 under the 

billion gallons. This 7 percent increase is significant and as a food source is a factor that 

Congress mandated EPA to consider in its establishment of the 2013 biomass-based diesel 

mandate. In the category of new information that is available since the Administrator made her 

decision, we note that the soy oil futures prices are significantly higher (10 percent) for 2013 

than the Administrator’s 45 cent estimate.11 This new information concerning soy oil prices is

 

8

 77 Federal Register at 59459, note 3. 

9

Id. at 59463/2. 

10 Id. at 59465/1. 

11 Soy oil futures prices for 2013 currently vary from 49 cents to 50.5 cents. See Commodities Futures prices at: 

www.cnbc.com, last accessed on November 8, 2012. 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 5 

directly relevant to the statutory criteria EPA applies in determining the appropriate amount of 

biomass-based diesel for 2013.12

 

2. RIN Fraud 

EPA is now well aware of the fact that biodiesel producers have inflated the amount of 

biodiesel actually produced under the RFS mandate. A significant portion of this fraud stems 

from biodiesel producers generating Renewable Identification Numbers (“RINs”) that do not 

correspond to the gallons of biodiesel they have produced. Another potential source of 

significant fraud is the failure to retire RINs that correspond to the number of gallons of biomassbased diesel that are exported. 

To date, EPA has initiated enforcement actions based on 140 million fraudulent RINs. 

These RINs represent between 6 and 12 percent of the entire biodiesel market and raise a serious 

question as to the true amount of biodiesel that has been produced. Moreover, we are aware of 

several ongoing investigations into additional biodiesel producer fraud that would have a 

material impact on EPA’s estimate of the amount of gallons actually produced. While the 

existence of RIN fraud was unknown during the public comment period, EPA now recognizes 

that it is a materially significant problem and is considering regulatory changes to address the 

predicament.13 The large number of invalid RINs represents a serious disparity in the estimates 

of expected commercial rate of biodiesel production and also impacts EPA’s conclusion that an 

increase to 1.28 billion gallons represents only a “moderate” increase in the biomass-based diesel 

mandate. 

3. Diesel Fuel Exports - Impact on Domestic Energy Security 

The Administrator mistakenly concludes that the 2013 increase in biomass-based diesel 

beyond the billion gallon statutory floor will improve U.S. energy security. 

This final standard will assure an increased use of biomass-based 

diesel in the U.S. and help to improve U.S. energy security. 

Reducing U.S. petroleum imports and increasing the diversity of 

U.S. liquid fuel supplies lowers both the financial and strategic 

 

12 On November 16, 2012, EPA denied multiple petitions to waive the RFS requirements for ethanol based upon the 

impact of the drought. We note that the legal standard for reviewing RFS waiver petitions differs from the statutory 

criteria EPA must consider in establishing the BBD volumetric requirements for 2013. The standard for waiving the 

RFS is one of severe economic harm, while the criteria for establishing the BBD volumes include inter alia an 

analysis of the supply of agricultural commodities.

13 U.S. Environmental Protection Agency, Public Release of Draft Quality Assurance Plan Requirements, EPA-420-

B-12-063 (October 31, 2012). http://www.epa.gov/otaq/fuels/renewablefuels/documents/420b12063.pdf. 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 6 

risks caused by potential sudden disruptions in the supply of 

imported petroleum to the U.S. 

This quote represents a fundamental misunderstanding of the difference between petroleum 

crude oil and finished transportation fuels. The increase in biomass-based diesel use in the U.S. 

from 1.0 billion gallons to 1.28 billion gallons will not displace a single barrel of imported crude 

oil. This is primarily because biomass-based diesel is a substitute for finished diesel fuel and has 

no impact upon the U.S. demand for gasoline. 

Each barrel of oil refined yields approximately 19 gallons of gasoline and 11 gallons of 

diesel fuel, as well as 12 gallons of other petroleum-derived products.14 While these proportions 

can be adjusted on the margins, in manufacturing gasoline the United States generates more 

diesel fuel than it can consume domestically.15 As such, the U.S. has become a net exporter of 

diesel fuel. For this reason, any requirement to blend biomass-based diesel will not reduce the 

amount of crude oil imported into the U.S., it simply will cause an increase in the amount of 

exported diesel fuel it displaces. Thus, the Final Rule’s increase in biomass-based diesel of 280 

million gallons will result in a corresponding increase in the export of petroleum-derived diesel 

fuel of 280 million gallons. It will have no impact upon the amount of crude oil imported and 

therefore will have no impact on domestic energy security. These facts have a direct impact on 

the Administrator’s analysis of the statutory criterion of energy security and warrants 

reconsideration of the decision to extend the biomass-based diesel mandate beyond the 1.0 

billion gallon statutory threshold. 

The preamble to the Final Rule suggests that the Administrator extrapolated perceived 

energy security benefits from the RFS generally and applied that analysis to this rulemaking. 

Thus, on balance, each gallon of fuel saved as a consequence of the 

renewable fuel standards is anticipated to reduce total U.S. imports 

of petroleum by 0.95 gallons.16

 

As demonstrated above and based on the fact that we export diesel fuel, this extrapolation 

produces an erroneous conclusion with respect to the impact on energy security from increasing 

the biomass-based diesel mandate in 2013.17 

 

14 See Energy Information Administration, Products Made for a Barrel of Crude Oil, 

http://www.eia.gov/energyexplained/index.cfm?page=oil_home. 

15 According to the Energy Information Administration, from January 2012 to August 2012, the U.S. exported more 

than 213 million barrels of distillate fuel. 

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MDIEXUS1&f=M 

16 77 Federal Register at 59470/2. 

17 The Final Rule includes an energy security benefit of $0.15 per gallon derived from the macroeconomic

disruption and adjustment costs component of the energy security premium. See 77 Federal Register at 59471/3. 

For the reasons stated herein, this benefit is illusory. 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 7 

 The Agency acknowledges that “the U.S. is projected to be a net exporter of diesel fuel in 

2013.” Notwithstanding this realization, the Agency has ignored Congress’ instruction to 

analyze the energy security impact of this specific Final Rule. 

Our energy security analysis does not evaluate the energy security 

benefits of individual finished petroleum products; rather, our 

analysis takes into account the energy security benefits of overall 

net petroleum product imports. 

Congress did not give the Administrator the authority to ignore one of the six statutory criteria in 

her determination of whether to increase the biomass-based diesel mandate beyond the 1.0 

billion gallon statutory threshold. 

Although we believe that the Agency acted arbitrarily in extrapolating its overall RFS 

energy security analysis to the Final Rule affecting only the biomass-based diesel mandate, we 

note a significant change in facts underlying the Agency’s original analysis of U.S. energy 

security. Following the close of the comment period the National Petroleum Council released an 

18-month study of North American natural gas and oil resources.18 This study demonstrates that 

the United States has much greater access to North American sources of energy than previously 

thought and warrants reconsideration of the Administrator’s conclusions on the impact this rule 

and the RFS will have on U.S. energy security. 

4. Job Creation 

EPA’s conclusions on the employment benefits associated with an increase in biomassbased diesel from 1.0 billion gallons to 1.28 billion gallons are overstated given the recent 

closures of certain biodiesel facilities and the underutilization of facilities that have maintained 

operations. Here again EPA is using biased information provided by the NBB rather than 

conducting its own analysis. EPA is aware that many of the biodiesel producers are operating at 

a reduced rate, some have been idled, and others have permanently closed. Reliance on a prior 

study as to the overall benefits to rural employment under the RFS ignores some of the current 

facts concerning biodiesel plant utilization that would have a material impact on EPA’s 

conclusions with respect to job creation. EPA should have reviewed the 200 biodiesel producers 

provided on the NBB list and determined the status and current utilization rates of these facilities 

as part of its obligation to analyze the statutory criteria. It is far more economical to expand 

production at an existing plant that is underutilized than it is to bring idle biodiesel plants back 

on line. Unfortunately, the number of jobs that will be created by increasing the throughput at an 

 

18 National Petroleum Council, Prudent Development: Realizing the Potential of North America’s Abundant Natural 

Gas and Oil Resources, (September 2011). 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 8 

already operational plant is nowhere near the NBB estimate of 30 to 40 people.19 Other 

estimates of employment provided by NBB are similarly overstated and EPA should 

independently investigate these facts. For example, some plants are fed by pipeline while most 

others are located very close to their feedstock source, rendering NBB’s estimate of additional 

transportation workers unrealistic, since it assumes that each driver can make only one delivery 

per day.20

We also note, that it is improper to consider only the positive employment benefits 

associated with an increase in the biomass-based diesel mandate and simultaneously 

acknowledge that the corresponding loss in employment in other economic sectors is not 

quantifiable and therefore may be ignored. 

 

5. Costs and the Impact on the Consumer 

EPA’s legal requirement to blend biomass-based diesel will result in increased 

production and/or imports of this fuel, as obligated parties must comply with the mandate. The 

question remains, however, at what cost can this fuel be produced under the mandate. 

EPA acknowledged the need to restrain the growth of the biomass-based diesel mandate. 

In the NPRM we indicated that, based on the limited information 

available on the current and historical operation of the RFS 

program, it would be prudent for 2013 to consider only moderate 

increases in biomass-based diesel above the statutory minimum of 

1.0 billion gallons. 

Notwithstanding this pronouncement, EPA went on to promulgate a 28% increase in the 

volumetric mandate. This percentage increase during a time of slow economic growth is 

very aggressive and difficult to justify under the banner of moderate growth.21

EPA estimates that the cost of increasing the biomass-based diesel mandate from 1.0 

billion to 1.28 billion will add between $253 million and $381 million to consumers 

transportation fuel bill in 2013. We note that this addition to the Nation’s transportation fuel bill

comes at a time when economic conditions in the country are poor and millions who depend 

upon transportation fuels remain out of work or underemployed. 

At the close of the comment period, EPA had no way to predict the state of the economy 

in 2013 or whether the $1 per gallon blending credit would be extended by Congress; however, 

 

19 On a somewhat related issue, our discussions with a well-known biodiesel plant auditor indicate that the average 

employment is closer to 25 individuals per plant. 

20 See 77 Federal Register at 59477/1. 

21 77 Federal Register at 59461/1 (emphasis added). 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 9 

at the time the Final Rule was issued, EPA should have done everything in its power to lower the 

costs of transportation fuels for consumers and under no circumstances should have exercised its 

discretion to mandate the use of biodiesel, a fuel that is significantly more expensive than ULSD. 

Indeed, Congress requires EPA to consider the cost to consumers as one of the statutory criteria 

that frames its annual decision to set the biomass-based diesel volumetric requirement. 

 

6. Potential Carbon Reductions 

Under the statutory criteria, EPA must consider the environmental impact of its decision 

to expand the biomass-based diesel mandate by 280 million gallons. We note that because 

biomass-based diesel operates as a requirement nested within the advanced biofuels mandate, the 

likely impact of this decision is to ensure the use of additional biomass-based diesel at the 

expense of ethanol derived from sugar cane. Focusing on the carbon emissions associated with 

these two fuels, soy-based biodiesel has an average carbon intensity that is ten percent greater 

than ethanol derived from sugarcane, resulting in the likely increase in carbon emissions from 

EPA’s decision to increase biomass-based diesel by 280 million gallons.22

 

C. The Statutory Factors Must be Applied Annually 

EPA has chosen to downplay the statutory requirement to apply these factors annually for 

each year that it promulgates a biomass-based diesel quantity following 2012 and instead has 

relied upon the long-term RFS economic analysis, which is contrary to Congress’ intent in 

specifying the six factors to be examined each year. 

The statute is forward-looking in that it created a program whose energy and 

environmental benefits are intended to grow over time. To evaluate the program 

on the basis of only one early year’s impacts, as part of near-term implementation, 

would be to paint an unbalanced and incomplete picture.23

In substituting the long-term costs and benefits in place of the specific statutory criteria that are 

to be applied to biomass-based diesel volumes each year following 2012, EPA has ignored the 

consumer safeguards that Congress wrote into the statute for each year in which EPA is required 

to establish a biomass-based diesel volumetric requirement. To safeguard consumers and other 

interested parties, Congress intended EPA to adjust the volumetric requirement annually based 

on factors that change each year. Relying on a long-term analysis that ignores the specific 

variables that change on a more frequent basis is a significant departure from Congressional 

intent. 

 

22 See 75 Federal Register 14669, 14790-91 (March 26, 2010). 

23 77 Federal Register at 59482/3. 
AFPM Petition for Reconsideration 

Docket No. EPA-HQ-OAR-2010-0133 

November 20, 2012 

Page 10 

Congress intended to provide an insurance policy to the biodiesel producing industry by 

creating a floor of 1.0 billion gallons of biomass-based diesel that must be blended each year.24

 

Any decision to exceed that floor is a discretionary decision that must be is based upon the 

annual application of the enumerated statutory factors as directed by Congress. 

CONCLUSION 

At the close of the comment period, EPA could not foresee whether Congress would 

eliminate the $1 per gallon biodiesel blending credit, the impact of the drought on feedstock 

supplies and prices, the extent of RIN fraud in the biodiesel industry, and the growth of diesel 

exports ameliorating the energy security benefits from biodiesel, all of which have a material 

impact upon EPA’s analyses of the statutory criteria underlying the establishment of the annual 

biomass-based diesel requirement. Based upon these changed facts and new information, the 

Administrator must reconsider her decision to require a 28 percent increase in biomass-based 

diesel above the statutory minimum established by Congress. 

 Respectfully submitted, 

 

 Richard Moskowitz 

 General Counsel 

cc: Gina McCarthy 

Chris Grundler 

 Byron Bunker 

 Paul Machiele 

 

 

24 See 42 U.S.C. § 7545(o)(2)(B)(ii)(v).